Wilshire Bancorp 10Q 2005 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________________________________________

FORM 10-Q

(Mark One)

x	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2005.

¨	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File Number 000-50923

__________________________

WILSHIRE BANCORP, INC.

(Exact name of registrant as specified in its charter)


California	20-0711133
State or other jurisdiction of incorporation or organization	I.R.S. Employer Identification Number

3200 Wilshire Blvd.
Los Angeles, California	90010
Address of principal executive offices	Zip Code
(213) 387-3200
Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, no par value

______________________

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 x No ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

The number of shares of Common Stock of the registrant outstanding as of October 31, 2005 was 28,585,640.

FORM 10-Q

INDEX

WILSHIRE BANCORP, INC.

Part I.	FINANCIAL INFORMATION	1
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	9
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures	36
Part II.	OTHER INFORMATION	37
Item 1.	Legal Proceedings	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 3.	Defaults upon Senior Securities	37
Item 4.	Submission of Matters to a Vote of Security Holders	37
Item 5.	Other Information	37
Item 6.	Exhibits	37
SIGNATURES		38

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

WILSHIRE BANCORP, INC. CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)

	September 30, 2005			December 31, 2004
ASSETS

Cash and due from banks	$	59,397,952		$	53,903,163
Federal funds sold and other cash equivalents		100,000,000			45,000,000
Cash and cash equivalents		159,397,952			98,903,163

Interest-bearing deposits in other financial institutions		2,959			2,573
Securities available for sale - at fair value (amortized cost of $127,591,968 and
$86,121,349 at September 30, 2005 and December 31, 2004, respectively)		126,797,896			85,712,485
Securities held to maturity - at amortized cost (fair value of $24,706,904 and
$29,161,100 at September 30, 2005 and December 31, 2004, respectively)		24,881,133			29,262,188
Interest only strip - at fair value (amortized cost of $1,549,082
and $1,550,444 at September 30, 2005 and December 31, 2004, respectively)		1,557,307			1,494,176
Loans held for sale, at the lower of cost or market		20,776,780			21,144,128
Loans receivable, net of allowance for loan losses of $13,550,664 and $11,111,092
at September, 30, 2005 and December 31, 2004, respectively		1,154,837,849			988,468,142
Bank premises and equipment, net		8,723,940			5,479,776
Federal Home Loan Bank stock		6,111,600			4,371,500
Accrued interest receivable		6,163,549			3,867,005
Other real estate owned, net		156,400			—
Deferred income taxes - net		7,001,694			4,839,346
Servicing asset		4,769,203			4,373,974
Due from customers on acceptances		2,971,382			2,041,023
Cash surrender value of life insurance		14,955,763			11,536,476
Other assets		6,730,124			4,145,368

TOTAL	$	1,545,835,531		$	1,265,641,323

LIABILITIES AND SHAREHOLDERS’ EQUITY

LIABILITIES:
Deposits
Noninterest-bearing	$	312,890,363		$	273,940,106
Interest-bearing:
Savings		25,398,694			22,946,077
Time deposits of $100,000 or more		584,232,530			448,526,610
Other time deposits		123,264,042			115,728,483
Money markets and NOWs		253,678,390			237,564,098
Total deposits		1,299,464,019			1,098,705,374

Federal Home Loan Bank borrowings		61,000,000			41,000,000
Junior subordinated debentures		61,547,000			25,464,000
Accrued interest payable		4,800,227			2,891,707
Acceptances outstanding		2,971,382			2,041,023
Other liabilities		9,254,025			7,231,601

Total liabilities		1,439,036,653			1,177,333,705

COMMITMENTS AND CONTINGENCIES (Note 7)

SHAREHOLDERS’ EQUITY:
Preferred stock, no par value; authorized, 1,000,000 shares; issued and outstanding, none		—			—
Common stock, no par value; authorized, 80,000,000 shares;
issued and outstanding, 28,585,640 and 28,142,470 shares at
September 30, 2005 and December 31, 2004, respectively		41,079,050			38,926,430
Accumulated other comprehensive loss		(455,796	)		(223,703	)
Retained earnings		66,175,624			49,604,891
Total shareholders’ equity		106,798,878			88,307,618

TOTAL	$	1,545,835,531		$	1,265,641,323

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

WILSHIRE BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2005		2004		2005		2004

INTEREST INCOME:
Interest and fees on loans	$	23,426,039	$	14,836,911	$	62,435,585	$	39,448,958
Interest on investment securities and deposits in other financial institutions		1,332,561		821,288		3,351,560		2,209,160
Interest on federal funds sold and other cash equivalents		505,406		266,944		1,476,930		525,102
Interest on commercial paper		14,573		—		81,707		—
Total interest income		25,278,579		15,925,143		67,345,782		42,183,220

INTEREST EXPENSE:
Deposits		7,828,519		4,312,714		19,474,943		11,150,356
Interest on other borrowings		1,124,039		498,933		2,936,730		1,276,079
Total interest expense		8,952,558		4,811,647		22,411,673		12,426,435

NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES		16,326,021		11,113,496		44,934,109		29,756,785

PROVISION FOR LOSSES ON LOANS AND LOAN COMMITMENTS		1,250,000		1,450,000		2,470,000		3,016,711

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		15,076,021		9,663,496		42,464,109		26,740,074

NONINTEREST INCOME:
Service charges on deposit accounts		1,973,371		1,892,169		5,507,777		5,548,730
Gain on sale of loans		2,162,483		2,730,952		5,674,414		6,902,066
Loan-related servicing income		475,211		590,129		1,605,961		1,763,441
Loan referral fees		—		—		118,217		99,520
Loan packaging fees		101,971		64,317		299,737		324,361
Income from other earning assets		223,798		175,223		636,262		476,313
Other income		188,809		494,083		836,386		1,092,203
Total noninterest income		5,125,643		5,946,873		14,678,754		16,206,634

NONINTEREST EXPENSES:
Salaries and employee benefits		4,924,298		3,709,045		13,617,124		10,385,656
Occupancy and equipment		893,344		711,130		2,496,192		1,996,194
Data processing		473,461		454,921		1,431,679		1,228,322
Loan referral fees		343,860		292,997		913,048		896,621
Professional fees		78,908		332,798		633,497		752,433
Directors’ fees		130,650		123,550		368,000		332,100
Office supplies		235,413		137,723		478,023		383,296
Advertising and promotional		163,763		175,972		552,317		378,697
Communications		122,987		82,000		329,599		244,551
Deposit insurance premiums		38,364		32,865		113,687		95,244
Outsourced service for customers		415,014		361,061		1,071,714		985,625
Other operating		539,806		714,026		1,725,361		1,594,455
Total noninterest expenses		8,359,868		7,128,088		23,730,241		19,273,194

INCOME BEFORE INCOME TAX PROVISION		11,841,796		8,482,281		33,412,622		23,673,514

INCOME TAX PROVISION		4,662,999		3,382,000		13,412,195		9,405,000

NET INCOME	$	7,178,797	$	5,100,281	$	20,000,427	$	14,268,514

EARNINGS PER SHARE
Basic	$	0.25	$	0.18	$	0.70	$	0.52

Diluted	$	0.25	$	0.18	$	0.69	$	0.50

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

WILSHIRE BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)

	Three Months Ended September 30,					Nine Months ended September 30,
	2005			2004		2005			2004

Net income	$	7,178,797		$	5,100,281	$	20,000,427		$	14,268,514
Other comprehensive income, net of tax:
Unrealized gains (losses) on securities available for sale and interest-only strip:
Unrealized holding gains (losses) on securities available for sale arising during period,
net of tax benefit of $94,319 for the three months ended September 30, 2005 and
net of tax expense of $335,648 for the three months ended September 30, 2004,
net of tax benefit of $161,789 for the nine months ended September 30, 2005 and
net of tax benefit of $165,562 for the nine months ended September 30, 2004		(130,250	)		463,514		(223,423	)		(228,632	)
Unrealized holding gains (losses) on interest only strips arising during period,
net of tax benefit of $26,752 for the three months ended September 30, 2005 and
net of tax expense of $35,157 for the three months ended September 30, 2004,
net of tax benefit of $6,278 for the nine months ended September 30, 2005 and
net of tax benefit of $101,346 for the nine months ended September 30, 2004		(36,943	)		34,197		(8,669	)		(57,206	)
Unrealized holding gains on interest rate SWAP arising during period,
net of tax expense of $25,308 for the nine months ended September 30, 2004										37,962
Other comprehensive income (loss), net of tax:		(167,193	)		497,711		(232,092	)		(247,876	)
Comprehensive income	$	7,011,604		$	5,597,992	$	19,768,335		$	14,020,638

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

WILSHIRE BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

	Nine Months Ended September 30,
	2005			2004

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	20,000,427		$	14,268,514
Adjustments to reconcile net income to net cash provided by
operating activities:
Amortization and accretion of premiums and discounts		(20,432	)		237,155
Depreciation of premises & equipment		724,692			577,390
Provision for losses on loans and loan commitments		2,470,000			3,016,711
Deferred tax provision (benefit)		(2,073,725	)		(352,122	)
Loss (gain) on disposition of bank premises, equipment and securities		902			(4,706	)
Gain on sale of loans		(5,674,414	)		(6,902,066	)
Origination of loans held for sale		(114,028,588	)		(78,155,201	)
Proceeds from sale of loans held for sale		120,070,351			67,387,602
Gain on sale of AFS securities		—			(271,891	)
Impairment of servicing asset		78,731			—
Loss on sale of other real estate owned		8,607			3,967
Tax benefit from exercise of stock options		1,724,074			8,841,664
Change in cash surrender value of life insurance		(419,286	)		(333,320	)
Servicing assets capitalization		(1,546,218	)		(1,503,058	)
Servicing assets amortization		1,072,258			721,606
Decrease (increase) in interest-only strip		1,363			(767,348	)
Increase in accrued interest receivable		(2,296,544	)		(886,457	)
Increase in other assets		(2,584,757	)		(2,764,453	)
Dividends of FHLB stock		(147,800	)		(80,800	)
Increase in accrued interest payable		1,908,520			644,703
Increase (decrease) in other liabilities		790,061			(2,968,434	)

Net cash provided by operating activities		20,058,222			709,456

CASH FLOWS FROM INVESTING ACTIVITIES:
Net (increase) decrease in interest-bearing deposits in other financial institutions		(386	)		198,990
Purchases of investment securities available for sale		(96,873,454	)		(40,854,028	)
Purchases of investment securities held to maturity		(1,999,000	)		(8,987,338	)
Proceeds from matured securities and principal repayment (AFS)		55,406,809			31,997,686
Proceeds from principal repayment, matured or called securities (HTM)		6,396,512			6,100,000
Net increase in loans receivable		(169,215,370	)		(210,359,376	)
Proceeds from sale of other loans		—			11,307,787
Proceeds from sale of other real estate owned		299,593			373,233
Purchases of premises and equipment		(3,969,759	)		(1,109,647	)
Proceeds from redemption of FHLB stock		54,400			—
Purchase of FHLB stock		(1,646,700	)		(2,687,900	)
Purchases of Bank Owned Life Insurance		(3,000,000	)		—
Proceeds from disposition of bank equipment		—			1,036

Net cash used in investing activities		(214,547,355	)		(214,019,557	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits		200,758,645			190,772,455
Increase in Federal Home Loan Bank borrowing		20,000,000			16,000,000
Increase in junior subordinated debentures		36,083,000			—
Payment of cash dividend		(2,286,269	)		—
Proceeds from exercise of stock options		428,546			1,764,079

Net cash provided by financing activities		254,983,922			208,536,534

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		60,494,789			(4,773,567	)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		98,903,163			112,486,069

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	159,397,952		$	107,712,502

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid	$	20,503,152		$	11,781,732
Income taxes paid	$	14,280,178		$	5,775,000
NONCASH INVESTING AND FINANCING ACTIVITIES
Cash dividend declared, but not paid	$	1,143,426
Transfer of loans to OREO	$	464,600

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

WILSHIRE BANCORP, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 1. Business of Wilshire Bancorp, Inc.

Wilshire Bancorp, Inc. (the “Company,” “we,” “us,” or “our,” hereafter) succeeded to the business and operations of Wilshire State Bank, a California state-chartered commercial bank (the “Bank”), upon consummation of the reorganization of the Bank into a holding company structure, effective as of August 25, 2004. Wilshire State Bank was incorporated under the laws of the State of California on May 20, 1980 and commenced operations on December 30, 1980. The Company was incorporated in December 2003 as a wholly owned subsidiary of the Bank for the purpose of facilitating the issuance of trust preferred securities for the Bank and eventually serving as the holding company of the Bank. The Bank’s shareholders approved a reorganization into a holding company structure at a meeting held on August 25, 2004. As a result of the reorganization, shareholders of the Bank are now shareholders of the Company and the Bank is a direct wholly owned subsidiary of the Company.

Prior to the completion of the reorganization, the Bank was subject to the information, reporting and proxy statement requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, pursuant to the regulations of its primary regulator, the Federal Deposit Insurance Corporation, or FDIC. Accordingly, the Bank filed annual and quarterly reports, proxy statements and other information with the FDIC. Pursuant to Rule 12g-3 of the Exchange Act, the Company has succeeded to the reporting obligations of the Bank and the reporting obligations of the Bank to the FDIC have terminated. Filings by the Company under the Exchange Act, like this Form 10-Q, are to be made with the Securities and Exchange Commission, or the Commission. Although we refer generally to the “Company” throughout this filing, all references to the Company prior to August 25, 2004, except where otherwise indicated, are to the Bank.

Our Corporate Headquarters and primary banking facilities are located at 3200 Wilshire Boulevard, Los Angeles, California 90010. In addition, we have 16 full-service Bank branch offices in Southern California and Texas. We also have nine loan production offices nationwide utilized primarily for the origination of loans under our Small Business Administration (“SBA”) lending program.

Note 2. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company (the Bank for periods prior to August 25, 2004) and its wholly owned subsidiary. The financial statements have been prepared in accordance with the Securities and Exchange Commission (“SEC”) rules and regulations for interim financial reporting and therefore do not necessarily include all information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America. The information provided by these interim financial statements reflects all adjustments which are, in the opinion of management, necessary for a fair presentation of the Company’s financial condition as of September 30, 2005 and December 31, 2004, the related statements of operations and comprehensive income for the three months and nine months ended September 30, 2005 and 2004, and the statements of cash flows for the nine months ended September 30, 2005 and 2004. Such adjustments are of a normal recurring nature unless otherwise disclosed in the Form 10-Q. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year.

The unaudited financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2004. The accounting policies used in the preparation of these interim financial statements were consistent with those used in the preparation of the financial statements for the year ended December 31, 2004, unless otherwise noted.

Note 3. Earnings per Share

Basic earnings per share (“EPS”) exclude dilution and are computed by dividing earnings available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution of securities that could share in the earnings. There was a two-for-one stock split of the Company’s common shares for the shareholders of record at the close of business on December 3, 2004, which was effective on December 14, 2004. All basic and diluted earnings per share in this report have been retroactively restated for the stock split.

The following is a reconciliation of the numerators and denominators of the basic and diluted per share computations for the specified periods.

	Three months ended September 30, 2005							Three months ended September 30, 2004
	Income (Numerator)		Shares (Denominator)		Per Share Amount			Income (Numerator)		Shares (Denominator)		Per Share Amount
Basic EPS	$	7,178,797		28,580,640	$	0.25		$	5,100,281		28,045,290	$	0.18
Effect of dilution		—		345,590		(0.00	)		—		657,842		(0.00	)
Diluted EPS	$	7,178,797		28,926,230	$	0.25		$	5,100,281		28,703,132	$	0.18

	Nine months ended September 30, 2005							Nine months ended September 30, 2004
		Income (Numerator)		Shares (Denominator)		Per Share Amount			Income (Numerator)		Shares (Denominator)		Per Share Amount
Basic EPS	$	20,000,427		28,528,499	$	0.70		$	14,268,514		27,456,010	$	0.52
Effect of dilution		—		377,941		(0.01	)		—		982,159		(0.02	)
Diluted EPS	$	20,000,427		28,906,440	$	0.69		$	14,268,514		28,438,169	$	0.50

There were 158,450 anti-dilutive stock options excluded from the calculation above for the three months and nine months ended September 30, 2005 for which the exercise price exceeded the average market price of the Company’s common stock during the period. No such options were outstanding for the three months and nine months ended September 30, 2004.

Note 4. Goodwill and Other Intangible Assets

The Company’s identifiable intangible assets that are subject to amortization, loan servicing rights, were $4,769,203 and $4,064,135 (net of $1,599,212 and $1,281,646 accumulated amortization, respectively) as of September 30, 2005 and 2004, respectively. Amortization expense for intangible assets subject to amortization was $417,725 and $207,404 for the three months ended September 30, 2005 and 2004, respectively, and it is estimated that it will be approximately $953,840 annually for the next five fiscal years. The Company did not have any material unidentifiable assets as of September 30, 2005 and 2004.

Note 5. Business Segment Information

The following disclosure about segments of the Company is made in accordance with the requirements of SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information. The Company segregates its operations into three primary segments: banking operations, trade finance services (“TFS”), and Small Business Administration lending services. The Company determines the operating results of each segment based on an internal management system that allocates certain expenses to each segment.

Banking Operations - The Company provides lending products, including commercial, consumer and real estate loans to its customers.

Trade Finance Services - The trade finance department allows the Company’s import/export customers to handle their international transactions. Trade finance products include, among others, the issuance and collection of letters of credit, international collection, and import/export financing.

Small Business Administration Lending Services - The SBA department mainly provides customers with access to the U.S. SBA guaranteed lending program.

The following are the results of operations of the Company’s segments for the periods indicated below:

(Dollars in Thousands)	Three months ended September 30, 2005									Three months ended September 30, 2004
Business Segment	Banking Operations		TFD			SBA		Company		Banking Operations		TFD			SBA			Company
Net interest income	$	11,787	$	838		$	3,704	$	16,326	$	8,112	$	517		$	2,485		$	11,114
Less provision for loan losses		712		3			535		1,250		294		841			315			1,450
Non-interest income		2,358		509			2,257		5,126		2,575		467			2,904			5,946
Net revenue		13,433		1,341			5,428		20,202		10,393		143			5,074			15,610
Non-interest expenses		6,925		196			1,240		8,360		5,944		162			1,022			7,128
Income before taxes	$	6,508	$	1,145		$	4,188	$	11,842	$	4,449	$	(19	)	$	4,052		$	8,482
Business segment assets	$	1,326,970	$	53,793		$	165,073	$	1,545,836	$	1,024,979	$	44,550		$	142,372		$	1,211,901

(Dollars in Thousands)	Nine months ended September 30, 2005									Nine months ended September 30, 2004
Business Segment		Banking Operations		TFD			SBA		Company		Banking Operations		TFD			SBA			Company
Net interest income	$	32,917	$	2,230		$	9,787	$	44,934	$	21,625	$	1,322		$	6,810		$	29,757
Less provision for loan losses		2,068		(201	)		603		2,470		1,878		1,234			(95	)		3,017
Non-interest income		7,079		1,379			6,221		14,679		7,195		1,389			7,623			16,207
Net revenue		37,928		3,810			15,405		57,143		26,942		1,477			14,528			42,947
Non-interest expenses		19,760		647			3,323		23,730		16,079		516			2,678			19,273
Income before taxes	$	18,168	$	3,163		$	12,082	$	33,413	$	10,863	$	961		$	11,850		$	23,674
Business segment assets	$	1,326,970	$	53,793		$	165,073	$	1,545,836	$	1,024,979	$	44,550		$	142,372		$	1,211,901

Note 6. Stock Option Plan

During 1997, the Company established a new stock option plan that provides for the issuance of up to 6,499,800 shares of its authorized but unissued common stock to managerial employees and directors. In addition, the outstanding stock options granted under the Bank’s 1990 stock option plan were transferred to this new plan. In connection with the holding company reorganization, the options granted under this plan are exercisable into shares of the Company’s common stock. Exercise prices may not be less than the fair market value at the date of grant. As of September 30, 2005, 857,112 shares were outstanding under this option plan. Options granted under the stock option plan expire not more than 10 years after the date of grant.

For the third quarter of 2005, options to purchase 30,000 shares in total were granted, whereas 4,000 stock options were granted in the same period of 2004. The average estimated fair value of options granted during 2005 was $1.98. The fair value was estimated on the date of grant using the Black−Scholes option pricing model under the following assumptions−dividend yield of 1.16%, expected volatility of 25.3%, average expected life of 2 years and average risk free interest rate of 3.25%. Had compensation costs for the Company’s stock option plan been determined based on the fair values at the grant dates for awards under the plan consistent with the fair value method of SFAS No. 123, the Company’s net income and earnings per share for the three and nine months ended September 30, 2004 and 2005 would have been reduced to the pro forma amounts indicated below:

	Three months ended September 30,						Nine months ended September 30,
	2005			2004			2005			2004
Net income - as reported	$	7,178,797		$	5,100,281		$	20,000,427		$	14,268,514

Deduct: Total stock-based employee compensation expenses determined under fair value-based method for all awards - net of related tax effects		(40,974	)		(45,653	)		(106,539	)		(111,398	)
Pro forma net income	$	7,137,823		$	5,054,628		$	19,893,888		$	14,157,116
Earnings per share:
Basic - as reported	$	0.25		$	0.18		$	0.70		$	0.52
Basic - pro forma	$	0.25		$	0.18		$	0.70		$	0.52

Diluted - as reported	$	0.25		$	0.18		$	0.69		$	0.50
Diluted - pro forma	$	0.25		$	0.18		$	0.69		$	0.50

Note 7. Commitments and Contingencies

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 statements of financial condition. Our exposure to credit loss in the event of nonperformance on 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 we do 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 based 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 September 30, 2005 are summarized as follows:

Commitments to extend credit	$	99,403,000
Standby letters of credit	$	2,808,000
Commercial letters of credit	$	13,010,000

As part of our asset and liability management strategy, we may engage in derivative financial instruments, such as interest rate swaps, with the overall goal of minimizing the impact of interest rate fluctuations on our net interest margin. Interest rate swaps involve the exchange of fixed-rate and variable-rate interest payment obligations without the exchange of the underlying notional amounts. We are not currently engaged in such activities.

In the normal course of business, we are involved in various legal claims. We have reviewed all legal claims against us with counsel and have taken into consideration the views of such counsel as to the outcome of the claims. In our opinion, the final disposition of all such claims will not have a material adverse effect on our financial position and results of operations.

Note 8. Recent Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 123 (revised 2004), Share-Based Payment (“SFAS No. 123R”), which replaces SFAS No. 123, Accounting for Stock-Based Compensation, and supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees. SFAS No. 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. The pro forma disclosures previously permitted under SFAS No. 123 no longer will be an alternative to financial statement recognition. SFAS No. 123R is effective as of the beginning of the first fiscal year that begins after June 15, 2005. Thus, the Company is required to adopt SFAS No. 123R effective January 1, 2006. In adopting SFAS No. 123R, the Company may apply the “modified prospective application” method, which requires that compensation expense be recorded for all unvested stock options and restricted stock at the beginning of the first quarter of adoption of SFAS No. 123R. Alternatively, the Company may apply the “modified retrospective application,” which would require the recording of compensation expense for all unvested stock options beginning with the first period restated. The Company does not expect the adoption of SFAS No. 123R to result in amounts that are materially different from the current pro forma disclosures under SFAS No. 123.

On June 7, 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections - a replacement of APB Opinion No. 20, Accounting Changes, and SFAS No. 3, Reporting Accounting Changes in Interim Financial Statements. Under the provisions of SFAS No. 154, voluntary changes in accounting principles are applied retrospectively to prior periods’ financial statements unless it would be impractical. SFAS No. 154 supersedes APB Opinion No. 20, which required that most voluntary changes in accounting principles be recognized by including in the current period’s net income the cumulative effect of the change. SFAS No. 154 also makes a distinction between “retrospective application” of a change in accounting principle and the “restatement” of financial statements to reflect the correction of an error. The provisions of SFAS No. 154 are effective for accounting changes made in fiscal years beginning after December 15, 2005. The Company does not expect the adoption SFAS No. 154 to have a material impact on the consolidated financial statements, results of operations or liquidity of the Company.

Note 9. Acquisition of Liberty Bank

The transactions contemplated by the agreement are anticipated to close in the fourth quarter of 2005 and will be subject to certain conditions, including regulatory approvals from the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve, and the California Department of Financial Institutions. The agreement contemplates that Liberty Bank will be merged into Wilshire State Bank, our wholly-owned subsidiary.

Note 10. Reclassifications

Certain reclassifications were made to the prior periods’ presentation to conform to the current year’s presentation.

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

This discussion presents management’s analysis of our results of operations for the three-month and nine-month periods ended September 30, 2005 and 2004, and our financial condition as of December 31, 2004 and September 30, 2005. All per share amounts and number of shares outstanding in this item have been retroactively adjusted and restated to give effect to a two-for-one stock split (effected in the form of a 100% stock dividend) in December 2004. The discussion should be read in conjunction with our financial statements and the notes related thereto which appear elsewhere in this Quarterly Report on Form 10-Q. Statements contained in this report that are not purely historical are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, including our expectations, intentions, beliefs, or strategies regarding the future. Any statements in this document about expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and are forward-looking statements. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “expect,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” and “outlook,” and similar expressions. Accordingly, these statements involve estimates, assumptions and uncertainties, which could cause actual results to differ materially from those expressed in them. Any forward-looking statements are qualified in their entirety by reference to the factors discussed throughout this document. All forward-looking statements concerning economic conditions, rates of growth, rates of income or values as may be included in this document are based on information available to us on the dates noted, and we assume no obligation to update any such forward-looking statements. It is important to note that our actual results may differ materially from those in such forward-looking statements due to fluctuations in interest rates, inflation, government regulations, economic conditions, customer disintermediation and competitive product and pricing pressures in the geographic and business areas in which we conduct operations, including our plans, objectives, expectations and intentions and other factors discussed under the section entitled “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2004, including the following:

·	If a significant number of clients fail to perform under their loans, our business, profitability, and financial condition would be adversely affected.

·	The holders of recently issued debentures have rights that are senior to those of our shareholders.

·	Adverse changes in domestic or global economic conditions, especially in California, could have a material adverse effect on our business, growth, and profitability.

·	Maintaining or increasing our market share depends on market acceptance and regulatory approval of new products and services.

·	Significant reliance on loans secured by real estate may increase our vulnerability to downturns in the California real estate market and other variables impacting the value of real estate.

·	If we fail to retain our key employees, our growth and profitability could be adversely affected.

·	We may be unable to manage future growth.

·	Increases in our allowance for loan losses could materially adversely affect our earnings.

·	We could be liable for breaches of security in our online banking services. Fear of security breaches could limit the growth of our online services.

·	Our directors and executive officers beneficially own a significant portion of our outstanding common stock.

·	The market for our common stock is limited, and potentially subject to volatile changes in price.

·	Additional shares of our common stock issued in the future could have a dilutive effect.

·	Shares of our preferred stock issued in the future could have dilutive and other effects.

·	We face substantial competition in our primary market area.

·	Our profitability is dependent on the profitability of the Bank.

·	We rely heavily on the payment of dividends from the Bank.

·	Anti-takeover provisions of our charter documents may have the effect of delaying or preventing changes in control or management.

·	We are subject to significant government regulation and legislation that increases the cost of doing business and inhibits our ability to compete.

·	We could be negatively impacted by downturns in the South Korean economy.

These factors and the risk factors referred to in our Annual Report on Form 10-K for the year ended December 31, 2004 could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements made by us, and you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made and we do not undertake any obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict which will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

Selected Financial Data

The following table presents selected historical financial information (unaudited) as of and for the three and nine months ended September 30, 2005 and 2004. All per share amounts have been retroactively adjusted and restated to give effect to a two-for-one stock split (effected in the form of a 100% stock dividend) in December 2004. In the opinion of our management, the information presented reflects all adjustments considered necessary for a fair presentation of the results of such periods. The operations results of the interim periods are not necessarily indicative of our future operating results.

	Three months ended September 30,						Nine months ended September 30,
	(Dollars in thousands, except per share data)
	2005			2004			2005			2004
Net income	$	7,179		$	5,100		$	20,000		$	14,269
Net income per share, basic		0.25			0.18			0.70			0.52
Net income per share, diluted		0.25			0.18			0.69			0.50
Net interest income		16,326			11,113			44,934			29,757
Average balances:
Assets		1,468,264			1,223,991			1,391,433			1,109,718
Cash and cash equivalents		119,738			130,534			126,060			110,316
Investment securities		139,564			95,468			123,927			85,731
Net loans		1,145,588			945,462			1,086,350			867,439
Total deposits		1,247,913			1,053,405			1,182,330			955,364
Shareholders’ equity		104,974			80,783			98,923			73,175
Performance Ratios:
Annualized return on average assets		1.96	%		1.67	%		1.92	%		1.71	%
Annualized return on average equity		27.35	%		25.25	%		26.96	%		26.00	%
Net interest margin		4.84	%		3.97	%		4.67	%		3.91	%
Efficiency ratio¹		38.97	%		41.78	%		39.81	%		41.93	%
Capital Ratios:
Tier 1 capital to adjusted total assets		9.71	%		8.03	%
Tier 1 capital to risk-weighted assets		11.66	%		9.84	%
Total capital to risk-weighted assets		14.81	%		12.01	%

Period-end balances as of:		September 30, 2005			December 31, 2004			September 30, 2004
Total assets	$	1,545,836		$	1,265,641		$	1,211,901
Investment securities		151,679			114,975			99,807
Total loans, net of unearned income		1,189,165			1,020,723			972,829
Total deposits		1,299,464			1,098,705			1,047,289
Junior subordinated debentures		61,547			25,464			25,464
FHLB borrowings		61,000			41,000			45,000
Shareholders’ equity		106,799			88,307			83,368
Asset Quality Ratios:
Net charge-off (recoveries) to average total loans for the quarter		0.01	%		0.05	%		0.05	%
Nonperforming loans to total loans		0.33	%		0.26	%		0.31	%
Nonperforming assets to total loans and other real estate owned		0.34	%		0.26	%		0.31	%
Allowance for loan losses to total loans		1.14	%		1.09	%		1.14	%
Allowance for loan losses to nonperforming loans		344	%		412	%		370	%

Executive Overview

Introduction

Wilshire Bancorp, Inc. (the “Company,” “we,” “us,” or “our,” hereafter) succeeded to the business and operations of Wilshire State Bank (the “Bank”) upon consummation of the reorganization of the Bank into a holding company structure, effective as of August 25, 2004. Prior to the completion of the reorganization, the Bank was subject to the information, reporting and proxy statement requirements of the Exchange Act, pursuant to the regulations of its primary regulator, the Federal Deposit Insurance Corporation, or FDIC. Accordingly, the Bank filed annual and quarterly reports, proxy statements and other information with the FDIC. Pursuant to Rule 12g-3 of the Exchange Act, the Company has succeeded to the reporting obligations of the Bank and the reporting obligations of the Bank to the FDIC have terminated. Filings by the Company under the Exchange Act, like this Form 10-Q, are to be made with the SEC. Note that while we refer generally to the “Company” throughout this filing, all references to the Company prior to August 25, 2004, except where otherwise indicated, are to the Bank.

¹Represents the ratio of noninterest expense to the sum of net interest income before provision for loan losses and noninterest income.

We operate as a community bank in the general commercial banking business, with our primary market encompassing the multi-ethnic population of the Los Angeles metropolitan area. Our full-service offices are located primarily in areas where a majority of the businesses are owned by Korean-speaking immigrants, with many of the remaining businesses owned by Hispanic and other minority groups.

At September 30, 2005, we had approximately $1.55 billion in assets, $1.19 billion in total loans, and $1.30 billion in deposits.

We also have expanded and diversified our business growth by focusing on the continued development of our commercial and consumer lending divisions. Over the past several years, our network of branches and loan production offices has been expanded geographically. We currently maintain 16 branch offices and 9 loan production offices. In 2005, we opened three branch offices - two in Southern California and the other in Texas (Dallas) - and four loan production offices nationwide - one in Colorado, one in Georgia, one in Texas, and the other in New York. Our expansion in these areas complements our multi-ethnic small business focus. We intend to continue our growth strategy in future years through the opening of additional branches and loan production offices as our needs and resources permit.

The Bank issued a $10 million Junior Subordinated Debenture in December 2002. In December 2003, March 2005 and September 2005, we issued additional Junior Subordinated Debentures in an amount of $15.5 million, $20.6 million, and $15.5 million, respectively, to the Wilshire Statutory Trusts (Wilshire Statutory Trust I, Wilshire Statutory Trust II and Wilshire Statutory Trust III), our wholly owned subsidiaries, which in turn issued trust preferred securities of $15.0 million, $20.0 million and $15.0 million, respectively. We believe that the supplemental capital, raised in connection with the issuance of these debentures and trust preferred securities, has allowed us to achieve and maintain status as a well-capitalized institution and sustained our continued loan growth.

As evidenced by our past several years of operations, we have experienced significant balance sheet growth. We have implemented a strategy of building our core banking foundation by focusing on commercial loans and business transaction accounts. We believe that this strategy has created recurring revenue streams, diversified our product portfolio and enhanced shareholder value.

Third Quarter 2005 Key Performance Indicators

We believe the following were key indicators of our performance during the third quarter of 2005:

·	Our total assets grew to $1.55 billion at the end of the third quarter of 2005, an increase of 22.1% from $1.27 billion at the end of 2004.

·	Our total deposits grew to $1.30 billion at the end of the third quarter of 2005, an increase of 18.3% from $1.10 billion at the end of 2004.

·	Our total loans grew to $1.19 billion at the end of the third quarter of 2005, an increase of 16.5% from $1.02 billion at the end of 2004.

·	We maintained the level of non-performing loans reasonably low although our ratio of total non-performing loans to total loans slightly increased to 0.33% at the end of the third quarter of 2005 from 0.26% at the end of 2004.

Total noninterest income decreased to $5.1 million in the third quarter of 2005 from $5.9 million in the third quarter of 2004. Such decrease was primarily attributable to the fact that we had no sales of unguaranteed SBA loans in the third quarter of 2005, compared to a gain of $235,110 on such sales in the third quarter of 2004.

Total noninterest expense increased from $7.1 million in the third quarter of 2004 to $8.4 million in the third quarter of 2005, reflecting the expanded personnel and premises associated with our business growth. Due to continuing efforts to minimize operating expenses, noninterest expenses as a percentage of average assets were maintained at low rate of 0.57% and 0.58% in the third quarter of 2005 and 2004, respectively. We believe that our efforts in cost-cutting and revenue diversification have improved our operational efficiency, as evidenced by the improvement in our efficiency ratio (the ratio of noninterest expense to the sum of net interest income before provision for loan losses and total noninterest income) from 41.78% in the third quarter of 2004 to 38.97% in the third quarter of 2005.

These items, as well as other factors, contributed to the increase in net income for the third quarter of 2005 to $7.2 million, or $0.25 per diluted common share, from $5.1 million, or $0.18 per diluted common share, in the third quarter of 2004.

2005 Outlook

As we look ahead to the remainder of 2005, we will continue to pursue opportunities for growth in our existing markets, as well as opportunities to expand into new markets through de novo branching and regional loan production offices. On August 1, 2005 we entered into a definitive stock purchase agreement with the shareholders of Liberty Bank of New York to acquire all of the stock of Liberty Bank for approximately $15.7 million. The stock purchase is expected to be completed in the fourth quarter of 2005, and will increase our assets by approximately $55 million. See “Item 5. Additional Information” for further discussion regarding our acquisition of Liberty Bank.

We seek additional growth in our portfolio of unsecured business loans and consumer loans by utilizing target marketing efforts in these areas. Further, we intend to continue our focus on loan and deposit growth and managing our net interest margin, while attempting to control expenses and credit losses to achieve our net income and other objectives. We will continue to strive to be more efficient and focus on controlling the growth of other operating expenses relative to the growth of our business.

Although interest rates decreased in 2003, 2002 and 2001, compressing our interest margins, we continued to exhibit growth in net interest income. As interest rates increased since June 2004, our yield on earning assets increased. Should interest rates increase further, our yield on earning assets will likely increase further although we cannot be certain as to the extent of such increases, if any. If interest rates continue to increase, we will decide whether to increase the interest rates we pay on our deposit accounts or change our promotional or other interest rates on new deposits in certain marketing programs to attempt to achieve a desirable net interest margin. Any increases in the rates we charge our customers could have an adverse effect on our efforts to attract new customers and grow loans, particularly with the continuing competition in the commercial and consumer lending industry. The economies and real estate markets in our primary market areas will continue to be significant determinants of the quality of our assets in future periods and, thus, our results of operations, liquidity and financial condition. The economic indicators suggest that the national economy and the economies in our primary market areas are expanding in recent two years.

Finally, we completed our reorganization into a holding company structure during the third quarter of 2004. We believe operating within a holding company structure, among other things:

·	allows us to use the portion of proceeds from the issuance of our trust preferred securities as Tier 1 capital (within regulatory guidelines).

·	provides greater operating flexibility;

·	facilitates the acquisition of related businesses as opportunities arise;

·	improves our ability to diversify;

·	enhances our ability to remain competitive in the future with other companies in the financial services industry that are organized in a holding company structure; and

·	enhances our ability to raise capital to support growth.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations is based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities at the date of our financial statements. Actual results may differ from these estimates under different assumptions or conditions.

Various elements of our accounting policies, by their nature, are inherently subject to estimation techniques, valuation assumptions and other subjective assessments. In particular, we have identified six accounting policies that, due to judgments, estimates and assumptions inherent in those policies are critical to an understanding of our consolidated financial statements. These policies relate to the classification and valuation of investment securities, the methodologies that determine our allowance for loan losses, the treatment of non-accrual loans, the valuation of properties acquired through foreclosure, the valuation of retained interests and mortgage servicing assets related to the sales of Small Business Administration loans, and the treatment and valuation of stock-based compensation. In each area, we have identified the variables most important in the estimation process. We have used the best information available to make the estimation necessary to value the related assets and liabilities. Actual performance that differs from our estimates and future changes in the key variables could change future valuation and impact net income.

Our significant accounting policies are described in greater detail in our 2004 Annual Report on Form 10-K in the “Critical Accounting Policies” section of “Management’s Discussion and Analysis of financial condition and result of operations” and in Note 1 to the Consolidated Financial Statements-“Significant Accounting Policies” which are essential to understanding Management’s Discussion and Analysis of Results of Operations and Financial Condition. There has been no material modification to these policies during the quarter ended September 30, 2005.

Results of Operations

Net Interest Income and Net Interest Margin

Our primary source of revenue is net interest income, which is the difference between interest and fees derived from earning assets and interest paid on liabilities obtained to fund those assets. Our net interest income is affected by changes in the level and mix of interest-earning assets and interest-bearing liabilities, referred to as volume changes. Our net interest income is also affected by changes in the yields earned on assets and rates paid on liabilities, referred to as rate changes. Interest rates charged on our loans are affected principally by the demand for such loans, the supply of money available for lending purposes and competitive factors. Those factors are, in turn, affected by general economic conditions and other factors beyond our control, such as federal economic policies, the general supply of money in the economy, legislative tax policies, governmental budgetary matters and the actions of the Federal Reserve Board, or FRB.

Average interest-earning assets increased by 20.5% to $1.4 billion in the third quarter of 2005, as compared with $1.1 billion in the same quarter of 2004. Average net loans also increased by 21.2% to $1.1 billion in the third quarter of 2005, as compared with $945.5 million in the same quarter of 2004. For the first nine months of 2005, average interest-earning assets and average net loans also increased to $1.3 billion and $1.1 billion, respectively, as compared with $1.0 billion and $864.4 million for the prior year’s same period. The FRB has raised the Fed Funds target rate by an aggregate of 200 basis points since September 2004, giving us additional benefits on yields on our earning assets, most of which bear variable interest rates. The average yields on interest-earning assets increased to 7.49% for the third quarter of 2005, as compared with 5.69% for the prior year’s same period. This increase of interest-earning assets and their yields significantly increased our total interest income by 58.7% to $25.3 million for the third quarter of 2005, as compared with $15.9 million for the prior year’s same period. For the first nine months of 2005, total interest income increased to $67.3 million from $42.2 million for the prior year’s same period and average yields on interest-earning assets increased to 7.00% for the first nine months of 2005, as compared with 5.54% for the prior year’s same period.

Our average interest-bearing deposit portfolio increased by 19.6% to $947.6 million in the third quarter of 2005, as compared with $792.4 million in the same quarter of 2004. We increased other borrowings by $52,000,000 over the last 12 months (see “Financial Condition-Deposits and Other Sources of Funds” below). Therefore, average interest-bearing liabilities also increased by 20.4% to $1.0 billion in the third quarter of 2005, as compared with $870.0 million in the same quarter of 2004. For the first nine months of 2005, our average interest-bearing deposit portfolio and average interest-bearing liabilities increased to $996.8 million and $900.9 million, respectively, as compared with $779.0 million and $708.9 million for the prior year’s same period. The FRB’s rate increases also increased our average interest rate paid for interest-bearing liabilities to 3.42% for the third quarter of 2005 and 3.00% for the first nine months of 2005 from 2.21% and 2.13% for the prior year’s same periods. Due to the volume increase of interest-bearing liabilities together with the interest rate increase, total interest expense increased to $9.0 million for the third quarter of 2005 and to $22.4 million for the first nine months of 2005, as compared with $4.8 million and $12.4 million for the prior year’s same periods. Since the end of the third quarter last year, the FRB raised its overnight lending rate eight times by an aggregate 200 basis points to 3.75% as of September 30, 2005. The Wall Street Journal Prime Rate correspondingly increased to 6.75% as of September 30, 2005. We are in an asset-sensitive position, meaning that these rate increases positively affected our net interest income because more earning assets were immediately repriced than interest-bearing deposits. Although we price deposits competitively with the goal to continue to fund our growing loan portfolio, our models indicate that our margin should expand in a rising interest rate environment.

The combined result of our growth and the interest rate increases was an increase in our net interest income. Net interest income increased to $16.3 million in the third quarter of 2005 and to $44.9 million for the first nine months of 2005 as compared with $11.1 million and $29.8 million for the prior year’s same periods, representing an increase of 46.9% and 51.0%, respectively. Due mainly to the positive impact of the FRB’s rate increases on our asset-sensitive position, our net interest margin increased to 4.84% and 4.67% respectively, for the third quarter and the first nine months of 2005, as compared with 3.97% and 3.91%, respectively, for the prior year’s same periods. The net interest spread also improved to 4.07% and 4.00% for the third quarter and first nine months of 2005, respectively, from 3.47% and 3.41%, respectively, for the prior year’s same periods.

The following tables set forth, for the periods indicated, our average balances of assets, liabilities and shareholders’ equity, in addition to the major components of net interest income and net interest margin (all yields were calculated without the consideration of tax effects, if any):

Distribution, Yield and Rate Analysis of Net Interest Income

					For the Quarter Ended September 30,
			2005								2004
	(Dollars in Thousands)
	Average Balance		Interest Income/ Expense			Annualized Average Rate/Yield			Average Balance		Interest Income/ Expense		Annualized Average Rate/Yield

Assets: Interest-earning assets:
Net loans¹	$	1,145,588	$	23,426			8.18	%	$	945,462	$	14,837		6.28	%
Securities of U.S. government agencies		133,224		1,266			3.80	%		86,245		675		3.13	%
Other investment securities		6,340		67			4.21	%		9,223		112		4.83	%
Commercial paper		1,476		15			3.95	%		—		—		0.00	%
Overnight investments		56,862		453			3.19	%		71,237		267		1.50	%
Money market preferred securities		6,706		52			3.10	%		8,313		34		1.65	%
Interest-earning deposits		3		—			17.12	%		17		—		3.74	%
Total interest-earning assets		1,350,199		25,279			7.49	%		1,120,497		15,925		5.69	%
Cash and due from banks		61,399								59,297
Other assets		56,666								44,197
Total assets	$	1,468,264							$	1,223,991
Liabilities and Shareholders’ Equity:
Interest-bearing liabilities:
Money market deposits	$	230,776	$	1,700			2.95	%	$	222,867	$	1,084		1.95	%
Super NOW deposits		21,823		50			0.92	%		22,498		44		0.79	%
Savings deposits		22,915		42			0.72	%		27,058		50		0.75	%
Time certificates of deposit in denominations of $100,000 or more		562,434		5,158			3.67	%		398,934		2,370		2.38	%
Other time deposits		109,603		879			3.21	%		121,036		765		2.53	%
Total interest bearing deposits		947,551		7,829			3.30	%		792,393		4,313		2.18	%
Other borrowings		99,772		1,124			4.51	%		77,584		499		2.57	%
Total interest-bearing liabilities		1,047,323		8,953			3.42	%		869,977		4,812		2.21	%
Non-interest bearing deposits		300,362								261,011
Total deposits and other borrowings		1,347,685								1,130,988
Other liabilities		15,605								12,220
Shareholders’ equity		104,974								80,783
Total liabilities and shareholders’ equity	$	1,468,264							$	1,223,991
Net interest income			$	16,326							$	11,113
Net interest spread²							4.07	%						3.47	%
Net interest margin³							4.84	%						3.97	%

___________________________

¹ Loan fees have been included in the calculation of interest income. Loan fees were approximately $1,393 and $760 for the quarters ended September 30, 2005 and 2004, respectively, and approximately $3,577 and $2,131for the nine months ended September 30, 2005 and 2004, respectively. Net loans are net of the allowance for loan losses, deferred fees, unearned income, and related direct costs, but includes those loans placed on non-accrual status.

² Represents the average rate earned on interest-earning assets less the average rate paid on interest-bearing liabilities.

³ Represents net interest income as a percentage of average interest-earning assets.

Distribution, Yield and Rate Analysis of Net Interest Income

					For the Nine Months Ended September 30,
				2005							2004
		(Dollars in Thousands)
		Average Balance		Interest Income/ Expense		Annualized Average Rate/Yield			Average Balance		Interest Income/ Expense	Annualized Average Rate/Yield

Assets: Interest-earning assets:
Net loans¹	$	1,086,350	$	62,436		7.66	%	$	867,439	$	39,449	6.06	%
Securities of U.S. government agencies		118,059		3,162		3.57	%		72,238		1,639	3.02	%
Other investment securities		5,868		188		4.28	%		13,494		509	5.03	%
Commercial paper		3,152		82		3.46	%		0		0	0.00	%
Overnight Investments		65,183		1,368		2.80	%		56,377		525	1.24	%
Money market preferred securities		5,051		109		2.88	%		5,251		59	1.51	%
Interest-earning deposits		3		1		47.12	%		88		2	2.52	%
Total interest-earning assets		1,283,666		67,346		7.00	%		1,014,887		42,183	5.54	%
Cash and due from banks		57,725							53,939
Other assets		50,042							40,892
Total assets	$	1,391,433						$	1,109,718
Liabilities and Shareholders’ Equity:
Interest-bearing liabilities:
Money market deposits	$	233,910	$	4,508		2.57	%	$	186,711	$	2,593	1.85	%
Super NOW deposits		21,477		130		0.81	%		21,094		121	0.77	%
Savings deposits		23,345		127		0.72	%		27,131		151	0.74	%
Time certificates of deposit in denominations of $100,000 or more		512,576		12,335		3.21	%		356,424		6,051	2.26	%
Other time deposits		109,546		2,375		2.89	%		117,495		2,234	2.54	%
Total interest bearing deposits		900,854		19,475		2.88	%		708,855		11,150	2.10	%
Other borrowings		95,914		2,937		4.08	%		70,100		1,276	2.43	%
Total interest-bearing liabilities		996,768		22,412		3.00	%		778,955		12,426	2.13	%
Non-interest bearing deposits		281,476							246,509
Total deposits and other borrowings		1,278,244							1,025,464
Other liabilities		14,266							11,079
Shareholders’ equity		98,923							73,175
Total liabilities and shareholders’ equity	$	1,391,433						$	1,109,718
Net interest income			$	44,934						$	29,757
Net interest spread²						4.00	%					3.41	%
Net interest margin³						4.67	%					3.91	%

___________________________

¹ Loan fees have been included in the calculation of interest income. Loan fees were approximately $1,393 and $760 for the quarters ended September 30, 2005 and 2004, respectively, and approximately $3,577 and $2,131 for the nine months ended September 30, 2005 and 2004, respectively. Loans are net of the allowance for loan losses, deferred fees, unearned income, and related direct costs, but includes those loans placed on non-accrual status.

² Represents the average rate earned on interest-earning assets less the average rate paid on interest-bearing liabilities.

³ Represents net interest income as a percentage of average interest-earning assets.

The following table sets forth, for the periods indicated, the dollar amount of changes in interest earned and paid for interest-earning assets and interest-bearing liabilities and the amount of change attributable to changes in average daily balances (volume) or changes in average daily interest rates (rate). All yields were calculated without the consideration of tax effects, if any, and the variances attributable to both the volume and rate changes have been allocated to volume and rate changes in proportion to the relationship of the absolute dollar amount of the changes in each:

Rate/Volume Analysis of Net Interest Income

(Dollars in Thousands)

	Three Months Ended September 30, 2005 vs. 2004 Increase (Decrease) Due to Change In									Nine Months Ended September 30, 2005 vs. 2004 Increase (Decrease) Due to Change In
	Volume			Rate			Total			Volume			Rate			Total
Interest income: Net loans¹	$	3,532			5,057		$	8,589		$	11,240			11,747		$	22,987
Securities of U.S. government agencies		424			167			591			1,185			338			1,523
Other investment securities		(32	)		(13	)		(45	)		(253	)		(68	)		(321	)
Commercial paper		15			0			15			82			0			82
Overnight investments		(63	)		249			186			93			750			843
Money market preferred securities		(8	)		26			18			(2	)		52			50
Interest-earning deposits		0			0			0			(3	)		2			(1	)
Total interest income		3,868			5,486			9,354			12,342			12,821			25,163

Interest expense:
Money market deposits	$	40			576		$	616			756			1,160		$	1,916
Super NOW deposits		(1	)		7			6			2			7			9
Savings deposits		(8	)		(1	)		(9	)		(21	)		(4	)		(25	)
Time certificates of deposit in denominations of $100,000 or more		1,198			1,590			2,788			3,218			3,066			6,284
Other time deposits		(77	)		192			115			(158	)		299			141
Other borrowings		172			453			625			582			1,079			1,661
Total interest expense		1,324			2,817			4,141			4,379			5,607			9,986

Change in net interest income	$	2,544		$	2,669		$	5,213		$	7,963		$	7,214		$	15,177

Provision for Loan Losses

In anticipation of credit risk inherent in our lending business, we set aside allowances through charges to earnings. Such charges were not only made for our outstanding loan portfolio, but also for off-balance sheet items, such as commitments to extend credit or letters of credit. The charges made for our outstanding loan portfolio were credited to the allowance for loan losses, whereas charges for off-balance sheet items were credited to the reserve for off-balance sheet items, which is presented as a component of other liabilities.

We respond to potential loan losses proactively by identifying problem loans in a timely manner and by taking immediate actions to successfully curb increases in the level of non-performing assets (see “Financial Condition-Nonperforming Assets” below for further discussion) and reduced net charge-offs. Despite continued loan growth, our low charge-offs and recoveries of the previously charged-off loans reduced our provision for loan losses to $1.3 million in the third quarter of 2005, as compared to the $1.5 million for the prior year’s third quarter. The provision for loan losses in the first nine months of 2005 decreased to $2.5 million, as compared with $3.0 million in the first nine months of 2004. The 2004 provision was abnormally high due to the adjustment to the reserve for off-balance-sheet items caused by the application of the higher calculated loss migration ratio to off-balance-sheet items since the first quarter of 2004. We provided a $456,000 reserve for the credit risk of off-balance sheet items in the first nine months of 2004, as compared with $89,000 in the first nine months of 2005. The procedures for monitoring the adequacy of the allowance for loan losses, as well as detailed information concerning the allowance itself, are described in the section entitled “Financial Condition-Allowance for Loan Losses” below.

___________________________

¹ Loan fees have been included in the calculation of interest income. Loan fees were approximately $1,393 and $760 for the quarters ended September 30, 2005 and 2004, respectively, and approximately $3,577 and $2,131 for the nine months ended September 30, 2005 and 2004, respectively. Net loans are net of the allowance for loan losses, unearned income and related direct costs.

Noninterest Income

Total noninterest income decreased to $5.1 million in the third quarter of 2005 and $14.7 million for the first nine months of 2005, as compared with $5.9 million and $16.2 million, respectively, for the prior year’s same periods. Noninterest income as a percentage of average assets decreased to 0.35% and 1.05%, respectively, for the third quarter and the first nine months of 2005 from 0.49% and 1.46% for the prior year’s same periods. These decreases were primarily due to the decrease in gains from loan sales discussed below. We currently earn non-interest income from various sources, including an income stream provided by BOLI in the form of an increase in cash surrender value.

The following table sets forth the various components of our noninterest income for the periods indicated:

Noninterest Income

(Dollars in thousands)

For Three Months Ended September 30,	2005					2004
	(Amount)		(%)			(Amount)		(%)
Service charges on deposit accounts	$	1,973		38.5	%	$	1,892		31.8	%
Gain on sale of loans		2,163		42.2	%		2,731		45.9	%
Loan-related servicing income		475		9.2	%		590		9.9	%
Loan referral fees		—		—			—		—
Loan packaging fees		102		2.0	%		65		1.1	%
Income from other earning assets		224		4.4	%		175		3.0	%
Other income		189		3.7	%		494		8.3	%
Total	$	5,126		100.0	%	$	5,947		100.0	%
Average assets	$	1,468,264				$	1,223,991
Noninterest income as a % of average assets				0.35	%				0.49	%

For Nine Months Ended September 30,	2005					2004
		(Amount)		(%)			(Amount)		(%)
Service charges on deposit accounts	$	5,508		37.5	%	$	5,549		34.2	%
Gain on sale of loans		5,675		38.7	%		6,902		42.6	%
Loan-related servicing income		1,606		11.0	%		1,764		10.9	%
Loan referral fees		118		0.8	%		100		0.6	%
Loan packaging fees		300		2.0	%		324		2.0	%
Income from other earning assets		636		4.3	%		476		2.9	%
Other income		836		5.7	%		1,092		6.8	%
Total	$	14,679		100.0	%	$	16,207		100.0	%
Average assets	$	1,391,433				$	1,109,718
Noninterest income as a % of average assets				1.05	%				1.46	%

Our largest noninterest income source for the third quarter of 2005 was the gain on sale of loans, representing approximately 42% of our total noninterest income. Income in this category includes sales gains on residential mortgage loans in 2005 in addition to sales gains on the guaranteed portion of SBA loans. The sales gains on the guaranteed portions of SBA loans, the main source of this income, was $5.4 million for the nine-month period ended September 30, 2005, as compared to $5.5 million in the same period in 2004. Since the inception of our Home Loan Center in the fourth quarter of 2003, the sales of residential mortgage loans have become a stable noninterest income source. Gain on such sales was $86,000 and $300,000, respectively, for the three and nine months ended September 30, 2005 as compared with $94,000 and $253,000, respectively, for the prior year’s same periods. However, the gain on sales of the unguaranteed portion of SBA loans is not considered stable. We had no such sales in 2005, as compared with realized gains of $235,000 and $1.1 million in the three and nine months ended September 30, 2004, respectively. The combined gain on sale of loans was $2.2 million and $2.7 million in the third quarters of 2005 and 2004, respectively, and $5.7 million and $6.9 million in the first nine months of 2005 and 2004, respectively.

Our second largest noninterest income source for the third quarter of 2005 was service charge income on deposit accounts, generally representing 30% to 40% of our total noninterest income. This income source increased by $81,000 in the third quarter of 2005 as compared with $1.9 million in the prior year’s same quarter, but decreased by $41,000 in the first nine months of 2005 from $5.5 million for the prior year’s same period despite an increase in the number of transactional accounts over the past 12 months. Such decrease was due primarily to our efforts to comply with the Bank Secrecy Act and protect us from potential loss. For such purposes, we imposed more rigid requirements on money service business (“MSB”) accounts and more closely monitored their transactions. As a result, the number of MSB accounts was reduced and fee income therefrom was also reduced. We continuously review service charge rates and the manager’s authority to waive them to maximize service charge income while maintaining a competitive position.

The third largest source of noninterest income for the third quarter of 2005 was loan-related servicing income. This fee income consists of trade-financing fees and servicing fees on SBA loans sold. With the expansion of our trade financing activities and the growth of our servicing loan portfolio, this fee income source historically has increased, but it decreased to $475,000 and $1.6 million, respectively, in the third quarter and the first nine months of 2005 as compared with $590,000 and $1.8 million for the prior year’s same periods. Such decrease was mainly caused by the significant reversals of servicing assets on sold loans which were paid off before their maturities. The servicing fees on sold SBA loans are credited when we collect the monthly payments on the sold loans we are servicing, and are charged by the monthly amortization of servicing assets that we capitalize upon sale of the related loan. Such servicing assets are also reversed and charged against the fee income account when the sold loans are paid off before the related servicing assets are fully amortized. For the first nine months of 2005, $833,000 of servicing assets were charged back to this income account by the early pay-offs as compared to $396,000 for the prior year’s same period. Considering our continued expansion of SBA activities (the assets increased to $262.5 million at September 30, 2005 from $221.1 million a year ago), we believe this income source will increase as prepayments on SBA loans decline.

Our loan referral fee income source includes income derived from our referring to other financial institutions loans that did not meet our lending requirements for various reasons, including size, availability of funds, credit criteria and others. Our referral fee income was $0 and $122,000, respectively, in the third quarter and the first nine months of 2005 as compared with $0 and $100,000 for the prior year’s same periods. We cannot assure you that this source of revenue will increase because loan referrals do not represent our core banking business and fee income, and, therefore, is not a stable source of revenue.

Loan packaging fee income represents charges to borrowers for loan processing. The increased volume of loan production increased income from this source to $102,000 in the third quarter of 2005 from $65,000 for the prior year’s same quarter. For the first nine-month period, however, such income decreased to $300,000 in 2005 as compared with the last year’s $324,000 due mainly to heightened competition, which often results in packaging fee waivers.

Income from other earning assets represents income from earning assets other than interest-earning assets, such as dividend income on Federal Home Loan Bank (the “FHLB”) stock ownership and the increase in cash surrender value of Bank Owned Life Insurance (the “BOLI”). Such income increased to $224,000 and $636,000, respectively, in the third quarter and the first nine months of 2005, as compared with $175,000 and $476,000 for the prior year’s same periods. These increases were attributable primarily due to our purchasing an additional $3 million of BOLI in the third quarter of 2005 and increasing our FHLB stock ownership over the past 12 months.

Other income represents income from miscellaneous sources, such as gain on sale of investment securities and the excess of insurance proceeds over the carrying value of an insured loss. Other income decreased to $189,000 and $836,000 in the third quarter and first nine months of 2005, respectively, as compared with $494,000 and $1.1 million for the prior year’s same periods. Such decreases were due mainly to the non-recurring income recognized in 2004 (a $135,000 settlement award on an insurance claim received in 2004 and a net gain of $267,000 on sale and call of investment securities) offset by the $65,000 recovery in 2005 for an operation loss expensed in 2004.

Noninterest Expense

Total noninterest expense increased to $8.3 million and $23.7 million in the third quarter and the first nine months of 2005, respectively, as compared with $7.1 million and $19.2 million in the prior year’s same periods, representing an increase of 17.3% and 23.1%, respectively. These increases can be attributed to the expanded personnel and premises associated with our business growth, including the recent openings of new offices. However, due to continuing efforts to minimize operating expenses, noninterest expenses as a percentage of average assets decreased to 1.71% in the first nine months of 2005 from 1.74% in the same period of 2004. We believe that our efforts in cost-cutting and revenue diversification have improved our operational efficiency, as evidenced by the decrease in our efficiency ratio (the ratio of noninterest expense to the sum of net interest income before provision for loan losses and total noninterest income) to 39.0% and 39.8% in the third quarter and the first nine months of 2005, respectively, as compared with 41.8% and 41.9%, respectively, in the prior year’s same periods.

The following table sets forth a summary of noninterest expenses for the periods indicated:

Noninterest Expense

(Dollars in thousands)

For the Quarter Ended September 30,	2005					2004
	(Amount)		(%)			(Amount)		(%)
Salaries and employee benefits	$	4,924		58.9	%	$	3,709		52.0	%
Occupancy and equipment		893		10.7	%		711		10.0	%
Data processing		474		5.6	%		455		6.4	%
Loan referral fee		344		4.1	%		293		4.1	%
Professional fees		79		0.9	%		333		4.7	%
Directors’ fees		131		1.6	%		123		1.7	%
Office supplies		236		2.8	%		138		1.9	%
Advertising		164		2.0	%		176		2.5	%
Communications		123		1.5	%		82		1.1	%
Deposit insurance premium		38		0.5	%		33		0.5	%
Outsourced service for customer		415		4.9	%		361		5.1	%
Investor relations expenses		4		0.1	%		164		2.3	%
Other operating		535		6.0	%		550		7.7	%
Total	$	8,360		100.0	%	$	7,128		100.0	%
Average assets	$	1,468,264				$	1,223,991
Noninterest expenses as a % of average assets				0.57	%				0.58	%

For the Nine Months Ended September 30,		2005					2004
		(Amount)		(%)			(Amount)		(%)
Salaries and employee benefits	$	13,617		57.4	%	$	10,386		53.9	%
Occupancy and equipment		2,496		10.5	%		1,996		10.3	%
Data processing		1,432		6.0	%		1,228		6.4	%
Loan referral fee		913		3.8	%		897		4.7	%
Professional fees		633		2.7	%		752		3.9	%
Directors’ fees		368		1.6	%		332		1.7	%
Office supplies		478		2.0	%		383		2.0	%
Advertising		552		2.3	%		379		2.0	%
Communications		330		1.4	%		245		1.3	%
Deposit insurance premium		114		0.5	%		95		0.5	%
Outsourced service for customer		1,072		4.5	%		986		5.1	%
Investor relation expenses		233		1.0	%		299		1.5	%
Other operating		1,492		6.3	%		1,295		6.7	%
Total	$	23,730		100.0	%	$	19,273		100.0	%
Average assets	$	1,391,433				$	1,109,718
Noninterest expenses as a % of average assets				1.71	%				1.74	%

Salaries and employee benefits generally represented over 55% of total noninterest expenses. For the third quarter and first nine months of 2005, salaries and employee benefits totaled $4.9 million and $13.6 million, respectively, as compared with $3.7 million and $10.4 million for the prior year’s same periods, representing an increase of 32.8% and 31.1%, respectively, from the comparable periods. Such increases were the result of our new office openings, and significant asset growth in the past 12 months that increased the number of full-time equivalent employees to 278 at September 30, 2005 from 235 at September 30, 2004. However, our efforts to promote efficient operations increased assets per employee to $5.6 million at September 30, 2005 from $5.2 million at September 30, 2004.

Occupancy and equipment expenses represented approximately 10% to 11% of total noninterest expenses and totaled $893,000 and $2.5 million, respectively, for the third quarter and first nine months of 2005, as compared with $711,000 and $2.0 million for the prior year’s same periods, representing an increase of 25.6% and 25.1% respectively, from the comparable periods. These increases were attributable primarily to the expansion of our branch network, including loan production offices.

Data processing expenses were $474,000 and $1.4 million, respectively, for the third quarter and the first nine months of 2005, as compared with $455,000 and $1.2 million for the prior year’s same periods, representing an increase of 4.2% and 16.6% respectively, from the comparable periods. These increases correspond to the growth of our business.

Loan referral fees generally are paid to brokers who refer loans to us. These loans are SBA loans in most cases, although we also pay referral fees for qualified commercial loans. Due to the growth of SBA loan production, these referral fees increased to $344,000 and $913,000 in the third quarter and the first nine months of 2005, respectively, from $293,000 and $897,000 in the prior year’s same periods. Professional fees generally increase as we grow and we expect these expenditures will continue to be significant, as we address the enhanced SEC and NASDAQ corporate governance requirements. For the third quarter and the first nine months of 2005, professional fees decreased to $79,000 and $633,000, respectively, from $333,000 and $752,000 recorded in the prior year’s same periods. These decreases were attributable to the legal and accounting fees incurred in 2004 to comply with the enhanced legal and accounting requirements of the Sarbanes-Oxley Act (“SOX”), especially the annual certification requirements of SOX 404.

Advertising expense usually fluctuates depending on the timing of payment. Advertising expenses decreased to $164,000 in the third quarter of 2005 from $176,000 in the prior year’s same quarter, but increased to $552,000 in the first nine months of 2005, as compared with $379,000 for the prior year’s same period. Such increases were attributable to expanded marketing activities, such as media advertisements and promotional gifts for customers of newly opened offices, especially for the Dallas branch and new loan production offices.

Outsourced service costs for customers are payments made to third parties who provide services that were traditionally provided by banks to their customers, such as armored car services or bookkeeping services. These expenses are recouped from the earnings credits earned by the respective depositors on their balances maintained with us. Due mainly to the increase in service activities, these expenses increased to $415,000 and $1.1 million in the third quarter and the first nine months of 2005, respectively, as compared with $361,000 and $986,000 for the prior year’s same periods.

Investor relations expenses represent costs for providing services to our existing or prospective shareholders, such as NASDAQ listing fees, fees for an outside investor relations company and various promotional material costs and usually fluctuate depending on the timing of payment. These expenses decreased to $4,000 and $233,000, respectively, in the third quarter and the first nine months of 2005, as compared with $164,000 and $299,000, respectively, in the prior year’s same periods. Such decreases were mainly the result of the non-recurring expenditures in 2004, including SEC filing fees and printing costs relating to the holding company reorganization.

Noninterest expenses other than the categories specifically addressed above, such as office supplies and communication expenses, increased to $1.1 million and $2.8 million in the third quarter and the first nine months of 2005, respectively, as compared with $989,000 and $2.4 million for the prior year’s same periods, representing an increase of 7.5% and 18.4%, respectively, from the prior year’s comparable periods. We believe that such increases corresponded to our business growth.

Generally, noninterest expense has increased in recent years as a result of rapid asset growth and expansion of our office network and products, all requiring substantial increases in staff, as well as additional occupancy and data processing costs. We anticipate that noninterest expense will continue to increase as we continue to grow. However, we remain committed to cost-control and efficiency, and we expect to keep these increases to a minimum relative to growth.

Provision for Income Taxes

For the quarter ended September 30, 2005, we made a provision for income taxes of $4.6 million on pretax net income of $11.8 million, representing an effective tax rate of 39.4%, as compared with a provision for income taxes of $3.4 million on pretax net income of $8.5 million, representing an effective tax rate of 39.9%, for the same quarter of 2004. For the first nine months of 2005, we made a provision for income taxes of $13.4 million on pretax net income of $33.4 million, representing an effective tax rate of 40.1%, as compared with a provision for income taxes of $9.4 million on pretax net income of $23.7 million, representing an effective tax rate of 39.7%, for the same period of 2004.

The effective tax rates in the third quarter and the first nine months of 2005 were reasonably consistent with those for the prior year’s same periods. Our effective tax rates were one to two percentage points lower than statutory rates due to state tax benefits derived from doing business in an Enterprise Zone and our ownership of BOLI and Low Income Housing Tax Credit Funds (see “Financial Condition -- Other Earning Assets” for further discussion). Generally, income tax expense is the sum of two components: current tax expense and deferred tax expense (benefit). Current tax expense is calculated by applying the current tax rate to taxable income. Deferred tax expense results from changes in deferred tax assets (liabilities) from year to year. Deferred income tax assets and liabilities represent the tax effects, based on current tax law, of future deductible or taxable amounts attributable to events that have been recognized in the financial statements. Because we traditionally recognize substantially more expenses in our financial statements than we have been allowed to deduct for taxes, we generally have a net deferred tax asset. At September 30, 2005 and December 31, 2004, we had net deferred tax assets of $7.0 million and $4.8 million, respectively.

We believe that we have adequately provided for income tax issues not yet resolved with federal, state and foreign tax authorities. In March 2005, we prepaid $515,000 to the California Franchise Tax Board for unresolved tax matters in order to avoid the new potential penalty imposed by the State of California for any tax balances owed for years prior to 2003. Such prepayment was made from the reserve we previously accrued, the balance of which was $532,000 at December 31, 2004. Based upon a consideration of all relevant facts and circumstances, we do not believe the ultimate resolution of tax issues for all open tax periods will have a material adverse effect upon our results of operations or financial condition.

Financial Condition

Loan Portfolio

Total loans net of unearned income increased by $168.4 million, or 16.5%, to $1.19 billion at September 30, 2005, as compared with $1.02 billion at December 31, 2004. Total loans net of unearned income as a percentage of total assets as of September 30, 2005 and December 31, 2004 were 76.9% and 80.6%, respectively.

Real estate secured loans consist primarily of commercial real estate loans and are extended to finance the purchase or improvement of commercial real estate or businesses thereon. The properties may be either user owned or for investment purposes. Our loan policy adheres to the real estate loan guidelines set forth by the FDIC in 1993. The policy provides guidelines including, among other things, fair review of appraisal value, limitation on loan-to-value ratio and minimum cash flow requirements to service debt. Loans secured by real estate equaled $973.0 million and $859.0 million as of September 30, 2005 and December 31, 2004, respectively. The robust California real estate market in the last few years and our increased involvement in the residential mortgage loan market have increased our composition of real estate secured loans to 84.2% of total loans at the end of last year. However, our continuing effort to diversify our loan portfolio lowered the ratio of real estate secured loans over total loans to 81.8% at September 30, 2005.

Commercial and industrial loans include revolving lines of credit, as well as term business loans. Commercial and industrial loans at September 30, 2005 increased to $168.9 million, as compared with $135.9 million at December 31, 2004 due to our continuing effort to diversify our loan portfolio. Commercial and industrial loans as a percentage of total loans increased to 14.2% at September 30, 2005, from 13.3% at December 31, 2004.

Consumer loans have historically represented less than 5% of our total loan portfolio. The majority of consumer loans are concentrated in automobile loans, which we formerly provided as a service only to existing customers. However, in 2003, we initiated an Auto Loan Center to increase our consumer loan portfolio. Consumer loans more than doubled from $18.8 million at December 31, 2004 to $39.4 million at September 30, 2005. We anticipate further increases in consumer loans going forward, although no assurance can be given that this increase will occur.

Construction loans generally have represented 5% or less of our total loan portfolio and are extended as a temporary financing vehicle only. In the third quarter of 2004, we formed a construction loan department in the Commercial Loan Center and appointed a construction loan specialist as its manager. We expect to expand our construction loans with the specialized capacity under the guidance of the Commercial Loan Center.

Our loan terms vary according to loan type. Commercial term loans have typical maturities of three to five years and are extended to finance the purchase of business entities, business equipment, leasehold improvements or to provide permanent working capital. SBA guaranteed loans usually have longer maturities (8 to 25 years). We generally limit real estate loan maturities to five to eight years. Lines of credit, in general, are extended on an annual basis to businesses that need temporary working capital and/or import/export financing. We generally seek diversification in our loan portfolio, and our borrowers are diverse as to industry, location, and their current and target markets.

The majority of the properties taken as collateral are located in Southern California. The loans generated by our loan production offices, which are located outside of our main geographical market, are generally collateralized by property in close proximity to those offices. We employ strict guidelines regarding the use of collateral located in less familiar market areas. Since a major real estate recession during the first part of the previous decade, property values in Southern California, where most of our loan collateral is located, have generally increased. However, no assurance can be given that this trend will continue or that property values will not significantly decrease.

The following table sets forth the amount of total loans outstanding (excluding unearned income) and the percentage distributions in each category, as of the dates indicated:

Distribution of Loans and Percentage Composition of Loan Portfolio

	Amount Outstanding
	(Dollars in Thousands)
	September 30, 2005			December 31, 2004
Construction	$	8,116		$	6,972
Real estate secured		972,770			858,998
Commercial and industrial		168,895			135,943
Consumer		39,384			18,810
Total loans, net of unearned income	$	1,189,165		$	1,020,723
Participation loans sold and serviced by the Company	$	262,547		$	235,534
Construction		0.7	%		0.7	%
Real estate secured		81.8	%		84.2	%
Commercial and industrial		14.2	%		13.3	%
Consumer		3.3	%		1.8	%
Total loans, net of unearned income		100.0	%		100.0	%

The following table shows the contractual maturity distribution and repricing intervals of the outstanding loans in our portfolio, as of September 30, 2005. In addition, the table shows the distribution of such loans between those with variable or floating interest rates and those with fixed or predetermined interest rates. The table excludes the gross amount of non-accrual loans of $8.4 million, and includes unearned income and deferred fees totaling $10.1 million at September 30, 2005:

Loan Maturities and Repricing Schedule

	At September 30, 2005,
	Within One Year		After One But Within Five Years		After Five Years		Total
	(Dollars in Thousands)
Construction	$	8,116	$	0	$	0	$	8,116
Real estate secured		893,443		33,149		42,029		968,621
Commercial and industrial		175,000		102		92		175,194
Consumer		18,449		20,529		300		39,278
Total loans, net of unearned income	$	1,095,008	$	53,780	$	42,421	$	1,191,209
Loans with variable (floating) interest rates	$	1,067,875	$	0	$	0	$	1,067,875
Loans with predetermined (fixed) interest rates	$	27,133	$	53,780	$	42,421	$	123,334

Nonperforming Assets

Nonperforming assets consist of loans on non-accrual status, loans 90 days or more past due and still accruing interest, loans restructured, where the terms of repayment have been renegotiated resulting in a reduction or deferral of interest or principal, and other real estate owned (“OREO”).

Loans are generally placed on non-accrual status when they become 90 days past due, unless management believes the loan is adequately collateralized and in the process of collection. The past due loans may or may not be adequately collateralized, but collection efforts are continuously pursued. Loans may be restructured by management when a borrower has experienced some changes in financial status, causing an inability to meet the original repayment terms, and where we believe the borrower will eventually overcome those circumstances and repay the loan in full. OREO consists of properties acquired by foreclosure or similar means and which management intends to offer for sale.

Despite the significant growth of our loan portfolio, our asset quality sustained a controllable level of nonperforming loans. Our nonperforming loans at September 30, 2005 were $3.9 million, or 0.33% of total loans, an increase from the levels at September 30, 2004, which was $3.0 million, or 0.31% of total loans, and at December 31, 2004 ($2.7 million, or 0.26% of total loans). We acquired two OREOs during the third quarter of 2005 and recorded them at their net fair market value in the total amount of $156,000. We believe that our nonperforming loans are well protected with an adequate reserve together with tangible collateral. See “Allowance for Loan Losses” below for further discussion. Except as disclosed above, as of September 30, 2005, we were not aware of any material credit problems of borrowers that would cause us to have serious doubts about the ability of a borrower to comply with present loan payment terms. However, no assurance can be given that credit problems do not exist that may not have been brought to the attention of management.

The following table provides information with respect to the components of our nonperforming assets as of the dates indicated (the figures in the table are net of the portion guaranteed by the U.S. Government):

Nonperforming Assets

(Dollars in Thousands)

Nonaccrual loans:¹	September 30, 2005			December 31, 2004			September 30, 2004
Real estate secured	$	2,877		$	2,242		$	2,328
Commercial and industrial		614			401			510
Consumer		106			0			0
Total		3,597			2,643			2,838
Loans 90 days or more past due and still accruing (as to principal or interest):
Construction		—			—			—
Real estate secured		315			0			0
Commercial and industrial		9			0			107
Consumer		19			42			49
Total		343			42			156
Restructured loans:²
Real estate secured		—			—			—
Commercial and industrial		—			14			16
Consumer		—			—			—
Total		—			14			16
Total nonperforming loans		3,940			2,699			3,010
Other real estate owned		156			—			—
Total nonperforming assets	$	4,096		$	2,699		$	3,010
Nonperforming loans as a percentage of total loans		0.33	%		0.26	%		0.31	%
Nonperforming assets as a percentage of total loans and other real estate owned		0.34	%		0.26	%		0.31	%
Allowance for loan losses as a percentage of nonperforming loans		343.91	%		411.63	%		369.75	%

___________________________

¹ During the nine months ended September 30, 2005, no interest income related to these loans was included in net income. Additional interest income of approximately $431 would have been recorded during the nine months ended September 30, 2005, if these loans had been paid in accordance with their original terms and had been outstanding throughout the three months ended September 30, 2005 or, if not outstanding, throughout the three months ended September 30, 2005, since origination.

² A “restructured loan” is one in which the terms have been renegotiated to provide a reduction or deferral of interest or principal because of deterioration in the financial position of the borrower.

Allowance for Loan Losses

In anticipation of credit risk inherent in our lending business, we set aside allowances through charges to earnings. Such charges are not only made for the outstanding loan portfolio, but also for off-balance sheet items, such as commitment to extend credit or letters of credit. The charge made for our outstanding loan portfolio is credited to allowance for loan losses, whereas the charge for off-balance sheet items is credited to reserve for off-balance sheet items, which is presented as a component of other liabilities. The rapid growth of our loan portfolio has required more reserves for possible loan losses. The provision for loan losses is discussed in “Results of Operations - Provision for Loan Losses” above.

The table below summarizes, for the periods indicated, loan balances at the end of each period, the daily averages during the period, changes in the allowance for loan losses arising from loans charged off, recoveries on loans previously charged off, additions to the allowance and certain ratios related to the allowance for loan losses:

Allowance for Loan Losses

(Dollars in Thousands)

As of and for the period of	Three months ended September 30,						Nine months ended September 30,
	2005			2004			2005			2004
Balances:
Average total loans outstanding during period	$	1,158,245		$	956,085		$	1,098,404		$	877,361
Total loans (net of unearned income)		1,189,165			972,829			1,189,165			972,829
Allowance for loan losses:
Balances at beginning of period		12,450			10,251			11,111			9,011
Actual charge-offs:
Real estate secured		86			—			110			—
Commercial and industrial		114			613			264			629
Consumer		—			10			52			81
Total charge-offs		200			623			426			710
Recoveries on loans previously charged off:
Real estate secured		—			—			24			—
Commercial and industrial		101			109			426			245
Consumer		9			13			35			24
Total recoveries		110			122			485			269
Net charge-offs (net recoveries)		90			501			(59	)		441
Provision for loan losses		1250			1450			2,470			3,017
Less: provision for off-balance sheet credit losses		59			69			89			456
Balances at end of period	$	13,551		$	11,131		$	13,551		$	11,131
Ratios:
Net charge-offs (net recoveries) to average total loans		0.01	%		0.05	%		(0.01	%)		0.05	%
Allowance for loan losses to total loans at period-end		1.14	%		1.14	%		1.14	%		1.14	%
Net charge-offs (net recoveries) to allowance for loan losses		0.67	%		4.51	%		(0.43	%)		3.96	%
Net charge-offs (net recoveries) to provision for loan losses		7.24	%		34.62	%		(2.37	%)		14.62	%

The allowance for loan losses increased by 22.0%, or $2.4 million, to $13.6 million at September 30, 2005, as compared with $11.1 million at December 31, 2004, which sustained a similar level at September 30, 2004, relative to outstanding loans. With our continued emphasis on asset quality control, we lowered the level of charge-offs to $200,000 and $426,000, respectively, for the three and nine-month periods ended September 30, 2005 as compared with $623,000 and $710,000 for the prior year’s same periods. As a result of recoveries on loans previously charged-off net charge-offs for the third quarter of 2005 were lowered to $90,000 as compared with $501,000 for the prior year’s same quarter. We had net recoveries of $59,000 for the first nine-month period of 2005, as compared with the net charge-offs of $441,000 for the prior year’s same period.

Although we believe the allowance, at September 30, 2005, was adequate to absorb losses from any known and inherent risks in the portfolio, no assurance can be given that economic conditions which may adversely affect our service areas or other variables will not result in increased losses in the loan portfolio in the future. As of September 30, 2005 and December 31, 2004, our allowance for loan losses consisted of amounts allocated to three phases of our methodology for assessing loan loss allowances, as follows:

Phase of Methodology	As of:		As of:
	September 30, 2005		December 31, 2004
Specific review of individual loans	$	1,119,666	$	541,261
Review of pools of loans with similar characteristics		10,225,437		8,954,465
Judgmental estimate based on various subjective factors		2,205,561		1,615,366
Total allowance for loan losses	$	13,550,664	$	11,111,092

The table below summarizes, for the end of the periods indicated, the balance of allowance for loan losses and its percent of such loan balance for each type of loan:


	Distribution and Percentage Composition of Allowance for Loan Losses
	(Dollars in thousands)
Balance as of	September 30, 2005							December 31, 2004
Applicable to:	Reserve Amount		Total Loans		(%)			Reserve Amount		Total Loans		(%)
Construction loans	$	73	$	8,116		0.90	%	$	66	$	6,972		0.95	%
Real estate secured		8,989		974,178		0.92	%		8,081		858,998		0.94	%
Commercial and industrial		4,159		177,818		2.34	%		2,796		135,943		2.06	%
Consumer		330		39,384		0.84	%		168		18,810		0.89	%
Total Allowance	$	13,551	$	1,199,496		1.13	%	$	11,111	$	1,020,723		1.09	%

Contractual Obligations

The following table represents our aggregate contractual obligations to make future payments as of September 30, 2005:

(Dollars in thousands)	One Year or Less		Over One Year To Three Years		Over Three Years To Five Years		Over Five Years		Total
FHLB borrowings	$	41,976	$	21,684		—		—	$	63,660
Junior subordinated debentures		3,814		7,081		3,708		61,547		76,150
Operating leases		1,678		2,909		2,202		2,813		9,602
Time deposits		709,649		15,360		3		16		725,028
Total	$	757,117	$	47,034	$	5,913	$	64,376	$	874,440

With exception of the operating leases, the expected obligations presented above include anticipated interest accrual, based on current respective contractual terms.

Off-Balance Sheet Arrangements

During the ordinary course of business, we provide various forms of credit lines to meet the financing needs of our customers. These commitments, which represent a credit risk to us, are not represented in any form on our balance sheets.

As of September 30, 2005 and December 31, 2004, we had commitments to extend credit of $99.4 million and $69.5 million, respectively. Obligations under standby letters of credit were $2.8 million at each of September 30, 2005 and December 31, 2004, respectively, and our obligations under commercial letters of credit were $13.0 million and $9.3 million at such dates, respectively. The effect on our revenues, expenses, cash flows and liquidity from the unused portion of the commitments to provide credit cannot be reasonably predicted because there is no guarantee that the lines of credit will be used.

In the normal course of business, we are involved in various legal claims. We have reviewed all legal claims against us with counsel and have taken into consideration the views of counsel as to the outcome of the claims. In our opinion, the final disposition of all such claims will not have a material adverse effect on our financial position and results of operations.

Investment Activities

Investments are one of our major sources of interest income and are acquired in accordance with a written comprehensive investment policy addressing strategies, types and levels of allowable investments. This investment policy is reviewed at least annually by the Board of Directors. Management of our investment portfolio is set in accordance with strategies developed and overseen by our Asset/Liability Committee. Investment balances, including cash equivalents and interest-bearing deposits in other financial institutions, are subject to change over time based on our asset/liability funding needs and interest rate risk management objectives. Our liquidity levels take into consideration anticipated future cash flows and all available sources of credits and are maintained at levels management believes are appropriate to assure future flexibility in meeting anticipated funding needs.

Cash Equivalents and Interest-bearing Deposits in other Financial Institutions

We sell federal funds, purchase securities under agreements to resell and high quality money market instruments, and deposit interest bearing accounts in other financial institutions to help meet liquidity requirements and provide temporary holdings until the funds can be otherwise deployed or invested. As of September 30, 2005 and December 31, 2004, we had $100 million and $45 million, respectively, in federal funds sold and repurchase agreements, and $3,000 at each of September 30, 2005 and December 31, 2004 in interest-bearing deposits in other financial institutions.

Investment Securities

Management of our investment securities portfolio focuses on providing an adequate level of liquidity and establishing an interest rate-sensitive position, while earning an adequate level of investment income without taking undue risk. We classify our investment securities as “held-to-maturity” or “available-for-sale.” Investment securities that we intend and are able to hold until maturity are classified as held-to-maturity securities, and all other investment securities are classified as available-for-sale. The carrying values of available-for-sale investment securities are adjusted for unrealized gains or losses as a valuation allowance and any gain or loss is reported on an after-tax basis as a component of other comprehensive income. At September 30, 2005 and December 31, 2004, we had $6.0 million and $10.0 million in money market preferred stock (“MMPS”), which is classified as available-for-sale securities. MMPS is a form of equity security having characteristics similar to money market instruments and offers attractive tax-equivalent yields with a 70% dividend received deduction. MMPS is re-auctioned every 49 or 90 days.

The following table summarizes the book value and market value and distribution of our investment securities as of the dates indicated:

Investment Securities Portfolio

(Dollars in Thousands)

	As of September 30, 2005				As of December 31, 2004
	Amortized Cost		Market Value		Amortized Cost		Market Value
Held to Maturity:
Securities of government sponsored
enterprises	$	21,990	$	21,830	$	28,073	$	27,976
Collateralized mortgage obligation		272		261		379		371
Municipal securities		2,619		2,616		810		814
Available-for-Sale:
Securities of government sponsored
enterprises		73,856		73,399		39,945		39,732
Mortgage backed securities		25,695		25,635		27,794		27,740
Collateralized mortgage obligation		16,027		15,804		4,389		4,291
Corporate securities		2,991		2,939		3,994		3,950
Municipal securities		3,023		3,021		—		—
Money market preferred stock		6,000		6,000		10,000		10,000
Total investment securities	$	152,473	$	151,505	$	115,384	$	114,874

The following table summarizes the maturity and repricing schedule of our investment securities at their carrying values and their weighted average yields (without the consideration of tax effects, if any) at September 30, 2005:

Investment Maturities and Repricing Schedule

(Dollars in Thousands)

	Within One Year					After One But Within Five Years					After Five But Within Ten Years					After Ten Years				Total
	Amount		Yield			Amount		Yield			Amount		Yield			Amount		Yield		Amount		Yield
Held to Maturity: Securities of government sponsored enterprises	$	3,999		2.79	%	$	17,991		3.58	%		—		—			—		—	$	21,990		3.43	%
Collateralized mortgage obligation		—		—			272		3.93	%		—		—			—		—		272		3.93	%
Corporate securities		—		—			—		—			—		—			—		—		—		—
Municipal securities		—		—			2,619		4.05	%		—		—			—		—		2,619		4.05	%

Available-for-sale: Securities of government sponsored enterprises		9,940		3.41	%		63,459		3.72	%		—		—			—		—		73,399		3.68	%
Mortgage backed securities		11,991		3.87	%		29,448		4.30	%		—		—			—		—		41,439		4.18	%
Corporate securities				—			987		4.20	%		1,952		4.46	%		—		—		2,939		4.37	%
Municipal securities												3,021		3.75	%						3,021		3.75	%
Money market preferred stock		6,000		3.12	%		—		—			—		—							6,000		3.12	%
Total investment securities	$	31,930		3.45	%	$	114,776		3.86	%	$	4,973		4.03	%		—		—	$	151,679		3.78	%

Our investment securities holdings increased by $36.7 million, or 31.9%, to $151.7 million at September 30, 2005, compared to holdings of $115.0 million at December 31, 2004. Total investment securities as a percentage of total assets were 9.8% and 9.1% at September 30, 2005 and December 31, 2004, respectively. As of September 30, 2005, investment securities having a carrying value of $117.9 million were pledged to secure certain deposits.

As of September 30, 2005, held-to-maturity securities, which are carried at their amortized costs, decreased to $24.9 million from $29.3 million at December 31, 2004. Available-for-sale securities, which are stated at their fair market values, increased to $126.8 million at September 30, 2005 from $85.7 million at December 31, 2004. These increases reflect a strategy of improving our liquidity level using available-for-sale securities, in addition to immediately available funds, the majority of which are maintained in the form of overnight investments.

The following table shows our investments’ gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at September 30, 2005:

(Dollars in thousands)	Less than 12 months					12 months or longer					Total
Description of Securities	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Securities of government sponsored enterprises	$	73,381	$	(470	)	$	12,850	$	(151	)	$	86,231	$	(621	)
Collateralized mortgage obligation		9,398		(107	)		3,475		(127	)		12,873		(234	)
Mortgage backed securities		8,848		(70	)		7,091		(93	)		15,939		(163	)
Municipal securities		4,370		(22	)		—		—			4,370		(22	)
Corporate securities		987		(13	)		1,952		(39	)		2,939		(52	)
	$	96,984	$	(682	)	$	25,368	$	(410	)	$	122,352	$	(1,092	)

Declines in the fair value of held-to-maturity and available-for-sale securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses. In estimating other-than-temporary impairment losses, we consider, among other things, (i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer, and (iii) our intent and ability to retain our investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

We have the ability and intent to hold the securities classified as held-to-maturity until they mature, at which time we expect to receive full value for the securities. As of September 30, 2005, we also had the ability and intent to hold the securities classified as available-for-sale for a period of time sufficient for a recovery of cost. The unrealized losses were largely due to increases in market interest rates over the yields available at the time the underlying securities were purchased. The fair value is expected to recover as the bonds approach their maturity date or repricing date or if market yields for such investments decline. We do not believe any of the securities are impaired due to reasons of credit quality. Accordingly, as of September 30, 2005, we believe the impairments detailed in the table above were temporary, and no impairment loss has been realized in our consolidated statements of operations.

Other Earning Assets

For various business purposes, we make investments in earning assets other than the interest-earning securities discussed above.

During 2003, in an effort to provide additional benefits aimed at retaining key employees, while generating a tax-exempt noninterest income stream, we purchased $10.5 million in BOLI from insurance carriers rated AA or above. We are the owner and the primary beneficiary of the life insurance policies and recognize the increase of the cash surrender value of the policies as tax-exempt other income. In the second quarter of 2005, we purchased an additional $3.0 million of BOLI.

We also invested in two low-income housing tax credit funds (“LIHTCF”) to promote our participation in CRA activities. We committed to invest, over the next two to three years, a total of $3.0 million to two different LIHTCF: $1.0 million in Apollo California Tax Credit Fund XXII, LP, and $2.0 million in Hudson Housing Los Angeles Revitalization Fund, LP. We anticipate receiving the return in the form of tax credits and tax deductions over the next 15 years following investment disbursements.

The balances of other earning assets as of September 30, 2005 and December 31, 2004 were as follows:

Type	Balance as of September 30, 2005		Balance as of December 31, 2004
BOLI	$	14,956,000	$	11,536,000
LIHTCF	$	2,163,000	$	1,784,000
Federal Home Loan Bank Stock	$	6,112,000	$	4,372,000

Deposits and Other Sources of Funds

Deposits

Deposits are our primary source of funds. Total deposits at September 30, 2005 and December 31, 2004 were $1.30 billion and $1.10 billion, respectively, representing an increase of $200.8 million, or 18.3%, over the first nine-month period of 2005.

Due to the heightened competition for core deposits, our time deposit reliance level increased. The percentage of average time deposits over the average total deposits in the third quarter of 2005 increased to 53.9% from 49.4% for the prior year’s same quarter. The average time deposits for the quarter ended September 30, 2005 increased by $152.1 million, or 29.2%, to $672.0 million from $520.0 million a year ago, while the average total deposits increased by $194.5 million, or 18.5%, to $1.25 billion for the quarter ended September 30, 2005, from $1.05 billion for the quarter ended September 30, 2004.

The average rate paid on time deposits in denominations of $100,000 or more for the third quarter and the first nine months of 2005 increased to 3.67% and 3.21%, respectively, as compared with 2.38% and 2.26%, respectively, for the same periods in the prior year. See “Net Interest Income and Net Interest Margin” for further discussion.

The following tables summarize the distribution of average daily deposits and the average daily rates paid for the quarters indicated:

Average Deposits

(Dollars in Thousands)

For the quarters ended:		September 30, 2005				December 31, 2004				September 30, 2004
		Average Balance	Average Rate			Average Balance	Average Rate			Average Balance	Average Rate

Demand, noninterest-bearing	$	300,362			$	268,559			$	261,011
Money market		230,776	2.95	%		212,207	1.93	%		222,867	1.95	%
Super NOW		21,823	0.92	%		22,877	0.77	%		22,498	0.79	%
Savings		22,915	0.72	%		23,913	0.79	%		27,058	0.75	%
Time certificates of deposit in denominations of $100,000or more		562,434	3.67	%		425,900	2.49	%		398,934	2.38	%
Other time deposits		109,603	3.21	%		118,296	2.54	%		121,036	2.53	%
Total deposits	$	1,247,913	2.51	%	$	1,071,752	1.68	%	$	1,053,404	1.64	%

The scheduled maturities of our time deposits in denominations of $100,000 or greater at September 30, 2005 were as follows:

Maturities of Time Deposits of $100,000 or More, at September 30, 2005

(Dollars in Thousands)

Three months or less	$	294,774
Over three months through nine months		196,479
Over nine months through twelve months		90,201
Over twelve months		2,779
Total	$	584,233

Because our client base is comprised primarily of commercial and industrial accounts, individual account balances are generally higher than those of consumer-oriented banks. A number of clients carried deposit balances of more than 1% of our total deposits at December 31, 2004, but only two customers, including the California State Treasury, had a deposit balance of more than 1% of total deposits at September 30, 2005.

In order to take advantage of historically low funding costs, in the past few years we also accepted brokered deposits on a selective basis at reasonable interest rates to augment deposit growth. Brokered deposits grew to $47.3 million at December 31, 2004 from $4.2 million at the end of 2001. However, we have controlled their growth and reduced these deposits to $26.6 million at September 30, 2005 in order to limit our reliance on non-core funding sources. Most of the brokered deposits will mature within one year. Since brokered deposits are generally less stable forms of deposits, we closely monitor growth from this non-core funding source.

FHLB Borrowings

Although deposits are the primary source of funds for our lending and investment activities and for general business purposes, we may obtain advances from FHLB as an alternative to retail deposit funds. We have increased borrowings from FHLB in order to take advantage of the flexibility of the program and its reasonably low cost. See “Liquidity Management” below for details relating to the FHLB borrowings program.

The following table is a summary of our FHLB borrowings for the quarters indicated:

For the Quarter ended	September 30, 2005			December 31, 2004
Balance at quarter-end	$	61,000,000		$	41,000,000
Average balance during the quarter	$	51,000,000		$	41,184,783
Maximum amount outstanding at any month-end	$	61,000,000		$	41,000,000
Average interest rate during the quarter		3.21	%		2.05	%
Average interest rate at quarter-end		3.29	%		2.08	%

Junior Subordinated Debentures; Trust Preferred Securities

The Bank issued a $10 million Junior Subordinated Debenture in December 2002 and, issued additional Junior Subordinated Debentures in December 2003, March 2005, and September 2005 in amounts of $15.46 million, $20.62 million and $15.46 million, respectively, to the Wilshire Statutory Trusts (Wilshire Statutory Trust I, Wilshire Statutory Trust II and Wilshire Statutory Trust III), our wholly owned subsidiaries, which in turn issued trust preferred securities of $15 million, $20 million and $15 million, respectively.

2002 Bank Level Junior Subordinated Debenture. In December 2002, the Bank issued a $10 million Junior Subordinated Debenture (the “2002 debenture”). The interest rate payable on the 2002 debenture was 7.06% at September 30, 2005, which rate adjusts quarterly to the three-month LIBOR plus 3.10%. The 2002 debenture will mature on December 26, 2012. Interest on the 2002 debenture is payable quarterly and no scheduled payments of principal are due prior to maturity. The Bank may redeem the 2002 debenture in whole or in part prior to maturity on or after December 26, 2007.

The 2002 debenture is treated as Tier 2 capital for Bank regulatory capital purposes. Likewise, on a consolidated basis, the 2002 debenture also is treated as Tier 2 capital for Company-level capital purposes under current FRB capital guidelines.

2003 Junior Subordinated Debenture; Trust Preferred Securities Issuance. In December 2003, the Company was formed as a wholly-owned subsidiary of the Bank, in order to raise additional capital funds through the issuance of trust preferred securities. Prior to the completion of the August 2004 bank holding company reorganization, the Company organized its wholly owned subsidiary, Wilshire Statutory Trust I, which issued $15 million in trust preferred securities. The Company then purchased all of the common interest in the Wilshire Statutory Trust I ($464,000) and issued the 2003 Junior Subordinated Debenture (the “2003 debenture”) in the amount of $15.5 million to the Wilshire Statutory Trust I with terms substantially similar to the 2003 trust preferred securities in exchange for the proceeds from the issuance of the Wilshire Statutory Trust I’s 2003 trust preferred securities and common securities. The Company subsequently deposited the proceeds from the 2003 debenture in a depository account at the Bank and infused $14.5 million as additional equity capital to the Bank immediately following the holding company reorganization. The rate of interest on the 2003 debenture and related trust preferred securities was 6.74% at September 30, 2005, which adjusts quarterly to the three-month LIBOR plus 2.85%. The 2003 debenture and related trust preferred securities will mature on December 17, 2033. The interest on both the 2003 debenture and related trust preferred securities is payable quarterly and no scheduled payments of principal are due prior to maturity. The Company may redeem the 2003 debenture (and in turn the trust preferred securities) in whole or in part prior to maturity on or after December 17, 2008.

March 2005 Junior Subordinated Debenture; Trust Preferred Securities Issuance. In March 2005, the Company organized its wholly owned subsidiary, Wilshire Statutory Trust II, which issued $20 million in trust preferred securities. The Company then purchased all of the common interest in the Wilshire Statutory Trust ($619,000) and issued the 2005 Junior Subordinated Debenture (the “2005 debenture”) in the amount of $20.6 million to the Wilshire Statutory Trust II with terms substantially similar to the 2005 trust preferred securities in exchange for the proceeds from the issuance of the Wilshire Statutory Trust II’s 2005 trust preferred securities and common securities. The Company subsequently deposited the proceeds from the 2005 debenture in a depository account at the Bank and infused $14 million as additional equity capital to the Bank. The rate of interest on the 2005 debenture and related trust preferred securities was 5.68% at September 30, 2005, which adjusts quarterly to the three-month LIBOR plus 1.79%. The 2005 debenture and related trust preferred securities will mature on March 17, 2035. The interest on both the 2005 debenture and related trust preferred securities are payable quarterly and no scheduled payments of principal are due prior to maturity. The Company may redeem the 2005 debenture (and in turn the trust preferred securities) in whole or in part prior to maturity on or after March 17, 2010.

September 2005 Junior Subordinated Debenture; Trust Preferred Securities Issuance. In September 2005, the Company organized its wholly owned subsidiary, Wilshire Statutory Trust III (“Wilshire Trust”), which issued $15 million in trust preferred securities. Wilshire Statutory Trust III, a subsidiary of Wilshire Bancorp, purchased $15.5 million of Wilshire Bancorp's Junior Subordinated Debt Securities, payable in 2035. Until September 15, 2010, the securities will be fixed at a 6.07% annual interest rate, thereafter converting to a floating rate of three-month LIBOR plus 1.40%, resetting quarterly. Wilshire Bancorp may defer the payment of interest at any time for a period up to twenty consecutive quarters, provided the deferral period does not extend past the stated maturity. Except upon the occurrence of certain events resulting in a change in the capital treatment or tax treatment of the Subordinated Debentures or resulting in Wilshire Trust being deemed to be an investment company required to register under the Investment Company Act of 1940, we may not redeem the Subordinated Debentures until after September 15, 2010.

Payments of distributions on the trust preferred securities and payments on redemption of the trust preferred securities are guaranteed by the Company. The junior subordinated debentures are senior to our shares of common stock. As a result, we must make payments on the junior subordinated debentures before any dividends can be paid on our common stock and in the event of our bankruptcy, dissolution or liquidation, the holder of the junior subordinated debentures must be satisfied before any distributions can be made to the holders of our common stock. We have the right to defer distributions on the junior subordinated debentures and related trust preferred securities for up to five years, during which time no dividends may be paid to holders of our common stock.

On March 1, 2005, the Federal Reserve Board adopted a final rule that allows continued inclusion of trust preferred securities in the Tier 1 capital of bank holding companies, subject to stricter quantitative limits. Under the final rule, bank holding companies may include trust preferred securities in Tier 1 capital in an amount (together with other restricted core capital elements) equal to 25% of the sum of core capital elements (including restricted core capital elements) net of goodwill less any associated deferred tax liability. Amounts in excess of these limits will generally be included in Tier 2 capital. For purposes of this rule, restricted core capital elements are generally to be comprised of qualifying cumulative perpetual preferred stock and related surplus, minority interest related to qualifying cumulative perpetual preferred stock directly issued by a consolidated U.S. depository institution or foreign bank subsidiary, minority interest related to qualifying common stock or qualifying cumulative perpetual preferred stock directly issued by a consolidated subsidiary that is neither a U.S. depository institution or a foreign bank and qualifying trust preferred securities.

The final rule provides a transition period for bank holding companies to come into compliance with these new capital restrictions. Accordingly, while the final rule became effective on April 11, 2005, for practical purposes, bank holding companies will have until September 30, 2009 (an extension of the September 30, 2007 transition period under the proposed rule) to come into compliance with the final rule’s capital restrictions due to the transition period. In extending the transition period to 2009, the Federal Reserve noted that the extended period will provide bank holding companies with existing trust preferred securities with call features after the first five years an opportunity to restructure their capital elements in order to conform to the limitations of the final rule.

Under the final rule, as of September 30, 2005, Wilshire Bancorp counted $35.8 million of total trust preferred securities as Tier 1 capital, leaving $14.2 million as Tier 2 capital.

Asset/Liability Management

We seek to ascertain optimum and stable utilization of available assets and liabilities as a vehicle to attain our overall business plans and objectives. In this regard, we focus on measurement and control of liquidity risk, interest rate risk and market risk, capital adequacy, operation risk and credit risk. See further discussion on these risks in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2004. Information concerning interest rate risk management is set forth under “Item 3. Quantitative and Qualitative Disclosures about Market Risk.”

Liquidity Management

Maintenance of adequate liquidity requires that sufficient resources be available at all times to meet our cash flow requirements. Liquidity in a banking institution is required primarily to provide for deposit withdrawals and the credit needs of its customers and to take advantage of investment opportunities as they arise. Liquidity management involves our ability to convert assets into cash or cash equivalents without incurring significant loss, and to raise cash or maintain funds without incurring excessive additional cost. For this purpose, we maintain a portion of our funds in cash and cash equivalents, deposits in other financial institutions and loans and securities available for sale. Our liquid assets at September 30, 2005 and December 31, 2004 totaled approximately $307.0 million and $205.8 million, respectively. Our liquidity level measured as the percentage of liquid assets to total assets was 19.9% and 16.3% at September 30, 2005 and December 31, 2004, respectively.

As a secondary source of liquidity, we rely on advances from the FHLB to supplement our supply of lendable funds and to meet deposit withdrawal requirements. Advances from the FHLB are typically secured by our mortgage loans and stock issued by the FHLB. Advances are made pursuant to several different programs. Each credit program has its own interest rate and range of maturities. Depending on the program, limitations on the amount of advances are based either on a fixed percentage of an institution’s net worth or on the FHLB’s assessment of the institution’s creditworthiness. While this fund provides flexibility and low cost, we limit our use to 70% of borrowing capacity, as such borrowing does not qualify as core funds. As of September 30, 2005, our borrowing capacity from the FHLB was about $347.8 million and the outstanding balance was $61 million, or approximately 17.5% of our borrowing capacity. We also maintain a guideline to purchase up to $10 million in federal funds with Union Bank of California.

Capital Resources and Capital Adequacy Requirements

Historically, our primary source of capital has been internally generated operating income through retained earnings. In order to ensure adequate levels of capital, we conduct ongoing assessments of projected sources and uses of capital in conjunction with projected increases in assets and level of risks. We have considered, and we will continue to consider, additional sources of capital as the need arises, whether through the issuance of additional securities, debt or otherwise.

We are subject to various regulatory capital requirements administered by federal banking agencies. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, we must meet specific capital guidelines that rely on quantitative measures of our assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. Failure to meet minimum capital requirements can trigger regulatory actions under the prompt corrective action rules that could have a material adverse effect on our financial condition and operations. Prompt corrective action may include regulatory enforcement actions that restrict dividend payments, require the adoption of remedial measures to increase capital, terminate FDIC deposit insurance, and mandate the appointment of a conservator or receiver in severe cases. In addition, failure to maintain a well-capitalized status may adversely affect the evaluation of regulatory applications for specific transactions and activities, including acquisitions, continuation and expansion of existing activities, and commencement of new activities, and could adversely affect our business relationships with our existing and prospective clients. The aforementioned regulatory consequences for failing to maintain adequate ratios of Tier 1 and Tier 2 capital could have a material adverse effect on our financial condition and results of operations. Our capital amounts and classification are also subject to qualitative judgments by regulators about components, risk weightings, and other factors. See Part I, Item 1 “Description of Business -- Regulation and Supervision -- Capital Adequacy Requirements” in our Annual Report on Form 10-K for the year ended December 31, 2004 for additional information regarding regulatory capital requirements.

At September 30, 2005, total shareholders’ equity increased to $106.8 million from $88.3 million at December 31, 2004, representing an increase of $18.5 million, primarily from internally generated operating income ($20.0 million), increased by stock option exercises ($429,000 proceeds from stock option exercises and the $1.7 million in tax benefits therefrom) and decreased by the cash dividends of $3.4 million, which were declared during the first nine months of 2005.

In addition, in March and September of 2005, we issued a total of $36.1 million in Junior Subordinated Debentures to the Wilshire Statutory Trusts, our wholly owned subsidiaries, which in turn issued the trust preferred securities of the total of $35 million and we infused $14 million as additional equity capital to the Bank in March 2005. As a result, our Tier I capital and Tier 2 capital increased further by $20.8 million and $14.2 million, respectively. For the Bank level, the Tier 1 capital also increased by $14 million with the capital infusion. See “Deposits and Other Sources of Funds” for further discussion regarding the subordinated debentures and the trust preferred securities.

As of September 30, 2005, we were qualified as a “well capitalized institution” under the regulatory framework for prompt corrective action. The following table presents the regulatory standards for well-capitalized institutions, compared to capital ratios as of the dates specified for the Company and the Bank:

Wilshire Bancorp, Inc.				Actual ratios as of:
	Regulatory Well-Capitalized Standards	Regulatory Adequately-Capitalized Standards	September 30, 2005	December 31, 2004	September 30, 2004
Total capital to risk-weighted assets	10%	8%	14.81%	11.95%	12.01%
Tier I capital to risk-weighted assets	6%	4%	11.66%	9.87%	9.84%
Tier I capital to adjusted average assets	5%	4%	9.71%	8.35%	8.03%

Wilshire State Bank				Actual ratios as of:
	Regulatory Well-Capitalized Standards	Regulatory Adequately-Capitalized Standards	September 30, 2005	December 31, 2004	September 30, 2004
Total capital to risk-weighted assets	10%	8%	13.24%	11.92%	11.97%
Tier I capital to risk-weighted assets	6%	4%	11.25%	9.84%	9.80%
Tier I capital to adjusted average assets	5%	4%	9.36%	8.33%	7.99%

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risk is the risk of loss from adverse changes in market prices and rates. Our market risk arises primarily from interest rate risk inherent in lending, investing and deposit taking activities. We evaluate market risk pursuant to policies reviewed and approved annually by our Board of Directors. The Board delegates responsibility for market risk management to the Asset & Liability Management Committee (“ALCO”), which reports monthly to the Board on activities related to market risk management. As part of the management of our market risk, ALCO may direct changes in the mix of assets and liabilities. To that end, we actively monitor and manage interest rate risk exposures.

Interest rate risk management involves development, analysis, implementation and monitoring of earnings to provide stable earnings and capital levels during periods of changing interest rates. In the management of interest rate risk, we utilize monthly gap analysis and quarterly simulation modeling to determine the sensitivity of net interest income and economic value sensitivity of the balance sheet. These techniques are complementary and are used together to provide a more accurate measurement of interest rate risk.

Gap analysis measures the repricing mismatches between assets and liabilities. The interest rate sensitivity gap is determined by subtracting the amount of liabilities from the amount of assets that reprice in a particular time interval. If repricing assets exceed repricing liabilities in any given time period, we would be deemed to be “asset-sensitive” for that period. Conversely, if repricing liabilities exceed repricing assets in a given time period, we would be deemed to be “liability-sensitive” for that period.

We normally seek to maintain a balanced position over the period of one year to ensure net interest margin stability in times of volatile interest rates. This is accomplished by maintaining a similar level of loans and investment securities and deposits available to be repriced within one year. At September 30, 2005, we were asset-sensitive, with a positive cumulative one-year gap of $167.6 million, or 10.84% of total assets. In general, based upon our mix of deposits, loans and investments, increases in interest rates would be expected to increase our net interest margin. Decreases in interest rates would be expected to have the opposite effect, which was the case in the past three years. At September 30, 2005, we intentionally maintained a three-month positive gap of $404.6 million, or 26.17% of total assets. This positive gap is strategically planned to meet any unanticipated funding needs by maintaining a large portion of funds obtained from non-interest bearing deposits in overnight investments and other cash equivalents.

The change in net interest income may not always follow the general expectations of an “asset-sensitive” or a “liability-sensitive” balance sheet during periods of changing interest rates. This possibility results from interest rates earned or paid changing by differing increments and at different time intervals for each type of interest-sensitive asset and liability. The interest rate gaps reported in the tables arise when assets are funded with liabilities having different repricing intervals. Since these gaps are actively managed and change daily as adjustments are made in interest rate views and market outlook, positions at the end of any period may not reflect our interest rate sensitivity in subsequent periods. We attempt to balance longer-term economic views against prospects for short-term interest rate changes.

Although the interest rate sensitivity gap is a useful measurement and contributes to effective asset and liability management, it is difficult to predict the effect of changing interest rates based solely on that measure. As a result, the ALCO also regularly uses simulation modeling as a tool to measure the sensitivity of earnings and net portfolio value (“NPV”) to interest rate changes. The NPV is defined as the net present value of an institution’s existing assets, liabilities and off-balance sheet instruments. The simulation model captures all assets, liabilities and off-balance sheet financial instruments accounting for significant variables that are believed to be affected by interest rates. These include prepayment speeds on loans, cash flows of loans and deposits, principal amortization, call options on securities, balance sheet growth assumptions and changes in rate relationships as various rate indices react differently to market rates.

The following table sets forth the interest rate sensitivity of our interest-earning assets and interest-bearing liabilities as of September 30, 2005 using the interest rate sensitivity gap ratio. For purposes of the following table, an asset or liability is considered rate-sensitive within a specified period when it can be repriced or matures within its contractual terms. Actual payment patterns may differ from contractual payment patterns:

Interest Rate Sensitivity Analysis

(Dollars in Thousands)

	At September 30, 2005
	Amounts Subject to Repricing Within
Interest-earning assets:	0-3 months			3-12 months			Over 1 to 5 years			After 5 years			Total
Gross loans¹	$	1,081,085		$	13,923		$	53,780		$	42,420		$	1,191,208
Investment securities		11,845			20,085			114,776			4,973			151,679
Federal funds sold and cash equivalents		100,000			—			—			—			100,000
Interest-earning deposits		3			—			—			—			3
Total	$	1,192,933		$	34,008		$	168,556		$	47,393		$	1,442,890

Interest-bearing liabilities:
Savings deposits		25,399			—			—			—			25,399
Time deposits of $100,000 or more		387,521			193,933			2,779			—			584,23
Other time deposits		50,698			61,076			11,485			5			123,264
Other interest-bearing deposits		253,678			—			—			—			253,678
Other borrowings demand deposits		25,000			16,000			20,000			—			61,000
Subordinated debentures		46,083			—			—			15,464			61,547
Total	$	788,379		$	271,009		$	34,264		$	15,469		$	1,109,121
Interest rate sensitivity gap	$	404,553			($ 237,000	)	$	134,292		$	31,925		$	333,770
Cumulative interest rate sensitivity gap	$	404,553		$	167,553		$	301,845		$	333,770
Cumulative interest rate sensitivity gap ratio (based on total assets)		26.17	%		10.84	%		19.53	%		21.59	%

The following table sets forth our estimated net interest income over a 12-month period and NPV based on the indicated changes in market interest rates as of September 30, 2005. All assets presented in this table are held-to-maturity or available-for-sale. At September 30, 2005, we had no trading securities:

(Dollars in Thousands)
Change	Net Interest Income
(in Basis Points)	(next twelve months)	% Change	NPV	% Change
+200	87,217	15.4%	234,637	12.7%
+100	80,175	6.1%	222,600	6.9%
0	75,561	—	208,181	—
-100	72,087	-4.6%	189,971	-8.7%
-200	64,715	-14.4%	168,548	-19.0%

Although the simulation measures the volatility of net interest income and net portfolio value under immediate rising or falling market interest rate scenarios in 100 basis point increments, our main concern is the negative effect for the reasonably possible worst scenario. The ALCO policy prescribes that, for the worst possible rate drop scenario, the possible reduction of net interest income and NPV, should not exceed 20% of the base net interest income and 25% of the base NPV.

As indicated above, the net interest income increases (decreases) as market interest rates rise (fall), since we were positively gapped by $167.6 million for a time horizon of one year, as of September 30, 2005. This is also due to the fact that a substantial portion of the interest earning assets reprice immediately after the rate change, that interest-bearing liabilities reprice slower than interest-earning assets and that interest-bearing liabilities do not reprice to the same degree as interest earning assets, given a stated change in the interest rate. The NPV increases (decreases) as the interest income increases (decreases) since the change in the cash flows has a greater impact on the change in the NPV than does the change in the discount rate.

¹Excludes the gross amount of non-accrual loans of approximately $8.4 million at September 30, 2005.

We believe that the assumptions used to evaluate the vulnerability of our operations to changes in interest rates approximate actual experience and consider them reasonable; however, the interest rate sensitivity of our assets and liabilities and the estimated effects of changes in interest rates on our net interest income and NPV could vary substantially if different assumptions were used or actual experience differs from the historical experience on which they are based.

Our strategies in protecting both net interest income and economic value of equity from significant movements in interest rates involve restructuring our investment portfolio and using FHLB advances. We also permit the purchase of rate caps and floors, and engage in interest rate swaps, although we have not yet engaged in either of these activities, other than an interest rate swap agreement arranged in September 2003 on the notional amount of $3.0 million and subsequently terminated without any gain or loss by mutual agreement between us and a brokerage company in January 2004.

Item 4. Controls and Procedures

As of September 30, 2005, we carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our “disclosure controls and procedures,” as such term is defined under Exchange Act Rules 13a-15(e) and 15d-15(e).

Based on this evaluation, our chief executive officer and chief financial officer concluded that, as of September 30, 2005, such disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and in reaching a reasonable level of assurance our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

There were no changes in our internal controls over financial reporting during the quarter ended September 30, 2005 that materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Part II. OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

In September 2005, the Company organized its wholly owned subsidiary, Wilshire Statutory Trust III, which issued $15 million in trust preferred securities. The Company then purchased all of the common interest in the Wilshire Statutory Trust ($464,000) and issued the September 2005 Junior Subordinated Debenture (the “September 2005 debenture”) in the amount of $15.5 million to the Wilshire Statutory Trust III with terms substantially similar to the September 2005 trust preferred securities in exchange for the proceeds from the issuance of the Wilshire Statutory Trust III’s 2005 trust preferred securities and common securities. The Company subsequently deposited the proceeds from the 2005 debenture in a depository account at the Bank. The rate of interest on the September 2005 debenture and related trust preferred securities was fixed at a 6.07% annual interest rate until September 15, 2010, thereafter converting to a floating rate of three-month LIBOR plus 1.40%, resetting quarterly. The September 2005 debenture and related trust preferred securities will mature on March 17, 2035. The interest on both the 2005 debenture and related trust preferred securities are payable quarterly and no scheduled payments of principal are due prior to maturity. The Company may redeem the September 2005 debenture (and in turn the trust preferred securities) in whole or in part prior to maturity on or after September 15, 2010. The issuance of the trust preferred securities and the September 2005 debenture was made in private placement in reliance upon the exemption from compliance with the registration requirements of the Securities Act contained in Section 4(2) of the Securities Act and applicable state securities law exemptions.

Item 3. Defaults upon Senior Securities

None.

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

None.

Item 5. Other Information

On August 1, 2005, we entered into a stock purchase agreement with the shareholders of Liberty Bank of New York (“Liberty Bank”) to acquire all of the outstanding stock of Liberty Bank for approximately $15.7 million subject to adjustment immediately prior to closing. The agreement contemplates that the purchase price will be payable 60% in cash and 40% in our restricted common stock. However, prior to closing, at our option, we may modify the form of consideration so that a higher percentage (up to 100%) of the purchase price may be paid in cash. The value of the shares of our common stock, if any, comprising the purchase price will be based on the average closing sales prices of our common stock as reported by the NASDAQ National Market System for the 20 consecutive trading days ending on the last business day prior to the closing date.

The definitive purchase price will be increased or decreased to the extent the shareholders’ equity of Liberty Bank immediately prior to closing is greater or less than $8,800,000, respectively. In addition, the purchase price will be decreased to the extent any increase in the allowance of loan and lease losses on the books of Liberty Bank is deemed appropriate by the Superintendent of Banks of the State of New York Banking Department or the FDIC, but in no event will such adjustment be less than the amount required to increase the allowance to $600,000.

The shares to be issued pursuant to the agreement will be issued as restricted securities under an exemption pursuant to Section 4(2) under the Securities Act of 1933.

Item 6. Exhibits

Exhibit Table

Reference Number		Item

3.1		Articles of Incorporation, as amended and restated ¹
3.2		Bylaws, as amended and restated ²
4.1		Specimen of Common Stock Certificate ³
4.2		Indenture of Subordinated Debentures ⁴
4.3		Indenture by and between Wilshire Bancorp, Inc. and U.S. Bank National Association dated as of December 17, 2003 ⁵
11		Statement Regarding Computation of Net Earnings per Share ⁶
31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32		Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

__________________________________

1.	Incorporated herein by reference to Exhibit 3.1 in the Registration Statement on Form S-4 filed with the Securities and Exchange Commission on June 15, 2004.

2.	Incorporated herein by reference to Exhibit 3.2 in the Registration Statement on Form S-4 filed with the Securities and Exchange Commission on June 15, 2004.

3.	Incorporated herein by reference to Exhibit 4.1 in the Registration Statement on Form S-4 filed with the Securities and Exchange Commission on April 1, 2004.

4.	Incorporated herein by reference to Exhibit 4.2 in the Registration Statement on Form S-4 filed with the Securities and Exchange Commission on April 1, 2004.

5.	Incorporated herein by reference to Exhibit 4.3 in the Registration Statement on Form S-4 filed with the Securities and Exchange Commission on April 1, 2004.

6.	The information required by this Exhibit is incorporated by reference from Note [3] of the Company’s Financial Statements included herein.

SIGNATURES

Pursuant to the requirement 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.


	WILSHIRE BANCORP, INC.

Date: November 9, 2005	By:	/s/ Brian E. Cho
		Brian E. Cho
		Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

INDEX TO EXHIBITS
Exhibit Table

Reference Number		Item

3.1		Articles of Incorporation, as amended and restated ¹
3.2		Bylaws, as amended and restated ²
4.1		Specimen of Common Stock Certificate ³
4.2		Indenture of Subordinated Debentures ⁴
4.3		Indenture by and between Wilshire Bancorp, Inc. and U.S. Bank National Association dated as of December 17, 2003 ⁵
11		Statement Regarding Computation of Net Earnings per Share ⁶
31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32		Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

__________________________________

1.	Incorporated herein by reference to Exhibit 3.1 in the Registration Statement on Form S-4 filed with the Securities and Exchange Commission on June 15, 2004.

2.	Incorporated herein by reference to Exhibit 3.2 in the Registration Statement on Form S-4 filed with the Securities and Exchange Commission on June 15, 2004.

3.	Incorporated herein by reference to Exhibit 4.1 in the Registration Statement on Form S-4 filed with the Securities and Exchange Commission on April 1, 2004.

4.	Incorporated herein by reference to Exhibit 4.2 in the Registration Statement on Form S-4 filed with the Securities and Exchange Commission on April 1, 2004.

5.	Incorporated herein by reference to Exhibit 4.3 in the Registration Statement on Form S-4 filed with the Securities and Exchange Commission on April 1, 2004.

6.	The information required by this Exhibit is incorporated by reference from Note [3] of the Company’s Financial Statements included herein

Positive
Negative
Uncertain
Constraining
Legalese
Litigous
Readability	H.S. sophomore Avg

Wilshire Bancorp (WIBC) Inactive 10-Q2005 Q3 Quarterly report

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