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 March 31, 2008.**




**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: **Common
      Stock, no par value**




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


______________________




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
            xNon-accelerated
                filer
            o (Do
                    not check if a smaller reporting company)
            
            Smaller
                reporting company
            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 April
      30,
      2008 was 29,391,177.









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**
            **14****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
                1A.**
            **Risk
                Factors**
            **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**
            **40****SIGNATURES**
            **41**





i


**Part
      I. FINANCIAL INFORMATION**




**Item
                1.**
              **Financial
                  Statements******
 **WILSHIRE
                    BANCORP, INC.****CONSOLIDATED
                    STATEMENTS OF FINANCIAL CONDITION****(DOLLARS
                    IN THOUSANDS)****ASSETS**
                
                
                **March
                    31, 2008**
                
                
                **December
                    31,****2007****(Unaudited)**Cash
                    and due from banks
                
                $
                77,225
                
                $
                82,506Federal
                    funds sold and other cash equivalents
                
                
                20,004
                
                
                10,003Cash
                    and cash equivalents
                
                
                97,229
                
                
                92,509Securities
                      available for sale, at fair value (amortized cost of $215,549
                      and $223,933
                      at March 31, 2008 and Decemeber 31, 2007,
                      respectively)
                
                
                218,505
                
                
                224,256Securities
                      held to maturity, at amortized cost (fair value of $371 and
                      $7,372 at
                      March 31, 2008 and December 31, 2007, respectively)
                
                
                377
                
                
                7,384Loans
                      receivable, net of allowance for loan losses of $22,072 and
                      $21,579 at
                      March 31, 2008 and December 31, 2007, respectively
                
                
                1,851,115
                
                
                1,779,558Loans
                    held for sale—at the lower of cost or market
                
                
                10,313
                
                
                7,912Federal
                    Home Loan Bank stock, at cost
                
                
                11,280
                
                
                8,695Other
                    real estate owned
                
                
                133
                
                
                133Due
                    from customers on acceptances
                
                
                2,332
                
                
                3,377Cash
                    surrender value of bank owned life insurance
                
                
                16,367
                
                
                16,228Investment
                    in affordable housing partnerships
                
                
                6,518
                
                
                6,222Bank
                    premises and equipment
                
                
                10,828
                
                
                10,960Accrued
                    interest receivable
                
                
                9,832
                
                
                10,062Deferred
                    income taxes
                
                
                7,106
                
                
                9,151Servicing
                    assets
                
                
                4,931
                
                
                4,950Interest-only
                      strips, at fair value (amortized cost of $379 and $430 at March
                      31, 2008
                      and December 31, 2007, respectively)
                
                
                727
                
                
                753Goodwill
                
                
                6,675
                
                
                6,675Other
                    intangible assets
                
                
                1,512
                
                
                1,587Other
                    assets
                
                
                4,655
                
                
                6,293TOTAL
                
                $
                2,260,435
                
                $
                2,196,705**LIABILITIES
                    AND SHAREHOLDERS’ EQUITY**LIABILITIES:Deposits:Noninterest
                    bearing
                
                $
                308,037
                
                $
                314,114Interest
                    bearing:Savings
                
                
                34,740
                
                
                31,812Money
                    market checking and NOW accounts
                
                
                415,393
                
                
                485,547Time
                    deposits of $100 or more
                
                
                793,235
                
                
                788,883Other
                    time deposits
                
                
                176,182
                
                
                142,715Total
                    deposits
                
                
                1,727,587
                
                
                1,763,071Federal
                    Home Loan Bank borrowings
                
                
                240,000
                
                
                150,000Junior
                    subordinated debentures
                
                
                87,321
                
                
                87,321Accrued
                    interest payable
                
                
                10,339
                
                
                10,440Acceptances
                    outstanding
                
                
                2,332
                
                
                3,377Other
                    liabilities
                
                
                15,320
                
                
                10,710Total
                    liabilities
                
                
                2,082,899
                
                
                2,024,919SHAREHOLDERS’
                    EQUITY:Preferred
                    stock, no par value—authorized, 5,000,000 shares; issued and outstanding,
                    noneCommon
                    stock, no par value—authorized, 80,000,000 shares; issued and outstanding,
                    29,391,177 shares and 29,253,311 shares at March 31, 2008 and
                    December 31,
                    2007, respectively
                
                
                51,399
                
                
                50,895Accumulated
                      other comprehensive income, net of tax expense of $1,388 and
                      $271 at March
                      31, 2008 and December 31, 2007, respectively
                
                
                1,916
                
                
                375Retained
                    earnings
                
                
                125,483
                
                
                121,778178,798
                
                
                173,048Less
                      Treasury stock, at cost, 127,425 shares at March 31, 2008 and
                      December 31,
                      2007
                
                
                (1,262
                )
                
                (1,262
                )Total
                    shareholders’ equity
                
                
                177,536
                
                
                171,786TOTAL
                
                $
                2,260,435
                
                $
                2,196,705
 See
          accompanying notes to consolidated financial statements.
  1
 **WILSHIRE
                    BANCORP, INC.****CONSOLIDATED
                    STATEMENTS OF OPERATIONS (UNAUDITED)****(DOLLARS
                    IN THOUSANDS, EXCEPT PER SHARE DATA)****Three
                    Months Ended March 31,****2008**
                
                **2007**INTEREST
                    INCOME:Interest
                    and fees on loans
                
                $
                35,318
                
                $
                33,901Interest
                    on investment securities
                
                
                2,584
                
                
                2,239Interest
                    on federal funds sold
                
                
                80
                
                
                1,509Total
                    interest income
                
                
                37,982
                
                
                37,649INTEREST
                    EXPENSE:Interest
                    on deposits
                
                
                14,738
                
                
                17,362Interest
                    on FHLB advances and other borrowings
                
                
                2,043
                
                
                182Interest
                    on junior subordinated debentures
                
                
                1,457
                
                
                1,132Total
                    interest expense
                
                
                18,238
                
                
                18,676NET
                      INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES AND LOAN
                      COMMITMENTS
                
                
                19,744
                
                
                18,973PROVISION
                      FOR LOSSES ON LOANS AND LOAN COMMITMENTS
                
                
                1,400
                
                
                1,630NET
                      INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES AND LOAN
                      COMMITMENTS
                
                
                18,344
                
                
                17,343NON-INTEREST
                    INCOME:Service
                    charges on deposit accounts
                
                
                2,748
                
                
                2,287Gain
                    on sale of loans
                
                
                864
                
                
                1,809Loan-related
                    servicing fees
                
                
                675
                
                
                419Income
                    from other earning assets
                
                
                319
                
                
                277Other
                    income
                
                
                548
                
                
                418Total
                    noninterest income
                
                
                5,154
                
                
                5,210NON-INTEREST
                    EXPENSES:Salaries
                    and employee benefits
                
                
                6,976
                
                
                5,698Occupancy
                    and equipment
                
                
                1,425
                
                
                1,270Data
                    processing
                
                
                764
                
                
                765Loan
                    referral fee
                
                
                280
                
                
                420Outsourced
                    service for customer
                
                
                449
                
                
                376Advertising
                    and promotional
                
                
                177
                
                
                146Professional
                    fees
                
                
                500
                
                
                315Office
                    supplies
                
                
                217
                
                
                174Directors’
                    fees
                
                
                96
                
                
                140Communications
                
                
                123
                
                
                115Investor
                    relation expenses
                
                
                79
                
                
                81Deposit
                    insurance premiums
                
                
                330
                
                
                50Amortization
                    of investments in affordable housing partnerships
                
                
                174
                
                
                113Amortization
                    of other intangible assets
                
                
                74
                
                
                74Other
                    operating
                
                
                560
                
                
                766Total
                    noninterest expenses
                
                
                12,224
                
                
                10,503INCOME
                    BEFORE INCOME TAXES
                
                
                11,274
                
                
                12,050INCOME
                    TAXES
                
                
                4,224
                
                
                4,733NET
                    INCOME
                
                $
                7,050
                
                $
                7,317EARNINGS
                    PER SHARE:Basic
                
                $
                0.24
                
                $
                0.25Diluted
                
                $
                0.24
                
                $
                0.25WEIGHTED-AVERAGE
                    SHARES OUTSTANDING:Basic
                
                
                29,276,871
                
                
                29,346,442Diluted
                
                
                29,341,080
                
                
                29,517,299
 See
          accompanying notes to consolidated financial statements.
  2
 **WILSHIRE
                    BANCORP, INC.****CONSOLIDATED
                    STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)****(DOLLARS
                    IN THOUSANDS)****Common
                    Stock****Gross**
                  **Shares**
                
                
                
                
                
                
                
                **Accumulated**
                    Other
                
                
                
                **Treasury**
                
                **Total****Issued
                    and**
                
                **Treasury**
                
                **Shares**
                
                
                
                **Comprehensive**
                
                **Retained**
                
                **Stock,**
                
                **Shareholders’****Outstanding**
                
                **Shares**
                
                **Outstanding**
                
                **Amount**
                
                **Income
                    (Loss)**
                
                **Earnings**
                
                **at
                    Cost**
                
                **Equity**BALANCE—January
                    1, 2007
                
                
                29,197,420
                
                
                
                
                
                29,197,420
                
                $
                49,123
                
                $
                (408
                )
                $
                100,920
                
                $
                -
                
                $
                149,635Stock
                    options exercised
                
                
                171,476
                
                
                
                
                
                171,476
                
                
                108
                
                
                
                
                
                
                
                
                
                
                
                108Cash
                    dividend declared
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (1,468
                )
                
                
                
                
                (1,468
                )Share-based
                    compensation expense
                
                
                
                
                
                
                
                
                
                
                
                118
                
                
                
                
                
                
                
                
                
                
                
                118Tax
                    benefit from stock options exercised
                
                
                
                
                
                
                
                
                
                
                
                1,286
                
                
                
                
                
                
                
                
                
                
                
                1,286Cumulative
                      impact of change in accounting for uncertainties in income
                      tases
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (162
                )
                
                
                
                
                (162
                )Cumulative
                      impact of change in accounting for fair valuation method
                      adoption
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                80
                
                
                
                
                
                80Comprehensive
                    income:Net
                    income
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                7,317
                
                
                
                
                
                7,317Other
                    comprehensive income:Change
                      in unrealized gain on interest - only strips
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                51
                
                
                
                
                
                
                
                
                51Change
                      in unrealized gain on securities available for sale
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                221
                
                
                
                
                
                
                
                
                221Comprehensive
                    income
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                $
                7,589BALANCE—March
                    31, 2007
                
                
                29,368,896
                
                
                -
                
                
                29,368,896
                
                $
                50,635
                
                $
                (136
                )
                $
                106,687
                
                $
                -
                
                $
                157,186
  **Common
                    Stock****Gross
                    Shares**
                
                
                
                
                
                
                
                **Accumulated****Other**
                
                
                
                **Treasury**
                
                **Total****Issued
                    and**
                
                **Treasury**
                
                **Shares**
                
                
                
                **Comprehensive**
                
                **Retained**
                
                **Stock,**
                
                **Shareholders’****Outstanding**
                
                **Shares**
                
                **Outstanding**
                
                **Amount**
                
                **Income
                    (Loss)**
                
                **Earnings**
                
                **at
                    Cost**
                
                **Equity**BALANCE—January
                    1, 2008
                
                
                29,380,736
                
                
                (127,425
                )
                
                29,253,311
                
                $
                50,895
                
                $
                375
                
                $
                121,778
                
                $
                (1,262
                )
                $
                171,786Stock
                    options exercised
                
                
                137,866
                
                
                
                
                
                137,866
                
                
                391
                
                
                
                
                
                
                
                
                
                
                
                391Cash
                    dividend declared
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (1,469
                )
                
                
                
                
                (1,469
                )Share-based
                    compensation expense
                
                
                
                
                
                
                
                
                
                
                
                56
                
                
                
                
                
                
                
                
                
                
                
                56Tax
                    benefit from stock options exercised
                
                
                
                
                
                
                
                
                
                
                
                57
                
                
                
                
                
                
                
                
                
                
                
                57Cumulative
                    impact of change in accounting
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (1,876
                )
                
                
                
                
                (1,876
                )Comprehensive
                    income:Net
                    income
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                7,050
                
                
                
                
                
                7,050Other
                    comprehensive income:Change
                      in unrealized gain on interest - only strips
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                14
                
                
                
                
                
                
                
                
                14Change
                      in unrealized gain on securities available for sale
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                1,527
                
                
                
                
                
                
                
                
                1,527Comprehensive
                    income
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                $
                8,591BALANCE—March
                    31, 2008
                
                
                29,518,602
                
                
                (127,425
                )
                
                29,391,177
                
                $
                51,399
                
                $
                1,916
                
                $
                125,483
                
                $
                (1,262
                )
                $
                177,536
  **Three
                    Months Ended March 31****2008**
                
                **2007**DISCLOSURE
                      OF RECLASSIFICATION AMOUNTS WITHIN ACCUMULATED OTHER COMPREHENSIVE
                      INCOME:Unrealized
                      gains on securities available for sale arising during
                      period
                
                
                
                
                
                
                
                
                
                
                $
                2,633
                
                $
                381Less
                    income tax expense
                
                
                
                
                
                
                
                
                
                
                
                1,106
                
                
                160Net
                    unrealized gains on securities available for sale
                
                
                
                
                
                
                
                
                
                
                $
                1,527
                
                $
                221Net
                      unrealized gains on interest-only strips arising during
                      period
                
                
                
                
                
                
                
                
                
                
                $
                24
                
                $
                87Less
                    income tax expense
                
                
                
                
                
                
                
                
                
                
                
                10
                
                
                37Net
                    unrealized gains on interest-only strips
                
                
                
                
                
                
                
                
                
                
                $
                14
                
                $
                50
 See
          accompanying notes to consolidated financial statements.
  3
 **WILSHIRE
                    BANCORP, INC.****CONSOLIDATED
                    STATEMENTS OF CASH FLOWS (UNAUDITED)****(DOLLARS
                    IN THOUSANDS)****Three
                    Months Ended March 31,****2008**
                
                **2007**CASH
                    FLOWS FROM OPERATING ACTIVITIES:Net
                    income
                
                $
                7,050
                
                $
                7,317Adjustments
                      to reconcile net income to net cash provided by operating
                      activities:Amortization
                    (accretion) of investment securities
                
                
                271
                
                
                (46
                )Depreciation
                    of bank premises & equipment
                
                
                441
                
                
                395Amortization
                    of other intangible assets
                
                
                74
                
                
                74Amortization
                    of investments in affordable housing partnerships
                
                
                174
                
                
                113Provision
                    for losses on loans and loan commitments
                
                
                1,400
                
                
                1,630Deferred
                    tax benefit
                
                
                929
                
                
                2,086Loss
                    on disposition of bank premises and equipment
                
                
                1
                
                
                9Net
                    gain on sale of loans
                
                
                (864
                )
                
                (1,809
                )Origination
                    of loans held for sale
                
                
                (23,083
                )
                
                (41,960
                )Proceeds
                    from sale of loans held for sale
                
                
                21,547
                
                
                38,986Gain
                    on sale or call of available for sale securities
                
                
                (3
                )
                
                -Decrease
                    in fair value of serving rights
                
                
                332
                
                
                547Loss
                    on sale of other real estate owned
                
                
                -
                
                
                22Loss
                    on sale of repossessed vehicles
                
                
                2
                
                
                18Share-based
                    compensation expense
                
                
                56
                
                
                118Change
                    in cash surrender value of life insurance
                
                
                (139
                )
                
                (148
                )Servicing
                    assets capitalized
                
                
                (304
                )
                
                (456
                )Decrease
                    in interest-only strips
                
                
                50
                
                
                244Decrease in
                    accrued interest receivable
                
                
                230
                
                
                458Decrease in
                    other assets
                
                
                1,486
                
                
                22Dividends
                    of Federal Home Loan Bank stock
                
                
                (118
                )
                
                (110
                )Tax
                    benefit from exercise of stock options
                
                
                (57
                )
                
                (1,286
                )(Decrease)
                    Increase in accrued interest payable
                
                
                (102
                )
                
                267Increase
                    in other liabilities
                
                
                2,887
                
                
                1,352Net
                    cash provided by operating activities
                
                
                12,260
                
                
                7,843CASH
                    FLOWS FROM INVESTING ACTIVITIES:Proceeds
                      from principal repayment, matured or called securities held
                      to
                      maturity
                
                
                7,007
                
                
                9Purchase
                    of securities available for sale
                
                
                (46,165
                )
                
                (24,956
                )Proceeds
                    from sale, principle repayment, matured or called securities
                    available for sale
                
                
                54,281
                
                
                21,429Net
                    increase in loans receivable
                
                
                (73,068
                )
                
                (52,727
                )Proceeds
                    from sale of other real estate owned
                
                
                -
                
                
                78Proceeds
                    from sale of repossessed vehicles
                
                
                -
                
                
                42Purchases
                    of investments in affordable housing partnerships
                
                
                (470
                )
                
                (241
                )Purchases
                    of Bank premises and equipment
                
                
                (160
                )
                
                (148
                )Purchases
                    of Federal Home Loan Bank stock
                
                
                (2,467
                )
                
                -Proceeds
                    from disposition of Bank equipment
                
                
                1
                
                
                -Net
                    cash used in investing activities
                
                
                (61,041
                )
                
                (56,514
                )
 See accompanying notes to consolidated
                    financial statements.
                  (Continued)
  4


**WILSHIRE
                  BANCORP, INC.****CONSOLIDATED
                  STATEMENTS OF CASH FLOWS (UNAUDITED)****(DOLLARS
                  IN THOUSANDS)****Three
                  Months Ended March 31,****2008**
              
              **2007**CASH
                  FLOWS FROM FINANCING ACTIVITIES:Proceeds
                  from exercise of stock options
              
              $
              391
              
              $
              108Payment
                  of cash dividend
              
              
              (1,463
              )
              
              (1,460
              )Increase
                  in Federal Home Loan Bank borrowings
              
              
              90,000
              
              
              -Tax
                  benefit from exercise of stock options
              
              
              57
              
              
              1,286Net
                  increase in deposits
              
              
              (35,484
              )
              
              (16,289
              )Net
                  cash provided by (used in) financing activities
              
              
              53,501
              
              
              (16,355
              )NET
                    INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
              
              
              4,720
              
              
              (65,026
              )CASH
                  AND CASH EQUIVALENTS—Beginning of period
              
              
              92,509
              
              
              205,247CASH
                  AND CASH EQUIVALENTS—End of period
              
              $
              97,229
              
              $
              140,221SUPPLEMENTAL
                    DISCLOSURES OF CASH FLOW INFORMATION:Interest
                  paid
              
              $
              18,339
              
              $
              18,410Income
                  taxes paid
              
              $
              37
              
              $
              226SUPPLEMENTAL
                    SCHEDULE OF NONCASH INVESTING ACTIVITES:Other
                    assets transferred to Bank premises and equipment
              
              $
              150
              
              $
              187SUPPLEMENTAL
                    SCHEDULE OF NONCASH FINANCING ACTIVITIES:Cash
                  dividend declared, but not paid
              
              $
              1,469
              
              $
              1,468
 See accompanying notes to consolidated
                    financial statements.
                  (Concluded)


5


**WILSHIRE
      BANCORP, INC.**




**Notes
      to Consolidated Financial Statements**




**Note
              1.**
            **Business
                of Wilshire Bancorp, Inc.**




Wilshire
      Bancorp, Inc. (hereafter, the “Company,” “we,” “us,” or “our”) 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. The
      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  20
      full-service Bank branch offices in Southern California, Texas, New York and
      New
      Jersey. We also have 7 loan production offices utilized primarily for the
      origination of loans under our Small Business Administration (“SBA”) lending
      program in Colorado, Georgia, New Jersey, Texas, Virginia, and
      Washington.




**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 (“GAAP”). 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 consolidated statements of financial
      condition as of March 31, 2008 and December 31, 2007, the related statements
      of
      operations and shareholders’ equity and comprehensive income for the three
      months ended March 31, 2008 and 2007, and the statements of cash flows for
      the
      three months ended March 31, 2008 and 2007. Operating results for interim
      periods are not necessarily indicative of operating results for an entire fiscal
      year. To conform to the consolidated financial statements of the prior period
      to
      the current period’s presentation, we (i) reclassified change in the fair
      valuation of servicing assets of $148,000 from non-interest income to loan
      servicing income (ii) separately disclosed investment in affordable housing
      partnerships from other assets, increasing the net cash provided by operating
      activities and net cash used in investing activities by $241,000.




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, 2007. 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, 2007.




**Note
              3.**
            **Fair
                Value Option and Measurement for Financial Assets and Liabilities**




In
      February 2007, the Financial Accounting Standards Board (“FASB”) issued
      Statement of Financial Accounting Standards (“SFAS”) No. 159, *The
      Fair Value Option for Financial Assets and Financial
      Liabilities* ,
      which
      permits all entities to choose to measure eligible items at fair value at
      specified election dates. A business entity shall report unrealized gains and
      losses on items for which the fair value option has been elected in earnings
      at
      each subsequent reporting date. Under the statement, the fair value option
      may
      be applied instrument by instrument, with only a few exceptions, but may only
      apply to entire instruments and not to portions of instruments. The fair value
      option is a one-time election for existing instruments and is irrevocable.
      The
      Company adopted SFAS No. 159 as of January 1, 2008. All assets and liabilities
      are evaluated for eligibility of the fair value option under the statement.
      Based on the analysis performed, the Company concluded that the fair value
      option provided by this statement is not elected for any of the existing
      instruments under its current asset and liability balances. The Company will
      constantly review the new asset and liability additions on an ongoing basis,
      and
      will elect fair value option pursuant to SFAS No. 159 for any new instruments
      that fall in line with the fair value accounting and reporting.




6




In
      September 2006, the FASB issued SFAS No. 157, *Fair
      Value Measurements* ,
      which
      provides a definition of fair value, establishes a framework for measuring
      fair
      value, and requires expanded disclosures about fair value measurements. The
      standard applies when GAAP requires or allows assets or liabilities to be
      measured at fair value, and therefore, does not expand the use of fair value
      in
      any new circumstance. SFAS No. 157 defines fair value as the price that would
      be
      received to sell an asset or paid to transfer a liability in an arm’s length
      transaction between market participants in the markets where we conduct
      business. SFAS No. 157 clarifies that fair value should be based on the
      assumptions market participants would use when pricing an asset or liability
      and
      establishes a fair value hierarchy that prioritizes the information used to
      develop those assumptions. The fair value hierarchy gives the highest priority
      to quoted prices available in active markets and the lowest priority to data
      lacking transparency.




The
      fair
      value inputs of the instruments are classified and disclosed in one of the
      following categories pursuant to SFAS No. 157:




Level
      1 -
      Unadjusted quoted prices in active markets for identical assets or liabilities
      that the reporting entity has the ability to access at the measurement date.
      The
      quoted price shall not be adjusted for the position size.




Level
      2 -
      Pricing inputs are inputs other than quoted prices included within Level 1
      that
      are observable for the asset or liability, either directly or indirectly. Fair
      value is determined through the use of models or other valuation methodologies,
      including the use of pricing matrices. If the asset or liability has a specified
      (contractual) term, a Level 2 input must be observable for substantially the
      full term of the asset or liability.




Level
      3 -
      Pricing inputs are inputs unobservable inputs for the asset or liability.
      Unobservable inputs shall be used to measure fair value to the extent that
      observable inputs are not available, thereby allowing for situations in which
      there is little, if any, market activity for the asset or liability at the
      measurement date. The inputs into the determination of fair value require
      significant management judgment or estimation.




In
      certain cases, the inputs used to measure fair value may fall into different
      levels of the fair value hierarchy. In such cases, an investment’s level within
      the fair value hierarchy is based on the lowest level of input that is
      significant to the fair value measurement. Our assessment of the significance
      of
      a particular input to the fair value measurement in its entirety requires
      judgment and considers factors specific to the investment.




The
        Company adopted SFAS No. 157 as of January 1, 2008. It used the following
        methods and assumptions in estimating our fair value disclosure for financial
        instruments. Financial assets and liabilities recorded at fair value on a
        recurring basis are listed as follows:
  Securities
        available for sale -
        Investment in available-for-sale securities is recorded at fair
        value pursuant to SFAS 115, *Accounting
        for Certain Investments in Debt and Equity Securities* .
        Fair
        value measurement is based upon quoted prices for similar assets, if available.
        If quoted prices are not available, fair values are measured using matrix
        pricing models, or other model-based valuation techniques requiring observable
        inputs other than quoted prices such as yield curves, prepayment speeds,
        and
        default rates. The securities available for sale include federal agency
        securities, mortgage-backed securities, collateralized mortgage obligations,
        municipal bonds and corporate debt securities. Our existing investment
        available-for-sale security holdings as of March 31, 2008 are measured using
        matrix pricing models in lieu of direct price quotes and recorded based on
        Level
        2 measurement inputs.
  Servicing
        assets and interest-only strips - SBA
        loan servicing assets represent the value associated with servicing SBA loans
        sold. The value is determined through a discounted cash flow analysis which
        uses
        interest rates, prepayment speeds and delinquency rate assumptions as inputs.
        All of these assumptions require a significant degree of management judgment.
        Adjustments are only made when the discounted cash flows are less than the
        carrying value. The Company classifies SBA loan servicing assets as recurring
        with Level 3 measurement inputs.


7


Financial
        assets and liabilities recorded at fair value on a nonrecurring basis are
        listed
        as follows:
  Impaired
        loans - A loan
        is considered to be impaired when it is probable that all of the principal
        and
        interest due under the original underwriting terms of the loan may not be
        collected. Impairment is measured based on the fair value of the underlying
        collateral. The fair value is determined through appraisals and other matrix
        pricing models, which required a significant degree of management judgment.
        The
        Company measures impairment on all nonaccrual loans, except automobile loans,
        for which it has established specific reserves as part of the specific allocated
        allowance component of the allowance for loan losses. The Company records
        impaired loans as nonrecurring with Level 3 measurement inputs.
  The
        table
        below summarizes the valuation of our investments by the above SFAS No. 157
        fair
        value hierarchy levels as of March 31, 2008:
  **Assets
        Measured at Fair Value**
  **(dollars
        in thousands)**
  As
                  of March 31, 2008Fair
                  Value Measurements Using:Total
                  Fair
                Value
              
              Quoted
                  Prices in
                Active
                  Markets
                (Level
                  1)
              
              Significant
                  Other
                Observable
                  Inputs
                (Level
                  2)
              
              Significant
                  Unobservable Inputs
                (Level
                  3)Available
                  for salesecurities
              
              $
              218,505
              
              $
              -
              
              $
              218,505
              
              $
              -Servicing
                  assets
              
              
              4,931
              
              
              -
              
              
              -
              
              
              4,931Interest-only
                  strips
              
              
              727
              
              
              -
              
              
              -
              
              
              727Impaired
                  loans
              
              
              22,180
              
              
              -
              
              
              -
              
              
              22,180


Financial
      instruments measured at fair value on a recurring basis, which were part of
      the
      asset balances that were deemed to have Level 3 fair value inputs when
      determining valuation, are identified in the table below by asset category
      with
      a summary of changes in fair value for the quarter-ended March 31, 2008 (dollars
      in thousands):


At
                  December 31, 2007
              
              Net
                  Realized
                Losses
                  in Net Income
              
              Net
                  Unrealized Gains in Other Comprehensive Income
              
              Net
                  Purchases Sales and Settlements
              
              Transfers
                  In/out of Level 3
              
              At
                  March 31, 2008
              
              Net
                  Cumulative
                Unrealized
                GainsServicingassets
              
              $
              4,950
              
              $
              (322
              )
              $
              -
              
              $
              303
              
              $
              -
              
              $
              4,931
              
              $
              -Interest-onlystrips
              
              
              753
              
              
              (50
              )
              
              24
              
              
              -
              
              
              -
              
              
              727
              
              
              202




**Note
                4.**
              **Bank
                  Owned Life Insurance (BOLI) Obligation**




FASB
      Emerging Issue Task Force (“EITF”) 06-4 requires an employer to recognize
      obligations associated with endorsement split-dollar life insurance arrangements
      that extend into the participant’s post-employment benefit cost for the
      continuing life insurance or based on the future death benefit depending on
      the
      contractual terms of the underlying agreement. EITF 06-4 is effective as of
      the
      beginning of the entity’s first fiscal year after December 15, 2007. We adopted
      EITF 06-4 on January 1, 2008 using the later option, i.e., based on the future
      death benefit. Upon this adoption, we recognized increases in the liability
      for
      unrecognized post-retirement obligations of $806,000 and $1,070,000 for
      directors and officers, respectively, as a cumulative adjustment to the current
      year’s beginning equity. During the first quarter of 2008, the increase in BOLI
      expense and liability related to the adoption of EITF 06-4 was $36,000, which
      was included as part of the other expense and other liabilities balances in
      the
      consolidated financial statements.







8


**Note
              5.**
            **Shareholder’s
                Equity**




***Earnings
      per Share***




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




**For
                the Quarter Ended**
              **March
                31,**
              **(dollars
                in thousands)****2008**
            
            **2007**Numerator:Net
                income - numerator for basic earningsper
                share and diluted earnings per share-income
                available to common stockholders
            
            $
            7,050
            
            $
            7,317Denominator:Denominator
                for basic earnings per share:
              Weighted-average
                shares
            
            
            29,276,871
            
            
            29,346,442Effect
                of dilutive securities:
              Stock
                option dilution
            
            
            64,209
            
            
            170,857Denominator
                for diluted earnings per share:
              Adjusted
                weighted-average shares
              And
                assumed conversions
            
            
            29,341,080
            
            
            29,517,299Basic
                earnings per share
            
            $
            0.24
            
            $
            0.25Diluted
                earnings per share
            
            $
            0.24
            
            $
            0.25




***Stock
      Repurchase Program***




In
      July
      2007, the Company’s Board of Directors authorized a stock repurchase program to
      repurchase up to $10 million of the Company’s common stock until July 31, 2008.
      During first quarter of 2008, there were no such repurchases. The approximate
      dollar value of shares that may yet be purchased under the program as of March
      31, 2008 was $8.7 million.




**Note
              6.**
            **Share-Based
                Compensation**




During
      1997, the Bank established the 1997 stock option plan (“1997 Plan”) that
      provided for the issuance of options to purchase up to 6,499,800 shares of
      its
      authorized but unissued common stock to managerial employees and directors.
      The
      options granted under the 1997 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. This 1997 Plan completed its ten-year term and expired in May
      2007, with 307,650 previously granted options outstanding as of March 31, 2008.
      In accordance with the terms of the 1997 Plan, options granted under the 1997
      Plan will remain outstanding according to their respective terms, despite
      expiration of the 1997 Plan. Options granted through 2005 under this 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.




On
      January 1, 2006, the Company adopted the SFAS No. 123R, using the prospective
      method. The adoption of SFAS No. 123R resulted in incremental stock-based
      compensation expense of $56,000 and $118,000 for the three months ended March
      31, 2008 and 2007, respectively, and accordingly decreased the periodic income
      before income taxes by the respective amounts and their effects on basic or
      diluted earnings per share was negligible. For the three months ended March
      31,
      2008 and 2007, cash provided by operating activities decreased by $57,000 and
      $1,286,000, respectively, and cash provided by financing activities increased
      by
      identical amounts for 2008 and 2007, respectively, related to excess tax
      benefits from stock-based payment arrangements.




9




The
      Company has issued stock options to employees under share-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. The expected life (estimated
      period of time outstanding) of options was estimated using the simple method
      in
      accordance with SFAS No. 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
      three months ended March 31, 2008 and 2007, there were no stock options
      granted.




A
      summary
      of activity for the Company’s stock options as of and for the three months ended
      March 31, 2008 is presented below:  **Shares**
              
              **Weighted**
                **Average**
                **Exercise**
                **Price**
              
              **Weighted**
                **Average**
                **Remaining**
                **Contractual
                  term**
                **(in
                  years)**
              
              **Aggregate**
                **Intrinsic**
                **Value**Outstanding
                  at January 1, 2008
              
              
              522,476
              
              $
              12.16Granted
              
              
              -
              
              
              -Exercised
              
              
              (137,866
              )
              
              2.84Forfeited
              
              
              (76,960
              )
              
              17.73Outstanding
                  at March 31, 2008
              
              
              307,650
              
              
              14.94
              
              
              5.23
              
              $
              170,035Options
                  exercisable at March 31, 2008
              
              
              197,690
              
              
              13.63
              
              
              5.50
              
              $
              170,035
 
 The
        following table summarizes information about stock options outstanding as
        of
        March 31, 2008:
  **Options
                  Outstanding**
              
              **Options
                  Exercisable****Weighted****Weighted**
              
              **Average**
              
              
              
              **Weighted****Number
                  of**
              
              **Average**
              
              **Remaining**
              
              **Number
                  of**
              
              **Average****Outstanding**
              
              **Exercise**
              
              **Contractual**
              
              **Exercisable**
              
              **Exercise****Range
                  of Exercise Prices**
              
              **Options**
              
              **Price**
              
              **Life**
              
              **Options**
              
              **Price**$1.00
                  to $1.99
              
              
              4,800
              
              $
              1.39
              
              
              2.72
                  years
              
              
              4,800
              
              $
              1.39$2.00
                  to $2.99
              
              
              20,260
              
              
              2.57
              
              
              4.15
                  years
              
              
              20,260
              
              
              2.57$3.00
                  to $4.99
              
              
              12,000
              
              
              4.53
              
              
              5.33
                  years
              
              
              12,000
              
              
              4.53$13.00
                  to $14.99
              
              
              47,000
              
              
              13.74
              
              
              7.03
                  years
              
              
              32,200
              
              
              13.73$15.00
                  to $16.99
              
              
              102,090
              
              
              15.21
              
              
              6.98
                  years
              
              
              75,630
              
              
              15.22$17.00
                  to $19.99
              
              
              121,500
              
              
              18.80
              
              
              3.33
                  years
              
              
              52,800
              
              
              18.72$1.00
                  to $19.99
              
              
              307,650
              
              
              14.94
              
              
              5.23
                  years
              
              
              197,690
              
              
              13.63


10


During
      the three months ended March 31, 2008 and 2007, information related to stock
      options is presented as follows:  **Three
                  Months
                  Ended****March
                  31,****2008**
              
              **2007**Total
                  intrinsic value of options exercised
              
              $
              618,443
              
              $
              3,071,873Total
                  fair value of options vested
              
              
              54,116
              
              
              73,379Weighted
                  average fair value of optionsgranted
                  during the period
              
              
              -
              
              
              -
  As
        of
        March 31, 2008, total unrecognized compensation cost related to stock options
        amounted to $195,000, which is expected to be recognized over a weighted
        average
        period of 1.02 years.
  A
        summary
        of the status and changes of the Company’s nonvested shares related to the
        Company’s stock plans as of and during the three months ended March 31, 2008 is
        presented below:
  ******Shares**
              
              **Weighted
                  Average**
                **Grant
                  date**
                **Fair
                  value**Nonvested
                  at January 1, 2008
              
              
              164,540
              
              $
              4.15Granted
              
              
              -
              
              
              -Vested
              
              
              (21,520
              )
              
              2.51Forfeited
                  on unvested shares
              
              
              (33,060
              )
              
              5.29Nonvested
                  at March 31, 2008
              
              
              109,960
              
              
              4.13
  **Note
                7.**
              **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.




11


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




**(dollars
                in thousands)**
            
            **Three
                Months Ended March 31, 2008**
            
            **Three
                Months Ended March 31, 2007****Business
                Segment**
            
            **Banking**
              **Operations**
            
            **TFS**
            
            **SBA**
            
            **Total**
            
            **Banking****Operations**
            
            **TFS**
            
            **SBA**
            
            **Total**Net
                interest income
            
            $
            15,901
            
            $
            620
            
            $
            3,223
            
            $
            19,744
            
            $
            14,113
            
            $
            951
            
            $
            3,909
            
            $
            18,973Less
                provision for loan losses
            
            
            (1,014
            )
            
            422
            
            
            1,992
            
            
            1,400
            
            
            1,550
            
            
            (84
            )
            
            164
            
            
            1,630Other
                operating income
            
            
            3,528
            
            
            275
            
            
            1,351
            
            
            5,154
            
            
            3,040
            
            
            343
            
            
            1,827
            
            
            5,210Net
                revenue
            
            
            20,443
            
            
            473
            
            
            2,582
            
            
            23,498
            
            
            15,603
            
            
            1,378
            
            
            5,572
            
            
            22,553Other
                operating expenses
            
            
            10,896
            
            
            260
            
            
            1,068
            
            
            12,224
            
            
            9,142
            
            
            236
            
            
            1,125
            
            
            10,503Income
                before taxes
            
            $
            9,547
            
            $
            213
            
            $
            1,514
            
            $
            11,274
            
            $
            6,461
            
            $
            1,142
            
            $
            4,447
            
            $
            12,050Business
                segment assets
            
            $
            2,063,297
            
            $
            42,387
            
            $
            154,751
            
            $
            2,260,435
            
            $
            1,800,073
            
            $
            50,208
            
            $
            150,802
            
            $
            2,001,083





**Note
              8.**
            **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 consolidated 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 March 31, 2008 are summarized as
      follows (dollars in thousands):




Commitments
                to extend credit
            
            $
            233,436Standby
                letters of credit
            
            $
            9,333Commercial
                letters of credit
            
            $
            12,615




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. We
      do
      not believe the final disposition of all such claims will have a material
      adverse effect on our financial position or results of operations.




**Note
              9.**
            **Recent
                Accounting Pronouncements**




In
      December 2007, the FASB issued SFAS No. 141R, *Business
      Combinations.* This
      new
      statement revises SFAS No. 141, which was issued June 2001. SFAS No. 141R
      changes multiple aspects of the accounting for business combinations. Under
      the
      guidance in SFAS No. 141R, the acquisition method must be used, which requires
      the acquirer to recognize most identifiable assets acquired, liabilities assumed
      and non-controlling interests in the acquiree at their full fair value on the
      acquisition date. Goodwill is to be recognized as the excess of the
      consideration transferred plus the fair value of the non-controlling interest
      over the fair values of the identifiable net assets acquired. Subsequent changes
      in the fair value of contingent consideration classified as a liability are
      to
      be recognized in earnings, while contingent consideration classified as equity
      is not to be remeasured. Costs such as transaction costs are to be excluded
      from
      acquisition accounting, generally leading to recognizing expense and
      additionally, restructuring costs that do not meet certain criteria at the
      acquisition date are to be subsequently recognized as post-acquisition costs.
      SFAS No. 141R is effective for business combinations for which the acquisition
      date is on or after the beginning of the first annual reporting period beginning
      on or after December 15, 2008. We are currently assessing the impact that the
      adoption of SFAS No. 141R will have on our consolidated financial
      statements.




12




In
      December 2007, the FASB issued SFAS No. 160, *Noncontrolling
      Interests in Consolidated Financial Statements* ,
      which
      amends Accounting Research Bulletin (“ARB”) No. 51, *Consolidated
      Financial Statements* .
      SFAS
      No. 160 requires a non-controlling interest or minority interest to be reported
      by all entities in the same way, which is as equity in the consolidated
      financial statements. It also requires income attributable to the
      non-controlling interest to be disclosed on the face of the consolidated
      statement of income. Furthermore, SFAS No. 160 eliminates the diversity that
      currently exists in accounting for transactions between an entity and
      non-controlling interests by requiring they be treated as equity transactions.
      SFAS No. 160 is effective for financial statements issued for fiscal years
      beginning on or after December 15, 2008, and interim periods within those years.
      Early adoption is prohibited. The provisions of SFAS No. 160 should be applied
      prospectively, except for presentation and disclosure requirements. The
      presentation and disclosure requirements should be applied retrospectively
      for
      all periods presented. We are currently assessing the impact that the adoption
      of SFAS No. 160 will have on our consolidated financial statements.




In
      February 2008, the FASB issued FASB Staff Position (“FSP”) No. 157-2, which
      delays the effective date of SFAS No. 157, for nonfinancial assets and
      nonfinancial liabilities, except for items that are recognized or disclosed
      at
      fair value in the financial statements on a recurring basis. The delay is
      intended to allow the FASB and constituents additional time to consider the
      effect of various implementation issues that have arise, or that may arise,
      from
      the application of SFAS No. 157. This FSP applies to various nonfinancial assets
      and liabilities, including goodwill and nonfinancial long-lived assets, and
      it
      defers the effective date of SFAS No. 157 to such nonfinancial assets and
      liabilities to fiscal years beginning after November 15, 2008, and interim
      periods within those fiscal years for items within the scope of this FSP. We
      are
      currently assessing the impact that the adoption of FSP No. 157-2 will have
      on
      our consolidated financial statements.




In
      March
      2008, the FASB issued SFAS No. 161, *Disclosure
      about Derivative Instruments and Hedging Activities,* which
      amends SFAS No. 133, *Accounting
      for Derivative Instruments and Hedging Activities.* This
      new
      statement has the same scope as SFAS No. 133. Accordingly, it applies to all
      entities. SFAS No. 161 is intended to improve financial reporting about
      derivative instruments and hedging activities by requiring enhanced disclosures
      to enable investors a better and clearer understanding of the derivative
      instruments and hedging activities. Entities are required to provide enhanced
      disclosures about how and why an entity uses derivative instruments, how
      derivative instruments and related hedged items are accounted for under SFAS
      No.
      133 and its related interpretations, and how derivative instruments and related
      hedged items affect an entity’s financial position, financial performance, and
      cash flows. SFAS No. 161 is effective for financial statements issued for fiscal
      years and interim periods beginning after November 15, 2008, with early adoption
      encouraged. The statement encourages, but does not require, comparative
      disclosures for earlier periods at initial adoption. We are currently assessing
      the impact that the adoption of SFAS No. 161 will have on our consolidated
      financial statements.




13




**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 months ended March 31, 2008 and
      2007, 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, 2007, including
      the
      following:




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




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




·
            Banking
                organizations are subject to interest rate risk and variations in
                interest
                rates may negatively affect our financial
                performance.




·
            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.




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




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




·
            Recently
                negative development in the financial industry and U.S. and global
                credit
                markets may affect our operations and
                results.




·
            Our
                operations may require us to raise additional capital in the future,
                but
                that capital may not be available or may not be on terms acceptable
                to us
                when it is needed.




·
            The
                short-term and long-term impact of the new Basel II capital standards
                and
                the forthcoming new capital rules to be proposed for non-Basel II
                U.S.
                banks is uncertain.




·
            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.




14




·
            Unexpected
                litigation or unexpected outcomes of pending litigation matters may
                negatively affect our results of operations, financial condition
                or
                reputation.




·
            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.




·
            We
                face substantial competition in our primary market
                area.




·
            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
                increase the cost of doing business and inhibits our ability to
                compete.




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




·
            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.




These
      factors and the risk factors referred to in our Annual Report on Form 10-K
      for
      the year ended December 31, 2007 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.




15


**Selected
      Financial Data**




The
      following table presents selected historical financial information (unaudited)
      as of and for the three months ended March 31, 2008 and 2007. 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.




**Executive
      Overview**


**(dollars
                  in thousands, except per share data)****As
                  of and for the Three Months Ended**
              
              **March
                  31, 2008**
              
              **March
                  31, 2007**Net
                  income
              
              $
              7,050
              
              $
              7,317Net
                  income per share, basic
              
              
              0.24
              
              
              0.25Net
                  income per share, diluted
              
              
              0.24
              
              
              0.25Net
                  interest income before provision for loan losses andoff-balance
                  sheet commitments
              
              
              19,744
              
              
              18,973**Average
                  balances:**Assets
              
              
              2,211,860
              
              
              1,991,923Cash
                  and cash equivalents
              
              
              76,202
              
              
              175,918Investment
                  securities
              
              
              222,525
              
              
              186,563Net
                  loans
              
              
              1,828,889
              
              
              1,551,416Total
                  deposits
              
              
              1,704,820
              
              
              1,731,159Shareholders’
                  equity
              
              
              175,332
              
              
              155,100**Performance
                  Ratios:**Annualized
                  return on average assets
              
              
              1.28
              %
              
              1.47
              %Annualized
                  return on average equity
              
              
              16.08
              %
              
              18.87
              %Net
                  interest margin
              
              
              3.83
              %
              
              4.10
              %Efficiency
                  ratio
              
              
              49.10
              %
              
              43.43
              %**Capital
                  Ratios:**Tier
                  1 capital to adjusted total assets
              
              
              10.24
              %
              
              10.00
              %Tier
                  1 capital to risk-weighted assets
              
              
              11.75
              %
              
              12.07
              %Total
                  capital to risk-weighted assets
              
              
              14.37
              %
              
              13.80
              %
 
 **Period-end
                  balances as of:**
              
              **March
                  31, 2008**
              
              **December
                  31, 2007**
              
              **March
                  31, 2007**Total
                  assets
              
              $
              2,260,435
              
              $
              2,196,705
              
              $
              2,001,083Investment
                  securities
              
              
              218,882
              
              
              231,640
              
              
              186,403Total
                  loans, net of unearned income
              
              
              1,883,500
              
              
              1,809,050
              
              
              1,615,355Total
                  deposits
              
              
              1,727,587
              
              
              1,763,071
              
              
              1,735,683Junior
                  subordinated debentures
              
              
              87,321
              
              
              87,321
              
              
              61,547FHLB
                  borrowings
              
              
              240,000
              
              
              150,000
              
              
              20,000Shareholders’
                  equity
              
              
              177,536
              
              
              171,786
              
              
              157,186**Asset
                  Quality Ratios:**Net
                  charge-off to average total loans for the quarter
              
              
              0.06
              %
              
              0.23
              %
              
              0.17
              %Nonperforming
                  loans to total loans
              
              
              0.64
              %
              
              0.59
              %
              
              1.25
              %Nonperforming
                  assets to total loans and other real estate owned
              
              
              0.72
              %
              
              0.60
              %
              
              1.25
              %Allowance
                  for loan losses to total loans
              
              
              1.17
              %
              
              1.19
              %
              
              1.07
              %Allowance
                  for loan losses to nonperforming loans
              
              
              184.35
              %
              
              203.55
              %
              
              85.01
              %
  Wilshire
        Bancorp, Inc. succeeded to the business and operations of Wilshire State
        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 Securities
        Exchange Act of 1934, as amended, or Exchange Act, the Company has succeeded
        to
        the reporting obligations of the Bank and the reporting obligations of the
        Bank
        to the FDIC have terminated. Filings by the Company under the Exchange Act,
        like
        this Form 10-Q, are to be made with the Securities and Exchange Commission,
        or
        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 doing a 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 that we served are owned by Hispanic and other
      minority groups.




16




We
      have
      also expanded and diversified our business with the focus on our commercial
      and
      consumer lending divisions. Over the past several years, our network of branches
      and loan production offices has been expanded geographically. We currently
      maintain 20 full-service branch banking offices in Southern California, Texas,
      New Jersey, and New York, and 7 separate loan production offices in Aurora,
      Colorado (the Denver area); Atlanta, Georgia; Palisades Park, New Jersey;
      Dallas, Texas; Houston, Texas; Annandale, Virginia, and Seattle,
      Washington.




In
      July
      2007, the Company implemented a stock repurchase program whereby the Company
      may
      repurchase up to an aggregate of $10 million worth of shares of its common
      stock
      from time to time until July 31, 2008. Thus far, 127,425 shares have been
      repurchased under this program amounting to $1.3 million. We believe this
      program represents an efficient way to manage capital as well as affirming
      our
      optimism for the long term value for shareholders.




**First** **Quarter 2008 Key Performance Indicators**




We
      believe the following were key indicators of our performance for operations
      during the first quarter of 2008:




·
            Under
                our strategy of disciplined loan and asset growth, our total assets
                grew
                to $2.26 billion at the end of first quarter of 2008, or an increase
                of
                2.90% from $2.20 billion at the end of
                2007.




·
            Consistent
                with our strategy and asset growth, our total loans, net of allowance
                for
                loan losses, grew in a more controlled way by 4.14% to $1.86 billion
                at
                the end of the first quarter of 2008, as compared with $1.79 billion
                at
                the end of 2007.




·
            Despite
                the overall weak economy and fierce competition for deposits among
                financial institutions, our total deposits only slightly declined
                2.01% to
                $1.73 billion at the end of the first quarter of 2008, as compared
                with
                $1.76 billion at the end of 2007.




·
            Due
                to the significant 200 basis point cuts of federal funds rate in
                January
                and March 2008, total interest income decreased 5.08% to $38.0 million
                in
                the first quarter of 2008, as compared with $40.0 million in the
                fourth
                quarter of 2007. However, it increased 0.89% when compared to $37.6
                million in the first quarter of 2007.




·
            Consistent
                with the interest rate cuts, our total interest expense was reduced
                to
                $18.2 million in the first quarter of 2008, or 6.42% and 2.35% decreases
                from $19.5 million and $18.7 million in the fourth quarter and first
                quarter of 2007, respectively.




·
            Net
                income for the first quarter of 2008 was $7.1 million, which represents
                a
                slight decrease of 3.65% from $7.3 million in the first quarter of
                2007
                and a significant increase of 28.21% from $5.5 million in the fourth
                quarter of 2007. Such income growth compared to the previous quarter
                was
                primarily explained by steady loan growth and improved loan quality.




**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
      GAAP. 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.
      Besides the newly adopted accounting pronouncements noted at Note 3 and Note
      4,
      we have particularly identified several 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 retained interests and servicing assets related to
      the
      sales of SBA loans, and the accounting for income tax provisions and the
      uncertainty in income taxes. In each area, we have identified the variables
      most
      important in the estimation process. We have used the best information available
      to make the estimates 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.


17




Our
      significant accounting policies are described in greater detail in our 2007
      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”) of this report, 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 March 31, 2008.




**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.




Average
      interest-earning assets increased 11.33% to $2.06 billion in the first quarter
      of 2008, as compared with $1.85 billion in the same quarter of 2007 and average
      net loans increased 17.89% to $1.83 billion in the first quarter of 2008, as
      compared with $1.55 billion in the same quarter of 2007. Our average
      interest-bearing deposits slightly decreased 1.08% to $1.40 billion in the
      first
      quarter of 2008, as compared with $1.42 billion in the same quarter of 2007.
      Among which, average FHLB advances and other borrowings have significantly
      increased $197.6 million to $217.6 million in the first quarter of 2008 from
      $20.0 million in the same quarter of last year (see “Financial
      Condition-Deposits and Other Sources of Funds” below), and average junior
      subordinated debenture has increased $25.8 million to $87.3 million in the
      first
      quarter of 2008 from $61.5 million in the first quarter of 2007. As a result,
      total interest bearing liabilities increased 13.85% to $1.71 billion in the
      first quarter of 2008, as compared with $1.50 billion in the first quarter
      of
      2007.




The
      recent interest rate cuts have decreased our earning-asset yields as well as
      our
      cost of funds. However, due the stiff competition in our local market, our
      earning-asset yields have decreased relatively more when compared to our cost
      of
      funds. The average yields on our interest-earning assets decreased to 7.37%
      for
      the first quarter of 2008 from 8.13% for the first quarter of the prior year.
      Consistent with the decrease in average yields on interest-earning assets,
      the
      cost of funds for average yields on interest-earning liabilities also decreased
      to 4.27% for the first quarter of 2008 from 4.97% for the prior year’s same
      quarter. Although interest income slightly grew 0.89%, because of the higher
      interest-earning asset balance, to $38.0 million for the first quarter of 2008,
      as compared with $37.6 million for the prior year’s same period, the interest
      expense has slightly decreased 2.35% to $18.2 million for the first quarter
      of
      2008, as compared with $18.7 million for the same quarter a year ago. The net
      result of our growth in interest income and decline in interest expense was
      an
      increase in net interest income of 4.07% to $19.7 million for the first quarter
      of 2008, as compared with $19.0 million for the same quarter a year
      ago.




Despite
      our net interest income having increased by $0.8 million in the first quarter
      2008, our net interest spread and margin were lowered, primarily impacted by
      the
      stiff deposit competition among financial institutions and 200 basis point
      federal funds rate cuts in January and March 2008. Our net interest spread
      and
      net interest margin have deteriorated in the first quarter of 2008 to 3.10%
      and
      3.83%, respectively, lowered from 3.29% and 4.15% in the prior quarter, and
      3.16% and 4.10% in the same quarter a year ago. M anagement believes
      that the recent federal funds rate cut of 75 basis points on March 18, 2008,
      will further affect and compress our margins in the second quarter of 2008.




18


The
      following table sets 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 March 31,****2008**
              
              **2007****(dollars
                  in thousands)****Average
                  Balance**
              
              **Interest
                  Income/ Expense**
              
              **Annualized
                  Average Rate/Yield**
              
              **Average
                  Balance**
              
              **Interest
                  Income/ Expense**
              
              **Annualized
                  Average**
                **Rate/Yield****Assets**:Interest-earning
                  assets:Net
                  loans1
              
              $
              1,828,889
              
              $
              35,318
              
              
              7.72
              %
              $
              1,551,416
              
              $
              33,901
              
              
              8.74
              %Securities
                  of U.S. government agencies
              
              
              204,313
              
              
              2,378
              
              
              4.66
              %
              
              161,064
              
              
              1,933
              
              
              4.80
              %Other
                  investment securities
              
              
              18,211
              
              
              206
              
              
              4.52
              %
              
              25,499
              
              
              306
              
              
              4.80
              %Interest
                  on federal fund sold
              
              
              9,851
              
              
              80
              
              
              3.27
              %
              
              113,444
              
              
              1,509
              
              
              5.32
              %Total
                  interest-earning assets
              
              
              2,061,264
              
              
              37,982
              
              
              7.37
              %
              
              1,851,423
              
              
              37,649
              
              
              8.13
              %Cash
                  and due from banks
              
              
              66,351
              
              
              
              
              
              
              
              
              62,474Other
                  assets
              
              
              84,245
              
              
              
              
              
              
              
              
              78,026Total
                  assets
              
              $
              2,211,860
              
              
              
              
              
              
              
              $
              1,991,923**Liabilities
                  and Shareholders’ Equity:**Interest-bearing
                  liabilities:Money
                  market deposits
              
              $
              396,595
              
              
              3,725
              
              
              3.76
              %
              $
              405,927
              
              
              4,598
              
              
              4.53
              %Super
                  NOW deposits
              
              
              22,520
              
              
              79
              
              
              1.41
              %
              
              20,957
              
              
              58
              
              
              1.11
              %Savings
                  deposits
              
              
              32,617
              
              
              249
              
              
              3.05
              %
              
              29,270
              
              
              141
              
              
              1.93
              %Time
                  certificates of deposit in denominations of $100,000 or
                  more
              
              
              788,630
              
              
              8,799
              
              
              4.46
              %
              
              803,630
              
              
              10,618
              
              
              5.28
              %Other
                  time deposits
              
              
              163,993
              
              
              1,886
              
              
              4.60
              %
              
              159,946
              
              
              1,948
              
              
              4.87
              %FHLB
                  advances and other borrowings
              
              
              217,593
              
              
              2,043
              
              
              3.76
              %
              
              20,017
              
              
              181
              
              
              3.63
              %Junior
                  subordinated debenture
              
              
              87,321
              
              
              1,457
              
              
              6.68
              %
              
              61,547
              
              
              1,132
              
              
              7.36
              %Total
                  interest-bearing liabilities
              
              
              1,709,269
              
              
              18,238
              
              
              4.27
              %
              
              1,501,294
              
              
              18,676
              
              
              4.97
              %Non-interest-bearing
                  deposits
              
              
              300,465
              
              
              
              
              
              
              
              
              311,428Total
                  deposits and other borrowings
              
              
              2,009,734
              
              
              
              
              
              1,812,722Other
                  liabilities
              
              
              26,794
              
              
              
              
              
              
              
              
              24,101Shareholders’
                  equity
              
              
              175,332
              
              
              
              
              
              
              
              
              155,100Total
                  liabilities and shareholders’ equity
              
              $
              2,211,860
              
              
              
              
              
              
              
              $
              1,991,923Net
                  interest income
              
              
              
              
              $
              19,744
              
              
              
              
              
              
              
              $
              18,973Net
                  interest spread2
              
              
              
              
              
              
              
              
              3.10
              %
              
              
              
              
              
              
              
              3.16
              %Net
                  interest margin3
              
              
              
              
              
              
              
              
              3.83
              %
              
              
              
              
              
              
              
              4.10
              %


___________________________


1 Net loan
      fees have been included in the calculation of interest income. Loan fees were
      approximately $1,282,000 and $1,599,000 for the quarters ended March 31, 2008
      and 2007, respectively. 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.




19


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, respectively, 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)**




**For
                the Quarter Ended March 31,**
              **2008
                vs. 2007****Increase
                (Decrease) Due to Change In**Volume
            
            Rate
            
            TotalInterest
              income:Net
                loans1
            
            $
            5,637
            
            $
            (4,220
            )
            $
            1,417Securities
                of U.S. government agencies
            
            
            504
            
            
            (59
            )
            
            445Other
                investment securities
            
            
            (83
            )
            
            (17
            )
            
            (100
            )Interest
                on federal fund sold
            
            
            (1,005
            )
            
            (424
            )
            
            (1,429
            )Total
                interest income
            
            
            5,053
            
            
            (4,720
            )
            
            333Interest
                expense:Money
                market deposits
            
            
            (104
            )
            
            (769
            )
            
            (873
            )Super
                NOW deposits
            
            
            5
            
            
            16
            
            
            21Savings
                deposits
            
            
            18
            
            
            90
            
            
            108Time
                certificates of deposit indenominations
                of $100,000 or more
            
            
            (195
            )
            
            (1,624
            )
            
            (1,819
            )Other
                time deposits
            
            
            48
            
            
            (110
            )
            
            (62
            )FHLB
                advances and other borrowings
            
            
            1,855
            
            
            7
            
            
            1,862Junior
                subordinated debenture
            
            
            438
            
            
            (113
            )
            
            325Total
                interest expense
            
            
            2,065
            
            
            (2,503
            )
            
            (438
            )Change
                in net interest income
            
            $
            2,988
            
            $
            (2,217
            )
            $
            771


___________________________


1 Net loan
        fees have been included in the calculation of interest income. Net loan fees
        were approximately $1,282,000 and $1,599,000 for the quarters ended March
        31,
        2008 and 2007, respectively. Loans are net of the allowance for loan losses,
        deferred fees, unearned income, and related direct costs, but includes those
        placed on non-accrual status.


**P** **rovision
      for Loan Losses and Provision for Off-balance Sheet Losses**




Due
      to
      the credit risk inherent in our lending business, we set aside allowances
      through charges to earnings. Such charges are made not 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 is presented as a component of other liabilities.




We
      recorded a provision for loan and off-balance sheet losses of $1.4 million
      in
      the first quarter of 2008 as compared to a provision of $1.6 million for the
      prior year’s same quarter. The decrease in the provision for credit and
      off-balance sheet losses was in line with our enhanced lending policy and our
      strategy of improving loan quality (see “Financial Condition - Allowance for
      Loan and Off-Balance Sheet Losses” below for further discussion). The $1.4
      million provision in the first quarter of 2008 was net of a recovery of $112,000
      provision for off-balance-sheet items, while the $1.6 million provision in
      the
      first quarter of 2007 included $375,000 provision to the reserve for
      off-balance-sheet items. The procedures for monitoring the adequacy of the
      allowance for loan and off-balance sheet losses, as well as detailed information
      concerning the allowance itself, are described in the section entitled
“Allowance for Loan and Off-Balance Sheet Losses” below.


20




**Non-interest** **Income**




Total
      non-interest income stayed fairly stable at $5.2 million in the first quarter
      of
      2008 and 2007. This was because the $945,000 decrease in gain of sale of loans
      was offset by the income increase in other areas, primarily related to the
      $461,000 increase in service charges on deposit accounts, $256,000 increase
      in
      loan-related servicing income, and $130,000 increase in income from other
      income. Non-interest income as a percentage of average assets decreased to
      0.23%
      for the first quarter of 2008 from 0.26% for the prior year’s same period, which
      was because the non-interest income stayed unchanged while the average asset
      base has grown 11.05% to $2.21 billion in the first quarter of 2008, as compared
      with $1.99 billion in the same quarter a year ago. We currently earn
      non-interest income from various sources, including an income stream provided
      by
      BOLI in the form of an increase in cash surrender value.




The
      following table sets forth the various components of our non-interest income
      for
      the periods indicated:




**Non-interest
      Income**


**(dollars
      in thousands)**




**For
                Three Months Ended March 31,**
            
            ******2008**
            
            ******2007****(Amount)**
            
            **(%)**
            
            **(Amount)**
            
            **(%)**Service
                charges on deposit accounts
            
            $
            2,748
            
            
            53.3
            %
            $
            2,287
            
            
            43.9
            %Gain
                on sale of loans
            
            
            864
            
            
            16.8
            %
            
            1,809
            
            
            34.8
            %Trade
                finance and loan servicing income
            
            
            675
            
            
            13.1
            %
            
            419
            
            
            8.0
            %Income
                from other earning assets
            
            
            319
            
            
            6.2
            %
            
            277
            
            
            5.3
            %Other
                income
            
            
            548
            
            
            10.6
            %
            
            418
            
            
            8.0
            %Total
            
            $
            5,154
            
            
            100.0
            %
            $
            5,210
            
            
            100.0
            %Average
                assets
            
            $
            2,211,860
            
            
            
            
            $
            1,991,923Non-interest
                income as a % of average assets
            
            
            
            
            
            0.23
            %
            
            
            
            
            0.26
            %




Our
      largest source of non-interest income in the first quarter of 2008 was the
      service charge income on deposit accounts, which generally increases as the
      number of transactional accounts increase. The service charge income was $2.7
      million, representing over $53% of the total non-interest income for the first
      quarter of 2008. It has increased 20.2% as compared to $2.3 million in the
      first
      quarter of 2007.




Our
      second largest source of non-interest income for the first quarter of 2008
      was
      the gain on the sale of loans, which was $864,000 for the first quarter of
      2008,
      representing approximately 17% of the total non-interest income. It has
      substantially decreased to $864,000 in the first quarter of 2008 from $1.8
      million in the same period of prior year. This non-interest income is derived
      primarily from the sale of the guaranteed portion of SBA loans. We sell the
      portion of SBA loans guaranteed under the SBA 7(a) program in government
      securities secondary markets and retain servicing rights. We also recognized
      minimal gains from the sale of residential mortgage loans of $14,000 in first
      quarter 2008 due to the slow-down of the residential mortgage market. Since
      there were no unguaranteed SBA loan sales, and only $14,000 sales gain on
      residential mortgage sales in the first quarter of 2008, the $945,000 decrease
      in gain on sale was primarily related to the sale of guaranteed portions of
      the
      SBA loans. Such decrease in gain on sale of loans was primarily related to
      the
      combined effect of decrease in SBA loan production level, and decrease in sales
      premium rate. SBA loan production levels decreased $16.5 million or 42.6% to
      $22.3 million in first quarter of 2008 compared to $38.8 million in first
      quarter 2007. The average sales premium of SBA loans we have received decreased
      233 basis points to 5.12% in the first quarter of 2008, as compared with 7.45%
      in the first quarter 2007.




The
      third
      largest source of non-interest 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. In the first
      quarter of 2008, it increased to $675,000 as compared with $419,000 for the
      prior year’s same period. Such increase was primarily $413,000 income increase
      related to the disposal of servicing assets and interest-only (“I/O”) strips
      between the current quarter and the same quarter a year ago. 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 and I/O strips that we capitalize upon sale of the related loans. Such
      servicing rights and I/O strips are also charged against the loan service fee
      income account when the sold loans are paid off. For the first three months
      of
      2008, $194,000 of servicing assets and I/O strips were charged back to this
      loan
      service fee income account by the early pay-offs as compared to $607,000 for
      the
      prior year’s same period.




21




Income
      from other earning assets mainly represents dividend income on FHLB stock
      ownership and increases in cash surrender value of BOLI. For the first quarter
      of 2008, the balance increased to $319,000 as compared to $277,000 in the prior
      year’s same period. The $42,000 increase was primarily attributable to $32,000
      increase in FHLB stock dividend income, which was due to $2.6 million increase
      in FHLB stock corresponding to our increase in FHLB borrowings.




Non-interest
      income, other than the categories specifically addressed above, represents
      income from miscellaneous sources, such as checkbook sales income, gain on
      sales
      of investment securities, excess of insurance proceeds over carrying value
      of an
      insured loss, and generally increases as our business activities grow. For
      the
      first quarter of 2008, this miscellaneous income amounted to $548,000 as
      compared to $418,000 in the prior year’s same period.




**Non-interest** **Expense**




Total
      noninterest expense increased to $12.2 million in the first quarter of 2008
      from
      $10.5 million in the same period of 2007. This increase is attributed to the
      expanded personnel and premises associated with our business growth, including
      the increase in expenses associated with the new offices opened in the third
      and
      fourth quarters of 2007. However, due to continuing efforts to minimize
      operating expenses during our expansion, we were able to maintain non-interest
      expenses as a percentage of average assets at the low level of 0.55% and 0.53%
      in the first quarter of 2008 and 2007, respectively. Our efficiency ratio was 49.1% i n
      the
      first quarter of 2008, compared to 43.4% in the same quarter a year ago, which
      was mainly due to the integration of the operation for the newly opened New
      Jersey and California branches in the previous quarters.




The
      following table sets forth a summary of non-interest expenses for the periods
      indicated:




**Non-interest
      Expense** **s**


**(dollars
      in thousands)**




**For
                the Quarter Ended March 31,**
            
            **2008**
            
            **2007****(Amount)**
            
            **(%)**
            
            **(Amount)**
            
            **(%)**Salaries
                and employee benefits
            
            $
            6,976
            
            
            57.1
            %
            $
            5,698
            
            
            54.3
            %Occupancy
                and equipment
            
            
            1,425
            
            
            11.7
            %
            
            1,270
            
            
            12.1
            %Data
                processing
            
            
            764
            
            
            6.2
            %
            
            765
            
            
            7.3
            %Loan
                referral fee
            
            
            280
            
            
            2.3
            %
            
            420
            
            
            4.0
            %Professional
                fees
            
            
            500
            
            
            4.1
            %
            
            315
            
            
            3.0
            %Directors’
                fees
            
            
            96
            
            
            0.8
            %
            
            140
            
            
            1.3
            %Office
                supplies
            
            
            217
            
            
            1.8
            %
            
            174
            
            
            1.7
            %Advertising
            
            
            177
            
            
            1.4
            %
            
            146
            
            
            1.4
            %Communications
            
            
            123
            
            
            1.0
            %
            
            115
            
            
            1.1
            %Deposit
                insurance premium
            
            
            330
            
            
            2.7
            %
            
            50
            
            
            0.5
            %Outsourced
                service for customer
            
            
            449
            
            
            3.7
            %
            
            376
            
            
            3.6
            %Investor
                relation expenses
            
            
            79
            
            
            0.6
            %
            
            81
            
            
            0.8
            %Amortization
                of investments in affordable housingpartnerships
            
            
            174
            
            
            1.4
            %
            
            113
            
            
            1.1
            %Amortization
                of other intangible assets
            
            
            74
            
            
            0.6
            %
            
            74
            
            
            0.7
            %Other
                operating
            
            
            560
            
            
            4.6
            %
            
            766
            
            
            7.1
            %Total
            
            $
            12,224
            
            
            100.0
            %
            $
            10,503
            
            
            100.0
            %Average
                assets
            
            $
            2,211,860
            
            
            
            
            $
            1,991,923Non-interest
                expenses as a % of average assets
            
            
            
            
            
            0.55
            %
            
            
            
            
            0.53
            %




Salaries
      and employee benefits historically represent more than half of total
      non-interest expense and generally increase as our branch network and business
      volume expand. Associated with the new branches opened in the third and fourth
      quarters in 2007, these expenses increased 22.4% to $7.0 million or 57% of
      total
      noninterest expenses in the first quarters of 2008, as compared with $5.7
      million, or 54% for the prior year’s same quarter. Such increase was the result
      of overall compensation increase caused by stiff competition for qualified
      bankers in our niche market in addition to our new office openings and business
      growth in the past 12 months that require additional staffing. The number of
      full-time equivalent employees increased to 352 as of March 31, 2008, as
      compared with 347 as of March 31, 2007, Nonetheless, our significant asset
      growth helped us improved assets per employee ratio to $6.4 million in the
      first
      quarter of 2008, as compared with $5.8 million in the same quarter a year
      ago.


22




Occupancy
      and equipment expenses increased to $1.4 million or 12% of total noninterest
      expenses, in the first quarter of 2008 as compared with $1.3 million for the
      same quarter a year ago. The increase was primarily attributable to the
      additional office space and lease expenses for of the two additional branch
      offices in New Jersey and California.




Data
      processing expenses and office supplies together represent about 8% of total
      noninterest expenses. The balances remained fairly the same at $764,000 in
      the
      first quarter of 2008, as compared with $765,000 for the same quarter a year
      ago. The expenses were fairly maintained at the same level due to our effort
      of
      controlling expenses while keeping up with the growth pace of our business.




Loan
      referral fees are paid to brokers who refer loans to us, mostly SBA loans.
      Although we also pay referral fees for some qualified commercial loans, referral
      fee expenses generally correspond to our SBA loan production level. SBA loan
      production level decreased $16.5 million or 42.6% to $22.3 million in first
      quarter of 2008 compared to $38.8 million in first quarter 2007. The loan
      referral fees also decreased consistent with the decline in the SBA loan
      production level.




Professional
      fees generally increase as we grow and were $500,000 and $315,000, or 4% and
      3%
      of total noninterest expenses, in the first quarters of 2008 and 2007,
      respectively. The $185,000 increase in professional fees is mainly attributable
      to the $170,000 increase in legal fees related to loan collection, property
      foreclosure and repossession, and various other legal consultations.




Deposit
      insurance premium expenses represent The Financing Corporation (“FICO”) and FDIC
      insurance premium assessments. In the first quarter of 2008, the expenses
      sharply increased to $330,000 from $50,000 in the same quarter a year ago,
      which
      was primarily attributable to the new $251,000 FDIC risk insurance premium
      assessment. In the same quarter a year ago, only FICO premium of $50,000 was
      assessed.




Outsourced
      service costs for customers are payments made to third parties who provide
      services that were traditionally provided by the Bank’s customers, such as
      armored car services or bookkeeping services, and are recouped from their
      deposit balances maintained with us. Due mainly to the increase in service
      activities and the increase in depositors demanding such services, such as
      escrow accounts and brokerage accounts, these expenses increased to $449,000
      in
      the first quarter of 2008 from $376,000 in the same period of 2007. The $73,000
      increase in this expense category was related to various vendor services, which
      is consistent with our business growth.




Non-interest
      expense other than the categories specifically addressed above, such as
      director’s fees, office supplies, advertising, communications, and other
      miscellaneous expenses, decreased to $1.5 million in total in the first quarter
      of 2008 as compared with $1.6 million for the prior year’s same quarter.




**Provision
      for Income Taxes**




For
      the
      quarter ended March 31, 2008, we made a provision for income taxes of $4.2
      million on pretax net income of $11.3 million, representing an effective tax
      rate of 37.5%, as compared with a provision for income taxes of $4.7 million
      on
      pretax net income of $12.1 million, representing an effective tax rate of 39.3%
      for the prior year’s same period.




Our
      effective tax rate in the first quarter of 2008 was 1.8% lower when compared
      to
      the same quarter a year ago, which was mainly due to the increase in low income
      tax credit to which we were entitled for our investment in various government
      defined low income communities. Our effective tax rate in general has been
      lower
      than the statutory rate 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.




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.




23


**Financial
      Condition**




**Investment** **Portfolio**




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. 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 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.




*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. As of March
      31,
      2008, our investment portfolio is primarily comprised of United States
      government agency securities, accounting for 93% of the entire investment
      portfolio. Our U.S. government agency securities holdings are all
“prime/conforming” mortgage backed securities, or MBS’s, and collateralized
      mortgage obligations, or CMO’s, guaranteed by FNMA, FHLMC, or GNMA. Our
      investment portfolio currently contains 0% subprime mortgages. Besides the
      U.S.
      government agency securities, we also have a 3% investment in corporate debt
      and
      4% in municipal debt securities. Among all the corporate and municipal debt
      securities, the majority of which are “Triple A” rated, and all are considered
      investment grade. We adopted SFAS No. 157 and SFAS No. 159 effective January
      1,
      2008. Pursuant to the fair value elective option of SFAS No. 159, we have chosen
      to continue classifying our existing instruments of investment securities as
      “held-to-maturity” or “available-for-sale” under SFAS No. 115. 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 fair market values of our held-to-maturity and
      available-for-sale securities were respectively $0.4 million and $218.5 million
      as of March 31, 2008 .
      See
      Note 3 for adoption of SFAS No. 159 and SFAS No. 157 and the fair value
      measurement input disclosure for SFAS No. 157.




24


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 March 31, 2008**
            
            **As
                of December 31, 2007****Amortized**
              **Cost**
            
            **Market**
              **Value**
            
            **Unrealized**
              **Gain
                (Loss)**
            
            **Amortized**
              **Cost**
            
            **Market**
              **Value**
            
            **Unrealized**
              **Gain
                (Loss)**Held
                to Maturity:Securities
                of governmentsponsored
                enterprises
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            7,000
            
            $
            7,001
            
            $
            1Collateralized
                mortgageobligation.
            
            
            157
            
            
            150
            
            
            (7
            )
            
            164
            
            
            151
            
            
            (13
            )Municipal
                securities
            
            
            220
            
            
            221
            
            
            1
            
            
            220
            
            
            220
            
            
            -Total
                held to maturitysecurities
            
            $
            377
            
            $
            371
            
            $
            (6
            )
            $
            7,384
            
            $
            7,372
            
            $
            (12
            )Available
                for Sale:Securities
                of governmentsponsored
                enterprises
            
            $
            44,922
            
            $
            45,404
            
            $
            482
            
            $
            64,932
            
            $
            65,175
            
            $
            243Mortgage
                backedsecurities
            
            
            86,056
            
            
            86,906
            
            
            850
            
            
            60,470
            
            
            60,557
            
            
            87Collateralized
                mortgageobligation
            
            
            69,774
            
            
            71,132
            
            
            1,358
            
            
            73,416
            
            
            73,286
            
            
            (130
            )Corporate
                securities
            
            
            7,072
            
            
            7,238
            
            
            166
            
            
            17,390
            
            
            17,484
            
            
            94Municipal
                securities
            
            
            7,725
            
            
            7,825
            
            
            100
            
            
            7,725
            
            
            7,754
            
            
            29Total
                available forsale
                securities
            
            $
            215,549
            
            $
            218,505
            
            $
            2,956
            
            $
            223,933
            
            $
            224,256
            
            $
            323




25


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 March 31, 2008:




**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****Held
                to Maturity:**Mortgage
                backed securities
            
            $
            -
            
            $
            157
            
            $
            -
            
            $
            -
            
            $
            157Municipal
                securities
            
            
            220
            
            
            -
            
            
            -
            
            
            -
            
            
            220**Available-for-sale:**Securities
                of governmentsponsored
                enterprises
            
            
            3,036
            
            
            25,256
            
            
            17,112
            
            
            -
            
            
            45,404Mortgage
                backed securities
            
            
            11,113
            
            
            1,342
            
            
            193
            
            
            74,258
            
            
            86,906Collateralized
                mortgageobligation
            
            
            4,841
            
            
            66,291
            
            
            -
            
            
            -
            
            
            71,132Corporate
                securities
            
            
            -
            
            
            7,238
            
            
            -
            
            
            -
            
            
            7,238Municipal
                securities
            
            
            400
            
            
            -
            
            
            4,682
            
            
            2,743
            
            
            7,825Total
                investment Securities
            
            $
            19,610
            
            $
            100,284
            
            $
            21,987
            
            $
            77,001
            
            $
            218,882




Our
      investment securities holdings decreased by $12.8 million, or 5.5%, to $218.9
      million at March 31, 2008, compared to holdings of $231.6 million at December
      31, 2007. Total investment securities as a percentage of total assets were
      9.7%
      and 10.5% at March 31, 2008 and December 31, 2007, respectively. As of March
      31,
      2008, investment securities having a carrying value of $202.5 million were
      pledged to secure certain deposits.




As
      of
      March 31, 2008, due to substantial decrease in interest rates, our
      held-to-maturity securities, which are carried at their amortized costs, were
      mostly called by the issuers. The investment balance decreased to $0.4 million
      from $7.4 million at December 31, 2007. Similarly, available-for-sale
      securities, which are stated at their fair market values, decreased to $218.5
      million at March 31, 2008 from $224.3 million at December 31, 2007.




**Loan
      Portfolio**




All
      loans
      are carried at face amount, less principal repayment collected, net of deferred
      loan fees, and the allowance for loan losses, interest on loans is accrued
      daily
      on a simple interest basis. Total loans net of unearned loans and allowance
      for
      loan losses increased $74.0 million, or 4.1%, to $1.86 billion at March 31,
      2008, as compared with $1.79 billion at December 31, 2007. Total loans net
      of
      unearned income as a percentage of total assets as of March 31, 2008 and
      December 31, 2007 were 83.3% and 82.4%, respectively.




26


The
      following table sets forth the amount of total loans outstanding 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)****March
                31, 2008**
            
            **December
                31, 2007**Construction
            
            $
            46,047
            
            $
            59,443Real
                estate secured
            
            
            1,460,695
            
            
            1,386,622Commercial
                and industrial
            
            
            354,911
            
            
            335,332Consumer
            
            
            27,440
            
            
            33,569Total
                loans1
            
            
            1,889,093
            
            
            1,814,966Unearned
                Income
            
            
            (5,593
            )
            
            (5,916
            )Gross
                loans, net of unearned income
            
            
            1,883,500
            
            
            1,809,050Allowance
                for loan losses
            
            
            (22,072
            )
            
            (21,579
            )Net
                loans
            
            $
            1,861,428
            
            $
            1,787,471Percentage
                breakdown of gross loans:Construction
            
            
            2.4
            %
            
            3.3
            %Real
                estate secured
            
            
            77.3
            %
            
            76.4
            %Commercial
                and industrial
            
            
            18.8
            %
            
            18.4
            %Consumer
            
            
            1.5
            %
            
            1.9
            %Total
                loans
            
            
            100.00
            %
            
            100.0
            %


___________________________


1 Includes
      loans held for sale, at the lower of cost or market, of $10.3 million and $7.9
      million at March 31, 2008 and December 31, 2007, 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. Loans secured by real estate equaled $1.46 billion and $1.39 billion
      as of March 31, 2008 and December 31, 2007, respectively. The real estate
      secured loans as a percentage of total loans were 77.3% and 76.4% at March
      31,
      2008 and December 31, 2007, respectively. Most of our salable loans are
      transferred to the secondary market while we retain a portion on our books
      as
      portfolio loans. Our total home mortgage loan portfolio outstanding was only
      $37.6 million at March 31, 2008 and $38.0 million at December 31, 2007, and
      we
      have deemed its effect on our credit risk profile to be immaterial. Due to
      the
      higher risk exposure of those residential mortgage loans, we limited ourselves
      from originating such loans starting 2007.




Commercial
      and industrial loans include revolving lines of credit as well as term business
      loans. Commercial and industrial loans at March 31, 2008 increased to $354.9
      million, as compared with $335.3 million at December 31, 2007. Commercial and
      industrial loans as a percentage of total loans were 18.8% at March 31, 2008,
      from 18.4% at December 31, 2007. Under the current economic condition, we
      exercise more due diligence in acquiring new loans. Hence, we expect to see
      our
      loan portfolio to continue growing, but at a more controlled pace.




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
      provide as a service only to existing customers. As consumer loans present
      a
      higher risk potential compared to our loan products, especially during the
      current economic condition, we have reduced our effort in consumer lending
      since
      2007. Hence, as of March 31, 2008, our consumer loan total was down $6.2 million
      from the prior quarter level. As of March 31, 2008, the balance of consumer
      loans was $27.4 million, or 1.5% of total loans, as compared to $33.6 million,
      or 1.9% of total loans as of December 31, 2007. Nonetheless, consumer loans
      as a
      percentage of total loans have always been minimal.




Construction
      loans generally have represented 5% or less of our total loan portfolio and
      are
      extended as a temporary financing vehicle only. Construction loans decreased
      to
      $46.0 million, or 2.4% of total loans, at the end of the first quarter of 2008,
      as compared with $59.4 million, or 3.3% of total loans at the end of 2007.
      The
      $13.4 million decrease in loan production in the first quarter of 2008 was
      primarily because of our stricter loan underwriting policy.




27




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. We generally limit real estate loan maturities to five to
      eight
      years. Lines of credit, in general, are extended on an annual basis to
      businesses that need temporary working capital and/or import/export financing.
      We generally seek diversification in our loan portfolio, and our borrowers
      are
      diverse as to industry, location, and their current and target
      markets.




The
      following table shows the contractual maturity distribution and repricing
      intervals of the outstanding loans in our portfolio, as of March 31, 2008.
      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
      $18.1 million:




**Loan
      Maturities and Repricing Schedule**




**At
                March 31, 2008,****Within**
              **One
                Year**
            
            **After
                One**
              **But
                Within**
              **Five
                Years**
            
            **After**
              **Five
                Years**
            
            **Total****(dollars
                in thousands)**Construction
            
            $
            46,047
            
            $
            -
            
            $
            -
            
            $
            46,047Real
                estate secured
            
            
            879,371
            
            
            472,503
            
            
            97,500
            
            
            1,449,374Commercial
                and industrial
            
            
            327,199
            
            
            17,682
            
            
            3,469
            
            
            348,350Consumer
            
            
            16,840
            
            
            10,351
            
            
            -
            
            
            27,191Total
                loans, net of non-accrual loans
            
            $
            1,269,457
            
            $
            500,536
            
            $
            100,969
            
            $
            1,870,962Loans
                with variable (floating) interest rates
            
            $
            1,183,533
            
            $
            21,305
            
            $
            -
            
            $
            1,204,838Loans
                with predetermined (fixed) interest rates ...
            
            $
            85,924
            
            $
            479,231
            
            $
            100,969
            
            $
            666,124




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
      properties in close proximity to those offices.




**Non-performing
      Assets**




Non-performing
      assets, or NPAs, consist of non-performing loans, or NPLs, restructured loans,
      and other NPAs. NPLs are reported at their outstanding principal balances,
      net
      of any portion guaranteed by SBA, and consist of loans on non-accrual status
      and
      loans 90 days or more past due and still accruing interest. Restructured loans
      are loans of which the terms of repayment have been renegotiated resulting
      in a
      reduction or deferral of interest or principal, Other NPAs consist of
      properties, mainly other real estate owned (OREO) and repossessed vehicles,
      acquired by foreclosure or similar means that management intends to offer for
      sale.




28


The
      following table provides information with respect to the components of our
      non-performing assets as of the dates indicated (the figures in the table are
      net of the portion guaranteed by SBA, with the total amounts adjusted and
      reconciled for the SBA guarantee portion for the gross nonperforming
      assets):




**Non** **-performing
      Assets**


**(dollars
      in thousands)**




**March
                31, 2008**
            
            **December
                31, 2007**
            
            **March
                31, 2007****Nonaccrual
                loans:****1**Real
                estate secured
            
            $
            8,061
            
            $
            8,154
            
            $
            15,927Commercial
                and industrial
            
            
            2,914
            
            
            1,986
            
            
            1,485Consumer
            
            
            250
            
            
            154
            
            
            235Total
            
            
            11,225
            
            
            10,294
            
            
            17,647**Loans
                90 days or more past due and still accruing:**Real
                estate secured
            
            
            503
            
            
            117
            
            
            2,558Commercial
                and industrial
            
            
            56
            
            
            4
            
            
            6Consumer
            
            
            189
            
            
            187
            
            
            39Total
            
            
            748
            
            
            308
            
            
            2,603Total
                nonperforming loans
            
            
            11,973
            
            
            10,602
            
            
            20,250Restructured
                loans2,
                3
            
            
            1,393
            
            
            -
            
            
            -Repossessed
                vehicles
            
            
            21
            
            
            50
            
            
            112Other
                real estate owned
            
            
            133
            
            
            133
            
            
            -Total
                nonperforming assets, net of SBA guarantee
            
            $
            13,520
            
            $
            10,785
            
            $
            20,362Guaranteed
                portion of nonperforming SBA loans
            
            
            6,906
            
            
            4,424
            
            
            6,595Total
                gross nonperforming assets
            
            $
            20,426
            
            $
            15,209
            
            $
            26,957Nonperforming
                loans as a percentage of total loans
            
            
            0.64
            %
            
            0.59
            %
            
            1.25
            %Nonperforming
                assets as a percentage of total loans and other nonperforming
              assets
            
            
            0.72
            %
            
            0.60
            %
            
            1.26
            %Allowance
                for loan losses as a percentage of nonperformingloans
            
            
            184.35
            %
            
            203.55
            %
            
            85.01
            %


___________________________


1 During
      the three months ended March 31, 2008, no interest income related to these
      loans
      was included in interest income. Additional interest income of approximately
      $716,000 would have been recorded during the three months ended March 31, 2008,
      if these loans had been paid in accordance with their original terms and had
      been outstanding throughout the quarter ended March 31, 2008 or, if not
      outstanding throughout the three months ended March 31, 2008, 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.


3 During
      the three months ended March 31, 2008, no interest income related to this loan
      was included in interest income. Additional
      interest income would be negligible during the three months ended March 31,
      2008, if this loan had been paid in accordance with its original
      term and had been outstanding throughout the three months ended March 31,
      2008.




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.




Despite
      our loan portfolio continuing to grow, our emphasis on asset quality control
      enabled us to maintain a relatively low level of NPLs as of March 31, 2008.
      However, the general economic condition of the United States as well as the
      local economies in which we do business have shown a slowdown as the housing
      sector decline and the transition to below-trend GDP growth continued. The
      downward movement of the macro economic environment affected our borrowers’
strength and our NPLs, net of SBA guaranteed portion, increased to $12.0
      million, or 0.64% of the total loans at the end of the first quarter of 2008,
      as
      compared with $10.6 million, or 0.59% of the total loans, at the end of 2007.
      The $1.4 million increase of NPLs was primarily related to $0.9 million net
      increase in non-accrual loans, and $0.4 million increase in delinquent loans.
      Out of the $1.4 million net increase in NPLs, $0.1 million real estate related
      non-accruals were paid-off subsequently.




29




Management
      also believes that the reserve provided for non-performing loans, together
      with
      the tangible collateral, were adequate as of March 31, 2008. See “Allowance for
      Credit and Off-Balance Sheet Losses” below for further discussion. Except as
      disclosed above, as of March 31, 2008, management was not aware of any material
      credit problems of borrowers that would cause it to have serious doubts about
      the ability of a borrower to comply with the present loan payment terms.




In
      January 2008, we have negotiated with the borrower and restructured a commercial
      loan worth for a combined principal and interest accrual total of $1.4 million.
      Management performed SFAS No. 114 impairment analysis and provided adequate
      reserve for this restructured loan as of March 31, 2008.




Overall, total
      NPAs increased $2.7 million or 25.4%, to $13.5 million at March 31, 2008, as
      compared with $10.8 million at the prior year end. However, when compared to
      $20.4 million NPAs at March 31, 2007, it has decreased $6.8 million, or 33.6%.




**A** **llowance
      for Loan and Off-Balance Sheet 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
      allowance for loan losses and allowance for off-balance sheet items are
      maintained at levels that are believed to be adequate by management to absorb
      estimated probable loan losses inherent in the loan portfolio. The adequacy
      of
      the allowances is determined through periodic evaluations of the loan portfolio
      and other pertinent factors, which are inherently subjective as the process
      calls for various significant estimates and assumptions. Among other factors,
      the estimates involve the amounts and timing of expected future cash flows
      and
      fair value of collateral on impaired loans, estimated losses on loans based
      on
      historical loss experience, various qualitative factors, and uncertainties
      in
      estimating losses and inherent risks in the various credit portfolios, which
      may
      be subject to substantial change.




On
      a
      quarterly basis, we utilize a classification migration model and individual
      loan
      review analysis as starting points for determining the adequacy of the allowance
      for loan losses. Our loss migration analysis tracks a certain number of quarters
      of loan loss history to determine historical losses by classification category
      for each loan type, except certain loans (automobile, mortgage and credit
      cards), which are analyzed as homogeneous loan pools. These calculated loss
      factors are then applied to outstanding loan balances. Based on expected
      utilization of unused commitments and off-balance sheet exposures, such as
      letters of credit, we record allowance for off balance losses.




The
      individual loan review analysis is the other part of the allowance allocation
      process, applying specific monitoring policies and procedures in analyzing
      the
      existing loan portfolios. Further allowance assignments are made based on
      general and specific economic conditions, as well as performance trends within
      specific portfolio segments and individual concentrations of
      credit.




We
      increased our allowance for loan losses to $22.1 million at March 31, 2008,
      representing an increase of 2.3%, or $0.5 million from $21.6 million at the
      end
      of 2007 and an increase of 28.2% or $4.9 million from $17.2 million at March
      31,
      2007. With the increase of our non-performing loans, our allowance requirements
      have increased and we have maintained the ratio of allowance for loan losses
      to
      total loans at 1.17%, slightly higher than 1.07% retained at the first
      quarter-end of 2007, but a bit lower than the 1.19% at the year end of 2007.
      Management believes that the current ratio of 1.17% is adequate for our loan
      portfolio.




In
      the
      first quarter of 2008, both charge-offs and loan loss provision were lowered
      compared to either the fourth quarter or first quarter of
      2007.


30


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**
            
            **March
                31, 2008**
            
            **December
                31, 2007**Applicable
                to:
            
            **Reserve**
              **Amount**
            
            **Total**
              **Loans**
            
            **(%)**
            
            **Reserve**
              **Amount**
            
            **Total**
              **Loans**
            
            **(%)**Construction
                loans
            
            $
            162
            
            $
            46,047
            
            
            0.35
            %
            $
            557
            
            $
            59,443
            
            
            0.94
            %Real
                estate secured
            
            $
            8,010
            
            $
            1,460,695
            
            
            0.55
            %
            $
            13,445
            
            $
            1,386,622
            
            
            0.97
            %Commercial
                and industrial
            
            $
            13,189
            
            $
            354,911
            
            
            3.72
            %
            $
            7,023
            
            $
            335,332
            
            
            2.09
            %Consumer
            
            $
            711
            
            $
            27,440
            
            
            2.59
            %
            $
            554
            
            $
            33,569
            
            
            1.65
            %Total
                Allowance
            
            $
            22,072
            
            $
            1,889,093
            
            
            1.17
            %
            $
            21,579
            
            $
            1,814,966
            
            
            1.19
            %




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




**Allowance
      for Loan and Off-Balance Sheet Losses**


**(dollars
      in thousands)**




**As
                of and for the quarter ended**
            
            **March
                31, 2008**
            
            **December
                31, 2007**
            
            **March
                31, 2007**Allowance
                for loan losses:**Balances
                at beginning of period**
            
            $
            21,579
            
            $
            20,902
            
            $
            18,654Actual
                charge-offs:Real
                estate secured
            
            
            3
            
            
            523
            
            
            163Commercial
                and industrial
            
            
            826
            
            
            3,368
            
            
            1,655Consumer
            
            
            310
            
            
            365
            
            
            928Total
                charge-offs
            
            
            1,139
            
            
            4,256
            
            
            2,746**Recoveries
                on loans previously charged off:**Real
                estate secured
            
            
            1
            
            
            -
            
            
            -Commercial
                and industrial
            
            
            92
            
            
            101
            
            
            10Consumer
            
            
            27
            
            
            15
            
            
            41Total
                recoveries
            
            
            120
            
            
            116
            
            
            51Net
                loan charge-offs
            
            
            1,019
            
            
            4,140
            
            
            2,695**Provision
                for loan losses**
            
            
            1,512
            
            
            4,817
            
            
            1,255**Balances
                at end of period**
            
            $
            22,072
            
            $
            21,579
            
            $
            17,214Allowance
                for off-balance sheet losses:**Balances
                at beginning of period**
            
            $
            1,998
            
            $
            2,065
            
            $
            891**Provision
                for losses in off-balance sheet items**
            
            
            (112
            )
            
            (67
            )
            
            375**Balances
                at end of period**
            
            $
            1,886
            
            $
            1,998
            
            $
            1,266**Ratios:**Net
                loan charge-offs to average total loans
            
            
            0.06
            %
            
            0.23
            %
            
            0.17
            %Allowance
                for loan losses to total loans at period-end
            
            
            1.17
            %
            
            1.19
            %
            
            1.07
            %Net
                loan charge-offs to allowance for loan losses
            
            
            4.62
            %
            
            19.18
            %
            
            15.66
            %Net
                loan charge-offs to provision for loan losses
            
            
            72.79
            %
            
            87.15
            %
            
            165.33
            %




31


**Contractual
      Obligations**




The
      following table represents our aggregate contractual obligations to make future
      payments (principal and interest) as of March 31, 2008:




**(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
            
            $
            117,204
            
            $
            134,218
            
            $
            -
            
            $
            -
            
            $
            251,422Junior
                subordinated debentures
            
            
            3,653
            
            
            4,380
            
            
            11,550
            
            
            77,321
            
            
            96,904Operating
                leases
            
            
            3,284
            
            
            5,138
            
            
            3,320
            
            
            4,540
            
            
            16,282Time
                deposits
            
            
            981,585
            
            
            12,966
            
            
            -
            
            
            10
            
            
            994,561Total
            
            $
            1,105,726
            
            $
            156,702
            
            $
            14,870
            
            $
            81,871
            
            $
            1,359,169




**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
      March 31, 2008 and December 31, 2007, we had commitments to extend credit of
      $233.4 million and $284.9 million, respectively. Obligations under standby
      letters of credit were $9.3 million and $10.0 million at March 31, 2008 and
      December 31, 2007, respectively, and our obligations under commercial letters
      of
      credit were $12.6 million and $10.8 million at such dates, respectively.




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.




**Deposits
      and Other Sources of Funds**




*Deposits*




Deposits
      are our primary source of funds. Total deposits at March 31, 2008 and December
      31, 2007 were $1.73 billion and $1.76 billion, respectively.




Total
      core-deposit at March 31, 2008 decreased 8.8% to $758.2 million over the last
      three months while time deposits increased 4.1% to $969.4 million from December
      31, 2007.




Consistent
      with our efforts to decrease interest expenses, we have permitted relatively
      expensive time deposits to expire. The average rate paid on time deposits in
      denominations of $100,000 or more for the first quarter of 2008 decreased to
      4.46% from 5.28% in the same period of the prior year. See “Net Interest Income
      and Net Interest Margin” for further discussion.




32




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:**
            
            **March
                31, 2008**
            
            **December
                31, 2007****Average**
              **Balance**
            
            **Average**
              **Rate**
            
            **Average****Balance**
            
            **Average**
              **Rate**Demand,
                non-interest-bearing
            
            $
            300,465
            
            
            
            
            $
            310,502Money
                market
            
            
            396,595
            
            
            3.76
            %
            
            478,153
            
            
            4.43
            %Super
                NOW
            
            
            22,520
            
            
            1.41
            %
            
            24,613
            
            
            1.65
            %Savings
            
            
            32,617
            
            
            3.05
            %
            
            31,144
            
            
            2.80
            %Time
                certificates of deposit indenominations
                of $100,000 or more
            
            
            788,630
            
            
            4.46
            %
            
            738,769
            
            
            5.00
            %Other
                time deposit
            
            
            163,993
            
            
            4.60
            %
            
            133,567
            
            
            4.65
            %Total
                deposits
            
            $
            1,704,820
            
            
            3.46
            %
            $
            1,716,748
            
            
            3.82
            %





The
      scheduled maturities of our time deposits in denominations of $100,000 or
      greater at March 31, 2008 were as follows:




**Maturities
      of Time Deposits of $100,000 or More, at March 31, 200** **8**


**(dollars
      in thousands)**




Three
                months or less
            
            $
            392,277Over
                three months through six months
            
            
            238,868Over
                six months through twelve months
            
            
            151,218Over
                twelve months
            
            
            10,872Total
            
            $
            793,235




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 March 31, 2008 and December 31,
      2007.




We
      accept
      brokered deposits on a selective basis at reasonable interest rates to augment
      deposit growth. We have increased these deposits to $125.1 million at March
      31,
      2008 from $62.6 million at December 31, 2007 in order to limit our reliance
      on
      high interest rate time deposits.




*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. We have historically utilized
      borrowings from the FHLB in order to take advantage of their flexibility and
      comparatively low cost. See “Liquidity Management” below for details relating to
      the FHLB borrowings program.




The
      following table is a summary of FHLB borrowings for the quarters indicated
      (dollars in thousands):




**March
                31, 2008**
            
            **December
                31, 2007**Balance
                at quarter-end
            
            $
            240,000
            
            $
            150,000Average
                balance during the quarter
            
            $
            216,374
            
            $
            46,890Maximum
                amount outstanding at any month-end
            
            $
            240,000
            
            $
            155,000Average
                interest rate during the quarter
            
            
            3.78
            %
            
            4.24
            %Average
                interest rate at quarter-end
            
            
            3.57
            %
            
            4.22
            %




**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, 2007. Information concerning
      interest rate risk management is set forth under “Item 3 - Quantitative and
      Qualitative Disclosures about Market Risk.”




33




**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
      March 31, 2008 and December 31, 2007 totaled approximately $326.0 million and
      $324.7 million, respectively. Our liquidity levels measured as the percentage
      of
      liquid assets to total assets were 14.4% and 14.8% at March 31, 2008 and
      December 31, 2007, 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. We took advantage of the lower interest rate
      FHLB advances in allowing us to let expensive time deposit run off. However,
      while this fund provides flexibility and low cost, we also closely monitor
      the
      usage against our borrowing capacity, as such borrowing does not qualify as
      core
      funds. As of March 31, 2008, our borrowing capacity from the FHLB was about
      $476.4 million and the outstanding balance was $240.0 million, or approximately
      50.4% of our borrowing capacity. As of March 31, 2008, we also maintained an
      internal guideline that would allow us to purchase up to $30 million and $10
      million in federal funds with Bank of the West and Union Bank of California,
      respectively. Management will further emphasize on the core-deposit campaign
      and
      rely less on non-core deposit borrowings going into 2008, and we believe the
      opening of a new California branch, and our further expansion into the New
      York/New Jersey market will help us gain more client base for
      deposits.




**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, 2007 for additional information regarding regulatory capital
      requirements.




34




As
      of
      March 31, 2008, 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:****March
                  31, 2008**
              
              **December
                  31, 2007**
              
              **March
                  31, 2007**Total
                  capital to risk-weighted assets
              10%
              
              8%
              
              14.37%
              
              14.58%
              
              13.80%Tier
                  I capital to risk-weighted assets
              6%
              
              4%
              
              11.75%
              
              11.83%
              
              12.07%Tier
                  I capital to adjusted average assets
              5%
              
              4%
              
              10.24%
              
              10.36%
              
              10.00%
 
 **Wilshire
                  State Bank**
              **Regulatory**
                **Well-**
                **Capitalized**
                **Standards**
              
              **Regulatory**
                **Adequately-Capitalized**
                **Standards**
              
              **Actual
                  ratios for the Bank as of:****March
                  31, 2008**
              
              **December
                  31, 2007**
              
              **March
                  31, 2007**Total
                  capital to risk-weighted assets
              10%
              
              8%
              
              13.50%
              
              13.59%
              
              13.71%Tier
                  I capital to risk-weighted assets
              6%
              
              4%
              
              11.73%
              
              11.80%
              
              11.98%Tier
                  I capital to adjusted average assets
              5%
              
              4%
              
              10.24%
              
              10.33%
              
              9.93%




The
      Company adopted the 2007 stock repurchase program which permits the repurchase
      of up to $10 million worth of shares of the Company’s common stock from time to
      time until July 31, 2008. During the first quarter of 2008, there were no such
      repurchases. As of March 31, 2008, the approximate dollar value of shares that
      may yet be purchased under the plans was $8.7 million.




For
      the
      regulatory capital ratio computation purpose, the Junior Subordinated Debentures
      of $87.3 million, which consists of $10 million issued by the Bank and $77.3
      million issued by the Company in connection with the issuance of $75 million
      trust preferred securities, were taken into consideration. At December 31,
      2007,
      Wilshire Bancorp accounted for $57.1 million of such securities as Tier 1
      capital and $27.9 million as Tier 2 capital. With the improvement in loan
      quality and hence the improvement in risk-weighted assets, the portion qualified
      for Tier 1 capital increased to $58.5 million and the portion for Tier 2
      decreased to $26.5 million at March 31, 2008. For the Bank level, only the
      $10
      million debenture issued by the Bank in 2002 is treated as Tier 2 capital.


35




**Item
              3.**
            **Quantitative
                and Qualitative Disclosures about Market
                Risk**




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




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




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




The
      significant balance of non-interest-bearing deposits puts us in an overall
      asset-sensitive position and we strategically plan a significant three-month
      positive gap 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. 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. However, we usually 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 interest-earning assets and interest-paying
      liabilities available to be repriced within one year. At March 31, 2008, our
      position appeared balanced for a one-year timeframe with a negligible sensitive
      cumulative gap (minus 13.4% of average interest-earning assets).




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, or 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 and accounts
      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.




Although
      the simulation measures the volatility of net interest income and net portfolio
      value under immediate increase or decrease of market interest rate scenarios
      in
      100 basis point increments, our main concern is the negative effect of a
      reasonably-possible worst scenario. The ALCO policy prescribes that for the
      worst possible rate-change 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, respectively.




36




As
      our
      simulation measures indicate below, the net interest income increases
      (decreases) as market interest rates rise (fall), since we were in an overall
      asset-sensitive position with a 11.7% positive gap for the three-month timeframe
      and 17.4% cumulative positive gap for a whole portfolios. The NPV increases
      (decreases) as interest income increases (decreases) since the change in cash
      flows has a greater impact on the change in the NPV than does the change in
      the
      discount rate. However the extent of such changes was within the tolerance
      level
      prescribed by our ALCO policy due partly to the near-balanced cumulative gap
      for
      the one-year timeframe.




Management
      believes that the assumptions used to evaluate the vulnerability of our
      operations to changes in interest rates approximate actual experience and
      considers 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.




The
      following table sets forth the interest rate sensitivity of our interest-earning
      assets and interest-bearing liabilities as of March 31, 2008 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
                March 31, 2008****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
            
            $
            1,202,331
            
            $
            67,126
            
            $
            500,536
            
            $
            100,969
            
            $
            1,870,962Investment
                securities
            
            
            3,379
            
            
            16,231
            
            
            100,284
            
            
            98,988
            
            
            218,882Federal
                funds sold and cash equivalents
            
            
            20,004
            
            
            -
            
            
            -
            
            
            -
            
            
            20,004Total
            
            $
            1,225,714
            
            $
            83,357
            
            $
            600,820
            
            $
            199,957
            
            $
            2,109,848**Interest-bearing
                liabilities:**Savings
                deposits
            
            $
            34,740
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            34,740Time
                deposits of $100,000 or more
            
            
            392,277
            
            
            390,086
            
            
            10,872
            
            
            -
            
            
            793,235Other
                time deposits
            
            
            67,803
            
            
            106,697
            
            
            1,677
            
            
            5
            
            
            176,182Other
                interest-bearing deposits
            
            
            415,393
            
            
            -
            
            
            -
            
            
            -
            
            
            415,393FHLB
                borrowings
            
            
            -
            
            
            110,000
            
            
            130,000
            
            
            -
            
            
            240,000Junior
                Subordinated Debentures
            
            
            71,857
            
            
            -
            
            
            15,464
            
            
            -
            
            
            87,321Total
            
            $
            982,070
            
            $
            606,783
            
            $
            158,013
            
            $
            5
            
            $
            1,746,871Interest
                rate sensitivity gap
            
            $
            243,644
            
            
            ($
                523,426
            )
            $
            442,807
            
            $
            199,952
            
            $
            362,977Cumulative
                interest rate sensitivity gap
            
            $
            243,644
            
            
            ($
                279,782
            )
            $
            163,025
            
            $
            362,977Cumulative
                interest rate sensitivity gap ratio (based on average interest-earning
                assets)
            
            
            11.66
            %
            
            -13.39
            %
            
            7.80
            %
            
            17.37
            %


___________________________


1 Excludes
      the gross amount of non-accrual loans of approximately $18.1 million at March
      31, 2008.


37


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
      March 31, 2008. All assets presented in this table are held-to-maturity or
      available-for-sale. At March 31, 2008, we had no trading securities (dollars
      in
      thousand):




**Change**
            
            **Net
                Interest Income****(in
                basis points)**
            
            **(next
                twelve months)**
            
            **%
                Change**
            
            **NPV**
            
            **%
                Change**+200
            
            88,866
            
            8.6%
            
            287,384
            
            7.5%+100
            
            85,572
            
            4.6%
            
            281,685
            
            5.4%0
            
            81,818
            
            -
            
            267,299
            
            --100
            
            76,299
            
            -6.7%
            
            243,036
            
            -9.1%-200
            
            71,728
            
            -12.3%
            
            219,073
            
            -18.1%




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. Although our policy also permits
      us to purchase rate caps and floors and interest rate swaps, we are not
      currently engaged in any of these types of transactions.




**Item
                  4.**
                **Controls
                    and Procedures******




As
      of
      March 31, 2008, we carried out an evaluation, under the supervision and with
      the
      participation of our management, including our chief executive officer and
      chief
      financial officer, regarding the effectiveness of the design and operation
      of
      our “disclosure controls and procedures,” as 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 March 31, 2008, 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 only provide reasonable assurance in 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 March 31, 2008 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**




We
      are
      not involved in any material legal proceedings. Our subsidiary, Wilshire State
      Bank, from time to time is party to litigation that arises in the ordinary
      course of business, such as claims to enforce liens, claims involving the
      origination and servicing of loans, and other issues related to the business
      of
      the Bank. In the opinion of our management, in consultation with legal counsel,
      the resolution of any such issues would not have a material adverse impact
      on
      our financial position, results of operations, or liquidity.




**Item 1A.**
            **Risk
                Factors**




There
      are
      no material changes to our risk factors as presented in the Company’s 2007
      Form 10-K under the heading “Item 1A. Risk Factors.”




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




In
      July
      2007, the Company’s Board of Directors authorized a stock repurchase program to
      repurchase up to $10 million of the Company’s common stock until July 31, 2008.
      During first quarter of 2008, no shares have been repurchased under this program
      in open-market transactions. The total approximate dollar value of shares that
      may yet be purchased under the plan as of March 31, 2008 is shown below (dollars
      in thousands):




Issuer
                Purchases of Equity SecuritiesPeriod
            (a)
              Total
                number of shares (or units) purchased
            (b)
              Average
                price paid per share (or unit)
            (c)
              Total
                number of shares (or units) purchased as part of publicly announced
                plans
                or programs
            (d)
              Approximate
                dollar value of shares (or units) that may yet be purchased under
                the
                plans or programsJanuary
                1, 2008 -
              January
                31, 2008
            -
            -
            -
            $
                8,738February
                1, 2008 - February 29, 2008
            -
            -
            -
            8,738March
                1, 2008 -
              March
                31, 2008
            -
            -
            -
            8,738


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


None.




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




None.




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




None.


39




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




**Exhibit
                Table****Reference
                Number**
            **Item**31.1
            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


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:
              May 12, 2008
            By:
            /s/
              Alex
              KoAlex
                Ko
              Chief
                Financial Officer
              (Principal
                Financial and Accounting Officer)




41