Center Financial Reports Record Quarterly Net Income for 2004 First Quarter.Business Editors LOS LOS Length of stay, see there ANGELES--(BUSINESS WIRE)--April 21, 2004 Strong Loan, Deposit and Fee Income Growth Continues to Drive Company to New Levels of Achievement Center Financial Corporation (Nasdaq:CLFC CLFC Creating Lasting Family Connections (New Hampshire) CLFC Clear Lake Fencing Club (Texas) ), the financial holding company of Center Bank, a community bank focused on the Korean-American niche market A niche market also known as a target market is a focused, targetable portion (subset) of a market sector. By definition, then, a business that focuses on a niche market is addressing a need for a product or service that is not being addressed by mainstream providers. , today reported strong growth in loans, deposits and fee income, contributing to record quarterly net income for the three-month period ended March 31, 2004. 2004 first quarter highlights, compared to a year ago, include: -- Revenues increased 29% to $13.5 million -- Net interest income before provision for loan losses increased 27% to $9.4 million -- Noninterest income increased 31% to $4.1 million -- Net loans increased 37% to $795.8 million -- Provision for loan losses increased to $1.2 million in response to strong loan growth -- Total deposits grew 26% to $946.5 million -- Total assets were up 27% to $1.1 billion -- Quarterly cash dividend of $0.04 per share Net income for the first quarter of 2004 increased 33% to $3.3 million, or $0.20 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, from $2.5 million, or $0.16 per diluted share, in the prior-year period. (All per share figures have been adjusted to reflect a two-for-one stock split in March 2004 and an 8% stock dividend paid in March 2003.) Return on average assets and return on average equity for the 2004 first quarter improved to 1.29% and 16.80%, respectively, from 1.25% and 15.28% in the first quarter of 2003. "We are off to a very strong start in the new fiscal year," said (Paul Paul, 1901–64, king of the Hellenes (1947–64), brother and successor of George II. He married (1938) Princess Frederika of Brunswick. During Paul's reign Greece followed a pro-Western policy, and the Cyprus question was temporarily resolved. ) Seon-Hong Kim Kim orphan wanders streets of India with lama. [Br. Lit.: Kim] See : Adventurousness , president and chief executive officer. "We continued to build on the momentum from record-breaking Adj. 1. record-breaking - surpassing any previously established record; "a record-breaking high jump"; "record-breaking crowds" best - (superlative of `good') having the most positive qualities; "the best film of the year"; "the best solution"; "the best time for successes in 2003 and posted strong, healthy growth of our loan portfolio and deposits and higher noninterest income, resulting in record net income for our current first quarter." Net interest income before provision for loan losses grew 27% to $9.4 million for the 2004 first quarter from $7.4 million in the same period a year earlier. The net interest margin improved to 4.02% from 3.94% in the 2003 first quarter, reflecting the replacement of low-yielding assets with higher-yielding loans. Center Financial increased its provision for loan losses to $1.2 million for the current first quarter, providing for the strong growth in loans, from $400,000 in the corresponding 2003 period. Noninterest income rose 31% to $4.1 million from $3.1 million in the 2003 first quarter, due to solid growth across all noninterest income categories. The company's focus on adding new account relationships and increasing its volume of SBA SBA abbr. Small Business Administration Noun 1. SBA - an independent agency of the United States government that protects the interests of small businesses and ensures that they receive a fair share of government loan sales and retention of servicing rights contributed to increases of 19% in customer service fees and 94% in loan service fees. Center Financial recorded a gain of $377,000 from the sale of SBA loans in the current three-month period. First quarter 2003 results included a net gain of $247,000 from the sale of securities available for sale. Noninterest expenses totaled $6.9 million, an increase of 13% from $6.1 million in the first quarter a year ago. The increase principally reflects normal increases in annual salary for existing employees and higher occupancy Gaining or having physical possession of real property subject to, or in the absence of, legal right or title. In a fire insurance policy, for example, the term occupancy and staff costs related to Center Bank's expanded franchise. During 2003, the company opened a full-service full-ser·vice adj. Associated with or offering complete service: full-service gasoline pumps; full-service banks. branch office in Fullerton Fullerton, city (1990 pop. 114,144), Orange co., S Calif., SE of Los Angeles; founded 1887, inc. 1904. The city is named for George H. Fullerton, head of a land company, who arranged to route the San Diego–Los Angeles–Santa Fe RR through the settlement in , Calif., and a loan production office in Las Vegas Las Vegas (läs vā`gəs), city (1990 pop. 258,295), seat of Clark co., S Nev.; inc. 1911. It is the largest city in Nevada and the center of one of the fastest-growing urban areas in the United States. and relocated re·lo·cate v. re·lo·cat·ed, re·lo·cat·ing, re·lo·cates v.tr. To move to or establish in a new place: relocated the business. v.intr. its Western Office. As a result of increased contributions from new branches, a shift in interest earning assets Earning Assets Any income-earning asset owned by a company. Notes: These assets are generally interest-bearing accounts, bonds, and securities available for sale. See also: Asset, Asset Valuation, Earnings, Net Interest Margin by using the prepayments Prepayments Payments made in excess of scheduled mortgage principal repayments. from investment securities to finance higher yielding loans and the implementation of expense controls, the company was able to significantly improve its efficiency ratio to 50.96%, compared with 59.37% in the 2003 first quarter. At March 31, 2004, gross loans totaled $808.5 million and net loans equaled $795.8 million, compared with $728.7 million and $717.0 million, respectively, at the end of 2003. Kim said: "While commercial real estate loans, which are primarily owner-occupied adj. 1. lived in by the owner; - of dwellings. Adj. 1. owner-occupied - lived in by the owner; "one owner-occupied and three rental apartments" inhabited - having inhabitants; lived in; "the inhabited regions of the earth" business properties secured by first deeds deed n. 1. Something that is carried out; an act or action. 2. A usually praiseworthy act; a feat or exploit. 3. Action or performance in general: Deeds, not words, matter most. of trust, continued to contribute the greatest growth in terms of value to our loan portfolio during the current first quarter, we are very pleased with the strong up-tick Noun 1. up-tick - a small increase; "the up-tick in terrorist activity" increment, increase - the amount by which something increases; "they proposed an increase of 15 percent in the fare" in our trade finance business. We believe this underscores the strengthened trade finance team brought in during 2003 to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. improving trends in the Asia Pacific trade volumes." Trade finance loans increased 61% from a year ago at the end of the 2003 first quarter, and improved 23% from year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. 2003. Commercial real estate loans recorded growth of 50% from prior-year levels, accounting for 53% of the company's loan portfolio at the end of the 2004 first quarter. Commercial loans represented 21% of Center Financial's loan portfolio at March 31, 2004; SBA loans totaled 8%; consumer loans equaled 6%; and real estate construction was 2%. Total deposits grew to $946.5 million at the end of the first quarter of 2004, compared with $867.9 million at December December: see month. 31, 2003. Core deposits represented 54% of total deposits at the end of the current quarter, with non-interest bearing, interest bearing and savings deposits Savings deposits Accounts that pay interest, typically at below-market interest rates, that do not have a specific maturity, and that usually can be withdrawn upon demand. posting increases of 33%, 6% and 27%, respectively, over year-ago levels. Non-interest bearing deposits accounted for 30% of total deposits at March 31, 2004, as compared with 29% at the end of the 2003 first quarter. Time deposits rose 31% over a year ago and increased to 46% of total deposits, versus 44% at the end of the 2003 first quarter. The average cost of deposits for the 2004 first quarter was reduced to 1.83% from 2.22% a year earlier, principally benefiting from a reduction of 25 basis points in target Fed Fund Rate. Total assets rose to $1.1 billion at March 31, 2004, from $1.0 billion at year-end 2003. Interest-earning assets grew to $969.9 million from $906.6 million at December 31, 2003. The growth of total assets was financed by the increase in deposits. In addition, the company replaced some short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. borrowings with lower cost, more stable deposits collected by branches in 2004. Total non-performing assets were reduced to $3.0 million, or 0.28% of total assets, at March 31, 2004, from $3.3 million, or 0.32% of total assets, at December 31, 2003. Net charge-offs for the current quarter totaled $376,000, compared with net recoveries of $17,000 at March 31, 2003. The allowance for loan losses was increased to $9.6 million in response to the strong growth in the Company's loan portfolio, and represented 1.19% of loans, net of unearned income Unearned Income Any income that comes from investments and other sources unrelated to employment services. Notes: Examples of unearned income include interest from a savings account, bond interest, tips, alimony, and dividends from stock. at March 31, 2004, compared with 1.21% at year-end 2003. "We believe that the dedication of our employees and our commitment to relationship banking is garnering a greater presence for Center Bank in the communities we serve," said Kim. "We continue to benefit from the sound execution of a steady, organic growth strategy, and we are about to embark on Verb 1. embark on - get off the ground; "Who started this company?"; "We embarked on an exciting enterprise"; "I start my day with a good breakfast"; "We began the new semester"; "The afternoon session begins at 4 PM"; "The blood shed started when the partisans the geographic geographic /geo·graph·ic/ (je?o-graf´ik) in pathology, of or referring to a pattern that is well demarcated, resembling outlines on a map. geographic pertaining to geography. expansion of our first out-of-state out-of-state adj. Of, relating to, or being from another state. , full-service branch office in Chicago Chicago, city, United States Chicago (shĭkä`gō, shĭkô`gō), city (1990 pop. 2,783,726), seat of Cook co., NE Ill., on Lake Michigan; inc. 1837. , on schedule to open this week. We believe Center Financial is well positioned to maintain solid growth trends, particularly if the economic environment continues to improve. More than ever, the Board of Directors and management, together, are focused on translating the Company's growth into greater shareholder value." Center Financial's Board of Directors recently declared de·clare v. de·clared, de·clar·ing, de·clares v.tr. 1. To make known formally or officially. See Synonyms at announce. 2. To state emphatically or authoritatively; affirm. 3. a regular quarterly cash dividend of $0.04 per share. This cash dividend will be paid on or about May 14, 2004, to shareholders of record at the close of market on April 30, 2004. Shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. at March 31, 2004, increased to $81.6 million from $78.3 million at December 31, 2003. At the end of the 2004 first quarter, Center Financial remained "well-capitalized" under all regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. categories, with a Tier 1 risk-based capital ratio Risk-based capital ratio Bank requirement that there be a minimum ratio of estimated total capital to estimated risk-weighted asset. of 11.07%, a total risk-based capital ratio of 12.20%, and a Tier 1 leverage ratio of 9.32%. About Center Financial Corporation Center Financial Corporation is the holding company of Center Bank, a community bank offering a full range of financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. . Founded in 1986, Center Bank specializes in commercial and SBA loans and trade finance products for multi-ethnic Adj. 1. multi-ethnic - involving several ethnic groups multiethnic social - living together or enjoying life in communities or organized groups; "a human being is a social animal"; "mature social behavior" and small business customers, and is one of the largest financial institutions in the nation focusing on the Korean-American community. The Bank operates 13 branches throughout Southern California Southern California, also colloquially known as SoCal, is the southern portion of the U.S. state of California. Centered on the cities of Los Angeles and San Diego, Southern California is home to nearly 24 million people and is the nation's second most populated region, and five Loan Production Offices located in Phoenix; Seattle Seattle (sēăt`əl), city (1990 pop. 516,259), seat of King co., W Wash., built on seven hills, between Elliott Bay of Puget Sound and Lake Washington; inc. 1869. ; Denver Denver, city (1990 pop. 467,610), alt. 5,280 ft (1,609 m), state capital, coextensive with Denver co., N central Colo., on a plateau at the foot of the Front Range of the Rocky Mts., along the South Platte River where Cherry Creek meets it; inc. 1861. ; Washington Washington, town, England Washington, town (1991 pop. 48,856), Sunderland metropolitan district, NE England. Washington was designated one of the new towns in 1964 to alleviate overpopulation in the Tyneside-Wearside area. , D.C.; and Las Vegas. Further information about the Company can be found at www.centerbank.com. This release may contain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , which are included in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with the "safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 and accordingly, the cautionary statements contained in Center Financial Corp.'s Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the fiscal year ended Dec. 31, 2003 (See Business, and Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial ), and other filings with the Securities and Exchange Commission are incorporated herein by reference. These factors include, but are not limited to: the effect of interest rate and currency exchange fluctuations, competition in the financial services market for both deposits and loans, Center Financial's ability to efficiently incorporate acquisitions into its operations, the ability of Center Financial and its subsidiaries to increase its customer base, and regional and general economic conditions. Actual results and performance in future periods may be materially different from any future results or performance suggested by the forward-looking statements in this release. Such forward-looking statements speak only as of the date of this release. Center Financial expressly disclaims any obligation to update or revise any forward-looking statements found herein to reflect any changes in the Company's expectations of results or any change in events.
CENTER FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited)
(In thousands, except share and per share data)
03/31/04 03/31/03 12/31/03
----------- ----------- -----------
Assets
Cash and due from banks $53,199 $32,795 $76,926
Federal funds sold 29,165 23,910 41,635
Money market funds and interest-
bearing deposits in other banks 30,000 35,000 22,400
Securities available-for-sale 100,902 126,946 110,126
Securities held-to-maturity 13,992 15,587 15,390
Loans (net of unearned income) 805,409 587,638 725,812
Allowance for loan losses (9,578) (7,177) (8,804)
----------- ----------- -----------
Net loans 795,831 580,461 717,008
Fixed assets 11,048 10,266 11,063
Bank-owned life insurance - cash
surrender value 10,136 - 10,034
Other assets 23,021 17,793 22,784
----------- ----------- -----------
Total assets $1,067,294 $842,758 $1,027,366
=========== =========== ===========
Liabilities and Shareholders' Equity
Deposits
Non-interest bearing deposits $285,417 $214,514 $268,534
Interest bearing deposits 661,108 534,903 599,331
----------- ----------- -----------
Total deposits 946,525 749,417 867,865
Borrowed funds 10,709 15,639 50,671
Long-term subordinated debenture 18,557 - 18,557
Other liabilities 9,942 9,219 12,012
----------- ----------- -----------
Total Liabilities 985,733 774,275 949,105
Shareholders' Equity 81,561 68,483 78,261
----------- ----------- -----------
Total Liabilities & Shareholders'
Equity $1,067,294 $842,758 $1,027,366
=========== =========== ===========
Book value per share(1) $5.07 $4.41 $4.88
Number of common shares
outstanding at period end(1) 16,088,264 15,526,194 16,048,520
=========== =========== ===========
(1) Adjusted to reflect 2-for-1 stock split in 2004.
CENTER FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)
(In thousands, except share and per share data)
Quarter Ended
March 31,
2004 2003
----------------------------------------------------------------------
Interest income $12,562 $10,332
Interest expense 3,173 2,966
----------------------
Net interest income before provision for loan
losses 9,389 7,366
----------------------
Provision for loan losses 1,150 400
----------------------
Net interest income after provision for loan
losses 8,239 6,966
Noninterest income
Customer service fees 1,916 1,612
Fee income from trade finance transactions 703 635
Wire transfer fees 185 154
Gain on sale of loans 377 -
Net (loss) gain on sale of securities
available for sale - 247
Loan service fees 551 285
Other income 353 186
----------------------
Total noninterest income 4,085 3,119
----------------------
Noninterest expenses
Salaries and employee benefits 3,682 3,172
Occupancy 537 439
Furniture, fixtures, and equipment 321 323
Data processing 468 391
Professional service fees 344 262
Business promotion and advertising 321 431
Stationery and supplies 106 128
Telecommunications 126 127
Postage and courier service 129 121
Security service 155 143
Other operating expenses 677 541
----------------------
Total noninterest expenses 6,866 6,078
----------------------
INCOME BEFORE INCOME TAX PROVISION 5,458 4,007
INCOME TAX PROVISION 2,111 1,482
----------------------
Net income $3,347 $2,525
======================
Other comprehensive (loss) income(1) 436 194
Total comprehensive income $3,783 $2,719
======================
Earning per share, basic(2) $0.21 $0.16
Earning per share, diluted(2) $0.20 $0.16
Basic average common shares outstanding(2) 16,062,048 15,416,282
Diluted average common shares outstanding(2) 16,464,230 15,799,386
(1) Comprehensive income represents the change in unrealized gain
(loss) on securities available for sale and interest rate swaps,
net of tax, from the previous period end.
(2) Adjusted to reflect 2-for-1 stock split in 2004.
CENTER FINANCIAL CORPORATION
SELECTED FINANCIAL DATA
(Unaudited)
(In thousands)
For the Three Months For the Year
Ended Ended
March 31, December 31,
2004 2003 2003
-------------------------- ---------------
Average gross loans
outstanding during period $784,072 $557,259 $620,302
Total loans outstanding at
end of period(1) 805,409 587,638 725,812
Non-performing assets
Loans past due 90 days or
more and still accruing
interest $- $- $-
Non-accrual loans 3,018 2,385 3,327
-------------------------- ---------------
Total Non-performing loans 3,018 2,385 3,327
Other Real Estate Owned - - -
-------------------------- ---------------
Total Non-performing assets $3,018 $2,385 $3,327
============= ========== ===============
Allowance for Loan Losses
Balance as of January 1 $(8,804) $(6,760) $(6,760)
Provision for loan losses (1,150) (400) (2,000)
Net loan charge-offs and
(recoveries) 376 (17) (44)
-------------------------- ---------------
Balance as of September 30 $(9,578) $(7,177) $(8,804)
============= ========== ===============
Quarter Ended Year Ended
Selected Ratios March 31,
For the Period 2004 2003 2003
Return on average assets 1.29% 1.25% 1.32%
Return on average equity 16.80 15.28 16.28
Interest rate spread 3.49 3.28 3.35
Net interest margin 4.02 3.94 3.96
Yield on earning assets 5.37 5.53 5.40
Cost of deposits 1.83 2.22 2.02
Cost of funds 1.88 2.25 2.05
Noninterest expense/average assets 0.66 0.74 3.19
Efficiency ratio 50.96 59.37 58.10
Net charge-offs/(recoveries) to
average loans 0.05 - (0.01)
Period End
Period Ended March 31, Year Ended
December 31,
2004 2003 2003
Tier 1 risk-based capital ratio 11.07% 9.89% 11.56%
Total risk-based capital ratio 12.20 10.97 12.67
Tier 1 leverage ratio 9.32 8.11 10.69
Non-accrual loans to gross
loans 0.37 0.41 0.46
Non-performing assets to total
loans and OREO 0.37 0.41 0.46
Non-performing assets to total
assets 0.28 0.28 0.32
Allowance for loan loss to
gross loans 1.19 1.22 1.21
Allowance for loan losses to
non-performing assets 317.36 300.94 264.62
(1) Total loans are net of deferred loan fees and discount on SBA
loan sold.
CENTER FINANCIAL CORPORATION
SELECTED FINANCIAL DATA
(Unaudited)
(In thousands)
For the Three Months
Ended Year Ended
December
March 31, 31,
Loans 2004 2003 % chg 2003
-------------- ---------- ------ -----------
Real estate-construction $17,396 $22,274 -21.9% $18,464
Real estate-commercial 426,770 284,515 50.0% 384,824
Commercial 169,844 112,009 51.6% 147,368
Consumer 50,627 41,791 21.1% 49,530
Trade finance 76,215 47,235 61.4% 61,886
SBA 67,549 81,105 -16.7% 66,487
Other 89 152 -41.4% 179
-------------- ---------- ------ -----------
Total loans-gross 808,490 589,081 37.3% 728,738
Unearned Income (3,081) (1,443) 113.5% (2,926)
Allowance for loan losses (9,578) (7,177) 33.5% (8,804)
-------------- ---------- ------ -----------
Total loans-net $795,831 $580,461 37.1% $717,008
Deposits
Non-interest bearing $285,417 $214,514 33.1% $268,534
Interest bearing checking 160,324 151,253 6.0% 156,928
Savings 63,955 50,211 27.4% 61,251
Time deposits 436,829 333,439 31.0% 381,152
-------------- ---------- ------ -----------
Total deposits $946,525 $749,417 26.3% $867,865
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