NARA Nara Bancorp, Inc. (MM)

Nara Bancorp, Inc. (the “Company”) (NASDAQ: NARA), the holding company of Nara Bank (the “Bank”), reported net income available to common stockholders of $8.7 million, or $0.23 per diluted common share, for the third quarter 2011, compared to net income available to common stockholders of $4.0 million, or $0.11 per diluted common share, for the third quarter 2010, and net income available to common stockholders of $5.2 million, or $0.14 per diluted common share, for the second quarter 2011.

Alvin Kang, President and Chief Executive Officer, said, “Our third quarter results represent continued improvement in our financial performance and the highest level of quarterly net income we have generated in four years. We are seeing solid balance sheet growth, due in part to our successful efforts to attract more commercial loan and deposit relationships. We are also seeing more stability in our loan portfolio and a reduction in our credit costs as a result of the steady progress we have made in improving our asset quality over the past several quarters. We are executing well in all areas of the Company and we have momentum as we look ahead to receiving regulatory approval and completing our merger with Center Financial Corp. We would expect the merger to further strengthen our position in the marketplace.”

 

Financial Highlights

    2011 Third   2010 Third   2011 Second     Quarter   Quarter   Quarter     (Dollars in thousands) Net income  

$

9,815

    $ 5,100     $ 6,318   Net income available to common stockholders   $ 8,738     $ 4,027     $ 5,243   Diluted earnings per share   $ 0.23     $ 0.11     $ 0.14   Net interest income   $ 31,053     $ 27,610     $ 29,331   Net interest margin     4.29 %     3.85 %     4.16 % Non-interest income   $ 4,258     $ 7,339     $ 7,684   Non-interest expense   $ 16,817     $ 15,693     $ 16,886   Net loans receivable   $ 2,208,119     $ 2,098,164     $ 2,142,750   Deposits   $ 2,267,196     $ 2,202,656     $ 2,232,180   Non-performing loans (excludes accruing restructured loans) *   $ 27,790     $ 50,521     $ 35,385   Non-performing loans (includes accruing restructured loans) *   $ 51,333     $ 84,912     $ 51,172   ALLL to gross loans *     2.66 %     2.97 %     2.73 % ALLL to non-performing loans (excludes accruing restructured loans) *     216 %     126 %     169 % ALLL to non-performing loans (includes accruing restructured loans) *     117 %     75 %     117 % ALLL to non-performing assets *     107 %     72 %     107 % Provision for loan losses   $ 3,483     $ 11,100     $ 10,047   Net charge-offs   $ 3,170     $ 10,396     $ 13,691   Efficiency ratio     47.63 %     44.90 %     45.62 %               * Excludes the guaranteed portion of delinquent SBA loans totaling $10.5 million, $14.3 million and $12.4 million at third quarter 2011, third quarter 2010 and second quarter 2011, respectively.  

Operating Results for Third Quarter 2011

Net Interest Income and Net Interest Margin. Third quarter 2011 net interest income before provision for loan losses was $31.1 million, an increase of 12% from third quarter 2010. The increase in net interest income was due primarily to an improvement in the net interest margin.

Third quarter 2011 net interest margin (net interest income divided by average interest-earning assets) increased 44 basis points to 4.29% from 3.85% for third quarter 2010. The improvement in the net interest margin was primarily due to lower rates paid on time deposits and interest-bearing demand deposits. The cost of time deposits decreased to 1.11% for third quarter 2011 from 1.25% for third quarter 2010. The cost of interest-bearing demand deposits also decreased to 0.84% for third quarter 2011 from 1.11% for third quarter 2010.

The weighted average yield on the loan portfolio for third quarter 2011 was 6.16%, essentially unchanged from the 6.15% in the same period last year. At September 30, 2011, fixed rate loans were 44% of the loan portfolio, compared to 49% at September 30, 2010, reflecting the emphasis on variable rate C&I lending. The weighted average yield on the variable rate and fixed rate loan portfolios (excluding loan discount accretion) at September 30, 2011 was 4.96% and 6.94%, respectively, compared to 4.79% and 7.24% at September 30, 2010.

The weighted average yield on securities available-for-sale for third quarter 2011 increased slightly to 3.16% from 3.12% for the same period 2010.

The weighted average cost of deposits for third quarter 2011 decreased 20 basis points to 0.88% from 1.08% for the same period last year, driven primarily by the decrease in the cost of time deposits and interest-bearing demand deposits and the increase in the average balance of non-interest bearing demand deposits.

The weighted average cost of FHLB advances for third quarter 2011 decreased 22 basis points to 3.23% for third quarter 2011, compared to 3.45% for third quarter 2010, as maturing advances with higher rates were paid in full or refinanced at lower rates.

Following are the weighted average rate data on a spot rate basis at September 30, 2011 and 2010:

      September 30,     2011   2010 Weighted average loan portfolio yield (excluding discounts)   5.82 %   5.99 % Weighted average available-for-sale securities portfolio yield   3.33 %   3.16 % Weighted average cost of deposits   0.82 %   1.06 % Weighted average cost of total interest-bearing deposits   1.03 %   1.27 % Weighted average cost of FHLB advances   3.19 %   3.42 % Net interest margin   4.10 %   3.78 %  

Third quarter 2011 net interest income before provision for loan losses increased $1.7 million, or 6%, from second quarter 2011. The increase was attributable to an improvement in the net interest margin, which increased 13 basis points. The increase in net interest margin resulted primarily from an increase of nine basis points in the yield on loans and a reduction of five basis points in the weighted average cost of interest-bearing liabilities. The increase in the yield on loans was primarily due to a quarter to quarter change in adjustments to non-accrual loan income from $(237) thousand in the second quarter to $154 thousand in the third quarter.

Non-interest Income. Third quarter 2011 non-interest income was $4.3 million, a decrease of $3.1 million, or 42%, compared to third quarter 2010. The decrease was primarily due to a decrease of $3.8 million in net gains on sales of loans. In third quarter 2010, problem assets that were recorded at estimated fair value, less selling costs, at June 30, 2010 were sold at a net gain of $3.7 million.

Non-interest income decreased $3.4 million, or 45%, from second quarter 2011. The decrease was primarily due to a decrease of $3.5 million in net gains on sale of SBA loans. Net gains on sale of SBA loans were $823 thousand for third quarter 2011, a decrease of $3.5 million from $4.4 million for second quarter 2011. Of the net gains of $4.4 million in the second quarter, $1.5 million was due to recognition of deferred gains from sales of $15.3 million in SBA loans during first quarter 2011, and $2.9 million was from sales of $31.7 million in SBA loans during second quarter of 2011. During third quarter 2011, $9.6 million of SBA loans were sold.

Non-interest Expense. Third quarter 2011 non-interest expense was $16.8 million, an increase of $1.1 million, or 7%, from $15.7 million for the same period last year. The increase was primarily due to increases in salaries and benefits expense and merger-related expenses, partially offset by a decrease in credit-related expenses.

Salaries and benefits expense increased $1.4 million, or 22%, to $7.7 million for third quarter 2011, compared to $6.3 million for the same quarter of 2010. The increase is due to an increase in the number of full-time equivalent (FTE) employees, which increased to 377 at September 30, 2011 from 364 at September 30, 2010, an increase of $541 thousand in vacation and bonus accrual, an increase of $179 thousand in group insurance expense due to the increase in premium costs, and an increase of $146 thousand in 401(k) plan contributions, as the Company reinstated the company matching program effective January 1, 2011. The year-over-year increase in FTE employees was due to increases in our staffing in our Eastern Region lending unit, Information Technology and loan servicing unit.

Merger-related expenses of $574 thousand were recorded during third quarter 2011 as a result of the pending merger with Center Financial Corporation. Credit-related expense decreased $616 thousand, or 42%, to $867 thousand for third quarter 2011, compared to $1.5 million for the same period last year. The decrease was primarily due to a lower need for collection activities in third quarter 2011.

Income Taxes. The effective income tax provision rate was 35%, 37% and 37% for third quarter 2011 and 2010 and second quarter 2011, respectively. The lower provision rate for the third quarter 2011 was primarily due to an increase in the federal and state tax credits for 2011 versus 2010.

Balance Sheet Summary

Gross loans receivable increased $65.7 million to $2.27 billion at September 30, 2011 from $2.20 billion at June 30, 2011. New loan production was $115.3 million during third quarter 2011, compared to $116.1 million during second quarter 2011, and $97.9 million during third quarter 2010. Total loan pay-offs, pay-downs, amortization and other adjustments totaled $49.9 million during third quarter 2011, compared to $67.8 million during second quarter 2011 and $62.8 million during third quarter 2010.

Total deposits increased $35.0 million to $2.27 billion at September 30, 2011 from $2.23 billion at June 30, 2011. The increase was driven by $22.2 million and $16.4 million of growth in non-interest bearing demand deposits and time deposits, respectively.

Credit Quality

The Company recorded a provision for loan losses of $3.5 million in third quarter 2011, compared to $11.1 million for the same period of the prior year and $10.0 million in second quarter 2011. The reduction in the provision for loan losses for third quarter 2011 compared to second quarter 2011 reflects a decrease in net charge offs, which decreased to $3.2 million for third quarter from $10.4 million for the same period of the prior year and $13.7 million for second quarter 2011, and a decline in the historical loss factors, as larger charge-off quarters are beginning to run-off or be weighted less in the calculation.

Total Watchlist loans, defined as Special Mention and Classified loans, were $141.0 million at September 30, 2011, a slight increase from $137.1 million at June 30, 2011. Special Mention loans increased $16.2 million, and classified loans decreased $12.3 million. The increase in Special Mention loans was due primarily to four relationships aggregating $15.7 million. Although all of the loans continue to perform, they were placed in the Special Mention category while the Company waits for the borrowers to provide more current financial statements.

Total delinquent loans, 30 to 89 days past due, were $11.0 million at September 30, 2011, compared to $3.3 million at June 30, 2011. The increase in early stage delinquencies was due primarily to a single CRE relationship totaling $7.7 million.

Non-performing loans (loans past due 90 days or more and non-accrual loans) at September 30, 2011 declined to $27.8 million, or 1.23% of total loans, compared to $35.4 million, or 1.62% of total loans, at June 30, 2011. The decrease was primarily due to $5.5 million in non-performing loans being sold or transferred to Loans-held-for-Sale, and the return of one $2.2 million C&I loan to accrual status based on sustained performance and improved financial trends. Non-Performing loans, including accruing restructured loans, were $51.3 million, or 2.27 % of total loans, compared to $51.2 million, or 2.34% of total loans, at June 30, 2011.

Non-performing assets at September 30, 2011 were $56.2 million, or 1.86% of total assets, compared to $55.6 million, or 1.87% of total assets, at June 30, 2011.

Net loan charge-offs during the third quarter 2011 were $3.2 million, or 0.56% of average loans on an annualized basis, compared to $13.7 million, or 2.50%, during the second quarter 2011. Gross charge-offs of $4.0 million resulted primarily from $3 million in loans either partially or fully charged off and $833 thousand related to individual note sales during the quarter.

The allowance for loan losses at September 30, 2011 was $60.0 million, or 2.66% of gross loans receivable (excluding the guaranteed portion of delinquent SBA loans and loans held for sale), compared to $59.7 million, or 2.73%, at June 30, 2011. The coverage ratio of the allowance for loan losses to non-performing loans (excluding accruing restructured loans) increased to 216% at September 30, 2011, compared to 169% at June 30, 2011.

Impaired loans (defined as loans for which it is probable that not all principal and interest payments due will be collectible according to contractual terms) at September 30, 2011 were $75.6 million compared to $76.2 million at June 30, 2011.

Specific reserves for impaired loans were $14.6 million, or 19.30% of the aggregate impaired loan amount at September 30, 2011, compared to $13.2 million, or 17.32%, at June 30, 2011. Excluding specific reserves for impaired loans, the allowance coverage on the remaining loan portfolio was 2.08% at September 30, 2011, compared to 2.20% at June 30, 2011. This decrease is due primarily to reduced general reserve requirements resulting from decreasing historical loss factors and slightly offset by increased total loan balances.

Capital

At September 30, 2011, the Company continued to be in excess of the regulatory capital requirements to be classified as a “well-capitalized” institution. The Leverage Ratio was 13.50% at September 30, 2011, compared to 13.32% at June 30, 2011. The Tier 1 Risk-based Ratio was 16.71% at September 30, 2011, compared to 16.42% at June 30, 2011. The Total Risk-based Ratio was 17.98% at September 30, 2011, compared to 17.69% at June 30, 2011.

At September 30, 2011, tangible common equity represented 10.40% of tangible assets, compared to 10.21% of tangible assets at June 30, 2011. Tangible common equity per share was $8.23 at September 30, 2011, compared to $7.94 at June 30, 2011.

Tangible common equity to tangible assets is a non-GAAP financial measure that represents common equity less goodwill and net other intangible assets divided by total assets less goodwill and net other intangible assets. Management reviews tangible common equity to tangible assets in evaluating the Company's capital levels and has included this ratio in response to market participant interest in tangible common equity as a measure of capital. See the accompanying financial information for a reconciliation of the ratio of tangible common equity to tangible assets with stockholders' equity and total assets.

Conference Call and Webcast

A conference call with simultaneous webcast to discuss the Company's third quarter 2011 financial results will be held tomorrow, October 25, 2011, at 9:00 a.m. Pacific / 12:00 p.m. Eastern. Interested participants and investors may access the conference call by dialing 877-941-2332 (domestic) or 480-629-9866 (international), conference ID# 4479966. There will also be a live webcast of the call available at the Investor Relations section of Nara Bank's web site at www.narabank.com.

After the live webcast, a replay will remain available in the Investor Relations section of Nara Bancorp's web site. A replay of the call will be available at 800-406-7325 (domestic) or 303-590-3030 (international) through November 1, 2011, conference ID# 4479966.

About Nara Bancorp, Inc.

Nara Bancorp, Inc. is the parent company of Nara Bank, which was founded in 1989. Nara Bank is a full-service community bank headquartered in Los Angeles, with 23 branches and one loan production office in the United States. Nara Bank operates full-service branches in California, New York and New Jersey, and a loan production office in Texas. Nara Bank was founded specifically to serve the needs of Korean-Americans. Presently, Nara Bank serves a diverse group of customers mirroring its communities. Nara Bank specializes in core business banking products for small and medium-sized companies, with an emphasis in commercial real estate and business lending, SBA lending and international trade financing. Nara Bank is a member of the FDIC and is an Equal Opportunity Lender.

Forward-Looking Statements

This press release contains forward-looking statements, including statements about future operations and projected full-year financial results that are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such forward looking statements. These risks and uncertainties include but are not limited to economic, competitive, governmental and technological factors affecting the Company's operations, markets, products, services, and pricing. Readers should carefully review the risk factors and the information that could materially affect the Company's financial results and business, described in documents the Company files from time to time with the Securities and Exchange Commission, including its quarterly reports on Form 10-Q and Annual Reports on Form 10-K, and particularly the discussions of business considerations and certain factors that may affect results of operations and stock price set forth therein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements.

  Nara Bancorp, Inc. Consolidated Statements of Financial Condition Unaudited (Dollars in Thousands, Except per Share Data)     Assets   9/30/2011   6/30/2011   % change   12/31/2010   % change   9/30/2010   % change             Cash and due from banks $ 175,827 $ 171,129 3 % $ 172,331 2 % $ 234,161 -25 % Securities available for sale, at fair value 455,789 472,420 -4 % 528,262 -14 % 479,779 -5 % Federal Home Loan Bank and Federal Reserve Bank stock 21,933 22,657 -3 % 24,084 -9 % 24,817 -12 % Loans held for sale, at the lower of cost or fair value 31,342 27,120 16 % 26,927 16 % 12,901 143 % Loans receivable 2,268,128 2,202,446 3 % 2,147,745 6 % 2,161,856 5 % Allowance for loan losses   (60,009 )     (59,696 )   -1 %     (62,320 )   4 %     (63,692 )   6 % Net loans receivable   2,208,119       2,142,750     3 %     2,085,425     6 %     2,098,164     5 % Accrued interest receivable 8,257 8,069 2 % 8,648 -5 % 8,606 -4 % Premises and equipment, net 9,408 9,938 -5 % 10,915 -14 % 11,147 -16 % Bank owned life insurance 24,677 24,489 1 % 24,117 2 % 23,933 3 % Goodwill 2,509 2,509 0 % 2,509 0 % 2,509 0 % Other intangible assets, net 302 379 -20 % 534 -43 % 661 -54 % Other assets   77,964       85,828     -9 %     79,544     -2 %     88,298     -12 % Total assets $ 3,016,127     $ 2,967,288     2 %   $ 2,963,296     2 %   $ 2,984,976     1 %   Liabilities   Deposits $ 2,267,196 $ 2,232,180 2 % $ 2,176,114 4 % $ 2,202,656 3 % Borrowings from Federal Home Loan Bank 300,000 300,000 0 % 350,000 -14 % 350,000 -14 % Subordinated debentures 39,268 39,268 0 % 39,268 0 % 39,268 0 % Other borrowings 701 - 100 % 11,758 -94 % 8,129 -91 % Accrued interest payable 3,752 3,382 11 % 4,830 -22 % 4,842 -23 % Other liabilities   21,595       19,919     8 %     22,763     -5 %     23,979     -10 % Total liabilities   2,632,512       2,594,749     1 %     2,604,733     1 %     2,628,874     0 %   Stockholders' Equity   Preferred stock, $0.001 par value; authorized 10,000,000 undesignated shares; issued and outstanding 67,000 shares of Fixed Rate Cumulative Perpetual Preferred Stock, Series A with a liquidation preference of $67,428,000 at September 30, 2011, June 30, 2011, December 31, 2010 and September 30, 2010 67,000 67,000 0 % 67,000 0 % 67,000 0 % Preferred stock discount (2,082 ) (2,321 ) 10 % (2,797 ) 26 % (3,033 ) 31 % Common stock, $0.001 par value; authorized, 150,000,000 shares at September 30, 2011 and 100,000,000 shares at June 30, 2011, December 31, 2010 and September 30, 2010, respectively; issued and outstanding, 38,095,260, 38,097,327, 37,983,027 and 37,956,527 shares at September 30, 2011, June 30, 2011, December 31, 2010 and September 30, 2010, respectively 38 38 0 % 38 0 % 38 0 % Capital surplus 172,065 172,066 0 % 171,364 0 % 171,111 1 % Retained earnings 140,013 131,275 7 % 120,361 16 % 115,365 21 % Accumulated other comprehensive income, net   6,581       4,481     47 %     2,597     -153 %     5,621     -17 % Total stockholders' equity   383,615       372,539     3 %     358,563     7 %     356,102     8 %   Total liabilities and stockholders' equity $ 3,016,127     $ 2,967,288     2 %   $ 2,963,296     2 %   $ 2,984,976     1 %     Nara Bancorp, Inc. Consolidated Statements of Income (Loss) Unaudited (Dollars in Thousands, Except for Per Share Data)     Three Months Ended   Nine Months Ended, 9/30/2011   9/30/2010   % change   6/30/2011   % change 9/30/2011   9/30/2010   % change             Interest income: Interest and fees on loans $ 34,902 $ 33,444 4 % $ 33,150 5 % $ 101,137 $ 100,302 1 % Interest on securities 3,843 3,438 12 % 3,965 -3 % 11,738 11,410 3 % Interest on federal funds sold and other investments   182       248       -27 %     179       2 %   540       672     -20 % Total interest income   38,927       37,130       5 %     37,294       4 %   113,415       112,384     1 %   Interest expense: Interest on deposits 4,977 5,968 -17 % 5,090 -2 % 15,198 22,194 -32 % Interest on other borrowings   2,897       3,552       -18 %     2,873       1 %   8,950       10,529     -15 % Total interest expense   7,874       9,520       -17 %     7,963       -1 %   24,148       32,723     -26 %   Net interest income before provision for loan losses 31,053 27,610 12 % 29,331 6 % 89,267 79,661 12 % Provision for loan losses   3,483       11,100       -69 %     10,047       -65 %   18,792       78,830     -76 % Net interest income after provision for loan losses   27,570       16,510       67 %     19,284       43 %   70,475       831     8381 %   Non-interest income: Service fees on deposit accounts 1,352 1,637 -17 % 1,413 -4 % 4,262 4,828 -12 % Net gains on sales of SBA loans 823 308 167 % 4,354 -81 % 6,337 680 832 % Net gains (losses) on sales of other loans (30 ) 3,725 N/A - N/A (30 ) 4,375 N/A Net gains on sales of securities available-for-sale 64 4 1500 % 6 967 % 70 6,396 -99 % Net valuation gains (losses) on interest swaps and caps (3 ) (226 ) 99 % (106 ) 97 % (120 ) (952 ) 87 % Net gains (losses) on sales of OREO 108 (62 ) 274 % 25 332 % 135 (614 ) 122 % Other income and fees   1,944       1,953       0 %     1,992       -2 %   5,798       5,470     6 % Total non-interest income   4,258       7,339       -42 %     7,684       -45 %   16,452       20,183     -18 %   Non-interest expense: Salaries and employee benefits 7,657 6,258 22 % 7,625 0 % 22,436 18,065 24 % Occupancy 2,480 2,470 0 % 2,445 1 % 7,362 7,321 1 % Furniture and equipment 984 952 3 % 934 5 % 2,853 2,614 9 % Advertising and marketing 354 527 -33 % 594 -40 % 1,527 1,598 -4 % Data processing and communications 813 951 -15 % 923 -12 % 2,719 2,935 -7 % Professional fees 612 627 -2 % 769 -20 % 2,090 1,848 13 % FDIC assessment 983 1,171 -16 % 877 12 % 3,149 3,729 -16 % Merger-related expenses 574 - 100 % 380 51 % 1,465 - 100 % Other   2,360       2,737       -14 %     2,339       1 %   6,797       7,734     -12 % Total non-interest expense   16,817       15,693       7 %     16,886       0 %   50,398       45,844     10 % Income (loss) before income taxes 15,011 8,156 84 % 10,082 49 % 36,529 (24,830 ) N/A Income tax provision (benefit)   5,196       3,056       70 %     3,764       38 %   13,650       (11,521 )   N/A   Net income (loss) $ 9,815     $ 5,100       92 %   $ 6,318       55 %   22,879       (13,309 )   N/A   Dividends and discount accretion on preferred stock $ (1,077 )   $ (1,073 )     0 %   $ (1,075 )     0 %   (3,227 )     (3,217 )   0 % Net income (loss) available to common stockholders $ 8,738     $ 4,027       117 %   $ 5,243       67 % $ 19,652     $ (16,526 )   N/A     Earnings (Loss) Per Common Share: Basic $ 0.23 $ 0.11 $ 0.14 $ 0.52 $ (0.44 ) Diluted $ 0.23 $ 0.11 $ 0.14 $ 0.52 $ (0.44 )   Average Shares Outstanding: Basic 38,097,327 37,956,527 38,047,371 38,044,350 37,902,809 Diluted 38,112,908 38,004,768 38,082,023 38,078,932 37,902,809   Three months ended Nine Months Ended, 9/30/2011   6/30/2011   3/31/2011   12/31/2010   9/30/2010 9/30/2011   9/30/2010   Net interest income $ 31,053 $ 29,331 $ 28,883 $ 28,723 $ 27,610 $ 89,267 $ 79,661 Non-interest income 4,258 7,684 4,510 4,298 7,339 16,452 20,183 Non-interest expense   16,817       16,886       16,695       17,530       15,693     50,398       45,844   Pre Tax - Pre Provision income 18,494 20,129 16,698 15,491 19,256 55,321 54,000 Provision for loan losses   3,483       10,047       5,262       5,800       11,100     18,792       78,830   Income (loss) before income taxes $ 15,011     $ 10,082     $ 11,436     $ 9,691     $ 8,156   $ 36,529     $ (24,830 )   PTPP to average assets (annualized) 2.48 % 2.75 % 2.27 % 2.07 % 2.60 % 2.50 % 2.39 %     Nara Bancorp, Inc. Supplemental Data Unaudited (Dollars in Thousands, Except for Per Share Data)     (Annualized)     (Annualized) At or for the Three Months Ended At or for the Nine Months Ended Profitability measures: 9/30/2011   9/30/2010   6/30/2011   9/30/2011     9/30/2010     ROA 1 1.31 %   0.69 %   0.86 % 1.03 %   -0.59 % ROE 1 10.40 % 5.72 % 6.84 % 8.24 % -4.86 % Net interest margin4 4.29 % 3.85 % 4.16 % 4.20 % 3.68 % Efficiency ratio 47.63 % 44.90 % 45.62 % 47.67 % 45.92 %   1 based on net income before effect of dividends and discount accretion on preferred stock   Three Months Ended Three Months Ended Three Months Ended 9/30/2011   9/30/2010   6/30/2011   Interest Annualized Interest Annualized Interest Annualized Average Income/ Average Average Income/ Average Average Income/ Average Balance Expense Yield/Cost Balance Expense Yield/Cost Balance Expense Yield/Cost (Dollars in thousands) (Dollars in thousands) INTEREST EARNING ASSETS:   Gross loans4, includes loans held for sale $ 2,248,544 $ 34,902 6.16 % $ 2,158,073 $ 33,444 6.15 % $ 2,190,436 $ 33,150 6.07 % Securities available for sale 486,009 3,843 3.16 % 441,298 3,438 3.12 % 501,298 3,965 3.16 % FRB and FHLB stock and other investments 142,306 182 0.51 % 248,417 248 0.40 % 132,957 179 0.54 % Federal funds sold   -     -   N/A   -   -   N/A   -     -   N/A Total interest earning assets4 $ 2,876,859   $ 38,927   5.37 % $ 2,847,788 $ 37,130   5.18 % $ 2,824,691   $ 37,294   5.29 %   INTEREST BEARING LIABILITIES: Deposits: Demand, interest-bearing $ 701,109 $ 1,490 0.84 % $ 637,814 $ 1,782 1.11 % $ 710,948 $ 1,545 0.87 % Savings 126,231 764 2.40 % 137,278 851 2.46 % 126,238 729 2.32 % Time deposits: $100,000 or more 363,155 351 0.38 % 364,199 572 0.62 % 315,278 381 0.49 % Other   607,193     2,372   1.55 %   698,201   2,763   1.57 %   623,361     2,435   1.57 % Total time deposits   970,348     2,723   1.11 %   1,062,400   3,335   1.25 %   938,639     2,816   1.20 % Total interest bearing deposits   1,797,688     4,977   1.10 %   1,837,492   5,968   1.29 %   1,775,825     5,090   1.15 % FHLB advances 300,000 2,438 3.23 % 350,000 3,045 3.45 % 300,000 2,412 3.23 % Other borrowings   37,816     459   4.75 %   40,199   507   4.93 %   42,624     461   4.27 % Total interest bearing liabilities   2,135,504   $ 7,874   1.46 %   2,227,691 $ 9,520   1.69 %   2,118,449   $ 7,963   1.51 % Non-interest bearing demand deposits   447,120     353,980   417,366   Total funding liabilities / cost of funds $ 2,582,624   1.21 % $ 2,581,671 1.46 % $ 2,535,815   1.26 % Net interest income / net interest spread4 $ 31,053   3.91 % $ 27,610   3.49 % $ 29,331   3.78 % Net interest margin4 4.29 % 3.85 % 4.16 %

Net interest margin4, excluding effect of non-accrual loan income (expense)

4.27 % 3.88 % 4.20 %

Net interest margin4, excluding effect of non-accrual loan income(expense) and prepayment fee income

4.24

%

3.86

%

4.19

%

  Non-accrual loan income (reversed) recognized $ 154 $ (188 ) $ (237 ) Prepayment fee income received   175     124     34   Net $ 329   $ (64 ) $ (203 )   Cost of deposits: Non-interest bearing demand deposits $ 447,120 $ - $ 353,980 $ - $ 417,366 $ - Interest bearing deposits   1,797,688     4,977   1.10 %   1,837,492   5,968   1.29 %   1,775,825     5,090   1.15 % Total deposits $ 2,244,808   $ 4,977   0.88 % $ 2,191,472 $ 5,968   1.08 % $ 2,193,191   $ 5,090   0.93 %       Nine Months Ended   Nine Months Ended 9/30/2011   9/30/2010         Interest Annualized Interest Annualized Average Income/ Average Average Income/ Average Balance Expense Yield/Cost   Balance Expense   Yield/Cost (Dollars in thousands) (Dollars in thousands) INTEREST EARNING ASSETS:   Gross loans4, includes loans held for sale $ 2,202,535 $ 101,137 6.14 % $ 2,178,540 $ 100,302 6.16 % Securities available for sale 504,402 11,738 3.10 % 520,259 11,410 2.92 % FRB and FHLB stock and other investments 137,473 540 0.52 % 185,907 623 0.45 % Federal funds sold   -   -   N/A   8,132   49   0.79 % Total interest earning assets4 $ 2,844,410 $ 113,415   5.33 % $ 2,892,838 $ 112,384   5.19 %   INTEREST BEARING LIABILITIES: Deposits: Demand, interest-bearing $ 697,513 $ 4,500 0.86 % $ 578,318 $ 4,675 1.08 % Savings 126,375 2,202 2.33 % 135,885 2,484 2.44 % Time deposits: $100,000 or more 333,532 1,187 0.48 % 574,482 6,880 1.60 % Other   623,579   7,309   1.57 %   590,746   8,155   1.85 % Total time deposits   957,111   8,496   1.19 %   1,165,228   15,035   1.73 % Total interest bearing deposits   1,780,999   15,198   1.14 %   1,879,431   22,194   1.58 % FHLB advances 308,114 7,422 3.22 % 350,000 9,042 3.45 % Other borrowings   45,113   1,528   4.47 %   40,299   1,487   4.87 % Total interest bearing liabilities   2,134,226 $ 24,148   1.51 %   2,269,730 $ 32,723   1.93 % Non-interest bearing demand deposits   418,024   344,933 Total funding liabilities / cost of funds $ 2,552,250 1.26 % $ 2,614,663 1.67 % Net interest income / net interest spread4 $ 89,267   3.82 % $ 79,661   3.26 % Net interest margin4 4.20 % 3.68 %

Net interest margin4, excluding effect of non-accrual loan income(expense)

4.20 % 3.74 %

Net interest margin4, excluding effect of non-accrual loan income(expense) and prepayment fee income

4.18 % 3.72 %   Non-accrual loan income (reversed) recognized $ (184 ) $ (1,280 ) Prepayment fee income received   438     420   Net $ 254   $ (860 )   Cost of deposits: Non-interest bearing demand deposits $ 418,024 $ - $ 344,933 $ - Interest bearing deposits   1,780,999   15,198   1.14 %   1,879,431   22,194   1.58 % Total deposits $ 2,199,023 $ 15,198   0.92 % $ 2,224,364 $ 22,194   1.33 %       For the Three Months Ended   Nine Months Ended 9/30/2011   9/30/2010   % change   6/30/2011   % change   9/30/2011   9/30/2010   % change AVERAGE BALANCES               Gross loans4, includes loans held for sale $ 2,248,544 $ 2,158,073 4 % $ 2,190,436 3 % 2,202,535 2,178,540 1 % Investments 628,315 689,715 -9 % 634,255 -1 % 641,875 714,298 -10 % Interest-earning assets4 2,876,859 2,847,788 1 % 2,824,691 2 % 2,844,410 2,892,838 -2 % Total assets 2,987,441 2,968,151 1 % 2,933,003 2 % 2,952,371 3,013,934 -2 %   Interest-bearing deposits 1,797,688 1,837,492 -2 % 1,775,825 1 % 1,780,999 1,879,431 -5 % Interest-bearing liabilities 2,135,504 2,227,691 -4 % 2,118,449 1 % 2,134,226 2,269,730 -6 % Non-interest-bearing demand deposits 447,120 353,980 26 % 417,366 7 % 418,024 344,933 21 % Stockholders' Equity 377,654 356,915 6 % 369,485 2 % 370,155 365,351 1 % Net interest earning assets4 741,355 620,097 20 % 706,242 5 % 710,184 623,108 14 %     LOAN PORTFOLIO COMPOSITION4:   9/30/2011   6/30/2011   % change   12/31/2010   % change   9/30/2010   % change           Commercial loans $ 594,396 $ 578,508 3 % $ 549,240 8 % $ 559,357 6 % Real estate loans 1,653,756 1,602,162 3 % 1,573,814 5 % 1,574,856 5 % Consumer and other loans   12,222       11,755     4 %     13,268     -8 %   15,650     -22 % Loans outstanding4 2,260,374 2,192,425 3 % 2,136,322 6 % 2,149,863 5 % Unamortized deferred loan fees - net of costs   (2,707 )     (2,386 )   -13 %     (2,261 )   -20 %   (2,350 )   -15 % Loans4, net of deferred loan fees and costs 2,257,667 2,190,039 3 % 2,134,061 6 % 2,147,513 5 % Allowance for loan losses   (60,009 )     (59,696 )   -1 %     (62,320 )   4 %   (63,692 )   6 % Loan receivable4, net $ 2,197,658     $ 2,130,343     3 %   $ 2,071,741     6 % $ 2,083,821     5 % 4 The loan portfolio composition tables and net interest margin excludes the guaranteed portion of delinquent SBA loans for the amounts indicated at each period as these are 100% guaranteed by the SBA. $ 10,461 $ 12,407 $ 13,684 $ 14,343   REAL ESTATE LOANS BY PROPERTY TYPE: 9/30/2011   6/30/2011   % change   12/31/2010   % change 9/30/2010   % change Retail buildings $ 409,852 $ 386,380 6 % $ 361,774 13 % $ 363,125 13 % Hotels/motels 269,988 256,129 5 % 275,433 -2 % 279,480 -3 % Gas stations/ car washes 319,208 309,914 3 % 270,788 18 % 272,760 17 % Mixed-use facilities 156,653 161,285 -3 % 160,498 -2 % 147,424 6 % Warehouses 114,852 116,461 -1 % 112,415 2 % 117,182 -2 % Multifamily 99,923 98,464 1 % 88,094 13 % 84,965 18 % Other   283,280       273,529     4 %     304,812     -7 %   309,920     -9 % Total $ 1,653,756     $ 1,602,162     3 %   $ 1,573,814     5 % $ 1,574,856     5 %   DEPOSIT COMPOSITION 9/30/2011   6/30/2011   % Change   12/31/2010   % Change   9/30/2010   % Change Non-interest-bearing demand deposits $ 454,842 $ 432,616 5 % $ 388,731 17 % $ 363,089 25 % Money market and other 711,748 712,028 0 % 688,593 3 % 688,355 3 % Saving deposits 123,413 126,694 -3 % 126,255 -2 % 137,410 -10 % Time deposits of $100,000 or more 424,044 343,366 23 % 321,542 32 % 329,855 29 % Other time deposits   553,149       617,476     -10 %     650,993     -15 %     683,947     -19 % Total deposit balances $ 2,267,196     $ 2,232,180     2 %   $ 2,176,114     4 %   $ 2,202,656     3 %   DEPOSIT COMPOSITION (%) 9/30/2011   6/30/2011   12/31/2010   9/30/2010 Non-interest-bearing demand deposits 20.1 % 19.4 % 17.9 % 16.5 % Money market and other 31.4 % 31.9 % 31.6 % 31.3 % Saving deposits 5.4 % 5.7 % 5.8 % 6.2 % Time deposits of $100,000 or more 18.7 % 15.4 % 14.8 % 15.0 % Other time deposits   24.4 %     27.6 %   29.9 %     31.0 % Total deposit balances   100.0 %     100.0 %   100.0 %     100.0 %     CAPITAL RATIOS 9/30/2011   6/30/2011   12/31/2010   9/30/2010 Total stockholders' equity $ 383,615   $ 372,539   $ 358,563   $ 356,102 Tier 1 risk-based capital ratio 16.71 % 16.42 % 16.42 % 16.55 % Total risk-based capital ratio 17.98 % 17.69 % 17.69 % 17.82 % Tier 1 leverage ratio 13.50 % 13.32 % 12.61 % 12.78 % Book value per common share $ 8.30 $ 8.02 $ 7.69 $ 7.63 Tangible common equity per share2 $ 8.23 $ 7.94 $ 7.61 $ 7.55 Tangible common equity to tangible assets2 10.40 % 10.21 % 9.76 % 9.61 %  

2 Tangible common equity to tangible assets is a non-GAAP financial measure that represents common equity less goodwill and other intangible assets, net divided by total assets less goodwill and other intangible assets, net. Management reviews tangible common equity to tangible assets in evaluating the Company's capital levels and has included this ratio in response to market participant interest in tangible common equity as a measure of capital.

  Reconciliation of GAAP financial measures to non-GAAP financial measures:     9/30/2011   6/30/2011   12/31/2010   9/30/2010 Total stockholders' equity $ 383,615   $ 372,539   $ 358,563   $ 356,102 Less: Preferred stock, net of discount (64,918 ) (64,679 ) (64,203 ) (63,967 ) Common stock warrant (2,383 ) (2,383 ) (2,383 ) (2,383 ) Goodwill and other intangible assets, net   (2,811 )     (2,888 )     (3,043 )     (3,170 ) Tangible common equity $ 313,503     $ 302,589     $

288,934

    $ 286,582     Total assets $ 3,016,127 $ 2,967,288 $ 2,963,296 $ 2,984,976 Less: Goodwill and other intangible assets, net   (2,811 )     (2,888 )     (3,043 )     (3,170 ) Tangible assets $ 3,013,316     $ 2,964,400     $ 2,960,253     $ 2,981,806     Common shares outstanding 38,095,260 38,097,327 37,983,027 37,956,527   Tangible common equity to tangible assets 10.40 % 10.21 % 9.76 % 9.61 % Tangible common equity per share $ 8.23 $ 7.94 $ 7.61 $ 7.55       For the Three Months Ended   For the Nine Months Ended ALLOWANCE FOR LOAN LOSSES: 9/30/2011   6/30/2011   3/31/2011   12/31/2010   9/30/2010 9/30/2011   9/30/2010 Balance at beginning of period $ 59,696   $ 63,340   $ 62,320   $ 63,692   $ 62,988 $ 62,320   $ 59,424 Provision for loan losses 3,483 10,047 5,262 5,800 11,100 18,792 78,830 Recoveries 800 1,500 1,068 917 432 3,367 2,001 Charge offs   (3,970 )     (15,191 )     (5,310 )     (8,089 )     (10,828 )   (24,470 )     (76,563 ) Balance at end of period $ 60,009     $ 59,696     $ 63,340     $ 62,320     $ 63,692   $ 60,009     $ 63,692   Net charge-off/average gross loans4 (annualized) 0.56 % 2.50 % 0.78 % 1.33 % 1.93 % 1.28 % 4.56 %   For the Three Months Ended For the Nine Months Ended

NET CHARGED OFF LOANS BY TYPE

9/30/2011   6/30/2011   3/31/2011   12/31/2010   9/30/2010 9/30/2011   9/30/2010   Real estate loans $ 1,902 $ 12,242 $ 2,847 $ 5,400 $ 5,821 $ 16,991 $ 53,520 Commercial loans 1,158 1,474 1,455 1,663 4,549 4,087 19,993 Consumer loans   110     (25 )   (60 )   109     26     25     1,049   Total net charge-offs $ 3,170   $ 13,691   $ 4,242   $ 7,172   $ 10,396   $ 21,103   $ 74,562       NON-PERFORMING ASSETS   9/30/2011   6/30/2011   3/31/2011   12/31/2010   9/30/2010 Delinquent loans 90 days or more on non-accrual status4 $ 27,790   $ 35,385   $ 46,961   $ 43,803   $ 50,521 Delinquent loans 90 days or more on accrual status   -       -     -       -       -   Total non-performing loans4 27,790 35,385 46,961 43,803 50,521 Other real estate owned 4,838 4,404 2,708 1,581 3,591 Accruing restructured loans   23,543       15,787     29,419       35,103       34,391   Total non-performing assets4 $ 56,171     $ 55,576   $ 79,088     $ 80,487     $ 88,503   Non-performing assets4/ total assets 1.86 % 1.87 % 2.70 % 2.72 % 2.96 % Non-performing assets4/ gross loans4 & OREO 2.48 % 2.53 % 3.69 % 3.77 % 4.11 % Non-performing assets4/ total capital 14.64 % 14.92 % 21.71 % 22.45 % 24.85 % Non-performing loans (excludes accruing restructured loans)4/gross loans4 1.23 % 1.62 % 2.19 % 2.05 % 2.35 %

Non-performing loans (includes accruing restructured loans)4/gross loans4

2.27 % 2.34 % 3.57 % 3.70 % 3.95 % Allowance for loan losses/ gross loans4 2.66 % 2.73 % 2.96 % 2.92 % 2.97 % Allowance for loan losses/ non-performing loans (excludes accruing restructured loans)4 215.94 % 168.70 % 134.88 % 142.27 % 126.07 % Allowance for loan losses/ non-performing loans (includes accruing restructured loans)4 116.90 % 116.66 % 82.93 % 78.98 % 75.01 % Allowance for loan losses/ non-performing assets4 106.83 % 107.41 % 80.09 % 77.43 % 71.97 %     BREAKDOWN OF ACCRUING RESTRUCTURED LOANS BY TYPE: 9/30/2011   6/30/2011   3/31/2011   12/31/2010   9/30/2010 Retail buildings $ 590 $ - $ 1,192 $ 4,832 $ 2,396 Hotels/motels 12,905 12,027 17,503 6,193 8,589 Gas stations/ car washes - - 566 1,475 910 Mixed-use facilities 952 953 953 - - Warehouses - - - - - Multifamily - - - - - Other3   9,096     2,807     9,205     22,603     22,496   Total $ 23,543   $ 15,787   $ 29,419   $ 35,103   $ 34,391   3 Includes commercial business and other loans     DELINQUENT LOANS LESS THAN 90 DAYS PAST DUE 9/30/2011   6/30/2011   3/31/2011   12/31/2010   9/30/2010   30 - 59 days $ 9,455 $ 1,450 $ 5,618 $ 3,012 $ 2,192 60 - 89 days   1,503     1,868     2,741     1,284     757   Total delinquent loans less than 90 days past due4 $ 10,958   $ 3,318   $ 8,359   $ 4,296   $ 2,949     DELINQUENT LOANS LESS THAN 90 DAYS PAST DUE BY TYPE 9/30/2011   6/30/2011   3/31/2011   12/31/2010   9/30/2010   Real estate loans $ 9,091 $ 1,701 $ 7,200 $ 2,714 $ 1,369 Commercial loans 1,861 1,606 1,138 1,539 1,540 Consumer loans   6     11     21     43     40   Total delinquent loans less than 90 days past due4 $ 10,958   $ 3,318   $ 8,359   $ 4,296   $ 2,949       NON-PERFORMING LOANS BY TYPE 9/30/2011   6/30/2011   3/31/2011   12/31/2010   9/30/2010   Real estate loans $ 14,725 $ 20,661 $ 31,096 $ 26,895 $ 31,153 Commercial loans 12,908 14,342 15,465 16,460 18,680 Consumer loans   157     382     400     448     688   Total non-performing loans4 $ 27,790   $ 35,385   $ 46,961   $ 43,803   $ 50,521     WATCH LIST LOANS 9/30/2011   6/30/2011   3/31/2011   12/31/2010   9/30/2010 Special mention $ 31,576 $ 15,342 $ 21,272 $ 29,573 $ 30,767 Substandard 103,798 116,561 142,191 135,774 147,641 Doubtful 5,600 5,174 5,057 260 413 Loss   -     -     -     -     -   Total watch list loans4 $ 140,974   $ 137,077   $ 168,520   $ 165,607   $ 178,821       4 The loan portfolio composition tables and net interest margin excludes the guaranteed portion of delinquent SBA loans for the amounts indicated at each period as these are 100% guaranteed by the SBA.