Following its return to profitable operations in the 2010 first quarter, Center Financial Corporation (NASDAQ: CLFC), today reported net income of $7.5 million, equal to $0.17 per diluted common share, for its second quarter ended June 30, 2010, in contrast with a net loss of $12.8 million, or $0.81 per share, a year earlier.

?We believe the collective actions taken in 2009 firmly positioned the company to achieve the return to profitable operations for the six months ended 2010 notwithstanding what continues to be a challenging operating environment, particularly related to commercial real estate,? said Jae Whan (J.W.) Yoo, president and chief executive officer. ?The company's strengthened capital standing enabled us to complete an FDIC-assisted transaction in the second quarter, immediately contributing to earnings by way of a bargain purchase gain, while at the same time increasing the earnings power going forward. We continued to proactively monitor the portfolio to mitigate potential losses and negotiated $55 million in note sales during the quarter at an average 6.7% discount to the principal amount. Overall, credit metrics are trending positively with a considerable reduction in delinquent loans, especially in early stage delinquencies. However, we are standing on the sidelines with cautious optimism and expect to maintain elevated reserve levels until we see directionally consistent data that point to a more stabilizing economic recovery.?

2010 SECOND QUARTER SUMMARY:

• Net income totaled $7.5 million, equal to $0.17 per diluted common share;
• Company recorded a bargain purchase gain of $5.9 million relating to the Innovative Bank acquisition, net of the equity appreciation instrument (EAI) cost of $1.4 million;
• $1.2 million gain on sale of loans reflects the SBA loans to the wholesale market;
• Capital ratios further strengthened with total risk-based capital ratio of approximately 18.85% and Tier 1 leverage capital ratio of approximately 13.55% at June 30;
• Total assets increased to $2.28 billion, primarily reflecting the Innovative Bank transaction;
• Non-covered nonperforming loans declined to $67.5 million at June 30, and delinquent non-covered loans 30 to 89 days past due fell to $11.6 million;
• Net charge-offs of $7.6 million, included a total of $2.9 million in recoveries during the quarter;
• Non-covered loans declined to $1.47 billion at June 30 with continued downsizing of the commercial real estate portfolio;
• Provision for loan losses equaled $5.0 million, and allowance for loan losses remained relatively stable at 3.97% of gross loans at June 30;
• Total deposits increased to $1.80 billion, reflecting the Innovative Bank transaction and organic growth in noninterest bearing deposits, partially offset by continued run off of higher rate funds. Noninterest bearing deposits represent 22.1% of total deposits;
• Net interest margin increased 12 basis points on a sequential basis to 3.53% for Q2 2010; and
• Company's efficiency ratio improved to 43.01%.

FDIC-ASSISTED TRANSACTION

On April 16, 2010, following the closure of Oakland, California-based Innovative Bank by the California Department of Financial Institutions, Center Bank acquired the banking operations of Innovative Bank from the Federal Deposit Insurance Corporation (FDIC), under a whole bank purchase and assumption agreement with loss sharing. After purchase accounting fair value adjustments, Center Bank acquired total assets of $219.8 million, including $126.2 million of loans for which the FDIC will bear 80% of the losses. Center Bank also assumed liabilities of $233.9 million, including $209.3 million in deposits. The transaction added four branches and marked the company's entry into the Northern California market. The company said systems integration of the former Innovative Bank branches is on schedule to be completed during the third quarter.

The company recorded a bargain purchase gain on the transaction of $5.9 million, net of an equity appreciation instrument cost of $1.4 million. The acquisition was immediately accretive to operating results, contributing net interest income of $1.9 million, noninterest income of $286,000, noninterest expense of $777,000 and pre-tax earnings of $1.4 million for the second quarter of 2010. These operating results exclude the bargain purchase gain and are not indicative of future operating results. Center Financial incurred merger-related expenses in connection with the acquisition of Innovative Bank of $129,000.

Loans acquired in the FDIC-assisted transaction are subject to a loss sharing agreement and are referred to as ?covered loans.? Covered loans are reported separately in the consolidated statements of financial condition.

ASSET QUALITY

Non-covered nonperforming loans at June 30, 2010 declined sequentially from March 31 levels to $67.5 million, but was up when compared with $63.5 million at December 31, 2009. Total non-covered nonperforming assets at the end of the 2010 second quarter, including $2.8 million in other real estate owned (OREO), equaled $70.3 million, or $67.0 million net of guarantees. This compares with total non-covered nonperforming assets at March 31, 2010 of $73.4 million, or $68.7 million net of guarantees, including $3.0 million in OREO. The largest contributing factor to the sequential decline in non-covered nonperforming loans was the $55.0 million in note sales negotiated during the 2010 second quarter. At December 31, 2009, total non-covered nonperforming assets equaled $67.7 million, or $64.9 million net of guarantees, including $4.3 million in OREO. Total non-covered nonperforming assets represented 4.76% of gross loans and OREO at June 30, 2010, compared with 4.81% at March 31, 2010 and 4.39% at December 31, 2009.

Delinquent non-covered loans 30 to 89 days past due declined to $11.6 million at June 30, 2010 from $28.8 million at March 31, 2010 and was lower when compared with $13.4 million at December 31, 2009. Performing troubled debt restructurings (TDRs) that are not accounted for in non-covered nonaccrual or delinquent loans equaled $17.7 million at June 30, 2010, compared with $9.8 million at March 31, 2010 and $4.4 million at December 31, 2009.

Net charge-offs during the 2010 second quarter equaled $7.6 million, including total recoveries of $2.9 million. The company attributes the strong recoveries to its early actions to resolve potential problem loans. In comparison, net charge-offs totaled $4.5 million in the 2010 first quarter and $28.1 million in the 2009 fourth quarter. As a percentage of average loans on an annualized basis, net charge-offs year-to-date equaled 1.61%.

Center Financial recorded a provision for loan losses of $5.0 million for the 2010 second quarter. The allowance for loan losses declined to $58.4 million and was relatively stable at 3.97% of gross non-covered loans. The company's allowance for loan losses at March 30, 2010 was $61.0 million, equal to 4.01% of gross loans and totaled $58.5 million, representing 3.81% of gross loans, at December 31, 2009.

LOANS & DEPOSITS

Non-covered loans at June 30, 2010 declined to $1.47 billion from $1.52 billion at March 31, 2010 and $1.54 billion at year-end 2009, primarily reflecting decreases in the commercial real estate portfolio. Covered loans at June 30, 2010 totaled $122.4 million. Total loans at June 30, 2010 amounted to $1.60 billion.

Total deposits at June 30, 2010 rose to $1.80 billion from $1.63 billion at March 31, 2010 and $1.75 billion at December 31, 2009. The company attributed the sequential increase to deposits assumed in the Innovative Bank transaction and organic growth in its noninterest-bearing and money market accounts, partially offset by the strategic run off of higher rate retail and brokered deposits. As of June 30, 2010, noninterest-bearing demand deposits rose 10% from March 31, 2010 levels to $397.6 million, and represented 22.0% of total deposits. The company's loan-to-deposit ratio equaled 85.4% at June 30, 2010, including the Innovative Bank transaction. In comparison, the company's loan-to-deposit ratio was 89.8% at March 31, 2010 and 84.6% at December 31, 2009.

The average cost of interest-bearing deposits continued to trend downwards, decreasing to 1.52% for the three months ended June 30, 2010 from 1.65% for the preceding first quarter and from 1.97% for the 2009 fourth quarter. Total cost of deposits also continued to decline at 1.19% for the 2010 second quarter, compared with 1.31% for the 2010 first quarter and 1.60% for the 2009 fourth quarter.

BALANCE SHEET SUMMARY & CAPITAL

Total assets at June 30, 2010 increased to $2.28 billion from $2.19 billion at year-end 2009, largely reflecting the FDIC-assisted acquisition of former Innovative Bank, offset by reductions in the company's investment securities portfolio, predominantly due to securities sales effected in the 2010 first quarter. Average interest-earning assets for the 2010 second quarter equaled $1.98 billion, compared with $1.95 billion for the 2010 first quarter and $2.01 billion for the 2009 fourth quarter.

Total shareholders' equity at June 30, 2010 increased to $265.2 million from $256.1 million at December 31, 2009. As of June 30, 2010, the company's tangible common equity as a percentage of tangible assets, which is a non-GAAP financial measure, decreased to 9.25% from 9.75% at March 31, 2010. At December 31, 2009, tangible common equity as a percentage of tangible assets was 6.01%. Center Financial further strengthened its capital position as of June 30, 2010 from year-end 2009. Total risk-based capital ratio increased to approximately 18.85%, Tier 1 risk-based capital ratio advanced to approximately 17.59% and Tier 1 leverage ratio expanded to approximately 13.55%.

2010 SECOND QUARTER OPERATIONAL HIGHLIGHTS

Net interest income before provision for loan losses totaled $17.5 million for the 2010 second quarter. The FDIC-assisted Innovative Bank transaction contributed to higher levels of interest income on loans, as well as higher interest expense on borrowed funds. Net interest income before provision for loan losses totaled $16.4 million for the preceding three months ended March 31, 2010 and $15.3 million in the year-ago second quarter. The average yield on loans for the 2010 second quarter rose to 5.72% from 5.68% for the preceding first quarter, but was down when compared with 6.12% for the 2009 second quarter.

The company's net interest margin (NIM) for the 2010 second quarter expanded 12 basis points to 3.53% from 3.41% in the immediately preceding first quarter, benefiting from continued reductions in the cost of deposits, partially offset by the reversal of $894,000 in interest income from non-accruing loans recognized during the second quarter. For the year-ago second quarter, the company's NIM was 2.96%.

Noninterest income of $11.1 million for the 2010 second quarter reflects a sharp increase from comparable periods due to a $5.9 million bargain purchase gain and a gain on the sale of loans of $1.2 million. For the preceding 2010 first quarter, noninterest income totaled $5.7 million and included a $2.2 million gain on sale of securities available for sale. Noninterest income for the prior-year second quarter amounted to $3.5 million, for which there were no comparable gains.

Total noninterest expense for the 2010 second quarter was $12.3 million, compared with $10.9 million in the immediately preceding 2010 first quarter and $11.7 million in the prior-year second quarter. The increase primarily reflects additional staff and operating expenses associated with the Innovative Bank transaction. The company continues to focus on managing costs and improving its operating efficiencies. The company's 2010 second quarter efficiency ratio benefited from the $5.9 million bargain purchase gain and improved to 43.01% from 49.12% for the 2010 first quarter and from 62.48% in the year-ago second quarter.

For the 2010 second quarter, Center Financial posted net income of $7.5 million, or $0.17 per diluted common share, after a loan loss provision of $5.0 million and an income tax provision of $3.8 million. This compares with net income of $2.8 million, $0.10 per diluted common share, in the immediately preceding first quarter, after a loan loss provision of $7.0 million and an income tax provision of $1.5 million. In the 2009 second quarter, the company sustained a net loss of $12.8 million, or $0.81 per common share, after a loan loss provision of $29.8 million and an income tax benefit of $10.0 million.

For the 2010 second quarter, Center Financial posted a return on average assets (ROAA) of 1.38% and a return on average equity (ROAE) of 11.43%. This compares with an ROAA of 0.53% and an ROAE of 4.34% for the 2010 first quarter. For the year-ago second quarter, the company reported a loss on average assets equal to 2.32% and a loss on average equity of 23.95%.

?Looking ahead to the second half of 2010 and with two profitable quarters under our belt, we are more confident that we may be ahead of the credit cycle and anticipate being able to sustain profitable operations for the year,? Yoo said. ?While keeping a close eye on asset quality, our board and management team expect to focus more of our attention on strategic growth opportunities, both organic and acquisitive, and enhancing the overall earnings capacity of Center Bank for the longer term.?

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

Investor Conference Call

The company will host an investor conference call on Thursday, July 29, 2010 at 9 a.m. PDT (12 noon EDT) to review financial results for its 2010 second quarter. The institutional investment community is invited to participate in the call by dialing 866-831-6234 (domestic) or 617-213-8854 (international) and entering passcode 19320092. Other interested parties are invited to listen to the live call through a listen-only audio Web broadcast via the Internet in the Investor Relations section of www.centerbank.com. Listeners are encouraged to visit the Web site at least 15 minutes prior to the start of the scheduled presentation to register, download and install any necessary audio software. For those who are not available to listen to the live broadcast, the audio broadcast will be archived for one year. A telephonic replay of the call will be available through Thursday, August 5, 2010 by dialing 888-286-8010 (domestic) or 617-801-6888 (international) and entering replay passcode 81983786.

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 $2.28 billion at June 30, 2010. Headquartered in Los Angeles, Center Bank operates a total of 23 full-service branches and one loan production office. The company has 17 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, 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, as amended, for the fiscal year ended December 31, 2009 (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; the successful integration and operations of the FDIC-assisted acquisition; the company's ability to sustain profitable operations; the company's ability to capitalize on strategic growth opportunities; the company's ability to enhance its earnings capacity; 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 OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Unaudited)
(Dollars in thousands, except per share data)
			Three Months Ended												Six Months Ended
			6/30/10				3/31/10				6/30/09				6/30/10				6/30/09
Interest and Dividend Income:
Interest and fees on loans			$	21,388			$	20,628			$	24,742			$	42,016			$	49,053
Interest on federal funds sold				102				60				114				162				149
Interest on investment securities				2,859				2,944				2,343				5,803				4,634
Total interest and dividend income				24,349				© Business Wire 2010 Latest news on CENTER FIN COR NPV 08/13 Center Financial Amends 2010 First Quarter Financial Statements to Address Benef.. 07/29 Center Financial Reports $7.5 Million Net Income, $0.17 EPS for 2010 Second Quar.. 07/14 Center Financial to Host 2010 Second Quarter Conference Call on Thursday, July 2.. 06/09 Center Financial Appoints Interim CFO 05/25 Center Financial Announces Departure of CFO 05/24 Center Financial to Present at the 11th Annual B. Riley & Co. Investor Conferenc.. 2007 Center Financial Announces Quarterly Cash Dividend of $0.05 Per Share 2007 Center Financial to Present at Howe Barnes Hoefer & Arnett's 12th Annual Communi.. 2007 Center Financial Reports Solid Operating Performance for 2007 Second Quarter 2007 Center Financial Increases Quarterly Cash Dividend to $0.05 Per Share		Chart CENTER FIN COR NPV Short term Mid-term Long term Full-screen chart Income Statement Evolution More Fundamentals EPS Reviews More Estimates Reviews