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"Over the course of 2009, it has become more apparent that the current economic crisis we are all experiencing may be even more severe and prolonged than widely anticipated," said Jae Whan (J.W.) Yoo, president and chief executive officer. "In light of this outlook, we are taking an even more assertive stance on credit risk management and are preparing for potentially even greater stress on our portfolio. As part of this effort, we completed our annual internal portfolio analysis during the second quarter, after expanding the application of the stress test to 100% of our loan portfolio. Having the benefit of this recent review of our entire portfolio, we believe the second quarter's provisioning, charge-offs and increased reserve levels help position Center Bank ahead of the curve to better manage through this credit cycle."
2009 SECOND QUARTER SUMMARY:
-- Nonperforming assets decreased to $43.5 million at June 30 from $56.3 million at March 31, 2009
-- Nonperforming assets to total loans and OREO declined to 2.63% at June 30, 2009 from 3.38% at March 31, 2009
-- Net charge-offs increased significantly to $14.4 million for Q2, $17.3 million year-to-date
-- Total delinquent loans including nonaccrual loans declined 17% from the preceding quarter to $68.7 million at June 30, 2009
-- Provision for loan losses of $29.8 million exceeded Q2 charge-offs by $15.4 million
-- Allowance for loan losses to gross loans increased to 3.96% as of June 30, from 2.99% as of March 31, 2009
-- Deposits increased $190.9 million totaling $1.85 billion at June 30, 2009
-- Gross loans further reduced to $1.65 billion from $1.66 billion at March 31, 2009
-- Higher balances in lower-yielding Federal funds sold due to excess liquidity and the reversal of interest income on nonaccrual loans pressure net interest margin, down 38 basis points to 2.96% from 3.34% for Q1 2009
-- Company remains strongly capitalized with total risk-based capital ratio of 12.76% at June 30, 2009
-- Tangible common equity to total assets equals 6.48% at June 30, 2009
ASSET QUALITY
Nonperforming assets as of June 30, 2009 declined to $43.5 million from $56.3 million at March 31, 2009. This reflects reductions of $14.4 million in commercial real estate loans and $5.0 million in commercial business loans due to charge-offs and the sales of four nonaccrual loans, partially offset by additions of $4.6 million in other real estate owned (OREO), $1.5 million in construction real estate loans and $473,000 in consumer loans. Total nonperforming assets as a percentage of gross loans and OREO improved to 2.63% as of June 30, 2009 from 3.38% at March 31, 2009.
Net charge-offs during the 2009 second quarter totaled $14.4 million, increasing year-to-date net charge-offs to $17.3 million. As a percentage of average loans, net charge-offs equaled 1.03% for the six months ended June 30, 2009, versus 0.17% for the comparable prior-year period.
Considering the comprehensive analysis of Center Financial's total loan portfolio and accounting for directional consistency with respect to recent asset quality trends, the company posted a $29.8 million provision for loan losses in the 2009 second quarter. This provision exceeded net charge-offs during the quarter by $15.4 million and boosted the total allowance for loan losses to $65.2 million as of June 30, 2009, equaling 3.96% of gross loans. The 2009 first quarter provision for loan losses was $14.5 million, with the allowance for loan losses totaling $49.8 million as of March 31, 2009 and representing 2.99% of gross loans.
BALANCE SHEET SUMMARY & CAPITAL
Gross loans at June 30, 2009 totaled $1.65 billion, reflecting a decrease of $16.9 million from March 31, 2009 and a decrease of $170.7 million from June 30, 2008. The reductions are attributed to lower levels of loan production, higher levels of loan pay-offs and charge-offs in 2009, and the company's strategic sale of commercial real estate and SBA loans in 2008. Net loans as a percentage of total assets declined to 69.7% at June 30, 2009 from 77.2% at March 31, 2009 and 84.4% at June 30, 2008, principally due to higher levels of liquidity on balance sheet.
Total deposits increased sharply to $1.85 billion at June 30, 2009 from $1.66 billion at March 31, 2009 and at June 30, 2008. The company's marketing campaign initiated late in the preceding first quarter and targeting the non-ethnic consumer base resulted in increased money market deposits and time deposits. At June 30, 2009, money market deposits increased to $530.4 million from $470.7 million at March 31, 2009. Time deposits at the close of the 2009 second quarter rose to $932.0 million from $834.5 million at March 31, 2009. Noninterest-bearing demand deposits grew to $314.6 million at June 30, 2009 from $306.1 million at the end of the preceding first quarter. Savings deposits also increased to $78.0 million at June 30, 2009 from $52.7 million at March 31, 2009. Reflecting the significant increase in deposits, the company's loan-to-deposit ratio equaled 85.2% at June 30, 2009, compared with 96.9% at March 31, 2009.
The average cost of interest-bearing deposits was 2.68% for the three months ended June 30, 2009, versus 2.73% for the three months ended March 31, 2009 and 3.72% for the prior-year second quarter.
Total assets at June 30, 2009 increased to $2.27 billion from $2.06 billion at year-end 2008, reflecting higher levels of liquidity on the balance sheet, offset in part by a continued reduction in the company's loan portfolio. Average interest-earning assets for the 2009 second quarter equaled $2.08 billion, compared with $2.00 billion for the year-ago second quarter.
Total shareholders' equity at June 30, 2009 was $200.0 million, compared with $211.7 million at March 31, 2009 and $214.6 million at December 31, 2008. As of June 30, 2009, the company's tangible book value and tangible common equity as a percentage of total assets equaled $8.75 and 6.48%, respectively. This compares with tangible book value of $9.53 per share and tangible common equity to total assets of 7.78% as of December 31, 2008. Center Financial remains strongly capitalized, exceeding all regulatory guidelines. As of June 30, 2009, the company's total risk-based capital ratio equaled 12.76%, Tier 1 risk-based capital ratio was 11.49%, and Tier 1 leverage ratio was 9.38%.
2009 SECOND QUARTER OPERATIONAL HIGHLIGHTS
Net interest income before provision for loan losses declined to $15.3 million for the three months ended June 30, 2009 from $15.9 million in the immediately preceding 2009 first quarter and $19.0 million in the second quarter of 2008. The company attributed the decrease to a shift in the asset mix, the reversal of interest on non-accrual loans and market rate reductions. The average yield on loans for the 2009 second quarter increased to 6.12% from 5.91% for the preceding first quarter, but was down by 82 basis points from the prior-year second quarter. The average yields on the investment portfolio were 4.14% for the 2009 second quarter, 4.53% for the preceding first quarter and 4.85% for the second quarter of 2008.
The company's net interest margin for the 2009 second quarter was 2.96%, compared with 3.34% in the preceding first quarter and 3.81% in the second quarter a year ago. The compression in net interest margin principally reflects the decline in weighted average loan yields, decreasing loan balances, the reversal of previously accrued interest income on loans placed on non-accrual status during the quarter and higher balances in low-yielding Federal funds sold.
Noninterest income totaled $3.5 million in the 2009 second quarter, versus $3.7 million in the preceding first quarter. In the year-ago second quarter, noninterest income amounted to $3.9 million, which included a $630,000 gain on sale of loans.
Total noninterest expense increased to $11.7 million in the 2009 second quarter from $10.1 million in the preceding first quarter, as the company's operational efficiencies were more than offset by a special FDIC deposit insurance assessment of $1.0 million. Notwithstanding this assessment and a significant hike in the regular FDIC insurance premiums, total noninterest expense for the 2009 second quarter was lower when compared with $12.3 million in the prior-year period, primarily due to a 21% reduction in compensation expenses. The special assessment fee adversely impacted the company's efficiency ratio for the 2009 second quarter, which increased to 62.48% from 51.67% in the preceding first quarter and 53.49% in the 2008 second quarter.
Including the $29.8 million provision for loan losses and an income tax benefit of $10.0 million, Center Financial posted a net loss of $12.8 million, equal to $0.81 per share, for the 2009 second quarter. This compares with a net loss of $2.7 million, or $0.19 per share, for the 2009 first quarter, after a provision for loan losses of $14.5 million and an income tax benefit of $2.2 million. In the 2008 second quarter, the company posted net income of $5.3 million, equal to $0.32 per diluted share, after a provision for loan losses of $2.0 million and an income tax provision of $3.3 million.
For the 2009 second quarter, Center Financial posted a loss on average assets and loss on average equity of 2.32% and 23.95%, respectively. This compares with loss on average assets of 0.54% and loss on average equity of 4.94% in the preceding first quarter. For the year-ago second quarter, return on average assets equaled 1.00% and return on average equity was 12.97%.
"We believe the actions taken this quarter move the company significantly forward in managing credit risk in the current environment and will enable our management and board to redirect more of our focus on building franchise value," Yoo said.
Investor Conference Call
The company will host an investor conference call at 9 a.m. PDT (12 noon EDT) on Thursday, July 23, 2009 to review the financial results for its second quarter ended June 30, 2009. The call will be open to all interested investors through a live, listen-only audio Web broadcast via the Internet at 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, July 30, 2009 by dialing 888-286-8010 (domestic) or 617-801-6888 (international) and entering replay passcode 14006319.
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 soundest financial institutions focusing on the Korean-American community, with total assets of $2.27 billion at June 30, 2009. Headquartered in Los Angeles, Center Bank operates a total of 19 full-service branches and one loan production office. The company has 16 full-service branches located throughout Southern California. Center Bank also operates two branches and one loan production office in the Seattle area, along with one branch in Chicago. Center Bank is a California state-chartered institution and its deposits are insured by the FDIC to the extent provided by law. For additional information on Center Bank, visit the company's Web site at www.centerbank.com.
This release contains forward-looking statements, which are included in accordance with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties, and actual results and performance in future periods may be materially different from any future results or performance suggested by the forward-looking statements in this release. Factors that might cause such differences include, but are not limited to, those identified in our cautionary statements contained in Center Financial Corp.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2008 (See Business, and Management's Discussion and Analysis), and other filings with the Securities and Exchange Commission (SEC) are incorporated herein by reference. These factors include, but are not limited to: competition in the financial services market for both deposits and loans; the ability of Center Financial and its subsidiaries to increase its customer base; changes in interest rates; new litigation or changes or adverse developments in existing litigation; and regional and general economic conditions. Such forward-looking statements speak only as of the date of this release. Center Financial expressly disclaims any obligation to update or revise any forward-looking statements found herein to reflect any changes in the company's expectations of results or any change in events.
CENTER FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited)
(Dollars in thousands)
6/30/2009 12/31/2008
ASSETS
Cash and due from banks $ 37,153 $ 45,129
Federal funds sold 263,240 50,435
Money market funds and interest-bearing deposits in other banks 53,047 2,647
Cash and cash equivalents 353,440 98,211
Securities available for sale, at fair value 219,368 173,833
Securities held to maturity, at amortized cost (fair value of $0 - 8,861
as of June 30, 2009 and $8,879 as of December 31, 2008)
Federal Home Loan Bank and Pacific Coast Bankers Bank stock, at cost 15,673 15,673
Loans, net of allowance for loan losses of $65,197 as of June 30, 1,568,298 1,669,476
2009 and $38,172 as of December 31, 2008
Loans held for sale, at the lower of cost or fair value 12,477 9,864
Premises and equipment, net 14,095 14,739
Customers' liability on acceptances 2,927 4,503
Other real estate owned, net 4,567 -
Accrued interest receivable 7,668 7,477
Deferred income taxes, net 27,472 19,855
Investments in affordable housing partnerships 12,229 12,936
Cash surrender value of life insurance 12,190 11,992
Income tax receivable 9,221 2,327
Goodwill 1,253 1,253
Intangible assets, net 187 213
Other assets 6,573 5,396
Total $ 2,267,638 $ 2,056,609
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits:
Noninterest-bearing $ 314,621 $ 310,154
Interest-bearing 1,540,327 1,293,365
Total deposits 1,854,948 1,603,519
Acceptances outstanding 2,927 4,503
Accrued interest payable 7,681 7,268
Other borrowed funds 168,321 193,021
Long-term subordinated debentures 18,557 18,557
Accrued expenses and other liabilities 15,411 15,174
Total liabilities 2,067,845 1,842,042
Commitments and Contingencies - -
Shareholders' Equity
Preferred stock, par value of $1,000 per share; authorized 53,061 52,959
10,000,000 shares; issued and outstanding, 55,000 shares as of June
30, 2009 and December 31, 2008, respectively
Common stock, no par value; authorized 40,000,000 shares; issued and 74,732 74,254
outstanding, 16,789,080 shares (including 11,550 shares and 10,400
shares of unvested restricted stock) as of June 30, 2009 and
December 31, 2008
Retained earnings 68,866 85,846
Accumulated other comprehensive income, net of tax 3,134 1,508
Total shareholders' equity 199,793 214,567
Total $ 2,267,638 $ 2,056,609
Book value per common share $ 8.84 $ 9.62
Tangible book value $ 8.75 $ 9.53
Tangible common equity to total assets 6.48 % 7.78 %
CENTER FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(LOSS) (Unaudited)
(Dollars in thousands, except per share data)
Three Months Ended Six Months Ended
6/30/09 3/31/09 6/30/08 6/30/09 6/30/08
Interest and Dividend Income:
Interest and fees on loans $ 24,742 $ 24,311 $ 31,369 $ 49,053 $ 64,979
Interest on federal funds sold 114 35 25 149 66
Interest on investment securities 2,343 2,291 2,168 4,634 4,196
Total interest and dividend income 27,199 26,637 33,562 53,836 69,241
Interest Expense:
Interest on deposits 9,913 8,725 12,157 18,637 26,194
Interest on borrowed funds 1,782 1,818 2,188 3,600 4,905
Interest expense on trust preferred securities 181 192 258 373 584
Total interest expense 11,876 10,735 14,603 22,610 31,683
Net interest income before provision for loan losses 15,323 15,902 18,959 31,226 37,558
Provision for loan losses 29,835 14,451 2,047 44,287 4,209
Net interest (loss) income after provision for loan losses (14,512 ) 1,451 16,912 (13,061 ) 33,349
Noninterest Income:
Customer service fees 2,022 1,973 1,913 3,996 3,726
Fee income from trade finance transactions 587 548 672 1,136 1,273
Wire transfer fees 279 267 293 546 553
Gain on sale of loans - - 630 - 960
Net loss on sale of securities available for sale - (49 ) - (49 ) -
Loan service fees 185 275 48 459 301
Other income 401 724 387 1,124 770
Total noninterest income 3,474 3,738 3,943 7,212 7,583
Noninterest Expense:
Salaries and employee benefits 4,684 4,289 5,924 8,973 13,044
Occupancy 1,248 1,182 1,119 2,430 2,160
Furniture, fixtures and equipment 517 528 500 1,045 992
Data processing 522 595 577 1,117 1,099
Legal fees 408 243 971 650 1,601
Accounting and other professional fees 352 410 381 762 718
Business promotion and advertising 344 338 494 682 956
Stationery and supplies 105 109 157 214 288
Telecommunications 152 169 179 321 348
Postage and courier service 47 146 191 193 392
Security service 261 245 294 506 568
Regulatory assessment 1,642 592 352 2,235 640
Other operating expenses 1,463 1,302 1,112 2,765 2,682
Total noninterest expense 11,745 10,148 12,251 21,893 25,488
(Loss) income before income tax (benefit) provision (22,783 ) (4,959 ) 8,604 (27,742 ) 15,444
Income tax (benefit) provision (9,996 ) (2,233 ) 3,325 (12,229 ) 5,945
Net (loss) income (12,787 ) (2,726 ) 5,279 (15,513 ) 9,499
Preferred stock dividends and accretion of preferred stock discount (739 ) (731 ) - (1,470 ) -
Net (loss) income available to common shareholders (13,526 ) (3,457 ) 5,279 (16,983 ) 9,499
Other comprehensive income (loss) - unrealized gain (loss) on 2,270 278 (2,115 ) 1,226 (1,346 )
available-for-sale securities, net of income tax (expense) benefit
of ($1,644), $1,532, ($1,845) and $975
Comprehensive (loss) income $ (10,517 ) $ (2,448 ) $ 3,164 $ (14,287 ) $ 8,153
EARNINGS PER SHARE:
Basic $ (0.81 ) $ (0.19 ) $ 0.32 $ (1.01 ) $ 0.58
Diluted $ (0.81 ) $ (0.19 ) $ 0.32 $ (1.01 ) $ 0.58
Weighted average shares outstanding - basic 16,789,080 16,789,080 16,367,475 16,789,080 16,367,608
Weighted average shares outstanding - diluted 16,789,080 16,789,080 16,399,197 16,789,080 16,401,955
CENTER FINANCIAL CORPORATION
SELECTED FINANCIAL DATA (Unaudited)
(Dollars in thousands)
Three Months Ended
6/30/09 3/31/09 6/30/08
Average Rate/ Average Rate/ Average Rate/
Balance Yield Balance Yield Balance Yield
Assets:
Interest-earning assets:
Loans $ 1,622,366 6.12 % $ 1,668,873 5.91 % $ 1,816,960 6.94 %
Federal funds sold 227,678 0.20 56,598 0.25 4,745 2.12
Investments 227,014 4.14 205,180 4.53 179,755 4.85
Total interest-earning assets 2,077,058 5.25 1,930,651 5.60 2,001,460 6.74
Noninterest - earning assets:
Cash and due from banks 53,934 41,163 56,875
Bank premises and equipment, net 14,382 14,750 14,526
Customers' acceptances outstanding 3,073 3,851 5,411
Accrued interest receivables 7,037 6,853 7,499
Other assets 53,653 45,940 37,762
Total noninterest-earning assets 132,079 112,557 122,073
Total assets $ 2,209,137 $ 2,043,208 $ 2,123,533
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Deposits:
Money market and NOW accounts $ 492,730 2.09 % $ 452,204 1.99 % $ 358,778 2.89 %
Savings 63,569 3.48 51,343 3.56 54,429 3.35
Time certificates of deposit over $100,000 582,390 2.91 484,393 3.08 697,414 4.07
Other time certificates of deposit 344,761 2.99 308,618 3.13 204,480 4.06
1,483,450 2.68 1,296,558 2.73 1,315,101 3.72
Other borrowed funds 168,147 4.25 176,864 4.17 244,631 3.60
Long-term subordinated debentures 18,557 3.91 18,557 4.20 18,557 5.59
Total interest-bearing liabilities 1,670,154 2.85 1,491,979 2.92 1,578,289 3.72
Noninterest-bearing liabilities:
Demand deposits 304,931 305,690 356,309
Total funding liabilities 1,975,085 2.41 % 1,797,669 2.42 % 1,934,598 3.04 %
Other liabilities 19,937 21,799 25,262
Total noninterest-bearing liabilities 324,868 327,489 381,571
Shareholders' equity 214,115 223,740 163,673
Total liabilities and shareholders' equity $ 2,209,137 $ 2,043,208 $ 2,123,533
Net interest income
Cost of deposits 2.22 % 2.21 % 2.93 %
Net interest spread 2.40 % 2.68 % 3.02 %
Net interest margin 2.96 % 3.34 % 3.81 %
CENTER FINANCIAL CORPORATION
SELECTED FINANCIAL DATA (Unaudited)
(Dollars in thousands)
Six Months Ended June 30,
2009 2008
Average Rate/ Average Rate/
Balance Yield Balance Yield
Assets:
Interest-earning assets:
Loans $ 1,645,491 6.01 % $ 1,816,817 7.19 %
Federal funds sold 142,610 0.21 4,748 2.80
Investments 216,157 4.32 171,359 4.92
Total interest-earning assets 2,004,258 5.42 1,992,924 6.99
Noninterest - earning assets:
Cash and due from banks 47,584 58,432
Bank premises and equipment, net 14,565 14,257
Customers' acceptances outstanding 3,460 4,400
Accrued interest receivables 6,946 7,849
Other assets 49,818 38,210
Total noninterest-earning assets 122,373 123,148
Total assets $ 2,126,631 $ 2,116,072
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Deposits:
Money market and NOW accounts $ 472,579 2.05 % $ 328,173 3.23 %
Savings 57,490 3.52 54,129 3.34
Time certificates of deposit over $100,000 533,662 2.98 710,889 4.41
Other time certificates of deposit 326,789 3.05 202,905 4.36
1,390,520 2.70 1,296,096 4.06
Other borrowed funds 172,481 4.21 260,884 3.78
Long-term subordinated debentures 18,557 4.05 18,557 6.33
Total interest-bearing liabilities 1,581,558 2.88 1,575,537 4.04
Noninterest-bearing liabilities:
Demand deposits 305,308 353,708
Total funding liabilities 1,886,866 2.42 % 1,929,245 3.30 %
Other liabilities 20,864 24,176
Total noninterest-bearing liabilities 326,172 377,884
Shareholders' equity 218,901 162,651
Total liabilities and shareholders' equity $ 2,126,631 $ 2,116,072
Net interest income
Cost of deposits 2.22 % 3.19 %
Net interest spread 2.53 % 2.94 %
Net interest margin 3.14 % 3.79 %
CENTER FINANCIAL CORPORATION
SELECTED FINANCIAL DATA (Unaudited)
(Dollars in thousands)
As of the Dates Indicated
6/30/09 3/31/09 12/31/08 9/30/08 6/30/08
Loans
Real Estate:
Construction $ 37,224 $ 53,072 $ 61,983 $ 62,296 $ 62,072
Commercial 1,104,496 1,131,682 1,134,793 1,157,286 1,191,097
Commercial 320,005 313,065 334,350 336,929 352,220
Trade Finance 52,000 48,813 63,479 70,395 81,399
SBA 38,401 37,962 37,027 38,069 39,310
Consumer and other 95,417 79,868 88,423 93,053 92,157
Total Gross Loans 1,647,543 1,664,462 1,720,055 1,758,028 1,818,255
Less:
Allowance for Losses 65,197 49,778 38,172 21,485 21,499
Deferred Loan Fees 555 1,188 1,359 1,488 1,688
Discount on SBA Loans Retained 1,016 1,102 1,184 1,284 1,296
Total Net Loans and Loans Held for Sale $ 1,580,775 $ 1,612,394 $ 1,679,340 $ 1,733,771 $ 1,793,772
As a percentage of total gross loans:
Real estate:
Construction 2.3 % 3.2 % 3.6 % 3.5 % 3.4 %
Commercial 67.0 % 68.0 % 66.0 % 65.8 % 65.5 %
Commercial 19.4 % 18.8 % 19.4 % 19.2 % 19.4 %
Trade finance 3.2 % 2.9 % 3.7 % 4.0 % 4.5 %
SBA 2.3 % 2.3 % 2.2 % 2.2 % 2.2 %
Consumer 5.8 % 4.8 % 5.1 % 5.3 % 5.0 %
Total gross loans 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
As of the Dates Indicated
6/30/09 3/31/09 12/31/08 9/30/08 6/30/08
Deposits
Demand deposits (noninterest-bearing) $ 314,621 $ 306,112 $ 310,154 $ 367,171 $ 378,835
Money market accounts and NOW 530,410 470,741 447,275 425,156 375,606
Savings 77,958 52,683 52,692 54,520 55,281
922,989 829,536 810,121 846,847 809,722
Time deposits
Less than $100,000 335,440 321,456 312,136 218,498 191,310
$100,000 or more 596,519 513,076 481,262 553,931 657,658
Total deposits $ 1,854,948 $ 1,664,068 $ 1,603,519 $ 1,619,276 $ 1,658,690
As a percentage of total deposits:
Demand deposits (noninterest-bearing) 17.0 % 18.4 % 19.3 % 22.7 % 22.8 %
Money market accounts and NOW 28.6 % 28.3 % 27.9 % 26.3 % 22.6 %
Savings 4.2 % 3.2 % 3.3 % 3.3 % 3.4 %
49.8 % 49.9 % 50.5 % 52.3 % 48.8 %
Time deposits
Less than $100,000 18.1 % 19.3 % 19.5 % 13.5 % 11.5 %
$100,000 or more 32.1 % 30.8 % 30.0 % 34.2 % 39.7 %
Total deposits 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
CENTER FINANCIAL CORPORATION
SELECTED FINANCIAL DATA (Unaudited)
(Dollars in thousands)
June 30, March 31, December 31, June 30,
2009 2009 2008 2008
Nonperforming loans:
Construction Real Estate $ 16,973 $ 15,451 $ 1,951 $ 2,152
Commercial Real Estate 4,516 18,870 13,128 -
Commercial 13,577 18,582 2,272 1,434
Consumer 889 416 369 380
Trade Finance 1,196 1,196 1,196 2,276
SBA 1,774 1,774 1,538 2,454
Total nonperforming loans 38,925 56,289 20,454 8,696
Other real estate owned 4,567 - - -
Total nonperforming assets 43,492 56,289 20,454 8,696
Guaranteed portion of nonperforming loans with SBA guarantee 2,448 2,408 2,110 2,755
Total nonperforming assets, net of SBA guarantee $ 41,044 $ 53,881 $ 18,344 $ 5,941
Nonperforming loans as a percent of total gross loans 2.36 % 3.38 % 1.19 % 0.48 %
Nonperforming assets as a percent of total loans and other real 2.63 % 3.38 % 1.19 % 0.48 %
estate owned
Delinquent loans 30-89 days past due $ 29,740 $ 26,931 $ 16,737 $ 2,934
Total nonperforming loans 38,925 56,289 20,454 8,696
Total delinquent loans $ 68,665 $ 83,220 $ 37,190 $ 11,630
Six Months Three Months Year Six Months
Ended Ended Ended Ended
June 30, March 31, December 31, June 30,
2009 2009 2008 2008
Balances
Average total loans outstanding during the period $ 1,682,918 $ 1,678,518 $ 1,800,972 $ 1,838,280
Total loans outstanding at end of period( 1) $ 1,645,972 $ 1,662,172 $ 1,717,511 $ 1,815,271
Allowance for Loan Losses:
Balance at beginning of period $ 38,172 $ 38,172 $ 20,477 $ 20,477
Charge-offs:
Construction Real Estate 2,727 931 402 201
Commercial Real Estate 4,448 70 319 319
Commercial 8,780 1,236 4,403 2,257
Consumer 1,104 605 2,040 472
SBA 417 129 581 144
Trade Finance - 1,144 -
Total charge-offs 17,476 2,971 8,889 3,393
Recoveries
Commercial 43 25 128 74
Consumer 140 78 131 56
SBA 30 22 135 76
Trade Finance 1 1 12 -
Total recoveries 214 126 406 206
Net loan charge-offs 17,262 2,845 8,483 3,187
Provision for loan losses 44,287 14,451 26,178 4,209
Balance at end of period $ 65,197 $ 49,778 $ 38,172 $ 21,499
Ratios:
Net loan charge-offs to average loans 1.03 % 0.17 % 0.47 % 0.17 %
Provision for loan losses to average total loans 2.63 0.86 1.45 0.23
Allowance for loan losses to gross loans at end of period 3.96 2.99 2.22 1.18
Allowance for loan losses to total nonperforming loans 168 88 187 247
Net loan charge-offs to allowance for loan losses at end of period 26.48 5.72 22.22 14.82
Net loan charge-offs to provision for loan losses 38.98 19.69 32.41 75.72
(1) Net of deferred loan fees and discount on SBA loans sold
CENTER FINANCIAL CORPORATION
SELECTED FINANCIAL DATA (Unaudited)
Three Months Ended Six Months Ended
6/30/09 3/31/09 6/30/08 6/30/09 6/30/08
Performance ratios:
(Loss) return on average assets (2.32 ) % (0.54 ) % 1.00 % (1.47 ) % 0.90 %
(Loss) return on average equity (23.95 ) (4.94 ) 12.97 (14.29 ) 11.74
Efficiency ratio 62.48 51.67 53.49 56.96 56.46
Net loans to total deposits at period end 85.22 96.89 108.14 85.22 108.10
Net loans to total assets at period end 69.71 77.19 84.37 69.71 84.37
As of the Dates Indicated
6/30/09 3/31/09 6/30/08
Capital ratios:
Leverage capital ratio
Consolidated Company 9.38 % 11.04 % 8.51 %
Center Bank 8.88 10.41 8.46
Tier 1 risk-based capital ratio
Consolidated Company 11.49 12.53 9.49
Center Bank 10.84 11.81 9.43
Total risk-based capital ratio
Consolidated Company 12.76 13.80 10.63
Center Bank 12.11 13.08 10.57
SOURCE: Center Financial Corporation
Center Financial Corporation Lonny Robinson Chief Financial Officer 213-401-2311 lonnyr@centerbank.com or PondelWilkinson Inc. Angie Yang Investor Relations 310-279-5967 ayang@pondel.com
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