SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

	For the quarterly period ended March 31, 2010.

OR

o	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

	For the transition period from to

Commission File Number 000-50923

WILSHIRE BANCORP, INC.

(Exact name of registrant as specified in its charter)

California		20-0711133
State or other jurisdiction of incorporation or organization		I.R.S. Employer Identification Number

3200 Wilshire Blvd.
Los Angeles, California		90010
Address of principal executive offices		Zip Code

(213) 387-3200

Registrant’s telephone number, including area code

No change

(Former name, former address, and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “small reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	o	Accelerated filer	x

Non-accelerated filer	o (Do not check if a smaller reporting company)	Smaller reporting company	o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

The number of shares of Common Stock of the registrant outstanding as of April 30, 2010 was 29,485,637.

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FOR 10-Q

INDEX

WILSHIRE BANCORP, INC.

Part I. FINANCIAL INFORMATION		1

Item 1.	Financial Statements	1

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	41

Item 4.	Controls and Procedures	43

Part II.	OTHER INFORMATION	44

Item 1.	Legal Proceedings	44

Item 1A.	Risk Factors	44

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44

Item 3.	Defaults Upon Senior Securities	44

Item 4.	Submission of Matters to a Vote of Security Holders	44

Item 5.	Other Information	44

SIGNATURES		46

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Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

WILSHIRE BANCORP, INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

( DOLLARS IN THOUSANDS) (UNAUDITED)

	March 31, 2010		December 31, 2009
ASSETS
Cash and due from banks	$	214,970	$	155,753
Federal funds sold and other cash equivalents	30,018		80,004
Cash and cash equivalents	244,988		235,757

Securities available for sale, at fair value (amortized cost of $681,945 and $651,095 at March 31, 2010 and December 31, 2009, respectively)	687,716		651,318
Securities held to maturity, at amortized cost (fair value of $108 and $109 at March 31, 2010 and December 31, 2009, respectively)	105		109
Loans receivable (net of allowance for loan losses of $79,576 and $62,130 at March 31, 2010 and December 31, 2009, respectively)	2,294,747		2,329,078
Loans held for sale—at the lower of cost or market	43,501		36,233
Federal Home Loan Bank	20,850		20,850
Other real estate owned	4,860		3,797
Due from customers on acceptances	1,006		945
Cash surrender value of bank owned life insurance	18,197		18,037
Investment in affordable housing partnerships	25,127		13,732
Bank premises and equipment	13,602		12,660
Accrued interest receivable	15,214		15,266
Deferred income taxes	20,198		18,684
Servicing assets	6,715		6,898
Goodwill	6,675		6,675
Core deposits intangibles	1,921		2,013
FDIC loss share indemnification	33,329		33,775
Other assets	20,561		30,170
TOTAL	$	3,459,312	$	3,435,997

LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES:
Deposits:
Non-interest bearing	$	414,023	$	385,188
Interest bearing:
Savings	76,346		71,601
Money market and NOW accounts	1,000,278		932,063
Time deposits of $100,000 or more	746,866		795,679
Other time deposits	687,532		643,684
Total deposits	2,925,045		2,828,215

Federal Home Loan Bank borrowings and other borrowings	142,487		232,000
Junior subordinated debentures	87,321		87,321
Accrued interest payable	5,954		5,865
Acceptances outstanding	1,006		945
Other liabilities	26,804		15,515
Total liabilities	3,188,617		3,169,861

SHAREHOLDERS’ EQUITY:
Preferred stock, $1,000 par value—authorized, 5,000,000 shares; issued and outstanding, 62,158 shares at March 31, 2010 and December 31, 2009	60,058		59,931
Common stock, no par value—authorized, 80,000,000 shares; issued and outstanding, 29,485,637 shares and 29,415,657 shares at March 31, 2010 and December 31, 2009, respectively	55,118		54,918
Accumulated other comprehensive income, net of tax	3,624		326
Retained earnings	151,895		150,961
Total shareholders’ equity	270,695		266,136

TOTAL	$	3,459,312	$	3,435,997

See accompanying notes to consolidated financial statements.

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WILSHIRE BANCORP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)

	Three Months Ended March 31,
	2010		2009

INTEREST INCOME:
Interest and fees on loans	$	35,304	$	30,193
Interest on investment securities	5,615		2,942
Interest on federal funds sold	382		289
Total interest income	41,301		33,424

INTEREST EXPENSE:
Interest on deposits	11,174		11,181
Interest on FHLB advances and other borrowings	920		1,658
Interest on junior subordinated debentures	649		921
Total interest expense	12,743		13,760

NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES AND LOAN COMMITMENTS	28,558		19,664

PROVISION FOR LOAN LOSSES AND LOAN COMMITMENTS	17,000		6,700

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES AND LOAN COMMITMENTS	11,558		12,964

NON-INTEREST INCOME:
Service charges on deposit accounts	3,224		2,899
Gain (loss) on sale of loans	36		(831		)
Gain on sale of securities	2,484		13
Loan-related servicing fees	1,039		964
Other income	1,002		692
Total non-interest income	7,785		3,737

NON-INTEREST EXPENSES:
Salaries and employee benefits	7,115		6,207
Occupancy and equipment	2,181		1,676
Deposit insurance premiums	1,076		611
Professional fees	992		342
Data processing	637		827
Other operating	2,689		2,324
Total non-interest expenses	14,690		11,987

INCOME BEFORE INCOME TAXES	4,653		4,714
INCOME TAXES	1,338		1,655
NET INCOME	3,315		3,059

Preferred stock cash dividend and accretion of preferred stock	903		920

NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	2,412	$	2,139

PER COMMON SHARE INFORMATION
Basic	$	0.08	$	0.07
Diluted	$	0.08	$	0.07
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING:
Basic	29,484,006		29,413,757
Diluted	29,537,933		29,422,290

COMMON STOCK CASH DIVIDEND DECLARED:
Cash dividend declared on common shares	$	1,477	$	1,471
Cash dividend declared per common share	$	0.05	$	0.05

See accompanying notes to consolidated financial statements.

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WILSHIRE BANCORP, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)

							Accumulated
	Preferred Stock			Common Stock			Other						Total
	Numbers			Numbers			Comprehensive			Retained			Shareholders’
	of Shares	Amount		of Shares	Amount		Income (Loss)			Earnings			Equity

BALANCE—January 1, 2009	62,158	$	59,443	29,413,757	$	54,039	$	1,238		$	140,340		$	255,060
Stock options exercised													—
Cash dividend declared
Common stock										(1,471		)	(1,471		)
Preferred stock										(777		)	(777		)
Share-based compensation expense					199								199
Tax benefit from stock options exercised													—
Accretion of discount on preferred stock		119								(143		)	(24		)
Comprehensive income:
Net income										3,059			3,059
Other comprehensive income:
Change in unrealized gain on interest-only strips (net of tax)							31						31
Change in unrealized gain on securities available for sale (net of tax)							1,629						1,629
Comprehensive income													4,719
BALANCE—March 31, 2009	62,158	$	59,562	29,413,757	$	54,238	$	2,898		$	141,008		$	257,706

BALANCE—January 1, 2010	62,158	$	59,931	29,415,657	$	54,918	$	326		$	150,961		$	266,136
Stock options exercised				69,980	14								14
Cash dividend declared
Common stock										(1,477		)	(1,477		)
Preferred stock										(777		)	(777		)
Share-based compensation expense					186								186
Tax benefit from stock options exercised													—
Accretion of discount on preferred stock		127								(127		)	—
Comprehensive income:
Net income										3,315			3,315
Other comprehensive income:
Change in unrealized gain on interest-only strips (net of tax)							(20		)				(20		)
Change in unrealized gain on securities available for sale (net of tax)							3,318						3,318
Comprehensive income													6,613
BALANCE—March 31, 2010	62,158	$	60,058	29,485,637	$	55,118	$	3,624		$	151,895		$	270,695

See accompanying notes to consolidated financial statements.

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WILSHIRE BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(DOLLARS IN THOUSANDS) (UNAUDITED)

	Three Months Ended March 31,
	2010			2009
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	3,315		$	3,059
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of investment securities	1,373			823
Depreciation of Bank premises and equipment	508			487
Accretion of discount on acquired loans	(1,558		)	—
Amortization of core deposit intangibles	92			74
Amortization of investments in affordable housing partnerships	—			288
Provision for losses on loans and loan commitments	17,000			6,700
Provision for other real estate owned losses	24			204
Deferred tax benefit	(3,729		)	(966		)
Loss on disposition of bank premises and equipment	4			11
Net realized (gain) loss on sale of loans held for sale	(36		)	831
Proceeds from sale of loans held for sale	14,200			1,671
Origination of loans held for sale	(21,432		)	(3,422		)
Net realized gain on sale of available for sale securities	(2,484		)	(13		)
Change in unrealized appreciation on serving assets	183			49
Net realized (gain) loss on sale of other real estate owned	(5		)	247
Share-based compensation expense	186			199
Change in cash surrender value of life insurance	(160		)	(165		)
Decrease (increase) in accrued interest receivable	52			(147		)
Decrease (increase) in other assets	3,254			(60		)
Increase in accrued interest payable	89			374
Increase in other liabilities	1,041			1,383
Net cash provided by operating activities	11,917			11,627

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from principal repayment, matured or called securities held to maturity	5			5
Purchase of securities available for sale	(289,869		)	(130,591		)
Proceeds from principal repayments, matured, called, or sold securities available for sale	260,131			41,671
Net decrease (increase) in loans receivable	14,938			(30,030		)
Payment of FDIC loss share indemnification	5,262			—
Proceeds from sale of other loans	—			1,168
Proceeds from sale of other real estate owned	3,597			949
Purchases of investments in affordable housing partnerships	(1,703		)	(2,484		)
Loss of investment in affordable housing partnerships	485			—
Purchases of premise and equipment	(609		)	(418		)
Net cash used in investing activities	(7,763		)	(119,730		)

See accompanying notes to consolidated financial statements.

(Continued)

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WILSHIRE BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(DOLLARS IN THOUSANDS) (UNAUDITED)

	Three Months Ended March 31,
	2010			2009
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options	$	14		$	—
Payment of cash dividend on common stock	(1,477		)	(1,471		)
Payment of cash dividend on preferred stock	(777		)	(544		)
(Decrease) Increase in Federal Home Loan Bank borrowings and other borrowings	(89,513		)	66,000
Net increase in deposits	96,830			92,846
Net cash provided by financing activities	5,077			156,831

NET INCREASE IN CASH AND CASH EQUIVALENTS	9,231			48,728

CASH AND CASH EQUIVALENTS—Beginning of year	235,757			97,541
CASH AND CASH EQUIVALENTS—End of year	$	244,988		$	146,269

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid	$	12,654		$	13,387
Income taxes paid	$	35		$	149

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Real estate acquired through foreclosures	$	4,021		$	5,019
Note financing for OREO sales	$	—		$	225
Note financing for sale of other loans	$	5,807		$	4,916
Other assets transferred to Bank premises and equipment	$	844		$	290
Common stock cash dividend declared, but not paid	$	1,477		$	1,471
Preferred stock cash dividend declared, but not paid	$	388		$	388

See accompanying notes to consolidated financial statements.

(Concluded)

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WILSHIRE BANCORP, INC.

Notes to Consolidated Financial Statements (Unaudited)

Note 1. Business of Wilshire Bancorp, Inc.

Wilshire Bancorp, Inc. (hereafter, the “Company,” “we,” “us,” or “our”) succeeded to the business and operations of Wilshire State Bank, a California state-chartered commercial bank (the “Bank”), upon consummation of the reorganization of the Bank into a holding company structure, effective as of August 25, 2004. The Bank was incorporated under the laws of the State of California on May 20, 1980 and commenced operations on December 30, 1980. The Company was incorporated in December 2003 as a wholly-owned subsidiary of the Bank for the purpose of facilitating the issuance of trust preferred securities for the Bank and eventually serving as the holding company of the Bank. The Bank’s shareholders approved the reorganization into a holding company structure at a meeting held on August 25, 2004. As a result of the reorganization, shareholders of the Bank are now shareholders of the Company, and the Bank is a direct wholly-owned subsidiary of the Company.

Our corporate headquarters and primary banking facilities are located at 3200 Wilshire Boulevard, Los Angeles, California 90010. On June 26, 2009, we purchased substantially all the assets and assumed substantially all the liabilities of Mirae Bank (“Mirae”) from the Federal Deposit Insurance Corporation (“FDIC”), as receiver of Mirae Bank. Mirae Bank previously operated five commercial banking branches, all located within southern California, and these branches were integrated into our existing branch network following the acquisition. In addition, we also have six loan production offices utilized primarily for the origination of loans under our Small Business Administration (“SBA”) lending program in Colorado, Georgia, Texas (2 offices), Virginia, and New Jersey.

Note 2. Basis of Presentation

The consolidated financial statements have been prepared in accordance with the Securities and Exchange Commission (“SEC”) rules and regulations for interim financial reporting and therefore do not necessarily include all information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The information provided by these interim financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the Company’s consolidated statements of financial condition as of March 31, 2010 and December 31, 2009, the statements of operations for the three months ended March 31, 2010 and March 31, 2009, and the related statements of shareholders’ equity and statements of cash flows for the three months ended March 31, 2010 and March 31, 2009. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year.

The Financial Accounting Standards Board’s (“FASB’s”) Accounting Standards Codification (“ASC”) became effective on July 1, 2009. At that date, the ASC became the FASB’s officially recognized source of authoritative GAAP applicable to all public and non-public non-governmental entities, superseding existing FASB, American Institute of Certified Public Accountants (“AICPA”), Emerging Issues Task Force (“EITF”) and related literature. Rules and interpretive releases of the SEC under the authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. All other accounting literature is considered non-authoritative. The switch to the ASC affects the way companies refer to GAAP in financial statements and accounting policies. Citing particular content in the ASC involves specifying the unique numeric path to the content through the Topic, Subtopic, Section and Paragraph structure.

The unaudited financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009. The accounting policies used in the preparation of these interim financial statements were consistent with those used in the preparation of the financial statements for the year ended December 31, 2009.

Note 3. Federally Assisted Acquisition of Mirae Bank

The FDIC placed Mirae Bank under receivership upon Mirae Bank’s closure by the California Department of Financial Institutions (“DFI”) at the close of business on June 26, 2009. We purchased substantially all of Mirae Bank’s assets and assumed all of Mirae Bank’s deposits and certain other liabilities. Further, we entered into loss sharing agreements with the FDIC in connection with the Mirae Bank acquisition. Under the loss sharing agreements, the FDIC will share in the losses on assets covered under the agreement, which generally include loans acquired from Mirae Bank and foreclosed loan collateral existing at June 26, 2009 (referred to collectively as “covered assets”).

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With the acquisition of Mirae Bank, The Bank entered into loss-sharing agreements with the FDIC for amounts receivable under the agreements. The Company accounted for the receivable balances under the loss-sharing agreements as an FDIC Indemnification asset in accordance with ASC 805 (formerly FAS 141R Business Combinations). The FDIC indemnification is accounted for and calculated by adding the present value of all the cash flows that the Company expected to collect from the FDIC on the date of the acquisition as stated in the loss-sharing agreement. As expected and actual cash flows increase and decreased from what was expected at the time of acquisition, the FDIC indemnification will decrease and increase, respectively. When covered loans are paid-off and sold, the FDIC indemnification asset is reduced and is offset with interest income. Covered loans that become impaired, increases the indemnification assets.

The table below summarizes the changes to the FDIC loss share indemnification in the first quarter of 2010:

(Dollars in Thousands)	March 31, 2010

Beginning balance of FDIC indemnification at 12/31/09	$	33,775
Increase resulting from provision for loan losses	5,831
Payments received from FDIC	(5,262		)
Others	(1,015		)
Ending balance of FDIC indemnification	$	33,329

Note 4. Fair Value Measurement for Financial and Non-Financial Assets and Liabilities

ASC 820 “Fair Value Measurement and Disclosure” (formerly SFAS No. 157, Fair Value Measurements) , provides a definition of fair value, establishes a framework for measuring fair value, and requires expanded disclosures about fair value measurements. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an arm’s length transaction between market participants in the markets where the Company conducts business. ASC 820 clarifies that fair value should be based on the assumptions market participants would use when pricing an asset or liability and establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. The fair value hierarchy gives the highest priority to quoted prices available in active markets and the lowest priority to data lacking transparency.

The fair value inputs of the instruments are classified and disclosed in one of the following categories pursuant to ASC 820:

Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. The quoted price shall not be adjusted for the blockage factor (i.e., size of the position relative to trading volume).

Level 2 — Pricing inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Fair value is determined through the use of models or other valuation methodologies, including the use of pricing matrices. If the asset or liability has a specified (contractual) term, a Level 2 input must be observable for substantially the full term of the asset or liability.

Level 3 — Pricing inputs are inputs unobservable for the asset or liability. Unobservable inputs shall be used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. The inputs into the determination of fair value require significant management judgment or estimation.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the investment.

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In accordance with ASC 820-10, the Company uses the following methods and assumptions in estimating our fair value disclosure for financial instruments. Financial assets and liabilities recorded at fair value on a recurring and non-recurring basis are listed as follows:

Securities available for sale — Investment in available-for-sale securities are recorded at their fair values pursuant to ASC 320-10 (SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities) . Fair value measurement is based upon quoted prices for similar assets, if available. If quoted prices are not available, fair values are measured using matrix pricing models, or other model-based valuation techniques requiring observable inputs other than quoted prices such as yield curves, prepayment speeds, and default rates. The securities available for sale include federal agency securities, mortgage-backed securities, collateralized mortgage obligations, municipal bonds and corporate debt securities. Our existing investment available-for-sale security holdings as of March 31, 2010 are measured using matrix pricing models in lieu of direct price quotes and recorded based on Level 2 measurement inputs.

Collateral dependent impaired loans — A loan is considered to be impaired when it is probable that all of the principal and interest due under the original underwriting terms of the loan may not be collected. Fair value of collateral dependent loans is measured based on the fair value of the underlying collateral. The fair value is determined through appraisals and other matrix pricing models, which required a significant degree of management judgment. The Company records impairments on all nonaccrual loans and trouble debt restructured loans based on the valuation methods above with the exception of automobile loans. Automobile loans are assessed based on a homogenous pool of loans and the Company has established specific reserves which is a component of the allowance for loan losses. The Company records impaired loans as non-recurring with Level 3 measurement inputs.

Other real estate owned (“OREO”) — Other real estate owned or “OREO”, consists principally of properties acquired through foreclosures. The fair values of OREOs are recorded at the lower of carrying value of the loan or estimated fair value at the time of foreclosure. Fair values are derived from third party appraisals and written offers that have been accepted. Management periodically performs valuations on OREO properties for fair valuation. Any subsequent declines in the fair value of the OREO property after the date of transfer are recorded as a write-down of the asset. However, in accordance with ASC 820-10 (FASB 157) fair value disclosures for financial instruments, OREO are measured at fair value. The Company records OREO as non-recurring with Level 3 measurement inputs.

Servicing assets and interest-only strips — Small Business Administration (“SBA”) loan servicing assets and interest-only strips represent the value associated with servicing SBA loans sold. The value is determined through a discounted cash flow analysis which uses discount rates, prepayment speeds and delinquency rate assumptions as inputs. All of these assumptions require a significant degree of management judgment. The fair market valuation is performed on a quarterly basis for servicing assets while I/O strips are measures at the lower of cost or fair value. The Company classifies SBA loan servicing assets and interest-only strips as recurring with Level 3 measurement inputs.

Servicing liabilities —SBA loan servicing liabilities represent the value associated with servicing SBA loans sold. The value is determined through a discounted cash flow analysis which uses discount rates, prepayment speeds and delinquency rate assumptions as inputs. All of these assumptions require a significant degree of management judgment. The fair market valuation is performed on a quarterly basis. The Company classifies SBA loan servicing liabilities as recurring with Level 3 measurement inputs.

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The table below summarizes the valuation of our financial assets and liabilities by the above ASC 820-10 fair value hierarchy levels as of March 31, 2010 and December 31, 2009:

Assets Measured at Fair Value on a Recurring Basis
(Dollars in Thousands)

	Fair Value Measurements Using:
As of March 31, 2010	Total Fair Value			Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Investments
Securities of government sponsored enterprises	$	153,823		$	—	$	153,823	$	—
Mortgage backed securities	125,066			—		125,066		—
Collateralized mortgage obligations	364,693			—		364,693		—
Corporate securities	2,039			—		2,039		—
Municipal bonds	42,095			—		42,095		—
Servicing assets	6,715			—		—		6,715
Interest-only strips	667			—		—		667
Servicing liabilities	(392		)	—		—		(392		)

	Fair Value Measurements Using:
As of December 31, 2009	Total Fair Value			Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Investments
Securities of government sponsored enterprises	$	155,382		$	—	$	155,382	$	—
Mortgage backed securities	131,711			—		131,711		—
Collateralized mortgage obligations	319,554			—		319,554		—
Corporate securities	2,017			—		2,017		—
Municipal bonds	42,654			—		42,654		—
Servicing assets	6,898			—		—		6,898
Interest-only strips	724			—		—		724
Servicing liabilities	(407		)	—		—		(407		)

Financial instruments measured at fair value on a recurring basis, which were part of the asset balances that were deemed to have Level 3 fair value inputs when determining valuation, are identified in the table below by asset category with a summary of changes in fair value for the quarter ended March 31, 2010 and March 31, 2009:

(Dollars in Thousands)	At December 31, 2009			Net Realized Losses in Net Income			Unrealized Loss in Other Comprehensive Income			Net Purchases, Sales and Settlements		Transfers In/out of Level 3		At March 31, 2010			Net Cumulative Unrealized Loss
Servicing assets	$	6,898		$	(183	)	$	—		$	—	$	—	$	6,715		$	—
Interest-only strips	724			(22		)	(35		)	—		—		667			(280		)
Servicing liabilities	(407		)	15			—			—		—		(392		)	—

(Dollars in Thousands)	At December 31, 2008			Net Realized Losses in Net Income			Unrealized Loss in Other Comprehensive Income		Net Purchases, Sales and Settlements		Transfers In/out of Level 3		At March 31, 2009			Net Cumulative Unrealized Loss
Servicing assets	$	4,838		$	(48	)	$	—	$	—	$	—	$	4,790		$	—
Interest-only strips	632			(25		)	54		—		—		661			(280		)
Servicing liabilities	(328		)	(5		)	—		—		—		(333		)	—

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The following tables present the aggregated balance of assets measured at estimated fair value on a non-recurring basis at March 31, 2010 and December 31, 2009, and the total losses resulting from these fair value adjustments for the three months ended March 31, 2010 and December 31, 2009:

As of March 31, 2010

(Dollars in Thousands)	Level 1		Level 2		Level 3		Total		Net Realized Losses in Net Income
Collateral dependent impaired loans	$	—	$	—	$	161,536	$	161,536	$	19,202
OREO	—		—		5,098		5,098		24
Total	$	—	$	—	$	166,634	$	166,634	$	19,226

As of December 31, 2009

(Dollars in Thousands)	Level 1		Level 2		Level 3		Total		Net Realized Losses in Net Income
Collateral dependent impaired loans	$	—	$	—	$	128,764	$	128,764	$	10,250
OREO	—		—		4,031		4,031		435
Total	$	—	$	—	$	132,795	$	132,795	$	10,685

Note 5. Investment Securities

The following table summarizes the amortized cost, market value, net unrealized gain (loss), and distribution of our investment securities as of the dates indicated:

Investment Securities Portfolio

(Dollars in Thousands)

	As of March 31, 2010						As of December 31, 2009
	Amortized Cost		Market Value		Net Unrealized Gain		Amortized Cost		Market Value		Net Unrealized Gain (Loss)
Held to Maturity :
Collateralized mortgage obligations	$	105	$	108	$	3	$	109	$	109	$	—
Total investment securities held to maturity	$	105	$	108	$	3	$	109	$	109	$	—

Available for Sale :
Securities of government sponsored enterprises	$	153,807	$	153,823	$	16	$	156,879	$	155,382	$	(1,497	)
Mortgage backed securities	123,736		125,066		1,330		131,617		131,711		94
Collateralized mortgage obligations	360,775		364,693		3,918		318,531		319,554		1,023
Corporate securities	2,000		2,039		39		2,000		2,017		17
Municipal securities	41,627		42,095		468		42,068		42,654		586
Total investment securities available for sale	$	681,945	$	687,716	$	5,771	$	651,095	$	651,318	$	223

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The following table summarizes the maturity and repricing schedule of our investment securities at their market values at March 31, 2010:

Investment Maturities and Repricing Schedule
(Dollars in Thousands)

	Within One Year		After One & Within Five Years		After Five & Within Ten Years		After Ten Years		Total
Held to Maturity :
Collateralized mortgage obligations	$	—	$	105	$	—	$	—	$	105
Total investment securities held to maturity	$	—	$	105	$	—	$	—	$	105

Available for Sale :
Securities of government sponsored enterprises	$	—	$	—	$	153,823	$	—	$	153,823
Mortgage backed securities	7,018		590		4,167		113,291		125,066
Collateralized mortgage obligations	12,364		333,168		19,161		—		364,693
Corporate securities	—		2,039		—		—		2,039
Municipal securities	—		734		4,204		37,157		42,095
Total investment securities available for sale	$	19,382	$	336,531	$	181,355	$	150,448	$	687,716

The following table shows the gross unrealized losses and fair values of our investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss positions, at March 31, 2010 and December 31, 2009:

As of March 31, 2010

(Dollars in Thousands)

	Less than 12 months					12 months or longer					Total
			Gross					Gross					Gross
			Unrealized					Unrealized					Unrealized
Description of Securities (AFS) (1)	Fair Value		Losses			Fair Value		Losses			Fair Value		Losses

Securities of government sponsored enterprises	$	42,575	$	(384	)	$	—	$	—		$	42,575	$	(384	)
Mortgage-backed securities	17,932		(98		)	—		—			17,932		(98		)
Collateralized mortgage obligations	55,612		(113		)	—		—			55,612		(113		)
Corporate securities	—		—			—		—			—		—
Municipal bonds	10,159		(227		)	7,557		(258		)	17,716		(485		)
	$	126,278	$	(822	)	$	7,557	$	(258	)	$	133,835	$	(1,080	)

As of December 31, 2009

(Dollars in Thousands)

	Less than 12 months					12 months or longer				Total
			Gross					Gross				Gross
			Unrealized					Unrealized				Unrealized
Description of Securities (AFS) (1)	Fair Value		Losses			Fair Value		Losses		Fair Value		Losses

Securities of government sponsored enterprises	$	110,296	$	(1,600	)	$	—	$	—	$	110,296	$	(1,600	)
Mortgage-backed securities	85,313		(726		)	—		—		85,313		(726		)
Collateralized mortgage obligations	145,622		(975		)	—		—		145,622		(975		)
Corporate securities	—		—			—		—		—		—
Municipal bonds	18,783		(505		)	—		—		18,783		(505		)
	$	360,014	$	(3,806	)	$	—	$	—	$	360,014	$	(3,806	)

(1) The Company had no held to maturity investment securities with unrealized losses at March 31, 2010 and December 31, 2009.

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At March 31, 2010, the total unrealized losses less than 12 months old were $822,000 and total unrealized losses more than 12 months old were $258,000 for the same period. The aggregate related fair value of investments with unrealized losses less than 12 months old was $126.2 million at March 31, 2010, and $7.6 million with unrealized losses more than 12 months old. As of December 31, 2009, the total unrealized losses less than 12 months old were $3.8 million, and there were no unrealized losses more than 12 months old. The aggregate related fair value of investments with unrealized losses less than 12 months old was $360.0 million at December 31, 2009.

Credit related declines in the fair value of securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses. In estimating other-than-temporary impairment losses, we consider, among other things, (i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer, and (iii) our intent and ability to retain our investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

Management determined that any individual unrealized loss as of March 31, 2010 did not represent an other-than-temporary impairment. The unrealized losses on our government-sponsored enterprises (“GSE”) bonds, GSE collateralized mortgage obligations (“CMOs”), and GSE mortgage backed securities (“MBS”) were attributable to both changes in interest rate (U.S. Treasury curve) and a repricing of risk (spreads widening against risk-fee rate) in the market. We do not own any non-agency MBS or CMO. All GSE bonds, GSE CMO, and GSE MBS securities are backed by U.S. Government Sponsored and Federal Agencies and therefore rated “ Aaa/AAA .” We have no exposure to the “Subprime Market” in the form of Asset Backed Securities, or ABS, and Collateralized Debt Obligations, or “CDOs” that are below investment grade. We have the intent and ability to hold the securities in an unrealized loss position at March 31, 2010 until the market value recovers or the securities mature.

Municipal bonds and corporate bonds are evaluated by reviewing the credit-worthiness of the issuer and market conditions. The unrealized losses on our municipal and corporate securities were primarily attributable to both changes in interest rates and a repricing of risk in the market. We have the intent and ability to hold the securities in an unrealized loss position at March 31, 2010 until the market value recovers or the securities mature.

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Note 6. Loans

The loans in the portfolio as a result of the Mirae Bank acquisition are covered by the FDIC loss-share agreements and such loans are referred to herein as “covered loans.” All loans other than the covered loans are referred to herein as “non-covered loans.” A summary of covered and non-covered loans is presented in the table below:

Covered & Non-Covered Loans

	(Dollars in Thousands)
	March 31, 2010			December 31, 2009
Non-covered loans:
Construction	$	47,564		$	48,371
Real estate secured	1,795,142			1,783,638
Commercial and industrial	313,872			325,034
Consumer	16,113			16,626
Total loans	2,172,691			2,173,669
Unearned Income	(4,938		)	(5,311		)
Gross loans, net of unearned income	2,167,753			2,168,358
Allowance for losses on loans	(71,597		)	(61,377		)
Net loans	$	2,096,156		$	2,106,981

Covered loans:
Construction	$	—		$	—
Real estate secured	188,353			196,066
Commercial and industrial	61,527			62,409
Consumer	191			608
Total loans	250,071			259,083
Allowance for losses on loans	(7,979		)	(753		)
Net loans	$	242,092		$	258,330

Total loans:
Construction	$	47,564		$	48,371
Real estate secured	1,983,495			1,979,704
Commercial and industrial	375,399			387,443
Consumer	16,304			17,234
Total loans	2,422,762			2,432,752
Unearned Income	(4,938		)	(5,311		)
Gross loans, net of unearned income	2,417,824			2,427,441
Allowance for losses on loans	(79,576		)	(62,130		)
Net loans	$	2,338,248		$	2,365,311

In accordance with ASC 310-30 (formerly AICPA Statement of Position “SOP 03-3”, Accounting for Certain Loans or Debt Securities Acquired in a Transfer ) , the covered loans were divided into “SOP 03-3 Loans” and “Non-SOP 03-3 Loans”, of which SOP 03-3 loans are loans with evidence of deterioration of credit quality and it was probable, at the time of acquisition, that the Bank will be unable to collect all contractually required payments receivable. In contrast, Non-SOP 03-3 loans are all other covered loans that do not qualify as SOP 03-3 loans. In addition, the covered loans are further categorized into four different loan pools by loan type: construction, commercial & industrial, real estate secured, and consumer.

The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition is referred to as the non-accretable difference which is included in the carrying amount of the loans. Subsequent decreases to the expected cash flows will generally result in a provision for loan losses. Subsequent increases in cash flows result in a reversal of the provision for loan losses to the extent of prior charges, or a reversal of the non-accretable difference with a positive impact on interest income. Further, any excess of cash flows expected at acquisition over the estimated fair value is referred to as the accretable yield and is recognized into interest income over the remaining life of the loan when there is a reasonable expectation about the amount and timing of such cash flows.

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The following table represents the carry value of SOP 03-3 and non SOP 03-3 loans acquired from Mirae Bank at March 31, 2010:

(Dollars in Thousands)	March 31, 2010

Non SOP 03-3 loans	$	243,264
SOP 03-3 loans	6,807
Total outstanding balance	250,071
Allowance related to these loans	(7,979		)
Carrying amount, net of allowance	$	242,092

The following table represents the balance of SOP 03-3 acquired loans from Mirae Bank for which it was probable at the time of the acquisition that all of the contractually required payments would not be collected:

(Dollars in Thousands)	March 31, 2010

Breakdown of SOP 03-3 Loans
Real Estate loans	$	5,102
Commercial loans	$	1,705

Loan acquired from the acquisition of Mirae Bank were discounted based on estimated cashflows to be received at June 26, 2009. Discount on acquired loans totaled $54.9 million at acquisition. Discount accretion on acquired loans of $1.3 million was recorded as interest income as follows:

(Dollars in Thousands)	March 31, 2010

Beginning balance of discount on loans 12/31/09	$	30,846
Discount accretion income recognized	(1,271		)
Disposals related to charge-offs	(4,559		)
Disposals related to loan sales	(287		)
Carrying amount, net of allowance	$	24,729

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The table below summarizes for the periods indicated, changes in the allowance for losses on loans arising from loans charged-off, recoveries on loans previously charged off, additions to the allowance and certain ratios related to the allowance for losses on loans and loan commitments:

Allowance for Losses on Loans and Loan Commitments
(Dollars in Thousands)

	Three Months Ended,
	March 31, 2010			December 31, 2009			March 31, 2009
Balances:
Allowance for loan losses:
Balances at beginning of period	$	62,130		$	54,735		$	29,437
Actual charge-offs: (1)
Real estate secured	4,373			8,495			672
Commercial and industrial	1,340			10,117			1,629
Consumer	115			43			102
Total charge-offs	5,828			18,655			2,403

Recoveries on loans previously charged off:
Real estate secured	11			174			—
Commercial and industrial	468			441			70
Consumer	34			40			43
Total recoveries	513			655			113

Net loan charge-offs	5,315			18,000			2,290

FDIC Indemnification	5,831			855			—
Provision for losses on loan and loan commitments (2)	16,930			24,540			7,009
Balances at end of period	$	79,576		$	62,130		$	34,156
Allowance for loan commitments:
Balances at beginning of year	$	2,515		$	1,455		$	1,243
Provision for losses (recapture) on loan commitments	70			1,060			(309		)
Balance at end of period	$	2,585		$	2,515		$	934

Ratios :
Net loan charge-offs to average total loans	0.22		%	0.74		%	0.11		%
Allowance for loan losses to total loans at end of period	3.29		%	2.56		%	1.65		%
Net loan charge-offs to allowance for loan losses at end of period	6.68		%	28.97		%	6.70		%
Net loan charge-offs to provision for losses on loans and loan commitments	31.26		%	70.31		%	34.18		%

(1) Charge-off amount for March 31, 2010 includes net charge-offs of covered loans amounting to $63,000, which represents gross covered loan charge-offs of $4.1 million less FDIC receivable portion of $4.0 million.

(2) Provision for loss on loans and loan commitments amount includes net provisions for covered loans amounting to $63,000 which represents gross covered loan provision of $4.1 million less FDIC receivable portion of $4.0 million.

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The table below summarizes for the end of the periods indicated, the balance of our allowance for losses on loans and the percent of such loan balances for each loan type:

Distribution and Percentage Composition of Allowance for Loan Losses

(Dollars in Thousands)

	March 31, 2010						December 31, 2009
	Reserve		Gross Loans		(%)		Reserve		Gross Loans		(%)
Applicable to:
Construction	$	470	$	47,564	0.99	%	$	411	$	48,371	0.85	%
Real estate secured	51,108		1,983,496		2.58	%	34,458		1,979,704		1.74	%
Commercial and industrial	27,833		375,398		7.41	%	27,059		387,443		6.98	%
Consumer	165		16,304		1.01	%	202		17,234		1.17	%
Total allowance	$	79,576	$	2,422,762	3.28	%	$	62,130	$	2,432,752	2.55	%

The allowance for loan losses is comprised of specific loss allowances for impaired loans and general loan loss allowances based on quantitative and qualitative analyses.

A loan is impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. At March 31, 2010, our recorded impaired loans totaled $193.7 million, of which $80.3 million had specific reserves of $28.4 million. At December 31, 2009, our recorded impaired loans totaled $165.2 million, of which $84.2 million had specific reserves of $15.6 million.

On a quarterly basis, we utilize a classification migration model and individual loan impairment as starting points for determining the adequacy of our allowance for losses on loans. Our loss migration analysis tracks a certain number of quarters of loan loss history to determine historical losses by classification category for each loan type, except for certain loans (automobile, mortgage and credit scored based business loans), which are analyzed as homogeneous loan pools. These calculated loss factors are then applied to outstanding loan balances. Based on a Company defined utilization rate of exposure for unused off-balance sheet loan commitments, such as letters of credit, we record a reserve for loan commitments.

Note 7. Shareholders’ Equity

Earnings per Share

Basic earnings per share (“EPS”) excludes dilution and is calculated by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that would then share in the earnings of the Company. The following table provides the basic and diluted EPS computations for the periods indicated below:

	For the Three Months Ended March 31,
(Dollars in Thousands, Except per Share Data)	2010		2009
Numerator:
Net income available to common shareholders	$	2,412	$	2,139
Denominator:
Denominator for basic earnings per share:
Weighted-average shares	29,484,006		29,413,757
Effect of dilutive securities:
Stock option dilution	53,927		8,533
Denominator for diluted earnings per share:
Adjusted weighted-average shares and assumed conversions	29,537,933		29,422,290
Basic earnings per share	$	0.08	$	0.07
Diluted earnings per share	$	0.08	$	0.07

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Note 8. Business Segment Reporting

The following disclosure about segments of the Company is made in accordance with the requirements of ASC 280 (formerly SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information) . The Company segregates its operations into three primary segments: banking operations, SBA lending services, and trade finance department (“TFD”). The Company determines the operating results of each segment based on an internal management system that allocates certain expenses to each segment.

Banking Operations — The Company raises funds from deposits and borrowings for loans and investments, and provides lending products, including commercial, consumer, and real estate loans to its customers.

Small Business Administration Lending Services — The SBA department mainly provides customers with access to the U.S. SBA guaranteed lending program.

Trade Finance Services — The trade finance department allows the Company’s import/export customers to handle their international transactions. Trade finance products include, among others, the issuance and collection of letters of credit, international collection, and import/export financing.

The following are the results of operations of the Company’s segments for the periods indicated below:

	Three Months Ended March 31, 2010
(Dollars in Thousands)	Banking
Business Segments	Operations		TFD			SBA			Company

Net interest income	$	25,586	$	554		$	2,418		$	28,558
Less provision (recapture) for loan losses	12,220		(871		)	5,651			17,000
Non-interest income	6,751		242			792			7,785
Non-interest expense	13,611		436			643		14,690
Income (loss) before taxes	$	6,506	$	1,231		$	(3,084	)	$	4,653
Total assets	$	3,228,249	$	36,877		$	194,186		$	3,459,312

	Three Months Ended March 31, 2009
(Dollars in Thousands)	Banking
Business Segments	Operations		TFD			SBA		Company

Net interest income	$	17,060	$	441		$	2,163	$	19,664
Less provision for loan losses	4,007		829			1,864		6,700
Non-interest income	2,774		284			679		3,737
Non-interest expense	11,278		272			437		11,987
Income (loss) before taxes	$	4,549	$	(376	)	$	541	$	4,714
Total assets	$	2,403,788	$	52,109		$	155,385	$	2,611,282

Note 9. Commitments and Contingencies

We are a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of our customers. These financial instruments include commitments to extend credit, standby letters of credit, and commercial letters of credit. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated statements of financial condition. Our exposure to credit loss in the event of nonperformance on commitments to extend credit and standby letters of credit is represented by the contractual notional amount of those instruments. We use the same credit policies in making commitments and conditional obligations as we do for extending loan facilities to customers. We evaluate each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary upon extension of credit, is based on our credit evaluation of the counterparty. The types of collateral that we hold varies, but may include accounts receivable, inventory, property, plant, and equipment and income-producing properties.

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Commitments at March 31, 2010 are summarized as follows:

(Dollars in Thousands)	March 31, 2010
Commitments to extend credit	$	262,232
Standby letters of credit	8,229
Commercial letters of credit	16,684
Commitments to fund Low Income Housing Tax Credits (“LIHTC”)	10,176

In the normal course of business, we are involved in various legal claims. We have reviewed all legal claims against us with counsel and have taken into consideration the views of such counsel as to the outcome of the claims. We do not believe the final disposition of all such claims will have a material adverse effect on our financial position or results of operations.

Note 10. Recent Accounting Pronouncements

In December 2009, FASB issued ASU 2009-16, “Transfers and Servicing (Topic 860): Accounting for Transfers of Financial Assets.” Update 2009-16 will require more information regarding transferred financial assets, including securitization transactions, and where entities have continuing exposure to risks related to transferred financial assets. The Company adopted this standard as of January 1, 2010. As a result of certain recourse provisions that are included in the sale of SBA guaranteed loans, of the classification of sold SBA guarantee portions are recorded as secured borrowings and the gain from the sale of such loans are deferred until such recourse provisions are reassessed.

In January 2010, FASB issued Accounting Standards Update 2010-06, “Improving Disclosures about Fair Value Measurements”. ASU 2010-06 will require reporting entities to make new disclosures about (a) amounts and reasons for significant transfers in and out of Level 1 and Level 2 fair value measurements, (b) Input and valuation techniques used to measure fair value for both recurring and nonrecurring fair value measurements that fall in either Level 2 or Level 3 and (c) information on purchases, sales, issuances and settlements in the roll forward of activity in Level 3 fair value measures. The new and revised disclosures are effective for interim and annual reporting periods beginning after December 15, 2009 except for disclosures about purchases, sales, issuances and settlements in the roll forward of activity in Level 3 fair value measures, which are effective for fiscal years beginning after December 15, 2010. The adoption of ASU 2010-06 effective for reporting periods after December 15, 2009 did not have a material impact on the consolidated financial statements. The Company is still evaluating the impact of the remainder of ASU 2010-06 effective for fiscal years beginning after December 15, 2010.

In February 2010, FASB issued ASU 2010-09, and amendment of ASC 855 (formerly Statement No. 165, Subsequent Events). ASC 855 was issued to establish general standards of accounting for and disclosure of events that occur after the balance sheet date but before the financial statements are issued or are available to be issued. ASC Topic 2010-09 amends ASC 855 by adding the “SEC filer”, and “revised financial statements” to the ASC Master Glossary while removing the definition of “public entity” from the glossary. The amendment also exempts SEC filers from disclosing the date through which subsequent events have been evaluated and require SEC files and conduit debt obligors to evaluate subsequent events through the date the financial statements are issued. ASU 2010-09 is effective as of the issue date for financial statements that are issued, available to be issued, or revised. The adoption of ASU 2010-09 did not have a material impact on the consolidated financial statements.

Note 11. Subsequent Events

The Company evaluated subsequent events through the date the financial statements were issued. As of the issue date of this report, the Company did not have any subsequent events to report.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This discussion presents management’s analysis of our results of operations for the three months ended March 31, 2010 and March 31, 2009, financial condition as of March 31, 2010 and December 31, 2009, and includes the statistical disclosures required by the Securities and Exchange Commission Guide 3 (“Statistical Disclosure by Bank Holding Companies”). The discussion should be read in conjunction with our financial statements and the notes related thereto which appear elsewhere in this Quarterly Report on Form 10-Q.

Statements contained in this report that are not purely historical are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, including our expectations, intentions, beliefs, or strategies regarding the future. Any statements in this document about expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and are forward-looking statements. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “expect,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” and “outlook,” and similar expressions. Accordingly, these statements involve estimates, assumptions and uncertainties, which could cause actual results to differ materially from those expressed in them. Any forward-looking statements are qualified in their entirety by reference to the factors discussed throughout this document. All forward-looking statements concerning economic conditions, rates of growth, rates of income or values as may be included in this document are based on information available to us on the dates noted, and we assume no obligation to update any such forward-looking statements. It is important to note that our actual results may differ materially from those in such forward-looking statements due to fluctuations in interest rates, inflation, government regulations, economic conditions, customer disintermediation, and competitive product and pricing pressures in the geographic and business areas in which we conduct operations, including our plans, objectives, expectations and intentions and other factors discussed under the section entitled “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2009, including the following:

· If a significant number of clients fail to perform under their loans, our business, profitability, and financial condition would be adversely affected.

· Increases in our allowance for loan losses could materially affect our earnings adversely.

· Banking organizations are subject to interest rate risk and variations in interest rates may negatively affect our financial performance.

· Liquidity risk could impair our ability to fund operations, meet our obligations as they become due and jeopardize our financial condition.

· The profitability of Wilshire Bancorp will be dependent on the profitability of the Bank.

· Wilshire Bancorp relies heavily on the payment of dividends from the Bank.

· The holders of debentures and Series A Preferred Stock have rights that are senior to those of our common shareholders.

· Adverse changes in domestic or global economic conditions, especially in California, could have a material adverse effect on our business, growth, and profitability.

· Recent negative developments in the financial industry and U.S. and global credit markets may affect our operations and results.

· Governmental responses to recent market disruptions may be inadequate and may have unintended consequences.

· Our operations may require us to raise additional capital in the future, but that capital may not be available or may not be on terms acceptable to us when it is needed.

· Maintaining or increasing our market share depends on market acceptance and regulatory approval of new products and services.

· Significant reliance on loans secured by real estate may increase our vulnerability to downturns in the California real estate market and other variables impacting the value of real estate.

· If we fail to retain our key employees, our growth and profitability could be adversely affected.

· We may be unable to manage future growth.

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· Our expenses will increase as a result of increases in FDIC insurance premiums.

· We could be liable for breaches of security in our online banking services. Fear of security breaches could limit the growth of our online services.

· Our directors and executive officers beneficially own a significant portion of our outstanding common stock.

· The market for our common stock is limited, and potentially subject to volatile changes in price.

· We may experience goodwill impairment.

· We face substantial competition in our primary market area.

· Anti-takeover provisions of our charter documents may have the effect of delaying or preventing changes in control or management.

· We are subject to significant government regulation and legislation that increase the cost of doing business and inhibits our ability to compete.

· As participants in the United States Department of the Treasury’s Capital Purchase Program, we are subject to additional regulations and legislation that may not be applicable to other financial institution competitors.

· We could be negatively impacted by downturns in the South Korean economy.

· Additional shares of our common stock issued in the future could have a dilutive effect.

· Shares of our preferred stock previously issued and preferred stock issued in the future could have dilutive and other effects.

These factors and the risk factors referred to in our Annual Report on Form 10-K for the year ended December 31, 2009 could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements made by us, and you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made and we do not undertake any obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict which will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

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Selected Financial Data

The following table presents selected historical financial information for the three months ended March 31, 2010, December 31, 2009, and March 31, 2009. In the opinion of management, the information presented reflects all adjustments considered necessary for a fair presentation of the results of such periods. The operating results for the interim periods are not necessarily indicative of our future operating results.

	Three months ended,
(Dollars in thousands, except per share data) (unaudited)	March 31, 2010			December 31, 2009			March 31, 2009
Net income available to common shareholders	$	2,412		$	3,174		$	2,139
Net income per common share, basic	0.08			0. 11			0.07
Net income per common share, diluted	0.08			0.11			0.07
Net interest income before provision for loan losses and loan commitments	28,558			29,406			19,664

Average balances:
Assets	3,417,633			3,414,830			2,525,225
Cash and cash equivalents	216,127			260,880			105,417
Investment securities	665,366			613,021			286,553
Net loans	2,359,522			2,388,443			2,030,595
Total deposits	2,886,514			2,787,804			1,832,479
Shareholders’ equity	273,293			278,382			259,072
Performance Ratios:
Annualized return on average assets	0.39		%	0.48		%	0.48		%
Annualized return on average equity	4.85		%	5.86		%	4.72		%
Net interest margin	3.65		%	3.73		%	3.35		%
Efficiency ratio	40.42		%	35.08		%	51.22		%
Capital Ratios:
Tier 1 capital to adjusted total assets	9.78		%	9.77		%	12.79		%
Tier 1 capital to risk-weighted assets	14.50		%	14.37		%	15.15		%
Total capital to risk-weighted assets	15.95		%	15.81		%	16.69		%

	March 31, 2010			December 31, 2009			March 31, 2009
Period-end balances as of:
Total assets	$	3,459,312		$	3,435,997		$	2,611,282
Investment securities	687,821			651,427			320,188
Total loans, net of unearned income and allowance for loan losses	2,417,824			2,427,441			2,074,001
Total deposits	2,925,045			2,828,215			1,905,447
Junior subordinated debentures	87,321			87,321			87,321
FHLB borrowings	126,000			232,000			340,000
Total common equity	210,637			206,205			198,144

Asset Quality Ratios:
(net of SBA guaranteed portion)
Net charge-off to average total loans for the quarter	0.22		%	0.74		%	0.11		%
Non-performing loans to total loans	4.34		%	2.92		%	1.43		%
Non-performing assets to total loans and other real estate owned	4.54		%	3.07		%	1.73		%
Allowance for loan losses to total loans	3.29		%	2.56		%	1.65		%
Allowance for loan losses to non-performing loans	75.77		%	87.78		%	114.84		%

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Executive Overview

We operate a community bank engaged in the commercial banking business, with our primary market encompassing the multi-ethnic population of the Los Angeles metropolitan area. Our full-service offices are located primarily in areas where a majority of the businesses are owned by diversified ethnic groups.

We have also expanded our business with the focus on our commercial and consumer lending divisions. Over the past several years, our network of branches and loan production offices has been expanded geographically. Pursuant to the acquisition on June 26, 2009, five commercial banking branches, formerly operated by Mirae and located within southern California, were integrated into our branch network, although four of the branches were eventually closed due to their proximity to our existing branches. In the first quarter, an additional branch in Van Nuys, California was opened. We also have six loan production offices in Aurora, Colorado; Atlanta, Georgia; Dallas, Texas; Houston, Texas; Annandale, Virginia and Fort Lee, New Jersey.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations is based upon our financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities at the date of our financial statements. Actual results may differ from these estimates under different assumptions or conditions.

Various elements of our accounting policies, by their nature, are inherently subject to estimation techniques, valuation assumptions, and other subjective assessments. We have identified several accounting policies that, due to judgments, estimates, and assumptions inherent in those policies are critical to an understanding of our consolidated financial statements. These policies relate to the classification and valuation of investment securities, the methodologies that determine our allowance for losses on loans, the treatment of non-accrual loans, the valuation of retained interests and servicing assets related to the sales of SBA loans, and the accounting for income tax provisions and the uncertainty in income taxes. In each area, we have identified the variables most important in the estimation process. We believe that we have used the best information available to make the estimates necessary to value the related assets and liabilities. Actual performance that differs from our estimates and future changes in the key variables could change future valuation and could have an impact on our net income.

Our significant accounting policies are described in greater detail in our 2009 Annual Report on Form 10-K in the “Critical Accounting Policies” section of “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, which are essential to understanding Management’s Discussion and Analysis of Results of Operations and Financial Condition. There has been no material modification to these policies during the quarter ended March 31, 2010.

Results of Operations

Net Interest Income and Net Interest Margin

Our primary source of revenue is net interest income, which is the difference between interest and fees derived from earning assets and interest paid on liabilities obtained to fund those assets. Our net interest income is affected by changes in the level and mix of interest-earning assets and interest-bearing liabilities, referred to as volume changes. Our net interest income is also affected by changes in the yields earned on assets and rates paid on liabilities, referred to as rate changes. Interest rates charged on our loans are affected principally by the demand for such loans, the supply of money available for lending purposes, and other competitive factors. Those factors are, in turn, affected by general economic conditions and other factors beyond our control, such as federal economic policies, the general supply of money in the economy, legislative tax policies, governmental budgetary matters, and the actions of the Federal Reserve Board (“FRB”).

Net interest income before provision for losses on loans and loan commitments increased by $8.9 million or 45.2%, to $28.6 million in the first quarter of 2010, compared to $19.7 million in the first quarter of 2009. Net interest margin of 3.65% in the first quarter of 2010 was increased by 30 basis points from net interest margin of 3.35% in the previous year. The increase in net interest income was primarily due to a corresponding increase in interest income while interest expense decreased slightly.

Interest income increased by $7.9 million, or 23.6%, to $41.3 million in first quarter of 2010 compared to $33.4 million in the first quarter of 2009. The increase in interest income was primarily due to higher average balances in our loan portfolio and in our US government agency securities portfolio, and the accretion of discounted loans. Average loan balances increased by $328.9 million to $2.4 billion in the first quarter of 2010, compared to $2.0 billion in the first quarter of 2009. This increase was primarily due to loans acquired as a result of the acquisition of Mirae Bank on June 26, 2009.

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The average balances of investment securities increased from $286.6 million to $665.4 million from the first quarter of 2009 to 2010. Due to the lower rate environment, the overall tax equivalent yield on investments decreased from 4.24% at March 31, 2009 to 3.52% at March 31, 2010.

Interest expense decreased by $1.0 million, or 7.4%, to $12.7 million in the first quarter of 2010 compared to $13.8 million in the first quarter of 2009, although average balances of our interest bearing liabilities increased by $762.1 million to $2.7 billion in the first quarter of 2010 compared to $2.0 billion in the first quarter of 2009. The increase is attributable to an increase in deposits amounting to $1.0 billion from the first quarter of 2009 to 2010, while FHLB borrowings decreased by $197.5 million during the same period. Total cost of interest bearing liabilities decreased from 2.79% at the end of the first quarter 2009 to 1.87% at the end of the first quarter of 2010. The decrease resulted from an improved deposits mix as cored deposits to total deposits increased, and an interest rate reduction on interest bearing deposits.

The following table sets forth, for the periods indicated, our average balances of assets, liabilities and shareholders’ equity, in addition to the major components of net interest income and net interest margin:

Distribution, Yield and Rate Analysis of Net Interest Income

(Dollars in Thousands)

	Three Months Ended March 31,
	2010						2009
	Average Balance		Interest Income/ Expense		Average Rate/Yield		Average Balance		Interest Income/ Expense		Average Rate/Yield
Assets:
Earning assets:
Net loans (1)	$	2,359,522	$	35,304	5.98	%	$	2,030,595	$	30,192	5.95	%
Securities of government sponsored enterprises	620,393		5,144		3.32	%	261,629		2,668		4.08	%
Other investment securities (2)	44,973		471		6.33	%	24,924		275		5.97	%
Federal funds sold	130,965		382		1.17	%	45,639		289		2.53	%
Total interest-earning assets	3,155,853		41,301		5.27	%	2,362,787		33,424		5.67	%
Total non-interest-earning assets	261,780						162,438
Total assets	$	3,417,633					$	2,525,225

Liabilities and Shareholders’ Equity:
Interest-bearing liabilities:
Money market deposits	$	956,035	4,023		1.68	%	$	362,733	2,331		2.57	%
Super NOW deposits	22,481		29		0.52	%	19,557		46		0.94	%
Savings deposits	74,052		586		3.17	%	43,241		393		3.63	%
Time deposits of $100,000 or more	768,882		3,047		1.58	%	933,494		6,668		2.86	%
Other time deposits	675,764		3,489		2.07	%	196,714		1,743		3.54	%
FHLB borrowings and other borrowings	148,000		920		2.49	%	327,344		1,658		2.03	%
Junior subordinated debenture	87,321		649		2.97	%	87,321		921		4.22	%
Total interest-bearing liabilities	2,732,535		12,743		1.87	%	1,970,404		13,760		2.79	%
Non-interest-bearing liabilities:
Non-interest-bearing deposits	389,300						276,740
Other liabilities	22,505						19,009
Total non-interest-bearing liabilities	411,805						295,749
Shareholders’ equity	273,293						259,072
Total liabilities and shareholders’ equity	$	3,417,633					$	2,525,225
Net interest income			$	28,558					$	19,664
Net interest spread (3)					3.40	%					2.88	%
Net interest margin (4)					3.65	%					3.35	%

(1) Net loan fees are included in the calculation of interest income. Net loan fees were approximately $763,000 and $569,000 for the quarters ended March 31, 2010 and 2009, respectively. Loans are net of the allowance for loan losses, deferred fees, unearned income, and related direct costs, but include loans placed on non-accrual status.

(2) Represents tax equivalent yields, non-tax equivalent yields for 2010 and 2009 were 4.19% and 4.41%, respectively.

(3) Represents the average rate earned on interest-earning assets less the average rate paid on interest-bearing liabilities.

(4) Represents net interest income as a percentage of average interest-earning assets.

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The following table sets forth, for the periods indicated, the dollar amount of changes in interest earned and paid for interest-earning assets and interest-bearing liabilities, respectively, and the amount of change attributable to changes in average daily balances (volume) or changes in average daily interest rates (rate). All yields were calculated without the consideration of tax effects, if any, and the variances attributable to both the volume and rate changes have been allocated to volume and rate changes in proportion to the relationship of the absolute dollar amount of the changes in each:

Rate/Volume Analysis of Net Interest Income
(Dollars in Thousands)

	Three Months Ended March 31, 2010 vs. 2009 Increases (Decreases) Due to Change In
	Volume			Rate			Total
Interest income:
Net loans (1)	$	4,922		$	190		$	5,112
Securities of government sponsored enterprises	3,056			(580		)	2,476
Other Investment securities	212			(15		)	197
Federal funds sold	314			(221		)	93
Interest-earning deposits	—			—			—
Total interest income	8,504			(626		)	7,878

Interest expense:
Money market deposits	2,727			(1,035		)	1,692
Super NOW deposits	6			(23		)	(17		)
Savings deposits	249			(56		)	193
Time deposit of $100,000 or more	(1,027		)	(2,594		)	(3,621		)
Other time deposits	2,732			(986		)	1,746
FHLB borrowings and other borrowings	(1,054		)	316			(738		)
Junior subordinated debenture	—			(272		)	(272		)
Total interest expense	3,633			(4,650		)	(1,017		)

Change in net interest income	$	4,871		$	4,024		$	8,895

(1) Net loan fees have been included in the calculation of interest income. Net loan fees were approximately $763,000 and $569,000 for the quarters ended March 31, 2010 and 2009, respectively. Loans are net of the allowance for loan losses, deferred fees, unearned income, and related direct costs, but include loans placed on non-accrual status.

Provision for Losses on Loans and Loan Commitments

In anticipation of credit risks inherent in our lending business and ongoing weakness in the local and national economy, we set aside allowances through charges to earnings. Such charges were made not only for our outstanding loan portfolio, but also for off-balance sheet items, such as commitments to extend credits or letters of credit. The charges made for our outstanding loan portfolio were credited to allowance for loan losses, whereas charges for off-balance sheet items were credited to the reserve for off-balance sheet items, and are presented as a component of other liabilities.

Although we continue to enhance our loan underwriting standards and maintain proactive credit follow-up procedures, we experienced a deterioration of credit quality in our loan portfolio throughout 2009 and 2010 because of the weak economy and the decline in the real estate market. We recorded a provision for losses on loans and loan commitments of $17.0 million in the first quarter of 2010, as compared with a provision of $6.7 million for the prior year’s same quarter. The increase in our provision for losses on loans and loan commitments was primarily to keep pace with an increase of non-performing loans (see “Financial Condition — Non-performing Assets” below for further discussion). The $17.0 million provision in the first quarter of 2010 includes net charge-offs of $5.3 million, and FDIC indemnification of $5.8 million. Our procedures for monitoring the adequacy of our allowance for losses on loans and loan commitments, as well as detailed information concerning the allowance itself, are described in the section entitled “Allowance for Losses on Loans and Loan Commitments” below. Losses on Mirae loans purchased from the FDIC are partially reimbursable as stated in our loss-sharing agreements with the FDIC.

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At March 31, 2010, the Company had a FDIC indemnification of $5.8 million included in our allowance for loan losses calculation.

Non-interest Income

Total non-interest income increased to $7.8 million in the first quarter of 2010, as compared with $3.7 million in the same quarter a year ago. Non-interest income as a percentage of average assets was 0.23% for the first quarter of 2010 and 0.15% for the first quarter of 2009. The increase in non-interest income was primarily caused by an increase in gain on sale of securities and loans.

The following table sets forth the various components of our non-interest income for the periods indicated:

Non-interest Income
(Dollars in Thousands)

	For the Three Months Ended March 31,
	2010				2009
	(Amount)		(%)		(Amount)			(%)
Service charges on deposit accounts	$	3,224	41.4	%	$	2,899		77.5	%
Gain on sale of securities	2,484		31.9	%	13			0.3	%
Loan-related servicing fees	1,039		13.3	%	964			25.9	%
Income from other earning assets	204		2.6	%	195			5.2	%
Gain (loss) on sale of loans	36		0.5	%	(831		)	-22.3	%
Other income	798		10.3	%	497			13.4	%
Total	$	7,785	100.0	%	$	3,737		100.0	%
Average assets	$	3,417,633			$	2,525,225
Non-interest income as a % of average assets			0.23	%				0.15	%

Our largest source of non-interest income in the first quarter of 2010 was service charges on deposit accounts, which represented about 41% of our total non-interest income. Service charge income increased to $3.2 million in the first quarter of 2010, as compared with $2.9 million for the prior year’s same period. The increase in service charge income was primarily due to increased non sufficient fund and analysis charges as well as an increase in deposits accounts. Management constantly reviews service charge rates to maximize service charge income while still maintaining a competitive position.

The second largest source of non-interest income in the first quarter of 2010 was gain on sale of securities at $2.5 million, which represented approximately 32% of our total non-interest income, compared to $13,000 at the first quarter of 2009. Market value of securities has continued to increase as we experienced decreased volatility in securities markets, changes in the yield curve, and contraction of interest rates spreads on securities owned by the Bank. We were able to realize the appreciation in market values of our securities while maintaining our overall duration on our investment portfolio.

Loan related servicing fees accounted for $1.0 million or 13% of total non-interest income at the end of the first quarter of 2010. Loan related servicing fees increased slightly from $964,000 at March 31, 2009. This fee income consists of trade-financing fees and servicing fees on SBA loans sold. With the expansion of our trade-financing activities and the growth of our servicing loan portfolio, related fee income has continued to increase.

Income on other earning assets represents dividend income from FHLB stock ownership and increases in the cash surrender value of BOLI. Income on other earning assets was $204,000, or 2.6% of total non-interest income at March 31, 2010. Income from other earning assets at March 31, 2010 increased by $9,000 compared to the first quarter of 2009.

Gain on sale of loans at the end of the first quarter of 2010 was $36,000, or less than 1% of total non-interest income compared to a loss on sale of loans of $831,000 during the first quarter of the previous year. The Company did not recognize any gain on sale of SBA loans in the first quarter of 2010 due to the adoption of ASU 200-16 on January 1, 2010. Approximately $14.0 million in SBA loans were sold in the first quarter of 2010. However, approximately $1.3 million in gains from the sale of these loans are expected to be recognized in the second quarter of 2010, upon reevaluation after the expiration of the recourse provisions inherent in SBA loan sales. The $36,000 in gain on sale of loans was attributable to mortgage loan sales during the first quarter of 2010.

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Other non-interest income represents income from miscellaneous sources such as loan referral fees, SBA loan packaging fees, checkbook sales income, and excess of insurance proceeds over carrying value of an insured loss. For the first quarter of 2010, this miscellaneous income amounted to $798,000, as compared with $497,000 in the prior year’s same period. Other non-interest expense as a percentage of total non-interest income was 10.3% and 13.4% at March 31, 2010 and March 31, 2009, respectively.

Non-interest Expense

Total non-interest expense increased to $14.7 million at the first quarter of 2010, from $12.0 million at the same period in 2009. Non-interest expenses as a percentage of average assets was lowered to 0.43%, from 0.47% at the first quarter of 2010 and 2009, respectively. Our efficiency ratio was 40.4% at the end of the first quarter of 2010, compared with 51.2% at the same period a year ago.

The following table sets forth a summary of non-interest expenses for the periods indicated:

Non-interest Expenses
(Dollars in Thousands)

	For the Three Months Ended March 31,
	2010				2009
	(Amount)		(%)		(Amount)		(%)
Salaries and employee benefits	$	7,115	48.4	%	$	6,207	51.8	%
Occupancy and equipment	2,181		14.8	%	1,676		14.0	%
Deposit insurance premiums	1,076		7.3	%	611		5.1	%
Professional fees	992		6.8	%	342		2.9	%
Data processing	637		4.3	%	827		6.9	%
Advertising and promotional	350		2.4	%	233		1.9	%
Outsourced service for customer	260		1.8	%	268		2.2	%
Office supplies	237		1.6	%	161		1.3	%
Directors’ fees	128		0.9	%	93		0.8	%
Communications	111		0.8	%	103		0.9	%
Investor relation expenses	105		0.7	%	52		0.4	%
Amortization of other intangible assets	92		0.6	%	74		0.6	%
Other operating	1,406		9.6	%	1,340		11.2	%
Total	$	14,690	100.0	%	$	11,987	100.0	%
Average assets	$	3,417,633			$	2,525,225
Non-interest expense as a % of average assets			0.43	%			0.47	%

Salaries and employee benefits historically represent half of our total non-interest expense and generally increase as our branch network and business volumes expand. These expenses were $7.1 million for the first three months of 2010 compared with $6.2 million for the prior year’s same period. Since the first quarter of 2009, additional staffing was necessitated by branch openings as well as the addition of employees from the acquisition of Mirae Bank. However, we have successfully slowed the growth in salaries expenses even with the increased staffing. The number of full-time equivalent employees was increased to 408 as of March 31, 2010, as compared with 347 as of March 31, 2009. In addition, our asset growth helped us improve our assets per employee ratio to $8.5 million at March 31, 2010 from $7.5 million at March 31, 2009.

Occupancy and equipment expenses represent about 15% of our total non-interest expenses. These expenses increased to $2.2 million in the first quarter of 2010 compared with $1.7 million and for the same period a year ago. The increase was primarily attributable to the additional lease expenses for our business growth in the past 12 months with the addition of our Forth Worth, Olympic, and Van Nuys branches, which all opened subsequent to March 31, 2009.

Deposit insurance premium expenses represent The Financing Corporation (“FICO”) and FDIC insurance premium assessments. In the first quarter of 2010, these expenses totaled $1.1 million or 7% of total non-interest expense, compared with $611,000 for the prior year’s same periods. Recent bank failures coupled with deteriorating economic conditions have significantly reduced the FDIC’s deposit insurance fund reserves. As a result, the FDIC has significantly increased its deposit assessment premiums for federally insured financial institutions.

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Professional fees generally increase as we grow. They increased to $992,000 in the first quarter of compared to $342,000 for the same period of the prior year and represented 7% of total non-interest expense at March 31, 2010. This increase was primarily due to increased legal fees resulting from collection of non-performing loans and OREOs foreclosures.

Data processing expenses decreased to $637,000 in the first quarter of 2010 from $827,000 for the same period a year ago. In order to reduce overhead expenses, the Company changed check clearing service providers in 2008 which resulted in a decrease in overall data processing expense from the first quarter of 2009 to the first quarter of 2010.

Advertising and promotional expenses increased to $350,000 for first three months of 2010 compared with $233,000 in the same period a year ago. These expenses represent marketing activities, such as media advertisements and promotional gifts for customers of newly opened offices, especially in the new areas such as the east coast market in New York and New Jersey. The increases in the current quarter of 2010 was primarily attributable to our increased advertising spending to promote a branch addition in Van Nuys, as well as a new marketing campaign that began in the first quarter of 2010.

Outsourced service costs for customers are payments made to third parties who provide services that were traditionally paid by the Bank’s customers, such as armored car services or bookkeeping services, and are recouped from analysis fee charges from those customer’s deposit accounts. As a result of our cost control measures, these expenses decreased slightly to $260,000 in the first quarter of 2010, as compared with $268,000 for the prior year’s same period.

Other non-interest expenses, such as office supplies, communications, director’s fees, investor relation expenses, amortization of intangible assets and other operating expenses were $2.1 million for the first quarter of 2010 compared with $1.8 million for the same periods a year ago. The increase represents a normal growth in association with the growth of our business activities and was consistent with our expectations.

Provision for Income Taxes

For the quarter ended March 31, 2010, we had an income tax provision of $1.3 million on a pretax net income of $4.7 million, representing an effective tax rate of 28.8%, as compared with a provision for income taxes of $1.7 million on pretax net income of $4.7 million, representing an effective tax rate of 35.1% for the same quarter in 2009. The effective tax rate for the three month ending March, 31 2010 was lower than the tax rate for March 31, 2009 due to the use of enterprise zone and low income housing tax credits.

Financial Condition

Investment Portfolio

Investments are one of our major sources of interest income and are acquired in accordance with a written comprehensive investment policy addressing strategies, types and levels of allowable investments. Management of our investment portfolio is set in accordance with strategies developed and overseen by our Asset/Liability Committee. Investment balances, including cash equivalents and interest-bearing deposits in other financial institutions, are subject to change over time based on our asset/liability funding needs and interest rate risk management objectives. Our liquidity levels take into consideration anticipated future cash flows and all available sources of credit and is maintained at levels management believes are appropriate to assure future flexibility in meeting anticipated funding needs.

Cash Equivalents and Interest-bearing Deposits in other Financial Institutions

Cash and cash equivalents include cash and due from banks, term and overnight federal funds sold, and securities purchased under agreements to resell, all of which have original maturities of less than 90 days. We buy or sell federal funds and maintain deposits in interest-bearing accounts in other financial institutions to help meet liquidity requirements and provide temporary holdings until the funds can be otherwise deployed or invested.

Investment Securities

Management of our investment securities portfolio focuses on providing an adequate level of liquidity and establishing a balanced interest rate-sensitive position, while earning an adequate level of investment income without taking undue risk. As of March 31, 2010, our investment portfolio was comprised primarily of United States government agency securities, which accounted for 94% of the entire investment portfolio.

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Our U.S. government agency securities holdings are all “prime/conforming” mortgage backed securities, or MBS, and collateralized mortgage obligations, or CMOs, guaranteed by FNMA, FHLMC, or GNMA. GNMAs are considered equivalent to U.S. Treasury securities, as they are backed by the full faith and credit of the U.S. government. Currently, there are no subprime mortgages in our investment portfolio. Besides the U.S. government agency securities, we also have as a percentage to total investments, 6.1% investment in municipal debt securities and 0.3% investment in corporate debt. Among our investment portfolio that was not comprised of U.S. government securities, 5.9%, or $40.5 million carry the top two highest “Investment Grade” rating of “Aaa/AAA” or “Aa/AA”, while 0.3%, or $2.2 million, carry an intermediate “Investment Grade” rating of at least “Baa1/BBB+” or above, and 0.2%, or $1.4 million, is unrated. Our investment portfolio does not contain any government sponsored enterprises, or GSE preferred securities or any distressed corporate securities that required other-than-temporary-impairment charges as of March 31, 2010.

We classified our investment securities as “held-to-maturity” or “available-for-sale” pursuant to ASC 320-10 (SFAS No. 115). Pursuant to the fair value election option of ASC 470-20, we have chosen to continue classifying our existing instruments of investment securities as “held-to-maturity” or “available-for-sale” under ASC 320-10. Investment securities that we intend to hold until maturity are classified as held to maturity securities, and all other investment securities are classified as available-for-sale. The carrying values of available-for-sale investment securities are adjusted for unrealized gains and losses as a valuation allowance and any gain or loss is reported on an after-tax basis as a component of other comprehensive income. Credit related declines in the fair value of held-to-maturity and available-for-sale securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses, and there were no such other-than-temporary-impairment in 2009. The fair market values of our held-to-maturity and available-for-sale securities were respectively $0.1 million and $687.7 million as of March 31, 2010.

The fair value of investments is accounted for in accordance with ASC 320-10 (SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities) . The Company currently utilizes an independent third party bond accounting service for our investment portfolio accounting. The third party provides market values derived using a proprietary matrix pricing model which utilizes several different sources for pricing. The Company uses market values received for investment fair values which are updated on a monthly basis. The market values received is tested annually and is validated using prices received from another independent third party source. All of these evaluations are considered as level 2 in reference to ASC 820. As required under Financial Accounting Standards Board (“FASB”) ASC 325 we consider all available information relevant to the collectability of the security, including information about past events, current conditions, and reasonable and supportable forecasts, and we consider factors such as remaining payment terms of the security, prepayment speeds, the financial condition of the issuer(s), expected defaults, and the value of any underlying collateral.

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The following table summarizes the amortized cost, market value, net unrealized gain (loss), and distribution of our investment securities as of the dates indicated:

Investment Securities Portfolio

(Dollars in Thousands)

	As of March 31, 2010						As of December 31, 2009
	Amortized Cost		Market Value		Net Unrealized Gain		Amortized Cost		Market Value		Net Unrealized Gain (Loss)
Held to Maturity :
Collateralized mortgage obligations	$	105	$	108	$	3	$	109	$	109	$	—
Total investment securities held to maturity	$	105	$	108	$	3	$	109	$	109	$	—

Available for Sale :
Securities of government sponsored enterprises	$	153,807	$	153,823	$	16	$	156,879	$	155,382	$	(1,497	)
Mortgage backed securities	123,736		125,066		1,330		131,617		131,711		94
Collateralized mortgage obligations	360,775		364,693		3,918		318,531		319,554		1,023
Corporate securities	2,000		2,039		39		2,000		2,017		17
Municipal securities	41,627		42,095		468		42,068		42,654		586
Total investment securities available for sale	$	681,945	$	687,716	$	5,771	$	651,095	$	651,318	$	223

The following table summarizes the maturity and repricing schedule of our investment securities at their market values at March 31, 2010:

Investment Maturities and Repricing Schedule
(Dollars in Thousands)

	Within One Year		After One & Within Five Years		After Five & Within Ten Years		After Ten Years		Total
Held to Maturity :
Collateralized mortgage obligations	$	—	$	105	$	—	$	—	$	105
Total investment securities held to maturity	$	—	$	105	$	—	$	—	$	105

Available for Sale :
Securities of government sponsored enterprises	$	—	$	—	$	153,823	$	—	$	153,823
Mortgage backed securities	7,018		590		4,167		113,291		125,066
Collateralized mortgage obligations	12,364		333,168		19,161		—		364,693
Corporate securities	—		2,039		—		—		2,039
Municipal securities	—		734		4,204		37,157		42,095
Total investment securities available for sale	$	19,382	$	336,531	$	181,355	$	105,448	$	687,716

Holdings of investment securities increased to $687.8 million at March 31, 2010, as compared with holdings of $651.4 million at December 31, 2009. Total investment securities as a percentage of total assets was 19.9% and 19.0% at March 31, 2010 and December 31, 2009, respectively. As of March 31, 2010, investment securities with a market value of $251.9 million were pledged to secure certain deposits.

As of March 31, 2010, our investment securities classified as held-to-maturity, which are carried at their amortized cost, stayed relatively unchanged on a dollar basis at $105,000, as compared with $109,000 as of December 31, 2009. Our investment securities classified as available-for-sale, which are stated at their fair market values, increased to $687.7 million at March 31, 2010 from $651.3 million at December 31, 2009.

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The following table shows the gross unrealized losses and fair value of our investments, aggregated by investment category and the length of time that individual securities have been in a continuous unrealized loss position, at March 31, 2010 and December 31, 2009:

As of March 31, 2010

(Dollars in Thousands)

	Less than 12 months					12 months or longer					Total
			Gross					Gross					Gross
			Unrealized					Unrealized					Unrealized
Description of Securities (AFS) (1)	Fair Value		Losses			Fair Value		Losses			Fair Value		Losses

Securities of government sponsored enterprises	$	42,575	$	(384	)	$	—	$	—		$	42,575	$	(384	)
Mortgage-backed securities	17,932		(98		)	—		—			17,932		(98		)
Collateralized mortgage obligations	55,612		(113		)	—		—			55,612		(113		)
Corporate securities	—		—			—		—			—		—
Municipal bonds	10,159		(227		)	7,557		(258		)	17,716		(485		)
	$	126,278	$	(822	)	$	7,557	$	(258	)	$	133,835	$	(1,080	)

As of December 31, 2009

(Dollars in Thousands)

	Less than 12 months					12 months or longer				Total
			Gross					Gross				Gross
			Unrealized					Unrealized				Unrealized
Description of Securities (AFS) (1)	Fair Value		Losses			Fair Value		Losses		Fair Value		Losses

Securities of government sponsored enterprises	$	110,296	$	(1,600	)	$	—	$	—	$	110,296	$	(1,600	)
Mortgage-backed securities	85,313		(726		)	—		—		85,313		(726		)
Collateralized mortgage obligations	145,622		(975		)	—		—		145,622		(975		)
Corporate securities	—		—			—		—		—		—
Municipal bonds	18,783		(505		)	—		—		18,783		(505		)
	$	360,014	$	(3,806	)	$	—	$	—	$	360,014	$	(3,806	)

(1) There were no held-to-maturity securities with losses as of March 31, 2010 and December 31, 2009.

As of March 31, 2010, the total unrealized losses less than 12 months old were $822,000 and total unrealized losses more than 12 months old were $258,000 for the same period. The aggregate related fair value of investments with unrealized losses less than 12 months old was $126.2 million and $7.6 million with unrealized losses more than 12 months old at March 31, 2010. As of December 31, 2009, the total unrealized losses less than 12 months old were $3.8 million, and there were no unrealized losses more than 12 months old. The aggregate related fair value of investments with unrealized losses less than 12 months old was $360.0 million at December 31, 2009.

Credit declines in the fair value of held-to-maturity and available-for-sale investment securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses. In accordance with guidance from FASB ASC 320-10-65-1 and ASC 958-320 Recognition and Presentation of Other-Than-Temporary Impairments , the Company evaluates whether an event or change in circumstances has occurred that may have a significant adverse effect on the fair value of the investment (an “impairment indicator”). In evaluating an other-than-temporary impairment (“OTTI”), the Company utilizes a systematic methodology that includes all documentation of the factors considered. All available evidence concerning declines in market values below cost are identified and evaluated in a disciplined manner by management. The steps taken by the Company in evaluating OTTI are:

· The Company first determines whether impairment has occurred. A security is considered impaired if its fair value is less than its amortized cost basis. If a debt security is impaired, the Company must assess whether it intends to sell the security (i.e., whether a decision to sell the security has been made). If the Company intends to sell the security, an OTTI is considered to have occurred.

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· If the Company does not intend to sell the security (i.e., a decision to sell the security has not been made), it must assess whether it is more likely than not that it will be required to sell the security before recovery of the amortized cost basis of the security.

· Even if the Company does not intend to sell the security, an OTTI has occurred if the Company does not expect to recover the entire amortized cost basis (i.e., there is a credit loss). Under this analysis, the Company compares the present value of the cash flows expected to be collected to the amortized cost basis of the security.

· The Company believes that impairment exists on securities when their fair value is below amortized cost but an impairment loss has not occurred due to the following reasons:

· The Company does not have any intent to sell any of the securities that are in an unrealized loss position.

· It is highly unlikely that the Company will be forced to sell any of the securities that have an unrealized loss position before recovery. The Company’s Asset/Liability Committee mandated liquidity ratios are well above the minimum targets and secondary sources of liquidity such as borrowings lines, brokered deposits, junior subordinated debenture, are easily accessible.

· The Company fully expects to recover the entire amortized cost basis of all the securities that are in an unrealized loss position. The basis of this conclusion is that the unrealized loss positions were caused by changes in interest rates and interest rate spreads and not by default risk.

As of March 31, 2010, the net unrealized gain in the investment portfolio was $5.8 million compared to $223,000 in net unrealized gains as of December 31, 2009. The increase in unrealized gains can be attributed to better recent market stability, which has led to a decrease in treasuries interest rate spreads, and an increase in treasury rates.

Loan Portfolio

Total loans are the sum of loans receivable and loans held for sale and reported at their outstanding principal balances net of any unearned income which is unamortized deferred fees and costs and premiums and discounts. Interest on loans is accrued daily on a simple interest basis. Total loans net of unearned income and allowance for losses on loans decreased to $2.34 billion at March 31, 2010, as compared with $2.37 billion at December 31, 2009. Total loans net of unearned income and allowance for loan losses as a percentage of total assets as of March 31, 2010 and December 31, 2009 were 67.6% and 68.8%, respectively.

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The following table sets forth the amount of total loans outstanding and the percentage distributions in each category, as of the dates indicated:

Distribution of Loans and Percentage Composition of Loan Portfolio

(Dollars in Thousands)

	Amount Outstanding
	March 31, 2010			December 31, 2009
Construction	$	47,564		$	48,371
Real estate secured	1,983,495			1,979,704
Commercial and industrial	375,399			387,443
Consumer	16,304			17,234
Total loans (1)	2,422,762			2,432,752
Unearned Income	(4,938		)	(5,311		)
Gross loans, net of unearned income	2,417,824			2,427,441
Allowance for losses on loans	(79,576		)	(62,130		)
Net loans	$	2,338,248		$	2,365,311

Percentage breakdown of gross loans:
Construction	1.9		%	2.0		%
Real estate secured	81.9		%	81.4		%
Commercial and industrial	15.5		%	15.9		%
Consumer	0.7		%	0.7		%

(1) Includes loans held for sale, which are recorded at the lower of cost or market, of $43.5 million and $36.2 million at March 31, 2010 and December 31, 2009, respectively.

Real estate secured loans consist primarily of commercial real estate loans and are extended to finance the purchase and/or improvement of commercial real estate or businesses thereon. The properties may be either user owned or held for investment purposes. Our loan policy adheres to the real estate loan guidelines set forth by the FDIC. The policy provides guidelines including, among other things, fair review of appraisal value, limitation on loan-to-value ratio, and minimum cash flow requirements to service debt. Loans secured by real estate remained unchanged $2.0 billion both as of March 31, 2010 and December 31, 2009. Real estate secured loans as a percentage of total loans were 81.9% and 81.4% at March 31, 2010 and December 31, 2009, respectively. Home mortgage loans represent a small fraction of our total real estate secured loan portfolio. Total home mortgage loans outstanding were only $42.7 million at March 31, 2010 and $41.3 million at December 31, 2009.

Commercial and industrial loans include revolving lines of credit as well as term business loans. Commercial and industrial loans at March 31, 2010 decreased to $375.4 million, as compared with $387.4 million at December 31, 2009. Commercial and industrial loans as a percentage of total loans were 15.5% at March 31, 2010, decreasing from 15.9% at December 31, 2009.

Consumer loans have historically represented less than 5% of our total loan portfolio. The majority of consumer loans are concentrated in automobile loans, which we provide as a service only to existing customers. Because we believe that consumer loans present a higher risk compared to our other loan products, especially given current economic conditions, we have reduced our efforts in consumer lending since 2007. Accordingly, as of March 31, 2010, our volume of consumer loans was down by $930,000 from the prior year end. As of March 31, 2010, the balance of consumer loans was $16.3 million, or 0.7% of total loans, as compared to $17.2 million, or 0.7% of total loans as of December 31, 2009.

Construction loans represented less than 5% of our total loan portfolio as of March 31, 2010. In response to the current real estate market, which has been experiencing a downward trend since mid-2007, we have applied stricter loan underwriting policies when making construction related loans. As a result, construction loans decreased to $47.6 million, or 1.9% of total loans, at the end of the first quarter of 2010, as compared with $48.4 million, or 2.0% of total loans at March 31, 2009.

Our loan terms vary according to loan type. Commercial term loans have typical maturities of three to five years and are extended to finance the purchase of business entities, business equipment, leasehold improvements or to provide permanent working capital. We generally limit real estate loan maturities to five to eight years. Lines of credit, in general, are extended on an annual basis to businesses that need temporary working capital and/or import/export financing. We generally seek diversification in our loan portfolio, and our borrowers are diverse as to industry, location, and their current and target markets.

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The following table shows the contractual maturity distribution and repricing intervals of the outstanding loans in our portfolio, as of March 31, 2010. In addition, the table shows the distribution of such loans between those with variable or floating interest rates and those with fixed or predetermined interest rates.

Loan Maturities and Repricing Schedule

(Dollars in Thousands)

	March 31, 2010
	Within One Year		After One But within Five Years		After Five Years		Total
Construction	$	47,564	$	—	$	—	$	47,564
Real estate secured	1,144,792		817,304		21,399		1,983,495
Commercial and industrial	365,612		9,787		—		375,399
Consumer	14,550		1,754		—		16,304
Total loans	$	1,572,518	$	828,845	$	21,399	$	2,422,762

Loans with variable interest rates	$	1,290,756	$	—	$	—	$	1,290,756
Loans with fixed interest rates	$	281,762	$	828,845	$	21,399	$	1,132,006

A majority of the properties that collateralized against our loans are located in Southern California. The loans generated by our loan production offices, which are located outside of our main geographical market, are generally collateralized by properties in close proximity to those offices.

Non-performing Assets

Non-performing assets, or NPAs, consist of non-performing loans, or NPLs, restructured loans, and other NPAs. NPLs are reported at their outstanding principal balances, net of any portion guaranteed by SBA, and consist of loans on non-accrual status and loans 90 days or more past due and still accruing interest. Restructured loans are loans for which the terms of repayment have been renegotiated, resulting in a reduction or deferral of interest or principal, Other NPAs consist of properties, mainly other real estate owned (“OREO”), acquired by foreclosure or similar means that management intends to offer for sale.

On June 26, 2009, we acquired substantially all the assets and assumed substantially all the liabilities of Mirae from the FDIC. We also entered into loss sharing agreements with the FDIC in connection with the Mirae acquisition. Under the loss sharing agreements, the FDIC will share in the losses on assets covered under the agreements, which generally include loans acquired from Mirae and foreclosed loan collateral existing at June 26, 2009. With respect to losses of up to $83.0 million on the covered assets, the FDIC has agreed to reimburse us for 80 percent of the losses. On losses exceeding $83.0 million, the FDIC has agreed to reimburse us for 95 percent of the losses. The loss sharing agreements are subject to our following servicing procedures and satisfying certain other conditions as specified in the agreements with the FDIC. The term for the FDIC’s loss sharing on residential real estate loans is ten years, and the term for loss sharing on non-residential real estate loans is five years with respect to losses and eight years with respect to loss recoveries.

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For the purposes of the table below, loans and OREO covered under the loss sharing agreements with the FDIC are referred to as “covered loans” and “covered OREO”, respectively. Covered loans and covered OREO were recorded at estimated fair value on June 26, 2009.

The following is a summary of covered non-performing loans and OREO on the dates indicated:

Non-performing Covered Loans and Covered OREO
(Dollars in Thousands)

	March 31, 2010			December 31, 2009
Covered Nonaccrual loans: (1)
Real estate secured	$	19,696		$	15,555
Commercial and industrial	2,213			2,773
Consumer	—			—
Total	21,909			18,328
Loans 90 days or more past due and still accruing:
Real estate secured	—			—
Commercial and industrial	—			—
Consumer	—			—
Total	—			—
Total non-performing loans	21,909			18,328
Repossessed vehicles	—			—
Other real estate owned	1,723			500
Total covered non-performing assets	$	23,632		$	18,828

Non-performing loans as a percentage of total covered loans	8.76		%	7.07		%

(1) During the three months ended March 31, 2010, December 31, 2009, no interest income related to these loans was included in interest income. The Company had no covered loans as of March 31, 2009.

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The following table provides information with respect to the components of our non-performing (non-covered) assets as of the dates indicated (the figures in the table are net of the portion guaranteed by SBA, with the total amounts adjusted and reconciled for the SBA guarantee portion for the gross non-performing assets):

Non-performing Non-covered Assets and Restructured Loans
(Dollars in Thousands)

	March 31, 2010			December 31, 2009			March 31, 2009
Non-covered Nonaccrual loans: (1)
Real estate secured	$	75,470		$	48,017		$	23,185
Commercial and industrial	7,603			3,032			5,774
Consumer	42			70			307
Total	83,115			51,119			29,266
Loans 90 days or more past due and still accruing:
Real estate secured	—			1,317			240
Commercial and industrial	—			—			235
Consumer	—			19			—
Total	—			1,336			475

Total non-performing loans	83,115			52,455			29,741

Repossessed vehicles	—			—			—
Other real estate owned	3,136			3,297			6,282
Total non-covered non-performing assets, net of SBA guarantee	86,251			55,752			36,023

Guaranteed portion of non-performing SBA loans	12,493			13,421			8,387
Total gross non-covered non-performing assets	$	98,744		$	69,173		$	44,410

Performing troubled debt restructurings	46,498			55,437			7,963

Non-performing loans as a percentage of total non-covered loans	3.83		%	2.42		%	1.43		%

(1) During the three months ended March 31, 2010 and December 31, 2009, no interest income related to these loans was included in interest income.

Loans are generally placed on non-accrual status when they become 90 days past due, unless management believes the loan is adequately collateralized and in the process of collection. The past due loans may or may not be adequately collateralized, but collection efforts are continuously pursued. Loans may be restructured by management when a borrower has experienced some changes in financial status, causing an inability to meet the original repayment terms, and where we believe the borrower will eventually overcome those circumstances and repay the loan in full.

As a result of the challenging economic conditions in the last few years, credit quality has continued to deteriorate in the past year. The general economic conditions in the United States as well as the local economies in which we do business have experienced a severe downturn in the housing sector and the transition to below-trend GDP growth has continued. The downward movement of the macroeconomic environment affected our borrowers’ strength and our total NPLs, net of SBA guaranteed portion, increased to $105.0 million, or 4.34% of the total loans at the end of the first quarter of 2010, as compared with $70.8 million, or 2.92% of the total loans, at the end of 2009. The $34.2 million increase of NPLs was due to a $35.5 increase in non-accrual loans, offset by a $1.3 million decrease in loans 90 days or more past due and still accruing.

No interest income related to non-accrual loans was included in net income for the quarters ending March 31, 2009 and March 31, 2010. Additional interest income of approximately $2.0 million and $674,000 would have been recorded during the quarter ended March 31, 2010 and March 31, 2009, respectively, if these loans had been paid in accordance with their original terms and had been outstanding at quarter end or, if not outstanding throughout the quarter, since origination.

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Management also believes that the reserves provided for non-performing loans, together with the tangible collateral, were adequate as of March 31, 2010. See “Allowance for Losses on Loans and Loan Commitments” below for further discussion.

Allowance for Losses on Loans and Loan Commitments

Based on the credit risk inherent in our lending business, we set aside allowances through charges to earnings. Such charges were not only made for the outstanding loan portfolio, but also for off-balance sheet loan commitments, such as commitments to extend credit or letters of credit. Charges made for our outstanding loan portfolio were credited to the allowance for losses on loans, whereas charges related to loan commitments were credited to the reserve for loan commitments, which is presented as a component of other liabilities.

The allowance for losses on loans and loan commitments are maintained at levels that are believed to be adequate by management to absorb estimated probable losses on loans inherent in the loan portfolio. The adequacy of our allowance is determined through periodic evaluations of the loan portfolio and other pertinent factors, which are inherently subjective because the process calls for various significant estimates and assumptions. Among other factors, the estimates involve the amounts and timing of expected future cash flows and fair value of collateral on impaired loans, estimated losses on loans based on historical loss experience, various qualitative factors, and uncertainties in estimating losses and inherent risks in the various credit portfolios, which may be subject to substantial change.

Total charge-offs for the three month ending March 31, 2010 were $5.8 million compared with $2.4 million for the same period in 2009. Real estate secured loan charge-offs increased by $3.7 million compared to the previous year. Commercial and industrial loan charge-offs decreased to $1.31 million from $1.6 million for the three month ending March 2010 and 2009, respectively. Consumer charge-offs increased from $102,000 at March 31, 2009 to $115,000 at March 31, 2010.

On a quarterly basis, we utilize a classification migration model and individual loan review analysis as starting points for determining the adequacy of our allowance for losses on loans. Our loss migration analysis tracks a certain number of quarters of loan losses history to determine historical losses by classification category for each loan type, except certain loans (automobile, mortgage and credit scored based business loans), which are analyzed as homogeneous loan pools. These calculated loss factors are then applied to outstanding loan balances. Based on Company defined utilization rate of exposure for unused off-balance sheet loan commitments, such as letters of credit, we record a reserve for loan commitments.

The individual loan review analysis is the other part of the allowance allocation process, applying specific monitoring policies and procedures in analyzing the existing loan portfolios. Further allowance assignments are made based on general and specific economic conditions, as well as performance trends within specific portfolio segments and individual concentrations of credit.

We increased our allowance for losses on loans to $79.6 million at March 31, 2010, representing an increase of 28.1%, or $17.4 million from $62.1 million at December 31, 2009. With the increase of our non-performing loans, we have increased the ratio of allowance for losses on loans to total loans to 3.29% at March 31, 2010, as compared with the 2.56% at the year end of 2009. Our total general reserve stands at $37.5 million and represents 1.62% of total loans at the end of March 31, 2010. Although management believes our allowance at March 31, 2010 was adequate to absorb losses from any known and inherent risks in the portfolio at that time, no assurance can be given that economic conditions which adversely affect our service areas or other variables will not result in further increased losses in the loan portfolio in the future.

Our allowance for losses on off-balance sheet items increased slightly to $2.6 million at March 31, 2010, as compared to $2.5 million at December 31, 2009.

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The table below summarizes for the periods indicated, changes in the allowance for losses on loans arising from loans charged-off, recoveries on loans previously charged-off, additions to the allowance and certain ratios related to the allowance for losses on loans and loan commitments:

Allowance for Loan Losses and Loan Commitments

(Dollars in Thousands)

	For the Three Month Ended,
	March 31, 2010			December 31, 2009			March 31, 2009
Allowance for loan losses:
Balances at beginning of period	$	62,130		$	54,735		$	29,437

Actual charge-offs: (1)
Real estate secured	4,373			8,495			672
Commercial and industrial	1,340			10,117			1,629
Consumer	115			43			102
Total charge-offs	5,828			18,655			2,403

Recoveries on loans previously charged off:
Real estate secured	11			174			—
Commercial and industrial	468			441			70
Consumer	34			40			43
Total recoveries	513			655			113

Net loan charge-offs	5,315			18,000			2,290

FDIC Indemnification	5,831			855			—
Provision for losses on loan and loan commitments (2)	16,930			24,540			7,009
Balances at end of year	$	79,576		$	62,130		$	34,156
Allowance for loan commitments:
Balances at beginning of period	$	2,515		$	1,455		$	1,243
Provision (credit) for losses on loan commitments	70			1,060			(309		)
Balance at end of period	$	2,585		$	2,515		$	933

Ratios :
Net loan charge-offs to average total loans	0.22		%	0.74		%	0.11		%
Allowance for loan losses to total loans at end of period	3.29		%	2.56		%	1.65		%
Net loan charge-offs to allowance for loan losses at end of period	6.68		%	28.97		%	6.70		%
Net loan charge-offs to provision for losses on loans and loan commitments	31.26		%	70.31		%	34.18		%

(1)	Charge-off amount for March 31, 2010 includes net charge-offs of covered loans amounting to $63,000, which represents gross covered loan charge-offs of $4.1 million less FDIC receivable portion of $4.0 million.
(2)	Provision for loss on loans and loan commitments amount includes net provisions for covered loans amounting to $63,000 which represents gross covered loan provision of $4.1 million less FDIC receivable portion or $4.0 million.

Contractual Obligations

The following table represents our aggregate contractual obligations to make future payments (principal and interest) as of March 31, 2010:

(Dollars in Thousands)	One Year or Less		Over One Year To Three Years		Over Three Years To Five Years		Over Five Years		Indeterminate Maturity		Total
FHLB borrowings	$	58,852	$	71,256	$	—	$	—	$	—	$	130,108
Junior subordinated debentures	1,109		10,708		—		77,321		—		89,138
Operating leases	3,314		5,595		4,821		6,038		—		19,768
Unrecognized tax benefit	—		—		—		—		398		398
Time deposits	1,417,849		35,763		19		—		—		1,453,631
Total	$	1,481,124	$	123,322	$	4,840	$	83,359	$	398	$	1,693,043

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Off-Balance Sheet Arrangements

During the ordinary course of business, we provide various forms of credit lines to meet the financing needs of our customers. These commitments, which represent a credit risk to us, are not shown or stated in any form on our balance sheets.

As of March 31, 2010 and December 31, 2009, we had commitments to extend credit of $262.2 million and $238.2 million, respectively. Obligations under standby letters of credit were $8.2 million and $13.0 million at March 31, 2010 and December 31, 2009, respectively, and our obligations under commercial letters of credit were $16.7 million and $10.2 million at such dates, respectively. Commitments to fund Low Income Housing Tax Credit investments were $10.2 million at the end of first quarter of 2010.

In the normal course of business, we are involved in various legal claims. We have reviewed all legal claims against us with counsel and have taken into consideration the views of counsel as to the outcome of the claims. In our opinion, the final disposition of all such claims will not have a material adverse effect on our financial position and results of operations.

Deposits and Other Sources of Funds

Deposits are our primary source of funds. Total deposits increased to $2.93 billion at March 31, 2010, compared with $2.83 billion at December 31, 2009.

Total non-time deposits at March 31, 2010 increased to $1.49 billion in the first three months of 2010, from $1.39 billion at December 31, 2009, while time deposits decreased to $1.43 billion at March 31, 2010 from $1.44 billion at December 31, 2009.

The increase in deposits was primarily attributable to our continued marketing campaign aimed at raising core deposits. Other time deposits or time deposits under $100,000 increased to $687.5 million at March 31, 2010 compared to $643.7 million at December 31, 2009.

The average rate that we paid on time deposits in denominations of $100,000 or more for the first quarter of 2010 decreased to 1.58% from 2.86% in the same period of the prior year. In order to keep the interest expense down, we plan to closely monitor interest rate trends and changes, and our time deposit rates, in an effort to maximize our net interest margin and profitability.

The following table summarizes the distribution of average daily deposits and the average daily rates paid
for the quarters indicated:

Average Deposits

(Dollars in Thousands)

	For the Three Months Ended,
	March 31, 2010				December 31, 2009				March 31, 2009
	Average Balance		Average Rate		Average Balance		Average Rate		Average Balance		Average Rate

Demand, non-interest-bearing	$	389,300			$	388,549			$	276,740
Money market	956,035		1.68	%	853,770		2.18	%	362,734		2.57	%
Super NOW	22,481		0.52	%	21,971		0.65	%	19,556		0.94	%
Savings	74,052		3.17	%	68,373		3.33	%	43,241		3.63	%
Time deposits in denominations of $100,000 or more	768,882		1.58	%	862,805		1.91	%	933,494		2.86	%
Other time deposits	675,764		2.07	%	592,336		2.27	%	196,714		3.54	%
Total deposits	$	2,886,514	1.55	%	$	2,787,804	1.83	%	$	1,832,479	2.44	%

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The scheduled maturities of our time deposits in denominations of $100,000 or greater at March 31, 2010 were as follows:

Maturities of Time Deposits of $100,000 or More

(Dollars in Thousands)

Three months or less	$	376,110
Over three months through six months	183,566
Over six months through twelve months	157,424
Over twelve months	29,766
Total	$	746,866

A number of clients carry deposit balances of more than 1% of our total deposits, but the California State Treasury was the only depositor that had a deposit balance representing more than 5% of our total deposits at March 31, 2010 and December 31, 2009.

In addition to our regular customer base, we also accept brokered deposits on a selective basis at reasonable interest rates to augment deposit growth. In the first three months of 2010, despite the ongoing weakness in the economy and stiff competition for customer deposits among banks within the markets where we do business, we were able to increase non-interest bearing demand deposits to $414.0 million at March 31, 2010 from $385.2 million at December 31, 2009. We expect that interest rates will trend upward when the Federal Reserve Board starts increasing the federal funds rate. To improve our net interest margin as well as to maintain flexibility in our cost of funds, we will constantly monitor our deposit mix to minimize our cost of funds.

Although deposits are the primary source of funds for our lending and investment activities and for general business purposes, we may obtain advances from the FHLB as an alternative to retail deposit funds. We have historically utilized borrowings from the FHLB in order to take advantage of their flexibility and comparatively low cost. Due to the ongoing credit crisis and stiff competition for customer deposits among banks, we have increased FHLB borrowing as an alternative to fund our growing loan portfolio. See “Liquidity Management” below for details relating to the FHLB borrowings program.

The following table is a summary of FHLB borrowings for the quarters indicated:

(Dollars in Thousands)	March 31, 2010			December 31, 2009

Balance at quarter end	$	126,000		$	232,000
Average balance during the quarter	$	143,022		$	237,341
Maximum amount outstanding at any month-end	$	142,000		$	242,000
Average interest rate during the quarter	2.57		%	3.05		%
Average interest rate at quarter-end	2.56		%	2.22		%

Asset/Liability Management

We seek to ascertain optimum and stable utilization of available assets and liabilities as a vehicle to attain our overall business plans and objectives. In this regard, we focus on measurement and control of liquidity risk, interest rate risk and market risk, capital adequacy, operation risk and credit risk. See further discussion on these risks in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2009. Information concerning interest rate risk management is set forth under “Item 3 - Quantitative and Qualitative Disclosures about Market Risk.”

Liquidity Management

Maintenance of adequate liquidity requires that sufficient resources be available at all times to meet our cash flow requirements. Liquidity in a banking institution is required primarily to provide for deposit withdrawals and the credit needs of its customers and to take advantage of investment opportunities as they arise. Liquidity management involves our ability to convert assets into cash or cash equivalents without incurring significant loss, and to raise cash or maintain funds without incurring excessive additional cost. For this purpose, we maintain a portion of our funds in cash and cash equivalents, deposits in other financial institutions and loans and securities available for sale. Our liquid assets at March 31, 2010 and December 31, 2009 totaled approximately $976.3 million and $923.4 million, respectively. Our liquidity levels measured as the percentage of liquid assets to total assets were 28.2% and 26.9% at March 31, 2010 and December 31, 2009, respectively.

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Our primary sources of liquidity are derived from our core operating activities of accepting customer deposits. This funding source is augmented by payments of principal and interest on loans, the routine liquidation of securities from the available-for-sale portfolio and securitizations of loans. In addition, government programs, such as TLGP, may influence deposit behavior. Primary use of funds include withdrawal of and interest payments on deposits, originations and purchases of loans, purchases of investment securities, and payment of operating expenses.

As a secondary source of liquidity, we accept brokered deposits, federal funds facilities, repurchase agreement facilities, and obtain advances from the FHLB to supplement our supply of lendable funds and to meet deposit withdrawal requirements. Advances from the FHLB are typically secured by our loans, securities and stock issued by the FHLB. Advances are made pursuant to several different programs. Each credit program has its own interest rate and range of maturities. Depending on the program, limitations on the amount of advances are based either on a fixed percentage of an institution’s net worth or on the FHLB’s assessment of the institution’s creditworthiness. As of March 31, 2010, our borrowing capacity from the FHLB was about $908.5 million and our outstanding balance was $126.0 million, or approximately 13.9% of our borrowing capacity.

Capital Resources and Capital Adequacy Requirements

Historically, our primary source of capital has been internally generated operating income through retained earnings. In order to ensure adequate levels of capital, we conduct ongoing assessments of projected sources and uses of capital in conjunction with projected increases in assets and level of risks. We have considered, and we will continue to consider, additional sources of capital as the need arises, whether through the issuance of additional equity, debt or hybrid securities. In December of 2008, we received a Troubled Assets Relief Program or “TARP” investment from the U.S. Treasury in the amount of $62.2 million.

We are subject to various regulatory capital requirements administered by federal banking agencies. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, we must meet specific capital guidelines that rely on quantitative measures of our assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. Failure to meet minimum capital requirements can trigger regulatory actions under the prompt corrective action rules that could have a material adverse effect on our financial condition and operations. Prompt corrective action may include regulatory enforcement actions that restrict dividend payments, require the adoption of remedial measures to increase capital, terminate FDIC deposit insurance, and mandate the appointment of a conservator or receiver in severe cases. In addition, failure to maintain a well-capitalized status may adversely affect the evaluation of regulatory applications for specific transactions and activities, including acquisitions, continuation and expansion of existing activities, and commencement of new activities, and could adversely affect our business relationships with our existing and prospective clients. The aforementioned regulatory consequences for failing to maintain adequate ratios of Tier 1 and Tier 2 capital could have a material adverse effect on our financial condition and results of operations. Our capital amounts and classification are also subject to qualitative judgments by regulators about components, risk weightings, and other factors. See Part I, Item 1 “Description of Business — Regulation and Supervision — Capital Adequacy Requirements” in our Annual Report on Form 10-K for the year ended December 31, 2009 for additional information regarding regulatory capital requirements.

As of March 31, 2010, we were qualified as a “well capitalized institution” under the regulatory framework for prompt corrective action. The following table presents the regulatory standards for well-capitalized institutions, compared to capital ratios as of the dates specified for the Company and the Bank:

Wilshire Bancorp, Inc.

	Regulatory Adequately- Capitalized		Regulatory Well- Capitalized		Actual ratios for the Company as of:
	Standards		Standards		March 31, 2010		December 31, 2009		March 31, 2009

Total capital to risk-weighted assets	8	%	10	%	15.95	%	15.81	%	16.69	%
Tier I capital to risk-weighted assets	4	%	6	%	14.50	%	14.37	%	15.15	%
Tier I capital to average assets	4	%	5	%	9.78	%	9.77	%	12.79	%

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Wilshire State Bank

	Regulatory Adequately-Capitalized		Regulatory Well- Capitalized		Actual ratios for the Bank as of:
	Standards		Standards		March 31, 2010		December 31, 2009		March 31, 2009

Total capital to risk-weighted assets	8	%	10	%	15.45	%	15.73	%	16.21	%
Tier I capital to risk-weighted assets	4	%	6	%	14.00	%	14.29	%	14.67	%
Tier I capital to average assets	4	%	5	%	9.45	%	9.71	%	12.39	%

For the purposes of our regulatory capital ratio computation, our equity capital includes the $62.2 million Series A Preferred Stock issued by the Company to the U.S. Treasury as part of our participation of the TARP Capital Purchase Program. As of March 31, 2010, the Company’s total Tier 1 capital (which includes our equity capital, plus junior subordinated debentures, less goodwill and intangibles) was $332.8 million, as compared with $331.4 million as of December 31, 2009. For the Bank level, Tier 1 capital was $321.2 million as of March 31, 2010, as compared with $329.3 million as of December 31, 2009.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Market risk is the risk of loss from adverse changes in market prices and rates. Our market risk arises primarily from interest rate risk inherent in lending, investing and deposit taking activities. Our profitability is affected by fluctuations in interest rates. A sudden and substantial change in interest rates may adversely impact our earnings to the extent that the interest rates borne by assets and liabilities do not change at the same speed, to the same extent or on the same basis. We evaluate market risk pursuant to policies reviewed and approved annually by our Board of Directors. The Company’s Board delegates responsibility for market risk management to the Asset/Liability Management Committee, which reports monthly to the Board on activities related to market risk management. As part of the management of our market risk, Asset/Liability Management Committee may direct changes in the mix of assets and liabilities. To that end, we actively monitor and manage interest rate risk exposures.

Interest rate risk management involves development, analysis, implementation and monitoring of earnings to provide stable earnings and capital levels during periods of changing interest rates. In the management of interest rate risk, we utilize monthly gap analysis and quarterly simulation modeling to determine the sensitivity of net interest income and economic value sensitivity of the balance sheet. These techniques are complementary and are used together to provide a more accurate measurement of interest rate risk.

Gap analysis measures the repricing mismatches between assets and liabilities. The interest rate sensitivity gap is determined by subtracting the amount of liabilities from the amount of assets that reprice in a particular time interval. If repricing assets exceed repricing liabilities in any given time period, we would be deemed to be “asset-sensitive” for that period. Conversely, if repricing liabilities exceed repricing assets in a given time period, we would be deemed to be “liability-sensitive” for that period.

We usually seek to maintain a balanced position over the period of one year to ensure net interest margin stability in times of volatile interest rates. This is accomplished by maintaining a similar level of interest-earning assets and interest-paying liabilities available to be repriced within one year.

The change in net interest income may not always follow the general expectations of an “asset-sensitive” or a “liability-sensitive” balance sheet during periods of changing interest rates. This possibility results from interest rates earned or paid changing by differing increments and at different time intervals for each type of interest-sensitive asset and liability. The interest rate gaps reported in the tables arise when assets are funded with liabilities having different repricing intervals. Because these gaps are actively managed and change daily as adjustments are made in interest rate views and market outlook, positions at the end of any period may not reflect our interest rate sensitivity in subsequent periods. We attempt to balance longer-term economic views against prospects for short-term interest rate changes.

Although the interest rate sensitivity gap is a useful measurement and contributes to effective asset and liability management, it is difficult to predict the effect of changing interest rates based solely on that measure. As a result, the Asset/Liability Management Committee also regularly uses simulation modeling as a tool to measure the sensitivity of earnings and net portfolio value, or NPV, to interest rate changes. The NPV is defined as the net present value of an institution’s existing assets, liabilities and off-balance sheet instruments. The simulation model captures all assets, liabilities and off-balance sheet financial instruments and accounts for significant variables that are believed to be affected by interest rates. These include prepayment speeds on loans, cash flows of loans and deposits, principal amortization, call options on securities, balance sheet growth assumptions and changes in rate relationships as various rate indices react differently to market rates.

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Although the simulation measures the volatility of net interest income and net portfolio value under immediate increase or decrease of market interest rate scenarios in 100 basis point increments, our main concern is the negative effect of a reasonably-possible worst scenario. The Asset/Liability Management Committee policy prescribes that for the worst possible rate-change scenario the possible reduction of net interest income and NPV should not exceed 20% of the base net interest income and 25% of the base NPV, respectively.

In general, based upon our current mix of deposits, loans and investments, decrease in interest rates would result an increase in our net interest margin and NPV. An increase in interest rates would be expected to have opposite effect. However, given in the record low interest rate environment, either an increase or decrease in interest rates will result in higher net interest margin, while either an increase or decrease in interest rates will lower NPV as shown in our simulation measures below.

Management believes that the assumptions used to evaluate the vulnerability of our operations to changes in interest rates approximate actual experience and considers them reasonable; however, the interest rate sensitivity of our assets and liabilities and the estimated effects of changes in interest rates on our net interest income and NPV could vary substantially if different assumptions were used or actual experience differs from the historical experience on which they are based.

The following table sets forth the interest rate sensitivity of our interest-earning assets and interest-bearing liabilities as of March 31, 2010 using the interest rate sensitivity gap ratio. For purposes of the following table, an asset or liability is considered rate-sensitive within a specified period, if it can be repriced or if it matures within that timeframe. Actual payment patterns may differ from contractual payment patterns:

Interest Rate Sensitivity Analysis
(Dollars in Thousands)

	At March 31, 2010
	Amounts Subject to Repricing Within
	0-3 months			3-12 months			1-5 years			After 5 years			Total
Interest-earning assets:
Gross loans	$	1,435,058		$	137,460		$	828,845		$	21,399		$	2,422,762
Investment securities	3,595			15,786			336,634			331,806			687,821
Federal funds sold and cash equivalents	30,018			—			—			—			30,018
Interest-earning deposits	—			—			—			—			—
Total	$	1,468,671		$	153,246		$	1,165,479		$	353,205		$	3,140,601

Interest-bearing liabilities:
Savings deposits	$	76,346		$	—		$	—		$	—		$	76,346
Time deposits of $100,000 or more	376,110			340,990			29,766			—			746,866
Other time deposits	63,409			618,913			5,210			—			687,532
Other interest-bearing deposits	1,000,278			—			—			—			1,000,278
FHLB Advances	72,487			—			70,000						142,487
Junior Subordinated Debenture	71,857			15,464			—			—			87,321
Total	$	1,660,487		$	975,367		$	104,976		$	—		$	2,740,830

Interest rate sensitivity gap	$	(191,816	)	$	(822,121	)	$	1,060,503		$	353,205		$	399,771
Cumulative interest rate sensitivity gap	$	(191,816	)	$	(1,013,937	)	$	46,566		$	399,771
Cumulative interest rate sensitivity gap ratio (based on total assets)	-5.54		%	-29.31		%	1.35		%	11.56		%

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The following table sets forth our estimated net interest income over a 12-month period and NPV based on the indicated changes in market interest rates as of March 31, 2010. All assets presented in this table are held-to-maturity or available-for-sale. At March 31, 2010, we had no trading investment securities:

Change (in basis points)	Net Interest Income (next twelve months) (Dollars in Thousands)		% Change		NPV (Dollars in Thousands)		% Change
+200	$	120,590	-5.03	%	$	322,870	-14.29	%
+100	121,733		-4.13	%	351,331		-6.73	%
0	126,981		—		376,698		—
-100	127,439		0.36	%	351,880		-6.59	%
-200	127,058		0.06	%	327,757		-12.99	%

Our strategies in protecting both net interest income and economic value of equity from significant movements in interest rates involve restructuring our investment portfolio and using FHLB advances. Although our policy also permits us to purchase rate caps and floors and interest rate swaps, we are not currently engaged in any of those types of transactions.

Item 4. Controls and Procedures

As of March 31, 2010, we carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, regarding the effectiveness of the design and operation of our “disclosure controls and procedures,” as defined under Exchange Act Rules 13a-15(e) and 15d-15(e).

Based on this evaluation, our chief executive officer and chief financial officer concluded that, as of March 31, 2010, such disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance in achieving the desired control objectives and in reaching a reasonable level of assurance our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

There were no changes in our internal controls over financial reporting during the quarter ended March 31, 2010 that materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

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Part II. OTHER INFORMATION

Item 1. Legal Proceedings

Item 1A. Risk Factors

There are no material changes to our risk factors as presented in the Company’s 2009 Form 10-K under the heading “Item 1A. Risk Factors.”

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Submission of Matters to a Vote of Security Holders

None.

Item 5. Other Information

None.

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EXHIBITS

Exhibit Table

Reference Number		Item

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32		Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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SIGNATURES

Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.