Hanmi Financial Corporation Reports Fourth-Quarter and Fiscal Year 2009 Financial Results
LOS ANGELES--(BUSINESS WIRE)-- Hanmi Financial Corporation (NASDAQ: HAFC) ("we," "our" or "Hanmi"), the holding company for Hanmi Bank (the "Bank"), reported a fourth-quarter net loss of $35.9 million, or ($0.70) per share, primarily driven by $77 million in credit loss provisions, compared to a net loss of $3.8 million, or ($0.08) per share, in the comparable period a year ago.
For the year ended December 31, 2009, Hanmi reported a net loss of $122.3 million, or ($2.57) per share, mainly due to $196.4 million in credit loss provisions, compared to a net loss of $102.1 million, or ($2.23) per share, for the year ended December 31, 2008. In 2008, there was a non-cash impairment loss on goodwill of $107.4 million, for which there was no comparable loss in 2009.
"Over the past year, we achieved a number of positive changes in what continues to be a very difficult economic environment," said Jay S. Yoo, Hanmi's President and Chief Executive Officer. "Most notably, we have made significant progress in strengthening our loan monitoring and loan review departments, maintaining appropriate loan loss reserves in anticipation of asset deterioration, managing our liquidity, and enhancing our net interest margin."
"Notwithstanding these improvements, our focus during the first half of 2010 will be to fully comply with previously announced regulatory requirements by further strengthening our capital position, improving asset quality, and enhancing liquidity. Our highest priority during the next few months will be to raise sufficient capital, executing our strategic plan to comply with regulatory requirements.
"To enhance liquidity, we will continue our efforts to reduce our illiquid assets as well as further increase our core deposits through product features and upgraded customer service. With the expectation of substantial progress in achieving these goals along with a successful capital raise," concluded Mr. Yoo, "we will strive to be back in position for organic growth."
Results of Operations
Net interest income before provision for credit losses increased by $1.9 million, or 7.3 percent, to $28.4 million in the fourth quarter of 2009 as compared with $26.5 million in the prior quarter as the $1.9 million decrease in interest and fees on loans was more than offset by a $4.5 million decrease in total interest expense. For the full year 2009, net interest income before provision for credit losses decreased by $33.2 million, or 24.7 percent, to $101.2 million, as compared with $134.4 million in the prior year.
The average yield on the loan portfolio was 5.54 percent in the fourth quarter of 2009, an increase of four basis points compared to 5.50 percent in the third quarter. Thanks to our proper management of high-cost time deposits that were offered through early 2009 and matured in the fourth quarter, combined with an overall decline of deposit rates in our community, the cost of average interest-bearing deposits was 2.26 percent, a decrease of 44 basis points compared to 2.70 percent in the third quarter. Consistent with this trend, net interest margin was 3.46 percent in the fourth quarter of 2009, an increase of 46 basis points compared to 3.00 percent in the third quarter.
The provision for credit losses in the fourth quarter of 2009 increased by $27.5 million to $77.0 million, compared to $49.5 million in the prior quarter, due mainly to the increase in our historical loss ratios used in the allowance for loan losses migration analysis which was the result of our increase in charge-offs in recent quarters. The charge-offs of impaired loans for the deficiency of collateral in this weakening commercial real estate ("CRE") market also contributed to the increase. For the full year, the provision for credit losses was $196.4 million compared to $75.7 million in 2008.
Total non-interest income in the fourth quarter of 2009 was $7.8 million as compared with $8.2 million in the third quarter of 2009 and $7.4 million in the fourth quarter of 2008. The decrease in non-interest income from the third quarter is mainly attributable to the overall decrease in service charges in the slowed economy. Consistent with our balance sheet deleveraging strategy, we continued to sell SBA loans and recognized a $354,000 gain in the fourth quarter, as compared with $864,000 in the prior quarter. In the fourth quarter, we also sold investment securities, mainly municipal bonds, for risk management purposes, and recorded a net gain of $665,000. For the full year 2009, total non-interest income was $32.1 million, a decrease of $39,000, or 0.1 percent, from the prior year.
Total non-interest expense in the fourth quarter of 2009 was $22.7 million as compared with $23.7 million in the third quarter, a decrease of $979,000, or 4.1 percent, from the prior quarter. A major contributor to the sequential decrease in fourth-quarter non-interest expense was a decrease of $2.5 million in other real estate owned expenses, partially offset by an increase of $1.0 million in deposit insurance premiums and regulatory assessments. For the full year 2009, total non-interest expense was $90.4 million compared to $194.3 million in 2008. The 2008 expense included a $107.4 million impairment loss on goodwill.
With the aforementioned decreases in non-interest expense and non-interest income and the increase in net interest income before provision for credit losses, the fourth-quarter 2009 efficiency ratio (non-interest expense divided by the sum of net interest income before provision for credit losses and non-interest income) was 62.6 percent, as compared with 68.2 percent in the third quarter and 55.5 percent in the comparable period a year ago.
Balance Sheet and Asset Quality
Reflecting the Bank's ongoing program to de-leverage the balance sheet, at December 31, 2009, total assets decreased by $294.8 million, or 8.5 percent, to $3.16 billion as compared with $3.46 billion at September 30, 2009, and decreased by $713.1 million, or 18.4 percent, in comparison to $3.88 billion at December 31, 2008.
Gross loans, net of deferred loan fees, decreased by $158.4 million, or 5.3%, to $2.82 billion as of December 31, 2009, compared with $2.98 billion at September 30, 2009, and decreased by $543 million, or 16.2%, as compared with $3.36 billion at December 31, 2008. The bulk of the decrease relative to the prior quarter-end is attributable to the stringent lending policy implementing selective loan renewals in addition to sale of loans and charge-offs.
Total deposits decreased by $242.5 million, or 8.1 percent, to $2.75 billion at December 31, 2009 compared to $2.99 billion at September 30, 2009, and decreased by $320.8 million, or 10.4 percent, compared to $3.07 billion at December 31, 2008. The decrease in total deposits compared to the previous quarter-end reflects a reduction in brokered deposits of $188.4 million and a reduction in Freedom CDs of $114.3 million. FHLB advances also decreased by $6.8 million.
Fourth-quarter charge-offs, net of recoveries, were $57.3 million compared to $29.9 million in the prior quarter and $18.6 million in the fourth quarter of 2008. Fourth-quarter charge-offs include a partial charge-off in the amount of $4.6 million on a construction loan to a senior housing project as a result of a decrease in collateral value; investment property loan charge-offs totaling $13.5 million; and other commercial term loan charge-offs totaling $30.3 million, which includes partial charge-offs from owner-occupied and single-tenant property loans. The remaining charge-offs of approximately $9 million consist of consumer, international, and SBA loans as well as commercial lines of credit. For the full year 2009, charge-offs, net of recoveries, were $122.6 million compared to $46.0 million in 2008.
At December 31, 2009, the allowance for loan losses was $145.0 million, or 5.14 percent of total gross loans (66.19 percent of total non-performing loans), compared to $71.0 million, or 2.11 percent of total gross loans (58.23 percent of total non-performing loans), at December 31, 2008. At September 30, 2009, the allowance for loan losses was $124.8 million, or 4.19 percent of total gross loans (71.53 percent of total non-performing loans). The increase in the allowance for loan losses was mainly due to an increase in quantitative reserves to $90.1 million from $61.1 million at September 30, 2009. The increase in the quantitative allowance was partially offset by a decrease in impaired reserves to $23.1 million from $36.7 million at September 30, 2009 as a result of increased charge-offs. Qualitative allowance slightly increased to $31.6 million from $26.6 million at the end of the third quarter.
Delinquent loans were $186.3 million (6.60 percent of total gross loans) at December 31, 2009, compared to $151.0 million (5.07 percent of total gross loans) at September 30, 2009, and $128.5 million (3.82 percent of total gross loans) at December 31, 2008. Contributing to the increase in delinquent loans were an increase in delinquencies of owner-occupied business property loans as well as an increase in delinquencies of SBA loans. Delinquencies from these two loan categories increased by approximately $18.0 million and $13.5 million, respectively, quarter-over-quarter.
Non-performing loans ("NPL") at December 31, 2009 were $219.1 million (7.77 percent of total gross loans), compared with $174.4 million at September 30, 2009 (5.85 percent of total gross loans), and $121.9 million (3.62 percent of total gross loans) at December 31, 2008. The majority of the quarter-over-quarter increase in non-performing loans is attributable to an increase of approximately $20.7 million in NPLs from income-producing commercial property loans, and an increase of approximately $17.8 million in NPLs from owner-occupied business property loans. Non-performing SBA loans also increased by approximately $7.5 million compared to the prior quarter. Non-performing loans at December 31, 2009 consisted of 5.7 percent construction loans, 46.9 percent commercial and industrial ("C&I") loans including owner/user occupied business property loans, 26.9 percent CRE loans, 16.3 percent SBA loans, 3.0 percent consumer loans, and the remaining 1.2 percent consisting of commercial lines of credit and international loans. Of the total NPL of $219.1 million, $74.0 million, or 33.8 percent, is current at December 31, 2009. Of the total NPL of $174.4 million, $51.9 million, or 29.8%, was current at September 30, 2009. Of the current NPL of $74.0 million, $35.7 million was moved to non-accrual status from accrual status due to shortfalls in collateral with negative cash flow; and of the $35.7 million that moved to non-accrual status, $7.9 million was restructured and identified as troubled debt restructured loans.
As of December 31, 2009, total non-performing assets of $245.4 million included other real estate owned assets ("OREO") of $26.3 million compared with total non-performing assets of $201.6 million with OREO of $27.1 million at September 30, 2009, and total non-performing assets of $122.7 million with OREO of $823,000 at December 31, 2008.
The aggregate net OREO balance has shown a decreasing trend since the second quarter of 2009. The net balance decreased from $34.0 million at June 30, 2009 to $27.1 million at September 30, 2009. The balance further decreased to $26.3 million at December 31, 2009.
Capital Adequacy
The Bank's capital ratios exceed levels defined as "adequately capitalized" by our regulators. At December 31, 2009, the Bank's Tier 1 Leverage, Tier 1 Risk-Based Capital and Total Risk-Based Capital Ratio were 6.69 percent, 7.77 percent, and 9.07 percent, respectively, compared to 7.05 percent, 8.40 percent and 9.69 percent, respectively, at September 30, 2009. The Bank's ratio of tangible shareholders' equity to total tangible assets for the fourth quarter was 7.13 percent compared to 7.57 percent at September 30, 2009.
About Hanmi Financial Corporation
Headquartered in Los Angeles, Hanmi Bank, a wholly-owned subsidiary of Hanmi Financial Corporation, provides services to the multi-ethnic communities of California, with 27 full-service offices in Los Angeles, Orange, San Bernardino, San Francisco, Santa Clara and San Diego counties, and a loan production office in Washington State. Hanmi Bank specializes in commercial, SBA and trade finance lending, and is a recognized community leader. Hanmi Bank's mission is to provide a full range of quality products and premier services to its customers and to maximize shareholder value. Additional information is available at www.hanmi.com.
Forward-Looking Statements
This 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. 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 regulatory orders we have entered into and 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 ("SBA") loans; failure to attract or retain key employees; changes in governmental regulation, including, but not limited to, any increase in FDIC insurance premiums; ability to receive regulatory approval for Hanmi Bank to declare dividends to Hanmi Financial; adequacy of our allowance for loan losses, credit quality and the effect of credit quality on our provision for credit losses and allowance for loan 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 successfully integrate acquisitions we may make; our ability to control expenses; and changes in securities markets. In addition, we set forth certain risks in our reports filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2008 and current and periodic reports filed with the Securities and Exchange Commission thereafter, which could cause actual results to differ from those projected. You should understand that it is not possible to predict or identify all such risks. Consequently, you should not consider such disclosures to be a complete discussion of all potential risks or uncertainties. We undertake no obligation to update such forward-looking statements except as required by law.
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS(UNAUDITED)
(Dollars in Thousands)
December 31, September 30, % December 31, %
2009 2009 Change 2008 Change
ASSETS
Cash and Due from $ 55,263 $ 57,727 (4.3 )% $ 83,933 (34.2 )%
Banks
Interest-Bearing
Deposits in Other 98,847 155,607 (36.5 )% 2,014 4,808.0 %
Banks
Federal Funds Sold -- -- -- 130,000 (100.0 )%
Cash and Cash 154,110 213,334 (27.8 )% 215,947 (28.6 )%
Equivalents
Investment 133,289 205,901 (35.3 )% 197,117 (32.4 )%
Securities
Loans:
Gross Loans, Net of 2,819,060 2,977,504 (5.3 )% 3,362,111 (16.2 )%
Deferred Loan Fees
Allowance for Loan (144,996 ) (124,768 ) 16.2 % (70,986 ) 104.3 %
Losses
Loans Receivable, 2,674,064 2,852,736 (6.3 )% 3,291,125 (18.7 )%
Net
Due from Customers 994 1,859 (46.5 )% 4,295 (76.9 )%
on Acceptances
Premises and 18,657 19,302 (3.3 )% 20,279 (8.0 )%
Equipment, Net
Accrued Interest 9,492 11,389 (16.7 )% 12,347 (23.1 )%
Receivable
Other Real Estate 26,306 27,140 (3.1 )% 823 3,096.4 %
Owned, Net
Deferred Income -- 2,464 (100.0 )% 29,456 (100.0 )%
Taxes, Net
Servicing Assets 3,842 3,957 (2.9 )% 3,791 1.3 %
Other Intangible 3,382 3,736 (9.5 )% 4,950 (31.7 )%
Assets, Net
Investment in
Federal Home Loan 30,697 30,697 -- 30,697 --
Bank Stock, at Cost
Investment in
Federal Reserve 7,878 10,053 (21.6 )% 10,228 (23.0 )%
Bank Stock, at Cost
Bank-Owned Life 26,408 26,171 0.9 % 25,476 3.7 %
Insurance
Income Taxes 60,162 34,908 72.3 % 11,712 413.7 %
Receivable
Other Assets 13,425 13,843 (3.0 )% 17,573 (23.6 )%
TOTAL ASSETS $ 3,162,706 $ 3,457,490 (8.5 )% $ 3,875,816 (18.4 )%
LIABILITIES AND
STOCKHOLDERS'
EQUITY
Liabilities:
Deposits:
Noninterest-Bearing $ 556,306 $ 561,548 (0.9 )% $ 536,944 3.6 %
Interest-Bearing 2,193,021 2,430,312 (9.8 )% 2,533,136 (13.4 )%
Total Deposits 2,749,327 2,991,860 (8.1 )% 3,070,080 (10.4 )%
Accrued Interest 12,606 19,730 (36.1 )% 18,539 (32.0 )%
Payable
Bank Acceptances 994 1,859 (46.5 )% 4,295 (76.9 )%
Outstanding
Federal Home Loan 153,978 160,828 (4.3 )% 422,196 (63.5 )%
Bank Advances
Other Borrowings 1,747 1,496 16.8 % 787 122.0 %
Junior Subordinated 82,406 82,406 -- 82,406 --
Debentures
Accrued Expenses
and Other 11,904 12,191 (2.4 )% 13,598 (12.5 )%
Liabilities
Total Liabilities 3,012,962 3,270,370 (7.9 )% 3,611,901 (16.6 )%
Stockholders' 149,744 187,120 (20.0 )% 263,915 (43.3 )%
Equity
TOTAL LIABILITIES
AND STOCKHOLDERS' $ 3,162,706 $ 3,457,490 (8.5 )% $ 3,875,816 (18.4 )%
EQUITY
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS(UNAUDITED)
(Dollars in Thousands, Except Per Share Data)
Three Months Ended Year Ended
Dec. 31, Sept. 30, % Dec. 31, % Dec. 31, Dec. 31, %
2009 2009 Change 2008 Change 2009 2008 Change
INTEREST AND
DIVIDEND INCOME:
Interest and Fees on $ 40,810 $ 42,705 (4.4 )% $ 51,305 (20.5 )% $ 173,318 $ 223,942 (22.6 )%
Loans
Taxable Interest on
Investment 1,414 1,541 (8.2 )% 1,644 (14.0 )% 5,675 9,387 (39.5 )%
Securities
Tax-Exempt Interest
on Investment 432 607 (28.8 )% 646 (33.1 )% 2,303 2,717 (15.2 )%
Securities
Interest on Term 30 293 (89.8 )% 43 (30.2 )% 1,718 43 3,895.3 %
Federal Funds Sold
Dividends on Federal 136 150 (9.3 )% 164 (17.1 )% 592 692 (14.5 )%
Reserve Bank Stock
Interest on Federal
Funds Sold and
Securities Purchased 65 67 (3.0 )% 29 124.1 % 326 166 96.4 %
Under Resale
Agreements
Interest on
Interest-Bearing 70 68 2.9 % 5 1,300.0 % 151 10 1,410.0 %
Deposits in Other
Banks
Dividends on Federal -- 64 (100.0 )% 273 (100.0 )% 64 1,226 (94.8 )%
Home Loan Bank Stock
Total Interest and 42,957 45,495 (5.6 )% 54,109 (20.6 )% 184,147 238,183 (22.7 )%
Dividend Income
INTEREST EXPENSE:
Interest on Deposits 13,410 17,365 (22.8 )% 19,654 (31.8 )% 76,246 84,353 (9.6 )%
Interest on Federal
Home Loan Bank 412 865 (52.4 )% 2,621 (84.3 )% 3,399 14,027 (75.8 )%
Advances
Interest on Junior
Subordinated 690 747 (7.6 )% 1,293 (46.6 )% 3,271 5,056 (35.3 )%
Debentures
Interest on Other -- -- -- 2 (100.0 )% 2 346 (99.4 )%
Borrowings
Total Interest 14,512 18,977 (23.5 )% 23,570 (38.4 )% 82,918 103,782 (20.1 )%
Expense
NET INTEREST INCOME
BEFORE PROVISION FOR 28,445 26,518 7.3 % 30,539 (6.9 )% 101,229 134,401 (24.7 )%
CREDIT LOSSES
-- -- --
Provision for Credit 77,000 49,500 55.6 % 25,450 202.6 % 196,387 75,676 159.5 %
Losses
NET INTEREST INCOME
(LOSS) AFTER (48,555 ) (22,982 ) 111.3 % 5,089 (1,054.1 )% (95,158 ) 58,725 (262.0 )%
PROVISION FOR CREDIT
LOSSES
NON-INTEREST INCOME:
Service Charges on 4,022 4,275 (5.9 )% 4,559 (11.8 )% 17,054 18,463 (7.6 )%
Deposit Accounts
Insurance 1,062 1,063 (0.1 )% 1,174 (9.5 )% 4,492 5,067 (11.3 )%
Commissions
Remittance Fees 530 511 3.7 % 651 (18.6 )% 2,109 2,194 (3.9 )%
Trade Finance Fees 439 512 (14.3 )% 614 (28.5 )% 1,956 3,088 (36.7 )%
Other Service 371 489 (24.1 )% 513 (27.7 )% 1,810 2,365 (23.5 )%
Charges and Fees
Net Gain on Sales of 354 864 (59.0 )% -- -- 1,220 765 59.5 %
Loans
Bank-Owned Life 237 234 1.3 % 237 -- 932 952 (2.1 )%
Insurance Income
Gain on Sales of
Investment 1,050 -- -- -- -- 2,327 618 276.5 %
Securities
Loss on Sales of
Investment (385 ) -- -- (58 ) 563.8 % (494 ) (541 ) (8.7 )%
Securities
Other-Than-Temporary
Impairment Loss on -- -- -- -- -- -- (2,410 ) (100.0 )%
Investment
Securities
Other Operating 159 265 (40.0 )% (286 ) (155.6 )% 704 1,588 (55.7 )%
Income (Loss)
Total Non-Interest 7,839 8,213 (4.6 )% 7,404 5.9 % 32,110 32,149 (0.1 )%
Income
NON-INTEREST
EXPENSE:
Salaries and 8,442 8,648 (2.4 )% 8,846 (4.6 )% 33,101 42,209 (21.6 )%
Employee Benefits
Occupancy and 2,733 2,834 (3.6 )% 2,798 (2.3 )% 11,239 11,158 0.7 %
Equipment
Deposit Insurance
Premiums and 2,998 2,001 49.8 % 1,615 85.6 % 10,418 3,713 180.6 %
Regulatory
Assessments
Data Processing 1,606 1,608 (0.1 )% 1,069 50.2 % 6,297 5,799 8.6 %
Other Real Estate 873 3,372 (74.1 )% 249 250.6 % 5,890 390 1,410.3 %
Owned Expense
Professional Fees 1,354 1,239 9.3 % 912 48.5 % 4,099 3,539 15.8 %
Advertising and 762 447 70.5 % 904 (15.7 )% 2,402 3,518 (31.7 )%
Promotion
Supplies and 580 603 (3.8 )% 510 13.7 % 2,352 2,518 (6.6 )%
Communications
Loan-Related Expense 357 192 85.9 % 221 61.5 % 1,947 790 146.5 %
Amortization of
Other Intangible 354 379 (6.6 )% 454 (22.0 )% 1,568 1,958 (19.9 )%
Assets
Other Operating 2,651 2,366 12.0 % 3,478 (23.8 )% 11,041 11,337 (2.6 )%
Expenses
Impairment Loss on -- -- -- -- -- -- 107,393 (100.0 )%
Goodwill
Total Non-Interest 22,710 23,689 (4.1 )% 21,056 7.9 % 90,354 194,322 (53.5 )%
Expense
LOSS BEFORE
PROVISION (BENEFIT) (63,426 ) (38,458 ) 64.9 % (8,563 ) 640.7 % (153,402 ) (103,448 ) 48.3 %
FOR INCOME TAXES
Provision (Benefit) (27,545 ) 21,207 (229.9 )% (4,748 ) 480.1 % (31,125 ) (1,355 ) 2,197.0 %
for Income Taxes
NET LOSS $ (35,881 ) $ (59,665 ) (39.9 )% $ (3,815 ) 840.5 % $ (122,277 ) $ (102,093 ) 19.8 %
LOSS PER SHARE:
Basic $ (0.70 ) $ (1.26 ) (44.4 )% $ (0.08 ) 775.0 % $ (2.57 ) $ (2.23 ) 15.2 %
Diluted $ (0.70 ) $ (1.26 ) (44.4 )% $ (0.08 ) 775.0 % $ (2.57 ) $ (2.23 ) 15.2 %
WEIGHTED-AVERAGE
SHARES OUTSTANDING:
Basic 50,998,103 47,413,141 45,884,462 47,570,361 45,872,541
Diluted 50,998,103 47,413,141 45,884,462 47,570,361 45,872,541
SHARES OUTSTANDING 51,182,390 51,201,390 45,905,549 51,182,390 45,905,549
AT PERIOD-END
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL DATA (UNAUDITED)
(Dollars in Thousands)
Three Months Ended Year Ended
December 31, September 30, % December 31, % December 31, December 31, %
2009 2009 Change 2008 Change 2009 2008 Change
AVERAGE BALANCES:
Average Gross
Loans, Net of $ 2,924,722 $ 3,078,104 (5.0 )% $ 3,366,601 (13.1 )% $ 3,157,133 $ 3,332,133 (5.3 )%
Deferred Loan Fees
Average Investment 182,635 209,021 (12.6 )% 205,305 (11.0 )% 188,325 271,802 (30.7 )%
Securities
Average
Interest-Earning 3,291,042 3,552,698 (7.4 )% 3,637,232 (9.5 )% 3,611,009 3,653,720 (1.2 )%
Assets
Average Total 3,356,383 3,672,253 (8.6 )% 3,789,435 (11.4 )% 3,717,179 3,866,856 (3.9 )%
Assets
Average Deposits 2,914,794 3,100,419 (6.0 )% 2,879,674 1.2 % 3,109,322 2,913,171 6.7 %
Average Borrowings 244,704 297,455 (17.7 )% 602,838 (59.4 )% 341,514 591,930 (42.3 )%
Average
Interest-Bearing 2,598,520 2,844,821 (8.7 )% 2,913,723 (10.8 )% 2,909,014 2,874,470 1.2 %
Liabilities
Average
Stockholders' 164,767 232,136 (29.0 )% 271,544 (39.3 )% 225,708 323,462 (30.2 )%
Equity
Average Tangible 161,169 228,169 (29.4 )% 266,333 (39.5 )% 221,537 264,490 (16.2 )%
Equity
PERFORMANCE RATIOS
(Annualized):
Return on Average (4.24 )% (6.45 )% (0.40 )% (3.29 )% (2.64 )%
Assets
Return on Average
Stockholders' (86.40 )% (101.97 )% (5.59 )% (54.17 )% (31.56 )%
Equity
Return on Average (88.33 )% (103.75 )% (5.70 )% (55.19 )% (38.60 )%
Tangible Equity
Efficiency Ratio 62.59 % 68.21 % 55.49 % 67.76 % 116.67 %
Net Interest Spread 2.99 % 2.47 % 2.74 % 2.28 % 2.95 %
(1)
Net Interest Margin 3.46 % 3.00 % 3.38 % 2.84 % 3.72 %
(1)
ALLOWANCE FOR LOAN
LOSSES:
Balance at $ 124,768 $ 105,268 18.5 % $ 63,948 95.1 % $ 70,986 $ 43,611 62.8 %
Beginning of Period
Provision Charged
to Operating 77,540 49,375 57.0 % 25,660 202.2 % 196,607 73,345 168.1 %
Expense
Charge-Offs, Net of (57,312 ) (29,875 ) 91.8 % (18,622 ) 207.8 % (122,597 ) (45,970 ) 166.7 %
Recoveries
Balance at End of $ 144,996 $ 124,768 16.2 % $ 70,986 104.3 % $ 144,996 $ 70,986 104.3 %
Period
Allowance for Loan
Losses to Total 5.14 % 4.19 % 2.11 % 5.14 % 2.11 %
Gross Loans
Allowance for Loan
Losses to Total 66.19 % 71.53 % 58.23 % 66.19 % 58.23 %
Non-Performing
Loans
ALLOWANCE FOR
OFF-BALANCE SHEET
ITEMS:
Balance at $ 4,416 $ 4,291 2.9 % $ 4,306 2.6 % $ 4,096 $ 1,765 132.1 %
Beginning of Period
Provision Charged
to Operating (540 ) 125 (532.0 )% (210 ) 153.3 % (220 ) 2,331 (109.4 )%
Expense
Balance at End of $ 3,876 $ 4,416 (12.2 )% $ 4,096 (5.4 )% $ 3,876 $ 4,096 (5.4 )%
Period
(1)Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate.
December 31, September 30, % December 31, %
2009 2009 Change 2008 Change
NON-PERFORMING
ASSETS:
Non-Accrual Loans $ 219,000 $ 174,363 25.6 % $ 120,823 81.3 %
Loans 90 Days or
More Past Due and 67 64 4.7 % 1,075 (93.8 )%
Still Accruing
Total
Non-Performing 219,067 174,427 25.6 % 121,898 79.7 %
Loans
Other Real Estate 26,306 27,140 (3.1 )% 823 3,096.4 %
Owned, Net
Total
Non-Performing $ 245,373 $ 201,567 21.7 % $ 122,721 99.9 %
Assets
Total
Non-Performing 7.77 % 5.85 % 3.62 %
Loans/Total Gross
Loans
Total
Non-Performing 7.76 % 5.83 % 3.17 %
Assets/Total Assets
Total
Non-Performing 169.2 % 161.6 % 172.9 %
Assets/Allowance
for Loan Losses
DELINQUENT LOANS $ 186,257 $ 151,047 23.3 % $ 128,469 45.0 %
Delinquent
Loans/Total Gross 6.60 % 5.07 % 3.82 %
Loans
LOAN PORTFOLIO:
Real Estate Loans $ 1,043,097 $ 1,086,735 (4.0 )% $ 1,180,114 (11.6 )%
Commercial and 1,714,212 1,824,042 (6.0 )% 2,099,732 (18.4 )%
Industrial Loans
Consumer Loans 63,303 68,537 (7.6 )% 83,525 (24.2 )%
Total Gross Loans 2,820,612 2,979,314 (5.3 )% 3,363,371 (16.1 )%
Deferred Loan Fees (1,552 ) (1,810 ) (14.3 )% (1,260 ) 23.2 %
Gross Loans, Net of 2,819,060 2,977,504 (5.3 )% 3,362,111 (16.2 )%
Deferred Loan Fees
Allowance for Loan (144,996 ) (124,768 ) 16.2 % (70,986 ) 104.3 %
Losses
Loans Receivable, $ 2,674,064 $ 2,852,736 (6.3 )% $ 3,291,125 (18.7 )%
Net
LOAN MIX:
Real Estate Loans 37.0 % 36.5 % 35.1 %
Commercial and 60.8 % 61.2 % 62.4 %
Industrial Loans
Consumer Loans 2.2 % 2.3 % 2.5 %
Total Gross Loans 100.0 % 100.0 % 100.0 %
DEPOSIT PORTFOLIO:
Demand - $ 556,306 $ 561,548 (0.9 )% $ 536,944 3.6 %
Noninterest-Bearing
Savings 111,172 98,019 13.4 % 81,869 35.8 %
Money Market
Checking and NOW 685,858 723,585 (5.2 )% 370,401 85.2 %
Accounts
Time Deposits of 815,190 845,318 (3.6 )% 849,800 (4.1 )%
$100,000 or More
Other Time Deposits 580,801 763,390 (23.9 )% 1,231,066 (52.8 )%
Total Deposits $ 2,749,327 $ 2,991,860 (8.1 )% $ 3,070,080 (10.4 )%
DEPOSIT MIX:
Demand - 20.2 % 18.8 % 17.5 %
Noninterest-Bearing
Savings 4.0 % 3.3 % 2.7 %
Money Market
Checking and NOW 24.9 % 24.2 % 12.1 %
Accounts
Time Deposits of 29.7 % 28.3 % 27.7 %
$100,000 or More
Other Time Deposits 21.2 % 25.4 % 40.0 %
Total Deposits 100.0 % 100.0 % 100.0 %
CAPITAL RATIOS
(Bank Only):
Total Risk-Based 9.07 % 9.69 % 10.71 %
Tier 1 Risk-Based 7.77 % 8.40 % 9.44 %
Tier 1 Leverage 6.69 % 7.05 % 8.85 %
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
AVERAGE BALANCES, AVERAGE YIELDS EARNED AND AVERAGE RATES PAID (UNAUDITED)
(Dollars in Thousands)
Three Months Ended Year Ended
December 31, 2009 September 30, 2009 December 31, 2008 December 31, 2009 December 31, 2008
Average Interest Average Average Interest Average Average Interest Average Average Interest Average Average Interest Average
Balance Income/ Yield/ Balance Income/ Yield/ Balance Income/ Yield/ Balance Income/ Yield/ Balance Income/ Yield/
Expense Rate Expense Rate Expense Rate Expense Rate Expense Rate
INTEREST-EARNING
ASSETS
Loans:
Real Estate
Loans:
Commercial $ 861,831 $ 11,872 5.47 % $ 887,028 $ 12,051 5.39 % $ 902,367 $ 14,074 6.20 % $ 894,408 $ 49,901 5.58 % $ 841,526 $ 56,968 6.77 %
Property
Construction 130,400 1,342 4.08 % 138,340 1,464 4.20 % 186,080 1,881 4.02 % 156,619 5,947 3.80 % 202,879 9,962 4.91 %
Residential 80,257 997 4.93 % 83,387 1,050 5.00 % 91,366 1,174 5.11 % 85,228 4,329 5.08 % 90,395 4,758 5.26 %
Property
Total Real 1,072,488 14,211 5.26 % 1,108,755 14,565 5.21 % 1,179,813 17,129 5.78 % 1,136,255 60,177 5.30 % 1,134,800 71,688 6.32 %
Estate Loans
Commercial and 1,787,795 25,472 5.65 % 1,897,321 26,863 5.62 % 2,104,820 32,691 6.18 % 1,947,669 108,346 5.56 % 2,112,421 145,107 6.87 %
Industrial Loans
Consumer Loans 66,074 965 5.79 % 73,670 1,084 5.84 % 83,411 1,353 6.45 % 74,700 4,310 5.77 % 86,787 6,142 7.08 %
Total Gross 2,926,357 40,648 5.51 % 3,079,746 42,512 5.48 % 3,368,044 51,173 6.04 % 3,158,624 172,833 5.47 % 3,334,008 222,937 6.69 %
Loans
Prepayment -- 162 -- -- 193 -- -- 132 -- -- 485 -- -- 1,005 --
Penalty Income
Unearned Income
on Loans, Net of (1,635 ) -- -- (1,642 ) -- -- (1,443 ) -- -- (1,491 ) -- -- (1,875 ) -- --
Costs
Gross Loans, Net 2,924,722 40,810 5.54 % 3,078,104 42,705 5.50 % 3,366,601 51,305 6.06 % 3,157,133 173,318 5.49 % 3,332,133 223,942 6.72 %
Investment
Securities:
Municipal Bonds 41,653 665 6.39 % 58,179 933 6.41 % 59,718 994 6.66 % 54,448 3,543 6.51 % 63,918 4,180 6.54 %
(1)
U.S. Government
Agency 36,500 437 4.79 % 37,969 431 4.54 % 21,720 201 3.70 % 24,417 1,108 4.54 % 65,440 2,813 4.35 %
Securities
Mortgage-Backed 77,354 738 3.82 % 82,429 807 3.92 % 79,821 971 4.87 % 77,627 3,320 4.28 % 87,930 4,217 4.77 %
Securities
Collateralized
Mortgage 14,312 143 4.00 % 17,066 173 4.05 % 37,853 403 4.26 % 21,365 879 4.11 % 43,842 1,865 4.25 %
Obligations
Corporate Bonds 286 -- 0.00 % 401 -- 0.00 % 1,688 46 10.90 % 271 -- 0.00 % 6,671 333 4.59 %
Other Securities 12,530 97 3.10 % 12,977 130 4.01 % 4,505 23 2.04 % 10,197 369 3.62 % 4,001 159 4.73 %
Total Investment 182,635 2,080 4.56 % 209,021 2,474 4.73 % 205,305 2,638 5.14 % 188,325 9,219 4.90 % 271,802 13,567 4.99 %
Securities(1)
Other
Interest-Earning
Assets:
Equity 40,605 136 1.34 % 41,741 214 2.05 % 42,551 437 4.11 % 41,399 656 1.58 % 38,516 1,918 4.98 %
Securities
Federal Funds
Sold and
Securities
Purchased
Under Resale 51,713 65 0.50 % 56,568 67 0.47 % 14,410 29 0.80 % 84,363 326 0.39 % 8,934 166 1.86 %
Agreements
Term Federal 8,500 30 1.41 % 90,239 293 1.30 % 7,609 43 2.26 % 95,822 1,718 1.79 % 1,913 43 2.25 %
Funds Sold
Interest-Bearing
Deposits in 82,867 70 0.34 % 77,025 68 0.35 % 756 5 2.65 % 43,967 151 0.34 % 422 10 2.37 %
Other Banks
Total Other
Interest-Earning 183,685 301 0.66 % 265,573 642 0.97 % 65,326 514 3.15 % 265,551 2,851 1.07 % 49,785 2,137 4.29 %
Assets
TOTAL
INTEREST-EARNING $ 3,291,042 $ 43,191 5.21 % $ 3,552,698 $ 45,821 5.12 % $ 3,637,232 $ 54,457 5.96 % $ 3,611,009 $ 185,388 5.13 % $ 3,653,720 $ 239,646 6.56 %
ASSETS(1)
INTEREST-BEARING
LIABILITIES
Interest-Bearing
Deposits:
Savings $ 104,068 $ 711 2.71 % $ 93,404 $ 585 2.48 % $ 83,777 $ 506 2.40 % $ 91,089 $ 2,328 2.56 % $ 89,866 $ 2,093 2.33 %
Money Market
Checking and NOW 733,063 3,508 1.90 % 629,124 2,998 1.89 % 506,062 3,963 3.12 % 507,619 9,786 1.93 % 618,779 19,909 3.22 %
Accounts
Time Deposits of 835,726 4,930 2.34 % 983,341 7,447 3.00 % 754,081 8,162 4.31 % 1,051,994 34,807 3.31 % 1,045,968 43,598 4.17 %
$100,000 or More
Other Time 680,959 4,261 2.48 % 841,497 6,335 2.99 % 966,965 7,023 2.89 % 916,798 29,325 3.20 % 527,927 18,753 3.55 %
Deposits
Total
Interest-Bearing 2,353,816 13,410 2.26 % 2,547,366 17,365 2.70 % 2,310,885 19,654 3.38 % 2,567,500 76,246 2.97 % 2,282,540 84,353 3.70 %
Deposits
Borrowings:
FHLB Advances 160,754 412 1.02 % 213,583 865 1.61 % 518,058 2,620 2.01 % 257,529 3,399 1.32 % 498,875 14,026 2.81 %
Other Borrowings 1,544 -- 0.00 % 1,466 -- 0.00 % 2,374 3 0.50 % 1,579 2 0.13 % 10,649 347 3.26 %
Junior
Subordinated 82,406 690 3.32 % 82,406 747 3.60 % 82,406 1,293 6.24 % 82,406 3,271 3.97 % 82,406 5,056 6.14 %
Debentures
Total Borrowings 244,704 1,102 1.79 % 297,455 1,612 2.15 % 602,838 3,916 2.58 % 341,514 6,672 1.95 % 591,930 19,429 3.28 %
TOTAL
INTEREST-BEARING $ 2,598,520 $ 14,512 2.22 % $ 2,844,821 $ 18,977 2.65 % $ 2,913,723 $ 23,570 3.22 % $ 2,909,014 $ 82,918 2.85 % $ 2,874,470 $ 103,782 3.61 %
LIABILITIES
NET INTEREST $ 28,679 $ 26,844 $ 30,887 $ 102,470 $ 135,864
INCOME(1)
NET INTEREST 2.99 % 2.47 % 2.74 % 2.28 % 2.95 %
SPREAD(1)
NET INTEREST 3.46 % 3.00 % 3.38 % 2.84 % 3.72 %
MARGIN(1)
(1) Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate.
Source: Hanmi Financial Corporation
Released January 28, 2010