Hanmi’s First Quarter Results Reflect Solid Loan Production and 7.8% Increase in Net Income
2018 First Quarter Highlights:
- First quarter net income of $14.9 million, or $0.46 per diluted share, up 29.2% from the prior quarter and up 7.8% year-over-year.
- Loans and leases receivable of $4.4 billion, up 10.0% in the first quarter on an annualized basis driven by new loan and lease production of $245.3 million; Loans and leases receivable up 11.9% year-over-year.
- Deposits of $4.4 billion, up 2.8% in the first quarter on an annualized basis and up 7.2% year-over-year; Non-interest bearing demand deposits increased 3.0% from the prior quarter and 8.9% from a year ago.
- Net interest margin was 3.70% compared to 3.79% in the prior quarter and 3.89% a year ago; Net interest margin in the prior quarter included an 8 basis point benefit from prepayment fees.
- Net interest income was $44.9 million, down 3.1% from the prior quarter and up 6.1% year-over-year.
- Return on average assets was 1.16% and return on average equity was 10.65% compared with 0.88% and 8.12%, respectively, for the prior quarter and 1.18% and 10.46%, respectively, a year ago.
LOS ANGELES, April 24, 2018 (GLOBE NEWSWIRE) -- Hanmi Financial Corporation (NASDAQ:HAFC) (or “Hanmi”), the parent company of Hanmi Bank (the “Bank”), today reported net income for the 2018 first quarter of $14.9 million, or $0.46 per diluted share, compared with $11.5 million, or $0.36 per diluted share for the 2017 fourth quarter and $13.8 million, or $0.43 per diluted share for the 2017 first quarter.
Mr. C. G. Kum, President and Chief Executive Officer, said, “Hanmi’s first quarter results represent a good start to the year with strong loan production, expanding net income and continued excellent asset quality. During the first quarter, which is typically our seasonally weakest quarter, new loan and lease production of $245.3 million increased 21% from last year’s first quarter. This robust origination activity, which benefitted from our focus on C&I lending, helped loans and leases receivable increase in the first quarter 10% on an annualized basis and grow 12% compared to a year ago, while net income expanded nearly 8% year-over-year. I am also pleased that our net interest margin held relatively steady after adjusting for benefits in the prior quarter from prepayment fees. Importantly, credit quality remained excellent with nonperforming assets declining to 32 basis points of total assets in the quarter.”
Mr. Kum concluded, “During the first quarter, our Board increased the quarterly dividend 14%, to $0.24 per share. Hanmi remains committed to rewarding its shareholders and this dividend increase reflects confidence in our ability to continue generating profitable growth in 2018 and beyond.”
Quarterly Highlights
(In thousands, except per share data)
As of or for the Three Months Ended | Amount Change | ||||||||||||||||||||||||
March 31, | December 31, | September 30, | June 30, | March 31, | Q1-18 | Q1-18 | |||||||||||||||||||
2018 | 2017 | 2017 | 2017 | 2017 | vs. Q4-17 | vs. Q1-17 | |||||||||||||||||||
Net income | $ | 14,855 | $ | 11,500 | $ | 14,923 | $ | 14,457 | $ | 13,783 | $ | 3,355 | $ | 1,072 | |||||||||||
Net income per diluted common share | $ | 0.46 | $ | 0.36 | $ | 0.46 | $ | 0.45 | $ | 0.43 | $ | 0.10 | $ | 0.03 | |||||||||||
Assets | $ | 5,305,641 | $ | 5,210,485 | $ | 5,111,396 | $ | 4,973,346 | $ | 4,811,821 | $ | 95,156 | $ | 493,820 | |||||||||||
Loans receivable | $ | 4,413,557 | $ | 4,304,458 | $ | 4,195,355 | $ | 4,073,062 | $ | 3,943,951 | $ | 109,099 | $ | 469,606 | |||||||||||
Deposits | $ | 4,378,101 | $ | 4,348,654 | $ | 4,299,010 | $ | 4,259,173 | $ | 4,083,165 | $ | 29,447 | $ | 294,936 | |||||||||||
Return on average assets | 1.16 | % | 0.88 | % | 1.18 | % | 1.19 | % | 1.18 | % | 0.28 | -0.02 | |||||||||||||
Return on average stockholders' equity | 10.65 | % | 8.12 | % | 10.73 | % | 10.65 | % | 10.46 | % | 2.53 | 0.19 | |||||||||||||
Net interest margin (1) | 3.70 | % | 3.79 | % | 3.79 | % | 3.81 | % | 3.89 | % | -0.09 | -0.19 | |||||||||||||
Efficiency ratio (3) | 58.36 | % | 54.16 | % | 53.33 | % | 54.74 | % | 54.95 | % | 4.20 | 3.41 | |||||||||||||
Tangible common equity to tangible assets (2) | 10.43 | % | 10.58 | % | 10.72 | % | 10.83 | % | 10.98 | % | -0.15 | -0.55 | |||||||||||||
Tangible common equity per common share (2) | $ | 16.98 | $ | 16.96 | $ | 16.86 | $ | 16.59 | $ | 16.26 | $ | 0.02 | $ | 0.72 | |||||||||||
(1) Amounts calculated on a fully taxable equivalent basis using the federal tax rate in effect for the periods presented. | |||||||||||||||||||||||||
(2) Refer to "Non-GAAP Financial Measures" for further details. | |||||||||||||||||||||||||
(3) Noninterest expense divided by net interest income plus noninterest income. |
Results of Operations
First quarter 2018 net interest income decreased 3.1% to $44.9 million from $46.3 million in the 2017 fourth quarter as the expansion of loans and leases receivable were more than offset by a five basis point decrease in overall loan and lease yields along with a five basis point increase in cost of deposits. Interest and fees on loans and leases for the first quarter decreased 1.2%, or $0.6 million, from the preceding quarter while interest expense on deposits increased 5.2%, or $0.4 million. Loan prepayment fees were $0.1 million for the first quarter compared with $1.0 million for the fourth quarter.
As of or For the Three Months Ended (in thousands) | Percentage Change | |||||||||||||||||||
Mar 31, | Dec 31, | Sep 30, | Jun 30, | Mar 31, | Q1-18 | Q1-18 | ||||||||||||||
Net Interest Income | 2018 | 2017 | 2017 | 2017 | 2017 | vs. Q4-17 | vs. Q1-17 | |||||||||||||
Interest and fees on loans and leases(1) | $ | 51,574 | $ | 52,176 | $ | 50,265 | $ | 47,971 | $ | 45,378 | -1.2 | % | 13.7 | % | ||||||
Interest on securities | 3,105 | 3,194 | 3,188 | 2,949 | 2,520 | -2.8 | % | 23.2 | % | |||||||||||
Dividends on FHLB stock | 289 | 289 | 286 | 283 | 374 | 0.0 | % | -22.7 | % | |||||||||||
Interest on deposits in other banks | 114 | 125 | 123 | 123 | 77 | -8.8 | % | 48.1 | % | |||||||||||
Total interest and dividend income | $ | 55,082 | $ | 55,784 | $ | 53,862 | $ | 51,326 | $ | 48,349 | -1.3 | % | 13.9 | % | ||||||
Interest on deposits | 7,785 | 7,402 | 7,071 | 6,463 | 5,154 | 5.2 | % | 51.0 | % | |||||||||||
Interest on borrowings | 679 | 363 | 198 | 49 | 468 | 87.1 | % | 45.1 | % | |||||||||||
Interest on subordinated debentures | 1,694 | 1,676 | 1,667 | 1,636 | 373 | 1.1 | % | 354.2 | % | |||||||||||
Total interest expense | 10,158 | 9,441 | 8,936 | 8,148 | 5,995 | 7.6 | % | 69.4 | % | |||||||||||
Net interest income | $ | 44,924 | $ | 46,343 | $ | 44,926 | $ | 43,178 | $ | 42,354 | -3.1 | % | 6.1 | % | ||||||
(1) Includes loans held for sale. | ||||||||||||||||||||
Net interest margin for the first quarter of 2018 was 3.70%, down 9 basis points from 3.79% for the fourth quarter of 2017, mainly due to higher interest income in the fourth quarter from end of year prepayment fees. Adjusting for this, net interest margin for the first quarter was relatively flat on a sequential quarter basis.
For the Three Months Ended (in thousands) | Percentage Change | ||||||||||||||||||||||||
Mar 31, | Dec 31, | Sep 30, | Jun 30, | Mar 31, | Q1-18 | Q1-18 | |||||||||||||||||||
Average Earning Assets and Interest-bearing Liabilities | 2018 | 2017 | 2017 | 2017 | 2017 | vs. Q4-17 | vs. Q1-17 | ||||||||||||||||||
Loans and lease receivables (1) | $ | 4,310,964 | $ | 4,227,259 | $ | 4,092,131 | $ | 3,951,934 | $ | 3,881,686 | 2.0 | % | 11.1 | % | |||||||||||
Securities | 588,738 | 611,181 | 611,538 | 585,384 | 526,549 | -3.7 | % | 11.8 | % | ||||||||||||||||
FHLB stock | 16,385 | 16,385 | 16,385 | 16,385 | 16,385 | 0.0 | % | 0.0 | % | ||||||||||||||||
Interest-bearing deposits in other banks | 32,401 | 36,386 | 38,981 | 47,402 | 38,600 | -11.0 | % | -16.1 | % | ||||||||||||||||
Average interest-earning assets | $ | 4,948,488 | $ | 4,891,211 | $ | 4,759,035 | $ | 4,601,105 | $ | 4,463,220 | 1.2 | % | 10.9 | % | |||||||||||
Demand: interest-bearing | $ | 91,378 | $ | 90,646 | $ | 90,720 | $ | 93,873 | $ | 97,602 | 0.8 | % | -6.4 | % | |||||||||||
Money market and savings | 1,478,795 | 1,513,408 | 1,526,951 | 1,532,733 | 1,406,903 | -2.3 | % | 5.1 | % | ||||||||||||||||
Time deposits | 1,440,382 | 1,408,227 | 1,384,724 | 1,320,005 | 1,173,184 | 2.3 | % | 22.8 | % | ||||||||||||||||
Average interest-bearing deposits | 3,010,555 | 3,012,281 | 3,002,395 | 2,946,611 | 2,677,689 | -0.1 | % | 12.4 | % | ||||||||||||||||
Borrowings | 179,000 | 119,946 | 67,935 | 20,000 | 270,500 | 49.2 | % | -33.8 | % | ||||||||||||||||
Subordinated debentures | 117,323 | 117,198 | 117,065 | 116,850 | 30,950 | 0.1 | % | 279.1 | % | ||||||||||||||||
Average interest-bearing liabilities | $ | 3,306,878 | $ | 3,249,425 | $ | 3,187,395 | $ | 3,083,461 | $ | 2,979,139 | 1.8 | % | 11.0 | % | |||||||||||
(1) Includes loans held for sale. | |||||||||||||||||||||||||
For the Three Months Ended | Amount Change | ||||||||||||||||||||||||
Mar 31, | Dec 31, | Sep 30, | Jun 30, | Mar 31, | Q1-18 | Q1-18 | |||||||||||||||||||
Average Yields and Rates | 2018 | 2017 | 2017 | 2017 | 2017 | vs. Q4-17 | vs. Q1-17 | ||||||||||||||||||
Loans and lease receivables (1) | 4.85 | % | 4.90 | % | 4.87 | % | 4.87 | % | 4.74 | % | -0.05 | 0.11 | |||||||||||||
Securities (2) | 2.24 | % | 2.37 | % | 2.41 | % | 2.35 | % | 2.30 | % | -0.13 | -0.06 | |||||||||||||
FHLB stock | 7.15 | % | 7.00 | % | 6.93 | % | 6.93 | % | 9.26 | % | 0.15 | -2.11 | |||||||||||||
Interest-bearing deposits in other banks | 1.43 | % | 1.36 | % | 1.25 | % | 1.04 | % | 0.81 | % | 0.07 | 0.62 | |||||||||||||
Interest-earning assets | 4.53 | % | 4.56 | % | 4.53 | % | 4.52 | % | 4.44 | % | -0.03 | 0.09 | |||||||||||||
Interest-bearing deposits | 1.05 | % | 0.97 | % | 0.93 | % | 0.88 | % | 0.78 | % | 0.08 | 0.27 | |||||||||||||
Borrowings | 1.54 | % | 1.20 | % | 1.16 | % | 0.98 | % | 0.70 | % | 0.34 | 0.84 | |||||||||||||
Subordinated debentures | 5.77 | % | 5.70 | % | 5.68 | % | 5.59 | % | 4.82 | % | 0.07 | 0.95 | |||||||||||||
Interest-bearing liabilities | 1.25 | % | 1.15 | % | 1.11 | % | 1.06 | % | 0.82 | % | 0.10 | 0.43 | |||||||||||||
Net interest margin (taxable equivalent basis) | 3.70 | % | 3.79 | % | 3.79 | % | 3.81 | % | 3.89 | % | -0.09 | -0.19 | |||||||||||||
Cost of deposits | 0.73 | % | 0.68 | % | 0.66 | % | 0.62 | % | 0.54 | % | 0.05 | 0.19 | |||||||||||||
(1) Includes loans held for sale. | |||||||||||||||||||||||||
(2) Amounts calculated on a fully taxable equivalent basis using the federal tax rate in effect for the periods presented. |
For the first quarter of 2018, the loan and lease loss provision expense was $0.6 million compared with $0.2 million for the preceding quarter.
First quarter noninterest income decreased 21.1% to $6.1 million from $7.7 million for the fourth quarter of 2017 primarily due to the $0.4 million loss on the sales of securities related to the sale of $22.0 million of CRA mutual funds and a $0.6 million decrease in gains on sales of SBA loans. Gains on sales of SBA loans were $1.4 million for the first quarter 2018, down from $2.1 million from the fourth quarter of 2017 as the volume of SBA loans sold decreased to $19.2 million from $27.5 million for the preceding quarter.
For the Three Months Ended (in thousands) | Percentage Change | ||||||||||||||||||||
Mar 31, | Dec 31, | Sep 30, | Jun 30, | Mar 31, | Q1-18 | Q1-18 | |||||||||||||||
Noninterest Income | 2018 | 2017 | 2017 | 2017 | 2017 | vs. Q4-17 | vs. Q1-17 | ||||||||||||||
Service charges on deposit accounts | $ | 2,511 | $ | 2,729 | $ | 2,678 | $ | 2,461 | $ | 2,528 | -8.0 | % | -0.7 | % | |||||||
Trade finance and other service charges and fees | 1,173 | 1,047 | 1,133 | 1,269 | 1,047 | 12.0 | % | 12.0 | % | ||||||||||||
Servicing income | 662 | 799 | 625 | 644 | 564 | -17.1 | % | 17.5 | % | ||||||||||||
Bank-owned life insurance income | 277 | 282 | 260 | 286 | 285 | -1.7 | % | -2.8 | % | ||||||||||||
Other operating income | 285 | 404 | 328 | 896 | 877 | -29.5 | % | -67.5 | % | ||||||||||||
Service charges, fees & other | 4,908 | 5,261 | 5,024 | 5,556 | 5,301 | -6.7 | % | -7.4 | % | ||||||||||||
Gain on sale of SBA loans | 1,448 | 2,056 | 2,546 | 2,668 | 1,464 | -29.6 | % | -1.1 | % | ||||||||||||
Disposition gain on PCI loans | 133 | 91 | 979 | 540 | 183 | 46.2 | % | -27.3 | % | ||||||||||||
Net gain (loss) on sales of securities | (428 | ) | 275 | 267 | 938 | 269 | -255.6 | % | -259.1 | % | |||||||||||
Total noninterest income | $ | 6,061 | $ | 7,683 | $ | 8,816 | $ | 9,702 | $ | 7,217 | -21.1 | % | -16.0 | % | |||||||
Noninterest expense for the first quarter increased 1.7% to $29.8 million from $29.3 million for the prior quarter primarily due to a $1.4 million increase in salaries and employee benefits expenses, partially offset by a $0.7 million decrease in other operating expense. Salaries and employee benefits expenses are typically higher in the first quarter due to the seasonal impact of elevated payroll taxes and employee benefits. As a result of the increase in noninterest expense, as well as lower noninterest income due to losses on CRA mutual fund sales and lower SBA gain on sale income, the efficiency ratio increased to 58.4% in the first quarter from 54.2% in the prior quarter.
For the Three Months Ended (in thousands) | Percentage Change | ||||||||||||||||||||||
Mar 31, | Dec 31, | Sep 30, | Jun 30, | Mar 31, | Q1-18 | Q1-18 | |||||||||||||||||
2018 | 2017 | 2017 | 2017 | 2017 | vs. Q4-17 | vs. Q1-17 | |||||||||||||||||
Noninterest Expense | |||||||||||||||||||||||
Salaries and employee benefits | $ | 18,702 | $ | 17,270 | $ | 16,947 | $ | 16,623 | $ | 17,104 | 8.3 | % | 9.3 | % | |||||||||
Occupancy and equipment | 4,072 | 3,997 | 3,883 | 3,878 | 3,982 | 1.9 | % | 2.3 | % | ||||||||||||||
Data processing | 1,678 | 1,812 | 1,779 | 1,738 | 1,631 | -7.4 | % | 2.9 | % | ||||||||||||||
Professional fees | 1,369 | 1,552 | 1,210 | 1,554 | 1,148 | -11.8 | % | 19.3 | % | ||||||||||||||
Supplies and communication | 708 | 778 | 755 | 745 | 635 | -9.0 | % | 11.5 | % | ||||||||||||||
Advertising and promotion | 876 | 988 | 1,147 | 1,015 | 802 | -11.3 | % | 9.2 | % | ||||||||||||||
Other operating expenses | 2,273 | 2,961 | 2,955 | 2,881 | 2,070 | -23.2 | % | 9.8 | % | ||||||||||||||
subtotal | 29,678 | 29,358 | 28,676 | 28,434 | 27,372 | 1.1 | % | 8.4 | % | ||||||||||||||
Other real estate owned expense (income) | 79 | (100 | ) | (16 | ) | 510 | (132 | ) | -179.0 | % | -159.8 | % | |||||||||||
Total noninterest expense | $ | 29,757 | $ | 29,258 | $ | 28,660 | $ | 28,944 | $ | 27,240 | 1.7 | % | 9.2 | % | |||||||||
Hanmi recorded a provision for income taxes of $5.7 million for the first quarter of 2018, representing an effective tax rate of 27.8%, compared with $13.0 million, representing an effective tax rate of 53.2%, for the fourth quarter of 2017. As a result of the lower Federal corporate tax rate beginning in 2018, the provision for income taxes for the prior quarter included additional income tax expense of $3.9 million resulting from a one-time revaluation adjustment to reduce Hanmi’s deferred tax assets. The effective tax rate, before the additional income tax expense, was 37.5% for the 2017 fourth quarter.
Financial Position
Total assets were $5.31 billion at March 31, 2018, a 1.8% increase from $5.21 billion at December 31, 2017. The increase in total assets was primarily due to an increase in loans and leases receivable.
Loans and leases receivable, before the allowance for loan and lease losses, were $4.41 billion at March 31, 2018, up 2.5% from $4.30 billion at December 31, 2017. The increase in loans and leases from the prior quarter reflects Hanmi’s continued strong loan and lease production. Loans held for sale, representing the guaranteed portion of SBA loans, were $6.0 million at March 31, 2018 compared with $6.4 million at the end of 2017.
Loans and leases receivable, before the allowance for loan and lease losses, increased 11.9% from $3.94 billion for the first quarter last year, primarily due to strong loan and lease production over the last twelve months.
As of (in thousands) | Percentage Change | |||||||||||||||||||
Mar 31, | Dec 31, | Sep 30, | Jun 30, | Mar 31, | Q1-18 | Q1-18 | ||||||||||||||
2018 | 2017 | 2017 | 2017 | 2017 | vs. Q4-17 | vs. Q1-17 | ||||||||||||||
Loan and Lease Portfolio | ||||||||||||||||||||
Commercial real estate loans | $ | 3,122,745 | $ | 3,069,063 | $ | 3,108,931 | $ | 3,068,069 | $ | 2,991,123 | 1.7 | % | 4.4 | % | ||||||
Residential real estate loans | 545,053 | 521,852 | 430,627 | 384,044 | 359,152 | 4.4 | % | 51.8 | % | |||||||||||
Commercial and industrial loans | 409,380 | 399,197 | 364,456 | 346,150 | 316,284 | 2.6 | % | 29.4 | % | |||||||||||
Lease receivable | 321,480 | 297,286 | 272,271 | 257,525 | 259,591 | 8.1 | % | 23.8 | % | |||||||||||
Consumer loans | 14,899 | 17,060 | 19,070 | 17,274 | 17,801 | -12.7 | % | -16.3 | % | |||||||||||
Loans and leases receivable | 4,413,557 | 4,304,458 | 4,195,355 | 4,073,062 | 3,943,951 | 2.5 | % | 11.9 | % | |||||||||||
Loans held for sale | 6,008 | 6,394 | 6,469 | 10,949 | 8,849 | -6.0 | % | -32.1 | % | |||||||||||
Total loans | $ | 4,419,565 | $ | 4,310,852 | $ | 4,201,824 | $ | 4,084,011 | $ | 3,952,800 | 2.5 | % | 11.8 | % | ||||||
New loan and lease production for the 2018 first quarter was $245.3 million while payoffs, amortization and net line utilization was $154.3 million compared with $262.4 million and $228.3 million, respectively, for the fourth quarter of 2017. First quarter 2018 new loan and lease production was comprised of $136.6 million of commercial real estate loans, $27.4 million of commercial and industrial loans, $25.1 million of SBA loans, $55.0 million of commercial leases and $1.2 million of consumer loans. Loan purchases for the 2018 first quarter were $38.9 million, compared with $105.0 million in the fourth quarter of 2017. For the first quarter of 2018, commercial real estate loans as a percentage of loans and leases receivable decreased to 70.8% compared with 75.8% for the same period last year.
Deposits increased to $4.38 billion at the end of the 2018 first quarter from $4.35 billion at the end of the preceding quarter. Time deposits and non-interest bearing demand deposits led this growth with increases of 3.3% and 3.0%, respectively. The loans to deposits ratio at March 31, 2018 increased to 100.8% from 99.0% in the fourth quarter.
Deposits increased 7.2% from $4.08 billion in the first quarter last year, as time deposits and non-interest bearing demand deposits increased 21.1% and 8.9%, respectively, from a year ago.
As of (in thousands) | Percentage Change | |||||||||||||||||||
Mar 31, | Dec 31, | Sep 30, | Jun 30, | Mar 31, | Q1-18 | Q1-18 | ||||||||||||||
2018 | 2017 | 2017 | 2017 | 2017 | vs. Q4-17 | vs. Q1-17 | ||||||||||||||
Deposit Portfolio | ||||||||||||||||||||
Demand: noninterest-bearing | $ | 1,352,162 | $ | 1,312,274 | $ | 1,293,538 | $ | 1,260,929 | $ | 1,241,272 | 3.0 | % | 8.9 | % | ||||||
Demand: interest-bearing | 93,591 | 92,948 | 90,734 | 93,390 | 99,433 | 0.7 | % | -5.9 | % | |||||||||||
Money market and savings | 1,469,010 | 1,527,100 | 1,534,457 | 1,528,127 | 1,534,578 | -3.8 | % | -4.3 | % | |||||||||||
Time deposits of $100,000 or more | 1,197,026 | 954,104 | 949,826 | 916,197 | 731,445 | 25.5 | % | 63.7 | % | |||||||||||
Other time deposits | 266,312 | 462,228 | 430,455 | 460,530 | 476,437 | -42.4 | % | -44.1 | % | |||||||||||
Total deposits | $ | 4,378,101 | $ | 4,348,654 | $ | 4,299,010 | $ | 4,259,173 | $ | 4,083,165 | 0.7 | % | 7.2 | % | ||||||
At March 31, 2018, stockholders’ equity was $564.3 million, compared with $562.5 million at December 31, 2017. Tangible common stockholders’ equity was $551.8 million, or 10.43% of tangible assets, compared with $549.9 million, or 10.58% of tangible assets at December 31, 2017. Tangible book value per share was $16.98, compared to $16.96 in the fourth quarter.
Hanmi continues to be well capitalized, with a preliminary Tier 1 risk-based capital ratio of 12.55% and a Total risk-based capital ratio of 15.47% at March 31, 2018, versus 12.55% and 15.50%, respectively, at year end 2017.
As of | Amount Change | |||||||||||||||||
Mar 31, | Dec 31, | Sep 30, | Jun 30, | Mar 31, | Q1-18 | Q1-18 | ||||||||||||
2018 | 2017 | 2017 | 2017 | 2017 | vs. Q4-17 | vs. Q1-17 | ||||||||||||
Regulatory Capital ratios (1) | ||||||||||||||||||
Hanmi Financial | ||||||||||||||||||
Total risk-based capital | 15.47 | % | 15.50 | % | 15.58 | % | 15.69 | % | 16.16 | % | -0.03 | -0.69 | ||||||
Tier 1 risk-based capital | 12.55 | % | 12.55 | % | 12.56 | % | 12.58 | % | 12.93 | % | 0.00 | -0.38 | ||||||
Common equity tier 1 capital | 12.12 | % | 12.19 | % | 12.20 | % | 12.22 | % | 12.56 | % | -0.07 | -0.44 | ||||||
Tier 1 leverage capital ratio | 10.88 | % | 10.79 | % | 10.92 | % | 11.08 | % | 11.21 | % | 0.09 | -0.33 | ||||||
Hanmi Bank | ||||||||||||||||||
Total risk-based capital | 15.16 | % | 15.20 | % | 15.32 | % | 15.44 | % | 15.91 | % | -0.04 | -0.75 | ||||||
Tier 1 risk-based capital | 14.43 | % | 14.47 | % | 14.55 | % | 14.62 | % | 15.07 | % | -0.04 | -0.64 | ||||||
Common equity tier 1 capital | 14.43 | % | 14.47 | % | 14.55 | % | 14.62 | % | 15.07 | % | -0.04 | -0.64 | ||||||
Tier 1 leverage capital ratio | 12.50 | % | 12.44 | % | 12.66 | % | 12.89 | % | 13.08 | % | 0.06 | -0.58 | ||||||
(1) Preliminary ratios for March 31, 2018 | ||||||||||||||||||
Hanmi declared a cash dividend of $0.24 per common share on its common stock in the 2018 first quarter, up 14% from the prior quarter. The dividend was paid on February 23, 2018, to stockholders of record as of the close of business on February 5, 2018.
Asset Quality
Nonperforming loans were $15.4 million at the end of the first quarter of 2018, or 0.35% of loans, compared with $15.8 million at the end of 2017, or 0.37% of loans. Loans 30 to 89 days past due and still accruing were 0.16% of loans at the end of the first quarter of 2018, compared with 0.20% of loans at the end of the fourth quarter.
Nonperforming assets were $17.0 million at the end of the first quarter of 2018, or 0.32% of assets, compared with 0.34% of assets at the end of the prior quarter.
Gross charge-offs for the first quarter of 2018 were $1.6 million compared with $2.6 million for the preceding quarter. Recoveries of previously charged-off loans for the first quarter of 2018 were $1.7 million compared with $973,000 for the preceding quarter. As a result, there were net recoveries of $85,000 for the first quarter of 2018, compared to net charge-offs of $1.7 million, or 4 basis points, for the preceding quarter. For the first quarter of 2018, net recoveries were 0.01% of average loans and leases compared with net charge-offs of 0.16% for the preceding quarter.
The allowance for loan and lease losses (ALLL) was $31.8 million as of March 31, 2018, generating an allowance of loan and lease losses to gross loans and leases of 0.72%, unchanged from the prior quarter. ALLL to nonperforming loans for the first quarter of 2018 was 206.9%, up from 196.4% a quarter ago.
As of or for the Three Months Ended (in thousands) | Amount Change | ||||||||||||||||||||||||||
Mar 31, | Dec 31, | Sep 30, | Jun 30, | Mar 31, | Q1-18 | Q1-18 | |||||||||||||||||||||
2018 | 2017 | 2017 | 2017 | 2017 | vs. Q4-17 | vs. Q1-17 | |||||||||||||||||||||
Asset Quality | |||||||||||||||||||||||||||
Non-performing assets (1): | |||||||||||||||||||||||||||
Nonaccrual loans | $ | 15,345 | $ | 15,805 | $ | 14,558 | $ | 16,464 | $ | 12,774 | $ | (460 | ) | $ | 2,571 | ||||||||||||
Loans 90 days or more past due and still accruing | 17 | - | - | - | - | 17 | 17 | ||||||||||||||||||||
Non-performing loans and leases | 15,362 | 15,805 | 14,558 | 16,464 | 12,774 | (443 | ) | 2,588 | |||||||||||||||||||
Other real estate, net | 1,660 | 1,946 | 1,946 | 4,321 | 4,636 | (286 | ) | (2,976 | ) | ||||||||||||||||||
Nonperforming assets | $ | 17,022 | $ | 17,751 | $ | 16,504 | $ | 20,785 | $ | 17,410 | $ | (729 | ) | $ | (388 | ) | |||||||||||
Delinquent loans: | |||||||||||||||||||||||||||
Loans, 30 to 89 days past due and still accruing | $ | 7,270 | $ | 8,666 | $ | 5,682 | $ | 9,602 | $ | 8,356 | $ | (1,396 | ) | $ | (1,086 | ) | |||||||||||
Delinquent loans to loans | 0.16 | % | 0.20 | % | 0.14 | % | 0.24 | % | 0.21 | % | (0.04 | ) | (0.05 | ) | |||||||||||||
Allowance for loan and lease losses: | |||||||||||||||||||||||||||
Balance at beginning of period | $ | 31,043 | $ | 32,492 | $ | 33,758 | $ | 33,152 | $ | 32,429 | |||||||||||||||||
Loan and lease loss provision (income) | 649 | 220 | 269 | 422 | (80 | ) | |||||||||||||||||||||
Net loan charge-offs (recoveries) | (85 | ) | 1,669 | 1,535 | (184 | ) | (803 | ) | |||||||||||||||||||
Balance at end of period | $ | 31,777 | $ | 31,043 | $ | 32,492 | $ | 33,758 | $ | 33,152 | |||||||||||||||||
Asset quality ratios: | |||||||||||||||||||||||||||
Non-performing loans and leases to loans and leases | 0.35 | % | 0.37 | % | 0.35 | % | 0.41 | % | 0.32 | % | |||||||||||||||||
Non-performing assets to assets | 0.32 | % | 0.34 | % | 0.32 | % | 0.42 | % | 0.36 | % | |||||||||||||||||
Net loan and lease charge-offs (recoveries) to average loans and leases (1) | -0.01 | % | 0.16 | % | 0.15 | % | -0.02 | % | -0.08 | % | |||||||||||||||||
Allowance for loan and lease losses to loans and leases | 0.72 | % | 0.72 | % | 0.77 | % | 0.83 | % | 0.84 | % | |||||||||||||||||
Allowance for loan and lease losses to non-performing loans and leases | 206.85 | % | 196.41 | % | 223.19 | % | 205.04 | % | 259.53 | % | |||||||||||||||||
Allowance for off-balance sheet items: | |||||||||||||||||||||||||||
Balance at beginning of period | $ | 1,296 | $ | 915 | $ | 1,135 | $ | 1,184 | $ | 1,184 | |||||||||||||||||
Provision (income) for off-balance sheet items | 27 | 381 | (220 | ) | (49 | ) | - | ||||||||||||||||||||
Balance at end of period | $ | 1,323 | $ | 1,296 | $ | 915 | $ | 1,135 | $ | 1,184 | |||||||||||||||||
(1) Annualized |
Conference Call
Management will host a conference call today, April 24, 2018 at 2:00 p.m. PT (5:00 p.m. ET) to discuss these results. This call will also be broadcast live via the internet. Investment professionals and all current and prospective stockholders are invited to access the live call by dialing 1-877-407-9039 before 2:00 p.m. PT, using access code HANMI. To listen to the call online, either live or archived, visit the Investor Relations page of Hanmi’s website at www.hanmi.com.
About Hanmi Financial Corporation
Headquartered in Los Angeles, California, Hanmi Financial Corporation owns Hanmi Bank, which serves multi-ethnic communities through its network of 40 full-service branches and 9 loan production offices in California, Texas, Illinois, Virginia, New Jersey, New York, Colorado, Washington and Georgia. Hanmi Bank specializes in real estate, commercial, SBA and trade finance lending to small and middle market businesses. Additional information is available at www.hanmi.com.
Forward-Looking Statements
This press release contains forward-looking statements, which are included in accordance with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” or “continue,” or the negative of such terms and other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. All statements other than statements of historical fact are “forward–looking statements” for purposes of federal and state securities laws, including, but not limited to, statements about anticipated future operating and financial performance, financial position and liquidity, business strategies, regulatory and competitive outlook, investment and expenditure plans, capital and financing needs and availability, plans and objectives of management for future operations, developments regarding our capital plans, strategic alternatives for a possible business combination, merger or sale transaction, and other similar forecasts and statements of expectation and statements of assumption underlying any of the foregoing. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ from those expressed or implied by the forward-looking statement. These factors include the following: failure to maintain adequate levels of capital and liquidity to support our operations; the effect of potential future supervisory action against us or Hanmi Bank; general economic and business conditions internationally, nationally and in those areas in which we operate; volatility and deterioration in the credit and equity markets; changes in consumer spending, borrowing and savings habits; availability of capital from private and government sources; demographic changes; competition for loans and deposits and failure to attract or retain loans and deposits; fluctuations in interest rates and a decline in the level of our interest rate spread; risks of natural disasters related to our real estate portfolio; risks associated with Small Business Administration loans; failure to attract or retain key employees; changes in governmental regulation, including, but not limited to, any increase in FDIC insurance premiums; ability of Hanmi Bank to make distributions to Hanmi Financial Corporation, which is restricted by certain factors, including Hanmi Bank’s retained earnings, net income, prior distributions made, and certain other financial tests; ability to identify a suitable strategic partner or to consummate a strategic transaction; adequacy of our allowance for loan and lease losses; credit quality and the effect of credit quality on our provision for loan and lease losses and allowance for loan and lease losses; changes in the financial performance and/or condition of our borrowers and the ability of our borrowers to perform under the terms of their loans and other terms of credit agreements; our ability to control expenses; and changes in securities markets. In addition, we set forth certain risks in our reports filed with the U.S. Securities and Exchange Commission, including, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2017, our Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K that we will file hereafter, which could cause actual results to differ from those projected. We undertake no obligation to update such forward-looking statements except as required by law.
Investor Contacts:
Romolo (Ron) Santarosa
Senior Executive Vice President & Chief Financial Officer
213-427-5636
Richard Pimentel
Senior Vice President & Corporate Finance Officer
213-427-3191
Lasse Glassen
Investor Relations
Addo Investor Relations
310-829-5400
Hanmi Financial Corporation and Subsidiaries | ||||||||||||||||||
Consolidated Balance Sheets (Unaudited) | ||||||||||||||||||
(In thousands) | ||||||||||||||||||
March 31, | December 31, | Percentage | March 31, | Percentage | ||||||||||||||
2018 | 2017 | Change | 2017 | Change | ||||||||||||||
Assets | ||||||||||||||||||
Cash and due from banks | $ | 151,611 | $ | 153,826 | -1.4 | % | $ | 138,592 | 9.4 | % | ||||||||
Securities available for sale, at fair value | 570,351 | 578,804 | -1.5 | % | 548,010 | 4.1 | % | |||||||||||
Loans held for sale, at the lower of cost or fair value | 6,008 | 6,394 | -6.0 | % | 8,849 | -32.1 | % | |||||||||||
Loans receivable, net of allowance for loan losses | 4,381,780 | 4,273,415 | 2.5 | % | 3,910,799 | 12.0 | % | |||||||||||
Accrued interest receivable | 12,751 | 12,770 | -0.1 | % | 10,774 | 18.3 | % | |||||||||||
Premises and equipment, net | 26,465 | 26,655 | -0.7 | % | 28,350 | -6.6 | % | |||||||||||
Customers' liability on acceptances | 870 | 803 | 8.3 | % | 932 | -6.7 | % | |||||||||||
Servicing assets | 9,867 | 10,218 | -3.4 | % | 10,609 | -7.0 | % | |||||||||||
Goodwill and other intangible assets, net | 12,454 | 12,544 | -0.7 | % | 12,797 | -2.7 | % | |||||||||||
Federal Home Loan Bank ("FHLB") stock, at cost | 16,385 | 16,385 | 0.0 | % | 16,385 | 0.0 | % | |||||||||||
Bank-owned life insurance | 50,831 | 50,554 | 0.5 | % | 49,722 | 2.2 | % | |||||||||||
Prepaid expenses and other assets | 66,268 | 68,117 | -2.7 | % | 76,002 | -12.8 | % | |||||||||||
Total assets | $ | 5,305,641 | $ | 5,210,485 | 1.8 | % | $ | 4,811,821 | 10.3 | % | ||||||||
Liabilities and Stockholders' Equity | ||||||||||||||||||
Liabilities: | ||||||||||||||||||
Deposits: | ||||||||||||||||||
Noninterest-bearing | $ | 1,352,162 | $ | 1,312,274 | 3.0 | % | $ | 1,241,272 | 8.9 | % | ||||||||
Interest-bearing | 3,025,939 | 3,036,380 | -0.3 | % | 2,841,893 | 6.5 | % | |||||||||||
Total deposits | 4,378,101 | 4,348,654 | 0.7 | % | 4,083,165 | 7.2 | % | |||||||||||
Accrued interest payable | 5,931 | 5,309 | 11.7 | % | 2,619 | 126.5 | % | |||||||||||
Bank's liability on acceptances | 870 | 803 | 8.3 | % | 932 | -6.7 | % | |||||||||||
Borrowings | 220,000 | 150,000 | 46.7 | % | 50,000 | 340.0 | % | |||||||||||
Subordinated debentures | 117,400 | 117,270 | 0.1 | % | 116,795 | 0.5 | % | |||||||||||
Accrued expenses and other liabilities | 19,061 | 25,972 | -26.6 | % | 18,768 | 1.6 | % | |||||||||||
Total liabilities | 4,741,363 | 4,648,008 | 2.0 | % | 4,272,279 | 11.0 | % | |||||||||||
Stockholders' equity: | ||||||||||||||||||
Common stock | 33 | 33 | 0.0 | % | 33 | 0.0 | % | |||||||||||
Additional paid-in capital | 567,081 | 565,627 | 0.3 | % | 563,151 | 0.7 | % | |||||||||||
Accumulated other comprehensive income | (8,207 | ) | (1,869 | ) | 339.1 | % | (1,603 | ) | 412.0 | % | ||||||||
Retained earnings | 77,691 | 70,575 | 10.1 | % | 49,395 | 57.3 | % | |||||||||||
Less treasury stock | (72,320 | ) | (71,889 | ) | 0.6 | % | (71,434 | ) | 1.2 | % | ||||||||
Total stockholders' equity | 564,278 | 562,477 | 0.3 | % | 539,542 | 4.6 | % | |||||||||||
Total liabilities and stockholders' equity | $ | 5,305,641 | $ | 5,210,485 | 1.8 | % | $ | 4,811,821 | 10.3 | % | ||||||||
Hanmi Financial Corporation and Subsidiaries | ||||||||||||||||||
Consolidated Statements of Income (Unaudited) | ||||||||||||||||||
(In thousands, except share and per share data) | ||||||||||||||||||
Three Months Ended | ||||||||||||||||||
March 31, | December 31, | Percentage | March 31, | Percentage | ||||||||||||||
2018 | 2017 | Change | 2017 | Change | ||||||||||||||
Interest and dividend income: | ||||||||||||||||||
Interest and fees on loans and leases | $ | 51,574 | $ | 52,176 | -1.2 | % | $ | 45,378 | 13.7 | % | ||||||||
Interest on securities | 3,105 | 3,194 | -2.8 | % | 2,520 | 23.2 | % | |||||||||||
Dividends on FHLB stock | 289 | 289 | 0.0 | % | 374 | -22.7 | % | |||||||||||
Interest on deposits in other banks | 114 | 125 | -8.8 | % | 77 | 48.1 | % | |||||||||||
Total interest and dividend income | 55,082 | 55,784 | -1.3 | % | 48,349 | 13.9 | % | |||||||||||
Interest expense: | ||||||||||||||||||
Interest on deposits | 7,785 | 7,402 | 5.2 | % | 5,154 | 51.0 | % | |||||||||||
Interest on borrowings | 679 | 363 | 87.1 | % | 468 | 45.1 | % | |||||||||||
Interest on subordinated debentures | 1,694 | 1,676 | 1.1 | % | 373 | 354.2 | % | |||||||||||
Total interest expense | 10,158 | 9,441 | 7.6 | % | 5,995 | 69.4 | % | |||||||||||
Net interest income before provision for loan and lease losses | 44,924 | 46,343 | -3.1 | % | 42,354 | 6.1 | % | |||||||||||
Loan and lease loan provision (income) | 649 | 220 | 195.0 | % | (80 | ) | -911.3 | % | ||||||||||
Net interest income after provision for loan and lease losses | 44,275 | 46,123 | -4.0 | % | 42,434 | 4.3 | % | |||||||||||
Noninterest income: | ||||||||||||||||||
Service charges on deposit accounts | 2,511 | 2,729 | -8.0 | % | 2,528 | -0.7 | % | |||||||||||
Trade finance and other service charges and fees | 1,173 | 1,047 | 12.0 | % | 1,047 | 12.0 | % | |||||||||||
Gain on sale of Small Business Administration ("SBA") loans | 1,448 | 2,056 | -29.6 | % | 1,464 | -1.1 | % | |||||||||||
Servicing income | 662 | 564 | 0.0 | % | 799 | 0.0 | % | |||||||||||
Bank-owned life insurance income | 277 | 285 | 0.0 | % | 282 | 0.0 | % | |||||||||||
Disposition gains on Purchased Credit Impaired ("PCI") loans | 133 | 91 | 46.2 | % | 183 | -27.3 | % | |||||||||||
Net gain (loss) on sales of securities | (428 | ) | 275 | -255.6 | % | 269 | -259.1 | % | ||||||||||
Other operating income | 285 | 637 | -55.2 | % | 646 | -55.9 | % | |||||||||||
Total noninterest income | 6,061 | 7,683 | -21.1 | % | 7,217 | -16.0 | % | |||||||||||
Noninterest expense: | ||||||||||||||||||
Salaries and employee benefits | 18,702 | 17,270 | 8.3 | % | 17,104 | 9.3 | % | |||||||||||
Occupancy and equipment | 4,072 | 3,997 | 1.9 | % | 3,982 | 2.3 | % | |||||||||||
Data processing | 1,678 | 1,812 | -7.4 | % | 1,631 | 2.9 | % | |||||||||||
Professional fees | 1,369 | 1,552 | -11.8 | % | 1,148 | 19.3 | % | |||||||||||
Supplies and communications | 708 | 778 | -9.0 | % | 635 | 11.5 | % | |||||||||||
Advertising and promotion | 876 | 988 | -11.3 | % | 802 | 9.2 | % | |||||||||||
Other real estate owned expense (income) | 79 | (100 | ) | -179.0 | % | (101 | ) | -178.2 | % | |||||||||
Other operating expenses | 2,273 | 2,961 | -23.2 | % | 2,039 | 11.5 | % | |||||||||||
Total noninterest expense | 29,757 | 29,258 | 1.7 | % | 27,240 | 9.2 | % | |||||||||||
Income from continuing operations before provision for income taxes | 20,579 | 24,548 | -16.2 | % | 22,411 | -8.2 | % | |||||||||||
Provision for income taxes | 5,724 | 13,048 | -56.1 | % | 8,628 | -33.7 | % | |||||||||||
Net income | $ | 14,855 | $ | 11,500 | 29.2 | % | $ | 13,783 | 7.8 | % | ||||||||
Basic earnings per share: | $ | 0.46 | $ | 0.36 | $ | 0.43 | ||||||||||||
Diluted earnings per share: | $ | 0.46 | $ | 0.36 | $ | 0.43 | ||||||||||||
Weighted-average shares outstanding: | ||||||||||||||||||
Basic | 32,145,214 | 32,109,792 | 32,001,766 | |||||||||||||||
Diluted | 32,301,095 | 32,299,838 | 32,191,458 | |||||||||||||||
Common shares outstanding | 32,502,658 | 32,431,630 | 32,392,580 | |||||||||||||||
Hanmi Financial Corporation and Subsidiaries | ||||||||||||||||||||||||
Average Balance, Average Yield Earned, and Average Rate Paid (Unaudited) | ||||||||||||||||||||||||
(In thousands, except ratios) | ||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||
March 31, 2018 | December 31, 2017 | March 31, 2017 | ||||||||||||||||||||||
Interest | Average | Interest | Average | Interest | Average | |||||||||||||||||||
Average | Income / | Yield / | Average | Income / | Yield / | Average | Income / | Yield / | ||||||||||||||||
Balance | Expense | Rate | Balance | Expense | Rate | Balance | Expense | Rate | ||||||||||||||||
Assets | ||||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||
Loans and leases (1) | $ | 4,310,964 | $ | 51,574 | 4.85 | % | $ | 4,227,259 | $ | 52,176 | 4.90 | % | $ | 3,881,686 | $ | 45,378 | 4.74 | % | ||||||
Securities (2) | 588,738 | 3,296 | 2.24 | % | 611,181 | 3,619 | 2.37 | % | 526,549 | 3,026 | 2.30 | % | ||||||||||||
FHLB stock | 16,385 | 289 | 7.15 | % | 16,385 | 289 | 7.00 | % | 16,385 | 374 | 9.26 | % | ||||||||||||
Interest-bearing deposits in other banks | 32,401 | 114 | 1.43 | % | 36,386 | 125 | 1.36 | % | 38,600 | 77 | 0.81 | % | ||||||||||||
Total interest-earning assets | 4,948,488 | 55,273 | 4.53 | % | 4,891,211 | 56,209 | 4.56 | % | 4,463,220 | 48,855 | 4.44 | % | ||||||||||||
Noninterest-earning assets: | ||||||||||||||||||||||||
Cash and due from banks | 122,580 | 118,230 | 117,802 | |||||||||||||||||||||
Allowance for loan and lease losses | (32,487 | ) | (32,469 | ) | (32,842 | ) | ||||||||||||||||||
Other assets | 175,209 | 185,994 | 190,041 | |||||||||||||||||||||
Total assets | $ | 5,213,790 | $ | 5,162,966 | $ | 4,738,221 | ||||||||||||||||||
Liabilities and Stockholders' Equity | ||||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||||
Demand: interest-bearing | $ | 91,378 | $ | 18 | 0.08 | % | $ | 90,646 | $ | 18 | 0.08 | % | $ | 97,602 | $ | 19 | 0.08 | % | ||||||
Money market and savings | 1,478,795 | 3,326 | 0.91 | % | 1,513,408 | 3,315 | 0.87 | % | 1,406,903 | 2,666 | 0.77 | % | ||||||||||||
Time deposits | 1,440,382 | 4,441 | 1.25 | % | 1,408,227 | 4,069 | 1.15 | % | 1,173,184 | 2,469 | 0.85 | % | ||||||||||||
Total interest-bearing liabilities | 3,010,555 | 7,785 | 1.05 | % | 3,012,281 | 7,402 | 0.97 | % | 2,677,689 | 5,154 | 0.78 | % | ||||||||||||
Borrowings | 179,000 | 679 | 1.54 | % | 119,946 | 363 | 1.20 | % | 270,500 | 468 | 0.70 | % | ||||||||||||
Subordinated debentures | 117,323 | 1,694 | 5.77 | % | 117,198 | 1,676 | 5.70 | % | 30,950 | 373 | 4.82 | % | ||||||||||||
Total interest-bearing liabilities | 3,306,878 | 10,158 | 1.25 | % | 3,249,425 | 9,441 | 1.15 | % | 2,979,139 | 5,995 | 0.82 | % | ||||||||||||
Noninterest-bearing liabilities and equity: | ||||||||||||||||||||||||
Demand deposits: noninterest-bearing | 1,307,072 | 1,321,182 | 1,196,151 | |||||||||||||||||||||
Other liabilities | 33,973 | 30,482 | 28,658 | |||||||||||||||||||||
Stockholders' equity | 565,867 | 561,877 | 534,273 | |||||||||||||||||||||
Total liabilities and stockholders' equity | $ | 5,213,790 | $ | 5,162,966 | $ | 4,738,221 | ||||||||||||||||||
Net interest income (tax equivalent basis) | $ | 45,115 | $ | 46,768 | $ | 42,860 | ||||||||||||||||||
Cost of deposits | 0.73 | % | 0.68 | % | 0.54 | % | ||||||||||||||||||
Net interest spread (taxable equivalent basis) | 3.28 | % | 3.41 | % | 3.62 | % | ||||||||||||||||||
Net interest margin (taxable equivalent basis) | 3.70 | % | 3.79 | % | 3.89 | % | ||||||||||||||||||
(1) Includes loans held for sale | ||||||||||||||||||||||||
(2) Amounts calculated on a fully taxable equivalent basis using the federal tax rate in effect for the periods presented. |
Non-GAAP Financial Measures
Tangible Common Equity to Tangible Assets Ratio
Tangible common equity to tangible assets ratio is supplemental financial information determined by a method other than in accordance with U.S. generally accepted accounting principles (“GAAP”). This non-GAAP measure is used by management in the analysis of Hanmi’s capital strength. Tangible equity is calculated by subtracting goodwill and other intangible assets from stockholders’ equity. Banking and financial institution regulators also exclude goodwill and other intangible assets from stockholders’ equity when assessing the capital adequacy of a financial institution. Management believes the presentation of this financial measure excluding the impact of these items provides useful supplemental information that is essential to a proper understanding of the capital strength of Hanmi. This disclosure should not be viewed as a substitution for results determined in accordance with GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies.
The following table reconciles this non-GAAP performance measure to the GAAP performance measure for the periods indicated:
Tangible Common Equity to Tangible Assets Ratio (Unaudited) | ||||||||||||||||||||
(In thousands, except share, per share data and ratios) | ||||||||||||||||||||
March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||
Hanmi Financial Corporation | 2018 | 2017 | 2017 | 2017 | 2017 | |||||||||||||||
Assets | $ | 5,305,641 | $ | 5,210,485 | $ | 5,111,396 | $ | 4,973,346 | $ | 4,811,821 | ||||||||||
Less goodwill and other intangible assets | (12,454 | ) | (12,544 | ) | (12,628 | ) | (12,712 | ) | (12,797 | ) | ||||||||||
Tangible assets | $ | 5,293,187 | $ | 5,197,941 | $ | 5,098,768 | $ | 4,960,634 | $ | 4,799,024 | ||||||||||
Stockholders' equity | $ | 564,278 | $ | 562,477 | $ | 559,247 | $ | 550,140 | $ | 539,542 | ||||||||||
Less goodwill and other intangible assets | (12,454 | ) | (12,544 | ) | (12,628 | ) | (12,712 | ) | (12,797 | ) | ||||||||||
Tangible stockholders' equity | $ | 551,824 | $ | 549,933 | $ | 546,619 | $ | 537,428 | $ | 526,745 | ||||||||||
Stockholders' equity to assets | 10.64 | % | 10.80 | % | 10.94 | % | 11.06 | % | 11.21 | % | ||||||||||
Tangible common equity to tangible assets | 10.43 | % | 10.58 | % | 10.72 | % | 10.83 | % | 10.98 | % | ||||||||||
Common shares outstanding | 32,502,658 | 32,431,630 | 32,413,082 | 32,393,856 | 32,392,580 | |||||||||||||||
Tangible common equity per common share | $ | 16.98 | $ | 16.96 | $ | 16.86 | $ | 16.59 | $ | 16.26 |
Released April 24, 2018