1174820--3/12/2010--CENTER_FINANCIAL

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Risks Relating to Our Bank and the Banking Business The Company and the Bank have each entered into MOUs with their respective regulatory agencies and may be subject to future additional regulatory restrictions and enforcement actions if they fail to comply with the MOUs or if their financial condition should further deteriorate. Our business has been and may continue to be adversely affected by volatile conditions in the financial markets and deteriorating economic conditions generally. We may have continuing losses and continuing variation in our quarterly results. Concentrations of real estate loans could subject us to increased risks in the event of a prolonged real estate recession or natural disaster. Our provision for loan losses and net loan charge-offs have increased significantly and we may be required to make further increases in our provisions for loan losses and to charge off additional loans in the future, which could adversely affect our results of operations. We may experience loan and lease losses in excess of our allowance for loan and lease losses. Our use of appraisals in deciding whether to make a loan on or secured by real property does not ensure the value of the real property collateral. All of our lending involves underwriting risks, especially in a competitive lending market. We may not be able to continue to attract and retain banking customers, and our efforts to compete may reduce our profitability. Our expenses have increased and are likely to continue to increase as a result of increases in FDIC insurance premiums. Recently enacted legislation and our participation in the TARP Capital Purchase Program may increase costs and limit our ability to pursue business opportunities. If the Emergency Economic Stabilization Act of 2008 and other recently enacted government programs do not help stabilize the U.S. financial system, our operations could be adversely affected. We may be adversely affected by the soundness of other financial institutions. Liquidity risk could impair our ability to fund operations and jeopardize our financial condition. The value of securities in our investment portfolio may be negatively affected by continued disruptions in securities markets. Our growth or future losses may require us to raise additional capital in the future, but that capital may not be available when it is needed or the cost of that capital may be very high. We may engage in FDIC-assisted transactions, which could present additional risks to our business. Financial services companies depend on the accuracy and completeness of information about customers and counterparties. If our information systems were to experience a system failure or a breach in network security, our business and reputation could suffer. We depend on our executive officers and key personnel to implement our business strategy and could be harmed by the loss of their services. Our earnings are subject to interest rate risk, especially if rates fall. We are subject to extensive regulation that could limit or restrict our activities. If we are not able to successfully keep pace with technological changes affecting the industry, our business could be hurt. We may incur additional costs for environmental clean up. Risks Related to Our Securities The price of our common stock may fluctuate significantly, and this may make it difficult for you to sell shares of common stock at times or at prices you find attractive. The Company is currently prohibited from paying cash dividends on its capital stock without the prior approval of federal banking regulators and the U.S. Treasury Department, and there can be no assurance that the Company will be able to pay dividends in the future. The Company relies heavily on the payment of dividends from its subsidiary, Center Bank, and such dividends are subject to federal and state regulatory requirements and approvals. There will be a significant number of shares of our common stock eligible for future sale, which may depress our stock price. If shareholders do not approve the conversion of the Series B Preferred Stock into common stock, the conversion price of the Series B Preferred Stock will be adjusted downward, and the market price of the common stock could be adversely affected if the Company is unable to pay any scheduled dividends on the Series B Preferred Stock. The FDIC s recently adopted Statement of Policy on the Acquisition of Failed Insured Depository Institutions may restrict our activities and those of certain investors in us. Your investment may be diluted because of the ability of management to offer stock to others and stock options. The holders of our Series A perpetual preferred stock have rights that are senior to those of our common shareholders. If we are unable to redeem our Series A Preferred Stock by December 12, 2013, the cost of this capital to us will increase substantially. The holders of our junior subordinated debentures have rights that are senior to those of the shareholders. Our directors and executive officers control a large amount of our stock, and your interests may not always be the same as those of the board and management. Provisions in our articles of incorporation may delay or prevent changes in control of our corporation or our management.

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1174820--3/12/2010--CENTER_FINANCIAL_CORP