BUSINESS SEGMENTS

6 Months Ended

Jun. 30, 2011

BUSINESS SEGMENTS [Abstract]

BUSINESS SEGMENTS

NOTE 13 - BUSINESS SEGMENTS

The Company utilizes an internal reporting system to measure the performance of various operating segments within the Bank and the Company overall. We have identified three operating segments for purposes of management reporting: 1) Retail Banking; 2) Commercial Banking; and 3) Other. These three business divisions meet the criteria of an operating segment: the segment engages in business activities from which it earns revenues and incurs expenses, and whose operating results are regularly reviewed by the Company's chief operating decision-maker to make decisions about resources to be allocated to the segment and assess its performance and for which discrete financial information is available.

The Retail Banking segment focuses primarily on retail operations through the Bank's branch network. The Commercial Banking segment, which includes commercial real estate, primarily generates commercial loans through the efforts of the commercial lending offices located in the Bank's northern and southern California production offices. Furthermore, the Company's Commercial Banking segment also offers a wide variety of international finance and trade services and products. The remaining centralized functions, including treasury activities and eliminations of intersegment amounts, have been aggregated and included in the Other segment, which provides broad administrative support to the two core segments.

The Company's funds transfer pricing assumptions are intended to promote core deposit growth and to reflect the current risk profiles of various loan categories within the credit portfolio. Transfer pricing assumptions and methodologies are reviewed at least annually to ensure that the Company's process is reflective of current market conditions. The transfer pricing process is formulated with the goal of incenting loan and deposit growth that is consistent with the Company's overall growth objectives as well as to provide a reasonable and consistent basis for the measurement of the Company's business segments and product net interest margins. Changes to the Company's transfer pricing methodologies are approved by the Asset Liability Committee.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies. Operating segment results are based on the Company's internal management reporting process, which reflects assignments and allocations of capital, certain operating and administrative costs, and the provision for loan losses. Net interest income is based on the Company's internal funds transfer pricing system, which assigns a cost of funds or a credit for funds to assets or liabilities based on their type, maturity or repricing characteristics. Noninterest income and noninterest expense, including depreciation and amortization, directly attributable to a segment are assigned to that business. Indirect costs, including overhead expense, are allocated to the segments based on several factors, including, but not limited to, full-time equivalent employees, loan volume, and deposit volume. The provision for credit losses is allocated based on actual charge-offs for the period as well as average loan balances for each segment during the period. The Company evaluates overall performance based on profit or loss from operations before income taxes excluding nonrecurring gains and losses.

Changes in our management structure or reporting methodologies may result in changes in the measurement of operating segment results. Results for prior periods are generally restated for comparability for changes in management structure or reporting methodologies unless it is not deemed practicable to do so.

The following tables present the operating results and other key financial measures for the individual operating segments for the three and six months ended June 30, 2011 and 2010:

	Three Months Ended June 30, 2011
	Retail Banking			Commercial Lending			Other			Total
	(In thousands)
Interest income	$	94,964		$	153,015		$	26,489		$	274,468
Charge for funds used		(24,091	)		(37,356	)		(260	)		(61,707	)
Interest spread on funds used		70,873			115,659			26,229			212,761
Interest expense		(23,538	)		(8,002	)		(15,592	)		(47,132	)
Credit on funds provided		54,387			3,456			3,864			61,707
Interest spread on funds provided		30,849			(4,546	)		(11,728	)		14,575
Net interest income	$	101,722		$	111,113		$	14,501		$	227,336
Provision for loan losses	$	(1,787	)	$	(24,713	)	$	-		$	(26,500	)
Depreciation, amortization and accretion		(5,375	)		(21,119	)		3,920			(22,574	)
Goodwill		320,566			16,872			-			337,438
Segment pre-tax profit		28,703			38,675			28,352			95,730
Segment assets		6,212,906			10,491,816			5,167,986			21,872,708

	Three Months Ended June 30, 2010
	Retail Banking			Commercial Lending			Other			Total
	(In thousands)
Interest income	$	94,361		$	142,995		$	16,177		$	253,533
Charge for funds used		(30,449	)		(32,884	)		(1,958	)		(65,291	)
Interest spread on funds used		63,912			110,111			14,219			188,242
Interest expense		(29,299	)		(5,399	)		(15,212	)		(49,910	)
Credit on funds provided		56,411			4,311			4,569			65,291
Interest spread on funds provided		27,112			(1,088	)		(10,643	)		15,381
Net interest income	$	91,024		$	109,023		$	3,576		$	203,623
Provision for loan losses	$	(22,076	)	$	(33,180	)	$	-		$	(55,256	)
Depreciation, amortization and accretion		2,015			(14,166	)		1,318			(10,833	)
Goodwill		320,566			16,872			-			337,438
Segment pre-tax profit		12,562			30,369			15,803			58,734
Segment assets		6,370,531			9,719,021			3,877,769			19,967,321

	Six Months Ended June 30, 2011
	Retail Banking			Commercial Lending			Other			Total
	(In thousands)
Interest income	$	182,754		$	298,350		$	47,699		$	528,803
Charge for funds used		(49,679	)		(77,553	)		500			(126,732	)
Interest spread on funds used		133,075			220,797			48,199			402,071
Interest expense		(46,109	)		(13,987	)		(32,537	)		(92,633	)
Credit on funds provided		111,732			6,934			8,066			126,732
Interest spread on funds provided		65,623			(7,053	)		(24,471	)		34,099
Net interest income	$	198,698		$	213,744		$	23,728		$	436,170
Provision for loan losses	$	(8,943	)	$	(44,063	)	$	-		$	(53,006	)
Depreciation, amortization and accretion		(7,215	)		(34,907	)		7,185			(34,937	)
Goodwill		320,566			16,872			-			337,438
Segment pre-tax profit		56,393			87,274			38,643			182,310
Segment assets		6,212,906			10,491,816			5,167,986			21,872,708

	Six Months Ended June 30, 2010
	Retail Banking			Commercial Lending			Other			Total
	(In thousands)
Interest income	$	208,848		$	320,570		$	42,818		$	572,236
Charge for funds used		(60,122	)		(62,471	)		(10,176	)		(132,769	)
Interest spread on funds used		148,726			258,099			32,642			439,467
Interest expense		(62,577	)		(13,124	)		(31,188	)		(106,889	)
Credit on funds provided		113,420			9,291			10,058			132,769
Interest spread on funds provided		50,843			(3,833	)		(21,130	)		25,880
Net interest income	$	199,569		$	254,266		$	11,512		$	465,347
Provision for loan losses	$	(48,182	)	$	(83,495	)	$	-		$	(131,677	)
Depreciation, amortization and accretion		(7,952	)		(42,744	)		2,820			(47,876	)
Goodwill		320,566			16,872			-			337,438
Segment pre-tax profit		7,031			51,283			38,362			96,676
Segment assets		6,370,531			9,719,021			3,877,769			19,967,321