Aaron Deer - Sandler O’Neill & Partners Tim Coffey - FIG Partners Jonathan Elmy - McGwire Don Worthington - Howe Barnes Hoefer & Arnett Inc

Good day ladies and gentlemen, and welcome to the Wilshire Bancorp second quarter 2010 Earnings Conference Call. My name is Onega and I'll be your audio coordinator for today. At this time, all participants are in listen-only mode. We will have a question-and-answer session towards the end of this conference. (Operator Instructions) At this time, I would now like to turn the call over to Mr. Edward Han, First Vice President of Investor Relations. Please proceed.

Thank you and good morning everyone. We appreciate you joining us today for our second quarter 2010 Earnings Conference Call. Again, my name is Edward Han and joining me today are Joanne Kim, President and Chief Executive Officer, and Alex Ko, Executive Vice President and Chief Financial Officer. Earlier this morning, Wilshire Bancorp issued its second quarter 2010 earnings results, which can be accessed either through the Investors Relations tab at wilshirebank.com or from the various financial news websites. This call is being webcast and will be available in archive for one year on the company's website. Before we begin, I must remind you that during this call, we may make certain statements concerning Wilshire's future performance or events. Any such comments constitute forward-looking statements and are subject to a number of risks and uncertainty that might cause actual results to differ materially from stated expectations. These factors include but are not limited to the ability to grow market share in our markets, including New York and Los Angeles, success of new branches, marketing costs, loan growth and balance sheet management, credit quality, our ability to collect on past due loans, deposit generation, net interest margin expectations, interest rate exposure, global and local economic conditions, and other risks detailed in the most recent reports on Form 10-K and Form 10-Q as filed with the Securities and Exchange Commission. Given these uncertainties, undue reliance should not be placed on such forward-looking statements. Wilshire Bancorp is under no obligation to update this information as future events or developments take place that may change these forward-looking statements. First, Ms. Kim will provide an overview of our principal operations as well as an update on the loan portfolio. Following that, Mr. Ko will review our financial results. Following his remarks, Ms. Kim, will provide additional perspective and closing comments. We will then commence the question-and-answer portion of the call. With that, I will now turn the call over to Joanne. Joanne.

Thank you, Edward. And thank you all for joining us today for our call. During the second quarter, we showed further evidence of the increasing earnings power of the bank with strong recurring revenue trends and stable expense management. However, our net loss of $4.6 million or $0.15 per share reflects the increasing impact of the weak economy on our commercial real estate portfolio and our aggressive actions to reduce problem assets. I’d like to start out with a discussion of our asset quality. Most of the weakness we’re seeing in the portfolio is related to carwash, gas station and hotel loans located outside of the metro areas of Southern California and we are making a concerted effort to reduce our exposure to these markets. During the quarter, we sold approximately $48 million in nonperforming and delinquent loans primarily secured by gas station, carwashes, hotels and multifamily property in Las Vegas at an average discount of 16% to their carrying value. Earlier this year, as we recognize that some of our CRE followers were beginning to demonstrate more signs of stress. We began developing more aggressive trends to manage the increasing problem assets. One of the strategies we put out in place was the development of a database of potential buyers that own or operate similar properties as sold under the most stress and we contact them directly to determine their level of input in loans we are considering selling. We believe these individuals have a better sense of the true value of these properties than institutional buyers. Given their familiarity, they are in a good position to be able to quickly make changes to the property and increase its net operating income. As a result, they are comfortable paying a higher price than we would get from an institutional…

Thank you, Joanne and hello everyone. Let me begin with a review of our balance sheet. Total assets were down slightly from last quarter to $3.45 billion. The one significant change from the prior quarter is a balance in our investment securities, which declined approximately $180 million. Due to the tightening of credit between the treasury and agency securities, which resulted in lower investment yield, which does not display all of our security sales and the paid down during the quarter with new purchase. We retained an uninvested balance into Fed funds we see an improvement in credit spread. In line with the management's intention, we have substantially decreased the duration of the investment portfolio to 2.1 in Q3 from 3.1 in Q1. Our total deposits were down slightly from last quarter to 2.91 billion. As one of our strategy to reduce our deposit cost we discontinued our money market promotion of products. We had approximately 249 million equities that matured during the second quarter with a weighted average interest rate of 2.05%. We retained approximately 154 million of debt balances at a weighted average interest rate of 1.3%, a reduction of 75 basis points which has helped to further reduce our cost of finds. Despite the net loss we recorded in the second quarter, our capital position remains strong and all of our ratios are well above the minimum of a well capitalized institution. As on June 30, 2010, we should have at least 123.8 million in excess capital before any of the ratios reach the well capitalized regulatory limit. Our tangible common equity to tangible asset ratio was 5.8% at June 30, 2010. Turing to our income statement, our net interest income before provision for loan losses were 29.2 million in the second quarter of 2010 compared to…

Thanks Alex, going forward we expect a continuation of many of the positive trend that we have experienced. We expect to see further reduction in our cost of funds which should lead to additional expansion in our net interest margin. We expect to see higher gains on SBA loan sales and we expect our expenses to remain relatively stable which should provide good leverage as our revenue continues to increase. The key variables in our level of possibility of course will be our credit cost. However, following the actions we took to review problem assets and the other positive trends we saw in the portfolio, we do believe that our provision for loan losses will turn down from the level we experience in the second quarter. With our increasing earnings power we believe we should be better able to absorb our credit cost going forward. We are thinking a very consummative approach with regards to our capital management in this environment. We intend to remain aggressive in managing our problems assets and we want to insure that we aren’t constrained in our availability to take any remediation’s or desperation positions measures that we deemed appropriate. We have indicated in our fourth quarter earnings release that we would continue to monitor our dividend policy in light of the current economic conditions and given the higher losses we experienced in our loan portfolio in the second quarter, we thought it was prudent to temporarily suspend our dividends although the total dollar amount paid from suspending the dividend isn’t that large, we would rather owe on the side of conservatism. We are optimistic that our financial performance will award the reinstatement of the dividend in the relatively near future. Thank you for being with us this morning.

That concludes our formal presentation. And at this time would like to open the call for questions.

(Operator Instructions). Your first question comes from the line of Aaron Deer of Sandler O’Neill & Partners. Aaron Deer – Sandler O’Neill & Partners: I noted that there were slower influence into non-accruals, but it looked like delinquencies might have been up a fair bit. What trends did you say that you had seen subsequent to the June 30? Did you say that there were some improvement there and what’s your outlook on that going forward?

Aaron, let me give you a little bit more caller on the delinquencies. I know the ending balance of the delinquencies the increased about $7 million, from $33 or $37 million, but actually we are a little encouraged in terms of the actual competition inflow and outflow. Inflow it’s the pretty much the same level. In Q1 was $87 million versus in Q2 it is at $86 million, it’s pretty much the same however outflow wise. Let me give you a comparison number, the migrated current to current loan in Q1 was $45.5 million, in Q2 it has increased to $51.4 million. So, the actually there is a little bit upgrade to interims of the delinquencies. And also outflow wise from the migration to non-accrual. In Q1 $44.4 million actually have migrated from deliquesces from non-accrual, we do see a substantial decrease on the migration which has only $7.8 million. So, the ending number quarter over quarter comparisons, I think there is an increase however there is competition inflow and outflow specially for the outflow wise, I think there is a little bit of encouragement. Aaron Deer – Sandler O’Neill & Partners: Okay and then Alex did you say that the duration on the securities book had fallen to 2.1 from 3.1 in the first quarter is that right?

That’s right. Aaron Deer – Sandler O’Neill & Partners: I guess it sounds like you are reluctant to really deploy some of this excess liquidity you have on the balance sheet and yet it also sounds as though you guide in for some margin expansion. What do you intend to do with respect to the securities portfolio and the points on this excess liquidity and can you be more specific in terms of some margins guidance.

Yes we are not in a position to hurry-hurry and purchase the investment securities and we are closely monitoring the credit differences between the treasury and agencies so that we can – when we repurchased with investment securities, we want to earn much better rates. So, we are more focused on the deposit sides. We were somewhat successful of reducing our deposit cost, we continued to reduce our deposit cost. For example I mentioned in my call earlier, where in the second quarter about $250 million in the CDs which had an average rate of 2.05% renewed at about 66% at a rate of 1.3% which is a 75 bases point decrease. And we still have about $425 million of CD’s that is expected to be matured in Q3 and that portion has about 2.01% of weighted average rate and assuming the same renewal rate about 65% and much lower rate we believe about 1.2% or 1.25% of renewal rate. We do expect about like a seven-basis point reduction in our deposits right there. So we are much more focused on the deposit cost reduction which we expect to continue into the next two quarters. And related to loan yield, obviously there is reversal of non-interested loans that has an impact, but aside from that I don’t expect substantial increase on the loan yield. So again, it is more towards the focus on the CD rate with that all in the combine, we expect still margin to be expanded down the next two quarters but If you want like a specific and a percentage, again it really depends on the nonaccrual loans reversal and accretion of those in a discount, but I think it can expand in two digits, maybe low two digits like 10% plus, bases points. I’m sorry. Aaron Deer – Sandler O’Neill & Partners: That’s what I wanted to clarify. And I'm sorry did I miss in the press release, did you give the metrics in terms of what the interest reversals and the accelerated accretion impact was in the second quarter.

Yes, we gave an actual impact of interest reversal, interest reversal on the non-accrual was $600,000 or about 10 basis points impact to net interest margin. Aaron Deer – Sandler O’Neill & Partners: Okay, great. Thank you very much. I appreciate the help.

(Operator Instructions). Your next question comes from the line of Tim Coffey with FIG Partners. Please proceed. Tim Coffey – FIG Partners: Thank you, good morning everybody.

Good morning Tim.

Hello Tim. Tim Coffey – FIG Partners: As we talk about your loan sales in the past quarter, are there any thoughts about selling, you know perhaps performing loans going forward?

In selling…

Performing loans.

Performing loans, not at this time. I guess we are here, I guess our main source of income is interest income from our loan portfolio. So, we have no intention of selling performing loans. We are focusing disposing of nonperforming loans at this time. Tim Coffey – FIG Partners: Okay and this gas station and carwash loans that are outside your core early market, was there any geographic concentration of these loans?

Well, not necessarily. I guess we primarily serve the Los Angeles, Orange County portion of Riverside County and as some of you may already know the inline area is the area that was impacted very badly and many of the distressed gas station and carwash properties were located in those area, Riverside, Palm Beach, Palm Spring, those are the outskirts of metro Los Angeles area. However, our total exposure to County and Riverside County is less than 9% of total CRE loans. Tim Coffey – FIG Partners: Okay, thanks Alex. That’s my next question. I think that was it from me. I appreciate the time. Thank you.

(Operator Instructions) Your next question comes from the line [Jonathan Elmy with McGwire]. Please proceed.

Hey good morning guys. I apologies if I missed it, but I just wanted to get some clarification again on the issue, with is regards to the tax rate.

Sure, we have actually lost position in the pre-tax rise during the second quarter. In Q1 we used annualize effective tax rate meaning we projected what will be the year end pre-tax figures. However, in Q2 since we encourage the net loss position to project more accurate tax rate instead of using annualize effective tax rate methods, we just through up the tax rate on a quarter-over-quarter basis, which is called a year to date or actual provision method. So with that changes, we have highest tax benefit in the second quarter.

Okay got it, and then remind me again what the size of your DTA is?

Our total DTA is, I think we have a lot of changes and we have a total of DTA is about $28.2 million.

$28.2 million. Okay great thanks.

Your next question comes from the line Don Worthington with Howe Barnes Hoefer & Arnett Inc. Please proceed. Don Worthington - Howe Barnes Hoefer & Arnett Inc: Good morning Joanne and Alex. Couple of things; one do you plan to do anymore restructuring in the securities portfolio, was tat pretty much it in terms of the duration.

Well I don’t think we expect any substantial non-restructuring investment. I think we have done a lot. Don Worthington - Howe Barnes Hoefer & Arnett Inc: And then given the comments on the dividend and capital preservation, I would assume there are no plans to do anything with TARP at this point.

Not at this point. On a periodic basis we can review options, but at this time we don’t had any immediate plan to pay off the cost.

At this time there are no further questions.