CLFC Center Financial Corporation (MM)

Center Financial Corporation (NASDAQ: CLFC) today reported net income of $4.9 million, or $0.10 per diluted common share, for its 2011 second quarter. This compares with prior-year second quarter net income of $7.5 million, or $0.17 per diluted common share, which included a $5.9 million bargain purchase gain related to an FDIC-assisted acquisition.

“Center Financial’s results for the three months ended June 30, 2011 reflect another solid quarter marked by steady, consistent and sustainable improvements in the overall condition of the bank,” said Richard S. Cupp, president and chief executive officer. “Our sixth consecutive quarter of profitability continues to illustrate Center’s successful rebound from the financial crisis and puts us another step closer to a successful merger with Nara Bancorp later in the year. Improving deposit mix and costs, moderating loan loss provision and credit expenses, and loan and deposit growth were all positive factors contributing to the second quarter performance. Accordingly, our capital position further strengthened and far exceeds minimum regulatory levels, as well as our peer averages. We remain prudent in identifying and managing the risks associated with the loan portfolio, giving us confidence in our ability to deliver ongoing improvements in our overall asset quality, notwithstanding the uncertain economic environment.”

2011 SECOND QUARTER FINANCIAL HIGHLIGHTS

      At or for the Three Months Ended         6/30/2011       3/31/2011       6/30/2010 Net income       $ 4,895         $ 4,885         $ 7,502   Net income available to common shareholders       $ 4,141         $ 4,135         $ 6,756   Net income per diluted common share       $ 0.10         $ 0.10         $ 0.17   Gain on sale of loans       $ 1,800         $ 3,752         $ 1,203   Gain on business acquisition      

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        $ 5,900   Income before income tax provision       $ 5,180         $ 5,390         $ 11,260   Income tax provision       $ 285         $ 505         $ 3,758   Net interest margin         3.21 %         3.17 %         3.45 % Total risk-based capital ratio         20.67 %         20.42 %         18.47 % Tier 1 leverage ratio         13.20 %         12.85 %         12.38 % Tangible common equity per common share       $ 5.76         $ 5.61         $ 5.27   Tangible common equity to tangible assets         10.14 %         9.91 %         9.25 % Non-covered nonperforming loans, net of SBA guarantee       $ 36,044         $ 34,142         $ 64,241   Delinquent non-covered loans 30 to 89 days past due, net of SBA guarantee       $ 6,138         $ 10,352         $ 10,666   Non-covered net loan charge-offs       $ 6,420         $ 7,037         $ 7,576   Provision for loan losses       $ 5,000         $ 6,000         $ 5,000   Allowance for non-covered loan losses to total non-covered loans         3.41 %         3.53 %         3.97 % Total non-covered loans       $ 1,455,423         $ 1,447,777         $ 1,474,831   Total deposits       $ 1,791,981         $ 1,779,606         $ 1,799,995   Noninterest-bearing deposits as a % of total deposits         25.5 %         23.0 %         22.1 % Annualized average cost of deposits         0.96 %         1.05 %         1.19 %            

The company’s 2010 second quarter financial results benefited from a $5.9 million bargain purchase gain related to its April 16, 2010 FDIC-assisted acquisition of former Innovative Bank. Loans acquired in the transaction are subject to a loss-sharing agreement with the FDIC and reported separately in the consolidated statements of financial condition as “covered loans.” Center’s legacy portfolio is referred to as “non-covered.”

2011 SECOND QUARTER OPERATIONAL HIGHLIGHTS

Net interest income before provision for loan losses totaled $17.0 million for the 2011 second quarter. This is up 1.4% sequentially from $16.8 million in the 2011 first quarter, but down 2.8% when compared with $17.5 million in the prior-year second quarter.

The average yield on loans for the 2011 second quarter improved three basis points to 5.54% from 5.51% in the preceding first quarter, but is down 18 basis points when compared with 5.72% in the 2010 second quarter. The average cost of interest-bearing deposits continued to improve, decreasing to 1.27% for the 2011 second quarter from 1.34% for the 2011 first quarter and from 1.52% for the 2010 second quarter. Total cost of deposits improved to 0.96% for the 2011 second quarter, compared with 1.05% for the 2011 first quarter and 1.19% for the prior-year second quarter.

The company’s net interest margin (NIM) for the 2011 second quarter increased four basis points to 3.21% from 3.17% in the preceding first quarter, primarily reflecting the nine basis point reduction in the cost of deposits. The company’s NIM for the prior-year second quarter was 3.45%. The company commented that management historically evaluated and reported NIM excluding the cash balances of Federal Reserve deposits as they believed it to be a more meaningful measurement of trends in the loan and investment yields in relation to costs of deposits and borrowings. The reported NIM, which now includes the impact of these deposit balances and related income, is heavily affected this year by the higher balances of Federal Reserve deposits, which earn a nominal interest rate. Excluding the impact of Federal Reserve deposits from the calculation, NIM was 3.69%, 3.49% and 3.53%, respectively for the 2011 second quarter, 2011 first quarter and 2010 second quarter.

Noninterest income totaled $6.0 million for the 2011 second quarter, compared with $7.6 million for the preceding first quarter and $11.1 million for the prior-year second quarter. In the first quarter, reflecting an SBA rule change that became effective in the 2011 first quarter, the company recorded a net $3.8 million gain on sale of loans in the preceding first quarter, which included the recognition of deferred gains of $1.8 million on the SBA loan transfer in the 2010 fourth quarter, as well as a gain of $2.0 million on the 2011 first quarter SBA loan sales. In the year-ago second quarter, noninterest income included a $5.9 million bargain purchase gain related to the FDIC-assisted acquisition of former Innovative Bank. Excluding the net impact of the SBA rule change and the bargain purchase gain in the prior comparable periods, total noninterest income for the 2011 second quarter improved from the prior periods.

Total noninterest expense for the 2011 second quarter equaled $12.8 million. This compares with $13.0 million for the 2011 first quarter and $12.3 million for the second quarter a year ago. The company’s efficiency ratio for the 2011 second quarter rose to 55.66% from 53.26% in the preceding first quarter. In the 2010 second quarter, the company’s considerably lower efficiency ratio of 43.01% largely reflected the benefit from the $5.9 bargain purchase gain.

For the 2011 second quarter, Center Financial posted net income of $4.9 million and net income available to common shareholders of $4.1 million, equal to $0.10 per diluted common share. This includes a $1.8 million gain on sale of loans and an income tax provision of $285,000, which reflects a reduction in the deferred tax asset valuation allowance by approximately $1.7 million from the March 31, 2011 balance. For the preceding 2011 first quarter, net income amounted to $4.9 million and net income available to common shareholders totaled $4.1 million, equal to $0.10 per diluted common share. This included a $3.8 million gain on sale of loans and an income tax provision of $505,000. For the 2010 second quarter, net income amounted to $7.5 million and net income available to common shareholders was $6.8 million, equal to $0.17 per diluted common share. The 2010 second quarter net income included a $1.2 million gain on sale of securities, a $5.9 million bargain purchase gain and an income tax provision of $3.8 million.

For the 2011 second quarter, Center Financial’s return on average assets (ROAA) and return on average equity (ROAE) were relatively steady at 0.86% and 6.97%, respectively, when compared with an ROAA of 0.86% and an ROAE of 7.17% for the preceding first quarter. The company’s reported ROAA of 1.38% and ROAE of 11.52% in the 2010 second quarter was largely affected by the $5.9 million bargain purchase gain.

ASSET QUALITY

At June 30, 2011, total non-covered nonperforming assets net of SBA guarantees amounted to $36.2 million. This is up modestly from $34.3 million at March 31, 2011, but down significantly when compared with $67.0 million a year ago at June 30, 2010. As a percentage of gross non-covered loans and other real estate owned (OREO), total non-covered nonperforming assets net of SBA guarantees equaled 2.49% at June 30, 2011, compared with 2.37% at March 31, 2011 and 4.54% at June 30, 2010. As of June 30, 2011, the company’s non-covered OREO portfolio had a carrying value of $133,000, compared with carrying values of $144,000 at March 31, 2011 and $2.8 million at June 30, 2010.

Non-covered nonperforming loans net of SBA guarantees rose modestly to $36.0 million at June 30, 2011 from $34.1 million at March 31, 2011, as new inflows of loans into nonperforming status ticked up from the preceding quarter to $10.5 million and exceeded outflows of $8.6 million. Of the new nonaccruals, commercial and industrial (C&I) loans represented 47%, commercial real estate (CRE) loans accounted for 46% and consumer loans equaled 7%. The company did not transfer any loans to loans held for sale during the quarter. At the close of the 2010 second quarter, non-covered nonperforming loans net of SBA guarantees totaled $64.2 million.

Delinquent non-covered loans 30 to 89 days past due net of SBA guarantees declined to $6.1 million at June 30, 2011 from $10.4 million at March 31, 2011, as inflows into non-covered past due status decreased significantly from the preceding quarter by more than half to $4.2 million. Non-covered loans past due 30 to 89 days at June 30, 2010 totaled $10.7 million.

Performing troubled debt restructurings (TDRs) that are not accounted for in non-covered nonaccrual or delinquent loans amounted to $19.1 million at June 30, 2011, $19.9 million at March 31, 2011 and $17.7 million at June 30, 2010.

Non-covered loan net charge-offs during the 2011 second quarter declined to $6.4 million from $7.0 million in the preceding 2011 first quarter and from $7.6 million in the year-ago second quarter. As a percentage of average non-covered loans on an annualized basis, non-covered loan net charge-offs equaled 1.85% for the 2011 second quarter, compared with 1.91% for the 2011 first quarter, and 1.61% for the 2010 second quarter.

Center Financial recorded a provision for loan losses of $5.0 million in the 2011 second quarter, compared with $6.0 million in the preceding first quarter and $5.0 million in the second quarter a year ago.

At June 30, 2011, the company’s allowance for loan losses for non-covered loans totaled $49.6 million, reflecting decreases from $51.0 million at March 31, 2011 and $58.4 million at June 30, 2010. As a percentage of gross non-covered loans, the allowance for loan losses equaled 3.41% at June 30, 2011, 3.53% at March 31, 2011 and 3.97% at June 30, 2010.

LOANS & DEPOSITS

Non-covered loans at June 30, 2011 totaled $1.46 billion, compared with $1.45 billion at March 31, 2011 and $1.53 billion at December 31, 2010. Covered loans at June 30, 2011 declined to $102.6 million from $111.8 million at March 31, 2011 and $117.3 million at December 31, 2010. Total loans at June 30, 2011 amounted to $1.56 billion.

Total deposits at June 30, 2011 rose to $1.79 billion from $1.78 billion at March 31, 2011 and from $1.77 billion at December 31, 2010. The increase in deposits is primarily attributable to a $48.3 million increase in noninterest-bearing demand deposits, offset by a $32.1 million reduction in jumbo certificates of deposit. As a percentage of total deposits, noninterest-bearing demand deposits rose to 25.5% at June 30, 2011 from 23.0% at March 31, 2011 and from 22.4% at year-end 2010. The company’s loan-to-deposit ratio equaled 84.1% at June 30, 2011, compared with 84.7% at March 31, 2011 and 89.9% at December 31, 2010.

BALANCE SHEET SUMMARY & CAPITAL

Total assets at June 30, 2011 amounted to $2.27 billion, compared with $2.26 billion March 31, 2011 and $2.27 billion at December 31, 2010. Average interest-earning assets equaled $2.13 billion for the 2011 second quarter, compared with $2.15 billion for the 2011 first quarter and $2.14 billion for the 2010 fourth quarter.

Total shareholders’ equity at June 30, 2011 rose to $285.0 million from $278.9 million at March 31, 2011 and from $274.0 million at December 31, 2010. Tangible common equity as a percentage of tangible assets, which is a non-GAAP financial measure, rose to 10.14% at June 30, 2011 from 9.91% at March 31, 2011 and from 9.65% at December 31, 2010.

With its sixth consecutive profitable quarter of operations, Center Financial’s capital position further strengthened and continued to be well in excess of both minimum guidelines for “well-capitalized” institutions and regulatory requirements. At June 30, 2011, Total Risk-Based capital ratio was 20.67%, Tier 1 Risk-Based capital ratio equaled 19.39% and Tier 1 Leverage ratio amounted to 13.20%, all reflecting increases from the levels at March 31, 2011 and December 31, 2010.

Use of Non-GAAP Financial Measures

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

Investor Conference Call

The company will host an investor conference call on Thursday, July 28, 2011 at 9 a.m. PDT (12 noon EDT) to review financial results for its 2011 second quarter. The institutional investment community is invited to participate in the call by dialing 866-356-4281 (domestic) or 617-597-5395 (international) and entering passcode 80839701. Other interested parties are invited to listen to the live call through a listen-only audio Web broadcast via the Internet in the Investor Relations section of www.centerbank.com. Listeners are encouraged to visit the Web site at least 15 minutes prior to the start of the scheduled presentation to register, download and install any necessary audio software. For those who are not available to listen to the live broadcast, the audio broadcast will be archived for one year. A telephonic replay of the call will be available through Thursday, August 4, 2011 by dialing 888-286-8010 (domestic) or 617-801-6888 (international) and entering replay passcode 74655358.

About Center Financial Corporation

Center Financial Corporation is the holding company of Center Bank, a community bank offering a full range of financial services for diverse ethnic and small business customers. Founded in 1986 and specializing in commercial and SBA loans and trade finance products, Center Bank has grown to be one of the nation’s leading financial institutions focusing on the Korean-American community, with total assets of $2.27 billion at June 30, 2011. Headquartered in Los Angeles, Center Bank operates a total of 22 full-service branches and two loan production offices. The company has 16 full-service branches located throughout Southern California and three branches in Northern California. Center Bank also operates two branches and one loan production office in the Seattle area, one branch in Chicago and a loan production office in Denver. Center Bank is a California state-chartered institution and its deposits are insured by the FDIC to the extent provided by law. For additional information on Center Bank, visit the company’s Web site at www.centerbank.com.

Additional Information and Where to Find It

In connection with the proposed merger of Center Financial Corporation and Nara Bancorp, Inc., Nara has filed a Registration Statement on Form S-4 (Registration No. 333-173511) with the Securities and Exchange Commission (SEC) that includes a Joint Proxy Statement/Prospectus of Center Financial Corporation and Nara Bancorp, as well as other relevant documents concerning the proposed merger. Shareholders are urged to read the Registration Statement and the Joint Proxy Statement/Prospectus regarding the merger and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they contain or will contain important information about the transaction. You may obtain a free copy of the Joint Proxy Statement/Prospectus, as well as other filings containing information about Nara Bancorp and Center Financial at the SEC’s Web site (www.sec.gov). You may also obtain these documents free of charge from Center at http://www.centerbank.com or from Nara at http://www.narabank.com under the tab “Investor Relations” and then under the heading “SEC Filings.”

Participants in Solicitation

Center Financial, Nara Bancorp and their respective directors, executive officers, management and employees may be deemed to be participants in the solicitation of proxies in respect of the merger. Information concerning Center Financial’s participants is set forth in its Form 10-K Annual Report filed with the SEC for the year ended December 31, 2010, as amended by its Form 10-K/A filed with the SEC on April 29, 2011. Information concerning Nara Bancorp’s participants is set forth in its Form 10-K Annual Report for the year ended December 31, 2010, as amended by its Form 10-K/A filed with the SEC on April 26, 2011. Additional information regarding the interests of participants of Center Financial and Nara Bancorp in the solicitation of proxies in respect of the merger is included in the Registration Statement and Joint Proxy Statement/Prospectus filed with the SEC.

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

                  CENTER FINANCIAL CORPORATION CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited) (Dollars in thousands)   6/30/11 3/31/11 12/31/10 ASSETS Cash and due from banks $ 33,738 $ 33,056 $ 28,181 Federal funds sold 650 150 136,180 Money market funds and interest-bearing deposits in other banks   298,040   284,609   94,559 Cash and cash equivalents 332,428 317,815 258,920   Securities available for sale, at fair value 305,058 312,336 289,551 Non-covered loans held for sale, at the lower of cost or fair value 58,776 65,677 60,234 Federal Home Loan Bank and FRB stock, at cost 13,810 14,426 15,019 Non-covered loans, net of allowance for loan losses of $49,590 and $52,047 as of June 30, 2011 and December 31, 2010, respectively 1,345,740 1,330,122 1,415,646 Covered loans, net of allowance for loan losses of $1,010 as of June 30, 2011 and December 31, 2010 101,597 110,753 116,283 Premises and equipment, net 12,659 13,160 13,532 Core deposit intangible, net 434 449 464 Customers' liability on acceptances 2,748 1,819 2,287 Non-covered other real estate owned 133 144 937 Covered other real estate owned 1,132 1,405 1,459 Accrued interest receivable 5,096 5,489 5,509 Deferred income taxes, net 13,898 14,556 14,383 Investments in affordable housing partnerships 10,110 10,469 10,824 Cash surrender value of life insurance 17,991 12,890 12,791 Income tax receivable 13,216 13,298 14,277 Prepaid assessment fees 5,949 6,902 7,864 FDIC loss share receivable 21,964 21,849 23,991 Other assets   5,588   6,559   6,308 Total $ 2,268,327 $ 2,260,118 $ 2,270,279   LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Deposits: Noninterest-bearing $ 457,182 $ 408,843 $ 396,973 Interest-bearing   1,334,799   1,370,763   1,374,021 Total deposits 1,791,981 1,779,606 1,770,994   Acceptances outstanding 2,748 1,819 2,287 Accrued interest payable 4,660 4,771 5,113 Other borrowed funds 157,299 167,749 188,670 Long-term subordinated debentures 18,557 18,557 18,557 Accrued expenses and other liabilities   8,043   8,709   10,646 Total liabilities 1,983,288 1,981,211 1,996,267   Commitments and Contingencies   Shareholders' Equity Preferred stock, Series A 53,538 53,472 53,409 Common stock 188,031 187,892 187,754 Retained earnings 40,277 36,135 32,000 Accumulated other comprehensive income, net of tax   3,193   1,408   849 Total shareholders' equity   285,039   278,907   274,012 Total $ 2,268,327 $ 2,260,118 $ 2,270,279     Tangible common equity per common share $ 5.76 $ 5.61 $ 5.49 Tangible common equity to tangible assets 10.14 % 9.91 % 9.65 %                             CENTER FINANCIAL CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Unaudited)   Three Months Ended Six Months Ended 6/30/11 3/31/11 6/30/10 6/30/11 6/30/10   Interest and Dividend Income: Interest and fees on loans $ 20,755 $ 21,161 $ 21,359 $ 41,916 $ 41,957 Interest on federal funds sold 1 42 102 43 162 Interest on investment securities 2,109 1,782 2,855 3,891 5,792 Interest on money market funds and interest-earning deposits   211     94     33     305     70   Total interest and dividend income 23,076 23,079 24,349 46,155 47,981   Interest Expense: Interest on deposits 4,294 4,634 5,060 8,928 10,521 Interest on borrowed funds 1,648 1,542 1,671 3,190 3,274 Interest expense on long-term subordinated debentures   142     142     143     284     283   Total interest expense 6,084 6,318 6,874 12,402 14,078   Net interest income before provision for loan losses 16,992 16,761 17,475 33,753 33,903 Provision for loan losses   5,000     6,000     5,000     11,000     12,000   Net interest income after provision for loan losses 11,992 10,761 12,475 22,753 21,903   Noninterest Income: Customer service fees 1,782 1,800 2,086 3,582 4,117 Fee income from trade finance transactions 685 616 720 1,301 1,378 Wire transfer fees 344 313 331 657 612 Gain on business acquisition - - 5,900 - 5,900 Gain on sale of loans 1,800 3,752 1,203 5,552 1,203 Net gain on sale of securities available for sale - - - - 2,209 Loan service fees 708 662 427 1,370 587 Increase in FDIC loss share receivable 114 49 - 163 - Other income   532     416     391     948     741   Total noninterest income 5,965 7,608 11,058 13,573 16,747   Noninterest Expense: Salaries and employee benefits 5,327 5,113 4,647 10,440 8,987 Occupancy 1,389 1,345 1,437 2,734 2,632 Furniture, fixtures, and equipment 519 603 640 1,122 1,147 Data processing 654 669 654 1,323 1,118 Legal fees 305 397 279 702 585 Accounting and other professional service fees 340 572 546 912 861 Business promotion and advertising 382 354 415 736 672 Supplies and communication 337 348 396 685 660 Security service 309 293 285 602 520 Regulatory assessment 998 1,053 1,037 2,051 2,023 Merger related expenses 200 437 129 637 129 OREO related expenses 638 474 400 1,112 1,359 Other operating expenses   1,379     1,321     1,408     2,700     2,443   Total noninterest expense   12,777     12,979     12,273     25,756     23,136     Income before income tax provision 5,180 5,390 11,260 10,570 15,514 Income tax provision   285     505     3,758     790     5,245     Net income 4,895 4,885 7,502 9,780 10,269   Preferred stock dividends and accretion of preferred stock discount   (754 )   (750 )   (746 )   (1,504 )   (30,498 ) Net income (loss) available to common shareholders   4,141     4,135     6,756     8,276     (20,229 )   Other comprehensive income (loss) - Unrealized gain (loss) on available-for-sale securities, net of income tax expense (benefit)   1,936     408     1,013     2,344     (235 )   Comprehensive income $ 6,831   $ 5,293   $ 8,515   $ 12,124   $ 10,034     Earnings (loss) per share: Basic $ 0.10   $ 0.10   $ 0.17   $ 0.21   $ (0.66 ) Diluted $ 0.10   $ 0.10   $ 0.17   $ 0.21   $ 0.66     Weighted average shares outstanding - basic   39,868,773     39,825,609     39,895,181     39,860,613     30,642,197   Weighted average shares outstanding - diluted   39,936,146     39,897,740     39,908,346     39,930,270     30,642,197                                             CENTER FINANCIAL CORPORATION SELECTED FINANCIAL DATA (Unaudited) (Dollars in thousands)     Three Months Ended 6/30/11 3/31/11 6/30/10 Interest Annualized Interest Annualized Interest Annualized Average Income/ Rate/ Average Income/ Rate/ Average Income/ Rate/ Balance Expense Yield Balance Expense Yield Balance Expense Yield Assets: Interest-earning assets: Loans $ 1,502,416 $ 20,755 5.54 % $ 1,556,504 $ 21,161 5.51 % $ 1,498,956 $ 21,359 5.72 % Federal funds sold 1,377 1 0.29 72,653 42 0.23 185,860 102 0.22 Investments 317,930 2,109 2.66 305,790 1,782 2.36 297,282 2,855 3.85 Money market funds and interest-earning deposits   304,633   211 0.28   212,244   94 0.18   51,534   33 0.26 Total interest-earning assets   2,126,356   23,076 4.35   2,147,191   23,079 4.36   2,033,632   24,349 4.80 Noninterest - earning assets: Cash and due from banks 35,636 36,484 39,325 Bank premises and equipment, net 12,981 13,432 12,845 Customers' acceptances outstanding 2,032 2,138 2,353 Accrued interest receivables 4,734 4,945 6,165 Other assets   89,766   92,925   84,064 Total noninterest-earning assets   145,149   149,924   144,752   Total assets $ 2,271,505 $ 2,297,115 $ 2,178,384   Liabilities and Shareholders' Equity: Interest-bearing liabilities: Deposits: Money market and NOW accounts $ 540,246 $ 1,419 1.05 % $ 525,538 $ 1,425 1.10 % $ 475,608 $ 1,361 1.15 % Savings 89,222 548 2.46 87,790 559 2.58 92,390 619 2.69 Time certificates of deposit over $100,000 424,761 1,240 1.17 461,539 1,418 1.25 499,851 1,816 1.46 Other time certificates of deposit   305,345   1,087 1.43   325,146   1,232 1.54   265,746   1,264 1.91 1,359,574 4,294 1.27 1,400,013 4,634 1.34 1,333,595 5,060 1.52 Other borrowed funds 160,201 1,648 4.13 184,910 1,542 3.38 167,541 1,671 4.00 Long-term subordinated debentures   18,557   142 3.07   18,557   142 3.10   18,557   143 3.09 Total interest-bearing liabilities   1,538,332   6,084 1.59   1,603,480   6,318 1.60   1,519,693   6,874 1.81 Noninterest-bearing liabilities: Demand deposits   434,702   396,251   379,059 Total funding liabilities 1,973,034 1.24 % 1,999,731 1.28 % 1,898,752 1.45 % Other liabilities   16,792   21,171   18,488 Total noninterest-bearing liabilities 451,494 417,422 397,547 Shareholders' equity   281,679   276,213   261,144 Total liabilities and shareholders' equity $ 2,271,505 $ 2,297,115 $ 2,178,384   Net interest income $ 16,992 $ 16,761 $ 17,475 Cost of deposits 0.96 % 1.05 % 1.19 % Net interest spread 2.77 % 2.76 % 2.99 % Net interest margin 3.21 % 3.17 % 3.45 %                               CENTER FINANCIAL CORPORATION SELECTED FINANCIAL DATA (Unaudited) (Dollars in thousands)       Six Months Ended 6/30/2011 6/30/2010 Interest Annualized Interest Annualized Average Income/ Rate/ Average Income/ Rate/ Balance Expense Yield Balance Expense Yield Assets: Interest-earning assets: Loans $ 1,529,311 $ 41,916 5.53 % $ 1,508,357 $ 41,957 5.61 % Federal funds sold 36,818 43 0.24 191,185 162 0.17 Investments 311,893 3,891 2.52 337,245 5,792 3.46 Money market funds and interest-earning deposits   258,694   305 0.24   52,178   70 0.27 Total interest-earning assets   2,136,716   46,155 4.36   2,088,965   47,981 4.63 Noninterest - earning assets: Cash and due from banks 36,057 39,397 Bank premises and equipment, net 13,206 13,066 Customers' acceptances outstanding 2,085 2,423 Accrued interest receivables 4,839 6,293 Other assets   91,337   83,829 Total noninterest-earning assets   147,524   145,008   Total assets $ 2,284,240 $ 2,233,973   Liabilities and Shareholders' Equity: Interest-bearing liabilities: Deposits: Money market and NOW accounts $ 532,933 $ 2,844 1.08 % $ 516,774 $ 2,664 1.04 % Savings 88,510 1,107 2.52 90,527 1,230 2.74 Time certificates of deposit over $100,000 443,049 2,658 1.21 511,735 4,173 1.64 Other time certificates of deposit   315,191   2,319 1.48   279,801   2,454 1.77 1,379,683 8,928 1.30 1,398,837 10,521 1.52 Other borrowed funds 172,487 3,190 3.73 160,133 3,274 4.12 Long-term subordinated debentures   18,557   284 3.09   18,557   283 3.08 Total interest-bearing liabilities   1,570,727   12,402 1.59   1,577,527   14,078 1.80 Noninterest-bearing liabilities: Demand deposits   415,583   374,997 Total funding liabilities 1,986,310 1.26 % 1,952,524 1.45 % Other liabilities   18,969   20,838 Total noninterest-bearing liabilities 434,552 395,835 Shareholders' equity   278,961   260,611 Total liabilities and shareholders' equity   2,284,240 $ 2,233,973   Net interest income $ 33,753 $ 33,903 Cost of deposits 1.00 % 1.20 % Net interest spread 2.76 % 2.83 % Net interest margin 3.19 % 3.27 %                           CENTER FINANCIAL CORPORATION SELECTED FINANCIAL DATA (Unaudited) (Dollars in thousands)     Non-covered Loans 6/30/11 3/31/11 12/31/10 9/30/10 6/30/10 Real Estate: Construction $ 9,525 $ 14,182 $ 14,803 $ 14,987 $ 15,052 Commercial 895,662 880,723 914,003 918,882 937,792 Commercial: Commercial 272,643 276,180 315,285 279,450 296,195 Trade Finance 65,476 66,243 71,174 65,666 53,342 SBA 104,272 100,712 101,683 69,029 60,531 Others: Consumer 67,813 69,699 71,279 68,968 71,895 Other   40,032     40,038     40,039     50,219   40,024 Non-covered Loans 1,455,423 1,447,777 1,528,266 1,467,201 1,474,831   Less: Allowance for Losses 49,590 51,010 52,047 54,460 58,435 Deferred Loan Fee (Cost) (629 ) (649 ) (523 ) 31 188 Discount on SBA Loans Retained   1,946     1,617     862     936   997 Net Non-covered Loans $ 1,404,516   $ 1,395,799   $ 1,475,880   $ 1,411,774 $ 1,415,211     Covered Loans   6/30/11     3/31/11     12/31/10     9/30/10   6/30/10 Real Estate: Construction $ - $ - $ - $ - $ - Commercial 63,332 61,599 63,500 73,043 76,280 Commercial Commercial 9,327 15,369 18,307 9,698 12,388 Trade Finance - - - - - SBA 29,456 34,102 35,000 29,022 32,438 Others: Consumer - - - - - Other   492     693     486     911   1,256 Covered Loans 102,607 111,763 117,293 112,674 122,362   Less: Allowance for Losses   1,010     1,010     1,010     -   - Net Covered Loans $ 101,597   $ 110,753   $ 116,283   $ 112,674 $ 122,362     Total Loans   6/30/11     3/31/11     12/31/10     9/30/10   6/30/10 Real Estate: Construction $ 9,525 $ 14,182 $ 14,803 $ 14,987 $ 15,052 Commercial 958,994 942,322 977,503 991,925 1,014,072 Commercial: Commercial 281,970 291,549 333,592 289,148 308,583 Trade Finance 65,476 66,243 71,174 65,666 53,342 SBA 133,728 134,814 136,683 98,051 92,969 Others: Consumer 67,813 69,699 71,279 68,968 71,895 Other   40,524     40,731     40,525     51,130   41,280 Total Loans 1,558,030 1,559,540 1,645,559 1,579,875 1,597,193   Less: Allowance for Losses 50,600 52,020 53,057 54,460 58,435 Deferred Loan Fees (629 ) (649 ) (523 ) 31 188 Discount on SBA Loans Retained   1,946     1,617     862     936   997 Net Loans $ 1,506,113   $ 1,506,552   $ 1,592,163   $ 1,524,448 $ 1,537,573     As a percentage of total loans:   6/30/11     3/31/11     12/31/10     9/30/10   6/30/10 Real Estate: Construction 0.6 % 0.9 % 0.9 % 0.9 % 0.9 % Commercial 61.6 60.4 59.4 62.8 63.5 Commercial: Commercial 18.1 18.7 20.3 18.3 19.3 Trade Finance 4.2 4.2 4.3 4.2 3.3 SBA 8.6 8.6 8.3 6.2 5.8 Others: Consumer 4.4 4.5 4.3 4.4 4.5 Other   2.5     2.6     2.6     3.2   2.7 Total Loans   100.0     100.0     100.0     100.0   100.0       6/30/11     3/31/11     12/31/10     9/30/10   6/30/10 Deposits Demand deposits (noninterest-bearing) $ 457,182 $ 408,843 $ 396,973 $ 383,508 $ 397,598 Money market accounts and NOW 530,615 531,580 471,132 497,362 505,217 Savings   90,085     88,423     87,484     89,067   94,486 1,077,882 1,028,846 955,589 969,937 997,301 Time deposits Less than $100,000 304,735 309,311 334,341 302,745 303,441 $100,000 or more   409,364     441,449     481,064     519,599   499,253 Total deposits $ 1,791,981   $ 1,779,606   $ 1,770,994   $ 1,792,281 $ 1,799,995     As a percentage of total deposits: Demand deposits (noninterest-bearing) 25.5 % 23.0 % 22.4 % 21.4 % 22.1 % Money market accounts and NOW 29.6 29.9 26.6 27.8 28.1 Savings   5.1     5.0     4.9     5.0   5.2 60.2 57.9 53.9 54.2 55.4 Time deposits Less than $100,000 17.0 17.4 18.9 16.9 16.9 $100,000 or more   22.8     24.7     27.2     28.9   27.7 Total deposits   100.0     100.0     100.0     100.0   100.0                       CENTER FINANCIAL CORPORATION SELECTED FINANCIAL DATA (Unaudited) (Dollars in thousands)         6/30/11 3/31/11 12/31/10 6/30/10 Non-covered nonperforming loans: Real estate: Construction $ 1,269 $ 5,738 $ 6,108 $ 4,540 Commercial - Real Estate 25,182 21,490 29,167 51,057 Commercial Commercial - Business 7,504 5,263 5,696 7,445 Trade Finance 355 100 - 1,196 SBA 7,885 5,278 3,896 2,972 Other Consumer   1,096   383   651   281 Total non-covered nonperforming loans 43,291 38,252 45,518 67,491 Guaranteed portion of nonperforming SBA loans   7,247   4,110   3,293   3,250 Total non-covered nonperforming loans, net of SBA guarantees 36,044 34,142 42,225 64,241 Other real estate owned   133   144   937   2,778   Total non-covered nonperforming assets, net of SBA guarantees $ 36,177 $ 34,286 $ 43,162 $ 67,019   Performing TDR's not included above $ 19,090 $ 19,894 $ 21,377 $ 17,709   Ratios: Nonperforming loans, net of SBA guarantees as a percent of total non-covered loans 2.48 % 2.36 2.76 % 4.36 % Nonperforming assets, net of SBA guarantees as a percent of non-covered loans and OREO 2.49 2.37 2.82 4.54 Allowance for loan losses to non-covered nonperforming loans, net of SBA guarantees 137.6 149.4 123.3 91.0   Delinquency: Delinquent non-covered loans 30-89 days past due, net of SBA guarantees $ 6,138 $ 10,352 $ 12,732 $ 10,666 Total non-covered nonperforming loans, net of SBA guarantees   36,044   34,142   42,225   64,241 Total delinquent non-covered loans $ 42,182 $ 44,494 $ 54,957 $ 74,907   Covered nonperforming assets: Covered nonperforming loans $ 8,898 $ 14,273 $ 15,021 $ 13,358 Covered other real estate owned   1,132   1,405   1,459   1,560 Total covered nonperforming assets $ 10,030 $ 15,678 $ 16,480 $ 14,918   Ratios: Covered nonperforming loans to total covered loans 8.67 % 12.77 % 12.81 10.92 % Covered nonperforming assets to total assets 0.44 0.69 0.73 0.66   Total nonperforming assets, net of SBA guarantees (combined): Total nonperforming loans, net of SBA guarantees $ 44,942 $ 48,415 $ 57,246 $ 77,599 Other real estate owned   1,265   1,549   2,396   4,338 Total nonperforming assets, net of SBA guarantees $ 46,207 $ 49,964 $ 59,642 $ 81,937   Ratios (combined): Nonperforming loans, net of SBA guarantees to total gross loans 2.88 % 3.10 % 3.48 % 4.86 % Nonperforming assets, net of SBA guarantees to total assets 2.04 2.21 2.63 3.60   Six Months Three Months Year Six Months Ended Ended Ended Ended 6/30/11 3/31/11 12/31/10 6/30/10 Balances (non-covered loans): Average total non-covered loans outstanding during the period $ 1,470,025 $ 1,494,492 $ 1,493,526 $ 1,517,404 Total non-covered loans outstanding at end of period $ 1,454,106 $ 1,446,808 $ 1,527,928 $ 1,473,646   Allowance for Loan Losses (non-covered loans): Balance at beginning of period $ 52,047 $ 52,047 $ 58,543 $ 58,543 Charge-offs: Construction Real Estate 1,932 371 947 - Commercial Real Estate 6,350 5,246 20,296 10,040 Commercial - Business 4,545 1,251 8,114 3,747 Trade Finance 444 200 767 251 SBA 534 370 1,075 872 Consumer 488 303 1,448 238 Other   -   -   -   - Total charge-offs 14,293 7,741 32,647 15,148 Recoveries Construction Real Estate 366 366 561 43 Commercial Real Estate 195 191 1,357 62 Commercial - Business 126 63 2,890 2,789 Trade Finance - - - - SBA 25 18 189 80 Consumer 124 66 154 66 Other   -   -   -   - Total recoveries   836   704   5,151   3,040 Net loan charge-offs 13,457 7,037 27,496 12,108 Provision for loan losses (non-covered loans)   11,000   6,000   21,000   12,000 Balance at end of period $ 49,590 $ 51,010 $ 52,047 $ 58,435   Ratios (non-covered loans): Net loan charge-offs to average non-covered loans 1.85 % 1.91 % 1.84 % 1.61 % Provision for loan losses to average non-covered loans 1.51 1.63 1.41 1.59 Allowance for loan losses to gross non-covered loans at end of period 3.41 3.53 3.41 3.97 Allowance for loan losses to non-covered nonperforming loans 114.55 133.35 114.34 86.58 Net loan charge-offs to allowance for loan losses at end of period 54.72 55.95 52.83 41.78 Net loan charge-offs to provision for loan losses 122.34 117.28 130.93 100.90                           CENTER FINANCIAL CORPORATION SELECTED FINANCIAL DATA (Unaudited)   As of and

For the Three Months Ended

As of and

For the Six Months Ended

Performance ratios: 6/30/11 3/31/11 6/30/10 6/30/11 6/30/10 Return on average assets 0.86 % 0.86 % 1.38 % 0.86 % 0.93 % Return on average equity 6.97 7.17 11.52 7.07 7.95 Efficiency ratio 55.66 53.26 43.01 54.42 45.68 Net loans to total deposits at period-end 84.05 84.66 85.42 84.05 85.42 Net loans to total assets at period-end 66.40 66.66 67.58 66.40 67.58   Capital ratios: Leverage capital ratio Consolidated Company 13.20 % 12.85 % 12.38 % Center Bank 13.04 12.67 12.09 Tier 1 risk-based capital ratio Consolidated Company 19.39 19.14 17.19 Center Bank 19.15 18.86 16.77 Total risk-based capital ratio Consolidated Company 20.67 20.42 18.47 Center Bank 20.43 20.14 18.05                         CENTER FINANCIAL CORPORATION RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES (Unaudited) (Dollars in thousands, except per share data)   6/30/11 3/31/11 12/31/10 6/30/10   Total shareholders' equity $ 285,039 $ 278,907 $ 274,012 $ 265,164

Less:

Preferred stock

(53,538 ) (53,472 ) (53,409 ) (53,286 ) Common stock warrant (1,026 ) (1,026 ) (1,026 ) (1,026 ) Intangible assets, net (434 ) (449 ) (464 ) (490 ) Tangible common equity $ 230,041 $ 223,960 $ 219,113 $ 210,362   Total assets $ 2,268,327 $ 2,260,118 $ 2,270,279 $ 2,275,143

Less:

Intangible assets, net

(434 ) (449 ) (464 ) (490 ) Tangible assets $ 2,267,893 $ 2,259,669 $ 2,269,815 $ 2,274,653   Common shares outstanding 39,913,660 39,908,514 39,914,686 39,895,111   Tangible common equity per common share $ 5.76 $ 5.61 $ 5.49 $ 5.27 Tangible common equity to tangible assets 10.14 % 9.91 % 9.65 % 9.25 %