Hanmi Financial Corporation Reports First Quarter 2010 Financial Results
LOS ANGELES, April 29, 2010 (GLOBE NEWSWIRE) -- Hanmi Financial Corporation (Nasdaq:HAFC), the holding company for Hanmi Bank, today reported a first quarter net loss of $49.5 million, or $0.97 per share, primarily driven by $58.0 million in credit loss provisions, compared to a net loss of $17.2 million, or $0.37 per share, in the first quarter a year ago when it took a $46.0 million provision.
"Although we continue to face challenging economic conditions, we are making progress preserving liquidity, growing core deposits, building reserves for loan losses, and expanding our net interest margin," said Jay S. Yoo, President and Chief Executive Officer. "As a result of continuing problems with our loan portfolio, we once again set aside a substantial provision for loan losses. The impact of the elevated levels of provision for loan losses, the change in deferred tax asset valuation and rising costs associated with loan and OREO workout expenses are the primary contributors to our current quarter loss.
"We are also making progress on achieving full compliance with previously announced regulatory requirements by strengthening our capital position, improving asset quality, and enhancing liquidity," Yoo continued. "Our progress in the first quarter of the year is noteworthy, with a strong liquidity position, reduced loan and securities portfolios, and solid interest from investors to bring in fresh capital."
First Quarter 2010 Highlights (as of and for the quarter ended March 31, 2010 compared to March 31, 2009)
-- The allowance for loan losses increased 69% to $177.8 million, or 6.63%
of total loans.
-- Core deposits, which exclude brokered deposits and jumbo CDs, increased
by 9.8% or $137.7 million to $1.54 billion, reflecting the continued
strong support of the local community. Non-interest bearing demand
deposits grew 6% year over year and 3% in the quarter to $575.0 million,
and now account for 22% of total deposits.
-- Continuing successful deleveraging of the balance sheet resulted in
assets declining 22% to $3.02 billion, with gross loans down 19%,
securities down 31%, and Federal Home Loan Bank advances down 51%.
-- Net interest margin expanded 23 basis points in the quarter and 119
basis points year over year to 3.69%, reflecting a 38 basis point drop
in the quarter and 140 basis points year over year in the total cost of
funds.
Capital Adequacy
"We continue to work with a sense of urgency toward the goal of adding capital in order to improve our capital position," said Yoo. "We are encouraged by the recent influx of new capital into the local market, and hope that investors will continue to favor our financial sector. Our goal is to raise enough new equity to strengthen our capital ratios and provide us with the capital strength to emerge from these challenging economic times."
At March 31, 2010, the Bank's Tier 1 Leverage was 5.68%; Tier 1 Risk-Based Capital was 6.49% and Total Risk-Based Capital Ratio was 7.81%. The ratio of tangible shareholders' equity to total tangible assets for the first quarter was 5.89% compared to 7.13% at December 31, 2009.
Asset Quality
"With more than 80% of our loans in Southern California, our business is greatly influenced by the local economy, which has been quite difficult for the people and businesses of Los Angeles for the past two years. While the Los Angeles County Economic Development Corporation forecasts gradual economic improvement during 2010 and 2011 in its February report, the recovery has yet to provide relief to the commercial and residential real estate markets we serve," said Yoo. "Consequently, we continue to see adverse results in our loan portfolio."
Non-performing loans (NPLs) totaled $262.2 million, or 9.77 % of gross loans at March 31, 2010, compared with $219.1 million, or 7.77% of gross loans at December 31, 2009, and $156.3 million or 4.71% of gross loans at March 31, 2009. Of the total non-performing loans $94.8 million or 36.14% were current on payments. The majority of these non-performing loans are supported by collateral. As of March 31, 2010, the bank has recorded an impairment reserve of $27.2 million on these non-performing loans. Of the increase in first quarter non-performing loans, 75% is related to a $32.6 million bridge loan secured by 29 acres of vacant land in Northern California that moved into the non-performing category. "We are currently talking with interested parties for the future sale of this property without a significant loss," Yoo noted. The following table shows nonperforming loans by loan category:
% of % of % of
Total Total Total
('000) 3/31/2010 NPL 12/31/2009 NPL 3/31/2009 NPL
------------------------ --------- ------ ---------- ------ --------- ------
Real Estate Loans:
Commercial Property 95,388 36.4% 60,117 27.4% 15,576 10.0%
Construction 7,179 2.7% 12,541 5.7% 39,198 25.1%
Residential Property 5,457 2.1% 5,979 2.7% 1,616 1.0%
Commercial & Industrial
Loans:
Owner Occupied Property 115,384 44.0% 97,008 44.3% 65,934 42.2%
Other Commercial &
Industrial 38,043 14.5% 42,732 19.5% 33,076 21.2%
Consumer Loans 782 0.3% 689 0.3% 930 0.6%
------------------------ --------- ------ ---------- ------ --------- ------
TOTAL NPLs 262,232 100.0% 219,067 100.0% 156,330 100.0%
------------------------ --------- ------ ---------- ------ --------- ------
Other real estate owned (OREO) has declined in the past two quarters and now stands at $22.4 million at March 31, 2010, down from $26.3 million at December 31, 2009 and up from $1.2 million a year ago. During the first quarter, $3.9 million of OREO was sold and $4.4 million of nonaccrual loans were foreclosed. "We have been aggressive in selling loans prior to foreclosure," said Yoo. Total non-performing assets were $284.6 million, or 9.49% of total assets at March 31, 2010, compared to $245.4 million, or 7.76% of total assets at December 31, 2009, and $157.5 million, or 4.06% of total assets at March 31, 2009.
Delinquent loans (DLs) on accrual status were $68.6 million or 29.1% at March 31, 2010, up from $41.2 million or 22.1% at December 31, 2009, and $48.0 or 29.2% at March 31, 2009. The following table shows DLs on accrual status by loan category:
% of Total % of Total % of Total
('000) 3/31/2010 Delinquency 12/31/2009 Delinquency 3/31/2009 Delinquency
---------------------------- --------- ----------- ---------- ----------- --------- -----------
Real Estate Loans:
Commercial Property 17,455 7.4% 3,650 2.0% 9,518 5.8%
Residential Property 284 0.1% 864 0.5% 115 0.1%
Commercial & Industrial Loans:
Owner Occupied Property 37,348 15.8% 23,828 12.8% 21,995 13.4%
Other Commercial &
Industrial 13,119 5.6% 11,851 6.4% 15,756 9.6%
Consumer Loans 433 0.2% 958 0.5% 661 0.4%
---------------------------- --------- ----------- ---------- ----------- --------- -----------
Total DLs (Accrual Status) 68,640 29.1% 41,151 22.1% 48,046 29.2%
---------------------------- --------- ----------- ---------- ----------- --------- -----------
At March 31, 2010, the allowance for loan losses increased 22.64% to $177.8 million, or 6.63% of gross loans and 67.81% of NPLs, compared to $145.0 million, or 5.14% of gross loans and 66.19% of NPLs at December 31, 2009, and $104.9 million, or 3.16% of gross loans and 67.13% of NPLS at March 31, 2009. First-quarter charge-offs, net of recoveries, were $26.4 million compared to $57.3 million in the prior quarter and $11.8 million in the first quarter of 2009.
The increase in the allowance for loan losses was mainly due to an increase in quantitative reserves to $120.0 million from $90.1 million at December 31, 2009. The impaired loan reserves totaled $27.2 million, up from $23.1 million at December 31, 2009 and the qualitative reserve portion of the allowance slightly decreased to $30.5 million from $31.6 million at the end of the fourth quarter.
Balance Sheet
Reflecting the Bank's ongoing program to de-leverage its balance sheet, total assets decreased to $3.02 billion, at March 31, 2010, a 5% decline from $3.16 billion at December 31, 2009, and a 22% decline from $3.88 billion at March 31, 2009. Gross loans, net of deferred loan fees, were $2.68 billion as of March 31, 2010, down 5% from $2.82 billion at December 31, 2009, and down 19% from $3.32 billion at March 31, 2009.
"Our depositors have been supportive of the bank during these difficult times and we appreciate their loyalty in helping us to continue to build core deposits," stated Yoo. "We are continuing to reduce our reliance on brokered deposits as we continue to de-leverage our balance sheet." Total deposits decreased 17% year over year and 4% during the quarter with jumbo CDs and other time deposits down 14% and 60%, respectively, compared to a year ago. Total deposits were $2.65 billion at March 31, 2010, compared to $2.75 billion at December 31, 2009, and $3.20 billion at March 31, 2009. Demand deposits increased 3.4%, to $575.0 million at the end of the first quarter from $556.3 million at December 31, 2009. "We continue to reduce our reliance on wholesale funding, reflecting a decrease in brokered deposits from a year ago. FHLB advances are down 51% from a year ago to $153.9 million."
"We continue to maintain strong liquidity in order to meet our customers' needs. We have a sound mix of funding sources, including core deposits, which are increasing, sale of long-term assets such as non-performing loans, and our contingent borrowing lines with the Federal Home Loan Bank and Federal Reserve Bank," said Brian Cho, Chief Financial Officer.
Results of Operations
Net interest income before provision for credit losses totaled $27.3 million, a 4% decrease from $28.4 million in the preceding quarter and an 18% increase from the $23.1 million in first quarter a year ago, with lower cost of funds offsetting lower yields on interest earning assets.
The average yield on the loan portfolio was 5.38% in the first quarter of 2010, a 16 basis point decrease from the prior quarter, reflecting the increase of nonaccrual loans. The cost of average interest-bearing deposits in the first quarter was 1.87%, down 39 basis points from the fourth quarter of 2009. As a result, Hanmi's net interest margin improved 23 basis points to 3.69% up from 3.46% percent in the fourth quarter of 2009.
The provision for credit losses in the first quarter of 2010 was $58.0 million, compared to $77.0 million in the prior quarter and $46.0 million in the first quarter a year ago. The provision in all periods was well above the rate of net charge-offs, taken in the respective periods. The provision for loan losses increased primarily due to the increase of historical loss ratios used in ALLL migration analysis which was the result of the elevated level of net charge-offs in recent quarters.
Total non-interest income in the first quarter of 2010 was $7.0 million compared to $7.8 million in the fourth quarter of 2009 and $8.5 million in the first quarter of 2009. Lower gains from asset sales and reduced fee income caused by the slow economy contributed to the decline in non-interest income. In addition, gains from sales of SBA loans were deferred to the second quarter due to changes in the accounting rules for such sales.
In the first quarter of 2010, net gain on sales of investment securities decreased by $1.1 million to $105,000 from $1.2 million in the first quarter a year ago. In the fourth quarter of 2009, $54.6 million of investment securities were sold, generating solid profits in the quarter, whereas in the first quarter of 2010, only $3.1 million in securities were sold.
First quarter service charges on deposit accounts decreased to $3.7 million, a 14% decline from $4.3 million for the first quarter of 2009, reflecting lower overdraft charges and reduced fees from account analysis. Insurance commission increased 8% to $1.3 million in the first quarter of 2010 from $1.2 million in the first quarter a year ago as the marketing campaign for insurance products met with success throughout the branch banking network. Remittance fees and loan-related servicing fees both dropped slightly in the first quarter from a year ago. Fees generated from international trade finance decreased 31% to $351,000 in the first quarter of 2010 from $506,000 in the first quarter a year ago, reflecting the decrease of import and export letters of credit.
Total non-interest expense in the first quarter of 2010 was $26.2 million, up from $22.7 million in the fourth quarter of 2009 and $18.4 million in the first quarter a year ago. Continuing high levels of expenditures for OREO management and credit collections expenses were the primary drivers of higher operating expense, coupled with higher FDIC insurance premiums. "We completed the foreclosure of an 88-unit condominium project in Northern California last year and booked a $4 million write down on the property during the first quarter to bring the carrying value to $22 million," Cho noted. "These added expenses is not typical for our operations and was the major component of the $5.7 million OREO expense in the first quarter of 2010." In the fourth quarter of 2009, OREO expenses was $873,000 and it was just $143,000 in the first quarter a year ago.
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, 2009 and current and periodic reports filed with the Securities and Exchange Commission thereafter, 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.
Sources: http://www.laedc.org/reports/Forecast-2010-02.pdf
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in Thousands)
March 31, December 31, % March 31, %
2010 2009 Change 2009 Change
------------- ------------- --------- ------------- ----------
ASSETS
------------------------------
Cash and Due from Banks $ 59,677 $ 55,263 8.0 % $ 62,965 (5.2)%
Interest-Bearing Deposits in
Other Banks 139,540 98,847 41.2 % 168,035 (17.0)%
Federal Funds Sold -- -- -- 90,000 (100.0)%
Cash and Cash Equivalents 199,217 154,110 29.3 % 321,000 (37.9)%
------------- ------------- --------- ------------- ----------
Investment Securities 114,231 133,289 (14.3)% 164,362 (30.5)%
Loans:
Gross Loans, Net of Deferred
Loan Fees 2,682,890 2,819,060 (4.8)% 3,318,382 (19.2)%
Allowance for Loan Losses (177,820) (144,996) 22.6 % (104,943) 69.4 %
------------- ------------- --------- ------------- ----------
Loans Receivable, Net 2,505,070 2,674,064 (6.3)% 3,213,439 (22.0)%
Due from Customers on
Acceptances 1,914 994 92.6 % 2,176 (12.0)%
Premises and Equipment, Net 18,236 18,657 (2.3)% 20,269 (10.0)%
Accrued Interest Receivable 9,026 9,492 (4.9)% 11,702 (22.9)%
Other Real Estate Owned, Net 22,399 26,306 (14.9)% 1,206 1,757.3 %
Deferred Income Taxes, Net -- 3,608 (100.0)% 28,599 (100.0)%
Servicing Assets 3,590 3,842 (6.6)% 3,630 (1.1)%
Other Intangible Assets, Net 3,055 3,382 (9.7)% 4,521 (32.4)%
Investment in Federal Home
Loan Bank Stock, at Cost 30,697 30,697 -- 30,697 --
Investment in Federal Reserve
Bank Stock, at Cost 7,878 7,878 -- 10,228 (23.0)%
Bank-Owned Life Insurance 26,639 26,408 0.9 % 25,710 3.6 %
Income Taxes Receivable 59,680 56,554 5.5 % 27,211 119.3 %
Other Assets 16,669 13,425 24.2 % 16,145 3.2 %
------------- ------------- --------- ------------- ----------
TOTAL ASSETS $ 3,018,301 $ 3,162,706 (4.6)% $ 3,880,895 (22.2)%
============= ============= ========= ============= ==========
LIABILITIES AND STOCKHOLDERS'
EQUITY
------------------------------
Liabilities:
Deposits:
Noninterest-Bearing $ 575,015 $ 556,306 3.4 % $ 542,521 6.0 %
Interest-Bearing 2,075,265 2,193,021 (5.4)% 2,653,588 (21.8)%
------------- ------------- --------- ------------- ----------
Total Deposits 2,650,280 2,749,327 (3.6)% 3,196,109 (17.1)%
Accrued Interest Payable 13,146 12,606 4.3 % 27,234 (51.7)%
Bank Acceptances Outstanding 1,914 994 92.6 % 2,176 (12.0)%
Federal Home Loan Bank
Advances 153,898 153,978 (0.1)% 311,075 (50.5)%
Other Borrowings 4,428 1,747 153.5 % 1,761 151.4 %
Junior Subordinated
Debentures 82,406 82,406 -- 82,406 --
Accrued Expenses and Other
Liabilities 11,207 11,904 (5.9)% 11,891 (5.8)%
------------- ------------- --------- ------------- ----------
Total Liabilities 2,917,279 3,012,962 (3.2)% 3,632,652 (19.7)%
Stockholders' Equity 101,022 149,744 (32.5)% 248,243 (59.3)%
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 3,018,301 $ 3,162,706 (4.6)% $ 3,880,895 (22.2)%
============= ============= ========= ============= ==========
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in Thousands, Except Per Share Data)
Three Months Ended
------------------------------------------------------------
March 31, Dec. 31, % March 31, %
2010 2009 Change 2009 Change
----------- ----------- --------- ----------- ----------
INTEREST AND DIVIDEND INCOME:
Interest and Fees on Loans $ 36,695 $ 40,810 (10.1)% $ 45,085 (18.6)%
Taxable Interest on Investment
Securities 1,070 1,414 (24.3)% 1,350 (20.7)%
Tax-Exempt Interest on Investment
Securities 77 432 (82.2)% 643 (88.0)%
Interest on Term Federal Funds
Sold -- 30 (100.0)% 700 (100.0)%
Dividends on Federal Reserve Bank
Stock 118 136 (13.2)% 153 (22.9)%
Interest on Federal Funds Sold and
Securities Purchased Under Resale
Agreements 17 65 (73.8)% 82 (79.3)%
Interest on Interest-Bearing
Deposits in Other Banks 55 70 (21.4)% 2 2,650.0 %
Dividends on Federal Home Loan
Bank Stock 21 -- -- -- --
----------- ----------- --------- ----------- ----------
Total Interest and Dividend
Income 38,053 42,957 (11.4)% 48,015 (20.7)%
----------- ----------- --------- ----------- ----------
INTEREST EXPENSE:
Interest on Deposits 9,704 13,410 (27.6)% 22,785 (57.4)%
Interest on Federal Home Loan Bank
Advances 346 412 (16.0)% 1,112 (68.9)%
Interest on Junior Subordinated
Debentures 669 690 (3.0)% 988 (32.3)%
----------- ----------- --------- ----------- ----------
Total Interest Expense 10,719 14,512 (26.1)% 24,885 (56.9)%
----------- ----------- --------- ----------- ----------
NET INTEREST INCOME BEFORE
PROVISION FOR CREDIT LOSSES 27,334 28,445 (3.9)% 23,130 18.2 %
Provision for Credit Losses 57,996 77,000 (24.7)% 45,953 26.2 %
----------- ----------- --------- ----------- ----------
NET INTEREST INCOME (LOSS) AFTER
PROVISION FOR CREDIT LOSSES (30,662) (48,555) (36.9)% (22,823) 34.3 %
----------- ----------- --------- ----------- ----------
NON-INTEREST INCOME:
Service Charges on Deposit
Accounts 3,726 4,022 (7.4)% 4,315 (13.7)%
Insurance Commissions 1,278 1,062 20.3 % 1,182 8.1 %
Remittance Fees 462 530 (12.8)% 523 (11.7)%
Other Service Charges and Fees 412 371 11.1 % 483 (14.7)%
Trade Finance Fees 351 439 (20.0)% 506 (30.6)%
Bank-Owned Life Insurance Income 231 237 (2.5)% 234 (1.3)%
Net Gain on Sales of Investment
Securities 105 665 (84.2)% 1,167 (91.0)%
Net Gain on Sales of Loans -- 354 (100.0)% 2 (100.0)%
Other Operating Income (Loss) 440 159 176.7 % 66 566.7 %
----------- ----------- --------- ----------- ----------
Total Non-Interest Income 7,005 7,839 (10.6)% 8,478 (17.4)%
----------- ----------- --------- ----------- ----------
NON-INTEREST EXPENSE:
Salaries and Employee Benefits 8,786 8,442 4.1 % 7,503 17.1 %
Other Real Estate Owned Expense 5,700 873 552.9 % 143 3,886.0 %
Occupancy and Equipment 2,725 2,733 (0.3)% 2,884 (5.5)%
Deposit Insurance Premiums and
Regulatory Assessments 2,224 2,998 (25.8)% 1,490 49.3 %
Data Processing 1,499 1,606 (6.7)% 1,536 (2.4)%
Professional Fees 1,066 1,354 (21.3)% 616 73.1 %
Advertising and Promotion 535 762 (29.8)% 569 (6.0)%
Supplies and Communications 517 580 (10.9)% 570 (9.3)%
Amortization of Other Intangible
Assets 328 354 (7.3)% 429 (23.5)%
Loan-Related Expense 307 357 (14.0)% 181 69.6 %
Other Operating Expenses 2,537 2,651 (4.3)% 2,429 4.4 %
----------- ----------- --------- ----------- ----------
Total Non-Interest Expense 26,224 22,710 15.5 % 18,350 42.9 %
----------- ----------- --------- ----------- ----------
LOSS BEFORE PROVISION (BENEFIT) FOR
INCOME TAXES (49,881) (63,426) (21.4)% (32,695) 52.6 %
Provision (Benefit) for Income
Taxes (395) (27,545) (98.6)% (15,499) (97.5)%
----------- ----------- --------- ----------- ----------
NET LOSS $ (49,486) $ (35,881) 37.9 % $ (17,196) 187.8 %
=========== =========== ========= =========== ==========
LOSS PER SHARE:
Basic $ (0.97) $ (0.70) 38.6 % $ (0.37) 162.2 %
Diluted $ (0.97) $ (0.70) 38.6 % $ (0.37) 162.2 %
WEIGHTED-AVERAGE SHARES
OUTSTANDING:
Basic 50,998,990 50,998,103 45,891,043
Diluted 50,998,990 50,998,103 45,891,043
SHARES OUTSTANDING AT PERIOD-END 51,182,390 51,182,390 45,940,967
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL DATA (UNAUDITED)
(Dollars in Thousands)
Three Months Ended
---------------------------------------------------------------
March 31, December 31, % March 31, %
2010 2009 Change 2009 Change
------------ ------------ --------- ------------ ----------
AVERAGE BALANCES:
Average Gross Loans, Net of
Deferred Loan Fees $ 2,765,701 $ 2,924,722 (5.4)% $ 3,349,085 (17.4)%
Average Investment Securities 125,340 182,635 (31.4)% 182,284 (31.2)%
Average Interest-Earning Assets 3,010,938 3,291,042 (8.5)% 3,806,186 (20.9)%
Average Total Assets 3,086,198 3,356,383 (8.0)% 3,946,727 (21.8)%
Average Deposits 2,662,960 2,914,794 (8.6)% 3,202,032 (16.8)%
Average Borrowings 257,132 244,704 5.1 % 440,053 (41.6)%
Average Interest-Bearing
Liabilities 2,360,992 2,598,520 (9.1)% 3,115,332 (24.2)%
Average Stockholders' Equity 137,931 164,767 (16.3)% 263,553 (47.7)%
Average Tangible Equity 134,679 161,169 (16.4)% 258,775 (48.0)%
PERFORMANCE RATIOS (Annualized):
Return on Average Assets (6.50)% (4.24)% (1.77)%
Return on Average Stockholders'
Equity (145.50)% (86.40)% (26.46)%
Return on Average Tangible
Equity (149.02)% (88.33)% (26.95)%
Efficiency Ratio 76.37% 62.59% 58.05%
Net Interest Spread (1) 3.29% 2.99% 1.91%
Net Interest Margin (1) 3.69% 3.46% 2.50%
ALLOWANCE FOR LOAN LOSSES:
Balance at Beginning of Period $ 144,996 $ 124,768 16.2 % $ 70,986 104.3 %
Provision Charged to Operating
Expense 59,217 77,540 (23.6)% 45,770 29.4 %
Charge-Offs, Net of Recoveries (26,393) (57,312) (53.9)% (11,813) 123.4 %
------------ ------------ --------- ------------ ----------
Balance at End of Period $ 177,820 $ 144,996 22.6 % $ 104,943 69.4 %
============ ============ ========= ============ ==========
Allowance for Loan Losses to
Total Gross Loans 6.63% 5.14% 3.16%
Allowance for Loan Losses to
Total Non-Performing Loans 67.81% 66.19% 67.13%
ALLOWANCE FOR OFF-BALANCE SHEET
ITEMS:
Balance at Beginning of Period $ 3,876 $ 4,416 (12.2)% $ 4,096 (5.4)%
Provision Charged to Operating
Expense (1,221) (540) 126.1 % 183 (31.1)%
------------ ------------ --------- ------------ ----------
Balance at End of Period $ 2,655 $ 3,876 (31.5)% $ 4,279 (38.0)%
============ ============ ========= ============ ==========
57,996 77,000 (24.7)%
(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)
March 31, December 31, % March 31, %
2010 2009 Change 2009 Change
------------ ------------ --------- ------------ ----------
NON-PERFORMING ASSETS:
Non-Accrual Loans $ 262,232 $ 219,000 19.7 % $ 155,508 68.6 %
Loans 90 Days or More Past Due
and Still Accruing -- 67 (100.0)% 823 (100.0)%
------------ ------------ --------- ------------ ----------
Total Non-Performing Loans 262,232 219,067 19.7 % 156,331 67.7 %
Other Real Estate Owned, Net 22,399 26,306 (14.9)% 1,206 1,757.3 %
------------ ------------ --------- ------------ ----------
Total Non-Performing Assets $ 284,631 $ 245,373 16.0 % $ 157,537 80.7 %
============ ============ ========= ============ ==========
Total Non-Performing
Loans/Total Gross Loans 9.77% 7.77% 4.71%
Total Non-Performing
Assets/Total Assets 9.43% 7.76% 4.06%
Total Non-Performing
Assets/Allowance for Loan
Losses 160.1% 169.2% 150.1%
DELINQUENT LOANS (Accrual
Status) $ 68,640 $ 41,151 66.8 % $ 48,046 42.9 %
============ ============ ========= ============ ==========
Delinquent Loans (Accrual
Status)/Total Gross Loans 2.56% 1.46% 1.45%
LOAN PORTFOLIO:
Real Estate Loans $ 986,417 $ 1,043,097 (5.4)% $ 1,185,054 (16.8)%
Commercial and Industrial Loans
(2) 1,638,550 1,714,212 (4.4)% 2,055,209 (20.3)%
Consumer Loans 58,886 63,303 (7.0)% 79,459 (25.9)%
------------ ------------ --------- ------------ ----------
Total Gross Loans 2,683,853 2,820,612 (4.8)% 3,319,722 (19.2)%
Deferred Loan Fees (963) (1,552) (38.0)% (1,340) (28.1)%
------------ ------------ --------- ------------ ----------
Gross Loans, Net of Deferred
Loan Fees 2,682,890 2,819,060 (4.8)% 3,318,382 (19.2)%
Allowance for Loan Losses (177,820) (144,996) 22.6 % (104,943) 69.4 %
------------ ------------ --------- ------------ ----------
Loans Receivable, Net $ 2,505,070 $ 2,674,064 (6.3)% $ 3,213,439 (22.0)%
============ ============ ========= ============ ==========
LOAN MIX:
Real Estate Loans 36.8% 37.0% 35.7%
Commercial and Industrial Loans
(2) 61.1% 60.8% 61.9%
Consumer Loans 2.1% 2.2% 2.4%
------------ ------------ ------------
Total Gross Loans 100.0% 100.0% 100.0%
============ ============ ============
DEPOSIT PORTFOLIO:
Demand - Noninterest-Bearing $ 575,015 $ 556,306 3.4 % $ 542,521 6.0 %
Savings 121,041 111,172 8.9 % 82,824 46.1 %
Money Market Checking and NOW
Accounts 488,366 685,858 (28.8)% 308,383 58.4 %
Time Deposits of $100,000 or
More 1,048,688 815,190 28.6 % 1,218,826 (14.0)%
Other Time Deposits 417,170 580,801 (28.2)% 1,043,555 (60.0)%
------------ ------------ --------- ------------ ----------
Total Deposits $ 2,650,280 $ 2,749,327 (3.6)% $ 3,196,109 (17.1)%
============ ============ ========= ============ ==========
DEPOSIT MIX:
Demand - Noninterest-Bearing 21.7% 20.2% 17.0%
Savings 4.6% 4.0% 2.6%
Money Market Checking and NOW
Accounts 18.4% 24.9% 9.6%
Time Deposits of $100,000 or
More 39.6% 29.7% 38.1%
Other Time Deposits 15.7% 21.2% 32.7%
------------ ------------ ------------
Total Deposits 100.0% 100.0% 100.0%
============ ============ ============
CAPITAL RATIOS (Bank Only):
Total Risk-Based 7.81% 9.07% 10.50%
Tier 1 Risk-Based 6.49% 7.77% 9.22%
Tier 1 Leverage 5.68% 6.69% 8.10%
(2) Commercial and industrial loans include owner-occupied property loans of $1,08 billion, $1,15
billion and $1,23 billion as of March 31, 2010, December 31, 2009, and March 31, 2009,
respectively.
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
AVERAGE BALANCES, AVERAGE YIELDS EARNED AND AVERAGE RATES PAID (UNAUDITED)
(Dollars in Thousands)
Three Months Ended
----------------------------------------------------------------------
March 31, 2010 December 31, 2009
---------------------------------- ----------------------------------
Interest Average Interest Average
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
------------- ---------- ------- ------------- ---------- -------
INTEREST-EARNING ASSETS
----------------------------
Loans:
Real Estate Loans:
Commercial Property $ 836,147 $ 11,374 5.52% $ 861,831 $ 11,872 5.47%
Construction 113,115 1,394 5.00% 130,400 1,342 4.08%
Residential Property 74,077 783 4.29% 80,257 997 4.93%
------------- ---------- ------- ------------- ---------- -------
Total Real Estate Loans 1,023,339 13,551 5.37% 1,072,488 14,211 5.26%
Commercial and Industrial
Loans (1) 1,682,429 22,235 5.36% 1,787,795 25,472 5.65%
Consumer Loans 61,197 849 5.63% 66,074 965 5.79%
------------- ---------- ------- ------------- ---------- -------
Total Gross Loans 2,766,965 36,635 5.37% 2,926,357 40,648 5.51%
Prepayment Penalty Income -- 60 -- -- 162 --
Unearned Income on Loans,
Net of Costs (1,264) -- -- (1,635) -- --
------------- ---------- ------- ------------- ---------- -------
Gross Loans, Net 2,765,701 36,695 5.38% 2,924,722 40,810 5.54%
------------- ---------- ------- ------------- ---------- -------
Investment Securities:
Municipal Bonds (2) 7,549 118 6.25% 41,653 665 6.39%
U.S. Government Agency
Securities 32,120 383 4.77% 36,500 437 4.79%
Mortgage-Backed Securities 61,920 490 3.17% 77,354 738 3.82%
Collateralized Mortgage
Obligations 11,382 113 3.97% 14,312 143 4.00%
Corporate Bonds -- -- -- 286 -- --
Other Securities 12,369 98 3.17% 12,530 97 3.10%
------------- ---------- ------- ------------- ---------- -------
Total Investment
Securities (2) 125,340 1,202 3.84% 182,635 2,080 4.56%
------------- ---------- ------- ------------- ---------- -------
Other Interest-Earning
Assets:
Equity Securities 39,369 125 1.27% 40,605 136 1.34%
Federal Funds Sold and
Securities Purchased Under
Resale Agreements 14,118 17 0.48% 51,713 65 0.50%
Term Federal Funds Sold -- -- -- 8,500 30 1.41%
Interest-Bearing Deposits
in Other Banks 66,410 55 0.33% 82,867 70 0.34%
------------- ---------- ------- ------------- ---------- -------
Total Other
Interest-Earning Assets 119,897 197 0.66% 183,685 301 0.66%
------------- ---------- ------- ------------- ---------- -------
TOTAL INTEREST-EARNING
ASSETS (2) $ 3,010,938 $ 38,094 5.13% $ 3,291,042 $ 43,191 5.21%
============= ========== ======= ============= ========== =======
INTEREST-BEARING LIABILITIES
----------------------------
Interest-Bearing Deposits:
Savings $ 115,625 $ 824 2.89% $ 104,068 $ 711 2.71%
Money Market Checking and
NOW Accounts 558,916 1,622 1.18% 733,063 3,508 1.90%
Time Deposits of $100,000
or More 924,055 4,677 2.05% 835,726 4,930 2.34%
Other Time Deposits 505,264 2,581 2.07% 680,959 4,261 2.48%
------------- ---------- ------- ------------- ---------- -------
Total Interest-Bearing
Deposits 2,103,860 9,704 1.87% 2,353,816 13,410 2.26%
------------- ---------- ------- ------------- ---------- -------
Borrowings:
FHLB Advances 173,062 346 0.81% 160,754 412 1.02%
Other Borrowings 1,664 -- 0.00% 1,544 -- 0.00%
Junior Subordinated
Debentures 82,406 669 3.29% 82,406 690 3.32%
------------- ---------- ------- ------------- ---------- -------
Total Borrowings 257,132 1,015 1.60% 244,704 1,102 1.79%
------------- ---------- ------- ------------- ---------- -------
TOTAL INTEREST-BEARING
LIABILITIES $ 2,360,992 $ 10,719 1.84% $ 2,598,520 $ 14,512 2.22%
============= ========== ======= ============= ========== =======
NET INTEREST INCOME (2) $ 27,375 $ 28,679
========== ==========
NET INTEREST SPREAD (2) 3.29% 2.99%
======= =======
NET INTEREST MARGIN (2) 3.69% 3.46%
======= =======
Three Months Ended
----------------------------------
March 31, 2009
----------------------------------
Interest Average
Average Income/ Yield/
Balance Expense Rate
------------- ---------- -------
INTEREST-EARNING ASSETS
----------------------------
Loans:
Real Estate Loans:
Commercial Property $ 914,632 $ 12,937 5.74%
Construction 180,026 1,547 3.49%
Residential Property 90,490 1,163 5.21%
------------- ---------- -------
Total Real Estate Loans 1,185,148 15,647 5.35%
Commercial and Industrial
Loans (1) 2,083,951 28,237 5.50%
Consumer Loans 81,244 1,153 5.76%
------------- ---------- -------
Total Gross Loans 3,350,343 45,037 5.45%
Prepayment Penalty Income -- 48 --
Unearned Income on Loans,
Net of Costs (1,258) -- --
------------- ---------- -------
Gross Loans, Net 3,349,085 45,085 5.46%
------------- ---------- -------
Investment Securities:
Municipal Bonds (2) 58,886 989 6.72%
U.S. Government Agency
Securities 9,578 96 4.01%
Mortgage-Backed Securities 75,716 895 4.73%
Collateralized Mortgage
Obligations 33,631 348 4.14%
Corporate Bonds 159 (22) -55.35%
Other Securities 4,314 33 3.06%
------------- ---------- -------
Total Investment
Securities (2) 182,284 2,339 5.13%
------------- ---------- -------
Other Interest-Earning
Assets:
Equity Securities 41,727 153 1.49%
Federal Funds Sold and
Securities Purchased Under
Resale Agreements 94,585 82 0.35%
Term Federal Funds Sold 138,344 700 2.05%
Interest-Bearing Deposits
in Other Banks 161 2 5.04%
------------- ---------- -------
Total Other
Interest-Earning Assets 274,817 937 1.38%
------------- ---------- -------
TOTAL INTEREST-EARNING
ASSETS (2) $ 3,806,186 $ 48,361 5.15%
============= ========== =======
INTEREST-BEARING LIABILITIES
----------------------------
Interest-Bearing Deposits:
Savings $ 82,029 $ 505 2.50%
Money Market Checking and
NOW Accounts 343,354 1,854 2.19%
Time Deposits of $100,000
or More 1,078,650 10,322 3.88%
Other Time Deposits 1,171,246 10,104 3.50%
------------- ---------- -------
Total Interest-Bearing
Deposits 2,675,279 22,785 3.45%
------------- ---------- -------
Borrowings:
FHLB Advances 356,190 1,112 1.27%
Other Borrowings 1,457 -- 0.00%
Junior Subordinated
Debentures 82,406 988 4.86%
------------- ---------- -------
Total Borrowings 440,053 2,100 1.94%
------------- ---------- -------
TOTAL INTEREST-BEARING
LIABILITIES $ 3,115,332 $ 24,885 3.24%
============= ========== =======
NET INTEREST INCOME (2) $ 23,476
==========
NET INTEREST SPREAD (2) 1.91%
=======
NET INTEREST MARGIN (2) 2.50%
=======
(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.
CONTACT: Hanmi Financial Corporation
Brian E. Cho, Chief Financial Officer
(213) 368-3200
Investor Relations and Corporate Planning
David Yang
(213) 637-4798
Released April 29, 2010