Hope Bancorp (HOPE) 10-Q 2002 Q1 Quarterly report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

	Quarterly report pursuant to section 13 or 15 (d) of the Securities Exchange Act of 1934
	For the quarterly period ended March 31, 2002 or
	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the transition period from                 to

NARA BANCORP, INC

(Exact name of registrant as specified in its charter)

Delaware	95-4849715
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification Number)
3701 Wilshire Boulevard, Suite 220, Los Angeles, California	90010
(Address of Principal executive offices)	(ZIP Code)

(213) 639-1700

(Registrant’s telephone number, including area code)

Nara Bank, N.A

(Former name, former address and former fiscal year, if changed since last report)

         Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes      No  

         As of March 31, 2002, there were 5,603,427 outstanding shares of the issuer’s Common Stock, $0.001 par value.

TABLE OF CONTENTS

		CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
PART I
FINANCIAL INFORMATION
	Item 1. Financial Statements
		CONSOLIDATED STATEMENTS OF INCOME
		CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
		Notes to Consolidated Financial Statements
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3. Quantitative and qualitative disclosures about market risk
PART II OTHER INFORMATION
	Item 1. Legal Proceedings
	Item 2. Changes in Securities and Use of Proceeds
	Item 3. Defaults upon Senior Securities
	Item 4. Submission of Matters to a vote of Security Holders
	Item 5. Other information
	Item 6. Exhibits and Reports on Form 8-K
SIGNATURES

Table of Contents

		Page
	PART I FINANCIAL INFORMATION
Item 1.	FINANCIAL STATEMENTS
	Consolidated Statements of Financial Condition – March 31, 2002 and December 31, 2001	2
	Consolidated Statements of Income – Three Months Ended March 31, 2002 and 2001	3
	Consolidated Statements of Stockholders’ Equity – Three Months Ended March 31, 2002 and 2001	4
	Consolidated Statements of Cash Flows - Three Months Ended March 31, 2002 and 2001	5
	Notes to Consolidated Financial Statements	6
Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	11
Item 3.	QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	26
	PART II OTHER INFORMATION
Item 1.	Legal Proceeding	30
Item 2	Change in Securities and Use of Proceeds	30
Item 3.	Defaults upon Senior Securities	30
Item 4.	Submission of Matters to a vote of Securities Holders	30
Item 5.	Other information	30
Item 6.	Exhibits and Reports on Form 8-K	30
	Signature	34

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)

					March 31,			December 31,
					2002			2001
ASSETS
Cash and due from banks					$	24,338,903		$	30,364,996
Federal funds sold						42,200,000			42,230,000
Interest-bearing deposits in other banks						487,000			487,000
Securities available for sale, at fair value						88,998,885			65,131,608
Securities held to maturity, at amortized cost (fair value:
		3/31/02 - $4,268,220; 12/31/01- $4,274,010)				4,364,471			4,323,569
Interest-only strips, at fair value						293,883			224,322
Loan held for sale, at the lower of cost or market						2,236,720			3,657,842
Loans receivable, net of allowance for loan losses (3/31/2002 - $6,787,162; 12/31/2001 — $6,709,575)						517,151,396			498,482,682
Federal Reserve Bank stock						963,465			918,300
Federal Home Loan Bank Stock						746,000			266,700
Premises and equipment						5,338,886			5,301,080
Other real estate owned						65,035			—
Accrued interest receivable						3,138,677			3,242,772
Servicing assets						1,264,293			1,182,414
Deferred income taxes, net						6,287,739			5,994,002
Customers’ acceptance liabilities						2,909,229			2,609,753
Cash surrender value						10,500,051			10,429,962
Goodwill and intangible assets, net						1,315,559			1,347,030
Other assets						4,014,803			3,244,143
TOTAL					$	716,614,995		$	679,438,175
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES:
	Deposits:
			Noninterest-bearing		$	201,570,538		$	199,082,971
			Interest-bearing:
				Money market and other		95,095,908			84,102,987
				Savings deposits		83,008,570			78,932,997
				Time deposits of $100,000 or more		160,517,548			158,224,821
				Other time deposits		67,623,207			69,500,626
				Total deposits		607,815,771			589,844,402
Borrowing from Federal Home Loan Bank						15,000,000			5,000,000
Subordinated notes						4,300,000			4,300,000
Accrued interest payable						2,743,997			3,205,721
Acceptances outstanding						2,909,229			2,609,753
Negative goodwill, net						—			4,192,334
Trust Preferred Securities						17,426,945			9,665,082
Other liabilities						5,227,293			5,193,475
				Total liabilities		655,423,235			624,010,767
Stockholders’ equity:
	Common stock, $0.001 par value; authorized, 10,000,000 shares; issued and outstanding, 5,603,437 and 5,572,837 shares at March 31, 2002 and December 31, 2001, respectively					5,604			5,573
	Capital surplus					33,349,858			32,989,549
	Retained earnings					27,920,230			22,075,612
	Accumulated other comprehensive (loss) income					—
			unrealized (loss) gain on securities available for sale and interest- only strips, net of taxes of ($55,954) and $237,785 at March 31, 2002 and December 31, 2001, respectively			(83,932	)		356,674
				Total stockholders’ equity		61,191,760			55,427,408
				Total liabilities and stockholders’ equity	$	716,614,995		$	679,438,175

See accompanying notes to consolidated financial statements

CONSOLIDATED STATEMENTS OF INCOME
For the three months ended March 31, 2002 and 2001
(Unaudited)

				Three Months Ended March 31,
				2002		2001
INTEREST INCOME:
	Interest and fees on loans			$	9,005,056	$	10,157,229
	Interest on securities				1,217,909		1,354,450
	Interest on other investments, including TCD with other financial institution				15,121		117,549
	Interest on federal funds sold				163,897		1,140,313
			Total interest income		10,401,983		12,769,541
INTEREST EXPENSE:
Interest expense on deposits					2,486,021		4,618,046
Interest on borrowings					477,870		180,540
			Total interest expense		2,963,891		4,798,586
			Net interest income before provision for loan losses		7,438,092		7,970,955
Provision for loan losses					350,000		—
Net interest income after provision for loan losses					7,088,092		7,970,955
NON-INTEREST INCOME:
	Service charges on deposit accounts				1,441,932		1,430,401
	Other charges and fees				1,326,088		1,330,092
	Gain on sale of securities				572,001		—
	Gain on sale of fixed assets				8,585		328
	Gain on sale of other real estate owned				—		35,555
	Amortization of negative goodwill				—		330,974
	Gain on sale of SBA loans				356,891		—
			Total non-interest income		3,705,497		3,127,350
NON-INTEREST EXPENSE:
	Salaries, wages and employee benefits				4,070,429		3,531,317
	Net occupancy expense				1,011,815		924,921
	Furniture and equipment expense				378,644		306,642
	Advertising and marketing expense				214,525		196,164
	Data processing expense				406,371		379,056
	Professional fee				204,122		220,484
	Other operating expenses				1,015,055		1,169,645
			Total non-interest expense		7,300,961		6,728,229
Income before income taxes and cumulative effect of a change in accounting principle					3,492,628		4,370,077
Income tax provision					1,280,000		1,595,000
Income before cumulative effect of a change in accounting principle					2,212,628		2,775,077
Cumulative effect of change in accounting principle					4,192,334		—
Net income				$	6,404,962	$	2,775,077
Earnings Per Share:
Income before cumulative effect of a change in accounting principle
		Basic		$	0.40	$	0.51
		Diluted			0.38		0.48
Cumulative effect of a change in accounting principle
		Basic		$	0.75	$	—
		Diluted			0.71		—
Net income
		Basic		$	1.15	$	0.51
		Diluted			1.09		0.48

See accompanying notes to consolidated financial statements

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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
THREE MONTHS ENDED MARCH 31, 2002 and 2001
(Unaudited)

											Accumulated
		Number of									Other
		Shares		Common		Capital		Retained			Comprehensive			Comprehensive
		Outstanding		Stock		Surplus		Earnings			Income(Loss)			Income
BALANCE, DECEMBER 31, 2001			5,572,837		5,573	$	32,989,549	$	22,075,612		$	356,674
Warrants exercised			29,600		30		355,170
Stock options exercised			1,000		1		5,139
Cash dividend declared									(560,344	)
Comprehensive income:
	Net income								6,404,962					$	6,404,962
	Other comprehensive loss -
	Change in unrealized gain on securities available for sale and interest-only strips net of tax											(440,606	)		(440,606	)
Comprehensive income														$	5,964,356
BALANCE, MARCH 31, 2002			5,603,437	$	5,604	$	33,349,858	$	27,920,230		$	(83,932	)
BALANCE, DECEMBER 31, 2000			5,461,929		5,462	$	32,103,495	$	12,114,836		$	288,378
Warrants exercised			7,928		8		87,200
Stock options exercised			2,000		2		10,278
Cash dividend declared									(822,754	)
Comprehensive income:
	Net income								2,775,076					$	2,775,076
	Other comprehensive income -
	Change in unrealized gain on securities available for sale and interest-only strips net of tax											426,785			426,785
Comprehensive income														$	3,201,861
BALANCE, MARCH 31, 2001			5,471,857	$	5,472	$	32,200,973	$	14,067,158		$	715,163

			2002			2001
DISCLOSURE OF RECLASSIFICATION AMOUNT FOR MARCH 31:
	Unrealized (loss) gain on securities available for sale and interest-only strips:
		Unrealized holding (losses) gains arising during year, net of tax (benefit) expense of $(64,937) in 2002 and $284,523 in 2001	$	(97,405	)	$	426,785
	Reclassification adjustment for gain included in net income, net of tax expense of $228,800 in 2002			(343,201	)		—
	Net change in unrealized (loss) gain of securities available for sale and interest-only strips, net of tax (benefit) expense of $(293,737) in 2002 and $284,523 in 2001		$	(440,606	)	$	426,785

See accompanying notes to consolidated financial statements

4

CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2002 AND 2001
(Unaudited)

					2002			2001
CASH FLOW FROM OPERATING ACTIVITIES
Net income					$	6,404,962			2,775,076
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation, amortization, and accretion				263,799			125,138
		Provision for loan losses				350,000			—
		Proceeds from sales of SBA Loans				6,738,677			—
		Origination of SBA Loans				(6,501,334	)		(9,064,000	)
		Net gain on sale of SBA loans				(356,891	)		—
		Gain on sales of securities available for sale				(572,001	)		—
		Gain on sales of furniture and equipments				(36,070	)		(328	)
		Increase(decrease) in accrued interest receivable				104,095			(947,260	)
		Increase in other assets				(852,539	)		(107,458	)
		(Decrease) increase in accrued interest payable				(461,724	)		405,649
		Increase (decrease) in other liabilities				69,888			(2,813,623	)
		Cumulative effect of a change in accounting principle				(4,192,334	)		—
				Net cash provided by (used in) operating activities		958,528			(9,626,806	)
CASH FLOWS FROM INVESTING ACTIVITIES
		Net increase in loans receivable				(17,543,079	)		(28,888,290	)
		Net increase in cash surrender value				(70,089	)		(47,556	)
		Purchase of premises and equipment				(308,275	)		(328,985	)
		Purchase of investment securities available for sale				(42,195,310	)		(17,446,170	)
		Proceeds from sale of equipment				—			13,093
		Proceeds from sale of investment securities available for sale				15,950,256			—
		Proceeds from matured or called securities held to maturity				—			300,000
		Proceeds from matured or called investment securities available for sale				2,140,388			17,282,873
		Purchase of Federal Home Loan Bank Stocks				(479,300	)		(3,600	)
		Purchase of Federal Reserve Stocks				(45,165	)		—
		(Decrease) increase in interest-only strip				(138	)		802
		Proceeds from matured interest-bearing deposits in other banks				—			1,366,000
		Net cash used in investing activities				(42,550,712	)		(27,751,833	)
CASH FLOWS FROM FINANCING ACTIVITIES
		Net increase in deposits				17,971,369			9,482,371
		Proceeds from issuance of Trust Preferred Securities, net				7,764,726			9,656,500
		Payment of cash dividend				(560,344	)		(822,754	)
		Proceeds from Federal Home Loan Bank borrowing				10,000,000
		Proceeds from warrants exercised				355,200			87,208
		Proceeds from stock option				5,140			10,280
		Net cash provided by financing activities				35,536,091			18,413,605
	NET DECREASE IN CASH AND CASH EQUIVALENTS					(6,056,093	)		(18,965,034	)
	CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR					72,594,996			132,680,310
	CASH AND CASH EQUIVALENTS, END OF YEAR				$	66,538,903			113,715,276
	SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
			Interest Paid		$	3,425,615			4,392,936
			Income Taxes Paid		$	250,400			1,562,453
	SUPPLEMENTAL SCHEDULE OF NONCASH INVESTMENT ACTIVITIES
			Transfer of loans to other real estate owned		$	65,035			—

See accompanying notes to consolidated financial statements

5

Notes to Consolidated Financial Statements

1. Nara Bancorp Inc.

         Nara Bancorp, Inc. (“Nara Bancorp, on a parent-only basis, and “we” or “our” on a consolidated basis), incorporated under the laws of the State of Delaware in 2000, is a bank holding company, headquartered in Los Angeles, California, offering a full range of commercial banking and consumer financial services through its wholly owned subsidiary, Nara Bank, N.A., a national bank (“Nara Bank”) with branches in California and New York as well as Loan Production Offices in Seattle, Chicago, New Jersey and Atlanta.

2. Basis of Presentation

         Our consolidated financial statements included herein have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures, normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America, have been condensed or omitted pursuant to such SEC rules and regulations.

         The consolidated financial statements include the accounts of Nara Bancorp and its wholly owned subsidiaries, Nara Bank, Nara Capital Trust I and Nara Statutory Trust II. All significant intercompany transactions and balances have been eliminated in consolidation.

         We also believe that we have made all adjustments necessary to fairly present our financial position and the results of our operations for the interim period ended March 31, 2002. Certain reclassifications have been made to prior year amounts to conform to the March 31, 2002 presentation. The results of operations for interim periods are not necessarily indicative of results for the full year.

         These consolidated financial statements should be read along with the audited consolidated financial statements and accompanying notes included in our 2001 Annual Report on Form 10-K.

3. Dividends

         On February 28, 2002, we declared a $0.10 per share cash dividend payable on April 11, 2002 to stockholders of record at the close of business on March 31, 2002. On March 21, 2001, we declared a $0.15 per share cash dividend payable on May 1, 2001 to stockholders of record at the close of business on April 24, 2001.

4. Earnings Per Share

         Basic earnings-per-share excludes the number of shares of common stock that could be purchased from those who hold exercisable stock options or warrants and is computed by dividing our earnings for the period by the weighted-average number of common shares outstanding for the period. Diluted earnings-per-share includes the weighted-average number of common shares, plus the number of shares that could be issued upon the exercise of stock options and/or warrants that are currently exercisable and where the exercise price is more than the current market value of our common stock.

6

         The following table shows how we computed basic and diluted earnings per share at March 31, 2002 and 2001.

			For the three months ended March 31,
			2002							2001
	Income		Shares		Per Share			Income		Shares		Per Share
	(Numerator)		(denominator)		Amount			(Numerator)		(denominator)		Amount
Basic EPS
Income before Cumulative Effect of a Change in Accounting Principle	$	2,212,628		5,574,958	$	0.40		$	2,775,076		5,466,890	$	.51
Effect of Dilutive Securities:
Options – Common Stock Equivalent				279,938		(0.02	)				310,895		(0.03	)
Warrants – Common Stock Equivalent				41,919		(-	)				54,379		(-	)
Diluted EPS
Income Available to Common Stockholders	$	2,212,628		5,896,815	$	0.38		$	2,775,076		5,832,164	$	0.48
Basic EPS
Cumulative Effect of a Change in Accounting Principle		4,192,334							—
Income Available to Common Stockholders	$	6,404,962		5,574,958	$	1.15		$	2,775,076		5,466,890	$	0.51
Effect of Dilutive Securities:
Options – Common Stock Equivalent				279,938		(0.05	)				310,895		(0.03	)
Warrants – Common Stock Equivalent				41,919		(0.01	)				54,379		(-	)
Diluted EPS
Income Available to Common Stockholders	$	6,404,962		5,896,815	$	1.09		$	2,775,076		5,832,164	$	0.48

5. Trust Preferred

         We have completed two private offerings of trust preferred securities for a total of $18.0 million for general corporate purposes.

         The first offering was completed on March 28, 2001 and we raised $10.0 million through Nara Capital Trust I (“Trust I”), as part of a pooled offering with several other financial institutions. The trust preferred securities bear a 10.18 percent per annum fixed rate of interest payable semi-annually for a 30-year term. We incurred $344,000 in issuance costs, which are being amortized over the term of these securities. Trust I used the proceeds from the sale of the trust preferred securities to purchase junior subordinated deferrable interest debentures of Nara Bancorp.

7

         The second offering was completed on March 26, 2002 and we raised $8.0 million through Nara Statutory Trust II (“Trust II”), as part of a pooled offering with several other financial institutions. For the period beginning on March 26, 2002 to June 25, 2002, the trust preferred securities bear the interest rate of 5.59 percent per annum payable quarterly. Beginning with June 26, 2002, the interest rate is adjusted quarterly on March 26, June 26, September 26 and December 26 during the 30-year term based on the 3-month LIBOR plus 3.60 percent. However, prior to March 26, 2007, the interest rate cannot exceed 11.0 percent. We incurred $271,000 in issuance costs, which are being amortized over the term of these securities. Trust II used the proceeds from the sale to purchase junior subordinated deferrable interest debentures of Nara Bancorp.

6. Goodwill and Other Intangible Assets

         In July 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (“SFAS”) No. 141,Business Combinations, and SFAS No. 142,Goodwill and Other Intangible Assets. SFAS No. 141 requires that the purchase method of accounting be used for all business combinations completed after June 30, 2001 and also specifies the types of acquired intangible assets that are required to be recognized and reported separately from goodwill and those acquired intangible assets that are required to be included in goodwill. SFAS No. 142 requires that goodwill no longer be amortized, but instead be tested for impairment at least annually. Additionally, SFAS No. 142 requires recognized intangible assets to be amortized over their respective estimated useful lives and reviewed for impairment in accordance with SFAS No. 121,Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, as replaced by SFAS No. 144. Any recognized intangible asset determined to have an indefinite useful life will not be amortized, but instead must be tested for impairment until its life is determined to no longer be indefinite. We adopted the new rules on accounting for goodwill and other intangible assets on January 1, 2002.

         At adoption and at March 31, 2002, we do not have any intangible assets that will no longer be amortized and subject to annual impairment testing. During the first quarter of fiscal year 2002, we evaluated our existing intangible assets to make any necessary reclassifications in order to conform with the new requirements. We reassessed the useful life and the residual value of our intangible assets and concluded that the useful life will remain the same and no amortization adjustment was necessary. As of March 31, 2002, intangible assets that continue to be subject to amortization include core deposits of $639,000 (net of $242,000 accumulated amortization) and loan servicing rights of $1.3 million (net of $435,000 accumulated amortization). Amortization expense for such intangible asset was $97,000 for the three months ended March 31, 2002. Estimated amortization expense for the remainder of 2002 and the five succeeding fiscal years follows:

2002 (remaining nine months)	$	228,705
2003		285,920
2004		266,279
2005		248,651
2006		232,778
2007		132,500

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         Furthermore, in connection with the transitional impairment evaluation, SFAS No. 142 requires us to perform an assessment of whether there was an indication that goodwill was impaired as of January 1, 2002. The transitional assessment consists of the following steps: (1) identify our reporting units, (2) determine the carrying value of each reporting unit by assigning the assets and liabilities, including the existing goodwill and intangible assets to those reporting units, and (3) determine the fair value of each reporting unit. The transitional goodwill impairment test must be completed by June 31, 2002. If the carrying value of any reporting unit exceeds its fair value, then detailed fair values for each of the assigned assets (excluding goodwill) and liabilities will be determined in calculating the amount of goodwill impaired, if any. The impairment evaluation has to be completed as soon as possible, but no later than December 31, 2002. Any transitional impairment loss resulting from the adoption will be recognized as the effect of a change in accounting principle in our consolidated statement of income. We are currently evaluating goodwill for impairment and have not yet reached a conclusion.

         We had negative goodwill (the amount of the fair values of assets acquired and liabilities assumed exceeds the cost of an acquired company) of $4,192,334 at December 31, 2001. In accordance with SFAS No. 142, such amount was recognized in our consolidated statement of income as the cumulative effect of a change in accounting principle on January 1, 2002. Additionally, the recognition of negative goodwill into the consolidated statement of income is not effected for taxes as such item is treated as a permanent difference for tax purposes and no deferred taxes were allocated during the initial recording of the negative goodwill.

         The following table sets forth a reconciliation of net income and earnings per share information, before the cumulative effect of a change in accounting principle, for the three months ended March 31, 2002 and 2001 adjusted for the non-amortization provision of SFAS No. 142.

		Three Months Ended			Three Months Ended
		March 31, 2002			March 31, 2001
		(Dollars in thousands)
Reported net income		$	6,405		$	2,775
Deduct: Recognition of a negative goodwill			(4,192	)		—
Reported net income before cumulative effect of a change in accounting principle			2,213			2,775
Add back: Goodwill amortization, net of tax expense of $7			—			12
Deduct: Negative goodwill amortization			—			(331	)
Adjusted net income		$	2,213		$	2,456
Basic earnings per share:
	Reported net income	$	1.15		$	0.51
	Recognition of a negative goodwill		(0.75	)		—
	Goodwill amortization		—			—
	Negative goodwill amortization		—			(0.06	)
	Adjusted net income	$	0.40		$	0.45
Diluted earnings per share:
	Reported net income	$	1.09		$	0.48
	Recognition of a negative goodwill		(0.71	)		—
	Goodwill amortization		—			—
	Negative goodwill amortization		—			(0.06	)
	Adjusted net income	$	0.38		$	0.42

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7. Recent Accounting Pronouncements

         SFAS No. 140,Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, a replacement of FASB Statement No. 125, was issued in September 2000 and revises the standards for accounting for securitizations and other transfers of financial assets and collateral and requires certain disclosures, but it carries over most of the provisions of SFAS No. 125 without reconsideration SFAS No.140 is effective for transfers and servicing of financial assets and extinguishments of liabilities occurring after March 31, 2001. The statement is effective for recognition and reclassification of collateral and for disclosures related to securitization transactions and collateral for fiscal years ending after December 15, 2000. The adoption of SFAS No. 140 did not have a material impact on ours financial position, results of operations, or cash flows.

         SFAS No. 144,Accounting for Impairment or Disposal of Long-Lived Assets, replaces SFAS No.121. SFAS No. 144 requires that long-lived assets be measured at the lower of carrying amount of fair value less cost to sell, whether reported in continuing operations or in discontinued operations. It also expands the reporting of discontinued operations to include all components of an entity with operations that can be distinguished from the rest of the entity and that will be eliminated from the ongoing operations of the entity in a disposal transaction. SFAS No. 144 is effective for financial statements issued for fiscal years beginning after December 5, 2001. The adoption of this statement is not expected to have a material impact on our financial position, results of operation, or cash flows.

8. Commitments

         We are a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of our customers. These financial instruments include commitments to extend credit, standby letters of credit, and commercial letters of credit. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated statements of financial condition. Our exposure to credit loss in the event of nonperformance by the other party to commitments to extend credit and standby letters of credit is represented by the contractual notional amount of those instruments.

         We use the same credit policies in making commitments and conditional obligations as it does for extending loan facilities to customers. We evaluate each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary upon extension of credit, is base on our credit evaluation of the counterparty. Collateral held varies but may include accounts receivable; inventory; property, plant, and equipment; and income-producing properties.

         Commitments at March 31, 2001 are summarized as follows:

Commitments to extend credit	$	146,512,881
Standby letters of credit		4,677,068
Commercial letters of credit		27,329,221

10

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

         The following is management’s discussion and analysis of the major factors that influenced our consolidated results of operations and financial condition for the three months ended March 31, 2002. This analysis should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2001 and with the unaudited consolidated financial statements and notes as set forth in this report.

GENERAL

Selected Financial Data

         The following table sets forth certain selected financial data concerning the periods indicated:

			At or for the Three Months Ended
			(Unaudited)
			3/31/2002		3/31/2001
			(dollars in thousands)
STATEMENTS OF INCOME
	Interest income		$	10,402	$	12,770
	Interest expense			2,964		4,799
	Net interest income			7,438		7,971
	Provision for loan losses			350		—
	Non-interest income			3,705		3,127
	Non-interest expense			7,301		6,728
	Income before income tax			3,493		4,370
	Income tax			1,280		1,595
	Net income before cumulative effect of change in accounting principle			2,213		2,775
	Cumulative effect of change in accounting principle			4,192		—
	Net income after cumulative effect of change in accounting principle		$	6,405	$	2,775
PER SHARE DATA:
	Before cumulative effect of a change in accounting principle:
		Basic	$	0.40	$	0.51
		Diluted		0.38		0.48
	After cumulative effect of a change in accounting principle:
		Basic		1.15		0.51
		Diluted		1.09		0.48
	Book value (period end)			10.92		8.59
	Number of shares outstanding			5,603,427		5,471,857
	Dividend declared			0.10		0.15
STATEMENTS OF FINANCIAL CONDITION:
	Total assets		$	716,615	$	620,443
	Investment securities			93,363		71,368
	Net loans			519,388		392,775
	Deposits			607,816		537,191
	Stockholders’ equity			61,192		46,989

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AVERAGE BALANCES:
	Average net loans *	$	507,107		$	378,327
	Average investment securities		80,085			75,721
	Average assets		687,650			602,825
	Average deposits		591,083			527,755
	Average equity		60,708			46,116
PERFORMANCE RATIOS:
	Return on average asset (1)		3.73	%		1.84	%
	Return on average stockholders’ equity (1)		42.20	%		24.07	%
	Operating expense to average assets		1.06	%		1.12	%
	Efficiency ratio (2)		65.52	%		60.62	%
	Net interest margin (3)		4.74	%		5.87	%
CAPITAL RATIOS (4)
	Leverage capital ratio (5)		11.28	%		9.19	%
	Tier 1 risk-based capital ratio		12.74	%		11.40	%
	Total risk-based capital ratio		14.14	%		13.19	%
ASSET QUALITY RATIOS
	Allowance for loan losses to total gross loans		1.32	%		1.74	%
	Allowance for loan losses to non-accrual loans		458.89	%		1,568.62	%
	Total non-performing assets to total assets (6)		0.22	%		0.07	%

*	Includes the loan held for sale in the amount of $2,236,720 at March 31, 2002. There were no loan held sale at March 31, 2001.
(1)	Calculations are based on annualized net income.
(2)	Efficiency ratio is defined as operating expense divided by the sum of net interest income and other non-interest income.
(3)	Net interest margin is calculated by dividing annualized net interest income by total average interest-earning assets.
(4)	The required ratios for a “well-capitalized” institution are 5% leverage capital, 6% tier 1 risk-based capital and 10% total risk-based capital.
(5)	Calculations are based on average quarterly assets balances.
(6)	Non-performing assets include non-accrual loans and other real estate owned.

Forward-Looking Information

         Certain matters discussed under this caption may constitute forward-looking statements under Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934. There can be no assurance that the results described or implied in such forward-looking statements will, in fact, be achieved and actual results, performance, and achievements could differ materially because our business involves inherent risks and uncertainties. Risks and uncertainties include possible future deteriorating economic conditions in our areas of operation; interest rate risk associated with volatile interest rates and related asset-liability matching risk; liquidity risks; risk of significant non-earning assets, and net credit losses that could occur, particularly in times of weak economic conditions or times of rising interest rates; risks of available for sale securities declining significantly in value as interest rates rise; and regulatory risks associated with the variety of current and future regulations to which we are subject. For additional information concerning these factors, see “Item 1. Business — Factors That May Affect Business or the Value of Our Stock” contained in our Form 10-K for the year ended December 31, 2001.

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RESULTS OF OPERATIONS

Overview

         Net Income. For the first quarter of 2002, our net income before the cumulative effect of a change in accounting principle was $2.2 million or $0.38 per diluted share compared to $2.8 million or $0.48 per diluted share for the same quarter of 2001, which represented a decrease of approximately $0.6 million. This decrease is primarily due to decrease in net interest income. Net interest income is discussed further below. The effect of the change in accounting principle, related to the one-time recognition of all negative goodwill in the consolidated statement of income at January 1, 2002 in accordance with SFAS No. 142,Goodwill and Other Intangible Assets, was a positive $4.2 million, resulting in total net income for the quarter of $6.4 million or $1.09 per diluted share.

         The annualized return on average assets was 3.73% for the first quarter of 2002 compared to a return on average assets of 1.84% for the corresponding period of 2001. The annualized returns on average equity was 42.20% for the first quarter of 2002 compared to a return on average equity of 24.07% for the corresponding period of 2001.

Net Interest Income

         The principal component of our earnings is net interest income, which is the difference between the interest and fees earned on loans and investments and the interest paid on deposits and borrowed funds. When net interest income is expressed as a percentage of average interest-earning assets, the result is the net interest margin. The net interest spread is the yield on average interest-earning assets less the cost of average interest-bearing deposits and borrowed funds.

         Net interest income before provision for loan losses was $7.4 million for the first quarter of 2002, which represented a decrease of $0.6 million, or 7.5% from net interest income of $8.0 million for the same quarter of 2001. This decrease was primarily due to the 325 basis point rate cuts during past twelve months, despite an increase of $128.8 million or 34.0% in average net loans and an increase of $88.2 million or 16.4% in average interest-earning assets.

         Interest income for the first quarter of 2002 was $10.4 million, which represented a decrease of $2.4 million or 18.8% over interest income of $12.8 million for the same quarter of 2001. The decrease was the net result of a $2.5 million increase in average interest-earning assets (volume change) off-set by a $4.8 million decrease in the yield earned on those average interest-earning assets (rate change).

         The yield on average interest-earning assets decreased to 6.63% for the three months ended March 31, 2002, from a yield of 9.47% for the three months ended March 31, 2001. This decrease is mainly due to a 325 basis point decrease in prime rate by the Federal Reserve Board (“FRB”) between these periods.

         Interest expense for the first quarter of 2002 was $3.0 million, which represented a decrease of $1.8 million or 37.5% over interest expense of $4.8 million for the same quarter of

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2001. The decrease was the net result of a $737,000 increase in average interest-bearing liabilities (volume change) off-set by a $2.6 million decrease in the cost of those interest-bearing liabilities (rate change).

         The average cost of interest-bearing liabilities decreased to 2.83% for the three months ended March 31, 2002 from 5.31% for the three months ended March 31, 2001. This decrease is mainly due to decreases in interest rates noted above.

         Net Interest Margin.The net interest margin was 4.74% for the three months ended March 31, 2002, down from 5.91% for the same quarter of 2001. The decrease in the net interest margin resulted primarily from a decrease in interest rates. Because we are asset-sensitive, which means our assets generally reprice more often than liabilities, the decline in interest rates affected our interest-earning assets at a faster rate than it did our deposits and other interest-bearing liabilities.

         The following table presents our condensed average balance sheet information, together with interest rates earned and paid on the various sources and uses of funds for each of the quarter periods indicated:

				March 31, 2002							March 31, 2001
						Interest		Average					Interest		Average
				Average		Income/		Yield/			Average		Income/		Yield/
				Balance		Expense		Cost			Balance		Expense		Cost
								(Dollars in thousands)
Interest earning assets:
	Net loans			$	507,107	$	9,005		7.10	%	$	378,327	$	10,157		10.74	%
	Other investments				1,928		15		3.13	%		6,612		118		7.11	%
	Securities				80,085		1,218		6.08	%		75,721		1,355		7.16	%
	Federal funds sold				38,480		164		1.70	%		78,713		1,140		5.79	%
			Total interest earning assets	$	627,600	$	10,402		6.63	%	$	539,373	$	12,770		9.47	%
Interest bearing liabilities:
	Demand, interest-bearing				85,733		386		1.80	%		82,567		841		4.07	%
	Savings				80,659		489		2.43	%		53,697		497		3.70	%
	Time certificates of deposit				228,278		1,611		2,82	%		215,710		3,280		6.08	%
	Subordinated notes				4,300		97		9.00	%		4,300		97		9.00	%
	FHLB borrowings				9,889		119		4.81	%		5,000		84		6.70	%
	Trust preferred securities				10,183		262		10.29	%		—		—		—
		Total interest bearing Liabilities		$	419,042	$	2,964		2.83	%	$	361,274		4,799		5.31	%
Net interest income						$	7,438						$	7,971
Net yield on interest-earning assets									4.74	%						5.91	%
Net interest spread									3.80	%						4.16	%
Average interest-earning assets to average interest-bearing liabilities									149.8	%						149.3	%

         The following table illustrates the changes in our interest income, interest expense, amount attributable to variations in interest rates, and volumes for the periods indicated. The variances attributable to simultaneous volume and rate changes have been allocated to the

14

changes due to volume and the changes due to rate categories in proportion to the relationship of the absolute dollar amount attributable solely to the change in volume and to the change in rate.

				Three Months Ended
				March 31, 2002 over March 31, 2001
				Net			Change due to
				Increase/
				(Decrease)			Rate			Volume
				(Dollars in thousands)
INTEREST INCOME:
		Interest and fees on loans			($1,152	)		($4,022	)	$	2,870
		Interest on other investments			(103	)		(46	)		(57	)
		Interest on securities			(137	)		(212	)		75
		Interest on fed funds sold			(976	)		(565	)		(411	)
			Total Interest income:		(2,368	)		(4,845	)		2,477
INTEREST EXPENSE
	Interest on demand deposits				(455	)		(486	)		31
	Interest on savings				(8	)		(207	)		199
	Interest on time certificates of deposits				(1,669	)		(1,850	)		181
	Interest on subordinated notes				—			—			—
	Interest on FHLB borrowings				35			(29	)		64
	Interest on trust preferred securities				262			—			262
			Total Interest Expense:		($1,835	)		(2,572	)	$	737

Provision for Loan Losses

         The provision for loan losses reflects our judgment of the current period cost associated with credit risk inherent in our loan portfolio. Specifically, the provision for loan losses represents the amount charged against current period earnings to achieve an allowance for loan losses that, in our judgment, is adequate to absorb losses inherent in our loan portfolio.

         We made a $350,000 provision for loan losses in the first quarter of 2002. This was primarily due to the growth experienced in the loan portfolio. No provision was made for the first quarter of 2001. During the first quarter of 2001, we recovered approximately $841,000 in loans previously charged off which were mostly due to recoveries on the loans from the Korea First Bank of New York acquisition. We believe that the allowance is sufficient for the known and inherent losses at March 31, 2002. Refer to Allowance and Provision for Loan Losses section for further discussion.

Non-interest Income

         Non-interest income includes revenues earned from sources other than interest income. It is primarily comprised of service charges and fees on deposits accounts, fees received from letter of credit operations, and gains on sale of SBA loans and investment securities.

15

         Non-interest income for the first quarter of 2002 was $3.7 million compared to $3.1 million for the corresponding quarter of 2001, which represented an increase of $578,000, or 18.6%, primarily as a result of gains on sale of SBA loans and investment securities. Gains on sale of SBA loans and investment securities for the first quarter of 2002 was approximately $357,000 and $572,000, respectively. There were no such gains on sale of SBA loans and investment securities recorded for the first quarter of 2001. We started reselling the SBA guaranteed portion after the first quarter of 2001 as the premium on such portion became more attractive. We had no sale activities in our investment portfolio during the first quarter of 2001. No negative goodwill amortization was recognized for the first quarter of 2002 compared to $331,000 for the corresponding quarter of 2001. The remaining negative goodwill of $4.2 million at December 31, 2001 was recognized as a cumulative effect of a change in accounting principle in the consolidated statement of income as of March 31, 2002.

         The summary of our non-interest income by category is illustrated below:

										Three
		Three Months		Increase (Decrease)						Months
		Ended								Ended
		3/31/02		Amount			Percent(%)			3/31/01
				(Dollars in thousands)
Non-interest income									%
Service charges on deposits		$	1,442	$	12			0.8	%		1,430
	International service fee income		588		27			4.8	%		561
	Wire transfer fees		238		(2	)		-0.8	%		240
	Service fee income from SBA		191		82			75.2	%		109
	Earnings on cash surrender value		102		30			41.7	%		72
	Gain on sale of OREO		—		(36	)		-100.0	%		36
	Gain on sale of SBA loans		357		357			100.0	%		—
	Gain on sale of securities		572		572			100.0	%		—
	Amortization of negative goodwill		—		(331	)		-100.0	%		331
	Other		215		(133	)		-38.2	%		348
Total non-interest income:		$	3,705	$	578			18.5	%	$	3,127

Non-interest Expense

         Non-interest expense for the first quarter of 2002 was $7.3 million compared to $6.7 million for the corresponding quarter of 2001, which represented an increase of $0.6 million or 9.0%, primarily due to increase in salaries and employee benefit expenses.

         Salaries and employee benefits expenses for the first quarter of 2002, increased $0.6 million or 17.1% to $4.1 million from $3.5 million for the corresponding quarter of 2001. This increase was primarily due to the additional employees for Cerritos, Aroma, and Atlanta LPO, which are the new branches opened after the first quarter of 2001 and additional employees in the specialized area, such as compliance, internal audit, and legal to accommodate our growth and to comply with the Stipulation and Consent to the Issuance of a Consent Order (the “Consent Order”) signed with the Office of the Comptroller of the Currency (the “OCC”) (see Regulatory Matter — Consent Order section below). We expect that professional fees will increase in each of the next quarters as we continue to devote the resources necessary to comply with the Consent Order.

         The summary of our non-interest expenses is illustrated below:

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		Three								Three
		Months								Months
		Ended		Increase (Decrease)						Ended
		3/31/02		Amount			Percent (%)			3/31/01
				(Dollars in thousands)
Non-interest expense
	Salaries and benefits	$	4,070	$	539			15.3	%	$	3,531
	Net occupancy		1,012		87			9.4	%		925
	Furniture and equipment		379		72			23.5	%		307
	Advertising & marketing related		215		19			9.7	%		196
	Corporate & regulatory fees		137		(8	)		-5.5	%		145
	Communications		170		32			23.2	%		138
	Data processing		406		27			7.1	%		379
	Professional fees		204		(16	)		-7.3	%		220
	Loan referral fees		98		(26	)		-21.0	%		124
	Office supplies & forms		60		(74	)		-55.2	%		134
	Directors’ fees		93		3			3.3	%		90
	Credit related expenses		176		(95	)		-35.1	%		271
	Amortization of goodwill		0		(19	)		-100.0	%		19
	Amortization of intangible assets		31		—			0	%		31
	Others		251		32			14.7	%		218
Total non-interest expense:		$	7,301	$	573			8.5	%	$	6,728

Provision for Income Taxes

         The provision for income taxes was $1.3 million and $1.6 million on income before taxes and cumulative effect of a change in accounting principle of $3.5 million and $4.4 million for the three months ended March 31, 2002 and 2001, respectively. The effective tax rate for the quarter ended March 31, 2002 was 36.6%, compared with 36.5% for the quarter ended March 31, 2001.

Financial Condition

         At March 31, 2002, our total assets were $716.6 million, an increase of $37.2 million or 5.5%, from $679.4 million at December 31, 2001. The growth resulted primarily from increases in interest- earning assets.

Investment Security Portfolio

         We classify our securities as held-to-maturity or available-for-sale under SFAS No. 115. Those securities that we have the ability and intent to hold to maturity are classified as “held-to-maturity securities”. All other securities are classified as “available-for-sale”. We owned no trading securities at March 31, 2002, nor did we hold any derivative financial instruments. Securities that are held to maturity are stated at cost, adjusted for amortization of premiums and accretion of discounts. The securities we currently hold are government-sponsored agency bonds, corporate bonds, collateralized mortgage obligations, and municipal bonds.

         As of March 31, 2002, we had $4.4 million of held-to-maturity securities and $89.0 million of available-for-sale securities, compared to $4.3 million and $65.1 million at December 31, 2001, respectively. The total net unrealized loss on the available-for sale securities at March 31, 2002 was $255,000, compared to net unrealized gain of $558,000 at December 31, 2001.

17

         During the first quarter of 2002, we bought a total of $42.2 million in available-for-sale securities and sold $15.4 million and recognized total gross gains of $572,000.

         Securities with an amortized cost of $2.5 million were pledged to secure public deposits and for other purposes as required or permitted by law at March 31, 2002.

         The following table presents our securities portfolio on the dates indicated:

				At March 31, 2002							At December 31, 2001
				Amortized Cost		Market Value		Unrealized Gain (Loss)			Amortized Cost		Market Value		Unrealized Gain (Loss)
				(Dollars in thousands)
Held-to-maturity
	U.S. Government Securities			$	1,626	$	1,548		($78	)	$	1,598	$	1,520		($78	)
	U.S. Corporate Notes				2,738		2,720		(18	)		2,726		2,754		28
		Total held-to-maturity		$	4,364	$	4,268		($96	)	$	4,324	$	4,274		($50	)
Available-for-Sale
	U.S. Government Securities			$	30,983	$	30,855		($128	)	$	16,154	$	16,521	$	367
	Collateralized Mortgage Obligation				8,231		8,328		97			8,756		8,977		221
	Mortgage-backed Securities				4,126		4,077		(49	)		1,102		1,104		2
	Asset-backed Securities				306		307		1			383		384		1
	Municipal Bonds				18,470		18,371		(99	)		4,369		4,304		(65	)
	U.S. Corporate Notes				25,681		25,511		(170	)		32,359		32,287		(72	)
	Korean Corporate Notes				1,457		1,550		93			1,451		1,555		104
			Total available-for-sale	$	89,254	$	88,999		($255	)	$	64,574	$	65,132	$	558
Total Investment Portfolio:				$	93,618	$	93,267		($351	)	$	68,898	$	69,406		($508	)

         The amortized cost and estimated fair value of investment securities as of March 31, 2002, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

			March 31, 2002
							Weighted
			Amortized		Market		Average
			Cost		Value		Yield
			(Dollars in thousands)
Held-to-maturity
U.S. Government:
	After ten years		$	1,626	$	1,548		6.97	%
U.S. Corporate Notes:
	One to five years			2,002		2,085		7.07	%
	Five to ten years			—		—		—
	After ten years			736		635		7.48	%
		Total held-to-maturity	$	4,364	$	4,268

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Available-for-sale U.S. Government:
		One to five years		$	19,988	$	19,864	4.35	%
		Five to ten years			8,995		9,008	4.79	%
		After ten years			2,000		1,983	7.00	%
	Collateralized Mortgage Obligations:
		Five to ten years			902		936	6.75	%
		After ten years			7,329		7,392	5.41	%
	Mortgage-backed Securities:
		One to five years			3,028		2,980	4.73	%
		After ten years			1,098		1,097	6.63	%
	Asset-backed Securities:
		Five to ten years			306		307	4.38	%
	Municipal Bonds:
		After ten years			18,470		18,371	5.05	%
	U.S. Corporate Notes :
		Due within one year			4,993		5,016	7.24	%
		One to five years			12,036		12,109	5.98	%
		Five to ten years			4,532		4,468	7.57	%
		After ten years			4,120		3,918	9.16	%
	Korean Corporate Note:
		One to five years			1,457		1,550	8.60	%
			Total available-for-sale	$	89,254	$	88,999
Total Investment Portfolio				$	93,618	$	93,267

Loan Portfolio

         We carry all loans (except for certain SBA loans held-for-sale) at face amount, less payments collected, net of deferred loan origination fees and the allowance for possible loan losses. SBA loans held-for-sale are carried at the lower of cost or market. Interest on all loans is accrued daily on a simple interest basis. Once a loan is placed on non-accrual status, accrual of interest is discontinued and previously accrued interest is reversed. Loans are placed on a non-accrual status when principal and interest on a loan is past due 90 days or more, unless a loan is both well-secured and in process of collection.

         As of March 31, 2002, our gross loans, including loans held for sale, increased by $17.3 million or 3.4% to $526.8 million from $509.5 million at December 31, 2001. The commercial loans, which include domestic commercial, international trade finance, SBA loans, and equipment leasing, at March 31, 2002 decreased by $10.9 million or 4.1% to $253.4 million from $264.3 million at December 31, 2001. Real estate and construction loans increased by $26.0 million or 13.1% to $224.6 million from $198.6 million at December 31, 2001.

         The following table illustrates our loan portfolio by amount and percentage of gross loans in each major loan category at the dates indicated:

19

			March 31, 2002						December 31, 2001
			Amount			Percent			Amount			Percent
						(Dollars in thousands)
	Loan Portfolio Composition:
	Commercial loans *		$	253,397			48.1	%	$	264,283			51.9	%
	Real estate and construction loans			224,589			42.6	%		198,622			39.0	%
	Consumer loans			48,913			9.3	%		46,596			9.1	%
		Total loans outstanding		526,899			100.0	%		509,501			100.0	%
	Unamortized loan fees, net of costs			(724	)					(650	)
	Less: Allowance for loan losses			(6,787	)					(6,710	)
Net Loans Receivable			$	519,388					$	502,141

* Includes loans held for sale of $2,236,720 at March 31, 2002 and $3,657,842 at December 31, 2001.

         We do not normally make loan commitments in material amounts for period in excess of one year. We use the same credit policies in making commitments and conditional obligations as we do for extending loan facilities to our customers. We perform annual review of such commitments prior to the renewal. The following table shows our loan commitments and letters of credit outstanding at the dates indicated.:

	March 31, 2002		December 31, 2001
	(Dollars in thousands)
Loan commitments	$	146,513		$	146,201
Standby letters of credit		4,677			4,785
Commercial letters of credit		27,329			21,634

         At March 31, 2002, our nonperforming assets (nonaccrual loans, loans 90 days or more past due and still accruing interest, restructured loans, and other real estate owned) were $1.6 million, which represented a decrease of approximately $200,000 or 11.1% from $1.8 million at December 31, 2001. This decrease was due to $583,000 charge offs we made during the first quarter. As a percentage of gross loans, nonperforming assets slightly decreased to 0.30% at March 31, 2002, from 0.35% at December 31, 2001.

         The following table illustrates the composition of our nonperforming assets as of the dates indicated.

			March 31, 2002		December 31, 2001
			(Dollars in thousands)
Nonaccrual loans			$	1,479	$	1,720
Loan past due 90 days or more, still accruing				46		36
Restructured loans				—		—
		Total Nonperforming Loans		1,525		1,756
Other real estate owned				65		—
	Total Nonperforming Assets		$	1,590	$	1,756

Allowance for Loan Losses

         The allowance for loan losses represents the amounts that we have set aside for the specific purpose of absorbing losses that may occur in our loan portfolio. The provision for loan losses is an expense charged against operating income and added to the allowance for loan losses. Actual loan losses or recoveries are charged or credited, respectively, directly to the allowance for loan losses.

20

         We continue to carefully monitor the allowance of loan losses in relation to the size of our loan portfolio and known risks or problem loans. Central to our credit risk management is our credit risk rating system. Both internal, contracted external, and regulatory credit reviews are used to determine and validate loan risk grades. Our credit review system takes into consideration factors such as: borrower’s background and experience; historical and current financial condition; credit history and payment performance; industry and the economy; type, market value, and volatility of market value of collateral, and our lien position; and the financial strength of guarantors.

         We use three different methodologies to determine the adequacy of the Allowance: (1) the Migration Analysis; (2) the Reasonableness Test; and (3) the Specific Allocation method.

         The Migration Analysis is a formula method based on our actual historical net charge-off experience for each loan type pools and undisbursed commitments graded Pass (less cash secured loans), Special Mention, Substandard, and Doubtful.

         We use an eight-quarter rolling average of historical losses detailing charge-offs, recoveries, and loan type pool balances to determine the estimated credit losses for non-classified and classified loans. Also, in order to reflect the impact of recent events, the eight-quarter rolling average has been weighted. The most recent four quarters have been assigned a 60% weighted average and the older four quarters have been assigned a 40% weighted average.

         The resulting migration risk factors, or our established minimum risk factor for loan type pools that have no historical loss, whichever is greater, for each loan type pool is used to calculate our General Reserve. For loan type pools that have no historical loss, we have established a minimum risk factor for each loan grade Pass (0.40% — 1.0%), Special Mention (3.0% — 5.0%), Substandard (7.0% — 15.0%), Doubtful (50.0%), and Loss (100.0%).

         For unfunded/undisbursed commitments and contingent liabilities, we use 50.0% of the migration/minimum risk factor for loans graded Pass, due to the fact that in many cases the Bank has the option of freezing or withholding unfunded loan proceeds if the Bank becomes aware of a problem or potential problem with the borrower. For graded loans (Special Mention, Substandard, Doubtful, and Loss), 100% of the migration/minimum risk factor is assigned to the unfunded/undisbursed commitments and contingent liabilities.

         For identified impaired loans, if the calculated impairment is less than the migration risk factor, the migration risk factor is used. If the calculated impairment is greater than the migration risk factor, the General Reserve is increased by the amount of the difference.

         Additionally, in order to systematically quantify the credit risk impact of trends and changes within the loan portfolio, we subjectively, within established parameters, make adjustments to the Migration Analysis for:

• 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.

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• 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 nonaccrual loans and troubled debt restructurings, and other loan modifications.

• Changes in the quality of our 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.

• Transfer risk on cross-border lending activities.

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

         Our parameters for making adjustments are established under a Credit Risk Matrix that provides seven possible scenarios for each of the above factors. The matrix allows for three positive/decrease (Major, Moderate, and Minor), three negative/increase (Major, Moderate, and Minor), and one neutral credit risk scenarios within each factor for each loan type pool. Generally, the factors are considered to have no impact (neutral) to our migration ratios. However, if information exists to warrant adjustment to the Migration Analysis, we make the changes in accordance with the established parameters supported by narrative and/or statistical analysis. Our Credit Risk Matrix and the seven possible scenarios enable us to adjust the Migration Analysis as much as 50 basis points in either direction (positive or negative) for each loan type pool.

         The Reasonableness Test is based on a national historical loss experience for each loan graded Special Mention, Substandard, Doubtful, and Loss; and an established minimum for loans graded Pass. The reserve factors applied under this method are: 1.0% for loans graded Pass; 5.0% for loans graded Special Mention; 15.0% for loans graded Substandard; 50.0% for loans graded Doubtful; and 100.0% for loans graded Loss. This method in not intended to substitute or override the Bank’s other methodologies, but rather is used for comparative purposes.

         Under the Specific Allocation method, management establishes specific allowances for loans where management has identified significant conditions or circumstances related to a credit that are believed to indicate the probability that a loss may be incurred. The specific allowance amount is determined by a method prescribed by the Statement of Financial Accounting Standards (SFAS) No. 114, “Accounting by Creditors for Impairment of a Loan.” Our actual historical repayment experience and the borrower’s cash flow, together with an individual analysis of the collateral held on a loan, is taken into account in determining the allocated portion of the required Allowance under this method. As estimations and assumptions change, based on the most recent information available for a credit, the amount of the required specific allowance for a credit will increase or decrease. The Migration Analysis risk factor is used to determine the unallocated portion of the required Allowance under this method. By analyzing the identified credits on a quarterly basis, we are able to adjust a specific allowance based upon the most recent information that has become available.

22

         The allowance for loan losses was $6.8 million at March 31, 2002, compared to $6.9 million at March 31, 2001. We recorded a provision of $350,000 for the first quarter of 2002 due to the increased loan portfolio. During the first quarter of 2002, we charged off $583,000 and recovered $310,000. The allowance for loan losses was 1.29% of gross loans at March 31, 2002 compared to 1.74% at March 31, 2001. This decrease in the ratio was primarily due to an increase in new loans in the loan portfolio which require lower reserves and a decrease in non-performing loans.

         Based on the calculation and continued loan recoveries, we believe the level of allowance as of March 31, 2002 is adequate to absorb the estimated losses from any known or inherent risks in the loan portfolio and the loan growth for the quarter. However, no assurance can be given that economic conditions which adversely affect our service areas or other circumstances will not be reflected in increased provisions or loan losses in the future.

         The following table shows the provisions made for loan losses, the amount of loans charged off, the recoveries on loans previously charged off together with the balance in the allowance for possible loan losses at the beginning and end of each period, the amount of average and total loans outstanding, and other pertinent ratios as of the dates and for the periods indicated:

					Quarter Ended			Quarter Ended
					March 31, 2002			March 31, 2001
					(Dollars in thousands)
Loans:
		Average gross loans			$	513,888		$	386,096
		Total gross loans at end of period (net of unearned fees)				526,175			399,724
Allowance:
		Balance – beginning of period				6,710			7,881
		Loans charged off:
				Commercial		534			1,623
				Consumer		49			67
				Real estate		—			83
				Total loans charged off		583			1,773
		Less: Recoveries on loan previous charged off Commercial				295			323
			Consumer			13			148
			Real estate			2			370
				Total recoveries		310			841
		Net loan charged-off				273			932
		Provision for loan losses				350			—
	Less: provision for losses on commitments and letters of credit					—			—
	Balance — end of period				$	6,787		$	6,949
RATIO
	Net loan charge-offs to average total loans					0.05	%		0.24	%
	Net loan charge-offs to total loans at end of period					0.05	%		0.23	%
	Allowance for loan losses to average total loans					1.32	%		1.80	%
	Allowance for loan losses to total loans at end of period					1.29	%		1.74	%
	Net loan charge-offs to beginning allowance					4.05	%		11.83	%
	Net loan charge-offs to provision for loan losses					77.71	%		N/A

23

Deposits and Other Borrowings

         Deposits.Deposits are our primary source of funds to use in lending and investment activities. At March 31, 2002, our deposits increased by $18.0 million or 3.1% to $607.8 million from $589.8 million at December 31, 2001. Demand deposits totaled $201.6 million, which represented an increase of $2.5 million or 1.3% from $199.1 million at December 31, 2001. Time deposits over $100,000 totaled $160.5 million, which represented an increase of $2.3 million or 1.5% from $158.2 million at December 31, 2001. Other interest-bearing demand deposits, including money market and super now accounts, totaled $95.1 million, which represented an increase of $11.0 million or 13.1% from $84.1 million at December 31, 2001. This increase is the result of one money market account depositor whose balance fluctuated throughout the quarter, but maintained a large balance at quarter end.

         At March 31, 2002, 33.2% of the total deposits were non-interest bearing demand deposits, 37.5% were time deposits, 13.7% were savings accounts, and 15.6% were interest bearing demand deposits. By comparison, at December 31, 2001, 33.8% of the total deposits were non-interest bearing demand deposits, 38.6% were time deposits, 14.3% were savings accounts, and 13.4% were interest bearing demand deposits.

         At March 31, 2002, we had a total of $4.1 million in broker time deposits: $2.1 million maturing in five year bearing an interest rate of 5.65% and $2.0 million maturing in two years bearing an interest rate of 5.30%. We also had $5.0 million in time deposits maturing in 3 months bearing an interest rate of 1.83% and $5.0 million in time deposits maturing in 2 months bearing an interest rate of 2.19% from the State of California Treasurer’s Office, collateralized with our securities, with an amortized cost of $11.8 million.

         On September 30, 1999, we issued five-year subordinated capital notes in the aggregate amount of $4.3 million with a stated interest rate of 9.0%, maturing on September 30, 2004 but with a prepayment option commencing September 30, 2002. Interest on the notes is payable quarterly. It is our current intention to pay out the principal at the end of three-year term on September 30, 2002, which is allowable as indicated in the note agreement. At March 31, 2002, $1.7 million, which represents 40% of the total outstanding amount of the notes, qualified as risk-based Tier 2 capital.

         In October of 2000, we established a borrowing line with the FHLB of San Francisco. Advances may be obtained from the FHLB of San Francisco to supplement our supply of lendable funds. Advances from the FHLB of San Francisco are typically secured by a pledge of mortgage loan and/or securities, with a market value at least equal to outstanding advances plus investment in FHLB stocks. The following table shows our outstanding borrowings from FHLB at March 31, 2002.

FHLB Advances			Issue Date		Maturity Date		Rate
	$5,000,000			10/19/2000		10/19/2007		6.70	%
		5,000,000		02/04/2002		02/04/2004		3.39	%
		2,000,000		02/27/2002		02/27/2003		2.42	%
		3,000,000		02/28/2002		08/28/2002		2.02	%
	$15,000,000							4.09	%

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         Nara Bancorp established special purpose trusts in 2000 and 2001 for the purpose of issuing Preferred Trust Securities (the “Trust Securities”). The trusts exist for the sole purpose of issuing Trust Securities and investing the proceeds thereof in Junior Subordinate Debentures issued by Nara Bancorp. Payment of distributions out of the monies held by the trusts and payments on liquidation of the trusts or the redemption of the Junior Subordinated Debentures are guaranteed by Nara Bancorp to the extent the trusts have funds available thereof. The obligation of Nara Bancorp under the guarantees and the Junior Subordinate Debentures are subordinate and junior in right of payment to all indebtedness of Nara Bancorp and are structurally subordinated to all liabilities and obligations of Nara Bancorp’s subsidiaries. The table below summarizes the outstanding Junior Subordinated Debentures issued by each special purpose trust and the debentures issued by Nara Bancorp to each trust as of March 31, 2002.

TRUST SECURITIES

TRUST SECURITIES AND JUNIOR SUBORDINATED DEBENTURES

TRUST NAME

ISSUANCE DATE

AMOUNT

PRINCIPAL BALANCE OF DEBENTURES

STATED MATURITY

ANNUALIZED COUPON RATE

INTEREST DISTRIBUTION DATES

(DOLLARS IN THOUSANDS)

Nara Capital Trust I

March 2001

$

10,000

$

10,400

June 8, 2031

10.18%

June 8 and December 8

Nara Statutory Trust II

March 2002

$

8,000

$

8,248

March 26, 2032

3 month LIBOR + 3.6%

March 26, June 26,

September 26 and

December 26

         The Junior Subordinate Debentures are not redeemable prior to June 8, 2011 with respect to Nara Capital Trust I and March 26, 2007 with respect to Nara Statutory Trust II unless certain events have occurred. The proceeds from the issuance of the Trust Securities were used primarily for corporate purposes.

Stockholders’ Equity and Regulatory Capital

         In order to ensure adequate levels of capital, we conduct an ongoing assessment of projected sources and uses of capital in conjunction with projected increases in assets and levels of risk. We consider on an ongoing basis, among other things, cash generated from operations, access to capital from financial markets or the issuance of additional securities, including common stock or notes, to meet our capital needs. Total stockholders’ equity was $61.2 million at March 31, 2002. This represented an increase of $5.8 million or 10.5% over total stockholders’ equity of $55.4 million at December 31, 2001.

         The federal banking agencies require a minimum ratio of qualifying total capital to risk-adjusted assets of 8% and a minimum ratio of Tier 1 capital to risk-adjusted assets of 4%. In addition to the risk-based guidelines, federal banking regulators require banking organizations to maintain a minimum amount of Tier 1 capital to total assets, referred to as the leverage ratio. For a banking organization rated in the highest of the five categories used by regulators to rate banking organizations, the minimum leverage ratio of Tier 1 capital to total assets must be 3%. In addition to these uniform risk-based capital guidelines and leverage ratios that apply across the industry, the regulators have the discretion to set individual minimum capital requirements for specific institutions at rates significantly above the minimum guidelines and ratios.

         At March 31, 2002, Tier 1 capital, stockholders’ equity less intangible assets, plus proceeds from the Trust Securities, was $77.4 million. This represented an increase of $14.0 million or 22.1% over total Tier 1 capital of $63.4 million at December 31, 2001. This increase

25

was due to an additional $8.0 million in Trust Preferred Securities we sold and net income of $6.4 million offset by a cash dividend of $560,000, which we declared during the first quarter of 2002. At March 31, 2002, we had a ratio of total capital to total risk-weighted assets of 14.14% and a ratio of Tier 1 capital to total risk weighted assets of 12.74%. The Tier 1 leverage ratio was 11.28% at March 31, 2002.

         The following table presents the amounts of our regulatory capital and capital ratios, compared to regulatory capital requirements for adequacy purposes as of March 31, 2002 and December 31, 2001.

	As of March 31, 2002 (Dollars in thousands)
	Actual					Required						Excess
	Amount		Ratio				Amount		Ratio				Amount		Ratio
Leverage ratio	$	77,387		11.28	%		$	27,453		4.00	%		$	49,934		7.28	%
Tier 1 risk-based capital ratio	$	77,387		12.74	%		$	24,302		4.00	%		$	53,085		8.74	%
Total risk-based capital ratio	$	85,894		14.14	%		$	48,604		8.00	%		$	37,290		6.14	%

	As of March 31, 2001 (Dollars in thousands)
	Actual					Required						Excess
	Amount		Ratio				Amount		Ratio				Amount		Ratio
Leverage ratio	$	63,389		9.64	%		$	26,298		4.00	%		$	37,091		5.64	%
Tier 1 risk-based capital ratio	$	63,389		10.91	%		$	23,231		4.00	%		$	40,158		6.91	%
Total risk-based capital ratio	$	71,818		12.37	%		$	46,462		8.00	%		$	25,356		4.37	%

Regulator Issues – Consent Order

         On February 20, 2002, Nara Bank and its Board of Directors signed a Stipulation and Consent to the Issuance of a Consent Order (the “Consent Order”) with the Office of the Comptroller of the Currency (the “OCC”). Nara Bank, without admitting to any allegations, entered into the Consent Order in connection with alleged deficiencies relating to the lack of sufficient internal controls, procedures and inadequate compliance with the Bank Secrecy Act. Failure to comply with a consent order permits the OCC to take various actions, including assessing civil monetary penalties or initiating termination of insurance proceedings, either of which, if taken against Nara Bank, would materially and adversely affect or render it impossible for us to continue our business and operations. In May 2002, the OCC completed a preliminary examination of Nara Bank to evaluate its progress in complying with the Consent Order. Although, Nara Bank had not fully complied with the Consent Order, Management is taking all necessary steps to comply with the Consent Order, the Bank Secrecy Act and anti-money laundering regulations and anticipates being in full compliance with the Consent Order before the OCC’s re-evaluation, which is expected before the end of this year.

Item 3. Quantitative and qualitative disclosures about market risk

General

         Market risk is the risk of loss to future earnings, to fair values, or to future cash flow that may result from changes in the price of a financial institution. The value of a financial instrument may change as a result of changes in interest rates, foreign currency exchange rates, commodity prices, equity prices, and other market changes that affect market risk sensitive instruments.

26

         Market risk is attributed to all market risk sensitive financial instruments, including securities, loans, deposits, and borrowings, as well as derivative instruments. Our exposure to market risk is a function of our asset and liability management activities and our role as a financial intermediary in customer-related transactions. The objective of market risk management is to avoid excessive exposure of our earnings and equity to loss and to reduce the volatility inherent in certain financial instruments.

         The management of market risk is governed by policies reviewed and approved annually by the Board of Directors of Nara Bank (“Board”). The Board delegates responsibility for market risk management to the Asset and Liability Management Committee (ALCO), which is composed of Nara Bank’s senior executives and other designated officers. ALCO makes changes in the mix of assets and liabilities. ALCO also reviews and approves market risk-management programs and market risk limits.

Liquidity and Interest Rate Sensitivity

         Liquidity risk is the risk to earnings or capital resulting from our inability to meet our obligations when they come due without incurring unacceptable losses. Liquidity risk includes the ability to manage unplanned decreases or changes in funding sources and to recognize or address changes in market conditions that affect our ability to liquidate assets quickly and with a minimum loss of value. Factors considered in liquidity risk management are stability of the deposit base, marketability, maturity, and pledging of investments, and demand for credit.

         In general, we manage liquidity risk daily by controlling the level of federal funds and the use of funds provided by the cash flow from the investment portfolio. To meet unexpected demands, lines of credit are maintained with correspondent banks, the Federal Reserve Bank, and Federal Home Loan Bank. The sale of investment securities available–for-sale also can also serve as a contingent source of funds. Increases in deposit rates are considered a last resort as a means of raising funds to increase liquidity.

         Our liquid assets include cash and cash equivalents, interest-bearing deposits in other banks, federal funds sold and securities available-for-sale. The aggregate of these assets totaled $156.0 million at March 31, 2002, compared to $138.2 million at December 31, 2001.

         Because the primary sources and uses of funds are loans and deposits, the relationship between gross loans and deposits provides a useful measure of our liquidity. Typically, the closer the ratio of loans to deposits is to 100%, the more we rely on our loan portfolio to provide for short-term liquidity needs. Because repayment of loans tends to be less predictable than the maturity of investments and other liquid resources, the higher the loan to deposit ratio, the less liquid are our assets. At March 31, 2002, our loan to deposit ratio averaged 86.9% compared to an average ratio of 82.6% at December 31, 2001.

         Our results of operation are largely dependent upon our ability to manage interest rate risk, which is the impact of adverse fluctuations in interest rates on our net interest income and net portfolio value. Although in the normal course of business we manage other risks, such as credit and liquidity risk, management considers interest rate risk to be its most significant market risk and could potentially have the largest material effect on our financial condition and results of operations

         The fundamental objective of the asset liability management process is to manage our exposure to interest rate fluctuations while maintaining adequate levels of liquidity and capital.

27

         The Asset Liability Committee meets monthly to monitor the interest rate risk, the sensitivity of our assets and liabilities to those interest rate changes, investment activities and directs changes in the composition of the balance sheet. Our balance sheet is inherently asset sensitive, which means that assets generally reprice more often than liabilities. Since an asset-sensitive balance sheet tends to reduce net interest income when interest rates decline and to increase net interest income when interest rate rise, careful forecast of interest rate and security portfolio changes are used to manage the interest rate risk.

         We use gap analysis monthly to measure the repricing mismatches between interest earning assets and interest bearing liabilities. The interest rate sensitivity gap is determined by subtracting the amount of interest bearing liabilities from the amount of interest earning assets that reprice in a specified time period. The gap analysis presented below indicates that assets that are rate sensitive within one year exceeded liabilities within that same period by $88.3 million at March 31, 2002.

         The following table shows our gap position as of March 31, 2002

		0-90 days		91-365 days			1-3 years		Over 3 yrs		Total
		(Dollars in thousands)
Total Investments *		$	42,398	$	9,342		$	18,466	$	67,554	$	137,760
Total Loans			418,297		9,805			26,430		72,367		526,899
Rate Sensitive Assets:			460,695		19,147			44,896		139,921		664,659
Deposits:
	Time Certificate of Deposit $100,000 or more		98,472		58,102			1054		2,890		160,518
	Time Certificate of Deposit Under $100,000		35,969	��	30,424			1,179		51		67,623
	Money Market		85,774		—			—		—		85,774
	Now Accounts		9,322		—			—		—		9,322
	Savings Accounts		60,705		9,761			—		12,543		83,009
Other liabilities:
	Subordinated Notes		—		—			4,300		—		4,300
	FHLB Borrowings		—		3,000			4,000		5,000		15,000
	Trust Preferred Securities		—		—			—		17,427		17,427
Rate Sensitive Liabilities:		$	290,242	$	101,287		$	13,533	$	37,911	$	442,973
Net Gap Position			170,453		(82,140	)		31,363		102,010
Net Cumulative Gap Position			170,453		88,313			119,676		221,686

* Includes investment securities, federal funds sold, FRB stock, FHLB stocks, and deposits with other banks

         We also use quarterly simulation analysis model to determine the sensitivity of net interest income and economic value sensitivity of the balance sheet. The market value of equity is defined as the present value of assets minus the present value of liabilities. The table below shows the estimated impact of changes in interest rates on net interest income and market value of equity as of March 31, 2002.

28

		Net Interest Income			Market Value
		Volatility			Volatility
		March 31, 2002
Change in Interest Rates (Basis Points)
	+200		13.18	%		-15.04	%
	+100		6.59	%		-7.21	%
	-100		-7.21	%		6.23	%
	-200		-13.92	%		4.82	%

29

PART II
OTHER INFORMATION

Item 1. Legal Proceedings

         We are a party to routine litigation incidental to our business, none of which is considered likely to have a material adverse effect on us.

Item 2. Changes in Securities and Use of Proceeds

         (a)  None.

         (b)  None.

         (c)  On March 26, 2002, Nara Bancorp completed a $8.0 million offering of trust preferred securities, through Nara Statutory Trust II, issued as part of a private-placement pooled offering with several other financial institutions. Keefe, Bruyette & Woods, Inc. acted as placement agent for the pooled offering. For the period beginning on March 26, 2002 to June 25, 2002, the trust preferred securities bear the interest rate of 5.59 percent per annum payable quarterly. Beginning with June 26, 2002, the interest rate is adjusted quarterly beginning March 26, June 26, September 26 and December 26 during the 30-year term based on the 3-month LIBOR plus 3.60 percent. However, prior to March 26, 2007, the interest rate cannot exceed 11.0 percent. Nara Statutory Trust II used the proceeds from the sale of the trust preferred securities to purchase junior subordinated deferrable interest debentures of Nara Bancorp.

         The trust preferred offering was made pursuant to Rule 506 of Regulation D under the Securities Act of 1933 and was made to a limited number of accredited investors. Nara Bancorp incurred $271,000 in underwriting discounts and other fees related to this offering.

Item 3. Defaults upon Senior Securities

         None

Item 4. Submission of Matters to a vote of Security Holders

         Inapplicable

Item 5. Other information

         Inapplicable

Item 6. Exhibits and Reports on Form 8-K

         (a)  Exhibits

30

         The following exhibits constitute compensation plans or arrangements: 10.1, 10.2, 10.3. and 10.9.

Number	Description
2.1	Plan of Reorganization and Merger Agreement among Nara Bancorp, Inc., Nara Bank, N.A. and Nara Interim Bank, N.A.1
2.2	Agreement and Plan of Reorganization between Nara Bank, N.A., Korea First Bank of New York and Korea First Ltd., dated November 9, 19992
3.1	Certificate of Incorporation of Nara Bancorp, Inc.1
3.2	Bylaws of Nara Bancorp, Inc.1
4.1	Form of Stock Certificate of Nara Bancorp, Inc.3
4.2	Subordinated Note Purchase Agreement4
4.3	Warrant Agreement5
4.4	Warrant Certificate Agreement5
4.5	Amended and Restated Trust Agreement of Trust dated March 28, 2001, by and among Delaware Trustee, Wilmington Trust Company as Property Trustee, the Nara Bancorp and the Administrative Trustees named therein9
4.6	Indenture dated March 28, 2001 between the Nara Bancorp and Wilmington Trust Company as Debenture Trustee9
4.7	Common Securities Guarantee Agreement dated March 28, 2001 of the Nara Bancorp9
4.8	Capital Securities Guarantee Agreement dated March 28, 2001 between Nara Bancorp and Wilmington Trust Company as Guarantee Trustee9
4.9	Amended and Restated Declaration of Trust dated March 26, 2002, by and among State Street Bank and Trust Company of Connecticut, National Association, as Institutional Trustee, Nara Bancorp, Inc., as sponsor.9
4.10	Indenture dated March 26, 2002 between the Nara Bancorp and State Street Bank and Trust Company of Connecticut, National Association as Trustee9
4.11	Guarantee Agreement dated March 26, 2002 be and between Nara Bancorp and State Street Bank and Trust Company of Connecticut, National Association9

31

Number	Description
10.1	Nara Bancorp, Inc. 2001 Nara Bank 2000 Continuation Long Term Incentive Plan5
10.2	Nara Bancorp, Inc. 2001 Nara Bank 1989 Continuation Stock Option Plan5
10.3	Nara Bank, N.A. Deferred Compensation Plan9
10.4	Lease for premise located at 118 Broad Avenue, Palisades Park, New Jersey7
10.5	Lease for premise located at 29 West 30th Street, New York, New York7
10.6	Lease for premise located at 138-02 Northern Boulevard., Flushing, New York7
10.7	Lease for premises located at 2250 Broadway, Oakland, California7
10.8	Lease for premises located at 3701 Wilshire Blvd. Los Angeles, California. (incorporated herein by reference to Exhibit 10.8 on 10K filed with the Securities and Exchange Commission on March 31, 2000)
10.9	Employment Agreement between Benjamin B. Hong and Nara Bank, N.A.4
10.10	Consent Order issued by the OCC8
10.11	Tax Sharing Agreement9
10.12	Affiliate Agreement9
10.13	Form of Nara Bancorp, Inc Option Agreement with Nara Bancorp Directors (entered into by directors Ki Suh Park, Jesun Paik, and Steve Kim)9
21.1	List of Subsidiaries9

1.	Incorporated by reference to Exhibits filed with our Statement on Form S-4 filed with the Commission on November 16, 2000.
2.	Incorporated by reference to Exhibits filed with our Statement on Form S-4 filed with the Commission on March 31, 2000.
3.	Incorporated by reference to Exhibits filed with our Statement on Form S-4 filed with the Commission on December 5, 2000.
4.	Incorporated by reference to Exhibits filed with our Statement on Form 10-Q filed with the Commission on May 15, 2001.
5.	Incorporated by reference to Exhibits filed with our Statement on Form S-8 filed with the Commission on April 19, 2001.
6.	Incorporated by reference to Exhibits filed with our Statement on Form 10-K filed with the Commission on March 31, 2000.

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7.	Incorporated by reference to Exhibits filed with our Statement on Form 10-K filed with the Commission on April 2, 2001.
8.	Incorporated by reference to Exhibits filed with our Statement on Form 8-K filed with the Commission on February 26, 2002.
9.	Incorporated by reference to Exhibits filed with our Statement on Form 10K filed with the Commission on April 2, 2002.

(b)  Reports on Form 8-K

         None

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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, thereunto duly authorized.

	NARA BANCORP, INC
Date: May 15, 2002	By /s/ BON T. GOO
	Bon T. Goo
	Chief Financial Officer
	(Principal financial or accounting officer
	and duly authorized signatory)

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