Hanmi Financial Corporation Reports Second-Quarter 2009 Financial Results
To Restate First-Quarter Results
LOS ANGELES--(BUSINESS WIRE)-- Hanmi Financial Corporation (NASDAQ:HAFC) ("we," "our" or "Hanmi"), the holding company for Hanmi Bank (the "Bank"), reported a second-quarter net loss of $9.5 million, or ($0.21) per share, compared to a net loss of $105.5 million, or ($2.30) per share, in the second quarter of 2008, and compared to a net loss of $17.2 million, or ($0.37) per share, in the first quarter of 2009; the second-quarter 2008 net loss included a non-cash goodwill impairment charge of $107.4 million.
For the six months ended June 30, 2009, we reported a net loss of $26.7 million, or ($0.58) per share, compared to a net loss of $102.6 million, or ($2.24) per share, for the comparable period of 2008.
In a related matter, following the findings of a recent regulatory examination of the Bank, Hanmi determined that it will restate its Quarterly Report on Form 10-Q for the period ended March 31, 2009. The restatement includes an increase of the allowance for loan losses by $21.0 million to reflect an adjustment to the qualitative reserve factors that the Bank utilized in calculating its allowance for loan losses as of March 31, 2009. The adjustments in the qualitative reserve factors were the result of management incorporating first quarter trends in delinquent, classified and non-performing loans that the Bank's loan portfolio is experiencing. The restatement also reflects certain loan grading changes that occurred as a result of the recent regulatory examination.
According to Jay S. Yoo, President and Chief Executive Officer of Hanmi, "As a result of the restatement, the first-quarter net loss increased to $17.2 million, or ($0.37) per share. The higher allowance for loan losses is attributable to the more defensive application of applying the Bank's methodology to reflect the prolonged downturn in the economy that has led to a further deterioration in commercial real estate values in Southern California.
"Second-quarter results point to the same factors that led us to our decision to restate first-quarter results -- namely, the continuing recession and its effect on a growing number of our customers who are increasingly having difficulty meeting their financial obligations to the Bank," continued Mr. Yoo. "Their difficulties are evident in growing delinquencies and an increase in the number of non-performing loans. With that understood, and consistent with our longstanding commitment to ensuring that loan loss provisions fully reflect the economic realities of the day, we continue to be vigilant in fully and proactively addressing the challenges of our current credit environment. With no quick end to the recession in sight, we continue to diligently monitor loans with the aim of addressing problematic credits in a timely fashion. Similarly, we are carefully evaluating credits that are subject to renewal and accepting only those that are of the highest quality; this was in part responsible for the decrease of $160.4 million in the loan portfolio compared to March 31, 2009.
"On a positive note," concluded Mr. Yoo, "as previously announced, on June 12, 2009, we entered into a Securities Purchase Agreement, subsequently amended on July 31, 2009, with Leading Investment & Securities Co., Ltd. ("Leading"), a Korean securities broker-dealer, for a total capital infusion of $11.0 million. The initial investment of $6.9 million is in an escrow account awaiting regulatory consents. We expect to close the initial investment in the near future and to receive an additional $4.1 million from Leading by the end of September. Furthermore, we remain in active negotiations with another Korean institutional investor regarding a considerably larger infusion of equity capital."
Results of Operations
Second-quarter 2009 net interest income before provision for credit losses was unchanged at $23.1 million compared to the prior quarter. Interest and fees on loans decreased by $367,000, or 0.8 percent, from the first quarter of 2009, reflecting a decrease in the size of the loan portfolio. Interest paid on deposits declined by only $99,000, or 0.4 percent, from the first quarter of 2009 as a decline in the cost of funds was partially offset by a $91.8 million increase in the deposit portfolio in the second quarter.
During the second quarter, the high-cost six-month time deposits offered from December 2008 through March 2009 started to mature and a substantial number of them were rolled over into lower-cost deposits. The average cost of interest-bearing deposits accordingly decreased by eight basis points to 3.37 percent in the second quarter of 2009 from 3.45 percent in the first quarter. The average yield on the loan portfolio was unchanged at 5.46 percent in both the first and second quarters of 2009. Net interest margin likewise was essentially unchanged at 2.49 percent compared to 2.50 percent in the first quarter. It is anticipated that net interest margin will improve in the third quarter as $839.3 million of the aforementioned promotional time deposits will mature and are expected to be replaced by lower-cost deposits.
The provision for credit losses in the second quarter of 2009 was $23.9 million compared to $46.0 million in the prior quarter and $19.2 million in the second quarter of 2008. Second-quarter charge-offs, net of recoveries, were $23.6 million compared to $11.8 million in the prior quarter and $8.2 million in the second quarter of 2008. Second-quarter charge-offs consisted primarily of unsecured commercial and industrial loans. Management's analysis of the third-party loan review that was completed during the second quarter, and the expectation of a prolonged recession, led to another significant provision for credit losses in the second quarter.
Total non-interest income in the second quarter of 2009 was $6.7 million compared to $8.4 million in the prior quarter and $9.7 million in the second quarter of 2008. The sequential decrease in non-interest income reflects a $909,000 other-than-temporary impairment ("OTTI") loss on securities during the second quarter of 2009. There was also a $1.2 million net gain on sales of investment securities in the first quarter of 2009 and no comparable sales in the second quarter of 2009.
Total non-interest expense in the second quarter of 2009 was $24.7 million compared to $18.3 million in the first quarter, an increase of $6.4 million, or 35.3 percent, and $129.4 million in the second quarter of 2008, a decrease of $104.7 million, or 80.9 percent; second-quarter 2008 non-interest expense included a non-cash goodwill impairment charge of $107.4 million. The sequential increase in total non-interest expense is attributable mainly to a $2.4 million increase in deposit insurance premiums, including a $1.8 million accrual for a FDIC special assessment, a $1.4 million increase in other real estate owned ("OREO") expense and a $1.0 million increase in loan-related expense. In addition, salaries and employee benefits increased to $8.5 million from the prior quarter's $7.5 million, which had been reduced by the reversal of a $2.5 million post-retirement benefit obligation related to bank-owned life insurance. Absent this one-time reversal of expense, salaries and employee benefits in the second quarter decreased by $1.5 million from the prior quarter and by $2.8 million from $11.3 million in the second quarter of 2008, reflecting the progress of our cost-cutting efforts.
Due primarily to the increase in non-interest expense, the efficiency ratio (non-interest expense divided by the sum of net interest income before provision for credit losses and non-interest income) increased to 82.85 percent, compared to 57.92 percent in the prior quarter and 296.07 percent in the second quarter of 2008.
Balance Sheet and Asset Quality
Total assets at June 30, 2009 decreased by $5.0 million, or 0.1 percent, to $3.87 billion from $3.88 billion at December 31, 2008 and increased by $25.7 million, or 0.7 percent, compared to $3.85 billion at June 30, 2008. Beginning in the second quarter of 2009, we carefully evaluated credit extensions subject to renewal and approved only those with the highest quality, which meaningfully reduced our loan portfolio. At June 30, 2009, gross loans, net of deferred loan fees, decreased by $204.2 million, or 6.1 percent, to $3.16 billion, compared to $3.36 billion at December 31, 2008, and decreased by $194.9 million, or 5.8 percent, compared to $3.35 billion at June 30, 2008.
During the second quarter of 2009, we launched a core-deposit campaign in order to secure sufficient funds in this time of uncertainty in the capital markets. Total deposits increased by $217.8 million, or 7.1 percent, to $3.29 billion at June 30, 2009, compared to $3.07 billion at December 31, 2008, and increased by $326.4 million, or 11.0 percent, compared to $2.96 billion at June 30, 2008. This increase in total deposits was mainly used to reduce our reliance on wholesale funds such as FHLB advances and broker deposits.
FHLB advances decreased by $211.2 million, or 50.0 percent, to $211.0 million at June 30, 2009, compared to $422.2 million at December 31, 2008, and decreased by $285.5 million, or 57.5 percent, compared to $496.4 million at June 30, 2008. At June 30, 2009, broker deposits were $475.0 million, a decline of $399.2 million, or 45.7 percent, compared to $874.1 million at December 31, 2008, and an increase of $279.9 million, or 143.5 percent, compared to $195.1 million at June 30, 2008.
"With a sizable positive cash position of $382.8 million that resulted from the decrease in loans and the increase in deposits, we are well positioned to rebuild our core deposit base even as we anticipate some run-off of the high-cost time deposits maturing in next few months," said Brian Cho, Chief Financial Officer. "In the same process, we anticipate lowering our overall cost of deposits during the remainder of the year by replacing them with lower-cost deposits."
Delinquent loans were $178.7 million (5.66 percent of total gross loans) at June 30, 2009, compared to $128.5 million (3.82 percent of total gross loans) at December 31, 2008, and $138.4 million (4.12 percent of total gross loans) at June 30, 2008. The majority of the increase in delinquencies was attributable to business property loans suffering during this economic downturn. Non-performing loans at June 30, 2009 were $167.3 million (5.30 percent of total gross loans), compared to $121.9 million (3.62 percent of total gross loans) at December 31, 2008, and $112.2 million (3.34 percent of total gross loans) at June 30, 2008. As of June 30, 2009, total non-performing assets included OREO of $34.0 million, a $33.2 million increase compared to $823,000 as of December 31, 2008. The increase in OREO during the second quarter is mostly attributable to two previously mentioned California properties that have been foreclosed: a condominium project in Oakland, and a private golf course in Fallbrook.
At June 30, 2009, the allowance for loan losses was $105.3 million, or 3.33 percent of total gross loans (62.92 percent of total non-performing loans), compared to $104.9 million, or 3.16 percent of total gross loans (67.13 percent of total non-performing loans), at March 31, 2009, and $63.0 million, or 1.88 percent of total gross loans (56.14 percent of total non-performing loans), at June 30, 2008.
Capital Adequacy
At June 30, 2009, the Bank's Tier 1 Leverage, Tier 1 Risk-Based Capital and Total Risk-Based Capital ratios were 8.01 percent, 9.42 percent and 10.70 percent, respectively, compared to 8.85 percent, 9.44 percent and 10.71 percent, respectively, at December 31, 2008.
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; the ability of Leading to complete the transactions contemplated by the Securities Purchase Agreement; 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.
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 two loan production offices in Virginia and 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.hanmifinancial.com.
HANMI FINANCIAL
CORPORATION AND
SUBSIDIARIES
CONDENSED
CONSOLIDATED
BALANCE SHEETS
(UNAUDITED)
(Dollars in
Thousands)
June 30, December 31, % June 30, %
2009 2008 Change 2008 Change
ASSETS
Cash and Due from $ 382,826 $ 85,188 349.4 % $ 110,222 247.3 %
Banks
Federal Funds Sold
and Securities -- 130,000 (100.0 )% 10,000 (100.0 )%
Purchased Under
Resale Agreements
Cash and Cash 382,826 215,188 77.9 % 120,222 218.4 %
Equivalents
Investment 218,823 197,876 10.6 % 262,601 (16.7 )%
Securities
Loans:
Gross Loans, Net of 3,157,947 3,362,111 (6.1 )% 3,352,879 (5.8 )%
Deferred Loan Fees
Allowance for Loan (105,268 ) (70,986 ) 48.3 % (62,977 ) 67.2 %
Losses
Loans Receivable, 3,052,679 3,291,125 (7.2 )% 3,289,902 (7.2 )%
Net
Due from Customers 1,916 4,295 (55.4 )% 6,717 (71.5 )%
on Acceptances
Premises and 19,833 20,279 (2.2 )% 20,801 (4.7 )%
Equipment, Net
Accrued Interest 12,118 12,347 (1.9 )% 13,155 (7.9 )%
Receivable
Other Real Estate 34,018 823 4,033.4 % -- --
Owned, Net
Servicing Assets 3,444 3,791 (9.2 )% 4,328 (20.4 )%
Other Intangible 4,115 4,950 (16.9 )% 5,882 (30.0 )%
Assets, Net
Investment in
Federal Home Loan 30,697 30,697 -- 29,397 4.4 %
Bank Stock, at Cost
Investment in
Federal Reserve 10,053 10,228 (1.7 )% 11,733 (14.3 )%
Bank Stock, at Cost
Bank-Owned Life 25,937 25,476 1.8 % 24,998 3.8 %
Insurance
Other Assets 74,392 58,741 26.6 % 55,371 34.4 %
TOTAL ASSETS $ 3,870,851 $ 3,875,816 (0.1 )% $ 3,845,107 0.7 %
LIABILITIES AND
STOCKHOLDERS'
EQUITY
Liabilities:
Deposits:
Noninterest-Bearing $ 547,737 $ 536,944 2.0 % $ 683,846 (19.9 )%
Interest-Bearing 2,740,186 2,533,136 8.2 % 2,277,714 20.3 %
Total Deposits 3,287,923 3,070,080 7.1 % 2,961,560 11.0 %
Accrued Interest 31,859 18,539 71.8 % 16,583 92.1 %
Payable
Bank Acceptances 1,916 4,295 (55.4 )% 6,717 (71.5 )%
Outstanding
Federal Home Loan 210,952 422,196 (50.0 )% 496,433 (57.5 )%
Bank Advances
Other Borrowings 2,532 787 221.7 % 3,674 (31.1 )%
Junior Subordinated 82,406 82,406 -- 82,406 --
Debentures
Accrued Expenses
and Other 14,137 13,598 4.0 % 16,229 (12.9 )%
Liabilities
Total Liabilities 3,631,725 3,611,901 0.5 % 3,583,602 1.3 %
Stockholders' 239,126 263,915 (9.4 )% 261,505 (8.6 )%
Equity
TOTAL LIABILITIES
AND STOCKHOLDERS' $ 3,870,851 $ 3,875,816 (0.1 )% $ 3,845,107 0.7 %
EQUITY
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS(UNAUDITED)
(Dollars in Thousands, Except Per Share Data)
Three Months Ended Six Months Ended
June 30, March 31, % June 30, % June 30, June 30, %
2009 2009 Change 2008 Change 2009 2008 Change
(Restated)
INTEREST AND
DIVIDEND INCOME:
Interest and Fees on $ 44,718 $ 45,085 (0.8 )% $ 55,905 (20.0 )% $ 89,803 $ 116,503 (22.9 )%
Loans
Taxable Interest on
Investment 1,381 1,352 2.1 % 2,579 (46.5 )% 2,733 5,695 (52.0 )%
Securities
Tax-Exempt Interest
on Investment 621 643 (3.4 )% 662 (6.2 )% 1,264 1,421 (11.0 )%
Securities
Dividends on Federal -- -- -- 310 (100.0 )% -- 548 (100.0 )%
Home Loan Bank Stock
Dividends on Federal 153 153 -- 176 (13.1 )% 306 352 (13.1 )%
Reserve Bank Stock
Interest on Federal
Funds Sold and
Securities Purchased 112 82 36.6 % 31 261.3 % 194 114 70.2 %
Under Resale
Agreements
Interest on Term 695 700 (0.7 )% -- -- 1,395 -- --
Federal Funds Sold
Total Interest and 47,680 48,015 (0.7 )% 59,663 (20.1 )% 95,695 124,633 (23.2 )%
Dividend Income
INTEREST EXPENSE:
Interest on Deposits 22,686 22,785 (0.4 )% 20,487 10.7 % 45,471 45,334 0.3 %
Interest on Federal
Home Loan Bank 1,010 1,112 (9.2 )% 3,929 (74.3 )% 2,122 8,082 (73.7 )%
Advances
Interest on Other 2 -- -- 15 (86.7 )% 2 339 (99.4 )%
Borrowings
Interest on Junior
Subordinated 846 988 (14.4 )% 1,164 (27.3 )% 1,834 2,613 (29.8 )%
Debentures
Total Interest 24,544 24,885 (1.4 )% 25,595 (4.1 )% 49,429 56,368 (12.3 )%
Expense
NET INTEREST INCOME
BEFORE PROVISION FOR 23,136 23,130 -- 34,068 (32.1 )% 46,266 68,265 (32.2 )%
CREDIT LOSSES
Provision for Credit 23,934 45,953 (47.9 )% 19,229 24.5 % 69,887 37,050 88.6 %
Losses
NET INTEREST INCOME
(LOSS) AFTER (798 ) (22,823 ) (96.5 )% 14,839 (105.4 )% (23,621 ) 31,215 (175.7 )%
PROVISION FOR CREDIT
LOSSES
NON-INTEREST INCOME:
Service Charges on 4,442 4,315 2.9 % 4,539 (2.1 )% 8,757 9,256 (5.4 )%
Deposit Accounts
Insurance 1,185 1,182 0.3 % 1,384 (14.4 )% 2,367 2,699 (12.3 )%
Commissions
Remittance Fees 545 523 4.2 % 539 1.1 % 1,068 1,044 2.3 %
Trade Finance Fees 499 506 (1.4 )% 825 (39.5 )% 1,005 1,690 (40.5 )%
Other Service 467 483 (3.3 )% 703 (33.6 )% 950 1,419 (33.1 )%
Charges and Fees
Bank-Owned Life 227 234 (3.0 )% 234 (3.0 )% 461 474 (2.7 )%
Insurance Income
Gain on Sales of
Investment 1 1,276 (99.9 )% -- -- 1,277 618 106.6 %
Securities
Loss on Sales of
Investment -- (109 ) (100.0 )% -- -- (109 ) -- --
Securities
Net Gain on Sales of -- 2 (100.0 )% 552 (100.0 )% 2 765 (99.7 )%
Loans
Other-Than-Temporary
Impairment Loss on (909 ) (98 ) 827.6 % -- -- (1,007 ) -- --
Securities
Other Operating 214 66 224.2 % 876 (75.6 )% 280 1,452 (80.7 )%
Income
Total Non-Interest 6,671 8,380 (20.4 )% 9,652 (30.9 )% 15,051 19,417 (22.5 )%
Income
NON-INTEREST
EXPENSE:
Salaries and 8,508 7,503 13.4 % 11,301 (24.7 )% 16,011 22,581 (29.1 )%
Employee Benefits
Occupancy and 2,788 2,884 (3.3 )% 2,792 (0.1 )% 5,672 5,574 1.8 %
Equipment
Deposit Insurance
Premiums and 3,929 1,490 163.7 % 758 418.3 % 5,419 1,318 311.2 %
Regulatory
Assessments
Data Processing 1,547 1,536 0.7 % 1,698 (8.9 )% 3,083 3,232 (4.6 )%
Other Real Estate 1,502 143 950.3 % -- -- 1,645 139 1,083.5 %
Owned Expense
Professional Fees 890 616 44.5 % 995 (10.6 )% 1,506 1,980 (23.9 )%
Loan-Related Expense 1,217 181 572.4 % 240 407.1 % 1,398 399 250.4 %
Advertising and 624 569 9.7 % 888 (29.7 )% 1,193 1,700 (29.8 )%
Promotion
Supplies and 599 570 5.1 % 623 (3.9 )% 1,169 1,327 (11.9 )%
Communications
Amortization of
Other Intangible 406 429 (5.4 )% 502 (19.1 )% 835 1,026 (18.6 )%
Assets
Other Operating 2,686 2,331 15.2 % 2,253 19.2 % 5,017 4,362 15.0 %
Expenses
Impairment Loss on -- -- -- 107,393 (100.0 )% -- 107,393 (100.0 )%
Goodwill
Total Non-Interest 24,696 18,252 35.3 % 129,443 (80.9 )% 42,948 151,031 (71.6 )%
Expense
LOSS BEFORE
PROVISION (BENEFIT) (18,823 ) (32,695 ) (42.4 )% (104,952 ) (82.1 )% (51,518 ) (100,399 ) (48.7 )%
FOR INCOME TAXES
Provision (Benefit) (9,288 ) (15,499 ) (40.1 )% 595 (1,661.0 )% (24,787 ) 2,227 (1,213.0 )%
for Income Taxes
NET LOSS $ (9,535 ) $ (17,196 ) (44.6 )% $ (105,547 ) (91.0 )% $ (26,731 ) $ (102,626 ) (74.0 )%
LOSS PER SHARE:
Basic $ (0.21 ) $ (0.37 ) (43.2 )% $ (2.30 ) (90.9 )% $ (0.58 ) $ (2.24 ) (74.1 )%
Diluted $ (0.21 ) $ (0.37 ) (43.2 )% $ (2.30 ) (90.9 )% $ (0.58 ) $ (2.24 ) (74.1 )%
WEIGHTED-AVERAGE
SHARES OUTSTANDING:
Basic 45,924,767 45,891,043 45,881,549 45,907,998 45,861,963
Diluted 45,924,767 45,891,043 45,881,549 45,907,998 45,861,963
SHARES OUTSTANDING 46,130,967 45,940,967 45,900,549 46,130,967 45,900,549
AT PERIOD-END
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL DATA(UNAUDITED)
(Dollars in Thousands)
Three Months Ended Six Months Ended
June 30, March 31, % June 30, % June 30, June 30, %
2009 2009 Change 2008 Change 2009 2008 Change
(Restated)
AVERAGE
BALANCES:
Average Gross
Loans, Net of $ 3,282,152 $ 3,349,085 (2.0 )% $ 3,317,061 (1.1 )% $ 3,315,434 $ 3,310,101 0.2 %
Deferred Loan Fees
Average
Investment 179,129 182,284 (1.7 )% 296,790 (39.6 )% 180,698 319,457 (43.4 )%
Securities
Average
Interest-Earning 3,786,788 3,806,186 (0.5 )% 3,657,676 3.5 % 3,796,434 3,673,663 3.3 %
Assets
Average
Total 3,900,158 3,946,727 (1.2 )% 3,920,796 (0.5 )% 3,924,155 3,944,199 (0.5 )%
Assets
Average 3,223,309 3,202,032 0.7 % 2,882,506 11.8 % 3,212,728 2,938,910 9.3 %
Deposits
Average 386,477 440,053 (12.2 )% 621,239 (37.8 )% 413,117 587,189 (29.6 )%
Borrowings
Average
Interest-Bearing 3,083,774 3,115,332 (1.0 )% 2,851,021 8.2 % 3,099,465 2,874,115 7.8 %
Liabilities
Average
Stockholders' 243,207 263,553 (7.7 )% 377,096 (35.5 )% 254,166 378,030 (32.8 )%
Equity
Average Tangible 238,850 258,775 (7.7 )% 264,710 (9.8 )% 249,600 264,943 (5.8 )%
Equity
PERFORMANCE
RATIOS:
(Annualized)
Return on Average (0.98 )% (1.77 )% (10.83 )% (1.37 )% (5.23 )%
Assets
Return on Average
Stockholders' (15.73 )% (26.46 )% (112.57 )% (21.21 )% (54.59 )%
Equity
Return on Average (16.01 )% (26.95 )% (160.37 )% (21.60 )% (77.90 )%
Tangible Equity
Efficiency Ratio 82.85 % 57.92 % 296.07 % 70.04 % 172.25 %
Net Interest 1.90 % 1.91 % 2.99 % 1.90 % 2.92 %
Spread (1)
Net Interest 2.49 % 2.50 % 3.79 % 2.49 % 3.78 %
Margin (1)
ALLOWANCE FOR
LOAN LOSSES:
Balance at
Beginning of $ 104,943 $ 70,986 47.8 % $ 52,986 98.1 % $ 70,986 $ 43,611 62.8 %
Period
Provision Charged
to Operating 23,922 45,770 (47.7 )% 18,211 31.4 % 69,692 34,883 99.8 %
Expense
Charge-Offs, Net (23,597 ) (11,813 ) 99.8 % (8,220 ) 187.1 % (35,410 ) (15,517 ) 128.2 %
of Recoveries
Balance at End $ 105,268 $ 104,943 0.3 % $ 62,977 67.2 % $ 105,268 $ 62,977 67.2 %
of Period
Allowance for Loan
Losses to Total 3.33 % 3.16 % 1.88 % 3.33 % 1.88 %
Gross Loans
Allowance for Loan
Losses to Total 62.92 % 67.13 % 56.14 % 67.10 % 56.14 %
Non-Performing
Loans
ALLOWANCE FOR
OFF-BALANCE SHEET
ITEMS:
Balance at
Beginning of $ 4,279 $ 4,096 4.5 % $ 2,914 46.8 % $ 4,096 $ 1,765 132.1 %
Period
Provision Charged
to Operating 12 183 (93.4 )% 1,018 (109.2 )% 195 2,167 (91.0 )%
Expense
Balance at End $ 4,291 $ 4,279 0.3 % $ 3,932 9.1 % $ 4,291 $ 3,932 9.1 %
of Period
(1)Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate.
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL DATA(UNAUDITED) (Continued)
(Dollars in Thousands)
June 30, December 31, % June 30, %
2009 2008 Change 2008 Change
NON-PERFORMING
ASSETS:
Non-Accrual $ 167,255 $ 120,823 38.4 % $ 112,024 49.3 %
Loans
Loans 90 Days or More
Past Due and Still 41 1,075 (96.2 )% 158 (74.1 )%
Accruing
Total
Non-Performing 167,296 121,898 37.2 % 112,182 49.1 %
Loans
Other Real Estate 34,018 823 4,033.4 % -- --
Owned, Net
Total
Non-Performing $ 201,314 $ 122,721 64.0 % $ 112,182 79.5 %
Assets
Total Non-Performing
Loans/Total Gross 5.30 % 3.62 % 3.34 %
Loans
Total
Non-Performing 5.20 % 3.17 % 2.92 %
Assets/Total Assets
Total Non-Performing
Assets/Allowance for 191.2 % 116.9 % 178.1 %
Loan Losses
DELINQUENT $ 178,663 $ 128,469 39.1 % $ 138,373 29.1 %
LOANS
Delinquent
Loans/Total Gross 5.66 % 3.82 % 4.12 %
Loans
LOAN
PORTFOLIO:
Real Estate $ 1,137,395 $ 1,180,114 (3.6 )% $ 1,158,480 (1.8 )%
Loans
Commercial and 1,945,816 2,099,732 (7.3 )% 2,108,506 (7.7 )%
Industrial Loans
Consumer 76,098 83,525 (8.9 )% 88,062 (13.6 )%
Loans
Total Gross 3,159,309 3,363,371 (6.1 )% 3,355,048 (5.8 )%
Loans
Deferred (1,362 ) (1,260 ) 8.1 % (2,169 ) (37.2 )%
Loan Fees
Gross Loans, Net of 3,157,947 3,362,111 (6.1 )% 3,352,879 (5.8 )%
Deferred Loan Fees
Allowance for Loan (105,268 ) (70,986 ) 48.3 % (62,977 ) 67.2 %
Losses
Loans Receivable, $ 3,052,679 $ 3,291,125 (7.2 )% $ 3,289,902 (7.2 )%
Net
LOAN MIX:
Real Estate 36.0 % 35.1 % 34.5 %
Loans
Commercial and 61.6 % 62.4 % 62.8 %
Industrial Loans
Consumer 2.4 % 2.5 % 2.7 %
Loans
Total Gross Loans 100.0 % 100.0 % 100.0 %
DEPOSIT
PORTFOLIO:
Demand - $ 547,737 $ 536,944 2.0 % $ 683,846 (19.9 )%
Noninterest-Bearing
Savings 88,477 81,869 8.1 % 93,747 (5.6 )%
Money Market Checking 424,760 370,401 14.7 % 728,601 (41.7 )%
and NOW Accounts
Time Deposits of 1,284,491 849,800 51.2 % 1,050,942 22.2 %
$100,000 or More
Other Time 942,458 1,231,066 (23.4 )% 404,424 133.0 %
Deposits
Total $ 3,287,923 $ 3,070,080 7.1 % $ 2,961,560 11.0 %
Deposits
DEPOSIT
MIX:
Demand - 16.7 % 17.5 % 23.1 %
Noninterest-Bearing
Savings 2.7 % 2.7 % 3.2 %
Money Market Checking 12.9 % 12.1 % 24.6 %
and NOW Accounts
Time Deposits of 39.1 % 27.7 % 35.5 %
$100,000 or More
Other Time 28.6 % 40.0 % 13.6 %
Deposits
Total 100.0 % 100.0 % 100.0 %
Deposits
CAPITAL RATIOS
(Bank Only):
Total 10.70 % 10.71 % 10.64 %
Risk-Based
Tier 1 9.42 % 9.44 % 9.39 %
Risk-Based
Tier 1 8.01 % 8.85 % 8.60 %
Leverage
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
AVERAGE BALANCES, AVERAGE YIELDS EARNED AND AVERAGE RATES PAID (UNAUDITED)
(Dollars in
Thousands)
Three Months Ended Six Months Ended
June 30, 2009 March 31, 2009 June 30, 2008 June 30, 2009 June 30, 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 $ 914,802 $ 13,041 5.72 % $ 914,632 $ 12,937 5.74 % $ 804,745 $ 13,810 6.90 % $ 914,717 $ 25,978 5.73 % $ 797,548 $ 28,290 7.13 %
Property
Construction 178,456 1,594 3.58 % 180,026 1,547 3.49 % 208,074 2,649 5.12 % 179,237 3,141 3.53 % 212,842 5,542 5.24 %
Residential 86,913 1,119 5.16 % 90,490 1,163 5.21 % 89,949 1,205 5.39 % 88,692 2,282 5.19 % 89,730 2,375 5.32 %
Property
Total Real 1,180,171 15,754 5.35 % 1,185,148 15,647 5.35 % 1,102,768 17,664 6.44 % 1,182,646 31,401 5.35 % 1,100,120 36,207 6.62 %
Estate Loans
Commercial and 2,025,414 27,774 5.50 % 2,083,951 28,237 5.50 % 2,127,882 36,236 6.85 % 2,054,521 56,011 5.50 % 2,122,691 76,288 7.23 %
Industrial Loans
Consumer Loans 77,989 1,108 5.70 % 81,244 1,153 5.76 % 88,491 1,596 7.25 % 79,608 2,261 5.73 % 89,385 3,294 7.41 %
Total Gross 3,283,574 44,636 5.45 % 3,350,343 45,037 5.45 % 3,319,141 55,496 6.72 % 3,316,775 89,673 5.45 % 3,312,196 115,789 7.03 %
Loans
Prepayment -- 82 -- -- 48 -- -- 409 -- -- 130 -- -- 714 --
Penalty Income
Unearned Income
on Loans, Net of (1,422 ) -- -- (1,258 ) -- -- (2,080 ) -- -- (1,341 ) -- -- (2,095 ) -- --
Costs
Gross Loans, Net 3,282,152 44,718 5.46 % 3,349,085 45,085 5.46 % 3,317,061 55,905 6.78 % 3,315,434 89,803 5.46 % 3,310,101 116,503 7.08 %
Investment
Securities:
Municipal Bonds 59,222 956 6.46 % 58,886 989 6.72 % 63,177 1,018 6.45 % 59,055 1,945 6.59 % 67,528 2,186 6.47 %
(1)
U.S. Government
Agency 13,177 144 4.37 % 9,578 96 4.01 % 84,088 884 4.21 % 11,387 240 4.22 % 96,974 2,129 4.39 %
Securities
Mortgage-Backed 74,939 880 4.70 % 75,716 895 4.73 % 91,488 1,076 4.70 % 75,326 1,775 4.71 % 94,288 2,252 4.78 %
Securities
Collateralized
Mortgage 20,713 215 4.15 % 33,631 348 4.14 % 46,411 487 4.20 % 27,136 563 4.15 % 48,172 1,021 4.24 %
Obligations
Corporate Bonds 233 22 37.77 % 159 (22 ) -55.35 % 7,779 89 4.58 % 196 -- -- 8,644 198 4.58 %
Other Securities 10,845 109 4.02 % 4,314 33 3.06 % 3,847 42 4.37 % 7,598 142 3.74 % 3,851 94 4.88 %
Total Investment 179,129 2,326 5.19 % 182,284 2,339 5.13 % 296,790 3,596 4.85 % 180,698 4,665 5.16 % 319,457 7,880 4.93 %
Securities(1)
Other
Interest-Earning
Assets:
Equity 41,532 153 1.47 % 41,727 153 1.47 % 38,031 486 5.11 % 41,629 306 1.47 % 35,760 900 5.03 %
Securities
Federal Funds
Sold and
Securities
Purchased
Under Resale 135,362 112 0.33 % 94,585 82 0.35 % 5,621 31 2.21 % 115,086 194 0.34 % 8,258 114 2.76 %
Agreements
Term Federal 147,692 695 1.88 % 138,344 700 2.02 % -- -- -- 143,044 1,395 1.95 % -- -- --
Funds Sold
Interest-Earning 921 11 4.78 % 161 2 4.97 % 173 1 2.31 % 543 13 4.79 % 87 1 2.30 %
Deposits
Total Other
Interest-Earning 325,507 971 1.19 % 274,817 937 1.36 % 43,825 518 4.75 % 300,302 1,908 1.27 % 44,105 1,015 4.60 %
Assets
TOTAL
INTEREST-EARNING $ 3,786,788 $ 48,015 5.09 % $ 3,806,186 $ 48,361 5.15 % $ 3,657,676 $ 60,019 6.60 % $ 3,796,434 $ 96,376 5.12 % $ 3,673,663 $ 125,398 6.86 %
ASSETS(1)
INTEREST-BEARING
LIABILITIES
Interest-Bearing
Deposits:
Savings $ 84,588 $ 527 2.50 % $ 82,029 $ 505 2.50 % $ 91,803 $ 527 2.31 % $ 83,315 $ 1,032 2.50 % $ 92,135 $ 1,054 2.30 %
Money Market
Checking and NOW 319,319 1,426 1.79 % 343,354 1,854 2.19 % 718,257 5,707 3.20 % 331,270 3,280 2.00 % 637,875 10,367 3.27 %
Accounts
Time Deposits of 1,313,683 12,108 3.70 % 1,078,650 10,322 3.88 % 1,098,990 11,040 4.04 % 1,196,816 22,430 3.78 % 1,226,728 26,727 4.38 %
$100,000 or More
Other Time 979,707 8,625 3.53 % 1,171,246 10,104 3.50 % 320,732 3,213 4.03 % 1,074,947 18,729 3.51 % 330,188 7,186 4.38 %
Deposits
Total
Interest-Bearing 2,697,297 22,686 3.37 % 2,675,279 22,785 3.45 % 2,229,782 20,487 3.70 % 2,686,348 45,471 3.41 % 2,286,926 45,334 3.99 %
Deposits
Borrowings:
FHLB Advances 302,220 1,010 1.34 % 356,190 1,112 1.27 % 536,412 3,929 2.95 % 329,056 2,122 1.30 % 485,157 8,082 3.35 %
Other Borrowings 1,851 2 0.43 % 1,457 -- -- 2,421 15 2.49 % 1,655 2 0.24 % 19,626 339 3.47 %
Junior
Subordinated 82,406 846 4.12 % 82,406 988 4.86 % 82,406 1,164 5.68 % 82,406 1,834 4.49 % 82,406 2,613 6.38 %
Debentures
Total Borrowings 386,477 1,858 1.93 % 440,053 2,100 1.94 % 621,239 5,108 3.31 % 413,117 3,958 1.93 % 587,189 11,034 3.78 %
TOTAL
INTEREST-BEARING $ 3,083,774 $ 24,544 3.19 % $ 3,115,332 $ 24,885 3.24 % $ 2,851,021 $ 25,595 3.61 % $ 3,099,465 $ 49,429 3.22 % $ 2,874,115 $ 56,368 3.94 %
LIABILITIES
NET INTEREST $ 23,471 $ 23,476 $ 34,424 $ 46,947 $ 69,030
INCOME(1)
NET INTEREST 1.90 % 1.91 % 2.99 % 1.90 % 2.92 %
SPREAD(1)
NET INTEREST 2.49 % 2.50 % 3.79 % 2.49 % 3.78 %
MARGIN(1)
(1)Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate.
Source: Hanmi Financial Corporation
Released August 6, 2009