8-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

Amendment No. 1

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 30, 2011

BBCN Bancorp, Inc.

(Exact name of registrant as specified in its charter)

Delaware	000-50245	95-4170121
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

3731 Wilshire Boulevard, Suite 1000, Los Angeles, CA	90010
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (213) 639-1700.

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Explanatory Note

This Amendment No. 1 amends the Current Report on Form 8-K filed on December 5, 2011 by BBCN Bancorp, Inc. to include the financial statements and unaudited pro forma financial information referred to in Item 9.01(a) and (b) below relating to the merger of Center Financial Corporation into Nara Bancorp, Inc., in connection with which merger Nara Bancorp’s name was changed to BBCN Bancorp, Inc.

Item 9.01 Financial Statements and Exhibits.

(a) Financial statements of business acquired.

The audited consolidated financial statements of Center Financial Corporation as of December 31, 2010 and 2009 and for each of the three years in the period ended December 31, 2010 previously filed by Nara Bancorp, Inc. on its Current Report on Form 8-K dated September 30, 2011, are incorporated herein by reference.

The unaudited consolidated financial statements of Center Financial Corporation as of September 30, 2011, and for the three-month and nine-month periods ended September 30, 2011 and 2010, are attached as Exhibit 99.1 to this Current Report on Form 8-K and are incorporated herein by reference.

(b) Pro forma financial information.

Unaudited pro forma combined condensed consolidated financial statements reflecting the merger of Center Financial Corporation into Nara Bancorp, Inc. are attached as Exhibit 99.2 and are incorporated herein by reference.

(c) Exhibit.

23.1 Consent of KPMG LLP

23.2 Consent of Grant Thornton LLP

99.1 Unaudited consolidated financial statements of Center Financial Corporation as of September 30, 2011, and for the three-month and nine-month periods ended September 30, 2011 and 2010.

99.2 Unaudited pro forma combined condensed consolidated financial statements reflecting the merger of Center Financial Corporation into Nara Bancorp, Inc.

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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 hereunto duly authorized.

	BBCN Bancorp, Inc.
Date: February 3, 2012	/s/ Alvin D. Kang
	Alvin D. Kang
	President and Chief Executive Officer

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EXHIBIT INDEX

Exhibit No.	Description of Exhibit
23.1	Consent of KPMG LLP
23.2	Consent of Grant Thornton LLP
99.1	Unaudited consolidated financial statements of Center Financial Corporation as of September 30, 2011, and for the three-month and nine-month periods ended September 30, 2011 and 2010.
99.2	Unaudited pro forma combined condensed consolidated financial statements reflecting the merger of Center Financial Corporation into Nara Bancorp, Inc.

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EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors

BBCN Bancorp, Inc.:

We consent to the incorporation by reference in registration statement Nos. 333-145014 and 333-179241 on Form S-8 and registration statement Nos. 333-161992 and 333-172521 on Form S-3 of BBCN Bancorp, Inc. of our reports dated March 3, 2011, with respect to the consolidated statement of financial condition of Center Financial Corporation and subsidiaries as of December 31, 2010, and the related consolidated statements of operations, shareholders’ equity and comprehensive income (loss), and cash flows for the year then ended, and the effectiveness of internal control over financial reporting as of December 31, 2010, which reports appear in Amendment No. 1 to the Form 8-K of BBCN Bancorp, Inc.

/s/ KPMG LLP

February 3, 2012

EX-23.2

Exhibit 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have issued our report dated March 12, 2010, with respect to the consolidated financial statements of Center Financial Corporation included in the Current Report on Form 8-K of Nara Bancorp, Inc. dated September 30, 2011. We hereby consent to the incorporation by reference of said report in the Current Report of BBCN Bancorp, Inc. on Form 8-K/A (Amendment No. 1) and in the Registration Statements of BBCN Bancorp, Inc. on Forms S-3 (File Nos. 333-161992 and 333-172521) and on Forms S-8 (File Nos. 333-145014 and 333-179241).

/s/ GRANT THORNTON LLP

Los Angeles, California

February 3, 2012

EX-99.1

Exhibit 99.1

CENTER FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)

AS OF SEPTEMBER 30 AND DECEMBER 31

	2011		2010
	(Dollars in thousands)
ASSETS
Cash and due from banks	$	41,644	$	28,181
Federal funds sold		870		136,180
Money market funds and interest-bearing deposits in other banks		263,631		94,559
Cash and cash equivalents		306,145		258,920
Securities available for sale, at fair value		310,983		289,551
Non-covered loans held for sale, at the lower of cost or fair value		66,608		60,234
Federal Home Loan Bank and FRB stock, at cost		13,199		15,019
Non-covered loans, net of allowance for loan losses of $47,098 and $52,047 as of September 30, 2011 and December 31, 2010, respectively		1,353,440		1,415,646
Covered loans, net of allowance for loan losses of $1,010 as of September 30, 2011 and December 31, 2010		92,581		116,283
Premises and equipment, net		12,281		13,532
Core deposit intangibles, net		418		464
Customers’ liability on acceptances		3,313		2,287
Non-covered other real estate owned, net		947		937
Covered other real estate owned, net		1,028		1,459
Accrued interest receivable		5,089		5,509
Deferred income taxes, net		19,995		14,383
Investments in affordable housing partnerships		9,876		10,824
Cash surrender value of life insurance		18,147		12,791
Income tax receivable		13,236		14,277
Prepaid regulatory assessment fees		5,387		7,864
FDIC loss share receivable		17,503		23,991
Other assets		6,911		6,308
Total	$	2,257,087	$	2,270,279
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Deposits:
Noninterest-bearing	$	499,556	$	396,973
Interest-bearing		1,297,348		1,374,021
Total deposits		1,796,904		1,770,994
Acceptances outstanding		3,313		2,287
Accrued interest payable		4,317		5,113
Other borrowed funds		132,130		188,670
Long-term subordinated debentures		18,557		18,557
Accrued expenses and other liabilities		7,186		10,646
Total liabilities		1,962,407		1,996,267
Commitments and Contingencies		0		0
Shareholders’ Equity
Preferred stock, no par value, 10,000,000 shares authorized; issued and outstanding, 55,000 shares as of September 30, 2011 and December 31, 2010
Series A, cumulative, issued and outstanding, 55,000 shares as of September 30, 2011 and December 31, 2010		53,607		53,409
Common stock, no par value; 100,000,000 shares authorized; issued and outstanding, 39,919,952 and 39,914,686 shares (including 51,449 and 76,809 shares of unvested restricted stock) as of September 30, 2011 and December 31, 2010, respectively		188,208		187,754
Retained earnings		48,914		32,000
Accumulated other comprehensive income, net of tax		3,951		849
Total shareholders’ equity		294,680		274,012
Total	$	2,257,087	$	2,270,279

See accompanying notes to interim consolidated financial statements.

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CENTER FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
	(Dollars in thousands, except per share data)
Interest and Dividend Income:
Interest and fees on loans	$	20,668		$	22,472		$	62,584		$	64,430
Interest on federal funds sold		1			127			44			289
Interest on taxable investment securities		2,002			1,499			5,870			7,290
Dividends on equity stock		9			0			32			—
Money market funds and interest-earning deposits		182			41			487			111
Total interest and dividend income		22,862			24,139			69,017			72,120
Interest Expense:
Interest on deposits		3,947			5,137			12,875			15,658
Interest on borrowed funds		1,570			1,747			4,760			5,021
Interest expense on trust preferred securities		143			155			427			438
Total interest expense		5,660			7,039			18,062			21,117
Net interest income before provision for loan losses		17,202			17,100			50,955			51,003
Provision for loan losses		1,200			4,000			12,200			16,000
Net interest income after provision for loan losses		16,002			13,100			38,755			35,003
Noninterest Income:
Customer service fees		1,727			2,043			5,308			6,161
Fee income from trade finance transactions		623			684			1,924			2,062
Wire transfer fees		330			321			987			933
Gain on business acquisition		0			0			0			5,900
Net gain on sale of loans		1,896			257			7,448			1,460
Net gain on sale of securities available for sale		0			0			0			2,209
Loan service fees		526			565			1,896			1,153
Increase in FDIC loss share receivable		308			105			471			105
Other income		560			434			1,509			1,174
Total noninterest income		5,970			4,409			19,543			21,157
Noninterest Expense:
Salaries and employee benefits		5,214			4,653			15,654			13,640
Occupancy		1,260			1,388			3,994			4,020
Furniture, fixtures, and equipment		549			756			1,671			1,903
Data processing		615			832			1,938			1,950
Legal fees		239			567			941			1,152
Accounting and other professional service fees		466			309			1,378			1,170
Business promotion and advertising		206			376			942			1,048
Supplies and communications		280			440			965			1,100
Security service		303			320			905			840
Regulatory assessment		771			1,073			2,821			3,096
Merger related expenses		477			0			1,114			129
Net OREO related expenses		577			170			1,689			1,529
Other operating expenses		1,207			1,508			3,907			3,950
Total noninterest expense		12,164			12,392			37,919			35,527
Income before income tax provision (benefit)		9,808			5,117			20,379			20,633
Income tax provision (benefit)		415			(846	)		1,205			4,400
Net income		9,393			5,963			19,174			16,233
Preferred stock dividends and accretion of preferred stock discount		(757	)		(748	)		(2,261	)		(31,246	)
Net income (loss) available to common shareholders		8,636			5,215			16,913			(15,013	)
Comprehensive income:
Net income	$	9,393		$	5,963		$	19,174		$	16,233
Other comprehensive income (loss) - unrealized gain (loss) on available-for-sale securities, net of income tax (expense) benefit of ($408), ($78), ($1,670) and $49, respectively		758			144			3,102			(91	)
Comprehensive income	$	10,151		$	6,107		$	22,276		$	16,142
Earnings (loss) per common share:
Basic	$	0.22		$	0.13		$	0.42		$	(0.44	)
Diluted	$	0.22		$	0.13		$	0.42		$	(0.44	)
Average common shares outstanding:
Basic		39,876,029			39,902,114			39,865,808			33,762,755
Diluted		39,932,601			39,912,160			39,931,507			33,762,755

See accompanying notes to interim consolidated financial statements.

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CENTER FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

FOR THE NINE MONTHS ENDED SEPTEMBER 30

	2011			2010
	(Dollars in thousands)
Cash flows from operating activities:
Net income	$	19,174		$	16,233
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Compensation expenses related to stock options and restricted stock awards		454			553
Depreciation and amortization		4,824			3,159
Amortization of deferred fees and accretion of discount		(4,951	)		(190	)
Amortization of premium, net of accretion of discount, on securities available for sale		1,768			(59	)
Provision for loan losses		12,200			16,000
Net gain on sale of securities available for sale		0			(2,209	)
Net increase in loans held for sale		(62,567	)		(45,750	)
Gain on business acquisition		0			(5,900	)
Gain on sale of loans		(7,448	)		(1,460	)
Proceeds from sale of loans acquired for sale		66,919			19,805
Net loss on sale of OREO		238			15
Valuation adjustment on non-covered OREO		398			994
Valuation adjustment on covered OREO		663			29
Deferred tax (expense) benefit		(7,283	)		1,505
Decrease in accrued interest receivable		420			1,392
Net increase in cash surrender value of bank-owned life insurance		(356	)		(299	)
Decrease (increase) in income tax receivable		1,041			(214	)
Decrease in prepaid assessment		—			2,675
Increase in other assets		(1,620	)		(1,035	)
Decrease in accrued interest payable		(796	)		(2,037	)
Decrease in accrued expenses and other liabilities		(2,434	)		(4,454	)
Net cash provided by (used in) operating activities		20,644			(1,247	)
Cash flows from investing activities:
Purchase of securities available for sale		(119,997	)		(88,390	)
Proceeds from principal repayment, maturity or call of securities available for sale		101,570			122,304
Proceeds from sale of securities available for sale		0			59,745
Net decrease in investment in Federal Home Loan Bank and other equity stock		1,820			1,249
Net decrease in non-covered loans		29,236			32,888
Net decrease in covered loans		27,627			11,821
Proceeds from sale of loans acquired for investment		13,094			36,971
Proceeds from recoveries of loans previously charged off		1,410			4,544
Proceeds from FDIC loss share receivable		6,960			1,753
Net increase in premises and equipment		(360	)		(1,889	)
Proceeds from sale of OREO		1,085			5,306
Net cash acquired from business combination, inclusive of settlement received from FDIC		1,283			71,505
Net increase in investments in affordable housing partnerships		0			131
Purchase of bank-owned life insurance		(5,000	)		0
Net cash provided by investing activities		58,728			257,938
Cash flows from financing activities:
Net increase (decrease) in deposits		25,910			(164,697	)
Net decrease in other borrowed funds		(55,995	)		(1,720	)
Payment of cash dividend		(2,062	)		(2,064	)
Net cash used in financing activities		(32,147	)		(168,481	)
Net increase in cash and cash equivalents		47,225			88,210
Cash and cash equivalents, beginning of period		258,920			232,802
Cash and cash equivalents, end of period	$	306,145		$	321,012
Supplemental disclosure of cash flow information:
Interest paid	$	19,403		$	23,585
Income taxes paid, net of refunds		7,447			826
Supplemental schedule of noncash investing, operating, and financing activities:
Cash dividend accrual for preferred stock	$	344		$	344
Accretion of preferred stock discount		198			176
Transfer of non-covered loans to non-covered loans held for sale		17,218			12,784
Transfer of non-covered loans to non-covered OREO		2,634			4,560
Transfer of covered loans to covered OREO		1,380			1,672
Acquisition:
Assets acquired	$	0		$	219,797
Liabilities assumed		0			232,485

See accompanying notes to interim consolidated financial statements.

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CENTER FINANCIAL CORPORATION

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. THE BUSINESS OF CENTER FINANCIAL CORPORATION

Center Financial Corporation (“Center Financial”) is a California corporation registered as a bank holding company under the Bank Holding Company Act of 1956, as amended (the “BHC Act”), and is headquartered in Los Angeles, California. Center Financial was incorporated on April 19, 2000 and acquired all of the issued and outstanding shares of Center Bank (the “Bank”) in October 2002. Currently, Center Financial’s direct subsidiaries include the Bank and Center Capital Trust I. Center Financial exists primarily for the purpose of holding the stock of the Bank and of the other subsidiary and for providing access to capital and funding for the Bank. Center Financial, the Bank, and Center Capital Trust I are collectively referred to herein as the “Company, unless the context indicates otherwise.”

The Bank is a California state-chartered and Federal Deposit Insurance Corporation (“FDIC”) insured financial institution, which was incorporated in 1985 and commenced operations in March 1986. The Bank’s headquarters are located at 3435 Wilshire Boulevard, Suite 700, Los Angeles, California 90010. The Bank provides comprehensive financial services for small to medium sized business owners, primarily in Southern California. The Bank specializes in commercial loans, most of which are secured by real property, to small business customers. In addition, the Bank is a Preferred Lender of Small Business Administration (“SBA”) loans and provides trade finance loans. The Bank’s primary market is the Southern California area, including Los Angeles, Orange, San Bernardino, and San Diego counties, primarily focused in areas with high concentrations of Korean-Americans.

The Bank currently has 21 full-service branch offices, 18 of which are located in California. The Bank also operates two Loan Production Offices in Seattle and Denver. In December 2003, Center Financial formed a wholly owned subsidiary, Center Capital Trust I, a Delaware statutory business trust, for the exclusive purpose of issuing and selling trust preferred securities. Center Financial’s principal source of income is generally dividends from the Bank and equity earnings in the Bank. The expenses of Center Financial, including interest on junior subordinated debentures issued to Center Capital Trust I, legal and accounting fees and NASDAQ listing fees have been and will generally be paid by the cash on hand or from dividends paid by the Bank.

2. BASIS OF PRESENTATION

The interim consolidated financial statements include the accounts of Center Financial and the Bank. Center Capital Trust I is not consolidated as disclosed in Note 12.

The interim consolidated financial statements are presented in accordance with U. S. generally accepted accounting principles (“GAAP”) for unaudited financial statements. The information furnished in these interim statements reflects all adjustments that are, in the opinion of management, necessary for the fair statement of results for the periods presented. All adjustments are of a normal and recurring nature. Results for the three and nine months ended September 30, 2011 are not necessarily indicative of the results that may be expected for any other interim period or for the year as a whole. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted. The interim consolidated financial statements should be read in conjunction with the audited financial statements and notes included in the Company’s annual report on Form 10-K, as amended, for the year ended December 31, 2010.

Use of estimates

Management has made a number of estimates and assumptions related to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the interim consolidated financial statements and the reported amounts of revenues and expenses during the reporting period to prepare these interim consolidated financial statements in accordance with GAAP. Actual results could differ from those estimates. Material estimates subject to change in the near term include, among other items, the allowance for loan losses, investment securities, the carrying value of other real estate owned, the carrying value of intangible assets, the carrying value of the FDIC loss share receivable and the realization of deferred tax assets.

Reclassifications

Reclassifications have been made to the prior year financial statements to conform to the current presentation.

3. SIGNIFICANT ACCOUNTING POLICIES

Accounting policies are fully described in Note 2 to the consolidated financial statements in Center Financial’s Annual Report on Form 10-K, as amended, for the year ended December 31, 2010 and there have been no material changes noted.

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Trouble Debt Restructured Loans

The amendments in ASU 2011-02 require prospective application of the impairment measurement guidance in ASC 310-10-35 for those receivables newly identified as impaired. As a result of adopting the amendments in ASU 2011-02, the Company reassessed all restructurings that occurred on or after January 1, 2011 for identification as a TDR. A loan is classified as a troubled debt restructured when a borrower is experiencing financial difficulties that lead to a restructuring of the loan, and the Company grants concessions to the borrower in the restructuring that it would not otherwise consider. These concessions may include interest rate reductions, principal forgiveness, extension of maturity date and other actions intended to minimize potential losses. Generally, a nonaccrual loan that is restructured remains on nonaccrual for a period of six months to demonstrate that the borrower can meet the restructured terms. However, the borrower’s performance prior to the restructuring or other significant events at the time of restructuring may be considered in assessing whether the borrower can meet the new terms and may result in the loan being returned to accrual status after a shorter performance period. If the borrower’s performance under the new terms is not reasonably assured, the loan remains classified as a nonaccrual loan. The Company usually identified as TDRs certain receivables for which the ALLL had previously been measured under a general ALLL methodology. Upon identifying those receivables as TDRs, the Company identified them as impaired under the guidance in ASC 310-10-35 and established a specific or formula allowance.

4. RECENT ACCOUNTING PRONOUNCEMENTS

In January 2010, the FASB issued FASB ASU 2010-06, Improving Disclosures about Fair Value Measurements, which amends ASC 820 to require additional disclosures regarding fair value measurements. Specifically, the ASU requires disclosure of the amounts of significant transfers between Level 1 and Level 2 of the fair value hierarchy and the reasons for these transfers, the reasons for any transfers in or out of Level 3, and information in the reconciliation of recurring Level 3 measurements about purchases, sales, issuances and settlements on a gross basis. In addition to these new disclosure requirements, the ASU also amends ASC 820 to clarify certain existing disclosure requirements. For example, the ASU clarifies that reporting entities are required to provide fair value measurement disclosures for each class of assets and liabilities. Previously separate fair value disclosures were required for each major category of assets and liabilities. ASU 2010-06 also clarifies the requirement to disclose information about both the valuation techniques and inputs used in estimating Level 2 and Level 3 fair value measurements. Except for the requirement to disclose information about purchases, sales, issuances, and settlements in the reconciliation of recurring Level 3 measurements on a gross basis, these disclosures are effective for the quarter ended March 31, 2010. The requirement to separately disclose purchases, sales, issuances, and settlements of recurring Level 3 measurements became effective for the Company for the quarter ended March 31, 2011. The Company adopted this new accounting guidance as of January 1, 2010 and 2011, respectively, and the impact of adoption was not material on the consolidated financial statements.

In July 2010, the FASB issued FASB ASU 2010-20, Receivables (Topic 310) – Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses, which required more information about credit quality. The ASU requires an entity to provide additional disclosures including, but not limited to, a rollforward schedule of the allowance for credit losses (with the ending allowance balance further disaggregated based on impairment methodology) and the related ending balance of the finance receivable presented by portfolio segment, and the aging of past due financing receivables at the end of the period, the nature and extent of troubled debt restructurings that occurred during the period and their impact on the allowance for credit losses, the nature and extend of troubled debt restructurings that occurred within the last year, that have defaulted in the current reporting period, and their impact on the allowance for credit losses, the nonaccrual status of financing receivables, and impaired financing receivables, presented by class. The new disclosures of information as of the end of a reporting period are effective for both interim and annual reporting periods ending after December 15, 2010 for public companies. The Company adopted this new accounting guidance as of December 31, 2010.

In December 2010, the FASB issued FASB ASU 2010-29, Disclosure of Supplementary ProForma Information for Business Combinations, a consensus of the FASB Emerging Issues Task Force (Issue No. 10-G), which requires that the pro forma information be presented as if the business combination occurred at the beginning of the prior annual reporting period for purposes of calculating both the current reporting period and the prior reporting period pro forma financial information. The ASU also requires that this disclosure be accompanied by a narrative description of the amount and nature of material nonrecurring pro forma adjustments. The amendments in this ASU are effective for business combinations with effective dates on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. Prospective application is required with early adoption permitted. The Company does not anticipate the new guidance will have a material impact on the consolidated financial statements as this relates to only pro-forma disclosure.

In April 2011, the FASB issued FASB ASU 2011-02, Receivables (Topic 310) – A Creditor’s Determination whether a Restructuring Is A Troubled Debt Restructuring, which provides additional guidance for determining whether the creditor has granted a concession and whether the debtor is experiencing financial difficulty. A troubled debt restructuring (TDR) is a restructuring of a debt if the creditor for economic or legal reasons related to the debtor’s financial difficulties grants a concession to the debtor that it would not otherwise consider. Public entities are required to adopt this ASU for interim and annual periods beginning on or after June 15, 2011. For purposes of TDR disclosure, the ASU applies retrospectively to restructurings occurring on or after the beginning

5

of the annual period of adoption, or January 1, 2011 for the Company. However, any changes in the method used to measure impairment apply prospectively. Beginning in the period the ASU is adopted, public entities are subject to the requirements to disclose the activity-based information about TDRs that was previously deferred by ASU 2011-01. The Company adopted this guidance during the quarterly period ending September 30, 2011 as disclosed in Note 7, and the impact of adoption was not material on the consolidated financial statements.

In May 2011, the FASB issued FASB ASU 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in the U.S. GAAP and IFRSs, to provide largely identical guidance about fair value measurement and disclosure requirements with the International Accounting Standards Board’s new International Financial Reporting Standards (“IFRS”) 13, Fair Value Measurement. The new guidance does not extend the use of fair value but, rather, provides guidance about how fair value should be applied where it already is required or permitted under U.S. GAAP. Most of the changes are clarifications of existing guidance or wording changes to align with IFRS 13. A public entity is required to apply this ASU prospectively for interim and annual periods beginning after December 15, 2011. Early adoption is not permitted for a public entity. In the period of adoption, a reporting entity will be required to disclose a change, if any, in valuation technique and related inputs that result from applying the ASU and to quantify the total effect, if practicable. The Company does not anticipate the adoption of this ASU will have a significant impact on the consolidated financial statements.

In June 2011, the FASB issued FASB ASU 2011-05, Presentation of Comprehensive Income. To improve comparability, consistency and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income, the ASU eliminates the option to present other comprehensive income in the statement of changes in equity. Under this ASU, an entity will have the option to present the components of net income and comprehensive income in either one or two consecutive financial statements. An entity should apply the ASU retrospectively. For a public entity, the ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The Company does not anticipate the adoption of this ASU will have a significant impact on the consolidated financial statements.

5. BUSINESS COMBINATION

On December 9, 2010, Center Financial and Nara Bancorp, Inc. (“Nara Bancorp”) entered into a definitive agreement to merge. Under the terms of the merger agreement, Center Financial shareholders will receive a fixed ratio of 0.7804 of a share of Nara Bancorp common stock in exchange for each share of Center Financial common stock they own. At the closing date of the merger, Nara Bancorp shareholders will own approximately 55% of the combined company and Center Financial shareholders will own approximately 45%. The combined company will operate under a new name that will be determined prior to the closing. In addition, at the closing or as soon as possible thereafter, it is anticipated that Nara Bank, a California state-chartered bank and a wholly-owned subsidiary of Nara Bancorp, will merge with and into the Bank, with the Bank as the surviving bank after the bank merger.

The boards of directors of both companies have unanimously approved the transaction. Both our shareholders and Nara Bancorp’s have approved the merger at separate meetings, both held on September 21, 2011. On November 7, 2011, the Company announced receipt of approval from the FDIC of the planned merger of Nara Bank and Center Bank. This represents the final regulatory approval required for the merger of the two companies. Approvals have previously been received from the DFI and the FRB. The merger is expected to close by end of November 2011, subject to customary closing conditions.

6

6. INVESTMENT SECURITIES

The following table summarizes the amortized cost, fair value and distribution of the Company’s investment securities as of September 30, 2011 and December 31, 2010:

	As of September 30, 2011
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value
	(Dollars in thousands)
Available for Sale:
U.S. Treasury	$	300	$	—	$	—		$	300
U.S. Governmental agencies securities and U.S. Government sponsored enterprise securities		37,935		183		—			38,118
U.S. Governmental agencies and U.S. Government sponsored and enterprise mortgage-backed securities		157,440		6,010		(22	)		163,428
Corporate trust preferred security		2,747		—		(1,930	)		817
Mutual funds backed by adjustable rate mortgages		5,000		257		—			5,257
Collateralized mortgage obligations		101,483		1,669		(89	)		103,063
Total securities available for sale	$	304,905	$	8,119	$	(2,041	)	$	310,983

	As of December 31, 2010
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value
	(Dollars in thousands)
Available for Sale:
U.S. Treasury	$	300	$	—	$	—		$	300
U.S. Governmental agencies securities and U.S. Government sponsored enterprise securities		58,994		94		(481	)		58,607
U.S. Governmental agencies and U.S. Government sponsored and enterprise mortgage-backed securities		154,149		3,549		(599	)		157,099
Corporate trust preferred security		2,738		—		(1,979	)		759
Mutual funds backed by adjustable rate mortgages		5,000		73		—			5,073
Collateralized mortgage obligations		67,063		816		(166	)		67,713
Total securities available for sale	$	288,244	$	4,532	$	(3,225	)	$	289,551

.

7

The following table shows the Company’s investments with gross unrealized losses and related fair values, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of September 30, 2011 and December 31, 2010.

	As of September 30, 2011
	Less than 12 months					12 months or more					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
	(Dollars in thousands)
U.S. Governmental agencies securities and U.S. Government sponsored enterprise securities	$	—	$	—		$	—	$	—		$	—	$	—
U.S. Governmental agencies and U.S. Government sponsored enterprise mortgage-backed securities		2,260		(22	)		—		—			2,260		(22	)
Corporate trust preferred security		—		—			817		(1,930	)		817		(1,930	)
Collateralized mortgage obligations		12,041		(61	)		4,165		(28	)		16,206		(89	)
Total	$	14,301	$	(83	)	$	4,982	$	(1,958	)	$	19,283	$	(2,041	)

	As of December 31, 2010
	Less than 12 months					12 months or more					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
	(Dollars in thousands)
U.S. Governmental agencies and U.S. Government sponsored enterprise securities	$	33,486	$	(481	)	$	—	$	—		$	33,486	$	(481	)
U.S. Governmental agencies and U.S. Government sponsored enterprise mortgage-backed securities		27,084		(599	)		—		—			27,084		(599	)
Corporate trust preferred security		—		—			759		(1,979	)		759		(1,979	)
Collateralized mortgage obligations		20,369		(166	)		—		—			20,369		(166	)
Total	$	80,939	$	(1,246	)	$	759	$	(1,979	)	$	81,698	$	(3,225	)

The Company considers numerous factors to determine any other-than-temporary impairment (“OTTI”) for the collateralized debt obligation (“CDO”) trust preferred security including review of trustee reports, monitoring of “break in yield” tests, analysis of current defaults and deferrals and the expectation for future defaults and deferrals. The Company reviews the key financial characteristics for individual issuers (commercial banks or thrifts) in the CDO trust preferred security and considers capital ratios, leverage ratios, nonperforming loan and nonperforming asset ratios, in addition to the credit ratings. The credit ratings of the Company’s CDO trust preferred security were “Ca” (Moody’s) and “C” (Fitch) as of September 30, 2011 and December 31, 2010.

The Company uses cash flow projections for the purpose of assessing OTTI on the CDO trust preferred security which incorporate certain credit events in the underlying collaterals and prepayment assumptions. The projected issuer default rates are assumed at a rate equivalent to 150 basis points applied annually and have a 0% recovery factor after the initial default date. The principal is assumed to be prepaying at 1% annually and at 100% at maturity.

8

Based on the results from the cash flow model, the CDO trust preferred security did not experience an adverse change in its cash flow status. As such, based on all of these factors, the Company determined that there was no OTTI adjustment required for the securities that have been in a continuous unrealized loss position as of September 30, 2011. The risk of future OTTI will be highly dependent upon the performance of the underlying issuers. The Company does not have the intention to sell and does not believe it will be required to sell the CDO trust preferred security until maturity.

The following table summarizes, as of September 30, 2011, the maturity characteristics of the investment portfolio by investment category. Expected remaining maturities may differ from remaining contractual maturities because obligors may have the right to prepay certain obligations with or without penalties.

	Within one Year					After One  But Within Five Years					After Five  But Within Ten Years					After Ten Years					Total
	Amount		Yield			Amount		Yield			Amount		Yield			Amount		Yield			Amount		Yield
	(Dollars in thousands)
Available for Sale (Fair Value):
U.S. Treasury	$	300		0.05	%	$	—		—	%	$	—		—	%	$	—		—	%	$	300		0.05	%
U.S. Governmental agencies securities and U.S Government sponsored enterprise securities		—		—			38,118		1.32			—		—			—		—			38,118		1.32
U.S. Governmental agencies and U.S. Government sponsored and enterprise mortgage-backed securities		—		—			994		4.51			65,572		2.85			96,862		3.28			163,428		3.11
Corporate trust preferred security		—		—			—		—			—		—			817		11.70			817		11.70
Mutual funds backed by adjustable rate mortgages		5,257		3.05			—		—			—		—			—		—			5,257		3.05
Collateralized mortgage obligations		—		—			967		2.37			26,972		1.96			75,124		2.31			103,063		2.22
Total available for sale	$	5,557		2.89		$	40,079		1.42		$	92,544		2.59		$	172,803		2.90		$	310,983		2.62

7. NON-COVERED LOANS AND ALLOWANCE FOR LOAN AND LEASE LOSSES

On April 16, 2010, the California Department of Financial Institution (the “DFI”) closed Innovative Bank, Oakland, 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 with loss sharing. Non-covered loans refer to loans not covered by the FDIC loss sharing agreement. Loans acquired in an FDIC-assisted acquisition that are subject to a loss sharing agreement are referred to as “covered loans” and reported separately in the interim consolidated statements of financial condition.

9

Non-covered loans, segregated by class of loans, as of September 30, 2011 and December 31, 2010 consist of the following:

	September 30, 2011						December 31, 2010
	Amount			Percent of Total			Amount			Percent of Total
	(Dollars in thousands)
Real Estate:
Construction	$	9,407			0.7	%	$	14,803			1.0	%
Commercial		894,686			60.9			914,003			59.8
Commercial:
Commercial		281,711			19.2			315,285			20.5
Trade Finance		63,860			4.3			71,174			4.7
SBA 1)		112,207			7.6			101,683			6.7
Others:
Consumer		57,514			3.9			71,279			4.7
Other 2)		50,048			3.4			40,039			2.6
Total Non-covered Loans 3)		1,469,433			100.0			1,528,266			100.0
Less:
Allowance for loan losses		47,098						52,047
Net deferred loan fees 4)		(454	)					(523	)
Discount on SBA loans retained		2,741						862
Net Non-covered Loans and Loans Held for Sale	$	1,420,048					$	1,475,880

1) Includes non-covered SBA loans held for sale of $61.6 million and $46.4 million, at the lower of cost or fair value, as of September 30, 2011 and December 31, 2010, respectively.

2) Consists of term fed funds sold for maturity of greater than 1 day, transactions in process and overdrafts.

3) Includes loans held for sale of $66.6 million and $60.2 million at the lower of cost or fair value as of September 30, 2011 and December 31, 2010, respectively.

4) Net deferred loan fees are net of origination costs. In 2011 and 2010, origination costs exceeded fees on SBA loan origination.

The activity in the allowance for loan losses on total loans (including non-covered loans and covered loans and excluding loans held for sale), segregated by portfolio segment, as of and for the three and nine months ended September 30, 2011 and the year ended December 31, 2010 is as follows:

Allowance for loan losses:	Real Estate			Commercial			Consumer / Others			Total
	(Dollars in thousands)
Three months ended September 30, 2011
Beginning balance	$	27,470		$	21,226		$	1,904		$	50,600
Charge-offs		(2,030	)		(1,768	)		(468	)		(4,266	)
Recoveries		381			103			90			574
Provision		726			529			(55	)		1,200
Ending balance	$	26,547		$	20,090		$	1,471		$	48,108
Nine months ended September 30, 2011
Beginning balance	$	29,272		$	22,035		$	1,750		$	53,057
Charge-offs		(10,312	)		(7,291	)		(956	)		(18,559	)
Recoveries		942			254			214			1,410
Provision		6,645			5,092			463			12,200
Ending balance	$	26,547		$	20,090		$	1,471		$	48,108
Period-end amount allocated to loans:
Individually evaluated for impairment	$	7,591		$	8,901		$	75		$	16,567
Collectively evaluated for impairment		18,956			10,179			1,396			30,531
Acquired with deteriorated credit quality		—			1,010			—			1,010
Ending balance	$	26,547		$	20,090		$	1,471		$	48,108

10

Allowance for loan losses:	Real Estate			Commercial			Consumer / Others			Total
	(Dollars in thousands)
Year ended December 31, 2010
Beginning balance	$	37,604		$	19,000		$	1,939		$	58,543
Charge-offs		(21,243	)		(10,637	)		(767	)		(32,647	)
Recoveries		1,918			3,079			154			5,151
Provision		10,993			10,593			424			22,010
Ending balance	$	29,272		$	22,035		$	1,750		$	53,057
Period-end amount allocated to loans:
Individually evaluated for impairment	$	2,349		$	8,965		$	329		$	11,643
Collectively evaluated for impairment		26,923			12,060			1,421			40,404
Acquired with deteriorated credit quality		—			1,010			—			1,010
Ending balance	$	29,272		$	22,035		$	1,750		$	53,057
Financing receivables 1):	Real Estate			Commercial			Consumer / Others			Total
	(Dollars in thousands)
As of September 30, 2011
Loans individually evaluated for impairment	$	47,586		$	22,899		$	1,244		$	71,729
Loans collectively evaluated for impairment		851,532			373,247			106,317			1,331,096
Loans acquired with deteriorated credit quality		51,725			41,406			486			93,617
Ending balance	$	950,843		$	437,552		$	108,047		$	1,496,442
As of December 31, 2010
Loans individually evaluated for impairment	$	69,287		$	26,830		$	1,460		$	97,577
Loans collectively evaluated for impairment		845,707			414,890			109,858			1,370,455
Loans acquired with deteriorated credit quality		63,500			53,307			486			117,293
Ending balance	$	978,494		$	495,027		$	111,804		$	1,585,325

1) Financing receivables represent unpaid principal balance, which approximates recorded investment.

Loans are considered impaired when it is probable that the Company will be unable to collect all amounts due as scheduled according to the contractual terms of the loan agreement, including contractual interest and principal payments. Impaired loans are measured for impairment based on the present value of expected future cash flows discounted at the loan’s effective interest rate or, alternatively, at the loan’s observable market price or the fair value of the collateral if the loan is collateralized, less costs to sell. Loans are identified for specific allowances from information provided by several sources including asset classification, third party reviews, delinquency reports, periodic updates to financial statements, public records, and industry reports. All loan types are subject to impairment evaluation for a specific allowance once identified as impaired.

11

The Bank generally writes down nonperforming collateral dependent impaired loans to the value of the underlying collateral. The collateral value is generally updated every six months and the impairment amount is generally charged off during the quarter in which collateral value is updated. The performing impaired loans, such as performing TDRs, are allocated with specific reserve and are not generally charged off. The performing impaired loans typically continue to make contractual payments according to their restructured terms and conditions.

	September 30, 2011			December 31, 2010
	(Dollars in thousands)
Impaired loans with specific reserves
Without charge-offs	$	38,166		$	35,109
With charge-offs		9,668			2,575
Impaired loans without specific reserves
Without charge-offs		20,684			49,043
With charge-offs		3,211			10,850
Total impaired loans		71,729			97,577
Allowance on impaired loans		(16,567	)		(11,643	)
Net recorded investment in impaired loans	$	55,162		$	85,934

Non-covered nonperforming loans, net of SBA guarantees totaled $29.0 million as of September 30, 2011, a decrease of $13.2 million as compared to $42.2 million as of December 31, 2010. Non-covered nonperforming loans, net of SBA guarantees as a percentage of total non-covered loans decreased to 1.98% as of September 30, 2011 as compared to 2.76% as of December 31, 2010. Gross interest income of approximately $308,000 and $657,000 would have been additionally recorded for the three and nine months ended September 30, 2011, respectively, compared to $373,000 and $1.6 million for the same periods in 2010, respectively, if these loans had been paid in accordance with their original terms and had been outstanding throughout the applicable period then ended or, if not outstanding throughout the applicable period then ended, since origination.

As of September 30, 2011, the Company held non-covered TDRs of $46.3 million, representing an increase of $7.2 million, or 18.4%, as compared to $39.1 million as of December 31, 2010. The increase in the non-covered TDRs was mainly result of one commercial business loan relationship for $8.0 million that became a TDR during the third quarter of 2011. The debtor has been making loan payments according to its restructured terms and conditions since July 2011.

A TDR is a debt restructuring in which a bank, for economic or legal reasons related to a borrower’s financial difficulties, grants a concession to the borrower that it would not otherwise consider. TDRs may include, but are not necessarily limited to, one or a combination of the following:

1. Transfer from the debtor to the creditor of receivables from third parties, real estate, or other assets to satisfy fully or partially a debt (including a transfer resulting from foreclosure or repossession)

2. Issuance or other granting of an equity interest to the creditor by the debtor to satisfy fully or partially a debt unless the equity interest is granted pursuant to existing terms for converting the debt into an equity interest

3. Modification of terms of a debt, such as one or a combination of any of the following:

a. Reduction (absolute or contingent) of the stated interest rate for the remaining original life of the debt

b. Extension of the maturity date or dates at a stated interest rate lower than the current market rate for new debt with similar risk

c. Reduction (absolute or contingent) of the face amount or maturity amount of the debt as stated in the instrument or other agreement

d. Reduction (absolute or contingent) of accrued interest.

A TDR that has been formally restructured so as to be reasonably assured of repayment and of performance according to its modified terms need not be maintained in a non-accrual or nonperforming status, provided the TDR is supported by a current well documented credit evaluation and positive prospects of repayment under the revised terms. If these conditions can not be met, the Company will classify the TDR as non-accrual or nonperforming.

The TDRs are monitored on a monthly basis to review the performance of the restructured term. When it is determined that the future performance of TDR is uncertain of repayment in accordance with the new restructured term, the loan is placed on non-accrual. The TDRs are usually analyzed for impairment evaluation for a specific allowance when outstanding balance is $100,000 or more.

12

The fair value of the collateral is used for nonperforming TDR and present value of expected future cash flow is used for performing TDR.

As a result of adopting the amendments in ASU 2011-02, the Company reassessed all restructurings that occurred on or after January 1, 2011 for identification as a TDR. The Company usually identified as TDRs certain receivables for which the ALLL had previously been measured under a general ALLL methodology. Upon identifying those receivables as TDRs, the Company identified them as impaired under the guidance in ASC 310-10-35. The amendments in ASU 2011-02 require prospective application of the impairment measurement guidance in ASC 310-10-35 for those receivables newly identified as impaired. At September 30, 2011, the recorded investment in receivables for which the ALLL was previously measured under a general ALLL methodology and are now considered as the TDRs under ASC 310-10-35 was $21.4 million, and the ALLL associated with those receivables, on the basis of current evaluation of loss, was $3.3 million.

92% of the TDRs as of September 30, 2011 are impaired, and $12.1 million were on non-accrual status. The remaining $34.2 million of the Company’s TDRs meet the conditions that qualify these loans as performing as of September 30, 2011.

The following table provides the information of the Company’s TDRs as of September 30, 2011:

	For the Three Months Ended September 30, 2011						For the Nine Months Ended September 30, 2011
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Real Estate:
Construction		—	$	—	$	—		—	$	—	$	—
Commercial		6		7,444		7,451		9		11,316		11,296
Commercial:
Commercial		12		9,647		9,641		19		9,935		10,006
Trade Finance		—		—		—		—		—		—
SBA		1		47		47		2		105		104
Others:
Consumer		—		—		—		—		—		—
Other		—		—		—		—		—		—
Total		19	$	17,138	$	17,139		30	$	21,356	$	21,406
	Number of Contracts		Recorded Investment				Number of Contracts		Recorded Investment
Troubled Debt Restructurings That Subsequently Defaulted
Real Estate:
Construction		—	$	—				—	$	—
Commercial		1		1,000				1		1,000
Commercial:
Commercial		2		144				4		636
Trade Finance		—		—				—		—
SBA		—		—				—		—
Others:
Consumer		—		—				—		—
Other		—		—				—		—
Total		3	$	1,144				5	$	1,636

The most of common types of modification that the Company provided for commercial real estate loans and commercial loans are interest rate reductions and loan payment adjustments. The loan payment adjustment typically involves deferment of principal payment for significant delay that increases uncertainty factor for full repayment of the loans. Generally, a nonaccrual loan that is restructured remains on nonaccrual for a period of six months to demonstrate that the borrower can meet the restructured terms. The subsequent default generally occurs when the borrower’s performance under the restructuring is not reasonably assured, and the loan is classified as a nonaccrual loan. The subsequent defaulted TDR is measured for impairment and subject to a specific or formula allowance.

13

The following table provides information on non-covered impaired loans, segregated by class of loans, as of and for the three and nine months ended September 30, 2011 and the year ended December 31, 2010, respectively:

							For the Nine Months Ended September 30, 2011				For the Three Months Ended September 30, 2011
	Recorded Investment  1)		Unpaid Principal Balance 2)		Related Allowance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(Dollars in thousands)
With no related allowance recorded:
Real Estate
Construction	$	1,268	$	1,270	$	—	$	1,322	$	—	$	1,270	$	—
Commercial - Real Estate		16,746		16,706		—		30,824		300		21,356		97
Commercial
Commercial - Business		3,783		3,758		—		6,528		198		3,889		42
Trade Finance		—		—		—		289		—		—		—
SBA		1,234		1,231		—		1,214		52		1,303		20
Others
Consumer		929		930		—		707		13		834		4
Other		—		—		—		—		—		—		—
Total	$	23,960	$	23,895	$	—	$	40,884	$	563	$	28,652	$	163
With an allowance recorded:
Real Estate
Construction	$	—	$	—	$	—	$	1,796	$	—	$	—	$	—
Commercial - Real Estate		29,789		29,611		7,591		24,516		677		31,166		278
Commercial
Commercial - Business		16,495		16,368		7,974		17,888		370		16,966		140
Trade Finance		1,241		1,215		644		1,042		29		1,260		11
SBA		304		326		283		412		12		279		—
Others
Consumer		314		314		75		703		36		481		12
Other		—		—		—		—		—		—		—
Total	$	48,143	$	47,834	$	16,567	$	46,357	$	1,124	$	50,152	$	441
Total
Real Estate
Construction	$	1,268	$	1,270	$	—	$	3,118	$	—	$	1,270	$	—
Commercial - Real Estate		46,535		46,317		7,591		55,340		977		52,522		375
Commercial
Commercial - Business		20,278		20,126		7,974		24,416		568		20,855		182
Trade Finance		1,241		1,215		644		1,331		29		1,260		11
SBA		1,538		1,557		283		1,626		64		1,582		20
Others
Consumer		1,243		1,244		75		1,410		49		1,315		16
Other		—		—		—		—		—		—		—
Total	$	72,103	$	71,729	$	16,567	$	87,241	$	1,687	$	78,804	$	604

1) Includes unpaid principal balance plus any accrued interest, net of deferred fees.

2) The unpaid principal balance is presented net of charge-offs and recoveries.

14

							For the Twelve Months Ended December 31, 2010
	Recorded Investment  1)		Unpaid Principal Balance  2)		Related Allowance		Average Recorded Investment		Interest Income Recognized
	(Dollars in thousands)
With no related allowance recorded:
Real Estate
Construction	$	3,514	$	3,501	$	—	$	2,841	$	20
Commercial - Real Estate		45,251		45,042		—		53,451		798
Commercial
Commercial - Business		10,277		10,216		—		8,746		277
Trade Finance		—		—		—		80		4
SBA		490		488		—		383		41
Others
Consumer		646		646		—		538		21
Other		—		—		—		—		—
Total	$	60,178	$	59,893	$	—	$	66,039	$	1,161
With an allowance recorded:
Real Estate
Construction	$	2,606	$	2,607	$	223	$	3,289	$	—
Commercial - Real Estate		18,263		18,137		2,126		26,981		659
Commercial
Commercial - Business		13,758		13,649		8,022		6,111		165
Trade Finance		1,219		1,199		633		915		53
SBA		1,275		1,278		310		710		57
Others
Consumer		817		814		329		637		20
Other		—		—		—		—		—
Total	$	37,938	$	37,684	$	11,643	$	38,643	$	954
Total
Real Estate
Construction	$	6,120	$	6,108	$	223	$	6,130	$	20
Commercial - Real Estate		63,514		63,179		2,126		80,432		1,457
Commercial
Commercial - Business		24,035		23,865		8,022		14,857		442
Trade Finance		1,219		1,199		633		995		57
SBA		1,765		1,766		310		1,093		98
Others
Consumer		1,463		1,460		329		1,175		41
Other		—		—		—		—		—
Total	$	98,116	$	97,577	$	11,643	$	104,682	$	2,115

1) Includes unpaid principal balance plus any accrued interest, net of deferred fees.

2) The unpaid principal balance is presented net of charge-offs and recoveries.

15

The following table provides aging information on non-covered past due loans inclusive of loans held for sale, segregated by class of loans, as of September 30, 2011 and December 31, 2010, respectively:

As of September 30, 2011	30-59 Days Past Due		60-89 Days Past Due		Non-accrual		Total Past Due and Non-accrual		Current		Total Financing Receivables 1)
	(Dollars in thousands)
Real Estate
Construction	$	—	$	—	$	1,270	$	1,270	$	8,137	$	9,407
Commercial - Real Estate		913		—		19,129		20,042		874,644		894,686
Commercial
Commercial - Business		—		263		7,275		7,538		274,173		281,711
Trade Finance		—		—		355		355		63,505		63,860
SBA		395		2,711		5,534		8,640		103,567		112,207
Others
Consumer		174		329		820		1,323		56,191		57,514
Other		—		—		—		—		50,048		50,048
Total	$	1,482	$	3,303	$	34,383	$	39,168	$	1,430,265	$	1,469,433
As of December 31, 2010	30-59 Days Past Due		60-89 Days Past Due		Non-accrual		Total Past Due and Non-accrual		Current		Total Financing Receivables 1)
	(Dollars in thousands)
Real Estate
Construction	$	—	$	—	$	6,108	$	6,108	$	8,695	$	14,803
Commercial - Real Estate		4,569		5,023		29,167		38,759		875,244		914,003
Commercial
Commercial - Business		291		1,018		5,696		7,005		308,280		315,285
Trade Finance		254		28		—		282		70,892		71,174
SBA		1,383		1,074		3,896		6,353		95,330		101,683
Others
Consumer		386		177		651		1,214		70,065		71,279
Other		—		—		—		—		40,039		40,039
Total	$	6,883	$	7,320	$	45,518	$	59,721	$	1,468,545	$	1,528,266

1) Balances represent unpaid principal balance, which approximates recorded investment.

The Company utilizes a risk grading matrix to assign a risk grade to its loan portfolio. The Company categorizes 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. Loans, excluding homogeneous loans, are individually analyzed by classifying loans as to credit risk and are graded on a scale of 1 to 7 at least on a quarterly basis. A description of the general characteristics of the seven risk grades is as follows:

Grade 1 - This grade includes loans secured by cash or listed securities. The borrowers generally have significant capital strength with unquestionable ability to service the debt.

Grades 2 and 3 - These grades include “pass grade” loans to borrowers of solid or acceptable credit quality and risk. The borrowers generally have sufficient capital strength with highly reliable or adequate primary source of repayment.

Grade 3A - This grade includes loans on management’s “watch list” and is intended to be utilized on a temporary basis for pass grade borrowers. The borrowers generally experiencing a temporary setback and may have weakening primary source of repayment.

Grade 4 - This grade is for “Special Mention” in accordance with regulatory guidelines. This grade includes borrowers that require close credit monitoring. The borrowers generally have inconclusive earnings histories and access to alternate sources of financing are limited.

Grade 5 - This grade includes “Substandard” loans in accordance with regulatory guidelines. The borrowers typically have well-defined weaknesses with possibility of payment default or some loss if the weakness is not corrected.

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Grade 6 - This grade includes “Doubtful” loans in accordance with regulatory guidelines. Such loans are placed on non-accrual status and the liquidation of collateral in full is highly questionable or improbable.

Grade 7 - This grade includes “Loss” loans in accordance with regulatory guidelines. Such loans are deemed uncollectible and are to be charged off or charged down. This classification is not intended to imply that the loan or some portion of it will never be paid.

The following table presents the credit risk profile of non-covered loans exclusive of loans held for sale, segregated by class of loans, as of September 30, 2011 and December 31, 2010, respectively:

	As of September 30, 2011
	Grade 1 - 3A		Grade 4		Grade 5		Grade 6		Total
	(Dollars in thousands)
Non-covered loans 1)
Real estate
Construction	$	7,132	$	—	$	2,275	$	—	$	9,407
Commercial - Real Estate		781,775		45,540		62,396		—		889,711
Commercial
Commercial - Business		227,242		17,059		37,394		16		281,711
Trade Finance		62,136		467		1,257		—		63,860
SBA		45,947		786		3,841		—		50,574
Others
Consumer		54,324		—		3,190		—		57,514
Other		50,048		—		—		—		50,048
Total	$	1,228,604	$	63,852	$	110,353	$	16	$	1,402,825
	As of December 31, 2010
	Grade 1 - 3A		Grade 4		Grade 5		Grade 6		Total
	(Dollars in thousands)
Non-covered loans 1)
Real estate
Construction	$	7,689	$	—	$	7,114	$	—	$	14,803
Commercial - Real Estate		780,479		47,873		71,498		341		900,191
Commercial
Commercial - Business		255,828		18,759		40,080		618		315,285
Trade Finance		68,598		1,100		1,476		—		71,174
SBA		49,416		880		4,956		9		55,261
Others
Consumer		69,598		—		1,681		—		71,279
Other		40,039		—		—		—		40,039
Total	$	1,271,647	$	68,612	$	126,805	$	968	$	1,468,032

1) Balances represent unpaid principal balance, which approximates recorded investment.

The Company’s allowance for loan loss methodologies incorporate a variety of risk considerations, both quantitative and qualitative, in establishing an allowance for loan losses that management believes is appropriate at each reporting date. Quantitative factors include the Company’s historical loss experience, delinquency and charge-off trends, collateral values, changes in nonperforming loans, and other factors. Quantitative factors also incorporate known information about individual loans, including borrowers’ sensitivity to interest rate movements and to quantifiable external factors including commodity and finished good prices as well as acts of nature (earthquakes, floods, fires, etc.) that occur in a particular period. Qualitative factors include the general economic environment in the Company’s markets and, in particular, the state of certain industries. Size and complexity of individual credits, loan structure, extent and nature of waivers of existing loan policies and pace of portfolio growth are other qualitative factors that are considered in its methodologies. As the Company adds new products, increases the complexity of the loan portfolio, and expands its geographic coverage, the Company will enhance the methodologies to keep pace with the size and complexity of the loan portfolio. Changes in any of the above factors could have significant impact to the allowance for loan loss calculation. The Company believes that its methodologies continue to be appropriate given its size and level of complexity.

The allowance for loan losses reflects management’s judgment of the level of allowance adequate to provide for probable losses inherent in the loan portfolio as of the date of the consolidated statements of financial condition. On a quarterly basis, the Company

17

assesses the overall adequacy of the allowance for loan losses, utilizing a disciplined and systematic approach which includes the application of a specific allowance for identified problem loans, a formula allowance for identified graded loans and an allocated allowance for large groups of smaller balance homogenous loans.

Allowance for Specifically Identified Problem Loans. A specific allowance is established for impaired loans. A loan is impaired when, based on current information and events, it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement. The specific allowance is determined based on the present value of expected future cash flows discounted at the loan’s effective interest rate, except that as a practical expedient, the Company may measure impairment based on a loan’s observable market price, or the fair value of the collateral if the loan is collateral dependent. The Company measures impairment based on the fair value of the collateral, adjusted for the cost related to liquidation of the collateral.

Formula Allowance for Identified Graded Loans. Non-homogenous loans such as commercial real estate, construction, commercial business, trade finance and SBA loans that are not subject to the allowance for specifically identified loans discussed above are not reviewed individually and are subject to a formula allowance. The formula allowance is calculated by applying loss factors to outstanding Pass, Special Mention, Substandard and Doubtful loans. The evaluation of the inherent loss for these loans involves a high degree of uncertainty, subjectivity and judgment because probable loan losses are not identified with a specific loan. In determining the formula allowance, the Company relies on a mathematical calculation that incorporates a six-quarter rolling average of historical losses, which has been adjusted from the twelve quarter analysis used historically. The Company started using the six-quarter rolling average beginning in the fourth quarter of 2008 instead of the twelve-quarter rolling average that the Company had historically been applying. Current quarter losses are measured against previous quarter loan balances to develop the loss factor. Loans risk rated Pass, Special Mention and Substandard for the most recent three quarters are adjusted to an annual basis as follows:

• the most recent quarter is weighted 4/1;

• the second most recent is weighted 4/2;

• the third most recent is weighted 4/3.

The formula allowance may be further adjusted to account for the following qualitative factors:

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

• Changes in the quality of the Company’s loan review system and the degree of oversight by the directors;

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

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

Allowance for Large Groups of Smaller Balance Homogenous Loans. The portion of the allowance allocated to large groups of smaller balance homogenous loans is focused on loss experience for the pool rather than on an analysis of individual loans. Large groups of smaller balance homogenous loans mainly consist of consumer loans to individuals. The allowance for groups of performing loans is based on historical losses over a six-quarter period. In determining the level of allowance for delinquent groups of loans, the Company classifies groups of homogenous loans based on the number of days delinquent and other qualitative factors and trends.

Allowance for Loans held for sale. No allowance is established for loans held for sale.

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8. NON-COVERED OTHER REAL ESTATE OWNED (OREO)

The Company had three non-covered OREO properties valued at $947,000 as of September 30, 2011. The changes in non-covered other real estate owned for the three and nine months ended September 30, 2011 and 2010 are as follows:

	Three months ended September 30,						Nine months ended September 30,
	2011			2010			2011			2010
	(Dollars in thousands)
Balance at beginning of period	$	133		$	2,778		$	937		$	4,278
Acquisition due to foreclosures at fair value		2,519			3,300			2,634			4,560
Disposition due to sales		(576	)		(1,530	)		(1,458	)		(3,195	)
Valuation Adjustment subsequent to foreclosures		(361	)		—			(398	)		(994	)
Transfer to other receivable		(768	)		—			(768	)		(101	)
Balance at end of period	$	947		$	4,548		$	947		$	4,548

9. COVERED ASSETS AND FDIC LOSS SHARE RECEIVABLE

Covered Loans

Loans acquired in an FDIC-assisted acquisition that are subject to a loss sharing agreement are referred to as “covered loans” and reported separately in the interim consolidated statements of financial condition. Covered loans are reported exclusive of the expected cash flow reimbursements expected from the FDIC.

Acquired loans are valued as of the acquisition date in accordance with FASB ASC 805, Business Combinations. Loans purchased with evidence of credit deterioration since origination for which it is probable that all contractually required payments will not be collected are accounted for under FASB ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality. In addition, because of the significant discounts associated with the acquired portfolios, the Company elected to account for all of the acquired loans, with the exception of a small population of loans, under ASC 310-30 in the amount of $125.2 million at acquisition. Certain cash secured loans and overdrafts in the amount of $0.9 million were not accounted for under ASC 310-30. Under ASC 805 and ASC 310-30, loans are recorded at fair value at the acquisition date, factoring in credit losses expected to be incurred over the life of the loan. Accordingly, an allowance for loan losses is not carried over or recorded as of the acquisition date.

If credit deterioration is experienced subsequent to the initial acquisition fair value amount, such deterioration of the expected cash flows will be measured, and a provision for loan losses will be charged to earnings. The effect of the provision for loan losses on covered loans will be offset, to the extent of the 80% loss share, by an increase to the FDIC loss share receivable. Any increase in the FDIC loss share receivable will be recognized in non-interest income. During the nine months ended September 30, 2011, no additional provision for loan losses has been required related to the covered loan portfolio.

The outstanding principal balance of covered loans, excluding fair value adjustments, as of September 30, 2011 and December 31, 2010 was $117.7 million and $147.6 million, respectively. The following table presents covered loans inclusive of fair value adjustment, segregated by class of loans, as of September 30, 2011 and December 31, 2010:

	September 30, 2011		December 31, 2010
	(Dollars in thousands)
Commercial - Real Estate	$	51,705	$	63,500
Commercial - Business		14,100		18,307
SBA		27,300		35,000
Other		486		486
Total covered loans		93,591		117,293
Less:
ALLL due to decrease in expected cash flows		1,010		1,010
Net covered loans	$	92,581	$	116,283

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The following table presents the outstanding principal balance and related fair value adjustments of covered loans, segregated by class of loans, as of September 30, 2011 and December 31, 2010:

	September 30, 2011						December 31, 2010
	Amount			Percent of Total			Amount			Percent of Total
	(Dollars in thousands)
Real Estate:
Construction	$	—			—	%	$	—			—	%
Commercial - Real Estate		60,234			51.1			74,193			50.3
Commercial:
Commercial - Business		15,490			13.2			20,277			13.7
Trade Finance		—			—			—			—
SBA		41,508			35.3			52,681			35.7
Others:
Consumer		486			0.4			489			0.3
Gross Covered Loans		117,718			100.0			147,640			100.0
Covered loans discount		(24,101	)					(30,344	)
Total Covered Loans		93,617						117,296
Less:
Allowance for loan losses		1,010						1,010
Net deferred loan fees		26						3
Net Covered Loans	$	92,581					$	116,283

In estimating the fair value of the covered loans at the acquisition date, the Company (i) calculated the contractual amount and timing of undiscounted principal and interest payments and (ii) estimated the amount and timing of undiscounted expected principal and interest payments. The difference between these two amounts represents the nonaccretable difference.

On the acquisition date, the amount by which the undiscounted expected cash flows exceed the estimated fair value of the acquired loans is the “accretable yield”. The accretable yield is then measured at each financial reporting date and represents the difference between the remaining undiscounted expected cash flows and the current carrying value of the loans. The accretable yield will change from period to period due to the followings:

• Estimates of the remaining life of acquired loans will affect the amount of future interest income.

• Indices for variable rates of interest on acquired loans may change.

• Estimates of the amount of the contractual principal and interest that will not be collected (nonaccretable difference) may change.

During the first nine months of 2011, there was no change in the estimate of contractual principal and interest that will ultimately be collectible.

The following table presents the carrying amounts for the covered loans as of September 30, 2011 and December 31, 2010, respectively:

	September 30, 2011			December 31, 2010
	(Dollars in thousands)
Undiscounted contractual cash flows	$	133,101		$	165,355
Nonaccretable difference		(28,553	)		(36,107	)
Undiscounted cash flows expected to be collected		104,548			129,248
Accretable difference		(12,393	)		(13,880	)
Covered loans under ASC 310-30		92,155			115,368
Covered loans excluded from ASC 310-30		426			915
Total covered loans	$	92,581		$	116,283

20

Changes in the carrying amount of covered loans and the accretable yield were as follows for the three and nine months ended September 30, 2011 and 2010:

	Three months ended September 30, 2011						Nine months ended September 30, 2011
	Carrying amount of Loans			Accretable Yield			Carrying amount of Loans			Accretable Yield
	(Dollars in thousands)
Balance at beginning of period	$	101,597		$	12,453		$	116,283		$	13,880
Acquisition		—			—			—			—
Accretion		1,561			(1,561	)		5,305			(5,305	)
Net payments received		(10,102	)		—			(27,627	)		—
Increase in expected cash flows		—			1,501			—			3,818
Transfer to OREO		(475	)		—			(1,380	)		—
Balance at end of period	$	92,581		$	12,393		$	92,581		$	12,393
	Three months ended September 30, 2010						Nine months ended September 30, 2010
	Carrying amount of Loans			Accretable Yield			Carrying amount of Loans			Accretable Yield
	(Dollars in thousands)						(Dollars in thousands)
Balance at beginning of period	$	122,362		$	18,503		$	—		$	—
Acquisition		—			—			126,167			20,412
Accretion		2,207			(2,207	)		4,116			(4,116	)
Net payments received		(11,783	)		—			(15,937	)		—
Increase in expected cash flows		—			—			—			—
Transfer to OREO		(112	)		—			(1,672	)		—
Balance at end of period	$	112,674		$	16,296		$	112,674		$	16,296

Net payment received includes all cash receipts related to the covered loans, net of the disbursements that are required to repurchase the participation sold portion of the SBA loans prior to collecting this guaranteed balance from the SBA.

Credit Quality Indicators—The covered loans acquired are and will continue to be subject to the Bank’s internal and external credit review and monitoring. The covered loans have the same credit quality indicators as the non-covered loans, to enable the monitoring of the borrower’s credit and the likelihood of repayment.

Loans are risk rated based on analysis of the current state of the borrower’s credit quality. The analysis of credit quality includes review of all sources of repayment, the borrower’s current financial and liquidity status and all other relevant information. The Company utilizes a seven-grade risk rating system, where a higher grade represents a higher level of credit risk. The seven-grade risk rating system can be generally classified by the following categories: Pass or Watch (Grade 1-3A), Special Mention (Grade 4), Substandard (Grade 5), Doubtful and Loss (Grade 6-7). The risk ratings reflect the relative strength of the sources of repayment. A detailed description of this risk grading matrix is included in Note 7 above concerning non-covered loans.

21

The following table presents the credit risk profile of covered loans, by class of loans, as of dates indicated:

	As of September 30, 2011
	Grade 1 - 3A		Grade 4		Grade 5		Grade 6		Grade 7		Total
	(Dollars in thousands)
Covered loans 1)
Real estate
Construction	$	—	$	—	$	—	$	—	$	—	$	—
Commercial - Real Estate		30,769		6,655		14,301		—		—		51,725
Commercial
Commercial - Business		8,148		1,250		4,691		17		—		14,106
Trade Finance		—		—		—		—		—		—
SBA		19,456		150		6,992		89		613		27,300
Others
Consumer		486		—		—		—		—		486
Other		—		—		—		—		—		—
Total Covered Loans	$	58,859	$	8,055	$	25,984	$	106	$	613	$	93,617
	As of December 31, 2010
	Grade 1 - 3A		Grade 4		Grade 5		Grade 6		Grade 7		Total
	(Dollars in thousands)
Covered loans 1)
Real estate
Construction	$	—	$	—	$	—	$	—	$	—	$	—
Commercial - Real Estate		42,372		7,317		13,574		235		—		63,498
Commercial
Commercial - Business		12,856		1,828		3,422		206		—		18,312
Trade Finance		—		—		—		—		—		—
SBA		28,412		266		4,902		399		1,021		35,000
Others
Consumer		486		—		—		—		—		486
Other		—		—		—		—		—		—
Total Covered Loans	$	84,126	$	9,411	$	21,898	$	840	$	1,021	$	117,296

1) Balances represent unpaid principal balance, net of discount, and exclude accrued interest.

Covered Nonperforming Assets

Covered nonperforming assets totaled $20.1 million as of September 30, 2011 compared to $26.3 million as of December 31, 2010. These covered nonperforming assets are subject to a loss sharing agreement with the FDIC. The covered nonperforming assets as of September 30, 2011 and December 31, 2010 are as follows:

	September 30, 2011		December 31, 2010
	(Dollars in thousands)
Covered loans on non-accrual status	$	19,069	$	24,874
Covered other real estate owned		1,028		1,459
Total covered nonperforming assets	$	20,097	$	26,333

Loans accounted for under ASC 310-30 are generally considered accruing and performing loans as the loans accrete the accretable discount to interest income over the estimated 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 and performing loans. The loans may be classified as nonaccrual if the timing and amount of future cash flows is not reasonably estimable.

Covered OREO

All OREO acquired in FDIC-assisted acquisitions that are subject to a FDIC loss sharing agreement is referred to as “covered OREO” and reported separately in the interim consolidated statements of financial condition. Covered OREO is reported exclusive of expected reimbursement cash flows from the FDIC. Foreclosed covered loan collateral is transferred into covered OREO at the loan’s fair value, inclusive of the acquisition date fair value discount.

22

Covered OREO was initially recorded at its estimated fair value on the acquisition date based on similar market comparable valuations less estimated selling costs. Any subsequent valuation adjustments due to declines in fair value will be charged to non-interest expense, and will be offset, in part, by non-interest income representing the corresponding increase to the FDIC loss share receivable. Any recoveries of previous valuation adjustments will be credited to non-interest expense with a corresponding charge to non-interest income for the portion of the recovery that is due to the FDIC.

The activities related to the covered OREO for the three and nine months ended September 30, 2011 and 2010, respectively, are as follows:

	Three months ended September 30,						Nine months ended September 30,
	2011			2010			2011			2010
	(Dollars in thousands)
Balance at beginning of period	$	1,132		$	1,560		$	1,459		$	—
Acquisition		—			—			—			1,942
Additions to covered OREO		475			112			1,380			1,672
Fair value adjustment during the period		(67	)		—			(663	)		—
Dispositions of covered OREO		(512	)		(213	)		(1,148	)		(2,155	)
Balance at end of period	$	1,028		$	1,459		$	1,028		$	1,459

FDIC Loss Share Receivable

The Company has elected to account for amounts receivable under the loss sharing agreement with the FDIC as an FDIC loss share receivable in accordance with FASB ASC 805, Business Combinations. The FDIC loss share receivable was initially recorded at fair value, based on the discounted value of expected future cash flows under the loss sharing agreement. The difference between the present value and the undiscounted cash flows the Company expects to collect from the FDIC will be accreted into non-interest income over the life of the FDIC loss share receivable.

The FDIC loss share receivable is reviewed quarterly and adjusted for any changes in expected cash flows based on recent performance and expectations for future performance of the covered assets. These adjustments are measured on the same basis as the related covered loans and covered other real estate owned. Any increases in the cash flows of the covered assets over those expected will reduce the FDIC loss share receivable and any decreases in cash flows of the covered assets under those expected will increase the FDIC loss share receivable. Increases and decreases to the FDIC loss share receivable are recorded as adjustments to non-interest income.

The FDIC loss share receivable was determined to be $25.3 million at the acquisition date. Changes in the FDIC loss share receivable for the three and nine months ended September 30, 2011 and 2010, respectively, are as follows:

	Three months ended September 30,						Nine months ended September 30,
	2011			2010			2011			2010
	(Dollars in thousands)
Balance at beginning of period	$	21,964		$	25,300		$	23,991		$	—
Acquisition		—			—			—			25,300
Payment received from FDIC		(4,769	)		(1,753	)		(6,960	)		(1,753	)
Accretion		308			105			472			105
Balance at end of period	$	17,503		$	23,652		$	17,503		$	23,652

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10. OTHER INTANGIBLE ASSETS

In April 2010, the Company recorded a core deposit intangible of $510,000 for the acquisition of Innovative Bank. The Company amortizes premiums on acquired deposits over the estimated useful life. The Company’s amortization expense for core deposit intangible was $16,000 and $46,000 for the three and nine months ended September 30, 2011, respectively, resulting in a core deposit intangible net of amortization of $418,000 as of September 30, 2011. Estimated amortization expense for five succeeding fiscal years is as follows:

Year	Amount
	(Dollars in thousands)
2011 (remaining 3 months)	$	16
2012		62
2013		62
2014		62
2015		62
2016 and thereafter		154
Total	$	418

11. OTHER BORROWED FUNDS

The Company borrows funds from the Federal Home Loan Bank of San Francisco (“FHLB”) and the Treasury, Tax, and Loan Investment Program. Other borrowed funds totaled $132.1 million and $188.7 million as of September 30, 2011 and December 31, 2010, respectively. Interest expense on other borrowed funds was $1.6 million and $4.7 million for the three and nine months ended September 30, 2011, respectively, reflecting average interest rates of 4.18% and 3.86%, compared to $1.7 million and $5.0 million with average interest rates of 4.08% and 4.02%, respectively, for the same periods in 2010. The following table represents the composition of other borrowed funds as of dates indicated:

	September 30, 2011		December 31, 2010
	(Dollars in thousands)
FHLB	$	131,385	$	167,213
US Treasury		745		963
Secured financing - SBA loan transfer		—		20,494
Total other borrowed funds	$	132,130	$	188,670

As of September 30, 2011, the Company had outstanding borrowings of $131.4 million from the FHLB with original maturity terms ranging from 4 years to 15 years. Advances of 10-year and 15-year terms are amortizing at predetermined schedules over the life of the advances. Of the $131.4 million outstanding, $120.0 million is composed of five fixed rate term advances, each with an option to be called by the FHLB after the original lockout dates varying from 6 months to 2 years. If market interest rates are higher than the advances’ stated rates at that time, the advances will be called by the FHLB and the Bank will be required to repay the FHLB. If market interest rates are lower after the lockout period, then the advances will not be called by the FHLB. If the fixed rate term advances are not called by the FHLB, they will mature at maturity dates ranging from 5 years to 10 years. The Company may repay the advances with a prepayment penalty at any time. If the advances are called by the FHLB, there is no prepayment penalty.

The Company has pledged, under a blanket lien, all qualifying commercial and residential loans as collateral under the borrowing agreement with the FHLB, with a total carrying value of $849.4 million as of September 30, 2011 as compared to $828.0 million as of December 31, 2010.

Subject to the right of the FHLB to require early repayment of the borrowings discussed above, FHLB advances outstanding, with an average interest rate of 4.45%, as of September 30, 2011, mature as follows:

Year	Amount
	(Dollars in thousands)
2011 (remaining 3 months)	$	5,195
2012		105,389
2013		157
2014		167
2015		176
2016 and thereafter		20,301
Total	$	131,385

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Borrowings obtained from the Treasury Tax and Loan Investment Program mature within a month from the transaction date. Under the program, the Company receives funds from the U.S. Treasury Department in the form of open-ended notes, up to a total of $2.2 million. The Company has pledged U.S. government agencies and/or mortgage-backed securities with a total carrying value of $1.2 million as of September 30, 2011, as collateral to participate in the program as compared to $1.5 million as of December 31, 2010. The total borrowed amount under the program, outstanding as of September 30, 2011 and December 31, 2010 was $745,000 and $963,000, respectively.

As of December 31, 2010, the Company had SBA loans transferred of $20.5 million which were accounted for as a secured financing pursuant to ASC 860, Transfers and Servicing. At that time, SBA loan transfers were subject to a 90-day recourse provision and, therefore, were not considered sold until the recourse period expired. However, during the first quarter of 2011, SBA removed the recourse provision from the standard transfer agreement. As such, all of the SBA loan transfers executed are qualified as sales, thus, are not accounted for as secured financing from 2011.

12. LONG-TERM SUBORDINATED DEBENTURES

Center Capital Trust I is a Delaware business trust formed by the Company for the sole purpose of issuing trust preferred securities fully and unconditionally guaranteed by the Company. During the fourth quarter of 2003, Center Capital Trust I issued 18,000 Capital Trust Preferred Securities (“TP Securities”), with liquidation value of $1,000 per security, for gross proceeds of $18,000,000. The entire proceeds of the issuance were invested by Center Capital Trust I in $18,000,000 of Junior Long-term Subordinated Debentures (the “Subordinated Debentures”) issued by the Company, with identical maturity, repricing and payment terms as the TP Securities. The Subordinated Debentures represent the sole assets of Center Capital Trust I. The Subordinated Debentures mature on January 7, 2034, with interest based on 3-month LIBOR plus 2.85%, with repricing and payments due quarterly in arrears on January 7, April 7, July 7, and October 7 of each year commencing April 7, 2004. The Subordinated Debentures are redeemable by the Company on any January 7, April 7, July 7, and October 7 on or after April 7, 2009 at the Redemption Price. Redemption Price means 100% of the principal amount of Subordinated Debentures being redeemed plus accrued and unpaid interest on such Subordinated Debentures to the Redemption Date, or in case of redemption due to the occurrence of a Special Event, to the Special Redemption Date if such Redemption Date is on or after April 7, 2009. The TP Securities are subject to mandatory redemption to the extent of any early redemption of the Subordinated Debentures and upon maturity of the Subordinated Debentures on January 7, 2034.

Holders of the TP Securities are entitled to a cumulative cash distribution on the liquidation amount of $1,000 per security at a current rate per annum of 3.10%. Interest rate defined as per annum rate of interest, resets quarterly, equal to LIBOR immediately preceding each interest payment date (January 7, April 7, July 7, and October 7 of each year) plus 2.85%.

The distributions on the TP Securities are treated as interest expense in the consolidated statements of operations. The Company has the option to defer payment of the distributions for a period of up to five years, as long as the Company is not in default on the payment of interest on the Subordinated Debentures. The TP Securities issued in the offering were sold in private transactions pursuant to an exemption from registration under the Securities Act of 1933, as amended. The Company has guaranteed, on a subordinated basis, distributions and other payments due on the TP Securities.

The FRB has adopted a final rule that allows the continued inclusion of trust-preferred securities in the Tier I capital of bank holding companies, provided that the aggregate amount of trust preferred securities and certain other capital elements cannot exceed 25% of Tier I capital elements. In addition, since the Company had less than $15 billion in assets as of December 31, 2009, under the Dodd-Frank Act, the Company will be able to include its existing TP Securities in Tier 1 capital to the extent permitted by FRB guidelines. As of September 30, 2011, trust preferred securities comprised 5.84% of the Company’s Tier I capital.

Center Capital Trust I is not reported on a consolidated basis in accordance with ASC 810, Consolidation. Therefore, the capital securities of $18,000,000 do not appear on the interim consolidated statements of financial condition. Instead, the long-term subordinated debentures of $18,557,000 payable by Center Financial to the Center Capital Trust I and the investment in the Center Capital Trust I’s common stock of $557,000 (included in other assets) are separately reported.

13. COMMITMENTS AND CONTINGENCIES

Off-Balance-Sheet Risk

The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, commercial letters of credit, standby letters of credit and performance bonds. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheets.

The Company’s exposure to credit loss is represented by the contractual notional amount of these instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

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Commitments to extend credit are agreements to lend to a customer provided there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since certain of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of the collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the borrower.

Commercial letters of credit, standby letters of credit, and performance bonds are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in making loans to customers. The Company generally holds collateral supporting those commitments if deemed necessary.

A summary of the notional amounts of the Company’s financial instruments relating to extension of credit with off-balance-sheet risk as of September 30, 2011 and December 31, 2010 is as follows:

	September 30, 2011		December 31, 2010
	(Dollars in thousands)
Loans	$	213,192	$	158,828
Standby letters of credit		17,497		27,931
Commercial letters of credit		21,288		30,341
Performance bonds		301		222

Liabilities for losses on outstanding commitments of $245,000 and $244,000, respectively, were reported separately in other liabilities as of September 30, 2011 and December 31, 2010.

Litigation

From time to time, the Company is a party to claims and legal proceedings arising in the ordinary course of business. After taking into consideration information furnished by counsel as to the current status of these claims and proceedings, management does not believe that the aggregate potential liability resulting from such proceedings would have a material adverse effect on the Company’s financial condition or results of operations.

On May 2, 2011, a purported class action was filed in Los Angeles County Superior Court against the Company, the Company’s directors and Nara Bancorp alleging, among other things, that the directors breached their fiduciary duties in connection with their approval of the proposed merger with Nara Bancorp and that the Company breached its fiduciary duties in connection with the disclosures it made regarding the proposed merger. On July 29, 2011, the parties to the litigation agreed to settle all claims asserted in the action, subject to, among other things, the execution of a stipulation of settlement and court approval. As part of the settlement, Nara Bancorp and the Company agreed to make certain supplemental disclosures included in an amendment to the registration statement for the Nara Bancorp shares to be issued at the completion of the merger. In addition, defendants have agreed to pay up to $400,000 in plaintiff’s attorneys’ fees and expenses, if and to the extent approved by the court. The court hearing on the proposed settlement is scheduled on November 16, 2011. Such payment would be due only if the merger is consummated and be payable by the combined company. If approved by the court, the settlement also would result in the release by the plaintiff and the proposed settlement class of all claims that were or could have been brought challenging any aspect of the merger agreement, the merger and any disclosures made in connection therewith (but excluding any properly perfected claims for statutory appraisal in connection with the merger, certain claims arising under the federal securities laws and any claims to enforce the settlement).

14. STOCK-BASED COMPENSATION

The Company has a Stock Incentive Plan which was adopted by the Board of Directors in April 2006, approved by the shareholders in May 2006, and amended by the Board in June 2007 (the “2006 Plan”). 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 2006 Plan replaced the Company’s former stock option plan (the “1996 Plan”) which expired in February 2006, and all options under the 1996 Plan which were outstanding on April 12, 2006 were transferred to and made part of the 2006 Plan. The option prices of all options granted under the 2006 Plan (including options transferred from the 1996 Plan) must be not less than 100% of the fair market value at the date of grant. Options granted generally vest at the rate of 20% per year. All options not exercised generally expire ten years after the date of grant. Vesting of restricted stock awards (“RSAs”) is discretionary with the Board of Directors or the Compensation Committee, but awards granted to date generally vest at the rate of 50% on the third anniversary of the grant date and 25% per year for the next two years. Certain RSAs were granted to a director in 2011 with immediate vesting as part of special compensation in connection with the proposed merger with Nara Bancorp. In addition, RSAs granted to our Chief Executive Officer will vest at earlier of the closing of the proposed merger with Nara Bancorp or December 31, 2011, provided that he remains employed with the Company until such date. RSAs granted to senior executive officers are also subject to restrictions on transfer even after vesting for as long as the Company has preferred stock outstanding to the U.S. Treasury Department pursuant to the TARP Capital Purchase Program.

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The Company’s pre-tax stock-based compensation expense for employees and directors was $139,000 and $416,000 ($130,000 and $390,000 after tax effect of non-qualified stock options) for the three and nine months ended September 30, 2011, respectively, as compared to $105,000 and $553,000 ($97,000 and $443,000 after tax effect of non-qualified stock options) for the same periods in 2010, respectively.

Stock Option Awards

The fair value of the stock options granted was estimated on the date of grant using the Black-Scholes option valuation model that uses the assumptions including risk-free interest rate, expected life, expected volatility and expected dividend yield. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant. Beginning in 2006, the expected life (estimated period of time outstanding) of options granted with a 10-year term was determined using the average of the vesting period and term. Expected volatility was based on historical volatility for a period equal to the stock option’s expected life, ending on the day of grant, and calculated on a weekly basis. These assumptions are utilized in the calculation of the compensation expenses. The expenses are the result of previously granted stock options and restricted stocks and those awarded, if any, during the three and nine months ended September 30, 2011 and 2010, respectively. No stock options were granted during the nine months ended September 30, 2011 and 2010.

A summary of the Company’s stock option activity and related information for the three and nine months ended September 30, 2011 and 2010 is set forth in the following table:

			Outstanding Options
	Shares Available For Grant		Number of Shares			Weighted Average Exercise Price
Three months ended September 30, 2011 and 2010
Balance at June 30, 2011		2,443,513		583,344		$	16.01
Options granted		—		—			—
Options forfeited		—		—			—
Options exercised		—		(7,192	)		5.26
Balance at September 30, 2011		2,443,513		576,152			16.14
Balance at June 30, 2010		2,298,917		727,940		$	16.92
Options granted		—		—			—
Options forfeited		10,800		(10,800	)		15.21
Options exercised		—		—			—
Balance at September 30, 2010		2,309,717		717,140			16.95
Nine months ended September 30, 2011 and 2010
Balance at December 31, 2010		2,335,013		691,844		$	16.95
Options granted		—		—			—
Options forfeited		108,500		(108,500	)		22.04
Options exercised		—		(7,192	)		5.26
Balance at September 30, 2011		2,443,513		576,152			16.14
Balance at December 31, 2009		2,266,612		760,245		$	16.93
Options granted		—		—			—
Options forfeited		43,105		(43,105	)		16.59
Options exercised		—		—			—
Balance at September 30, 2010		2,309,717		717,140			16.95

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The stock options as of September 30, 2011 and 2010, respectively, have been segregated into three ranges for additional disclosure as follows:

	Options Outstanding						Options Exercisable
Range of Exercise Prices	Options Outstanding		Weighted- Average Remaining Contractual Life in Years		Weighted- Average Exercise Price		Options Exercisable		Weighted- Average Remaining Contractual Life in Years		Weighted- Average Exercise Price
$ 2.59 - $ 8.00		45,552		5.10	$	4.98		34,219		4.30	$	5.09
$ 8.01 - $ 20.00		449,600		5.19		16.05		407,100		5.12		16.07
$ 20.01 - $ 25.10		81,000		4.93		22.94		70,700		4.86		23.02
As of September 30, 2011		576,152		5.14		16.14		512,019		5.03		16.29
$ 3.34 - $ 8.00		52,745		5.38	$	5.02		32,078		3.38	$	5.23
$ 8.01 - $ 20.00		478,395		6.15		16.08		387,017		6.01		16.07
$ 20.01 - $ 25.10		186,000		6.08		22.56		162,900		6.07		22.56
As of September 30, 2010		717,140		6.08		16.95		581,995		5.88		17.29

The aggregate intrinsic value of options outstanding and options exercisable as of September 30, 2011 was $2,000 and $1,000 compared to $12,000 and $4,000 as of September 30, 2010, respectively. The aggregate intrinsic value represents the difference between the Company’s closing stock price on the last trading day of the period, which was $4.69 and $5.09 as of September 30, 2011 and 2010, respectively, and the exercise price multiplied by the number of options outstanding. 7,192 options were exercised during the three and nine months ended September 30, 2011 while no options were exercised during the same periods in 2010. Total fair value of vested options was $3.2 million and $1.1 million as of September 30, 2011 and 2010, respectively. The number of options that were not vested as of September 30, 2011 and 2010 was 64,133 and 135,145, respectively.

As of September 30, 2011 and 2010, the Company had approximately $385,000 and $523,000 of unrecognized compensation costs related to unvested options, respectively, which are expected to be recognized over a weighted average period of 0.77 years and 1.80 years, respectively.

Restricted Stock Awards

Restricted stock activity under the 2006 Plan as of and changes during the three and nine months ended September 30, 2011 and 2010 are as follows:

	Three Months Ended September 30, 2011					Nine Months Ended September 30, 2011
	Number of Shares			Weighted-Average Grant-Date Fair Value per Share		Number of Shares			Weighted-Average Grant-Date Fair Value per Share
Restricted Stock:
Nonvested, beginning of period		52,349		$	5.91		76,809		$	5.77
Granted		—			—		28,079			7.61
Vested		—			—		(22,088	)		8.26
Cancelled and forfeited		(900	)		5.68		(31,351	)		5.42
Nonvested, at end of period		51,449			5.92		51,449			5.92
	Three Months Ended September 30, 2010					Nine Months Ended September 30, 2010
	Number of Shares			Weighted-Average Grant-Date Fair Value per Share		Number of Shares			Weighted-Average Grant-Date Fair Value per Share
Restricted Stock:
Nonvested, beginning of period		57,309		$	5.83		10,050		$	13.59
Granted		8,700			5.50		59,609			5.13
Vested		—			—		(2,950	)		17.00
Cancelled and forfeited		(225	)		11.43		(925	)		14.29
Nonvested, at end of period		65,784			5.76		65,784			5.76

The Company recorded compensation cost of $39,000 and $117,000, respectively, related to the restricted stock granted under the 2006 Plan for the three and nine months ended September 30, 2011 as compared to $20,000 and $62,000, respectively, for the same periods in 2010. As of September 30, 2011 and 2010, the Company had approximately $304,000 and $196,000 of unrecognized compensation costs related to unvested restricted stock, respectively. The costs are expected to be recognized over a weighted-average period of 2.74 years and 2.15 years as of September 30, 2011 and 2010, respectively.

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15. COMMON AND PREFERRED STOCK CASH DIVIDENDS

In March 2009, the Company’s board of directors suspended its quarterly cash dividends on the Company’s common stock based on adverse economic conditions and the Company’s then recent losses. The board of directors determined that this is a prudent, safe and sound practice to preserve capital, and does not expect to resume the payment of cash dividends in the foreseeable future. Unless the preferred stock issued to the Treasury Department in the TARP Capital Purchase Program has been redeemed, the Company will not be permitted to resume paying cash dividends without the consent of the Treasury Department until December 2011. In addition, the Bank and the Company had each entered into informal regulatory agreements with the respective regulatory agency or agencies, pursuant to which both the Bank and the Company must obtain prior regulatory approval to pay dividends. The Bank’s MOU with the FDIC and the DFI and the Company’s MOU with the FRB were lifted in September 2011 and October 2011, respectively.

The Company paid a preferred stock dividend of $688,000 on August 15, 2011 and accrued for the preferred stock dividends of $344,000 as of September 30, 2011 which will be included in the next payment scheduled on November 15, 2011.

16. PREFERRED STOCK AND COMMON STOCK WARRANTS

The Company entered into Securities Purchase Agreements with a limited number of institutional and other accredited investors, including insiders, to sell a total of 73,500 shares of mandatorily convertible non-cumulative non-voting perpetual preferred stock, series B, without par value (the “Series B Preferred Stock”) at a price of $1,000 per share, for an aggregate gross purchase price of $73.5 million. This private placement closed on December 31, 2009, and the Company issued an aggregate of 73,500 shares of Series B Preferred Stock upon its receipt of consideration in cash. The Series B Preferred Stock converted into 19,599,981 shares of common stock effective March 29, 2010, following shareholder approval of such conversion. The conversion ratio was equal to the quotient obtained by dividing the $1,000 per share purchase price by the conversion price of $3.75. The shares issued in this private placement were registered on a Form S-3 Registration Statement, as amended, which became effective April 8, 2010, thus removing the restrictions on resale.

The conversion price of $3.75 per share was less than the fair value of $5.23 per share of our common stock on December 29, 2009, the commitment date for the issuance of the Series B Preferred Stock. The Series B Preferred Stock was thus issued with a beneficial conversion feature with an intrinsic value of $1.48 per share or at a discount of $29.0 million. On the effective date of the conversion, the unamortized discount due to the beneficial conversion feature was immediately recognized as a dividend and accounted for as a charge to retained earnings and a reduction of net income available to common shareholders in the earnings per share computation. As this accounting treatment was a mere reclassification within shareholders’ equity, it did not affect shareholders’ equity.

The Company also issued 3,360,000 shares of common stock in a private placement which closed on November 30, 2009 (the “November Private Placement”), at a price per share of $3.71 to non-affiliated investors and $4.69 to certain directors and employees of the Company. The difference in the purchase price was necessary to comply with NASDAQ Listing Rule 5635(c). The Company obtained shareholder approval of the November Private Placement at a special meeting held on March 24, 2010 so that all investors in the November Private Placement could be treated equally. Following receipt of shareholder approval, 85,045 additional shares were issued for no additional consideration to the directors and employees who invested in the November Private Placement, in order to effectuate this result. The shares issued in the November Private Placement were also registered on a Form S-3 Registration Statement which became effective April 8, 2010, thus removing the restrictions on resale.

The Company entered into a purchase agreement with the U.S. Treasury Department on December 12, 2008, pursuant to which the Company issued and sold 55,000 shares of the Company’s fixed-rate cumulative perpetual preferred stock for a total purchase price of $55.0 million, and a 10-year warrant to purchase 864,780 shares of the Company’s common stock at an exercise price of $9.54 per share. The number of shares underlying the warrant was reduced to 432,390 effective December 31, 2009 as a result of the fourth quarter capital raises described above. The Company will pay the U.S. Treasury Department a five percent dividend annually for each of the first five years of the investment and a nine percent dividend thereafter until the shares are redeemed. The cumulative dividend for the preferred stock is accrued for and payable on February 15, May 15, August 15 and November 15 of each year.

The Company allocated total proceeds of $55.0 million, based on the relative fair value of preferred stock and common stock warrants, to preferred stock for $52.9 million and common stock warrants for $2.1 million, respectively, on December 12, 2008. The preferred stock discount is being accreted, on an effective yield method, to preferred stock over 10 years.

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17. EARNINGS (LOSS) PER COMMON SHARE

Common stock outstanding as of September 30, 2011 totaled 39,919,952 shares. The following table sets forth the Company’s earnings (loss) per common share calculation for the three and nine months ended September 30, 2011 and 2010, respectively:

	Three Months Ended September 30,
	2011								2010
	(Dollars in thousands, except earnings per share)
	Net Income			Average Number of Shares		Per Share Amounts			Net Income			Average Number of Shares		Per Share Amounts
Basic earnings per share
Net income	$	9,393			39,876	$	0.24		$	5,963			39,902	$	0.15
Less : preferred stock dividends and accretion of preferred stock discount		(757	)		—		(0.02	)		(748	)		—		(0.02	)
Income available to common shareholders		8,636			39,876		0.22			5,215			39,902		0.13
Effect of dilutive securities:
Stock options and restricted stock awards		—			57		—			—			10		—
Diluted earnings per share
Income available to common shareholders	$	8,636			39,933	$	0.22		$	5,215			39,912	$	0.13

	Nine Months Ended September 30,
	2011								2010
	(Dollars in thousands, except earnings per share)
	Net Income			Average Number of Shares		Per Share Amounts			Net Income (Loss)			Average Number of Shares		Per Share Amounts
Basic earnings (loss) per share
Net income	$	19,174			39,866	$	0.48		$	16,233			33,763	$	0.48
Less : preferred stock dividends and accretion of preferred stock discount		(2,261	)		—		(0.06	)		(31,246	)		—		(0.92	)
Income (loss) available to common shareholders		16,913			39,866		0.42			(15,013	)		33,763		(0.44	)
Effect of dilutive securities:
Stock options and restricted stock awards		—			66		—			—			—		—
Diluted earnings (loss) per share
Income (loss) available to common shareholders	$	16,913			39,932	$	0.42		$	(15,013	)		33,763	$	(0.44	)

The number of common shares underlying stock options which were outstanding but not included in the calculation of diluted earnings (loss) per share because they would have had an anti-dilutive effect amounted to approximately 0 and 10,703 shares for the three and nine months ended September 30, 2011, respectively, as compared to 717,000 and 678,000 for the same periods in 2010, respectively.

18. INCOME TAXES

The income tax provision amounted to $415,000 and $1.2 million for the three and nine months ended September 30, 2011 representing effective tax rates of 4.2% and 5.9%, respectively, as compared to income tax (benefit) provision of $(0.8) million and $4.4 million with effective tax rates of (16.5)% and 21.3%, respectively, for the same periods in 2010. The primary reasons for the difference from the federal statutory tax rate of 35% are the reduction in the valuation allowance for deferred taxes, the inclusion of state taxes and reductions related to tax favored investments in low-income housing, dividend exclusions, treatment of share-based payments amortization, an increase in cash surrender value of bank owned life insurance, California enterprise zone interest deductions and hiring credits, and nondeductible merger costs. The Company reduced taxes utilizing the tax credits from investments in the low-income housing projects in the amount of $353,000 and $1.1 million for the three and nine months ended September 30, 2011, respectively, as compared to $378,000 and $1.1 million for the same periods in 2010.

Deferred income tax assets or liabilities reflect the estimated future tax effects attributable to differences as to when certain items of income or expense are reported in the financial statements versus when they are reported in the tax returns. The Company’s

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net deferred tax assets were $20.0 million, net of a valuation allowance of $3.9 million as of September 30, 2011, and $14.4 million, net of a valuation allowance of $10.7 million as of December 31, 2010, respectively. The valuation allowance of $3.9 million was solely established for the state deferred income tax not expected to be realized. The reduction in the valuation allowance reduced income tax expense by $3.4 million and $6.4 million for the three and nine months ended September 30, 2011. The reduction in 2011 is primarily due to the pre-tax profit generated for the nine months ended September 30, 2011, which increased the cumulative taxable income available for carry-back for federal income tax purpose. As of September 30, 2011, the Company’s deferred tax assets were primarily due to the allowance for loan losses which was partially offset by a bargain purchase gain.

In assessing the future realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, the projected future taxable income, and tax planning strategies in making this assessment.

The Internal Revenue Service (the “IRS”) and the Franchise Tax Board (the “FTB”) have examined the Company’s consolidated federal income tax returns for tax years up to and including 2007. As of September 30, 2011, the Company was under examination by the IRS for the 2009 tax year and the FTB for the 2008-2009 tax years. The Company does not anticipate any material changes as a result of the IRS and the FTB examination. In addition, the Company does not have any unrecognized tax benefits subject to significant increase or decrease as a result of uncertainty.

19. FAIR VALUE MEASUREMENTS

Fair Values of Financial Instruments

The Company, using available market information and appropriate valuation methodologies available to management as of September 30, 2011 and December 31, 2010, has determined the estimated fair value of financial instruments. However, considerable judgment is required to interpret market data in order to develop estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. Furthermore, fair values do not reflect any premium or discount that may result from offering the instruments for sale. Potential taxes and other expenses that would be incurred in an actual sale or settlement are not reflected.

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The estimated fair values and related carrying amounts of the Company’s financial instruments as of September 30, 2011 and December 31, 2010 are as follows:

	September 30, 2011				December 31, 2010
	Carrying or Contract Amount		Estimated Fair Value		Carrying or Contract Amount		Estimated Fair Value
			(Dollars in thousands)
Assets:
Cash and cash equivalents	$	306,145	$	306,145	$	258,920	$	258,920
Investment securities available for sale		310,983		310,983		289,551		289,551
Non-covered loans held for sale, at the lower of cost or fair value		66,608		66,608		60,234		61,162
Federal Home Loan Bank and other equity stock		13,199		13,199		15,019		15,019
Non-covered loans, net		1,353,440		1,344,510		1,415,646		1,522,475
Covered loans, net		92,581		92,581		116,283		116,283
FDIC loss share receivable		17,503		17,503		23,991		23,991
Customers’ liability on acceptances		3,313		3,313		2,287		2,287
Accrued interest receivable		5,089		5,089		5,509		5,509
Income tax receivable		13,236		13,236		14,277		14,277
Liabilities:
Deposits		1,796,904		1,766,578		1,770,994		1,727,320
Other borrowed funds		132,130		138,287		188,670		197,781
Acceptances outstanding		3,313		3,313		2,287		2,287
Accrued interest payable		4,317		4,317		5,113		5,113
Long-term subordinated debentures		18,557		14,512		18,557		14,452
Accrued expenses and other liabilities		7,186		7,186		10,646		10,646
Off-balance sheet items:
Commitments to extend credit		213,192		273		158,828		204
Standby letter of credit		17,497		262		27,931		418
Commercial letters of credit		21,288		80		30,341		114
Performance bonds		301		4		222		3

The methods and assumptions used to estimate the fair value of each class of financial instruments for which it is practicable to estimate as follows:

Cash and Cash Equivalents—The carrying amounts approximate fair value due to the short-term nature of these instruments.

Securities—The fair value of securities is generally determined by quoted market prices and the valuation techniques available under the market approach, income approach and/or cost approach are used. The Company’s evaluations are based on market data and combinations of these approaches for its valuation methods are used depending on the asset class.

Non-covered Loans—Fair values are estimated for portfolios of loans with similar financial characteristics, primarily fixed and adjustable rate interest terms. The fair values of fixed rate loans are based on discounted cash flows utilizing applicable risk-adjusted spreads relative to the current pricing of similar fixed rate loans, as well as anticipated repayment schedules. The fair value of adjustable rate loans is based on the estimated discounted cash flows utilizing the discount rates that approximate the pricing of loans collateralized by similar properties or assets. The estimated fair value is net of allowance for loan losses, deferred loan fees, and deferred gain on SBA loans.

Covered Loans—Covered loans are measured at estimated fair value on the date of acquisition. Carrying value is calculated as the present value of expected cash flows and approximates fair value.

Federal Home Loan Bank and Federal Reserve Bank stock—The carrying amounts approximate fair value, as the stocks may be sold back to the Federal Home Loan Bank and Federal Reserve Bank at carrying value.

FDIC Loss Share Receivable—The fair value of FDIC loss share receivable is based on the discounted value of expected future cash flows under the loss sharing agreement with the FDIC.

32

Accrued Interest Receivable and Accrued Interest Payable—The carrying amounts approximate fair value due to the short-term nature of these assets and liabilities.

Customer’s Liability on Acceptances and Acceptances Outstanding—The carrying amounts approximate fair value due to the short-term nature of these assets.

Deposits—The fair value of nonmaturity deposits is the amount payable on demand at the reporting date. Nonmaturity deposits include non-interest-bearing demand deposits, savings accounts, NOW accounts, and money market accounts. Discounted cash flows have been used to value term deposits such as certificates of deposit. The discount rate used is based on interest rates currently being offered by the Company on comparable deposits as to amount and term.

Other Borrowed Funds—These funds mostly consist of FHLB advances. The fair values of FHLB advances are estimated based on the discounted value of contractual cash flows, using rates currently offered by the Federal Home Loan Bank of San Francisco for fixed-rate credit advances with similar remaining maturities.

Long-term Subordinated Debentures—The fair value of long-term subordinated debentures are estimated by discounting the cash flows through maturity based on prevailing rates offered on the 30-year Treasury bonds.

Loan Commitments, Letters of Credit, and Performance Bond—The fair value of loan commitments, standby letters of credit, commercial letters of credit and performance bonds is estimated using the fees currently charged to enter into similar agreements.

Fair Value Measurement – Three Levels

Fair value is measured in accordance with a three-level valuation hierarchy for disclosure of fair value measurement. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follow:

•   Level 1 –	inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
•   Level 2 –	inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
•   Level 3 –	inputs to the valuation methodology are unobservable and significant to the fair value measurement.

Following is a description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy:

Assets

Securities Available for Sale

U.S. Treasury—The Company measures fair value of these securities by using quoted market prices, a level 1 measurement.

U.S. Governmental agencies securities and U.S. Governmental sponsored enterprise securities—The Company measures fair value of these securities by using quoted market prices for similar securities or dealer quotes, a level 2 measurement.

U.S. Governmental agencies securities and U.S. Governmental sponsored enterprise mortgage-backed securities—The Company measures fair value of these securities by using quoted market prices for similar securities or dealer quotes, a level 2 measurement.

Mutual funds backed by adjustable rate mortgages—The Company measures fair value of residential mortgage-backed securities by using quoted market prices for similar securities or dealer quotes, a level 2 measurement.

Fixed rate collateralized mortgage obligations—The Company measures fair value of collateralized mortgage obligations by using quoted market prices for similar securities or dealer quotes, a level 2 measurement.

Corporate trust preferred security—The Company owns one collateralized debt obligation (“CDO”) security that is backed by trust preferred securities (“TRUPS”) issued by banks and thrifts. The Company measures the fair value of the CDO TRUPS security by using a Level 3 fair value measurement.

Non-covered SBA loans held for sale- Loans held for sale are measured at the lower of cost or fair value. As of September 30, 2011 and December 31, 2010, the Company had $61.6 million and $46.4 million of non-covered SBA loans held for sale, respectively. Management obtains quotes, bids or pricing indication sheets on all or part of these loans directly from the purchasing financial

33

institutions. Premiums received or to be received on the quotes, bids or pricing indication sheets are indicative of the fact that cost is lower than fair value. As of September 30, 2011 and December 31, 2010, the entire balance of loans held for sale was recorded at its cost. The Company records non-covered SBA loans held for sale on a nonrecurring basis with Level 2 inputs.

Non-covered nonperforming loans held for sale- The Company reclassifies certain nonperforming loans when the decision to sell those loans is made. The fair value of nonperforming loans held for sale is generally based upon the quotes, bids or sales contract price which approximate the fair value. Nonperforming loans held for sale are recorded at estimated fair value less anticipated liquidation cost. As of September 30, 2011 and December 31, 2010, the Company had $5.0 million and $13.8 million of nonperforming loans held for sale, respectively. The Company measures nonperforming loans held for sale at fair value on a nonrecurring basis with Level 3 inputs.

Non-covered impaired loans- A loan is considered impaired when it is probable that all of the principal and interest due may not be collected according to the original underwriting terms of the loan. Impaired loans are measured at the lower of its carrying value or 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 associated with liquidating the collateral. The Company measures impaired loans at fair value on a nonrecurring basis with Level 3 inputs.

Non-covered Other Real Estate Owned (OREO)- Non-covered OREO is transferred at fair value and is carried at the lower of its carrying value or its fair value less anticipated disposal cost. Fair value of the non-covered OREO is determined by appraisals or independent valuation, which is then adjusted for the cost associated with liquidating the property. The Company measures non-covered OREO at fair value on a nonrecurring basis with Level 3 inputs.

Covered OREO- Covered OREO was initially recorded at its estimated fair value on the acquisition date based on similar market comparable valuations less estimated selling costs. Any subsequent valuation adjustments due to declines in fair value will be charged to non-interest expense, and will be offset, in part, by non-interest income representing the corresponding increase to the FDIC loss share receivable. Any recoveries of previous valuation adjustments will be credited to non-interest expense with a corresponding charge to non-interest income for the portion of the recovery that is due to the FDIC. The Company measures covered OREO at fair value on a nonrecurring basis with Level 3 inputs.

Assets measured at fair value on a recurring basis by class as of September 30, 2011 and December 31, 2010 are as follows:

Assets measured at fair value on a recurring basis

			Fair Value Measurements at Reporting Date Using
	Total as of 9/30/2011		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in thousands)
U.S. Treasury	$	300	$	300	$	—	$	—
U.S. Governmental agencies securities and U.S. Government sponsored enterprise securities		38,118		—		38,118		—
U.S. Governmental agencies and U.S. Government sponsored and enterprise mortgage-backed securities		163,428		—		163,428		—
Corporate trust preferred security		817		—		—		817
Mutual Funds backed by adjustable rate mortgages		5,257		—		5,257		—
Collateralized mortgage obligations		103,063		—		103,063		—
Total available-for-sale securities	$	310,983	$	300	$	309,866	$	817

	Total as of 12/31/2010		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
			(Dollars in thousands)
Available-for-sale securities:
U.S. Treasury	$	300	$	300	$	—	$	—
U.S. Governmental agencies and U.S. Government sponsored enterprise securities		58,607				58,607		—
U.S. Governmental agencies and U.S. Government sponsored and enterprise mortgage-backed securities		157,099		—		157,099		—

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	Total as of 12/31/2010		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in thousands)
Corporate trust preferred security		759		—		—		759
Mutual Funds backed by adjustable rate mortgages		5,073		—		5,073		—
Collateralized mortgage obligations		67,713		—		67,713		—
Total available-for-sale securities	$	289,551	$	300	$	288,492	$	759

The following table presents the Company’s reconciliation and statement of operations classification of gains and losses for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and nine months ended September 30, 2011 and 2010, respectively.

	Three months ended September 30,
	2011		2010
	(Dollars in thousands)
Balance, beginning of period	$	756	$	1,790
Purchases, Issuances and Settlements		—		—
Gain (Loss) in Earnings (Expenses)		—		—
Gain (Loss) in Other Comprehensive Income		61		(77	)
Transfer in/out of Level 3		—		—
Balance, end of period	$	817	$	1,713
	Nine months ended September 30,
	2011		2010
	(Dollars in thousands)
Balance, beginning of period	$	759	$	2,404
Purchases, Issuances and Settlements		—		—
Gain (Loss) in Earnings (Expenses)		—		—
Gain (Loss) in Other Comprehensive Income		58		(691	)
Transfer in/out of Level 3		—		—
Balance, end of period	$	817	$	1,713

The Company transfers its assets and liabilities measured at fair value to a different hierarchy when the valuation techniques and inputs used to develop fair value measurements change. Such transfers are recognized at the end of each quarterly period. There have been no transfers during the three and nine months ended September 30, 2011.

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The following table presents the aggregate balance of assets measured at estimated fair value on a nonrecurring basis as of September 30, 2011 and 2010 and the total losses resulting from these fair value adjustments for the nine months ended September 30, 2011 and 2010:

	As of September 30, 2011
	Level 1		Level 2		Level 3		Total		Total Losses
	(Dollars in thousands)
Non-covered SBA loans held for sale	$	—	$	705	$	—	$	705	$	80
Non-covered nonperforming loans held for sale		—		—		4,975		4,975		1,720
Non-covered impaired loans		—		—		50,637		50,637		9,057
Non-covered OREO		—		—		947		947		786
Covered OREO		—		—		904		904		664
Total	$	—	$	705	$	57,463	$	58,168	$	12,307
	As of September 30, 2010
	Level 1		Level 2		Level 3		Total		Total Losses
	(Dollars in thousands)
Non-covered SBA loans held for sale	$	—	$	23	$	—	$	23	$	4
Non-covered nonperforming loans held for sale		—		—		12,784		12,784		4,558
Non-covered impaired loans		—		—		49,452		49,452		8,906
Non-covered OREO		—		—		1,193		1,193		1,047
Total	$	—	$	23	$	63,429	$	63,452	$	14,515

Liabilities

The Company did not identify any liabilities that are required to be presented at fair value.

20. SUBSEQUENT EVENTS

During the third quarter of 2011, the Company initiated a relatively small bulk sale that included 11 loans aggregating $5.0 million and concluded the transaction in October 2011. Including this $5.0 million, a total loan balance of $10.2 million was transferred to loans held for sale during the third quarter of 2011.

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EX-99.2

Exhibit 99.2

UNAUDITED PRO FORMA COMBINED CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

The following unaudited pro forma combined condensed consolidated financial information and explanatory notes illustrates the effects of the merger of Center Financial Corporation (“Center”) with and into Nara Bancorp, Inc. (“Nara”) on Nara’s financial position and results of operations based upon the companies’ respective historical financial positions and results of operations under the acquisition method of accounting with Nara treated as the acquirer. In connection with the merger, Nara changed its name to BBCN Bancorp, Inc. Nara in its capacity as the surviving corporation in the merger is referred to herein as “BBCN.”

The merger was completed on November 30, 2011. 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. Outstanding Center stock options and restricted stock awards were converted into stock options to purchase shares of BBCN common stock or shares of BBCN common stock, respectively, with appropriate adjustments to reflect the exchange ratio.

The unaudited pro forma combined condensed consolidated financial information has been derived from and should be read in conjunction with the historical consolidated financial statements and the related notes of (i) Nara included in its Annual Report on Form 10-K for the year ended December 31, 2010 and its quarterly report on Form 10-Q for the quarter ended September 30, 2011, and (ii) Center included in Exhibits 99.1 and 99.2 to the Current Report on Form 8-K/A of BBCN to which this Exhibit 99.3 is attached.

In accordance with generally accepted accounting principles in the United States of America, or GAAP, the assets and liabilities of Center were recorded by BBCN at their respective fair values as of the date the acquisition. The unaudited pro forma combined condensed consolidated income statements for the nine months ended September 30, 2011 and for the year ended December 31, 2010 assume the merger took place on January 1, 2010.

The unaudited pro forma combined condensed financial statements included herein are presented for informational purposes only and do not necessarily reflect the financial results of the combined companies would have experienced had the companies actually been combined at the beginning of each period presented. The adjustments included in these unaudited pro forma combined condensed financial statements may be subject to revisions in accordance with acquisition accounting guidelines as BBCN finalizes its financial statements subsequent to the acquisition date. This information does not reflect the benefits of expected cost savings or any opportunities to earn additional revenues, and also does not reflect all integration costs that may be incurred. It includes various preliminary estimates and may not necessarily be indicative of the financial position or results of operations that would have occurred if the merger had been consummated on the date or at the beginning of the period indicated or which may be attained in the future.

The unaudited pro forma stockholders’ equity and net income should not be considered indicative of the market value of BBCN common stock or the actual or future results of operations of BBCN for any period. Actual results may be materially different from the pro forma information presented.

Unaudited Pro Forma Combined Condensed Consolidated Balance Sheet

As of September 30, 2011

(in thousands, except share and per share data)

	Nara Bancorp (historical)			Center Financial (historical)			Pro Forma Adjustments (unaudited)(1)				Pro Forma Combined (unaudited)
Assets:
Cash and cash equivalents	$	175,827		$	306,145		$	50,431		A,J	$	532,403
Securities available for sale, at fair value		455,789			310,983			—				766,772
Non-covered loans held for sale, at the lower of cost or fair value		31,342			66,608			—				97,950
Gross non-covered loans, including covered loans		2,268,128			1,493,119			(95,834	)	B,C		3,665,413
Non-covered loans allowance for loan losses		(60,009	)		(47,098	)		47,098		B,C		(60,009	)
Non-covered other real estate owned		4,838			947			—				5,785
Covered other real estate owned		—			1,028			—				1,028
Federal Reserve Bank and Federal Home Loan Bank stock, at cost		21,933			13,199			—				35,132
Premises and equipment, net		9,408			12,281			410		E		22,099
FDIC loss share receivable		—			17,503			(6,651	)	F		10,852
Accrued interest receivable		8,257			5,089			—				13,346
Deferred tax assets, net		28,030			19,995			24,659		K		72,684
Cash surrender value of bank owned life insurance		24,677			18,147			—				42,824
Customers’ acceptance liabilities		9,343			3,313			—				12,656
Income tax receivable		8,950			13,236			—				22,186
Goodwill		2,509			—			87,436		L		89,945
Other Intangibles, net		302			418			3,692		L		4,412
Other assets		26,803			22,174			(1,507	)	G		47,470
Total assets	$	3,016,127		$	2,257,087		$	109,734			$	5,382,948
Liabilities:
Deposits	$	2,267,196		$	1,796,904		$	6,444		H	$	4,070,544
FHLB Borrowings		300,000			131,385			4,683		D		436,068
Other borrowed funds		701			745			—				1,446
Long-term subordinated debentures		39,268			18,557			(5,735	)	D		52,090
Acceptances outstanding		9,343			3,313			—				12,656
Other liabilities		16,004			11,503			276		I		27,783
Total liabilities		2,632,512			1,962,407			5,668				4,600,587
Stockholders’ equity		383,615			294,680			104,066		A,J		782,361
Total liabilities and stockholders’ equity	$	3,016,127		$	2,257,087		$	109,734			$	5,382,948
Total shares outstanding		38,095,260			39,924,259							77,984,252		N
Book value per share, including preferred stock	$	10.07		$	7.38		$	1.41			$	10.03

(1) See Note 3 of the accompanying Notes to Unaudited Pro Forma Combined Condensed Consolidated Financial Statements.

2

Unaudited Pro Forma Combined Condensed Consolidated Income Statement

For the Nine Months Ended September 30, 2011

(in thousands, except share and per share data)

	Nara Bancorp (historical)			Center Financial (historical)			Pro Forma Adjustments (unaudited)(1)				Pro Forma Combined (unaudited)
Interest income	$	113,415		$	69,017		$	19,602		C	$	202,034
Interest expense		(24,148	)		(18,062	)		(1,325	)	D,H		(43,535	)
Provision for loan losses		(18,792	)		(12,200	)		—				(30,992	)
Net interest income after provision for loan losses		70,475			38,755			18,277				127,507
Non-interest income		16,452			19,543			—				35,995
Non-interest expense		(50,398	)		(37,919	)		2,617		M		(85,700	)
Income before income tax provision		36,529			20,379			20,894				77,802
Income tax provision		13,650			1,205			8,263				23,118
Net income		22,879			19,174			12,631				54,684
Preferred stock dividends and accretion of preferred stock discount		(3,227	)		(2,261	)		—				(5,488	)
Net income available to common stockholders	$	19,652		$	16,913		$	12,631			$	49,196
Weighted average shares outstanding - Basic		38,044,625			39,865,808							77,929,984
Weighted average shares outstanding - Diluted		38,070,141			39,931,507							77,955,500
Earnings per share – Basic	$	0.52		$	0.42		$	0.16			$	0.63
Earnings per share – Diluted	$	0.52		$	0.42		$	0.16			$	0.63

(1) See Note 3 of the accompanying Notes to Unaudited Pro Forma Combined Condensed Consolidated Financial Statements.

3

Unaudited Pro Forma Combined Condensed Consolidated Income Statement

For the Year Ended December 31, 2010

(in thousands, except share and per share data)

	Nara Bancorp (historical)			Center Financial (historical)			Pro Forma Adjustments (unaudited)(1)			Pro Forma Combined (unaudited)
Interest income	$	150,436		$	95,831		$	26,136	C	$	272,403
Interest expense		(42,052	)		(27,893	)		281	D,H		(69,664	)
Provision for loan losses		(84,630	)		(22,010	)		—			(106,640	)
Net interest income after provision for loan losses		23,754			45,928			26,417			96,099
Non-interest income		24,481			26,088			—			50,569
Non-interest expense		(63,374	)		(48,017	)		1,724	M		(109,667	)
Income (loss) before income tax provision		(15,139	)		23,999			28,141			37,001
Income tax provision (benefit)		(7,900	)		1,316			11,650			5,066
Net income (loss)		(7,239	)		22,683			16,491			31,935
Preferred stock dividends and accretion of preferred stock discount		(4,291	)		(31,996	)		—			(36,287	)
Net income (loss) available to common stockholders	$	(11,530	)	$	(9,313	)	$	16,491		$	(4,352	)
Weighted average shares outstanding		37,919,340			35,263,251						77,804,699
Earnings (loss) per share – Basic	$	(0.30	)	$	(0.26	)	$	0.21		$	(0.06	)
Earnings (loss) per share – Diluted(2)	$	(0.30	)	$	(0.26	)	$	0.21		$	(0.06	)

(1) See Note 3 of the accompanying Notes to Unaudited Pro Forma Combined Condensed Consolidated Financial Statements.

(2) When an entity has a net loss from continuing operations, potential common shares are not included in the computation of diluted per share amounts since such inclusion would be anti-dilutive. Accordingly, we have utilized the basic shares outstanding amount to calculate both basic and diluted loss per share.

4

Notes to Unaudited Pro Forma Combined Condensed Consolidated Financial Statements

(In thousands, except share and per share data unless otherwise stated)

1. BASIS OF PRO FORMA PRESENTATION

The unaudited pro forma combined condensed consolidated financial information related to the merger includes the unaudited pro forma combined condensed consolidated balance sheet as of September 30, 2011 assuming the merger was completed on September 30, 2011, and also giving effect to an issuance of approximately 8 million shares of common stock by Nara in an October 2011 stock offering, as if both transactions had occurred as of the beginning of the earliest period presented. The unaudited pro forma combined condensed consolidated income statements for the nine months ended September 30, 2011 and for the year ended December 31, 2010 were prepared assuming the merger was completed on January 1, 2010. In the merger, 0.7805 of a share of BBCN common stock was issued in exchange for each outstanding share of Center common stock, resulting in BBCN issuing 31,160,884 common shares at a fair value of $292.0 million.

The merger was accounted for by BBCN using the acquisition method of accounting. Accordingly, the assets and liabilities of Center were recorded at their respective fair values and represents management’s estimates based on available information. The final allocation of the purchase price will be determined after completion of analyses of the fair value of Center’s tangible and identifiable intangible assets and liabilities as of the merger completion date. Increases or decreases in the estimated fair values of the net assets, commitments, and other items of Center as compared with the information shown in the unaudited pro forma combined condensed financial information may change the amount of the purchase price allocated to goodwill and other assets and may impact the statement of income due to adjustments in yield and/or amortization of the adjusted assets or liabilities. Any changes to Center’s shareholder’s equity, including changes resulting from Center’s operations during the period from September 30, 2011 through the date the merger was completed will also change the purchase price allocation, which may affect the amount of goodwill recorded. The final adjustments may be materially different from the unaudited pro forma adjustments presented herein.

For purposes of the unaudited pro forma combined condensed consolidated income statements for the nine months ended September 30, 2011 and for the year ended December 31, 2010, we assumed no adjustments to the historical deferred tax asset valuations in the amount of $6.4 million and $6.0 million, respectively, recorded by Center. Had Nara acquired Center as of January 1, 2010, the reversal of all or a portion of the deferred tax asset valuation allowance of the combined entity could have differed materially from the amount presented in the unaudited pro forma combined condensed consolidated income statements. In addition, the pro forma combined condensed consolidated financial statements do not take into account the impact, if any, of an ownership change under Section 382 of the Code that would have occurred with respect to BBCN as of January 1, 2010.

The historical financial results of Nara include merger and acquisition integration costs of $1.5 million and $1.0 million for the nine months ended September 30, 2011 and the year ended December 31, 2010, respectively. These integration costs primarily consisted of legal and other professional fees and due diligence related costs. The historical financial results of Nara also include $3.2 million and $4.3 million of preferred stock dividends and discount accretion for the six months ended September 30, 2011 and the year ended December 31, 2010. These amounts related to Nara’s participation in the U.S. Department of the Treasury’s Capital Purchase Program.

The historical financial results of Center for the nine months ended September 30, 2011 and the year ended December 31, 2010 include $12.2 million and $22.0 million provisions for credit losses and professional fees of $1.1 million and $0.7 million associated with the merger, respectively. The historical financial results of Center also include $2.3 million and $3.0 million of preferred stock dividends and discount accretion for the nine months ended September 30, 2011 and the year ended December 31, 2010, respectively, as well as an intrinsic value of $29 million for the beneficial conversion feature of its Series B Preferred Stock issued in December 2009.

The merger is expected to result in annual cost savings to be achieved following the consummation of the merger. These expected savings have not been included in the pro forma combined amounts.

2. Preliminary Purchase Accounting Allocations

The unaudited pro forma combined condensed consolidated financial information for the merger includes the unaudited pro forma combined condensed consolidated balance sheet as of September 30, 2011 assuming the merger was completed on September 30, 2011. The unaudited pro forma combined condensed consolidated income statements for the nine months ended September 30, 2011 and the year ended December 31, 2010 was prepared assuming the merger was completed on January 1, 2010.

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Preliminary Purchase Accounting Allocations

			(in thousands)
BBCN common stock issued(1)			$	291,977
Cash in lieu of fractional shares paid to Center Financial stockholders				1
Fair value of Center Financial employee stock options				1,347
Fair value of Center Financial common stock warrant				(648	)
Total consideration			$	292,677
Carrying value of Center net assets at September 30, 2011(2)			$	241,073
Loans, net	(48,736	)
FDIC loss share receivable	(6,651	)
Core deposit intangible	3,692
Other assets	(1,097	)
Certificates of deposits	(6,444	)
Borrowings	1,052
Other liabilities	(276	)
Other expected transaction costs(3)	(2,031	)
Deferred tax effect of adjustments (42.18)%	24,659
Total fair value adjustments				(35,832	)
Fair value of net assets acquired at September 30, 2011			$	205,241
Excess of consideration paid over fair value of net assets acquired (goodwill)			$	87,436

(1) The purchase price is based on a price of $9.37 per share of BBCN common stock (closing price as of November 30, 2011) and the 31,160,884 shares being issued.

(2) The carrying value of Center net assets at September 30, 2011 of $241,073 is equal to Center’s total assets less liabilities and preferred stock at that date. Total stockholders’ equity of $294,680 at September 30, 2011 includes $53,607 of Series A Preferred Stock issued to the United States of Treasury Department pursuant to the TARP Capital Purchase Program.

(3) Other expected transaction costs consist of financial adviser fees and other transaction related costs.

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3. Preliminary Pro Forma Adjustments

A. Adjustment to equity reflects the acquisition of Center by the issuance of approximately 31.2 million shares of the BBCN common stock, which was calculated by multiplying Center’s 39,924,259 shares outstanding as of November 30, 2011 by the merger exchange ratio of 0.7805 and an October 2011 stock offering of 8,724,475 shares.

B. The fair value of the loan portfolio being acquired from Center is estimated by Nara to be less than the net book value of the related assets. Based on management’s judgment, we applied an approximate $95.8 million discount to Center’s non-covered gross loan portfolio to estimate the fair value at September 30, 2011. This adjustment reflects our estimates of both market rate differential and potential adjustments required by FASB ASC 310-30, Receivables – Loans and Debt Securities Acquired with Deteriorated Credit Quality. Because the acquired loans are recorded at fair value at the acquisition date, there is no carryover of the seller’s allowance for loan losses of approximately $47,098,000.

In accordance with GAAP, BBCN will accrete the fair value difference pertaining to market rate differential into interest income over the remaining term of the Center loan portfolio. In addition, the fact that the loans acquired with deteriorated credit quality are recorded at fair value at acquisition date could result in a reduction in the amount of loan loss provision expense required on these loans in the future.

C. The loan fair value adjustment pertaining to market rate differential will be recognized over the estimated remaining life of the loan portfolio. The accretion for the first 12 months after the effective date is estimated to be approximately $26.1 million before tax.

D. The fair value of the outstanding FHLB borrowing assumed from Center is estimated by BBCN to be above the face amount of such debt. On the other hand, the fair value of the outstanding subordinated debt assumed from Center is estimated by BBCN to be below the face amount of such debt. In accordance with GAAP, subsequent to the effective date, BBCN will record amortization and accretion to the face amount in interest expense over the remaining term of the debt. The net amortization for the first 12 months after the effective date is estimated to be approximately $3.3 million.

E. The fair value of premises and equipment being acquired from Center is estimated by BBCN to be above the book value of such assets primarily due to appreciation in the value of land portion of the real estate owned by Center for its Western Branch and Olympic Branch.

F. Adjustment to FDIC loss share receivable represents the fair value based on the discounted value of expected future cash flows under the loss sharing agreement.

G. Adjustment to other assets includes servicing assets of ($0.5 million), investments in affordable housing partnerships of ($1.1 million) and an increase to reflect the fair value of the favorable operating leases of $89,000.

H. The fair value of certificate of deposit liabilities is estimated by BBCN to be above the face amount of such deposits. In accordance with GAAP, BBCN will record amortization to the face amount in interest expense over the remaining term of the deposits. The amortization for the first 12 months after the effective date is estimated to be approximately $3,019,000.

I. Adjustment to other liabilities reflects the unfavorable facilities lease contracts having rental rates that exceed current market rates.

J. The equity of the pro forma combined company was reduced for transaction costs of $6.2 million and restructuring costs of $3.1 million that are expected to be incurred by Nara and Center in connection with the merger. Some of these costs may not be tax deductible. The deductibility of such costs will be determined subsequent to the completion of the merger.

The specific details of the plan to integrate the operations of Nara and Center will continue to be refined over the next several months, and will include assessments of the personnel, benefit plans, premises, equipment and service contracts to determine the extent of redundancies that may be eliminated. Certain decisions arising from these assessments may involve involuntary termination of employees, vacating leased premises, changing information systems, canceling contracts with service providers and selling or otherwise disposing of certain furniture and equipment. Also included in the restructuring costs are additional integration costs consisting of costs relating to

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corporate name changes and incremental communication costs to customers and business partners, among others. Costs associated with these actions will be recorded based on the nature of the cost and timing of the integration actions.

K. Adjustment to deferred tax assets represents the tax effect of the pro forma adjustments using a combined federal and state tax rate of 42.18%.

L. 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. In determining this value, we have considered recently completed transactions and estimate that the overall value assigned to the DDA, NOW, Money Market and Savings approximated one percent as a result of the cost of these deposits being lower than the cost of comparable alternative funding sources. This presentation assumes amortization on a straight-line basis over seven years, which approximates $586,000 for the first year.

M. An adjustment to non-interest expense was made to exclude the actual costs of $2.6 million and $1.7 million for the nine months ended September 30, 2011 and the year ended December 31, 2010, respectively, incurred by Nara and Center related to the merger and to amortize $0.4 million and $0.6 million of the core deposit intangible for the nine months ended September 30, 2011 and the year ended December 31, 2010, respectively as well as amortization or accretion, as applicable, on servicing assets, favorable and unfavorable leases, investments in affordable housing partnerships and FDIC loss share receivable.

N. The amount of pro forma combined total shares outstanding is the actual combined outstanding shares as of November 30, 2011, which includes 46,823,368 Nara shares (including 8,724,475 shares issued in the October 2011 public offering) and the 39,924,259 pre-merger outstanding Center shares converted at the merger exchange ratio into 31,160,884 BBCN shares.

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