Table ofContents

 

 

 

**SECURITIESAND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

 

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**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, 2010.**                                                                                                                                   |
|   |                                                                                                                                                                                      |
| **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**

 

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**WILSHIREBANCORP, INC.**

(Exact name of registrant as specified in itscharter)

 

| **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

 

**No change**

(Former name, former address, and former fiscal year, if changed sincelast report)

 

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Indicate by check markwhether the registrant (1) has filed all reports required to be filed by Section 13or 15(d) of the Securities Exchange Act of 1934 during the preceding 12months (or for such shorter period that the registrant was required to filesuch reports), and (2) has been subject to such filing requirements forthe past 90 days.   Yes x    No o

 

Indicate by check markwhether the registrant has submitted electronically and posted on its corporateWeb site, if any, every Interactive Data File required to be submitted andposted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)during the preceding 12 months (or for such shorter period that the registrantwas required to submit and post such files). Yes o   No o

 

Indicate by check markwhether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, or a smaller reporting company.  See the definitions of “large acceleratedfiler,” “accelerated filer” and “small reporting company” in Rule 12b-2 ofthe Exchange Act.

 

| Large accelerated filer | o                                                | Accelerated  filer         | x      |
|-------------------------|--------------------------------------------------|----------------------------|--------|
|                    |                                             |                       |   |
| Non-accelerated filer   | o (Do not check if a smaller reporting  company) | Smaller reporting  company | o      |

 

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

 

The number ofshares of Common Stock of the registrant outstanding as of April 30, 2010was 29,485,637.

 

 

 

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Table ofContents

 

**FOR 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** | **19** |
|                                   |                                                                                            |   |
| **Item 3.**                            | **Quantitative  and Qualitative Disclosures about Market Risk**                                 | **41** |
|                                   |                                                                                            |   |
| **Item 4.**                            | **Controls and  Procedures**                                                                    | **43** |
|                                   |                                                                                            |   |
| **Part II.**                      | **OTHER INFORMATION**                                                                           | **44** |
|                                   |                                                                                            |   |
| **Item  1.**                           | **Legal  Proceedings**                                                                          | **44** |
|                                   |                                                                                            |   |
| **Item  1A.**                          | **Risk  Factors**                                                                               | **44** |
|                                   |                                                                                            |   |
| **Item 2.**                            | **Unregistered  Sales of Equity Securities and Use of Proceeds**                                | **44** |
|                                   |                                                                                            |   |
| **Item 3.**                            | **Defaults  Upon Senior Securities**                                                            | **44** |
|                                   |                                                                                            |   |
| **Item 4.**                            | **Submission  of Matters to a Vote of Security Holders**                                        | **44** |
|                                   |                                                                                            |   |
| **Item  5.**                           | **Other  Information**                                                                          | **44** |
|                                   |                                                                                            |   |
| SIGNATURES                             | **46**                                                                                          |

 

i

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Table ofContents

 

**Part I.  FINANCIAL INFORMATION**

 

**Item 1.            FinancialStatements**

** **

**WILSHIREBANCORP, INC.**

**CONSOLIDATEDSTATEMENTS OF FINANCIAL CONDITION**

**(****DOLLARSIN THOUSANDS) (UNAUDITED)**

** **
| ** **                                                                                                                                                                                      | ** ** | **March 31, 2010** | ** ** | **December 31, 2009** | ** ** |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------|------------|----------------------------|------------|
| **ASSETS**                                                                                                                                                                                      |       |                    |       |                       |       |
| Cash and due from banks                                                                                                                                                                         |       | $                       | 214,970    |                       | $          | 155,753 |   |
| Federal funds sold and  other cash equivalents                                                                                                                                                  |       | 30,018                  |       | 80,004                     |       |
| Cash and cash equivalents                                                                                                                                                                       |       | 244,988                 |       | 235,757                    |       |
|                                                                                                                                                                                            |       |                    |       |                       |       |
| Securities available for  sale, at fair value (amortized cost of $681,945 and $651,095at  March 31, 2010 and December 31, 2009, respectively)                                         |       | 687,716                 |       | 651,318                    |       |
| Securities held to  maturity, at amortized cost (fair value of $108 and $109at  March 31, 2010 and December 31, 2009, respectively)                                                   |       | 105                     |       | 109                        |       |
| Loans receivable (net of  allowance for loan losses of $79,576 and $62,130at  March 31, 2010 and December 31, 2009, respectively)                                                     |       | 2,294,747               |       | 2,329,078                  |       |
| Loans held for sale—at the  lower of cost or market                                                                                                                                        |       | 43,501                  |       | 36,233                     |       |
| Federal Home Loan Bank                                                                                                                                                                          |       | 20,850                  |       | 20,850                     |       |
| Other real estate owned                                                                                                                                                                         |       | 4,860                   |       | 3,797                      |       |
| Due from customers on  acceptances                                                                                                                                                              |       | 1,006                   |       | 945                        |       |
| Cash surrender value of  bank owned life insurance                                                                                                                                              |       | 18,197                  |       | 18,037                     |       |
| Investment in affordable  housing partnerships                                                                                                                                                  |       | 25,127                  |       | 13,732                     |       |
| Bank premises and equipment                                                                                                                                                                     |       | 13,602                  |       | 12,660                     |       |
| Accrued interest receivable                                                                                                                                                                     |       | 15,214                  |       | 15,266                     |       |
| Deferred income taxes                                                                                                                                                                           |       | 20,198                  |       | 18,684                     |       |
| Servicing assets                                                                                                                                                                                |       | 6,715                   |       | 6,898                      |       |
| Goodwill                                                                                                                                                                                        |       | 6,675                   |       | 6,675                      |       |
| Core deposits intangibles                                                                                                                                                                       |       | 1,921                   |       | 2,013                      |       |
| FDIC loss share indemnification                                                                                                                                                                 |       | 33,329                  |       | 33,775                     |       |
| Other assets                                                                                                                                                                                    |       | 20,561                  |       | 30,170                     |       |
| TOTAL                                                                                                                                                                                           |       | $                       | 3,459,312  |                       | $          | 3,435,997 |   |
|                                                                                                                                                                                            |       |                    |       |                       |       |
| **LIABILITIES  AND SHAREHOLDERS’ EQUITY**                                                                                                                                                  |       |                    |       |                       |       |
| LIABILITIES:                                                                                                                                                                                    |       |                    |       |                       |       |
| Deposits:                                                                                                                                                                                       |       |                    |       |                       |       |
| Non-interest bearing                                                                                                                                                                            |       | $                       | 414,023    |                       | $          | 385,188 |   |
| Interest bearing:                                                                                                                                                                               |       |                    |       |                       |       |
| Savings                                                                                                                                                                                         |       | 76,346                  |       | 71,601                     |       |
| Money market and NOW  accounts                                                                                                                                                                  |       | 1,000,278               |       | 932,063                    |       |
| Time deposits of $100,000  or more                                                                                                                                                              |       | 746,866                 |       | 795,679                    |       |
| Other time deposits                                                                                                                                                                             |       | 687,532                 |       | 643,684                    |       |
| Total deposits                                                                                                                                                                                  |       | 2,925,045               |       | 2,828,215                  |       |
|                                                                                                                                                                                            |       |                    |       |                       |       |
| Federal Home Loan Bank  borrowings and other borrowings                                                                                                                                         |       | 142,487                 |       | 232,000                    |       |
| Junior subordinated  debentures                                                                                                                                                                 |       | 87,321                  |       | 87,321                     |       |
| Accrued interest payable                                                                                                                                                                        |       | 5,954                   |       | 5,865                      |       |
| Acceptances outstanding                                                                                                                                                                         |       | 1,006                   |       | 945                        |       |
| Other liabilities                                                                                                                                                                               |       | 26,804                  |       | 15,515                     |       |
| Total liabilities                                                                                                                                                                               |       | 3,188,617               |       | 3,169,861                  |       |
|                                                                                                                                                                                            |       |                    |       |                       |       |
| SHAREHOLDERS’ EQUITY:                                                                                                                                                                      |       |                    |       |                       |       |
| Preferred stock, $1,000 par  value—authorized, 5,000,000 shares; issued and outstanding,62,158 shares  at March 31, 2010 and December 31, 2009                                   |       | 60,058                  |       | 59,931                     |       |
| Common stock, no par  value—authorized, 80,000,000 shares; issued and outstanding,29,485,637  shares and 29,415,657 shares at March 31, 2010 and December 31,2009,  respectively |       | 55,118                  |       | 54,918                     |       |
| Accumulated other  comprehensive income, net of tax                                                                                                                                             |       | 3,624                   |       | 326                        |       |
| Retained earnings                                                                                                                                                                               |       | 151,895                 |       | 150,961                    |       |
| Total shareholders’ equity                                                                                                                                                                 |       | 270,695                 |       | 266,136                    |       |
|                                                                                                                                                                                            |       |                    |       |                       |       |
| TOTAL                                                                                                                                                                                           |       | $                       | 3,459,312  |                       | $          | 3,435,997 |   |

 

See accompanying notes toconsolidated financial statements.

 

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Table of Contents

 

**WILSHIREBANCORP, INC.**

**CONSOLIDATED STATEMENTS OF OPERATIONS**

**(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)(UNAUDITED)**

 
| ** **                                                                 | ** ** | **Three  Months Ended March 31,** | ** ** |
|----------------------------------------------------------------------------|------------|----------------------------------------|------------|
| ** **                                                                 | ** ** | **2010**                               | ** ** | **2009** | ** ** |
|                                                                       |       |                                   |       |   |   |
| INTEREST INCOME:                                                           |       |                                   |       |   |   |
| Interest and fees on loans                                                 |       | $                                      | 35,304     |   | $ | 30,193 |   |
| Interest on investment  securities                                         |       | 5,615                                  |       | 2,942 |   |
| Interest on federal funds  sold                                            |       | 382                                    |       | 289 |   |
| Total interest income                                                      |       | 41,301                                 |       | 33,424 |   |
|                                                                       |       |                                   |       |   |   |
| INTEREST EXPENSE:                                                          |       |                                   |       |   |   |
| Interest on deposits                                                       |       | 11,174                                 |       | 11,181 |   |
| Interest on FHLB advances  and other borrowings                            |       | 920                                    |       | 1,658 |   |
| Interest on junior  subordinated debentures                                |       | 649                                    |       | 921 |   |
| Total interest expense                                                     |       | 12,743                                 |       | 13,760 |   |
|                                                                       |       |                                   |       |   |   |
| NET INTEREST INCOME BEFORE  PROVISION FORLOAN LOSSES AND LOAN  COMMITMENTS |       | 28,558                                 |       | 19,664 |   |
|                                                                       |       |                                   |       |   |   |
| PROVISION FOR LOAN LOSSES  AND LOAN COMMITMENTS                            |       | 17,000                                 |       | 6,700 |   |
|                                                                       |       |                                   |       |   |   |
| NET INTEREST INCOME AFTER  PROVISION FORLOAN LOSSES AND LOAN  COMMITMENTS  |       | 11,558                                 |       | 12,964 |   |
|                                                                       |       |                                   |       |   |   |
| NON-INTEREST INCOME:                                                       |       |                                   |       |   |   |
| Service charges on deposit  accounts                                       |       | 3,224                                  |       | 2,899 |   |
| Gain (loss) on sale of  loans                                              |       | 36                                     |       | (831 | ) |
| Gain on sale of securities                                                 |       | 2,484                                  |       | 13 |   |
| Loan-related servicing fees                                                |       | 1,039                                  |       | 964 |   |
| Other income                                                               |       | 1,002                                  |       | 692 |   |
| Total non-interest income                                                  |       | 7,785                                  |       | 3,737 |   |
|                                                                       |       |                                   |       |   |   |
| NON-INTEREST EXPENSES:                                                     |       |                                   |       |   |   |
| Salaries and employee  benefits                                            |       | 7,115                                  |       | 6,207 |   |
| Occupancy and equipment                                                    |       | 2,181                                  |       | 1,676 |   |
| Deposit insurance premiums                                                 |       | 1,076                                  |       | 611 |   |
| Professional fees                                                          |       | 992                                    |       | 342 |   |
| Data processing                                                            |       | 637                                    |       | 827 |   |
| Other operating                                                            |       | 2,689                                  |       | 2,324 |   |
| Total non-interest expenses                                                |       | 14,690                                 |       | 11,987 |   |
|                                                                       |       |                                   |       |   |   |
| INCOME BEFORE INCOME TAXES                                                 |       | 4,653                                  |       | 4,714 |   |
| INCOME TAXES                                                               |       | 1,338                                  |       | 1,655 |   |
| NET INCOME                                                                 |       | 3,315                                  |       | 3,059 |   |
|                                                                       |       |                                   |       |   |   |
| Preferred stock cash  dividend and accretion of preferred stock            |       | 903                                    |       | 920 |   |
|                                                                       |       |                                   |       |   |   |
| NET INCOME AVAILABLE TO  COMMON SHAREHOLDERS                               |       | $                                      | 2,412      |   | $ | 2,139 |   |
|                                                                       |       |                                   |       |   |   |
| PER COMMON SHARE  INFORMATION                                              |       |                                   |       |   |   |
| Basic                                                                      |       | $                                      | 0.08       |   | $ | 0.07 |   |
| Diluted                                                                    |       | $                                      | 0.08       |   | $ | 0.07 |   |
| WEIGHTED-AVERAGE COMMON  SHARES OUTSTANDING:                               |       |                                   |       |   |   |
| Basic                                                                      |       | 29,484,006                             |       | 29,413,757 |   |
| Diluted                                                                    |       | 29,537,933                             |       | 29,422,290 |   |
|                                                                       |       |                                   |       |   |   |
| COMMON STOCK CASH DIVIDEND  DECLARED:                                      |       |                                   |       |   |   |
| Cash dividend declared on  common shares                                   |       | $                                      | 1,477      |   | $ | 1,471 |   |
| Cash dividend declared per  common share                                   |       | $                                      | 0.05       |   | $ | 0.05 |   |

 

See accompanying notes toconsolidated financial statements.

 

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Table ofContents

 

**WILSHIRE BANCORP, INC.**

**CONSOLIDATEDSTATEMENTS OF SHAREHOLDERS’ EQUITY**

**(DOLLARS INTHOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)**

 
| ** **                                                               | ** ** | ** **          | ** ** | ** **       | ** ** | ** **    | ** ** | ** ** | ** ** | **Accumulated**   | ** ** | ** **   | ** ** | ** **             | ** ** |
|--------------------------------------------------------------------------|------------|---------------------|------------|------------------|------------|---------------|------------|------------|------------|-------------------|------------|--------------|------------|------------------------|------------|
| ** **                                                               | ** ** | **Preferred Stock** | ** ** | **Common Stock** | ** ** | **Other**     | ** ** | ** ** | ** ** | **Total**         | ** ** |
| ** **                                                               | ** ** | **Numbers**         | ** ** | ** **       | ** ** | **Numbers**   | ** ** | ** ** | ** ** | **Comprehensive** | ** ** | **Retained** | ** ** | **Shareholders’** | ** ** |
| ** **                                                               | ** ** | **of Shares**       | ** ** | **Amount**       | ** ** | **of Shares** | ** ** | **Amount** | ** ** | **Income (Loss)** | ** ** | **Earnings** | ** ** | **Equity**             | ** ** |
| ** **                                                               | ** ** | ** **          | ** ** | ** **       | ** ** | ** **    | ** ** | ** ** | ** ** | ** **        | ** ** | ** **   | ** ** | ** **             | ** ** |
| BALANCE—January 1,  2009                                       |       | 62,158              |       | $                | 59,443     |          | 29,413,757 |       | $          | 54,039            |       | $            | 1,238      |                   | $          | 140,340 |   | $ | 255,060 |   |
| Stock options exercised                                                  |       |                |       |             |       |          |       |       |       |              |       |         |       | —                 |       |
| Cash dividend declared                                                   |       |                |       |             |       |          |       |       |       |              |       |         |       |                   |       |
| Common stock                                                             |       |                |       |             |       |          |       |       |       |              |       | (1,471       | )          | (1,471                 | )          |
| Preferred stock                                                          |       |                |       |             |       |          |       |       |       |              |       | (777         | )          | (777                   | )          |
| Share-based compensation  expense                                        |       |                |       |             |       |          |       | 199        |       |              |       |         |       | 199                    |       |
| Tax benefit from stock  options exercised                                |       |                |       |             |       |          |       |       |       |              |       |         |       | —                 |       |
| Accretion of discount on  preferred stock                                |       |                |       | 119              |       |          |       |       |       |              |       | (143         | )          | (24                    | )          |
| Comprehensive income:                                                    |       |                |       |             |       |          |       |       |       |              |       |         |       |                   |       |
| Net income                                                               |       |                |       |             |       |          |       |       |       |              |       | 3,059        |       | 3,059                  |       |
| Other comprehensive income:                                              |       |                |       |             |       |          |       |       |       |              |       |         |       |                   |       |
| Change in unrealized gain  on interest-only strips (net of tax)          |       |                |       |             |       |          |       |       |       | 31                |       |         |       | 31                     |       |
| Change in unrealized gain  on securities available for sale (net of tax) |       |                |       |             |       |          |       |       |       | 1,629             |       |         |       | 1,629                  |       |
| Comprehensive income                                                     |       |                |       |             |       |          |       |       |       |              |       |         |       | 4,719                  |       |
| BALANCE—March 31, 2009                                         |       | 62,158              |       | $                | 59,562     |          | 29,413,757 |       | $          | 54,238            |       | $            | 2,898      |                   | $          | 141,008 |   | $ | 257,706 |   |
|                                                                     |       |                |       |             |       |          |       |       |       |              |       |         |       |                   |       |
| BALANCE—January 1,  2010                                       |       | 62,158              |       | $                | 59,931     |          | 29,415,657 |       | $          | 54,918            |       | $            | 326        |                   | $          | 150,961 |   | $ | 266,136 |   |
| Stock options exercised                                                  |       |                |       |             |       | 69,980        |       | 14         |       |              |       |         |       | 14                     |       |
| Cash dividend declared                                                   |       |                |       |             |       |          |       |       |       |              |       |         |       |                   |       |
| Common stock                                                             |       |                |       |             |       |          |       |       |       |              |       | (1,477       | )          | (1,477                 | )          |
| Preferred stock                                                          |       |                |       |             |       |          |       |       |       |              |       | (777         | )          | (777                   | )          |
| Share-based compensation  expense                                        |       |                |       |             |       |          |       | 186        |       |              |       |         |       | 186                    |       |
| Tax benefit from stock  options exercised                                |       |                |       |             |       |          |       |       |       |              |       |         |       | —                 |       |
| Accretion of discount on  preferred stock                                |       |                |       | 127              |       |          |       |       |       |              |       | (127         | )          | —                 |       |
| Comprehensive income:                                                    |       |                |       |             |       |          |       |       |       |              |       |         |       |                   |       |
| Net income                                                               |       |                |       |             |       |          |       |       |       |              |       | 3,315        |       | 3,315                  |       |
| Other comprehensive income:                                              |       |                |       |             |       |          |       |       |       |              |       |         |       |                   |       |
| Change in unrealized gain  on interest-only strips (net of tax)          |       |                |       |             |       |          |       |       |       | (20               | )          |         |       | (20                    | )          |
| Change in unrealized gain  on securities available for sale (net of tax) |       |                |       |             |       |          |       |       |       | 3,318             |       |         |       | 3,318                  |       |
| Comprehensive income                                                     |       |                |       |             |       |          |       |       |       |              |       |         |       | 6,613                  |       |
| BALANCE—March 31, 2010                                         |       | 62,158              |       | $                | 60,058     |          | 29,485,637 |       | $          | 55,118            |       | $            | 3,624      |                   | $          | 151,895 |   | $ | 270,695 |   |

 

See accompanying notes to consolidated financial statements.

 

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**WILSHIRE BANCORP, INC.**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(DOLLARS IN THOUSANDS) (UNAUDITED)**

 
| ** **                                                                                  | ** ** | **Three Months Ended March 31,** | ** ** |
|---------------------------------------------------------------------------------------------|------------|---------------------------------------|------------|
| ** **                                                                                  | ** ** | **2010**                              | ** ** | **2009** | ** ** |
| CASH FLOWS FROM OPERATING  ACTIVITIES:                                                      |       |                                  |       |   |   |
| Net income                                                                                  |       | $                                     | 3,315      |   | $ | 3,059 |   |
| Adjustments to reconcile  net income to net cash                                            |       |                                  |       |   |   |
| provided by operating  activities:                                                          |       |                                  |       |   |   |
| Amortization of investment  securities                                                      |       | 1,373                                 |       | 823 |   |
| Depreciation of Bank  premises and equipment                                                |       | 508                                   |       | 487 |   |
| Accretion of discount on  acquired loans                                                    |       | (1,558                                | )          | — |   |
| Amortization of core  deposit intangibles                                                   |       | 92                                    |       | 74 |   |
| Amortization of investments  in affordable housing partnerships                             |       | —                                |       | 288 |   |
| Provision for losses on  loans and loan commitments                                         |       | 17,000                                |       | 6,700 |   |
| Provision for other real  estate owned losses                                               |       | 24                                    |       | 204 |   |
| Deferred tax benefit                                                                        |       | (3,729                                | )          | (966 | ) |
| Loss on disposition of bank  premises and equipment                                         |       | 4                                     |       | 11 |   |
| Net realized (gain) loss on  sale of loans held for sale                                    |       | (36                                   | )          | 831 |   |
| Proceeds from sale of loans  held for sale                                                  |       | 14,200                                |       | 1,671 |   |
| Origination of loans held  for sale                                                         |       | (21,432                               | )          | (3,422 | ) |
| Net realized gain on sale  of available for sale securities                                 |       | (2,484                                | )          | (13 | ) |
| Change in unrealized  appreciation on serving assets                                        |       | 183                                   |       | 49 |   |
| Net realized (gain) loss on  sale of other real estate owned                                |       | (5                                    | )          | 247 |   |
| Share-based compensation  expense                                                           |       | 186                                   |       | 199 |   |
| Change in cash surrender  value of life insurance                                           |       | (160                                  | )          | (165 | ) |
| Decrease (increase) in  accrued interest receivable                                         |       | 52                                    |       | (147 | ) |
| Decrease (increase) in  other assets                                                        |       | 3,254                                 |       | (60 | ) |
| Increase in accrued  interest payable                                                       |       | 89                                    |       | 374 |   |
| Increase in other  liabilities                                                              |       | 1,041                                 |       | 1,383 |   |
| Net cash provided by  operating activities                                                  |       | 11,917                                |       | 11,627 |   |
| ** **                                                                                  | ** ** | ** **                            | ** ** | ** ** | ** ** |
| CASH FLOWS FROM INVESTING  ACTIVITIES:                                                      |       |                                  |       |   |   |
| Proceeds from principal  repayment, matured or called securities held to maturity           |       | 5                                     |       | 5 |   |
| Purchase of securities  available for sale                                                  |       | (289,869                              | )          | (130,591 | ) |
| Proceeds from principal  repayments, matured, called, or sold securities available for sale |       | 260,131                               |       | 41,671 |   |
| Net decrease (increase) in  loans receivable                                                |       | 14,938                                |       | (30,030 | ) |
| Payment of FDIC loss share  indemnification                                                 |       | 5,262                                 |       | — |   |
| Proceeds from sale of other  loans                                                          |       | —                                |       | 1,168 |   |
| Proceeds from sale of other  real estate owned                                              |       | 3,597                                 |       | 949 |   |
| Purchases of investments in  affordable housing partnerships                                |       | (1,703                                | )          | (2,484 | ) |
| Loss of investment in  affordable housing partnerships                                      |       | 485                                   |       | — |   |
| Purchases of premise and  equipment                                                         |       | (609                                  | )          | (418 | ) |
| Net cash used in investing  activities                                                      |       | (7,763                                | )          | (119,730 | ) |
|                                                                                             |            |                                       |            |  |  |  |  |

 
| See accompanying notes to consolidated financial statements. |   | (Continued) |
|--------------------------------------------------------------|--------|-------------|

 

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**WILSHIRE BANCORP, INC.**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(DOLLARS IN THOUSANDS) (UNAUDITED)**

 
| ** **                                                                     | ** ** | **Three Months Ended March 31,** | ** ** |
|--------------------------------------------------------------------------------|------------|---------------------------------------|------------|
| ** **                                                                     | ** ** | **2010**                              | ** ** | **2009** | ** ** |
| CASH FLOWS FROM FINANCING  ACTIVITIES:                                         |       |                                  |       |   |   |
| Proceeds from exercise of  stock options                                       |       | $                                     | 14         |   | $ | — |   |
| Payment of cash dividend on  common stock                                      |       | (1,477                                | )          | (1,471 | ) |
| Payment of cash dividend on  preferred stock                                   |       | (777                                  | )          | (544 | ) |
| (Decrease) Increase in  Federal Home Loan Bank borrowings and other borrowings |       | (89,513                               | )          | 66,000 |   |
| Net increase in deposits                                                       |       | 96,830                                |       | 92,846 |   |
| Net cash provided by  financing activities                                     |       | 5,077                                 |       | 156,831 |   |
|                                                                           |       |                                  |       |   |   |
| NET INCREASE IN CASH AND CASH  EQUIVALENTS                                     |       | 9,231                                 |       | 48,728 |   |
|                                                                           |       |                                  |       |   |   |
| CASH AND CASH  EQUIVALENTS—Beginning of year                              |       | 235,757                               |       | 97,541 |   |
| CASH AND CASH  EQUIVALENTS—End of year                                    |       | $                                     | 244,988    |   | $ | 146,269 |   |
|                                                                           |       |                                  |       |   |   |
| SUPPLEMENTAL DISCLOSURES OF  CASH FLOW INFORMATION:                            |       |                                  |       |   |   |
| Interest paid                                                                  |       | $                                     | 12,654     |   | $ | 13,387 |   |
| Income taxes paid                                                              |       | $                                     | 35         |   | $ | 149 |   |
|                                                                           |       |                                  |       |   |   |
| SUPPLEMENTAL SCHEDULE OF  NONCASH INVESTING AND FINANCING ACTIVITIES:          |       |                                  |       |   |   |
| Real estate acquired  through foreclosures                                     |       | $                                     | 4,021      |   | $ | 5,019 |   |
| Note financing for OREO  sales                                                 |       | $                                     | —     |   | $ | 225 |   |
| Note financing for sale of  other loans                                        |       | $                                     | 5,807      |   | $ | 4,916 |   |
| Other assets transferred to  Bank premises and equipment                       |       | $                                     | 844        |   | $ | 290 |   |
| Common stock cash dividend  declared, but not paid                             |       | $                                     | 1,477      |   | $ | 1,471 |   |
| Preferred stock cash  dividend declared, but not paid                          |       | $                                     | 388        |   | $ | 388 |   |

 
| See accompanying notes to consolidated financial statements. |   | (Concluded) |
|--------------------------------------------------------------|--------|-------------|

 

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**WILSHIRE BANCORP, INC.**

 

**Notesto Consolidated Financial Statements (Unaudited)**

 

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

 

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

 

Our corporateheadquarters and primary banking facilities are located at 3200 Wilshire Boulevard,Los Angeles, California 90010.  On June 26,2009, we purchased substantially all the assets and assumed substantially allthe liabilities of Mirae Bank (“Mirae”) from the Federal Deposit InsuranceCorporation (“FDIC”), as receiver of Mirae Bank.  Mirae Bank previously operated fivecommercial banking branches, all located within southern California, and thesebranches were integrated into our existing branch network following theacquisition. In addition, we also have six loan production offices utilizedprimarily for the origination of loans under our Small Business Administration(“SBA”) lending program in Colorado, Georgia, Texas (2 offices), Virginia, andNew Jersey.

 

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

 

The consolidatedfinancial statements have been prepared in accordance with the Securities andExchange Commission (“SEC”) rules and regulations for interim financialreporting and therefore do not necessarily include all information and footnotedisclosures normally included in annual financial statements prepared inaccordance with accounting principles generally accepted in the United Statesof America (“GAAP”). The information provided by these interim financialstatements reflect all adjustments which are, in the opinion of management,necessary for a fair presentation of the Company’s consolidated statements offinancial condition as of March 31, 2010 and December 31, 2009, thestatements of operations for the three months ended March 31, 2010 and March 31,2009, and the related statements of shareholders’ equity and statements of cashflows for the three months ended March 31, 2010 and March 31, 2009.Operating results for interim periods are not necessarily indicative ofoperating results for an entire fiscal year.

 

The Financial AccountingStandards Board’s (“FASB’s”) Accounting Standards Codification (“ASC”) becameeffective on July 1, 2009. At that date, the ASC became the FASB’sofficially recognized source of authoritative GAAP applicable to all public andnon-public non-governmental entities, superseding existing FASB, AmericanInstitute of Certified Public Accountants (“AICPA”), Emerging Issues Task Force(“EITF”) and related literature. Rules and interpretive releases of theSEC under the authority of federal securities laws are also sources ofauthoritative GAAP for SEC registrants. All other accounting literature isconsidered non-authoritative. The switch to the ASC affects the way companiesrefer to GAAP in financial statements and accounting policies. Citingparticular content in the ASC involves specifying the unique numeric path tothe content through the Topic, Subtopic, Section and Paragraph structure.

 

The unaudited financialstatements should be read in conjunction with the audited financial statementsand notes thereto included in the Company’s Annual Report on Form 10-K forthe year ended December 31, 2009. The accounting policies used in the preparation of these interimfinancial statements were consistent with those used in the preparation of thefinancial statements for the year ended December 31, 2009.

 

**Note 3.****  ****Federally Assisted Acquisition of Mirae Bank**

 

The FDIC placed MiraeBank under receivership upon Mirae Bank’s closure by the California Departmentof Financial Institutions (“DFI”) at the close of business on June 26,2009.  We purchased substantially all ofMirae Bank’s assets and assumed all of Mirae Bank’s deposits and certain otherliabilities. Further, we entered into loss sharing agreements with the FDIC inconnection with the Mirae Bank acquisition. Under the loss sharing agreements,the FDIC will share in the losses on assets covered under the agreement, whichgenerally include loans acquired from Mirae Bank and foreclosed loan collateralexisting at June 26, 2009 (referred to collectively as “covered assets”).

 

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With the acquisition ofMirae Bank, The Bank entered into loss-sharing agreements with the FDIC foramounts receivable under the agreements. The Company accounted for thereceivable balances under the loss-sharing agreements as an FDICIndemnification asset in accordance with ASC 805 (formerly FAS 141R BusinessCombinations).  The FDIC indemnificationis accounted for and calculated by adding the present value of all the cashflows that the Company expected to collect from the FDIC on the date of theacquisition as stated in the loss-sharing agreement. As expected and actualcash flows increase and decreased from what was expected at the time ofacquisition, the FDIC indemnification will decrease and increase,respectively.  When covered loans arepaid-off and sold, the FDIC indemnification asset is reduced and is offset withinterest income. Covered loans that become impaired, increases theindemnification assets.

 

The table belowsummarizes the changes to the FDIC loss share indemnification in the firstquarter of 2010:

 
| **(Dollars  in Thousands)**                            | ** ** | **March 31, 2010** | ** ** |
|--------------------------------------------------------|------------|-------------------------|------------|
|                                                   |       |                    |       |
| Beginning balance of FDIC indemnification at  12/31/09 |       | $                       | 33,775     |   |
| Increase resulting from provision for loan losses      |       | 5,831                   |       |
| Payments received from FDIC                            |       | (5,262                  | )          |
| Others                                                 |       | (1,015                  | )          |
| Ending balance of FDIC indemnification                 |       | $                       | 33,329     |   |

 

**Note 4.****  ****Fair Value Measurement for Financial and Non-Financial Assetsand Liabilities**

 

ASC820 “Fair Value Measurement and Disclosure” (formerly SFAS No. 157, *Fair Value Measurements)*, provides adefinition of fair value, establishes a framework for measuring fair value, andrequires expanded disclosures about fair value measurements. ASC 820 definesfair value as the price that would be received to sell an asset or paid totransfer a liability in an arm’s length transaction between market participantsin the markets where the Company conducts business. ASC 820 clarifies that fairvalue should be based on the assumptions market participants would use whenpricing an asset or liability and establishes a fair value hierarchy thatprioritizes the information used to develop those assumptions. The fair valuehierarchy gives the highest priority to quoted prices available in activemarkets and the lowest priority to data lacking transparency.

 

Thefair value inputs of the instruments are classified and disclosed in one of thefollowing categories pursuant to ASC 820:

 

Level 1 — Unadjusted quoted prices in active marketsfor identical assets or liabilities that the reporting entity has the abilityto access at the measurement date. The quoted price shall not be adjusted forthe blockage factor (i.e., size of the position relative to trading volume).

 

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

 

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

 

Incertain cases, the inputs used to measure fair value may fall into differentlevels of the fair value hierarchy. In such cases, an investment’s level withinthe fair value hierarchy is based on the lowest level of input that issignificant to the fair value measurement. Our assessment of the significanceof a particular input to the fair value measurement in its entirety requiresjudgment and considers factors specific to the investment.

 

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Inaccordance with ASC 820-10, the Company uses the following methods andassumptions in estimating our fair value disclosure for financial instruments.Financial assets and liabilities recorded at fair value on a recurring andnon-recurring basis are listed as follows:

 

Securitiesavailable for sale— Investment in available-for-sale securities are recorded at their fair valuespursuant to ASC 320-10 (SFAS No. 115, *Accountingfor Certain Investments in Debt and Equity Securities)*. Fair valuemeasurement is based upon quoted prices for similar assets, if available. Ifquoted prices are not available, fair values are measured using matrix pricingmodels, or other model-based valuation techniques requiring observable inputsother than quoted prices such as yield curves, prepayment speeds, and defaultrates. The securities available for sale include federal agency securities,mortgage-backed securities, collateralized mortgage obligations, municipalbonds and corporate debt securities. Our existing investment available-for-salesecurity holdings as of March 31, 2010 are measured using matrix pricingmodels in lieu of direct price quotes and recorded based on Level 2 measurementinputs.

 

Collateraldependent impaired loans — A loan is considered to be impaired when it is probable that all ofthe principal and interest due under the original underwriting terms of theloan may not be collected. Fair value of collateral dependent loans is measuredbased on the fair value of the underlying collateral. The fair value isdetermined through appraisals and other matrix pricing models, which required asignificant degree of management judgment. The Company records impairments onall nonaccrual loans and trouble debt restructured loans based on the valuationmethods above with the exception of automobile loans.  Automobile loans are assessed based on ahomogenous pool of loans and the Company has established specific reserveswhich is a component of the allowance for loan losses. The Company recordsimpaired loans as non-recurring with Level 3 measurement inputs.

 

Otherreal estate owned (“OREO”) — Other real estate owned or “OREO”, consistsprincipally of properties acquired through foreclosures. The fair values ofOREOs are recorded at the lower of carrying value of the loan or estimated fairvalue at the time of foreclosure.  Fairvalues are derived from third party appraisals and written offers that havebeen accepted. Management periodically performs valuations on OREO propertiesfor fair valuation.  Any subsequentdeclines in the fair value of the OREO property after the date of transfer arerecorded as a write-down of the asset. However, in accordance with ASC 820-10 (FASB 157) fair value disclosuresfor financial instruments, OREO are measured at fair value. The Company recordsOREO as non-recurring with Level 3 measurement inputs.

 

Servicingassets and interest-only strips — Small Business Administration (“SBA”) loanservicing assets and interest-only strips represent the value associated withservicing SBA loans sold. The value is determined through a discounted cashflow analysis which uses discount rates, prepayment speeds and delinquency rateassumptions as inputs. All of these assumptions require a significant degree ofmanagement judgment. The fair market valuation is performed on a quarterlybasis for servicing assets while I/O strips are measures at the lower of costor fair value. The Company classifies SBA loan servicing assets andinterest-only strips as recurring with Level 3 measurement inputs.

 

Servicingliabilities —SBAloan servicing liabilities represent the value associated with servicing SBAloans sold. The value is determined through a discounted cash flow analysiswhich uses discount rates, prepayment speeds and delinquency rate assumptionsas inputs. All of these assumptions require a significant degree of managementjudgment. The fair market valuation is performed on a quarterly basis. TheCompany classifies SBA loan servicing liabilities as recurring with Level 3measurement inputs.

 

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The table belowsummarizes the valuation of our financial assets and liabilities by the aboveASC 820-10 fair value hierarchy levels as of March 31, 2010 and December 31,2009:

 

**AssetsMeasured at Fair Value on a Recurring Basis****(Dollars in Thousands)**

 
| ** **                                      | ** ** | **Fair Value Measurements Using:** | ** ** |
|-------------------------------------------------|------------|------------------------------------|------------|
| **As  of March 31, 2010**                  | ** ** | **Total Fair  Value**              | ** ** | **Quoted Prices in  Active Markets  (Level 1)** | ** ** | **Significant Other  Observable Inputs  (Level 2)** | ** ** | **Significant  Unobservable Inputs  (Level 3)** | ** ** |
| Investments                                     |       |                               |       |   |   |   |   |   |   |
| Securities of government  sponsored enterprises |       | $                                  | 153,823    |   | $ | — |   | $ | 153,823 |   | $ | — |   |
| Mortgage backed securities                      |       | 125,066                            |       | — |   | 125,066 |   | — |   |
| Collateralized mortgage  obligations            |       | 364,693                            |       | — |   | 364,693 |   | — |   |
| Corporate securities                            |       | 2,039                              |       | — |   | 2,039 |   | — |   |
| Municipal bonds                                 |       | 42,095                             |       | — |   | 42,095 |   | — |   |
| Servicing assets                                |       | 6,715                              |       | — |   | — |   | 6,715 |   |
| Interest-only strips                            |       | 667                                |       | — |   | — |   | 667 |   |
| Servicing liabilities                           |       | (392                               | )          | — |   | — |   | (392 | ) |
|                                                 |            |                                    |            |  |  |  |  |  |  |  |  |  |  |

** **
| ** **                                      | ** ** | **Fair Value Measurements Using:** | ** ** |
|-------------------------------------------------|------------|------------------------------------|------------|
| **As  of December 31, 2009**               | ** ** | **Total Fair  Value**              | ** ** | **Quoted Prices in  Active Markets  (Level 1)** | ** ** | **Significant Other  Observable Inputs  (Level 2)** | ** ** | **Significant Unobservable Inputs  (Level 3)** | ** ** |
| Investments                                     |       |                               |       |   |   |   |   |   |   |
| Securities of government  sponsored enterprises |       | $                                  | 155,382    |   | $ | — |   | $ | 155,382 |   | $ | — |   |
| Mortgage backed securities                      |       | 131,711                            |       | — |   | 131,711 |   | — |   |
| Collateralized mortgage  obligations            |       | 319,554                            |       | — |   | 319,554 |   | — |   |
| Corporate securities                            |       | 2,017                              |       | — |   | 2,017 |   | — |   |
| Municipal bonds                                 |       | 42,654                             |       | — |   | 42,654 |   | — |   |
| Servicing assets                                |       | 6,898                              |       | — |   | — |   | 6,898 |   |
| Interest-only strips                            |       | 724                                |       | — |   | — |   | 724 |   |
| Servicing liabilities                           |       | (407                               | )          | — |   | — |   | (407 | ) |
|                                                 |            |                                    |            |  |  |  |  |  |  |  |  |  |  |

 

Financial instrumentsmeasured at fair value on a recurring basis, which were part of the assetbalances that were deemed to have Level 3 fair value inputs when determiningvaluation, are identified in the table below by asset category with a summaryof changes in fair value for the quarter ended March 31, 2010 and March 31,2009:

 
| **(Dollars  in Thousands)** | ** ** | **At December  31, 2009** | ** ** | **Net Realized********Losses in  Net Income** | ** ** | **Unrealized********Loss in Other  Comprehensive********Income** | ** ** | **Net  Purchases,  Sales and  Settlements** | ** ** | **Transfers  In/out of  Level 3** | ** ** | **At March 31,  2010** | ** ** | **Net  Cumulative********Unrealized********Loss** | ** ** |
|-----------------------------|------------|---------------------------|------------|-----------------------------------------------|------------|------------------------------------------------------------------|------------|---------------------------------------------|------------|-----------------------------------|------------|-----------------------------|------------|---------------------------------------------------|------------|
| Servicing assets            |       | $                         | 6,898      |                                          | $          | (183                                                             | )          | $                                           | —     |                              | $          | —                      |       | $                                                 | —     |   | $ | 6,715 |   | $ | — |   |
| Interest-only strips        |       | 724                       |       | (22                                           | )          | (35                                                              | )          | —                                      |       | —                            |       | 667                         |       | (280                                              | )          |
| Servicing liabilities       |       | (407                      | )          | 15                                            |       | —                                                           |       | —                                      |       | —                            |       | (392                        | )          | —                                            |       |
|                             |            |                           |            |                                               |            |                                                                  |            |                                             |            |                                   |            |                             |            |                                                   |            |  |  |  |  |  |  |  |

 
| **(Dollars in Thousands)** | ** ** | **At December  31, 2008** | ** ** | **Net Realized********Losses in  Net Income** | ** ** | **Unrealized********Loss in Other  Comprehensive********Income** | ** ** | **Net  Purchases,  Sales and  Settlements** | ** ** | **Transfers  In/out of  Level 3** | ** ** | **At March 31,  2009** | ** ** | **Net  Cumulative  Unrealized********Loss** | ** ** |
|--------------------------------------|------------|-------------------------------------|------------|--------------------------------------------------------------|------------|----------------------------------------------------------------------------|------------|--------------------------------------------------|------------|---------------------------------------------|------------|----------------------------------|------------|---------------------------------------------|------------|
| Servicing assets                     |       | $                                   | 4,838      |                                                         | $          | (48                                                                        | )          | $                                                | —     |                                        | $          | —                           |       | $                                           | —     |   | $ | 4,790 |   | $ | — |   |
| Interest-only strips                 |       | 632                                 |       | (25                                                          | )          | 54                                                                         |       | —                                           |       | —                                      |       | 661                              |       | (280                                        | )          |
| Servicing liabilities                |       | (328                                | )          | (5                                                           | )          | —                                                                     |       | —                                           |       | —                                      |       | (333                             | )          | —                                      |       |
|                                      |            |                                     |            |                                                              |            |                                                                            |            |                                                  |            |                                             |            |                                  |            |                                             |            |  |  |  |  |  |  |  |

 

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The following tablespresent the aggregated balance of assets measured at estimated fair value on anon-recurring basis at March 31, 2010 and December 31, 2009, and thetotal losses resulting from these fair value adjustments for the three monthsended March 31, 2010 and December 31, 2009:

 

**As of March 31, 2010**

 
| **(Dollars  in Thousands)**          | ** ** | **Level 1** | ** ** | **Level 2** | ** ** | **Level 3** | ** ** | **Total** | ** ** | **Net Realized Losses  in Net Income** | ** ** |
|--------------------------------------|------------|------------------|------------|------------------|------------|------------------|------------|-----------|------------|----------------------------------------|------------|
| Collateral dependent  impaired loans |       | $                | —     |             | $          | —           |       | $         | 161,536    |                                   | $          | 161,536 |   | $ | 19,202 |   |
| OREO                                 |       | —           |       | —           |       | 5,098            |       | 5,098     |       | 24                                     |       |
| Total                                |       | $                | —     |             | $          | —           |       | $         | 166,634    |                                   | $          | 166,634 |   | $ | 19,226 |   |

 

**As of December 31, 2009**

 
| **(Dollars  in Thousands)**          | ** ** | **Level 1** | ** ** | **Level 2** | ** ** | **Level 3** | ** ** | **Total** | ** ** | **Net Realized Losses  in Net Income** | ** ** |
|--------------------------------------|------------|------------------|------------|------------------|------------|------------------|------------|-----------|------------|----------------------------------------|------------|
| Collateral dependent  impaired loans |       | $                | —     |             | $          | —           |       | $         | 128,764    |                                   | $          | 128,764 |   | $ | 10,250 |   |
| OREO                                 |       | —           |       | —           |       | 4,031            |       | 4,031     |       | 435                                    |       |
| Total                                |       | $                | —     |             | $          | —           |       | $         | 132,795    |                                   | $          | 132,795 |   | $ | 10,685 |   |

 

**Note 5.****  ****Investment Securities**

 

The following tablesummarizes the amortized cost, market value, net unrealized gain (loss), anddistribution of our investment securities as of the dates indicated:

 

**InvestmentSecurities Portfolio**

**(Dollars in Thousands)**

** **
| ** **                                     | ** ** | **As  of March 31, 2010** | ** ** | **As  of December 31, 2009** | ** ** |
|------------------------------------------------|------------|--------------------------------|------------|-----------------------------------|------------|
| ** **                                     | ** ** | **Amortized  Cost**            | ** ** | **Market  Value**                 | ** ** | **Net  Unrealized  Gain** | ** ** | **Amortized  Cost** | ** ** | **Market  Value** | ** ** | **Net  Unrealized  Gain (Loss)** | ** ** |
| Held to Maturity:                              |       |                           |       |                              |       |   |   |   |   |   |   |   |   |
| Collateralized mortgage obligations            |       | $                              | 105        |                              | $          | 108 |   | $ | 3 |   | $ | 109 |   | $ | 109 |   | $ | — |   |
| Total investment securities held to maturity   |       | $                              | 105        |                              | $          | 108 |   | $ | 3 |   | $ | 109 |   | $ | 109 |   | $ | — |   |
|                                           |       |                           |       |                              |       |   |   |   |   |   |   |   |   |
| Available for Sale:                            |       |                           |       |                              |       |   |   |   |   |   |   |   |   |
| Securities of government sponsoredenterprises  |       | $                              | 153,807    |                              | $          | 153,823 |   | $ | 16 |   | $ | 156,879 |   | $ | 155,382 |   | $ | (1,497 | ) |
| Mortgage backed securities                     |       | 123,736                        |       | 125,066                           |       | 1,330 |   | 131,617 |   | 131,711 |   | 94 |   |
| Collateralized mortgage obligations            |       | 360,775                        |       | 364,693                           |       | 3,918 |   | 318,531 |   | 319,554 |   | 1,023 |   |
| Corporate securities                           |       | 2,000                          |       | 2,039                             |       | 39 |   | 2,000 |   | 2,017 |   | 17 |   |
| Municipal securities                           |       | 41,627                         |       | 42,095                            |       | 468 |   | 42,068 |   | 42,654 |   | 586 |   |
| Total investment securities available for sale |       | $                              | 681,945    |                              | $          | 687,716 |   | $ | 5,771 |   | $ | 651,095 |   | $ | 651,318 |   | $ | 223 |   |

 

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The following tablesummarizes the maturity and repricing schedule of our investment securities attheir market values at March 31, 2010:

 

**InvestmentMaturities and Repricing Schedule****(Dollars in Thousands)**

 
| ** **                                     | ** ** | **Within  One Year** | ** ** | **After  One &  Within Five  Years** | ** ** | **After  Five &  Within Ten  Years** | ** ** | **After  Ten Years** | ** ** | **Total** | ** ** |
|------------------------------------------------|------------|----------------------|------------|-----------------------------------------------|------------|-----------------------------------------------|------------|----------------------|------------|-----------|------------|
| Held to Maturity:                              |       |                 |       |                                          |       |                                          |       |                 |       |      |       |
| Collateralized mortgage obligations            |       | $                    | —     |                                          | $          | 105                                           |       | $                    | —     |      | $          | — |   | $ | 105 |   |
| Total investment securities held to maturity   |       | $                    | —     |                                          | $          | 105                                           |       | $                    | —     |      | $          | — |   | $ | 105 |   |
|                                           |       |                 |       |                                          |       |                                          |       |                 |       |      |       |
| Available for Sale:                            |       |                 |       |                                          |       |                                          |       |                 |       |      |       |
| Securities of government sponsoredenterprises  |       | $                    | —     |                                          | $          | —                                        |       | $                    | 153,823    |      | $          | — |   | $ | 153,823 |   |
| Mortgage backed securities                     |       | 7,018                |       | 590                                           |       | 4,167                                         |       | 113,291              |       | 125,066   |       |
| Collateralized mortgage obligations            |       | 12,364               |       | 333,168                                       |       | 19,161                                        |       | —               |       | 364,693   |       |
| Corporate securities                           |       | —               |       | 2,039                                         |       | —                                        |       | —               |       | 2,039     |       |
| Municipal securities                           |       | —               |       | 734                                           |       | 4,204                                         |       | 37,157               |       | 42,095    |       |
| Total investment securities available for sale |       | $                    | 19,382     |                                          | $          | 336,531                                       |       | $                    | 181,355    |      | $          | 150,448 |   | $ | 687,716 |   |

 

The following table showsthe gross unrealized losses and fair values of our investments, aggregated byinvestment category and length of time that individual securities have been ina continuous unrealized loss positions, at March 31, 2010 and December 31,2009:

** **

**As ofMarch  31, 2010**

(Dollars in Thousands)

** **
| ** **                                     | ** ** | **Less  than 12 months** | ** ** | **12  months or longer** | ** ** | **Total**       | ** ** |
|------------------------------------------------|------------|--------------------------|------------|--------------------------|------------|-----------------|------------|
| ** **                                     | ** ** | ** **               | ** ** | **Gross**                | ** ** | ** **      | ** ** | **Gross** | ** ** | ** ** | ** ** | **Gross** | ** ** |
| ** **                                     | ** ** | ** **               | ** ** | **Unrealized**           | ** ** | ** **      | ** ** | **Unrealized** | ** ** | ** ** | ** ** | **Unrealized** | ** ** |
| **Description of Securities (AFS)****(1)**     | ** ** | **Fair  Value**          | ** ** | **Losses**               | ** ** | **Fair  Value** | ** ** | **Losses** | ** ** | **Fair  Value** | ** ** | **Losses** | ** ** |
|                                           |       |                     |       |                     |       |            |       |   |   |   |   |   |   |
| Securities of government sponsored enterprises |       | $                        | 42,575     |                     | $          | (384            | )          | $ | — |   | $ | — |   | $ | 42,575 |   | $ | (384 | ) |
| Mortgage-backed securities                     |       | 17,932                   |       | (98                      | )          | —          |       | — |   | 17,932 |   | (98 | ) |
| Collateralized mortgage obligations            |       | 55,612                   |       | (113                     | )          | —          |       | — |   | 55,612 |   | (113 | ) |
| Corporate securities                           |       | —                   |       | —                   |       | —          |       | — |   | — |   | — |   |
| Municipal bonds                                |       | 10,159                   |       | (227                     | )          | 7,557           |       | (258 | ) | 17,716 |   | (485 | ) |
|                                           |       | $                        | 126,278    |                     | $          | (822            | )          | $ | 7,557 |   | $ | (258 | ) | $ | 133,835 |   | $ | (1,080 | ) |

 

**As of December 31, 2009**

(Dollarsin Thousands)

 
| ** **                                     | ** ** | **Less  than 12 months** | ** ** | **12  months or longer** | ** ** | **Total**       | ** ** |
|------------------------------------------------|------------|--------------------------|------------|--------------------------|------------|-----------------|------------|
| ** **                                     | ** ** | ** **               | ** ** | **Gross**                | ** ** | ** **      | ** ** | **Gross** | ** ** | ** ** | ** ** | **Gross** | ** ** |
| ** **                                     | ** ** | ** **               | ** ** | **Unrealized**           | ** ** | ** **      | ** ** | **Unrealized** | ** ** | ** ** | ** ** | **Unrealized** | ** ** |
| **Description of Securities (AFS)****(1)**     | ** ** | **Fair  Value**          | ** ** | **Losses**               | ** ** | **Fair  Value** | ** ** | **Losses** | ** ** | **Fair  Value** | ** ** | **Losses** | ** ** |
|                                           |       |                     |       |                     |       |            |       |   |   |   |   |   |   |
| Securities of government sponsored enterprises |       | $                        | 110,296    |                     | $          | (1,600          | )          | $ | — |   | $ | — |   | $ | 110,296 |   | $ | (1,600 | ) |
| Mortgage-backed securities                     |       | 85,313                   |       | (726                     | )          | —          |       | — |   | 85,313 |   | (726 | ) |
| Collateralized mortgage obligations            |       | 145,622                  |       | (975                     | )          | —          |       | — |   | 145,622 |   | (975 | ) |
| Corporate securities                           |       | —                   |       | —                   |       | —          |       | — |   | — |   | — |   |
| Municipal bonds                                |       | 18,783                   |       | (505                     | )          | —          |       | — |   | 18,783 |   | (505 | ) |
|                                           |       | $                        | 360,014    |                     | $          | (3,806          | )          | $ | — |   | $ | — |   | $ | 360,014 |   | $ | (3,806 | ) |

 

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(1)   The Company had no held tomaturity investment securities with unrealized losses at March 31, 2010and December 31, 2009.

 

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At March 31, 2010,the total unrealized losses less than 12 months old were $822,000 and totalunrealized losses more than 12 months old were $258,000 for the sameperiod.  The aggregate related fair valueof investments with unrealized losses less than 12 months old was $126.2million at March 31, 2010, and $7.6 million with unrealized losses morethan 12 months old.  As of December 31,2009, the total unrealized losses less than 12 months old were $3.8 million,and there were no unrealized losses more than 12 months old. The aggregaterelated fair value of investments with unrealized losses less than 12 monthsold was $360.0 million at December 31, 2009.

 

Credit related declinesin the fair value of securities below their cost that are deemed to be otherthan temporary are reflected in earnings as realized losses.  In estimating other-than-temporary impairmentlosses, we consider, among other things, (i) the length of time and theextent to which the fair value has been less than cost, (ii) the financialcondition and near-term prospects of the issuer, and (iii) our intent andability to retain our investment in the issuer for a period of time sufficientto allow for any anticipated recovery in fair value.

 

Managementdetermined that any individual unrealized loss as of March 31, 2010 didnot represent an other-than-temporary impairment.  The unrealized losses on ourgovernment-sponsored enterprises (“GSE”) bonds, GSE collateralized mortgageobligations (“CMOs”), and GSE mortgage backed securities (“MBS”) wereattributable to both changes in interest rate (U.S. Treasury curve) and arepricing of risk (spreads widening against risk-fee rate) in the market. We donot own any non-agency MBS or CMO. All GSE bonds, GSE CMO, and GSE MBSsecurities are backed by U.S. Government Sponsored and Federal Agencies andtherefore rated “Aaa/AAA.”  We have noexposure to the “Subprime Market” in the form of Asset Backed Securities, orABS, and Collateralized Debt Obligations, or “CDOs” that are below investmentgrade.  We have the intent and ability tohold the securities in an unrealized loss position at March 31, 2010 untilthe market value recovers or the securities mature.

 

Municipalbonds and corporate bonds are evaluated by reviewing the credit-worthiness ofthe issuer and market conditions. The unrealized losses on our municipal andcorporate securities were primarily attributable to both changes in interestrates and a repricing of risk in the market. We have the intent and ability to hold the securities in an unrealizedloss position at March 31, 2010 until the market value recovers or thesecurities mature.

 

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**Note 6.   Loans**

 

The loans in theportfolio as a result of the Mirae Bank acquisition are covered by the FDICloss-share agreements and such loans are referred to herein as “covered loans.”  All loans other than the covered loans arereferred to herein as “non-covered loans.” A summary of covered and non-covered loans is presented in the tablebelow:

 

**Covered &Non-Covered Loans**

 
| ** **                          | ** ** | **(Dollars in Thousands)** | ** ** |
|-------------------------------------|------------|----------------------------|------------|
| ** **                          | ** ** | **March 31, 2010**    | ** ** | **December 31, 2009** | ** ** |
| Non-covered loans:                  | ** ** | ** **                 | ** ** | ** ** | ** ** |
| Construction                        |       | $                          | 47,564     |   | $ | 48,371 |   |
| Real estate secured                 |       | 1,795,142                  |       | 1,783,638 |   |
| Commercial and industrial           |       | 313,872                    |       | 325,034 |   |
| Consumer                            |       | 16,113                     |       | 16,626 |   |
| Total loans                         |       | 2,172,691                  |       | 2,173,669 |   |
| Unearned Income                     |       | (4,938                     | )          | (5,311 | ) |
| Gross loans, net of unearned income |       | 2,167,753                  |       | 2,168,358 |   |
| Allowance for losses on loans       |       | (71,597                    | )          | (61,377 | ) |
| Net loans                           |       | $                          | 2,096,156  |   | $ | 2,106,981 |   |
|                                |       |                       |       |   |   |
| Covered loans:                      |       |                       |       |   |   |
| Construction                        |       | $                          | —     |   | $ | — |   |
| Real estate secured                 |       | 188,353                    |       | 196,066 |   |
| Commercial and industrial           |       | 61,527                     |       | 62,409 |   |
| Consumer                            |       | 191                        |       | 608 |   |
| Total loans                         |       | 250,071                    |       | 259,083 |   |
| Allowance for losses on loans       |       | (7,979                     | )          | (753 | ) |
| Net loans                           |       | $                          | 242,092    |   | $ | 258,330 |   |
|                                |       |                       |       |   |   |
| Total loans:                        |       |                       |       |   |   |
| Construction                        |       | $                          | 47,564     |   | $ | 48,371 |   |
| Real estate secured                 |       | 1,983,495                  |       | 1,979,704 |   |
| Commercial and industrial           |       | 375,399                    |       | 387,443 |   |
| Consumer                            |       | 16,304                     |       | 17,234 |   |
| Total loans                         |       | 2,422,762                  |       | 2,432,752 |   |
| Unearned Income                     |       | (4,938                     | )          | (5,311 | ) |
| Gross loans, net of unearned income |       | 2,417,824                  |       | 2,427,441 |   |
| Allowance for losses on loans       |       | (79,576                    | )          | (62,130 | ) |
| Net loans                           |       | $                          | 2,338,248  |   | $ | 2,365,311 |   |

 

In accordance with ASC310-30 (formerly AICPA Statement of Position “SOP 03-3”, *Accounting for Certain Loans or Debt SecuritiesAcquired in a Transfer*)*,*the covered loans were divided into “SOP 03-3 Loans” and “Non-SOP 03-3 Loans”,of which SOP 03-3 loans are loans with evidence of deterioration of creditquality and it was probable, at the time of acquisition, that the Bank will beunable to collect all contractually required payments receivable. In contrast,Non-SOP 03-3 loans are all other covered loans that do not qualify as SOP 03-3loans. In addition, the covered loans are further categorized into fourdifferent loan pools by loan type: construction, commercial &industrial, real estate secured, and consumer.

 

The difference betweencontractually required payments at acquisition and the cash flows expected tobe collected at acquisition is referred to as the non-accretable differencewhich is included in the carrying amount of the loans. Subsequent decreases tothe expected cash flows will generally result in a provision for loan losses.Subsequent increases in cash flows result in a reversal of the provision forloan losses to the extent of prior charges, or a reversal of the non-accretabledifference with a positive impact on interest income. Further, any excess ofcash flows expected at acquisition over the estimated fair value is referred toas the accretable yield and is recognized into interest income over theremaining life of the loan when there is a reasonable expectation about theamount and timing of such cash flows.

 

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The following tablerepresents the carry value of SOP 03-3 and non SOP 03-3 loans acquired fromMirae Bank at March 31, 2010:

 

| **(Dollars  in Thousands)**        | ** ** | **March 31, 2010** | ** ** |
|------------------------------------|------------|-------------------------|------------|
|                               |       |                    |       |
| Non SOP 03-3 loans                 |       | $                       | 243,264    |   |
| SOP 03-3 loans                     |       | 6,807                   |       |
| Total outstanding balance          |       | 250,071                 |       |
| Allowance related to these loans   |       | (7,979                  | )          |
| Carrying amount, net of  allowance |       | $                       | 242,092    |   |

 

The following tablerepresents the balance of SOP 03-3 acquired loans from Mirae Bank for which itwas probable at the time of the acquisition that all of the contractuallyrequired payments would not be collected:

 

| **(Dollars  in Thousands)** | ** ** | **March 31, 2010** | ** ** |
|-----------------------------|------------|-------------------------|------------|
|                        |       |                    |       |
| Breakdown of SOP 03-3 Loans |       |                    |       |
| Real Estate loans           |       | $                       | 5,102      |   |
| Commercial loans            |       | $                       | 1,705      |   |

 

Loan acquired from theacquisition of Mirae Bank were discounted based on estimated cashflows to bereceived at June 26, 2009.  Discounton acquired loans totaled $54.9 million at acquisition.  Discount accretion on acquired loans of $1.3million was recorded as interest income as follows:

 

| **(Dollars  in Thousands)**                     | ** ** | **March 31, 2010** | ** ** |
|-------------------------------------------------|------------|-------------------------|------------|
|                                            |       |                    |       |
| Beginning balance of discount on loans 12/31/09 |       | $                       | 30,846     |   |
| Discount accretion income recognized            |       | (1,271                  | )          |
| Disposals related to charge-offs                |       | (4,559                  | )          |
| Disposals related to loan sales                 |       | (287                    | )          |
| Carrying amount, net of allowance               |       | $                       | 24,729     |   |

 

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The table belowsummarizes for the periods indicated, changes in the allowance for losses onloans arising from loans charged-off, recoveries on loans previously chargedoff, additions to the allowance and certain ratios related to the allowance forlosses on loans and loan commitments:

 

**Allowancefor Losses on Loans and Loan Commitments****(Dollars in Thousands)**

 

| ** **                                                                  | ** ** | **Three  Months Ended,** | ** ** |
|-----------------------------------------------------------------------------|------------|--------------------------|------------|
| ** **                                                                  | ** ** | **March 31,  2010** | ** ** | **December 31,  2009** | ** ** | **March 31,  2009** | ** ** |
| **Balances:**                                                               | ** ** | ** **               | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Allowance for loan losses:**                                              |       |                     |       |   |   |   |   |
| Balances  at beginning of period                                            |       | $                        | 62,130     |   | $ | 54,735 |   | $ | 29,437 |   |
| **Actual charge-offs:****(1)**                                              |       |                     |       |   |   |   |   |
| Real  estate secured                                                        |       | 4,373                    |       | 8,495 |   | 672 |   |
| Commercial  and industrial                                                  |       | 1,340                    |       | 10,117 |   | 1,629 |   |
| Consumer                                                                    |       | 115                      |       | 43 |   | 102 |   |
| Total  charge-offs                                                          |       | 5,828                    |       | 18,655 |   | 2,403 |   |
| ** **                                                                  |       |                     |       |   |   |   |   |
| **Recoveries on loans previously charged off:**                             |       |                     |       |   |   |   |   |
| Real  estate secured                                                        |       | 11                       |       | 174 |   | — |   |
| Commercial  and industrial                                                  |       | 468                      |       | 441 |   | 70 |   |
| Consumer                                                                    |       | 34                       |       | 40 |   | 43 |   |
| Total  recoveries                                                           |       | 513                      |       | 655 |   | 113 |   |
|                                                                        |       |                     |       |   |   |   |   |
| Net  loan charge-offs                                                       |       | 5,315                    |       | 18,000 |   | 2,290 |   |
|                                                                        |       |                     |       |   |   |   |   |
| FDIC  Indemnification                                                       |       | 5,831                    |       | 855 |   | — |   |
| Provision  for losses on loan and loan commitments (2)                      |       | 16,930                   |       | 24,540 |   | 7,009 |   |
| Balances  at end of period                                                  |       | $                        | 79,576     |   | $ | 62,130 |   | $ | 34,156 |   |
| **Allowance for loan commitments:**                                         |       |                     |       |   |   |   |   |
| Balances  at beginning of year                                              |       | $                        | 2,515      |   | $ | 1,455 |   | $ | 1,243 |   |
| Provision  for losses (recapture) on loan commitments                       |       | 70                       |       | 1,060 |   | (309 | ) |
| Balance  at end of period                                                   |       | $                        | 2,585      |   | $ | 2,515 |   | $ | 934 |   |
|                                                                        |       |                     |       |   |   |   |   |
| **Ratios**:                                                                 |       |                     |       |   |   |   |   |
| Net  loan charge-offs to average total loans                                |       | 0.22                     | %          | 0.74 | % | 0.11 | % |
| Allowance  for loan losses to total loans at end of period                  |       | 3.29                     | %          | 2.56 | % | 1.65 | % |
| Net  loan charge-offs to allowance for loan losses at end of period         |       | 6.68                     | %          | 28.97 | % | 6.70 | % |
| Net  loan charge-offs to provision for losses on loans andloan  commitments |       | 31.26                    | %          | 70.31 | % | 34.18 | % |

 

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(1) Charge-off amount for March 31, 2010includes net charge-offs of covered loans amounting to $63,000, whichrepresents gross covered loan charge-offs of $4.1 million less FDIC receivableportion of $4.0 million.

 

(2) Provision for loss on loansand loan commitments amount includes net provisions for covered loans amountingto $63,000 which represents gross covered loan provision of $4.1 million lessFDIC receivable portion of $4.0 million.

 

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The table belowsummarizes for the end of the periods indicated, the balance of our allowancefor losses on loans and the percent of such loan balances for each loan type:

 

**Distributionand Percentage Composition of Allowance for Loan Losses**

**(Dollars inThousands)**

 
| ** **                | ** ** | **March 31,  2010** | ** ** | **December 31,  2009** | ** ** |
|---------------------------|------------|--------------------------|------------|-----------------------------|------------|
| ** **                | ** ** | **Reserve**              | ** ** | **Gross  Loans**            | ** ** | **(%)** | ** ** | **Reserve** | ** ** | **Gross  Loans** | ** ** | **(%)** | ** ** |
| Applicable to:            | ** ** | ** **               | ** ** | ** **                  | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Construction              |       | $                        | 470        |                        | $          | 47,564 |   | 0.99 | % | $ | 411 |   | $ | 48,371 |   | 0.85 | % |
| Real estate secured       |       | 51,108                   |       | 1,983,496                   |       | 2.58 | % | 34,458 |   | 1,979,704 |   | 1.74 | % |
| Commercial and industrial |       | 27,833                   |       | 375,398                     |       | 7.41 | % | 27,059 |   | 387,443 |   | 6.98 | % |
| Consumer                  |       | 165                      |       | 16,304                      |       | 1.01 | % | 202 |   | 17,234 |   | 1.17 | % |
| Total allowance           |       | $                        | 79,576     |                        | $          | 2,422,762 |   | 3.28 | % | $ | 62,130 |   | $ | 2,432,752 |   | 2.55 | % |

 

Theallowance for loanlosses is comprised of specific loss allowances for impaired loans and generalloan loss allowances based on quantitative and qualitative analyses.

 

A loan is impaired when,based on current information and events, it is probable that the Company willbe unable to collect all amounts due according to the contractual terms of theloan agreement. At March 31, 2010, our recorded impaired loans totaled$193.7 million, of which $80.3 million had specific reserves of $28.4 million.At December 31, 2009, our recorded impaired loans totaled $165.2 million,of which $84.2 million had specific reserves of $15.6 million.

 

On a quarterly basis, weutilize a classification migration model and individual loan impairment asstarting points for determining the adequacy of our allowance for losses onloans. Our loss migration analysis tracks a certain number of quarters of loanloss history to determine historical losses by classification category for eachloan type, except for certain loans (automobile, mortgage and credit scoredbased business loans), which are analyzed as homogeneous loan pools. Thesecalculated loss factors are then applied to outstanding loan balances.  Based on a Company defined utilization rateof exposure for unused off-balance sheet loan commitments, such as letters ofcredit, we record a reserve for loan commitments.

 

**Note 7.   Shareholders’ Equity**

 

***Earnings per Share***

 

Basic earnings per share(“EPS”) excludes dilution and is calculated by dividing income available tocommon shareholders by the weighted-average number of common shares outstandingfor the period.  Diluted EPS reflects thepotential dilution that could occur if securities or other contracts to issuecommon stock were exercised or converted into common stock or resulted in theissuance of common stock that would then share in the earnings of the Company.The following table provides the basic and diluted EPS computations for theperiods indicated below:

 
| ** **                                                | ** ** | **For the  Three Months Ended March 31,** | ** ** |
|-----------------------------------------------------------|------------|------------------------------------------------|------------|
| **(Dollars in Thousands, Except per Share Data)**         | ** ** | **2010**                                       | ** ** | **2009** | ** ** |
| Numerator:                                                |       |                                           |       |   |   |
| Net income available to  common shareholders              |       | $                                              | 2,412      |   | $ | 2,139 |   |
| Denominator:                                              |       |                                           |       |   |   |
| Denominator for basic  earnings per share:                |       |                                           |       |   |   |
| Weighted-average shares                                   |       | 29,484,006                                     |       | 29,413,757 |   |
| Effect of dilutive  securities:                           |       |                                           |       |   |   |
| Stock option dilution                                     |       | 53,927                                         |       | 8,533 |   |
| Denominator for diluted  earnings per share:              |       |                                           |       |   |   |
| Adjusted weighted-average  shares and assumed conversions |       | 29,537,933                                     |       | 29,422,290 |   |
| Basic earnings per share                                  |       | $                                              | 0.08       |   | $ | 0.07 |   |
| Diluted earnings per share                                |       | $                                              | 0.08       |   | $ | 0.07 |   |

 

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**Note8.   Business Segment Reporting**

 

The following disclosureabout segments of the Company is made in accordance with the requirements ofASC 280 (formerly SFAS No. 131, *Disclosuresabout Segments of an Enterprise and Related Information)*.  The Company segregates its operations intothree primary segments:  bankingoperations, SBA lending services, and trade finance department (“TFD”).  The Company determines the operating resultsof each segment based on an internal management system that allocates certainexpenses to each segment.

 

*BankingOperations*—**The Company raises funds from depositsand borrowings for loans and investments, and provides lending products,including commercial, consumer, and real estate loans to its customers.

 

*SmallBusiness Administration Lending Services*— The SBA department mainly provides customers withaccess to the U.S. SBA guaranteed lending program.

 

*TradeFinance Services*—The trade finance department allows the Company’s import/export customers tohandle their international transactions. Trade finance products include, among others, the issuance andcollection of letters of credit, international collection, and import/exportfinancing.

 

The following are theresults of operations of the Company’s segments for the periods indicatedbelow:

 
| ** **                                  | ** ** | **Three Months Ended March 31,  2010** | ** ** |
|---------------------------------------------|------------|---------------------------------------------|------------|
| **(Dollars  in Thousands)**                 | ** ** | **Banking**                                 | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Business  Segments**                      | ** ** | **Operations**                              | ** ** | **TFD** | ** ** | **SBA** | ** ** | **Company** | ** ** |
|                                        |       |                                        |       |   |   |   |   |   |   |
| Net interest income                         |       | $                                           | 25,586     |   | $ | 554 |   | $ | 2,418 |   | $ | 28,558 |   |
| Less provision (recapture)  for loan losses |       | 12,220                                      |       | (871 | ) | 5,651 |   | 17,000 |   |
| Non-interest income                         |       | 6,751                                       |       | 242 |   | 792 |   | 7,785 |   |
| Non-interest expense                        |       | 13,611                                      |       | 436 |   | 643 |   | 14,690 |   |
| Income (loss) before taxes                  |       | $                                           | 6,506      |   | $ | 1,231 |   | $ | (3,084 | ) | $ | 4,653 |   |
| Total assets                                |       | $                                           | 3,228,249  |   | $ | 36,877 |   | $ | 194,186 |   | $ | 3,459,312 |   |

 
| ** **                      | ** ** | **Three Months Ended March 31,  2009** | ** ** |
|---------------------------------|------------|---------------------------------------------|------------|
| **(Dollars  in Thousands)**     | ** ** | **Banking**                                 | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Business  Segments**          | ** ** | **Operations**                              | ** ** | **TFD** | ** ** | **SBA** | ** ** | **Company** | ** ** |
|                            |       |                                        |       |   |   |   |   |   |   |   |   |   |   |
| Net interest income             |       | $                                           | 17,060     |   | $ | 441 |   | $ | 2,163 |   | $ | 19,664 |   |
| Less provision for loan  losses |       | 4,007                                       |       | 829 |   | 1,864 |   | 6,700 |   |
| Non-interest income             |       | 2,774                                       |       | 284 |   | 679 |   | 3,737 |   |
| Non-interest expense            |       | 11,278                                      |       | 272 |   | 437 |   | 11,987 |   |
| Income (loss) before taxes      |       | $                                           | 4,549      |   | $ | (376 | ) | $ | 541 |   | $ | 4,714 |   |
| Total assets                    |       | $                                           | 2,403,788  |   | $ | 52,109 |   | $ | 155,385 |   | $ | 2,611,282 |   |

 

**Note9.   Commitments and Contingencies**

 

We are a party tofinancial instruments with off-balance sheet risk in the normal course ofbusiness to meet the financing needs of our customers.  These financial instruments includecommitments to extend credit, standby letters of credit, and commercial lettersof credit.  These instruments involve, tovarying degrees, elements of credit and interest rate risk in excess of theamount recognized in the consolidated statements of financial condition.  Our exposure to credit loss in the event ofnonperformance on commitments to extend credit and standby letters of credit isrepresented by the contractual notional amount of those instruments.  We use the same credit policies in makingcommitments and conditional obligations as we do for extending loan facilitiesto customers.  We evaluate each customer’screditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary upon extension ofcredit, is based on our credit evaluation of the counterparty.  The types of collateral that we hold varies,but may include accounts receivable, inventory, property, plant, and equipmentand income-producing properties.

 

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Commitments at March 31,2010 are summarized as follows:

 
| **(Dollars in Thousands)**                                              | ** ** | **March 31, 2010** | ** ** |
|-------------------------------------------------------------------------|------------|-------------------------|------------|
| Commitments to extend  credit                                           |       | $                       | 262,232    |   |
| Standby letters of credit                                               |       | 8,229                   |       |
| Commercial letters of  credit                                           |       | 16,684                  |       |
| Commitments to fund Low  Income Housing Tax Credits (“LIHTC”) |       | 10,176                  |       |
|                                                                         |            |                         |            |  |

 

In the normal course ofbusiness, we are involved in various legal claims.  We have reviewed all legal claims against uswith counsel and have taken into consideration the views of such counsel as tothe outcome of the claims.  We do notbelieve the final disposition of all such claims will have a material adverseeffect on our financial position or results of operations.

 

**Note10. Recent Accounting Pronouncements**

 

In December 2009,FASB issued ASU 2009-16, “Transfers and Servicing (Topic 860): Accounting forTransfers of Financial Assets.” Update 2009-16 will require more informationregarding transferred financial assets, including securitization transactions,and where entities have continuing exposure to risks related to transferredfinancial assets.  The Company adoptedthis standard as of January 1, 2010. As a result of certain recourse provisions that are included in the saleof SBA guaranteed loans, of the classification of sold SBA guarantee portionsare recorded as secured borrowings and the gain from the sale of such loans aredeferred until such recourse provisions are reassessed.

 

In January 2010,FASB issued Accounting Standards Update 2010-06, “Improving Disclosures aboutFair Value Measurements”. ASU 2010-06 will require reporting entities to makenew disclosures about (a) amounts and reasons for significant transfers inand out of Level 1 and Level 2 fair value measurements, (b) Input andvaluation techniques used to measure fair value for both recurring andnonrecurring fair value measurements that fall in either Level 2 or Level 3 and(c) information on purchases, sales, issuances and settlements in the rollforward of activity in Level 3 fair value measures. The new and reviseddisclosures are effective for interim and annual reporting periods beginningafter December 15, 2009 except for disclosures about purchases, sales,issuances and settlements in the roll forward of activity in Level 3 fair valuemeasures, which are effective for fiscal years beginning after December 15,2010. The adoption of ASU 2010-06 effective for reporting periods after December 15,2009 did not have a material impact on the consolidated financial statements.The Company is still evaluating the impact of the remainder of ASU 2010-06effective for fiscal years beginning after December 15, 2010.

 

In February 2010,FASB issued ASU 2010-09, and amendment of ASC 855 (formerly Statement No. 165,Subsequent Events).  ASC 855 was issuedto establish general standards of accounting for and disclosure of events thatoccur after the balance sheet date but before the financial statements are issuedor are available to be issued. ASC Topic 2010-09 amends ASC 855 by adding the“SEC filer”, and “revised financial statements” to the ASC Master Glossarywhile removing the definition of “public entity” from the glossary. Theamendment also exempts SEC filers from disclosing the date through whichsubsequent events have been evaluated and require SEC files and conduit debtobligors to evaluate subsequent events through the date the financialstatements are issued.  ASU 2010-09 iseffective as of the issue date for financial statements that are issued,available to be issued, or revised. The adoption of ASU 2010-09 did not have amaterial impact on the consolidated financial statements.

 

**Note11. Subsequent Events**

 

The Companyevaluated subsequent events through the date the financial statements wereissued. As of the issue date of this report, the Company did not have anysubsequent events to report.

 

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## ***Item2.***                                                           Management’sDiscussion and Analysis of Financial Condition and Results of Operations

 

This discussion presentsmanagement’s analysis of our results of operations for the three months ended March 31,2010 and March 31, 2009, financial condition as of  March 31, 2010 and December 31,2009, and includes the statistical disclosures required by the Securities andExchange Commission Guide 3 (“Statistical Disclosure by Bank Holding Companies”).  The discussion should be read in conjunctionwith our financial statements and the notes related thereto which appearelsewhere in this Quarterly Report on Form 10-Q.

 

Statements contained inthis report that are not purely historical are forward-looking statementswithin the meaning of Section 21E of the Securities Exchange Act of 1934,as amended, including our expectations, intentions, beliefs, or strategiesregarding the future.  Any statements inthis document about expectations, beliefs, plans, objectives, assumptions orfuture events or performance are not historical facts and are forward-lookingstatements. These statements are often, but not always, made through the use ofwords 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 anduncertainties, which could cause actual results to differ materially from thoseexpressed in them.  Any forward-lookingstatements are qualified in their entirety by reference to the factorsdiscussed throughout this document.  Allforward-looking statements concerning economic conditions, rates of growth,rates of income or values as may be included in this document are based oninformation available to us on the dates noted, and we assume no obligation toupdate any such forward-looking statements. It is important to note that our actual results may differ materiallyfrom those in such forward-looking statements due to fluctuations in interestrates, inflation, government regulations, economic conditions, customerdisintermediation, and competitive product and pricing pressures in thegeographic and business areas in which we conduct operations, including ourplans, objectives, expectations and intentions and other factors discussedunder the section entitled “Risk Factors,” in our Annual Report on Form 10-Kfor the year ended December 31, 2009, including the following:

 

·                  If a significant number of clients failto perform under their loans, our business, profitability, and financialcondition would be adversely affected.

 

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

 

·                  Banking organizations are subject to interest raterisk and variations in interest rates may negatively affect our financialperformance.

 

·                  Liquidity risk could impair our ability to fundoperations, meet our obligations as they become due and jeopardize ourfinancial condition.

 

·                  The profitability of Wilshire Bancorp will bedependent on the profitability of the Bank.

 

·                  Wilshire Bancorp relies heavily on the payment ofdividends from the Bank.

 

·                  The holders of debentures and Series A PreferredStock have rights that are senior to those of our common shareholders.

 

·                  Adverse changes in domestic or global economicconditions, especially in California, could have a material adverse effect onour business, growth, and profitability.

 

·                  Recent negative developments in the financial industryand U.S. and global credit markets may affect our operations and results.

 

·                  Governmental responses to recent market disruptionsmay be inadequate and may have unintended consequences.

 

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

 

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

 

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

 

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

 

·                  We may be unable to manage future growth.

 

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·                  Our expenses will increase as a result of increases inFDIC insurance premiums.

 

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

 

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

 

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

 

·                  We may experience goodwill impairment.

 

·                  We face substantial competition in our primary marketarea.

 

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

 

·                  We are subject to significant government regulationand legislation that increase the cost of doing business and inhibits ourability to compete.

 

·                  As participants in the United States Department of theTreasury’s Capital Purchase Program, we are subject to additional regulationsand legislation that may not be applicable to other financial institutioncompetitors.

 

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

 

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

 

·                  Shares of our preferred stock previouslyissued and preferred stock issued in the future could have dilutive and othereffects.

 

These factors and therisk factors referred to in our Annual Report on Form 10-K for the yearended December 31, 2009 could cause actual results or outcomes to differmaterially from those expressed in any forward-looking statements made by us,and you should not place undue reliance on any such forward-lookingstatements.  Any forward-lookingstatement speaks only as of the date on which it is made and we do notundertake any obligation to update any forward-looking statement or statementsto reflect events or circumstances after the date on which such statement ismade or to reflect the occurrence of unanticipated events.  New factors emerge from time to time, and itis not possible for us to predict which will arise.  In addition, we cannot assess the impact ofeach factor on our business or the extent to which any factor, or combinationof factors, may cause actual results to differ materially from those containedin any forward-looking statements.

 

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**SelectedFinancial Data**

 

The following tablepresents selected historical financial information for the three months ended March 31,2010, December 31, 2009, and March 31, 2009. In the opinion ofmanagement, the information presented reflects all adjustments considerednecessary for a fair presentation of the results of such periods.  The operating results for the interim periodsare not necessarily indicative of our future operating results.

 
| ** **                                                                 | ** ** | **Three  months ended,** | ** ** |
|----------------------------------------------------------------------------|------------|--------------------------|------------|
| **(Dollars in thousands, except  per share data) (unaudited)**             | ** ** | **March 31,  2010** | ** ** | **December 31,  2009** | ** ** | **March 31,  2009** | ** ** |
| Net income available to common shareholders                                |       | $                        | 2,412      |   | $ | 3,174 |   | $ | 2,139 |   |
| Net income per common share, basic                                         |       | 0.08                     |       | 0. 11 |   | 0.07 |   |
| Net income per common share, diluted                                       |       | 0.08                     |       | 0.11 |   | 0.07 |   |
| Net interest income before provision for loan  losses and loan commitments |       | 28,558                   |       | 29,406 |   | 19,664 |   |
| ** **                                                                 |       |                     |       |   |   |   |   |
| **Average balances:**                                                      |       |                     |       |   |   |   |   |
| Assets                                                                     |       | 3,417,633                |       | 3,414,830 |   | 2,525,225 |   |
| Cash and cash equivalents                                                  |       | 216,127                  |       | 260,880 |   | 105,417 |   |
| Investment securities                                                      |       | 665,366                  |       | 613,021 |   | 286,553 |   |
| Net loans                                                                  |       | 2,359,522                |       | 2,388,443 |   | 2,030,595 |   |
| Total deposits                                                             |       | 2,886,514                |       | 2,787,804 |   | 1,832,479 |   |
| Shareholders’ equity                                                  |       | 273,293                  |       | 278,382 |   | 259,072 |   |
| **Performance Ratios:**                                                    |       |                     |       |   |   |   |   |
| Annualized return on average assets                                        |       | 0.39                     | %          | 0.48 | % | 0.48 | % |
| Annualized return on average equity                                        |       | 4.85                     | %          | 5.86 | % | 4.72 | % |
| Net interest margin                                                        |       | 3.65                     | %          | 3.73 | % | 3.35 | % |
| Efficiency ratio                                                           |       | 40.42                    | %          | 35.08 | % | 51.22 | % |
| **Capital Ratios:**                                                        |       |                     |       |   |   |   |   |
| Tier 1 capital to adjusted total assets                                    |       | 9.78                     | %          | 9.77 | % | 12.79 | % |
| Tier 1 capital to risk-weighted assets                                     |       | 14.50                    | %          | 14.37 | % | 15.15 | % |
| Total capital to risk-weighted assets                                      |       | 15.95                    | %          | 15.81 | % | 16.69 | % |
|                                                                            |            |                          |            |  |  |  |  |  |  |  |

 
| ** **                                                         | ** ** | **March 31, 2010** | ** ** | **December 31, 2009** | ** ** | **March 31, 2009** | ** ** |
|--------------------------------------------------------------------|------------|------------------------------|------------|---------------------------------|------------|------------------------------|------------|
| **Period-end balances as of:**                      |       |                         |       |                            |       |                         |       |   |   |   |
| Total assets                                                       |       | $                            | 3,459,312  |                            | $          | 3,435,997                    |       | $ | 2,611,282 |   |
| Investment securities                                              |       | 687,821                      |       | 651,427                         |       | 320,188                      |       |
| Total loans, net of  unearned income and allowance for loan losses |       | 2,417,824                    |       | 2,427,441                       |       | 2,074,001                    |       |
| Total deposits                                                     |       | 2,925,045                    |       | 2,828,215                       |       | 1,905,447                    |       |
| Junior subordinated  debentures                                    |       | 87,321                       |       | 87,321                          |       | 87,321                       |       |
| FHLB borrowings                                                    |       | 126,000                      |       | 232,000                         |       | 340,000                      |       |
| Total common equity                                                |       | 210,637                      |       | 206,205                         |       | 198,144                      |       |
|                                                               |       |                         |       |                            |       |                         |       |
| **Asset Quality Ratios:**                                          |       |                         |       |                            |       |                         |       |
| *(net of SBA guaranteed portion)*                                  |       |                         |       |                            |       |                         |       |
| Net charge-off to average  total loans for the quarter             |       | 0.22                         | %          | 0.74                            | %          | 0.11                         | %          |
| Non-performing loans to  total loans                               |       | 4.34                         | %          | 2.92                            | %          | 1.43                         | %          |
| Non-performing assets to  total loans and other real estate owned  |       | 4.54                         | %          | 3.07                            | %          | 1.73                         | %          |
| Allowance for loan losses  to total loans                          |       | 3.29                         | %          | 2.56                            | %          | 1.65                         | %          |
| Allowance for loan losses  to non-performing loans                 |       | 75.77                        | %          | 87.78                           | %          | 114.84                       | %          |

 

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**ExecutiveOverview**

 

We operate a communitybank engaged in the commercial banking business, with our primary marketencompassing the multi-ethnic population of the Los Angeles metropolitanarea.  Our full-service offices arelocated primarily in areas where a majority of the businesses are owned bydiversified ethnic groups.

 

We have also expanded ourbusiness with the focus on our commercial and consumer lending divisions. Overthe past several years, our network of branches and loan production offices hasbeen expanded geographically. Pursuant to the acquisition on June 26,2009, five commercial banking branches, formerly operated by Mirae and located withinsouthern California, were integrated into our branch network, although four ofthe branches were eventually closed due to their proximity to our existingbranches. In the first quarter, an additional branch in Van Nuys, Californiawas opened.  We also have six loanproduction offices in Aurora, Colorado; Atlanta, Georgia; Dallas, Texas;Houston, Texas; Annandale, Virginia and Fort Lee, New Jersey.

 

**CriticalAccounting Policies**

 

The discussion andanalysis of our financial condition and results of operations is based upon ourfinancial statements, which have been prepared in accordance with GAAP.  The preparation of these financial statementsrequires management to make estimates and judgments that affect the reportedamounts of assets and liabilities, revenues and expenses, and relateddisclosures of contingent assets and liabilities at the date of our financialstatements.  Actual results may differfrom these estimates under different assumptions or conditions.

 

Various elements of ouraccounting policies, by their nature, are inherently subject to estimationtechniques, valuation assumptions, and other subjective assessments. We haveidentified several accounting policies that, due to judgments, estimates, andassumptions inherent in those policies are critical to an understanding of ourconsolidated financial statements. These policies relate to the classificationand valuation of investment securities, the methodologies that determine ourallowance for losses on loans, the treatment of non-accrual loans, thevaluation of retained interests and servicing assets related to the sales ofSBA loans, and the accounting for income tax provisions and the uncertainty inincome taxes. In each area, we have identified the variables most important inthe estimation process. We believe that we have used the best informationavailable to make the estimates necessary to value the related assets andliabilities. Actual performance that differs from our estimates and futurechanges in the key variables could change future valuation and could have animpact on our net income.

 

Our significantaccounting policies are described in greater detail in our 2009 Annual Reporton Form 10-K in the “Critical Accounting Policies” section of “Management’sDiscussion and Analysis of Financial Condition and Results of Operations”,which are essential to understanding Management’s Discussion and Analysis ofResults of Operations and Financial Condition. There has been no materialmodification to these policies during the quarter ended March 31, 2010.

 

**Resultsof Operations**

 

**NetInterest Income and Net Interest Margin**

 

Our primary source ofrevenue is net interest income, which is the difference between interest andfees derived from earning assets and interest paid on liabilities obtained tofund those assets.  Our net interestincome is affected by changes in the level and mix of interest-earning assetsand interest-bearing liabilities, referred to as volume changes.  Our net interest income is also affected bychanges in the yields earned on assets and rates paid on liabilities, referredto as rate changes.  Interest ratescharged on our loans are affected principally by the demand for such loans, thesupply of money available for lending purposes, and other competitivefactors.  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 theFederal Reserve Board (“FRB”).

 

Net interest incomebefore provision for losses on loans and loan commitments increased by $8.9million or 45.2%, to $28.6 million in the first quarter of 2010, compared to$19.7 million in the first quarter of 2009. Net interest margin of 3.65% in the first quarter of 2010 was increasedby 30 basis points from net interest margin of 3.35% in the previous year. Theincrease in net interest income was primarily due to a corresponding increasein interest income while interest expense decreased slightly.

 

Interest income increasedby $7.9 million, or 23.6%, to $41.3 million in first quarter of 2010 comparedto $33.4 million in the first quarter of 2009. The increase in interest income was primarily due to higher average balancesin our loan portfolio and in our US government agency securities portfolio, andthe accretion of discounted loans. Average loan balances increased by $328.9 million to $2.4 billion in thefirst quarter of 2010, compared to $2.0 billion in the first quarter of2009.  This increase was primarily due toloans acquired as a result of the acquisition of Mirae Bank on June 26,2009.

 

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The average balances ofinvestment securities increased from $286.6 million to $665.4 million from thefirst quarter of 2009 to 2010.  Due tothe lower rate environment, the overall tax equivalent yield on investmentsdecreased from 4.24% at March 31, 2009 to 3.52% at March 31, 2010.

 

Interest expensedecreased by $1.0 million, or 7.4%, to $12.7 million in the first quarter of2010 compared to $13.8 million in the first quarter of 2009, although averagebalances of our interest bearing liabilities increased by $762.1 million to$2.7 billion in the first quarter of 2010 compared to $2.0 billion in the firstquarter of 2009.  The increase isattributable to an increase in deposits amounting to $1.0 billion from thefirst quarter of 2009 to 2010, while FHLB borrowings decreased by $197.5million during the same period.  Totalcost of interest bearing liabilities decreased from 2.79% at the end of thefirst quarter 2009 to 1.87% at the end of the first quarter of 2010.  The decrease resulted from an improveddeposits mix as cored deposits to total deposits increased, and an interestrate reduction on interest bearing deposits.

 

The following table setsforth, for the periods indicated, our average balances of assets, liabilitiesand shareholders’ equity, in addition to the major components of net interestincome and net interest margin:

 

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

**(Dollarsin Thousands)**

 
| ** **                                      | ** ** | **Three  Months Ended March 31,** | ** ** |
|-------------------------------------------------|------------|----------------------------------------|------------|
| ** **                                      | ** ** | **2010**                               | ** ** | **2009** | ** ** |
| ** **                                      | ** ** | **Average  Balance**                   | ** ** | **Interest  Income/  Expense** | ** ** | **Average  Rate/Yield** | ** ** | **Average  Balance** | ** ** | **Interest  Income/  Expense** | ** ** | **Average  Rate/Yield** | ** ** |
| **Assets:**                                     |       |                                   |       |   |   |   |   |   |   |   |   |   |   |
| Earning assets:                                 |       |                                   |       |   |   |   |   |   |   |   |   |   |   |
| Net loans (1)                                   |       | $                                      | 2,359,522  |   | $ | 35,304 |   | 5.98 | % | $ | 2,030,595 |   | $ | 30,192 |   | 5.95 | % |
| Securities of government  sponsored enterprises |       | 620,393                                |       | 5,144 |   | 3.32 | % | 261,629 |   | 2,668 |   | 4.08 | % |
| Other investment securities  (2)                |       | 44,973                                 |       | 471 |   | 6.33 | % | 24,924 |   | 275 |   | 5.97 | % |
| Federal funds sold                              |       | 130,965                                |       | 382 |   | 1.17 | % | 45,639 |   | 289 |   | 2.53 | % |
| Total interest-earning  assets                  |       | 3,155,853                              |       | 41,301 |   | 5.27 | % | 2,362,787 |   | 33,424 |   | 5.67 | % |
| Total non-interest-earning assets               |       | 261,780                                |       |   |   |   |   | 162,438 |   |   |   |   |   |
| Total assets                                    |       | $                                      | 3,417,633  |   |   |   |   |   | $ | 2,525,225 |   |   |   |   |   |
| ** **                                      |       |                                   |       |   |   |   |   |   |   |   |   |   |   |
| **Liabilities and Shareholders’  Equity:** |       |                                   |       |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:                   |       |                                   |       |   |   |   |   |   |   |   |   |   |   |
| Money market deposits                           |       | $                                      | 956,035    |   | 4,023 |   | 1.68 | % | $ | 362,733 |   | 2,331 |   | 2.57 | % |
| Super NOW deposits                              |       | 22,481                                 |       | 29 |   | 0.52 | % | 19,557 |   | 46 |   | 0.94 | % |
| Savings deposits                                |       | 74,052                                 |       | 586 |   | 3.17 | % | 43,241 |   | 393 |   | 3.63 | % |
| Time deposits of $100,000  or more              |       | 768,882                                |       | 3,047 |   | 1.58 | % | 933,494 |   | 6,668 |   | 2.86 | % |
| Other time deposits                             |       | 675,764                                |       | 3,489 |   | 2.07 | % | 196,714 |   | 1,743 |   | 3.54 | % |
| FHLB borrowings and other  borrowings           |       | 148,000                                |       | 920 |   | 2.49 | % | 327,344 |   | 1,658 |   | 2.03 | % |
| Junior subordinated  debenture                  |       | 87,321                                 |       | 649 |   | 2.97 | % | 87,321 |   | 921 |   | 4.22 | % |
| Total interest-bearing  liabilities             |       | 2,732,535                              |       | 12,743 |   | 1.87 | % | 1,970,404 |   | 13,760 |   | 2.79 | % |
| Non-interest-bearing liabilities:               |       |                                   |       |   |   |   |   |   |   |   |   |   |   |
| Non-interest-bearing deposits                   |       | 389,300                                |       |   |   |   |   | 276,740 |   |   |   |   |   |
| Other liabilities                               |       | 22,505                                 |       |   |   |   |   | 19,009 |   |   |   |   |   |
| Total non-interest-bearing liabilities          |       | 411,805                                |       |   |   |   |   | 295,749 |   |   |   |   |   |
| Shareholders’ equity                       |       | 273,293                                |       |   |   |   |   | 259,072 |   |   |   |   |   |
| Total liabilities and shareholders’ equity |       | $                                      | 3,417,633  |   |   |   |   |   | $ | 2,525,225 |   |   |   |   |   |
| Net interest income                             |       |                                   |       | $ | 28,558 |   |   |   |   |   | $ | 19,664 |   |   |   |
| Net interest spread (3)                         |       |                                   |       |   |   | 3.40 | % |   |   |   |   | 2.88 | % |
| Net interest margin (4)                         |       |                                   |       |   |   | 3.65 | % |   |   |   |   | 3.35 | % |

 

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(1)          Net loan feesare included in the calculation of interest income. Net loan fees wereapproximately $763,000 and $569,000 for the quarters ended March 31, 2010and 2009, respectively.  Loans are net ofthe allowance for loan losses, deferred fees, unearned income, and relateddirect costs, but include loans placed on non-accrual status.

(2)          Represents taxequivalent yields, non-tax equivalent yields for 2010 and 2009 were 4.19% and4.41%, respectively.

(3)          Represents theaverage rate earned on interest-earning assets less the average rate paid oninterest-bearing liabilities.

(4)          Represents netinterest income as a percentage of average interest-earning assets.

 

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Thefollowing table sets forth, for the periods indicated, the dollar amount ofchanges in interest earned and paid for interest-earning assets andinterest-bearing liabilities, respectively, and the amount of changeattributable to changes in average daily balances (volume) or changes inaverage daily interest rates (rate). All yields were calculated without theconsideration of tax effects, if any, and the variances attributable to boththe volume and rate changes have been allocated to volume and rate changes inproportion to the relationship of the absolute dollar amount of the changes ineach:

 

**Rate/Volume Analysis of Net InterestIncome****(Dollars in Thousands)**

 

| ** **                                     | ** ** | **Three Months Ended March 31,********2010 vs. 2009********Increases (Decreases)********Due to Change In** | ** ** |
|------------------------------------------------|------------|-----------------------------------------------------------------------------------------------------------------|------------|
| ** **                                     | ** ** | **Volume**                                                                                                      | ** ** | **Rate** | ** ** | **Total** | ** ** |
| **Interest income:**                           |       |                                                                                                            |       |   |   |   |   |
| Net loans(1)                                   |       | $                                                                                                               | 4,922      |   | $ | 190 |   | $ | 5,112 |   |
| Securities of government sponsored enterprises |       | 3,056                                                                                                           |       | (580 | ) | 2,476 |   |
| Other Investment securities                    |       | 212                                                                                                             |       | (15 | ) | 197 |   |
| Federal funds sold                             |       | 314                                                                                                             |       | (221 | ) | 93 |   |
| Interest-earning deposits                      |       | —                                                                                                          |       | — |   | — |   |
| Total interest income                          |       | 8,504                                                                                                           |       | (626 | ) | 7,878 |   |
|                                           |       |                                                                                                            |       |   |   |   |   |
| **Interest expense:**                          |       |                                                                                                            |       |   |   |   |   |
| Money market deposits                          |       | 2,727                                                                                                           |       | (1,035 | ) | 1,692 |   |
| Super NOW deposits                             |       | 6                                                                                                               |       | (23 | ) | (17 | ) |
| Savings deposits                               |       | 249                                                                                                             |       | (56 | ) | 193 |   |
| Time deposit of $100,000 or more               |       | (1,027                                                                                                          | )          | (2,594 | ) | (3,621 | ) |
| Other time deposits                            |       | 2,732                                                                                                           |       | (986 | ) | 1,746 |   |
| FHLB borrowings and other borrowings           |       | (1,054                                                                                                          | )          | 316 |   | (738 | ) |
| Junior subordinated debenture                  |       | —                                                                                                          |       | (272 | ) | (272 | ) |
| Total interest expense                         |       | 3,633                                                                                                           |       | (4,650 | ) | (1,017 | ) |
|                                           |       |                                                                                                            |       |   |   |   |   |
| Change in net interest income                  |       | $                                                                                                               | 4,871      |   | $ | 4,024 |   | $ | 8,895 |   |

 

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(1) Netloan fees have been included in the calculation of interest income. Net loanfees were approximately $763,000 and $569,000 for the quarters ended March 31,2010 and 2009, respectively.  Loans arenet of the allowance for loan losses, deferred fees, unearned income, andrelated direct costs, but include loans placed on non-accrual status.

 

**Provisionfor Losses on Loans and Loan Commitments**

 

In anticipation of creditrisks inherent in our lending business and ongoing weakness in the local andnational economy, we set aside allowances through charges to earnings.  Such charges were made not only for our outstandingloan portfolio, but also for off-balance sheet items, such as commitments toextend credits or letters of credit.  Thecharges made for our outstanding loan portfolio were credited to allowance forloan losses, whereas charges for off-balance sheet items were credited to thereserve for off-balance sheet items, and are presented as a component of otherliabilities.

 

Although we continue toenhance our loan underwriting standards and maintain proactive credit follow-upprocedures, we experienced a deterioration of credit quality in our loanportfolio throughout 2009 and 2010 because of the weak economy and the declinein the real estate market. We recorded a provision for losses on loans and loancommitments of $17.0 million in the first quarter of 2010, as compared with aprovision of $6.7 million for the prior year’s same quarter.  The increase in our provision for losses onloans and loan commitments was primarily to keep pace with an increase ofnon-performing loans (see “Financial Condition — Non-performing Assets” belowfor further discussion). The $17.0 million provision in the first quarter of2010 includes net charge-offs of $5.3 million, and FDIC indemnification of $5.8million. Our procedures for monitoring the adequacy of our allowance for losseson loans and loan commitments, as well as detailed information concerning theallowance itself, are described in the section entitled “Allowance for Losseson Loans and Loan Commitments” below. Losses on Mirae loans purchased from the FDIC are partially reimbursableas stated in our loss-sharing agreements with the FDIC. 

 

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At March 31, 2010,the Company had a FDIC indemnification of $5.8 million included in ourallowance for loan losses calculation.

 

**Non-interestIncome**

 

Total non-interest incomeincreased to $7.8 million in the first quarter of 2010, as compared with $3.7million in the same quarter a year ago. Non-interest income as a percentage ofaverage assets was 0.23% for the first quarter of 2010 and 0.15% for the firstquarter of 2009. The increase in non-interest income was primarily caused by anincrease in gain on sale of securities and loans.

 

The following table setsforth the various components of our non-interest income for the periodsindicated:

 

**Non-interestIncome****(Dollars in Thousands)**

 
| ** **                                   | ** ** | **For the Three Months Ended March 31,** | ** ** |
|----------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                   | ** ** | **2010**                                      | ** ** | **2009** | ** ** |
| ** **                                   | ** ** | **(Amount)**                                  | ** ** | **(%)** | ** ** | **(Amount)** | ** ** | **(%)** | ** ** |
| Service charges on deposit accounts          |       | $                                             | 3,224      |   | 41.4 | % | $ | 2,899 |   | 77.5 | % |
| Gain on sale of securities                   |       | 2,484                                         |       | 31.9 | % | 13 |   | 0.3 | % |
| Loan-related servicing fees                  |       | 1,039                                         |       | 13.3 | % | 964 |   | 25.9 | % |
| Income from other earning  assets            |       | 204                                           |       | 2.6 | % | 195 |   | 5.2 | % |
| Gain (loss) on sale of  loans                |       | 36                                            |       | 0.5 | % | (831 | ) | -22.3 | % |
| Other income                                 |       | 798                                           |       | 10.3 | % | 497 |   | 13.4 | % |
| Total                                        |       | $                                             | 7,785      |   | 100.0 | % | $ | 3,737 |   | 100.0 | % |
| Average assets                               |       | $                                             | 3,417,633  |   |   |   | $ | 2,525,225 |   |   |   |
| Non-interest income as a % of average assets |       |                                          |       | 0.23 | % |   |   | 0.15 | % |

 

Our largest source ofnon-interest income in the first quarter of 2010 was service charges on depositaccounts, which represented about 41% of our total non-interest income. Servicecharge income increased to $3.2 million in the first quarter of 2010, ascompared with $2.9 million for the prior year’s same period. The increase inservice charge income was primarily due to increased non sufficient fund andanalysis charges as well as an increase in deposits accounts.  Management constantly reviews service chargerates to maximize service charge income while still maintaining a competitiveposition.

 

The second largest sourceof non-interest income in the first quarter of 2010 was gain on sale ofsecurities at $2.5 million, which represented approximately 32% of our totalnon-interest income, compared to $13,000 at the first quarter of 2009.  Market value of securities has continued toincrease as we experienced decreased volatility in securities markets, changesin the yield curve, and contraction of interest rates spreads on securitiesowned by the Bank.  We were able torealize the appreciation in market values of our securities while maintainingour overall duration on our investment portfolio.

 

Loan related servicingfees accounted for $1.0 million or 13% of total non-interest income at the endof the first quarter of 2010.  Loanrelated servicing fees increased slightly from $964,000 at March 31, 2009.This fee income consists of trade-financing fees and servicing fees on SBAloans sold.  With the expansion of ourtrade-financing activities and the growth of our servicing loan portfolio,related fee income has continued to increase.

 

Income on other earningassets represents dividend income from FHLB stock ownership and increases inthe cash surrender value of BOLI.  Incomeon other earning assets was $204,000, or 2.6% of total non-interest income at March 31,2010.  Income from other earning assetsat March 31, 2010 increased by $9,000 compared to the first quarter of2009.

 

Gain on sale of loans atthe end of the first quarter of 2010 was $36,000, or less than 1% of totalnon-interest income compared to a loss on sale of loans of $831,000 during thefirst quarter of the previous year. The Company did not recognize any gain onsale of SBA loans in the first quarter of 2010 due to the adoption of ASU200-16 on January 1, 2010. Approximately $14.0 million in SBA loans weresold in the first quarter of 2010. However, approximately $1.3 million in gainsfrom the sale of these loans are expected to be recognized in the secondquarter of 2010, upon reevaluation after the expiration of the recourseprovisions inherent in SBA loan sales. The $36,000 in gain on sale of loans wasattributable to mortgage loan sales during the first quarter of 2010.

 

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Other non-interest incomerepresents income from miscellaneous sources such as loan referral fees, SBAloan packaging fees, checkbook sales income, and excess of insurance proceedsover carrying value of an insured loss. For the first quarter of 2010, this miscellaneous income amounted to$798,000, as compared with $497,000 in the prior year’s same period.  Other non-interest expense as a percentage oftotal non-interest income was 10.3% and 13.4% at March 31, 2010 and March 31,2009, respectively.

 

**Non-interestExpense**

 

Total non-interestexpense increased to $14.7 million at the first quarter of 2010, from $12.0million at the same period in 2009. Non-interest expenses as a percentage ofaverage assets was lowered to 0.43%, from 0.47% at the first quarter of 2010and 2009, respectively. Our efficiency ratio was 40.4% at the end of the firstquarter of 2010, compared with 51.2% at the same period a year ago.

 

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

 

**Non-interestExpenses****(Dollars in Thousands)**

 
| ** **                                    | ** ** | **For the Three Months Ended March 31,** | ** ** |
|-----------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                    | ** ** | **2010**                                      | ** ** | **2009** | ** ** |
| ** **                                    | ** ** | **(Amount)**                                  | ** ** | **(%)** | ** ** | **(Amount)** | ** ** | **(%)** | ** ** |
| Salaries and employee  benefits               |       | $                                             | 7,115      |   | 48.4 | % | $ | 6,207 |   | 51.8 | % |
| Occupancy and equipment                       |       | 2,181                                         |       | 14.8 | % | 1,676 |   | 14.0 | % |
| Deposit insurance premiums                    |       | 1,076                                         |       | 7.3 | % | 611 |   | 5.1 | % |
| Professional fees                             |       | 992                                           |       | 6.8 | % | 342 |   | 2.9 | % |
| Data processing                               |       | 637                                           |       | 4.3 | % | 827 |   | 6.9 | % |
| Advertising and promotional                   |       | 350                                           |       | 2.4 | % | 233 |   | 1.9 | % |
| Outsourced service for  customer              |       | 260                                           |       | 1.8 | % | 268 |   | 2.2 | % |
| Office supplies                               |       | 237                                           |       | 1.6 | % | 161 |   | 1.3 | % |
| Directors’ fees                          |       | 128                                           |       | 0.9 | % | 93 |   | 0.8 | % |
| Communications                                |       | 111                                           |       | 0.8 | % | 103 |   | 0.9 | % |
| Investor relation expenses                    |       | 105                                           |       | 0.7 | % | 52 |   | 0.4 | % |
| Amortization of other  intangible assets      |       | 92                                            |       | 0.6 | % | 74 |   | 0.6 | % |
| Other operating                               |       | 1,406                                         |       | 9.6 | % | 1,340 |   | 11.2 | % |
| Total                                         |       | $                                             | 14,690     |   | 100.0 | % | $ | 11,987 |   | 100.0 | % |
| Average assets                                |       | $                                             | 3,417,633  |   |   |   | $ | 2,525,225 |   |   |   |
| Non-interest expense as a % of average assets |       |                                          |       | 0.43 | % |   |   | 0.47 | % |

 

Salaries and employeebenefits historically represent half of our total non-interest expense andgenerally increase as our branch network and business volumes expand.  These expenses were $7.1 million for thefirst three months of 2010 compared with $6.2 million for the prior year’s sameperiod. Since the first quarter of 2009, additional staffing was necessitatedby branch openings as well as the addition of employees from the acquisition ofMirae Bank. However, we have successfully slowed the growth in salariesexpenses even with the increased staffing. The number of full-time equivalentemployees was increased to 408 as of March 31, 2010, as compared with 347as of March 31, 2009. In addition, our asset growth helped us improve ourassets per employee ratio to $8.5 million at March 31, 2010 from $7.5million at March 31, 2009.

 

Occupancy and equipmentexpenses represent about 15% of our total non-interest expenses. These expensesincreased to $2.2 million in the first quarter of 2010 compared with $1.7million and for the same period a year ago. The increase was primarilyattributable to the additional lease expenses for our business growth in thepast 12 months with the addition of our Forth Worth, Olympic, and Van Nuysbranches, which all opened subsequent to March 31, 2009.

 

Deposit insurance premiumexpenses represent The Financing Corporation (“FICO”) and FDIC insurancepremium assessments. In the first quarter of 2010, these expenses totaled $1.1million or 7% of total non-interest expense, compared with $611,000 for theprior year’s same periods. Recent bank failures coupled with deterioratingeconomic conditions have significantly reduced the FDIC’s deposit insurancefund reserves.  As a result, the FDIC hassignificantly increased its deposit assessment premiums for federally insuredfinancial institutions.

 

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Professional feesgenerally increase as we grow. They increased to $992,000 in the first quarterof compared to $342,000 for the same period of the prior year and represented7% of total non-interest expense at March 31, 2010.  This increase was primarily due to increasedlegal fees resulting from collection of non-performing loans and OREOsforeclosures.

 

Data processing expensesdecreased to $637,000 in the first quarter of 2010 from $827,000 for the sameperiod a year ago. In order to reduce overhead expenses, the Company changedcheck clearing service providers in 2008 which resulted in a decrease inoverall data processing expense from the first quarter of 2009 to the firstquarter of 2010.

 

Advertising andpromotional expenses increased to $350,000 for first three months of 2010compared with $233,000 in the same period a year ago. These expenses representmarketing activities, such as media advertisements and promotional gifts forcustomers of newly opened offices, especially in the new areas such as the eastcoast market in New York and New Jersey. The increases in the current quarterof 2010 was primarily attributable to our increased advertising spending topromote a branch addition in Van Nuys, as well as a new marketing campaign thatbegan in the first quarter of 2010.

 

Outsourced service costsfor customers are payments made to third parties who provide services that weretraditionally paid by the Bank’s customers, such as armored car services orbookkeeping services, and are recouped from analysis fee charges from thosecustomer’s deposit accounts.  As a resultof our cost control measures, these expenses decreased slightly to $260,000 inthe first quarter of 2010, as compared with $268,000 for the prior year’s sameperiod.

 

Other non-interestexpenses, such as office supplies, communications, director’s fees, investorrelation expenses, amortization of intangible assets and other operatingexpenses were $2.1 million for the first quarter of 2010 compared with $1.8million for the same periods a year ago. The increase represents a normalgrowth in association with the growth of our business activities and wasconsistent with our expectations.

 

**Provisionfor Income Taxes**

 

For the quarter ended March 31,2010, we had an income tax provision of $1.3 million on a pretax net income of$4.7 million, representing an effective tax rate of 28.8%, as compared with aprovision for income taxes of $1.7 million on pretax net income of $4.7million, representing an effective tax rate of 35.1% for the same quarter in2009.  The effective tax rate for thethree month ending March, 31 2010 was lower than the tax rate for March 31,2009 due to the use of enterprise zone and low income housing tax credits.

 

**Financial Condition**

 

**InvestmentPortfolio**

 

Investments are one ofour major sources of interest income and are acquired in accordance with a writtencomprehensive investment policy addressing strategies, types and levels ofallowable investments.  Management of ourinvestment portfolio is set in accordance with strategies developed andoverseen by our Asset/Liability Committee. Investment balances, including cash equivalents and interest-bearingdeposits in other financial institutions, are subject to change over time basedon our asset/liability funding needs and interest rate risk managementobjectives.  Our liquidity levels takeinto consideration anticipated future cash flows and all available sources ofcredit and is maintained at levels management believes are appropriate toassure future flexibility in meeting anticipated funding needs.

 

*Cash Equivalents and Interest-bearing Deposits in otherFinancial Institutions*

 

Cash and cash equivalentsinclude cash and due from banks, term and overnight federal funds sold, andsecurities purchased under agreements to resell, all of which have originalmaturities of less than 90 days. We buy or sell federal funds and maintaindeposits in interest-bearing accounts in other financial institutions to helpmeet liquidity requirements and provide temporary holdings until the funds canbe otherwise deployed or invested.

 

*Investment Securities*

 

Managementof our investment securities portfolio focuses on providing an adequate levelof liquidity and establishing a balanced interest rate-sensitive position,while earning an adequate level of investment income without taking unduerisk.  As of March 31, 2010, our investment portfolio was comprisedprimarily of United States government agency securities, which accounted for94% of the entire investment portfolio.

 

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Our U.S. governmentagency securities holdings are all “prime/conforming” mortgage backedsecurities, or MBS, and collateralized mortgage obligations, or CMOs,guaranteed by FNMA, FHLMC, or GNMA. GNMAs are considered equivalent to U.S.Treasury securities, as they are backed by the full faith and credit of theU.S. government. Currently, there are no subprime mortgages in our investmentportfolio. Besides the U.S. government agency securities, we also have as a percentageto total investments, 6.1% investment in municipal debt securities and 0.3%investment in corporate debt. Among our investment portfolio that was notcomprised of U.S. government securities, 5.9%, or $40.5 million carrythe top two highest “Investment Grade” rating of “Aaa/AAA” or “Aa/AA”,while 0.3%, or $2.2 million, carry an intermediate “Investment Grade”rating of at least “Baa1/BBB+” or above, and 0.2%, or $1.4 million, isunrated.  Our investment portfolio does not contain any government sponsoredenterprises, or GSE preferred securities or any distressed corporate securitiesthat required other-than-temporary-impairment charges as of March 31,2010.

 

We classified ourinvestment securities as “held-to-maturity” or “available-for-sale” pursuant toASC 320-10 (SFAS No. 115). Pursuant to the fair value election option ofASC 470-20, we have chosen to continue classifying our existing instruments ofinvestment securities as “held-to-maturity” or “available-for-sale” under ASC320-10. Investment securities that we intend to hold until maturity areclassified as held to maturity securities, and all other investment securitiesare classified as available-for-sale. The carrying values of available-for-saleinvestment securities are adjusted for unrealized gains and losses as avaluation allowance and any gain or loss is reported on an after-tax basis as acomponent of other comprehensive income. Credit related declines in the fairvalue of held-to-maturity and available-for-sale securities below their costthat are deemed to be other than temporary are reflected in earnings asrealized losses, and there were no such other-than-temporary-impairment in2009. The fair market values of our held-to-maturity and available-for-salesecurities were respectively $0.1 million and $687.7 million as of March 31,2010.

 

Thefair value of investments is accounted for in accordance with ASC 320-10 (SFAS No. 115,*Accounting for Certain Investments in Debtand Equity Securities)*. The Company currently utilizes an independentthird party bond accounting service for our investment portfolioaccounting.   The third party providesmarket values derived using a proprietary matrix pricing model which utilizesseveral different sources for pricing. The Company uses market values receivedfor investment fair values which are updated on a monthly basis. The marketvalues received is tested annually and is validated using prices received fromanother independent third party source. All of these evaluations are consideredas level 2 in reference to ASC 820. As required under Financial AccountingStandards Board (“FASB”) ASC 325 we consider all available information relevantto the collectability of the security, including information about past events,current conditions, and reasonable and supportable forecasts, and we considerfactors such as remaining payment terms of the security, prepayment speeds, thefinancial condition of the issuer(s), expected defaults, and the value of anyunderlying collateral.

 

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The following tablesummarizes the amortized cost, market value, net unrealized gain (loss), anddistribution of our investment securities as of the dates indicated:

 

**InvestmentSecurities Portfolio**

**(Dollarsin Thousands)**

** **
| ** **                                     | ** ** | **As of March 31, 2010** | ** ** | **As of December 31, 2009** | ** ** |
|------------------------------------------------|------------|-------------------------------|------------|----------------------------------|------------|
| ** **                                     | ** ** | **Amortized  Cost**           | ** ** | **Market  Value**                | ** ** | **Net  Unrealized  Gain** | ** ** | **Amortized  Cost** | ** ** | **Market  Value** | ** ** | **Net  Unrealized  Gain  (Loss)** | ** ** |
| Held to Maturity:                              |       |                          |       |                             |       |   |   |   |   |   |   |   |   |
| Collateralized mortgage obligations            |       | $                             | 105        |                             | $          | 108 |   | $ | 3 |   | $ | 109 |   | $ | 109 |   | $ | — |   |
| Total investment securities held to maturity   |       | $                             | 105        |                             | $          | 108 |   | $ | 3 |   | $ | 109 |   | $ | 109 |   | $ | — |   |
|                                           |       |                          |       |                             |       |   |   |   |   |   |   |   |   |
| Available for Sale:                            |       |                          |       |                             |       |   |   |   |   |   |   |   |   |
| Securities of government sponsored enterprises |       | $                             | 153,807    |                             | $          | 153,823 |   | $ | 16 |   | $ | 156,879 |   | $ | 155,382 |   | $ | (1,497 | ) |
| Mortgage backed securities                     |       | 123,736                       |       | 125,066                          |       | 1,330 |   | 131,617 |   | 131,711 |   | 94 |   |
| Collateralized mortgage obligations            |       | 360,775                       |       | 364,693                          |       | 3,918 |   | 318,531 |   | 319,554 |   | 1,023 |   |
| Corporate securities                           |       | 2,000                         |       | 2,039                            |       | 39 |   | 2,000 |   | 2,017 |   | 17 |   |
| Municipal securities                           |       | 41,627                        |       | 42,095                           |       | 468 |   | 42,068 |   | 42,654 |   | 586 |   |
| Total investment securities available for sale |       | $                             | 681,945    |                             | $          | 687,716 |   | $ | 5,771 |   | $ | 651,095 |   | $ | 651,318 |   | $ | 223 |   |

 

The following tablesummarizes the maturity and repricing schedule of our investment securities attheir market values at March 31, 2010:

 

**InvestmentMaturities and Repricing Schedule****(Dollars in Thousands)**

** **
| ** **                                     | ** ** | **Within  One Year** | ** ** | **After  One &  Within Five  Years** | ** ** | **After  Five &  Within Ten  Years** | ** ** | **After  Ten Years** | ** ** | **Total** | ** ** |
|------------------------------------------------|------------|----------------------|------------|-----------------------------------------------|------------|-----------------------------------------------|------------|----------------------|------------|-----------|------------|
| Held to Maturity:                              |       |                 |       |                                          |       |                                          |       |                 |       |      |       |
| Collateralized mortgage obligations            |       | $                    | —     |                                          | $          | 105                                           |       | $                    | —     |      | $          | — |   | $ | 105 |   |
| Total investment securities held to maturity   |       | $                    | —     |                                          | $          | 105                                           |       | $                    | —     |      | $          | — |   | $ | 105 |   |
|                                           |       |                 |       |                                          |       |                                          |       |                 |       |      |       |
| Available for Sale:                            |       |                 |       |                                          |       |                                          |       |                 |       |      |       |
| Securities of governmentsponsored  enterprises |       | $                    | —     |                                          | $          | —                                        |       | $                    | 153,823    |      | $          | — |   | $ | 153,823 |   |
| Mortgage backed securities                     |       | 7,018                |       | 590                                           |       | 4,167                                         |       | 113,291              |       | 125,066   |       |
| Collateralized mortgage obligations            |       | 12,364               |       | 333,168                                       |       | 19,161                                        |       | —               |       | 364,693   |       |
| Corporate securities                           |       | —               |       | 2,039                                         |       | —                                        |       | —               |       | 2,039     |       |
| Municipal securities                           |       | —               |       | 734                                           |       | 4,204                                         |       | 37,157               |       | 42,095    |       |
| Total investment securities available for sale |       | $                    | 19,382     |                                          | $          | 336,531                                       |       | $                    | 181,355    |      | $          | 105,448 |   | $ | 687,716 |   |

 

Holdings of investmentsecurities increased to $687.8 million at March 31, 2010, as compared withholdings of $651.4 million at December 31, 2009.  Total investment securities as a percentageof total assets was 19.9% and 19.0% at March 31, 2010 and December 31,2009, respectively.  As of March 31,2010, investment securities with a market value of $251.9 million were pledgedto secure certain deposits.

 

As of March 31,2010, our investment securities classified as held-to-maturity, which arecarried at their amortized cost, stayed relatively unchanged on a dollar basisat $105,000, as compared with $109,000 as of December 31, 2009. Ourinvestment securities classified as available-for-sale, which are stated attheir fair market values, increased to $687.7 million at March 31, 2010from $651.3 million at December 31, 2009.

 

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The following table showsthe gross unrealized losses and fair value of our investments, aggregated byinvestment category and the length of time that individual securities have beenin a continuous unrealized loss position, at March 31, 2010 and December 31,2009:

 

**As ofMarch  31, 2010**

(Dollars in Thousands)

 
| ** **                                     | ** ** | **Less  than 12 months** | ** ** | **12  months or longer** | ** ** | **Total**       | ** ** |
|------------------------------------------------|------------|--------------------------|------------|--------------------------|------------|-----------------|------------|
| ** **                                     | ** ** | ** **               | ** ** | **Gross**                | ** ** | ** **      | ** ** | **Gross** | ** ** | ** ** | ** ** | **Gross** | ** ** |
| ** **                                     | ** ** | ** **               | ** ** | **Unrealized**           | ** ** | ** **      | ** ** | **Unrealized** | ** ** | ** ** | ** ** | **Unrealized** | ** ** |
| **Description of Securities (AFS)****(1)**     | ** ** | **Fair  Value**          | ** ** | **Losses**               | ** ** | **Fair  Value** | ** ** | **Losses** | ** ** | **Fair  Value** | ** ** | **Losses** | ** ** |
|                                           |       |                     |       |                     |       |            |       |   |   |   |   |   |   |
| Securities of government sponsored enterprises |       | $                        | 42,575     |                     | $          | (384            | )          | $ | — |   | $ | — |   | $ | 42,575 |   | $ | (384 | ) |
| Mortgage-backed securities                     |       | 17,932                   |       | (98                      | )          | —          |       | — |   | 17,932 |   | (98 | ) |
| Collateralized mortgage obligations            |       | 55,612                   |       | (113                     | )          | —          |       | — |   | 55,612 |   | (113 | ) |
| Corporate securities                           |       | —                   |       | —                   |       | —          |       | — |   | — |   | — |   |
| Municipal bonds                                |       | 10,159                   |       | (227                     | )          | 7,557           |       | (258 | ) | 17,716 |   | (485 | ) |
|                                           |       | $                        | 126,278    |                     | $          | (822            | )          | $ | 7,557 |   | $ | (258 | ) | $ | 133,835 |   | $ | (1,080 | ) |

 

**As ofDecember 31, 2009**

(Dollars in Thousands)

 
| ** **                                     | ** ** | **Less  than 12 months** | ** ** | **12  months or longer** | ** ** | **Total**       | ** ** |
|------------------------------------------------|------------|--------------------------|------------|--------------------------|------------|-----------------|------------|
| ** **                                     | ** ** | ** **               | ** ** | **Gross**                | ** ** | ** **      | ** ** | **Gross** | ** ** | ** ** | ** ** | **Gross** | ** ** |
| ** **                                     | ** ** | ** **               | ** ** | **Unrealized**           | ** ** | ** **      | ** ** | **Unrealized** | ** ** | ** ** | ** ** | **Unrealized** | ** ** |
| **Description of Securities (AFS)****(1)**     | ** ** | **Fair  Value**          | ** ** | **Losses**               | ** ** | **Fair  Value** | ** ** | **Losses** | ** ** | **Fair  Value** | ** ** | **Losses** | ** ** |
|                                           |       |                     |       |                     |       |            |       |   |   |   |   |   |   |
| Securities of government sponsored enterprises |       | $                        | 110,296    |                     | $          | (1,600          | )          | $ | — |   | $ | — |   | $ | 110,296 |   | $ | (1,600 | ) |
| Mortgage-backed securities                     |       | 85,313                   |       | (726                     | )          | —          |       | — |   | 85,313 |   | (726 | ) |
| Collateralized mortgage obligations            |       | 145,622                  |       | (975                     | )          | —          |       | — |   | 145,622 |   | (975 | ) |
| Corporate securities                           |       | —                   |       | —                   |       | —          |       | — |   | — |   | — |   |
| Municipal bonds                                |       | 18,783                   |       | (505                     | )          | —          |       | — |   | 18,783 |   | (505 | ) |
|                                           |       | $                        | 360,014    |                     | $          | (3,806          | )          | $ | — |   | $ | — |   | $ | 360,014 |   | $ | (3,806 | ) |

 

----

(1) Therewere no held-to-maturity securities with losses as of March 31, 2010 and December 31,2009.

 

As of March 31,2010, the total unrealized losses less than 12 months old were $822,000 andtotal unrealized losses more than 12 months old were $258,000 for the sameperiod.  The aggregate related fair valueof investments with unrealized losses less than 12 months old was $126.2million and $7.6 million with unrealized losses more than 12 months old at March 31,2010.  As of December 31, 2009, thetotal unrealized losses less than 12 months old were $3.8 million, and therewere no unrealized losses more than 12 months old. The aggregate related fairvalue of investments with unrealized losses less than 12 months old was $360.0million at December 31, 2009.

 

Creditdeclines in the fair value of held-to-maturity and available-for-saleinvestment securities below their cost that are deemed to be other thantemporary are reflected in earnings as realized losses. In accordance withguidance from FASB ASC 320-10-65-1 and ASC 958-320 *Recognition and Presentation of Other-Than-Temporary Impairments*,the Company evaluates whether an event or change in circumstances has occurredthat may have a significant adverse effect on the fair value of the investment(an “impairment indicator”). In evaluating an other-than-temporary impairment (“OTTI”),the Company utilizes a systematic methodology that includes all documentationof the factors considered.  All availableevidence concerning declines in market values below cost are identified andevaluated in a disciplined manner by management.  The steps taken by the Company in evaluatingOTTI are:

 

·                  The Company first determines whetherimpairment has occurred.  A security isconsidered impaired if its fair value is less than its amortized costbasis.  If a debt security is impaired,the Company must assess whether it intends to sell the security (i.e., whethera decision to sell the security has been made). If the Company intends to sellthe security, an OTTI is considered to have occurred.

 

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·                  If the Company does not intend to sellthe security (i.e., a decision to sell the security has not been made), it mustassess whether it is more likely than not that it will be required to sell thesecurity before recovery of the amortized cost basis of the security.

 

·                  Even if the Company does not intend tosell the security, an OTTI has occurred if the Company does not expect torecover the entire amortized cost basis (i.e., there is a credit loss).  Under this analysis, the Company compares thepresent value of the cash flows expected to be collected to the amortized costbasis of the security.

 

·                  The Company believes that impairmentexists on securities when their fair value is below amortized cost but animpairment loss has not occurred due to the following reasons:

 

·                  The Company does not have any intent to sell any ofthe securities that are in an unrealized loss position.

 

·                  It is highly unlikely that the Company will be forcedto sell any of the securities that have an unrealized loss position beforerecovery.  The Company’s Asset/LiabilityCommittee mandated liquidity ratios are well above the minimum targets andsecondary sources of liquidity such as borrowings lines, brokered deposits,junior subordinated debenture, are easily accessible.

 

·                  The Company fully expects to recover the entireamortized cost basis of all the securities that are in an unrealized lossposition.  The basis of this conclusionis that the unrealized loss positions were caused by changes in interest ratesand interest rate spreads and not by default risk.

 

As of March 31,2010, the net unrealized gain in the investment portfolio was $5.8 millioncompared to $223,000 in net unrealized gains as of December 31, 2009.  The increase in unrealized gains can beattributed to better recent market stability, which has led to a decrease intreasuries interest rate spreads, and an increase in treasury rates.

 

**LoanPortfolio**

 

Total loans are the sumof loans receivable and loans held for sale and reported at their outstandingprincipal balances net of any unearned income which is unamortized deferredfees and costs and premiums and discounts. Interest on loans is accrued daily on a simple interest basis. Totalloans net of unearned income and allowance for losses on loans decreased to$2.34 billion at March 31, 2010, as compared with $2.37 billion at December 31,2009.  Total loans net of unearned incomeand allowance for loan losses as a percentage of total assets as of March 31,2010 and December 31, 2009 were 67.6% and 68.8%, respectively.

 

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The following table setsforth the amount of total loans outstanding and the percentage distributions ineach category, as of the dates indicated:

 

**Distributionof Loans and Percentage Composition of Loan Portfolio**

**(Dollarsin Thousands)**

 
| ** **                           | ** ** | **Amount  Outstanding**  | ** ** |
|--------------------------------------|------------|--------------------------|------------|
| ** **                           | ** ** | **March 31,  2010** | ** ** | **December 31,  2009** | ** ** |
| Construction                         |       | $                        | 47,564     |   | $ | 48,371 |   |
| Real estate secured                  |       | 1,983,495                |       | 1,979,704 |   |
| Commercial and industrial            |       | 375,399                  |       | 387,443 |   |
| Consumer                             |       | 16,304                   |       | 17,234 |   |
| Total loans(1)                       |       | 2,422,762                |       | 2,432,752 |   |
| Unearned Income                      |       | (4,938                   | )          | (5,311 | ) |
| Gross loans, net of unearned income  |       | 2,417,824                |       | 2,427,441 |   |
| Allowance for losses on loans        |       | (79,576                  | )          | (62,130 | ) |
| Net loans                            |       | $                        | 2,338,248  |   | $ | 2,365,311 |   |
|                                 |       |                     |       |   |   |
| Percentage breakdown of gross loans: |       |                     |       |   |   |
| Construction                         |       | 1.9                      | %          | 2.0 | % |
| Real estate secured                  |       | 81.9                     | %          | 81.4 | % |
| Commercial and industrial            |       | 15.5                     | %          | 15.9 | % |
| Consumer                             |       | 0.7                      | %          | 0.7 | % |

 

----

(1) Includesloans held for sale, which are recorded at the lower of cost or market, of$43.5 million and $36.2 million at March 31, 2010 and December 31,2009, respectively.

 

Real estate secured loansconsist primarily of commercial real estate loans and are extended to financethe purchase and/or improvement of commercial real estate or businessesthereon.  The properties may be eitheruser owned or held for investment purposes. Our loan policy adheres to the realestate loan guidelines set forth by the FDIC. The policy provides guidelines including, among other things, fairreview of appraisal value, limitation on loan-to-value ratio, and minimum cashflow requirements to service debt. Loans secured by real estate remainedunchanged $2.0 billion both as of March 31, 2010 and December 31,2009.  Real estate secured loans as apercentage of total loans were 81.9% and 81.4% at March 31, 2010 and December 31,2009, respectively.  Home mortgage loansrepresent a small fraction of our total real estate secured loan portfolio.Total home mortgage loans outstanding were only $42.7 million at March 31,2010 and $41.3 million at December 31, 2009.

 

Commercial and industrialloans include revolving lines of credit as well as term business loans.  Commercial and industrial loans at March 31,2010 decreased to $375.4 million, as compared with $387.4 million at December 31,2009.  Commercial and industrial loans asa percentage of total loans were 15.5% at March 31, 2010, decreasing from15.9% at December 31, 2009.

 

Consumer loans havehistorically represented less than 5% of our total loan portfolio.  The majority of consumer loans areconcentrated in automobile loans, which we provide as a service only toexisting customers. Because we believe that consumer loans present a higherrisk compared to our other loan products, especially given current economicconditions, we have reduced our efforts in consumer lending since 2007.Accordingly, as of March 31, 2010, our volume of consumer loans was downby $930,000 from the prior year end. As of March 31, 2010, the balance ofconsumer loans was $16.3 million, or 0.7% of total loans, as compared to $17.2million, or 0.7% of total loans as of December 31, 2009.

 

Construction loansrepresented less than 5% of our total loan portfolio as of March 31, 2010.In response to the current real estate market, which has been experiencing adownward trend since mid-2007, we have applied stricter loan underwritingpolicies when making construction related loans. As a result, constructionloans decreased to $47.6 million, or 1.9% of total loans, at the end of thefirst quarter of 2010, as compared with $48.4 million, or 2.0% of total loansat March 31, 2009.

 

Our loan terms varyaccording to loan type. Commercial term loans have typical maturities of threeto five years and are extended to finance the purchase of business entities,business equipment, leasehold improvements or to provide permanent workingcapital.  We generally limit real estateloan maturities to five to eight years. Lines of credit, in general, are extended on an annual basisto businesses that need temporary working capital and/or import/exportfinancing.  We generally seekdiversification in our loan portfolio, and our borrowers are diverse as toindustry, location, and their current and target markets.

 

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The following table showsthe contractual maturity distribution and repricing intervals of theoutstanding loans in our portfolio, as of March 31, 2010.  In addition, the table shows the distributionof such loans between those with variable or floating interest rates and thosewith fixed or predetermined interest rates.

 

**LoanMaturities and Repricing Schedule**

**(Dollars in Thousands)**

 
| ** **                         | ** ** | **March 31,  2010** | ** ** |
|------------------------------------|------------|--------------------------|------------|
| ** **                         | ** ** | **Within  One Year**     | ** ** | **After  One  But within  Five Years** | ** ** | **After  Five Years** | ** ** | **Total** | ** ** |
| Construction                       |       | $                        | 47,564     |   | $ | — |   | $ | — |   | $ | 47,564 |   |
| Real estate secured                |       | 1,144,792                |       | 817,304 |   | 21,399 |   | 1,983,495 |   |
| Commercial and industrial          |       | 365,612                  |       | 9,787 |   | — |   | 375,399 |   |
| Consumer                           |       | 14,550                   |       | 1,754 |   | — |   | 16,304 |   |
| Total loans                        |       | $                        | 1,572,518  |   | $ | 828,845 |   | $ | 21,399 |   | $ | 2,422,762 |   |
|                               |       |                     |       |   |   |   |   |   |   |
| Loans with variable interest rates |       | $                        | 1,290,756  |   | $ | — |   | $ | — |   | $ | 1,290,756 |   |
| Loans with fixed interest rates    |       | $                        | 281,762    |   | $ | 828,845 |   | $ | 21,399 |   | $ | 1,132,006 |   |

 

A majority of theproperties that collateralized against our loans are located in SouthernCalifornia.  The loans generated by ourloan production offices, which are located outside of our main geographicalmarket, are generally collateralized by properties in close proximity to thoseoffices.

 

**Non-performingAssets**

 

Non-performing assets, orNPAs, consist of non-performing loans, or NPLs, restructured loans, and otherNPAs.  NPLs are reported at their outstandingprincipal balances, net of any portion guaranteed by SBA, and consist of loanson non-accrual status and loans 90 days or more past due and still accruinginterest. Restructured loans are loans for which the terms of repayment havebeen renegotiated, resulting in a reduction or deferral of interest orprincipal,  Other NPAs consist ofproperties, mainly other real estate owned (“OREO”), acquired by foreclosure orsimilar means that management intends to offer for sale.

 

On June 26, 2009, weacquired substantially all the assets and assumed substantially all theliabilities of Mirae from the FDIC.  Wealso entered into loss sharing agreements with the FDIC in connection with theMirae acquisition.  Under the losssharing agreements, the FDIC will share in the losses on assets covered underthe agreements, which generally include loans acquired from Mirae andforeclosed loan collateral existing at June 26, 2009.  With respect to losses of up to $83.0 millionon the covered assets, the FDIC has agreed to reimburse us for 80 percent ofthe losses.  On losses exceeding $83.0 million, the FDIC has agreedto reimburse us for 95 percent of the losses.  The loss sharingagreements are subject to our following servicing procedures and satisfyingcertain other conditions as specified in the agreements with theFDIC.  The term for the FDIC’s losssharing on residential real estate loans is ten years, and the term for losssharing on non-residential real estate loans is five years with respect tolosses and eight years with respect to loss recoveries.

 

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For the purposes of thetable below, loans and OREO covered under the loss sharing agreements with theFDIC are referred to as “covered loans” and “covered OREO”, respectively.  Covered loans and covered OREO were recordedat estimated fair value on June 26, 2009.

 

The following is asummary of covered non-performing loans and OREO on the dates indicated:

 

**Non-performingCovered Loans and Covered OREO****(Dollars in Thousands)**

 
| ** **                                                   | ** ** | **March 31,  2010** | ** ** | **December 31,  2009** | ** ** |
|--------------------------------------------------------------|------------|--------------------------|------------|-----------------------------|------------|
| **Covered Nonaccrual loans:****(1)**                         |       |                     |       |                        |       |
| Real estate secured                                          |       | $                        | 19,696     |                        | $          | 15,555 |   |
| Commercial and industrial                                    |       | 2,213                    |       | 2,773                       |       |
| Consumer                                                     |       | —                   |       | —                      |       |
| Total                                                        |       | 21,909                   |       | 18,328                      |       |
| **Loans 90 days or more past due and  still accruing:**      |       |                     |       |                        |       |
| Real estate secured                                          |       | —                   |       | —                      |       |
| Commercial and industrial                                    |       | —                   |       | —                      |       |
| Consumer                                                     |       | —                   |       | —                      |       |
| Total                                                        |       | —                   |       | —                      |       |
| Total non-performing loans                                   |       | 21,909                   |       | 18,328                      |       |
| Repossessed vehicles                                         |       | —                   |       | —                      |       |
| Other real estate owned                                      |       | 1,723                    |       | 500                         |       |
| Total covered non-performing assets                          |       | $                        | 23,632     |                        | $          | 18,828 |   |
|                                                         |       |                     |       |                        |       |
| Non-performing loans as a percentage of total  covered loans |       | 8.76                     | %          | 7.07                        | %          |

 

----

(1) During the three months ended March 31,2010, December 31, 2009, no interest income related to these loans wasincluded in interest income. The Company had no covered loans as of March 31,2009.

 

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The following tableprovides information with respect to the components of our non-performing(non-covered) assets as of the dates indicated (the figures in the table arenet of the portion guaranteed by SBA, with the total amounts adjusted andreconciled for the SBA guarantee portion for the gross non-performing assets):

 

**Non-performingNon-covered Assets and Restructured Loans****(Dollars in Thousands)**

 
| ** **                                                       | ** ** | **March 31,  2010** | ** ** | **December 31,  2009** | ** ** | **March 31,  2009** | ** ** |
|------------------------------------------------------------------|------------|--------------------------|------------|-----------------------------|------------|--------------------------|------------|
| **Non-covered Nonaccrual loans:****(1)**                         |       |                     |       |                        |       |                     |       |
| Real estate secured                                              |       | $                        | 75,470     |                        | $          | 48,017                   |       | $ | 23,185 |   |
| Commercial and industrial                                        |       | 7,603                    |       | 3,032                       |       | 5,774                    |       |
| Consumer                                                         |       | 42                       |       | 70                          |       | 307                      |       |
| Total                                                            |       | 83,115                   |       | 51,119                      |       | 29,266                   |       |
| **Loans 90 days or more past due and  still accruing:**          |       |                     |       |                        |       |                     |       |
| Real estate secured                                              |       | —                   |       | 1,317                       |       | 240                      |       |
| Commercial and industrial                                        |       | —                   |       | —                      |       | 235                      |       |
| Consumer                                                         |       | —                   |       | 19                          |       | —                   |       |
| Total                                                            |       | —                   |       | 1,336                       |       | 475                      |       |
|                                                             |       |                     |       |                        |       |                     |       |
| Total non-performing loans                                       |       | 83,115                   |       | 52,455                      |       | 29,741                   |       |
|                                                             |       |                     |       |                        |       |                     |       |
| Repossessed vehicles                                             |       | —                   |       | —                      |       | —                   |       |
| Other real estate owned                                          |       | 3,136                    |       | 3,297                       |       | 6,282                    |       |
| Total non-covered non-performing assets, net of SBA  guarantee   |       | 86,251                   |       | 55,752                      |       | 36,023                   |       |
|                                                             |       |                     |       |                        |       |                     |       |
| Guaranteed portion of non-performing SBA loans                   |       | 12,493                   |       | 13,421                      |       | 8,387                    |       |
| Total gross non-covered non-performing assets                    |       | $                        | 98,744     |                        | $          | 69,173                   |       | $ | 44,410 |   |
|                                                             |       |                     |       |                        |       |                     |       |
| Performing troubled debt restructurings                          |       | 46,498                   |       | 55,437                      |       | 7,963                    |       |
|                                                             |       |                     |       |                        |       |                     |       |
| Non-performing loans as a percentage of total  non-covered loans |       | 3.83                     | %          | 2.42                        | %          | 1.43                     | %          |

 

----

(1) During the three months ended March 31,2010 and December 31, 2009, no interest income related to these loans wasincluded in interest income.

 

Loans are generallyplaced on non-accrual status when they become 90 days past due, unlessmanagement believes the loan is adequately collateralized and in the process ofcollection.  The past due loans may ormay not be adequately collateralized, but collection efforts are continuouslypursued. Loans may be restructured by management when a borrower hasexperienced some changes in financial status, causing an inability to meet theoriginal repayment terms, and where we believe the borrower will eventuallyovercome those circumstances and repay the loan in full.

 

As a result of thechallenging economic conditions in the last few years, credit quality hascontinued to deteriorate in the past year. The general economic conditions inthe United States as well as the local economies in which we do business haveexperienced a severe downturn in the housing sector and the transition tobelow-trend GDP growth has continued. The downward movement of the macroeconomicenvironment affected our borrowers’ strength and our total NPLs, net of SBAguaranteed portion, increased to $105.0 million, or 4.34% of the total loans atthe end of the first quarter of 2010, as compared with $70.8 million, or 2.92%of the total loans, at the end of 2009. The $34.2 million increase of NPLs wasdue to a $35.5 increase in non-accrual loans, offset by a $1.3 million decreasein loans 90 days or more past due and still accruing.

 

No interest incomerelated to non-accrual loans was included in net income for the quarters endingMarch 31, 2009 and March 31, 2010. Additional interest income ofapproximately $2.0 million and $674,000 would have been recorded during thequarter ended March 31, 2010 and March 31, 2009, respectively, ifthese loans had been paid in accordance with their original terms and had beenoutstanding at quarter end or, if not outstanding throughout the quarter, sinceorigination.

 

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Management also believesthat the reserves provided for non-performing loans, together with the tangiblecollateral, were adequate as of March 31, 2010.  See “Allowance for Losses on Loans and LoanCommitments” below for further discussion.

 

**Allowancefor Losses on Loans and Loan Commitments**

 

Based on the credit riskinherent in our lending business, we set aside allowances through charges toearnings.  Such charges were not onlymade for the outstanding loan portfolio, but also for off-balance sheet loancommitments, such as commitments to extend credit or letters of credit.  Charges made for our outstanding loanportfolio were credited to the allowance for losses on loans, whereas chargesrelated to loan commitments were credited to the reserve for loan commitments,which is presented as a component of other liabilities.

 

The allowance for losseson loans and loan commitments are maintained at levels that are believed to beadequate by management to absorb estimated probable losses on loans inherent inthe loan portfolio. The adequacy of our allowance is determined throughperiodic evaluations of the loan portfolio and other pertinent factors, whichare inherently subjective because the process calls for various significantestimates and assumptions. Among other factors, the estimates involve theamounts and timing of expected future cash flows and fair value of collateralon impaired loans, estimated losses on loans based on historical lossexperience, various qualitative factors, and uncertainties in estimating lossesand inherent risks in the various credit portfolios, which may be subject tosubstantial change.

 

Total charge-offs for thethree month ending March 31, 2010 were $5.8 million compared with $2.4 millionfor the same period in 2009.  Real estatesecured loan charge-offs increased by $3.7 million compared to the previousyear. Commercial and industrial loan charge-offs decreased to $1.31 millionfrom $1.6 million for the three month ending March 2010 and 2009,respectively.  Consumer charge-offsincreased from $102,000 at March 31, 2009 to $115,000 at March 31,2010.

 

On a quarterly basis, weutilize a classification migration model and individual loan review analysis asstarting points for determining the adequacy of our allowance for losses onloans. Our loss migration analysis tracks a certain number of quarters of loanlosses history to determine historical losses by classification category foreach loan type, except certain loans (automobile, mortgage and credit scoredbased business loans), which are analyzed as homogeneous loan pools. Thesecalculated loss factors are then applied to outstanding loan balances.  Based on Company defined utilization rate of exposurefor unused off-balance sheet loan commitments, such as letters of credit, werecord a reserve for loan commitments.

 

The individual loanreview analysis is the other part of the allowance allocation process, applyingspecific monitoring policies and procedures in analyzing the existing loanportfolios. Further allowance assignments are made based on general andspecific economic conditions, as well as performance trends within specificportfolio segments and individual concentrations of credit.

 

We increased ourallowance for losses on loans to $79.6 million at March 31, 2010,representing an increase of 28.1%, or $17.4 million from $62.1 million at December 31,2009. With the increase of our non-performing loans, we have increased theratio of allowance for losses on loans to total loans to 3.29% at March 31,2010, as compared with the 2.56% at the year end of 2009.  Our total general reserve stands at $37.5million and represents 1.62% of total loans at the end of March 31,2010.  Although management believes ourallowance at March 31, 2010 was adequate to absorb losses from any knownand inherent risks in the portfolio at that time, no assurance can be giventhat economic conditions which adversely affect our service areas or othervariables will not result in further increased losses in the loan portfolio inthe future.

 

Our allowance for losseson off-balance sheet items increased slightly to $2.6 million at March 31,2010, as compared to $2.5 million at December 31, 2009.

 

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The table belowsummarizes for the periods indicated, changes in the allowance for losses onloans arising from loans charged-off, recoveries on loans previouslycharged-off, additions to the allowance and certain ratios related to theallowance for losses on loans and loan commitments:

 

**Allowancefor Loan Losses and Loan Commitments**

**(Dollars in Thousands)**

 
| ** **                                                                 | ** ** | **For  the Three Month Ended,** | ** ** |
|----------------------------------------------------------------------------|------------|---------------------------------|------------|
| ** **                                                                 | ** ** | **March 31,  2010**        | ** ** | **December 31,  2009** | ** ** | **March 31,  2009** | ** ** |
| **Allowance for loan losses:**                                             |       |                            |       |   |   |   |   |
| Balances at beginning of period                                            |       | $                               | 62,130     |   | $ | 54,735 |   | $ | 29,437 |   |
| ** **                                                                 |       |                            |       |   |   |   |   |
| **Actual charge-offs:**(1)                                                 |       |                            |       |   |   |   |   |
| Real estate secured                                                        |       | 4,373                           |       | 8,495 |   | 672 |   |
| Commercial and industrial                                                  |       | 1,340                           |       | 10,117 |   | 1,629 |   |
| Consumer                                                                   |       | 115                             |       | 43 |   | 102 |   |
| Total charge-offs                                                          |       | 5,828                           |       | 18,655 |   | 2,403 |   |
| ** **                                                                 |       |                            |       |   |   |   |   |
| **Recoveries on loans previously  charged off:**                           |       |                            |       |   |   |   |   |
| Real estate secured                                                        |       | 11                              |       | 174 |   | — |   |
| Commercial and industrial                                                  |       | 468                             |       | 441 |   | 70 |   |
| Consumer                                                                   |       | 34                              |       | 40 |   | 43 |   |
| Total recoveries                                                           |       | 513                             |       | 655 |   | 113 |   |
|                                                                       |       |                            |       |   |   |   |   |
| Net loan charge-offs                                                       |       | 5,315                           |       | 18,000 |   | 2,290 |   |
|                                                                       |       |                            |       |   |   |   |   |
| FDIC Indemnification                                                       |       | 5,831                           |       | 855 |   | — |   |
| Provision for losses on loan and loan commitments (2)                      |       | 16,930                          |       | 24,540 |   | 7,009 |   |
| Balances at end of year                                                    |       | $                               | 79,576     |   | $ | 62,130 |   | $ | 34,156 |   |
| **Allowance for loan commitments:**                                        |       |                            |       |   |   |   |   |
| Balances at beginning of period                                            |       | $                               | 2,515      |   | $ | 1,455 |   | $ | 1,243 |   |
| Provision (credit) for losses on loan commitments                          |       | 70                              |       | 1,060 |   | (309 | ) |
| Balance at end of period                                                   |       | $                               | 2,585      |   | $ | 2,515 |   | $ | 933 |   |
|                                                                       |       |                            |       |   |   |   |   |
| **Ratios**:                                                                |       |                            |       |   |   |   |   |
| Net loan charge-offs to average total loans                                |       | 0.22                            | %          | 0.74 | % | 0.11 | % |
| Allowance for loan losses to total loans at end of  period                 |       | 3.29                            | %          | 2.56 | % | 1.65 | % |
| Net loan charge-offs to allowance for loan losses  at end of period        |       | 6.68                            | %          | 28.97 | % | 6.70 | % |
| Net loan charge-offs to provision for losses on loans  andloan commitments |       | 31.26                           | %          | 70.31 | % | 34.18 | % |

----

| (1) | Charge-off  amount for March 31, 2010 includes net charge-offs of covered loans  amounting to $63,000, which represents gross covered loan charge-offs of $4.1  million less FDIC receivable portion of $4.0 million.            |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Provision  for loss on loans and loan commitments amount includes net provisions for  covered loans amounting to $63,000 which represents gross covered loan  provision of $4.1 million less FDIC receivable portion or $4.0 million. |

 

### **Contractual Obligations**

### ** **

The following tablerepresents our aggregate contractual obligations to make future payments(principal and interest) as of March 31, 2010:

 
| **(Dollars in Thousands)**     | ** ** | **One  Year********or Less** | ** ** | **Over  One Year To Three Years** | ** ** | **Over  Three Years  To Five Years** | ** ** | **Over  Five  Years** | ** ** | **Indeterminate  Maturity** | ** ** | **Total** | ** ** |
|--------------------------------|------------|------------------------------|------------|-----------------------------------|------------|-------------------------------------------|------------|-----------------------|------------|-----------------------------|------------|-----------|------------|
| FHLB borrowings                |       | $                            | 58,852     |                              | $          | 71,256                                    |       | $                     | —     |                        | $          | —    |       | $ | — |   | $ | 130,108 |   |
| Junior subordinated debentures |       | 1,109                        |       | 10,708                            |       | —                                    |       | 77,321                |       | —                      |       | 89,138    |       |
| Operating leases               |       | 3,314                        |       | 5,595                             |       | 4,821                                     |       | 6,038                 |       | —                      |       | 19,768    |       |
| Unrecognized tax benefit       |       | —                       |       | —                            |       | —                                    |       | —                |       | 398                         |       | 398       |       |
| Time deposits                  |       | 1,417,849                    |       | 35,763                            |       | 19                                        |       | —                |       | —                      |       | 1,453,631 |       |
| Total                          |       | $                            | 1,481,124  |                              | $          | 123,322                                   |       | $                     | 4,840      |                        | $          | 83,359    |       | $ | 398 |   | $ | 1,693,043 |   |

 

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**Off-BalanceSheet Arrangements**

 

During the ordinarycourse of business, we provide various forms of credit lines to meet thefinancing needs of our customers.  Thesecommitments, which represent a credit risk to us, are not shown or stated inany form on our balance sheets.

 

As of March 31, 2010and December 31, 2009, we had commitments to extend credit of $262.2million and $238.2 million, respectively. Obligations under standby letters of credit were $8.2 million and $13.0million at March 31, 2010 and December 31, 2009, respectively, andour obligations under commercial letters of credit were $16.7 million and $10.2million at such dates, respectively. Commitments to fund Low Income Housing Tax Credit investments were $10.2million at the end of first quarter of 2010.

 

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

 

**Depositsand Other Sources of Funds**

 

Deposits are our primarysource of funds.  Total depositsincreased to $2.93 billion at March 31, 2010, compared with $2.83 billionat December 31, 2009.

 

Total non-time depositsat March 31, 2010 increased to $1.49 billion in the first three months of2010, from $1.39 billion at December 31, 2009, while time depositsdecreased to $1.43 billion at March 31, 2010 from $1.44 billion at December 31,2009.

 

The increase in depositswas primarily attributable to our continued marketing campaign aimed at raisingcore deposits. Other time deposits or time deposits under $100,000 increased to$687.5 million at March 31, 2010 compared to $643.7 million at December 31,2009.

 

The average rate that wepaid on time deposits in denominations of $100,000 or more for the firstquarter of 2010 decreased to 1.58% from 2.86% in the same period of the prioryear. In order to keep the interest expense down, we plan to closely monitorinterest rate trends and changes, and our time deposit rates, in an effort tomaximize our net interest margin and profitability.

 

The following tablesummarizes the distribution of average daily deposits and the average dailyrates paidfor the quarters indicated:

 

**AverageDeposits**

**(Dollarsin Thousands)**

 
| ** **                                         | ** ** | **For  the Three Months Ended,** | ** ** |
|----------------------------------------------------|------------|----------------------------------|------------|
| ** **                                         | ** ** | **March 31,  2010**         | ** ** | **December 31,  2009** | ** ** | **March 31,  2009** | ** ** |
| ** **                                         | ** ** | **Average********Balance**       | ** ** | **Average********Rate** | ** ** | **Average********Balance** | ** ** | **Average********Rate** | ** ** | **Average********Balance** | ** ** | **Average********Rate** | ** ** |
|                                               |       |                             |       |   |   |   |   |   |   |   |   |   |   |
| Demand, non-interest-bearing                       |       | $                                | 389,300    | ** ** | ** ** |   | $ | 388,549 | ** ** | ** ** |   | $ | 276,740 | ** ** | ** ** | ** ** |
| Money market                                       |       | 956,035                          |       | 1.68 | % | 853,770 |   | 2.18 | % | 362,734 |   | 2.57 | % |
| Super NOW                                          |       | 22,481                           |       | 0.52 | % | 21,971 |   | 0.65 | % | 19,556 |   | 0.94 | % |
| Savings                                            |       | 74,052                           |       | 3.17 | % | 68,373 |   | 3.33 | % | 43,241 |   | 3.63 | % |
| Time deposits in denominations of $100,000 or more |       | 768,882                          |       | 1.58 | % | 862,805 |   | 1.91 | % | 933,494 |   | 2.86 | % |
| Other time deposits                                |       | 675,764                          |       | 2.07 | % | 592,336 |   | 2.27 | % | 196,714 |   | 3.54 | % |
| Total deposits                                     |       | $                                | 2,886,514  |   | 1.55 | % | $ | 2,787,804 |   | 1.83 | % | $ | 1,832,479 |   | 2.44 | % |

 

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The scheduled maturitiesof our time deposits in denominations of $100,000 or greater at March 31,2010 were as follows:

 

**Maturitiesof Time Deposits of $100,000 or More**

**(Dollars in Thousands)**

** **
| Three months or less                  |   | $       | 376,110 |   |
|---------------------------------------|--------|---------|---------|--------|
| Over three months through six months  |   | 183,566 |    |
| Over six months through twelve months |   | 157,424 |    |
| Over twelve months                    |   | 29,766  |    |
| Total                                 |   | $       | 746,866 |   |

 

A number of clients carrydeposit balances of more than 1% of our total deposits, but the California StateTreasury was the only depositor that had a deposit balance representing morethan 5% of our total deposits at March 31, 2010 and December 31,2009.

 

In addition to ourregular customer base, we also accept brokered deposits on a selective basis atreasonable interest rates to augment deposit growth.  In the first three months of 2010, despitethe ongoing weakness in the economy and stiff competition for customer depositsamong banks within the markets where we do business, we were able to increasenon-interest bearing demand deposits to $414.0 million at March 31, 2010from $385.2 million at December 31, 2009. We expect that interest rateswill trend upward when the Federal Reserve Board starts increasing the federalfunds rate. To improve our net interest margin as well as to maintainflexibility in our cost of funds, we will constantly monitor our deposit mix tominimize our cost of funds.

 

Although deposits are theprimary source of funds for our lending and investment activities and forgeneral business purposes, we may obtain advances from the FHLB as analternative to retail deposit funds.  Wehave historically utilized borrowings from the FHLB in order to take advantageof their flexibility and comparatively low cost.  Due to the ongoing credit crisis and stiffcompetition for customer deposits among banks, we have increased FHLB borrowingas an alternative to fund our growing loan portfolio. See “Liquidity Management”below for details relating to the FHLB borrowings program.

 

The following table is asummary of FHLB borrowings for the quarters indicated:

 
| **(Dollars  in Thousands)**                 | ** ** | **March 31, 2010** | ** ** | **December 31, 2009** | ** ** |
|---------------------------------------------|------------|-------------------------|------------|----------------------------|------------|
|                                        |       |                    |       |                       |       |
| Balance at quarter end                      |       | $                       | 126,000    |                       | $          | 232,000 |   |
| Average balance during the quarter          |       | $                       | 143,022    |                       | $          | 237,341 |   |
| Maximum amount outstanding at any month-end |       | $                       | 142,000    |                       | $          | 242,000 |   |
| Average interest rate during the quarter    |       | 2.57                    | %          | 3.05                       | %          |
| Average interest rate at quarter-end        |       | 2.56                    | %          | 2.22                       | %          |

 

**Asset/LiabilityManagement**

 

We seek to ascertainoptimum and stable utilization of available assets and liabilities as a vehicleto attain our overall business plans and objectives.  In this regard, we focus on measurement andcontrol of liquidity risk, interest rate risk and market risk, capitaladequacy, operation risk and credit risk. See further discussion on these risks in the “Risk Factors” section ofour Annual Report on Form 10-K for the year ended December 31,2009.  Information concerning interestrate risk management is set forth under “Item 3 - Quantitative and QualitativeDisclosures about Market Risk.”

 

**LiquidityManagement**

 

Maintenance of adequateliquidity requires that sufficient resources be available at all times to meetour cash flow requirements.  Liquidity ina banking institution is required primarily to provide for deposit withdrawalsand the credit needs of its customers and to take advantage of investmentopportunities as they arise.  Liquiditymanagement involves our ability to convert assets into cash or cash equivalentswithout incurring significant loss, and to raise cash or maintain funds withoutincurring excessive additional cost.  Forthis purpose, we maintain a portion of our funds in cash and cash equivalents,deposits in other financial institutions and loans and securities available forsale.  Our liquid assets at March 31,2010 and December 31, 2009 totaled approximately $976.3 million and$923.4 million, respectively.  Ourliquidity levels measured as the percentage of liquid assets to total assetswere 28.2% and 26.9% at March 31, 2010 and December 31, 2009,respectively.

 

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Our primary sources ofliquidity are derived from our core operating activities of accepting customerdeposits. This funding source is augmented by payments of principal andinterest on loans, the routine liquidation of securities from theavailable-for-sale portfolio and securitizations of loans. In addition,government programs, such as TLGP, may influence deposit behavior. Primary useof funds include withdrawal of and interest payments on deposits, originationsand purchases of loans, purchases of investment securities, and payment ofoperating expenses.

 

As a secondary source ofliquidity, we accept brokered deposits, federal funds facilities, repurchaseagreement facilities, and obtain advances from the FHLB to supplement oursupply of lendable funds and to meet deposit withdrawal requirements.  Advances from the FHLB are typically securedby our loans, securities and stock issued by the FHLB.  Advances are made pursuant to severaldifferent programs.  Each credit programhas its own interest rate and range of maturities.  Depending on the program, limitations on theamount of advances are based either on a fixed percentage of an institution’snet worth or on the FHLB’s assessment of the institution’s creditworthiness. Asof March 31, 2010, our borrowing capacity from the FHLB was about $908.5million and our outstanding balance was $126.0 million, or approximately 13.9%of our borrowing capacity.

 

**CapitalResources and Capital Adequacy Requirements**

 

Historically, our primarysource of capital has been internally generated operating income throughretained earnings.  In order to ensureadequate levels of capital, we conduct ongoing assessments of projected sourcesand uses of capital in conjunction with projected increases in assets and levelof risks.  We have considered, and wewill continue to consider, additional sources of capital as the need arises, whetherthrough the issuance of additional equity, debt or hybrid securities. In December of2008, we received a Troubled Assets Relief Program or “TARP” investment fromthe U.S. Treasury in the amount of $62.2 million.

 

We are subject to variousregulatory capital requirements administered by federal banking agencies. Undercapital adequacy guidelines and the regulatory framework for prompt correctiveaction, we must meet specific capital guidelines that rely on quantitativemeasures of our assets, liabilities and certain off-balance-sheet items ascalculated under regulatory accounting practices.  Failure to meet minimum capital requirementscan trigger regulatory actions under the prompt corrective action rules thatcould have a material adverse effect on our financial condition andoperations.  Prompt corrective action mayinclude regulatory enforcement actions that restrict dividend payments, requirethe adoption of remedial measures to increase capital, terminate FDIC depositinsurance, and mandate the appointment of a conservator or receiver in severecases.  In addition, failure to maintaina well-capitalized status may adversely affect the evaluation of regulatoryapplications for specific transactions and activities, including acquisitions,continuation and expansion of existing activities, and commencement of newactivities, and could adversely affect our business relationships with ourexisting and prospective clients.  Theaforementioned regulatory consequences for failing to maintain adequate ratiosof Tier 1 and Tier 2 capital could have a material adverse effect on ourfinancial condition and results of operations. Our capital amounts and classification are also subject to qualitativejudgments by regulators about components, risk weightings, and otherfactors.  See Part I, Item 1 “Descriptionof Business — Regulation and Supervision — Capital Adequacy Requirements” inour Annual Report on Form 10-K for the year ended December 31, 2009for additional information regarding regulatory capital requirements.

 

As of March 31,2010, we were qualified as a “well capitalized institution” under theregulatory framework for prompt corrective action.  The following table presents the regulatorystandards for well-capitalized institutions, compared to capital ratios as ofthe dates specified for the Company and the Bank:

 

**WilshireBancorp, Inc.**

 
| ** **                             | ** ** | **Regulatory********Adequately-  Capitalized** | ** ** | **Regulatory********Well-  Capitalized** | ** ** | **Actual ratios for the Company as of:** | ** ** |
|----------------------------------------|------------|------------------------------------------------|------------|------------------------------------------|------------|------------------------------------------|------------|
| ** **                             | ** ** | **Standards**                                  | ** ** | **Standards**                            | ** ** | **March 31, 2010**                  | ** ** | **December 31, 2009** | ** ** | **March 31, 2009** | ** ** |
|                                   |       |                                           |       |                                     |       |                                     |       |   |   |   |   |
| Total capital to risk-weighted assets  |       | 8                                              | %          | 10                                       | %          | 15.95                                    | %          | 15.81 | % | 16.69 | % |
| Tier I capital to risk-weighted assets |       | 4                                              | %          | 6                                        | %          | 14.50                                    | %          | 14.37 | % | 15.15 | % |
| Tier I capital to average assets       |       | 4                                              | %          | 5                                        | %          | 9.78                                     | %          | 9.77 | % | 12.79 | % |

 

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**Wilshire State Bank**

 
| ** **                             | ** ** | **Regulatory********Adequately-Capitalized** | ** ** | **Regulatory********Well-********Capitalized** | ** ** | **Actual ratios for the Bank as of:** | ** ** |
|----------------------------------------|------------|----------------------------------------------|------------|------------------------------------------------|------------|---------------------------------------|------------|
| ** **                             | ** ** | **Standards**                                | ** ** | **Standards**                                  | ** ** | **March 31, 2010**               | ** ** | **December 31, 2009** | ** ** | **March 31, 2009** | ** ** |
|                                   |       |                                         |       |                                           |       |                                  |       |   |   |   |   |
| Total capital to risk-weighted assets  |       | 8                                            | %          | 10                                             | %          | 15.45                                 | %          | 15.73 | % | 16.21 | % |
| Tier I capital to risk-weighted assets |       | 4                                            | %          | 6                                              | %          | 14.00                                 | %          | 14.29 | % | 14.67 | % |
| Tier I capital to average assets       |       | 4                                            | %          | 5                                              | %          | 9.45                                  | %          | 9.71 | % | 12.39 | % |

 

For the purposes of ourregulatory capital ratio computation, our equity capital includes the $62.2million Series A Preferred Stock issued by the Company to the U.S.Treasury as part of our participation of the TARP Capital Purchase Program. Asof March 31, 2010, the Company’s total Tier 1 capital (which includes ourequity capital, plus junior subordinated debentures, less goodwill andintangibles) was $332.8 million, as compared with $331.4 million as of December 31,2009. For the Bank level, Tier 1 capital was $321.2 million as of March 31,2010, as compared with $329.3 million as of December 31, 2009.

 

## ***Item 3.***                                                           Quantitativeand Qualitative Disclosures about Market Risk

## *** ***

Market risk is the riskof loss from adverse changes in market prices and rates.  Our market risk arises primarily frominterest rate risk inherent in lending, investing and deposit takingactivities.  Our profitability isaffected by fluctuations in interest rates. A sudden and substantial change ininterest rates may adversely impact our earnings to the extent that theinterest rates borne by assets and liabilities do not change at the same speed,to the same extent or on the same basis. We evaluate market risk pursuant topolicies reviewed and approved annually by our Board of Directors.  The Company’s Board delegates responsibilityfor market risk management to the Asset/Liability Management Committee, whichreports monthly to the Board on activities related to market riskmanagement.  As part of the management ofour market risk, Asset/Liability Management Committee may direct changes in themix of assets and liabilities.  To thatend, we actively monitor and manage interest rate risk exposures.

 

Interest rate riskmanagement involves development, analysis, implementation and monitoring ofearnings to provide stable earnings and capital levels during periods ofchanging interest rates.  In themanagement of interest rate risk, we utilize monthly gap analysis and quarterlysimulation modeling to determine the sensitivity of net interest income andeconomic value sensitivity of the balance sheet.  These techniques are complementary and areused together to provide a more accurate measurement of interest rate risk.

 

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

 

We usually seek to maintaina balanced position over the period of one year to ensure net interest marginstability in times of volatile interest rates. This is accomplished by maintaining a similar level of interest-earningassets and interest-paying liabilities available to be repriced within oneyear.

 

The change in netinterest income may not always follow the general expectations of an “asset-sensitive”or a “liability-sensitive” balance sheet during periods of changing interestrates.  This possibility results frominterest rates earned or paid changing by differing increments and at differenttime intervals for each type of interest-sensitive asset and liability.  The interest rate gaps reported in the tablesarise when assets are funded with liabilities having different repricingintervals.  Because these gaps areactively managed and change daily as adjustments are made in interest rateviews and market outlook, positions at the end of any period may not reflectour interest rate sensitivity in subsequent periods.  We attempt to balance longer-term economicviews against prospects for short-term interest rate changes.

 

Although the interestrate sensitivity gap is a useful measurement and contributes to effective assetand liability management, it is difficult to predict the effect of changinginterest rates based solely on that measure. As a result, the Asset/Liability Management Committee also regularlyuses simulation modeling as a tool to measure the sensitivity of earnings and netportfolio value, or NPV, to interest rate changes.  The NPV is defined as the net present valueof an institution’s existing assets, liabilities and off-balance sheetinstruments.  The simulation modelcaptures all assets, liabilities and off-balance sheet financial instrumentsand accounts for significant variables that are believed to be affected byinterest rates.  These include prepaymentspeeds on loans, cash flows of loans and deposits, principalamortization, call options on securities, balance sheet growth assumptions andchanges in rate relationships as various rate indices react differently tomarket rates.

 

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Although the simulationmeasures the volatility of net interest income and net portfolio value underimmediate increase or decrease of market interest rate scenarios in 100 basispoint increments, our main concern is the negative effect of areasonably-possible worst scenario.  TheAsset/Liability Management Committee policy prescribes that for the worstpossible rate-change scenario the possible reduction of net interest income andNPV should not exceed 20% of the base net interest income and 25% of the baseNPV, respectively.

 

In general, based uponour current mix of deposits, loans and investments, decrease in interest rateswould result an increase in our net interest margin and NPV. An increase ininterest rates would be expected to have opposite effect. However, given in therecord low interest rate environment, either an increase or decrease ininterest rates will result in higher net interest margin, while either anincrease or decrease in interest rates will lower NPV as shown in oursimulation measures below.

 

Management believes thatthe assumptions used to evaluate the vulnerability of our operations to changesin interest rates approximate actual experience and considers them reasonable;however, the interest rate sensitivity of our assets and liabilities and theestimated effects of changes in interest rates on our net interest income andNPV could vary substantially if different assumptions were used or actualexperience differs from the historical experience on which they are based.

 

The following table setsforth the interest rate sensitivity of our interest-earning assets andinterest-bearing liabilities as of March 31, 2010 using the interest ratesensitivity gap ratio.  For purposes ofthe following table, an asset or liability is considered rate-sensitive withina specified period, if it can be repriced or if it matures within thattimeframe. Actual payment patterns may differ from contractual paymentpatterns:

 

**InterestRate Sensitivity Analysis****(Dollars in Thousands)**

 
| ** **                                                              | ** ** | **At  March 31, 2010**              | ** ** |
|-------------------------------------------------------------------------|------------|------------------------------------------|------------|
| ** **                                                              | ** ** | **Amounts  Subject to Repricing Within** | ** ** | ** ** | ** ** |
| ** **                                                              | ** ** | **0-3 months**                           | ** ** | **3-12  months** | ** ** | **1-5  years** | ** ** | **After  5 years** | ** ** | **Total** | ** ** |
| Interest-earning assets:                                                | ** ** | ** **                               | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Gross loans                                                             |       | $                                        | 1,435,058  |   | $ | 137,460 |   | $ | 828,845 |   | $ | 21,399 |   | $ | 2,422,762 |   |
| Investment securities                                                   |       | 3,595                                    |       | 15,786 |   | 336,634 |   | 331,806 |   | 687,821 |   |
| Federal funds sold and cash equivalents                                 |       | 30,018                                   |       | — |   | — |   | — |   | 30,018 |   |
| Interest-earning deposits                                               |       | —                                   |       | — |   | — |   | — |   | — |   |
| Total                                                                   |       | $                                        | 1,468,671  |   | $ | 153,246 |   | $ | 1,165,479 |   | $ | 353,205 |   | $ | 3,140,601 |   |
|                                                                    |       |                                     |       |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:                                           |       |                                     |       |   |   |   |   |   |   |   |   |
| Savings deposits                                                        |       | $                                        | 76,346     |   | $ | — |   | $ | — |   | $ | — |   | $ | 76,346 |   |
| Time deposits of $100,000 or more                                       |       | 376,110                                  |       | 340,990 |   | 29,766 |   | — |   | 746,866 |   |
| Other time deposits                                                     |       | 63,409                                   |       | 618,913 |   | 5,210 |   | — |   | 687,532 |   |
| Other interest-bearing deposits                                         |       | 1,000,278                                |       | — |   | — |   | — |   | 1,000,278 |   |
| FHLB Advances                                                           |       | 72,487                                   |       | — |   | 70,000 |   |   |   | 142,487 |   |
| Junior Subordinated Debenture                                           |       | 71,857                                   |       | 15,464 |   | — |   | — |   | 87,321 |   |
| Total                                                                   |       | $                                        | 1,660,487  |   | $ | 975,367 |   | $ | 104,976 |   | $ | — |   | $ | 2,740,830 |   |
|                                                                    |       |                                     |       |   |   |   |   |   |   |   |   |
| Interest rate sensitivity gap                                           |       | $                                        | (191,816   | ) | $ | (822,121 | ) | $ | 1,060,503 |   | $ | 353,205 |   | $ | 399,771 |   |
| Cumulative interest rate sensitivity gap                                |       | $                                        | (191,816   | ) | $ | (1,013,937 | ) | $ | 46,566 |   | $ | 399,771 |   |   |   |
| Cumulative interest rate sensitivity gap ratio  (based on total assets) |       | -5.54                                    | %          | -29.31 | % | 1.35 | % | 11.56 | % |   |   |

 

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The following table setsforth our estimated net interest income over a 12-month period and NPV based onthe indicated changes in market interest rates as of March 31, 2010.  All assets presented in this table areheld-to-maturity or available-for-sale. At March 31, 2010, we had no trading investment securities:

 
| **Change********(in basis points)** | ** ** | **Net Interest Income********(next twelve months)********(Dollars in Thousands)** | ** ** | **% Change** | ** ** | **NPV********(Dollars in Thousands)** | ** ** | **% Change** | ** ** |
|-------------------------------------|------------|-----------------------------------------------------------------------------------|------------|--------------|------------|---------------------------------------|------------|--------------|------------|
| +200                                |       | $                                                                                 | 120,590    |         | -5.03      | %                                     | $          | 322,870      |       | -14.29 | % |
| +100                                |       | 121,733                                                                           |       | -4.13        | %          | 351,331                               |       | -6.73        | %          |
| 0                                   |       | 126,981                                                                           |       | —       |       | 376,698                               |       | —       |       |
| -100                                |       | 127,439                                                                           |       | 0.36         | %          | 351,880                               |       | -6.59        | %          |
| -200                                |       | 127,058                                                                           |       | 0.06         | %          | 327,757                               |       | -12.99       | %          |
|                                     |            |                                                                                   |            |              |            |                                       |            |              |            |  |  |

 

Our strategies inprotecting both net interest income and economic value of equity fromsignificant movements in interest rates involve restructuring our investmentportfolio and using FHLB advances. Although our policy also permits us to purchase rate caps and floors andinterest rate swaps, we are not currently engaged in any of those types oftransactions.

 

## ***Item 4.***                                                           Controlsand Procedures

## *** ***

As of March 31,2010, we carried out an evaluation, under the supervision and with theparticipation of our management, including our chief executive officer andchief financial officer, regarding the effectiveness of the design andoperation of our “disclosure controls and procedures,” as defined underExchange 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 31,2010, such disclosure controls and procedures were effective to ensure thatinformation required to be disclosed by us in the reports we file or submitunder the Exchange Act is recorded, processed, summarized and reported withinthe time periods specified in the rules and forms of the SEC, andaccumulated and communicated to our management, including our chief executiveofficer and chief financial officer, as appropriate to allow timely decisionsregarding required disclosure.

 

In designing andevaluating the disclosure controls and procedures, our management recognizedthat any controls and procedures, no matter how well designed and operated, canonly provide reasonable assurance in achieving the desired control objectivesand in reaching a reasonable level of assurance our management necessarily wasrequired to apply its judgment in evaluating the cost-benefit relationship ofpossible controls and procedures.

 

There were no changes inour internal controls over financial reporting during the quarter ended March 31,2010 that materially affected, or are reasonably likely to materially affect,our internal controls over financial reporting.

 

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# **Part II.  OTHER INFORMATION**

# ** **

## ***Item 1.***           LegalProceedings

## *** ***

In the normal course ofbusiness, we are involved in various legal claims. We have reviewed all legalclaims against us with counsel and have taken into consideration the views ofsuch counsel as to the outcome of the claims. We do not believe the finaldisposition of all such claims will have a material adverse effect on ourfinancial position or results of operations.

 

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

## *** ***

There are no materialchanges to our risk factors as presented in the Company’s 2009 Form 10-Kunder the heading “Item 1A. Risk Factors.”

 

## ***Item 2.***           UnregisteredSales of Equity Securities and Use of Proceeds

## *** ***

None.

 

## ***Item 3.***           DefaultsUpon Senior Securities

## *** ***

None.

 

## ***Item 4.***           Submissionof Matters to a Vote of Security Holders

## *** ***

None.

 

## ***Item 5.***           OtherInformation

## *** ***

None.

 

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EXHIBITS

 

**Exhibit Table**

 
| **Reference  Number** | ** ** | **Item**                                                                                                                                                                                    | ** ** |
|-----------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
| ** **            | ** ** | ** **                                                                                                                                                                                  |
| 31.1                  |       | Certification of Chief  Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of  2002                                                                                   |
| 31.2                  |       | Certification of Chief  Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of  2002                                                                                   |
| 32                    |       | Certifications of Chief  Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C.  Section 1350, as Adopted Pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002 |

 

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**SIGNATURES**

 

Pursuant to therequirement of the Securities Exchange Act of 1934, the registrant has dulycaused this report to be signed on its behalf by the undersigned, thereuntoduly authorized.

 
|                   | WILSHIRE BANCORP, INC. |
|------------------------|------------------------|
|                   |                   |
|                   |                   |
| Date: May 7, 2010 | By:                    | /s/ Alex Ko |
|                   |                   | Alex Ko |
|                   |                   | Chief Financial Officer |
|                   |                   | (Principal Financial  and Accounting Officer) |

 

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