Exhibit 99.1
Center Financial Reports 2009 Third Quarter Results
LOS ANGELES--(BUSINESS WIRE)--October 22, 2009--Center Financial Corporation (NASDAQ: CLFC), the holding company of Center Bank, today reported financial results for its three- and nine-month periods ended September 30, 2009.
2009 THIRD QUARTER SUMMARY:
- Delinquent loans 30 to 89 days past due decreased to $15.6 million at September 30, representing 0.98% of total loans, compared with $29.7 million at June 30, 2009
- Nonaccrual loans increased to $43.0 million at September 30 from $38.9 million at June 30, 2009
- Net charge-offs totaled $11.8 million for Q3, $29.0 million year-to-date
- Provision for loan losses of $10.6 million, versus $29.8 million in Q2 2009
- Allowance for loan losses to gross loans increased to 4.01% as of September 30, from 3.96% at June 30, 2009
- Gross loans further reduced to $1.59 billion from $1.65 billion at June 30, 2009
- Total deposits declined to $1.81 billion at September 30, 2009, reflecting reductions in jumbo time deposits and money market accounts, partially offset by increases in noninterest-bearing deposits
- Higher balances in lower-yielding Federal funds sold due to excess liquidity and the reversal of interest income on nonaccrual loans pressure net interest margin, down 11 basis points to 2.85% from 2.96% from for Q2 2009
- Net loss reduced to $2.5 million for Q3 2009 from $12.8 million for Q2 2009
- Company remains strongly capitalized with total risk-based capital ratio of 13.43% at September 30, 2009
- Tangible common equity to tangible assets, a non-GAAP financial measure, increased to 6.41% at September 30, 2009 from 6.32% at June 30, 2009
“The assertive actions taken in the second quarter of 2009 have positioned us on strong grounds to manage through one of the most challenging credit environments in history,” said Jae Whan (J.W.) Yoo, president and chief executive officer. “While additional loans migrated to nonaccrual status during the third quarter, we are gratified to see that the flows into delinquencies 30 to 89 days past due subsided considerably. We continue to stay in front of potential issues by identifying impaired loans early on, proactively working with our customers to seek resolutions and tactically disposing of problem assets. This is underscored by the resolution of four large credits, two of which were nonperforming loans and two that were delinquent 60 to 89 days, for an aggregate total of $25.2 million during the quarter.”
ASSET QUALITY
Nonperforming loans as of September 30, 2009 totaled $43.0 million, compared with $38.9 million at June 30, 2009. The increase primarily reflects net additions of $20.7 million in commercial real estate (CRE) loans, offset by reductions of $11.7 million in commercial real estate construction loans and $5.3 million in commercial business loans. Total nonperforming assets as of September 30, 2009, including $4.8 million in other real estate owned (OREO), equaled $47.8 million, or $44.7 million net of the SBA guarantee. This compares with total nonperforming assets of $43.5 million as of June 30, 2009, or $41.0 million net of the SBA guarantee, including $4.6 million in OREO. Total nonperforming assets as a percentage of gross loans and OREO amounted to 2.99% at September 30, 2009, compared with 2.63% as of June 30, 2009.
The company attributed the increase in nonperforming CRE loans to five loan relationships totaling $20.6 million, of which $11.5 million in loans is related to industrial buildings, $4.0 million to vacant land, $2.2 million to retail commercial real estate and $2.9 million to a multi-family apartment building.
Delinquent loans 30 to 89 days past due were sharply lower at $15.6 million as of September 30, 2009, compared with $29.7 million at June 30, 2009, primarily reflecting the migration of loans from delinquent to nonaccrual status. The company noted that troubled debt restructurings (TDRs) increased to $21.9 million at September 30, 2009, of which $17.0 million is included in nonaccrual loans. At June 30, 2009, TDRs amounted to $1.4 million.
Net charge-offs during the 2009 third quarter declined to $11.8 million from $14.4 million in the preceding second quarter, and increased year-to-date net charge-offs to $29.0 million. As a percentage of average loans on an annualized basis, net charge-offs equaled 2.33% for the nine months ended September 30, 2009, versus 2.05% for the six months ended June 30, 2009.
Center Financial recorded a provision for loan losses of $10.6 million for the 2009 third quarter, compared with a $29.8 million provision in the preceding 2009 second quarter. The allowance for loan losses totaled $64.0 million as of September 30, 2009 and represented 4.01% of gross loans. As of June 30, 2009, the allowance for loan losses was $65.2 million, representing 3.96% of gross loans.
LOANS & DEPOSITS
Gross loans at September 30, 2009 totaled $1.59 billion, reflecting a decrease of $53.8 million from June 30, 2009. The strategic reductions reflect significantly lower levels of loan production in the difficult credit environment, higher levels of loan pay-offs and charge-offs, and the resolution of four larger credits previously mentioned. Net loans as a percentage of total assets declined to 69.4% at September 20, 2009 from 69.7% at June 30, 2009, principally due to higher levels of liquidity on balance sheet.
Total deposits declined to $1.81 billion at September 30, 2009 from $1.85 billion at June 30, 2009. Noninterest-bearing demand deposits grew to $332.5 million at September 30, 2009 from $314.6 million at June 30, 2009 and increased as a percentage of total deposits to 18.4% from 17.0% respectively. This increase was offset by reductions in the company’s money market accounts and jumbo time deposits. At September 30, 2009, money market deposits decreased to $503.0 million from $530.4 million at June 30, 2009. Time deposits at the close of the 2009 third quarter fell to $897.0 million from $932.0 million at June 30, 2009. The company’s loan-to-deposit ratio equaled 84.4% at September 30, 2009, compared with 85.2% at June 30, 2009.
The average cost of interest-bearing deposits continued to decline and was 2.36% for the three months ended September 30, 2009. This compares with 2.68% for the preceding 2009 second quarter.
BALANCE SHEET SUMMARY & CAPITAL
Total assets at September 30, 2009 increased to $2.20 billion from $2.06 billion at year-end 2008, reflecting higher levels of liquidity on the balance sheet, partially offset by a continued reduction in the company’s loan portfolio. Average interest-earning assets for the 2009 third quarter equaled $2.06 billion, compared with $2.08 billion for the preceding second quarter, reflecting the lower balances in the company’s loan portfolio.
Total shareholders’ equity at September 30, 2009 was $197.7 million, compared with $214.6 million at December 31, 2008. As of September 30, 2009, the company’s tangible common equity as a percentage of tangible assets equaled 6.41%, compared with 7.69% at December 31, 2008. Center Financial remains strongly capitalized, exceeding all regulatory guidelines. As of September 30, 2009, the company’s capital position improved from the preceding period end with total risk-based capital ratio increasing to 13.43%, Tier 1 risk-based capital ratio advancing to 12.15%, and Tier 1 leverage ratio expanding to 9.41%.
2009 THIRD QUARTER OPERATIONAL HIGHLIGHTS
Net interest income before provision for loan losses totaled $14.8 million for the three months ended September 30, 2009, compared with $15.3 million for the three months ended June 30, 2009 and $19.8 million in the third quarter of 2008. The company attributed the decrease to market rate reductions and the reversal of interest on non-accrual loans, which lowered its yield on loans. The average yield on loans for the 2009 third quarter declined by 21 basis points to 5.91% from 6.12% in the preceding 2009 second quarter and fell by 98 basis points from the prior-year third quarter. The average yields on the investment portfolio were 3.82% for the 2009 third quarter, 4.14% for the 2009 second quarter and 4.97% for the third quarter of 2008.
The company’s net interest margin for the 2009 third quarter was 2.85%, compared with 2.96% in the preceding second quarter and 4.02% in the third quarter a year ago. The compression in net interest margin principally reflects the decline in weighted average loan yields, decreasing loan balances, the reversal of previously accrued interest income on loans placed on non-accrual status during the quarter and higher balances in low-yielding Federal funds sold.
Noninterest income totaled $3.3 million in the 2009 third quarter, versus $3.5 million in the 2009 second quarter and $3.4 million in the prior-year third quarter.
Total noninterest expense was stable at $11.7 million for the 2009 third and second quarters. For the year-ago third quarter, total noninterest expense was $27.0 million, including two large expenses totaling $15.0 million related to a non-cash, other-than-temporary impairment expense and the complete resolution of the long-standing Korea Export Insurance Corporation litigation during the quarter. The company’s efficiency ratio for the 2009 third quarter equaled 64.55%, compared with 62.48% for the preceding 2009 second quarter and 116.51% for the 2008 third quarter.
Center Financial incurred a net loss of $2.5 million, equal to $0.19 per common share, for the 2009 third quarter. This is down from a net loss of $12.8 million, or $0.81 per common share, for the preceding 2009 second quarter, and a net loss of $3.2 million, equal to $0.19 per common share, for the prior-year third quarter.
For the 2009 third quarter, Center Financial posted a loss on average assets and loss on average equity of 0.45% and 5.01%, respectively. This compares with loss on average assets of 2.32% and loss on average equity of 23.95% in the preceding second quarter of 2009. For the year-ago third quarter, loss on average assets equaled 0.61% and loss on average equity was 7.59%.
Yoo concluded, “Center Financial’s board and management team will not hesitate to do what it takes to ensure the healthy survival of the Center Bank franchise and enhance the value of the organization for our customers, employees and shareholders. We look forward to emerging from this economic downturn as the leading bank in our niche providing the best strategic advantages.”
Use of Non-GAAP Financial Measures
This news release includes “non-GAAP financial measures” within the meaning of the Securities and Exchange Commission rules. Tangible common equity per common share and tangible common equity to tangible assets are non-GAAP financial measures. Tangible common equity was calculated as total shareholders’ equity less preferred stock and related dividend and accretion of preferred stock discount, goodwill and intangible assets, net. Tangible common equity to tangible assets represents tangible common equity divided by total assets less goodwill and other intangible assets, net. The calculation of tangible common equity may differ among companies in light of diversity in presentation in the marketplace. Management believes that these measures are useful when comparing banks with preferred stock due to TARP funding to banks without preferred stock on their balance sheet and for evaluating a company’s capital levels. This information is being provided in response to market participant interest in these financial metrics. This information is not intended to be considered in isolation or as a substitute for the relevant measures calculated in accordance with U.S. GAAP. The reconciliations of these non-GAAP financial measures to GAAP financial measure included in this news release are attached herein.
Investor Conference Call
The company will host an investor conference call at 9:15 a.m. PDT (12:15 EDT) on Thursday, October 22, 2009 to review the financial results for its third quarter ended September 30, 2009. The call will be open to all interested investors through a live, listen-only audio Web broadcast via the Internet at www.centerbank.com. Listeners are encouraged to visit the Web site at least 15 minutes prior to the start of the scheduled presentation to register, download and install any necessary audio software. For those who are not available to listen to the live broadcast, the audio broadcast will be archived for one year. A telephonic replay of the call will be available through Thursday, October 29, 2009 by dialing 888-286-8010 (domestic) or 617-801-6888 (international) and entering replay passcode 31174236.
About Center Financial Corporation
Center Financial Corporation is the holding company of Center Bank, a community bank offering a full range of financial services for diverse ethnic and small business customers. Founded in 1986 and specializing in commercial and SBA loans and trade finance products, Center Bank has grown to be one of the nation’s soundest financial institutions focusing on the Korean-American community, with total assets of $2.20 billion at September 30, 2009. Headquartered in Los Angeles, Center Bank operates a total of 19 full-service branches and one loan production office. The company has 16 full-service branches located throughout Southern California. Center Bank also operates two branches and one loan production office in the Seattle area, along with one branch in Chicago. Center Bank is a California state-chartered institution and its deposits are insured by the FDIC to the extent provided by law. For additional information on Center Bank, visit the company’s Web site at www.centerbank.com.
This release contains forward-looking statements, which are included in accordance with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties, and actual results and performance in future periods may be materially different from any future results or performance suggested by the forward-looking statements in this release. Factors that might cause such differences include, but are not limited to, those identified in our cautionary statements contained in Center Financial Corp.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008 (See Business, and Management’s Discussion and Analysis), and other filings with the Securities and Exchange Commission (SEC) are incorporated herein by reference. These factors include, but are not limited to: competition in the financial services market for both deposits and loans; the ability of Center Financial and its subsidiaries to increase its customer base; changes in interest rates; new litigation or changes or adverse developments in existing litigation; and regional and general economic conditions. Such forward-looking statements speak only as of the date of this release. Center Financial expressly disclaims any obligation to update or revise any forward-looking statements found herein to reflect any changes in the company’s expectations of results or any change in events.
CENTER FINANCIAL CORPORATION | ||||||||
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited) | ||||||||
9/30/2009 | 12/31/2008 | |||||||
(Dollars in thousands) | ||||||||
ASSETS | ||||||||
Cash and due from banks | $ | 37,369 | $ | 45,129 | ||||
Federal funds sold | 217,615 | 50,435 | ||||||
Money market funds and interest-bearing deposits in other banks | 52,039 | 2,647 | ||||||
Cash and cash equivalents | 307,023 | 98,211 | ||||||
Securities available for sale, at fair value | 253,575 | 173,833 | ||||||
Securities held to maturity, at amortized cost (fair value of $0 as of September 30, 2009 and $8,879 as of December 31, 2008) | - | 8,861 | ||||||
Federal Home Loan Bank and Pacific Coast Bankers Bank stock, at cost | 15,673 | 15,673 | ||||||
Loans, net of allowance for loan losses of $63,978 as of September 30, 2009 and $38,172 as of December 31, 2008 | 1,510,564 | 1,669,476 | ||||||
Loans held for sale, at the lower of cost or fair value | 17,789 | 9,864 | ||||||
Premises and equipment, net | 13,698 | 14,739 | ||||||
Customers' liability on acceptances | 1,982 | 4,503 | ||||||
Other real estate owned, net | 4,813 | - | ||||||
Accrued interest receivable | 7,679 | 7,477 | ||||||
Deferred income taxes, net | 25,669 | 19,855 | ||||||
Investments in affordable housing partnerships | 11,870 | 12,936 | ||||||
Cash surrender value of life insurance | 12,291 | 11,992 | ||||||
Income tax receivable | 11,125 | 2,327 | ||||||
Goodwill | 1,253 | 1,253 | ||||||
Intangible assets, net | 173 | 213 | ||||||
Other assets | 6,665 | 5,396 | ||||||
Total | $ | 2,201,842 | $ | 2,056,609 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Liabilities | ||||||||
Deposits: | ||||||||
Noninterest-bearing | $ | 332,541 | $ | 310,154 | ||||
Interest-bearing | 1,477,674 | 1,293,365 | ||||||
Total deposits | 1,810,215 | 1,603,519 | ||||||
Acceptances outstanding | 1,982 | 4,503 | ||||||
Accrued interest payable | 7,108 | 7,268 | ||||||
Other borrowed funds | 147,805 | 193,021 | ||||||
Long-term subordinated debentures | 18,557 | 18,557 | ||||||
Accrued expenses and other liabilities | 18,456 | 15,174 | ||||||
Total liabilities | 2,004,123 | 1,842,042 | ||||||
Commitments and Contingencies | - | - | ||||||
Shareholders' Equity | ||||||||
Preferred stock, par value of $1,000 per share; authorized 10,000,000 shares; issued and outstanding, 55,000 shares as of September 30, 2009 and December 31, 2008, respectively | 53,115 | 52,959 | ||||||
Common stock, no par value; authorized 40,000,000 shares; issued and outstanding, 16,800,726 shares and 16,789,080 shares (including 10,700 shares and 10,400 shares of unvested restricted stock) as of September 30, 2009 and December 31, 2008 | 74,504 | 74,254 | ||||||
Retained earnings | 65,601 | 85,846 | ||||||
Accumulated other comprehensive income, net of tax | 4,499 | 1,508 | ||||||
Total shareholders' equity | 197,719 | 214,567 | ||||||
Total | $ | 2,201,842 | $ | 2,056,609 | ||||
Tangible common equity per common share | $ | 8.40 | $ | 9.42 | ||||
Tangible common equity to tangible assets | 6.41 | % | 7.69 | % | ||||
CENTER FINANCIAL CORPORATION | |||||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Unaudited) | |||||||||||||||||||
Three Months | Nine Months | ||||||||||||||||||
9/30/09 | 6/30/09 | 9/30/08 | 9/30/09 | 9/30/08 | |||||||||||||||
(Dollars in thousands, except per share data) | |||||||||||||||||||
Interest and Dividend Income: | |||||||||||||||||||
Interest and fees on loans | $ | 23,128 | $ | 24,742 | $ | 30,574 | $ | 72,181 | $ | 95,553 | |||||||||
Interest on federal funds sold | 162 | 114 | 24 | 310 | 90 | ||||||||||||||
Interest on taxable investment securities | 2,380 | 2,321 | 2,004 | 6,955 | 5,613 | ||||||||||||||
Interest on tax-advantaged investment securities | 2 | 3 | 51 | 12 | 151 | ||||||||||||||
Dividends on equity stock | 33 | 4 | 228 | 37 | 653 | ||||||||||||||
Money market funds and interest-earning deposits | 11 | 15 | 31 | 56 | 92 | ||||||||||||||
Total interest and dividend income | 25,716 | 27,199 | 32,912 | 79,551 | 102,152 | ||||||||||||||
Interest Expense: | |||||||||||||||||||
Interest on deposits | 9,031 | 9,913 | 10,666 | 27,668 | 36,860 | ||||||||||||||
Interest on borrowed funds | 1,736 | 1,782 | 2,225 | 5,336 | 7,130 | ||||||||||||||
Interest expense on trust preferred securities | 156 | 181 | 259 | 529 | 843 | ||||||||||||||
Total interest expense | 10,923 | 11,876 | 13,150 | 33,533 | 44,833 | ||||||||||||||
Net interest income before provision for loan losses | 14,793 | 15,323 | 19,762 | 46,018 | 57,319 | ||||||||||||||
Provision for loan losses | 10,561 | 29,835 | 2,121 | 54,847 | 6,330 | ||||||||||||||
Net interest income (loss) after provision for loan losses | 4,232 | (14,512 | ) | 17,641 | (8,829 | ) | 50,989 | ||||||||||||
Noninterest Income: | |||||||||||||||||||
Customer service fees | 2,008 | 2,022 | 1,918 | 6,004 | 5,644 | ||||||||||||||
Fee income from trade finance transactions | 543 | 587 | 675 | 1,679 | 1,948 | ||||||||||||||
Wire transfer fees | 275 | 279 | 269 | 820 | 822 | ||||||||||||||
Gain on sale of loans | - | - | 59 | - | 1,019 | ||||||||||||||
Loan service fees | 167 | 185 | 144 | 626 | 445 | ||||||||||||||
Other income | 356 | 401 | 321 | 1,480 | 1,091 | ||||||||||||||
Total noninterest income | 3,349 | 3,474 | 3,386 | 10,609 | 10,969 | ||||||||||||||
Noninterest Expense: | |||||||||||||||||||
Salaries and employee benefits | 4,671 | 4,684 | 6,137 | 13,645 | 19,182 | ||||||||||||||
Occupancy | 1,214 | 1,248 | 1,115 | 3,644 | 3,275 | ||||||||||||||
Furniture, fixtures, and equipment | 713 | 517 | 546 | 1,757 | 1,538 | ||||||||||||||
Data processing | 591 | 522 | 527 | 1,708 | 1,626 | ||||||||||||||
Legal fees | 174 | 408 | 529 | 824 | 2,130 | ||||||||||||||
Accounting and other professional service fees | 425 | 352 | 323 | 1,187 | 1,041 | ||||||||||||||
Business promotion and advertising | 289 | 344 | 469 | 971 | 1,424 | ||||||||||||||
Stationery and supplies | 104 | 105 | 140 | 318 | 429 | ||||||||||||||
Telecommunications | 185 | 152 | 188 | 506 | 537 | ||||||||||||||
Postage and courier service | 79 | 47 | 192 | 272 | 584 | ||||||||||||||
Security service | 269 | 261 | 283 | 775 | 851 | ||||||||||||||
Net loss on sale of securities available for sale | 7 | - | 7,279 | 55 | 7,279 | ||||||||||||||
Regulatory assessment | 642 | 1,642 | 312 | 2,876 | 953 | ||||||||||||||
KEIC litigation settlement | - | - | 7,700 | - | 7,700 | ||||||||||||||
Other operating expenses | 2,347 | 1,463 | 1,229 | 5,112 | 3,909 | ||||||||||||||
Total noninterest expense | 11,710 | 11,745 | 26,969 | 33,650 | 52,458 | ||||||||||||||
(Loss) income before income tax (benefit) provision | (4,129 | ) | (22,783 | ) | (5,942 | ) | (31,870 | ) | 9,500 | ||||||||||
Income tax (benefit) provision | (1,605 | ) | (9,996 | ) | (2,783 | ) | (13,834 | ) | 3,161 | ||||||||||
Net (loss) income | (2,524 | ) | (12,787 | ) | (3,159 | ) | (18,036 | ) | 6,339 | ||||||||||
Preferred stock dividends and accretion of preferred stock discount | (742 | ) | (739 | ) | - | (2,211 | ) | - | |||||||||||
Net (loss) income available to common shareholders | (3,266 | ) | (13,526 | ) | (3,159 | ) | (20,247 | ) | 6,339 | ||||||||||
Other comprehensive income - unrealized gain on securities available for sale, net of income tax expense of $991, $1,644, $1,075, $2,167 and $100 | 1,365 | 2,270 | 1,484 | 2,991 | 138 | ||||||||||||||
Comprehensive (loss) income | $ | (1,159 | ) | $ | (10,517 | ) | $ | (1,675 | ) | $ | (15,045 | ) | $ | 6,477 | |||||
(Loss) earnings per common share | |||||||||||||||||||
Basic | $ | (0.19 | ) | $ | (0.81 | ) | $ | (0.19 | ) | $ | (1.21 | ) | $ | 0.38 | |||||
Diluted | $ | (0.19 | ) | $ | (0.81 | ) | $ | (0.19 | ) | $ | (1.21 | ) | $ | 0.38 | |||||
Weighted average shares outstanding - basic | 16,788,950 | 16,789,080 | 16,577,318 | 16,789,036 | 16,437,778 | ||||||||||||||
Weighted average shares outstanding - diluted | 16,788,950 | 16,789,080 | 16,577,318 | 16,789,036 | 16,474,486 | ||||||||||||||
CENTER FINANCIAL CORPORATION | |||||||||||||||||||||||
SELECTED FINANCIAL DATA (Unaudited) | |||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||
9/30/09 | 6/30/09 | 9/30/08 | |||||||||||||||||||||
Average | Rate/ | Average | Rate/ | Average | Rate/ | ||||||||||||||||||
Balance | Yield | Balance | Yield | Balance | Yield | ||||||||||||||||||
Assets: | |||||||||||||||||||||||
Interest-earning assets: | |||||||||||||||||||||||
Loans | $ | 1,553,814 | 5.91 | % | $ | 1,622,366 | 6.12 | % | $ | 1,766,415 | 6.89 | % | |||||||||||
Federal funds sold | 254,853 | 0.25 | 227,678 | 0.20 | 4,387 | 2.18 | |||||||||||||||||
Investments | 251,891 | 3.82 | 227,014 | 4.14 | 185,109 | 4.97 | |||||||||||||||||
Total interest-earning assets | 2,060,558 | 4.95 | 2,077,058 | 5.25 | 1,955,911 | 6.69 | |||||||||||||||||
Noninterest - earning assets: | |||||||||||||||||||||||
Cash and due from banks | 84,367 | 53,934 | 49,557 | ||||||||||||||||||||
Bank premises and equipment, net | 13,975 | 14,382 | 14,703 | ||||||||||||||||||||
Customers' acceptances outstanding | 2,587 | 3,073 | 3,750 | ||||||||||||||||||||
Accrued interest receivables | 7,427 | 7,037 | 7,547 | ||||||||||||||||||||
Other assets | 62,418 | 53,653 | 42,872 | ||||||||||||||||||||
Total noninterest-earning assets | 170,774 | 132,079 | 118,429 | ||||||||||||||||||||
Total assets | $ | 2,231,332 | $ | 2,209,137 | $ | 2,074,340 | |||||||||||||||||
Liabilities and Shareholders' Equity: | |||||||||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||||
Deposits: | |||||||||||||||||||||||
Money market and NOW accounts | $ | 496,907 | 1.75 | % | $ | 492,730 | 2.09 | % | $ | 393,830 | 2.88 | % | |||||||||||
Savings | 80,529 | 3.24 | 63,569 | 3.48 | 54,424 | 3.52 | |||||||||||||||||
Time certificates of deposit over $100,000 | 585,469 | 2.66 | 582,390 | 2.91 | 688,610 | 3.63 | |||||||||||||||||
Other time certificates of deposit | 353,058 | 2.54 | 344,761 | 2.99 | 128,155 | 3.26 | |||||||||||||||||
1,515,963 | 2.36 | 1,483,450 | 2.68 | 1,265,019 | 3.35 | ||||||||||||||||||
Other borrowed funds | 159,775 | 4.31 | 168,147 | 4.25 | 244,059 | 3.63 | |||||||||||||||||
Long-term subordinated debentures | 18,557 | 3.34 | 18,557 | 3.91 | 18,557 | 5.55 | |||||||||||||||||
Total interest-bearing liabilities | 1,694,295 | 2.56 | 1,670,154 | 2.85 | 1,527,635 | 3.42 | |||||||||||||||||
Noninterest-bearing liabilities: | |||||||||||||||||||||||
Demand deposits | 322,370 | 304,931 | 357,145 | ||||||||||||||||||||
Total funding liabilities | 2,016,665 | 2.15 | % | 1,975,085 | 2.41 | % | 1,884,780 | 2.78 | % | ||||||||||||||
Other liabilities | 14,611 | 19,937 | 23,973 | ||||||||||||||||||||
Total noninterest-bearing liabilities | 336,981 | 324,868 | 381,118 | ||||||||||||||||||||
Shareholders' equity | 200,056 | 214,115 | 165,587 | ||||||||||||||||||||
Total liabilities and shareholders' equity | $ | 2,231,332 | $ | 2,209,137 | $ | 2,074,340 | |||||||||||||||||
Cost of deposits | 1.95 | % | 2.22 | % | 2.62 | % | |||||||||||||||||
Net interest spread | 2.39 | % | 2.40 | % | 3.27 | % | |||||||||||||||||
Net interest margin | 2.85 | % | 2.96 | % | 4.02 | % | |||||||||||||||||
CENTER FINANCIAL CORPORATION | |||||||||||||||||
SELECTED FINANCIAL DATA (Unaudited) | |||||||||||||||||
(Dollars in thousands) | |||||||||||||||||
Nine Months Ended September 30, | |||||||||||||||||
2009 | 2008 | ||||||||||||||||
Average | Rate/ | Average | Rate/ | ||||||||||||||
Balance | Yield | Balance | Yield | ||||||||||||||
Assets: | |||||||||||||||||
Interest-earning assets: | |||||||||||||||||
Loans | $ | 1,614,596 | 5.98 | % | $ | 1,799,893 | 7.09 | % | |||||||||
Federal funds sold | 180,436 | 0.23 | 4,627 | 2.60 | |||||||||||||
Investments | 228,200 | 4.14 | 175,976 | 4.94 | |||||||||||||
Total interest-earning assets | 2,023,232 | 5.26 | 1,980,496 | 6.89 | |||||||||||||
Noninterest - earning assets: | |||||||||||||||||
Cash and due from banks | 59,980 | 58,487 | |||||||||||||||
Bank premises and equipment, net | 14,366 | 14,407 | |||||||||||||||
Customers' acceptances outstanding | 3,166 | 4,182 | |||||||||||||||
Accrued interest receivables | 7,108 | 7,747 | |||||||||||||||
Other assets | 54,063 | 39,775 | |||||||||||||||
Total noninterest-earning assets | 138,683 | 124,598 | |||||||||||||||
Total assets | $ | 2,161,915 | $ | 2,105,094 | |||||||||||||
Liabilities and Shareholders' Equity: | |||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||
Deposits: | |||||||||||||||||
Money market and NOW accounts | $ | 480,777 | 1.94 | % | $ | 350,219 | 3.10 | % | |||||||||
Savings | 65,254 | 3.40 | 54,228 | 3.40 | |||||||||||||
Time certificates of deposit over $100,000 | 658,685 | 2.40 | 760,854 | 4.18 | |||||||||||||
Other time certificates of deposit | 228,078 | 4.23 | 120,361 | 3.97 | |||||||||||||
1,432,794 | 2.58 | 1,285,662 | 3.83 | ||||||||||||||
Other borrowed funds | 168,199 | 4.24 | 255,235 | 3.73 | |||||||||||||
Long-term subordinated debentures | 18,557 | 3.81 | 18,557 | 6.07 | |||||||||||||
Total interest-bearing liabilities | 1,619,550 | 2.77 | 1,559,454 | 3.84 | |||||||||||||
Noninterest-bearing liabilities: | |||||||||||||||||
Demand deposits | 311,058 | 357,913 | |||||||||||||||
Total funding liabilities | 1,930,608 | 2.32 | % | 1,917,367 | 3.12 | % | |||||||||||
Other liabilities | 18,757 | 24,091 | |||||||||||||||
Total noninterest-bearing liabilities | 329,815 | 382,004 | |||||||||||||||
Shareholders' equity | 212,550 | 163,636 | |||||||||||||||
Total liabilities and shareholders' equity | $ | 2,161,915 | $ | 2,105,094 | |||||||||||||
Cost of deposits | 2.12 | % | 3.00 | % | |||||||||||||
Net interest spread | 2.49 | % | 3.05 | % | |||||||||||||
Net interest margin | 3.04 | % | 3.87 | % | |||||||||||||
CENTER FINANCIAL CORPORATION | ||||||||||||||||||||||
SELECTED FINANCIAL DATA (Unaudited) | ||||||||||||||||||||||
(Dollars in thousands) | As of the Dates Indicated | |||||||||||||||||||||
9/30/09 | 6/30/09 | 3/31/09 | 12/31/08 | 9/30/08 | ||||||||||||||||||
Loans | ||||||||||||||||||||||
Real Estate: | ||||||||||||||||||||||
Construction | $ | 21,800 | $ | 37,224 | $ | 53,072 | $ | 61,983 | $ | 62,296 | ||||||||||||
Commercial | 1,095,858 | 1,104,496 | 1,131,682 | 1,134,793 | 1,157,286 | |||||||||||||||||
Commercial | 290,675 | 320,005 | 313,065 | 334,350 | 336,929 | |||||||||||||||||
Trade Finance | 43,602 | 52,000 | 48,813 | 63,479 | 70,395 | |||||||||||||||||
SBA | 43,969 | 38,401 | 37,962 | 37,027 | 38,069 | |||||||||||||||||
Consumer and other | 97,841 | 95,417 | 79,868 | 88,423 | 93,053 | |||||||||||||||||
Total Gross Loans | 1,593,745 | 1,647,543 | 1,664,462 | 1,720,055 | 1,758,028 | |||||||||||||||||
Less: | ||||||||||||||||||||||
Allowance for Losses | 63,978 | 65,197 | 49,778 | 38,172 | 21,485 | |||||||||||||||||
Deferred Loan Fees | 483 | 555 | 1,188 | 1,359 | 1,488 | |||||||||||||||||
Discount on SBA Loans Retained | 931 | 1,016 | 1,102 | 1,184 | 1,284 | |||||||||||||||||
Total Net Loans and Loans Held for Sale | $ | 1,528,353 | $ | 1,580,775 | $ | 1,612,394 | $ | 1,679,340 | $ | 1,733,771 | ||||||||||||
As a percentage of total gross loans: | ||||||||||||||||||||||
Real estate: | ||||||||||||||||||||||
Construction | 1.4 | % | 2.3 | % | 3.2 | % | 3.6 | % | 3.5 | % | ||||||||||||
Commercial | 68.8 | % | 67.0 | % | 68.0 | % | 66.0 | % | 65.8 | % | ||||||||||||
Commercial | 18.2 | % | 19.4 | % | 18.8 | % | 19.4 | % | 19.2 | % | ||||||||||||
Trade finance | 2.7 | % | 3.2 | % | 2.9 | % | 3.7 | % | 4.0 | % | ||||||||||||
SBA | 2.8 | % | 2.3 | % | 2.3 | % | 2.2 | % | 2.2 | % | ||||||||||||
Consumer | 6.1 | % | 5.8 | % | 4.8 | % | 5.1 | % | 5.3 | % | ||||||||||||
Total gross loans | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||
As of the Dates Indicated | ||||||||||||||||||||||
9/30/09 | 6/30/09 | 3/31/09 | 12/31/08 | 9/30/08 | ||||||||||||||||||
Deposits | ||||||||||||||||||||||
Demand deposits (noninterest-bearing) | $ | 332,541 | $ | 314,621 | $ | 306,112 | $ | 310,154 | $ | 367,171 | ||||||||||||
Money market accounts and NOW | 503,006 | 530,410 | 470,741 | 447,275 | 425,156 | |||||||||||||||||
Savings | 77,698 | 77,958 | 52,683 | 52,692 | 54,520 | |||||||||||||||||
913,245 | 922,989 | 829,536 | 810,121 | 846,847 | ||||||||||||||||||
Time deposits | ||||||||||||||||||||||
Less than $100,000 | 336,689 | 335,440 | 321,456 | 312,136 | 218,498 | |||||||||||||||||
$100,000 or more | 560,281 | 596,519 | 513,076 | 481,262 | 553,931 | |||||||||||||||||
Total deposits | $ | 1,810,215 | $ | 1,854,948 | $ | 1,664,068 | $ | 1,603,519 | $ | 1,619,276 | ||||||||||||
As a percentage of total deposits: | ||||||||||||||||||||||
Demand deposits (noninterest-bearing) | 18.4 | % | 17.0 | % | 18.4 | % | 19.3 | % | 22.7 | % | ||||||||||||
Money market accounts and NOW | 27.8 | % | 28.6 | % | 28.3 | % | 27.9 | % | 26.3 | % | ||||||||||||
Savings | 4.2 | % | 4.2 | % | 3.1 | % | 3.3 | % | 3.3 | % | ||||||||||||
50.4 | % | 49.8 | % | 49.8 | % | 50.5 | % | 52.3 | % | |||||||||||||
Time deposits | ||||||||||||||||||||||
Less than $100,000 | 18.6 | % | 18.1 | % | 19.3 | % | 19.5 | % | 13.5 | % | ||||||||||||
$100,000 or more | 31.0 | % | 32.1 | % | 30.9 | % | 30.0 | % | 34.2 | % | ||||||||||||
Total deposits | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||
CENTER FINANCIAL CORPORATION | ||||||||||||||||||||||||
SELECTED FINANCIAL DATA (Unaudited) | ||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
9/30/09 | 6/30/09 | 3/31/09 | 12/31/08 | 9/30/08 | ||||||||||||||||||||
Nonperforming loans: | ||||||||||||||||||||||||
Construction Real Estate | $ | 5,309 | $ | 16,973 | $ | 15,451 | $ | 1,951 | $ | 2,152 | ||||||||||||||
Commercial Real Estate | 25,167 | 4,516 | 18,870 | 13,128 | - | |||||||||||||||||||
Commercial | 8,236 | 13,577 | 18,582 | 2,272 | 1,557 | |||||||||||||||||||
Consumer | 909 | 889 | 416 | 369 | 307 | |||||||||||||||||||
Trade Finance | 1,196 | 1,196 | 1,196 | 1,196 | 2,301 | |||||||||||||||||||
SBA | 2,185 | 1,774 | 1,774 | 1,538 | 2,061 | |||||||||||||||||||
Total nonperforming loans | 43,002 | 38,925 | 56,289 | 20,454 | 8,378 | |||||||||||||||||||
Other real estate owned | 4,813 | 4,567 | - | - | - | |||||||||||||||||||
Total nonperforming assets | 47,815 | 43,492 | 56,289 | 20,454 | 8,378 | |||||||||||||||||||
Guaranteed portion of nonperforming loans through SBA | 3,134 | 2,448 | 2,408 | 2,110 | 2,485 | |||||||||||||||||||
Total nonperforming assets, net of SBA guarantee | $ | 44,681 | $ | 41,044 | $ | 53,881 | $ | 18,344 | $ | 5,893 | ||||||||||||||
Nonperforming loans as a percent of total gross loans | 2.70 | % | 2.36 | % | 3.38 | % | 1.19 | % | 0.48 | % | ||||||||||||||
Nonperforming assets as a percent of total loans and other real estate owned | 2.99 | % | 2.63 | % | 3.38 | % | 1.19 | % | 0.48 | % | ||||||||||||||
Delinquent loans 30-89 days past due | $ | 15,638 | $ | 29,740 | $ | 26,931 | $ | 16,737 | $ | 11,084 | ||||||||||||||
Total nonperforming loans | 43,002 | 38,925 | 56,289 | 20,454 | 8,378 | |||||||||||||||||||
Total delinquent loans | $ | 58,640 | $ | 68,665 | $ | 83,220 | $ | 37,191 | $ | 19,462 | ||||||||||||||
Nine Months | Six Months | Three Months | Year | Nine Months | ||||||||||||||||||||
Ended | Ended | Ended | Ended | Ended | ||||||||||||||||||||
9/30/09 | 6/30/09 | 3/31/09 | 12/31/08 | 9/30/08 | ||||||||||||||||||||
Balances | ||||||||||||||||||||||||
Average total loans outstanding during the period | $ | 1,661,384 | $ | 1,682,918 | $ | 1,678,518 | $ | 1,800,972 | $ | 1,821,449 | ||||||||||||||
Total loans outstanding at end of period(1) | $ | 1,592,331 | $ | 1,645,972 | $ | 1,662,172 | $ | 1,717,511 | $ | 1,755,137 | ||||||||||||||
(1) Net of deferred loan fees and discount on SBA loans sold | ||||||||||||||||||||||||
Allowance for Loan Losses: | ||||||||||||||||||||||||
Balance at beginning of period | $ | 38,172 | $ | 38,172 | $ | 38,172 | $ | 20,477 | $ | 20,477 | ||||||||||||||
Charge-offs: | ||||||||||||||||||||||||
Construction Real Estate | 5,078 | 2,727 | 931 | 402 | 201 | |||||||||||||||||||
Commercial Real Estate | 7,173 | 4,448 | 70 | 319 | 319 | |||||||||||||||||||
Commercial | 15,305 | 8,780 | 1,236 | 4,403 | 3,347 | |||||||||||||||||||
Consumer | 1,298 | 1,104 | 605 | 2,040 | 617 | |||||||||||||||||||
SBA | 786 | 417 | 129 | 581 | 424 | |||||||||||||||||||
Other | - | - | - | 1,144 | 725 | |||||||||||||||||||
Total charge-offs | 29,640 | 17,476 | 2,971 | 8,889 | 5,633 | |||||||||||||||||||
Recoveries | ||||||||||||||||||||||||
Commercial | 253 | 43 | 25 | 128 | 109 | |||||||||||||||||||
Consumer | 299 | 140 | 78 | 131 | 78 | |||||||||||||||||||
SBA | 46 | 30 | 22 | 135 | 114 | |||||||||||||||||||
Other | 1 | 1 | 1 | 12 | 10 | |||||||||||||||||||
Total recoveries | 599 | 214 | 126 | 406 | 311 | |||||||||||||||||||
Net loan charge-offs | 29,041 | 17,262 | 2,845 | 8,483 | 5,322 | |||||||||||||||||||
Provision for loan losses | 54,847 | 44,287 | 14,451 | 26,178 | 6,330 | |||||||||||||||||||
Balance at end of period | $ | 63,978 | $ | 65,197 | $ | 49,778 | $ | 38,172 | $ | 21,485 | ||||||||||||||
Ratios: | ||||||||||||||||||||||||
Net loan charge-offs to average loans(2) | 2.33 | % | 2.05 | % | 0.68 | % | 0.47 | % | 0.39 | % | ||||||||||||||
Provision for loan losses to average total loans(2) | 4.40 | 5.26 | 3.44 | 1.45 | 0.46 | |||||||||||||||||||
Allowance for loan losses to gross loans at end of period | 4.01 | 3.96 | 2.99 | 2.22 | 1.22 | |||||||||||||||||||
Allowance for loan losses to total nonperforming loans | 148.8 | 167.5 | 88.4 | 186.6 | 256.4 | |||||||||||||||||||
Net loan charge-offs to allowance for loan losses at end of period(2) | 60.52 | 52.95 | 22.86 | 22.22 | 33.03 | |||||||||||||||||||
Net loan charge-offs to provision for loan losses | 52.95 | 38.98 | 19.69 | 32.41 | 84.08 | |||||||||||||||||||
(2) Annualized for comparability | ||||||||||||||||||||||||
CENTER FINANCIAL CORPORATION | ||||||||||||||||||||
SELECTED FINANCIAL DATA (Unaudited) | ||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||
9/30/2009 | 6/30/2009 | 9/30/2008 | 9/30/2009 | 9/30/2008 | ||||||||||||||||
Performance ratios: | ||||||||||||||||||||
(Loss) return on average assets | (0.45 | ) | % | (2.32 | ) | % | (0.61 | ) | % | (1.12 | ) | % | 0.40 | % | ||||||
(Loss) return on average equity | (5.01 | ) | (23.95 | ) | (7.59 | ) | (11.35 | ) | 5.17 | |||||||||||
Efficiency ratio | 64.55 | 62.48 | 116.51 | 59.42 | 76.82 | |||||||||||||||
Net loans to total deposits at period end | 84.43 | 85.22 | 107.07 | 84.43 | 107.07 | |||||||||||||||
Net loans to total assets at period end | 69.41 | 69.71 | 85.19 | 69.41 | 85.19 | |||||||||||||||
Capital ratios: | ||||||||||||||||||||
Leverage capital ratio | ||||||||||||||||||||
Consolidated Company | 9.41 | % | 9.38 | % | 8.71 | % | ||||||||||||||
Center Bank | 8.98 | 8.88 | 8.73 | |||||||||||||||||
Tier 1 risk-based capital ratio | ||||||||||||||||||||
Consolidated Company | 12.15 | 11.49 | 9.84 | |||||||||||||||||
Center Bank | 11.59 | 10.84 | 9.86 | |||||||||||||||||
Total risk-based capital ratio | ||||||||||||||||||||
Consolidated Company | 13.43 | 12.76 | 11.03 | |||||||||||||||||
Center Bank | 12.87 | 12.11 | 11.04 | |||||||||||||||||
CENTER FINANCIAL CORPORATION | ||||||||
RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES | ||||||||
(Unaudited) | ||||||||
9/30/2009 | 12/31/2008 | |||||||
Total shareholders' equity | $ | 197,719 | $ | 214,567 | ||||
Less: Preferred stock | (53,115 | ) | (52,959 | ) | ||||
Common stock warrant | (2,051 | ) | (2,051 | ) | ||||
Goodwill and intangible assets, net | (1,426 | ) | (1,466 | ) | ||||
Tangible common equity | $ | 141,127 | $ | 158,091 | ||||
Total assets | $ | 2,201,842 | $ | 2,056,609 | ||||
Less: Goodwill and intangible assets, net | (1,426 | ) | (1,466 | ) | ||||
Tangible assets | $ | 2,200,416 | $ | 2,055,143 | ||||
Common shares outstanding | 16,800,726 | 16,789,080 | ||||||
Tangible common equity to tangible assets | 6.41 | % | 7.69 | % | ||||
Tangible common equity per common share | $ | 8.40 | $ | 9.42 |
CONTACT:
Center Financial Corporation
Lonny Robinson
Chief Financial Officer
213-401-2311
lonnyr@centerbank.com
or
PondelWilkinson Inc.
Angie Yang
Investor Relations
310-279-5967
ayang@pondel.com