**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 June 30, 2006.**




**OR**




o
            **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
o




Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition of “accelerated
      filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. Large
      accelerated filer o Accelerated
      filer x Non-accelerated
      filer o




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




The
      number of shares of Common Stock of the registrant outstanding as of July 31,
      2006 was 29,125,870.









**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
            11**Item
                3.**
            Quantitative
                and Qualitative Disclosures About Market Risk
            36**Item
                4.**
            Controls
                and Procedures
            38**Part
                II.**
            OTHER
                INFORMATION
            39**Item
                1.**
            Legal
                Proceedings
            39**Item
                2.**
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            39**Item
                3.**
            Defaults
                Upon Senior Securities
            39**Item
                4.**
            Submission
                of Matters to a Vote of Security Holders
            39**Item
                5.**
            Other
                Information
            39**Item
                6.**
            Exhibits
            40SIGNATURES
            41







i


**Part
        I.** **FINANCIAL
        INFORMATION**
  **Item
                  1.****Financial
                  Statements********WILSHIRE
                  BANCORP, INC.**
                **CONDENSED
                  CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION****(UNAUDITED)**
  **June
                  30, 2006**
              
              **December
                  31, 2005****ASSETS**Cash
                  and due from banks
              
              $
              72,584,812
              
              $
              68,205,078Federal
                  funds sold and other cash equivalents
              
              
              76,003,149
              
              
              126,002,978Cash
                  and cash equivalents
              
              
              148,587,961
              
              
              194,208,056Interest-bearing
                  deposits in other financial institutions
              
              
              500,000
              
              
              500,000Securities
                  available for sale - at fair value (amortized cost of $191,476,893
                  and$140,428,100
                  at June 30, 2006 and December 31, 2005, respectively)
              
              
              188,272,054
              
              
              138,650,270Securities
                  held to maturity - at amortized cost (fair value of $20,370,226
                  and$22,510,961
                  at June 30, 2006 and December 31, 2005, respectively)
              
              
              20,834,815
              
              
              22,860,200Interest
                  only strip - at fair value (amortized cost of $1,533,649and
                  $1,493,344 at June 30, 2006 and December 31, 2005,
                  respectively)
              
              
              1,268,880
              
              
              1,501,866Loans
                  held for sale, at the lower of cost or market
              
              
              16,946,680
              
              
              21,796,677Loans
                  receivable, net of allowance for loan losses of $16,358,454 and
                  $13,999,302at
                  June 30, 2006 and December 31, 2005, respectively
              
              
              1,400,830,443
              
              
              1,226,763,867Bank
                  premises and equipment, net
              
              
              9,940,042
              
              
              8,955,872Federal
                  Home Loan Bank stock, at cost
              
              
              7,346,100
              
              
              6,181,700Accrued
                  interest receivable
              
              
              8,727,985
              
              
              6,891,670Other
                  real estate owned - net
              
              
              241,500
              
              
              294,400Deferred
                  income taxes - net
              
              
              9,337,303
              
              
              8,114,343Servicing
                  asset
              
              
              4,788,131
              
              
              4,682,848Due
                  from customers on acceptances
              
              
              2,878,910
              
              
              3,220,846Cash
                  surrender value of life insurance
              
              
              15,396,527
              
              
              15,098,770Goodwill
              
              
              6,767,129
              
              
              -Core
                  deposit intangible
              
              
              1,619,317
              
              
              -Favorable
                  lease intangible
              
              
              414,850
              
              
              -Other
                  assets
              
              
              9,115,090
              
              
              6,552,033TOTAL
              
              $
              1,853,813,717
              
              $
              1,666,273,418**LIABILITIES
                  AND SHAREHOLDERS’ EQUITY**LIABILITIES:Deposits:Noninterest-bearing
              
              $
              345,019,076
              
              $
              292,170,888Interest-bearing:Savings
              
              
              25,847,423
              
              
              19,585,805Time
                  deposits of $100,000 or more
              
              
              695,657,464
              
              
              630,662,463Other
                  time deposits
              
              
              148,159,526
              
              
              142,944,546Money
                  markets accounts and other
              
              
              375,760,218
              
              
              324,101,535Total
                  deposits
              
              
              1,590,443,707
              
              
              1,409,465,237Federal
                  Home Loan Bank borrowings
              
              
              45,000,000
              
              
              61,000,000Junior
                  subordinated debentures
              
              
              61,547,000
              
              
              61,547,000Accrued
                  interest payable
              
              
              10,558,360
              
              
              6,898,196Acceptances
                  outstanding
              
              
              2,878,910
              
              
              3,220,846Other
                  liabilities
              
              
              10,604,875
              
              
              11,038,271Total
                  liabilities
              
              
              1,721,032,852
              
              
              1,553,169,550COMMITMENTS
                  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, 29,120,370 and 28,630,600 shares atJune
                  30, 2006 and December 31, 2005, respectively
              
              
              48,505,069
              
              
              41,340,448Accumulated
                  other comprehensive loss
              
              
              (1,858,812
              )
              
              (1,026,202
              )Retained
                  earnings
              
              
              86,134,608
              
              
              72,789,622Total
                  shareholders’ equity
              
              
              132,780,865
              
              
              113,103,868TOTAL
              
              $
              1,853,813,717
              
              $
              1,666,273,418
  The
                  accompanying notes are an integral part of these unaudited condensed
                  consolidated financial statements.
  1
  **WILSHIRE
                  STATE BANK****CONDENSED
                  CONSOLIDATED STATEMENTS OF OPERATIONS****(UNAUDITED)****Three
                  Months Ended June 30,**
              
              **Six
                  Months Ended June 30,****2006**
              
              **2005**
              
              **2006**
              
              **2005****INTEREST
                  INCOME:**Interest
                  and fees on loans
              
              $
              31,625,453
              
              $
              20,779,577
              
              $
              59,275,335
              
              $
              39,009,546Interest
                  on investment securities and deposits in other financial
                  institutions
              
              
              2,238,038
              
              
              1,147,444
              
              
              4,013,810
              
              
              2,019,000Interest
                  on federal funds sold and other cash equivalents
              
              
              773,415
              
              
              544,797
              
              
              2,388,917
              
              
              971,523Interest
                  on commercial paper
              
              
              -
              
              
              67,133
              
              
              -
              
              
              67,133Total
                  interest income
              
              
              34,636,906
              
              
              22,538,951
              
              
              65,678,062
              
              
              42,067,202**INTEREST
                  EXPENSE:**Deposits
              
              
              13,644,758
              
              
              6,535,943
              
              
              25,897,641
              
              
              11,646,424Interest
                  on other borrowings
              
              
              1,554,370
              
              
              1,034,971
              
              
              3,063,947
              
              
              1,812,691Total
                  interest expense
              
              
              15,199,128
              
              
              7,570,914
              
              
              28,961,588
              
              
              13,459,115NET
                  INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES
              
              
              19,437,778
              
              
              14,968,037
              
              
              36,716,474
              
              
              28,608,087PROVISION
                  FOR LOSSES ON LOANS AND LOAN COMMITMENTS
              
              
              1,200,000
              
              
              720,000
              
              
              2,260,000
              
              
              1,220,000NET
                  INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
              
              
              18,237,778
              
              
              14,248,037
              
              
              34,456,474
              
              
              27,388,087**NONINTEREST
                  INCOME:**Service
                  charges on deposit accounts
              
              
              2,441,093
              
              
              1,814,596
              
              
              4,596,250
              
              
              3,534,406Gain
                  on sale of loans
              
              
              3,055,165
              
              
              1,488,854
              
              
              5,405,015
              
              
              3,511,931Loan-related
                  servicing income
              
              
              363,755
              
              
              472,952
              
              
              892,836
              
              
              1,130,750Loan
                  referral fee income
              
              
              -
              
              
              17,428
              
              
              47,647
              
              
              118,217SBA
                  Loan packaging fee
              
              
              119,986
              
              
              132,049
              
              
              234,234
              
              
              197,766Income
                  from other earning assets
              
              
              256,761
              
              
              285,585
              
              
              496,637
              
              
              412,464Other
                  income
              
              
              343,666
              
              
              405,691
              
              
              671,834
              
              
              647,577Total
                  noninterest income
              
              
              6,580,426
              
              
              4,617,155
              
              
              12,344,453
              
              
              9,553,111**NONINTEREST
                  EXPENSES:**Salaries
                  and employee benefits
              
              
              5,964,781
              
              
              4,317,462
              
              
              11,220,786
              
              
              8,692,826Occupancy
                  and equipment
              
              
              1,072,116
              
              
              769,618
              
              
              1,967,839
              
              
              1,602,848Data
                  processing
              
              
              650,081
              
              
              543,351
              
              
              1,154,880
              
              
              958,218Loan
                  referral fees
              
              
              600,627
              
              
              306,653
              
              
              942,926
              
              
              569,188Professional
                  fees
              
              
              249,650
              
              
              108,583
              
              
              492,154
              
              
              554,589Directors’
                  fees
              
              
              125,118
              
              
              114,100
              
              
              246,468
              
              
              237,350Office
                  supplies
              
              
              199,776
              
              
              134,087
              
              
              310,689
              
              
              242,610Other
                  real estate owned
              
              
              12,090
              
              
              -
              
              
              12,090
              
              
              -Advertising
                  and promotional
              
              
              375,941
              
              
              142,961
              
              
              557,858
              
              
              388,554Communications
              
              
              127,631
              
              
              113,896
              
              
              232,752
              
              
              206,612Deposit
                  insurance premiums
              
              
              47,198
              
              
              38,269
              
              
              89,867
              
              
              75,323Outsourced
                  service for customers
              
              
              290,306
              
              
              335,084
              
              
              631,095
              
              
              656,699Amortization
                  of core deposit intangible
              
              
              20,743
              
              
              -
              
              
              20,743
              
              
              -Amortization
                  of favorable lease intangible
              
              
              14,634
              
              
              -
              
              
              14,634
              
              
              -Other
                  operating
              
              
              866,493
              
              
              607,133
              
              
              1,586,122
              
              
              1,185,555Total
                  noninterest expenses
              
              
              10,617,185
              
              
              7,531,197
              
              
              19,480,903
              
              
              15,370,372INCOME
                  BEFORE INCOME TAX PROVISION
              
              
              14,201,019
              
              
              11,333,995
              
              
              27,320,024
              
              
              21,570,826INCOME
                  TAX PROVISION
              
              
              5,785,741
              
              
              4,582,196
              
              
              11,082,032
              
              
              8,749,196NET
                  INCOME
              
              $
              8,415,278
              
              $
              6,751,799
              
              $
              16,237,992
              
              $
              12,821,630EARNINGS
                  PER SHAREBasic
              
              $
              0.29
              
              $
              0.24
              
              $
              0.56
              
              $
              0.45Diluted
              
              $
              0.29
              
              $
              0.23
              
              $
              0.56
              
              $
              0.44The
                  accompanying notes are an integral part of these unaudited condensed
                  consolidated financial statements.
   2
 
 **WILSHIRE
                  STATE BANK****CONDENSED
                  CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME****(UNAUDITED)****Three
                  Months Ended June 30,**
              
              **Six
                  Months ended June 30,****2006**
              
              **2005**
              
              **2006**
              
              **2005**Net
                  income
              
              $
              8,415,278
              
              $
              6,751,799
              
              $
              16,237,992
              
              $
              12,821,630Other
                  comprehensive income, net of tax:Unrealized
                  (losses) gains 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 $447,133 for the three months ended June 30,
                  2006 andnet
                  of tax expense of $154,749 for the three months ended June
                  30,2005net
                  of tax benefit of $599,344 for the six months ended June 30,2006
                  andnet
                  of tax benefit of $67,469 for the six months ended June 30,
                  2005
              
              
              (617,469
              )
              
              213,700
              
              
              (827,666
              )
              
              (93,171
              )Unrealized
                  holding (losses) gains on interest only strips arising during
                  period,net
                  of tax benefit of $3,579 for the three months ended June 30, 2006
                  andnet
                  of tax benefit of $76,679 for the three months ended June 30, 2005,net
                  of tax benefit of $3,579 for the six months ended June 30, 2006
                  andnet
                  of tax benefit of $20,474 for the six months ended June 30, 2005
              
              
              (4,943
              )
              
              (105,891
              )
              
              (4,943
              )
              
              28,273Other
                  comprehensive (loss) income, net of tax:
              
              
              (622,412
              )
              
              107,809
              
              
              (832,609
              )
              
              (64,898
              )Comprehensive
                  income
              
              $
              7,792,866
              
              $
              6,859,608
              
              $
              15,405,383
              
              $
              12,756,732
  The
                  accompanying notes are an integral part of these unaudited condensed
                  consolidated financial statements.
  3
  **WILSHIRE
                  BANCORP, INC.****CONDENSED
                  CONSOLIDATED STATEMENTS OF CASH FLOWS****(UNAUDITED)**
 **Six
                    Months Ended June 30,****2006**
                
                **2005****CASH
                    FLOWS FROM OPERATING ACTIVITIES:**Net
                    income
                
                $
                16,237,992
                
                $
                12,821,630Adjustments
                    to reconcile net income to net cash provided byoperating
                    activities, net of acquisition:Amortization
                    and accretion of premiums and discounts
                
                
                3,601
                
                
                38,622Depreciation
                    of premises & equipment
                
                
                591,427
                
                
                450,585Amortization
                    of core deposit intangible
                
                
                20,743
                
                
                -Amortization
                    of lease intangible
                
                
                14,634
                
                
                -Provision
                    for losses on loans and loan commitments
                
                
                2,260,000
                
                
                1,220,000Deferred
                    tax benefit
                
                
                (77,521
                )
                
                (955,235
                )Loss
                    on disposition of bank premises, equipment and securities
                
                
                9,766
                
                
                902Gain
                    on sale of loans
                
                
                (5,405,015
                )
                
                (3,511,931
                )Origination
                    of loans held for sale
                
                
                (104,115,057
                )
                
                (70,668,403
                )Proceeds
                    from sale of loans held for sale
                
                
                114,370,069
                
                
                76,507,771Impairment
                    of Servicing Asset
                
                
                233,226
                
                
                -Impairment
                    of I/O Strip
                
                
                88,020
                
                
                -Loss
                    on sale of other real estate owned
                
                
                (9,445
                )
                
                8,607Tax
                    benefit from exercise of stock option
                
                
                -
                
                
                1,724,074Stock
                    based compensation cost
                
                
                149,949
                
                
                -Change
                    in cash surrender value of life insurance
                
                
                (297,756
                )
                
                (283,915
                )Servicing
                    assets capitalization
                
                
                (1,324,687
                )
                
                (913,463
                )Servicing
                    assets amortization
                
                
                986,177
                
                
                654,533Decrease
                    in interest-only strip
                
                
                136,442
                
                
                (151,520
                )Increase
                    in accrued interest receivable
                
                
                (1,554,547
                )
                
                (1,122,513
                )Increase
                    in other assets
                
                
                (2,506,170
                )
                
                (1,833,828
                )Dividends
                    of FHLB Stock
                
                
                (149,100
                )
                
                -Increase
                    in accrued interest payable
                
                
                3,604,190
                
                
                1,137,721Decrease
                    in other liabilities
                
                
                (1,712,329
                )
                
                (277,002
                )Net
                    cash provided by operating activities
                
                
                21,554,609
                
                
                14,846,635
 **CASH
                      FLOWS FROM INVESTING ACTIVITIES:**Net
                      (increase) decrease in interest-bearing deposits in otherfinancial
                      institutions
                  
                  
                  -
                  
                  
                  (364
                  )Purchases
                      of investment securities available for sale
                  
                  
                  (41,387,838
                  )
                  
                  (52,746,527
                  )Purchases
                      of investment securities held to maturity
                  
                  
                  -
                  
                  
                  (1,999,000
                  )Proceeds
                      from matured securities and principal repayment (AFS)
                  
                  
                  5,439,704
                  
                  
                  17,108,875Proceeds
                        from principal repayment, matured or called securities(HTM)
                  
                  
                  2,030,825
                  
                  
                  6,173,506Net
                      increase in loans receivable
                  
                  
                  (150,353,685
                  )
                  
                  (112,597,630
                  )Proceeds
                      from sale of other real estate owned
                  
                  
                  108,264
                  
                  
                  299,593Purchases
                      of premises and equipment
                  
                  
                  (814,506
                  )
                  
                  (3,423,357
                  )Proceeds
                      from sale of FHLB stock
                  
                  
                  (1,015,300
                  )
                  
                  (1,680,900
                  )Purchases
                      of Bank Owned Life Insurance
                  
                  
                  -
                  
                  
                  (3,000,000
                  )Proceeds
                      from disposition of bank equipment
                  
                  
                  250
                  
                  
                  -Acquisition
                      of Liberty Bank, net of cash and cash equivalents acquired
                  
                  
                  5,840,113
                  
                  
                  -Net
                      cash used in investing activities
                  
                  
                  (180,152,173
                  )
                  
                  (151,865,804
                  )**CASH
                      FLOWS FROM FINANCING ACTIVITIES:**Net
                      increase in deposits
                  
                  
                  130,481,601
                  
                  
                  145,307,716Increase
                      in Federal Home Loan Bank borrowing
                  
                  
                  (16,000,000
                  )
                  
                  10,000,000Payment
                      of cash dividend
                  
                  
                  (2,582,212
                  )
                  
                  (1,142,843
                  )Increase
                      in junior subordinated debentures
                  
                  
                  -
                  
                  
                  20,619,000Tax
                      benefit from exercise of stock options
                  
                  
                  899,249
                  
                  
                  -Proceeds
                      from exercise of stock options
                  
                  
                  178,831
                  
                  
                  428,545Net
                      cash provided by financing activities
                  
                  
                  112,977,469
                  
                  
                  175,212,418NET
                      DECREASE IN CASH AND CASH EQUIVALENTS
                  
                  
                  (45,620,095
                  )
                  
                  38,193,249CASH
                      AND CASH EQUIVALENTS, BEGINNING OF PERIOD
                  
                  
                  194,208,056
                  
                  
                  98,903,163CASH
                      AND CASH EQUIVALENTS, END OF PERIOD
                  
                  $
                  148,587,961
                  
                  $
                  137,096,412SUPPLEMENTAL
                      DISCLOSURES OF CASH FLOW INFORMATION:Interest
                      paid
                  
                  $
                  25,301,424
                  
                  $
                  12,321,394Income
                      taxes paid
                  
                  $
                  12,858,010
                  
                  $
                  9,544,500
 NONCASH
                    INVESTING AND FINANCING ACTIVITIESCash
                    dividend declared, but has not been paid
                
                $
                1,456,019
                
                $
                1,143,426Transfer
                    of loans to OREO
                
                
                -
                
                $
                308,200
  The
        accompanying notes are an integral part of these unaudited condensed
        consolidated financial statements.
 4






**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.




Our
      Corporate Headquarters and primary banking facilities are located at 3200
      Wilshire Boulevard, Los Angeles, California 90010. In addition , we
      have  19
      full-service Bank branch offices in Southern California, Texas and New York.
      We
      also have seven loan production offices utilized primarily for the origination
      of loans under our Small Business Administration (“SBA”) lending program in
      Georgia, Washington, Texas, Nevada, Colorado, Virginia and
      California.




**Note
      2.**  **Basis
      of Presentation**




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 June 30, 2006 and
      December 31, 2005, the related statements of operations and comprehensive income
      for the three months and six months ended June 30, 2006 and 2005, and the
      statements of cash flows for the six months ended June 30, 2006 and 2005. 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, 2005. 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, 2005, unless otherwise noted.




**Note
      3.**  **Earnings
      per Share** **and Stock Based Compensation**




Basic
      earnings per share (“EPS”) excludes dilution and is computed by dividing income
      available to common shareholders by the weighted-average number of common shares
      outstanding for the period. Diluted EPS reflects the potential dilution that
      could occur if securities or other contracts to issue common stock were
      exercised or converted into common stock or resulted in the issuance of common
      stock that would then share in the earnings of the entity.




5




The
      following table provides the basic and diluted EPS computations for the periods
      indicated below:




**Three
                months ended**
              **June
                30**
            
            **Six
                months ended**
              **June
                30****2006**
            
            **2005**
            
            **2006**
            
            **2005**Numerator:
              Net
                income - numerator for basic earnings
              per
                share and diluted earnings per share-
              income
                available to common stockholders
            
            $
            8,415,278
            
            $
            6,751,799
            
            $
            16,237,992
            
            $
            12,821,630Denominator:
              Denominator
                for basic earnings per share:
              Weighted-average
                shares
            
            
            28,911,555
            
            
            28,574,385
            
            
            28,813,332
            
            
            28,499,455Effect
                of dilutive securities:
              Stock
                option dilution
            
            
            366,624
            
            
            350,074
            
            
            380,689
            
            
            395,538Denominator
                for diluted earnings per share:
              Adjusted
                weighted-average shares
              And
                assumed conversions
            
            
            29,278,179
            
            
            28,924,459
            
            
            29,194,021
            
            
            28,894,993Basic
                earnings per share
            
            $
            0.29
            
            $
            0.24
            
            $
            0.56
            
            $
            0.45Diluted
                earnings per share
            
            $
            0.29
            
            $
            0.23
            
            $
            0.56
            
            $
            0.44




On
      January 1, 2006, the Company adopted Statement of Financial Accounting Standards
      (“SFAS”) 123R, using the modified prospective method. Accordingly, prior-period
      amounts have not been restated. The adoption of SFAS 123R resulted in
      incremental stock-based compensation expense of $87,176 and $149,949 in the
      second quarter and the first half of 2006, respectively, and accordingly
      decreased the periodic income before income taxes by the respective amounts
      and
      their effect on basic or diluted earnings per share was negligible. Cash
      provided by financing activities increased by $899,249 related to excess tax
      benefits from stock-based payment arrangements.




The
      Company has issued stock options to employees under stock-based compensation
      plans. Stock options are issued at the current market price on the date of
      grant. The vesting period and contractual term are determined at the time of
      grant, but the contractual term may not exceed 10 years from the date of grant.
      The grant date fair value of each option award is estimated on the date of
      grant
      using the Black-Scholes option valuation model that uses the assumptions noted
      below. The expected life (estimated period of time outstanding) of options
      was
      estimated using the simple method in accordance with SFAS 123R. The expected
      volatility was based on historical volatility for a period equal to the stock
      option’s expected life. The risk-free rate is based on the U.S. Treasury yield
      curve in effect at the time of grant. For the second quarter of 2006 and 2005,
      60,000 and 55,000 shares was granted, respectively. The weighted average
      estimated fair value of options granted for the second quarter of 2006 and
      2005
      was $5.23 and $1.98, respectively. The fair value was estimated on the date
      of
      grant using the Black-Scholes option pricing model under the following
      assumptions; dividend yield of 1.08% and 1.16%, expected volatility of 33.3%
      and
      25.6%, average expected life of 3.46 years and 2 years, and average risk-free
      interest rate of 4.81% and 2.91% for the second quarter of 2006 and 2005,
      respectively. Prior to the adoption of SFAS 123R, the Company applied APB 25
      to
      account for its stock-based awards.




Had
      the
      Company determined compensation cost based on the fair value at the grant date
      for stock options exercisable under SFAS No. 123R prior to January 1, 2006,
      the
      Company’s results of operations and earnings per share would have been adjusted
      to the pro forma amounts for the period indicated below:




6






**Three
                months**
              **ended
                June 30**
            
            **Six
                months**
              **ended
                June 30****2005**
            
            **2005****Net
                income - as reported**
            
            $
            6,751,799
            
            $
            12,821,630**Add:**
              Stock-based
                compensation expense included inthe
                reported net income, net of tax
            
            
            -
            
            
            -**Deduct:**
              Total
                stock-based compensation expense,determined
                using fair value method, net of tax
            
            
            (34,651
            )
            
            (65,565
            )Pro
                forma net income
            
            $
            6,717,148
            
            $
            12,756,065**Earnings
                per share:**Basic
                - as reported
            
            $
            0.24
            
            $
            0.45Basic
                - pro forma
            
            $
            0.24
            
            $
            0.45Diluted
                - as reported
            
            $
            0.23
            
            $
            0.44Diluted
                - pro forma
            
            $
            0.23
            
            $
            0.44




There
      were 50,000 anti-dilutive stock options outstanding for the initial three and
      six month periods of 2006 for which the exercise price exceeded the average
      market price of the Company’s common stock during the periods. 16,250 and
      146,850 of such options were outstanding for the same periods of 2005.




**Note
      4.**  **Goodwill
      and Other Intangible Assets**




Prior
      to
      the acquisition of Liberty Bank of New York in May 2006, the Company did not
      have any material intangible assets that were subject to annual impairment
      testing. Loan servicing rights, the Company’s only significant intangible assets
      subject to amortization before the acquisition discussed in footnote 9, were
      $4,788,131 and $4,632,904 (net of $1,704,402 and $1,514,842 accumulated
      amortization, respectively) as of June 30, 2006 and 2005, respectively. In
      connection with the acquisition of Liberty Bank of New York in May 2006, the
      Company recorded goodwill valued at approximately $6.8 million, which is subject
      to annual impairment testing in accordance with these Statements, which the
      Company plans to test in December, 2006. The acquisition also caused the Company
      to record core deposit intangibles and favorable lease intangibles. As of June
      30, 2006, those intangible assets were $1,619,317 and $414,850, respectively,
      net of $20,743 and $14,634 accumulated amortizations, respectively. Combined
      amortization expense for intangible assets subject to amortization was $607,000
      and $406,000 for the three months ended June 30, 2006 and 2005, respectively,
      and $1,022,000 and $655,000 for the six months ended June 30, 2006 and 2005,
      respectively. We estimate this amount to be approximately $956,000 annually
      for
      the next five fiscal years.




**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.




7




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




**(Dollars
                in Thousands)**
            
            **Three
                Months Ended June 30, 2006**
            
            **Three
                Months Ended June 30, 2005****Business
                Segment**
            
            **Banking**
              **Operations**
            
            **TFS**
            
            **SBA**
            
            **Total**
            
            **Banking****Operations**
            
            **TFS**
            
            **SBA**
            
            **Total**Net
                interest income
            
            $
            13,766
            
            $
            1,107
            
            $
            4,565
            
            $
            19,438
            
            $
            10,992
            
            $
            725
            
            $
            3,251
            
            $
            14,968Less
                provision for loan losses
            
            
            870
            
            
            109
            
            
            221
            
            
            1,200
            
            
            725
            
            
            (116
            )
            
            111
            
            
            720Other
                operating income
            
            
            3,030
            
            
            425
            
            
            3,125
            
            
            6,580
            
            
            2,577
            
            
            475
            
            
            1,566
            
            
            4,618Net
                revenue
            
            
            15,926
            
            
            1,423
            
            
            7,469
            
            
            24,818
            
            
            12,844
            
            
            1,316
            
            
            4,706
            
            
            18,866Other
                operating expenses
            
            
            8,867
            
            
            257
            
            
            1,493
            
            
            10,617
            
            
            6,337
            
            
            245
            
            
            950
            
            
            7,532Income
                before taxes
            
            $
            7,059
            
            $
            1,166
            
            $
            5,976
            
            $
            14,201
            
            $
            6,507
            
            $
            1,071
            
            $
            3,756
            
            $
            11,334Business
                segment assets
            
            $
            1,644,008
            
            $
            50,829
            
            $
            158,977
            
            $
            1,853,814
            
            $
            1,255,181
            
            $
            45,379
            
            $
            156,465
            
            $
            1,457,025




**(Dollars
                in Thousands)**
            
            **Six
                Months Ended June 30, 2006**
            
            **Six
                Months Ended June 30, 2005****Business
                Segment**
            
            **Banking****Operations**
            
            **TFS**
            
            **SBA**
            
            **Total**
            
            **Banking****Operations**
            
            **TFS**
            
            **SBA**
            
            **Total**Net
                interest income
            
            $
            26,253
            
            $
            2,087
            
            $
            8,376
            
            $
            36,716
            
            $
            21,133
            
            $
            1,392
            
            $
            6,083
            
            $
            28,608Less
                provision for loan losses
            
            
            1,223
            
            
            234
            
            
            803
            
            
            2,260
            
            
            1,356
            
            
            (204
            )
            
            68
            
            
            1,220Other
                operating income
            
            
            5,728
            
            
            822
            
            
            5,794
            
            
            12,344
            
            
            4,718
            
            
            873
            
            
            3,963
            
            
            9,554Net
                revenue
            
            
            30,758
            
            
            2,675
            
            
            13,367
            
            
            46,800
            
            
            24,495
            
            
            2,469
            
            
            9,978
            
            
            36,942Other
                operating expenses
            
            
            15,876
            
            
            489
            
            
            3,115
            
            
            19,480
            
            
            12,838
            
            
            450
            
            
            2,083
            
            
            15,371Income
                before taxes
            
            $
            14,882
            
            $
            2,186
            
            $
            10,252
            
            $
            27,320
            
            $
            11,657
            
            $
            2,019
            
            $
            7,895
            
            $
            21,571Business
                segment assets
            
            $
            1,644,008
            
            $
            50,829
            
            $
            158,977
            
            $
            1,853,814
            
            $
            1,255,181
            
            $
            45,379
            
            $
            156,465
            
            $
            1,457,025




**Note
      6.**  **Stock
      Option Plan**




During
      1997, the Bank 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 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 June 30, 2006, 722,542 shares were
      outstanding under this option plan. The outstanding stock options granted under
      the Company’s 1990 plan were transferred to this plan. Options granted before
      2005 under the stock option plan expire not more than 10 years after the date
      of
      grant, but options granted after 2005 expire not more than 5 years after the
      date of grant.




**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 June 30, 2006 are summarized as follows:




Commitments
                to extend credit
            
            $
            126,727,000Standby
                letters of credit
            
            $
            4,612,000Commercial
                letters of credit
            
            $
            16,607,000




8




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.




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 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 are 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. We adopted the standard effective January 1, 2006 using the
      modified prospective method, the impact of which is shown in Note 3 to these
      condensed consolidated financial statements.




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
      adoption of SFAS No. 154 had no material impact on the 2006 consolidated
      financial statements or results of our operations.




In
      November 2005, the FASB issued FASB Staff Position (“FSP”) No. FAS 115-1 and FAS
      124-1, *The
      meaning of Other-Than-Temporary Impairment and Its Application to Certain
      Investment* .
      This
      FSP nullified certain requirements of Emerging Issues Tasks Force 03-1, *The
      meaning of Other-Than-Temporary Impairment and its Application to Certain
      Investments* ,
      and
      references existing other than temporary guidance. Furthermore, this FSP creates
      a three-step process in determining when an investment is considered impaired,
      whether that impairment is other than temporary, and measurement of an
      impairment loss. The FSP is effective for reporting periods beginning after
      December 15, 2005. The implementation of the FSP No. FAS 115-1 and FAS 124-1
      is
      not expected to have a material impact on our consolidated financial
      statements.




In
      December 2005, the FASB issued FSP Statement of Position (“SOP”) 94-6-1, *Terms
      of Loan Products That May Give Rise to a Concentration of Credit
      Risk* ,
      which
      addresses the circumstances under which the terms of loan products give rise
      to
      such risk and the disclosures or other accounting considerations that apply
      for
      entities that originate, hold, guarantee, service, or invest in loan products
      with terms that may give rise to a concentration of credit risk. The guidance
      under this FSP is effective for interim and annual periods ending after December
      19, 2005 and for loan products that are determined to represent a concentration
      of credit risk, and the disclosure requirements of SFAS No. 107, *Disclosures
      about Fair Value of Financial Instruments* ,
      should
      be provided for all periods presented. We adopted this FSP effective January
      1,
      2006, and the adoption of this FSP did not have a significant impact on our
      consolidated financial statements.




In
      February 2006, the FASB issued SFAS No. 155, *Accounting
      for Certain Hybrid Financial Instruments* ,
      which
      amends SFAS No. 133, *Accounting
      for Derivative Instruments and Hedging Activities* ,
      and
      SFAS No. 140, *Accounting
      for Transfers and Servicing of Financial Assets and Extinguishments of
      Liabilities* .
      This
      statement also resolves issues addressed in Statement 133 Implementation Issue
      No. D1, *Application
      of Statement 133 to Beneficial Interests in Securitized Financial Assets.* SFAS
      No.
      155 eliminates the exemption from applying SFAS No. 133 to interests in
      securitized financial assets so that similar instruments are accounted for
      similarly regardless of the form of the instruments. SFAS No. 155 also allows
      a
      preparer to elect fair value measurement at acquisition, at issuance, or when
      a
      previously recognized financial instrument is subject to a remeasurement (new
      basis) event, on an instrument-by-instrument basis, in a case in which a
      derivative would otherwise have to be bifurcated. SFAS No. 155 is effective
      for
      all financial instruments acquired or issued after the beginning of an entity’s
      first fiscal year that begins after September 15, 2006. We do not expect the
      adoption SFAS No. 155 to have a material impact on the consolidated financial
      statements or results of our operations.




9


In
      March
      2006, the FASB issued SFAS No. 156, *Accounting
      for Servicing of Financial Assets,* which
      amends the guidance in SFAS No. 140. SFAS No. 156 requires that an entity
      separately recognize a servicing asset or a servicing liability when it
      undertakes an obligation to service a financial asset under a servicing contract
      in certain situations. Such servicing assets or servicing liabilities are
      required to be measured initially at fair value, if practicable. SFAS No. 156
      also allows an entity to measure its servicing assets and servicing liabilities
      subsequently using either the amortization method, which existed under SFAS
      No.
      140, or the fair value measurement method. SFAS No. 156 will be effective for
      the Company in the fiscal year beginning January 1, 2007. The Company is in
      the
      process of evaluating the impact that adoption of this statement will have
      on
      its results of operations or financial condition.




In
      June
      2006, the FASB issued interpretation No. 48, *Accounting
      for Uncertainty in income taxes (FIN 48)* which
      supplements Statement of Financial Accounting Standard No. 109 by defining
      the
      confidence level that a tax position must meet in order to be recognized in
      the
      financial statement. The interpretation requires that the tax effects of a
      position be recognized only if it is “ more-likely-than-not” to be sustained
      based solely on its technical merits as of the reporting date. The
      more-likely-than-not threshold represents a positive assertion by management
      that a company is entitled to the economic benefits of a tax position. If a
      tax
      position is not considered more-likely-than-not to be sustained based solely
      on
      its technical merits, no benefits of the position are to be recognized.
      Moreover, the more-likely-than-not threshold must continue to be met in each
      reporting period to support continued recognition of a benefit. At adoption,
      companies must adjust their financial statements to reflect only those tax
      positions that are more-likely-than-not to be sustained as of the adoption
      date.
      Any necessary adjustment would be recorded directly to retained earnings in
      the
      period of adoption and reported as a change in accounting principle. This
      interpretation is effective as of the beginning of the first fiscal year
      beginning after December 15, 2006. Management is assessing the potential impact
      on our financial condition or results of operations.




**Note** **9.**  **Business
      Combination**




On
      May
      19, 2006, the Company completed its acquisition of Liberty Bank of New York
      (“Liberty”), a commercial bank with about $65 million in assets and two branches
      in New York City, which was then immediately merged into Wilshire State Bank.
      The Company paid $8,592,407 in cash and issued an aggregate of 328,110 shares
      of
      its common stock to the former shareholders of Liberty in connection with the
      closing of the Company’s acquisition of all the outstanding capital stock of
      Liberty. The Company’s common stock was valued pursuant to the Stock Purchase
      Agreement at $18.0933 per share, the average of the daily closing prices of
      the
      Company’s common stock as reported on the Nasdaq National Market for the 20
      consecutive trading days ending on the last business day prior to the closing.
      The aggregate purchase price of this business combination was $15,220,000,
      which
      included $691,000 of capitalized direct costs associated with this business
      combination in addition to the payment to the former Liberty shareholders of
      $14,529,000. The purchase price, as well as the fair values of assets and
      liabilities recorded, may change as certain estimates are
      finalized.




Certain
      restructuring costs, mainly consulting fees paid to third parties and severance
      payments to certain Liberty employees specified in the stock purchase agreement,
      were recognized as liabilities assumed in the business combination. Accordingly,
      they have been considered part of the purchase price of Liberty and recorded
      as
      an increase in the balance of goodwill. Such payments totaled $691,000 that
      consisted of $398,000 of legal and accounting consulting fees, $253,000 for
      severance payments, and $40,000 for miscellaneous items.




As
      of May
      19, 2006, the fair value of the Liberty’s net assets acquired was as
      follows:




**Assets:**
            
            (dollars
                in thousands)Cash
                and due from banks
            
            $
            2,423Federal
                funds sold and other cash equivalents
            
            
            12,700Cash
                and cash equivalents
            
            
            15,123Securities
                available for sale
            
            
            15,110Loans
                receivable
            
            
            25,657Bank
                premises and equipment, net
            
            
            631Accrued
                interest receivable
            
            
            282Deferred
                income taxes
            
            
            538Other
                assets
            
            
            248Favorable
                lease intangible
            
            
            429Core
                deposit intangible
            
            
            1,640Goodwill
            
            
            6,767Total
                assets
            
            $
            66,425**Liabilities:**Deposits:Noninterest-bearing
            
            $
            22,217Interest-bearingSavings
            
            
            2,445Time
                deposits of $100,000 or more
            
            
            12,116Other
                time deposits
            
            
            5,191Interest
                bearing demand deposit
            
            
            8,528Total
                deposits
            
            
            50,497Accrued
                interest payable
            
            
            56Other
                liabilities
            
            
            420Unfavorable
                lease intangible
            
            
            232Total
                liabilities
            
            
            51,205Total
                consideration paid
            
            $
            15,220




10




The
      core-deposit intangibles are the sum of intangibles on different types of core
      deposits. The intangible for each type of core deposit is being amortized over
      its respective estimated useful life, which range from 94 to 126 months. The
      favorable lease intangible is being amortized for the remaining lease term
      of 41
      months. None of the goodwill balance is expected to be deductible for income
      tax
      purposes.




Immediately
      following the acquisition of Liberty, in order to eliminate duplicate overhead
      costs and to streamline its operations, we restructured Liberty’s administration
      and back-office functions. Management believes that these actions, including
      the
      termination of seven management and branch employees, have been substantially
      completed as of June 30, 2006. Since the major merger-related costs, such as
      the
      termination of the data processing contract and the impairment of Liberty’s
      assets were recognized by the acquired bank pursuant to the stock purchase
      agreement, the restructuring costs we recognized as our expenses were mostly
      indirect and general expenses, such as new supply costs and equipment upgrade
      costs. Such expenses for this reporting period are deemed to be
      insignificant.




**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 and
      financial condition as of and for the three and six-month periods ended June
      30,
      2006 and 2005, respectively, and includes the statistical disclosures required
      by the Securities and Exchange Commission Guide 3 (“Statistical Disclosure”) by
      Bank Holding Companies”). 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, 2005, including
      the
      following:




11




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




·
            Our
                current level of interest rate spread may decline in the
                future.




·
            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 lossescould
                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.




·
            The
                profitability of Wilshire Bancorp will be dependent on the profitability
                of the Bank.




·
            Wilshire
                Bancorp relies 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, 2005 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.




12




**Selected
      Financial Data**




The
      following table presents selected historical financial information (unaudited)
      as of and for the three and six months ended June 30, 2006 and 2005. 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
      operating results for the interim periods are not necessarily indicative of
      our
      future operating results.




******Three
                months ended June 30,**
            
            ******Six
                months ended June 30,****(Dollars
                in thousands, except per share data)****2006**
            
            **2005**
            
            **2006**
            
            **2005**Net
                income
            
            $
            8,415
            
            $
            6,752
            
            $
            16,238
            
            $
            12,822Net
                income per share, basic
            
            
            0.29
            
            
            0.24
            
            
            0.56
            
            
            0.45Net
                income per share, diluted
            
            
            0.29
            
            
            0.23
            
            
            0.56
            
            
            0.44Net
                interest income
            
            
            19,438
            
            
            14,968
            
            
            36,716
            
            
            28,608**Average
                balances:**Assets
            
            
            1,774,172
            
            
            1,405,638
            
            
            1,738,821
            
            
            1,352,564Cash
                and cash equivalents
            
            
            124,464
            
            
            138,280
            
            
            163,686
            
            
            129,273Investment
                debt securities
            
            
            202,125
            
            
            127,228
            
            
            186,471
            
            
            115,979Net
                loans
            
            
            1,377,679
            
            
            1,085,961
            
            
            1,322,633
            
            
            1,056,240Total
                deposits
            
            
            1,512,128
            
            
            1,192,119
            
            
            1,478,548
            
            
            1,148,995Shareholders’
                equity
            
            
            127,895
            
            
            99,306
            
            
            123,208
            
            
            95,847**Performance
                Ratios:**Annualized
                return on average assets
            
            
            1.90
            %
            
            1.92
            %
            
            1.87
            %
            
            1.90
            %Annualized
                return on average equity
            
            
            26.32
            %
            
            27.20
            %
            
            26.36
            %
            
            26.75
            %Net
                interest margin
            
            
            4.74
            %
            
            4.61
            %
            
            4.56
            %
            
            4.58
            %Efficiency
                ratio1
            
            
            40.81
            %
            
            38.45
            %
            
            39.71
            %
            
            40.28
            %**Capital
                Ratios:**Tier
                1 capital to adjusted total assets
            
            
            9.63
            %
            
            9.59
            %Tier
                1 capital to risk-weighted assets
            
            
            11.35
            %
            
            11.29
            %Total
                capital to risk-weighted assets
            
            
            13.53
            %
            
            13.33
            %




**Period-end
                balances as of:**
            
            **June
                30, 2006**
            
            **December
                31, 2005**
            
            **June
                30, 2005**Total
                assets
            
            $
            1,853,814
            
            $
            1,666,273
            
            $
            1,457,025Investment
                securities
            
            
            209,107
            
            
            161,510
            
            
            146,239Total
                loans, net of unearned income
            
            
            1,434,136
            
            
            1,262,560
            
            
            1,130,834Total
                deposits
            
            
            1,590,444
            
            
            1,409,465
            
            
            1,244,013Junior
                subordinated debentures
            
            
            61,547
            
            
            61,547
            
            
            46,083FHLB
                borrowings
            
            
            45,000
            
            
            61,000
            
            
            51,000Shareholders’
                equity
            
            
            132,781
            
            
            113,104
            
            
            100,931**Asset
                Quality Ratios:**Net
                charge-off (recoveries) to average total loans for the
                quarter
            
            
            0.01
            %
            
            0.03
            %
            
            (0.01
            %)Nonperforming
                loans to total loans
            
            
            0.32
            %
            
            0.20
            %
            
            0.32
            %Nonperforming
                assets to total loans and other real estate owned
            
            
            0.34
            %
            
            0.22
            %
            
            0.32
            %Allowance
                for loan losses to total loans
            
            
            1.14
            %
            
            1.11
            %
            
            1.10
            %Allowance
                for loan losses to nonperforming loans
            
            
            352
            %
            
            567
            %
            
            339
            %







**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.




We
      operate community banks 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.







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




13




At
      June
      30, 2006, we had approximately $1.85 billion in assets, $1.43 billion in total
      loans, and $1.59 billion in deposits.




As
      of May
      19, 2006, we completed the acquisition of Liberty Bank of New York (“Liberty”)
      and its merger into Wilshire State Bank. With this acquisition, we added $65
      million in total assets and two branches in New York City. We paid $14.5 million
      for this acquisition, which consisted of $8.6 million in cash and $5.9 million
      in our common stock (328,110 shares). We also incurred merger-related costs
      of
      $691,000 which we recognized as additional consideration in connection with
      this
      business combination.




We
      have
      also expanded and diversified our business 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 added one more branch in Rancho Cucamonga,
      California, and currently maintain 19 branch offices and seven loan production
      offices. 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.




In
      December 2002, the Bank issued $10 million of the 2002 Junior Subordinated
      Debentures. Subsequently, the Company, as a wholly-owned subsidiary in 2003
      and
      as a parent company of the Bank in 2005, issued a total of $51,547,000 of Junior
      Subordinated Debentures in connection with a $50,000,000 trust preferred
      securities issued by statutory trusts wholly-owned by the Company. We believe
      that the supplemental capital raised in connection with the issuance of these
      debentures 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. Our management believes that this strategy has created recurring
      revenue streams, diversified our product portfolio and enhanced shareholder
      value.




**Second
      Quarter 200** **6
      Key Performance Indicators**




We
      believe the following were key indicators of our performance during the second
      quarter of 2006:




·
            Our
                total assets grew to $1.85 billion at the end of the second quarter
                of
                2006, an increase of 11.26% from $1.67 billion at the end of
                2005.




·
            Our
                total deposits grew to $1.59 billion at the end of the second quarter
                of
                2006, an increase of 12.84% from $1.41 billion at the end of
                2005.




·
            Our
                total loans grew to $1.43 billion at the end of the second quarter
                of
                2006, an increase of 13.59% from $1.26 billion at the end of 2005.




·
            Our
                ratio of total non-performing loans to total loans was 0.32%, comparable
                to the ratio a year ago, but increased from 0.20% at the end of 2005.




·
            Net
                interest income before provision for loan loss for the second quarter
                of
                2006 increased by $4.4 million (29.9%) to $19.4 million, as compared
                with
                $15.0 million in the second quarter of 2005, resulting in a net interest
                margin of 4.74% in the second quarter of 2006, an increase from 4.37%
                in
                the first quarter of 2006 and 4.61% in the second quarter of
                2005.




·
            Total
                noninterest income increased to $6.6 million in the second quarter
                of
                2006, an increase of 42.52% from $4.6 million in the second quarter
                of
                2005.




·
            Total
                noninterest expense increased from $7.5 million in the second quarter
                of
                2005 to $10.6 million in the second quarter of 2006, reflecting the
                expanded personnel and premises associated with our business growth,
                especially the market expansion into New York City.




These
      items, as well as other factors, contributed to the increase in net income
      for
      the second quarter of 2006 to $8.4 million, or $0.29 per diluted common share,
      as compared with $6.8 million, or $0.23 per diluted common share, in the second
      quarter of 2005.




14




**200** **6
      Outlook**




As
      we
      look ahead to the remainder of 2006, 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. With our acquisition of Liberty
      in the second quarter of 2006, we added two branches in the New York
      metropolitan area and expanded our business into the east coast market of the
      United States.




W e
      will
      continue our focus on loan and deposit growth and net interest margin
      management, while streamlining our operations so that our expenses grow more
      slowly than the overall growth of our business. Furthermore, we expect that
      our
      portfolio of unsecured business loans and consumer loans will continue to grow
      as a result of target-marketing efforts in these specific areas.




We
      will
      remain in an asset-sensitive position, meaning that the rising interest-rate
      environment positively affects our net interest income because more earning
      assets immediately re-price than interest-bearing deposits. Although we
      experienced a reduction of margin in the first quarter of 2006 due to the stiff
      competition in our local deposit market, our models indicate that our margin
      should expand in a rising interest-rate environment. In the second quarter
      of
      2006, we believe that our strategic focus on core deposit marketing and the
      reduction of the increase of expensive time deposits, complemented by our New
      York market expansion, benefited our margin and our models expect this trend
      to
      continue for the remainder of 2006.




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. Current
      economic indicators suggest that the national economy and the economies in
      our
      primary market areas are still expanding.




For
      the
      remainder of 2006, management will focus on the implementation of Wilshire’s
      marketing strategy into the newly acquired New York branches in addition to
      the
      above challenges and opportunities and other factors affecting the business
      results of the second quarter of 2006, as discussed in “Management’s Discussion
      and Analysis of Financial Condition and Results of Operations.”




**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 2005
      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
      June 30, 2006, except purchase accounting, which is described, as
      follows:




During
      the second quarter of 2006, in accordance with Statement of Financial Accounting
      Standards (“SFAS”) No. 141, “Business Combinations” (“SFAS No. 141”), the
      purchase of Liberty Bank of New York (“Liberty”) required significant estimates
      and assumptions. We engaged outside experts, including appraisers, to assist
      in
      estimating the fair values of certain assets acquired, particularly the loan
      portfolio, core deposit intangible asset and fixed assets. The Bank used market
      data regarding securities market prices and interest rates to estimate the
      fair
      values of financial assets, including the securities portfolio, deposits and
      borrowings. We also evaluated long-lived assets for impairment and no
      significant impairment was noted. In accordance with Emerging Issues Task Force
      Issue No. 95-3, “Recognition of Liabilities in Connection With a Purchase
      Business Combination,” we recognized liabilities assumed for costs to
      involuntarily terminate employees of Liberty and we do not assume any costs
      to
      exit activities of Liberty.




15




**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 26.5% to $1.6 billion in the second quarter
      of 2006, as compared with $1.3 billion in the same quarter of 2005. **** Average
      net loans also increased by 26.9% to $1.4 billion in the second quarter of
      2006,
      as compared with $1.1 billion in the same quarter of 2005. Average
      interest-bearing liabilities increased by 29.7% to $1.3 billion in the second
      quarter of 2006, as compared with $1.0 billion in the same quarter of 2005.
      Our
      average interest-bearing deposits also increased by 31.8% to $1.2 billion in
      the
      second quarter of 2006, as compared with $911.6 million in the same quarter
      of
      2005. We also increased other borrowings over the last 12 months (see “Financial
      Condition-Deposits and Other Sources of Funds” below).




The
      strong competition for customer deposits in our local market in the latter
      part
      of 2005 caused our fund costs to increase more than the increase of our
      interest-earning-asset yields. Our cost of funds increased by 1.64% (to 4.63%
      for the second quarter of 2006 from 2.99% for the prior year’s same quarter),
      more than the 1.49% increase in the average yields on interest-earning assets
      over the same time period. However, in the second quarter of 2006, we believe
      that our strategic focus on core deposit marketing, complemented by our New
      York
      market expansion, started to control the increase of expensive time deposits
      and
      funds cost increase. The average rate on interest-bearing liabilities in the
      second quarter of 2006 increased by 0.31% from 4.32% for the first quarter
      of
      2006, less than the 0.59% increase in the average yield on interest-earning
      assets from 7.85% for the first quarter of 2006.




The
      combined results of our growth and the interest rate increases was an increase
      in our net interest income. Net interest income increased by $4.5 million,
      or
      29.9%, to $19.4 million in the second quarter of 2006 as compared with $15.0
      million for the prior year’s same quarter. Since the increase of our fund cost
      over the past twelve months was more than the increase of our yield, the net
      interest spread was reduced to 3.80% in the second quarter of 2006 from 3.95%
      for the prior year’s same quarter. Net interest margin, however, increased to
      4.74% from 4.61% between the two quarters in comparison.




For
      the
      first six months of 2006, average interest-earning assets and average net loans
      increased to $1.6 billion and $1.3 billion, respectively, as compared with
      $1.2
      billion and $1.1 billion for the prior year’s same period. For the first six
      months of 2006, average interest-bearing liabilities and average
      interest-bearing deposit portfolio also increased to $1.3 billion and $1.2
      billion, respectively, as compared with $971.1 million and $877.1 million for
      the prior year’s same period. The average yields on interest-earning assets
      increased by 1.42% to 8.15% for the first half of 2006 from 6.73% for the prior
      year’s same period, while our cost of funds increased by 1.71% to 4.48% for the
      first half of 2006 from 2.77% for the prior year’s same period. The combined
      result of our growth and the interest rate increases was an increase in our
      net
      interest income. Net interest income increased by $8.1 million, or 28.3%, to
      $36.7 million in the first half of 2006 as compared with $28.6 million for
      the
      prior year’s same period. With the increase in cost of funds higher than our
      yield over the past twelve months, the net interest spread and margin were
      reduced to 3.67% and 4.56%, respectively, in the first half of 2006 from 3.96%
      and 4.58% for the prior year’s same period.




For
      the
      twelve-month period ended June 30, 2006, the FRB raised its overnight lending
      rate eight times by an aggregate of 2.0% to 5.25%. The Wall Street Journal
      Prime
      Rate was correspondingly increased to 8.25% as of June 30, 2006. We are in
      an
      asset-sensitive position, meaning that these rate increases positively affected
      our net interest income because more interest-earning assets were immediately
      re-priced than interest-bearing liabilities. Although we experienced a margin
      compression in the first quarter of 2006, our models indicate that our margin
      should expand in a rising interest rate environment.




16




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 June 30,****2006**
              
              **2005****(Dollars
                  in Thousands)****Interest**
              
              **Annualized**
              
              
              
              **Interest**
              
              **Annualized****Average**
              
              **Income/**
              
              **Average**
              
              **Average**
              
              **Income/**
              
              **Average****Balance**
              
              **Expense**
              
              **Rate/Yield**
              
              **Balance**
              
              **Expense**
              
              **Rate/Yield****Assets**:Interest-earning
                  assets:Net
                  loans1
              
              $
              1,377,679
              
              $
              31,626
              
              
              9.18
              %
              $
              1,085,961
              
              $
              20,780
              
              
              7.65
              %Securities
                  of U.S. government agencies
              
              
              181,570
              
              
              1,985
              
              
              4.37
              %
              
              120,819
              
              
              1,084
              
              
              3.59
              %Other
                  investment securities
              
              
              20,555
              
              
              248
              
              
              4.82
              %
              
              6,410
              
              
              63
              
              
              3.96
              %Commercial
                  paper
              
              
              -
              
              
              -
              
              
              -
              
              
              7,964
              
              
              67
              
              
              3.37
              %Overnight
                  investments
              
              
              61,746
              
              
              773
              
              
              5.01
              %
              
              71,948
              
              
              508
              
              
              2.82
              %Money
                  market preferred securities
              
              
              -
              
              
              -
              
              
              -
              
              
              4,506
              
              
              37
              
              
              3.29
              %Interest-earning
                  deposits
              
              
              500
              
              
              5
              
              
              4.26
              %
              
              3
              
              
              -
              
              
              0.00
              %Total
                  interest-earning assets
              
              
              1,642,050
              
              
              34,637
              
              
              8.44
              %
              
              1,297,611
              
              
              22,539
              
              
              6.95
              %Cash
                  and due from banks
              
              
              62,718
              
              
              
              
              
              
              
              
              58,367Other
                  assets
              
              
              69,404
              
              
              
              
              
              
              
              
              49,660Total
                  assets
              
              $
              1,774,172
              
              
              
              
              
              
              
              $
              1,405,638**Liabilities
                  and Shareholders’ Equity:**Interest-bearing
                  liabilities:Money
                  market deposits
              
              $
              348,733
              
              $
              3,616
              
              
              4.15
              %
              $
              252,181
              
              $
              1,695
              
              
              2.69
              %Super
                  NOW deposits
              
              
              21,448
              
              
              64
              
              
              1.19
              %
              
              21,397
              
              
              40
              
              
              0.74
              %Savings
                  deposits
              
              
              23,755
              
              
              68
              
              
              1.14
              %
              
              23,375
              
              
              42
              
              
              0.72
              %Time
                  certificates of deposit indenominations
                  of $100,000 or more
              
              
              657,744
              
              
              8,263
              
              
              5.03
              %
              
              507,513
              
              
              3,989
              
              
              3.14
              %Other
                  time deposits
              
              
              149,922
              
              
              1,634
              
              
              4.36
              %
              
              107,162
              
              
              770
              
              
              2.88
              %Total
                  interest bearing deposits
              
              
              1,201,602
              
              
              13,645
              
              
              4.54
              %
              
              911,628
              
              
              6,536
              
              
              2.87
              %Other
                  borrowings
              
              
              110,174
              
              
              1,554
              
              
              5.64
              %
              
              100,160
              
              
              1,035
              
              
              4.13
              %Total
                  interest-bearing liabilities
              
              
              1,311,776
              
              
              15,199
              
              
              4.63
              %
              
              1,011,788
              
              
              7,571
              
              
              2.99
              %Non-interest
                  bearing deposits
              
              
              310,525
              
              
              
              
              
              3.61
              %
              
              280,490
              
              
              
              
              
              2.19
              %Total
                  Deposits
              
              
              1,622,301
              
              
              
              
              
              
              
              
              1,292,278Other
                  liabilities
              
              
              23,976
              
              
              
              
              
              
              
              
              14,054Shareholders’
                  equity
              
              
              127,895
              
              
              
              
              
              
              
              
              99,306Total
                  liabilities and shareholders’ equity
              
              $
              1,774,172
              
              
              
              
              
              
              
              $
              1,405,638Net
                  interest income
              
              
              
              
              $
              19,438
              
              
              
              
              
              
              
              $
              14,968Net
                  interest spread2
              
              
              
              
              
              
              
              
              3.80
              %
              
              
              
              
              
              
              
              3.95
              %Net
                  interest margin3
              
              
              
              
              
              
              
              
              4.74
              %
              
              
              
              
              
              
              
              4.61
              %








___________________________


1
      Net loan fees have been included in the calculation of interest income. Loan
      fees were approximately $1,723,000 and $1,240,000 for the quarters ended June
      30, 2006 and 2005, respectively, and approximately $3,101,000 and $2,185,000
      for
      the six months ended June 30, 2006 and 2005, respectively. Net loans are net
      of
      the allowance for loan losses, deferred fees, unearned income and related direct
      costs, but include 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.




17




**Distribution,
      Yield and Rate Analysis of Net Interest Income**


**For
                    the Six Months Ended June 30,****2006**
                
                **2005****(Dollars
                    in****T****housands)****Interest**
                
                **Annualized**
                
                
                
                **Interest**
                
                **Annualized****Average**
                
                **Income/**
                
                **Average**
                
                **Average**
                
                **Income/**
                
                **Average****Balance**
                
                **Expense**
                
                **Rate/Yield**
                
                **Balance**
                
                **Expense**
                
                **Rate/Yield****Assets**:Interest-earning
                    assets:Net
                    loans1
                
                $
                1,322,633
                
                $
                59,275
                
                
                8.96
                %
                $
                1,056,240
                
                $
                39,010
                
                
                7.39
                %Securities
                    of U.S. government agencies
                
                
                168,014
                
                
                3,568
                
                
                4.25
                %
                
                110,351
                
                
                1,897
                
                
                3.44
                %Other
                    investment securities
                
                
                18,457
                
                
                435
                
                
                4.72
                %
                
                5,628
                
                
                121
                
                
                4.30
                %Commercial
                    paper
                
                
                -
                
                
                -
                
                
                -
                
                
                4,004
                
                
                67
                
                
                3.35
                %Overnight
                    investments
                
                
                102,175
                
                
                2,389
                
                
                4.68
                %
                
                69,412
                
                
                915
                
                
                2.63
                %Money
                    market preferred securities
                
                
                -
                
                
                -
                
                
                -
                
                
                4,210
                
                
                57
                
                
                2.71
                %Interest-earning
                    deposits
                
                
                500
                
                
                11
                
                
                4.22
                %
                
                3
                
                
                0
                
                
                0.00
                %Total
                    interest-earning assets
                
                
                1,611,779
                
                
                65,678
                
                
                8.15
                %
                
                1,249,848
                
                
                42,067
                
                
                6.73
                %Cash
                    and due from banks
                
                
                61,511
                
                
                
                
                
                
                
                
                55,857Other
                    assets
                
                
                65,531
                
                
                
                
                
                
                
                
                46,859Total
                    assets
                
                $
                1,738,821
                
                
                
                
                
                
                
                $
                1,352,564**Liabilities
                    and Shareholders’ Equity:**Interest-bearing
                    liabilities:Money
                    market deposits
                
                $
                332,383
                
                $
                6,730
                
                
                4.05
                %
                $
                235,503
                
                $
                2,808
                
                
                2.39
                %Super
                    NOW deposits
                
                
                21,583
                
                
                124
                
                
                1.15
                %
                
                21,301
                
                
                80
                
                
                0.75
                %Savings
                    deposits
                
                
                22,715
                
                
                116
                
                
                1.02
                %
                
                23,563
                
                
                85
                
                
                0.72
                %Time
                    certificates of deposit indenominations
                    of $100,000 or more
                
                
                653,548
                
                
                15,746
                
                
                4.82
                %
                
                487,233
                
                
                7,177
                
                
                2.95
                %Other
                    time deposits
                
                
                148,705
                
                
                3,182
                
                
                4.28
                %
                
                109,518
                
                
                1,496
                
                
                2.73
                %Total
                    interest bearing deposits
                
                
                1,178,934
                
                
                25,898
                
                
                4.39
                %
                
                877,118
                
                
                11,646
                
                
                2.66
                %Other
                    borrowings
                
                
                113,586
                
                
                3,064
                
                
                5.39
                %
                
                93,954
                
                
                1,813
                
                
                3.86
                %Total
                    interest-bearing liabilities
                
                
                1,292,520
                
                
                28,962
                
                
                4.48
                %
                
                971,072
                
                
                13,459
                
                
                2.77
                %Non-interest
                    bearing deposits
                
                
                299,613
                
                
                
                
                
                3.50
                %
                
                271,877
                
                
                
                
                
                2.03
                %Total
                    Deposits
                
                
                1,592,133
                
                
                
                
                
                
                
                
                1,242,949Other
                    liabilities
                
                
                23,480
                
                
                
                
                
                
                
                
                13,768Shareholders’
                    equity
                
                
                123,208
                
                
                
                
                
                
                
                
                95,847Total
                    liabilities and shareholders’ equity
                
                $
                1,738,821
                
                
                
                
                
                
                
                $
                1,352,564Net
                    interest income
                
                
                
                
                $
                36,716
                
                
                
                
                
                
                
                $
                28,608Net
                    interest spread2
                
                
                
                
                
                
                
                
                3.67
                %
                
                
                
                
                
                
                
                3.96
                %Net
                    interest margin3
                
                
                
                
                
                
                
                
                4.56
                %
                
                
                
                
                
                
                
                4.58
                %








___________________________


1
      Net loan fees have been included in the calculation of interest income. Loan
      fees were approximately $1,723,000 and $1,240,000 for the quarters ended June
      30, 2006 and 2005, respectively, and approximately $3,101,000 and $2,185,000
      for
      the six months ended June 30, 2006 and 2005, respectively. Net loans are net
      of
      the allowance for loan losses, deferred fees, unearned income, and related
      direct costs, but include 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.




18




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 June 30,**
              **2006
                vs. 2005**
              **Increase
                (Decrease) Due to Change In**
            
            **Six
                Months Ended June 30,**
              **2006
                vs. 2005**
              **Increase
                (Decrease) Due to Change In**Volume
            
            Rate
            
            Total
            
            Volume
            
            Rate
            
            Total**Interest
                income:**
              Net
                loans1
            
            $
            6,221
            
            
            4,624
            
            $
            10,845
            
            $
            10,976
            
            $
            9,289
            
            $
            20,265Securities
                of U.S. government agencies
            
            
            628
            
            
            274
            
            
            902
            
            
            1,152
            
            
            519
            
            
            1,671Other
                investment securities
            
            
            168
            
            
            17
            
            
            185
            
            
            302
            
            
            12
            
            
            314Commercial
                paper
            
            
            (33
            )
            
            (34
            )
            
            (67
            )
            
            (33
            )
            
            (34
            )
            
            (67
            )Overnight
                Investments
            
            
            (81
            )
            
            346
            
            
            265
            
            
            559
            
            
            915
            
            
            1,474Money
                market preferred securities
            
            
            (18
            )
            
            (19
            )
            
            (37
            )
            
            (28
            )
            
            (29
            )
            
            (57
            )Interest-earning
                deposits
            
            
            5
            
            
            -
            
            
            5
            
            
            11
            
            
            -
            
            
            11Total
                interest income
            
            
            6,890
            
            
            5,208
            
            
            12,098
            
            
            12,939
            
            
            10,672
            
            
            23,611**Interest
                expense:**Money
                market deposits
            
            $
            795
            
            $
            1,126
            
            $
            1,921
            
            $
            1,455
            
            $
            2,467
            
            $
            3,922Super
                NOW deposits
            
            
            -
            
            
            24
            
            
            24
            
            
            1
            
            
            43
            
            
            44Savings
                deposits
            
            
            1
            
            
            25
            
            
            26
            
            
            (3
            )
            
            34
            
            
            31Time
                certificates of deposit indenominations
                of $100,000 or more
            
            
            1,414
            
            
            2,860
            
            
            4,274
            
            
            2,994
            
            
            5,575
            
            
            8,569Other
                time deposits
            
            
            377
            
            
            487
            
            
            864
            
            
            653
            
            
            1,033
            
            
            1,686Other
                borrowings
            
            
            111
            
            
            408
            
            
            519
            
            
            431
            
            
            820
            
            
            1,251Total
                interest expense
            
            
            2,698
            
            
            4,930
            
            
            7,628
            
            
            5,531
            
            
            9,972
            
            
            15,503Change
                in net interest income
            
            $
            4,192
            
            $
            278
            
            $
            4,470
            
            $
            7,408
            
            $
            700
            
            $
            8,108







**P** **rovision
      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 made only for
      our
      outstanding loan portfolio, but also for off-balance sheet items, such as
      commitments to extend credits or letters of credit. The charges made for our
      outstanding loan portfolio were credited to allowance for loan losses, whereas
      charges for off-balance sheet items were credited to reserve for off-balance
      sheet items, which are presented as a component of other liabilities.




Although
      our proactive approaches in asset quality control, identifying problem loans
      in
      a timely manner and taking immediate actions on them has helped us to maintain
      non-performing assets and net charge-offs at a relatively low level, our
      provision for loan losses generally increases as our loan portfolio grows.




The
      provision for loan losses increased to $1.2 million in the second quarter of
      2006 from $720,000 for the prior year’s same quarter to keep pace with the
      continued growth in our loan portfolio and increase of non-performing loans
      (see
“Nonperforming Assets” below for further discussion). The provision for loan
      losses in the first half of 2006 was $2.3 million, as compared to $1.2 million
      in the first half 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
      Net loan
      fees have been included in the calculation of interest income. Loan fees were
      approximately $1,723,000 and $1,240,000 for the quarters ended June 30, 2006
      and
      2005, respectively, and approximately $3,101,000 and $2,185,000 for the six
      months ended June 30, 2006 and 2005, respectively. Net loans are net of the
      allowance for loan losses, unearned income and related direct
      costs.






19




**Noninterest
      Income**




Total
      noninterest income increased by 42.5% to $6.6 million in the second quarter
      of
      2006 as compared with $4.6 million for the prior year’s same quarter, due mainly
      to the overall increase of various income sources. Noninterest income as a
      percentage of average assets also increased to 0.37% for the second quarter
      of
      2006 from 0.33% for the prior year’s same period. For the first six months of
      2006, total noninterest income increased by 29.2% to $12.3 million as compared
      with $9.6 million in the same period of 2005 and such six-month income
      represents 0.71% of average assets. We currently earn non-interest income from
      various sources, including an income stream provided by bank-owned life
      insurance, or 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 June 30,**
            
            ******2006**
            
            ******2005****(Amount)**
            
            **(%)**
            
            **(Amount)**
            
            **(%)**Service
                charges on deposit accounts
            
            $
            2,441
            
            
            37.1
            %
            $
            1,815
            
            
            39.3
            %Gain
                on sale of loans
            
            
            3,055
            
            
            46.5
            %
            
            1,489
            
            
            32.2
            %Loan-related
                servicing income
            
            
            364
            
            
            5.5
            %
            
            473
            
            
            10.2
            %Loan
                referral fee income
            
            
            -
            
            
            -
            
            
            17
            
            
            0.4
            %SBA
                Loan packaging fee
            
            
            120
            
            
            1.8
            %
            
            132
            
            
            2.9
            %Income
                from other earning assets
            
            
            257
            
            
            3.9
            %
            
            285
            
            
            6.2
            %Other
                income
            
            
            343
            
            
            5.2
            %
            
            406
            
            
            8.8
            %Total
            
            $
            6,580
            
            
            100.0
            %
            $
            4,617
            
            
            100.0
            %Average
                assets
            
            $
            1,774,172
            
            
            
            
            $
            1,405,638Noninterest
                income as a % of average assets
            
            
            
            
            
            0.37
            %
            
            
            
            
            0.33
            %




**For
                Six Months Ended June 30,**
            
            ******2006**
            
            ******2005****(Amount)**
            
            **(%)**
            
            **(Amount)**
            
            **(%)**Service
                charges on deposit accounts
            
            $
            4,596
            
            
            37.2
            %
            $
            3,534
            
            
            37.0
            %Gain
                on sale of loans
            
            
            5,405
            
            
            43.8
            %
            
            3,512
            
            
            36.8
            %Loan-related
                servicing income
            
            
            893
            
            
            7.2
            %
            
            1,131
            
            
            11.8
            %Loan
                referral fee income
            
            
            48
            
            
            0.4
            %
            
            118
            
            
            1.2
            %SBA
                Loan packaging fee
            
            
            234
            
            
            1.9
            %
            
            198
            
            
            2.1
            %Income
                from other earning assets
            
            
            496
            
            
            4.0
            %
            
            412
            
            
            4.3
            %Other
                income
            
            
            672
            
            
            5.5
            %
            
            648
            
            
            6.8
            %Total
            
            $
            12,344
            
            
            100.0
            %
            $
            9,553
            
            
            100.0
            %Average
                assets
            
            $
            1,738,821
            
            
            
            
            $
            1,352,564Noninterest
                income as a % of average assets
            
            
            
            
            
            0.71
            %
            
            
            
            
            0.71
            %




Our
      largest source of noninterest income for the second quarter of 2006 was the
      gain
      on the sale of loans, representing over 40% of our total noninterest income,
      which increased to $3.1 million and $5.4 million in the second quarter and
      the
      first half of 2006 from $1.5 million and $3.5 million, respectively, for the
      prior year’s same periods. This non-interest income is derived primarily from
      the sale of the guaranteed portion of SBA loans. We sell the guaranteed portion
      of SBA loans in government securities secondary markets and retain servicing
      rights. For the first six-month period, SBA loan production levels were $93.7
      million in 2006, up from $55.9 million in 2005. The gain on sale of the
      guaranteed portions of SBA loans accordingly increased to $3.0 million and
      $5.3
      million in the second quarter and the first half of 2006 as compared with $1.4
      million and $3.3 million, respectively, for the prior year’s same periods. We
      also recognize gain on sale of loans from the sale of residential mortgage
      loans. 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, but gain on such sales decreased to $90,916 and $144,292,
      respectively, for the second quarter and the first half of 2006 as compared
      with
      $112,000 and $215,000, respectively, for the prior year’s same periods due to
      the slow-down of the residential mortgage market. Mainly for credit risk
      management purpose, we sometimes sell the unguaranteed portion of SBA loans,
      but
      the resulting gains are not considered a stable source of noninterest income.
      We
      had no such sales in the first half of 2006 and 2005.




Our
      second largest noninterest income source was service charge income on deposit
      accounts, generally representing over 35% of our total noninterest income.
      This
      income source increased by $626,000 in the second quarter of 2006 and by $1.1
      million in the first half of 2006 as compared with $1.8 million and $3.5
      million, respectively, for the prior year’s same periods. Such increases were
      mainly caused by an increase in the number of transactional accounts over the
      past 12 months. We constantly review service charge rates and the manager’s
      authority to waive them to maximize service charge income while maintaining
      a
      competitive position.






20




The
      third
      largest source of noninterest income 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 has generally increased, but it
      decreased to $364,000 and $893,000, respectively, in the second quarter and
      the
      first half of 2006 as compared with $473,000 and $1.1 million for the prior
      year’s same periods. Such decrease was mainly caused by the significant
      reversals of servicing rights on sold SBA loans which were paid off before
      their
      maturities. The servicing fee income on sold loans is credited when we collect
      the monthly payments on the sold loans we are servicing, and charged by the
      monthly amortization of servicing rights that we capitalize upon sale of the
      related loans. Such servicing rights are also reversed and charged against
      the
      fee income account when the sold loans are paid off before the related servicing
      rights are fully amortized. For the first half of 2006, $758,000 of servicing
      assets were charged back to this income account by the early pay-offs as
      compared to $454,000 for the prior year’s same period. Considering our continued
      expansion of SBA activities (the servicing portfolio increased to $308.9 million
      at June 30, 2006 from $251.4 million a year ago), management believes that
      this
      income should continue to increase as prepayments on SBA loans slow down.
      However, there can be no assurance that this will be the case.




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. There was no referral fee income in the second quarter of 2006. In
      the
      first half of 2006, the referral fee income was $48,000 as compared with $17,000
      and $118,000, respectively, for the second quarter and the first half of 2005.
      We cannot assure you that this source of revenue will increase because loan
      referrals do not represent our core banking business and fee income therefrom
      is
      not a stable source of revenue.




SBA
      Loan
      packaging fee income represents charges to borrowers for SBA loan processing.
      Due mainly to heightened competition, which often results in packaging fee
      waivers, the income slightly decreased to $120,000 in the second quarter of
      2006
      from $132,000 for the prior year’s same quarter, but increased to $234,000 for
      the first six month period of 2006 from $198,000 in 2005.




Income
      from other earning assets represented 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 BOLI. For
      the six month-period of 2006, it increased to $496,000 as compared with $412,000
      for the prior year’s same period. This increase was primarily attributable to an
      additional purchase of $3 million in BOLI in the second quarter of 2005 and
      the
      increased acquisition of FHLB stock as required by the new Capital Plan of
      the
      Federal Home Loan Bank of San Francisco that went into effect on April 1, 2004.
      We received both the first and second quarter dividends on FHLB stock in the
      second quarter of 2005. Therefore, income from other earning assets in the
      second quarter of 2005 was $285,000, an increase from the $257,000 in the same
      quarter of 2006.




Other
      income represents income from miscellaneous sources, such as check book sales
      income and recoveries of operation loss, and generally increases as our business
      activities grow. For the first six month-period of 2006, it increased to
      $672,000 as compared with $648,000 for the prior year’s same period. However,
      other income slightly decreased to $343,000 in the second quarter of 2006 from
      $406,000 for the prior year’s same quarter which included the additional income
      from the collection of $65,000 in 2005 for an operation loss we expensed in
      2004.




**Noninterest
      Expense**




Total
      noninterest expense increased to $10.6 million and $19.5 million in the second
      quarter and the first half of 2006, respectively, as compared with $7.5 million
      and $15.4 million in the prior year’s same periods, representing an increase of
      41.0% and 26.7%, respectively. However, due to continuing efforts to minimize
      operating expenses, noninterest expenses as a percentage of average assets
      decreased to 1.12% in the first half of 2006 from 1.14% in the same period
      of
      2005, but increased to 0.60% in the second quarter of 2006 from 0.54% for the
      same quarter of 2005. These increases can be attributed to the expanded
      personnel and premises associated with our business growth and marketing
      activities in newly expanded markets and the increase was especially significant
      in the second quarter of 2006 because of expenses we incurred for the New York
      market expansion. We believe that our efforts in cost-cutting and revenue
      diversification have improved our operational efficiency. We managed to maintain
      our efficiency ratio (the ratio of noninterest expense to the sum of net
      interest income before provision for loan losses and total noninterest income)
      at a relatively low level. Our efficiency ratio was stable at 40.8% and 39.7%
      in
      the second quarter and the first half of 2006 as compared with 38.5% and 40.3%,
      respectively, in the prior year’s same periods.




21




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




**Noninterest
      Expense**


**(Dollars
      in thousands)**




**For
                the Quarter Ended June 30,**
            
            **2006**
            
            **2005****(Amount)**
            
            **(%)**
            
            **(Amount)**
            
            **(%)**Salaries
                and employee benefits
            
            $
            5,965
            
            
            56.2
            %
            $
            4,317
            
            
            57.3
            %Occupancy
                and equipment
            
            
            1,072
            
            
            10.1
            %
            
            770
            
            
            10.2
            %Data
                processing
            
            
            650
            
            
            6.1
            %
            
            543
            
            
            7.2
            %Loan
                referral fee
            
            
            601
            
            
            5.7
            %
            
            307
            
            
            4.1
            %Professional
                fees
            
            
            250
            
            
            2.4
            %
            
            109
            
            
            1.4
            %Directors’
                fees
            
            
            125
            
            
            1.2
            %
            
            114
            
            
            1.5
            %Office
                supplies
            
            
            200
            
            
            1.9
            %
            
            134
            
            
            1.8
            %Other
                real estate owned
            
            
            12
            
            
            0.1
            %Advertising
            
            
            376
            
            
            3.5
            %
            
            143
            
            
            1.9
            %Communications
            
            
            128
            
            
            1.2
            %
            
            114
            
            
            1.5
            %Deposit
                insurance premium
            
            
            47
            
            
            0.4
            %
            
            38
            
            
            0.5
            %Outsourced
                service for customer
            
            
            290
            
            
            2.7
            %
            
            335
            
            
            4.5
            %Amortization
                of intangible
            
            
            35
            
            
            0.3
            %
            
            -
            
            
            -Investor
                relation expenses
            
            
            65
            
            
            0.6
            %
            
            74
            
            
            1.0
            %Other
                operating
            
            
            801
            
            
            7.6
            %
            
            533
            
            
            7.1
            %Total
            
            $
            10,617
            
            
            100.0
            %
            $
            7,531
            
            
            100.0
            %Average
                assets
            
            $
            1,774,172
            
            
            
            
            $
            1,405,638Noninterest
                expenses as a % of average assets
            
            
            
            
            
            0.60
            %
            
            
            
            
            0.54
            %




**For
                the Six Months Ended June 30,**
            
            **2006**
            
            **2005****(Amount)**
            
            **(%)**
            
            **(Amount)**
            
            **(%)**Salaries
                and employee benefits
            
            $
            11,221
            
            
            57.6
            %
            $
            8,693
            
            
            56.6
            %Occupancy
                and equipment
            
            
            1,968
            
            
            10.1
            %
            
            1,603
            
            
            10.4
            %Data
                processing
            
            
            1,155
            
            
            5.9
            %
            
            958
            
            
            6.2
            %Loan
                referral fee
            
            
            943
            
            
            4.8
            %
            
            569
            
            
            3.7
            %Professional
                fees
            
            
            492
            
            
            2.5
            %
            
            555
            
            
            3.6
            %Directors’
                fees
            
            
            246
            
            
            1.3
            %
            
            237
            
            
            1.6
            %Office
                supplies
            
            
            311
            
            
            1.6
            %
            
            243
            
            
            1.6
            %Other
                real estate owned
            
            
            12
            
            
            0.1
            %Advertising
                and promotional expenses
            
            
            558
            
            
            2.9
            %
            
            388
            
            
            2.5
            %Communications
            
            
            233
            
            
            1.2
            %
            
            207
            
            
            1.3
            %Deposit
                insurance premium
            
            
            90
            
            
            0.5
            %
            
            75
            
            
            0.5
            %Outsourced
                service for customer
            
            
            631
            
            
            3.2
            %
            
            657
            
            
            4.3
            %Amortization
                of intangible
            
            
            35
            
            
            0.1
            %
            
            -
            
            
            -Investor
                relation expenses
            
            
            110
            
            
            0.6
            %
            
            229
            
            
            1.5
            %Other
                operating
            
            
            1,476
            
            
            7.6
            %
            
            956
            
            
            6.2
            %Total
            
            $
            19,481
            
            
            100.0
            %
            $
            15,370
            
            
            100.0
            %Average
                assets
            
            $
            1,738,862
            
            
            
            
            $
            1,352,564Noninterest
                expenses as a % of average assets
            
            
            
            
            
            1.12
            %
            
            
            
            
            1.14
            %




Salaries
      and employee benefits usually represents more than half of our total noninterest
      expense. For the second quarter and first half of 2006, salaries and employee
      benefits totaled $6.0 million and $11.2 million, respectively, as compared
      with
      $4.3 million and $8.7 million for the prior year’s same periods, representing an
      increase of 38.2% and 29.1%, respectively, from the comparable periods. Such
      increases were the result of our new office openings, including the New York
      branches, and significant asset growth in the past 12 months that increased
      the
      number of full-time equivalent employees to 331 as of June 30, 2006 from 270
      as
      of June 30, 2005. However, our efforts to promote efficient operations increased
      assets per employee to $5.6 million at June 30, 2006 from $5.4 million at June
      30, 2005.




Occupancy
      and equipment expenses totaled $1.1 million and $2.0 million, respectively,
      for
      the second quarter and first half of 2005, as compared with $770,000 and $1.6
      million for the prior year’s same periods, representing an increase of 39.3% and
      22.8%, respectively, from the comparable periods. These increases were
      attributable primarily to our market expansion and the growth of our business.
      Occupancy and equipment expenses represented approximately 10% of total
      non-interest expenses.




Data
      processing expenses were $650,000 and $1.2 million, respectively, for the second
      quarter and the first half of 2006, as compared with $543,000 and $958,000
      for
      the prior year’s same periods, representing an increase of 19.6% and 20.5%,
      respectively, between the comparable periods. The increase corresponds to the
      general growth of our business.




22




Loan
      referral fees are paid to brokers who refer loans, mostly SBA loans, to us.
      Although we also paid referral fees for qualified commercial loans beginning
      in
      2004, the referral fee increases were mainly the result of increases in our
      SBA
      loan production, since most SBA loans are referred by brokers. Due to the growth
      of SBA loan production, these referral fees increased to $601,000 and $943,000
      in the second quarter and first half of 2006, respectively, from $307,000 and
      $569,000 in the prior year’s same periods.




We
      recorded $250,000 professional fees in the second quarter of 2006, as compared
      with $109,000 for the same quarter in 2005. This increase was attributable
      to
      the fact that we recognized most legal fees incurred in 2006 in connection
      with
      the annual report and the shareholders meeting preparation in the second quarter
      of 2006, while we recognized such fees incurred in 2005 in the first quarter
      of
      2005. For the first half of 2006, professional fees were $492,000 which was
      comparable to $555,000 in the prior year’s same period. We expect that
      expenditures in this area will continue to be significant, as we address the
      enhanced SEC regulations and Nasdaq corporate governance requirements as well
      as
      the regulations in various states where our business is expanding.




Advertising
      and promotional expenses  significantly
      increased to $376,000 and $558,000 in the second quarter and the first half
      of
      2006, respectively, as compared with $143,000 and $388,000 for the prior year’s
      same periods. These increases can be attributed to expanded marketing
      activities, such as media advertisements and promotional gifts for customers
      of
      newly opened offices, especially for the newly acquired New York branches 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, and are recouped from the earnings
      credits earned by the respective depositors on their balances maintained with
      us. Due to the reduction of such services, these expenses slightly decreased
      to
      $290,000 and $631,000 in the second quarter and the first half of 2006,
      respectively, as compared with $335,000 and $657,000 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. These
      expenses were $65,000 in the second quarter of 2006, comparable to $74,000
      in
      the same quarter of 2005. For the first half of 2006, such expenses decreased
      to
      $110,000 from $229,000 in the same period of 2005, due mainly to the additional
      Nasdaq listing fees for additional shares issued in connection with the December
      2004 stock split expensed in early 2005.




Noninterest
      expenses other than the categories specifically addressed above, such as office
      supplies and communication expenses, increased to $1.3 million and $2.4 million
      in the second quarter and the first half of 2006, respectively, as compared
      with
      $933,000 and $1.7 million for the prior year’s same periods, representing an
      increase of 44.5% and 39.8%, respectively, between the comparable periods.
      Such
      increases, higher than the general growth of our business, were mainly caused
      by
      the impairment charges we recognized at the time of the periodic valuation
      of
      intangibles (servicing assets and interest only strips we capitalized in
      connection with SBA loan sales). Such charges were $66,000 and $256,000 in
      the
      first and second quarter of 2006, respectively as compared with none in the
      same
      quarters in 2005.




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 operational efficiency, and we expect to keep these increases to a minimum
      relative to growth.




**Provision
      for Income Taxes**




For
      the
      quarter ended June 30, 2006, we made a provision for income taxes of $5.8
      million on pretax net income of $14.2 million, representing an effective tax
      rate of 40.7%, as compared with a provision for income taxes of $4.6 million
      on
      pretax net income of $11.3 million, representing an effective tax rate of 40.4%,
      for the same quarter of 2005. For the first half of 2006, we made a provision
      for income taxes of $11.1 million on pretax net income of $27.3 million,
      representing an effective tax rate of 40.6%, as compared with a provision for
      income taxes of $8.7 million on pretax net income of $21.6 million, representing
      an effective tax rate of 40.6%, for the same period of 2005.




The
      effective tax rates in the second quarter and the first half of 2006 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 accounts for the change 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 June 30, 2006 and
      December 31, 2005, we had net deferred tax assets of $9.3 million and $8.1
      million, respectively.




23




We
      believe that we have adequately provided or paid for income tax issues not
      yet
      resolved with federal, state and foreign tax authorities. Based upon
      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
      materially adverse effect upon our results of operations or financial
      condition.









**Financial
      Condition**




**Loan
      Portfolio**




Total
      loans, net of unearned income, increased by $171.7 million, or 13.6%, to $1.43
      billion at June 30, 2006, as compared with $1.26 billion at December 31, 2005.
      Total loans, net of unearned income, as a percentage of total assets as of
      June
      30, 2006 and December 31, 2005 were 77.4% and 75.8%, 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. 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 $1.12
      billion and $1.01 billion as of June 30, 2006 and December 31, 2005,
      respectively. The real estate secured loans as a percentage of total loans
      were
      78.2% and 80.1% at June 30, 2006 and December 31, 2005, respectively. Since
      2003, we have been actively involved in residential mortgage lending. We offer
      traditional and non-traditional mortgage products such as option ARM (Adjustable
      Rate Mortgage) and interest only programs. However, we predominantly sell our
      non-traditional loans to secondary markets and retain a fraction of conventional
      mortgages on our books. Our mortgage loan portfolio outstanding was $43.3
      million at December 31, 2005 and $44.9 million at June 30, 2006. We have deemed
      its effect on our credit risk profile to be immaterial. Non-traditional mortgage
      loans retained at the same periods were $8.0 million and $8.7 million
      respectively, including some pending transfers to secondary markets. The robust
      California real estate market in the past few years and our increased
      involvement in the residential mortgage loan market have further increased
      the
      composition of real estate secured loans.




Commercial
      and industrial loans include revolving lines of credit, as well as term business
      loans. Commercial and industrial loans at June 30, 2006 increased to $229.1
      million, as compared with $190.8 million at December 31, 2005. Commercial and
      industrial loans as a percentage of total loans also increased to 16.0% at
      June
      30, 2006, from 15.1% at December 31, 2005.




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 a business plan to increase our consumer loan portfolio, and
      introduced an Auto Loan Center. Consumer loans continue to increase since we
      initiated the program. The outstanding portfolio was $42.9 million at December
      31, 2005 and $52.1 million at June 30, 2006. **** Management
      anticipates 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 by appointing a construction loan
      specialist as its manager under the guidance of the Commercial Loan Center.
      We
      expect to expand our construction lending activities with this specialized
      capacity.




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.




24




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 1990s, 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)****June
                30, 2006**
            
            **December
                31, 2005**Construction
            
            $
            32,064
            
            $
            17,366Real
                estate secured
            
            
            1,120,882
            
            
            1,011,513Commercial
                and industrial
            
            
            229,108
            
            
            190,796Consumer
            
            
            52,082
            
            
            42,885Total
                loans, excluding unearned income
            
            $
            1,434,136
            
            $
            1,262,560Participation
                loans sold and serviced by the Company
            
            $
            308,947
            
            $
            273,876Construction
            
            
            2.2
            %
            
            1.4
            %Real
                estate secured
            
            
            78.2
            %
            
            80.1
            %Commercial
                and industrial
            
            
            16.0
            %
            
            15.1
            %Consumer
            
            
            3.6
            %
            
            3.4
            %Total
                loans, excluding 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 June 30, 2006. 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
      $5.6
      million, and includes unearned income and deferred fees totaling $11.5 million
      at June 30, 2006:




**Loan
      Maturities and Repricing Schedule**


**At
                June 30, 2006,****Within**
              **One
                Year**
            
            **After
                One**
              **But
                Within**
              **Five
                Years**
            
            **After**
              **Five
                Years**
            
            **Total****(Dollars
                in Thousands)**Construction
            
            $
            28,640
            
            $
            0
            
            $
            0
            
            $
            28,640Real
                estate secured
            
            
            901,980
            
            
            173,707
            
            
            47,696
            
            
            1,123,383Commercial
                and industrial
            
            
            232,150
            
            
            4,125
            
            
            78
            
            
            236,353Consumer
            
            
            21,716
            
            
            29,580
            
            
            334
            
            
            51,630Total
                loans, net of unearned income
            
            $
            1,184,486
            
            $
            207,412
            
            $
            48,108
            
            $
            1,440,006Loans
                with variable (floating) interest rates
            
            $
            1,142,456
            
            $
            37,327
            
            $
            600
            
            $
            1,180,383Loans
                with predetermined (fixed) interest rates
            
            $
            42,030
            
            $
            170,085
            
            $
            47,508
            
            $
            259,623




**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.




25




Despite
      the significant growth of our loan portfolio, our continued emphasis on asset
      quality control enabled us to maintain a relatively low level of nonperforming
      loans. Our nonperforming loans at June 30, 2006 were $4.65 million or 0.32%
      of
      total loans, comparable to the level at June 30, 2005, which was $3.67 million,
      or 0.32% of total loans, but higher than the level at December 31, 2005, which
      was $2.47 million, or 0.20% of total loans. Although nonperforming loans have
      increased in 2006, they remain manageable and we do not anticipate any
      significant losses because a majority of the increase was caused by two
      borrowers who recently experienced business deterioration and such nonperforming
      loans were adequately protected with the underlying collaterals and reserves
      we
      provided as of June 30, 2006. We did not own any OREO at the end of the second
      quarter of 2005. We possessed three OREO’s, totaling $294,000 at the end of 2005
      and we subsequently sold one of them at a small profit. As a result, we
      currently possess a residential property and a commercial property as OREO
      and
      their combined book value was $242,000 as of June 30, 2006. We believe that
      our
      reserve for nonperforming loans, together with tangible collateral, was adequate
      as of June 30, 2006. See “Allowance for Loan Losses” below for further
      discussion. Except as disclosed above, as of June 30, 2006, 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)**




**June
                30, 2006**
            
            **December
                31, 2005**
            
            **June
                30, 2005****Nonaccrual
                loans:****1**Real
                estate secured
            
            $
            1,143
            
            $
            1,171
            
            $
            2,655Commercial
                and industrial
            
            
            1,717
            
            
            341
            
            
            610Consumer
            
            
            892
            
            
            292
            
            
            3Total
            
            
            3,752
            
            
            1,804
            
            
            3,268**Loans
                90 days or more past due (as to principal****or****interest) and still****accruing:**Construction
            
            
            -
            
            
            -
            
            
            -Real
                estate secured
            
            
            240
            
            
            554
            
            
            205Commercial
                and industrial
            
            
            614
            
            
            111
            
            
            150Consumer
            
            
            47
            
            
            -
            
            
            47Total
            
            
            901
            
            
            665
            
            
            402**Restructured
                loans:****2**Real
                estate secured
            
            
            -
            
            
            -
            
            
            -Commercial
                and industrial
            
            
            -
            
            
            -
            
            
            -Consumer
            
            
            -
            
            
            -
            
            
            -Total
            
            
            -
            
            
            -
            
            
            -Total
                nonperforming loans
            
            
            4,653
            
            
            2,469
            
            
            3,670Other
                real estate owned
            
            
            242
            
            
            294
            
            
            -Total
                nonperforming assets
            
            $
            4,895
            
            $
            2,763
            
            $
            3,670Nonperforming
                loans as a % of total loans nonperforming assets as a % of total
                loans and
                OREO
            
            
            0.32
            %
            
            0.20
            %
            
            0.32
            %0.34
            %
            
            0.22
            %
            
            0.32
            %Allowance
                for loan losses as a % of nonperforming loans
            
            
            351.53
            %
            
            567.15
            %
            
            339.28
            %







(1)
                During the three months ended June 30, 2006, no interest income related
                to
                these loans was included in net income. Additional interest income
                of
                approximately $306,000 would have been recorded during the three
                months
                ended June 30, 2006, if these loans had been paid in accordance with
                their
                original terms and had been outstanding throughout the three months
                ended
                June 30, 2006 or, if not outstanding throughout the three months
                ended
                June 30, 2006, since origination.
              (2)
                A “restructured loan” is one the terms of which were renegotiated to
                provide a reduction or deferral of interest or principal because
                of
                deterioration in the financial position of the borrower.




26




**Allowance
      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
      the
      outstanding loan portfolio, but also for off-balance sheet items, such as
      commitments to extend credit or letters of credit. 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.
      The rapid growth of our loan portfolio has required more reserves for possible
      loan losses. The provision for loan losses is discussed in the section entitled
      “Results of Operations - Provision for Loan Losses”, above.




The
      allowance for loan losses increased by 16.9%, or $2.4 million, to $16.4 million
      at June 30, 2006, as compared with $14.0 million at December 31, 2005, which
      previously increased from $12.5 million at June 30, 2005. Although we believe
      the allowance at June 30, 2006 is 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. Our
      continued emphasis on asset quality control has maintained a lower level of
      net
      charge-offs. While we recorded net recoveries of $93,000 and $149,000,
      respectively in the second quarter and the first half of 2005, there were net
      charge-offs of $107,000 and $186,000, respectively, in the same periods of
      2006.




As
      of
      June 30, 2006 and December 31, 2005, 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:****June
                30, 2006**
            
            **December
                31, 2005**Specific
                review of individual loans
            
            $
            466,279
            
            $
            392,380Review
                of pools of loans with similar characteristics
            
            
            12,951,850
            
            
            11,345,551Judgmental
                estimate based on various subjective factors
            
            
            2,940,325
            
            
            2,261,371Total
                allowance for loan losses
            
            $
            16,358,454
            
            $
            13,999,302




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**
            
            **June
                30, 2006**
            
            **December
                31, 2005**Applicable
                to:
            
            **Reserve**
              **Amount**
            
            **Total**
              **Loans**
            
            **(%)**
            
            **Reserve**
              **Amount**
            
            **Total**
              **Loans**
            
            **(%)**Construction
                loans
            
            $
            215
            
            $
            28,640
            
            
            0.75
            %
            $
            152
            
            $
            15,322
            
            
            1.00
            %Real
                estate secured
            
            $
            8,703
            
            $
            1,125,734
            
            
            0.77
            %
            $
            9,751
            
            $
            1,015,055
            
            
            0.96
            %Commercial
                and industrial
            
            $
            6,276
            
            $
            239,192
            
            
            2.62
            %
            $
            3,742
            
            $
            199,581
            
            
            1.87
            %Consumer
            
            $
            1,164
            
            $
            52,082
            
            
            2.23
            %
            $
            354
            
            $
            42,885
            
            
            0.83
            %Total
                Allowance
            
            $
            16,358
            
            $
            1,445,648
            
            
            1.13
            %
            $
            13,999
            
            $
            1,272,843
            
            
            1.10
            %




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:




27




**Allowance
      for Loan Losses**




**(Dollars
      in Thousands)**





**As
                of and for the period of**
            
            **Three
                months ended June 30,**
            
            **Six
                months ended June 30,****2006**
            
            **2005**
            
            **2006**
            
            **2005****Balances:**Average
                total loans outstanding during period
            
            $
            1,393,340
            
            $
            1,098,018
            
            $
            1,337,631
            
            $
            1,067,987Total
                loans (net of unearned income)
            
            $
            1,434,136
            
            $
            1,130,834
            
            $
            1,434,136
            
            $
            1,130,834**Allowance
                for loan losses:****Balances
                at beginning of period**
            
            $
            14,870
            
            $
            11,669
            
            $
            13,999
            
            $
            11,111**Actual
                charge-offs:**Real
                estate secured
            
            
            7
            
            
            -
            
            
            7
            
            
            24Commercial
                and industrial
            
            
            237
            
            
            101
            
            
            347
            
            
            149Consumer
            
            
            48
            
            
            52
            
            
            118
            
            
            52Total
                charge-offs
            
            
            292
            
            
            153
            
            
            473
            
            
            225**Recoveries
                on loans previously charged off:**Real
                estate secured
            
            
            145
            
            
            22
            
            
            145
            
            
            23Commercial
                and industrial
            
            
            40
            
            
            199
            
            
            138
            
            
            325Consumer
            
            
            1
            
            
            25
            
            
            5
            
            
            26Total
                recoveries
            
            
            186
            
            
            246
            
            
            288
            
            
            374Net
                charge-offs (net recoveries)
            
            
            107
            
            
            (93
            )
            
            186
            
            
            (149
            )**Allowance
                for loan losses acquired in acquisition**
            
            
            601
            
            
            -
            
            
            601
            
            
            -**Provision
                for loan losses**
            
            
            1,200
            
            
            720
            
            
            2,260
            
            
            1,220**Less:
                provision for off-balance sheet credit losses**
            
            
            205
            
            
            32
            
            
            316
            
            
            30**Balances
                at end of period**
            
            $
            16,358
            
            $
            12,450
            
            $
            16,358
            
            $
            12,450**Ratios:**Net
                charge-offs (net recoveries) to average total loans
            
            
            0.01
            %
            
            (0.01
            %)
            
            0.01
            %
            
            (0.01
            %)Allowance
                for loan losses to total loans at period-end
            
            
            1.14
            %
            
            1.10
            %
            
            1.14
            %
            
            1.10
            %Net
                charge-offs (net recoveries) to allowance for loan losses
            
            
            0.65
            %
            
            (0.75
            %)
            
            1.13
            %
            
            (1.20
            %)Net
                charge-offs (net recoveries) to provision for loan losses
            
            
            8.90
            %
            
            (12.92
            %)
            
            8.21
            %
            
            (12.21
            %)




**Contractual
      Obligations**




The
      following table represents our aggregate contractual obligations to make future
      payments (principal and interest) as of June 30, 2006:




**(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
            
            $
            25,191
            
            $
            21,135
            
            
            -
            
            
            -
            
            $
            46,326Junior
                subordinateddebentures
            
            
            4,502
            
            
            7,028
            
            
            2,156
            
            
            61,547
            
            
            75,233Operating
                leases
            
            
            2,566
            
            
            4,622
            
            
            2,664
            
            
            2,508
            
            
            12,360Time
                deposits
            
            
            862,865
            
            
            9,028
            
            
            5
            
            
            20
            
            
            871,918Total
            
            $
            895,124
            
            $
            41,813
            
            $
            4,825
            
            $
            64,075
            
            $
            1,005,837




**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
      June 30, 2006 and December 31, 2005, we had commitments to extend credit of
      $126.7 million and $104.3 million, respectively. Obligations under standby
      letters of credit were $4.6 million and $2.5 million at June 30, 2006 and
      December 31, 2005, respectively, and our obligations under commercial letters
      of
      credit were $16.6 million and $11.4 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.




28




**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 June
      30,
      2006 and December 31, 2005, we had $76 million and $126 million, respectively,
      in federal funds sold and repurchase agreements, and $500,000 at each of June
      30, 2006 and December 31, 2005 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 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.




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 June 30, 2006**
            
            **As
                of December 31, 2005****Amortized**
              **Cost**
            
            **Market
                Value**
            
            **Amortized**
              **Cost**
            
            **Market
                Value**Held
                to Maturity:Securities
                of government sponsored enterprises
            
            $
            17,998
            
            $
            17,586
            
            $
            19,993
            
            $
            19,684Collateralized
                mortgage obligation.
            
            
            217
            
            
            192
            
            
            248
            
            
            229Municipal
                securities
            
            
            2,620
            
            
            2,592
            
            
            2,619
            
            
            2,598Available
                for Sale:Securities
                of government sponsored enterprises
            
            
            120,718
            
            
            119,274
            
            
            77,882
            
            
            76,981Mortgage
                backed securities
            
            
            25,074
            
            
            24,620
            
            
            23,451
            
            
            23,158Collateralized
                mortgage obligation
            
            
            27,172
            
            
            26,338
            
            
            26,302
            
            
            25,870Corporate
                securities
            
            
            5,054
            
            
            4,866
            
            
            8,132
            
            
            8,047Municipal
                securities
            
            
            13,459
            
            
            13,174
            
            
            4,661
            
            
            4,594Total
                investment securities
            
            $
            212,312
            
            $
            208,642
            
            $
            163,288
            
            $
            161,161







29







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 June 30, 2006:




**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 governmentsponsored
                enterprises
            
            $
            3,998
            
            
            3.71
            %
            $
            10,000
            
            
            3.85
            %
            
            4,000
            
            
            3.93
            %
            
            -
            
            
            -
            
            $
            17,998
            
            
            3.84
            %Mortgage
                backed securities
            
            
            -
            
            
            -
            
            
            217
            
            
            3.97
            %
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            217
            
            
            3.97
            %Municipal
                securities
            
            
            2,000
            
            
            4.03
            %
            
            620
            
            
            4.12
            %
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            2,620
            
            
            4.05
            %**Available-for-sale:**
              Securities
                of governmentsponsored
                enterprises
            
            
            40,623
            
            
            3.94
            %
            
            76,732
            
            
            4.64
            %
            
            1,919
            
            
            5.25
            %
            
            -
            
            
            -
            
            
            119,274
            
            
            4.42
            %Mortgage
                backed securities
            
            
            10,932
            
            
            4.31
            %
            
            11,305
            
            
            4.29
            %
            
            329
            
            
            5.70
            %
            
            2,054
            
            
            6.01
            %
            
            24,620
            
            
            4.46
            %Collateralized
                mortgageobligation
            
            
            -
            
            
            -
            
            
            26,337
            
            
            4.95
            %
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            26,337
            
            
            4.95
            %Corporate
                securities
            
            
            6,321
            
            
            5.23
            %
            
            4,981
            
            
            5.58
            %
            
            1,872
            
            
            4.46
            %
            
            -
            
            
            -
            
            
            13,174
            
            
            5.25
            %Municipal
                securities
            
            
            -
            
            
            -
            
            
            395
            
            
            3.66
            %
            
            1,579
            
            
            3.77
            %
            
            2,893
            
            
            3.74
            %
            
            4,867
            
            
            3.74
            %Total
                investment securities
            
            $
            63,874
            
            
            4.12
            %
            $
            130,587
            
            
            4.64
            %
            $
            9,699
            
            
            4.33
            %
            $
            4,947
            
            
            4.68
            %
            $
            209,107
            
            
            4.47
            %




Our
      investment securities holdings increased by $47.6 million, or 29.5%, to $209.1
      million at June 30, 2006, compared to holdings of $161.5 million at December
      31,
      2005. Total investment securities as a percentage of total assets were 11.3%
      and
      9.8% at June 30, 2006 and December 31, 2005, respectively. As of June 30, 2006,
      investment securities having a carrying value of $132.2 million were pledged
      to
      secure certain deposits.




As
      of
      June 30, 2006, held-to-maturity securities, which are carried at their amortized
      costs, decreased to $20.8 million from $22.9 million at December 31, 2005.
      Available-for-sale securities, which are stated at their fair market values,
      increased to $188.3 million at June 30, 2006 from $138.7 million at December
      31,
      2005. 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 June 30, 2006 and
      December 31, 2005:




**As
                of June 30, 2006**
            
            
            
            
            
            **(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 governmentsponsored
                enterprises
            
            $
            76,998
            
            $
            (735
            )
            $
            59,862
            
            $
            (1,121
            )
            $
            136,860
            
            $
            (1,856
            )Collateralized
                mortgageobligation
            
            
            18,192
            
            
            (425
            )
            
            8,338
            
            
            (434
            )
            
            26,530
            
            
            (859
            )Mortgage
                backed securities
            
            
            12,706
            
            
            (113
            )
            
            10,761
            
            
            (347
            )
            
            23,467
            
            
            (460
            )Municipal
                securities
            
            
            7,294
            
            
            (211
            )
            
            165
            
            
            (5
            )
            
            7,459
            
            
            (216
            )Corporate
                securities
            
            
            4,981
            
            
            (144
            )
            
            2,856
            
            
            (140
            )
            
            7,837
            
            
            (284
            )$
            120,171
            
            $
            (1,628
            )
            $
            81,982
            
            $
            (2,047
            )
            $
            202,153
            
            $
            (3,675
            )







30




**As
                of December 31, 2005****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 governmentsponsored
                enterprises
            
            $
            52,380
            
            $
            (513
            )
            $
            41,285
            
            $
            (697
            )
            $
            93,665
            
            $
            (1,210
            )Collateralized
                mortgageobligations
            
            
            14,971
            
            
            (280
            )
            
            3,167
            
            
            (171
            )
            
            18,138
            
            
            (451
            )Mortgage-backed
                securities
            
            
            8,632
            
            
            (136
            )
            
            8,075
            
            
            (185
            )
            
            16,707
            
            
            (321
            )Municipal
                securities
            
            
            5,553
            
            
            (89
            )
            
            -
            
            
            -
            
            
            5,553
            
            
            (89
            )Corporate
                securities
            
            
            982
            
            
            (17
            )
            
            1,926
            
            
            (68
            )
            
            2,908
            
            
            (85
            )$
            82,518
            
            $
            (1,035
            )
            $
            54,453
            
            $
            (1,121
            )
            $
            136,971
            
            $
            (2,156
            )




As
      of
      June 30, 2006, the total unrealized losses less than 12 months old were $1.63
      million, and total unrealized losses more than 12 months old were $2.05 million.
      The aggregate related fair value of investments with unrealized losses less
      than
      12 months old was $120.2 million at June 30, 2006, and those with unrealized
      losses more than 12 months old were $82.0 million. As of December 31, 2005,
      the
      total unrealized losses less than 12 months old were $1.0 million and total
      unrealized losses more than 12 months old were $1.1 million. The aggregate
      related fair value of investments with unrealized losses less than 12 months
      old
      was $82.5 million at December 31, 2005, and those with unrealized losses more
      than 12 months old were $54.5 million.




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. Furthermore, as of June 30, 2006, 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 June 30, 2006, 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. Before 2003, the only other earning
      assets held by us were insignificant amounts of Federal Home Loan Bank stock
      and
      the cash surrender value on the BOLI.




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.




In
      2003,
      we invested in two low-income housing tax credit funds (“LIHTCF”) to promote our
      participation in CRA activities. We committed to invest, over 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 following
      a
      two-to three-year period in the form of tax credits and tax deductions over
      15
      years.




31




In
      February and April of 2006, we committed to invest an additional $1 million
      and
      $2 million, respectively, in WNC Institutional Tax Credit Fund XXI to promote
      our CRA activities in the Dallas, Texas assessment area, and WNC Institutional
      Tax Credit Fund X New York Series 7 to promote our CRA activities in the New
      York, New York assessment area.




The
      balances of other earning assets as of June 30, 2006 and December 31, 2005
      were
      as follows:




**Type**
            
            **Balance
                as of**
              **June
                30, 2006**
            
            **Balance
                as of**
              **December
                31, 2005**BOLI
            
            $
            15,397,000
            
            $
            15,099,000LIHTCF
            
            $
            2,532,000
            
            $
            2,350,000Federal
                Home Loan Bank Stock
            
            $
            7,346,000
            
            $
            6,182,000




**Deposits
      and Other Sources of Funds**




*Deposits*




Deposits
      are our primary source of funds. Total deposits at June 30, 2006 and December
      31, 2005 were $1.59 billion and $1.41 billion, respectively, representing an
      increase of $181.0 million, or 12.8%, over the first six- month period of 2006.




In
      2005,
      our niche market depositor’s preference in time deposits bearing relatively high
      interest rates decreased the level of deposits in transactional accounts and
      we
      increased our reliance on time deposits to fund our loan growth. However, our
      efforts in controlling the growth of expensive time deposits saw some success
      in
      the second quarter of 2006. The percentage of the average time deposits over
      the
      average total deposits in the second quarter of 2006 was 53.4%, increased from
      51.6% for the prior year’s same quarter, but reduced from the preceding
      quarter’s 53.7%. We believe that our regional diversification into the Texas and
      New York markets will also help reduce our level of time deposit reliance going
      forward.




The
      average rate paid on time deposits in denominations of $100,000 or more for
      the
      second quarter and the first half of 2006 increased to 5.03% and 4.82%,
      respectively, as compared with 3.14% and 2.95%, 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:**


**June
                30, 2006**
            
            **December
                31, 2005**
            
            **June
                30, 2005****Average**
              **Balance**
            
            **Average**
              **Rate**
            
            **Average**
              **Balance**
            
            **Average**
              **Rate**
            
            **Average**
              **Balance**
            
            **Average**
              **Rate**Demand,
                noninterest-bearing
            
            $
            310,525
            
            
            
            
            $
            286,966
            
            
            
            
            $
            280,490Money
                market
            
            
            348,733
            
            
            4.15
            %
            
            247,313
            
            
            2.93
            %
            
            252,181
            
            
            2.69
            %Super
                NOW
            
            
            21,448
            
            
            1.19
            %
            
            21,446
            
            
            0.87
            %
            
            21,397
            
            
            0.74
            %Savings
            
            
            23,755
            
            
            1.14
            %
            
            22,878
            
            
            0.73
            %
            
            23,375
            
            
            0.72
            %Time
                certificates of deposit indenominations
                of $100,000 ormore
            
            
            657,744
            
            
            5.03
            %
            
            532,207
            
            
            3.49
            %
            
            507,513
            
            
            3.14
            %Other
                time deposits
            
            
            149,922
            
            
            4.36
            %
            
            116,698
            
            
            3.20
            %
            
            107,162
            
            
            2.88
            %Total
                deposits
            
            $
            1,512,127
            
            
            4.54
            %
            $
            1,227,508
            
            
            2.44
            %
            $
            1,192,118
            
            
            2.87
            %




The
      scheduled maturities of our time deposits in denominations of $100,000 or
      greater at June 30, 2006 were as follows:




**Maturities
      of Time Deposits of $100,000 or More, at June 30, 200** **6**


**(Dollars
      in Thousands)**




Three
                months or less
            
            $
            364,717Over
                three months through six months
            
            
            173,074Over
                six months through twelve months
            
            
            154,247Over
                twelve months
            
            
            3,619Total
            
            $
            695,657






32




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 carry deposit balances of more than 1% of our total
      deposits, but the California State Treasury was the only depositor which had
      a
      deposit balance of more than 5% of total deposits at June 30, 2006 and December
      31, 2005.




We
      accept
      brokered deposits on a selective basis at reasonable interest rates to augment
      deposit growth. We have reduced these deposits to $5 million at June 30, 2006
      from $23 million at December 31, 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 the
      FHLB as an alternative to retail deposit funds. Since 2002, we have increased
      borrowings from the 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**
            
            **June
                30, 2006**
            
            **December
                31, 2005**Balance
                at quarter-end
            
            $
            45,000
            
            $
            61,000Average
                balance during the quarter
            
            $
            48,626
            
            $
            56,151Maximum
                amount outstanding at any month-end
            
            $
            50,000
            
            $
            61,000Average
                interest rate during the quarter
            
            
            4.02
            %
            
            3.13
            %Average
                interest rate at quarter-end
            
            
            4.27
            %
            
            3.51
            %


*Junior
      Subordinated Debentures; Trust Preferred Securities*




In
      December 2002, the Bank issued $10 million of the 2002 Junior Subordinated
      Debentures. Subsequently, the Company, as a wholly owned subsidiary in 2003
      and
      as a parent company of the Bank in 2005, issued a total of $51,547,000 of Junior
      Subordinated Debentures in connection with a $50,000,000 trust preferred
      securities issuance by statutory trusts wholly owned by the Company.




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 8.56% at
      June 30, 2006, 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, Wilshire Bancorp 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, Wilshire Bancorp organized its wholly owned subsidiary,
      Wilshire Statutory Trust I, which issued $15 million in trust preferred
      securities. Wilshire Bancorp 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 approximately $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. Wilshire Bancorp 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 8.25% at June 30, 2006, 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. Wilshire Bancorp
      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.




33




March
      2005 Junior Subordinated Debenture; Trust Preferred Securities
      Issuance .
      In
      March 2005, Wilshire Bancorp organized its wholly owned subsidiary, Wilshire
      Statutory Trust II, which issued $20 million in trust preferred securities.
      Wilshire Bancorp then purchased all of the common interest in the Wilshire
      Statutory Trust II ($619,000) and issued the 2005 Junior Subordinated Debenture
      (the “March 2005 debenture”) in the amount of $20.6 million to the Wilshire
      Statutory Trust II with terms substantially similar to the March 2005 trust
      preferred securities in exchange for the proceeds from the issuance of the
      Wilshire Statutory Trust II’s March 2005 trust preferred securities and common
      securities. Wilshire Bancorp subsequently deposited the proceeds from the March
      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 March 2005
      debenture and related trust preferred securities was 7.19% at June 30, 2006,
      which adjusts quarterly to the three-month LIBOR plus 1.79%. The March 2005
      debenture and related trust preferred securities will mature on March 17, 2035.
      The interest on both the March 2005 debenture and related trust preferred
      securities are payable quarterly and no scheduled payments of principal are
      due
      prior to maturity. Wilshire Bancorp may redeem the March 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, Wilshire Bancorp organized its wholly owned subsidiary, Wilshire
      Statutory Trust III (“Wilshire Trust III”), 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 (the “September 2005 debenture”), 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 Wilshire Bancorp. 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 June 30, 2006, Wilshire Bancorp would have been able to count
      $44.9 million of total trust preferred securities as Tier 1 capital, leaving
      $5.1 million as Tier 2 capital.




34




**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, 2005. 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
      June 30, 2006 and December 31, 2005 totaled approximately $354.3 million and
      $355.2 million, respectively. Our liquidity level measured as the percentage
      of
      liquid assets to total assets was 19.1% and 21.3% at June 30, 2006 and December
      31, 2005, 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 50% of borrowing capacity, as such borrowing does
      not
      qualify as core funds. As of June 30, 2006, our borrowing capacity from the
      FHLB
      was about $394.8 million and the outstanding balance was $45 million, or
      approximately 11.4% of our borrowing capacity. As of June 30, 2006, we also
      maintained a guideline to purchase up to $25 million and $10 million in federal
      funds with Bank of the West and Union Bank of California,
      respectively.




**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 equity, debt or
      hybrid securities.




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, 2005 for additional information regarding regulatory capital
      requirements.




At
      June
      30, 2006, total shareholders’ equity increased by $19.7 million to $132.8
      million from $113.1 million at December 31, 2005. Such additional capital
      was primarily derived from internally generated operating income ($16.2
      million), the additional shares issued to the sellers in connection with the
      Liberty Bank acquisition ($5.9 million) and stock option exercises ($179,000
      proceeds from stock option exercises and the $899,000 in tax benefits therefrom)
      and decreased by the cash dividend of $2.9 million, which was declared during
      the first half of 2006, and other comprehensive loss of $400,000.




35




As
      of
      June 30, 2006, 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.**
            **Regulatory**
              **Well-**
              **Capitalized**
              **Standards**
            **Regulatory**
              **Adequately-**
              **Capitalized**
              **Standards**
            **Actual
                ratios for the Company as of:****June
                30, 2006**
            **December
                31, 2005**
            **June
                30, 2005**Total
                capital to risk-weighted assets
            10%
            8%
            13.53%
            14.41%
            13.33%Tier
                I capital to risk-weighted assets
            6%
            4%
            11.35%
            11.60%
            11.29%Tier
                I capital to adjusted average assets
            5%
            4%
            9.63%
            9.39%
            9.59%




**Wilshire
                State Bank**
            **Regulatory**
              **Well-**
              **Capitalized**
              **Standards**
            **Regulatory**
              **Adequately-**
              **Capitalized**
              **Standards**
            **Actual
                ratios for the Bank as of:****June
                30, 2006**
            **December
                31, 2005**
            **June
                30, 2005**Total
                capital to risk-weighted assets
            10%
            8%
            13.12%
            13.05%
            12.89%Tier
                I capital to risk-weighted assets
            6%
            4%
            11.29%
            11.15%
            10.95%Tier
                I capital to adjusted average assets
            5%
            4%
            9.59%
            9.04%
            9.29%




For
      the
      regulatory capital ratio computation purpose, we considered the Junior
      Subordinated Debentures of $61.5 million, which consists of $51.5 million issued
      by the Company in connection with the issuance of $50 million trust preferred
      securities and $10 million issued by the Bank. As of December 31, 2005, Wilshire
      Bancorp accounted for $38.0 million of such securities as Tier 1 capital,
      leaving $12.0 million, as Tier 2 capital. As of June 30, 2006, the portion
      qualified for Tier 1 capital increased to $44.9 million, reducing the portion
      for Tier 2 capital to $5.1 million. For the Bank level, only the $10 million
      debenture issued by the Bank in 2002 is treated as Tier 2 capital. See “Deposits
      and Other Sources of Funds” for further discussion regarding the capital
      treatment of subordinated debentures and the trust preferred securities.




**Item
        3. Q** **uantitative
        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 June 30,
      2006, we were asset-sensitive, with a positive cumulative one-year gap of $17.0
      million or 1.01% of average interest-earning 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. We intentionally maintain a significant
      three-month positive gap of $305.7 million or 18.13% of average interest-earning
      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.




36




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 June 30, 2006 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
                June 30, 2006****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
            
            $
            1,161,561
            
            $
            22,925
            
            $
            207,412
            
            $
            48,108
            
            $
            1,440,006Investment
                securities
            
            
            11,471
            
            
            52,403
            
            
            130,587
            
            
            14,646
            
            
            209,107Federal
                funds sold and cash equivalents
            
            
            76,003
            
            
            -
            
            
            -
            
            
            -
            
            
            76,003Interest-earning
                deposits
            
            
            -
            
            
            500
            
            
            -
            
            
            -
            
            
            500Total
            
            $
            1,249,035
            
            $
            75,828
            
            $
            337,999
            
            $
            62,754
            
            $
            1,725,616**Interest-bearing
                liabilities:**Savings
                deposits
            
            
            25,847
            
            
            -
            
            
            -
            
            
            -
            
            
            25,847Time
                deposits of $100,000 or more
            
            
            405,770
            
            
            286,484
            
            
            3,403
            
            
            -
            
            
            695,657Other
                time deposits
            
            
            64,915
            
            
            78,029
            
            
            5,229
            
            
            16
            
            
            148,189Other
                interest-bearing deposits
            
            
            375,760
            
            
            -
            
            
            -
            
            
            -
            
            
            375,760Other
                borrowings
            
            
            25,000
            
            
            -
            
            
            20,000
            
            
            -
            
            
            45,000Subordinated
                debentures
            
            
            46,083
            
            
            -
            
            
            15,464
            
            
            -
            
            
            61,547Total
            
            $
            943,375
            
            $
            364,513
            
            $
            44,096
            
            $
            16
            
            $
            1,352,000Interest
                rate sensitivity gap
            
            $
            305,660
            
            
            ($
                288,685
            )
            $
            293,903
            
            $
            62,738
            
            $
            373,616Cumulative
                interest rate sensitivity gap
            
            $
            305,660
            
            $
            16,975
            
            $
            310,878
            
            $
            373,616Cumulative
                interest rate sensitivity gap ratio (based on average interest-earning
                assets)
            
            
            18.13
            %
            
            1.01
            %
            
            18.44
            %
            
            22.16
            %




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
      June 30, 2006. All assets presented in this table are held-to-maturity or
      available-for-sale. At June 30, 2006, we had no trading securities:









1 Excludes
      the gross amount of non-accrual loans of approximately $5.6 million at June
      30,
      2006.




37




**(Dollars
                in Thousands)****Change**
            
            **Net
                Interest Income****(in
                Basis Points)**
            
            **(next
                twelve months)**
            
            **%
                Change**
            **NPV**
            
            **%
                Change**+200
            
            111,950
            
            15.7%
            298,312
            
            7.9%+100
            
            103,879
            
            7.4%
            288,238
            
            4.2%0
            
            96,724
            
            -
            276,555
            
            --100
            
            94,265
            
            -2.5%
            259,964
            
            -6.0%-200
            
            86,650
            
            -10.4%
            239,152
            
            -13.5%




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 $17.0 million
      for
      a time horizon of one year, as of June 30, 2006. 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.




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
      June 30, 2006, 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 June 30, 2006, 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 June 30, 2006 that materially affected, or are reasonably likely
      to materially affect, our internal controls over financial
      reporting.




38




**Part
      II.** **OTHER
      INFORMATION**




**Item
        1.** **Legal
        Proceedings**




From
      time
      to time, we are a party to claims and legal proceedings arising in the ordinary
      course of business. Our management evaluates our exposure to these claims and
      proceedings individually and in the aggregate and provides for potential losses
      on such litigation if the amount of the loss is estimatable and the loss is
      probable.




We
      believe that there are no material litigation matters at the current time.
      Although the results of such litigation matters and claims cannot be predicted
      with certainty, we believe that the final outcome of such claims and proceedings
      will not have a material adverse impact on our financial position, liquidity,
      or
      results of operations.




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




In
      May
      22, 2006, we issued an aggregate 328,110 shares of its common stock to the
      former shareholders of Liberty Bank of New York in connection with the closing
      of our acquisition of all the outstanding capital stock of Liberty. The
      aggregate purchase price of the acquisition was $15,220,000, which included
      the
      382,110 shares of our common stock, valued pursuant to the Stock Purchase
      Agreement at $18.0933 per share, the average of the daily closing prices of
      our
      common stock as reported on The Nasdaq National Market for the 20 consecutive
      trading days ending on the last business day prior to the closing, and
      $8,592,407 in cash. The closing price of our common stock as reported on the
      Nasdaq National Market on May 22, 2006 was $17.25 per share. The issuance of
      the
      shares were deemed exempt from registration under the Securities Act of 1933,
      as
      amended (the “Securities Act”), in reliance on Section 4(2) of the
      Securities Act as transactions by an issuer not involving a public
      offering.




**Item
        3.** **Defaults
        Upon Senior Securities**




None.




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




At
      our
      Annual Meeting of Shareholders held May 26, 2006, the following persons were
      elected as our Class II directors to serve three year terms expiring at the
      2009
      Annual Meeting of Shareholders or until their successors are duly elected and
      qualified:




·
            Mel
                Elliot (25,118,417 votes in favor1,099,678 votes
                withheld)




·
            Richard
                Lim (25,262,615 votes in favor; 955,480 votes
                withheld)




·
            Harry
                Siafaris (25,265,375 votes in favor; 952,720 votes
                withheld)




In
      addition to the foregoing, the terms of the following directors continued after
      the Annual Meeting:




*Class
      I*




·
            Steven
                Koh




·
            Gapsu
                Kim




·
            Fred
                Mautner




*·*
            Donald
                Byun




*Class
      III*




·
            Soo
                Bong Min




·
            Larry
                Greenfield, M.D.




·
            Kyu-Hyun
                Kim




·
            Young
                Hi Pak




**Item
        5.** **Other
        Information**




Not
      applicable.




39




**Item
        6.** **Exhibits** ****




**Exhibit
                Table****Reference**
              **Number**
            **Item**3.1
            Articles
                of Incorporation, as amended and restated13.2
            Bylaws,
                as amended and restated24.1
            Specimen
                of Common Stock Certificate34.2
            Indenture
                of Subordinated Debentures44.3
            Indenture
                by and between Wilshire Bancorp, Inc. and U.S. Bank National Association
                dated as of December 17, 2003511
            Statement
                Regarding Computation of Net Earnings per Share631.1
            Certification
                of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
                Act of 200231.2
            Certification
                of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
                Act of 200232
            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 isincorporatedby
                reference from Note 3 of the Company’s Financial Statements included
                herein.




40




**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:
              August
              9,2006
            By:
            /s/ Brian
              E.
              ChoBrian
              E. ChoExecutive
                Vice President and Chief Financial Officer
              (Principal
                Financial and Accounting Officer)






41