Attached files
| file | filename |
|---|---|
| 8-K - CENTER FINANCIAL CORPORATION 8-K - CENTER FINANCIAL CORP | a6700546.htm |
Exhibit 99.1
Center Financial Reports Solid 2011 First Quarter Results
-- Continued Asset Quality Improvements Highlight Company’s Fifth Consecutive Profitable Quarter --
LOS ANGELES--(BUSINESS WIRE)--April 27, 2011--Center Financial Corporation (NASDAQ: CLFC) today reported financial results for its 2011 first quarter, posting net income of $4.9 million and net income available to common shareholders of $4.1 million, equal to $0.10 per diluted common share, and continued improvements in all asset quality metrics.
“Center Financial’s 2011 first quarter results demonstrate sustainability in the company’s operational performance and ongoing improvements in asset quality and capital strength,” said Richard S. Cupp, president and chief executive officer. “Notwithstanding these positive trends, we recognize the economic conditions in our core markets continue to be challenging on numerous fronts. While our focus on returning to growth was overcome this quarter by higher-than-usual levels of pay-offs and pay-downs, we are pleased that our new business development efforts have led to a growing loan pipeline. Given our proactive identification and management of the risks associated with our portfolio, we are optimistic that our credit metrics will continue to steadily improve. We continue to make progress with preparations for and look forward to completion of the pending combination with Nara Bancorp.”
|
2011 FIRST QUARTER FINANCIAL HIGHLIGHTS |
|||||||||||||||
| At or for the Three Months Ended | |||||||||||||||
| 3/31/2011 | 12/31/2010 | 3/31/2010 | |||||||||||||
| Non-covered nonperforming loans, net of SBA guarantee | $ | 34,142 | $ | 42,225 | $ | 65,720 | |||||||||
| Delinquent non-covered loans 30 to 89 days past due, net of SBA guarantee | $ | 10,352 | $ | 12,732 | $ | 28,006 | |||||||||
| Non-covered net loan charge-offs | $ | 7,037 | $ | 7,413 | $ | 4,532 | |||||||||
| Provision for loan losses | $ | 6,000 | $ | 6,010 | $ | 7,000 | |||||||||
| Allowance for non-covered loan losses | 3.53 | % | 3.41 | % | 4.01 | % | |||||||||
| Gross non-covered loans | $ | 1,447,777 | $ | 1,528,266 | $ | 1,522,439 | |||||||||
| Total deposits | $ | 1,779,606 | $ | 1,770,994 | $ | 1,625,312 | |||||||||
| Noninterest-bearing deposits as a % of total deposits | 23.0 | % | 22.4 | % | 22.2 | % | |||||||||
| Annualized average cost of deposits | 1.05 | % | 1.09 | % | 1.31 | % | |||||||||
| Net interest margin | 3.49 | % | 3.28 | % | 3.41 | % | |||||||||
| Gain on sale of loans | $ | 3,752 | $ | (100 | ) |
$ |
─ |
||||||||
| Income before income tax provision (benefit) | $ | 5,390 | $ | 3,366 | $ | 4,254 | |||||||||
| Income tax provision (benefit) | $ | 505 | $ | (3,084 | ) | $ | 1,487 | ||||||||
| Net income | $ | 4,885 | $ | 6,450 | $ | 2,767 | |||||||||
| Net income (loss) available to common shareholders | $ | 4,135 | $ | 5,700 | $ | (26,985 | ) | ||||||||
| Net income (loss) per diluted common share | $ | 0.10 | $ | 0.14 | $ | (1.27 | ) | ||||||||
| Total risk-based capital ratio | 20.42 | % | 18.87 | % | 18.23 | % | |||||||||
| Tier 1 leverage ratio | 12.85 | % | 12.74 | % | 12.82 | % | |||||||||
Loans acquired in the April 16, 2010 FDIC-assisted transaction are subject to a loss-sharing agreement and are referred to as “covered loans.” Center’s legacy portfolio is referred to as “non-covered.”
ASSET QUALITY
At March 31, 2011, total non-covered nonperforming assets net of SBA guarantees declined to $34.3 million from $43.2 at year-end 2010. As a percentage of gross non-covered loans and other real estate owned (OREO), total non-covered nonperforming assets net of SBA guarantees declined to 2.36% at March 31, 2011 from 2.82% at December 31, 2010. As of March 31, 2011, the company’s non-covered OREO portfolio declined to a carrying value of $144,000. This is down from $937,000 at December 31, 2010.
Non-covered nonperforming loans net of SBA guarantees at March 31, 2011 declined to $34.1 million from $42.2 million at December 31, 2010. The company said new inflows into nonperforming status totaled $7.9 million, a moderate reduction from the 2010 fourth quarter inflow of $8.4 million. Commercial real estate (CRE) loans accounted for 90% of new nonaccruals, reflecting the still challenging CRE market conditions. Inflows were more than offset by outflows of $15.2 million. Outflows included two loans aggregating $5.5 million transferred to loans held for sale at a carrying value of $4.6 million.
Delinquent non-covered loans 30 to 89 days past due net of SBA guarantees declined to $10.4 million at March 31, 2011 from $12.7 million at December 31, 2010. As with non-covered nonperforming loans, inflows into non-covered delinquencies also moderately declined to $9.0 million during the 2011 first quarter from $9.9 million during the preceding 2010 fourth quarter. Performing troubled debt restructurings (TDRs) that are not accounted for in non-covered nonaccrual or delinquent loans increased to $24.5 million at March 31, 2011 from $21.4 million at December 31, 2010.
The company’s covered loans that are subject to a loss-sharing agreement with the FDIC are reported separately in the consolidated statements of financial condition.
Non-covered loan net charge-offs during the 2011 first quarter totaled $7.0 million, down from $7.4 million in the preceding 2010 fourth quarter. As a percentage of average loans on an annualized basis, non-covered loan net charge-offs equaled 1.91% of average non-covered loans for the 2011 first quarter, compared with 1.84% for the 2010 fourth quarter.
Center Financial recorded a provision for loan losses of $6.0 million for the 2011 first quarter, all of which is related to non-covered loans. In the preceding 2010 fourth quarter, the company recorded an aggregate provision for loan losses of $6.0 million, including $5.0 million related to non-covered loans and $1.0 million related to covered loans.
As a result of the improving asset quality trends, the company’s allowance for loan losses was reduced to $51.0 million at March 31, 2011 from $52.0 million at December 31, 2010. Due to the decline in the company’s loan portfolio from the year-end, the allowance for loan losses as a percentage of gross non-covered loans rose to 3.53% at March 31, 2011 from 3.41% at December 31, 2010.
LOANS & DEPOSITS
Non-covered loans declined to $1.45 billion at March 31, 2011 from $1.53 billion at December 31, 2010. The company said new loan production during the 2011 first quarter was more than offset by higher levels of pay-offs, as well as several significant pay-downs in commercial lines of credit. Covered loans at March 31, 2011 declined to $111.8 million from $117.3 million at December 31, 2010. Total loans at March 31, 2011 amounted to $1.56 billion.
Total deposits at March 31, 2011 rose to $1.78 billion from $1.77 billion at December 31, 2010. Noninterest-bearing demand deposits as a percentage of total deposits rose to 23.0 % at March 31, 2011 from 22.4% at year-end 2010. The company’s loan-to-deposit ratio equaled 84.7% at March 31, 2011, compared with 89.9% at December 31, 2010.
The average cost of interest-bearing deposits continued to decline, decreasing to 1.34% for the three months ended March 31, 2011 from 1.39% for the 2010 fourth quarter. Total cost of deposits declined to 1.05% for the 2011 first quarter, compared with 1.09% for the preceding 2010 fourth quarter.
BALANCE SHEET SUMMARY & CAPITAL
Total assets at March 31, 2011 amounted to $2.26 billion, compared with $2.27 billion at December 31, 2010. The decrease principally reflects the reduction in the company’s non-covered loan portfolio. Average interest-earning assets equaled $1.94 billion for the 2011 first quarter, compared with $2.05 billion for the 2010 fourth quarter.
Total shareholders’ equity at March 31, 2011 rose to $278.9 million from $274.0 million at December 31, 2010. Tangible common equity as a percentage of tangible assets, which is a non-GAAP financial measure, rose to 9.91% at March 31, 2011 from 9.65% at December 31, 2010.
With five consecutive profitable quarters of operations, Center Financial’s capital position continued to be well in excess of minimum guidelines for “well-capitalized” institutions. At March 31, 2011, Total Risk-Based capital ratio was 20.42%, Tier 1 Risk-Based capital ratio equaled 19.14% and Tier 1 Leverage ratio amounted to 12.85%, all reflecting increases from the levels at December 31, 2010.
2011 FIRST QUARTER OPERATIONAL HIGHLIGHTS
Net interest income before provision for loan losses totaled $16.7 million for the 2011 first quarter, compared with $16.9 million for the 2010 fourth quarter and $16.4 million in the prior-year first quarter. The average yield on loans for the 2011 first quarter declined to 5.51% from 5.64% for the preceding fourth quarter of 2010 and from 5.67% for the 2010 first quarter.
The company’s net interest margin (NIM) for the 2011 first quarter increased 21 basis points to 3.49% from 3.28% in the 2010 fourth quarter and 8 basis points from 3.41% in the first quarter of 2010. The company attributed the sequential quarter NIM expansion to a reduction in lower yielding interest-earning assets during the quarter, in addition to the reduced cost of funds.
Noninterest income for the 2011 first quarter rose to $7.7 million from $4.9 million in the 2010 fourth quarter. The company attributed the increase primarily to a $3.8 million gain on sale of loans, which includes gains recognized from the SBA loan transfer in the 2010 fourth quarter, as well as 2011 first quarter SBA loan sale gains, as a result of an SBA rule change effected during the first quarter . In the year-ago first quarter, noninterest income amounted to $5.7 million and included a $2.2 million gain on sale of securities.
Total noninterest expense for the 2011 first quarter equaled $13.0 million, compared with $12.5 million in the preceding 2010 fourth quarter, and $10.9 million for the 2010 first quarter. The company’s efficiency ratio for the 2011 first quarter improved to 53.26% from 57.12% for the 2010 fourth quarter, but was higher when compared with 49.12% for the prior-year first quarter.
For the 2011 first quarter, Center Financial posted net income of $4.9 million and net income available to common shareholders of $4.1 million, equal to $0.10 per diluted common share. This includes a net income tax provision of $505,000, reflecting a reduction in the deferred tax asset valuation allowance by approximately $1.5 million from the December 31, 2010 balance. For the preceding 2010 fourth quarter, net income amounted to $6.5 million and net income available to common shareholders of $5.7 million, equal to $0.14 per diluted common share. The 2010 fourth quarter net income includes a net income tax benefit of $3.1 million.
In the 2010 first quarter, the company posted net income of $2.8 million and a net loss available to common shareholders of $27.0 million, equal to a net loss of $1.27 per common share. As previously announced, the company incurred a net loss available to common shareholders due to the beneficial conversion feature of the company’s Series B Preferred Stock issued in December 2009, which reduced net income by an intrinsic value of the beneficial conversion in the amount of $29.0 million.
For the 2011 first quarter, Center Financial posted a return on average assets (ROAA) of 0.86% and a return on average equity (ROAE) of 7.17%. This compares with an ROAA of 1.12% and an ROAE of 9.35% for the 2010 fourth quarter. For the year-ago first quarter, the company reported an ROAA of 0.53% and an ROAE of 4.34% .
Use of Non-GAAP Financial Measures
This news release includes “non-GAAP financial measures” within the meaning of the Securities and Exchange Commission rules. Tangible common equity per common share and tangible common equity to tangible assets are non-GAAP financial measures. Tangible common equity was calculated as total shareholders’ equity less preferred stock and related dividend and accretion of preferred stock discount and net intangible assets. Tangible common equity to tangible assets represents tangible common equity divided by total assets less net intangible assets. The calculation of tangible common equity may differ among companies in light of diversity in presentation in the marketplace. Management believes that these measures are useful when comparing banks with preferred stock due to TARP funding to banks without preferred stock on their balance sheet and for evaluating a company’s capital levels. This information is being provided in response to market participant interest in these financial metrics. This information is not intended to be considered in isolation or as a substitute for the relevant measures calculated in accordance with U.S. GAAP. The reconciliations of these non-GAAP financial measures to GAAP financial measure included in this news release are attached herein.
Investor Conference Call
The company will host an investor conference call on Thursday, April 28, 2011 at 9 a.m. PDT (12 noon EDT) to review financial results for its 2011 first quarter. The institutional investment community is invited to participate in the call by dialing 866-700-7173 (domestic) or 617-213-8838 (international) and entering passcode 59594845. Other interested parties are invited to listen to the live call through a listen-only audio Web broadcast via the Internet in the Investor Relations section of www.centerbank.com. Listeners are encouraged to visit the Web site at least 15 minutes prior to the start of the scheduled presentation to register, download and install any necessary audio software. For those who are not available to listen to the live broadcast, the audio broadcast will be archived for one year. A telephonic replay of the call will be available through Thursday, May 5, 2011 by dialing 888-286-8010 (domestic) or 617-801-6888 (international) and entering replay passcode 49727640.
About Center Financial Corporation
Center Financial Corporation is the holding company of Center Bank, a community bank offering a full range of financial services for diverse ethnic and small business customers. Founded in 1986 and specializing in commercial and SBA loans and trade finance products, Center Bank has grown to be one of the nation’s leading financial institutions focusing on the Korean-American community, with total assets of $2.26 billion at March 31, 2011. Headquartered in Los Angeles, Center Bank operates a total of 22 full-service branches and two loan production offices. The company has 16 full-service branches located throughout Southern California and three branches in Northern California. Center Bank also operates two branches and one loan production office in the Seattle area, one branch in Chicago and a loan production office in Denver. Center Bank is a California state-chartered institution and its deposits are insured by the FDIC to the extent provided by law. For additional information on Center Bank, visit the company’s Web site at www.centerbank.com.
Additional Information and Where to Find It
In connection with the proposed merger of Center Financial Corporation and Nara Bancorp, Inc., Nara has filed a Registration Statement on Form S-4 (Registration No. 333-173511) with the Securities and Exchange Commission (SEC) that includes a Joint Proxy Statement/Prospectus of Center Financial Corporation and Nara Bancorp, as well as other relevant documents concerning the proposed merger. Shareholders are urged to read the Registration Statement and the Joint Proxy Statement/Prospectus regarding the merger and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they will contain important information about the transaction. You may obtain a free copy of the Joint Proxy Statement/Prospectus, as well as other filings containing information about Nara Bancorp and Center Financial at the SEC’s Web site (www.sec.gov). You may also obtain these documents free of charge from Center at http://www.centerbank.com or from Nara at http://www.narabank.com under the tab “Investor Relations” and then under the heading “SEC Filings.”
Participants in Solicitation
Center Financial, Nara Bancorp and their respective directors, executive officers, management and employees may be deemed to be participants in the solicitation of proxies in respect of the merger. Information concerning Center Financial’s participants is set forth in its Form 10-K Annual Report filed with the SEC for the year ended December 31, 2010. Information concerning Nara Bancorp’s participants is set forth in its Form 10-K Annual Report for the year ended December 31, 2010, as amended by its Form 10-K/A filed with the SEC on April 26, 2011. Additional information regarding the interests of participants of Center Financial and Nara Bancorp in the solicitation of proxies in respect of the merger is included in the Registration Statement and Joint Proxy Statement/Prospectus filed with the SEC.
This release contains forward-looking statements, which are included in accordance with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties, and actual results and performance in future periods may be materially different from any future results or performance suggested by the forward-looking statements in this release. Factors that might cause such differences include, but are not limited to, those identified in our cautionary statements contained in Center Financial Corp.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010 (See Business, and Management’s Discussion and Analysis), and other filings with the SEC are incorporated herein by reference. These factors include, but are not limited to: the health of the national and California economies; competition in the financial services market for both deposits and loans; the ability of Center Financial and its subsidiaries to increase its customer base; customers’ service expectations; changes in interest rates; loan portfolio performance; the company’s ability to sustain profitable operations; the company’s ability to capitalize on strategic growth opportunities. Factors also include, but are not limited to: the successful completion of the proposed merger of equals between Center Financial Corporation and Nara Bancorp; difficulties and delays in integrating the two institutions and achieving anticipated synergies, cost savings and other benefits from the transaction; higher than anticipated transaction costs; deposit attrition, operating costs, customer loss and business disruption following the merger, including difficulties in maintaining relationships with employees; the companies’ ability to receive required regulatory and shareholder approvals. Such forward-looking statements speak only as of the date of this release. Center Financial expressly disclaims any obligation to update or revise any forward-looking statements found herein to reflect any changes in the company’s expectations of results or any change in events.
| CENTER FINANCIAL CORPORATION | ||||||||
| CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited) | ||||||||
| (Dollars in thousands) | ||||||||
| 3/31/2011 | 12/31/2010 | |||||||
| ASSETS | ||||||||
| Cash and due from banks | $ | 33,858 | $ | 29,237 | ||||
| Federal funds sold | 150 | 136,180 | ||||||
| Money market funds and interest-bearing deposits in other banks | 283,807 | 93,503 | ||||||
| Cash and cash equivalents | 317,815 | 258,920 | ||||||
| Securities available for sale, at fair value | 312,336 | 289,551 | ||||||
| Non-covered loans held for sale, at the lower of cost or fair value | 65,677 | 60,234 | ||||||
| Federal Home Loan Bank and Pacific Coast Bankers Bank stock, at cost | 14,426 | 15,019 | ||||||
| Non-covered loans, net of allowance for loan losses of $51,010 as of March 31, 2011 and $52,047 as of December 31, 2010 | 1,330,122 | 1,415,646 | ||||||
|
Covered loans, net of allowance for loan losses of $51,010 as of March 31, 2011 and $52,047 as of December 31, 2010 |
110,753 | 116,283 | ||||||
| Premises and equipment, net | 13,160 | 13,532 | ||||||
| Core deposit intangible, net | 449 | 464 | ||||||
| Customers' liability on acceptances | 1,819 | 2,287 | ||||||
| Non-covered other real estate owned | 144 | 937 | ||||||
| Covered other real estate owned | 1,405 | 1,459 | ||||||
| Accrued interest receivable | 5,489 | 5,509 | ||||||
| Deferred income taxes, net | 14,556 | 14,383 | ||||||
| Investments in affordable housing partnerships | 10,469 | 10,824 | ||||||
| Cash surrender value of life insurance | 12,890 | 12,791 | ||||||
| Income tax receivable | 13,298 | 14,277 | ||||||
| Prepaid assessment fees | 6,902 | 7,864 | ||||||
| FDIC loss share receivable | 21,849 | 23,991 | ||||||
| Other assets | 6,559 | 6,308 | ||||||
| Total | $ | 2,260,118 | $ | 2,270,279 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| Liabilities | ||||||||
| Deposits: | ||||||||
| Noninterest-bearing | $ | 408,843 | $ | 396,973 | ||||
| Interest-bearing | 1,370,763 | 1,374,021 | ||||||
| Total deposits | 1,779,606 | 1,770,994 | ||||||
| Acceptances outstanding | 1,819 | 2,287 | ||||||
| Accrued interest payable | 4,771 | 5,113 | ||||||
| Other borrowed funds | 167,749 | 188,670 | ||||||
| Long-term subordinated debentures | 18,557 | 18,557 | ||||||
| Accrued expenses and other liabilities | 8,709 | 10,646 | ||||||
| Total liabilities | 1,981,211 | 1,996,267 | ||||||
| Commitments and Contingencies | ||||||||
| Shareholders' Equity | ||||||||
| Preferred stock, Series A | 53,472 | 53,409 | ||||||
| Common stock | 187,892 | 187,754 | ||||||
| Retained earnings | 36,135 | 32,000 | ||||||
| Accumulated other comprehensive income, net of tax | 1,408 | 849 | ||||||
| Total shareholders' equity | 278,907 | 274,012 | ||||||
| Total | $ | 2,260,118 | $ | 2,270,279 | ||||
| Tangible common equity per common share | $ | 5.61 | $ | 5.49 | ||||
| Tangible common equity to tangible assets | 9.91 | % | 9.65 | % | ||||
| CENTER FINANCIAL CORPORATION | ||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Unaudited) | ||||||||||||
|
Three Months
Ended |
||||||||||||
| 3/31/2011 | 12/31/2010 | 3/31/2010 | ||||||||||
| Interest and Dividend Income: | ||||||||||||
| Interest and fees on loans | $ | 21,161 | $ | 21,879 | $ | 20,599 | ||||||
| Interest on federal funds sold | 42 | 125 | 60 | |||||||||
| Interest on investment securities | 1,784 | 1,708 | 2,944 | |||||||||
| Total interest and dividend income | 22,987 | 23,712 | 23,603 | |||||||||
| Interest Expense: | ||||||||||||
| Interest on deposits | 4,634 | 4,954 | 5,461 | |||||||||
| Interest expense on long-term subordinated debentures | 142 | 145 | 140 | |||||||||
| Interest on borrowed funds | 1,542 | 1,677 | 1,603 | |||||||||
| Total interest expense | 6,318 | 6,776 | 7,204 | |||||||||
| Net interest income before provision for loan losses | 16,669 | 16,936 | 16,399 | |||||||||
| Provision for loan losses | 6,000 | 6,010 | 7,000 | |||||||||
| Net interest income after provision for loan losses | 10,669 | 10,926 | 9,399 | |||||||||
| Noninterest Income: | ||||||||||||
| Customer service fees | 1,800 | 1,947 | 2,031 | |||||||||
| Fee income from trade finance transactions | 616 | 750 | 658 | |||||||||
| Wire transfer fees | 313 | 334 | 281 | |||||||||
| Gain on sale of loans | 3,752 | (100 | ) | - | ||||||||
| Net gain on sale of securities available for sale | - | - | 2,209 | |||||||||
| Loan service fees | 662 | 473 | 160 | |||||||||
| Increase in FDIC loss share receivable | 49 | |||||||||||
| Other income | 508 | 1,526 | 379 | |||||||||
| Total noninterest income | 7,700 | 4,930 | 5,718 | |||||||||
| Noninterest Expense: | ||||||||||||
| Salaries and employee benefits | 5,113 | 5,086 | 4,340 | |||||||||
| Occupancy | 1,345 | 1,372 | 1,195 | |||||||||
| Furniture, fixtures, and equipment | 603 | 672 | 507 | |||||||||
| Data processing | 669 | 730 | 464 | |||||||||
| Legal fees | 397 | 329 | 306 | |||||||||
| Accounting and other professional service fees | 572 | 344 | 315 | |||||||||
| Business promotion and advertising | 354 | 467 | 257 | |||||||||
| Supplies and communication | 348 | 478 | 264 | |||||||||
| Security service | 293 | 293 | 235 | |||||||||
| Regulatory assessment | 1,053 | 1,033 | 986 | |||||||||
| Merger related expenses | 437 | 717 | - | |||||||||
| OREO related expenses |
474 |
441 | 959 | |||||||||
| Other operating expenses |
1,321 |
528 | 1,035 | |||||||||
| Total noninterest expense | 12,979 | 12,490 | 10,863 | |||||||||
| Income before income tax provision (benefit) | 5,390 | 3,366 | 4,254 | |||||||||
| Income tax provision (benefit) | 505 | (3,084 | ) | 1,487 | ||||||||
| Net income | 4,885 | 6,450 | 2,767 | |||||||||
| Preferred stock dividends and accretion of preferred stock discount | (750 | ) | (750 | ) | (29,752 | ) | ||||||
| Net income (loss) available to common shareholders | 4,135 | 5,700 | (26,985 | ) | ||||||||
| Other comprehensive income | ||||||||||||
| - unrealized gain (loss) on available-for-sale securities, net of income tax expense (benefit) | 408 | (2,573 | ) | (1,248 | ) | |||||||
| Comprehensive income | $ | 5,293 | $ | 3,877 | $ | 1,519 | ||||||
| Earnings (loss) per share: | ||||||||||||
| Basic | $ | 0.10 | $ | 0.14 | $ | (1.27 | ) | |||||
| Diluted | $ | 0.10 | $ | 0.14 | $ | (1.27 | ) | |||||
| Weighted average shares outstanding - basic | 39,825,609 | 39,909,816 | 21,286,403 | |||||||||
| Weighted average shares outstanding - diluted | 39,897,740 | 39,990,291 | 21,286,403 | |||||||||
| CENTER FINANCIAL CORPORATION | |||||||||||||||||||
| SELECTED FINANCIAL DATA (Unaudited) | |||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||
| Three Months Ended | |||||||||||||||||||
| 3/31/2011 | 12/31/2010 | 3/31/2010 | |||||||||||||||||
| Annualized | Annualized | Annualized | |||||||||||||||||
| Average | Rate/ | Average | Rate/ | Average | Rate/ | ||||||||||||||
| Balance | Yield | Balance | Yield | Balance | Yield | ||||||||||||||
| Assets: | |||||||||||||||||||
| Interest-earning assets: | |||||||||||||||||||
| Loans | $ | 1,556,504 | 5.51 | % | $ | 1,535,008 | 5.64 | % | $ | 1,474,122 | 5.67 | % | |||||||
| Federal funds sold | 72,653 | 0.23 | 212,010 | 0.23 | 103,624 | 0.23 | |||||||||||||
| Investments | 306,637 | 2.36 | 303,262 | 2.23 | 376,699 | 3.17 | |||||||||||||
| Total interest-earning assets | 1,935,794 | 4.82 | 2,050,280 | 4.58 | 1,954,445 | 4.90 | |||||||||||||
| Noninterest - earning assets: | |||||||||||||||||||
| Cash and due from banks | 247,881 | 122,498 | 84,983 | ||||||||||||||||
| Bank premises and equipment, net | 13,432 | 13,729 | 13,231 | ||||||||||||||||
| Customers' acceptances outstanding | 2,138 | 1,853 | 2,193 | ||||||||||||||||
| Accrued interest receivables | 4,945 | 5,133 | 6,437 | ||||||||||||||||
| Other assets | 92,925 | 93,296 | 70,425 | ||||||||||||||||
| Total noninterest-earning assets | 361,321 | 236,509 | 177,269 | ||||||||||||||||
| Total assets | $ | 2,297,115 | $ | 2,286,789 | $ | 2,131,714 | |||||||||||||
| Liabilities and Shareholders' Equity: | |||||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||||
| Deposits: | |||||||||||||||||||
| Money market and NOW accounts | $ | 525,538 | 1.10 | % | $ | 505,401 | 1.09 | % | $ | 492,797 | 1.07 | % | |||||||
| Savings | 87,790 | 2.58 | 88,269 | 2.62 | 91,507 | 2.71 | |||||||||||||
| Time certificates of deposit over $100,000 | 461,539 | 1.25 | 505,930 | 1.33 | 522,126 | 1.83 | |||||||||||||
| Other time certificates of deposit | 325,146 | 1.54 | 317,901 | 1.60 | 234,163 | 2.06 | |||||||||||||
| 1,400,013 | 1.34 | 1,417,501 | 1.39 | 1,340,593 | 1.65 | ||||||||||||||
| Other borrowed funds | 184,910 | 3.38 | 168,804 | 3.94 | 148,239 | 4.39 | |||||||||||||
| Long-term subordinated debentures | 18,557 | 3.10 | 18,557 | 3.10 | 18,557 | 3.06 | |||||||||||||
| Total interest-bearing liabilities | 1,603,480 | 1.60 | 1,604,862 | 1.68 | 1,507,389 | 1.94 | |||||||||||||
| Noninterest-bearing liabilities: | |||||||||||||||||||
| Demand deposits | 396,251 | 390,479 | 350,135 | ||||||||||||||||
| Total funding liabilities | 1,999,731 | 1.28 | % | 1,995,341 | 1.35 | % | 1,857,524 | 1.57 | % | ||||||||||
| Other liabilities | 21,171 | 17,762 | 15,742 | ||||||||||||||||
| Total noninterest-bearing liabilities | 417,422 | 408,241 | 365,877 | ||||||||||||||||
| Shareholders' equity | 276,213 | 273,686 | 258,448 | ||||||||||||||||
| Total liabilities and shareholders' equity | $ | 2,297,115 | $ | 2,286,789 | $ | 2,131,714 | |||||||||||||
| Net interest income | |||||||||||||||||||
| Cost of deposits | 1.05 | % | 1.09 | % | 1.31 | % | |||||||||||||
| Net interest spread | 3.22 | % | 2.91 | % | 2.97 | % | |||||||||||||
| Net interest margin | 3.49 | % | 3.28 | % | 3.41 | % | |||||||||||||
| CENTER FINANCIAL CORPORATION | ||||||||||||||||||||||
| SELECTED FINANCIAL DATA (Unaudited) | ||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||
| Non-covered Loans | 3/31/11 | 12/31/10 | 9/30/10 | 6/30/10 | 3/31/10 | |||||||||||||||||
| Real Estate: | ||||||||||||||||||||||
| Construction | $ | 14,182 | $ | 14,803 | $ | 14,987 | $ | 15,052 | $ | 16,620 | ||||||||||||
| Commercial | 880,723 | 914,003 | 918,882 | 937,792 | 985,479 | |||||||||||||||||
| Commercial: | ||||||||||||||||||||||
| Commercial | 276,180 | 315,285 | 279,450 | 296,195 | 299,738 | |||||||||||||||||
| Trade Finance | 66,243 | 71,174 | 65,666 | 53,342 | 43,370 | |||||||||||||||||
| SBA | 100,712 | 101,683 | 69,029 | 60,531 | 65,460 | |||||||||||||||||
| Others: | ||||||||||||||||||||||
| Consumer | 69,699 | 71,279 | 68,968 | 71,895 | 71,980 | |||||||||||||||||
| Other | 40,038 | 40,039 | 50,219 | 40,024 | 39,792 | |||||||||||||||||
| Non-covered Loans | 1,447,777 | 1,528,266 | 1,467,201 | 1,474,831 | 1,522,439 | |||||||||||||||||
| Less: | ||||||||||||||||||||||
| Allowance for Losses | 51,010 | 52,047 | 54,460 | 58,435 | 61,011 | |||||||||||||||||
| Deferred Loan Fee (Cost) | (649 | ) | (523 | ) | 31 | 188 | 290 | |||||||||||||||
| Discount on SBA Loans Retained | 1,617 | 862 | 936 | 997 | 799 | |||||||||||||||||
| Net Non-covered Loans | $ | 1,395,799 | $ | 1,475,880 | $ | 1,411,774 | $ | 1,415,211 | $ | 1,460,339 | ||||||||||||
| Covered Loans | 3/31/11 | 12/31/10 | 9/30/10 | 6/30/10 | ||||||||||||||||||
| Real Estate: | ||||||||||||||||||||||
| Construction | $ | - | $ | - | $ | - | $ | - | ||||||||||||||
| Commercial | 67,525 | 72,249 | 73,043 | 76,280 | ||||||||||||||||||
| Commercial | ||||||||||||||||||||||
| Commercial | 9,589 | 8,977 | 9,698 | 12,388 | ||||||||||||||||||
| Trade Finance | - | - | - | - | ||||||||||||||||||
| SBA | 34,355 | 35,152 | 29,022 | 32,438 | ||||||||||||||||||
| Others: | ||||||||||||||||||||||
| Consumer | - | - | - | - | ||||||||||||||||||
| Other | 294 | 915 | 911 | 1,256 | ||||||||||||||||||
| Covered Loans | 111,763 | 117,293 | 112,674 | 122,362 | ||||||||||||||||||
| Less: | ||||||||||||||||||||||
| Allowance for Losses | 1,010 | 1,010 | - | - | ||||||||||||||||||
| Net Covered Loans | $ | 110,753 | $ | 116,283 | $ | 112,674 | $ | 122,362 | ||||||||||||||
| Total Loans | 3/31/11 | 12/31/10 | 9/30/10 | 6/30/10 | 3/31/10 | |||||||||||||||||
| Real Estate: | ||||||||||||||||||||||
| Construction | $ | 14,182 | $ | 14,803 | $ | 14,987 | $ | 15,052 | $ | 16,620 | ||||||||||||
| Commercial | 948,248 | 986,252 | 991,925 | 1,014,072 | 985,479 | |||||||||||||||||
| Commercial: | ||||||||||||||||||||||
| Commercial | 285,769 | 324,262 | 289,148 | 308,583 | 299,738 | |||||||||||||||||
| Trade Finance | 66,243 | 71,174 | 65,666 | 53,342 | 43,370 | |||||||||||||||||
| SBA | 135,067 | 136,835 | 98,051 | 92,969 | 65,460 | |||||||||||||||||
| Others: | ||||||||||||||||||||||
| Consumer | 69,699 | 71,279 | 68,968 | 71,895 | 71,980 | |||||||||||||||||
| Other | 40,332 | 40,954 | 51,130 | 41,280 | 39,792 | |||||||||||||||||
| Total Loans | 1,559,540 | 1,645,559 | 1,579,875 | 1,597,193 | 1,522,439 | |||||||||||||||||
| Less: | ||||||||||||||||||||||
| Allowance for Losses | 52,020 | 53,057 | 54,460 | 58,435 | 61,011 | |||||||||||||||||
| Deferred Loan Fees | (649 | ) | (523 | ) | 31 | 188 | 290 | |||||||||||||||
| Discount on SBA Loans Retained | 1,617 | 862 | 936 | 997 | 799 | |||||||||||||||||
| Net Loans | 1,506,552 | 1,592,163 | 1,524,448 | 1,537,573 | 1,460,339 | |||||||||||||||||
| As a percentage of total loans: | 3/31/11 | 12/31/10 | 9/30/10 | 6/30/10 | 3/31/10 | |||||||||||||||||
| Real Estate: | ||||||||||||||||||||||
| Construction | 0.9 | % | 0.9 | % | 0.9 | % | 0.9 | % | 1.1 | % | ||||||||||||
| Commercial | 60.8 | 59.9 | 62.8 | 63.5 | 64.7 | |||||||||||||||||
| Commercial: | ||||||||||||||||||||||
| Commercial | 18.3 | 19.7 | 18.3 | 19.3 | 19.7 | |||||||||||||||||
| Trade Finance | 4.2 | 4.3 | 4.2 | 3.3 | 2.8 | |||||||||||||||||
| SBA | 8.7 | 8.3 | 6.2 | 5.8 | 4.3 | |||||||||||||||||
| Others: | ||||||||||||||||||||||
| Consumer | 4.5 | 4.3 | 4.4 | 4.5 | 4.7 | |||||||||||||||||
| Other | 2.6 | 2.5 | 3.2 | 2.6 | 2.6 | |||||||||||||||||
| Total Loans | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | |||||||||||||||||
| 3/31/11 | 12/31/10 | 9/30/10 | 6/30/10 | 3/31/10 | ||||||||||||||||||
| Deposits | ||||||||||||||||||||||
| Demand deposits (noninterest-bearing) | $ | 408,843 | $ | 396,973 | $ | 383,508 | $ | 397,598 | $ | 360,520 | ||||||||||||
| Money market accounts and NOW | 531,580 | 471,132 | 497,362 | 505,217 | 445,999 | |||||||||||||||||
| Savings | 88,423 | 87,484 | 89,067 | 94,486 | 90,294 | |||||||||||||||||
| 1,028,846 | 955,589 | 969,937 | 997,301 | 896,813 | ||||||||||||||||||
| Time deposits | ||||||||||||||||||||||
| Less than $100,000 | 309,311 | 334,341 | 302,745 | 303,441 | 227,909 | |||||||||||||||||
| $100,000 or more | 441,449 | 481,064 | 519,599 | 499,253 | 500,590 | |||||||||||||||||
| Total deposits | $ | 1,779,606 | $ | 1,770,994 | $ | 1,792,281 | $ | 1,799,995 | $ | 1,625,312 | ||||||||||||
| As a percentage of total deposits: | ||||||||||||||||||||||
| Demand deposits (noninterest-bearing) | 23.0 | % | 22.4 | % | 21.4 | % | 22.1 | % | 22.2 | % | ||||||||||||
| Money market accounts and NOW | 29.9 | 26.6 | 27.8 | 28.1 | 27.4 | |||||||||||||||||
| Savings | 5.0 | 4.9 | 4.9 | 5.2 | 5.6 | |||||||||||||||||
| 57.8 | 53.9 | 54.1 | 55.4 | 55.2 | ||||||||||||||||||
| Time deposits | ||||||||||||||||||||||
| Less than $100,000 | 17.4 | 18.9 | 16.9 | 16.9 | 14.0 | |||||||||||||||||
| $100,000 or more | 24.8 | 27.2 | 29.0 | 27.7 | 30.8 | |||||||||||||||||
| Total deposits | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | |||||||||||||||||
| CENTER FINANCIAL CORPORATION | ||||||||||||
| SELECTED FINANCIAL DATA (Unaudited) | ||||||||||||
| (Dollars in thousands) | ||||||||||||
| 3/31/11 | 12/31/10 | 3/31/10 | ||||||||||
| Non-covered nonperforming loans: | ||||||||||||
| Real estate: | ||||||||||||
| Construction | $ | 5,738 | $ | 6,108 | $ | 7,008 | ||||||
| Commercial - Real Estate | 21,490 | 29,167 | 49,088 | |||||||||
| Commercial | ||||||||||||
| Commercial - Business | 5,263 | 5,696 | 8,871 | |||||||||
| Trade Finance | 100 | - | 1,498 | |||||||||
| SBA | 5,278 | 3,896 | 3,612 | |||||||||
| Other | ||||||||||||
| Consumer | 383 | 651 | 348 | |||||||||
| Other | - | - | - | |||||||||
| Total non-covered nonperforming loans | 38,252 | 45,518 | 70,425 | |||||||||
| Guaranteed portion of nonperforming SBA loans | 4,110 | 3,293 | 4,705 | |||||||||
| Total non-covered nonperforming loans, net of SBA guarantees | 34,142 | 42,225 | 65,720 | |||||||||
| Other real estate owned | 144 | 937 | 2,993 | |||||||||
| Total non-covered nonperforming assets, net of SBA guarantees | $ | 34,286 | $ | 43,162 | $ | 68,713 | ||||||
| Performing TDR's not included above | $ | 24,541 | $ | 21,377 | $ | 9,811 | ||||||
| Ratios: | ||||||||||||
| Nonperforming loans, net of SBA guarantees as a percent of total non-covered loans | 2.36 | % | 2.76 | % | 4.32 | % | ||||||
| Nonperforming assets, net of SBA guarantees as a percent of non-covered loans and OREO | 2.37 | 2.82 | 4.81 | |||||||||
| Allowance for loan losses to non-covered nonperforming loans, net of SBA guarantees | 149.4 | 123.3 | 92.8 | |||||||||
| Delinquency: | ||||||||||||
| Delinquent non-covered loans 30-89 days past due, net of SBA guarantees | $ | 10,352 | $ | 12,732 | $ | 28,006 | ||||||
| Total non-covered nonperforming loans, net of SBA guarantees | 34,142 | 42,225 | 65,720 | |||||||||
| Total delinquent non-covered loans | $ | 44,494 | $ | 54,957 | $ | 93,726 | ||||||
| Covered nonperforming assets: | ||||||||||||
| Covered nonperforming loans | $ | 14,273 | $ | 15,021 | $ | 10,890 | ||||||
| Covered other real estate owned | 1,405 | 1,459 | 1,459 | |||||||||
| Total covered nonperforming assets | $ | 15,678 | $ | 16,480 | $ | 12,349 | ||||||
| Ratios: | ||||||||||||
| Covered nonperforming loans to total covered loans | 12.77 | % | 13.33 | % | 9.67 | % | ||||||
| Covered nonperforming assets to total assets | 0.69 | 0.73 | 0.54 | |||||||||
| Total nonperforming assets, net of SBA guarantees (combined): | ||||||||||||
| Total nonperforming loans, net of SBA guarantees | $ | 48,415 | $ | 57,246 | $ | 76,610 | ||||||
| Other real estate owned | 1,549 | 2,396 | 4,452 | |||||||||
| Total nonperforming assets, net of SBA guarantees | $ | 49,964 | $ | 59,642 | $ | 81,062 | ||||||
| Ratios (combined): | ||||||||||||
| Nonperforming loans, net of SBA guarantees to total gross loans | 3.10 | % | 3.48 | % | 3.42 | % | ||||||
| Nonperforming assets, net of SBA guarantees to total assets | 2.21 | 2.63 | 2.65 | |||||||||
| Three Months | Year | Three Months | ||||||||||
| Ended | Ended | Ended | ||||||||||
| 3/31/11 | 12/31/10 | 3/31/10 | ||||||||||
| Balances (non-covered loans): | ||||||||||||
| Average total non-covered loans outstanding during the period | $ | 1,494,492 | $ | 1,493,526 | $ | 1,534,369 | ||||||
| Total non-covered loans outstanding at end of period | $ | 1,446,808 | $ | 1,527,928 | $ | 1,521,350 | ||||||
| Allowance for Loan Losses (non-covered loans): | ||||||||||||
| Balance at beginning of period | $ | 52,047 | $ | 58,543 | $ | 58,543 | ||||||
| Charge-offs: | ||||||||||||
| Construction Real Estate | 371 | 947 | - | |||||||||
| Commercial Real Estate | 5,246 | 20,296 | 3,659 | |||||||||
| Commercial - Business | 1,251 | 8,114 | 532 | |||||||||
| Trade Finance | 200 | 767 | - | |||||||||
| SBA | 370 | 1,075 | 331 | |||||||||
| Consumer | 303 | 1,448 | 190 | |||||||||
| Other | - | - | - | |||||||||
| Total charge-offs | 7,741 | 32,647 | 4,712 | |||||||||
| Recoveries | ||||||||||||
| Construction Real Estate | 366 | 561 | 43 | |||||||||
|
Commercial Real Estate |
191 | 1,357 | - | |||||||||
|
Commercial - Business |
63 | 2,890 | 53 | |||||||||
| Trade Finance | - | - | - | |||||||||
| SBA | 18 | 189 | 40 | |||||||||
| Consumer | 66 | 154 | 44 | |||||||||
| Other | - | - | - | |||||||||
| Total recoveries | 704 | 5,151 | 180 | |||||||||
| Net loan charge-offs | 7,037 | 27,496 | 4,532 | |||||||||
| Provision for loan losses (non-covered loans) | 6,000 | 21,000 | 7,000 | |||||||||
| Balance at end of period | $ | 51,010 | $ | 52,047 | $ | 61,011 | ||||||
| Ratios (non-covered loans): | ||||||||||||
| Net loan charge-offs to average non-covered loans | 1.91 | % | 1.84 | % | 1.20 | % | ||||||
| Provision for loan losses to average non-covered loans | 1.63 | 1.41 | 1.85 | |||||||||
| Allowance for loan losses to gross non-covered loans at end of period | 3.53 | 3.41 | 4.01 | |||||||||
| Allowance for loan losses to non-covered nonperforming loans | 133.35 | 114.34 | 86.63 | |||||||||
| Net loan charge-offs to allowance for loan losses at end of period | 55.95 | 52.83 | 30.13 | |||||||||
| Net loan charge-offs to provision for loan losses | 117.28 | 130.93 | 64.74 | |||||||||
| CENTER FINANCIAL CORPORATION | ||||||||||
| SELECTED FINANCIAL DATA (Unaudited) | ||||||||||
|
As of and
for the three months ended |
||||||||||
| Performance ratios: | 3/31/11 | 12/31/10 | 3/31/10 | |||||||
| Return on average assets | 0.86 | % | 1.12 | % | 0.53 | % | ||||
| Return on average equity | 7.17 | 9.35 | 4.34 | |||||||
| Efficiency ratio | 53.26 | 57.12 | 49.12 | |||||||
| Net loans to total deposits at period-end | 84.66 | 89.90 | 89.85 | |||||||
| Net loans to total assets at period-end | 66.66 | 70.07 | 70.15 | |||||||
| Capital ratios: | ||||||||||
| Leverage capital ratio | ||||||||||
| Consolidated Company | 12.85 | % | 12.74 | % | 12.82 | % | ||||
| Center Bank | 12.67 | 12.50 | 12.46 | |||||||
| Tier 1 risk-based capital ratio | ||||||||||
| Consolidated Company | 19.14 | 17.60 | 16.94 | |||||||
| Center Bank | 18.86 | 17.26 | 16.45 | |||||||
| Total risk-based capital ratio | ||||||||||
| Consolidated Company | 20.42 | 18.87 | 18.23 | |||||||
| Center Bank | 20.14 | 18.53 | 17.73 | |||||||
| CENTER FINANCIAL CORPORATION | |||||||||||||||
| RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES (Unaudited) | |||||||||||||||
| (Dollars in thousands, except per share data) | |||||||||||||||
| 3/31/11 | 12/31/10 | 3/31/10 | |||||||||||||
| Total shareholders' equity | $ | 278,907 | $ | 274,012 | $ | 257,124 | |||||||||
| Less: Preferred stock | (53,472 | ) | (53,409 | ) | (53,227 | ) | |||||||||
| Common stock warrant | (1,026 | ) | (1,026 | ) | (1,026 | ) | |||||||||
| Intangible assets, net | (449 | ) | (464 | ) | - | ||||||||||
| Tangible common equity | $ | 223,960 | $ | 219,113 | $ | 202,871 | |||||||||
| Total assets | $ | 2,260,118 | $ | 2,270,279 | $ | 2,081,618 | |||||||||
| Less: Intangible assets, net | (449 | ) | (464 | ) | - | ||||||||||
| Tangible assets | $ | 2,259,669 | $ | 2,269,815 | $ | 2,081,618 | |||||||||
| Common shares outstanding | 39,908,514 | 39,914,686 | 39,895,661 | ||||||||||||
| Tangible common equity per common share | $ | 5.61 | $ | 5.49 | $ | 5.09 | |||||||||
| Tangible common equity to tangible assets | 9.91 | % | 9.65 | % | 9.75 | % | |||||||||
CONTACT:
Center Financial Corporation
Douglas J. Goddard
Interim
CFO
213-401-2311
douglasg@centerbank.com
or
Angie Yang
SVP,
Investor Relations
213-251-2219
angiey@centerbank.com