8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported) October 21, 2004

Center Financial Corporation

(Exact name of Registrant as specified in its charter)

Commission file number: 000-50050

California	52-2380548
(State of Incorporation)	(IRS Employer Identification No)

3435 Wilshire Boulevard, Suite 700, Los Angeles, California 90010

(Address of principal executive offices)

(213) 251-2222

(Registrant’s telephone number, including area code)

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 follow 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))

Section 2: Item 2.02. Results of Operations and Financial Condition

On October 21, 2004 Center Financial Corporation issued a press release concerning its results of operations and financial condition as of and for the three and nine months ended September 30, 2004. A copy of the press release is attached hereto as Exhibit 99.1.

Section 9: Item 9.01. Financial Statements and Exhibits

(c) Exhibits

99.1 Press release concerning earnings for September 30, 2004 calendar quarter.

SIGNATURES

Pursuant to the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized:

Date: October 25, 2004	/s/ Debbie H. Kong
	Center Financial Corporation Debbie H. Kong First Vice President & Controller

EXHIBIT INDEX

Exhibit No.	Description	Page
99.1	Press release concerning results of operations and financial conditions as of and for the calendar quarter ended September 30, 2004	5

EX-99.1

EXHIBIT 99.1

CENTER FINANCIAL POSTS 37% INCREASE IN NET INCOME

FOR 2004 THIRD QUARTER

— Net Loans and Total Deposits Increase 40% and 31%, Respectively;

Contributes to Strong Improvements in Interest and Noninterest Income —

LOS ANGELES, CA – October 21, 2004 – Center Financial Corporation (NASDAQ NM: CLFC), the financial holding company of Center Bank, one of the leading financial institutions focused on the Korean-American and other niche markets, today reported another quarter of record revenues with strong increases in interest and noninterest income for the three-month period ended September 30, 2004.

2004 third quarter highlights, compared with a year ago, include:

• Net income increased 37% to $4.1 million, or $0.25 per diluted share

• Net loans rose 40% to $928.8 million

• Total deposits grew 31% to $1.1 billion

• Total assets up 36% to $1.3 billion

• Revenues up 47% to $22.2 million

• Net interest income before provision for loan losses grew 41% to $11.3 million

• Noninterest income advanced 62% to $6.9 million

• Geographic expansion continued with loan production offices opened in Atlanta and Honolulu, followed by loan production offices in Houston and Dallas opened in the fourth quarter

• Quarterly cash dividend declared of $0.04 per share

“Center Financial’s 2004 third quarter exemplifies management’s strong discipline in maintaining healthy levels of balanced growth in loans and deposits as the company achieved another quarter of excellent results, primarily through organic growth,” said (Paul) Seon-Hong Kim, president and chief executive officer. “During the quarter, we broadened our geographic reach with new loan production offices in Atlanta and Honolulu. We further expanded our franchise with the announcement earlier this week of two additional loan production offices in Houston and Dallas. These cities support our targeted markets of growing communities of Korean-American owned small businesses, and we look forward to the contributions of these new LPOs as we enter the next stage of growth for Center Bank.”

For the three-month period ended September 30, 2004, net income grew 37% to $4.1 million, or $0.25 per diluted share, compared with $3.0 million, or $0.19 per diluted share, in the corresponding prior-year period. (All per share figures have been adjusted to reflect a two-for-one stock split in March 2004.) Return on average assets increased to 1.33% from 1.30% for the 2003 third quarter. Return on average equity improved to 19.19% from 16.53%, reflecting higher interest income, resulting partly from market rate hikes by the Federal Reserve Board of 25 basis points each in June 2004, August 2004 and September 2004, and also from increased noninterest income.

For the first nine months of 2004, net income increased 24% to $10.6 million, or $0.65 per diluted share, from $8.6 million, or $0.54 per diluted share, in the corresponding year-ago period. Return on average assets and return on average equity for the year-to-date period were 1.25% and 17.25%, respectively, compared with 1.34% and 16.50% in the prior-year period.

At September 30, 2004, gross and net loans increased 29% and 30% to $941.9 million and $928.8 million, respectively, from $728.7 million and $717.0 million at December 31, 2003. Commercial real estate loans posted 64% growth compared with a year ago and accounted for 59% of the company’s gross loans at the end of the 2004 third quarter. Commercial loans totaled 19% of the loan portfolio, an increase of 34% compared to a year ago. Trade finance loans increased 72% from prior-year levels and represented 8% of gross loans. SBA loans and consumer loans each equaled 6% and real estate construction loans totaled 2% of Center Financial’s loan portfolio at the end of the 2004 third quarter.

Total deposits amounted to $1.1 billion at September 30, 2004, compared with $867.9 million at year-end 2003. Core deposits represented 55% of total deposits at September 30, 2004, with non-interest bearing, interest bearing and savings deposits increasing 25%, 34% and 27%, respectively, over prior-year levels. Non-interest bearing deposits accounted for 30% of the company’s total deposits at September 30, 2004. Time deposits rose 34% to $480.7 million at September 30, 2004, as compared with $359.5 million a year ago.

The average cost of interest-bearing deposits for the 2004 third quarter was 1.92%, compared with 1.93% a year earlier, and the average cost of funds increased to 2.00% from 1.96%.

At September 30, 2004, total assets equaled $1.3 billion, compared with $1.0 billion at December 31, 2003. Interest-earning assets grew to $1.1 billion from $906.6 million at December 31, 2003. The company continued to finance its growth of total assets through increased deposits collected by its expanded network of branch offices.

Net interest income before provision for loan losses rose 41% in the 2004 third quarter to $11.3 million from $8.0 million in the same period last year, reflecting the 40% growth in net loans and the favorable impact of the series of recent rate hikes. The company’s average yield on loans improved to 6.23% from 6.14% in the 2003 third quarter, and net interest margin advanced by 21 basis points to 4.01% from 3.80% in the prior-year period. Center Financial added $700,000 to its provision for loan losses in the 2004 third quarter, compared with $800,000 in the corresponding prior-year period.

Noninterest income in the 2004 third quarter grew 62% to $6.9 million from $4.2 million a year earlier, reflecting a $1.7 million increase in gain on sale of loans, compared with the prior year. In addition, Center Bank continued to post strong improvements in service fee income, benefiting from increases in customer account relationships and loan and trade finance transactions.

For the year-to-date period, net interest income before provision for loan losses grew 31% to $30.2 million from $23.0 million a year earlier. The net interest margin for the 2004 nine-month period improved to 3.92% from 3.88% in the prior nine-month period. The company posted $2.2 million in its provision for loan losses to cover the growing loan base, compared with $1.8 million recorded for the first nine months of 2003.

Noninterest income increased 34% to $15.8 million in the first nine months of 2004 from $11.8 million a year ago, reflecting the gain on sale of unguaranteed portion of SBA loans, increased loan service fees and strong gains in all core fee income categories.

Kim said, “We are particularly pleased with the solid gains in service fee income which is contributing to increased net income for Center Financial. This underscores Center Bank’s customer-centric focus and the company’s knowledge of and appreciation for its target market’s financial needs.”

Total noninterest expenses in the current third quarter rose 60% to $10.8 million from $6.8 million in the corresponding prior-year period, reflecting higher staff and occupancy costs, as well as increased professional service fees and an impairment loss of securities available for sale of $1.3 million related to a decline in the market value of its Fannie Mae and Freddie Mac preferred stocks. During the quarter, the company announced the strengthening of its management team to establish a more scalable infrastructure to support continued growth. And compared with the prior-year third quarter, noninterest expenses for the current third quarter includes operational costs associated with the addition of a full-service branch office in Chicago and three additional loan production offices in Las Vegas, Atlanta and Honolulu. In addition, the company noted higher professional fees associated with complying with new regulatory regulations. Center Financial’s efficiency ratio for the current quarter was 59.53%, compared with 55.35% for the quarter ended September 30, 2003. Excluding the securities impairment charge, the efficiency ratio would have been 52.22%.

Total noninterest expenses for the year-to-date period increased 36% to $26.6 million from $19.5 million in the corresponding prior-year period. The efficiency ratio equaled 57.75% for the year-to-date period, compared with 55.99% a year earlier. Excluding the securities impairment charge, the efficiency ratio would have been 53.69%.

Total non-performing assets equaled $4.0 million, or 0.32% of total assets, at September 30, 2004, compared with $3.3 million, or 0.32% of total assets, at December 31, 2003. Net charge-offs for the nine-months ended September 30, 2004 increased by $97,000 over the same period last year. The allowance for loan losses was increased to $10.4 million in accordance with the strong growth in the company’s loan portfolio. The improving loan quality allowed the company to slightly decrease the allowance for loan losses to total gross loans ratio to 1.10% at September 30, 2004, compared with 1.20% at year-end 2003.

Shareholders’ equity at September 30, 2004 increased to $87.3 million from $78.3 million at December 31, 2003. At September 30, 2004, Center Financial remained “well-capitalized” under all regulatory categories, with a Tier 1 risk-based capital ratio of 10.35%, a total risk-based capital ratio of 11.39%, and a Tier 1 leverage ratio of 9.07%.

Kim added, “We have achieved a healthy first nine months of the year, reflecting our team’s dedication to meet the needs of our customers. With our continued focus on delivering value-added products to our customers and forging even stronger relationships with the communities we serve, we believe Center Bank is well positioned to continue its strong track record of growth.”

Investor Conference Call

Center Financial management will host an investor conference call on Friday, October 22, 2004, at 8:00 a.m. PDT (11:00 a.m. EDT) to review the company’s financials and operations for the fiscal third quarter ended September 30, 2004. The call will be open to all interested parties through a live, listen-only audio Web broadcast via the Internet at www.centerbank.com and www.fulldisclosure.com. For those who are not available to listen to the live broadcast, the call will be archived for one year at both Web sites. A telephonic playback of the conference call also will be available from 10:00 a.m. PDT, Friday, October 22, through 5:00 p.m. PDT, Friday, October 29, by calling 888-286-8010 (domestic) or 617-801-6888 (international) and using Reservation No. 69324201.

About Center Financial Corporation

Center Financial Corporation is the financial holding company of Center Bank, a community bank offering a full range of financial services for multi-ethnic and small business customers. Founded in 1986 and specializing in commercial and SBA loans and trade finance products, Center Bank has grown to be one of the nation’s largest financial institutions focusing on the Korean-American community, with total assets of $1.3 billion at September 30, 2004. Headquartered in Los Angeles, Center Bank operates 23 branch and loan production offices across the nation, of which 14 full-service branches are located throughout Southern California and in Chicago, plus nine loan production offices in Phoenix, Seattle, Denver, Washington D.C., Las Vegas, Atlanta, Honolulu, Houston and Dallas. Center Bank is a California state-chartered and FDIC-insured financial institution. For additional information on Center Bank, visit the company’s Web site at www.centerbank.com.

This release may contain forward-looking statements, which are included in accordance with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 and accordingly, the cautionary statements contained in Center Financial Corp’s Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2003 (See Business, and Management’s Discussion and Analysis), and other filings with the Securities and Exchange Commission are incorporated herein by reference. These factors include, but are not limited to: the effect of interest rate and currency exchange fluctuations; competition in the financial services market for both deposits and loans; Center Financial’s ability to efficiently incorporate acquisitions into its operations; the ability of Center Financial and its subsidiaries to increase its customer base; the company’s ability to successfully operate new loan production offices; and regional and general economic conditions. Actual results and performance in future periods may be materially different from any future results or performance suggested by the forward-looking statements in this release. Such forward-looking statements speak only as of the date of this release. Center Financial expressly disclaims any obligation to update or revise any forward-looking statements found herein to reflect any changes in the company’s expectations of results or any change in events.

# # #

(TABLES FOLLOW)

CENTER FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited)

(In thousands, except share and per share data)

	09/30/04			09/30/03			12/31/03
Assets
Cash and due from banks	$	59,068		$	68,336		$	76,926
Federal funds sold		84,145			21,270			41,635
Money market funds and interest-bearing deposits in other banks		—			21,300			22,400
Securities available-for-sale		124,778			115,046			110,126
Securities held-to-maturity		11,920			9,212			15,390
Loans (net of unearned income)		939,195			669,290			725,812
Allowance for loan losses		(10,364	)		(8,017	)		(8,804	)
Net loans		928,831			661,273			717,008
Fixed assets		11,221			10,831			11,063
Bank-owned life insurance - cash surrender value		10,340			—			10,034
Goodwill		1,253			—			—
Other assets		29,789			20,851			22,784
Total assets	$	1,261,345		$	928,119		$	1,027,366
Liabilities and Shareholders’ Equity
Deposits
Non-interest bearing deposits	$	325,486		$	259,724		$	268,534
Interest bearing deposits		753,239			566,064			599,331
Total deposits		1,078,725			825,788			867,865
Borrowed funds		59,776			15,904			50,671
Long-term subordinated debenture		18,557			—			18,557
Other liabilities		17,011			11,230			12,012
Total Liabilities		1,174,069			852,922			949,105
Shareholders’ Equity		87,276			75,197			78,261
Total Liabilities & Shareholders’ Equity	$	1,261,345		$	928,119		$	1,027,366
Book value per share1	$	5.37		$	4.77		$	4.88
Number of common shares outstanding at period end1		16,251,158			15,912,658			16,048,520

¹ Adjusted to reflect 2 for 1 stock split in 2004.

CENTER FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Unaudited)

(In thousands, except share and per share data)

	Quarter Ended September 30,						Nine Months Ended September 30,
	2004			2003			2004			2003
Interest income	$	15,350		$	10,916		$	41,036		$	31,758
Interest expense		4,052			2,905			10,820			8,744
Net interest income before provision for loan losses		11,298			8,011			30,216			23,014
Provision for loan losses		700			800			2,150			1,750
Net interest income after provision for loan losses		10,598			7,211			28,066			21,264
Noninterest income
Customer service fees		2,340			1,900			6,250			5,254
Fee income from trade finance transactions		1,053			691			2,671			1,966
Wire transfer fees		204			170			602			501
Gain on sale of loans		2,403			656			3,670			1,593
Net (loss) gain on sale of securities available for sale		(9	)		(9	)		(15	)		330
Loan service fees		514			322			1,523			948
Other income		367			510			1,146			1,205
Total noninterest income		6,872			4,240			15,847			11,797
Noninterest expenses
Salaries and employee benefits		4,487			3,160			11,844			9,767
Occupancy		634			537			1,843			1,480
Furniture, fixtures, and equipment		352			347			1,002			988
Data processing		675			445			1,649			1,278
Professional service fees		1,181			757			2,486			1,422
Business promotion and advertising		580			467			1,505			1,321
Stationery and supplies		147			146			380			450
Telecommunications		114			122			397			359
Postage and courier service		171			135			458			386
Security service		221			157			543			451
Impairment loss of securities available for sale		1,329			—			1,869			—
Other operating expenses		926			508			2,624			1,588
Total noninterest expenses		10,817			6,781			26,600			19,490
INCOME BEFORE INCOME TAX PROVISION		6,653			4,670			17,313			13,571
INCOME TAX PROVISION		2,550			1,666			6,664			4,963
Net income	$	4,103		$	3,004		$	10,649		$	8,608
Other comprehensive (loss) income1	$	1,234		$	(138	)	$	(293	)	$	(514	)
Total comprehensive income	$	5,337		$	2,866		$	10,356		$	8,094
Earning per share, basic2	$	0.25		$	0.19		$	0.66		$	0.55
Earning per share, diluted2	$	0.25		$	0.19		$	0.65		$	0.54
Basic average common shares outstanding2		16,136,334			15,586,602			16,104,842			15,516,392
Diluted average common shares outstanding2		16,635,759			16,081,864			16,472,584			15,930,032

¹ Comprehensive income represents the change in unrealized gain (loss) on securities available for sale and, interest rate swaps, net of tax, from the previous period end.

² Adjusted to reflect 2 for 1 stock split in 2004.

CENTER FINANCIAL CORPORATION

SELECTED FINANCIAL DATA (Unaudited)

(In thousands)

	For the Nine Months Ended September 30,						For the Year Ended December 31, 2003
	2004			2003
Average gross loans outstanding during period	$	846,638		$	597,064		$	620,302
Total loans outstanding at end of period1		939,195			669,290			725,812
Non-performing assets
Loans past due 90 days or more and still accruing interest	$	—		$	—		$	—
Non-accrual loans		4,028			3,905			3,327
Total non-performing loans		4,028			3,905			3,327
Other Real Estate Owned		—			—			—
Total Non-performing assets	$	4,028		$	3,905		$	3,327
Allowance for Loan Losses
Balance as of January 1, 2004	$	(8,804	)	$	(6,760	)	$	(6,760	)
Provision for loan losses		(2,150	)		(1,750	)		(2,000	)
Net loan charge-offs and (recoveries)		590			493			(44	)
Balance as of September 30, 2004	$	(10,364	)	$	(8,017	)	$	(8,804	)

Selected Ratios For the Period	Quarter Ended September 30,				Nine Months Ended September 30,				Year Ended December 31, 2003
	2004		2003		2004		2003
Return on average assets	1.33	%	1.30	%	1.25	%	1.34	%	1.32	%
Return on average equity	19.19		16.53		17.25		16.50		16.28
Interest rate spread	3.44		3.22		3.36		3.25		3.35
Net interest margin	4.01		3.80		3.92		3.88		3.96
Yield on earning assets	5.44		5.18		5.33		5.36		5.40
Cost of deposits	1.92		1.93		1.90		2.08		2.02
Cost of funds	2.00		1.96		1.97		2.11		2.05
Noninterest expense/average assets	0.88		0.74		2.34		2.26		3.19
Efficiency ratio	59.53		55.35		57.75		55.99		58.10
Net charge-offs/(recoveries) to average loans	0.04		0.02		0.07		0.08		(0.01	)

	Nine Months Ended September 30,				Year Ended December 31, 2003
	2004		2003
Tier 1 risk-based capital ratio	10.35	%	10.18	%	11.56	%
Total risk-based capital ratio	11.39		11.30		12.67
Tier 1 leverage ratio	9.07		8.62		10.69
Non-accrual loans to gross loans	0.43		0.58		0.46
Non-performing assets to total loans and OREO	0.43		0.58		0.46
Non-performing assets to total assets	0.32		0.42		0.32
Allowance for loan loss to gross loans	1.10		1.20		1.21
Allowance for loan losses to nonperforming assets	257.30		205.30		264.62

¹ Total loans are net of deferred loan fees and discount on SBA loan sold.

CENTER FINANCIAL CORPORATION

SELECTED FINANCIAL DATA (Unaudited)

(In thousands)

	At September 30,								At December 31, 2003
	2004			2003			% chg
Loans
Real estate–construction	$	17,644		$	17,361		1.6	%	$	18,464
Real estate–commercial		554,853			339,095		63.6	%		384,824
Commercial		182,070			135,916		34.0	%		147,368
Consumer		56,300			44,876		25.5	%		49,530
Trade finance		77,603			45,147		71.9	%		61,886
SBA		53,074			81,738		-35.1	%		66,487
Other		405			7,503		-94.6	%		179
Total loans-gross		941,949			671,636		40.2	%		728,738
Unearned Income		(2,754	)		(2,346	)	17.4	%		(2,926	)
Allowance for loan losses		(10,364	)		(8,017	)	29.3	%		(8,804	)
Total loans–net	$	928,831		$	661,273		40.5	%	$	717,008
Deposits
Non-interest bearing	$	325,486		$	259,724		25.3	%	$	268,534
Interest bearing checking		200,472			149,875		33.8	%		156,928
Savings		72,027			56,698		27.0	%		61,251
Time deposits
Less than $100,000		80,189			76,180		5.3	%		74,942
More than $100,000		400,551			283,311		41.4	%		306,210
Total deposits	$	1,078,725		$	825,788		30.6	%	$	867,865