Hanmi Financial Earns $8.0 Million, or $0.05 per Share in 2Q11; Continues Profitability for Third Consecutive Quarter
LOS ANGELES, July 21, 2011 (GLOBE NEWSWIRE) -- Hanmi Financial Corporation (Nasdaq:HAFC), the holding company for Hanmi Bank, today reported it earned $8.0 million, or $0.05 per diluted share, for the second quarter of 2011. These results include a $2.2 million non-recurring expense related to its unconsummated capital raising efforts which involve Woori Finance Holdings, Ltd. and a planned equity offering that it declined to complete. Hanmi's performance marks the third consecutive profitable quarter following the $10.4 million, or $0.07 per diluted share, earned in the first quarter of 2011 and $5.3 million, or $0.04 per diluted share, earned in the fourth quarter of 2010. In the first six months of 2011, Hanmi earned $18.4 million, or $0.12 per diluted share, compared to a loss of $78.7 million, or $1.54 per share in the first six months of 2010.
"Our second quarter further established the recovery of our core franchise with continued profitability and solid investor interest in the equity offering we previously initiated," said Jay S. Yoo, President and Chief Executive Officer. "Although the offering was fully subscribed, with excess demand, our Board of Directors was not satisfied with the pricing offered and did not believe it to be in the best interest of our shareholders to complete the offering at that time. Our capital ratios, including the Bank's tangible equity ratio, exceed all regulatory requirements, and our continuing profitability and the gradual improvement of our asset quality give us the flexibility to wait for more favorable market conditions."
Second Quarter and First Half 2011 Highlights (at or for the period ended June 30, 2011)
Hanmi's second quarter net income of $8.0 million, or $0.05 per diluted share, was the third consecutive quarterly profit and brought earnings for the first half of 2011 to $18.4 million, or $0.12 per diluted share. These results include a one-time $2.2 million expense related to unconsummated capital raising efforts. Non-performing assets (NPAs) declined 40% year-over-year to $159.8 million, or 5.90% of total assets, from $266.2 million, or 9.13% of total assets in the second quarter of 2010. NPAs increased by $5.5 million from the immediately preceding quarter. The ratio of non-performing loans (NPLs) current on payments to total NPLs was 48.6% compared to 35.2% at March 31, 2011, and 23.9% at June 30, 2010. Delinquent loans in accrual status, which are 30 to 89 days past due, were $15.6 million, down from $20.7 million in the preceding quarter and down from $21.7 million a year ago, reflecting the positive trend of lesser loans migrating to delinquent status. There was no provision for credit losses recorded during the second quarter and first-half of 2011. Improving credit quality of the loan portfolio and reductions in net charge-offs allowed for the reduction of the allowance for loan losses this quarter. Total net charge-offs declined to $16.5 million in the second quarter of 2011 from $21.6 million in the first quarter of 2011, and down from $38.9 million in the second quarter of 2010. For the first half of 2011, net charge-offs totaled $38.1 million, down from $65.3 million in the first six months of 2010. The ratio of the loan loss allowance to gross loans stood at 5.16%, compared to 7.05% a year ago. Total assets were $2.71 billion, a decline of $168.8 million, or 5.9%, on a sequential quarter basis. Due to the success of recent marketing initiatives together with a reinvigorated loan production, core deposits, which are total deposits less time deposits greater than $100,000, increased to $1.52 billion, up $66.3 million, or 4.6%, on a sequential quarter basis. Core deposits as of June 30, 2011, increased by $61.4 million when compared to the prior year period. Total deposits decreased slightly by $32.6 million, or 1.3%, to $2.40 billion during the second quarter from $2.43 billion for the preceding quarter. Net interest margin (NIM) was 3.65% in the second quarter of 2011, down 1 basis point from 3.66% in the preceding quarter and up 9 basis points from 3.56% in the second quarter of 2010. Year-to-date NIM was up 4 basis points to 3.66% from 3.62% in the first six months of 2010. The Bank's tangible equity to tangible assets and total risk-based capital to assets were at 10.33% and 14.02%, respectively, at June 30, 2011.
Capital Management
At June 30, 2011, the Bank's total risk-based capital ratio was 14.02% compared to 13.00% at March 31, 2011, and 7.35% at June 30, 2010. Tier 1 risk-based capital ratio at June 30, 2011, was 12.72% compared to 11.70% at March 31, 2011, and 6.02% at June 30, 2010. Tier 1 leverage ratio at June 30, 2011, was 9.70% compared to 9.08% at March 31, 2011, and 4.99% at June 30, 2010. The Bank's tangible common equity to tangible assets ratio at June 30, 2011, was 10.33% compared to 9.10% at March 31, 2011, and 5.20% at June 30, 2010. All of the Bank's capital ratios were above the minimum regulatory standards for being considered to be "well-capitalized" for regulatory purposes. The Bank's tangible common equity to tangible assets ratio at June 30, 2011, now exceeds the 9.5% requirement set forth in the Final Order issued to Hanmi Bank by the California Department of Financial Institutions.
Asset Quality
NPLs increased to $158.5 million at June 30, 2011, up 4.5% from $151.7 million at March 31, 2011, and are down 34.5% from $242.1 million at June 30, 2010. Of the total NPLs, non-performers current on payments were $76.9 million, or 48.6% compared to $53.4 million or 35.2% at March 31, 2011, and $57.8 million or 23.9% at June 30, 2010. In addition, $22.6 million, or 14.3% of the total NPLs, were recorded at the lower of cost or fair value as they were classified as held for sale. Out of the total NPLs, $13.4 million is guaranteed by the Small Business Administration (SBA) and the State of California.
The following table shows NPLs by loan category:
Total Non-Performing Loans
(Dollars in Thousands) 6/30/2011 % of
Total NPL 3/31/2011 % of
Total NPL 12/31/2010 % of
Total NPL 6/30/2010 % of
Total NPL
Real Estate Loans:
Commercial Property
Retail 14,335 9.0% 8,669 5.7% 10,998 6.5% 24,459 10.1%
Land 25,184 15.9% 22,523 14.8% 26,808 15.9% 35,806 14.8%
Other 3,672 2.3% 5,108 3.4% 10,131 6.0% 17,601 7.3%
Construction 12,298 7.8% 23,421 15.4% 19,097 11.3% 9,823 4.1%
Residential Property 1,726 1.1% 2,014 1.3% 1,926 1.1% 2,612 1.1%
Commercial & Industrial Loans:
Commercial Term
Unsecured 8,389 5.3% 10,435 6.9% 17,065 10.1% 22,283 9.2%
Secured by Real Estate 54,754 34.5% 45,763 30.2% 45,946 27.2% 93,826 38.7%
Commercial Lines of Credit 2,905 1.8% 2,169 1.4% 2,798 1.7% 4,038 1.7%
SBA 31,163 19.7% 30,539 20.1% 33,085 19.6% 30,601 12.6%
International Loans 3,243 2.0% 123 0.1% 127 0.1% 566 0.2%
Consumer Loans 824 0.5% 966 0.6% 1,047 0.6% 518 0.2%
TOTAL NPL (1) 158,493 100.0% 151,730 100.0% 169,028 100.0% 242,133 100.0%
(1) Includes loans held for sale of $22.6 million, $26.9 million, $26.6 million and $23.7 million as of June 30, 2011, March 31, 2011, December 31, 2010 and June 30, 2010, respectively.
"While NPLs did not decline as anticipated in the second quarter, our top priority is to work down NPLs through proactive note sales and to move delinquent loans through the collection process," said J.H. Son, Executive Vice President and Chief Credit Officer. "The market conditions for note sales were temporarily softened in the second quarter. Consequently, we did not meet our target NPL sales in the quarter. With expectations that the NPL market will improve in the coming quarters, we plan to pursue a more intense note sales strategy."
Sale of OREO continued during the second quarter of 2011, with five properties valued at $2.4 million sold for net proceeds of $1.8 million, resulting in a $462,000 net loss. In the first half of 2011, Hanmi sold eight properties valued at $4.4 million for net proceeds of $3.6 million resulting in a net loss of $681,000. OREO totaled $1.3 million at June 30, 2011, down from $2.6 million at March 31, 2011, and down from $24.1 million at June 30, 2010.
"The number and severity of loans that are just beginning to show stress, specifically those less than 90 days delinquent, continues to decline," Son said. Delinquent loans on accrual status, which are not included in total NPLs, decreased to $15.6 million, or 0.74% of gross loans at June 30, 2011, down from $20.7 million, or 0.95% of gross loans at March 31, 2011.
The following table shows delinquent loans on accrual status by loan category:
Delinquent Loans on Accrual Status
(Dollars in Thousands) 6/30/2011 % of
Total 3/31/2011 % of
Total 12/31/2010 % of
Total 6/30/2010 % of
Total
Real Estate Loans:
Commercial Property
Retail 295 1.4%
Land 1,000 4.8%
Other 4,082 26.1% 2,247 10.8% 3,020 13.9%
Construction 4,894 22.8%
Residential Property 2,778 17.8% 2,069 10.0% 522 2.4% 1,708 7.9%
Commercial & Industrial Loans:
Commercial Term
Unsecured 2,079 13.3% 3,142 15.2% 3,620 16.9% 5,373 24.8%
Secured by Real Estate 4,625 29.6% 5,026 24.3% 7,251 33.8% 8,692 40.1%
Commercial Lines of Credit 1,457 7.0% 160 0.7% 50 0.2%
SBA 1,412 9.0% 5,295 25.6% 4,381 20.4% 2,409 11.1%
International Loans 99 0.6%
Consumer Loans 569 3.6% 180 0.9% 629 2.9% 450 2.1%
TOTAL (1) 15,644 100.0% 20,711 100.0% 21,457 100.0% 21,702 100.0%
(1) Includes loans held for sale of $774,000 as of March 31, 2011.
The following table shows Hanmi's credit quality trends since the second quarter of 2007:
Credit Quality Trends (Dollars in Thousands)
Provision for
Credit Losses Net Charge-offs Allowance for Loan
Losses to Gross
Loans (%) 30-89 Days Past
Due to Gross
Loans(%) Non-performing
Assets to Total
Assets (%)
6/30/2011 16,501 5.16 0.74 5.90
3/31/2011 21,555 5.79 0.95 5.36
12/31/2010 5,000 35,249 6.44 0.95 5.95
9/30/2010 22,000 21,304 7.35 1.00 7.25
6/30/2010 37,500 38,946 7.06 0.87 9.13
3/31/2010 57,996 26,393 6.63 2.56 9.43
12/31/2009 77,000 57,312 5.14 1.46 7.76
9/30/2009 49,500 29,875 4.19 0.96 5.83
6/30/2009 23,934 23,597 3.33 1.51 5.20
3/31/2009 45,953 11,813 3.16 1.45 4.04
12/31/2008 25,450 18,622 2.11 1.23 3.14
9/30/2008 13,176 11,831 1.91 0.68 3.04
6/30/2008 19,229 8,220 1.88 0.94 2.91
3/31/2008 17,821 7,297 1.60 0.73 2.25
12/31/2007 20,704 11,628 1.33 0.61 1.37
9/30/2007 8,464 6,084 1.07 0.52 1.12
6/30/2007 3,023 2,518 1.05 0.52 0.61
One of the factors that have contributed to the improvement of asset quality is the on-going program for loan sales. During the second quarter of 2011, Hanmi sold 21 NPLs valued at $17.0 million for net proceeds of $17.6 million. In the first half of 2011, it sold 39 NPLs valued at $44.4 million with net proceeds of $45.5 million. At June 30, 2011, loans held for sale (LHFS) totaled $44.1 million, a reduction of $3.5 million, or 7.4%, from $47.6 million at March 31, 2011. For the first half of 2011, LHFS increased by $7.2 million, or 30.1%, from $36.6 million to $44.1 million, reflecting efforts to improve asset quality through the disposition of problem assets.
The following table presents the details of loans held for sale:
Loans Held for Sale
(Dollars in Thousands) 6/30/2011 3/31/2011 $ Change % Change 12/31/2010 $ Change % Change 6/30/2010 $ Change % Change
Real Estate Loans:
Commercial Property
Retail 295 (295) 8,917 (8,917) -100.0%
Land 1,082 (1,082) -100%
Other 708 3,217 (2,509) -78.0% 1,177 (469) -39.8% 5,936 (5,228) -88.1%
Construction 1,406 (1,406) -100.0%
Residential Property 266 266 266
Commercial & Industrial Loans:
Commercial Term
Unsecured 65 (65)
Secured by Real Estate 12,857 24,979 (12,122) -48.5% 14,893 (2,036) -13.7% 8,810 4,047 45.9%
SBA 30,274 19,093 11,181 58.6% 18,062 12,212 67.6% 6,881 23,393 340.0%
TOTAL 44,105 47,649 (3,544) -7.4% 36,620 7,219 30.1% 30,544 13,561 56.0%
At June 30, 2011, the allowance for loan losses was $109.0 million or 5.16% of gross loans. The ratio of loan loss reserves to loans peaked in September of 2010 at 7.35%, and has steadily declined over the past few quarters as credit metrics improved. The ratio of loan loss allowance to non-performing loans at June 30, 2011, was down to 69% from 73% at June 30, 2010. Second quarter charge-offs, net of recoveries, were $16.5 million, compared to $21.6 million in the first quarter of 2011 and $38.9 million in the second quarter of 2010.
Hanmi did not record a provision for credit losses due to the overall improvement in credit quality and existing high levels of reserves. Of the total $109.0 million of reserves, $250,000 was allocated to cover off-balance sheet items bringing the off-balance sheet reserve total to $2.4 million. The Company recorded a provision for credit losses of $37.5 million and $95.5 million in the second quarter and first half of 2010, respectively. With the improvement in overall credit metrics, provision expense in relations to loans has been minimal for the past two quarters. This assessment also takes into account many factors, including net loan charge-offs, non-accrual loans, specific reserves, risk-rating migration and changes in the portfolio composition and size.
Balance Sheet
Total assets decreased to $2.71 billion at the end of the second quarter of 2011, down 5.9% from $2.88 billion at March 31, 2011, and down 7.0% from $2.91 billion at June 30, 2010. The second quarter decrease in total assets was attributable to reductions in both investment securities and Federal Home Loan Bank (FHLB) borrowings. The main proceeds from the called bonds of $102.2 million in low yield callable agencies and from the sale of $95.6 million in longer duration bonds were used to pay off the $150 million of FHLB advance that came due in June 2011.
Gross loans, net of deferred loan fees, were $2.11 billion at June 30, 2011, down 2.8% from $2.17 billion at March 31, 2011, and down 15.6% from $2.50 billion at June 30, 2010. Average gross loans, net of deferred loan fees, decreased to $2.14 billion for the second quarter of 2011, down 18.2% from $2.61 billion for the second quarter of 2010, and declined 4.3% from $2.23 billion for the first quarter of 2011. The slight decline in loan balance in the second quarter of 2011 reflects continued progress in reducing the number of problem loans, partially offset by new loans originated and a lower level of charge-offs made in the quarter.
Average investment securities portfolio more than tripled to $497.1 million for the second quarter of 2011 from $158.5 million for the second quarter of 2010. However, the investment portfolio decreased $148.1 million, or 27.5%, to $391 million at June 30, 2011, from $539.2 million at March 31, 2011. The decline was the direct result of Hanmi's rate risk minimization strategy where longer-duration securities were sold and shorter-duration securities were purchased in anticipation of rising rates. The securities portfolio contains mostly high-quality short and mid-term investments that are selected to provide a relatively stable source of interest income, while maintaining sufficient liquidity. U.S. Government agency bonds, mortgage backed securities and securities collateralized by residential mortgages guaranteed by U.S. Government sponsored entities account for 90% of the securities portfolio. "To minimize interest rate risk, we will continue to invest at the short end of the yield curve," said Yoo.
Including secured off-balance sheet lines of credit, total available liquidity to Hanmi was $951 million at June 30, 2011, representing 35.1% of total assets and 39.7% of total deposits.
Average deposits decreased by 1.3% to $2.43 billion for the second quarter of 2011 compared to $2.46 billion for the preceding quarter, and decreased 7.3% from $2.62 billion for the second quarter of 2010. The reduction in average deposits was almost entirely due to the successful strategy to reduce time deposits, particularly non-retail deposits, including brokered time deposits and funds raised from rate listing services.
The improvement in the deposit mix which resulted from our new marketing campaign and renewed loan production efforts, contributed to lower interest costs. "With our new marketing campaign and proactive loan production efforts, we have gotten off to a great start in rebuilding our core deposit base. Core deposits now account for 49.9% of total deposits, up from, 44.2% a year ago, with many of our former customers now returning to bank with us," said Yoo.
Total deposits decreased by 1.3% from the preceding quarter and decreased 6.9% year-over-year. Both the quarterly and annual decline in total deposits was primarily due to reductions in time deposits over $100,000, including a $98.9 million, or 10.1% decrease for the second quarter and $238.1 million, or 21.3% decrease for the year. Total deposits were $2.40 billion at June 30, 2011, compared to $2.43 billion at March 31, 2011, and $2.58 billion at June 30, 2010. There are no brokered deposits in the deposit mix at quarter-end.
Results of Operations
Net interest income, before the provision for credit losses, totaled $25.5 million for the second quarter of 2011, and $51.6 million for the first six months of 2011, down 2.4% in the quarter and 3.8% year over year. Interest and dividend income was down 3.7% in the second quarter of 2011 while interest expense fell 8.0%. Year to date, interest and dividend income was down 10.4% and interest expense fell 27.6%.
The average yield on the loan portfolio improved 19 basis points to 5.49% in the second quarter of 2011 compared to 5.30% in the second quarter of 2010, and was down 12 basis points from 5.61% in the first quarter of 2011. The yield decline in the second quarter of 2011 compared to the preceding quarter was due to increases in interest reversals on non-accrual loans and decreases in recoveries on loans moving out of non-accrual status. The average yield on loans for the first six months of 2011 was up 21 basis points to 5.55% from 5.34% for the first six months of 2010.
The cost of average interest-bearing deposits in the second quarter of 2011 was down 9 basis points to 1.35% from 1.44% in the preceding quarter and down 37 basis points from 1.72% in the second quarter of 2010. Year-to-date, the cost of deposits was down 40 basis points to 1.40% from 1.80% for the first six months of 2010. As a result, NIM of 3.65% was almost flat in the second quarter of 2011 compared to 3.66% in the first quarter of 2011, and was up 9 basis points from 3.56% in the second quarter of 2010. For the first six months of 2011, NIM was up 4 basis points to 3.66% from 3.62% for the first six months of 2010.
Non-interest income in the second quarter of 2011 was $6.0 million, up 9.2% from $5.5 million in the first quarter of 2011, and down 9.9% from $6.7 million in the second quarter of 2010. For the first six months of 2011, non-interest income was down 15.8% to $11.5 million from $13.7 million for the first six months of 2010. The year-over-year decrease in non-interest income is due to decreases in service charges on deposit accounts and net gains on sales of loans and securities. Service charges on deposit accounts decreased to $6.4 million for the first half of 2011 compared to $7.3 million for the first half of 2010, reflecting a decrease in NSF service charges, due to better balance management by customers and regulatory reforms on these fees. For the first half of 2011, Hanmi recognized $2.9 million valuation adjustment on LHFS, the majority of which was offset by $2.5 million gains from the sales of LHFS. The net amount of $415,000 was recorded as net loss on sales of loans. For the first half of 2011, Hanmi posted a net loss on sales of investment securities of $70,000 compared to a gain of $105,000 in the first half of 2010.
Non-interest expense in the second quarter of 2011 increased to $22.9 million, up 8.7% from $21.1 million in the preceding quarter and down 7.6% from $24.8 million in the second quarter of 2010. For the first six months of 2011, non-interest expense decreased 13.8% to $43.9 million from $51.0 million in the first six months of 2010. The notable year-over-year improvements were primarily attributable to lower OREO expenses, FDIC deposit insurance assessments and other regulatory costs. These savings were partially offset by the $2.2 million in expenses associated with the unconsummated capital raising efforts.
Conference Call Information
Management will host a conference call today at 1:30 p.m. Pacific Time (4:30 p.m. ET) to discuss these results. This call will also be broadcast live via the internet. Investment professionals and all current and prospective shareholders are invited to access the live call by dialing (857) 350-1684 at 1:30 p.m. Pacific Time, 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. Shortly after the call concludes, the replay will also be available at (617) 801-6888, using access code #15398023 where it will be archived until August 11, 2011.
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 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 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: inability to continue as a going concern; inability to raise additional capital on acceptable terms or at all; 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 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 U.S. Securities and Exchange Commission ("SEC"), including, in particular Item 1A of our Form 10K for the year ended March 31, 2011, as well as current and periodic reports filed with the U.S. Securities and Exchange Commission 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.
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in Thousands)
June 30, March 31, % December 31, % June 30, %
2011 2011 Change 2010 Change 2010 Change
ASSETS
Cash and Due from Banks $ 67,166 $ 67,507 (0.5)% $ 60,983 10.1 % $ 60,034 11.9 %
Interest-Bearing Deposits in Other Banks 131,757 83,354 58.1 % 158,737 (17.0)% 170,711 (22.8)%
Federal Funds Sold — 19,500 — 30,000 — 20,000 —
Cash and Cash Equivalents 198,923 170,361 16.8 % 249,720 (20.3)% 250,745 (20.7)%
Investment Securities 391,045 539,194 (27.5)% 413,963 (5.5)% 191,094 —
Loans:
Gross Loans, Net of Deferred Loan Fees 2,112,698 2,173,415 (2.8)% 2,267,126 (6.8)% 2,503,426 (15.6)%
Allowance for Loan Losses (109,029) (125,780) (13.3)% (146,059) (25.4)% (176,667) (38.3)%
Loans Receivable, Net 2,003,669 2,047,635 (2.1)% 2,121,067 (5.5)% 2,326,759 (13.9)%
Accrued Interest Receivable 7,512 8,796 (14.6)% 8,048 (6.7)% 7,802 (3.7)%
Premises and Equipment, Net 16,869 17,165 (1.7)% 17,599 (4.1)% 17,917 (5.8)%
Other Real Estate Owned, Net 1,340 2,642 (49.3)% 4,089 (67.2)% 24,064 (94.4)%
Due from Customers on Acceptances 1,629 805 — 711 — 1,072 52.0 %
Servicing Assets 2,545 2,698 (5.7)% 2,890 (11.9)% 3,356 (24.2)%
Other Intangible Assets, Net 1,825 2,015 (9.4)% 2,233 (18.3)% 2,754 (33.7)%
Investment in FHLB and FRB Stock, at Cost 32,565 33,649 (3.2)% 34,731 (6.2)% 36,339 (10.4)%
Bank-Owned Life Insurance 27,813 27,581 0.8 % 27,350 1.7 % 26,874 3.5 %
Income Taxes Receivable 9,188 9,188 — 9,188 — 9,697 (5.2)%
Other Assets 15,912 17,937 (11.3)% 15,559 2.3 % 16,477 (3.4)%
TOTAL ASSETS $ 2,710,835 $ 2,879,666 (5.9)% $ 2,907,148 (6.8)% $ 2,914,950 (7.0)%
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest-Bearing $ 600,812 $ 576,733 4.2 % $ 546,815 9.9 % $ 574,843 4.5 %
Interest-Bearing 1,797,563 1,854,207 (3.1)% 1,919,906 (6.4)% 2,000,271 (10.1)%
Total Deposits 2,398,375 2,430,940 (1.3)% 2,466,721 (2.8)% 2,575,114 (6.9)%
Accrued Interest Payable 14,226 14,184 0.3 % 15,966 (10.9)% 14,024 1.4 %
Bank Acceptances Outstanding 1,629 805 — 711 — 1,072 52.0 %
Federal Home Loan Bank Advances 3,479 153,565 (97.7)% 153,650 (97.7)% 153,816 (97.7)%
Other Borrowings 1,034 1,386 (25.4)% 1,570 (34.1)% 3,062 (66.2)%
Junior Subordinated Debentures 82,406 82,406 — 82,406 — 82,406 —
Deferred Tax Liabilities — — — — — 1,203 —
Accrued Expenses and Other Liabilities 11,321 12,329 (8.2)% 12,868 (12.0)% 11,073 2.2 %
Total Liabilities 2,512,470 2,695,615 (6.8)% 2,733,892 (8.1)% 2,841,770 (11.6)%
Stockholders' Equity 198,365 184,051 7.8 % 173,256 14.5 % 73,180 —
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,710,835 $ 2,879,666 (5.9)% $ 2,907,148 (6.8)% $ 2,914,950 (7.0)%
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, Mar 31, % June 30, % June 30, June 30, %
2011 2011 Change 2010 Change 2011 2010 Change
INTEREST AND DIVIDEND INCOME:
Interest and Fees on Loans $ 29,249 $ 30,905 (5.4)% $ 34,486 (15.2)% $ 60,154 $ 71,181 (15.5)%
Taxable Interest on Investment Securities 3,094 2,673 15.8 % 1,359 — 5,767 2,443 —
Tax-Exempt Interest on Investment Securities 37 40 (7.5)% 77 (51.9)% 77 154 (50.0)%
Dividends on FRB and FHLB Stock 132 133 (0.8)% 123 7.3 % 265 248 6.9 %
Interest on Interest-Bearing Deposits in Other Banks 79 89 (11.2)% 99 (20.2)% 168 154 9.1 %
Interest on Federal Funds Sold 27 35 (22.9)% 27 — 62 44 40.9 %
Total Interest and Dividend Income 32,618 33,875 (3.7)% 36,171 (9.8)% 66,493 74,224 (10.4)%
INTEREST EXPENSE:
Interest on Deposits 6,192 6,735 (8.1)% 8,813 (29.7)% 12,927 18,517 (30.2)%
Interest on Junior Subordinated Debentures 711 698 1.9 % 692 2.7 % 1,409 1,361 3.5 %
Interest on Federal Home Loan Bank Advances and Other Borrowings 240 333 (27.9)% 370 (35.1)% 573 716 (20.0)%
Total Interest Expense 7,143 7,766 (8.0)% 9,875 (27.7)% 14,909 20,594 (27.6)%
NET INTEREST INCOME BEFORE PROVISION FOR CREDIT LOSSES 25,475 26,109 (2.4)% 26,296 (3.1)% 51,584 53,630 (3.8)%
Provision for Credit Losses — — — 37,500 — — 95,496 —
NET INTEREST INCOME (LOSS) AFTER PROVISION FOR CREDIT LOSSES 25,475 26,109 (2.4)% (11,204) — 51,584 (41,866) —
NON-INTEREST INCOME:
Service Charges on Deposit Accounts 3,278 3,141 4.4 % 3,602 (9.0)% 6,419 7,328 (12.4)%
Insurance Commissions 1,203 1,260 (4.5)% 1,206 (0.2)% 2,463 2,484 (0.8)%
Remittance Fees 499 462 8.0 % 523 (4.6)% 961 985 (2.4)%
Trade Finance Fees 328 297 10.4 % 412 (20.4)% 625 763 (18.1)%
Other Service Charges and Fees 368 333 10.5 % 372 (1.1)% 701 784 (10.6)%
Bank-Owned Life Insurance Income 233 230 1.3 % 235 (0.9)% 463 466 (0.6)%
Net Gain (Loss) on Sales of Loans (77) (338) (77.2)% 220 — (415) 214 —
Net Gain (Loss) on Sales of Investment Securities (70) — — — — (70) 105 —
Other Operating Income 255 123 107.3 % 106 — 378 552 (31.5)%
Total Non-Interest Income 6,017 5,508 9.2 % 6,676 (9.9)% 11,525 13,681 (15.8)%
NON-INTEREST EXPENSE:
Salaries and Employee Benefits 8,762 9,124 (4.0)% 9,011 (2.8)% 17,886 17,797 0.5 %
Occupancy and Equipment 2,650 2,565 3.3 % 2,674 (0.9)% 5,215 5,399 (3.4)%
Data Processing 1,487 1,399 6.3 % 1,487 — 2,886 2,986 (3.3)%
Deposit Insurance Premiums and Regulatory Assessments 1,377 2,070 (33.5)% 4,075 (66.2)% 3,447 6,299 (45.3)%
Professional Fees 1,138 789 44.2 % 1,022 11.4 % 1,927 2,088 (7.7)%
Other Real Estate Owned Expense 806 829 (2.8)% 1,718 (53.1)% 1,635 7,418 (78.0)%
Directors and Officers Liability Insurance 733 734 (0.1)% 716 2.4 % 1,467 1,433 2.4 %
Expenses Related to Unconsummated Capital Raises 2,220 — — — — 2,220 — —
Other Operating Expenses 3,713 3,551 4.6 % 4,062 (8.6)% 7,264 7,569 (4.0)%
Total Non-Interest Expense 22,886 21,061 8.7 % 24,765 (7.6)% 43,947 50,989 (13.8)%
INCOME (LOSS) BEFORE PROVISION (BENEFIT) FOR INCOME TAXES 8,606 10,556 (18.5)% (29,293) — 19,162 (79,174) —
Provision (Benefit) for Income Taxes 605 119 — (36) — 724 (431) —
NET INCOME (LOSS) $ 8,001 $ 10,437 (23.3)% $ (29,257) — $ 18,438 $ (78,743) —
EARNINGS (LOSS) PER SHARE:
Basic $ 0.05 $ 0.07 (28.6)% $ (0.57) — $ 0.12 $ (1.54) —
Diluted $ 0.05 $ 0.07 (28.6)% $ (0.57) — $ 0.12 $ (1.54) —
WEIGHTED-AVERAGE SHARES OUTSTANDING:
Basic 151,104,636 151,061,012 51,036,573 151,082,945 51,017,885
Diluted 151,258,390 151,287,573 51,036,573 151,257,350 51,017,885
SHARES OUTSTANDING AT PERIOD-END 151,258,390 151,258,390 51,198,390 151,258,390 51,198,390
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, %
2011 2011 Change 2010 Change 2011 2010 Change
AVERAGE BALANCES:
Average Gross Loans, Net of Deferred Loan Fees $ 2,136,976 $ 2,234,110 (4.3)% $ 2,611,178 (18.2)% $ 2,185,274 $ 2,688,012 (18.7)%
Average Investment Securities 497,052 473,113 5.1 % 158,543 — 485,148 142,034 —
Average Interest-Earning Assets 2,804,709 2,892,404 (3.0)% 2,965,975 (5.40)% 2,848,313 2,988,332 (4.7)%
Average Total Assets 2,836,967 2,906,253 (2.4)% 2,978,245 (4.7)% 2,871,419 3,031,917 (5.3)%
Average Deposits 2,427,934 2,458,836 (1.3)% 2,617,738 (7.3)% 2,443,299 2,640,224 (7.5)%
Average Borrowings 190,447 237,452 (19.8)% 240,189 (20.7)% 213,820 248,614 (14.0)%
Average Interest-Bearing Liabilities 2,025,392 2,133,097 (5.0)% 2,292,121 (11.6)% 2,078,947 2,326,367 (10.6)%
Average Stockholders' Equity 189,528 178,221 6.3 % 91,628 — 183,906 114,651 60.4 %
Average Tangible Equity 187,595 176,082 6.5 % 88,692 — 181,871 111,558 63.0 %
PER SHARE DATA:
Earnings (Loss) Per Share - Basic $ 0.05 $ 0.07 $ (0.57) $ 0.12 $ (1.54)
Earnings (Loss) Per Share - Diluted $ 0.05 $ 0.07 $ (0.57) $ 0.12 $ (1.54)
Book Value Per Share (1) $ 1.31 $ 1.22 $ 1.43 $ 1.31 $ 1.43
Tangible Book Value Per Share (2) $ 1.30 $ 1.20 $ 1.38 $ 1.30 $ 1.38
PERFORMANCE RATIOS (Annualized):
Return on Average Assets 1.13% 1.46% (3.94)% 1.29% (5.24)%
Return on Average Stockholders' Equity 16.93% 23.75% (128.07)% 20.22% (138.50)%
Return on Average Tangible Equity 17.11% 24.04% (132.31)% 20.44% (142.34)%
Efficiency Ratio 72.67% 66.61% 75.11% 69.64% 75.75%
Net Interest Spread (3) 3.26% 3.27% 3.17% 3.26% 3.22%
Net Interest Margin (3) 3.65% 3.66% 3.56% 3.66% 3.62%
ALLOWANCE FOR LOAN LOSSES:
Balance at Beginning of Period $ 125,780 $ 146,059 (13.9)% $ 177,820 (29.3)% $ 146,059 $ 144,996 0.7 %
Provision Charged to Operating Expense (250) 1,276 — 37,793 — 1,026 97,010 (98.9)%
Charge-Offs, Net of Recoveries (16,501) (21,555) (23.4)% (38,946) (57.6)% (38,056) (65,339) (41.8)%
Balance at End of Period $ 109,029 $ 125,780 (13.3)% $ 176,667 (38.3)% $ 109,029 $ 176,667 (38.3)%
Allowance for Loan Losses to Total Gross Loans 5.16% 5.79% 7.05% 5.16% 7.05%
Allowance for Loan Losses to Total Non-Performing Loans 68.79% 82.90% 72.96% 68.79% 72.96%
ALLOWANCE FOR OFF-BALANCE SHEET ITEMS:
Balance at Beginning of Period $ 2,141 $ 3,417 (37.3)% $ 2,655 (19.4)% $ 3,417 $ 3,876 (11.8)%
Provision Charged to Operating Expense 250 (1,276) — (293) — (1,026) (1,514) (32.2)%
Balance at End of Period $ 2,391 $ 2,141 11.7 % $ 2,362 1.2 % $ 2,391 $ 2,362 1.2 %
(1) Total stockholders' equity divided by common shares outstanding.
(2) Tangible equity divided by common shares outstanding. See "Non-GAAP Financial Measures."
(3) 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, March 31, % December 31, % June 30, %
2011 2011 Change 2010 Change 2010 Change
NON-PERFORMING ASSETS:
Non-Accrual Loans $ 158,493 $ 151,730 4.5 % $ 169,028 (6.2)% $ 242,133 (34.5)%
Loans 90 Days or More Past Due and Still Accruing — — — — — — —
Total Non-Performing Loans 158,493 151,730 4.5 % 169,028 (6.2)% 242,133 (34.5)%
Other Real Estate Owned, Net 1,340 2,642 (49.3)% 4,089 (67.2)% 24,064 (94.4)%
Total Non-Performing Assets $ 159,833 $ 154,372 3.5 % $ 173,117 (7.7)% $ 266,197 (40.0)%
Total Non-Performing Loans/Total Gross Loans 7.50% 6.98% 7.45% 9.67%
Total Non-Performing Assets/Total Assets 5.90% 5.36% 5.95% 9.13%
Total Non-Performing Assets/Allowance for Loan Losses 146.6% 122.7% 118.5% 150.7%
DELINQUENT LOANS (Accrual Status) $ 15,644 $ 20,711 (24.5)% $ 21,457 (27.1)% $ 21,702 (27.9)%
Delinquent Loans (Accrual Status)/Total Gross Loans 0.74% 0.95% 0.95% 0.87%
LOAN PORTFOLIO:
Real Estate Loans $ 788,559 $ 815,928 (3.4)% $ 856,527 (7.9)% $ 928,819 (15.1)%
Commercial and Industrial Loans (4) 1,277,650 1,309,644 (2.4)% 1,360,865 (6.1)% 1,519,639 (15.9)%
Consumer Loans 46,500 48,120 (3.4)% 50,300 (7.6)% 55,790 (16.7)%
Total Gross Loans 2,112,709 2,173,692 (2.8)% 2,267,692 (6.8)% 2,504,248 (15.6)%
Deferred Loan Fees (11) (277) (96.0)% (566) (98.1)% (822) (98.7)%
Gross Loans, Net of Deferred Loan Fees 2,112,698 2,173,415 (2.8)% 2,267,126 (6.8)% 2,503,426 (15.6)%
Allowance for Loan Losses (109,029) (125,780) (13.3)% (146,059) (25.4)% (176,667) (38.3)%
Loans Receivable, Net $ 2,003,669 $ 2,047,635 (2.1)% $ 2,121,067 (5.5)% $ 2,326,759 (13.9)%
LOAN MIX:
Real Estate Loans 37.3% 37.5% 37.8% 37.1%
Commercial and Industrial Loans 60.5% 60.2% 60.0% 60.7%
Consumer Loans 2.2% 2.3% 2.2% 2.2%
Total Gross Loans 100.0% 100.0% 100.0% 100.0%
DEPOSIT PORTFOLIO:
Demand - Noninterest-Bearing $ 600,812 $ 576,733 4.2 % $ 546,815 9.9 % $ 574,843 4.5 %
Savings 110,935 113,513 (2.3)% 113,968 (2.7)% 127,848 (13.2)%
Money Market Checking and NOW Accounts 484,132 469,377 3.1 % 402,481 20.3 % 434,533 11.4 %
Time Deposits of $100,000 or More 878,871 977,738 (10.1)% 1,118,621 (21.4)% 1,117,025 (21.3)%
Other Time Deposits 323,625 293,579 10.2 % 284,836 13.6 % 320,865 0.9 %
Total Deposits $ 2,398,375 $ 2,430,940 (1.3)% $ 2,466,721 (2.8)% $ 2,575,114 (6.9)%
DEPOSIT MIX:
Demand - Noninterest-Bearing 25.1% 23.7% 22.2% 22.3%
Savings 4.6% 4.7% 4.6% 5.0%
Money Market Checking and NOW Accounts 20.2% 19.3% 16.3% 16.9%
Time Deposits of $100,000 or More 36.6% 40.2% 45.3% 43.4%
Other Time Deposits 13.5% 12.1% 11.6% 12.4%
Total Deposits 100.0% 100.0% 100.0% 100.0%
CAPITAL RATIOS (Bank Only):
Total Risk-Based 14.02% 13.00% 12.22% 7.35%
Tier 1 Risk-Based 12.72% 11.70% 10.91% 6.02%
Tier 1 Leverage 9.70% 9.08% 8.55% 4.99%
Tangible equity ratio 10.33% 9.10% 8.59% 5.20%
(4) Commercial and industrial loans include owner-occupied property loans of $848.8 million, $864.7 million, $894.8 million and $995.1 million as of June 30, 2011, March 31, 2011, December 31, 2010 and June 30, 2010, respectively.
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
AVERAGE BALANCES, AVERAGE YIELDS EARNED AND AVERAGE RATES PAID (UNAUDITED)
(Dollars in Thousands)
Three Months Ended
June 30, 2011 March 31, 2011 June 30, 2010
Average Balance Interest Income/ Expense Average Yield/ Rate Average Balance Interest Income/ Expense Average Yield/ Rate Average Balance Interest Income/ Expense Average Yield/ Rate
INTEREST-EARNING ASSETS
Loans:
Real Estate Loans:
Commercial Property $ 688,142 $ 9,386 5.47% $ 721,933 $ 9,611 5.40% $ 811,063 $ 10,351 5.12%
Construction 50,192 621 4.96% 60,221 508 3.42% 81,067 946 4.68%
Residential Property 59,323 679 4.59% 60,978 683 4.54% 69,937 932 5.35%
Total Real Estate Loans 797,657 10,686 5.37% 843,132 10,802 5.20% 962,067 12,229 5.10%
Commercial and Industrial Loans (1) 1,291,470 17,914 5.56% 1,342,271 19,392 5.86% 1,593,326 21,484 5.41%
Consumer Loans 48,017 562 4.69% 49,167 582 4.80% 56,684 738 5.22%
Total Gross Loans 2,137,144 29,162 5.47% 2,234,570 30,776 5.59% 2,612,077 34,451 5.29%
Prepayment Penalty Income — 87 — — 129 — — 35 —
Unearned Income on Loans, Net of Costs (168) — — (460) — — (899) — —
Gross Loans, Net 2,136,976 29,249 5.49% 2,234,110 30,905 5.61% 2,611,178 34,486 5.30%
Investment Securities:
Municipal Bonds - Taxable 13,603 140 4.12% 17,531 178 4.06% — — —
Municipal Bonds -Nontaxable (2) 4,125 57 5.53% 4,466 62 5.55% 7,484 119 6.36%
U.S. Government Agency Securities 152,438 629 1.65% 146,312 623 1.70% 65,894 560 3.40%
Mortgage-Backed Securities 127,413 946 2.97% 114,830 639 2.23% 58,419 577 3.95%
Collateralized Mortgage Obligations 169,110 1,113 2.63% 156,583 977 2.50% 14,287 129 3.61%
Corporate Bonds 20,121 165 3.28% 20,205 167 3.31% — — —
Other Securities 10,242 101 3.94% 13,186 89 2.70% 12,459 94 3.02%
Total Investment Securities (2) 497,052 3,151 2.54% 473,113 2,735 2.31% 158,543 1,479 3.73%
Other Interest-Earning Assets:
Equity Securities 34,078 133 1.56% 35,557 132 1.48% 37,979 123 1.30%
Federal Funds Sold and Securities Purchased
Under Resale Agreements 7,067 9 0.51% 6,699 8 0.48% 12,198 16 0.52%
Term Federal Funds Sold 13,681 18 0.53% 19,778 27 0.55% 7,253 11 —
Interest-Bearing Deposits in Other Banks 115,855 79 0.27% 123,147 89 0.29% 138,824 99 0.29%
Total Other Interest-Earning Assets 170,681 239 0.56% 185,181 256 0.55% 196,254 249 0.51%
TOTAL INTEREST-EARNING ASSETS (2) $ 2,804,709 $ 32,639 4.67% $ 2,892,404 $ 33,896 4.75% $ 2,965,975 $ 36,214 4.90%
INTEREST-BEARING LIABILITIES
Interest-Bearing Deposits:
Savings $ 111,723 $ 734 2.64% $ 113,080 $ 749 2.69% $ 125,016 $ 922 2.96%
Money Market Checking and NOW Accounts 488,723 1,010 0.83% 448,807 1,002 0.91% 458,137 1,217 1.07%
Time Deposits of $100,000 or More 926,024 3,477 1.51% 1,051,340 4,059 1.57% 1,090,412 5,057 1.86%
Other Time Deposits 308,475 971 1.26% 282,418 925 1.33% 378,367 1,617 1.71%
Total Interest-Bearing Deposits 1,834,945 6,192 1.35% 1,895,645 6,735 1.44% 2,051,932 8,813 1.72%
Borrowings:
FHLB Advances 106,710 239 0.90% 153,609 333 0.88% 153,859 339 0.88%
Other Borrowings 1,331 1 0.30% 1,437 — — 3,924 31 —
Junior Subordinated Debentures 82,406 711 3.46% 82,406 698 3.44% 82,406 692 3.37%
Total Borrowings 190,447 951 2.00% 237,452 1,031 1.76% 240,189 1,062 1.77%
TOTAL INTEREST-BEARING LIABILITIES $ 2,025,392 $ 7,143 1.41% $ 2,133,097 $ 7,766 1.48% $ 2,292,121 $ 9,875 1.73%
NET INTEREST INCOME (2) $ 25,496 $ 26,130 $ 26,339
NET INTEREST SPREAD (2) 3.26% 3.27% 3.17%
NET INTEREST MARGIN (2) 3.65% 3.66% 3.56%
(1) Commercial and industrial loans include owner-occupied commercial real estate loans
(2) Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate.
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
AVERAGE BALANCES, AVERAGE YIELDS EARNED AND AVERAGE RATES PAID (UNAUDITED)
(Dollars in Thousands)
Six Months Ended
June 30, 2011 June 30, 2010
Average Balance Interest Income/ Expense Average Yield/ Rate Average Balance Interest Income/ Expense Average Yield/ Rate
INTEREST-EARNING ASSETS
Loans:
Real Estate Loans:
Commercial Property $ 704,944 $ 18,997 5.43% $ 823,535 $ 21,725 5.32%
Construction 55,178 1,129 4.13% 97,003 2,340 4.86%
Residential Property 60,146 1,362 4.57% 71,996 1,715 4.80%
Total Real Estate Loans 820,268 21,488 5.28% 992,534 25,780 5.24%
Commercial and Industrial Loans (1) 1,316,730 37,306 5.71% 1,637,631 43,719 5.38%
Consumer Loans 48,589 1,144 4.75% 58,928 1,587 5.43%
Total Gross Loans 2,185,587 59,938 5.53% 2,689,093 71,086 5.33%
Prepayment Penalty Income — 216 — — 95 —
Unearned Income on Loans, Net of Costs (313) — — (1,081) — —
Gross Loans, Net 2,185,274 60,154 5.55% 2,688,012 71,181 5.34%
Investment Securities:
Municipal Bonds - Taxable 15,556 318 4.09% — — 0.00%
Municipal Bonds -Nontaxable (2) 4,294 119 5.54% 7,517 237 6.31%
U.S. Government Agency Securities 149,392 1,252 1.68% 49,100 943 3.84%
Mortgage-Backed Securities 121,156 1,585 2.62% 60,161 1,067 3.55%
Collateralized Mortgage Obligations 162,881 2,090 2.57% 12,842 242 3.77%
Corporate Bonds 20,163 332 3.29% — — 0.00%
Other Securities 11,706 190 3.25% 12,414 146,059 3.09%
Total Investment Securities (2) 485,148 5,886 2.43% 142,034 2,681 3.78%
Other Interest-Earning Assets:
Equity Securities 34,813 265 1.52% 38,671 248 1.28%
Federal Funds Sold and Securities Purchased
Under Resale Agreements 6,884 17 0.49% 13,152 33 0.50%
Term Federal Funds Sold 16,713 45 0.54% 3,646 11 0.60%
Interest-Bearing Deposits in Other Banks 119,481 168 0.28% 102,817 154 0.30%
Total Other Interest-Earning Assets 177,891 495 0.56% 158,286 446 0.56%
TOTAL INTEREST-EARNING ASSETS (2) $ 2,848,313 $ 66,535 4.71% $ 2,988,332 $ (1,276) 5.01%
INTEREST-BEARING LIABILITIES
Interest-Bearing Deposits:
Savings $ 112,398 $ 1,483 2.66% $ 120,347 $ 1,746 2.93%
Money Market Checking and NOW Accounts 468,875 2,012 0.87% 508,248 2,839 1.13%
Time Deposits of $100,000 or More 988,336 7,536 1.54% 1,007,693 9,734 1.95%
Other Time Deposits 295,518 1,896 1.29% 441,465 4,198 1.92%
Total Interest-Bearing Deposits 1,865,127 12,927 1.40% 2,077,753 18,517 1.80%
Borrowings:
FHLB Advances 130,030 572 0.89% 163,407 685 0.85%
Other Borrowings 1,384 1 0.15% 2,801 31 2.23%
Junior Subordinated Debentures 82,406 1,409 3.45% 82,406 1,361 3.33%
Total Borrowings 213,820 1,982 1.87% 248,614 2,077 1.68%
TOTAL INTEREST-BEARING LIABILITIES $ 2,078,947 $ 14,909 1.45% $ 2,326,367 $ 20,594 1.79%
NET INTEREST INCOME (2) $ 51,626 $ 53,714
NET INTEREST SPREAD (2) 3.26% 3.22%
NET INTEREST MARGIN (2) 3.66% 3.62%
(1) Commercial and industrial loans include owner-occupied commercial real estate loans
(2) Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate.
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 Bank and Hanmi Financial's capital strength. Tangible equity is calculated by subtracting goodwill and other intangible assets from total stockholders' equity. Banking and financial institution regulators also exclude goodwill and other intangible assets from total 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 Bank and Hanmi Financial. 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:
HANMI BANK
NON-GAAP FINANCIAL MEASURES (UNAUDITED)
(Dollars in Thousands)
June 30, March 31, December 31, June 30,
2011 2011 2010 2010
TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS RATIO
Total Assets $ 2,705,997 $ 2,872,804 $ 2,900,415 $ 2,907,089
Less Other Intangible Assets (184) (303) (450) (756)
Tangible Assets $ 2,705,813 $ 2,872,501 $ 2,899,965 $ 2,906,333
Total Stockholders' Equity $ 279,712 $ 261,639 $ 249,637 $ 151,836
Less Other Intangible Assets (184) (303) (450) (756)
Tangible Stockholders' Equity $ 279,528 $ 261,336 $ 249,187 $ 151,080
Total Stockholders' Equity to Total Assets Ratio 10.34% 9.11% 8.61% 5.22%
Tangible Common Equity to Tangible Assets Ratio 10.33% 9.10% 8.59% 5.20%
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES (UNAUDITED)
(Dollars in Thousands)
June 30, March 31, December 31, June 30,
2011 2011 2010 2010
TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS RATIO
Total Assets $ 2,710,835 $ 2,879,666 $ 2,907,148 $ 2,914,950
Less Other Intangible Assets (1,825) (2,015) (2,233) (2,754)
Tangible Assets $ 2,709,010 $ 2,877,651 $ 2,904,915 $ 2,912,196
Total Stockholders' Equity $ 198,365 $ 184,051 $ 173,256 $ 73,180
Less Other Intangible Assets (1,825) (2,015) (2,233) (2,754)
Tangible Stockholders' Equity $ 196,540 $ 182,036 $ 171,023 $ 70,426
Total Stockholders' Equity to Total Assets Ratio 7.32% 6.39% 5.96% 2.51%
Tangible Common Equity to Tangible Assets Ratio 7.26% 6.33% 5.89% 2.42%
CONTACT: Hanmi Financial Corporation
David Yang
Investor Relations Officer
(213) 637-4798
Source: Hanmi Bank
Released July 21, 2011