Exhibit 99.1
Center Financial Reports 2009 Fourth Quarter and Year-End Results
LOS ANGELES--(BUSINESS WIRE)--January 28, 2010--Center Financial Corporation (NASDAQ:CLFC), the holding company of Center Bank, today reported financial results for its fourth quarter and full year ended December 31, 2009.
2009 FOURTH QUARTER SUMMARY:
- Company closed on two separate private placement transactions raising a total of $86.3 million in new capital
- Company’s capital ratios significantly strengthened with total risk-based capital ratio of 17.66% and tier 1 leverage capital ratio of 12.40% at December 31
- Detailed loan review completed in preparation for planned private placement near year-end
- Provision for loan losses of $22.6 million
- Nonperforming loans of $63.5 million at December 31
- Delinquent loans 30 to 89 days past due of $13.4 million at year-end, representing 0.87% of total loans
- Net charge-offs totaled $28.1 million for Q4, $57.1 million for full year
- Allowance for loan losses to gross loans equal 3.81% at December 31
- Gross loans further reduced to $1.54 billion at year-end
- Noninterest bearing deposits, money market accounts and savings deposit balances increased from September 30, 2009 levels, while time deposits declined significantly as brokered deposits were run off
- Company posts full impairment of its goodwill and core deposit intangible for a total of $1.4 million
- Deferred tax asset impairment of $15.0 million results in net tax provision of $8.0 million
- Net loss of $24.5 million, equal to $1.41 per common share, for the 2009 fourth quarter
“Center Financial closed a most difficult 2009 on high grounds with numerous achievements that strengthened the company’s position going into 2010,” said Jae Whan (J.W.) Yoo, president and chief executive officer. “We continued to strengthen our balance sheet and significantly enhanced our liquidity position. Throughout the year, we made more stringent our methodology for calculating reserves, which contributed to a strong build up of our reserves to levels that we believe sufficiently address the company’s current credit risk profile. We expanded our own stress testing capabilities and are now systematically performing reviews on a quarterly basis. In addition to our regular semi-annual external loan review, we engaged another third party to complete a detailed loan review ahead of imminent capital raise plans.
“Following these actions, Center Financial successfully completed two separate private placements late in the year raising a net total of $82.8 million in new capital for the company. The strong participation by the board and management team underscores a unified commitment to the organization. Both of these transactions were considerably oversubscribed for by the institutional investors and the local Korean-American community. We believe this was a resounding vote of confidence for Center Financial’s leadership to successfully navigate through the current economic storm and capitalize on the opportunities ahead,” Yoo said.
ASSET QUALITY
As previously announced and in preparation for the planned capital raise, Center Financial engaged a third party outside of its semi-annual external loan review to complete a detailed review of the bank’s 200 largest loan relationships. The extensive review, which was designed to be consistent with heightened regulatory standards in the current environment, encompassed approximately 75% of the commercial real estate loan portfolio and included 8 of the 20 largest commercial and industrial loans. Based on this review and considering the market’s expectations for declining commercial real estate valuations, the company proactively migrated a number of previously impaired credits to nonaccrual status and took aggressive actions to dispose of certain potential problem assets.
Nonperforming loans as of December 31, 2009 totaled $63.5 million, compared with $43.0 million at September 30, 2009. Total nonperforming assets as of December 31, 2009, including $4.3 million in other real estate owned (OREO), equaled $67.7 million, or $64.9 million net of the SBA guarantee. This compares with total nonperforming assets at September 30, 2009 of $47.8 million, or $44.7 million net of the SBA guarantee, including $4.8 million in OREO. Total nonperforming assets represented 4.39% of gross loans and OREO at December 31, 2009, compared with 2.99% at September 30, 2009.
Delinquent loans 30 to 89 days past due decreased to $13.4 million as of December 31, 2009 from $15.6 million at September 30, 2009. Performing troubled debt restructurings (TDRs) that are not accounted for in nonaccrual or delinquent loans equaled $4.4 million at December 31, 2009, which is relatively the same level as of September 30, 2009.
Net charge-offs during the 2009 fourth quarter totaled $28.1 million, compared with $11.8 million in the preceding third quarter as the company moved aggressively to dispose of potential problem credits. This increased the company’s net charge-offs for 2009 to $57.1 million. As a percentage of average loans on an annualized basis, net charge-offs equaled 3.49% for the full year ended December 31, 2009.
Center Financial recorded a provision for loan losses of $22.6 million for the 2009 fourth quarter, taking into consideration the findings of the detailed loan review and the current economic conditions. With this provision, the company said it believes its allowance for loan losses, which totaled $58.5 million at December 31, 2009 and represented 3.81% of gross loans, was sufficient to absorb the inherent losses in its portfolio. In the preceding 2009 third quarter, the company posted a $10.6 million provision and the allowance for loan losses was $64.0 million as of September 30, 2009, representing 4.01% of gross loans.
LOANS & DEPOSITS
Gross loans at December 31, 2009 totaled $1.54 billion, reflecting a decrease from $1.59 billion at September 30, 2009. The continued strategic reductions reflect lower levels of loan originations in the challenging credit environment, higher levels of loan pay-offs and charge-offs and assertive measures to dispose of potential problem assets. Net loans as a percentage of total assets declined to 67.5% at December 31, 2009 from 69.4% at September 30, 2009, principally due to higher levels of liquidity on balance sheet.
Total deposits at December 31, 2009 equaled $1.75 billion, compared with $1.81 billion at September 30, 2009. The company said strong increases in its core deposit categories, including noninterest-bearing deposits, money market account and savings were more than offset by a $116.6 million decline in its times deposit end of period balances, primarily in brokered certificates of deposit. At year-end, noninterest-bearing demand deposits increased by $19.9 million from September 30, 2009 to $352.4 million and represented 20.2% of total deposits. Money market accounts increased by $25.3 million to $528.3 million and savings deposits grew by $8.9 million to $86.6 million from September 30, 2009. The company’s loan-to-deposit ratio equaled 84.6% at December 31, 2009, compared with 84.4% at September 30, 2009.
The average cost of interest-bearing deposits continued to decline sharply, decreasing by 39 basis points to 1.97% for the three months ended December 31, 2009 from 2.36% for the preceding 2009 third quarter. Total cost of deposits declined 35 basis points to 1.60% at year-end from 1.95% at September 30, 2009.
BALANCE SHEET SUMMARY & CAPITAL
Total assets at December 31, 2009 increased to $2.19 billion from $2.06 billion at year-end 2008, primarily reflecting higher levels of liquidity on the balance sheet, partially offset by an ongoing strategic reduction in the company’s loan portfolio. Reflecting these lower balances, average interest-earning assets for the 2009 fourth quarter equaled $2.01 billion, compared with $2.06 billion for the preceding third quarter.
Total shareholders’ equity at December 31, 2009 increased to $256.1 million from $214.6 million at December 31, 2008 primarily reflecting the positive effect of the capital raise transactions in the 2009 fourth quarter. As of December 31, 2009, the company’s tangible common equity as a percentage of tangible assets, as a non-GAAP financial measure, equaled 6.01%, compared with 7.69% at December 31, 2008. Center Financial was strongly capitalized at year-end 2009, with all of its capital ratios exceeding all guidelines as outlined in the informal agreement entered into with the company’s regulators. As of December 31, 2009, the company’s capital position improved sharply from the preceding period end as a result of the capital raises with the total risk-based capital ratio increasing to 17.66%, Tier 1 risk-based capital ratio advancing to 16.38%, and Tier 1 leverage ratio expanding to 12.40%.
2009 FOURTH QUARTER OPERATIONAL HIGHLIGHTS
Net interest income before provision for loan losses increased to $15.2 million for the three months ended December 31, 2009 from $14.8 million for the preceding 2009 third quarter, as reductions in the company’s deposit costs offset the adverse effect of lower loan balances, declining loan yields and the reversal of interest on nonaccrual loans. For the 2008 fourth quarter, the company reported net interest income before provision for loan losses of $17.8 million. The average yield on loans for the 2009 fourth quarter equaled 5.63%, compared with 5.91% in the preceding 2009 third quarter and 6.37% for the prior-year fourth quarter. The average yields on the investment portfolio were 3.41% for the 2009 fourth quarter, 3.82% for the 2009 third quarter and 4.58% for the fourth quarter of 2008.
The company’s net interest margin for the 2009 fourth quarter rose 15 basis points to 3.00% from 2.85% in the preceding third quarter, but was lower when compared with 3.71% in the fourth quarter a year ago. The company attributed the sequential expansion in net interest margin principally to a 35 basis point reduction in cost of deposits and lower balances in low-yielding Federal funds sold, partially offset by the decline in weighted average loan yields, decreasing loan balances and the reversal of previously accrued interest income on loans placed on non-accrual status during the quarter.
Noninterest income totaled $3.4 million in the fourth 2009 quarter, versus $3.3 million in the 2009 third quarter and $1.2 million in the prior-year fourth quarter.
Total noninterest expense for the 2009 fourth quarter was $12.5 million, compared to $11.7 million for the 2009 third quarter and $10.2 million for the year-ago fourth quarter. The company noted that while its compensation expenses declined by 11.0% from the preceding 2009 third quarter, total noninterest expenses on a sequential basis was higher due to a full impairment of its goodwill and core deposit intangible for a total of $1.4 million. The company’s efficiency ratio for the 2009 fourth quarter equaled 66.95%, compared with 64.53% for the preceding 2009 third quarter and 53.25% for the 2008 fourth quarter.
As previously guided, following an evaluation of its deferred tax asset, the company recorded an impairment of $15.0 million based on the current economic conditions, which resulted in a net tax provision of $8.0 million for the 2009 fourth quarter. Including this significantly higher-than-usual tax provision and the $22.6 million loan loss provision for the quarter, Center Financial incurred a net loss of $24.5 million, equal to $1.41 per common share, for the 2009 fourth quarter. This compares with a net loss of $2.5 million, or $0.19 per common share, for the preceding 2009 third quarter, and a net loss of $6.1 million, equal to $0.37 per common share, for the prior-year fourth quarter.
For the 2009 fourth quarter, Center Financial posted a loss on average assets and loss on average equity of 4.44% and 48.45%, respectively. This compares with loss on average assets of 0.45% and loss on average equity of 5.01% in the preceding third quarter of 2009. For the year-ago fourth quarter, loss on average assets equaled 1.20% and loss on average equity was 13.53%.
Yoo concluded, “With the close of 2009, we have completed two years of strategic deleveraging and reserve building. We believe that the prudent, assertive and tactical actions that we have taken to date position Center Financial on strong grounds to return to profitability and capitalize on growth opportunities in 2010.”
Use of Non-GAAP Financial Measures
This news release includes “non-GAAP financial measures” within the meaning of the Securities and Exchange Commission rules. Tangible common equity per common share and tangible common equity to tangible assets are non-GAAP financial measures. Tangible common equity was calculated as total shareholders’ equity less preferred stock and related dividend and accretion of preferred stock discount, goodwill and intangible assets, net. Tangible common equity to tangible assets represents tangible common equity divided by total assets less goodwill and other intangible assets, net. The calculation of tangible common equity may differ among companies in light of diversity in presentation in the marketplace. Management believes that these measures are useful when comparing banks with preferred stock due to TARP funding to banks without preferred stock on their balance sheet and for evaluating a company’s capital levels. This information is being provided in response to market participant interest in these financial metrics. This information is not intended to be considered in isolation or as a substitute for the relevant measures calculated in accordance with U.S. GAAP. The reconciliations of these non-GAAP financial measures to GAAP financial measure included in this news release are attached herein.
Investor Conference Call
The company will host an investor conference call on Friday, January 29, 2010 at 9 a.m. PST (12 noon EST) to review financial results for its 2009 fourth quarter and full year. The institutional investment community is invited to participate in the call by dialing 866-202-4367 (domestic) or 617-213-8845 (international) and entering passcode 43939983. Other interested parties are invited to listen to the live call through a listen-only audio Web broadcast via the Internet in the Investor Relations section of www.centerbank.com. Listeners are encouraged to visit the Web site at least 15 minutes prior to the start of the scheduled presentation to register, download and install any necessary audio software. For those who are not available to listen to the live broadcast, the audio broadcast will be archived for one year. A telephonic replay of the call will be available through Friday, February 5, 2010 by dialing 888-286-8010 (domestic) or 617-801-6888 (international) and entering replay passcode 79205107.
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 $2.19 billion at December 31, 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) | ||||||||||
(Dollars in thousands) | ||||||||||
December 31, | ||||||||||
2009 | 2008 | |||||||||
ASSETS | ||||||||||
Cash and due from banks | $ | 34,294 | $ | 45,129 | ||||||
Federal funds sold | 145,810 | 50,435 | ||||||||
Money market funds and interest-bearing deposits in other banks | 52,698 | 2,647 | ||||||||
Cash and cash equivalents | 232,802 | 98,211 | ||||||||
Securities available for sale, at fair value | 370,427 | 173,833 | ||||||||
Securities held to maturity, at amortized cost (fair value of $0 as of December 31, 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 $58,543 as of December 31, 2009 and $38,172 as of December 31, 2008 | 1,455,824 | 1,669,476 | ||||||||
Loans held for sale, at the lower of cost or market | 23,318 | 9,864 | ||||||||
Premises and equipment, net | 13,368 | 14,739 | ||||||||
Customers' liability on acceptances | 2,341 | 4,503 | ||||||||
Other real estate owned, net | 4,278 | - | ||||||||
Accrued interest receivable | 6,879 | 7,477 | ||||||||
Deferred income taxes, net | 12,313 | 19,855 | ||||||||
Investments in affordable housing partnerships | 11,522 | 12,936 | ||||||||
Cash surrender value of life insurance | 12,392 | 11,992 | ||||||||
Income tax receivable | 15,378 | - | ||||||||
Goodwill | - | 1,253 | ||||||||
Intangible assets, net | - | 213 | ||||||||
Prepaid assessment fees | 11,483 | - | ||||||||
Other assets | 4,802 | 7,723 | ||||||||
Total | $ | 2,192,800 | $ | 2,056,609 | ||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||
Liabilities | ||||||||||
Deposits: | ||||||||||
Noninterest-bearing | $ | 352,395 | $ | 310,154 | ||||||
Interest-bearing | 1,395,276 | 1,293,365 | ||||||||
Total deposits | 1,747,671 | 1,603,519 | ||||||||
Acceptances outstanding | 2,341 | 4,503 | ||||||||
Accrued interest payable | 5,803 | 7,268 | ||||||||
Other borrowed funds | 148,443 | 193,021 | ||||||||
Long-term subordinated debentures | 18,557 | 18,557 | ||||||||
Accrued expenses and other liabilities | 13,927 | 15,174 | ||||||||
Total liabilities | 1,936,742 | 1,842,042 | ||||||||
Commitments and Contingencies | - | - | ||||||||
Shareholders' Equity | ||||||||||
Preferred stock, no par value, 10,000,000 shares authorized; issued and outstanding, 128,500 shares and 55,000 shares as of December 31, 2009 and December 31, 2008, respectively | ||||||||||
Series A, cumulative, issued and outstanding 55,000 shares as of December 31, 2009 and 2008 | 53,171 | 52,959 | ||||||||
Series B, non-cumulative, convertible, issued and outstanding 73,500 shares and none as of December 31, 2009 and 2008, respectively | 70,000 | - | ||||||||
Common stock, no par value; authorized 40,000,000 shares; issued and outstanding, 20,160,726 shares and 16,789,080 shares (including 10,050 shares and 10,400 shares of unvested restricted stock) as of December 31, 2009 and December 31, 2008, respectively | 88,060 | 74,254 | ||||||||
Retained earnings | 41,314 | 85,846 | ||||||||
Accumulated other comprehensive income, net of tax | 3,513 | 1,508 | ||||||||
Total shareholders' equity | 256,058 | 214,567 | ||||||||
Total | $ | 2,192,800 | $ | 2,056,609 | ||||||
Tangible common equity per common share | $ | 6.54 | $ | 9.42 | ||||||
Tangible common equity to tangible assets | 6.01 | % | 7.69 | % | ||||||
CENTER FINANCIAL CORPORATION | |||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Unaudited) | |||||||||||||||||||||||||
(Dollars in thousands, except per share data) | |||||||||||||||||||||||||
Three Months Ended | Twelve Months Ended December 31, | ||||||||||||||||||||||||
12/31/09 | 9/30/09 | 12/31/08 | 2009 | 2008 | |||||||||||||||||||||
Interest and Dividend Income: | |||||||||||||||||||||||||
Interest and fees on loans | $ | 21,378 | $ | 23,128 | $ | 27,427 | $ | 93,559 | $ | 122,424 | |||||||||||||||
Interest on federal funds sold | 108 | 162 | 15 | 418 | 105 | ||||||||||||||||||||
Interest on investment securities | 2,774 | 2,426 | 2,169 | 9,834 | 8,678 | ||||||||||||||||||||
Total interest and dividend income | 24,260 | 25,716 | 29,611 | 103,811 | 131,207 | ||||||||||||||||||||
Interest Expense: | |||||||||||||||||||||||||
Interest on deposits | 7,266 | 9,031 | 9,266 | 34,935 | 46,126 | ||||||||||||||||||||
Interest expense on long-term subordinated debentures | 145 | 156 | 344 | 674 | 1,187 | ||||||||||||||||||||
Interest on borrowed funds | 1,639 | 1,736 | 2,164 | 6,975 | 9,294 | ||||||||||||||||||||
Total interest expense | 9,050 | 10,923 | 11,774 | 42,584 | 56,607 | ||||||||||||||||||||
Net interest income before provision for loan losses | 15,210 | 14,793 | 17,837 | 61,227 | 74,600 | ||||||||||||||||||||
Provision for loan losses | 22,625 | 10,561 | 19,848 | 77,472 | 26,178 | ||||||||||||||||||||
Net interest (loss) income after provision for loan losses | (7,415 | ) | 4,232 | (2,011 | ) | (16,245 | ) | 48,422 | |||||||||||||||||
Noninterest Income: | |||||||||||||||||||||||||
Customer service fees | 2,009 | 2,008 | 2,014 | 8,013 | 7,658 | ||||||||||||||||||||
Fee income from trade finance transactions | 587 | 543 | 572 | 2,266 | 2,520 | ||||||||||||||||||||
Wire transfer fees | 300 | 275 | 332 | 1,120 | 1,153 | ||||||||||||||||||||
Gain on sale of loans | - | - | - | - | 1,017 | ||||||||||||||||||||
Loan service fees | 188 | 167 | 356 | 814 | 1,357 | ||||||||||||||||||||
Impairment loss on securities available for sale | - | - | (2,611 | ) | - | (9,889 | ) | ||||||||||||||||||
Other income | 340 | 349 | 577 | 1,766 | 1,670 | ||||||||||||||||||||
Total noninterest income | 3,424 | 3,342 | 1,240 | 13,979 | 5,486 | ||||||||||||||||||||
Noninterest Expense: | |||||||||||||||||||||||||
Salaries and employee benefits | 4,159 | 4,671 | 4,545 | 17,804 | 23,726 | ||||||||||||||||||||
Occupancy | 1,232 | 1,214 | 1,206 | 4,876 | 4,480 | ||||||||||||||||||||
Furniture, fixtures, and equipment | 653 | 713 | 565 | 2,410 | 2,103 | ||||||||||||||||||||
Data processing | 572 | 591 | 543 | 2,280 | 2,169 | ||||||||||||||||||||
Legal fees | 263 | 174 | 73 | 1,087 | 2,203 | ||||||||||||||||||||
Accounting and other professional service fees | 442 | 425 | 321 | 1,629 | 1,362 | ||||||||||||||||||||
Business promotion and advertising | 455 | 289 | 477 | 1,426 | 1,900 | ||||||||||||||||||||
Stationery and supplies | 208 | 104 | 131 | 526 | 560 | ||||||||||||||||||||
Telecommunications | 167 | 185 | 220 | 672 | 757 | ||||||||||||||||||||
Postage and courier service | 87 | 79 | 205 | 359 | 789 | ||||||||||||||||||||
Security service | 263 | 269 | 280 | 1,038 | 1,131 | ||||||||||||||||||||
Regulatory assessment | 558 | 642 | 312 | 3,435 | 1,265 | ||||||||||||||||||||
OREO related expenses | 605 | 1,152 | 2 | 1,910 | 71 | ||||||||||||||||||||
Impairment of goodwill and intangible assets | 1,413 | - | - | 1,413 | - | ||||||||||||||||||||
Other operating expenses | 1,400 | 1,195 | 1,277 | 5,205 | 12,819 | ||||||||||||||||||||
Total noninterest expense | 12,477 | 11,703 | 10,157 | 46,070 | 55,335 | ||||||||||||||||||||
Loss before income tax provision (benefit) | (16,468 | ) | (4,129 | ) | (10,928 | ) | (48,336 | ) | (1,427 | ) | |||||||||||||||
Income tax provision (benefit) | 7,999 | (1,605 | ) | (4,808 | ) | (5,834 | ) | (1,647 | ) | ||||||||||||||||
Net (loss) income | (24,467 | ) | (2,524 | ) | (6,120 | ) | (42,502 | ) | 220 | ||||||||||||||||
Preferred stock dividends and accretion of preferred stock discount | (744 | ) | (742 | ) | (155 | ) | (2,952 | ) | (155 | ) | |||||||||||||||
Net (loss) income available to common shareholders | (25,211 | ) | (3,266 | ) | (6,275 | ) | (45,455 | ) | 65 | ||||||||||||||||
Other comprehensive income - unrealized gain on available-for-sale securities, net of income tax expense | (64 | ) | 1,365 | 1,464 | 2,927 | 1,602 | |||||||||||||||||||
Comprehensive (loss) income | $ | (24,531 | ) | $ | (1,159 | ) | $ | (4,656 | ) | $ | (39,575 | ) | $ | 1,822 | |||||||||||
(Loss) earnings per share: | |||||||||||||||||||||||||
Basic | $ | (1.41 | ) | $ | (0.19 | ) | $ | (0.37 | ) | $ | (2.66 | ) | $ | - | |||||||||||
Diluted | $ | (1.41 | ) | $ | (0.19 | ) | $ | (0.37 | ) | $ | (2.66 | ) | $ | - | |||||||||||
Weighted average shares outstanding - basic | 17,933,000 | 16,789,000 | 16,788,000 | 17,077,000 | 16,526,000 | ||||||||||||||||||||
Weighted average shares outstanding - diluted | 17,933,000 | 16,789,000 | 16,815,000 | 17,077,000 | 16,560,000 | ||||||||||||||||||||
CENTER FINANCIAL CORPORATION | ||||||||||||||||||||||||
SELECTED FINANCIAL DATA (Unaudited) | ||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||
12/31/09 | 9/30/09 | 12/31/08 | ||||||||||||||||||||||
Average | Rate/ | Average | Rate/ | Average | Rate/ | |||||||||||||||||||
Balance | Yield | Balance | Yield | Balance | Yield | |||||||||||||||||||
Assets: | ||||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||
Loans | $ | 1,506,443 | 5.63 | % | $ | 1,553,814 | 5.91 | % | $ | 1,712,834 | 6.37 | % | ||||||||||||
Federal funds sold | 182,823 | 0.23 | 254,853 | 0.25 | 10,664 | 0.56 | ||||||||||||||||||
Investments | 322,311 | 3.41 | 251,891 | 3.82 | 188,268 | 4.58 | ||||||||||||||||||
Total interest-earning assets | 2,011,578 | 4.78 | 2,060,558 | 4.95 | 1,911,766 | 6.16 | ||||||||||||||||||
Noninterest - earning assets: | ||||||||||||||||||||||||
Cash and due from banks | 86,634 | 84,367 | 45,105 | |||||||||||||||||||||
Bank premises and equipment, net | 13,579 | 13,975 | 14,814 | |||||||||||||||||||||
Customers' acceptances outstanding | 1,832 | 2,587 | 4,081 | |||||||||||||||||||||
Accrued interest receivables | 6,857 | 7,427 | 7,365 | |||||||||||||||||||||
Other assets | 65,791 | 62,418 | 43,344 | |||||||||||||||||||||
Total noninterest-earning assets | 174,694 | 170,774 | 114,709 | |||||||||||||||||||||
Total assets | $ | 2,186,271 | $ | 2,231,332 | $ | 2,026,475 | ||||||||||||||||||
Liabilities and Shareholders' Equity: | ||||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||||
Money market and NOW accounts | $ | 542,529 | 1.35 | % | $ | 496,907 | 1.75 | % | $ | 402,482 | 2.52 | % | ||||||||||||
Savings | 79,824 | 2.96 | 80,529 | 3.24 | 51,731 | 3.48 | ||||||||||||||||||
Time certificates of deposit over $100,000 | 535,768 | 2.20 | 597,068 | 2.64 | 615,768 | 3.25 | ||||||||||||||||||
Other time certificates of deposit | 306,417 | 2.40 | 341,459 | 2.56 | 137,787 | 3.58 | ||||||||||||||||||
1,464,538 | 1.97 | 1,515,963 | 2.36 | 1,207,768 | 3.05 | |||||||||||||||||||
Other borrowed funds | 148,049 | 4.39 | 159,775 | 4.31 | 266,839 | 3.23 | ||||||||||||||||||
Long-term subordinated debentures | 18,557 | 3.10 | 18,557 | 3.34 | 18,557 | 7.37 | ||||||||||||||||||
Total interest-bearing liabilities | 1,631,144 | 2.20 | 1,694,295 | 2.56 | 1,493,164 | 3.14 | ||||||||||||||||||
Noninterest-bearing liabilities: | ||||||||||||||||||||||||
Demand deposits | 340,719 | 322,370 | 329,467 | |||||||||||||||||||||
Total funding liabilities | 1,971,863 | 1.82 | % | 2,016,665 | 2.15 | % | 1,822,631 | 2.57 | % | |||||||||||||||
Other liabilities | 14,040 | 14,611 | 23,810 | |||||||||||||||||||||
Total noninterest-bearing liabilities | 354,759 | 336,981 | 353,277 | |||||||||||||||||||||
Shareholders' equity | 200,368 | 200,056 | 180,034 | |||||||||||||||||||||
Total liabilities and shareholders' equity | $ | 2,186,271 | $ | 2,231,332 | $ | 2,026,475 | ||||||||||||||||||
Net interest income | ||||||||||||||||||||||||
Cost of deposits | 1.60 | % | 1.95 | % | 2.40 | % | ||||||||||||||||||
Net interest spread | 2.58 | % | 2.39 | % | 3.02 | % | ||||||||||||||||||
Net interest margin | 3.00 | % | 2.85 | % | 3.71 | % | ||||||||||||||||||
CENTER FINANCIAL CORPORATION | ||||||||||||||||
SELECTED FINANCIAL DATA (Unaudited) | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||
For the Year Ended December 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Annualized | Annualized | |||||||||||||||
Average | Average | Average | Average | |||||||||||||
Balance | Rate/Yield | Balance | Rate/Yield | |||||||||||||
Assets: | ||||||||||||||||
Interest-earning assets: | ||||||||||||||||
Loans | $ | 1,587,336 | 5.89 | % | $ | 1,779,420 | 6.88 | % | ||||||||
Federal funds sold | 181,037 | 0.23 | 6,144 | 1.71 | ||||||||||||
Investments | 251,921 | 3.90 | 179,066 | 4.85 | ||||||||||||
Total interest-earning assets | 2,020,294 | 5.14 | % | 1,964,630 | 6.68 | % | ||||||||||
Noninterest - earning assets: | ||||||||||||||||
Cash and due from banks | 66,698 | 52,851 | ||||||||||||||
Bank premises and equipment, net | 14,168 | 14,509 | ||||||||||||||
Customers' acceptances outstanding | 2,830 | 4,156 | ||||||||||||||
Accrued interest receivables | 7,045 | 7,651 | ||||||||||||||
Other assets | 57,020 | 40,675 | ||||||||||||||
Total noninterest-earning assets | 147,761 | 119,842 | ||||||||||||||
Total assets | $ | 2,168,055 | $ | 2,084,472 | ||||||||||||
Liabilities and Shareholders' Equity: | ||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||
Deposits: | ||||||||||||||||
Money market and NOW accounts | $ | 496,342 | 1.78 | % | $ | 363,356 | 2.94 | % | ||||||||
Savings | 68,926 | 3.27 | 53,601 | 3.42 | ||||||||||||
Time certificate of deposits over $100,000 | 627,703 | 2.35 | 724,384 | 3.98 | ||||||||||||
Other time certificate of deposits | 247,824 | 3.66 | 124,741 | 3.86 | ||||||||||||
1,440,795 | 2.42 | 1,266,082 | 3.64 | |||||||||||||
Other borrowed funds | 163,120 | 4.28 | 258,151 | 3.60 | ||||||||||||
Long-term subordinated debentures | 18,557 | 3.63 | 18,557 | 6.40 | ||||||||||||
Total interest-bearing liabilities | 1,622,472 | 2.62 | 1,542,790 | 3.67 | ||||||||||||
Noninterest-bearing liabilities: | ||||||||||||||||
Demand deposits | 318,534 | 349,902 | ||||||||||||||
Total funding liabilities | 1,941,006 | 2.19 | % | 1,892,692 | 2.99 | % | ||||||||||
Other liabilities | 17,569 | 24,020 | ||||||||||||||
Shareholders' equity | 209,480 | 167,760 | ||||||||||||||
Total liabilities and shareholders' equity | $ | 2,168,055 | $ | 2,084,472 | ||||||||||||
Net interest income | ||||||||||||||||
Cost of deposits | 1.99 | % | 2.85 | % | ||||||||||||
Net interest spread | 2.51 | % | 3.01 | % | ||||||||||||
Net interest margin | 3.03 | % | 3.80 | % | ||||||||||||
CENTER FINANCIAL CORPORATION | |||||||||||||||||||||||||
SELECTED FINANCIAL DATA (Unaudited) | |||||||||||||||||||||||||
(Dollars in thousands) | As of the Dates Indicated | ||||||||||||||||||||||||
12/31/09 | 9/30/09 | 6/30/09 | 3/31/09 | 12/31/08 | |||||||||||||||||||||
Loans | |||||||||||||||||||||||||
Real Estate: | |||||||||||||||||||||||||
Construction | $ | 21,014 | $ | 21,800 | $ | 37,224 | $ | 53,072 | $ | 61,983 | |||||||||||||||
Commercial | 1,007,794 | 1,095,858 | 1,104,496 | 1,131,682 | 1,134,793 | ||||||||||||||||||||
Commercial | 295,289 | 290,675 | 320,005 | 313,065 | 334,350 | ||||||||||||||||||||
Trade Finance | 39,290 | 43,602 | 52,000 | 48,813 | 63,479 | ||||||||||||||||||||
SBA | 49,933 | 43,969 | 38,401 | 37,962 | 37,027 | ||||||||||||||||||||
Consumer and other | 125,560 | 97,841 | 95,417 | 79,868 | 88,423 | ||||||||||||||||||||
Total Gross Loans | 1,538,880 | 1,593,745 | 1,647,543 | 1,664,462 | 1,720,055 | ||||||||||||||||||||
Less: | |||||||||||||||||||||||||
Allowance for Losses | 58,543 | 63,978 | 65,197 | 49,778 | 38,172 | ||||||||||||||||||||
Deferred Loan Fees | 331 | 483 | 555 | 1,188 | 1,359 | ||||||||||||||||||||
Discount on SBA Loans Retained | 864 | 931 | 1,016 | 1,102 | 1,184 | ||||||||||||||||||||
Total Net Loans and Loans Held for Sale | $ | 1,479,142 | $ | 1,528,353 | $ | 1,580,775 | $ | 1,612,394 | $ | 1,679,340 | |||||||||||||||
As a percentage of total gross loans: | |||||||||||||||||||||||||
Real estate: | |||||||||||||||||||||||||
Construction | 1.4 | % | 1.4 | % | 2.3 | % | 3.2 | % | 3.6 | % | |||||||||||||||
Commercial | 65.5 | % | 68.8 | % | 67.0 | % | 68.0 | % | 66.0 | % | |||||||||||||||
Commercial | 19.2 | % | 18.2 | % | 19.4 | % | 18.8 | % | 19.4 | % | |||||||||||||||
Trade finance | 2.6 | % | 2.7 | % | 3.2 | % | 2.9 | % | 3.7 | % | |||||||||||||||
SBA | 3.2 | % | 2.8 | % | 2.3 | % | 2.3 | % | 2.2 | % | |||||||||||||||
Consumer | 8.1 | % | 6.1 | % | 5.8 | % | 4.8 | % | 5.1 | % | |||||||||||||||
Total gross loans | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||||||
As of the Dates Indicated | |||||||||||||||||||||||||
12/31/09 | 9/30/09 | 6/30/09 | 3/31/09 | 12/31/08 | |||||||||||||||||||||
Deposits | |||||||||||||||||||||||||
Demand deposits (noninterest-bearing) | $ | 352,395 | $ | 332,541 | $ | 314,621 | $ | 306,112 | $ | 310,154 | |||||||||||||||
Money market accounts and NOW | 528,330 | 503,006 | 530,410 | 470,741 | 447,275 | ||||||||||||||||||||
Savings | 86,567 | 77,698 | 77,958 | 52,683 | 52,692 | ||||||||||||||||||||
967,292 | 913,245 | 922,989 | 829,536 | 810,121 | |||||||||||||||||||||
Time deposits | |||||||||||||||||||||||||
Less than $100,000 | 256,020 | 322,141 | 335,440 | 321,456 | 312,136 | ||||||||||||||||||||
$100,000 or more | 524,358 | 574,829 | 596,519 | 513,076 | 481,262 | ||||||||||||||||||||
Total deposits | $ | 1,747,670 | $ | 1,810,215 | $ | 1,854,948 | $ | 1,664,068 | $ | 1,603,519 | |||||||||||||||
As a percentage of total deposits: | |||||||||||||||||||||||||
Demand deposits (noninterest-bearing) | 20.2 | % | 18.4 | % | 17.0 | % | 18.4 | % | 19.3 | % | |||||||||||||||
Money market accounts and NOW | 30.2 | % | 27.8 | % | 28.6 | % | 28.3 | % | 27.9 | % | |||||||||||||||
Savings | 5.0 | % | 4.2 | % | 4.2 | % | 3.1 | % | 3.3 | % | |||||||||||||||
55.4 | % | 50.4 | % | 49.8 | % | 49.8 | % | 50.5 | % | ||||||||||||||||
Time deposits | |||||||||||||||||||||||||
Less than $100,000 | 14.6 | % | 17.8 | % | 18.1 | % | 19.3 | % | 19.5 | % | |||||||||||||||
$100,000 or more | 30.0 | % | 31.8 | % | 32.1 | % | 30.9 | % | 30.0 | % | |||||||||||||||
Total deposits | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||||||
CENTER FINANCIAL CORPORATION | |||||||||||||||
SELECTED FINANCIAL DATA (Unaudited) | |||||||||||||||
(Dollars in thousands) | |||||||||||||||
12/31/2009 | 9/30/2009 | 12/31/2008 | |||||||||||||
Nonperforming loans: | |||||||||||||||
Construction Real Estate | $ | 8,441 | $ | 5,309 | $ | 1,951 | |||||||||
Commercial Real Estate | 42,678 | 25,167 | 13,128 | ||||||||||||
Commercial | 8,290 | 8,236 | 2,272 | ||||||||||||
Consumer | 339 | 909 | 369 | ||||||||||||
Trade Finance | 1,498 | 1,196 | 1,196 | ||||||||||||
SBA | 2,207 | 2,185 | 1,538 | ||||||||||||
Total nonperforming loans | 63,453 | 43,002 | 20,454 | ||||||||||||
Other real estate owned | 4,278 | 4,813 | - | ||||||||||||
Total nonperforming assets | 67,731 | 47,815 | 20,454 | ||||||||||||
Guaranteed portion of nonperforming SBA loans | 2,816 | 3,134 | 2,110 | ||||||||||||
Total nonperforming assets, net of SBA guarantee | $ | 64,915 | $ | 44,681 | $ | 18,344 | |||||||||
Performing TDRs not included above | $ | 4,414 | $ | 4,392 | $ | - | |||||||||
Nonperforming loans as a percent of total gross loans | 4.12 | % | 2.70 | % | 1.19 | % | |||||||||
Nonperforming assets as a percent of total loans and other real estate owned | 4.39 | 2.99 | 1.19 | ||||||||||||
Delinquent loans 30-89 days past due | $ | 13,439 | $ | 15,638 | $ | 16,737 | |||||||||
Total nonperforming loans | 63,453 | 43,002 | 20,454 | ||||||||||||
Total delinquent loans | $ | 76,892 | $ | 58,640 | $ | 37,191 | |||||||||
Year | Nine Months | Year | |||||||||||||
Ended | Ended | Ended | |||||||||||||
12/31/2009 | 9/30/2009 | 12/31/2009 | |||||||||||||
Balances | |||||||||||||||
Average total loans outstanding during the period | $ | 1,637,703 | $ | 1,661,384 | $ | 1,800,972 | |||||||||
Total loans outstanding at end of period* | $ | 1,537,685 | $ | 1,592,331 | $ | 1,717,511 | |||||||||
* Net of deferred loan fees and discount on SBA loans sold | |||||||||||||||
Allowance for Loan Losses: | |||||||||||||||
Balance at beginning of period | $ | 38,172 | $ | 38,172 | $ | 20,477 | |||||||||
Charge-offs: | |||||||||||||||
Construction Real Estate | 6,844 | 5,078 | 402 | ||||||||||||
Commercial Real Estate | 23,742 | 7,173 | 319 | ||||||||||||
Commercial | 23,795 | 15,305 | 4,403 | ||||||||||||
Consumer | 1,599 | 1,298 | 2,040 | ||||||||||||
SBA | 941 | 786 | 581 | ||||||||||||
Trade Finance | 911 | - | 1,144 | ||||||||||||
Total charge-offs | 57,832 | 29,640 | 8,889 | ||||||||||||
Recoveries | |||||||||||||||
Real estate | - | - | - | ||||||||||||
Commercial | 269 | 253 | 128 | ||||||||||||
Consumer | 394 | 299 | 131 | ||||||||||||
SBA | 67 | 46 | 135 | ||||||||||||
Trade Finance | 1 | 1 | 12 | ||||||||||||
Total recoveries | 731 | 599 | 406 | ||||||||||||
Net loan charge-offs | 57,101 | 29,041 | 8,483 | ||||||||||||
Provision for loan losses | 77,472 | 54,847 | 26,178 | ||||||||||||
Balance at end of period | $ | 58,543 | $ | 63,978 | $ | 38,172 | |||||||||
Ratios: | |||||||||||||||
Net loan charge-offs to average loans | 3.49 | % | 2.33 | % | 0.47 | % | |||||||||
Provision for loan losses to average total loans | 4.73 | 4.40 | 1.45 | ||||||||||||
Allowance for loan losses to gross loans at end of period | 3.81 | 4.01 | 2.22 | ||||||||||||
Allowance for loan losses to total nonperforming loans | 96.4 | 148.8 | 186.6 | ||||||||||||
Net loan charge-offs to allowance for loan losses at end of period | 97.54 | 60.52 | 22.22 | ||||||||||||
Net loan charge-offs to provision for loan losses | 73.71 | 52.95 | 32.41 | ||||||||||||
CENTER FINANCIAL CORPORATION | ||||||||||||||||||||||||
SELECTED FINANCIAL DATA (Unaudited) | ||||||||||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||
Performance ratios: | 12/31/2009 | 9/30/2009 | 12/31/2008 | 12/31/2009 | 12/31/2008 | |||||||||||||||||||
(Loss) return on average assets | (4.44 | ) | % | (0.45 | ) | % | (1.20 | ) | % | (1.96 | ) | % | 0.01 | % | ||||||||||
(Loss) return on average equity | (48.45 | ) | (5.01 | ) | (13.53 | ) | (20.29 | ) | 0.13 | |||||||||||||||
Efficiency ratio | 66.95 | 64.53 | 53.25 | 61.26 | 69.09 | |||||||||||||||||||
Net loans to total deposits at period end | 84.64 | 84.43 | 104.73 | 84.64 | 104.73 | |||||||||||||||||||
Net loans to total assets at period end | 67.45 | 69.41 | 81.66 | 67.45 | 81.66 | |||||||||||||||||||
Capital ratios: | ||||||||||||||||||||||||
Leverage capital ratio | ||||||||||||||||||||||||
Consolidated Company | 12.40 | % | 9.45 | % | 11.28 | % | ||||||||||||||||||
Center Bank | 12.00 | 9.03 | 10.64 | |||||||||||||||||||||
Tier 1 risk-based capital ratio | ||||||||||||||||||||||||
Consolidated Company | 16.38 | 12.14 | 12.58 | |||||||||||||||||||||
Center Bank | 15.83 | 11.58 | 11.87 | |||||||||||||||||||||
Total risk-based capital ratio | ||||||||||||||||||||||||
Consolidated Company | 17.66 | 13.42 | 13.84 | |||||||||||||||||||||
Center Bank | 17.11 | 12.86 | 13.13 | |||||||||||||||||||||
CENTER FINANCIAL CORPORATION | ||||||||||
RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES (Unaudited) | ||||||||||
(Dollars in thousands, except per share data) | ||||||||||
12/31/2009 | 12/31/2008 | |||||||||
Total shareholders' equity | $ | 256,058 | $ | 214,567 | ||||||
Less : Preferred stock | (123,171 | ) | (52,959 | ) | ||||||
Common stock warrant | (1,026 | ) | (2,051 | ) | ||||||
Goodwill and intangible assets, net | - | (1,466 | ) | |||||||
Tangible common equity | $ | 131,862 | $ | 158,091 | ||||||
Total assets | $ | 2,192,800 | $ | 2,056,609 | ||||||
Less : Goodwill and intangible assets, net | - | (1,466 | ) | |||||||
Tangible assets | $ | 2,192,800 | $ | 2,055,143 | ||||||
Common shares outstanding | 20,160,726 | 16,789,080 | ||||||||
Tangible common equity per common share | $ | 6.54 | $ | 9.42 | ||||||
Tangible common equity to tangible assets | 6.01 | % | 7.69 | % | ||||||
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