UNITED STATES

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 ~~September 30, 2011~~March 31, 2012

¨	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: 000-50245

~~NARA~~BBCN BANCORP, INC.

(Exact name of registrant as specified in its charter)


Delaware		95-4849715
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification Number)

3731 Wilshire Boulevard, Suite 1000, Los Angeles, California		90010
(Address of Principal executive offices)		(ZIP Code)

(213) 639-1700

(Registrant’s telephone number, including area code)

(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 ¨

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 x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

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

As of ~~November 3, 2011~~March 31, 2012, there were ~~46,820,368~~77,996,391 outstanding shares of the issuer’s Common Stock, $0.001 par value.

Table of Contents


		Page
PART I FINANCIAL INFORMATION

	Forward - Looking Information		3

Item 1.	FINANCIAL STATEMENTS

	Condensed Consolidated Statements of Financial Condition ~~- September 30, 2011~~March 31, 2012 (unaudited) and December 31, ~~2010 (unaudited)~~2011		4

	Condensed Consolidated Statements of Income ~~(Loss)~~ - Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2012 and 2011 ~~and 2010~~ (unaudited)		6

	Condensed Consolidated Statements of ~~Changes in Stockholders’ Equity~~Comprehensive Income - ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2012 and 2011 ~~and 2010~~ (unaudited)		7

	Condensed Consolidated Statements of ~~Cash Flows~~Changes in Stockholders’ Equity - ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2012 and 2011 ~~and 2010~~ (unaudited)		8

	Condensed Consolidated Statements of Cash Flows - Three Months Ended March 31, 2012 and 2011 (unaudited)		9

	Notes to Condensed Consolidated Financial Statements (unaudited)		910

Item 2	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		4142

Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		6461

Item 4.	CONTROLS AND PROCEDURES		6562

PART II OTHER INFORMATION

Item 1.	Legal Proceedings		6562

Item 1A.	Risk Factors		6662

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		6662

Item 3.	Defaults Upon Senior Securities		6662

Item 4.	~~Reserved~~Mine Safety Disclosures		6662

Item 5.	Other Information		6662

Item 6.	Exhibits		6662

	Signatures		6763

	Index to Exhibits		6864

	Certifications

Forward-Looking Information

Certain matters discussed in this report may constitute forward-looking statements under Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. There can be no assurance that the results described or implied in such forward-looking statements will, in fact, be achieved and actual results, performance, and achievements could differ materially because our business involves inherent risks and uncertainties. The risks and uncertainties include: possible deterioration in economic conditions in our areas of operation; interest rate risk associated with volatile interest rates and related asset-liability matching risk; liquidity risks; risk of significant non-earning assets, and net credit losses that could occur, particularly in times of weak economic conditions or times of rising interest rates; ~~risks of available for sale securities declining significantly in value as interest rates rise;~~ and regulatory risks associated with current and future ~~regulations as well as the possibility of regulatory enforcement actions to which we are subject.~~regulations. For additional information concerning these and other risk factors, and “Part I, Item 1A. Risk Factors” contained in our Annual Report on Form 10-K for the year ended December 31, ~~2010.~~2011.

PART I

FINANCIAL INFORMATION

Item 1.

Financial Statements

~~NARA~~BBCN BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION


ASSETS	(Unaudited)					(Unaudited)
	September 30, 2011		December 31, 2010			March 31, 2012		December 31, 2011
	(Dollars in thousands, except share data)					(Dollars in thousands, except share data)
Cash and cash equivalents:
Cash and due from banks	$	32,976	$	23,916		$	79,439	$	81,785
Interest-bearing deposit at Federal Reserve Bank		142,851		148,415			284,970		217,800
Federal funds sold							1,270		525

Total cash and cash equivalents		175,827		172,331			365,679		300,110

Term federal funds sold, original maturities more than 90 days							20,000		40,000
Securities available for sale, at fair value		455,789		528,262			697,808		740,920
Loans held for sale, at the lower of cost or fair value		31,342		26,927			50,620		42,407
Loans receivable, net of allowance for loan losses (September 30, 2011 - $60,009 ; December 31, 2010 - $62,320)		2,208,119		2,085,425
Loans receivable, net of allowance for loan losses (March 31, 2012 - $62,309; December 31, 2011 - $61,952)							3,674,890		3,676,874
Other real estate owned, net		4,838		1,581			5,641		7,624
Federal Reserve Bank stock, at cost		6,372		6,367
Federal Home Loan Bank (FHLB) stock, at cost		15,561		17,717			26,064		27,373
Premises and equipment, net		9,408		10,915
Premises and equipment, net of accumulated depreciation and amortization (March 31, 2012 - $20,309; December 31, 2011 - $19,018)							20,353		20,913
Accrued interest receivable		8,257		8,648			12,253		13,439
Deferred tax assets, net		28,030		37,072			66,590		72,604
Customers’ liabilities on acceptances		9,343		11,528			12,187		10,515
Bank owned life insurance		24,677		24,117			42,819		42,514
Investments in affordable housing partnerships							14,854		15,367
Goodwill		2,509		2,509			89,882		90,473
Other intangible assets, net		302		534			3,938		4,276
Prepaid FDIC insurance		6,644		9,639			8,760		9,720
FDIC loss share receivable							11,095		10,819
Other assets		29,109		19,724			45,882		40,656

Total assets	$	3,016,127	$	2,963,296	��	$	5,169,315	$	5,166,604

~~See accompanying notes to condensed consolidated financial statements (unaudited)~~(Continued)

~~NARA~~BBCN BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION


LIABILITIES AND STOCKHOLDERS’ EQUITY	(Unaudited)						(Unaudited)
	September 30, 2011			December 31, 2010			March 31, 2012		December 31, 2011
	(Dollars in thousands, except share data)						(Dollars in thousands, except share data)
LIABILITIES:
Deposits:
Non-interest bearing	$	454,842		$	388,731		$	1,011,466	$	984,350
Interest bearing:
Money market and NOW accounts		711,748			688,593			1,240,295		1,237,378
Savings deposits		123,413			126,255			193,458		198,063
Time deposits of $100,000 or more		424,044			321,542			787,774		759,923
Other time deposits		553,149			650,993			687,471		761,178

Total deposits		2,267,196			2,176,114			3,920,464		3,940,892
Federal Home Loan Bank borrowings		300,000			350,000			332,109		344,402
Subordinated debentures		39,268			39,268			52,137		52,102
Other borrowings		701			11,758
Accrued interest payable		3,752			4,830			6,485		6,519
Acceptances outstanding		9,343			11,528			12,187		10,515
Other liabilities		12,252			11,235			27,767		16,235

Total liabilities		2,632,512			2,604,733			4,351,149		4,370,665

STOCKHOLDERS’ EQUITY:

Preferred stock, $0.001 par value - authorized 10,000,000 undesignated shares; issued and outstanding 67,000 shares of Fixed Rate Cumulative Perpetual Preferred Stock, Series A with a liquidation preference of $67,428,000 at September 30, 2011 and December 31, 2010		67,000			67,000
Preferred stock discount		(2,082	)		(2,797	)
Common stock, $0.001 par value; authorized, 150,000,000 and 100,000,000 shares at September 30, 2011 and December 31, 2010, respectively; issued and outstanding, 38,095,260 and 37,983,027 shares at September 30, 2011 and December 31, 2010, respectively		38			38
Preferred stock, $0.001 par value—authorized 10,000,000 undesignated shares; issued and outstanding 122,000 shares as of March 31, 2012 and December 31, 2011
Series A, Fixed Rate Cumulative Perpetual Preferred Stock, issued and outstanding 67,000 shares at March 31, 2012 and December 31, 2011, net, with a liquidation preference of $67,428,000 at March 31, 2012 and December 31, 2011								65,399		65,158
Series B, Fixed Rate Cumulative Perpetual Preferred Stock, issued and outstanding 55,000 shares at March 31, 2012 and December 31, 2011, net, with a liquidation preference of $55,229,000 at March 31, 2012 and December 31, 2011								54,295		54,192
Common stock, $0.001 par value; authorized, 150,000,000 shares at March 31, 2012 and December 31, 2011; issued and outstanding, 77,996,391 and 77,984,252 shares at March 31, 2012 and December 31, 2011, respectively								78		78
Capital surplus		172,065			171,364			525,123		524,644
Retained earnings		140,013			120,361			164,974		142,909
Accumulated other comprehensive income, net		6,581			2,597			8,297		8,958

Total stockholders’ equity		383,615			358,563			818,166		795,939

Total liabilities and stockholders’ equity	$	3,016,127		$	2,963,296		$	5,169,315	$	5,166,604

See accompanying notes to condensed consolidated financial statements (unaudited)

~~NARA~~BBCN BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME ~~(LOSS)~~

For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2012 and 2011 ~~and 2010~~

(Unaudited)


													Three Months Ended March 31,
	Three Months Ended September 30,						Nine Months Ended September 30,						2012			2011
	2011			2010			2011			2010			(In thousands, except share data)
INTEREST INCOME:
Interest and fees on loans	$	34,902		$	33,444		$	101,137		$	100,302		$	63,419		$	33,085
Interest on securities		3,843			3,438			11,738			11,410			4,909			3,930
Interest on federal funds sold and other investments		182			248			540			672			227			179

Total interest income		38,927			37,130			113,415			112,384			68,555			37,194

INTEREST EXPENSE:
Interest on deposits		4,977			5,968			15,198			22,194			5,403			5,131
Interest on FHLB advances		2,438			3,045			7,422			9,042			1,626			2,572
Interest on other borrowings		459			507			1,528			1,487			667			608

Total interest expense		7,874			9,520			24,148			32,723			7,696			8,311

NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES		31,053			27,610			89,267			79,661			60,859			28,883
PROVISION FOR LOAN LOSSES		3,483			11,100			18,792			78,830			2,600			5,262

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		27,570			16,510			70,475			831
NET INTEREST INCOME (LOSS) AFTER PROVISION FOR LOAN LOSSES														58,259			23,621

NON-INTEREST INCOME:
Service fees on deposit accounts		1,352			1,637			4,262			4,828			3,160			1,497
International service fees		603			633			1,842			1,785			1,224			570
Loan servicing fees, net		464			492			1,345			1,392			1,337			463
Wire transfer fees		343			289			1,013			884			741			322
Other income and fees		534			539			1,598			1,409			1,340			507
Net gains on sales of SBA loans		823			308			6,337			680			2,963			1,160
Net gains (losses) on sales of other loans		(30	)		3,725			(30	)		4,375
Net gains on sales and calls of securities available for sale		64			4			70			6,396			816			0
Net valuation losses on interest rate swaps and caps		(3	)		(226	)		(120	)		(952	)
Net valuation gains (losses) on interest rate swaps and caps														3			(11	)
Net gains on sales of OREO		108			(62	)		135			(614	)		61			2

Total non-interest income		4,258			7,339			16,452			20,183			11,645			4,510

NON-INTEREST EXPENSE:
Salaries and employee benefits		7,657			6,258			22,436			18,065			14,079			7,154
Occupancy		2,480			2,470			7,362			7,321			3,646			2,437
Furniture and equipment		984			952			2,853			2,614			1,218			935
Advertising and marketing		354			527			1,527			1,598			1,458			579
Data processing and communications		813			951			2,719			2,935			1,611			983
Professional fees		612			627			2,090			1,848			613			709
FDIC assessments		983			1,171			3,149			3,729			1,037			1,289
Credit related expenses		867			1,483			2,615			3,788			2,180			744
Merger-related expenses		574			0			1,465			0
Merger and integration expense														1,773			511
Other		1,493			1,254			4,182			3,946			2,820			1,354

Total non-interest expense		16,817			15,693			50,398			45,844			30,435			16,695

INCOME (LOSS) BEFORE INCOME TAX PROVISION (BENEFIT)		15,011			8,156			36,529			(24,830	)
INCOME TAX PROVISION (BENEFIT)		5,196			3,056			13,650			(11,521	)
INCOME BEFORE INCOME TAX PROVISION														39,469			11,436
INCOME TAX PROVISION														15,535			4,690

NET INCOME (LOSS)	$	9,815		$	5,100		$	22,879		$	(13,309	)
NET INCOME													$	23,934		$	6,746

DIVIDENDS AND DISCOUNT ACCRETION ON PREFERRED STOCK	$	(1,077	)	$	(1,073	)	$	(3,227	)	$	(3,217	)	$	(1,869	)	$	(1,075	)

NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS	$	8,738		$	4,027		$	19,652		$	(16,526	)
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS													$	22,065		$	5,671

EARNINGS (LOSS) PER COMMON SHARE
EARNINGS PER COMMON SHARE
Basic	$	0.23		$	0.11		$	0.52		$	(0.44	)	$	0.28		$	0.15
Diluted	$	0.23		$	0.11		$	0.52		$	(0.44	)	$	0.28		$	0.15

See accompanying notes to condensed consolidated financial statements (unaudited)

~~NARA~~BBCN BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF ~~CHANGES IN STOCKHOLDERS’ EQUITY~~COMPREHENSIVE INCOME

~~NINE~~THREE MONTHS ENDED ~~SEPTEMBER 30,~~MARCH 31, 2012 AND 2011 ~~AND 2010~~

(Unaudited)

            Accumulated
      Preferred       Other
   Preferred    Stock Common Stock    Capital Retained Comprehensive Comprehensive
   Stock    Discount Shares    Amount    Surplus Earnings Income (loss), net Income (loss)
   (In thousands, except share data)
BALANCE, JANUARY 1, 2010
   $ 67,000       $ (3,737 ) 37,824,007       $ 38       $ 169,806    $ 131,891    $ 2,977
Issuance of additional shares pursuant to various stock plans
      132,520          1,055
Tax effects of stock plans
            (21 )
Stock-based compensation
            271
Preferred stock cash dividends accrued (5%)
            (2,513 )
Accretion on preferred stock discount
      704          (704 )
Comprehensive income:

Net loss
            (13,309 ) $ (13,309 )
Other comprehensive income (loss):

Change in unrealized gain (loss) on securities available for sale, net of tax
            2,663    2,663
Change in unrealized gain (loss) on interest-only strips, net of tax
            1    1
Change in unrealized gain (loss) on interest rate swaps, net of tax
            (20 ) (20 )


Total comprehensive income (loss)
            $ (10,665 )








BALANCE, SEPTEMBER 30, 2010
   $ 67,000       $ (3,033 ) 37,956,527       $ 38       $ 171,111    $ 115,365    $ 5,621

               Accumulated
      Preferred          Other
   Preferred    Stock Common Stock    Capital    Retained Comprehensive Comprehensive
   Stock    Discount Shares    Amount    Surplus    Earnings Income (loss), net Income (loss)
   (In thousands, except share data)
BALANCE, JANUARY 1, 2011
   $ 67,000       $ (2,797 ) 37,983,027       $ 38       $ 171,364       $ 120,361    $ 2,597
Issuance of additional shares pursuant to various stock plans
      112,233          510
Tax effects of stock plans
            139
Stock-based compensation
            52
Preferred stock cash dividends accrued (5%)
               (2,512 )
Accretion of preferred stock discount
      715             (715 )
Comprehensive income:

Net income
               22,879    22,879
Other comprehensive income (loss):

Change in unrealized gain on securities available for sale, net of tax
               3,999    3,999
Change in unrealized gain on interest-only strips, net of tax
               5    5
Change in unrealized gain (loss) on interest rate swaps, net of tax
               (20 ) (20 )


Total comprehensive income (loss)
               26,863










BALANCE, SEPTEMBER 30, 2011
   $ 67,000       $ (2,082 ) 38,095,260       $ 38       $ 172,065       $ 140,013    $ 6,581

~~See accompanying notes to consolidated financial statements (unaudited).~~

~~NARA BANCORP, INC. AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~NINE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010~~

~~(Unaudited)~~

   Nine Months Ended
   September 30,
   2011 2010
   (In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES

Net income (loss)
   $ 22,879    $ (13,309 )
Adjustments to reconcile net loss to net cash from operating activities:

Depreciation, amortization, net of discount accretion
   6,242    8,600
Stock-based compensation expense
   52    271
Provision for loan losses
   18,792    78,830
Valuation adjustment of loans held for sale
   35    0
Valuation adjustment of OREO
   491    1,891
Proceeds from sales of loans
   82,849    93,373
Originations of loans held for sale
   (57,713 ) (18,921 )
Deferred gain on transfer of assets
   0    (790 )
Net gains on sales of SBA and other loans
   (6,307 ) (5,055 )
Net change in bank owned life insurance
   (560 ) (362 )
Net gains on sales and calls of securities available for sale
   (70 ) (6,396 )
Net (gains) losses on sales of OREO
   (135 ) 614
Net losses on dispositions of furniture and equipment
   18    14
Net valuation losses on interest rate swaps and caps
   120    952
Tax benefits from stock options exercised
   139    0
Change in accrued interest receivable
   391    2,655
Change in deferred income taxes
   6,524    (11,066 )
Change in prepaid FDIC insurance
   2,995    3,371
Change in other assets
   (9,534 ) 1,358
Change in accrued interest payable
   (1,078 ) (7,832 )
Change in other liabilities
   1,017    (3,580 )


Net cash provided by operating activities
   67,147    124,618


CASH FLOWS FROM INVESTING ACTIVITIES

Net change in loans receivable
   (171,323 ) (104,197 )
Proceeds from sales of securities available for sale
   0    208,141
Proceeds from sales of OREO
   2,945    8,408
Purchase of premises and equipment
   (833 ) (2,452 )
Purchase of securities available for sale
   (64,517 ) (96,741 )
Purchase of Federal Reserve Bank stock
   (5 ) (1,963 )
Redemption of Federal Home Loan Bank Stock
   2,156    1,480
Proceeds from matured, called, or paiddown securities available for sale
   139,903    196,159


Net cash provided by (used in) investing activities
   (91,674 ) 208,835


CASH FLOWS FROM FINANCING ACTIVITIES

Net change in deposits
   91,082    (231,534 )
Net change in secured borrowings
   (11,057 ) 8,129
Payment of cash dividends on Preferred Stock
   (2,512 ) (2,513 )
Proceeds from FHLB borrowings
   0    10,000
Repayment of FHLB borrowings
   (50,000 ) (10,000 )
Issuance of additional stock pursuant to various stock plans
   510    1,055
Tax effects on issuance of shares from stock plan
   0    (21 )


Net cash used in financing activities
   28,023    (224,884 )


NET CHANGE IN CASH AND CASH EQUIVALENTS
   3,496    108,569
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
   172,331    125,592


CASH AND CASH EQUIVALENTS, END OF PERIOD
   $ 175,827    $ 234,161


SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Interest paid
   $ 25,226    $ 40,555
Income taxes paid
   $ 15,182    $ 146
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTMENT ACTIVITIES

Transfer from loans receivable to other real estate owned
   $ 6,558    $ 12,460
Transfer from loan receivables to loans held for sale
   $ 23,279    $ 76,752


	Three Months Ended March 31,
	2012			2011
		(In thousands)
Net income	$	23,934		$	6,746
Other comprehensive income (loss):
Unrealized loss on securities available for sale and interest only strips		(312	)		(257	)
Reclassification adjustments for gains realized in income		(816	)		0
Tax expense (benefit)		(474	)		(95	)

Change in unrealized loss on securities available for sale and interest only strips		(654	)		(162	)
Reclassification adjustment for the deferred gain on early settlement of interest-rate caps		(11	)		(11	)
Tax expense (benefit)		(4	)		(4	)
Change in unrealized gain on interest-rate caps		(7	)		(7	)

Total other comprehensive loss		(661	)		(169	)

Total comprehensive income	$	23,273		$	6,577

See accompanying notes to condensed consolidated financial statements (unaudited)

BBCN BANCORP, INC. AND SUBSIDIARIES

~~Nara~~CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

THREE MONTHS ENDED MARCH 31, 2012 AND 2011

(Unaudited)


			Common Stock
	Preferred Stock		Shares		Amount		Capital Surplus		Retained Earnings			Accumulated Other Comprehensive Income (loss), net
		(In thousands, except share data)
BALANCE, JANUARY 1, 2011	$	64,203		37,983,027	$	38	$	171,364	$	120,361		$	2,597
Issuance of additional shares pursuant to various stock plans				10,300				6
Tax effects of stock plans
Stock-based compensation								27
Preferred stock cash dividends accrued (5%)										(837	)
Accretion of preferred stock discount		238								(238	)
Comprehensive income:
Net income										6,746
Other comprehensive income (loss):
Change in unrealized gain on securities available for sale, net of tax													(164	)
Change in unrealized gain on interest-only strips, net of tax													2
Change in unrealized gain (loss) on interest-rate caps, net of tax													(7	)

BALANCE, MARCH 31, 2011	$	64,441		37,993,327	$	38	$	171,397	$	126,032		$	2,428

BALANCE, JANUARY 1, 2012	$	119,350		77,984,252	$	78	$	524,644	$	142,909		$	8,958
Issuance of additional shares pursuant to various stock plans				12,139				81
Tax effects of stock plans
Stock-based compensation								398
Preferred stock cash dividends accrued (5%)										(1,525	)
Accretion of preferred stock discount		344								(344	)
Comprehensive income:
Net income										23,934
Other comprehensive income (loss):
Change in unrealized gain on securities available for sale, net of tax													(656	)
Change in unrealized gain on interest-only strips, net of tax													2
Change in unrealized gain (loss) on interest-rate caps, net of tax													(7	)

BALANCE, MARCH 31, 2012	$	119,694		77,996,391	$	78	$	525,123	$	164,974		$	8,297

See accompanying notes to condensed consolidated financial statements (unaudited)

BBCN BANCORP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED MARCH 31, 2012 AND 2011

(Unaudited)


	Three Months Ended
	March 31,
	2012			2011
	(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	23,934		$	6,746
Adjustments to reconcile net income to net cash from operating activities:
Depreciation, amortization, net of discount accretion		2,023			2,293
Stock-based compensation expense		398			27
Provision for loan losses		2,600			5,262
Valuation adjustment of loans held for sale		668			0
Valuation adjustment of OREO		390			27
Proceeds from sales of loans		37,904			11,695
Originations of loans held for sale		(43,822	)		(20,326	)
Deferred gain on transfer of assets		0			(1,474	)
Net gains on sales of SBA and other loans		(2,963	)		(1,160	)
Net change in bank owned life insurance		(305	)		(184	)
Net gains on sales and calls of securities available for sale		(816	)		0
Net gains on sales of OREO		(61	)		(2	)
Net valuation losses on interest rate swaps and caps		(3	)		11
Change in accrued interest receivable		1,186			(83	)
Change in deferred income taxes		6,058			2,391
Change in prepaid FDIC insurance		960			1,181
Change in investments in affordable housing partnership		513			0
Change in FDIC loss share receivable		(27	)		0
Change in other assets		(5,227	)		628
Change in accrued interest payable		(34	)		(97	)
Change in other liabilities		12,197			2,774

Net cash provided by operating activities		35,573			9,709

CASH FLOWS FROM INVESTING ACTIVITIES
Net change in loans receivable		(1,028	)		(14,680	)
Proceeds from sales of securities available for sale		1,883			0
Proceeds from sales of OREO		2,066			422
Proceeds from matured term federal funds		40,000			0
Proceeds from sales of equipment		3			0
Purchase of premises and equipment		(752	)		(397	)
Purchase of securities available for sale		0			(19,808	)
Redemption of Federal Home Loan Bank Stock		1,309			702
Purchase of term federal funds		(20,000	)		0
Proceeds from matured, called, or paiddown securities available for sale		39,334			34,359

Net cash provided by (used in) investing activities		62,815			598

CASH FLOWS FROM FINANCING ACTIVITIES
Net change in deposits		(20,428	)		(16	)
Net change in secured borrowings		0			3,550
Payment of cash dividends on Preferred Stock		(1,410	)		(837	)
Proceeds from FHLB borrowings		0			0
Repayment of FHLB borrowings		(11,062	)		(50,000	)
Issuance of additional stock pursuant to various stock plans		81			6
Tax effects on issuance of shares from stock plan		0			0

Net cash used in financing activities		(32,819	)		(47,297	)

NET CHANGE IN CASH AND CASH EQUIVALENTS		65,569			(36,990	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		300,110			172,331

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	365,679		$	135,341

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid	$	7,730		$	8,408
Income taxes paid (refunds received)	$	(4,250	)	$	45
SUPPLEMENTAL DISCLOSURES OF NON-CASH ACTIVITIES
Transfer from loans receivable to other real estate owned	$	412		$	1,574
Transfer from loan receivables to loans held for sale	$	0		$	2,496
Non-cash goodwill adjustment, net	$	591		$	0

See accompanying notes to condensed consolidated financial statements (unaudited)

BBCN Bancorp, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

~~Nara~~BBCN Bancorp, Inc.

~~Nara~~BBCN Bancorp, Inc. (“~~Nara~~BBCN Bancorp”, on a parent-only basis, and “Company,” “we” or “our” on a consolidated basis), ~~incorporated under the laws of the State of Delaware in 2000,~~formerly named Nara Bancorp, Inc., is a bank holding company headquartered in Los Angeles, ~~California, offering a full range of commercial banking and certain consumer financial services through its wholly owned subsidiary, Nara~~California. BBCN Bank (“~~Nara~~BBCN Bank” or “the Bank”)., formerly named Nara Bank, opened for business in June 1989 under the name “United Citizens National Bank” as a national banking association, was renamed “Nara Bank, National Association” in January 1994 and, in January 2005, became “Nara Bank” upon converting to a California state-chartered bank in connection with its holding company reorganization transaction. On November 30, 2011, we merged with Center Financial Corporation (“Center Financial” or “Center”) in a merger of equals transaction. Concurrently with the merger, Nara Bancorp, Inc. (“Nara”) changed its name to “BBCN Bancorp, Inc.” At the bank level, Nara Bank merged into Center Bank, and concurrently with the merger, Center Bank changed its name to “BBCN Bank.” The Bank has branches in California, the New York metropolitan area, ~~and Northern~~ New Jersey, Washington and Chicago as well as a loan production ~~office~~offices located in Dallas, ~~Texas that, in the current market, is primarily engaged in servicing loans previously made through the office.~~Seattle and Denver.

On December 9, 2010, we entered into a definitive agreement to merge with Center Financial in an all stock transaction valued at $285.7 million, or approximately $7.16 per Center Financial share based on the closing price on December 8, 2010. As of November 3, 2011, the transaction was valued at $277.4 million, or approximately $5.81 per Center Financial common share. The boards of directors of both companies each unanimously approved the merger and all required regulatory approvals for the merger have been received. Subject to the satisfaction of certain other customary closing conditions, we expect to complete the merger by November 30, 2011.

Upon consummation of the merger, each share of common stock of Center Financial issued and outstanding immediately prior to the effective time of the merger will be converted into 0.7804 of a share of common stock of Nara Bancorp, subject to the payment of cash in lieu of the issuance of fractional shares. Based on the number of shares Center Financial common stock outstanding on the date of the merger agreement and not including the effect of outstanding in-the-money options, this will result in approximately 31.1 million Nara Bancorp common shares being exchanged for approximately 39.9 million outstanding Center Financial common shares, subject to adjustment in certain limited circumstances. Historical Nara Bancorp shareholders will own 49% of the combined company and historical Center Financial shareholders will own 40%, not including shares of Nara common stock issued in a common stock offering completed by Nara on October 31, 2011. Please see Note 15, Subsequent Event for further information.

In addition, the merger agreement provides that the Fixed Rate Cumulative Perpetual Preferred Stock, Series A that Center Financial issued to the United States Treasury Department pursuant to the Capital Purchase Program portion of the Treasury Department’s Troubled Asset Relief Program, or TARP, will be converted into a new series of Nara Preferred Stock to be designated Fixed Rate Cumulative Perpetual Preferred Stock, Series B, having substantially the same rights, preferences, privileges and voting powers as Center Financial Corporation’s Series A Preferred Stock.

~~See “Item 1.A. Risk Factors – Risks Relating to the Center Merger” included in our 2010 Annual Report on Form 10-K for a description of risks relating to the merger.~~

Basis of Presentation

Our condensed consolidated financial statements included herein have been prepared without an audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such SEC rules and regulations.

The condensed consolidated financial statements include the accounts of ~~Nara~~BBCN Bancorp and its wholly owned subsidiaries, principally ~~Nara~~BBCN Bank. All intercompany transactions and balances have been eliminated in consolidation.

We believe that we have made all adjustments, consisting solely of normal recurring accruals, necessary to fairly present our financial position at ~~September 30, 2011~~March 31, 2012 and the results of our operations for the ~~three- and nine-month periods~~three months then ended. Certain reclassifications have been made to prior period amounts to conform to the current year presentation. The results of operations for the interim periods are not necessarily indicative of results to be anticipated for the full year.

These unaudited condensed consolidated financial statements should be read along with the audited consolidated financial statements and accompanying notes included in our ~~2010~~2011 Annual Report on Form 10-K.

Adoption of New Accounting Standards:

FASB ASU 2010-29, “Business Combinations (Topic 805), Disclosure of Supplementary Pro Forma Information for Business Combinations — This ASU specifies that if a public entity presents comparative financial statements, the entity (acquirer) should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. The ASU also expands the supplemental pro forma disclosures under Topic 805 to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. We are evaluating the impact of adoption of ASU 2011-05 on its disclosures in the consolidated financial statements upon the consummation of anticipated merger with Center Financial.

FASB ASU 2011-02, “Receivable (Topic 310), Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses” — ASU 2011-02 clarifies the guidance for evaluating whether a restructuring constitutes a troubled debt restructuring (‘TDR”). The guidance requires that a creditor separately conclude that both of the following exist: i) The restructuring constitutes a concession, ii) The debtor is experiencing financial difficulties. In addition, the guidance clarifies that a creditor is precluded from using the effective interest rate test in the debtor’s guidance on restructuring of payables when evaluating whether a restructuring constitutes a TDR. The amendments in ASU 2011-02 are effective for the first interim or annual period beginning on or after June 15, 2011, and should be applied retrospectively to the beginning of the annual period of adoption. We adopted ASU 2011-02 on its disclosures in the consolidated financial statements effective third quarter of 2011.

~~Newly Issued But Not Yet Effective Accounting Standards:~~

~~FASB~~ASB ASU 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs (Topic 820)”—This ASU provides guidance on fair value measurement and disclosure requirements that the FASB deemed largely identical across U.S. GAAP and IFRS. The requirements do not extend the use of fair value accounting, but provide guidance on how it should be applied where its use is already required or allowed. ASU 2011-04 supersedes most of the guidance in ASC topic 820, but many of the changes are clarifications of existing guidance or wording changes to reflect IFRS 13. Amendments in ASU 2011-04 change the wording used to describe U.S. GAAP requirements for fair value and disclosing information about fair value measurements. ASU 2011-04 is effective for interim and annual reporting periods beginning after December 15, 2011, and early application is not permitted. ~~Adoption of~~We adopted ASU 2011-04 ~~is not expected to have a significant impact~~ on ~~our~~its guidance and disclosures in the consolidated financial ~~condition or result of operations.~~statements effective first quarter 2012.

FASB ASU 2011-05, “Presentation of Comprehensive Income (Topic 220)”— This ASU is intended to improve the comparability, consistency, and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income. To increase the prominence of items reported in other comprehensive income and to facilitate convergence of U.S. GAAP and IFRS, the FASB decided to eliminate the option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity, among other amendments in this Update. These amendments apply to all entities that report items of other comprehensive income, in any period presented. Under the amendments to Topic 220, an entity has the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. ~~The amendments~~However, based on an amendment,FASB ASU 2011-12, “Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05,” issued in December 2011, companies are not required to present separate line items on the income statement for reclassifications adjustments of items out of accumulated other comprehensive income into net income as would have been required under the initial standard. Companies are required to present reclassification adjustments within other comprehensive income or in the notes to the financial statements. We adopted ASU 2011-05 ~~are~~and presented the components of net income, the components of other comprehensive income, and total comprehensive income in two consecutive statements effective fiscal years, and interim periods within those years, beginning after December 15, 2011. Adoption of ASU 2011-05 is not expected to have a significant impact on our financial condition or result of operations.first quarter 2012.

FASB ASU 2011-08, ~~“Intangibles -~~ “Intangibles—Goodwill and Other (Topic 350); Testing Goodwill for Impairment”—This ASU permits an entity to make a qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount before applying the two-step goodwill impairment test. If an entity can support the conclusion that is is not more likely than not that the fair value of a reporting unit is less than its carrying amount, it would not need to perform the two-step impairment test for that reporting unit. The ASU is effective for annual and interim goodwill impairment tests performed in fiscal years beginning after December 15, 2011. ~~Adoption of~~We adopted ASU 2011-08 ~~is not expected to have a significant impact on our financial condition or result of operations.~~effective first quarter 2012.

Center Merger

On November 30, 2011, the merger of Center and Nara was completed. Pursuant to the merger agreement, holders of Center common stock received 0.7805 of a share of common stock of BBCN for each share of Center common stock held immediately prior to the effective time of the merger, rounded to the nearest whole share, plus cash in lieu of the issuance of fractional shares, resulting in our issuance of approximately 31.2 million shares of Company common stock, with a merger date

fair value of $292 million. Outstanding Center stock options and restricted stock awards were converted into stock options with respect to shares of BBCN common stock or shares of BBCN common stock, respectively, with appropriate adjustments to reflect the exchange ratio.

The merger was accounted for by BBCN using the acquisition method of accounting under ASC 805, Business Combinations. Accordingly, the assets and liabilities of Center were recorded at their respective fair values and represent management’s estimates based on available information. Through the merger with Center, we acquired Center Bank’s 21 full-service branch offices as well as two Loan Production Offices, $326 million in cash, loans with a fair value of $1.4 billion, and core deposit intangibles of $4 million, as well as deposits with a fair value of $1.8 billion, and borrowings with a fair value of $149 million. Goodwill of approximately $88 million was initially recorded in conjunction with the transaction. The goodwill arising from the merger is intangible future benefit to the Company of acquiring Center Financial, thereby creating a platform for future operations, strengthening our presence in the primary existing markets in Southern California, expanding our national presence through the addition of Center’s offices in Chicago, Seattle and Northern California. The results of Center’s operations are included in our Consolidated Statements of Income from the date of merger.

The change in goodwill during the three months ended March 31, 2012 and 2011 is as follows:


	2012			2011
	(In Thousands)
Beginning of period	$	90,473		$	2,509
Adjustment		(591	)		0
Impairment		0			0

End of period	$	89,882		$	2,509

The goodwill arising from the Center merger was reduced by a net $591 thousand to $87.4 million due to adjustments of certain acquisition date fair value asset and liability estimates during first quarter 2012. There are a number of estimates made in the acquisition accounting as of the acquisition date that may be subject to revisions during the subsequent one-year measurement period. Due to the immateriality of the revision amount, the Company elected not to retrospectively adjust the acquisition date accounting and instead recorded the adjustments in first quarter 2012. Goodwill is not amortized for book purposes and is not deductible for tax purposes.

Direct costs related to the Center merger were expensed as incurred. During the three months ended March 31, 2012, we incurred $1.8 million in merger and integration expenses, including $0.6 million in salaries and benefits, $1.0 million in professional fees and other non-interest expenses of $0.1 million. During the three months ended March 31, 2011, we incurred $511 thousand in merger and integration expenses.

4. Stock-Based Compensation

The Company has a stock based incentive plan, the 2007 ~~Nara~~BBCN Bancorp ~~Inc.~~ Equity Incentive Plan (“2007 Plan”). The 2007 Plan, which was approved by our stockholders on May 31, 2007 as amended and restated on July 25, 2007 and again on December 1, 2011, provides for grants of stock options, stock appreciation rights (“SARs”), restricted stock, performance shares and performance units (sometimes referred to individually or collectively as “awards”) to non-employee directors, officers, employees and consultants of the Company. Stock options may be either “incentive stock options” (“ISOs”), as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), or nonqualified stock options (“NQSOs”).

The 2007 Plan gives the Company flexibility to (i) attract and retain qualified non-employee directors, executives and other key employees and consultants with appropriate equity-based awards, (ii) motivate high levels of performance, (iii) recognize employee contributions to the Company’s success, and (iv) align the interests of Plan participants with those of the Company’s stockholders. The exercise price for shares under an ISO may not be less than 100% of fair market value (“FMV”) on the date the award is granted under Code Section 422. Similarly, under the terms of the 2007 Plan the exercise price for SARs and NQSOs may not be less than 100% of FMV on the date of grant. Performance units are awarded to a participant at the market price of the Company’s common stock on the date of award (after the lapse of the restriction period and the attainment of the performance criteria). No minimum exercise price is prescribed for performance shares and restricted stock awarded under the 2007 Plan.

ISOs, SARs and NQSOs have vesting periods of three to five years and have 10-year contractual terms. Restricted stock, performance shares, and performance units will be granted with a restriction period of not less than one year from the grant date for performance-based awards and not ~~less~~more than three years from the grant date for time-based vesting of grants. Compensation expense for awards is recorded over the vesting period.

Upon the merger with Center Financial Corporation effective November 30, 2011, the former Center’s stock based incentive plan the Center Financial Corporation 2006 Stock Incentive Plan, adopted April 12, 2006, as amended and restated June 13, 2007 (“2006 Plan”) converted the outstanding share awards of 585,860 shares and 2,443,513 shares available for future grants at November 30, 2011 at an exchange ratio of 0.7805.

The 2006 Plan provides for the granting of incentive stock options to officers and employees, and non-qualified stock options and restricted stock awards to employees (including officers) and non-employee directors. The options prices of all options granted under the 2006 Plan must be not less than 100% of the fair market value at the date of grant. All options granted generally vest at the rate of 20% per year except that the options granted to the non-employee directors vest at the rate of 33 1/3% per year. All options not exercised generally expire ten years after the date of grant.

From both 2006 and 2007 ~~Plan reserves 1,300,000 shares for issuance. 1,231,000~~plans, 2,637,000 shares were available for future grants as of ~~September 30, 2011.~~March 31, 2012.

The total shares reserved for issuance will serve as the underlying value for all equity awards under the 2007 Plan and the 2006 Plan. With the exception of the shares underlying stock options and restricted stock awards, the board of directors may choose to settle the awards by paying the equivalent cash value or by delivering the appropriate number of shares.

The stock plan adopted in 2000, under which options and restricted units were previously granted to employees, officers, and directors of the Company, is no longer active and no additional equity awards may be granted under the plan. Options under the 2000 Plan were granted with an exercise price equal to the fair market value on the date of grant with vesting periods from three to five years and have 10-year contractual terms. Some restricted units were awarded under the 2000 plan to participants at the fair market value of the Company’s common stock on the date of award and all units granted under this plan were fully vested on the third anniversary of the grant. Compensation expense for the awards was recorded over the vesting period.

~~The~~ following is a summary of stock option activity under the Plan for the ~~nine~~three months ended ~~September 30, 2011:~~March 31, 2012:


	Number of Shares			Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value		Number of Shares			Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding - January 1, 2011		493,250		$	9.82
Outstanding - January 1, 2012											830,011		$	16.35
Granted		0			0						0			0
Exercised		(106,000	)		5.00						(12,139	)		7.07
Forfeited		0			0						0			0

Outstanding - September 30, 2011		387,250		$	11.13		2.50	$	4,000
Outstanding - March 31, 2012											817,872		$	16.49		6.07	$	707,000

Options exercisable - September 30, 2011		387,250		$	11.13		2.50	$	4,000
Options exercisable - March 31, 2012											787,588		$	16.33		5.93	$	707,000
Unvested options expected to vest after March 31, 2012											30,284		$	20.73		9.67	$	0

The following is a summary of restricted and performance unit activity under the Plan for the ~~nine~~three months ended ~~September 30, 2011:~~March 31, 2012:

   Number of
Shares Weighted-
Average
Grant
Date Fair
Value    Weighted-
Average
Remaining
Contractual
Life (Years)
Outstanding - January 1, 2011
   36,200    $ 8.25
Granted
   5,000    8.37
Vested
   (9,200 ) 11.61
Forfeited
   0    0



Outstanding - September 30, 2011
   32,000    $ 7.30       8.59

   Number of
Shares    Weighted-
Average
Grant
Date Fair
Value    Weighted-
Average
Remaining
Contractual
Life (Years)
Outstanding - January 1, 2012
   52,480       $ 7.42
Granted
   490,710       10.42
Vested
   0       0
Forfeited
   0       0



Outstanding - March 31, 2012
   543,190       $ 10.20       9.76

The total fair value of performance units vested for the ~~nine~~three months ending ~~September 30,~~March 31, 2012 and 2011 was $0 and ~~2010 was $56 thousand and $59~~$79 thousand, respectively.

The amount charged against income, before income tax benefit of $5$169 thousand and ~~$12~~$11 thousand, in relation to the stock-based payment arrangements, was ~~$13~~$398 thousand and ~~$32~~$27 thousand for the three months ending ~~September 30,~~March 31, 2012 and 2011, and 2010, respectively. The amount charged against income, before income tax benefit of $21 thousand and $27 thousand, in relation to the stock-based payment arrangements was $52 thousand and $271 thousand for the nine months ending September 30, 2011 and 2010, respectively. At ~~September 30, 2011,~~March 31, 2012, unrecognized compensation expense related to non-vested stock option grants and restricted and performance units aggregated ~~$188 thousand,~~$5.0 million, and is expected to be recognized over a remaining weighted average vesting period of ~~2.34~~1.7 years.

The estimated annual stock-based compensation expense as of ~~September 30, 2011~~March 31, 2012 for each of the succeeding years is indicated in the table below:


	Stock Based Compensation Expense		Stock Based Compensation Expense
	(In thousands)		(In thousands)
Remainder of 2011	$	13
Remainder of 2012			$	2,235
For the year ended December 31:
2012		52
2013		53		1,404
2014		46		651
2015		24		630
2016				86

Total	$	188	$	5,006

4.5.

Earnings Per Share (“EPS”)

Basic EPS does not reflect the possibility of dilution that could result from the issuance of additional shares of common stock upon exercise or conversion of outstanding securities, and is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if stock options or other contracts to issue common stock were exercised or converted to common stock that would then share in our earnings. For the three months ended ~~September 30,~~March 31, 2012 and 2011, ~~and 2010,~~ stock options and restricted shares awards for approximately ~~381,000~~564,000 shares and 464,000 shares of common stock were excluded in computing diluted earnings per common share because they were antidilutive. For the nine months ended September 30, 2011 and 2010, stock options and restricted shares awards for approximately 376,000 shares and 623,000150,000 shares of common stock were excluded in computing diluted earnings per common share because they were antidilutive. Additionally, warrants to purchase 337,480 shares and 521,266 shares of common stock (related to the TARP Capital Purchase Plan) were also antidilutive and excluded for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2012 and 2011, ~~and 2010.~~respectively.

The following table shows the computation of basic and diluted EPS for the three ~~and nine~~ months ended ~~September 30, 2011~~March 31, 2012 and ~~2010.~~2011.

   For the three months ended September 30,
   2011    2010
   Net income
available to
common
stockholders
(Numerator) Shares
(Denominator)    Per
Share
(Amount) �� Net income
available to
common
stockholders
(Numerator) Shares
(Denominator)    Per
Share
(Amount)
   (Dollars in thousands, except share and per share data)
Net income as reported
   $ 9,815          $ 5,100
Less: preferred stock dividends and accretion of preferred stock discount
   (1,077 )       (1,073 )





Basic EPS - common stock
   $ 8,738    38,098,142       $ 0.23       $ 4,027    37,956,527       $ 0.11




Effect of Dilutive Securities:

Stock Options and Performance Units
   5,541          48,241
Common stock warrants
   0          0





Diluted EPS - common stock
   $ 8,738    38,103,683       $ 0.23       $ 4,027    38,004,768       $ 0.11


	For the nine months ended September 30,															For the three months ended March 31,
	2011							2010								2012							2011
	Net income available to common stockholders (Numerator)			Shares (Denominator)		Per Share (Amount)		Net income available to common stockholders (Numerator)			Shares (Denominator)		Per Share (Amount)			Net income available to common stockholders (Numerator)			Shares (Denominator)		Per Share (Amount)		Net income available to common stockholders (Numerator)			Shares (Denominator)		Per Share (Amount)
	(Dollars in thousands, except share and per share data)															(Dollars in thousands, except share and per share data)
Net income (loss) as reported	$	22,879						$	(13,309	)
Net income as reported																$	23,934						$	6,746
Less: preferred stock dividends and accretion of preferred stock discount		(3,227	)						(3,217	)							(1,869	)						(1,075	)

Basic EPS - common stock	$	19,652			38,044,625	$	0.52	$	(16,526	)		37,902,809	$	(0.44	)	$	22,065			77,987,342	$	0.28	$	5,671			37,987,345	$	0.15

Effect of Dilutive Securities:
Stock Options and Performance Units					25,516							0								73,323							105,622
Common stock warrants					0							0								41,153							5,881

Diluted EPS - common stock	$	19,652			38,070,141	$	0.52	$	(16,526	)		37,902,809	$	(0.44	)	$	22,065			78,101,818	$	0.28	$	5,671			38,098,848	$	0.15

5.6. Securities Available for Sale

The following ~~table summarizes the amortized cost, estimated fair value and distribution~~is a summary of ~~our investment~~ securities ~~portfolio~~available for sale as of the dates indicated:

   At September 30, 2011
   Amortized
Cost    Gross
Unrealized
Gains    Gross
Unrealized
Losses Estimated
Fair Value
   (In thousands)
Available for Sale

Debt securities *:

GSE bonds
   $ 51,015       $ 752       $ 0    $ 51,767
GSE collateralized mortgage obligations
   112,055       3,481       (60 ) 115,476
GSE mortgage-backed securities
   263,862       6,931       (31 ) 270,762
Corporate note
   4,484       0       (1,078 ) 3,406
Municipal bonds
   5,257       401       0    5,658






Total debt securities
   436,673       11,565       (1,169 ) 447,069
Mutual funds - GSE mortgage related securities
   8,462       258       0    8,720






   $ 445,135       $ 11,823       $ (1,169 ) $ 455,789

   At December 31, 2010
   Amortized
Cost    Gross
Unrealized
Gains    Gross
Unrealized
Losses Estimated
Fair Value
   (In thousands)
Available for Sale

Debt securities*:

GSE bonds
   $ 125,429       $ 1,059       $ (770 ) $ 125,718
GSE collateralized mortgage obligations
   101,312       2,146       (257 ) 103,201
GSE mortgage-backed securities
   282,205       4,628       (1,999 ) 284,834
Corporate note
   4,473       0       (765 ) 3,708
Municipal bonds
   5,258       55       (31 ) 5,282






Total debt securities
   518,677       7,888       (3,822 ) 522,743
Mutual funds - GSE mortgage related securities
   5,462       57       0    5,519






   $ 524,139       $ 7,945       $ (3,822 ) $ 528,262


	At March 31, 2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(In thousands)
Debt securities:
U.S. Treasury	$	300	$	0	$	0		$	300
GSE collateralized mortgage obligations*		206,679		4,717		0			211,396
GSE mortgage-backed securities*		453,091		9,537		(130	)		462,498
Trust preferred security		4,491		0		(793	)		3,698
Municipal bonds		4,507		511		0			5,018

Total debt securities		669,068		14,765		(923	)		682,910
Mutual funds - GSE mortgage related securities		14,709		217		(28	)		14,898

	$	683,777	$	14,982	$	(951	)	$	697,808


	At December 31, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(In thousands)
Debt securities:
U.S. Treasury	$	300	$	0	$	0		$	300
GSE collateralized mortgage obligations*		222,400		5,480		(44	)		227,836
GSE mortgage-backed securities*		477,555		10,322		(123	)		487,754
Trust preferred securities		5,532		0		(1,184	)		4,348
Municipal bonds		5,257		507		0			5,764

Total debt securities		711,044		16,309		(1,351	)		726,002
Mutual funds - GSE mortgage related securities		14,710		227		(19	)		14,918

	$	725,754	$	16,536	$	(1,370	)	$	740,920

*	As of ~~September 30, 2011~~March 31, 2012 and December 31, ~~2010,~~2011, Government Sponsored Enterprises (GSE) included GNMA, FHLB, FNMA, FHLMC, and FFCB, and are all residential ~~property-based~~based investments.

As of March 31, 2012 and December 31, 2011, there were no holdings of securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of stockholders’ equity.

The proceeds from sales of securities and the associated gains are listed below:


	For the three months ended September 30,				For the nine months ended September 30,				For the three months ended March 31,
	2011		2010		2011		2010		2012		2011
	(In thousands)								(In thousands)
Proceeds	$	0	$	0	$	0	$	208,141	$	1,883	$	0
Gross gains		0		0		0		6,296		816		0
Gross losses		0		0		0		0		0		0

The amortized cost and estimated fair value of debt securities at ~~September 30, 2011,~~March 31, 2012, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately.


	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
	(In thousands)				(In thousands)
Available for sale:
Due within one year	$	0	$	0	$	300	$	300
Due after one year through five years		340		358		340		359
Due after five years through ten years		1,652		1,813		2,480		2,770
Due after ten years		58,765		58,659		6,178		5,587
GSE collaterized mortgage obligations		112,054		115,476		206,679		211,396
GSE mortgage-backed securities		263,862		270,763		453,091		462,498
Mutual funds - GSE mortgage related securities		8,462		8,720		14,709		14,898

	$	445,135	$	455,789	$	683,777	$	697,808

Securities with carrying values of approximately ~~$243.2~~$398.1 million and ~~$270.3~~$425.5 million at ~~September 30, 2011~~March 31, 2012 and December 31, ~~2010,~~2011, respectively, were pledged to secure public deposits, various borrowings and for other purposes as required or permitted by law.

The following table shows our investments’ gross unrealized losses and estimated fair value, aggregated by investment category and the length of time that the individual securities have been in a continuous unrealized loss position as of the dates indicated.

At September 30, 2011    Less than 12 months 12 months or longer Total
Description of
Securities
   Number of
Securities    Fair Value    Gross
Unrealized
Losses Number of
Securities    Fair Value    Gross
Unrealized
Losses Number of
Securities    Fair Value    Gross
Unrealized
Losses
            (In thousands)
GSE bonds
   0       $ 0       $ 0    0       $ 0       $ 0    0       $ 0       $ 0
GSE collaterized mortgage obligations
   1       8,092       (15 ) 1       14,124       (45 ) 2       22,216       (60 )
GSE mortgage-backed securities
   2       6,412       (31 ) 0       0       0    2       6,412       (31 )
Corporate note
   0       0       0    1       3,406       (1,078 ) 1       3,406       (1,078 )
Municipal bonds
   0       0       0    0       0       0    0       0       0














   3       $ 14,504       $ (46 ) 2       $ 17,530       $ (1,123 ) 5       $   32,034       $ (1,169 )


At March 31, 2012	Less than 12 months							12 months or longer							Total
Description of Securities	Number of Securities		Fair Value		Gross Unrealized Losses			Number of Securities		Fair Value		Gross Unrealized Losses			Number of Securities		Fair Value		Gross Unrealized Losses
	(In thousands)
GSE collaterized mortgage obligations		0	$	0	$	0			0	$	0	$	0			0	$	0	$	0
GSE mortgage-backed securities		6		28,148		(129	)		0		0		0			6		28,148		(129	)
Trust preferred security		0		0		0			1		3,698		(793	)		1		3,698		(793	)
Mutual funds - GSE mortgage related securities		1		5,219		(28	)		0		0		0			1		5,219		(28	)

		7	$	33,367	$	(157	)		1	$	3,698	$	(793	)		8	$	37,065	$	(950	)

At December 31, 2010    Less than 12 months 12 months or longer Total
Description of
Securities
   Number of
Securities    Fair Value    Gross
Unrealized
Losses Number of
Securities    Fair Value    Gross
Unrealized
Losses Number of
Securities    Fair Value    Gross
Unrealized
Losses
            (In thousands)
GSE bonds
   4       $ 65,465       $ (770 ) 0       $ 0       $ 0    4       $ 65,465       $ (770 )
GSE collaterized mortgage obligations
   3       9,091       (187 ) 2       17,337       (70 ) 5       26,428       (257 )
GSE mortgage-backed securities
   7       99,555       (1,999 ) 0       0       0    7       99,555       (1,999 )
Corporate note
   0       0       0    1       3,708       (765 ) 1       3,708       (765 )
Municipal bonds
   5       1,929       (31 ) 0       0       0    5       1,929       (31 )














   19       $ 176,040       $ (2,987 ) 3       $ 21,045       $ (835 ) 22       $ 197,085       $ (3,822 )

ASC Topic 320 requires an entity to assess whether the entity has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. If either of these conditions is met, an entity must recognize an other-than-temporary impairment (“OTTI”). If an entity does not intend to sell the debt security and will not be required to sell the debt security, the entity must consider whether it will recover the amortized cost basis of the security. If the present value of expected cash flows is less than the amortized cost basis of the security, OTTI shall be considered to have occurred. OTTI is then separated into the amount of the total impairment related to credit losses and the amount of the total impairment related to all other factors. An entity determines the impairment related to credit losses by comparing the present value of cash flows expected to be collected from the security with the amortized cost basis of the security. OTTI related to the credit loss is then recognized in earnings. OTTI related to all other factors is recognized in other comprehensive income.


At December 31, 2011	Less than 12 months							12 months or longer							Total
Description of Securities	Number of Securities		Fair Value		Gross Unrealized Losses			Number of Securities		Fair Value		Gross Unrealized Losses			Number of Securities		Fair Value		Gross Unrealized Losses
	(In thousands)
GSE collaterized mortgage obligations		2	$	3,305	$	(28	)		1	$	14,007	$	(16	)		3	$	17,312	$	(44	)
GSE mortgage-backed securities		5		38,082		(123	)		0		0		0			5		38,082		(123	)
Trust preferred securities		0		0		0			1		3,303		(1,184	)		1		3,303		(1,184	)
Mutual funds - GSE mortgage related securities		1		5,229		(19	)		0		0		0			1		5,229		(19	)

		8	$	46,616	$	(170	)		2	$	17,310	$	(1,200	)		10	$	63,926	$	(1,370	)

We evaluate securities for ~~OTTI~~other-than-temporary-impairment, (“OTTI”) on at least a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to the financial condition and near-term prospects of the issuer, the length of time and the extent to which the fair value of the securities has been less than our cost for the securities, and our intention to

sell, or whether it is more likely than not that we will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. In analyzing an issuer’s financial condition, we consider whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuer’s financial condition.

The ~~corporate note~~trust preferred security at ~~September 30, 2011 and December~~March 31, ~~2010 consists of one bond with~~2012 has an amortized cost of $4.5 million and an unrealized loss of ~~$1.1 million at September 30, 2011.~~$793 thousand. The ~~bond~~trust preferred security is scheduled to mature in May 2047, with a first call date option in May 2012. Management determined this unrealized loss did not represent OTTI at ~~September 30, 2011 and December~~March 31, ~~2010~~2012 as the investment is rated investment grade and there are no credit quality concerns with the obligor. The market value decline is deemed to be due to the current market volatility and is not reflective of management’s expectations of our ability to fully recover this investment, which may be at maturity. Interest on the ~~corporate note~~trust preferred security has been paid as agreed and management believes this will continue in the future and the ~~bond~~trust preferred security will be repaid in full as scheduled. For these reasons, no OTTI was recognized on the ~~corporate note~~trust preferred security at ~~September 30, 2011.~~March 31, 2012.

We consider the losses on our investments in an unrealized loss position at ~~September 30, 2011~~March 31, 2012 to be temporary based on: 1) the likelihood of recovery; 2) the information relative to the extent and duration of the decline in market value; and 3) the Company’s intention not to sell, and our determination that it is more likely than not that we will not be required to sell a security in an unrealized loss position before recovery of its amortized cost basis.

6.7.

Loans Receivable and Allowance for Loan Losses

The following is a summary of loans receivable by major category:


	September 30, 2011			December 31, 2010			March 31, 2012			December 31, 2011
	(In thousands)						(In thousands)
Loan portfolio composition
Real estate loans:
Residential	$	2,073		$	2,263		$	1,995		$	2,043
Commercial & industrial		1,610,391			1,524,650			2,626,530			2,631,880
Construction		41,292			46,900			48,064			44,756

Total real estate loans		1,653,756			1,573,813			2,676,589			2,678,679
Commercial business		507,737			491,811			846,307			849,576
Trade finance		86,659			57,430			152,704			146,684
Consumer and other		12,222			13,268			64,095			66,631

Total loans outstanding		2,260,374			2,136,322			3,739,695			3,741,570
Less: deferred loan fees		(2,707	)		(2,261	)		(2,496	)		(2,744	)

Gross loans receivable		2,257,667			2,134,061			3,737,199			3,738,826
Less: allowance for loan losses		(60,009	)		(62,320	)		(62,309	)		(61,952	)

Loans receivable, excluding guaranteed portion of delinquent SBA loans		2,197,658			2,071,741
Guaranteed portion of delinquent SBA loans		10,461			13,684

Loans receivable, net	$	2,208,119		$	2,085,425		$	3,674,890		$	3,676,874

Our loan portfolio is made up of four segments: real estate loans, commercial business, trade finance and consumer and other. These segments are further segregated between our loans accounted for under the amortized cost method (referred to as “legacy” loans) and loans acquired from Center Financial (referred to as “acquired” loans), as acquired loans were originally recorded at fair value with no carryover of the related allowance for loan losses. The acquired loans are further segregated between Credit Impaired Loans (ASC 310-30 loans acquired with the credit deterioration) and performing loans (pass graded loans acquired from Center at the time of merger). The following table presents the outstanding principal balance and the related carrying amount of the acquired Center Financial loans included in our Consolidated Statements of Condition at March 31, 2012 and December 31, 2011:


	March 31, 2012		December 31, 2011
	(In thousands)
Outstanding principal balance	$	1,327,898	$	1,458,133
Carrying amount		1,229,410		1,347,525

The following table presents changes in the accretable discount on the acquired Credit Impaired Loans in the Center merger for the dates indicated:


	(In thousands)
Balance at January 1, 2011	$	0
Center merger		32,872
Accretion		(873	)

Balance at December 31, 2011		31,999
Accretion		(3,561	)
Changes in expected cash flows		1,350

Balance at March 31, 2012	$	29,788

The activity in the allowance for loan losses by portfolio segment ~~of loans~~ for the three ~~and nine~~ months ended ~~September 30, 2011~~March 31, 2012 is as follows:

For three months:
   Real estate -
Residential Real estate -
Commercial Real estate -
Construction Commercial
Business Trade
Finance    Consumer
and other Unallocated      Total
Balance, July 1, 2011
   $ 12    $ 37,589    $ 1,462    $ 20,058    $ 188       $ 387    $ 0         $ 59,696
Provision for loan losses
   (3 ) 8    (696 ) 2,007    1,602       303    262         3,483
Loans charged off
   0    (2,358 ) 0    (1,479 ) 0       (133 ) 0         (3,970 )
Recoveries of charged offs
   0    455    0    321    0       24    0         800






Balance, September 30, 2011
   $ 9    $ 35,694    $ 766    $ 20,907    $ 1,790       $ 581    $ 262         $ 60,009

For nine months:
   Real estate -
Residential Real estate -
Commercial Real estate -
Construction Commercial
Business Trade
Finance    Consumer
and other Unallocated Total
Balance, January 1, 2011
   $ 14    $ 32,884    $ 3,396    $ 24,930    $ 192       $ 635    $ 269    $ 62,320
Provision for loan losses
   (5 ) 16,548    624    63    1,598       (29 ) (7 ) $ 18,792
Loans charged off
   0    (14,938 ) (3,254 ) (6,023 ) 0       (256 ) 0    $ (24,471 )
Recoveries of charged offs
   0    1,200    0    1,937    0       231    0    $ 3,368




Balance, September 30, 2011
   $ 9    $ 35,694    $ 766    $ 20,907    $ 1,790       $ 581    $ 262    $ 60,009


	Legacy											Acquired
	Real Estate			Commercial Business			Trade Finance			Consumer and Other		Real Estate			Commercial Business			Trade Finance		Consumer and Other			Total
	(In thousands)
Allowance for loan losses:
Balance, beginning of period	$	39,040		$	20,681		$	1,786		$	445	$	0		$	0		$	0	$	0		$	61,952
Provision (credit) for loan losses		(1,317	)		1,627			(23	)		548		1,254			477			16		18			2,600
Loans charged off		(1,934	)		(1,362	)		0			0		(14	)		(47	)		0		(25	)		(3,382	)
Recoveries of charged offs		20			645			60			17		303			87			0		7			1,139

Balance, end of period	$	35,809		$	21,591		$	1,823		$	1,010	$	1,543		$	517		$	16	$	0		$	62,309

Allowance for loan losses:
Individually evaluated for impairment	$	6,624		$	8,434		$	1		$	479	$	673		$	241		$	0	$	0		$	16,452
Collectively evaluated for impairment		29,185			13,157			1,822			531		56			276			16		0			45,043
Loans acquired with credit deterioration		0			0			0			0		814			0			0		0			814

Total	$	35,809		$	21,591		$	1,823		$	1,010	$	1,543		$	517		$	16	$	0		$	62,309

Loans outstanding:
Individually evaluated for impairment	$	55,448		$	27,423		$	4,702		$	624	$	10,770		$	821		$	0	$	0		$	99,788
Collectively evaluated for impairment		1,737,254			530,484			132,926			21,424		725,865			211,926			14,108		17,931			3,391,918
Loans acquired with credit deterioration		0			0			0					147,252			75,653			968		24,116			247,989

Total	$	1,792,702		$	557,907		$	137,628		$	22,048	$	883,887		$	288,400		$	15,076	$	42,047		$	3,739,695

The activity in the allowance for loan losses by portfolio segment for the three ~~and nine~~ months ended ~~September 30, 2010~~March 31, 2011 is as follows:


	Period Ended September 30, 2010						Legacy
	Three months			Nine months			Real Estate			Commercial Business			Trade Finance			Consumer and Other			Total
	(In thousands)						(In thousands)
Allowance for loan losses:
Balance, beginning of period	$	62,988		$	59,424		$	36,563		$	24,930		$	192		$	635		$	62,320
Provision for loan losses		11,100			78,830
Provision (credit) for loan losses								7,195			(1,705	)		(22	)		(206	)		5,262
Loans charged off		(10,828	)		(76,563	)		(3,082	)		(2,113	)		0			(115	)		(5,310	)
Recoveries of charge-offs		432			2,001
Recoveries of charged offs								234			659			0			175			1,068

Balance, end of period	$	63,692		$	63,692		$	40,910		$	21,771		$	170		$	489		$	63,340

Allowance for loan losses:
Individually evaluated for impairment							$	10,651		$	7,839		$	0		$	0		$	18,490
Collectively evaluated for impairment								30,259			13,932			170			489			44,850

Total							$	40,910		$	21,771		$	170		$	489		$	63,340

Loans outstanding:
Individually evaluated for impairment							$	79,142		$	29,866		$	460		$	170		$	109,638
Collectively evaluated for impairment								1,498,889			478,104			57,064			12,465			2,046,522

Total							$	1,578,031		$	507,970		$	57,524		$	12,635		$	2,156,160

~~The allowance~~As of March 31, 2012 and December 31, 2011, we had a liability for ~~loan~~unfunded commitments of $686 thousand and $686 thousand, respectively. For the three months ended March 31, 2012 and 2011, we recognized provision for credit losses ~~is comprised~~related to our unfunded commitments of ~~specific loss allowances for~~$0.

Individually impaired loans ~~and general loan loss allowances based on quantitative and qualitative analysis.~~

~~Interest income on individually impaired loans was~~were as follows:

   For the Three Months Ended    For the Nine Months Ended
   September 30, 2011    September 30, 2011
   Interest income
recognized during
impairment    Cash-basis
interest income
recognized    Interest income
recognized during
impairment    Cash-basis
interest income
recognized
   (In Thousands)    (In Thousands)
Real Estate - Commercial

Retail
   $ 8       $ 8       $ 111       $ 104
Hotel & Motel
   246       239       836       833
Gas Station & Car Wash
   24       24       129       131
Mixed Use
   17       19       52       57
Industrial & Warehouse
   77       77       237       236
Other
   140       100       335       300
Real Estate - Construction
   28       37       84       84
Commercial Business
   158       165       554       543
Trade Finance
   19       8       19       8








   $ 717       $ 677       $ 2,357       $ 2,296


	March 31, 2012			December 31, 2011
	(In Thousands)
With Allocated Allowance
Without charge-off	$	79,838		$	67,202
With charge-off		628			341
With No Allocated Allowance
Without charge-off		13,138			8,123
With charge-off		6,184			6,383
Allowance on Impaired Loans		(16,452	)		(18,035	)

Impaired Loans, net of allowance	$	83,336		$	64,014

Average Impaired Loans	$	89,398		$	93,627

   For the Three Months Ended    For the Nine Months Ended
   September 30, 2010    September 30, 2010
   (In Thousands)
Average of individually impaired loans during the period
   $ 113,218       $ 123,381
Interest income recognized during impairment
   1,960       5,098
Cash-basis interest income received
   1,917       5,055


	For the Three Months Ended March 31,
	2012		2011
	(In Thousands)
Interest income recognized during impairment	$	823	$	991

Interest income recognized during impairment represents ~~interest income earned on accruing impaired loans. Cash-basis~~the related amount of interest income recognized ~~represents cash received for interest payments on accruing impaired loans.~~

~~The impaired~~during the time within the period that the loans ~~at the periods indicated are set forth in the following table by class of loans.~~were impaired.

   As of September 30, 2011    As of December 31, 2010
   Unpaid
Principal
Balance^*    Related
Allowance Average
Balance    Unpaid
Principal
Balance*    Related
Allowance Average
Balance
   (In Thousands)    (In Thousands)
With Related Allowance:

Real Estate - Residential
   $ 0       $ 0    $ 24       $ 0       $ 0    $ 0
Real Estate - Commercial

Retail
   2,037       (762 ) 3,891       7,441       (1,559 ) 7,498
Hotel & Motel
   17,572       (3,701 ) 13,866       5,349       (987 ) 11,439
Gas Station & Car Wash
   2,089       (433 ) 2,964       3,142       (1,411 ) 8,844
Mixed Use
   2,108       (176 ) 1,661       308       (53 ) 2,334
Industrial & Warehouse
   4,286       (420 ) 4,967       7,539       (1,729 ) 2,453
Other
   10,862       (1,730 ) 4,000       2,603       (407 ) 5,711
Real Estate - Construction
   0       0    3,099       5,789       (1,686 ) 4,027
Commercial Business
   18,885       (7,366 ) 23,808       35,961       (13,270 ) 29,753
Trade Finance
   0       0    0       0       0    0
Consumer and Other
   0       0    0       0       0    89








   $ 57,839       $ (14,588 ) $ 58,280       $ 68,132       $ (21,102 ) $ 72,148








With No Related Allowance

Real Estate - Residential
   $ 0       $ 0    $ 0       $ 0       $ 0    $ 0
Real Estate - Commercial

Retail
   2,465       0    5,259       9,127       0    10,100
Hotel & Motel
   581       0    4,713       8,619       0    7,299
Gas Station & Car Wash
   515       0    3,204       5,197       0    8,361
Mixed Use
   —         0    2,335       3,660       0    4,635
Industrial & Warehouse
   2,694       0    2,313       367       0    2,510
Other
   2,130       0    10,642       17,530       0    10,853
Real Estate - Construction
   3,295       0    3,673       4,469       0    2,481
Commercial Business
   3,988       0    5,055       5,029       0    4,550
Trade Finance
   1,942       0    831       469       0    287
Consumer and Other
   155       0    144       88       0    18








   $ 17,765       $ 0    $ 38,169       $ 54,555       $ 0    $ 51,094








Total
   $ 75,604       $ (14,588 ) $ 96,449       $ 122,687       $ (21,102 ) $ 123,242

Recorded investment, which is net of unpaid principal, accrued interest receivable, deferred loan fees and discounts, is not materially different from loan balance in this presentation. Accrued interest receivable on loans is $5.9 million and $6.1 million and deferred loan fees on total loans are $(2.7) million and $(2.3) million at September 30, 2011 and December 31, 2010.

The following table ~~provides~~details the ~~recorded investment in nonaccrual~~amount of our impaired loans ~~and loans past due over 90 days still on accrual~~ by class with no related allowance for loan losses, as well as the amount of ~~loans:~~impaired loans for which there is a related allowance for loan losses as of March 31, 2012 and December 31, 2011. Loans with no related allowance for loan losses have adequate collateral securing their carrying value, and in some circumstances, have been written down to their current carrying value, which is based on the fair value of the collateral.


	As of September 30, 2011						As of March 31, 2012
	Non-accrual Loans*		Loans past due 90 days or more, still accruing*		Total nonperforming loans*		Recorded Investment		Unpaid Principal Balance		Related Allowance			Average Recorded Investment
	(In Thousands)						(In Thousands)
Real estate loans:
Commercial
With Related Allowance:
Real Estate - Residential							$	0	$	0	$	0		$	0
Real Estate - Commercial
Retail	$	3,912	$	0	$	3,912		2,563		2,529		(1,179	)		2,518
Hotel & Motel		1,264		0		1,264		22,762		22,553		(3,351	)		18,064
Gas Station & Car Wash		1,414		0		1,414		5,449		5,389		(1,310	)		3,286
Mixed Use		1,156		0		1,156		5,120		5,108		(162	)		3,156
Industrial & Warehouse		3,107		0		3,107		5,265		5,254		(405	)		4,371
Other		2,287		0		2,287		12,564		12,527		(890	)		8,166
Construction		1,585		0		1,585

Total		14,725		0		14,725
Commercial business		12,466		0		12,466
Trade finance		442		0		442
Consumer and other		157		0		157
Real Estate - Construction								0		0		0			1,346
Commercial Business								26,269		26,187		(8,675	)		20,990
Trade Finance								442		440		(1	)		994
Consumer and Other								479		479		(479	)		96

	$	27,790	$	0	$	27,790	$	80,913	$	80,466	($	16,452	)	$	62,987


With No Related Allowance
Real Estate - Residential							$	0	$	0	$	0		$	0
Real Estate - Commercial
Retail								1,622		1,591		0			2,984
Hotel & Motel								0		0		0			2,046
Gas Station & Car Wash								928		924		0			1,767
Mixed Use								0		0		0			1,136
Industrial & Warehouse								5,684		5,663		0			3,444
Other								2,977		2,970		0			6,023
Real Estate - Construction								1,723		1,710		0			2,733
Commercial Business								2,063		2,057		0			4,598
Trade Finance								4,285		4,262		0			1,523
Consumer and Other								145		145		0			157

							$	19,427	$	19,322	$	0		$	26,411

Total							$	100,340	$	99,788	($	16,452	)	$	89,398

*	~~Recorded investment, which is net of unpaid principal, accrued interest receivable, deferred loan fees and discounts, is not materially different from loan balance in this presentation.~~

   As of December 31, 2010
   Non-accrual
Loans*    Loans past
due 90 days or
more, still
accruing*    Total
nonperforming
loans*
   (In Thousands)
Real estate loans:

Commercial

Retail
   $ 1,615       $ 0       $ 1,615
Hotel & Motel
   1,187       0       1,187
Gas Station & Car Wash
   3,054       0       3,054
Mixed Use
   3,968       0       3,968
Industrial & Warehouse
   3,690       0       3,690
Other
   4,834       0       4,834
Construction
   8,547       0       8,547






Total
   26,895       0       26,895
Commercial business
   15,991       0       15,991
Trade finance
   469       0       469
Consumer and other
   448       0       448






   $ 43,803       $ 0       $ 43,803

*	~~Recorded investment, which is net of unpaid principal, accrued interest receivable, deferred loan fees and discounts, is not materially different from loan balance in this presentation.~~


	As of December 31, 2011
	Recorded Investment		Unpaid Principal Balance		Related Allowance			Average Recorded Investment
	(In Thousands)
With Related Allowance:
Real Estate - Residential	$	0	$	0	$	0		$	0
Real Estate - Commercial
Retail		1,810		1,810		(668	)		3,475
Hotel & Motel		17,439		17,441		(4,093	)		14,581
Gas Station & Car Wash		2,266		2,265		(550	)		2,825
Mixed Use		2,828		2,822		(128	)		1,953
Industrial & Warehouse		4,262		4,242		(407	)		4,826
Other		14,870		14,982		(4,630	)		6,192
Real Estate - Construction		127		128		(49	)		2,504
Commercial Business		19,413		19,416		(7,168	)		22,929
Trade Finance		4,528		4,497		(342	)		906
Consumer and Other		0		0		0			0

	$	67,543	$	67,603	$	(18,035	)	$	60,191

With No Related Allowance
Real Estate - Residential	$	0	$	0	$	0		$	0
Real Estate - Commercial
Retail		1,388		1,391		0			4,485
Hotel & Motel		0		0		0			3,770
Gas Station & Car Wash		288		287		0			2,621
Mixed Use		0		0		0			1,868
Industrial & Warehouse		2,651		2,662		0			2,380
Other		2,102		2,092		0			8,934
Real Estate - Construction		1,721		1,710		0			3,283
Commercial Business		5,737		5,740		0			5,191
Trade Finance		469		467		0			759
Consumer and Other		150		150		0			145

	$	14,506	$	14,499	$	0		$	33,436

Total	$	82,049	$	82,102	$	(18,035	)	$	93,627

The following table presents the aging of ~~the recorded investment in~~ past due loans as of March 31, 2012 and December 31, 2011 by class of loans:


	As of September 30, 2011								As of March 31, 2012
	30-59 Days Past Due*		60-89 Days Past Due*		Greater than 90 Days Past Due*		Total Past Due*		30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Non-accrual loans		Total Delinquent loans		Greater than 90 days and accruing
			(In Thousands)						(In Thousands)
Legacy Loans
Real estate - Residential	$	0	$	0	$	0	$	0	$	34	$	0	$	0	$	34	$	0	$	34	$	0
Real estate - Commercial
Retail		170		0		3,912		4,082		606		273		0		879		2,979		3,858		0
Hotel & Motel		3,367		0		1,264		4,631		228		0		0		228		487		715		0
Gas Station & Car Wash		0		0		1,414		1,414		377		2,881		0		3,258		1,934		5,192		0
Mixed Use		37		0		1,156		1,193		0		0		0		0		805		805		0
Industrial & Warehouse		362		0		3,107		3,469		358		0		0		358		3,054		3,412		0
Other		4,490		665		2,287		7,442		745		118		0		863		7,810		8,673		0
Real estate - Construction		0		0		1,585		1,585		0		0		0		0		0		0		0
Commercial business		1,027		834		12,466		14,327		745		542		0		1,287		11,065		12,352		0
Trade finance		0		0		442		442		0		0		0		0		0		0		0
Consumer and other		1		5		157		163		0		0		0		0		624		624		0

Subtotal									$	3,093	$	3,814	$	0	$	6,907	$	28,758	$	35,665	$	0
	$	9,454	$	1,504	$	27,790	$	38,748
Acquired Loans⁽¹⁾
Real estate - Residential									$	0	$	0	$	0	$	0	$	0	$	0	$	0
Real estate - Commercial
Retail										79		8		2,047		2,134		0		2,134		2,047
Hotel & Motel										990		15		0		1,005		6,341		7,346		0
Gas Station & Car Wash										1,467		146		3,206		4,819		384		5,203		3,206
Mixed Use										1,392		1,564		19		2,975		0		2,975		19
Industrial & Warehouse										3		5		32		40		3,028		3,068		32
Other										639		623		4,529		5,791		705		6,496		4,529
Real estate - Construction										0		0		6,363		6,363		0		6,363		6,363
Commercial business										1,036		513		1,335		2,884		371		3,255		1,335
Trade finance										100		13		0		113		0		113		0
Consumer and other										633		243		726		1,602		348		1,950		726

Subtotal										6,339		3,130		18,257		27,726		11,177		38,903		18,257

TOTAL										9,432		6,944		18,257		34,633		39,935		74,568		18,257

*⁽¹⁾

~~Recorded investment, which is net~~

The acquired loans include credit impaired loans (ASC 310-30 loans) and performing loans (pass graded loans acquired from Center at the time of unpaid principal, accrued interest receivable, deferred loan fees and discounts, is not materially different from loan balance in this presentation. Accrued interest receivable on total loans is $5.9 million and deferred loan fees on total loans are $(2.7) million at September 30, 2011.merger).


	As of December 31, 2010								As of December 31, 2011
	30-59 Days Past Due*		60-89 Days Past Due*		Greater than 90 Days Past Due*		Total Past Due*		30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Non-accrual loans		Total Delinquent loans		Greater than 90 days and accruing
			(In Thousands)						(In Thousands)
Legacy Loans
Real estate - Residential	$	46	$	0	$	0	$	46	$	36	$	0	$	0	$	36	$	0	$	36	$	0
Real estate - Commercial
Retail		950		188		1,708		2,846		431		0		0		431		2,612		3,043		0
Hotel & Motel		455		0		1,187		1,642		0		0		0		0		482		482		0
Gas Station & Car Wash		0		0		3,054		3,054		634		0		0		634		1,368		2,002		0
Mixed Use		401		0		3,968		4,369		0		0		0		0		822		822		0
Industrial & Warehouse		133		239		3,690		4,062		360		0		0		360		3,055		3,415		0
Other		302		0		4,741		5,043		0		119		0		119		10,865		10,984		0
Real estate - Construction		0		0		8,547		8,547		0		0		0		0		127		127		0
Commercial business		684		855		15,991		17,530		1,396		392		0		1,788		11,462		13,250		0
Trade finance		0		0		469		469		0		0		0		0		117		117		0
Consumer and other		41		2		448		491		5		0		0		5		150		155		0

Subtotal										2,862		511		0		3,373		31,060		34,433		0
	$	3,012	$	1,284	$	43,803	$	48,099
Acquired Loans⁽¹⁾
Real estate - Residential									$	0	$	0	$	0	$	0	$	0	$	0	$	0
Real estate - Commercial
Retail										147		64		1,675		1,886		0		1,886		1,675
Hotel & Motel										0		45		0		45		0		45		0
Gas Station & Car Wash										2,547		177		817		3,541		0		3,541		817
Mixed Use										1,178		1,702		389		3,269		0		3,269		389
Industrial & Warehouse										3,393		0		110		3,503		0		3,503		110
Other										1,472		228		4,237		5,937		0		5,937		4,237
Real estate - Construction										0		4,499		0		4,499		0		4,499		0
Commercial business										1,747		1,402		9,125		12,274		0		12,274		9,125
Trade finance										0		0		202		202		0		202		202
Consumer and other										705		370		700		1,775		0		1,775		700

Subtotal									$	11,189	$	8,487	$	17,255	$	36,931	$	0	$	36,931	$	17,255

TOTAL									$	14,051	$	8,998	$	17,255	$	40,304	$	31,060	$	71,364	$	17,255

*⁽¹⁾

~~Recorded investment, which is net~~

The acquired loans include credit impaired loans (ASC 310-30 loans) and performing loans (pass graded loans acquired from Center at the time of unpaid principal, accrued interest receivable, deferred loan fees and discounts, is not materially different from loan balance in this presentation. Accrued interest receivable on total loans is $6.1 million and deferred loan fees on total loans are $(2.3) million at December 31, 2010.merger).

We categorize loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. We analyze loans individually by classifying the loans as to credit risk. This analysis includes all non-homogeneous ~~loans and~~loans. This analysis is performed at least on a quarterly basis. We use the following definitions for risk ratings:

Special Mention: Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Substandard: Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the repayment of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful: Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or repayment in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loans not meeting the criteria above that are analyzed individually as part of the ~~above-described~~above described process are considered to be Pass-rated loans. ~~The~~As of March 31, 2012 and December 31, 2011, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

   As of September 30, 2011
   Special
Mention    Substandard    Doubtful    Total
Real estate - Residential
   $ 0       $ 38       $ 0       $ 38
Real estate - Commercial

Retail
   2,704       14,862       0       17,566
Hotel & Motel
   4,940       19,332       0       24,272
Gas Station & Car Wash
   3,255       2,882       0       6,137
Mixed Use
   2,461       5,046       0       7,507
Industrial & Warehouse
   4,006       7,306       412       11,724
Other
   1,410       12,537       0       13,947
Real estate - Construction
   128       3,295       0       3,423
Commercial business
   12,579       31,816       5,188       49,583
Trade finance
   93       5,562       0       5,655
Consumer and other
   0       1,122       0       1,122








Total Watch List Loans
   $ 31,576       $ 103,798       $ 5,600       $ 140,974


	As of December 31, 2010								As of March 31, 2012
	Special Mention		Substandard		Doubtful		Total		Special Mention		Substandard		Doubtful/Loss		Total
									(In thousands)
Legacy Loans:
Real estate - Residential	$	0	$	46	$	0	$	46	$	0	$	34	$	0	$	34
Real estate - Commercial
Retail		1,948		18,898		0		20,846		3,710		13,657		0		17,367
Hotel & Motel		10,896		15,490		0		26,386		2,279		16,854		0		19,133
Gas Station & Car Wash		8,798		8,923		0		17,721		3,484		5,994		0		9,478
Mixed Use		364		5,887		0		6,251		2,224		5,319		0		7,543
Industrial & Warehouse		385		8,871		0		9,256		3,976		8,245		398		12,619
Other		1,865		21,431		0		23,296		11,326		12,486		0		23,812
Real estate - Construction		0		10,257		0		10,257		0		1,723		0		1,723
Commercial business		4,182		45,054		260		49,496		12,234		30,352		5,845		48,431
Trade finance		305		469		0		774		516		4,727		0		5,243
Consumer and other		830		448		0		1,278		0		1,521		0		1,521

Total Watch List Loans	$	29,573	$	135,774	$	260	$	165,607
Subtotal									$	39,749	$	100,912	$	6,243	$	146,904

Acquired Loans:
Real estate - Residential									$	0	$	0	$	0	$	0
Real estate - Commercial
Retail										13,101		11,671		0		24,772
Hotel & Motel										16,870		23,280		0		40,150
Gas Station & Car Wash										5,696		5,892		0		11,588
Mixed Use										2,467		4,184		0		6,651
Industrial & Warehouse										3,675		6,821		0		10,496
Other										6,704		13,161		0		19,865
Real estate - Construction										0		7,514		0		7,514
Commercial business										18,486		32,853		210		51,549
Trade finance										284		589		0		873
Consumer and other										649		3,941		341		4,931

Subtotal									$	67,932	$	109,906	$	551	$	178,389

Total									$	107,681	$	210,818	$	6,794	$	325,293

   As of December 31, 2011
   Special
Mention    Substandard    Doubtful/Loss    Total
   (In thousands)
Legacy Loans:

Real estate - Residential
   $ 0       $ 36       $ 0       $ 36
Real estate - Commercial

Retail
   3,430       13,477       0       16,907
Hotel & Motel
   5,008       17,875       0       22,883
Gas Station & Car Wash
   3,489       2,554       0       6,043
Mixed Use
   2,279       3,026       0       5,305
Industrial & Warehouse
   3,998       7,238       404       11,640
Other
   5,914       15,393       0       21,307
Real estate - Construction
   0       1,848       0       1,848
Commercial business
   11,357       30,114       5,994       47,465
Trade finance
   274       4,997       0       5,271
Consumer and other
   0       1,081       0       1,081








Subtotal
   $ 35,749       $ 97,639       $ 6,398       $ 139,786








Acquired Loans:

Real estate - Residential
   $ 0       $ 0       $ 0       $ 0
Real estate - Commercial

Retail
   11,591       11,334       0       22,925
Hotel & Motel
   13,138       16,746       0       29,884
Gas Station & Car Wash
   5,665       5,760       0       11,425
Mixed Use
   3,532       2,829       0       6,361
Industrial & Warehouse
   2,673       3,770       0       6,443
Other
   6,702       12,598       0       19,300
Real estate - Construction
   0       5,489       0       5,489
Commercial business
   16,096       39,630       353       56,079
Trade finance
   128       829       0       957
Consumer and other
   1,662       2,526       0       4,188








Subtotal
   $ 61,187       $ 101,511       $ 353       $ 163,051








Total
   $ 96,936       $ 199,150       $ 6,751       $ 302,837

The following table presents loans sold from loans held for investment during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2012 and 2011 by portfolio segment:

For three months ended:    Real estate -
Residential    Real estate -
Commercial    Real estate -
Construction    Commercial
Business    Trade
Finance    Consumer
and other    Total
Sales or reclassification to held for sale
   $ 0       $   5,970       $ 0       $ 0       $ 0       $ 0       $   5,970


For nine months ended:	Real estate - Residential		Real estate - Commercial		Real estate - Construction		Commercial Business		Trade Finance		Consumer and other		Total
															Real estate - Commercial		Real estate - Construction		Commercial Business		Total
															(In thousands)
March 31, 2012:
Sales or reclassification to held for sale	$	0	$	21,955	$	4,600	$	49	$	0	$	0	$	26,604	$	0	$	0	$	0	$	0
March 31, 2011:
Sales or reclassification to held for sale															$	2,713	$	0	$	0	$	2,713

The adequacy of the allowance for loan losses is determined by management based upon an evaluation and review of the credit quality of the loan portfolio, consideration of historical loan loss experience, relevant internal and external factors that affect the collection of a loan, and other pertinent factors.

The Migration Analysis is a formula methodology based on the Bank’s actual historical net charge-off experience for each loan pool and loan risk grade (Pass, Special Mention, Substandard and Doubtful). The migration analysis is centered on the Bank’s internal credit risk rating system. Our internal loan review and external contracted credit review examinations are used to determine and validate loan risk grades. This credit review system takes into consideration factors such as: borrower’s background and experience; historical and current financial condition; credit history and payment performance; economic conditions and their impact on various industries; type, fair value and volatility of the fair value of collateral; lien position; and the financial strength of any guarantors.

A general loan loss allowance is provided on loans not specifically identified as impaired (“non-impaired loans”). The allowance is determined first based on a quantitative analysis using a loss migration methodology. The loans are classified by type and loan grade, and the historical loss migration is tracked for the various stratifications. Loss experience is quantified for the most recent 12 quarters and then weighted to give more weight to the most recent losses. That loss experience is then applied to the stratified portfolio at each quarter end. ~~During 2009,~~For the ~~non-impaired Commercial Real Estate~~Performing Loans acquired from Center, a general loan ~~portfolio was stratified into ten different loan pools based on property types and~~loss allowance is provided to the ~~non-impaired Commercial and Industrial loan portfolio was stratified into five different loan pools based on loan type, to allocate historic~~extent that there has been credit deterioration since the acquisition. The estimate of that credit deterioration becomes more evident as time passes since the acquisition. As of March 31, 2012, the historical loss experience from Center was utilized to ~~more granular loan pools. Effective June 30, 2010 four additional pools, primarily in the commercial real estate portfolio, were further stratified. In addition,~~provide for a ~~new software program was implemented effective June 30, 2010 and is used to track and allocate charge-offs to the various loan grades by loan pools.~~nominal allowance. The quantitative general loan loss allowance was ~~$22.4~~$19.5 million ($19.1 million for legacy loans and $348 thousand for acquired loans) at ~~September 30, 2011,~~March 31, 2012, compared to ~~$23.9~~$20.4 million at December 31, ~~2010.~~2011.

Additionally, in order to systematically quantify the credit risk impact of other trends and changes within the loan portfolio, the Bank utilizes qualitative adjustments to the Migration Analysis within established parameters. The parameters for making adjustments are established under a Credit Risk Matrix that provides seven possible scenarios for each of the factors below. The matrix allows for up to three positive (Major, Moderate, and Minor), three negative (Major, Moderate, and Minor), and one neutral credit risk scenarios within each factor for each loan type pool. Generally, the factors are considered to have no significant impact (neutral) to our historical migration ratios. However, if information exists to warrant adjustment to the Migration Analysis, changes are made in accordance with the established parameters supported by narrative and/or statistical analysis. The Credit Risk Matrix and the ~~seven~~nine possible scenarios enable the Bank to qualitatively adjust the Loss Migration Ratio or individual specific reserve allocations by as much as 50 basis points in either direction (positive or negative) for each loan type pool. This matrix considers the following nine factors, which are patterned after the guidelines provided under the FFIEC Interagency Policy Statement on the Allowance for Loan and Lease Losses:

Changes in lending policies and procedures, including underwriting standards and collection, charge-off, and recovery practices.

Changes in national and local economic and business conditions and developments, including the condition of various market segments.

Changes in the nature and volume of the loan portfolio.

Changes in the experience, ability, and depth of lending management and staff.

Changes in the trends of the volume and severity of past due and classified loans; and changes in trends in the volume of non-accrual loans and troubled debt restructurings, and other loan modifications.

Changes in the quality of our loan review system and the degree of oversight by the Directors.

Changes in the value of underlying collateral for collateral-dependent loans.

The existence and effect of any concentrations of credit, and changes in the level of such concentrations.

The effect of external factors such as competition and legal and regulatory requirements on the level of estimated losses in our loan portfolio.

The qualitative loan loss allowance on the loan portfolio was ~~$22.8~~$25.6 million at ~~September 30, 2011~~March 31, 2012, compared to ~~$17.0~~$23.5 million at December 31, ~~2010.~~2011.

We also establish specific loss allowances for loans where we have identified potential credit risk conditions or circumstances related to a specific individual credit. The specific allowance amounts are determined by a method prescribed by FASB ASC 310-10-35-22,Measurement of Impairment. The loans identified as impaired will be accounted for in accordance with one of the three acceptable valuation methods: 1) the present value of future cash flows discounted at the loan’s effective interest rate; 2) the loan’s observable market price; or 3) the fair value of the collateral, if the loan is collateral dependent. For the collateral dependent impaired loans, we obtain ana new appraisal to determine the amount of impairment as of the date that the loan become impaired. The appraisals are based on an “as is” valuation. To ensure that appraised values remain current, we generally obtain an updated appraisal every twelve months from a qualified independent appraiser. Furthermore, if the most current appraisal is dated more than six months prior to the effective date of the impairment test, we validate the most current value with third party market data appropriate to the location and property type of the collateral. If the third party market data indicates that the value of our collateral property has declined since the most recent valuation date, we adjust the value of the property downward to reflect current market conditions. If the fair value of the collateral, less cost to sell, is less than the recorded amount of the loan, we then recognize impairment by creating or adjusting an existing valuation allowance with a corresponding charge to the provision for loan losses. If an impaired loan is expected to be collected through liquidation of the collateral, the loan is deemed to be collateral dependent and the amount of impairment is charged off against the allowance for loan losses.

The Bank considers a loan to be impaired when it is probable that not all amounts due (principal and interest) will be collectible in accordance with the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. The significance of payment delays and payment shortfalls is determined on a case-by-case basis by taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed.

For commercial business loans, real estate loans and certain consumer loans, we base the measurement of loan impairment on the present value of the expected future cash flows, discounted at the loan’s effective interest rate or on the fair value of the loan’s collateral if the loan is collateral dependent. We evaluate most consumer loans for impairment on a collective basis, because these loans have generally smaller balances and are homogeneous in the underwriting terms and conditions, and in the type of collateral. If a loan is deemed to be impaired, the amount of the impairment is supported by a specific allowance amount which is included in the allowance for loan losses through a charge to the provision for loan losses.

In the third quarter, 2010, based on current market conditions, we expanded the criteria for evaluating loans for potential impairment which resulted in an increase in impaired loans from the prior quarter. Prior to the third quarter of 2010, loans graded Substandard were not individually evaluated for impairment and only considered impaired if they were 60+ days past due, unless other events existed that qualified the loan for impairment review. Therefore, a Substandard credit that was current in its contractual payments, but was classified due to other risk issues would not necessarily be subject to individual review for impairment analysis. Effective September 30, 2010, we expanded the scope of the loans reviewed for individual impairment by including all loans of $2.0 million or more that were risk-graded as Substandard, even though such loans were less than 60 days delinquent and were performing under their contractual terms. Effective December 31, 2010, we expanded the scope to include all loans of $1 million or more. This enhancement to our impairment analysis provided more coverage in terms of current fair values on classified loans as updated market values are required as part of the impairment analysis process. Effective March 31, 2011, we implemented a higher-level, preliminary non-impairment test, that is applied to loans for $1.0 million or more that are graded Substandard, are less than 60 days past due and accruing, and are not TDRs. We use a five-step test with the following criteria: (1) the loan is current with no 30-day late payments in the past six months; (2) the loan payments are the contractual, non-modified amount; (3) the financial information that supports payment capacity is not aged over one year; (4) the global cash flow supports the current payment amount at a ratio of 1:1 or better; and (5) for CRE loans secured by a first lien on real estate collateral, the most current LTV is below 100%. If the loan meets all of these criteria, it is not considered impaired and is subject to the general loan loss allowance for non-impaired loans.

Impaired loans at ~~September 30, 2011,~~March 31, 2012, were ~~$75.6~~$99.8 million, a net ~~decrease~~increase of ~~$47.1~~$17.7 million from ~~$122.7~~$82.1 million at December 31, ~~2010.~~2011. This net ~~decrease~~increase in impaired loans is due primarily to three commercial real estate (CRE) loans, aggregating $9.9 million, which were placed on non-accrual status and three loans, two CRE and one C&I, totaling $5.4 million, which were restructured.

For our Credit Impaired Loans, our allowance for loan losses is estimated based upon our expected cash flows for these loans. To the ~~sales~~extent that we experience a deterioration in borrower credit quality resulting in a decrease in our expected cash flows subsequent to the acquisition of ~~17 impaired~~the loans, ~~totaling $22.5 million, and the return of 33 loans totaling $26.1 million to non-impaired status year-to-date. The return to non-impaired status was~~an allowance for loan losses would be established based on ~~a review~~our estimate of future credit losses over the remaining life of the ~~current financial information and payment performance.~~loans.

The following table presents ~~the recorded investment in~~ loans by portfolio segment and impairment ~~status~~method at ~~September 30, 2011~~March 31, 2012 and December 31, ~~2010:~~2011:


	As of September 30, 2011																					As of March 31, 2012
	Real estate - Residential			Real estate - Commercial			Real estate - Construction			Commercial business			Trade finance			Consumer and other			Total			Real estate - Residential			Real estate - Commercial			Real estate - Construction			Commercial business			Trade finance			Consumer and other			Total
	(In Thousands)																					(In Thousands)
Impaired loans	$	0		$	47,339		$	3,295		$	22,873		$	1,942		$	155		$	75,604		$	0		$	64,508		$	1,710		$	28,244		$	4,702		$	624		$	99,788
Specific allowance	$	0		$	7,222		$	0		$	7,366		$	0		$	0		$	14,588		$	0		$	7,297		$	0		$	8,675		$	1		$	479		$	16,452
Loss coverage ratio		0	%		15.26	%		0	%		32.20	%		0	%		0	%		19.30	%		0.0	%		11.3	%		0.0	%		30.7	%		0.0	%		76.8	%		16.5	%

Non-impaired loans	$	2,073		$	1,563,052		$	37,997		$	484,864		$	84,717		$	12,067		$	2,184,770		$	1,995		$	2,562,022		$	46,354		$	818,063		$	148,002		$	63,471		$	3,639,907
General allowance	$	9		$	28,473		$	766		$	13,540		$	1,790		$	843		$	45,421		$	9		$	29,406		$	640		$	13,433		$	1,838		$	531		$	45,857
Loss coverage ratio		0.43	%		1.82	%		2.02	%		2.79	%		2.11	%		6.99	%		2.08	%		0.5	%		1.1	%		1.4	%		1.6	%		1.2	%		0.8	%		1.3	%

Total loans⁽¹⁾	$	2,073		$	1,610,391		$	41,292		$	507,737		$	86,659		$	12,222		$	2,260,374
Total allowance for loan loss	$	9		$	35,695		$	766		$	20,906		$	1,790		$	843		$	60,009
Total loans																						$	1,995		$	2,626,530		$	48,064		$	846,307		$	152,704		$	64,095		$	3,739,695
Total allowance for loan losses																						$	9		$	36,703		$	640		$	22,108		$	1,839		$	1,010		$	62,309
Loss coverage ratio		0.43	%		2.22	%		1.86	%		4.12	%		2.07	%		6.90	%		2.65	%		0.5	%		1.4	%		1.3	%		2.6	%		1.2	%		1.6	%		1.7	%

~~(1)~~

~~Excludes the guaranteed portion of delinquent SBA loans.~~

~~(2)~~

Adjustment to recorded investment is not deemed material to this presentation. Accrued interest receivable on total loans is $5.9 million and deferred loan fees on total loans are $(2.7) million at September 30, 2011.


	As of December 31, 2011
	Real estate - Residential			Real estate - Commercial			Real estate - Construction			Commercial business			Trade finance			Consumer and other			Total
	(In Thousands)
Impaired loans	$	0		$	49,904		$	1,848		$	25,150		$	4,997		$	150		$	82,049
Specific allowance	$	0		$	10,476		$	49		$	7,168		$	342		$	0		$	18,035
Loss coverage ratio		0.0	%		21.0	%		2.7	%		28.5	%		6.8	%		0.0	%		22.0	%
Non-impaired loans	$	2,043		$	2,581,976		$	42,908		$	824,426		$	141,687		$	66,482		$	3,659,522
General allowance	$	9		$	27,831		$	675		$	13,513		$	1,444		$	445		$	43,917
Loss coverage ratio		0.4	%		1.1	%		1.6	%		1.6	%		1.0	%		0.7	%		1.2	%
Total loans	$	2,043		$	2,631,880		$	44,756		$	849,576		$	146,684		$	66,632		$	3,741,571
Total allowance for loan losses	$	9		$	38,307		$	724		$	20,681		$	1,786		$	445		$	61,952
Loss coverage ratio		0.4	%		1.5	%		1.6	%		2.4	%		1.2	%		0.7	%		1.7	%

   As of December 31, 2010
   Real estate -
Residential Real estate -
Commercial Real estate -
Construction Commercial
business Trade finance Consumer
and other Total
   (In Thousands)
Impaired loans
   $ 0    $ 70,882    $ 10,258    $ 40,990    $ 469    $ 88    $ 122,687
Specific allowance
   $ 0    $ 6,145    $ 1,686    $ 13,271    $ 0    $ 0    $ 21,102
Loss coverage ratio
   0 % 8.67 % 16.44 % 32.38 % 0 % 0 % 17.20 %
Non-impaired loans
   $ 2,263    $ 1,453,768    $ 36,642    $ 450,821    $ 56,961    $ 13,180    $ 2,013,635
General allowance
   $ 14    $ 26,740    $ 1,710    $ 11,659    $ 192    $ 903    $ 41,218
Loss coverage ratio
   0.62 % 1.84 % 4.67 % 2.59 % 0.34 % 6.85 % 2.05 %
Total loans⁽¹⁾
   $ 2,263    $ 1,524,650    $ 46,900    $ 491,811    $ 57,430    $ 13,268    $ 2,136,322
Total allowance for loan loss
   $ 14    $ 32,885    $ 3,396    $ 24,930    $ 192    $ 903    $ 62,320
Loss coverage ratio
   0.62 % 2.16 % 7.24 % 5.07 % 0.33 % 6.81 % 2.92 %

~~(1)~~

~~Excludes the guaranteed portion of delinquent SBA loans.~~

~~(2)~~

Adjustment to recorded investment is not deemed material to this presentation. Accrued interest receivable on total loans is $6.1 million and deferred loan fees on total loans are $(2.3) million at December 31, 2010.

Under certain circumstances, we provide borrowers relief through loan modifications. These modifications are either temporary in nature (“temporary modifications”), or are more substantive troubled debt restructurings. At ~~September 30, 2011,~~March 31, 2012, total modified loans were ~~$37.6~~$43.7 million, compared to ~~$55.6~~$32.7 million at December 31, ~~2010.~~2011. The temporary modifications generally consist of interest only payments for a three- to six- month period, whereby principal payments are deferred. At the end of the modification period, the remaining principal balance is re-amortized based on the original maturity date. Loans subject to temporary modifications are generally downgraded to Substandard or Special Mention. At the end of the modification period, the loan either 1) returns to the original contractual terms; 2) is further modified and accounted for as a troubled debt restructuring in accordance with ASC 310-10-35; or 3) is disposed of through foreclosure or liquidation.

Troubled Debt Restructured (“TDR”) loans are defined by ASC 310-40, “Troubled Debt Restructurings by Creditors” and ASC 470-60, “Troubled Debt Restructurings by Debtors,” and evaluated for impairment in accordance with ASC 310-10-35. The concessions may be granted in various forms, including reduction in the stated interest rate, reduction in the amount of principal amortization, forgiveness of a portion of a loan balance or accrued interest, or extension of the maturity date. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under our internal underwriting policy.

A summary of TDRs on accrual and non-accrual by type of concession as of ~~September 30, 2011~~March 31, 2012 and December 31, ~~2010~~2011 is presented below:


	As of September 30, 2011																		As of March 31, 2012
	TDR on accrual								TDR on non-accrual										TDR on accrual								TDR on non-accrual
(In Thousands)	Real estate - Commercial		Commercial Business		Trade Finance		Total		Real estate - Commercial		Commercial Business		Trade Finance and Other		Total		TOTAL
(In thousands)																			Real estate - Commercial		Commercial Business		Trade Finance		Total		Real estate - Commercial		Commercial Business		Consumer & Other		Total		TOTAL
Payment concession	$	952	$	1,246	$	0	$	2,198	$	3,676	$	1,700	$	0	$	5,376	$	7,574	$	2,230	$	1,578	$	442	$	4,250	$	9,729	$	3,790	$	0	$	13,519	$	17,769
Maturity / Amortization concession		3,367		1,482		1,500		6,349		2,087		2,213		597		4,897		11,246		0		2,899		0		2,899		963		1,450		145		2,558		5,457
Rate concession		12,445		2551		0		14,996		3,067		678		0		3,745		18,741		14,389		2,637		0		17,026		3,320		0		0		3,320		20,346
Principal forgiveness		0		0		0		0		0		82		0		82		82		0		0		0		0		0		112		0		112		112

	$	16,764	$	5,279	$	1,500	$	23,543	$	8,830	$	4,673	$	597	$	14,100	$	37,643	$	16,619	$	7,114	$	442	$	24,175	$	14,012	$	5,352	$	145	$	19,509	$	43,684


	December 31, 2010																As of December 31, 2011
	TDR on accrual						TDR on non-accrual										TDR on accrual								TDR on non-accrual
(In Thousands)	Real estate - Commercial		Commercial Business		Total		Real estate - Commercial		Commercial Business		Trade Finance and Other		Total		TOTAL
(In thousands)																	Real estate - Commercial		Commercial Business		Trade Finance		Total		Real estate - Commercial		Commercial Business		Trade Finance and Other		Total		TOTAL
Payment concession	$	975	$	8,460	$	9,435	$	3,018	$	2,773	$	0	$	5,791	$	15,226	$	949	$	1,365	$	0	$	2,314	$	3,769	$	3,441	$	0	$	7,210	$	9,524
Maturity / Amortization concession		4,968		7,145		12,113		2,847		4,055		557		7,459		19,572		0		888		469		1,357		1,178		1,578		150		2,906		4,263
Rate concession		12,250		1,305		13,555		4,346		2,834		0		7,180		20,735		12,384		2,740		0		15,124		3,335		396		0		3,731		18,855
Principal forgiveness		0		0		0		0		91		0		91		91		0		0		0		0		0		78		0		78		78

	$	18,193	$	16,910	$	35,103	$	10,211	$	9,753	$	557	$	20,521	$	55,624	$	13,333	$	4,993	$	469	$	18,795	$	8,282	$	5,493	$	150	$	13,925	$	32,720

TDRs on accrual status are comprised of loans that were accruing at the time of restructuring and for which the Bank anticipates full repayment of both principal and interest. TDRs that are on non-accrual can be returned to accrual status after a

period of sustained performance, generally determined to be six months of timely payments as modified. Sustained performance includes the periods prior to the modification if the prior performance met or exceeded the modified terms. TDRs on accrual status at ~~September 30, 2011~~March 31, 2012 were comprised of 710 commercial real estate loans totaling ~~$16.8~~$16.4 million and 2125 commercial business loans totaling ~~$6.8~~$7.1 million. TDRs on accrual status at December 31, ~~2010~~2011 were comprised of 176 commercial real estate loans totaling ~~$18.2~~$13.3 million and 4319 commercial business loans totaling ~~$16.9~~$5.0 million. We expect that the TDRs on accrual status as of ~~September 30, 2011,~~March 31, 2012, which are all performing in accordance with their restructured terms, to continue to comply with the restructured terms because of the reduced principal or interest payments on these loans. TDRs that were restructured at market interest rates and had sustained performance as agreed under the modified loan terms may be reclassified as non-TDRs after each year end.

~~The following table presents loans by class modified as troubled debt restructuring that occurred during the three months and nine months ended September 30, 2011:~~

   Three months ended    Nine months ended
   September 30, 2011
   Number of
Loans    Pre-
Modification*    Post-
Modification    Number of
Loans    Pre-
Modification*    Post-
Modification
Real estate - Commercial

Retail
   0       $ 0       $ 0       3       $ 2,555       $ 1,871
Hotel & Motel
   0       0       0       4       10,084       9,119
Gas Station & Car Wash
   0       0       0       0       0       0
Mixed Use
   1       848       835       2       1,801       1,787
Industrial & Warehouse
   1       46       46       3       156       143
Other
   2       645       640       2       645       640
Real estate - Construction
   0       0       0       0       0       0
Commercial business
   7       272       764       22       1,382       1,773
Trade finance
   1       1,999       1,500       1       1,999       1,500
Consumer and other
   0       0       0       1       85       73












Total
   12       $ 3,810       $ 3,785       38       $ 18,707       $ 16,906

*	~~Pre-modification represents the month-end balance at the time of modification. Adjustment to recorded investment at the time of modification is not deemed material to this presentation.~~

The allowance for loan losses for the troubled debt restructuring described above as of September 30, 2011 was $4.4 million and the charge offs for the three months ended September 30, 2011 was $0 and $1.5 million.

The following table presents loans by class modified as troubled debt restructurings ~~for which there was a payment default within twelve months following the modification~~that occurred during the three months ended March 31, 2012:


(In thousands)	Number of Loans		Pre- Modification			Post- Modification
Real estate - Commercial
Retail		4	$	903		$	906
Hotel & Motel		0		0	��		0
Gas Station & Car Wash		1		218			217
Mixed Use		1		2,319			2,317
Industrial & Warehouse		1		1,064			1,064
Other		2		7,335			5,733
Real estate - Construction		0		0			0
Commercial business		8		2,538			2,524

Total		17	$	14,377		$	12,761

The specific reserves for the troubled debt restructurings described above as of March 31, 2012 was $1.3 million and ~~nine~~the charge offs for the three months ended ~~September 30, 2011:~~March 31, 2012 was $1.7 million.

The following table presents loans by class for TDR loans that have been modified within the previous twelve months and have subsequently had a payment default during the three months ended March 31, 2012:


	Three months ended				Nine months ended
	As of September 30, 2011
	Number of Loans		Balance		Number of Loans		Balance		Number of Loans		Balance
	(In thousands)								(In thousands)
Real estate - Commercial
Retail		1	$	52		3	$	1,476		1	$	258
Hotel & Motel		1		3,367		2		3,726
Gas Station & Car Wash		3		691		4		1,246
Industrial & Warehouse		2		2,277		4		2,374		2		1,102
Other		0		0		1		416		2		1,031
Commercial Business		17		4,599		29		5,718		7		2,883
Consumer and Other		1		82		1		82

		25	$	11,068		44	$	15,038		12	$	5,274

A loan is considered to be in payment default once it is 30 days contractually past due under the modified terms. The ~~allowance for loan losses~~specific reserves for the troubled debt ~~restructuring~~restructurings described above as of ~~September 30, 2011~~March 31, 2012 was ~~$0.4 million~~$472 thousand and the charge offs for the ~~nine~~three months ended ~~September 30, 2011~~March 31, 2012 was ~~$1.5 million.~~$0.

We have allocated ~~$7.6~~$7.2 million and ~~$15.8~~$6.4 million of specific reserves to TDRs as of ~~September 30, 2011~~March 31, 2012 and December 31, ~~2010,~~2011, respectively. As of ~~September 30, 2011~~March 31, 2012 and December 31, ~~2010,~~2011, we did not have any outstanding commitments to extend additional funds to these borrowers.

Covered Loans

On April 16, 2010, the Department of Financial Institutions closed Innovative Bank, California, and appointed the FDIC as its receiver. On the same date, Center Bank assumed the banking operations of Innovative Bank from the FDIC under a purchase and assumption agreement and two related loss sharing agreements with the FDIC. Upon the merger between Nara Bancorp and Center Financial, the Company assumed the loss sharing agreements with the FDIC.

Covered nonperforming assets totaled $3.7 million and $3.6 million at March 31, 2012 and December 31, 2011, respectively. These covered nonperforming assets are subject to the loss sharing agreements with the FDIC. The covered nonperforming assets at March 31, 2012 and December 31, 2011 were as follows:


(in thousands)	March 31, 2012		December 31, 2011
Covered loans on non-accrual status	$	0	$	0
Covered other real estate owned		3,677		3,575

Total covered nonperforming assets	$	3,677	$	3,575

Acquired covered loans	$	78,748	$	89,959

Loans accounted for under ASC 310-30 are generally considered accruing and performing loans and the accretable discount is accreted to interest income over the estimate life of the loan when cash flows are reasonably estimable. Accordingly, acquired impaired loans that are contractually past due are still considered to be accruing loans. The loans may be classified as nonaccrual if the timing and amount of future cash flows is not reasonably estimable.

7.8.

Borrowings

We maintain a secured credit facility with the Federal Home Loan Bank of San Francisco (“~~FHLB – SF”~~FHLB”) against which the Company may take advances. The borrowing capacity is limited to the lower of ~~30%~~25% of the Bank’s total assets or the Bank’s collateral capacity, which was ~~$666.2 million~~$1.3 billion at ~~September 30,~~March 31, 2012 and December 31, 2011. The terms of this credit facility require the Company to pledge eligible collateral with the ~~FHLB-SF~~FHLB equal to at least 100% of outstanding advances.

At ~~September 30, 2011~~March 31, 2012 and December 31, ~~2010,~~2011, real estate secured loans with a carrying amount of approximately ~~$1.1~~$2.0 billion were pledged as collateral for borrowings from the ~~FHLB-SF.~~FHLB. At ~~September 30, 2011~~March 31, 2012 and December 31, ~~2010,~~2011, other than ~~FHLB-SF~~FHLB stock, no securities totaling $2.2 million and $3.0 million, respectively, were pledged as collateral for borrowings from the ~~FHLB-SF.~~FHLB.

At ~~September 30, 2011~~March 31, 2012 and December 31, ~~2010, FHLB-SF~~2011, FHLB borrowings were ~~$300~~$332.1 million and ~~$350~~$344.4 million, had a weighted average interest rate of ~~3.19%~~1.85% and ~~3.18%~~1.93%, respectively, and had various maturities through September ~~2016.~~2017. At ~~September 30, 2011~~March 31, 2012 and December 31, ~~2010,~~2011, $205 million of the advances were putable advances with various ~~put~~putable dates and strike ~~prices were $150 million.~~prices. The cost of FHLB borrowings as of ~~September 30, 2011~~March 31, 2012 ranged between ~~0.68%~~0.23% and ~~4.57%~~4.52%. At ~~September 30, 2011,~~March 31, 2012, the Company had a remaining borrowing capacity of ~~$365.5~~$906.6 million.

At ~~September 30, 2011,~~March 31, 2012, the contractual maturities for FHLB-SF borrowings were as follows:


	Contractual Maturities		Maturity/ Put Date		Contractual Maturities		Maturity/ Put Date
	(In thousands)				(In thousands)
Due within one year	$	71,000	$	196,000	$	239,084	$	304,084
Due after one year through five years		229,000		104,000		70,000		25,000
Due after five years through ten years						20,000		0

	$	300,000	$	300,000	$	329,084	$	329,084

In addition, as a member of the Federal Reserve Bank ~~(“FRB”)~~ system, we may also borrow from the Federal Reserve Bank of San Francisco. The maximum amount that we may borrow from the Federal Reserve Bank’s discount window is calculated by the FRB based on the fair value of the securities and the outstanding principal balance of the qualifying loans that we pledge. At September 30, 2011, the Bank’s borrowing capacity at the FRB’s discount window was $310.4 million based on $403.0 millionup to 95% of the outstanding principal balance of the qualifying loans and the fair value of the securities that we ~~pledged. As~~pledge. At March 31, 2012, the principal balance of ~~September 30, 2011~~the qualifying loans were $511.1 million and ~~December 31, 2010,~~the collateral value of investment securities were $46.9 million, and no borrowing ~~was~~were outstanding against ~~the~~this line.

8.9.

��

Subordinated Debentures

At ~~September 30, 2011,~~March 31, 2012, five wholly-owned subsidiary grantor trusts ~~that were~~ established by former Nara Bancorp ~~at various times~~ had issued $38 million of pooled Trust Preferred Securities (“trust preferred securities”). and one wholly-owned subsidiary grantor trust established by former Center Financial Corporation had issued $18 million of trust preferred securities. Trust preferred securities accrue and pay distributions periodically at specified annual rates as provided in the ~~indentures for such securities.~~indentures. The trusts used the

net proceeds from ~~their respective offerings~~the offering to purchase a like amount of subordinated debentures (the “Debentures”) of ~~Nara~~BBCN Bancorp. The Debentures are the sole assets of the trusts. ~~Nara~~BBCN Bancorp’s obligations under the ~~Debentures~~subordinated debentures and related documents, taken together, constitute a full and unconditional guarantee by ~~Nara~~BBCN Bancorp of the obligations of the trusts. The trust preferred securities are mandatorily redeemable upon the maturity of the Debentures, or upon earlier redemption ~~of the Debentures~~ as provided in the indentures. ~~Nara~~BBCN Bancorp has the right to redeem the Debentures in whole (but not in part) on or after specific dates, at a redemption ~~prices~~price specified in the indentures plus any accrued but unpaid interest to the redemption date. ~~Nara~~BBCN Bancorp also has a right to defer consecutive payments of interest on the debentures for up to five years.

The following table is a summary of trust preferred securities and ~~the related Debentures~~debentures at ~~September 30, 2011:~~March 31, 2012:

      (Dollars in Thousands)
Issuance Trust
   Issuance
Date    Trust
Preferred
Security Amount    Subordinated
Debentures
Amount    Rate Type    Initial Rate Rate at
9/30/2011 Maturity
Date
Nara Bancorp Capital Trust I
   3/28/2001    $ 10,000       $ 10,400       Fixed    N/A    10.18 % 6/8/2031
Nara Capital Trust III
   6/5/2003    5,000       5,155       Variable    4.44 % 3.50 % 6/15/2033
Nara Statutory Trust IV
   12/22/2003    5,000       5,155       Variable    4.02 % 3.10 % 1/7/2034
Nara Statutory Trust V
   12/17/2003    10,000       10,310       Variable    4.12 % 3.30 % 12/17/2033
Nara Statutory Trust VI
   3/22/2007    8,000       8,248       Variable    7.00 % 2.00 % 6/15/2037





TOTAL ISSUANCE
      $ 38,000       $ 39,268

      (Dollars in Thousands)
Issuance Trust
   Issuance
Date    Trust
Preferred
Security
Amount    Subordinated
Debentures
Amount    Rate
Type    Initial
Rate Rate at
March 31,
2012 Maturity
Date
Nara Bancorp Capital Trust I
   3/28/2001       $ 10,000       $ 10,400       Fixed       10.18 % 10.18 % 6/8/2031
Nara Capital Trust III
   6/5/2003       5,000       5,155       Variable       4.44 % 3.62 % 6/15/2033
Nara Statutory Trust IV
   12/22/2003       5,000       5,155       Variable       4.02 % 3.42 % 1/7/2034
Nara Statutory Trust V
   12/17/2003       10,000       10,310       Variable       4.12 % 3.42 % 12/17/2033
Nara Statutory Trust VI
   3/22/2007       8,000       8,248       Variable       7.00 % 2.12 % 6/15/2037
Center Capital Trust I
   12/29/2003       18,000       12,869       Variable       3.42 % 1/7/2034





TOTAL ISSUANCE
      $ 56,000       $ 52,137

The Company’s investment in the common trust securities of the issuer trusts of ~~$1.5~~$2.0 million and $2.0 million at ~~September 30, 2011~~March 31, 2012 and December 31, ~~2010~~2011, respectively, is included in other assets. Although the ~~securities~~subordinated debt issued by the trusts are not included as a component of stockholders’ equity in the consolidated balance sheets, the ~~securities are~~debt is treated as capital for regulatory purposes. Specifically, under applicable regulatory guidelines, the ~~$38~~$56 million of securities issued by the trusts qualify as Tier 1 capital, along with the ~~$64.9~~$120 million of our outstanding Fixed Rate Cumulative Perpetual Preferred Stock, net of discount. The trust preferred security debt issuances are includable in Tier I capital up to a maximum of 25% of capital on an aggregate basis. Any amount that exceeds 25% qualifies as Tier 2 capital. At ~~September 30, 2011,~~March 31, 2012, all of the ~~$38~~$56 million of the trusts’ securities qualified as Tier 1 capital along with the ~~$64.9~~$120 million of preferred stock. In July 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) was signed into law which, among other things, limits to bank holding companies having total assets of more than $15 billion the ability to treat trust preferred security debt issuances as Tier 1 capital. Since the Company had less than $15 billion in assets at ~~September 30, 2011,~~March 31, 2012, under the Dodd-Frank Act, ~~it will~~wewill be able to continue to include its existing trust preferred securities in Tier 1 capital.

The Board of Governors of the Federal Reserve System, which is Nara Bancorp’s federal banking regulator, has promulgated a modification of the capital regulations affecting trust preferred securities. Under this modification, beginning September 30, 2011, the Company is required to use a more restrictive formula to determine the amount of trust preferred securities that can be included in regulatory Tier I capital. The Company will be allowed to include in Tier I capital an amount of trust preferred securities equal to no more than 25% of the sum of all core capital elements, which is generally defined as stockholders’ equity less certain intangibles, including core deposit intangibles, net of any related deferred income tax liability.

9.10.

Derivative Financial Instruments and Hedging Activities

As part of our asset and liability management strategy, wethe Company may enter into derivative financial instruments, such as interest rate swaps, caps and floors, with the overall goal of minimizing the impact of interest rate fluctuations on our net interest margin. Interest rate swaps and caps involve the exchange of fixed-rate and variable-rate interest payment obligations without the exchange of the underlying notional amounts.

During the third quarter of 2009, we entered into two two-year interest rate cap agreements with an aggregate notional amount of $50 million which were matured in the third quarter of 2011. Under these cap agreements, we receive quarterly payments from the counterparty when the quarterly resetting 3 Month London-Interbank Offered Rate (“3 Mo. LIBOR”) exceeds the strike level of 2.00%. The upfront fee paid to the counterparty in entering into these two interest rate cap agreements was $359 thousand. During the first quarter of 2010, wethe Company entered into ~~another~~a three-year interest rate cap agreement with an aggregate notional amount of $50 million. Under this cap agreement, ~~we also receive~~the Company receives quarterly payments from the counterparty when the quarterly resetting 3 ~~Mo. LIBOR~~Month London-Interbank Offered Rate exceeds the strike level of 2.00%. The upfront fee paid to the counterparty in entering into this interest rate cap agreement was $890 thousand.

These interest rate cap agreements are considered “free-standing” due to non-designation of a hedge relationship to any of its financial assets or liabilities. Under FASB ASC 815, valuation gains or losses on interest rate caps not designated as hedging instruments are recognized in earnings. At ~~September 30, 2011,~~March 31, 2012, the aggregate fair value of the outstanding interest rate caps was ~~$14~~$1 thousand, and we recognized mark-to-market losses on valuation of ~~$14~~$8 thousand for the ~~quarter and $153 thousand for the nine~~three months ended ~~September 30, 2011.~~March 31, 2012.

At ~~September 30,~~March 31, 2012 and December 31, 2011, summary information about these interest-rate caps is as follows:


	March 31, 2012		December 31, 2011
Notional amounts	$	50.0 million	$	50.0 million
Weighted average pay rates		N/A		N/A
Weighted average receive rates		N/A		N/A
Weighted average maturity	~~1.41~~	0.91 years		1.16 years
Fair value of combined interest rate ~~cap~~caps	$14	1 thousand	$	9 thousand

~~The following tables summarize the fair value of derivative financial instruments utilized by the Company:~~

   Derivatives at
   September 30, 2011    December 31, 2010
   (In thousands)
   Balance Sheet
Location    Fair Value    Balance Sheet
Location    Fair Value
Derivatives not designated as hedging instruments:

Interest rate caps
   Other Assets       $ 14       Other Assets    $ 167




Total derivatives not designated as hedging instruments
      $ 14          $ 167

The effect of derivative instruments on the Consolidated Statement of Income for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2012 and 2011 ~~and 2010~~ are as follows:


		Three Months Ended						Nine Months Ended
		September 30, 2011			September 30, 2010			September 30, 2011			September 30, 2010					Three Months Ended
		(In thousands)						(In thousands)								March 31, 2012			March 31, 2011
	Location of Gain or (Loss) Recognized in Income on Derivatives	Amount of Gain or (Loss) Recognized in Income on Derivatives						Amount of Gain or (Loss) Recognized in Income on Derivatives						Location of Gain or (Loss) Recognized in Income on Derivatives		(In thousands) Amount of Gain or (Loss) Recognized in Income on Derivatives
Derivatives not designated as hedging instruments under FASB ASC 815:
Interest rate contracts (1)	Other income	$	(14	)	$	(237	)	$	(153	)	$	(985	)		Other income	$	(8	)	$	(22	)

Total		$	(14	)	$	(237	)	$	(153	)	$	(985	)

(1)	Includes amounts representing the net interest payments as stated in the contractual agreements and the valuation gains or (losses) on interest rate contracts not designated as hedging instruments.

~~10.~~

~~Business Segments~~

Our management utilizes an internal reporting system to measure the performance of our various operating segments. We have identified three principal operating segments for the purposes of management reporting: banking operations, trade finance services (“TFS”) and small business administration (“SBA”) lending services. Information related to our remaining centralized functions and eliminations of inter-segment amounts has been aggregated and included in banking operations. Although all three operating segments offer financial products and services, they are managed separately based on each segment’s strategic focus. The banking operations segment focuses primarily on commercial and consumer lending and deposit operations throughout our branch network. The TFS segment focuses primarily on allowing our import/export customers to handle their international transactions. Trade finance products include the issuance and collection of letters of credit, international collection and import/export financing. The TFS business segment also originates loan products, such as trade finance loans, commercial business loans and other loans. The SBA segment primarily provides our customers with access to the U.S. SBA guaranteed lending program. The SBA segment also makes commercial real estate and commercial business loans, which are not under the SBA guarantee program.

Operating segment results are based on our internal management reporting process, which reflects assignments and allocations of capital, certain operating and administrative costs and the provision for loan losses. Non-interest income and non-interest expense, including depreciation and amortization, directly attributable to a segment are assigned to that business. We allocate indirect costs, including overhead expense, to the various segments based on several factors, including, but not limited to, full-time equivalent employees, loan volume and deposit volume. We evaluate the overall performance based on profit or loss from operations before income taxes, excluding gains and losses that are not expected to reoccur. Future changes in our management structure or reporting methodologies may result in changes to the measurement of our operating segment results.

~~The following tables present the operating results and other key financial measures for the individual operating segments for the three and nine months ended September 30, 2011 and 2010.~~

Three Months Ended September 30,

(Dollars in thousands)    Business Segment
2011
   Banking
Operations    TFS    SBA Company
Net interest income, before provision for loan losses
   $ 24,748       $ 3,000       $ 3,305    $ 31,053
Less provision for (reversal of) loan losses*
   3,295       2,442       (2,254 ) 3,483
Non-interest income
   2,306       631       1,321    4,258






Net revenue
   23,759       1,189       6,880    31,828
Non-interest expense
   15,692       521       604    16,817






Income (loss) before income taxes
   $ 8,067       $ 668       $ 6,276    $ 15,011






Goodwill
   $ 2,509       $ 0       $ 0    $ 2,509






Total assets
   $ 2,535,001       $ 230,245       $ 250,881    $ 3,016,127






2010
   Banking
Operations    TFS    SBA    Company
Net interest income, before provision for loan losses
   $ 22,307       $ 2,953       $ 2,350       $ 27,610
Less provision for loan losses*
   7,776       98       3,226       11,100
Non-interest income
   3,983       710       2,646       7,339








Net revenue
   18,514       3,565       1,770       23,849
Non-interest expense
   13,633       641       1,419       15,693








Income (loss) before income taxes
   $ 4,881       $ 2,924       $ 351       $ 8,156








Goodwill
   $ 2,509       $ 0       $ 0       $ 2,509








Total assets
   $ 2,499,001       $ 235,792       $ 250,183       $ 2,984,976

*	~~The overall decline in provision for loan losses is due to decline in net charge-offs for the current reporting period.~~

Nine Months Ended September 30,

(Dollars in thousands)    Business Segment
2011
   Banking
Operations    TFS    SBA    Company
Net interest income, before provision for loan losses
   $ 75,686       $ 6,700       $ 6,881       $ 89,267
Less provision for loan losses*
   8,474       4,249       6,069       18,792
Non-interest income
   6,758       1,916       7,778       16,452








Net revenue
   73,970       4,367       8,590       86,927
Non-interest expense
   46,718       1,551       2,129       50,398








Income (loss) before income taxes
   $ 27,252       $ 2,816       $ 6,461       $ 36,529








Goodwill
   $ 2,509       $ 0       $ 0       $ 2,509








Total assets
   $ 2,535,001       $ 230,245       $ 250,881       $ 3,016,127








2010
   Banking
Operations TFS    SBA Company
Net interest income, before provision for loan losses
   $ 64,268    $ 7,833       $ 7,560    $ 79,661
Less provision for loan losses*
   53,573    5,662       19,595    78,830
Non-interest income
   14,863    1,929       3,391    20,183




Net revenue
   25,558    4,100       (8,644 ) 21,014
Non-interest expense
   40,936    1,636       3,272    45,844




Income (loss) before income taxes
   $ (15,378 ) $ 2,464       $ (11,916 ) $ (24,830 )




Goodwill
   $ 2,509    $ 0       $ 0    $ 2,509




Total assets
   $ 2,499,001    $ 235,792       $ 250,183    $ 2,984,976

*	~~The overall decline in provision for loan losses is due to decline in net charge-offs for the current reporting period.~~

The SBA business segment primarily originates for sale and services SBA loans. It also originates commercial real estate loans and commercial business loans, not covered by the SBA guarantee program. Total SBA business segment assets at September 30, 2011 and 2010 included SBA loans (principally, the unguaranteed portion) of $91.9 million and $102.9 million; commercial real estate loans of $118.2 million and $124.6 million; and commercial business loans of $17.0 million and $16.9 million, respectively.

11.

Income Taxes

Our Company and its subsidiaries are subject to U.S. federal income tax as well as state income taxes. We had total unrecognized tax benefits of ~~$340~~$685 thousand at ~~September 30, 2011~~March 31, 2012 and ~~$202~~$569 thousand at December 31, ~~2010~~2011 that relate primarily to uncertainties related to ~~state income tax matters in prior years. The amount of unrecognized tax benefits increased slightly during the quarter due to state income tax positions~~California enterprise zone loan interest deductions taken in prior years.

We anticipate an increase of approximately $126 thousand in the unrecognized tax benefit related to the California enterprise zone loan interest deduction within the next twelve months. We are subject to U.S. federal income taxes, California franchise taxes and various other state franchise taxes.

The statute of limitations related to the consolidated Federal income tax return is closed for all tax years up to and including ~~2006.~~2007. The expiration of the statute of limitations ~~for~~related to the various state income ~~taxes~~and franchise tax returns varies by state.

We are currently under examination by New York City for the 2007, 2008, and 2009 tax years. While the outcome of the examination is unknown, we expect no material adjustments.

We recognize interest and penalties related to income tax matters in income tax expense. We had ~~accrued~~approximately $47 thousand and $77 thousand for interest and penalties ~~of approximately $43 thousand and $23 thousand~~accrued at ~~September 30, 2011~~March 31, 2012 and December 31, ~~2010,~~2011, respectively.

Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all, of the deferred tax asset will not be realized. In assessing the realization of deferred tax assets, management evaluates both positive and negative evidence, including the existence of any cumulative losses in the current year and the prior two years, the amount of taxes paid in available carry-back years, the forecasts of future income, applicable tax planning strategies, and assessments of current and future economic and business conditions. This analysis is updated quarterly and adjusted as necessary. Based on the analysis, the Company has determined that except for the valuation allowance against the capital loss carryforwards of $53 thousand, a valuation allowance for deferred tax assets was not required as of ~~September 30, 2011.~~March 31, 2012.

12.

Fair Value Measurements

FASB ASC 820,Fair Value Measurements and Disclosures, establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

Securities Available for Sale

The fair values of securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs).

Impaired Loans

The fair values of impaired loans are generally measured for impairment using the practical expedients permitted by FASB ASC 310-10-35 including impaired loans measured at an observable market price (if available), or at the fair value of the loan’s collateral (if the loan is collateral dependent). Fair value of the loan’s collateral, when the loan is dependent on collateral, is determined by appraisals or independent valuation, which is then adjusted for the cost related to liquidation of the collateral. These are considered Level 3 inputs.

Derivatives

The fair value of our derivative financial instruments, including interest rate swaps and caps, is based on derivative valuation models using market data inputs as of the valuation date that can generally be verified and do not typically involve significant management judgments. (Level 2 inputs).

Other Real Estate Owned

Other real estate owned is valued at the time the loan is foreclosed upon and the asset is transferred to other real estate owned. The value is based primarily on third party appraisals, less costs to sell and result in a Level 3 classification of the inputs for determining fair value. Other real estate owned is reviewed and evaluated on at least an annual basis for additional impairment and adjusted accordingly, based on the same factors identified above.

Loans held for sale

Loans held for sale are carried at the lower of cost or fair value, as determined by outstanding commitments from investors, or based on recent comparable sales, if available, and if not available, are based on discounted cash flows using current market rates applied to the estimated life and credit risk (Level 2 inputs) or may be assessed based upon the fair value of the collateral which is obtained from recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are typically significant and result in Level 3 classification of the inputs for determining fair value.

For the quarter ended March 31, 2012, there were no changes in valuation techniques and related inputs resulting from the adoption of ASU 2011-04.

The table below summarizes information about valuation method, inputs and assumptions for nonrecurring Level 3 fair value measurements. The weight assigned to each input is based on the facts and circumstances that exist at the date of measurement.

Assets and liabilities measured at fair value on a recurring basis are summarized below:


			Fair Value Measurements Using								Fair Value Measurements at the End of the Reporting Period Using
	September 30, 2011		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		March 31, 2012		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)								(In thousands)
Assets:
Securities available for sale:
GSE bonds	$	51,767	$	0	$	51,767	$	0
U.S. Treasury									$	300	$	0	$	300	$	0
GSE collateralized mortgage obligations		115,476		0		115,476		0		211,396		0		211,396		0
GSE mortgage-backed securities		270,762		0		270,762		0		462,498		0		462,498		0
Corporate note		3,406		0		3,406		0
Trust preferred security										3,698		0		3,698		0
Municipal bonds		5,658		0		5,658		0		5,018		0		5,018		0
Mutual funds		8,720		8,720		0		0		14,898		14,898		0		0
Derivatives - Interest rate caps		14		0		14		0
Derivatives—Interest rate caps										1		0		1		0

There were no ~~significant~~ transfers between Level 1, 2 and 3 during the quarter ended ~~September 30, 2011.~~

March 31, 2012.


			Fair Value Measurements Using								Fair Value Measurements at the End of the Reporting Period Using
	December 31, 2010		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		December 31, 2011		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)								(In thousands)
Assets:
Securities available for sale:
GSE bonds	$	125,718	$	0	$	125,718	$	0
U.S. Treasury									$	300	$	0	$	300	$	0
GSE collateralized mortgage obligations		103,201		0		103,201		0		227,836		0		227,836		0
GSE mortgage-backed securities		284,834		0		284,834		0		487,754		0		487,754		0
Corporate note		3,708		0		3,708		0
Trust preferred securities										4,348		0		4,348		0
Municipal bonds		5,258		0		5,258		0		5,764		0		5,764		0
Mutual funds		5,519		5,519		0		0		14,918		14,918		0		0
Derivatives - Interest rate caps		167		0		167		0
Derivatives—Interest rate caps										9		0		9		0

Fair value adjustments for interest rate caps resulted in a net expense of ~~$14 thousand and $153~~$8 thousand for the three ~~and nine~~ months ended ~~September 30, 2011~~March 31, 2012 and ~~$901~~$157 thousand for the year ended December 31, ~~2010.~~2011.

Assets measured at fair value on a non-recurring basis are summarized below:


			Fair Value Measurements Using								Fair Value Measurements at the End of the Reporting Period Using
	September 30, 2011		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		March 31, 2012		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Gains (Losses) for the Three Months Ended March 31, 2012
	(In thousands)								(In thousands)
Assets:
Impaired loans at fair value:
Real estate loans	$	13,629	$	0	$	0	$	13,629	$	13,464	$	0	$	0	$	13,464	$	(630	)
Commercial business		1,306		0		0		1,306		5,824		0		0		5,824		530
Loans held for sale, net*		5,620		0		5,620		0		11,140		0		11,140		0		(668	)
Other real estate owned*		3,356		0		0		3,356		2,986		0		0		2,986		(363	)

The balance consists of real estate portfolio segment only.

      Fair Value Measurements
at the End of the Reporting Period Using
   December 31,
2011    Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)    Significant
Other
Observable
Inputs
(Level 2)    Significant
Unobservable
Inputs
(Level 3)    Total Gains
(Losses) for the
Twelve Months
Ended
December 31,
2011
   (In thousands)
Assets:

Impaired loans at fair value:

Real estate loans
   $ 15,485       $ 0       $ 0       $ 15,485       $ (6,018 )
Commercial business
   6,360       0       0       6,360       (2,553 )
Loans held for sale, net*
   6,901       0       6,901       0       (3,393 )
Other real estate owned*
   3,471       0       0       3,471       (1,031 )

      Fair Value Measurements at Using
   December 31, 2010    Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)    Significant
Other
Observable
Inputs
(Level 2)    Significant
Unobservable
Inputs
(Level 3)
   (In thousands)
Assets:

Impaired loans at fair value:

Real estate loans
   $ 35,009       $ 0       $ 0       $ 35,009
Commercial business
   6,611       0       0       6,611
Loans held for sale, net*
   3,225       0       3,225       0
Other real estate owned*
   675       0       0       675

The balance consists of real estate portfolio segment only.

Impaired loans, which are measured for impairment using the fair value of the loan collateral, had a carrying amount of $23.9 million at September 30, 2011, after partial charge-offs of $8.6 million. In addition, these loans had a specific valuation allowance of $3.9 million at September 30, 2011. Of this $23.9 million, $18.8 million were carried at their fair value of $14.9 million as a result of the aforementioned charge-offs and specific valuation allowances. The remaining $5.1 million were carried at cost at September 30, 2011, as the fair value of the collateral on these loans exceeded the book value for each individual credit. The Company also has impaired loans totaling $51.7 million at September 30, 2011 which are measured based on the present value of expected future cash flows and are not included in the above table as this is not a measurement of fair value. Of these, $47.9 million were carried below cost as a result of charge-offs or assigned specific reserves of $11.5 million at September 30, 2011. The remaining $3.8 million of impaired loans measured based on the present value of expected cash flows are carried at cost. Charge-offs and changes in specific valuation allowances for the three and nine months ended September 30, 2011 on impaired loans carried at the fair value of loan collateral at September 30, 2011 resulted in additional provisions for loan losses of $3.0 million and $12.2 million, respectively.

Impaired loans, which are measured for impairment using the fair value of the loan collateral, had a loan principal balance of $94.6 million at December 31, 2010, after partial charge-offs of $20.0 million. In addition, these loans had a specific valuation allowance of $11.2 million at December 31, 2010. Of this $94.6 million, $52.8 million were carried at their fair value of $41.6 million as a result of the aforementioned charge-offs and specific valuation allowances. The remaining $41.8 million were carried at cost at December 31, 2010, as the fair value of the collateral on these loans exceeded the book value for each individual credit. The Company also has impaired loans totaling $28.1 million at December 31, 2010 which are measured based on the present value of expected cash flows and are not included in the above table as this is not a measurement of fair value. Of these, $27.8 million were carried below cost as a result of charge-offs or assigned specific reserves of $9.9 million at December 31, 2010. The remaining $231 thousand of impaired loans measured based on the present value of expected cash flows are carried at cost. Charge-offs and changes in specific valuation allowances during 2010 on impaired loans carried at the fair value of loan collateral at December 31, 2010 resulted in additional provision for loan losses of $43.2 million.

Loans held for sale, which were carried at their fair value, approximated $5.6 million, after partial charge-offs of $3.4 million at September 30, 2011. The charges-offs on loans held for sale were $0.9 million and $11.5 million for the three and nine months ended September 30, 2011.

Loans held for sale, which were carried at their fair value, approximated $3.2 million, after partial charge-offs of $1.3 million and a valuation allowance of $100 thousand at December 31, 2010. Total charge-offs on loans held for sale were $33.8 million during 2010.

Other real estate owned carried at its fair value had a carrying amount of $3.4 million at September 30, 2011, which is made up of an outstanding balance of $3.7 million, with a valuation allowance of $296 thousand. Changes in the valuation allowance on other real estate owned outstanding at September 30, 2011 resulted in a write-down of $386 thousand and $491 thousand for the three and nine months ended September 30, 2011.

Other real estate owned carried at its fair value had a carrying amount of $675 thousand at December 31, 2010, which is made up of an outstanding balance of $1.1 million, with a valuation allowance of $439 thousand. Changes in the valuation allowance on other real estate owned outstanding at December 31, 2010 resulted in a write-down of $2.2 million during 2010.

Fair Value of Financial Instruments

Carrying amounts and estimated fair values of financial instruments, not previously presented, at ~~September 30, 2011~~March 31, 2012 and December 31, ~~2010~~2011 were as follows:

   September 30, 2011
   Carrying
Amount Estimated
Fair Value
   (In thousands)
Financial Assets:

Cash and cash equivalents
   $ 175,827    $ 175,827
Loans held for sale
   25,722    27,823
Loans receivable—net
   2,193,184    2,243,339
Federal Reserve Bank stock
   6,372    N/A
Federal Home Loan Bank stock
   15,561    N/A
Accrued interest receivable
   8,257    8,257
Customers’ liabilities on acceptances
   9,343    9,343
Financial Liabilities:

Noninterest-bearing deposits
   $ (454,842 ) $ (454,842 )
Saving and other interest bearing demand deposits
   (835,161 ) (835,161 )
Time deposits
   (977,193 ) (979,413 )
Borrowings from Federal Home Loan Bank
   (300,000 ) (313,118 )
Subordinated debentures
   (39,268 ) (45,174 )
Accrued interest payable
   (3,752 ) (3,752 )
Bank’s liabilities on acceptances outstanding
   (9,343 ) (9,343 )
   December 31, 2010    March 31, 2012
   Carrying
Amount Estimated
Fair Value    Carrying
Amount    Estimated
Fair Value    Fair Value
Measurement
Using
   (In thousands)    (In thousands)
Financial Assets:

Cash and cash equivalents
   $ 172,331    $ 172,331       $ 365,679       $ 365,679       Level 1
Term federal funds sold
   20,000       20,000       Level 1
Loans held for sale
   23,702    25,364       28,107       30,508       Level 2
Loans receivable—net
   2,043,806    2,076,384       3,655,602       3,941,945       Level 3
Federal Reserve Bank stock
   6,367    N/A
Federal Home Loan Bank stock
   17,717    N/A       26,064       N/A       N/A
Accrued interest receivable
   8,648    8,648       12,253       12,253       Level 2
FDIC loss share receivable
   11,095       11,095       Level 3
Customers’ liabilities on acceptances
   11,528    11,528       12,187       12,187       Level 2
Financial Liabilities:

Noninterest-bearing deposits
   $ (388,731 ) $ (388,731 )    $ 1,011,466       $ 1,011,466       Level 2
Saving and other interest bearing demand deposits
   (814,848 ) (814,848 )    1,433,752       1,433,752       Level 2
Time deposits
   (972,535 ) (977,762 )    1,475,245       1,482,475       Level 2
Borrowings from Federal Home Loan Bank
   (350,000 ) (365,167 )    332,109       336,606       Level 2
Subordinated debentures
   (39,268 ) (39,649 )    52,137       49,848       Level 2
Secured borrowing
   (11,758 ) (11,758 )
Accrued interest payable
   (4,830 ) (4,830 )    6,485       6,485       Level 2
Bank’s liabilities on acceptances outstanding
   (11,528 ) (11,528 )    12,187       12,187       Level 2
   December 31, 2011
   Carrying
Amount    Estimated
Fair Value
   (In thousands)
Financial Assets:

Cash and cash equivalents
   $ 300,110       $ 300,110
Term federal funds sold
   40,000       40,000
Loans held for sale
   18,000       19,374
Loans receivable—net
   3,655,029       3,911,865
Federal Home Loan Bank stock
   27,373       N/A
Accrued interest receivable
   13,439       13,439
FDIC loss share receivable
   10,819       10,819
Customers’ liabilities on acceptances
   10,515       10,515
Financial Liabilities:

Noninterest-bearing deposits
   984,350       984,350
Saving and other interest bearing demand deposits
   1,435,441       1,435,441
Time deposits
   1,521,101       1,532,152
Borrowings from Federal Home Loan Bank
   344,402       349,311
Subordinated debentures
   52,102       53,757
Accrued interest payable
   6,519       6,519
Bank’s liabilities on acceptances outstanding
   10,515       10,515
The methods and assumptions used to estimate fair value are described as follows.
The carrying amount is the estimated fair value for cash and cash equivalents, savings and other interest bearing demand deposits, accrued interest receivable and payable, customer’s and Bank’s liabilities on acceptances, non-interest-bearing deposits, short-term debt, secured borrowings, and variable rate loans or deposits that reprice frequently and fully. For fixed rate loans or deposits and for variable rate loans or deposits with infrequent repricing or repricing limits, fair value is based on discounted cash flows using current market rates applied to the estimated life and credit risk. The allowance for loan losses is considered to be a reasonable estimate of discount for credit quality concerns. Fair value of loans held for sale is based on market quotes. Fair value of time deposits and debt is based on current rates for similar financing. It was not practicable to determine the fair value of Federal Reserve Bank stock or Federal Home Loan Bank stock due to restrictions placed on their transferability. The fair value of commitments to fund loans represents fees currently charged to enter into similar agreements with similar remaining maturities and is not presented herein. The fair value of these financial instruments is not material to the consolidated financial statements.
13. ~~Comprehensive Income (Loss)~~
~~Comprehensive income (loss) components and related tax effects were as follows:~~

   Three Months Ended
September 30, Nine Months Ended
September 30,
   2011 2010 2011 2010
   (In thousands)
Net income (loss)
   $ 9,815    $ 5,100    $ 22,879    $ (13,309 )
Unrealized holding gains on securities available-for sale and interest only strips
   3,479    287    6,606    10,716
Reclassification adjustments for gains realized in income
   (64 ) (4 ) (70 ) (6,396 )


Net unrealized gain
   3,415    283    6,536    4,320
Tax expense (benefit)
   1,308    97    2,532    1,656


Net of tax amount
   $ 2,107    $ 186    $ 4,004    $ 2,664
Reclassification adjustment for gains realized for the ineffective portion of swaps and caps and discontinued hedge positions
   $ (11 ) $ (11 ) $ (33 ) $ (33 )


Net unrealized loss
   (11 ) (11 ) (33 ) (33 )
Tax benefit
   (4 ) (4 ) (13 ) (13 )


Net of tax amount
   $ (7 ) $ (7 ) $ (20 ) $ (20 )


Total other comprehensive income
   $ 2,100    $ 179    $ 3,984    $ 2,644


Comprehensive income (loss)
   $ 11,915    $ 5,279    $ 26,863    $ (10,665 )


~~14.~~ Stockholders’ Equity and Regulatory Matters
The Company and the Bank are subject to various regulatory capital requirements administered by the federal and state banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s and the Bank’s financial statements, such as restrictions on the growth, expansion or the payment of dividends or other capital distributions or management fees. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Prompt corrective action provisions are not applicable to bank holding companies.
Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum ratios (set forth in the table below) of total and Tier I capital (as defined in the regulations) to risk-weighted assets (as defined) and of Tier I capital (as defined) to average assets (as defined). Management believes that, as of ~~September 30, 2011~~March 31, 2012 and December 31, ~~2010,~~2011, the Company and the Bank met all capital adequacy requirements to which they are subject.
As of ~~September 30, 2011~~March 31, 2012 and December 31, ~~2010,~~2011, the most recent regulatory notification categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain minimum total risk-based, Tier I risk-based and Tier I leverage ratios as set forth in the table below. There are no conditions or events since the notification that management believes have changed the Bank’s category.
On November 21, 2008, the Company received $67 million from the U.S. Treasury through its TARP capital purchase plan and issued 67,000 shares of cumulative preferred stock. The preferred stock will pay cumulative dividends at the rate of 5% per year for the first five years and 9% per year thereafter. The shares are callable by the Company at par after three years if the repurchase is made with proceeds of a new offering or placement of common equity or of certain preferred stock treated as Tier 1 capital under applicable Federal banking regulations.
In conjunction with the purchase of the Company’s preferred stock, the U.S. Treasury received a warrant to purchase 1,042,531 shares of the Company’s common stock at $9.64 per share. The term of the warrant is ten years. On December 3, 2009, US Treasury approved the Company’s request for an adjustment to the Company’s warrant share position due to a qualified equity offering in November 2009. The adjusted number of warrant is 521,266, or 50% of original issuance of 1,042,531.
Upon the merger with Center Financial, we issued 55,000 shares of a new series of our preferred stock having substantially the same rights, preferences, privileges and voting powers as our Series A Preferred Stock in exchange for the shares of similar preferred issued by Center Financial under the Treasury Department’s TARP Capital Purchase Program. The new series of preferred stock is designated as our Fixed Rate Cumulative Perpetual Preferred Stock, Series B. The ten-year warrant to purchase Center Financial common stock that was issued in connection with Center Financial’s sale of its Series A Preferred Stock to the Treasury Department was converted into a warrant to purchase BBCN Bancorp common stock upon our merger with Center. Reflecting the merger exchange ratio of 0.7805, the warrant now entitles the holder of the warrant to purchase, in one or more exercises of the warrant, up to 337,480 shares of BBCN Bancorp common stock at a price of $12.22 per share.
Prior to the earlier of the third anniversary of the closing date and the date on which the preferred shares have been redeemed in whole or the investor has transferred all of the preferred shares to third parties which are not affiliates of the investor, neither the Company nor any Company subsidiary shall, without the consent of the investor, declare or pay any dividend or make any distribution on its common stock (other than (A) regular quarterly cash dividends of not more than $0.0275, which was the amount of the last quarterly cash dividend per share declared or, if lower, publicly announced an intention to declare, on the common stock prior to October 14, 2008, as adjusted for any stock split, stock dividend, reverse stock split, reclassification or similar transaction, (B) dividends payable solely in shares of common stock and (C) dividends or distributions of rights or junior stock in connection with a stockholders’ rights plan). The preferred stock issued qualifies as Tier 1 capital.
In conjunction with the purchase of the Company’s preferred stock, the U.S. Treasury received a warrant to purchase 1,042,531 shares of the Company’s common stock at $9.64 per share. The term of the warrant is ten years. On December 3, 2009, US Treasury approved the Company’s request for an adjustment to the Company’s warrant share position due to a qualified equity offering in November 2009. The adjusted number of warrants are 521,266 shares, or 50% of original issuance of 1,042,531.
The Company’s and the Bank’s actual capital amounts and ratios are presented in the table below:

   Actual Required
For Capital
Adequacy Purposes Required
To Be Well
Capitalized under
Prompt Corrective
Action Provisions    Actual Required
For Capital
Adequacy Purposes Required
To Be Well
Capitalized under
Prompt Corrective
Action Provisions
   Amount    Ratio Amount    Ratio Amount    Ratio    Amount    Ratio Amount    Ratio Amount    Ratio
   (Dollars in thousands)    (Dollars in thousands)
As of September 30, 2011

As of March 31, 2012

Total capital (to risk-weighted assets):

Company
   $ 431,969       18.0 % $ 192,241       8.0 % N/A       N/A       $ 810,404       20.1 % $ 322,431       8.0 % N/A       N/A
Bank
   $ 424,778       17.7 % $ 192,029       8.0 % $ 240,037       10.0 %    $ 746,199       18.5 % $ 322,174       8.0 % $ 402,717       10.0 %
Tier I capital (to risk-weighted assets):

Company
   $ 401,441       16.7 % $ 96,121       4.0 % N/A       N/A       $ 759,784       18.9 % $ 161,215       4.0 % N/A       N/A
Bank
   $ 394,283       16.4 % $ 96,015       4.0 % $ 144,022       6.0 %    $ 695,618       17.3 % $ 161,087       4.0 % $ 241,630       6.0 %
Tier I capital (to average assets):
            ��
Company
   $ 401,441       13.5 % $ 118,954       4.0 % N/A       N/A       $ 759,784       15.1 % $ 201,560       4.0 % N/A       N/A
Bank
   $ 394,283       13.3 % $ 118,940       4.0 % $ 148,675       5.0 %    $ 695,618       13.8 % $ 201,486       4.0 % $ 251,858       5.0 %

   Actual Required
For Capital
Adequacy Purposes Required
To Be Well
Capitalized under
Prompt Corrective
Action Provisions    Actual Required
For Capital
Adequacy Purposes Required
To Be Well
Capitalized under
Prompt Corrective
Action Provisions
   Amount    Ratio Amount    Ratio Amount    Ratio    Amount    Ratio Amount    Ratio Amount    Ratio
   (Dollars in thousands)    (Dollars in thousands)
As of December 31, 2010

As of December 31, 2011

Total capital (to risk-weighted assets):

Company
   $ 403,298       17.7 % $ 182,389       8.0 % N/A       N/A       $ 784,054       19.4 % $ 323,144       8.0 % N/A       N/A
Bank
   $ 393,292       17.3 % $ 182,065       8.0 % $ 227,581       10.0 %    $ 721,551       17.9 % $ 322,891       8.0 % $ 403,613       10.0 %
Tier I capital (to risk-weighted assets):

Company
   $ 374,353       16.4 % $ 91,194       4.0 % N/A       N/A       $ 733,319       18.2 % $ 161,572       4.0 % N/A       N/A
Bank
   $ 364,397       16.0 % $ 91,032       4.0 % $ 136,549       6.0 %    $ 670,855       16.6 % $ 161,445       4.0 % $ 242,168       6.0 %
Tier I capital (to average assets):

Company
   $ 374,353       12.6 % $ 118,718       4.0 % N/A       N/A       $ 733,319       19.8 % $ 148,044       4.0 % N/A       N/A
Bank
   $ 364,397       12.3 % $ 118,742       4.0 % $ 148,427       5.0 %    $ 670,855       18.1 % $ 148,038       4.0 % $ 185,048       5.0 %
Under federal banking law, dividends declared by the Bank in any calendar year may not, without the approval of the regulatory agency, exceed its net income for that year combined with its retained income from the preceding two years. However, the regulatory agency has previously issued a bulletin to all banks outlining guidelines limiting the circumstances under which banks may pay dividends even if the banks are otherwise statutorily authorized to pay dividends. The limitations impose a requirement or in some cases suggest that prior approval of the regulatory agency should be obtained before a dividend is paid if a bank is the subject of administrative action or if the payment could be viewed by the regulatory agency as unsafe or unusual.
~~15.~~ ~~Subsequent Event~~
On October 31, 2011, the Company announced that it has completed an underwritten public offering of 8.7 million shares of the Company’s common stock at a price of $7.25 per share, including 1,137,975 shares sold on exercised by the underwriters of a 15% over-allotment option granted to them by the Company. Gross proceeds were approximately $63.3 million and net proceeds were approximately $59.7 million after underwriting fees and estimated offering expenses. The Company intends to use the net proceeds of the offering for general corporate purposes. These purposes include enhancement of Nara’s capital position to support Nara’s pending merger of equals with Center Financial Corporation, supporting internal growth in its banking business, funding working capital requirements and possible retirement of debt, preferred stock or other securities. On November 4, 2011, the California Department of Financial Institutions and the Federal Reserve Bank of San Francisco notified the Company that they would not object to termination by the boards of directors of the Company and Nara Bank of the resolutions previously adopted by the respective boards at the request of such bank regulatory authorities. The resolutions addressed certain actions that would be taken by the Company and Nara Bank with respect to their business operations and related matters.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, ~~2010~~2011 and the unaudited consolidated financial statements and notes set forth elsewhere in this report.
GENERAL
Selected Financial Data
The following table sets forth certain selected financial data concerning the periods indicated:

   At or for the Three Months Ended
September 30, At or for the Nine Months Ended
September 30,    At or for the Three Months Ended
March 31,
   2011 2010 2011 2010    2012 2011

(Dollars in thousands, except
share and per share data)

(Dollars in thousands, except
share and per share data)

(Dollars in thousands, except
share and per share data)

Income Statement Data:

Interest income
   $ 38,927    $ 37,130    $ 113,415    $ 112,384       $ 68,555    $ 37,194
Interest expense
   7,874    9,520    24,148    32,723       7,696    8,311




Net interest income
   31,053    27,610    89,267    79,661       60,859    28,883
Provision for loan losses
   3,483    11,100    18,792    78,830       2,600    5,262




Net interest income after provision for loan losses
   27,570    16,510    70,475    831       58,259    23,621
Non-interest income
   4,258    7,339    16,452    20,183       11,645    4,510
Non-interest expense
   16,817    15,693    50,398    45,844       30,435    16,695




Income (loss) before income tax expense (benefit)
   15,011    8,156    36,529    (24,830 )
Income tax expense (benefit)
   5,196    3,056    13,650    (11,521 )


Net income (loss)
   $ 9,815    $ 5,100    $ 22,879    $ (13,309 )
Income before income tax expense
   39,469    11,436
Income tax expense
   15,535    4,690
Net income
   $ 23,934    $ 6,746




Dividends and discount accretion on preferred stock
   $ (1,077 ) $ (1,073 ) $ (3,227 ) $ (3,217 )    $ (1,869 ) $ (1,075 )




Net income (loss) available to common stockholders
   $ 8,738    $ 4,027    $ 19,652    $ (16,526 )


Net income available to common stockholders
   $ 22,065    $ 5,671


Per Share Data:

Earnings (loss) per common share - basic
   $ 0.23    $ 0.11    $ 0.52    $ (0.44 )
Earnings (loss) per common share - diluted
   $ 0.23    $ 0.11    $ 0.52    $ (0.44 )
Earnings per common share-basic
   $ 0.28    $ 0.15
Earnings per common share-diluted
   $ 0.28    $ 0.15
Book value per common share (period end, excluding preferred stock and warrants)
   $ 8.30    $ 7.63    $ 8.30    $ 7.63       $ 8.92    $ 7.83
Common shares outstanding
   38,095,260    37,956,527    38,095,260    37,956,527
Weighted average shares - basic
   38,098,142    37,956,527    38,044,625    37,902,809
Weighted average shares - diluted
   38,103,683    38,004,768    38,070,141    37,902,809
Statement of Financial Condition Data - at Period End:

Tangible book value per common share (period end, excluding preferred stock and warrants)^{(1) (12)}
   $ 7.72    $ 7.75
Number of common shares outstanding (period end)
   77,996,391    37,993,327
Weighted average shares-basic
   77,996,391    37,987,345
Weighted average shares-diluted
   78,101,818    38,098,848
Tangible common equity ratio⁽⁹⁾
   11.86 % 10.08 %
Statement of Financial Condition Data-at Period End:

Assets
   $ 3,016,127    $ 2,984,976    $ 3,016,127    $ 2,984,976       $ 5,169,315    $ 2,926,143
Securities available for sale
   455,789    479,779    455,789    479,779       697,808    512,000
Gross loans, net of deferred loan fees and costs * (excludes loans held for sale)
   2,257,667    2,147,513    2,257,667    2,147,513
Gross loans, net of deferred loan fees and costs (excludes loans held for sale)
   3,737,199    2,154,113
Deposits
   2,267,196    2,202,656    2,267,196    2,202,656       3,920,464    2,176,098
Federal Home Loan Bank borrowings
   300,000    350,000    300,000    350,000       332,109    300,000
Subordinated debentures
   39,268    39,268    39,268    39,268       52,137    39,268
Stockholders’ equity
   383,615    356,102    383,615    356,102       818,166    364,336
   At or for the Three Months Ended
September 30, At or for the Nine Months Ended
September 30,    At or for the Three Months Ended
March 31,
   2011 2010 2011 2010    2012 2011
   (Dollars in thousands) (Dollars in thousands)    (Dollars in thousands)
Average Balance Sheet Data:

Assets
   $ 2,987,441    $ 2,968,151    $ 2,952,371    $ 3,013,934       $ 5,139,396    $ 2,936,114
Securities available for sale
   486,009    441,298    504,402    520,259       725,728    526,341
Gross loans, including loans held for sale *
   2,248,544    2,158,073    2,202,535    2,178,540
Gross loans, including loans held for sale
   3,777,495    2,167,739
Deposits
   2,244,808    2,191,472    2,199,023    2,224,364       3,903,661    2,158,100
Stockholders’ equity
   377,654    356,915    370,155    365,351       806,384    363,166
Selected Performance Ratios:

Return on average assets (1) (7)
   1.31 % 0.69 % 1.03 % (0.59 )%
Return on average assets^{(1) (8)}
   1.86 % 0.92 %
Return on average stockholders’ equity (1) ~~(7)~~(8)
   10.40 % 5.72 % 8.24 % (4.86 )%    11.87 % 7.43 %
Non-interest expense to average assets (1)
   2.25 % 2.11 % 2.28 % 2.03 %
Return on average tangible equity^{(8) (11)}
   13.44 % 7.49 %
Pre Tax- Pre Provision income to average assets⁽¹⁾
   3.27 % 2.27 %
Efficiency ratio (2)
   47.63 % 44.90 % 47.67 % 45.92 %    41.98 % 50.00 %
Net interest margin (3) *
   4.29 % 3.85 % 4.20 % 3.68 %
Net interest margin⁽³⁾
   5.11 % 4.13 %
Regulatory Capital Ratios (4)

Leverage capital ratio (5)
   13.50 % 12.78 % 13.50 % 12.78 %    15.08 % 12.92 %
Tier 1 risk-based capital ratio
   16.71 % 16.55 % 16.71 % 16.55 %    18.85 % 16.47 %
Total risk-based capital ratio
   17.98 % 17.82 % 17.98 % 17.82 %    20.11 % 17.74 %
Tangible common equity ratio (8)
   10.40 % 9.61 % 10.40 % 9.61 %
Asset Quality Ratios: *

Tier 1 common risk-based capital ratio⁽¹³⁾
   14.63 % 11.99 %
Asset Quality Ratios:

Allowance for loan losses to gross loans, excluding loans held for sale
   2.66 % 2.97 % 2.66 % 2.97 %    1.67 % 2.94 %
Allowance for loan losses to non-performing loans (excludes accruing restructured loans)
   215.94 % 126.07 % 215.94 % 126.07 %
Allowance for loan losses to non-performing loans (includes accruing restructured loans)
   116.90 % 75.01 % 116.90 % 75.01 %
Total non-performing loans (excludes accruing restructured loans) to gross loans, excluding loans held for sale
   1.23 % 2.35 % 1.23 % 2.35 %
Total non-performing loans (includes accruing restructured loans) to gross loans, excluding loans held for sale
   2.27 % 3.95 % 2.27 % 3.95 %
Total non-performing assets to total assets (6)
   1.86 % 2.96 % 1.86 % 2.96 %
Allowance for loan losses to legacy loans⁽¹⁰⁾
   2.40 % 2.94 %
Allowance for loan losses to non-accrual loans
   157.14 % 134.88 %
Allowance for loan losses to non-performing loans⁽⁶⁾
   75.97 % 82.93 %
Allowance for loan losses to non-performing assets⁽⁷⁾
   71.08 % 80.09 %
Nonaccrual loans to gross loans, excluding loans held for sale
   1.06 % 2.18 %
Nonperforming loans to gross loans, excluding loans held for sale⁽⁶⁾
   2.19 % 3.55 %
Nonperforming assets to gross loans and OREO⁽⁷⁾
   2.34 % 3.67 %
Total non-performing assets to total assets⁽⁷⁾
   1.69 % 2.70 %

* ~~Excludes the guaranteed portion of delinquent SBA loans of $10.5 million and $14.3 million as of September 30, 2011 and 2010, respectively.~~
(1) Annualized.
(2) Efficiency ratio is defined as non-interest expense divided by the sum of net interest income and non-interest income.
(3) Net interest margin is calculated by dividing annualized net interest income by average total interest-earning assets.
(4) The ratios required ~~ratios for~~to meet the definition of a “well-capitalized” institution under certain banking regulations are 5% leverage capital, 6% tier I risk-based capital and 10% total risk-based capital.
(5) Calculations are based on average quarterly asset balances.
(6) Non-performing loans include non-accrual loans, loans past due 90 days or more and still accruing interest, and accruing restructured loans. Loans 90 days or more past due and still accruing consist of acquired loans that were originally recorded at fair value upon acquisitions. These loans are considered to be accruing as we can reasonably estimate future cash flows on acquired loans and we expect to fully collect the carrying value of these loans.
(7) Non-performing assets include non-accrual loans, loans past due 90 days or more and still accruing interest, other real estate owned, and accruing restructured loans.
~~(7)~~(8) Based on net income (loss) before effect of dividends and discount accretion on preferred stock.
~~(8)~~(9) Excludes TARP preferred stock, net of discount, of ~~$64.9~~$119.7 million and ~~$64.0~~$64.9 million and stock warrants of ~~$2.4~~$2.8 million and $2.4 million at ~~September 30,~~March 31, 2012 and 2011, ~~and 2010,~~ respectively.
(10) Legacy loans are those loans accounted for under the amortized cost method, and do not include loans acquired from Center Financial Corporation on November 30, 2011. This is a non-GAAP measure that we believe provides investors with information that is useful in understanding our financial performance and position. Allowance for loan losses to legacy loans is calculated by dividing gross legacy loan balance by allowance for loan losses.
(11) Average tangible equity is calculated by subtracting average goodwill and average other intangibles from average stockholders’ equity. This is a non-GAAP measure that we believe provides investors with information that is useful in understanding our financial performance and position.
   March 31, 2012 March 31, 2011
   (In Thousands)
Net income
   $ 23,934    $ 6,746
Average stockholders’ equity
   $ 806,384    $ 363,166
Less: Average goodwill and other intangible assets, net
   (94,197 ) (3,015 )


Average tangible equity
   $ 712,187    $ 360,151


Net income (annualized) to average tangible equity
   13.44 % 7.49 %
(12) Tangible book value per share is calculated by subtracting goodwill and other intangible assets from total stockholders’ equity and diving the difference by the number of shares of common stock outstanding. This is a non-GAAP measure that we believe provides investors with information that is useful in understanding our financial performance and position.
   March 31, 2012 March 31, 2011
   (In Thousands)
Total stockholders’ equity
   $ 818,166    $ 364,336
Less: Preferred stock, net of discount
   (119,694 ) (64,441 )
Common stock warrant
   (2,760 ) (2,383 )
Goodwill and other intangible assets, net
   (93,820 ) (2,965 )


Tangible common equity
   $ 601,892    $ 294,547


Common shares outstanding
   77,996,391    37,993,327
Tangible common equity per share
   $ 7.72    $ 7.75
(13) Tier 1 common is calculated as tier 1 capital less non-common elements, including perpetual preferred stock and related surplus, minority interest in subsidiaries, trust preferred securities and mandatory convertible preferred securities.
   March 31, 2012 March 31, 2011
   (In Thousands)
Tier 1 capital
   $ 759,784    $ 376,383
Less: Preferred stock, net of discount
   (119,694 ) (64,441 )
Subordinated debentures
   (50,312 ) (38,000 )


Tier 1 common-risk based capital
   $ 589,778    $ 273,942


Total Risk-weighted assets less disallowed allowance for loan losses
   4,030,387    2,285,268


Tier 1 common-risk based capital ratio
   14.63 % 11.99 %
Results of Operations
Overview
Our total assets ~~increased $52.8~~were unchanged at $5.17 billion at March 31, 2012 and December 31, 2011. Gross loans receivable was unchanged at $3.74 billion during the three months ended March 31, 2012. Our deposits decreased $20 million, or ~~1.78%~~1%, to ~~$3.02~~$3.92 billion at ~~September 30, 2011,~~March 31, 2012 from ~~$2.96~~$3.94 billion at December 31, ~~2010. Gross loans receivable increased 6% during the nine months ended September 30,~~ 2011. Our deposits also increased $91.1 million, or 4.19%, to $2.27 billion at September 30, 2011 from $2.18 billion at December 31, 2010. The increase was driven primarily by growth in non-interest bearing demand deposits and money market accounts. Securities available for sale declined ~~13.72%~~6% during the first ~~nine~~three months of ~~2011~~2012 as a result of paydowns and maturities.
Our net income available to common stockholders for the ~~third~~first quarter of ~~2011~~2012 was ~~$8.7~~$22.1 million, or ~~$0.23~~$0.28 per diluted common share, compared to the net income available to common stockholders of ~~$4.0~~$5.7 million, or ~~$0.11~~$0.15 per diluted common share, for the same period of ~~2010,~~2011, representing an increase in net income of ~~$4.7~~$16.4 million, or ~~116.99%~~289%. The ~~improvement~~merger with Center Financial Corporation (“Center”) completed on November 30, 2011 impacts the comparability of operating results for the first quarter of 2012 compared to the same period of 2011. Our operating results for the three months ended March 31, 2012 and 2011, include the following pre-tax acquisition accounting adjustments and expenses related to the merger. The increase (decrease) to pre-tax income of these adjustments is summarized below. The impact which these adjustments have on certain yields and costs are described in ~~results of operations is primarily due to a decrease in the provision for loan losses.~~subsequent sections.
   Three Months Ended March 31,
(In thousands)    2012 2011
Accretion of discount on acquired Center loans⁽¹⁾
   $ 9,114    $ 0
Amortization of premiums on Center FHLB borrowings⁽²⁾
   1,231    0
Accretion of discount on Center subordinated debt⁽³⁾
   (35 ) 0
Amortization of premium on Center time deposits⁽⁴⁾
   1,275    0
Amortization of core deposit intangibles from Center⁽⁵⁾
   (290 ) 0
Accretion of discounts on other Center assets⁽⁶⁾
   57    0
Amortization of unfavorable lease liability⁽⁷⁾
   58    0
Merger and integration expense⁽⁸⁾
   (1,773 ) (511 )
Increase (decrease) to pre-tax income
   $ 9,637    $ (511 )


⁽¹⁾
We have estimated the fair value of the loans acquired as the result of our merger. The valuation resulted in a discount of approximately $118.0 million as of November 30, 2011. The accretion of this purchase discount over the remaining lives of the acquired loans is included in our reported interest income on loans.
⁽²⁾
The fair value of the outstanding FHLB borrowings assumed from Center was estimated to be above the face amount of such debt. Our reported interest expense on FHLB advances includes amortization to the face amount of these advances over the remaining term of the debt.
⁽³⁾
The fair value of the outstanding subordinated debt assumed from Center was estimated to be below the face amount of such debt. Our reported interest expense on other borrowings includes accretion to the face amount of this debt over the remaining term of the debt.
⁽⁴⁾
The fair value of certificate of deposit liabilities assumed from Center was estimated to be above the face amount of such deposits. Our reported interest expense on deposits includes amortization to the face amount of such liabilities over the remaining term of the deposits.
⁽⁵⁾
A core deposit intangible arises from a financial institution or a financial institution branch having a deposit base comprised of funds associated with stable customer relationships. These customer relationships provide a cost benefit to the acquiring institution since the associated customer deposits typically are at lower interest rates and can be expected to be retained on a long-term basis. Deposit customer relationships have value due to their favorable interest rates in comparison to market rates for alternative funding sources with expected lives comparable to expected lives of the core deposits. The discounted cash flow method, which we have used to estimate this value, is based upon the principle of future benefits; economic value tends to be based on anticipated future benefits as measured by cash flows expected to occur in the future. The core deposit intangible asset recognized as part of the Center merger is being amortized over its estimated useful life of approximately seven years utilizing an accelerated method.
⁽⁶⁾
Accretion of discounts on other assets primarily consist of servicing assets, investments in affordable housing partnerships and the fair value of the favorable operating leases.
⁽⁷⁾
Amortization of unfavorable lease liability represents the Center facilities lease contracts having rental rates that exceeded current market rates at the merger date.
⁽⁸⁾
Direct costs related to the Center merger were expensed as incurred. During the three months ended March 31, 2012, we incurred $1.8 million in merger and integration expenses related to the Center merger , including $0.6 million in salaries and benefits, $1.0 million in professional fees, and $0.1 million in other noninterest expense. During the three months ended March 31, 2011, we incurred $0.5 million in merger related expenses.
The annualized ~~income~~return on average assets, before the effect of dividends and discount accretion on preferred stock on average assets, was ~~1.31%~~1.86% for the ~~third~~first quarter of ~~2011,~~2012, compared to ~~0.69%~~0.92% for the same period of ~~2010.~~2011. The annualized ~~income~~return on average equity, before effect of dividends and discount accretion on preferred stock, ~~on average equity~~ was ~~10.40%~~11.87% for the ~~third~~first quarter of ~~2011,~~2012, compared to ~~5.72%~~7.43% for the same period of ~~2010.~~2011. The efficiency ratio was ~~47.63%~~41.98% for the ~~third~~first quarter of ~~2011,~~2012, compared to ~~44.90%~~50.00% for the same period of ~~2010.~~2011.
Our net income available to common stockholders for the nine months ended September 30, 2011 was $19.7 million, or $0.52 per diluted common share, compared to the net loss available to common stockholders of ($16.5) million, or ($0.44) per diluted common share, for the same period of 2010, representing an increase in net income of $36.2 million. The improvement in results of operations is primarily due to a decrease in the provision for loan losses.
The annualized income (loss) before effect of dividends and discount accretion on preferred stock on average assets was 1.03% for the nine months ended September 30, 2011, compared to (0.59)% for the same period of 2010. The annualized income (loss) before effect of dividends and discount accretion on preferred stock on average equity was 8.24% for the nine months ended September 30, 2011, compared to (4.86)% for the same period of 2010. The efficiency ratio was 47.67% for the nine months ended September 30, 2011, compared to 45.92% for the same period of 2010.
Net Interest Income and Net Interest Margin
Net Interest Income and Expense
The principal component of our earnings is net interest income, which is the difference between the interest and fees earned on loans and investments and the interest paid on deposits and borrowed funds. Net interest income expressed as a percentage of average interest-earning assets is referred to as net interest margin. The net interest spread is the yield on average interest-earning assets less the cost of average interest-bearing liabilities (interest-bearing deposits and borrowed funds). Net interest income is affected by changes in the respective volumes of interest-earning assets and funding liabilities as well as by changes in the yields earned on interest-earning assets and the rates paid on interest-bearing liabilities.
Net interest income before provision for loan losses was ~~$31.1~~$60.9 million for the ~~third~~first quarter of ~~2011,~~2012, an increase of ~~$3.5~~$32.0 million, or ~~12.47%~~111%, compared to ~~$27.6~~$28.9 million for the same period of ~~2010.~~2011. The increase ~~is primarily due~~was principally attributable to ~~an improvement in~~the higher level of interest earning assets, as well as the net interest ~~margin.~~margin improvement, following the merger. The net interest margin improved to ~~4.29%~~5.11% for the ~~third~~first quarter ~~2011,~~of 2012, compared to ~~3.85%~~4.13% for the same period of ~~2010.~~2011. The improvement in the net interest margin was ~~primarily due~~largely attributable to ~~lower rates paid on time deposits and interest-bearing demand deposits. The cost~~the effect of time deposits decreased to 1.11% for the third quarter of 2011 from 1.25% for the same period of 2010. The cost of interest-bearing demand deposits also decreased to 0.84% for the third quarter of 2011 from 1.11% for the same period of 2010.acquisition accounting adjustments.
Interest income for the ~~third~~first quarter of ~~2011~~2012 was ~~$38.9~~$68.6 million compared to ~~$37.1~~$37.2 million for the same period of ~~2010.~~2011. The increase of ~~$1.8~~$31.4 million was primarily the result of a ~~$157 thousand~~$2.8 million increase in interest income due to an increase in the average yield earnings on average interest-earnings assets and a ~~$1.6~~$28.6 million increase in interest income due to an increase in the volume of average interest-earning assets.
Interest expense for the ~~third~~first quarter of ~~2011~~2012 was ~~$7.9~~$7.7 million, a decrease of ~~$1.6~~$0.6 million, or ~~17%~~7%, compared to interest expense of ~~$9.5~~$8.3 million for the same quarter of ~~2010.~~2011. The decrease was the result of a ~~$1.0~~$3.3 million decrease in interest expense due to a decrease in the average rates paid on interest-bearing liabilities, ~~and a $621 thousand decrease in interest expense due to a decrease in the volume of average interest-bearing liabilities.~~
~~Net interest income before provision for loan losses~~which was $89.3 million for the nine months ended September 30, 2011, an increase of $9.6 million, or 12%, compared to $79.7 million for the same period of 2010. The increase is primarily due to an improvement in the net interest margin. The net interest margin improved to 4.20% for the nine months ended September 30, 2011, compared to 3.68% for the same period of 2010. The improvement in the net interest margin was primarily causedoffset by ~~the downward repricing of our interest bearing liabilities.~~
Interest income for the nine months ended September 30, 2011 was $113.4 million compared to $112.4 million for the same period of 2010. The increase of $1.0 million was primarily the result of a $512 thousand increase in interest income due to an increase in the average yield earnings on average interest-earnings assets and a $519 thousand increase in interest income due to an increase in the volume of average ~~interest-earning assets.~~
Interest expense for the nine months ended September 30, 2011 was $24.1 million, a decrease of $8.6 million, or 26%, compared to interest expense of $32.7 million for the same period of 2010. The decrease was primarily the result of a $6.0 million decrease in interest expense due to a decrease in the average rates paid on interest-bearing liabilities ~~and a $2.6 million decrease in interest expense due to a decrease in the volume~~ of ~~average interest-bearing liabilities.~~$2.7 million.
Net Interest Margin
~~During the third quarter of 2011, our~~The net interest margin ~~increased 44~~(net interest income divided by average interest-earning assets) for the first quarter of 2012 was 5.11%, an increase of 98 basis points ~~to 4.29%~~ from ~~3.85%~~4.13% for the ~~same period~~first quarter of ~~2010.~~2011. The improvement in ~~the~~ net interest margin was ~~primarily due~~largely attributable to ~~lower rates paid on time deposits and interest-bearing demand deposits. The cost~~the effect of ~~time deposits decreased to 1.11% for~~acquisition accounting adjustments, as summarized in the ~~third quarter of 2011 from 1.25% for the same period of 2010. The cost of interest-bearing demand deposits also decreased to 0.84% for the third quarter of 2011 from 1.11% for the same period of 2010.~~following table.
   Three Months Ended
   March 31,
2012 March 31,
2011
Net interest margin, excluding effect of acquisition accounting adjustments
   4.04 % 4.13 %
Acquisition accounting adjustments⁽¹⁾
   1.07    0.00
Reported net interest margin
   5.11 % 4.13 %



1) Acquisition accounting adjustments is calculated by subtracting net interest margin, excluding effect of acquisition accounting adjustments, from reported net interest margin.
The weighted average yield on loans increased to 6.75% for the first quarter of 2012 from 6.19% for the first quarter of 2011. The increase in the yield is largely attributable to the accretion of discounts on loans acquired from Center in the merger, as summarized in the following table.
   Three Months Ended
   March 31,
2012 March 31,
2011
The weighted average yield on loans, excluding effect of acquisition accounting adjustments
   5.61 % 6.19 %
Acquisition accounting adjustments⁽¹⁾
   1.14    0.00


Reported weighted average yield on loans
   6.75 % 6.19 %


(1) Acquisition accounting adjustments is calculated by subtracting the weighted average yield on loans, excluding effect of acquisition accounting adjustments, from reported weighted average yield on loans.
Excluding the accretion of discounts on loans acquired from Center, the weighted average yield on loans for the first quarter of 2012 was 5.61%, down 58 basis points from the first quarter of 2011. The reduction in yield, excluding the effect of acquisition accounting adjustments, is primarily due the lower yielding former Center Bank loan portfolio, ~~for~~and to a lesser extent, continued pricing pressures in the ~~third quarter of 2011 was 6.16%, essentially unchanged from 6.15% for the same period of 2010.~~market place. At ~~September 30, 2011,~~March 31, 2012, fixed rate loans ~~were 44%~~accounted for 39% of the loan portfolio, compared ~~to 49%~~with 46% at ~~September 30, 2010,~~March 31, 2011, reflecting the ~~emphasis~~Company’s focus on variable rate commercial ~~business loans.~~lending. The weighted average yield on the variable rate and fixed rate loan portfolios (excluding loan discount accretion) at ~~September 30, 2011~~March 31, 2012 was ~~4.96%~~4.61% and ~~6.94%~~6.49%, respectively, compared ~~to 4.79%~~with 4.82% and ~~7.24%~~7.12% at ~~September 30, 2010.~~March 31, 2011.
The weighted average yield on securities ~~available-for-sale~~available for sale for the ~~third~~first quarter of ~~2011 slightly increased to 3.16% from 3.12%~~2012 was 2.71%, compared with 2.99% for the ~~same period~~first quarter of ~~2010.~~2011. The decline in yield from the quarter ended March 31, 2011 was the result of the replacement of maturing securities with lower yield investments as market interest rates declined and the impact of acquisition accounting adjustments. The acquired Center securities portfolio of approximately $290 million was adjusted to fair value of $293 million as of the merger date, resulting in interest income on investment securities for that portfolio being recognized at a lower average yield, compared with the yield on the balance of the Company’s securities portfolio.
The weighted average cost of deposits for the ~~third~~first quarter of ~~2011 decreased 20~~2012 was 0.56%, an improvement of 40 basis points ~~to 0.88%~~ from ~~1.08%~~0.96% for the first quarter of 2011. The amortization of premium on time deposits assumed from Center positively affected the weighted average cost of deposits, as summarized in the following table.
   Three Months Ended
   March 31,
2012 March 31,
2011
The weighted average cost of deposits, excluding effect of acquisition accounting adjustments
   0.69 % 0.96 %
Acquisition accounting adjustments⁽¹⁾
   (0.13 ) 0.00


Reported weighted average cost of deposits
   0.56 % 0.96 %


⁽¹⁾
Acquisition accounting adjustments is calculated by subtracting the weighted average cost of deposits, excluding effect of acquisition accounting adjustments, from reported weighted average cost of deposits.
Excluding amortization of premium on time deposits assumed from Center, the weighted average cost of deposits was 0.69% for the first quarter of 2012, compared with 0.96% for the same period of ~~2010,~~2011. The improvement was driven ~~primarily~~ by ~~the decrease~~reductions in the cost of ~~time deposits and~~ interest-bearing demand deposits, ~~and the increase~~as well as a favorable shift in the ~~average balance~~mix of deposits to higher concentrations of non-interest bearing demand deposits. Non-interest bearing demand deposits accounted for 26% of total deposits at March 31, 2012, compared with 19% at March 31, 2011.
The weighted average cost of FHLB advances for the ~~third~~first quarter of ~~2011 decreased 22~~2012 was 1.92%, a decrease of 129 basis points from 3.21% in the first quarter of 2011. The significant improvement was attributable to ~~3.23%~~the amortization of premiums on Center FHLB borrowings, as summarized in the following table.
   Three Months Ended
   March 31,
2012 March 31,
2011
The weighted average cost on FHLB advances, excluding effect of acquisition accounting adjustments
   3.41 % 3.21 %
Acquisition accounting adjustments
   (1.49 ) 0.00


Reported weighted average cost on FHLB advances
   1.92 % 3.21 %


(1) Acquisition accounting adjustments is calculated by subtracting the weighted average cost on FHLB advances, excluding effect of acquisition accounting adjustments, from reported weighted average cost on FHLB advances.
Excluding amortization of premiums on assumed Center FHLB borrowings, the weighted average cost of FHLB advances increased slightly to 3.41% for the ~~third~~first quarter of ~~2011, compared to 3.45%~~2012 from 3.21% for the same period of ~~2010, as maturing advances with~~2011. The increase is attributed to higher rates ~~were paid~~on the assumed Center FHLB borrowings in ~~full or refinanced at lower~~relation to the Company’s legacy rates.
~~Following are selected weighted average data on a spot rate basis at September 30, 2011 and 2010:~~

   September 30, 2011      September 30, 2010
Weighted average loan portfolio yield (excluding discounts)
   5.82 %      5.99 %
Weighted average securities available-for-sale portfolio yield
   3.33 %      3.16 %
Weighted average cost of deposits
   0.82 %      1.06 %
Weighted average cost of total interest-bearing deposits
   1.03 %      1.27 %
Weighted average cost of FHLB advances
   3.19 %      3.42 %
Net interest margin
   4.10 %      3.78 %
Prepayment penalty income for the ~~third~~first quarter of 2012 and 2011 ~~and 2010~~ was ~~$175~~$116 thousand and ~~$124~~$229 thousand, respectively. Non-accrual interest income ~~recognized (reversed)~~reversed was ~~$154~~$349 thousand and ~~($188)~~$100 thousand for the ~~third~~first quarter of ~~2011~~2012 and ~~2010,~~2011, respectively. Excluding the effects of both non-accrual loan interest income and prepayment penalty income, the net interest margin for the ~~third~~first quarter ~~2011~~2012 and ~~2010~~2011 would have been as ~~4.24%~~5.13 and ~~3.86%, respectively.~~
During the nine months ended September 30, 2011, our net interest margin increased 52 basis points to 4.20% from 3.68% for the same period of 2010. The weighted average yield on the loan portfolio for the nine months ended September 30, 2011 slightly decreased by 2 basis points to 6.14% from 6.16% for the same period of 2010.
The weighted average yield on our investment securities for the nine months ended September 30, 2011 increased 18 basis points to 3.10% from 2.92% for the same period of 2010. The increase was primarily attributable to a higher level of premium amortization for FNMA and FHLMC mortgage related securities during the nine months ended September 30, 2010. The higher level of premium amortization was due to accelerated prepayments resulting from the buyouts of seriously delinquent mortgage loans from the special purpose entities of FNMA and FHLMC.
The weighted average cost of deposits for the nine months ended September 30, 2011 decreased 41 basis points to 0.92% from 1.33% for the same period of 2010. The cost of time deposits decreased 54 basis points to 1.19% from 1.73%, accounting for a substantial portion of the decrease. The decrease in the weighted average cost of deposits was for the same reasons mentioned previously in the third quarter discussion.
Prepayment penalty income for the nine months ended September 30, 2011 and 2010 was $438 thousand and $420 thousand, respectively. Non-accrual interest income reversed was $184 thousand and $1.3 million for the nine months ended September 30, 2011 and 2010, respectively. Excluding the effects of both non-accrual loan interest income and prepayment penalty income, the net interest margin for the nine months ended September 30, 2011 and 2010 would have been 4.18% and 3.72%4.11%, respectively.
The following table presents our condensed consolidated average balance sheet information, together with interest rates earned and paid on the various sources and uses of funds for the periods indicated:

   Three months ended
September 30, 2011 Three months ended
September 30, 2010
   Average
Balance    Interest
Income/
Expense    Average
Yield/
Rate * Average
Balance    Interest
Income/
Expense    Average
Yield/
Rate *
   (Dollars in thousands)
INTEREST EARNINGS ASSETS:

Loans⁽¹⁾⁽²⁾
   $ 2,248,544       $ 34,902       6.16 % $ 2,158,073       $ 33,444       6.15 %
Securities available for sale⁽³⁾
   486,009       3,843       3.16 % 441,298       3,438       3.12 %
FRB and FHLB stock and other investments
   142,306       182       0.51 % 248,417       248       0.40 %









Total interest earning assets
   $ 2,876,859       $ 38,927       5.37 % $ 2,847,788       $ 37,130       5.18 %









INTEREST BEARING LIABILITIES:

Deposits:

Demand, interest-bearing
   $ 701,109       $ 1,490       0.84 % $ 637,814       $ 1,782       1.11 %
Savings
   126,231       764       2.40 % 137,278       851       2.46 %
Time deposits:

$100,000 or more
   363,155       351       0.38 % 364,199       572       0.62 %
Other
   607,193       2,372       1.55 % 698,201       2,763       1.57 %









Total time deposits
   970,348       2,723       1.11 % 1,062,400       3,335       1.25 %









Total interest bearing deposits
   1,797,688       4,977       1.10 % 1,837,492       5,968       1.29 %









FHLB advances
   300,000       2,438       3.23 % 350,000       3,045       3.45 %
Other borrowings
   37,816       459       4.75 % 40,199       507       4.93 %









Total interest bearing liabilities
   2,135,504       $ 7,874       1.46 % 2,227,691       $ 9,520       1.69 %









Non-interest bearing demand deposits
   477,120          353,980





Total funding liabilities / cost of funds
   $ 2,612,624          1.21 % $ 2,581,671          1.46 %





Net interest income/net interest spread
      $ 31,053       3.91 %    $ 27,610       3.49 %





Net interest margin
         4.29 %       3.85 %
Net interest margin, excluding effect of non-accrual loan income (expense)⁽⁴⁾
         4.27 %       3.88 %
Net interest margin, excluding effect of non-accrual loan income (expense) and prepayment fee income⁽⁴⁾⁽⁵⁾
         4.24 %       3.86 %
Cost of deposits:

Non-interest demand deposits
   $ 477,120       $ 0       $ 353,980       $ 0
Interest bearing deposits
   1,797,688       4,977       1.10 % 1,837,492       5,968       1.29 %









Total deposits
   $ 2,274,808       $ 4,977       0.88 % $ 2,191,472       $ 5,968       1.08 %










Three months ended
March 31, 2012

Three months ended
March 31, 2011

   Average
Balance    Interest
Income/
Expense    Average
Yield/
Rate * Average
Balance    Interest
Income/
Expense    Average
Yield/
Rate *
   (Dollars in thousands)
INTEREST EARNINGS ASSETS:

Loans^{(1) (2)}
   $ 3,777,495       $ 63,419       6.75 % $ 2,167,739       $ 33,085       6.19 %
Securities available for sale⁽³⁾
   725,728       4,909       2.71 % 526,341       3,930       2.99 %
FRB and FHLB stock and other investments
   257,583       178       0.27 % 137,094       179       0.52 %
Federal funds sold
   25,780       49       0.74 % 0       0       N/A









Total interest earning assets
   $ 4,786,586       $ 68,555       5.76 % $ 2,831,174       $ 37,194       5.32 %









INTEREST BEARING LIABILITIES:

Deposits:

Demand, interest-bearing
   $ 1,232,763       $ 2,123       0.69 % $ 680,254       $ 1,464       0.87 %
Savings
   195,932       922       1.89 % 126,661       709       2.27 %
Time deposits:

$100,000 or more
   767,171       1,411       0.74 % 321,708       455       0.57 %
Other
   722,982       947       0.53 % 640,549       2,502       1.58 %









Total time deposits
   1,490,153       2,358       0.64 % 962,257       2,957       1.25 %









Total interest bearing deposits
   2,918,848       5,403       0.74 % 1,769,172       5,130       1.18 %









FHLB advances
   339,964       1,626       1.92 % 324,611       2,572       3.21 %
Other borrowings
   50,108       667       5.26 % 55,088       608       4.42 %









Total interest bearing liabilities
   3,308,920       $ 7,696       0.93 % 2,148,871       $ 8,310       1.57 %





Non-interest bearing demand deposits
         388,928



Total funding liabilities / cost of funds
   $ 3,308,920          0.72 % $ 2,537,799          1.33 %





Net interest income/net interest spread
      $ 60,859       4.83 %    $ 28,884       3.75 %





Net interest margin
         5.11 %       4.13 %
Net interest margin, excluding effect of non-accrual loan income (expense)⁽⁴⁾
         5.14 %       4.14 %
Net interest margin, excluding effect of non-accrual loan income (expense) and prepayment fee income^(4) (5)
         5.13 %       4.11 %
Cost of deposits:

Non-interest bearing demand deposits
   $ 984,813       $ 0       $ 388,928       $ 0
Interest bearing deposits
   2,918,848       5,403       0.74 % 1,769,172       5,130       1.18 %









Total deposits
   $ 3,903,661       $ 5,403       0.56 % $ 2,158,100       $ 5,130       0.96 %









* Annualized
(1) Interest income on loans includes loan fees.
(2) Average balances of loans are net of deferred loan fees and costs and include nonaccrual loans and loans held for ~~sale, but excludes the guaranteed portion of delinquent SBA loans.~~
~~(3)~~ ~~Interest income and yields are not presented on a tax-equivalent basis.~~
~~(4)~~ ~~Non-accrual interest income recognized (reversed) was $154 thousand and $(188) thousand for the three months ended September 30, 2011 and 2010, respectively.~~
~~(5)~~ ~~Loan prepayment fee income excluded was $175 thousand and $124 thousand for the three months ended September 30, 2011 and 2010, respectively.~~

   Nine months ended
September 30, 2011 Nine months ended
September 30, 2010
   Average
Balance    Interest
Income/
Expense    Average
Yield/
Rate * Average
Balance    Interest
Income/
Expense    Average
Yield/
Rate *
   (Dollars in thousands)
INTEREST EARNINGS ASSETS:

Loans⁽¹⁾⁽²⁾
   $ 2,202,535       $ 101,137       6.14 % $ 2,178,540       $ 100,302       6.16 %
Securities available for sale⁽³⁾
   504,402       11,738       3.10 % 520,259       11,410       2.92 %
FRB and FHLB stock and other investments
   137,473       540       0.52 % 185,907       623       0.45 %
Federal funds sold
   0       0       N/A    8,132       49       0.79 %









Total interest earning assets
   $ 2,844,410       $ 113,415       5.33 % $ 2,892,838       $ 112,384       5.19 %









INTEREST BEARING LIABILITIES:

Deposits:

Demand, interest-bearing
   $ 697,513       $ 4,500       0.86 % $ 578,318       $ 4,675       1.08 %
Savings
   126,375       2,202       2.33 % 135,885       2,484       2.44 %
Time deposits:

$100,000 or more
   333,532       1,187       0.48 % 574,482       6,880       1.60 %
Other
   623,579       7,309       1.57 % 590,746       8,155       1.85 %









Total time deposits
   957,111       8,496       1.19 % 1,165,228       15,035       1.73 %









Total interest bearing deposits
   1,780,999       15,198       1.14 % 1,879,431       22,194       1.58 %









FHLB advances
   308,114       7,422       3.22 % 350,000       9,042       3.45 %
Other borrowings
   45,113       1,528       4.47 % 40,299       1,487       4.87 %









Total interest bearing liabilities
   2,134,226       24,148       1.51 % 2,269,730       32,723       1.93 %
Non-interest bearing demand deposits
   418,024          344,933





Total funding liabilities / cost of funds
   $ 2,552,250          1.26 % $ 2,614,663          1.67 %





Net interest income/net interest spread
      $ 89,267       3.82 %    $ 79,661       3.26 %





Net interest margin
         4.20 %       3.68 %
Net interest margin, excluding effect of non-accrual loan income(expense)⁽⁴⁾
         4.20 %       3.74 %
Net interest margin, excluding effect of non-accrual loan income(expense) and prepayment fee income⁽⁴⁾⁽⁵⁾
         4.18 %       3.72 %
Cost of deposits:

Non-interest demand deposits
   $ 418,024       $ 0       $ 344,933       $ 0
Interest bearing deposits
   1,780,999       15,198       1.14 % 1,879,431       22,194       1.58 %









Total deposits
   $ 2,199,023       $ 15,198       0.92 % $ 2,224,364       $ 22,194       1.33 %









* ~~Annualized~~
~~(1)~~ ~~Interest income on loans includes loan fees.~~
~~(2)~~ ~~Average balances of loans are net of deferred loan fees and costs and include nonaccrual loans and loans held for sale, but excludes the guaranteed portion of delinquent SBA loans.~~sale.
(3) Interest income and yields are not presented on a tax-equivalent basis.
(4) Non-accrual interest income reversed was ~~$184~~$349 thousand and ~~$1.3 million~~$100 thousand for the ~~nine~~three months ended ~~September 30,~~March 31, 2012 and 2011, ~~and 2010,~~ respectively.
(5) Loan prepayment fee income excluded was ~~$438~~$116 thousand and ~~$420~~$229 thousand for the ~~nine~~three months ended ~~September 30,~~March 31, 2012 and 2011, ~~and 2010,~~ respectively.
The following table illustrates the changes in our interest income, interest expense, and amounts attributable to variations in interest rates and volumes for the periods indicated. The variances attributable to simultaneous volume and rate changes have been allocated to the changes due to volume and the changes due to rate categories in proportion to the relationship of the absolute dollar amounts attributable solely to the change in volume and to the change in rate.

   Three months ended
September 30, 2011 over September 30, 2010
   Net Increase Change due to
   (Decrease) Rate Volume
   (Dollars in thousands)
INTEREST INCOME:

Interest and fees on loans
   $ 1,458    $ 54    $ 1,404
Interest on securities
   405    45    360
Interest on other investments
   (66 ) 58    (124 )


Total interest income
   $ 1,797    $ 157    $ 1,640


INTEREST EXPENSE:

Interest on demand deposits
   $ (292 ) $ (453 ) $ 161
Interest on savings
   (87 ) (20 ) (67 )
Interest on time deposits
   (612 ) (342 ) (270 )
Interest on FHLB borrowings
   (607 ) (191 ) (416 )
Interest on other borrowings
   (48 ) (19 ) (29 )


Total interest expense
   $ (1,646 ) $ (1,025 ) $ (621 )


Net Interest Income
   $ 3,443    $ 1,182    $ 2,261


   Nine months ended
September 30, 2011 over September 30, 2010

Net
Increase
Change due to
   (Decrease) Rate Volume
   (Dollars in thousands)
INTEREST INCOME:

Interest and fees on loans
   $ 835    $ (267 ) $ 1,102
Interest on securities
   328    683    (355 )
Interest on other investments
   (83 ) 96    (179 )
Interest on federal funds sold
   (49 ) 0    (49 )


Total interest income
   $ 1,031    $ 512    $ 519


INTEREST EXPENSE:

Interest on demand deposits
   $ (175 ) $ (1,040 ) $ 865
Interest on savings
   (282 ) (113 ) (169 )
Interest on time deposits
   (6,539 ) (4,159 ) (2,380 )
Interest on FHLB borrowings
   (1,620 ) (585 ) (1,035 )
Interest on other borrowings
   41    (128 ) 169


Total interest expense
   $ (8,575 ) $ (6,025 ) $ (2,550 )


Net Interest Income
   $ 9,606    $ 6,537    $ 3,069


   Three months ended
March 31, 2012 over March 31, 2011
   Net Increase Change due to
   (Decrease) Rate Volume
   (Dollars in thousands)
INTEREST INCOME:

Interest and fees on loans
   $ 30,334    $ 3,271    $ 27,063
Interest on securities
   979    (395 ) 1,374
Interest on FRB and FHLB stock and other investments
   (1 ) (112 ) 111
Interest on federal funds sold
   49    0    49


Total interest income
   $ 31,361    $ 2,764    $ 28,597


INTEREST EXPENSE:

Interest on demand, interest bearing
   $ 659    $ (356 ) $ 1,015
Interest on savings
   213    (136 ) 349
Interest on time deposits
   (599 ) (1,841 ) 1,242
Interest on FHLB advances
   (946 ) (1,089 ) 143
Interest on other borrowings
   59    108    (49 )


Total interest expense
   $ (614 ) $ (3,314 ) $ 2,700


Net Interest Income
   $ 31,975    $ 6,078    $ 25,897


Provision for Loan Losses
The provision for loan losses reflects our judgment of the current period cost associated with credit risk inherent in our loan portfolio. The loan loss provision for each period is dependent upon many factors, including loan growth, net charge-offs, changes in the composition of the loan portfolio, delinquencies, assessments by management, third parties’ and regulators’ examination of the loan portfolio, the value of the underlying collateral onfor problem loans and the general economic conditions in our market areas. Specifically, the provision for loan losses represents the amount charged against current period earnings to achieve an allowance for loan losses that, in our judgment, is adequate to absorb probable incurred losses inherent in our loan portfolio. Periodic fluctuations in the provision for loan losses result from management’s assessment of the adequacy of the allowance for loan losses; however, actual loan losses may vary in material respects from current estimates. If the allowance for loan losses is inadequate, it may have a material adverse effect on our financial condition.
The provision for loan losses for the ~~third~~first quarter of ~~2011~~2012 was ~~$3.5~~$2.6 million, a decrease of ~~$7.6~~$2.7 million, or ~~69%~~51%, from ~~$11.1~~$5.3 million for the same period last year. The decrease is primarily due to lower charge-offs for the most recent quarters resulting in lower historical loss rates that are used to calculate general reserve requirements. Net charge-offs decreased to ~~$3.2~~$2.2 million for the three months ended ~~September 30, 2011,~~March 31, 2012, compared to ~~$10.4~~$4.2 million for the same period last year. The $3.5 million loan loss provision for the third quarter of 2011 was allocated among three operating segments as follows: banking operations $3.3 million, trade finance services $2.4 million and Small Business Administration $(2.2) million.
The provision for loan losses for the nine months ended September 30, 2011 was $18.8 million, a decrease of $60.0 million, or 76%, from $78.8 million for the same period last year. The decrease is also due to the same reasons previously discussed for the third quarter. Net charge-offs decreased to $21.1 million, compared to $74.6 million for the same period last year. The higher net charge-offs during the same period of last year were primarily due to the transfer of $63.3 million of problem loans to loans held for sale, resulting in additional loan charge offs, other valuation adjustments of $26.7 million to mark such assets to estimated fair market value, less selling costs. The $18.8 million loan loss provision for the nine months ended September 30, 2011 was allocated among three operating segments as follows: banking operations $8.5 million, trade finance services $4.2 million and Small Business Administration $6.1 million.
See ~~Footnote 6~~Note 7 of the Notes to Condensed Consolidated Financial Statements (unaudited) and Financial Condition-Loans Receivable and Allowance for Loan Losses for further discussion.
Non-interest Income
Non-interest income is primarily comprised of service fees on deposits accounts, fees received from our trade finance letter of credit operations and net gains on sales of loans and securities available for sale.
Non-interest income for the ~~third~~first quarter of ~~2011~~2012 was ~~$4.3~~$11.6 million, compared to ~~$7.3~~$4.5 million for the same quarter of ~~2010, a decrease~~2011, an increase of ~~$3.1~~$7.1 million, or ~~42%~~158%. The ~~decrease~~increase was primarily ~~due~~attributable to a decrease of $3.8 million in net gains on sale of other loans. In third quarter 2010, problem assets that were recorded at estimated fair value, less selling costs, at June 30, 2010 were sold at a net gain of $3.7 million during the ~~third quarter of 2010.~~
Non-interest income for the nine months ended September 30, 2011 was $16.5 million compared to $20.2 million for the same period of 2010, a decrease of $3.7 million, or 19%. The decrease was primarily due to decreases in net gains on sales of securities available for sale of $6.3 million and net gains on sale of other loans of $4.4 million, offset by an increase in netmerger with Center. Net gains on sales of SBA loans ~~of $5.7 million. During the nine months ended September 30, 2011, no securities were sold~~totaled $3.0 million and $44.9 million in securities available for sale were called at net loss of $64 thousand. During the same period in 2010, we sold $201.8 million in securities available for sale at net gains of $6.3 million. The increase in net gains on sales of SBA loans reflected higher levels of SBA loan production and sales. During the nine months ended September 30, 2011, $56.7 million of SBA loans were sold compared to $15.6$1.2 million for the ~~same period 2010. The decrease~~first quarter of 2012 and 2011, respectively. We sold $33.4 million in SBA loans to the secondary market during the first quarter of 2012. We posted a net ~~gains~~gain on sale of ~~other loans was for the same reason mentioned previously~~securities available-for-sale of $816 thousand in the ~~third~~first quarter ~~discussion.~~of 2012. This compares with none in first quarter 2011. This included sale of a relatively illiquid trust preferred security which had been marked to market in a prior period. We had no sales of securities in first quarter 2011.
The breakdown of changes in our non-interest income by category is shown below:

   Three Months Ended September 30, Increase (Decrease)
   2011 2010 Amount Percent (%)
   (Dollars in thousands)
Service fees on deposit accounts
   $ 1,352    $ 1,637    $ (285 ) -17.4 %
International service fees
   603    633    (30 ) (4.7 )%
Loan servicing fees, net
   464    492    (28 ) -5.7 %
Wire transfer fees
   343    289    54    18.7 %
Other income and fees
   534    539    (5 ) (0.9 )%
Net gains on sales of SBA loans
   823    308    515    167.2 %
Net gains on sales of other loans
   (30 ) 3,725    (3,755 ) -100.8 %
Net gains on sales and calls of securities available for sale
   64    4    60    1,500.0 %
Net valuation losses on interest rate contracts
   (3 ) (226 ) 223    -98.7 %
Net gains (losses) on sales of OREO
   108    (62 ) 170    -274.2 %


Total non-interest income
   $ 4,258    $ 7,339    $ (3,081 ) (42.0 )%


   Nine Months Ended September 30, Increase (Decrease)    Three Months Ended March 31, Increase (Decrease)
   2011 2010 Amount Percent (%)    2012    2011 Amount    Percent (%)
   (Dollars in thousands)    (Dollars in thousands)
Service fees on deposit accounts
   $ 4,262    $ 4,828    $ (566 ) -11.7 %    $ 3,160       $ 1,497    $ 1,663       111.1 %
International service fees
   1,842    1,785    57    3.2 %    1,224       570    654       114.7 %
Loan servicing fees, net
   1,345    1,392    (47 ) -3.4 %    1,337       463    874       188.8 %
Wire transfer fees
   1,013    884    129    14.6 %    741       322    419       130.1 %
Other income and fees
   1,598    1,409    189    13.4 %    1,340       507    833       164.3 %
Net gains on sales of SBA loans
   6,337    680    5,657    831.9 %    2,963       1,160    1,803       155.4 %
Net gains on sales of other loans
   (30 ) 4,375    (4,405 ) -100.7 %
Net gains on sales and calls of securities available for sale
   70    6,396    (6,326 ) -98.9 %    816       0    816       100.0 %
Net valuation losses on interest rate contracts
   (120 ) (952 ) 832    -87.4 %    3       (11 ) 14       -127.3 %
Net gains (losses) on sales of OREO
   135    (614 ) 749    -122.0 %    61       2    59       2,950.0 %







Total non-interest income
   $ 16,452    $ 20,183    $ (3,731 ) -18.5 %    $ 11,645       $ 4,510    $ 7,135       158.2 %







Non-interest Expense
Non-interest expense for the ~~third~~first quarter of ~~2011~~2012 was ~~$16.8~~$30.4 million, an increase of ~~$1.1~~$13.7 million, or 7%82%, from ~~$15.7~~$16.7 million for the same period of last year. The increase ~~was primarily due to increases in salaries and benefits expense and merger-related expenses, partially offset by a decrease in credit-related expenses.~~largely reflected the combined operations of new BBCN.
Salaries and benefits expense increased ~~$1.4~~$6.9 million, or ~~22%~~97%, to ~~$7.7~~$14.1 million for the ~~third~~first quarter of ~~2011,~~2012, compared to ~~$6.3~~$7.2 million for the same period of ~~2010.~~2011. The increase was due to an increase in the number of full-time equivalent (FTE) employees, which increased to ~~377~~661 at ~~September 30, 2011~~March 31, 2012 from ~~364~~376 at ~~September 30, 2010, an increase~~March 31, 2011. Occupancy expense for the first quarter of ~~$541 thousand in vacation and bonus accrual, an increase of $179 thousand in group insurance expense due~~2012 rose 50% to the increase in premium costs, and an increase of $146 thousand in 401(k) plan contributions, as the Company reinstated the company matching program effective January 1, 2011. The year-over-year increase in FTE employees was due to increases in our staffing in our Eastern Region lending unit, Information Technology and loan servicing unit. Merger-related expenses of $574 thousand were recorded during third quarter 2011 as a result of the pending merger with Center Financial Corporation. Credit-related expense decreased $616 thousand, or 42%, to $867 thousand for third quarter 2011, compared to $1.5$3.6 million from $2.4 million for the same period of ~~2010. The decrease was primarily~~2011 due to ~~a lower need for collection activities~~the increase in ~~third quarter 2011.~~
~~Non-interest expense for~~ the ~~nine months ended September 30, 2011 was $50.4 million, an increase~~number of ~~$4.6 million, or 10%, compared~~branches from 23 pre-merger to $45.8 million for the same period of 2010. The increase was primarily due to increases in salaries and benefits expense and merger-related expenses, partially offset by a decrease in credit-related expenses. Salaries and benefits expense and merger-related expenses were higher for the reasons mentioned previously.44 post-merger.
The breakdown of changes in non-interest expense by category is shown below:

   Three Months Ended September 30,    Increase (Decrease)
   2011    2010    Amount Percent (%)
   (Dollars in thousands)
Salaries and employee benefits
   $ 7,657       $ 6,258       $ 1,399    22.4 %
Occupancy
   2,480       2,470       10    0.4 %
Furniture and equipment
   984       952       32    3.4 %
Advertising and marketing
   354       527       (173 ) -32.8 %
Data processing and communications
   813       951       (138 ) -14.5 %
Professional fees
   612       627       (15 ) (2.4 )%
FDIC assessment
   983       1,171       (188 ) -16.1 %
Credit related expenses
   867       1,483       (616 ) -41.5 %
Merger-related expenses
   574       0       574    100.0 %
Other
   1,493       1,254       239    19.1 %






Total non-interest expense
   $ 16,817       $ 15,693       $ 1,124    7.2 %






   Nine Months Ended September 30,    Increase (Decrease)    Three Months Ended March 31,    Increase (Decrease)
   2011    2010    Amount Percent (%)    2012    2011    Amount Percent (%)
   (Dollars in thousands)    (Dollars in thousands)
Salaries and employee benefits
   $ 22,436       $ 18,065       $ 4,371    24.2 %    $ 14,079       $ 7,154       $ 6,925    96.8 %
Occupancy
   7,362       7,321       41    0.6 %    3,646       2,437       1,209    49.6 %
Furniture and equipment
   2,853       2,614       239    9.1 %    1,218       935       283    30.3 %
Advertising and marketing
   1,527       1,598       (71 ) (4.4 )%    1,458       579       879    151.8 %
Data processing and communications
   2,719       2,935       (216 ) -7.4 %    1,611       983       628    63.9 %
Professional fees
   2,090       1,848       242    13.1 %    613       709       (96 ) (13.5 )%
FDIC assessment
   3,149       3,729       (580 ) -15.6 %    1,037       1,289       (252 ) (19.6 )%
Credit related expenses
   2,615       3,788       (1,173 ) -31.0 %    2,180       744       1,436    193.0 %
Merger-related expenses
   1,465       0       1,465    100.0 %
Merge and integration expenses
   1,773       511       1,262    247.0 %
Other
   4,182       3,946       236    6.0 %    2,820       1,354       1,466    108.3 %












Total non-interest expense
   $   50,398       $   45,844       $ 4,554    9.9 %    $ 30,435       $ 16,695       $ 13,740    82.3 %












Provision for Income Taxes
Income tax expense was ~~$5.2~~$15.5 million and ~~$3.1~~$4.7 million for the ~~third~~first quarter ended ~~September 30,~~March 31, 2012 and 2011, ~~and 2010,~~ respectively. The effective income tax rate for the quarters ended ~~September 30,~~March 31, 2012 and 2011 was 39.4% and 2010 was 35% and 37%, respectively. Income tax expense (benefit) was $13.7 million and ($11.5) million for the nine months ended September 30, 2011 and 2010, respectively. The effective income tax rate for the nine months ended September 30, 2011 and 2010 was 37% and (46%)41.0%, respectively. The ~~higher~~lower effective ~~benefit~~ tax rate during the ~~nine months ended September 30, 2010~~first quarter of 2012 compared to the statutory tax rate was primarily due to the impact of state taxes and tax credits in a loss year. The effective tax rate will vary from period to period depending on the level of tax credits applied during the period. Tax credits primarily consist of Enterprise Zone tax credits related to applicable loans located within the economically depressed areas in California. The lower effective income tax rate for the third quarter of 2011 ~~compared to 2010~~ was primarily due to an increase in the ~~federal and state~~Federal affordable housing tax credits, ~~for 2011 versus 2010.~~California enterprise zone hiring credits, California enterprise zone loan interest deductions.
Financial Condition
At ~~September 30, 2011,~~March 31, 2012, our total assets were ~~$3.02~~$5.18 billion, an increase of ~~$52.8~~$9.9 million ~~or 1.78%,~~ from ~~$2.96~~$5.17 billion at December 31, ~~2010.~~2011.
Investment Securities Portfolio
As of ~~September 30, 2011,~~March 31, 2012, we had ~~$455.8~~$697.8 million in available-for-sale securities, compared to ~~$528.3~~$740.9 million of such securities at December 31, ~~2010.~~2011. The net unrealized gain on the available-for sale securities at ~~September 30, 2011~~March 31, 2012 was ~~$10.4~~$14.0 million, compared to a net unrealized gain on such securities of ~~$4.1~~$15.2 million at December 31, ~~2010.~~2011. During the ~~nine~~three months ended ~~September 30, 2011, $64.5 million in~~March 31, 2012, no securities was purchased, ~~$66.6~~$38.6 million in mortgage related securities were paid down, and ~~$73.3~~$0.8 million in securities were either called or matured. We sold $1.0 million corporate trust preferred security acquired from Center Financial, and recognized a gain of $0.8 million. No securities were sold during the nine months ended September 30, 2011. During the nine months ended September 30, 2010, $96.7 million in securities was purchased, $160.7 million in mortgage related securities were paid down, and $34.2 million in securities were either called or matured. During the same period of last year, ~~we sold $201.8 million in various available-for-sale agency debt and mortgage related securities, and recognized gross gains of $6.3 million.~~.
Loan Portfolio
As of ~~September 30, 2011,~~March 31, 2012, gross loans outstanding, net of deferred loan fees and costs and excluding loans held for sale, ~~and the guaranteed portion~~was $3.737 billion, a decrease of ~~delinquent SBA loans, increased $124~~$2 million ~~to $2.26 billion~~ from ~~$2.13~~$3.739 billion at December 31, ~~2010. New~~2011. Total loan ~~production~~originations during the ~~nine~~three months ended ~~September 30, 2011~~March 31, 2012 was ~~$319.6~~$167.6 million, including SBA loan originations of $34.6 million, compared to ~~$248.2~~$88.1 million during the same period of ~~2010.~~
All of the loans that we originate are subject to our underwriting guidelines and loan origination standards. We have undertaken a number of actions to minimize risks in response to the economic downturn, the related increase in nonperforming assets, and regulatory actions. We have enhanced our loan origination quality control practices by improving our appraisal review process to continue to comply with all new regulations and standards. We have expanded our loan review and monitoring process to include the review and monitoring of pass graded loans as well as problem loans in an attempt to improve early detection of potential problem loans. In addition, the loan review and monitoring process includes steps to verify compliance with internal lending policies and procedures. Finally, we have added additional qualified personnel to our credit administration function.
These tightened underwriting standards and credit practices may adversely impact loan origination volumes. However, we believe that there will likely be a beneficial long term impact on credit performance and loan quality.2011.
The following table summarizes our loan portfolio by amount and percentage of gross loans in each major loan ~~category~~type at the dates indicated:

   September 30, 2011 December 31, 2010
   Amount Percent Amount Percent
   (In thousands)
Loan portfolio composition

Real estate loans:

Residential
   $ 2,073    0 % $ 2,263    0 %
Commercial & industrial
   1,610,391    71 % 1,524,650    71 %
Construction
   41,292    2 % 46,900    2 %


Total real estate loans
   1,653,756    73 % 1,573,813    73 %
Commercial business
   507,737    22 % 491,811    23 %
Trade finance
   86,659    4 % 57,430    3 %
Consumer and other
   12,222    1 % 13,268    1 %


Total loans outstanding
   2,260,374    100 % 2,136,322    100 %


Less: deferred loan fees
   (2,707 ) (2,261 )


Gross loans receivable
   2,257,667    2,134,061
Less: allowance for loan losses
   (60,009 ) (62,320 )


Loans receivable, excluding guaranteed portion of delinquent SBA loans
   2,197,658    2,071,741
Guaranteed portion of delinquent SBA loans
   10,461    13,684


Loans receivable, net
   $ 2,208,119    $ 2,085,425


   March 31, 2012 December 31, 2011
   Amount Percent Amount Percent
   (In thousands)
Loan portfolio composition

Real estate loans:

Residential
   $ 1,995    0 % $ 2,043    0 %
Commercial & industrial
   2,626,530    70 % 2,631,880    70 %
Construction
   48,064    1 % 44,756    1 %
Total real estate loans
   2,676,589    72 % 2,678,679    73 %
Commercial business
   846,307    23 % 849,576    23 %
Trade finance
   152,704    4 % 146,684    4 %
Consumer and other
   64,095    2 % 66,631    2 %


Total loans outstanding
   3,739,695    100 % 3,741,570    100 %


Less: deferred loan fees
   (2,496 ) (2,744 )


Gross loans receivable
   3,737,199 �� 3,738,826
Less: allowance for loan losses
   (62,309 ) (61,952 )


Loans receivable, net
   $ 3,674,890    $ 3,676,874


SBA loans, consisting principally of the unguaranteed portion, are included in commercial business loans and commercial and industrial real estate loans. SBA loans included in commercial business loans were ~~$26.4~~$73.3 million at ~~September 30, 2011~~March 31, 2012 and ~~$48.1~~$81.6 million at December 31, ~~2010 and~~2011. SBA loans included in commercial and industrial real estate loans were ~~$55.0~~$139.9 million at ~~September 30, 2011~~March 31, 2012 and ~~$57.5~~$152.5 million at December 31, ~~2010.~~2011.
We normally do not extend lines of credit or make loan commitments to business customers for periods in excess of one year. We use the same credit policies in making commitments and conditional obligations as we do for providing loan facilities to our customers. We perform annual reviews of such commitments prior to renewal.
The following table shows our loan commitments and letters of credit outstanding at the dates indicated:

   September 30, 2011    December 31, 2010    March 31, 2012    December 31, 2011
   (Dollars in thousands)    (Dollars in thousands)
Loan commitments
   $ 261,997       $ 205,752       $ 534,070       $ 458,096
Standby letters of credit
   12,808       9,777       33,039       29,028
Other commercial letters of credit
   28,823       30,180       58,938       49,457








   $ 303,628       $ 245,709       $ 626,047       $ 536,581








Nonperforming Assets
Nonperforming assets, which include non-accrual loans, loans past due 90 days or more and accruing, restructured loans, and other real estate owned, were ~~$56.2~~$87.7 million at ~~September 30, 2011,~~March 31, 2012, compared to ~~$80.5~~$73.8 million at December 31, ~~2010. Restructured loans that are accruing as defined by FASB ASC 310-40~~“~~Troubled Debt Restructurings by Creditors~~”, ~~decreased to $23.5 million at September 30, 2011, compared to $35.1 million at December 31, 2010, resulting from the removal of $11.7 million or 19 restructured loans from the TDR disclosures~~2011. The increase in the ~~year after restructuring as these~~dollar amount of non-performing loans primarily reflects three commercial real estate (CRE) loans, aggregating $9.9 million, which were ~~restructured at market interest rates~~placed on non-accrual status and ~~had sustained performance as agreed to under the modified loan terms.~~three loans, two CRE and one C&I, totaling $5.4 million, which were restructured. The ratio of nonperforming assets to gross loans plus OREO was ~~2.48%~~2.34% and ~~3.77%~~1.97% at ~~September 30, 2011~~March 31, 2012 and December 31, ~~2010,~~2011, respectively.
The following table summarizes the composition of our nonperforming assets as of the dates indicated.

   September 30, 2011 December 31, 2010
   (Dollars in thousands)
Nonaccrual loans
   $ 27,790    $ 43,803
Loans past due 90 days or more, still accruing
   0    0


Total Nonperforming Loans
   27,790    43,803
Other real estate owned
   4,838    1,581
Restructured loans
   23,543    35,103


Total Nonperforming Assets
   $ 56,171    $ 80,487


Nonperforming loans (excludes accruing restructured loans) to total gross loans*, excluding loans held for sale
   1.23 % 2.05 %
Nonperforming loans (includes accruing restructured loans) to total gross loans*, excluding loans held for sale
   2.27 % 3.70 %
Nonperforming assets to gross loans* plus OREO
   2.48 % 3.77 %
Nonperforming assets to total assets
   1.86 % 2.72 %
Allowance for loan losses to non-performing loans (excludes accruing restructured loans)*
   215.94 % 142.27 %
Allowance for loan losses to non-performing loans (includes accruing restructured loans)*
   116.90 % 78.98 %
* ~~Excludes the guaranteed portion of delinquent SBA loans as these are 100% guaranteed by the SBA.~~
   March 31, 2012 December 31, 2011
   (Dollars in thousands)
Nonaccrual loans
   $ 39,935    $ 31,212
Delinquent loans 90 days or more on accrual status
   18,257    16,169
Accruing restructured loans
   23,888    18,775
Total Nonperforming Loans
   82,080    66,156
Other real estate owned
   5,641    7,625


Total Nonperforming Assets
   $ 87,721    $ 73,781


Nonperforming loans to total gross loans, excluding loans held for sale
   2.19 % 1.77 %
Nonperforming assets to gross loans plus OREO
   2.34 % 1.97 %
Nonperforming assets to total assets
   1.70 % 1.43 %
Allowance for loan losses to non-performing loans
   75.97 % 123.94 %
Allowance for loan losses to non-performing assets
   71.08 % 83.97 %
Allowance for Loan Losses
The allowance for loan losses was ~~$60.0~~$62.3 million at ~~September 30, 2011,~~March 31, 2012, compared to ~~$62.3~~$62.0 million at December 31, ~~2010.~~2011. We recorded a provision for loan losses of ~~$18.8~~$2.6 million during the ~~nine~~three months ended ~~September 30, 2011,~~March 31, 2012, compared to ~~$78.8~~$5.3 million for the same period of ~~2010.~~2011. The allowance for loan losses was ~~2.66%~~1.67% of gross loans at ~~September 30, 2011~~March 31, 2012 and ~~2.92%~~1.66% of gross loans at December 31, ~~2010.~~2011. Impaired loans as defined by FASB ASC 310-10-35, “Accounting by Creditors for Impairment of a Loan,” totaled ~~$75.6~~$99.8 million and ~~$122.7~~$82.1 million as of ~~September 30, 2011~~March 31, 2012 and December 31, ~~2010,~~2011, respectively, with specific allowances of ~~$14.6~~$16.5 million and ~~$21.1~~$18.0 million, respectively. The ~~decrease~~$17.7 million increase in ~~the~~ impaired loans by ~~$47.1 million~~ from December 31, ~~2010~~2011 to ~~September 30, 2011~~March 31, 2012 was due primarily ~~due~~ to ~~the sale of problem~~three CRE loans, ~~of $22.5~~aggregating $9.9 million, ~~during the nine months ended September 30, 2011~~which were placed on non-accrual status and ~~the return of $26.1~~three loans, two CRE and one C&I, totaling $5.4 million, ~~to non-impaired status. The return to non-impaired status was based on the review of current financial information and payment performance.~~which were restructured.
~~Activity in the allowance for loan losses for the individual operating segments is as follows for the nine months ended September 30, 2011 and the year ended December 31, 2010:~~

   Nine Months Ended September 30, 2011
   Banking
Operations Trade Finance
Services Small Business
Administration TOTAL
   (Dollars in thousands)
Balance, beginning of period
   $ 44,645    $ 3,515    $ 14,160    $ 62,320
Provision for loan losses
   8,474    4,249    6,069    18,792
Loans charged off
   (13,920 ) (812 ) (9,739 ) (24,471 )
Recoveries of charge-offs
   2,348    239    781    3,368


Balance, end of period
   $ 41,547    $ 7,191    $ 11,271    $ 60,009


   Year Ended December 31, 2010
   Banking
Operations Trade Finance
Services Small Business
Administration TOTAL
   (Dollars in thousands)
Balance, beginning of period
   $ 38,285    $ 3,392    $ 17,747    $ 59,424
Provision for loan losses
   51,607    5,146    27,877    84,630
Loans charged off
   (47,418 ) (5,088 ) (32,146 ) (84,652 )
Recoveries of charge-offs
   2,171    65    682    2,918


Balance, end of period
   $ 44,645    $ 3,515    $ 14,160    $ 62,320


~~The impaired loans for the individual operating segments at the period indicated are set forth in the following table by class of loans:~~

   Nine Months Ended September 30, 2011
   Banking Operations    Trade Finance
Services    Small Business
Administration    TOTAL
   Unpaid
Principal
Balance*    Related
Allowance    Unpaid
Principal
Balance*    Related
Allowance    Unpaid
Principal
Balance*    Related
Allowance    Unpaid
Principal
Balance*    Related
Allowance
   (Dollars in thousands)
Real Estate - Residential
   $ 0       $ 0       $ 0       $ 0       0       0       $ 0       $ 0
Real Estate - Commercial

Retail
   2,752       464       136       0       1,614       298       4,502       762
Hotel & Motel
   4,632       205       0       0       13,521       3,496       18,153       3,701
Gas Station & Car Wash
   0       0       0       0       2,604       433       2,604       433
Mixed Use
   2,108       176       0       0       0       0       2,108       176
Industrial & Warehouse
   2,644       412       0       0       4,336       8       6,980       420
Other
   10,817       1,727       1,427       0       748       3       12,992       1,730
Real Estate - Construction
   1,710       0       0       0       1,585       0       3,295       0
Commercial Business
   11,602       3,513       7,430       2,529       3,841       1,324       22,873       7,366
Trade Finance
   0       0       1,942       0       0       0       1,942       0
Consumer and Other
   155       0       0       0       0       0       155       0
















   $ 36,420       $ 6,497       $ 10,935       $ 2,529       $ 28,249       $ 5,562       $ 75,604       $ 14,588
















* ~~Recorded investment, which is net of unpaid principal, accrued interest receivable, deferred loan fees and discounts, is not materially different from loan balance in this presentation.~~

   Year Ended December 31, 2010
      Trade Finance    Small Business
   Banking Operations    Services    Administration    TOTAL
   Unpaid
Principal
Balance*    Related
Allowance    Unpaid
Principal
Balance*    Related
Allowance    Unpaid
Principal
Balance*    Related
Allowance    Unpaid
Principal
Balance*    Related
Allowance
   (Dollars in thousands)
Real Estate - Residential
   $ 0       $ 0       $ 0       $ 0       $ 0       $ 0       $ 0       $ 0
Real Estate - Commercial

Retail
   14,388       1,254       184       0       1,996       305       16,568       1,559
Hotel & Motel
   6,193       180       0       0       7,775       807       13,968       987
Gas Station & Car Wash
   4,569       0       0       0       3,770       1,411       8,339       1,411
Mixed Use
   3,968       53       0       0       0       0       3,968       53
Industrial & Warehouse
   2,978       1,020       0       0       4,928       709       7,906       1,729
Other
   18,883       358       763       0       487       49       20,133       407
Real Estate - Construction
   7,641       1,686       0       0       2,617       0       10,258       1,686
Commercial Business
   24,467       10,079       11,545       518       4,978       2,673       40,990       13,270
Trade Finance
   0       0       469       0       0       0       469       0
Consumer and Other
   88       0       0       0       0       0       88       0
















   $ 83,175       $ 14,630       $ 12,961       $ 518       $ 26,551       $ 5,954       $ 122,687       $ 21,102
















* ~~Recorded investment, which is net of unpaid principal, accrued interest receivable, deferred loan fees and discounts, is not materially different from loan balance in this presentation.~~
~~The following tables provide the nonperforming loans (excludes accruing restructured loans) by class of loans for the individual operating segments:~~

   As of September 30, 2011
   Banking
Operations*    Trade Finance
Services*    Small Business
Administration*    TOTAL
   (Dollars in thousands)
Real estate loans:

Commercial

Retail
   $ 2,162       $ 136       $ 1,614       $ 3,912
Hotel & Motel
   0       0       1,264       1,264
Gas Station & Car Wash
   0       0       1,414       1,414
Mixed Use
   1,156       0       0       1,156
Industrial & Warehouse
   2,643       0       464       3,107
Other
   776       763       748       2,287
Construction
   0       0       1,585       1,585








Total
   6,737       899       7,089       14,725
Commercial business
   5,150       5,000       2,316       12,466
Trade finance
   0       442       0       442
Consumer and other
   157       0       0       157








   $ 12,044       $ 6,341       $ 9,405       $ 27,790








* ~~Recorded investment, which is net of unpaid principal, accrued interest receivable, deferred loan fees and discounts, is not materially different from loan balance in this presentation.~~

   As of December 31, 2010
   Banking
Operations*    Trade Finance
Services*    Small Business
Administration*    TOTAL
   (Dollars in thousands)
Real estate loans:

Commercial

Retail
   $ 371       $ 0       1,244       1,615
Hotel & Motel
   0       0       1,187       1,187
Gas Station & Car Wash
   1,060       0       1,994       3,054
Mixed Use
   3,968       0       0       3,968
Industrial & Warehouse
   2,978       0       712       3,690
Other
   3,490       763       581       4,834
Construction
   5,931       0       2,616       8,547








Total
   17,798       763       8,334       26,895
Commercial business
   7,988       5,355       2,648       15,991
Trade finance
   0       469       0       469
Consumer and other
   448       0       0       448








   $ 26,234       $ 6,587       10,982       43,803








* ~~Recorded investment, which is net of unpaid principal, accrued interest receivable, deferred loan fees and discounts, is not materially different from loan balance in this presentation.~~
~~The following tables present the past due loans greater than 30 days (includes non-accrual loans), by class of loans for the individual operating segments:~~

   As of September 30, 2011
   Banking
Operations*    Trade Finance
Services*    Small Business
Administration*    TOTAL
   (Dollars in thousands)
Real estate loans:

Commercial

Retail
   $ 2,162       $ 136       $ 1,784       $ 4,082
Hotel & Motel
   3,367       0       1,264       4,631
Gas Station & Car Wash
   0       0       1,414       1,414
Mixed Use
   1,156       0       37       1,193
Industrial & Warehouse
   2,644       0       825       3,469
Other
   4,823       1,427       1,192       7,442
Construction
   0       0       1,585       1,585








Total
   14,152       1,563       8,101       23,816
Commercial business
   6,165       5,142       3,020       14,327
Trade finance
   0       442       0       442
Consumer and other
   163       0       0       163








   $ 20,480       $ 7,147       $ 11,121       $ 38,748








* ~~Recorded investment, which is net of unpaid principal, accrued interest receivable, deferred loan fees and discounts, is not materially different from loan balance in this presentation.~~

   As of December 31, 2010
   Banking
Operations*    Trade Finance
Services*    Small Business
Administration*    TOTAL
   (Dollars in thousands)
Real estate loans:

Residential
   $ 46       $ 0       $ 0       $ 46
Commercial

Retail
   632       0       2,214       2,846
Hotel & Motel
   0       0       1,642       1,642
Gas Station & Car Wash
   1,060       0       1,994       3,054
Mixed Use
   4,331       0       38       4,369
Industrial & Warehouse
   2,978       0       1,084       4,062
Other
   3,490       763       790       5,043
Construction
   5,931       0       2,616       8,547








Total
   18,468       763       10,378       29,609
Commercial business
   8,732       5,355       3,443       17,530
Trade finance
   0       469       0       469
Consumer and other
   491       0       0       491








   $ 27,691       $ 6,587       $ 13,821       $ 48,099








* ~~Recorded investment, which is net of unpaid principal, accrued interest receivable, deferred loan fees and discounts, is not materially different from loan balance in this presentation.~~
For further discussion of changes to the allowance for loan losses, see Note 6, Loans Receivable and Allowance for Loan Losses in the Notes to Condensed Consolidated Financial Statements (unaudited), included in Item 1. Financial Statements.
The following table reflects our allocation of the allowance for loan and lease losses (“ALLL”) by loan category and the ratio of each loan category to total loans as of the dates indicated:

   Allocation of Allowance for Loan Losses
   September 30, 2011 December 31, 2010
   Amount    Percent Amount    Percent
   (Dollars in thousands)
Loan Type

Real estate - Residential
   $ 9       0 % $ 14       0 %
Real estate - Commercial
   35,694       71 % 32,885       71 %
Real estate - Construction
   766       2 % 3,396       2 %
Commercial business
   20,907       22 % 24,930       23 %
Trade finance
   1,790       4 % 192       3 %
Consumer and other
   581       1 % 634       1 %
Unallocated
   262       N/A    269       N/A






Total
   $ 60,009       100 % $ 62,320       100 %






   Allocation of Allowance for Loan Losses
   March 31, 2012 December 31, 2011
   Amount of
allowance
for loan
losses    Percent of
loans to
total
loans Amount of
allowance
for loan
losses    Percent of
loans to
total
loans
   (Dollars in thousands)
Loan Type

Real estate - Residential
   $ 9       0 % $ 9       0 %
Real estate - Commercial
   36,703       70 % 38,307       70 %
Real estate - Construction
   640       1 % 724       1 %
Commercial business
   22,108       23 % 20,681       23 %
Trade finance
   1,839       4 % 1,786       4 %
Consumer and other
   1,010       2 % 445       2 %






Total
   $ 62,309       100 % $ 61,952       100 %






~~The reduction~~For a better understanding of the changes in the ~~commercial business class of~~ALLL, the loan portfolio has been segmented for disclosures purposes between loans, ~~was primarily due~~which are accounted for under the amortized cost method (referred to ~~a decrease in~~as “legacy” loans) and loans acquired from Center (referred to as “acquired” loans). The acquired loans were further segregated between credit impaired loans (ASC 310-30 loans) and performing loans (pass graded loans acquired from Center in the ~~corresponding impaired reserve amounts.~~ merger). The activity in the ALLL for the three months ended March 31, 2012 is as follows:
   Acquired Loans⁽²⁾
   Legacy
Loans⁽¹⁾ Credit
Impaired
Loans Performing
Loans Total
Balance, beginning of period
   $ 61,952    $ 0    $ 0    $ 61,952
Provision for loan losses
   835    814    951    2,600
Loans charged off
   (3,296 ) 0    (86 ) (3,382 )
Recoveries of charged offs
   742    0    397    1,139


Balance, end of period
   60,233    814    1,262    62,309


Gross loans, net of deferred loan fees and costs
   $ 2,507,789    170,837    1,058,573    $ 3,737,199
Loss coverage ratio
   2.40 % 0.48 % 0.12 % 1.67 %


⁽¹⁾
Legacy Loans includes acquired loans that have been renewed or refinanced after the merger.
⁽²⁾
Acquired loans were marked to fair value at the acquisition date, and provisions for loan losses reflect credit deterioration since the acquisition date.
The following table shows the provisions made for loan losses, the amount of loans charged off and the recoveries on loans previously charged off, together with the balance in the allowance for loan losses at the beginning and end of each period, the amount of average and gross loans outstanding, and certain other ~~pertinent~~ ratios as of the dates and for the periods indicated:

   Nine Months Ended September 30,    Three Months Ended
March 31,
   2011 2010    2012 2011
   (Dollars in thousands)    (Dollars in thousands)
LOANS⁽¹⁾

Average gross loans, including loans held for sale
   $ 2,202,535    $ 2,178,540
Average gross loans receivable, including loans held for sale (net of deferred fees)
   $ 3,777,495    $ 2,167,739




Gross loans, excluding loans held for sale, the guaranteed portion of delinquent SBA loans and net of deferred loan fees and costs, at end of period
   $ 2,257,667    $ 2,147,513
Total gross loans receivables, excluding loans held for sale at end of year (net of deferred fees)
   $ 3,737,199    $ 2,139,933




ALLOWANCE:

Balance-beginning of period
   $ 62,320    $ 59,424       $ 61,952    $ 62,320
Less: Loan charge-offs:

Residential real estate
   0    (23 )    0    0
Commercial & industrial real estate
   (14,938 ) (53,026 )    (1,934 ) (2,389 )
Construction
   (3,254 ) (848 )    0    (693 )
Commercial business loans
   (6,023 ) (21,542 )    (1,422 ) (2,113 )
Trade finance
   0    0       0    0
Consumer and other loans
   (256 ) (1,123 )    (26 ) (115 )




   (24,471 ) (76,562 )
Total loans charged off
   (3,382 ) (5,310 )




Plus: Loan recoveries

Commercial & industrial real estate
   1,200    378       323    234
Commercial business loans
   1,937    1,549       792    659
Consumer and other loans
   231    74       24    175




   3,368    2,001
Total loans recoveries
   1,139    1,068




Net loan charge-offs
   (21,103 ) (74,561 )    (2,243 ) (4,242 )

Provision for loan losses
   18,792    78,830       2,600    5,262




Balance-end of period
   $ 60,009    $ 63,693       $ 62,309    $ 63,340




Net loan charge-offs to average gross loans *
   1.28 % 4.56 %
Allowance for loan losses to total loans at end of period
   2.66 % 2.97 %
Net loan charge-offs to average gross loans, including loans held for sale (net of deferred fees) *
   0.24 % 0.78 %
Allowance for loan losses to gross loans at end of period
   1.67 % 2.96 %
Net loan charge-offs to beginning allowance *
   45.15 % 167.30 %    14.48 % 27.23 %
Net loan charge-offs to provision for loan losses
   112.30 % 94.58 %    86.27 % 80.62 %


* Annualized
~~(1)~~ Total loans are net of deferred loan fees and costs of $2.7 million and $2.4 million at September 30, 2011 and 2010, respectively. They also exclude the guaranteed portion of delinquent SBA loans of $10.5 million and $14.3 million at September 30, 2011 and 2010, respectively.
We believe the allowance for loan losses as of ~~September 30, 2011~~March 31, 2012 is adequate to absorb probable incurred losses in the loan portfolio. However, no assurance can be given that actual losses will not exceed the estimated amounts.
Deposits and Other Borrowings
Deposits. Deposits are our primary source of funds used in our lending and investment activities. At ~~September 30, 2011,~~March 31, 2012, our deposits had ~~increased~~decreased by ~~$91~~$20 million, or 4%1%, to ~~$2.27~~$3.92 billion from ~~$2.18~~$3.94 billion at December 31, ~~2010. The increase was driven by growth in non-interest bearing demand deposits and money market accounts.~~2011. Retail deposits totaled ~~$2.13~~$3.55 billion at ~~September 30, 2011, an increase~~March 31, 2012, a decrease of ~~$21~~$6 million from ~~$2.11~~$3.56 billion at December 31, ~~2010.~~2011. Interest-bearing demand deposits, including money market and Super Now accounts, totaled ~~$835.2 million~~$1.43 billion at ~~September 30, 2011, an increase~~March 31, 2012, a decrease of ~~$20.4~~$1.7 million from ~~$814.8 million~~$1.44 billion at December 31, ~~2010.~~2011.
At ~~September 30, 2011, 20.1%~~March 31, 2012, 25.8% of total deposits were non-interest bearing demand deposits, ~~43.1%~~37.6% were time deposits and ~~36.8%~~36.6% were interest bearing demand and savings deposits. By comparison, at December 31, ~~2010, 17.9%~~2011, 25.0% of total deposits were non-interest bearing demand deposits, ~~44.7%~~38.6% were time deposits, and ~~37.4%~~36.4% were interest bearing demand and saving deposits. ~~Time deposits continue to dominate our deposit composition; however, our recent focus on increasing transaction accounts has helped to reduce our dependency on time deposits.~~
At ~~September 30, 2011,~~March 31, 2012, we had ~~$133.4~~$66.5 million in brokered deposits and ~~$200.0~~$300.0 million in California State Treasurer deposits, compared to ~~$63.1~~$80.7 million and ~~$200.0~~$300.0 million of such deposits at December 31, ~~2010,~~2011, respectively. The California State Treasurer deposits ~~have~~had three-month maturities with a weighted average interest rate of ~~0.04%~~0.09% at ~~September 30, 2011~~March 31, 2012 and were collateralized with securities with a carrying value of ~~$242.4~~$347.6 million. The weighted average interest rate for brokered deposits was ~~0.18%~~0.33% at ~~September 30, 2011.~~March 31, 2012.
The following is a schedule of CD maturities as of ~~September 30, 2011:~~March 31, 2012:
Maturity Schedule of Time Deposits
(in thousands)

      Weighted Average
Quarter Ending
   Balance*    Interest Rate
December 31, 2011
   $ 217,507       1.48 %
March 31, 2012
   157,311       1.33 %
June 30, 2012
   77,274       1.42 %
September 30, 2012
   58,473       1.25 %



Total one year or less
   510,565       1.40 %
Over one year
   149,314       1.45 %



Total time deposits
   $ 659,879       1.41 %



* ~~Excludes wholesale time deposits~~
      Weighted Average
Quarter Ending
   Balance*    Interest Rate
June 30, 2012
   $ 551,705       0.55 %
September 30, 2012
   232,391       1.10 %
December 31, 2012
   244,836       1.28 %
March 31, 2013
   258,822       1.21 %



Total one year or less
   1,287,754       0.92 %
Over one year
   187,491       1.25 %



Total time deposits
   $ 1,475,245       0.96 %



Other Borrowings. Advances may be obtained from the FHLB as an alternative source of funds. Advances from the FHLB are typically secured by a pledge of commercial real estate loans and/or securities with a market value at least equal to the outstanding advances plus our investment in FHLB stock.
At ~~September 30, 2011,~~March 31, 2012, we had ~~$300.0~~$332.1 million of FHLB advances with average remaining maturities of ~~1.7~~1.1 years, compared to ~~$350.0~~$344.4 million with average remaining maturities of ~~2.2~~1.3 years at December 31, ~~2010.~~2011. The weighted average rate, including the acquisition accounting adjustments was ~~3.19%~~1.85% and ~~3.18%~~1.93% at ~~September 30, 2011~~March 31, 2012 and at December 31, ~~2010,~~2011, respectively.
At ~~September 30, 2011~~March 31, 2012 and December 31, ~~2010, five~~2011, six wholly-owned subsidiary grantor trusts (“Trusts”) established ~~at various times~~ by ~~Nara Bancorp~~us had ~~$38~~issued $56 million of ~~outstanding~~ pooled trust preferred securities (“~~trust preferred securities”~~Trust Preferred Securities”). The ~~trust preferred securities~~Trust Preferred Securities accrue and pay distributions periodically at specified annual rates as provided in the related ~~indentures.~~indentures for the securities. The ~~trusts~~Trusts used the net proceeds from their respective offerings to purchase a like amount of subordinated debentures (the “Debentures”) ~~of Nara Bancorp.~~issued by us. The Debentures are the sole assets of the trusts. ~~Nara Bancorp’s~~Our obligations under the Debentures and related documents, taken together, constitute a full and unconditional guarantee by ~~Nara Bancorp~~us of the obligations of the trusts. The ~~trust preferred securities~~Trust Preferred Securities are mandatorily redeemable upon the maturity of the Debentures, or upon earlier redemption as provided in the indentures. ~~Nara Bancorp has~~We have the right to redeem the Debentures in whole (but not in part) on or after specific dates, at redemption prices specified in the indentures plus any accrued but unpaid interest to the redemption date.
Off-Balance-Sheet Activities and Contractual Obligations
We routinely engage in activities that involve, to varying degrees, elements of risk that are not reflected, in whole or in part, in the consolidated financial statements. These activities are part of our normal course of business and include traditional off-balance-sheet credit-related financial instruments, interest rate swap contracts, operating leases and long-term debt.
Traditional off-balance-sheet credit-related financial instruments are primarily commitments to extend credit and standby letters of credit. These activities could require us to make cash payments to third parties ~~in the event~~if certain specified future events occur. The contractual amounts represent the extent of our exposure in these off-balance-sheet activities. However, since certain off-balance-sheet commitments, particularly standby letters of credit, are expected to expire or be only partially used, the total amount of commitments does not necessarily represent future cash requirements. These activities are necessary to meet the financing needs of our customers.
We enter into interest rate swap contracts under which we are required to either receive cash from or pay cash to counterparties depending on changes in interest rates. We also purchase interest rate caps to protect against increases in market interest rates. We utilize interest rate swap contracts and interest rate caps to help manage the risk of changing interest rates.
We do not anticipate that our current off-balance-sheet activities will have a material impact on our future results of operations or our financial condition. Further information regarding our financial instruments with off-balance-sheet risk can be found in Item 3 “Quantitative and Qualitative Disclosures about Market Risk”.
~~We lease our~~Our leased banking facilities and equipment are leased under non-cancelable operating leases under which we must make monthly payments over periods up to 3020 years.
Stockholders’ Equity and Regulatory Capital
Historically, our primary source of capital has been the retention of earnings, net of dividend payments to shareholders. We seek to maintain capital at a level sufficient to assure our stockholders, our customers, and our regulators that our company and our bank subsidiary are financially sound. For this purpose, we perform ongoing assessments of our components of capital as well as projected sources and uses of capital in conjunction with projected increases in assets and levels of risks. We have considered, and we will continue to consider, additional sources of capital as needs arise, through the issuance of additional stock or debt. Based on our analysis of our capital needs (including any needs arising out of our financial condition and results of operations) and the input of our regulators, we may decide, or our regulators may require us, to raise additional capital. For example, we anticipate that we will raise additional capital through an offering of our common stock in connection with the pending Center Merger, although the amount of such an offering has not yet been finally decided upon.
Total stockholders’ equity was ~~$383.6~~$818.2 million at ~~September 30, 2011~~March 31, 2012 compared to ~~$358.6~~$795.9 million at December 31, ~~2010.~~2011. The increase was primarily due to net income to common stockholders of ~~$19.7~~$22.1 million for the ~~nine~~three months ended ~~September 30, 2011.~~March 31, 2012. Our ratio of tangible common equity to tangible assets was ~~10.40%~~11.86% at ~~September 30, 2011,~~March 31, 2012, compared to ~~9.76%~~11.42% at December 31, ~~2010.~~2011. The increase was attributable to the increase in stockholders’ equity.
The federal banking agencies require a minimum ratio of qualifying total capital to risk-weighted assets of 8% and a minimum ratio of Tier I capital to risk-weighted assets of 4%. In addition to the risk-based guidelines, federal banking regulators require banking organizations to maintain a minimum amount of Tier I capital to average total assets, referred to as the leverage ratio. Capital requirements apply to the Company and the Bank separately. In addition to these uniform risk-based capital guidelines and leverage ratios that apply across the industry, the regulators have the discretion to set individual minimum capital requirements for specific institutions at rates significantly above the minimum guidelines and ratios.
At ~~September 30, 2011,~~March 31, 2012, our Tier I capital, defined as stockholders’ equity less intangible assets, plus proceeds from the trust preferred securities (subject to limitations), was ~~$401.4~~$759.8 million, compared to ~~$374.4~~$733.3 million at December 31, ~~2010,~~2011, representing an increase of ~~$27.1~~$26.5 million, or 7%4%. This increase was primarily due to the net income available to common stockholders of ~~$19.7~~$22.1 million for the ~~nine~~three months ended ~~September 30, 2011.~~March 31, 2012. At ~~September 30, 2011,~~March 31, 2012, the total capital to risk-weighted assets ratio was ~~18.0%~~20.11% and the Tier I capital to risk-weighted assets ratio was ~~16.7%~~18.85%. The Tier I leverage capital ratio was ~~13.5%~~15.08%.
As of ~~September 30, 2011~~March 31, 2012 and December 31, ~~2010,~~2011, the most recent regulatory notification categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain minimum total risk-based, Tier I risk-based and Tier I leverage capital ratios as set forth in the table below.

   As of September 30, 2011 (Dollars in thousands)
   Actual To Be Well-Capitalized Excess
   Amount    Ratio Amount    Ratio Amount    Ratio
Nara Bancorp, Inc

Tier 1 capital to total assets
   $ 401,441       13.5 % $ 148,692       5.0 % $ 252,749       8.5 %
Tier 1 risk-based capital ratio
   $ 401,441       16.7 % $ 144,181       6.0 % $ 257,260       10.7 %
Total risk-based capital ratio
   $ 431,969       18.0 % $ 240,301       10.0 % $ 191,668       8.0 %
Nara Bank

Tier I capital to total assets
   $ 394,283       13.3 % $ 148,675       5.0 % $ 245,608       8.3 %
Tier 1 risk-based capital ratio
   $ 394,283       16.4 % $ 144,022       6.0 % $ 250,261       10.4 %
Total risk-based capital ratio
   $ 424,778       17.7 % $ 240,037       10.0 % $ 184,741       7.7 %
   As of December 31, 2010 (Dollars in thousands)
   Actual To Be Well-Capitalized Excess
   Amount    Ratio Amount    Ratio Amount    Ratio
Nara Bancorp, Inc

Tier 1 capital to total assets
   $ 374,353       12.6 % $ 148,398       5.0 % $ 225,955       7.6 %
Tier 1 risk-based capital ratio
   $ 374,353       16.4 % $ 136,791       6.0 % $ 237,562       10.4 %
Total risk-based capital ratio
   $ 403,298       17.7 % $ 227,986       10.0 % $ 175,312       7.7 %
Nara Bank

Tier I capital to total assets
   $ 364,397       12.3 % $ 148,427       5.0 % $ 215,970       7.3 %
Tier 1 risk-based capital ratio
   $ 364,397       16.0 % $ 136,549       6.0 % $ 227,848       10.0 %
Total risk-based capital ratio
   $ 393,292       17.3 % $ 227,581       10.0 % $ 165,711       7.3 %
Under federal banking law and regulations, dividends declared by the Bank in any calendar year may not, without the approval of the regulatory agency, exceed its net income for that year combined with its retained income from the preceding two years. However, the regulatory agency has previously issued a bulletin to all banks outlining guidelines limiting the circumstances under which banks may pay dividends even if the banks are otherwise statutorily authorized to pay dividends. The limitations impose a requirement or in some cases suggest, that prior approval of the regulatory agency should be obtained before a dividend is paid if a bank is the subject of administrative action or if the payment could be viewed by the regulatory agency as unsafe or unusual.
   As of March 31, 2012 (Dollars in thousands)
   Actual To Be Well-Capitalized Excess
   Amount    Ratio Amount    Ratio Amount    Ratio
BBCN Bancorp, Inc

Tier I capital to total assets
   $ 759,784       15.1 % N/A       N/A
Tier I risk-based capital ratio
   $ 759,784       18.9 % N/A       N/A
Total risk-based capital ratio
   $ 810,404       20.1 % N/A       N/A
BBCN Bank

Tier I capital to total assets
   $ 695,618       13.8 % $ 251,858       5.0 % $ 443,760       8.8 %
Tier I risk-based capital ratio
   $ 695,618       17.3 % $ 241,630       6.0 % $ 453,988       11.3 %
Total risk-based capital ratio
   $ 746,199       18.5 % $ 402,717       10.0 % $ 343,482       8.5 %
   As of December 31, 2011 (Dollars in thousands)
   Actual To Be Well-Capitalized Excess
   Amount    Ratio Amount    Ratio Amount    Ratio
BBCN Bancorp, Inc

Tier I capital to total assets
   $ 733,319       19.8 % N/A       N/A
Tier I risk-based capital ratio
   $ 733,319       18.2 % N/A       N/A
Total risk-based capital ratio
   $ 784,054       19.4 % N/A       N/A
BBCN Bank

Tier I capital to total assets
   $ 670,855       18.1 % $ 185,048       5.0 % $ 485,807       13.1 %
Tier I risk-based capital ratio
   $ 670,855       16.6 % $ 242,168       6.0 % $ 428,687       10.6 %
Total risk-based capital ratio
   $ 721,551       17.9 % $ 403,613       10.0 % $ 317,938       7.9 %
Liquidity Management
Liquidity risk is the risk toof reduction in our earnings or capital that would ~~arise~~result if we were ~~to become unable~~not able to meet our obligations when they come due without incurring unacceptable losses. Liquidity risk includes the ~~possibility~~risk of ~~having to manage~~ unplanned decreases or changes in funding sources and ~~to recognize or address~~ changes in market conditions that affect our ability to liquidate assets quickly and with a minimum loss of ~~value or to access other sources of cash.~~value. Factors considered in liquidity risk management are the stability of the deposit ~~base,~~base; the marketability, maturity, and pledging of our ~~ability to pledge investments,~~investments; the availability of alternative sources of ~~funds,~~funds; and ~~the~~our demand for credit. ~~We manage~~The objective of our liquidity ~~risk by managing interest-earning assets~~management is to have funds available to meet cash flow requirements arising from fluctuations in deposit levels and ~~interest-bearing liabilities,~~the demands of daily operations, which include funding of securities purchases, providing for customers’ credit needs, and ~~by maintaining alternative sources~~ongoing repayment of ~~funds as described below.~~borrowings.
Our primary sources of liquidity are derived from financing activities, which include customer and broker deposits, federal funds facilities, and borrowings from the Federal Home Loan Bank of San Francisco and the Federal Reserve Bank Discount Window. These funding sources are augmented by payments of principal and interest on loans and securities, proceeds from ~~sales~~sale of loans and the liquidation or sale of securities from our available for sale portfolio. Primary uses of funds include withdrawal of and interest payments on deposits, originations of loans, purchases of investment securities, and payment of operating expenses.
At ~~September 30, 2011,~~March 31, 2012, our total borrowing capacity from the Federal Home Loan Bank of San Francisco was $1.2 billion, of which $$907 million was unused and available to borrow. At March 31, 2012, our total borrowing capacity from the Federal Reserve Bank was ~~$990~~$472 million, of which ~~$689~~$472 million was unused and available to borrow. In addition to these lines, our liquid assets, consisting of cash and cash equivalent, interest-bearing cash deposits with other banks, overnight federal funds sold to other banks, liquid investment securities available for sale, and loan repayments within 30 days, were ~~$433.6~~$735.2 million at ~~September 30, 2011~~March 31, 2012 compared to ~~$510.5~~$689.8 million at December 31, ~~2010.~~2011. Cash and cash equivalents, including federal funds sold were ~~$175.8~~$365.7 million at ~~September 30, 2011~~March 31, 2012 compared to ~~$172.3~~$300.1 million at December 31, ~~2010.~~2011. We believe our liquidity sources to be stable and adequate to meet our day-to-day cash flow requirements.
~~Recent Developments~~
In October 2011, we completed a public equity offering of 8,724,475 shares of common stock (including 1,137,975 shares pursuant to the full exercise by the underwriters of their overallotment option) at a price of $7.25 per share, less an underwriting discount of $0.3625 per share. Total proceeds from the equity offering, net of underwriters’ discount and offering costs, were approximately $59.7 million. We intend to use the net proceeds of the offering for general corporate purposes. The offering was conducted to increase our capital to support our pending merger with Center Financial, which is subject to regulatory and customary closing conditions. For further discussion of our public equity offering, see Note 15, Subsequent Event in the Notes to Condensed Consolidated Financial Statements (unaudited), included in Item 1. Financial Statements.
On November 4, 2011, the California Department of Financial Institutions and the Federal Reserve Bank of San Francisco notified the Company that they would not object to termination by the boards of directors of the Company and Nara Bank of the resolutions previously adopted by the respective boards at the request of such bank regulatory authorities. The resolutions addressed certain actions that would be taken by the Company and Nara Bank with respect to their business operations and related matters.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The objective of our asset and liability management activities is to improve our earnings by adjusting the type and mix of assets and liabilities to effectively address changing conditions and risks. Through overall management of our balance sheet and by controlling various risks, we seek to optimize our financial returns within safe and sound parameters. Our operating strategies for attaining this objective include managing net interest margin through appropriate risk/return pricing of assets and liabilities and emphasizing growth in retail deposits, as a percentage of interest-bearing liabilities, to reduce our cost of funds. We also seek to improve earnings by controlling non-interest expense, and enhancing non-interest income. We also use risk management instruments to modify interest rate characteristics of certain assets and liabilities to hedge against our exposure to interest rate fluctuations with the objective of, reducing the effects these fluctuations might have on associated cash flows or values. Finally, we perform internal analysis to measure, evaluate and monitor risk.
Interest Rate Risk
Interest rate risk is the most significant market risk impacting us. Interest rate risk occurs when interest rate sensitive assets and liabilities do not reprice simultaneously and in equal volume. A key objective of asset and liability management is to manage interest rate risk associated with changing asset and liability cash flows and values of our assets and liabilities and market interest rate movements. The management of interest rate risk is governed by policies reviewed and approved annually by the Board of Directors. Our Board delegates responsibility for interest rate risk management to the Asset Liability Committee of the Board (“ALCO”) and to the Asset and Liability Management Committee (“~~ALCO”~~ALM”), which is composed of Nara Bank’s senior executives and other designated officers.
Market risk is the risk of adverse impacts on our future earnings, the fair values of our assets and liabilities, or our future cash flows that may result from changes in the price of a financial instrument. The fundamental objective of our ~~ALCO~~ALM is to manage our exposure to interest rate fluctuations while maintaining adequate levels of liquidity and capital. Our ~~ALCO~~ALM meets regularly to monitor interest rate risk, the sensitivity of our assets and liabilities to interest rate changes, the book and market values of our assets and liabilities, and our investment activities. It also directs changes in the composition of our assets and liabilities . Our strategy has been to reduce the sensitivity of our earnings to interest rate fluctuations by more closely matching the effective maturities or repricing characteristics of our assets and liabilities. Certain assets and liabilities, however, may react in different degrees to changes in market interest rates. Furthermore, interest rates on certain types of assets and liabilities may fluctuate prior to changes in market interest rates, while interest rates on other types may lag behind. We consider the anticipated effects of these factors when implementing our interest rate risk management objectives.
Interest Rate Sensitivity
We monitor interest rate risk through the use of a simulation model that provides us with the ability to simulate our net interest income. In order to measure, at ~~September 30, 2011,~~March 31, 2012, the sensitivity of our forecasted net interest income to changing interest rates, both rising and falling interest rate scenarios were projected and compared to base market interest rate forecasts. One application of our simulation model measures the impact of market interest rate changes on the net present value of estimated cash flows from our assets and liabilities, defined as our market value of equity. This analysis assesses the changes in market values of interest rate sensitive financial instruments that would occur in response to immediate and parallel changes in market interest rates.
The impacts on our net interest income and market value of equity exposed to immediate and parallel hypothetical changes in market interest rates as projected by the model we use for this purpose are illustrated in the following table.
   September 30, 2011 December 31, 2010    March 31, 2012 December 31, 2011
Simulated
Rate Changes
   Estimated Net
Interest Income
Sensitivity Market Value
Of Equity
Volatility Estimated Net
Interest Income
Sensitivity Market Value
Of Equity
Volatility
Simulated    Estimated Net
Interest Income
Sensitivity Market Value
Of Equity
Volatility Estimated Net
Interest Income
Sensitivity Market Value
Of Equity
Volatility
Rate Changes

+ 200 basis points
   (3.16 )% (2.72 )% (3.12 )% (4.62 )%    10.53 % 0.55 % 5.46 % (4.61 )%
+ 100 basis points
   (3.82 )% (0.96 )% (2.92 )% (2.27 )%    5.29 % 0.68 % 2.91 % (1.84 )%
- 100 basis points
   0.36 % 0.24 % 0.56 % 0.24 %    0.08 % 3.47 % 0.77 % 4.57 %
- 200 basis points
   (3.36 )% 6.84 % (4.33 )% (0.57 )%    0.32 % 7.28 % 0.83 % 8.58 %
The results obtained from using the simulation model are somewhat uncertain as the model does not take into account other impacts or changes and the effect they could have on Company’s business or changes in business strategy the Company might make in reaction to changes in the interest rate environment.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We conducted an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) for the period ended ~~September 30, 2011.~~March 31, 2012. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer determined that our disclosure controls and procedures were effective.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting during the quarter ended ~~September 30, 2011~~March 31, 2012 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II
OTHER INFORMATION

Item 1. Legal Proceedings
~~The court granted the Company’s motion for summary judgment~~We are involved in September 2010, in the Chung Lawsuit described in the Company’s Form 10K for the period ended December 31, 2010, and the case was dismissed. Chung filed an appeal and oral arguments are scheduled for November 17, 2011.
On May 2, 2011, a purported shareholder class action was filed in Los Angeles Superior Court against 1) the directors of Center Financial Corporation (“Center”), 2) Center, and 3) Nara Bancorp, Inc. (Rational Strategies Fund vs. Jin Chul Jhung, et, al, Center Financial Corporation, and Nara Bancorp, Inc., Case #BC460783). The Complaint alleges the directors of Center breached their fiduciary duties of care, good faith and loyalty, in approving the proposed merger of Center and Nara Bancorp, and that all defendants failedroutine litigation incidental to properly disclose material information in the registration statement relating to the merger that has been filed with the SEC. In addition, it alleges that Nara Bancorp, Inc. aided and abetted the Center directors’ alleged breaches of fiduciary duty. The complaint seeks damages in an unspecified amount, attorneys fees, interest and costs. The parties to the class action signed a Memorandum of Understanding (“MOU”) to settle this lawsuit, subject to court approval, by making certain additional disclosures, allour business, none of which ~~appear in the amended Registration Statement filed by the Company~~is expected to have a material adverse effect on Form S-4 on July 15, 2011. Center further agreed to pay, following consummation of the merger, up to $400,000 in plaintiff’s attorneys’ fees, if and to the extent awarded by the court. Any such payment would not become due until the merger is consummated and would be payable by the combined company. The parties signed a stipulation, dated as of October 28, 2011, formalizing the settlement reflected in the MOU. On October 31, 2011, the plaintiff filed a motion seeking the court’s preliminary approval of the settlement.
us.
Item 1A. Risk Factors
There were no material changes from risk factors previously disclosed in our ~~2010~~2011 Annual Report on Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None

Item 3. Defaults Upon Senior Securities
None

Item 4. ~~Reserved~~Mine Safety Disclosures
None

Item 5. Other Information
None

Item 6. Exhibits
See “Index to Exhibits”.
SIGNATURES
Pursuant to the requirements 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.

~~NARA~~BBCN BANCORP, INC.
Date: ~~November 9, 2011~~May 10, 2012

/s/ Alvin D. Kang

Alvin D. Kang

President and Chief Executive Officer
~~Date: November 9, 2011~~
Date: May 10, 2012
/s/ Philip E. Guldeman

~~/s/ Philip E. Guldeman~~

Philip E. Guldeman

Executive Vice President and Chief Financial Officer
INDEX TO EXHIBITS

Exhibit Number

Description
  3.1 Certificate of Incorporation of the Company, filed with the Delaware Secretary of State on June 5, 2000 (incorporated herein by reference to the Registration Statement on Form S-4 filed with the Securities and Exchange Commission (“SEC”) on November 16, 2000)
  3.2 Certificate of Amendment of Certificate of Incorporation of the Company, filed with the Delaware Secretary of State on May 31, 2002 (incorporated herein by reference to the Registration Statement on Form S-8 Exhibit 3.3 filed with the SEC on February 5, 2003)
  3.3 Certificate of Amendment of Certificate of Incorporation of the Company, filed with the Delaware Secretary of State on June 1, 2004 (incorporated herein by reference to the Registration Statement on Form 10-Q Exhibit 3.1.1 filed with the SEC on November 8, 2004)
  3.4 Certificate of Amendment of Certificate of Incorporation of the Company, filed with the Delaware Secretary of State on November 2, 2005 (incorporated herein by reference to the Registration Statement on DEF14 A, Appendix B filed with the SEC on September 6, 2005)
  3.5 Certificate of Amendment of Certificate of Incorporation of the Company, filed with the Delaware Secretary of State on July 20, 2007 (incorporated herein by reference to the Registration Statement on DEF14 A, Appendix C filed with the SEC on April 19, 2007)
  3.6
Certificate of ~~Amendment of Certificate of Incorporation of the Company,~~Merger, filed with the Delaware Secretary of State on ~~October 17,~~November 30, 2011*
  3.7 Amended and Restated Bylaws of ~~Nara~~BBCN Bancorp, Inc. (incorporated herein by reference to Current Report on Form 8-K Exhibit ~~3.1~~5.1 filed with the SEC on ~~December 28, 2007)~~February 1, 2012, SEC file number 000-50245)
10.1 Amendment No. 2 to Agreement and Plan of Merger, dated as of July 6, 2011, between Nara Bancorp, Inc. and Center Financial Corporation (incorporated herein by reference to the Current Report on Form 8-K, Exhibit 2.1, filed with the SEC on July 7, 2011)
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*
32.1 Certification of Chief Executive Officer pursuant to Section 906 of the Public Company Accounting Reform and Investor Protection Act of 2002*
32.2 Certification of Chief Financial Officer pursuant to section 906 of the Public Company Accounting Reform and Investor Protection Act of 2002*
101.INS**
XBRL Instance Document
101.SCH**
XBRL Taxonomy Extension Schema Document
101.CAL**
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF**
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB**
XBRL Taxonomy Extension Label Linkbase Document
101.PRE**
XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith
** Furnished ~~herewith.~~herewith

6864


																Accumulated
			Preferred													Other
	Preferred		Stock			Common Stock				Capital			Retained			Comprehensive			Comprehensive
	Stock		Discount			Shares		Amount		Surplus			Earnings			Income (loss), net			Income (loss)
	(In thousands, except share data)
BALANCE, JANUARY 1, 2010	$	67,000	$	(3,737	)		37,824,007	$	38	$	169,806		$	131,891		$	2,977
Issuance of additional shares pursuant to various stock plans							132,520				1,055
Tax effects of stock plans											(21	)
Stock-based compensation											271
Preferred stock cash dividends accrued (5%)														(2,513	)
Accretion on preferred stock discount				704										(704	)
Comprehensive income:
Net loss														(13,309	)				$	(13,309	)
Other comprehensive income (loss):
Change in unrealized gain (loss) on securities available for sale, net of tax																	2,663			2,663
Change in unrealized gain (loss) on interest-only strips, net of tax																	1			1
Change in unrealized gain (loss) on interest rate swaps, net of tax																	(20	)		(20	)

Total comprehensive income (loss)																			$	(10,665	)

BALANCE, SEPTEMBER 30, 2010	$	67,000	$	(3,033	)		37,956,527	$	38	$	171,111		$	115,365		$	5,621


	Nine Months Ended
	September 30,
	2011			2010
	(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	22,879		$	(13,309	)
Adjustments to reconcile net loss to net cash from operating activities:
Depreciation, amortization, net of discount accretion		6,242			8,600
Stock-based compensation expense		52			271
Provision for loan losses		18,792			78,830
Valuation adjustment of loans held for sale		35			0
Valuation adjustment of OREO		491			1,891
Proceeds from sales of loans		82,849			93,373
Originations of loans held for sale		(57,713	)		(18,921	)
Deferred gain on transfer of assets		0			(790	)
Net gains on sales of SBA and other loans		(6,307	)		(5,055	)
Net change in bank owned life insurance		(560	)		(362	)
Net gains on sales and calls of securities available for sale		(70	)		(6,396	)
Net (gains) losses on sales of OREO		(135	)		614
Net losses on dispositions of furniture and equipment		18			14
Net valuation losses on interest rate swaps and caps		120			952
Tax benefits from stock options exercised		139			0
Change in accrued interest receivable		391			2,655
Change in deferred income taxes		6,524			(11,066	)
Change in prepaid FDIC insurance		2,995			3,371
Change in other assets		(9,534	)		1,358
Change in accrued interest payable		(1,078	)		(7,832	)
Change in other liabilities		1,017			(3,580	)

Net cash provided by operating activities		67,147			124,618

CASH FLOWS FROM INVESTING ACTIVITIES
Net change in loans receivable		(171,323	)		(104,197	)
Proceeds from sales of securities available for sale		0			208,141
Proceeds from sales of OREO		2,945			8,408
Purchase of premises and equipment		(833	)		(2,452	)
Purchase of securities available for sale		(64,517	)		(96,741	)
Purchase of Federal Reserve Bank stock		(5	)		(1,963	)
Redemption of Federal Home Loan Bank Stock		2,156			1,480
Proceeds from matured, called, or paiddown securities available for sale		139,903			196,159

Net cash provided by (used in) investing activities		(91,674	)		208,835

CASH FLOWS FROM FINANCING ACTIVITIES
Net change in deposits		91,082			(231,534	)
Net change in secured borrowings		(11,057	)		8,129
Payment of cash dividends on Preferred Stock		(2,512	)		(2,513	)
Proceeds from FHLB borrowings		0			10,000
Repayment of FHLB borrowings		(50,000	)		(10,000	)
Issuance of additional stock pursuant to various stock plans		510			1,055
Tax effects on issuance of shares from stock plan		0			(21	)

Net cash used in financing activities		28,023			(224,884	)

NET CHANGE IN CASH AND CASH EQUIVALENTS		3,496			108,569
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		172,331			125,592

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	175,827		$	234,161

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid	$	25,226		$	40,555
Income taxes paid	$	15,182		$	146
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTMENT ACTIVITIES
Transfer from loans receivable to other real estate owned	$	6,558		$	12,460
Transfer from loan receivables to loans held for sale	$	23,279		$	76,752


	Number of Shares			Weighted- Average Grant Date Fair Value		Weighted- Average Remaining Contractual Life (Years)
Outstanding - January 1, 2011		36,200		$	8.25
Granted		5,000			8.37
Vested		(9,200	)		11.61
Forfeited		0			0

Outstanding - September 30, 2011		32,000		$	7.30		8.59


	At September 30, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(In thousands)
Available for Sale
Debt securities *:
GSE bonds	$	51,015	$	752	$	0		$	51,767
GSE collateralized mortgage obligations		112,055		3,481		(60	)		115,476
GSE mortgage-backed securities		263,862		6,931		(31	)		270,762
Corporate note		4,484		0		(1,078	)		3,406
Municipal bonds		5,257		401		0			5,658

Total debt securities		436,673		11,565		(1,169	)		447,069
Mutual funds - GSE mortgage related securities		8,462		258		0			8,720

	$	445,135	$	11,823	$	(1,169	)	$	455,789


	At December 31, 2010
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(In thousands)
Available for Sale
Debt securities*:
GSE bonds	$	125,429	$	1,059	$	(770	)	$	125,718
GSE collateralized mortgage obligations		101,312		2,146		(257	)		103,201
GSE mortgage-backed securities		282,205		4,628		(1,999	)		284,834
Corporate note		4,473		0		(765	)		3,708
Municipal bonds		5,258		55		(31	)		5,282

Total debt securities		518,677		7,888		(3,822	)		522,743
Mutual funds - GSE mortgage related securities		5,462		57		0			5,519

	$	524,139	$	7,945	$	(3,822	)	$	528,262


For three months:	Real estate - Residential			Real estate - Commercial			Real estate - Construction			Commercial Business			Trade Finance		Consumer and other			Unallocated		Total
Balance, July 1, 2011	$	12		$	37,589		$	1,462		$	20,058		$	188	$	387		$	0	$	59,696
Provision for loan losses		(3	)		8			(696	)		2,007			1,602		303			262		3,483
Loans charged off		0			(2,358	)		0			(1,479	)		0		(133	)		0		(3,970	)
Recoveries of charged offs		0			455			0			321			0		24			0		800

Balance, September 30, 2011	$	9		$	35,694		$	766		$	20,907		$	1,790	$	581		$	262	$	60,009


For nine months:	Real estate - Residential			Real estate - Commercial			Real estate - Construction			Commercial Business			Trade Finance		Consumer and other			Unallocated			Total
Balance, January 1, 2011	$	14		$	32,884		$	3,396		$	24,930		$	192	$	635		$	269		$	62,320
Provision for loan losses		(5	)		16,548			624			63			1,598		(29	)		(7	)	$	18,792
Loans charged off		0			(14,938	)		(3,254	)		(6,023	)		0		(256	)		0		$	(24,471	)
Recoveries of charged offs		0			1,200			0			1,937			0		231			0		$	3,368

Balance, September 30, 2011	$	9		$	35,694		$	766		$	20,907		$	1,790	$	581		$	262		$	60,009


	For the Three Months Ended				For the Nine Months Ended
	September 30, 2011				September 30, 2011
	Interest income recognized during impairment		Cash-basis interest income recognized		Interest income recognized during impairment		Cash-basis interest income recognized
	(In Thousands)				(In Thousands)
Real Estate - Commercial
Retail	$	8	$	8	$	111	$	104
Hotel & Motel		246		239		836		833
Gas Station & Car Wash		24		24		129		131
Mixed Use		17		19		52		57
Industrial & Warehouse		77		77		237		236
Other		140		100		335		300
Real Estate - Construction		28		37		84		84
Commercial Business		158		165		554		543
Trade Finance		19		8		19		8

	$	717	$	677	$	2,357	$	2,296


	As of September 30, 2011							As of December 31, 2010
	Unpaid Principal Balance^*		Related Allowance			Average Balance		Unpaid Principal Balance*		Related Allowance			Average Balance
	(In Thousands)							(In Thousands)
With Related Allowance:
Real Estate - Residential	$	0	$	0		$	24	$	0	$	0		$	0
Real Estate - Commercial
Retail		2,037		(762	)		3,891		7,441		(1,559	)		7,498
Hotel & Motel		17,572		(3,701	)		13,866		5,349		(987	)		11,439
Gas Station & Car Wash		2,089		(433	)		2,964		3,142		(1,411	)		8,844
Mixed Use		2,108		(176	)		1,661		308		(53	)		2,334
Industrial & Warehouse		4,286		(420	)		4,967		7,539		(1,729	)		2,453
Other		10,862		(1,730	)		4,000		2,603		(407	)		5,711
Real Estate - Construction		0		0			3,099		5,789		(1,686	)		4,027
Commercial Business		18,885		(7,366	)		23,808		35,961		(13,270	)		29,753
Trade Finance		0		0			0		0		0			0
Consumer and Other		0		0			0		0		0			89

	$	57,839	$	(14,588	)	$	58,280	$	68,132	$	(21,102	)	$	72,148

With No Related Allowance
Real Estate - Residential	$	0	$	0		$	0	$	0	$	0		$	0
Real Estate - Commercial
Retail		2,465		0			5,259		9,127		0			10,100
Hotel & Motel		581		0			4,713		8,619		0			7,299
Gas Station & Car Wash		515		0			3,204		5,197		0			8,361
Mixed Use		—		0			2,335		3,660		0			4,635
Industrial & Warehouse		2,694		0			2,313		367		0			2,510
Other		2,130		0			10,642		17,530		0			10,853
Real Estate - Construction		3,295		0			3,673		4,469		0			2,481
Commercial Business		3,988		0			5,055		5,029		0			4,550
Trade Finance		1,942		0			831		469		0			287
Consumer and Other		155		0			144		88		0			18

	$	17,765	$	0		$	38,169	$	54,555	$	0		$	51,094


Total	$	75,604	$	(14,588	)	$	96,449	$	122,687	$	(21,102	)	$	123,242


For three months ended:	Real estate - Residential		Real estate - Commercial		Real estate - Construction		Commercial Business		Trade Finance		Consumer and other		Total
Sales or reclassification to held for sale	$	0	$	5,970	$	0	$	0	$	0	$	0	$	5,970


		(Dollars in Thousands)
Issuance Trust	Issuance Date	Trust Preferred Security Amount		Subordinated Debentures Amount		Rate Type	Initial Rate			Rate at 9/30/2011			Maturity Date
Nara Bancorp Capital Trust I	3/28/2001	$	10,000	$	10,400	Fixed		N/A			10.18	%	6/8/2031
Nara Capital Trust III	6/5/2003		5,000		5,155	Variable		4.44	%		3.50	%	6/15/2033
Nara Statutory Trust IV	12/22/2003		5,000		5,155	Variable		4.02	%		3.10	%	1/7/2034
Nara Statutory Trust V	12/17/2003		10,000		10,310	Variable		4.12	%		3.30	%	12/17/2033
Nara Statutory Trust VI	3/22/2007		8,000		8,248	Variable		7.00	%		2.00	%	6/15/2037

TOTAL ISSUANCE		$	38,000	$	39,268


Three Months Ended September 30,
(Dollars in thousands)	Business Segment
2011	Banking Operations		TFS		SBA			Company
Net interest income, before provision for loan losses	$	24,748	$	3,000	$	3,305		$	31,053
Less provision for (reversal of) loan losses*		3,295		2,442		(2,254	)		3,483
Non-interest income		2,306		631		1,321			4,258

Net revenue		23,759		1,189		6,880			31,828
Non-interest expense		15,692		521		604			16,817

Income (loss) before income taxes	$	8,067	$	668	$	6,276		$	15,011

Goodwill	$	2,509	$	0	$	0		$	2,509

Total assets	$	2,535,001	$	230,245	$	250,881		$	3,016,127


			Fair Value Measurements at Using
	December 31, 2010		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
Assets:
Impaired loans at fair value:
Real estate loans	$	35,009	$	0	$	0	$	35,009
Commercial business		6,611		0		0		6,611
Loans held for sale, net*		3,225		0		3,225		0
Other real estate owned*		675		0		0		675


	September 30, 2011
	Carrying Amount			Estimated Fair Value
	(In thousands)
Financial Assets:
Cash and cash equivalents	$	175,827		$	175,827
Loans held for sale		25,722			27,823
Loans receivable—net		2,193,184			2,243,339
Federal Reserve Bank stock		6,372			N/A
Federal Home Loan Bank stock		15,561			N/A
Accrued interest receivable		8,257			8,257
Customers’ liabilities on acceptances		9,343			9,343

Financial Liabilities:
Noninterest-bearing deposits	$	(454,842	)	$	(454,842	)
Saving and other interest bearing demand deposits		(835,161	)		(835,161	)
Time deposits		(977,193	)		(979,413	)
Borrowings from Federal Home Loan Bank		(300,000	)		(313,118	)
Subordinated debentures		(39,268	)		(45,174	)
Accrued interest payable		(3,752	)		(3,752	)
Bank’s liabilities on acceptances outstanding		(9,343	)		(9,343	)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
	(In thousands)
Net income (loss)	$	9,815		$	5,100		$	22,879		$	(13,309	)

Unrealized holding gains on securities available-for sale and interest only strips		3,479			287			6,606			10,716
Reclassification adjustments for gains realized in income		(64	)		(4	)		(70	)		(6,396	)

Net unrealized gain		3,415			283			6,536			4,320
Tax expense (benefit)		1,308			97			2,532			1,656

Net of tax amount	$	2,107		$	186		$	4,004		$	2,664

Reclassification adjustment for gains realized for the ineffective portion of swaps and caps and discontinued hedge positions	$	(11	)	$	(11	)	$	(33	)	$	(33	)

Net unrealized loss		(11	)		(11	)		(33	)		(33	)
Tax benefit		(4	)		(4	)		(13	)		(13	)

Net of tax amount	$	(7	)	$	(7	)	$	(20	)	$	(20	)


Total other comprehensive income	$	2,100		$	179		$	3,984		$	2,644


Comprehensive income (loss)	$	11,915		$	5,279		$	26,863		$	(10,665	)


	Actual					Required For Capital Adequacy Purposes					Required To Be Well Capitalized under Prompt Corrective Action Provisions						Actual					Required For Capital Adequacy Purposes					Required To Be Well Capitalized under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio				Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)																(Dollars in thousands)
As of September 30, 2011
As of March 31, 2012
Total capital (to risk-weighted assets):
Company	$	431,969		18.0	%	$	192,241		8.0	%		N/A		N/A			$	810,404		20.1	%	$	322,431		8.0	%		N/A		N/A
Bank	$	424,778		17.7	%	$	192,029		8.0	%	$	240,037		10.0	%		$	746,199		18.5	%	$	322,174		8.0	%	$	402,717		10.0	%
Tier I capital (to risk-weighted assets):
Company	$	401,441		16.7	%	$	96,121		4.0	%		N/A		N/A			$	759,784		18.9	%	$	161,215		4.0	%		N/A		N/A
Bank	$	394,283		16.4	%	$	96,015		4.0	%	$	144,022		6.0	%		$	695,618		17.3	%	$	161,087		4.0	%	$	241,630		6.0	%
Tier I capital (to average assets):																��
Company	$	401,441		13.5	%	$	118,954		4.0	%		N/A		N/A			$	759,784		15.1	%	$	201,560		4.0	%		N/A		N/A
Bank	$	394,283		13.3	%	$	118,940		4.0	%	$	148,675		5.0	%		$	695,618		13.8	%	$	201,486		4.0	%	$	251,858		5.0	%


	At or for the Three Months Ended September 30,						At or for the Nine Months Ended September 30,						At or for the Three Months Ended March 31,
	2011			2010			2011			2010			2012			2011
	(Dollars in thousands, except share and per share data)						(Dollars in thousands, except share and per share data)						(Dollars in thousands, except share and per share data)
Income Statement Data:
Interest income	$	38,927		$	37,130		$	113,415		$	112,384		$	68,555		$	37,194
Interest expense		7,874			9,520			24,148			32,723			7,696			8,311

Net interest income		31,053			27,610			89,267			79,661			60,859			28,883
Provision for loan losses		3,483			11,100			18,792			78,830			2,600			5,262

Net interest income after provision for loan losses		27,570			16,510			70,475			831			58,259			23,621
Non-interest income		4,258			7,339			16,452			20,183			11,645			4,510
Non-interest expense		16,817			15,693			50,398			45,844			30,435			16,695

Income (loss) before income tax expense (benefit)		15,011			8,156			36,529			(24,830	)
Income tax expense (benefit)		5,196			3,056			13,650			(11,521	)

Net income (loss)	$	9,815		$	5,100		$	22,879		$	(13,309	)
Income before income tax expense														39,469			11,436
Income tax expense														15,535			4,690
Net income													$	23,934		$	6,746

Dividends and discount accretion on preferred stock	$	(1,077	)	$	(1,073	)	$	(3,227	)	$	(3,217	)	$	(1,869	)	$	(1,075	)

Net income (loss) available to common stockholders	$	8,738		$	4,027		$	19,652		$	(16,526	)

Net income available to common stockholders													$	22,065		$	5,671

Per Share Data:
Earnings (loss) per common share - basic	$	0.23		$	0.11		$	0.52		$	(0.44	)
Earnings (loss) per common share - diluted	$	0.23		$	0.11		$	0.52		$	(0.44	)
Earnings per common share-basic													$	0.28		$	0.15
Earnings per common share-diluted													$	0.28		$	0.15
Book value per common share (period end, excluding preferred stock and warrants)	$	8.30		$	7.63		$	8.30		$	7.63		$	8.92		$	7.83
Common shares outstanding		38,095,260			37,956,527			38,095,260			37,956,527
Weighted average shares - basic		38,098,142			37,956,527			38,044,625			37,902,809
Weighted average shares - diluted		38,103,683			38,004,768			38,070,141			37,902,809

Statement of Financial Condition Data - at Period End:
Tangible book value per common share (period end, excluding preferred stock and warrants)^{(1) (12)}													$	7.72		$	7.75
Number of common shares outstanding (period end)														77,996,391			37,993,327
Weighted average shares-basic														77,996,391			37,987,345
Weighted average shares-diluted														78,101,818			38,098,848
Tangible common equity ratio⁽⁹⁾														11.86	%		10.08	%
Statement of Financial Condition Data-at Period End:
Assets	$	3,016,127		$	2,984,976		$	3,016,127		$	2,984,976		$	5,169,315		$	2,926,143
Securities available for sale		455,789			479,779			455,789			479,779			697,808			512,000
Gross loans, net of deferred loan fees and costs * (excludes loans held for sale)		2,257,667			2,147,513			2,257,667			2,147,513
Gross loans, net of deferred loan fees and costs (excludes loans held for sale)														3,737,199			2,154,113
Deposits		2,267,196			2,202,656			2,267,196			2,202,656			3,920,464			2,176,098
Federal Home Loan Bank borrowings		300,000			350,000			300,000			350,000			332,109			300,000
Subordinated debentures		39,268			39,268			39,268			39,268			52,137			39,268
Stockholders’ equity		383,615			356,102			383,615			356,102			818,166			364,336


	Three Months Ended
	March 31, 2012			March 31, 2011
Net interest margin, excluding effect of acquisition accounting adjustments		4.04	%		4.13	%
Acquisition accounting adjustments⁽¹⁾		1.07			0.00
Reported net interest margin		5.11	%		4.13	%


	September 30, 2011			September 30, 2010
Weighted average loan portfolio yield (excluding discounts)		5.82	%		5.99	%
Weighted average securities available-for-sale portfolio yield		3.33	%		3.16	%
Weighted average cost of deposits		0.82	%		1.06	%
Weighted average cost of total interest-bearing deposits		1.03	%		1.27	%
Weighted average cost of FHLB advances		3.19	%		3.42	%
Net interest margin		4.10	%		3.78	%


	Three months ended September 30, 2011							Three months ended September 30, 2010
	Average Balance		Interest Income/ Expense		Average Yield/ Rate *			Average Balance		Interest Income/ Expense		Average Yield/ Rate *
	(Dollars in thousands)
INTEREST EARNINGS ASSETS:
Loans⁽¹⁾⁽²⁾	$	2,248,544	$	34,902		6.16	%	$	2,158,073	$	33,444		6.15	%
Securities available for sale⁽³⁾		486,009		3,843		3.16	%		441,298		3,438		3.12	%
FRB and FHLB stock and other investments		142,306		182		0.51	%		248,417		248		0.40	%

Total interest earning assets	$	2,876,859	$	38,927		5.37	%	$	2,847,788	$	37,130		5.18	%

INTEREST BEARING LIABILITIES:
Deposits:
Demand, interest-bearing	$	701,109	$	1,490		0.84	%	$	637,814	$	1,782		1.11	%
Savings		126,231		764		2.40	%		137,278		851		2.46	%
Time deposits:
$100,000 or more		363,155		351		0.38	%		364,199		572		0.62	%
Other		607,193		2,372		1.55	%		698,201		2,763		1.57	%

Total time deposits		970,348		2,723		1.11	%		1,062,400		3,335		1.25	%

Total interest bearing deposits		1,797,688		4,977		1.10	%		1,837,492		5,968		1.29	%

FHLB advances		300,000		2,438		3.23	%		350,000		3,045		3.45	%
Other borrowings		37,816		459		4.75	%		40,199		507		4.93	%

Total interest bearing liabilities		2,135,504	$	7,874		1.46	%		2,227,691	$	9,520		1.69	%

Non-interest bearing demand deposits		477,120							353,980

Total funding liabilities / cost of funds	$	2,612,624				1.21	%	$	2,581,671				1.46	%

Net interest income/net interest spread			$	31,053		3.91	%			$	27,610		3.49	%

Net interest margin						4.29	%						3.85	%
Net interest margin, excluding effect of non-accrual loan income (expense)⁽⁴⁾						4.27	%						3.88	%
Net interest margin, excluding effect of non-accrual loan income (expense) and prepayment fee income⁽⁴⁾⁽⁵⁾						4.24	%						3.86	%

Cost of deposits:
Non-interest demand deposits	$	477,120	$	0				$	353,980	$	0
Interest bearing deposits		1,797,688		4,977		1.10	%		1,837,492		5,968		1.29	%

Total deposits	$	2,274,808	$	4,977		0.88	%	$	2,191,472	$	5,968		1.08	%


	Three months ended March 31, 2012							Three months ended March 31, 2011
	Average Balance		Interest Income/ Expense		Average Yield/ Rate *			Average Balance		Interest Income/ Expense		Average Yield/ Rate *
	(Dollars in thousands)
INTEREST EARNINGS ASSETS:
Loans^{(1) (2)}	$	3,777,495	$	63,419		6.75	%	$	2,167,739	$	33,085		6.19	%
Securities available for sale⁽³⁾		725,728		4,909		2.71	%		526,341		3,930		2.99	%
FRB and FHLB stock and other investments		257,583		178		0.27	%		137,094		179		0.52	%
Federal funds sold		25,780		49		0.74	%		0		0		N/A

Total interest earning assets	$	4,786,586	$	68,555		5.76	%	$	2,831,174	$	37,194		5.32	%

INTEREST BEARING LIABILITIES:
Deposits:
Demand, interest-bearing	$	1,232,763	$	2,123		0.69	%	$	680,254	$	1,464		0.87	%
Savings		195,932		922		1.89	%		126,661		709		2.27	%
Time deposits:
$100,000 or more		767,171		1,411		0.74	%		321,708		455		0.57	%
Other		722,982		947		0.53	%		640,549		2,502		1.58	%

Total time deposits		1,490,153		2,358		0.64	%		962,257		2,957		1.25	%

Total interest bearing deposits		2,918,848		5,403		0.74	%		1,769,172		5,130		1.18	%

FHLB advances		339,964		1,626		1.92	%		324,611		2,572		3.21	%
Other borrowings		50,108		667		5.26	%		55,088		608		4.42	%

Total interest bearing liabilities		3,308,920	$	7,696		0.93	%		2,148,871	$	8,310		1.57	%

Non-interest bearing demand deposits									388,928

Total funding liabilities / cost of funds	$	3,308,920				0.72	%	$	2,537,799				1.33	%

Net interest income/net interest spread			$	60,859		4.83	%			$	28,884		3.75	%

Net interest margin						5.11	%						4.13	%
Net interest margin, excluding effect of non-accrual loan income (expense)⁽⁴⁾						5.14	%						4.14	%
Net interest margin, excluding effect of non-accrual loan income (expense) and prepayment fee income^(4) (5)						5.13	%						4.11	%

Cost of deposits:
Non-interest bearing demand deposits	$	984,813	$	0				$	388,928	$	0
Interest bearing deposits		2,918,848		5,403		0.74	%		1,769,172		5,130		1.18	%

Total deposits	$	3,903,661	$	5,403		0.56	%	$	2,158,100	$	5,130		0.96	%


	Nine months ended September 30, 2011							Nine months ended September 30, 2010
	Average Balance		Interest Income/ Expense		Average Yield/ Rate *			Average Balance		Interest Income/ Expense		Average Yield/ Rate *
	(Dollars in thousands)
INTEREST EARNINGS ASSETS:
Loans⁽¹⁾⁽²⁾	$	2,202,535	$	101,137		6.14	%	$	2,178,540	$	100,302		6.16	%
Securities available for sale⁽³⁾		504,402		11,738		3.10	%		520,259		11,410		2.92	%
FRB and FHLB stock and other investments		137,473		540		0.52	%		185,907		623		0.45	%
Federal funds sold		0		0		N/A			8,132		49		0.79	%

Total interest earning assets	$	2,844,410	$	113,415		5.33	%	$	2,892,838	$	112,384		5.19	%

INTEREST BEARING LIABILITIES:
Deposits:
Demand, interest-bearing	$	697,513	$	4,500		0.86	%	$	578,318	$	4,675		1.08	%
Savings		126,375		2,202		2.33	%		135,885		2,484		2.44	%
Time deposits:
$100,000 or more		333,532		1,187		0.48	%		574,482		6,880		1.60	%
Other		623,579		7,309		1.57	%		590,746		8,155		1.85	%

Total time deposits		957,111		8,496		1.19	%		1,165,228		15,035		1.73	%

Total interest bearing deposits		1,780,999		15,198		1.14	%		1,879,431		22,194		1.58	%

FHLB advances		308,114		7,422		3.22	%		350,000		9,042		3.45	%
Other borrowings		45,113		1,528		4.47	%		40,299		1,487		4.87	%

Total interest bearing liabilities		2,134,226		24,148		1.51	%		2,269,730		32,723		1.93	%
Non-interest bearing demand deposits		418,024							344,933

Total funding liabilities / cost of funds	$	2,552,250				1.26	%	$	2,614,663				1.67	%

Net interest income/net interest spread			$	89,267		3.82	%			$	79,661		3.26	%

Net interest margin						4.20	%						3.68	%
Net interest margin, excluding effect of non-accrual loan income(expense)⁽⁴⁾						4.20	%						3.74	%
Net interest margin, excluding effect of non-accrual loan income(expense) and prepayment fee income⁽⁴⁾⁽⁵⁾						4.18	%						3.72	%

Cost of deposits:
Non-interest demand deposits	$	418,024	$	0				$	344,933	$	0
Interest bearing deposits		1,780,999		15,198		1.14	%		1,879,431		22,194		1.58	%

Total deposits	$	2,199,023	$	15,198		0.92	%	$	2,224,364	$	22,194		1.33	%


	Three months ended September 30, 2011 over September 30, 2010
	Net Increase			Change due to
	(Decrease)			Rate			Volume
	(Dollars in thousands)
INTEREST INCOME:
Interest and fees on loans	$	1,458		$	54		$	1,404
Interest on securities		405			45			360
Interest on other investments		(66	)		58			(124	)

Total interest income	$	1,797		$	157		$	1,640


INTEREST EXPENSE:
Interest on demand deposits	$	(292	)	$	(453	)	$	161
Interest on savings		(87	)		(20	)		(67	)
Interest on time deposits		(612	)		(342	)		(270	)
Interest on FHLB borrowings		(607	)		(191	)		(416	)
Interest on other borrowings		(48	)		(19	)		(29	)

Total interest expense	$	(1,646	)	$	(1,025	)	$	(621	)

Net Interest Income	$	3,443		$	1,182		$	2,261


	Nine months ended September 30, 2011 over September 30, 2010
	Net Increase			Change due to
	(Decrease)			Rate			Volume
	(Dollars in thousands)
INTEREST INCOME:
Interest and fees on loans	$	835		$	(267	)	$	1,102
Interest on securities		328			683			(355	)
Interest on other investments		(83	)		96			(179	)
Interest on federal funds sold		(49	)		0			(49	)

Total interest income	$	1,031		$	512		$	519


INTEREST EXPENSE:
Interest on demand deposits	$	(175	)	$	(1,040	)	$	865
Interest on savings		(282	)		(113	)		(169	)
Interest on time deposits		(6,539	)		(4,159	)		(2,380	)
Interest on FHLB borrowings		(1,620	)		(585	)		(1,035	)
Interest on other borrowings		41			(128	)		169

Total interest expense	$	(8,575	)	$	(6,025	)	$	(2,550	)

Net Interest Income	$	9,606		$	6,537		$	3,069


	Three months ended March 31, 2012 over March 31, 2011
	Net Increase			Change due to
	(Decrease)			Rate			Volume
	(Dollars in thousands)
INTEREST INCOME:
Interest and fees on loans	$	30,334		$	3,271		$	27,063
Interest on securities		979			(395	)		1,374
Interest on FRB and FHLB stock and other investments		(1	)		(112	)		111
Interest on federal funds sold		49			0			49

Total interest income	$	31,361		$	2,764		$	28,597

INTEREST EXPENSE:
Interest on demand, interest bearing	$	659		$	(356	)	$	1,015
Interest on savings		213			(136	)		349
Interest on time deposits		(599	)		(1,841	)		1,242
Interest on FHLB advances		(946	)		(1,089	)		143
Interest on other borrowings		59			108			(49	)

Total interest expense	$	(614	)	$	(3,314	)	$	2,700

Net Interest Income	$	31,975		$	6,078		$	25,897


	Three Months Ended September 30,						Increase (Decrease)
	2011			2010			Amount			Percent (%)
	(Dollars in thousands)
Service fees on deposit accounts	$	1,352		$	1,637		$	(285	)		-17.4	%
International service fees		603			633			(30	)		(4.7	)%
Loan servicing fees, net		464			492			(28	)		-5.7	%
Wire transfer fees		343			289			54			18.7	%
Other income and fees		534			539			(5	)		(0.9	)%
Net gains on sales of SBA loans		823			308			515			167.2	%
Net gains on sales of other loans		(30	)		3,725			(3,755	)		-100.8	%
Net gains on sales and calls of securities available for sale		64			4			60			1,500.0	%
Net valuation losses on interest rate contracts		(3	)		(226	)		223			-98.7	%
Net gains (losses) on sales of OREO		108			(62	)		170			-274.2	%

Total non-interest income	$	4,258		$	7,339		$	(3,081	)		(42.0	)%


	Nine Months Ended September 30, 2011
	Banking Operations			Trade Finance Services			Small Business Administration			TOTAL
	(Dollars in thousands)
Balance, beginning of period	$	44,645		$	3,515		$	14,160		$	62,320
Provision for loan losses		8,474			4,249			6,069			18,792
Loans charged off		(13,920	)		(812	)		(9,739	)		(24,471	)
Recoveries of charge-offs		2,348			239			781			3,368

Balance, end of period	$	41,547		$	7,191		$	11,271		$	60,009


	Year Ended December 31, 2010
	Banking Operations			Trade Finance Services			Small Business Administration			TOTAL
	(Dollars in thousands)
Balance, beginning of period	$	38,285		$	3,392		$	17,747		$	59,424
Provision for loan losses		51,607			5,146			27,877			84,630
Loans charged off		(47,418	)		(5,088	)		(32,146	)		(84,652	)
Recoveries of charge-offs		2,171			65			682			2,918

Balance, end of period	$	44,645		$	3,515		$	14,160		$	62,320


	Nine Months Ended September 30, 2011
	Banking Operations				Trade Finance Services				Small Business Administration				TOTAL
	Unpaid Principal Balance*		Related Allowance		Unpaid Principal Balance*		Related Allowance		Unpaid Principal Balance*		Related Allowance		Unpaid Principal Balance*		Related Allowance
	(Dollars in thousands)
Real Estate - Residential	$	0	$	0	$	0	$	0		0		0	$	0	$	0
Real Estate - Commercial
Retail		2,752		464		136		0		1,614		298		4,502		762
Hotel & Motel		4,632		205		0		0		13,521		3,496		18,153		3,701
Gas Station & Car Wash		0		0		0		0		2,604		433		2,604		433
Mixed Use		2,108		176		0		0		0		0		2,108		176
Industrial & Warehouse		2,644		412		0		0		4,336		8		6,980		420
Other		10,817		1,727		1,427		0		748		3		12,992		1,730
Real Estate - Construction		1,710		0		0		0		1,585		0		3,295		0
Commercial Business		11,602		3,513		7,430		2,529		3,841		1,324		22,873		7,366
Trade Finance		0		0		1,942		0		0		0		1,942		0
Consumer and Other		155		0		0		0		0		0		155		0

	$	36,420	$	6,497	$	10,935	$	2,529	$	28,249	$	5,562	$	75,604	$	14,588


	Year Ended December 31, 2010
					Trade Finance				Small Business
	Banking Operations				Services				Administration				TOTAL
	Unpaid Principal Balance*		Related Allowance		Unpaid Principal Balance*		Related Allowance		Unpaid Principal Balance*		Related Allowance		Unpaid Principal Balance*		Related Allowance
	(Dollars in thousands)
Real Estate - Residential	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Real Estate - Commercial
Retail		14,388		1,254		184		0		1,996		305		16,568		1,559
Hotel & Motel		6,193		180		0		0		7,775		807		13,968		987
Gas Station & Car Wash		4,569		0		0		0		3,770		1,411		8,339		1,411
Mixed Use		3,968		53		0		0		0		0		3,968		53
Industrial & Warehouse		2,978		1,020		0		0		4,928		709		7,906		1,729
Other		18,883		358		763		0		487		49		20,133		407
Real Estate - Construction		7,641		1,686		0		0		2,617		0		10,258		1,686
Commercial Business		24,467		10,079		11,545		518		4,978		2,673		40,990		13,270
Trade Finance		0		0		469		0		0		0		469		0
Consumer and Other		88		0		0		0		0		0		88		0

	$	83,175	$	14,630	$	12,961	$	518	$	26,551	$	5,954	$	122,687	$	21,102

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