BUSINESS SEGMENTS

9 Months Ended

Sep. 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 nine months ended September 30, 2011 and 2010:

	Three Months Ended September 30, 2011
	Retail			Commercial
	Banking			Lending			Other			Total
	(In thousands)
Interest income	$	88,189		$	166,789		$	27,763		$	282,741
Charge for funds used		(22,394	)		(33,575	)		2,257			(53,712	)
Interest spread on funds used		65,795			133,214			30,020			229,029
Interest expense		(21,407	)		(9,248	)		(14,304	)		(44,959	)
Credit on funds provided		46,480			3,291			3,941			53,712
Interest spread on funds provided		25,073			(5,957	)		(10,363	)		8,753
Net interest income	$	90,868		$	127,257		$	19,657		$	237,782
Provision for loan losses	$	(11,185	)	$	(10,815	)	$	-		$	(22,000	)
Depreciation, amortization and accretion		(6,815	)		(2,912	)		(6,943	)		(16,670	)
Goodwill		320,566			16,872			-			337,438
Segment pre-tax profit		15,773			64,290			17,622			97,685
Segment assets		6,230,680			10,345,990			5,236,376			21,813,046

	Three Months Ended September 30, 2010
	Retail			Commercial
	Banking			Lending			Other			Total
	(In thousands)
Interest income	$	69,311		$	143,729		$	18,360		$	231,400
Charge for funds used		(29,159	)		(46,446	)		21,583			(54,022	)
Interest spread on funds used		40,152			97,283			39,943			177,378
Interest expense		(26,851	)		(5,885	)		(15,859	)		(48,595	)
Credit on funds provided		48,391			2,431			3,200			54,022
Interest spread on funds provided		21,540			(3,454	)		(12,659	)		5,427
Net interest income	$	61,692		$	93,829		$	27,284		$	182,805
Provision for loan losses	$	(26,261	)	$	(12,387	)	$	-		$	(38,648	)
Depreciation, amortization and accretion		(19,282	)		(46,469	)		(2,543	)		(68,294	)
Goodwill		320,566			16,872			-			337,438
Segment pre-tax (loss) profit		(18,021	)		64,698			26,850			73,527
Segment assets		6,450,883			9,728,305			4,238,058			20,417,246

	Nine Months Ended September 30, 2011
	Retail			Commercial
	Banking			Lending			Other			Total
	(In thousands)
Interest income	$	270,943		$	465,138		$	75,463		$	811,544
Charge for funds used		(72,073	)		(111,128	)		2,759			(180,442	)
Interest spread on funds used		198,870			354,010			78,222			631,102
Interest expense		(67,515	)		(23,236	)		(46,841	)		(137,592	)
Credit on funds provided		158,212			10,225			12,005			180,442
Interest spread on funds provided		90,697			(13,011	)		(34,836	)		42,850
Net interest income	$	289,567		$	340,999		$	43,386		$	673,952
Provision for loan losses	$	(20,128	)	$	(54,878	)	$	-		$	(75,006	)
Depreciation, amortization and accretion		(34,941	)		(51,012	)		(14,129	)		(100,082	)
Goodwill		320,566			16,872			-			337,438
Segment pre-tax profit		81,443			164,258			34,294			279,995
Segment assets		6,230,680			10,345,990			5,236,376			21,813,046

	Nine Months Ended September 30, 2010
	Retail			Commercial
	Banking			Lending			Other			Total
	(In thousands)
Interest income	$	269,453		$	473,004		$	61,179		$	803,636
Charge for funds used		(87,078	)		(111,119	)		11,406			(186,791	)
Interest spread on funds used		182,375			361,885			72,585			616,845
Interest expense		(89,422	)		(19,015	)		(47,047	)		(155,484	)
Credit on funds provided		161,796			11,738			13,257			186,791
Interest spread on funds provided		72,374			(7,277	)		(33,790	)		31,307
Net interest income	$	254,749		$	354,608		$	38,795		$	648,152
Provision for loan losses	$	(59,976	)	$	(110,349	)	$	-		$	(170,325	)
Depreciation, amortization and accretion		(50,669	)		(91,081	)		(5,363	)		(147,113	)
Goodwill		320,566			16,872			-			337,438
Segment pre-tax (loss) profit		(1,172	)		106,165			65,210			170,203
Segment assets		6,450,883			9,728,305			4,238,058			20,417,246