Hanmi Financial Corporation Reports Fourth-Quarter and Fiscal Year 2008 Financial Results
LOS ANGELES--(BUSINESS WIRE)-- Hanmi Financial Corporation (NASDAQ:HAFC) ("we," "our" or "Hanmi"), the holding company for Hanmi Bank (the "Bank"), reported a fourth-quarter net loss of $3.8 million, or ($0.08) per share, compared to a net loss of $100.0 million, or ($2.15) per share, in the comparable period a year ago; the fourth-quarter 2007 net loss included a non-cash goodwill impairment charge of $102.9 million.
For the year ended December 31, 2008, Hanmi reported a net loss of $102.1 million, or ($2.23) per share, which includes a second-quarter non-cash goodwill impairment charge of $107.4 million, compared to a net loss of $60.8 million, or ($1.27) per share, for the year ended December 31, 2007, which included the aforementioned fourth-quarter non-cash goodwill impairment charge of $102.9 million. Excluding the goodwill impairment charges, for the year ended December 31, 2008 and 2007, non-GAAP net income was $5.3 million, or $0.12 per diluted share, and $42.1 million, or $0.88 per diluted share, respectively.
"Our financial results for 2008 reflect the difficult environment in which we continue to operate," said Jay S. Yoo, Hanmi's President and Chief Executive Officer. "The economic downturn has adversely affected many of our customers, both small businesses and larger commercial borrowers, and this in turn has led to higher delinquency rates and an increase in non-performing loans. Current indications are that this economic situation will persist well into 2009. In short, we believe that two of our biggest challenges of 2009 will be comparable to challenges we faced in 2008 -- namely, credit quality and liquidity.
"With that in mind, our focus in 2009 will be on improving the credit profile of the existing portfolio while increasing our customer deposit base. We are seeking to replace wholesale borrowings and broker deposits with reasonably priced retail core deposits, which are the foundation of our business. Similarly, we continue to work diligently to address the unacceptably high default and charge-off rates that we have experienced in the past several quarters. As we have noted in the past, we believe that the key to minimizing future loan losses is the early identification and aggressive resolution of problematic loans."
Results of Operations
At the end of this release is a table titled "Reconciliation of GAAP to Non-GAAP." The table provides reconciliations between various GAAP and non-GAAP metrics -- including non-interest expense, net income and earnings per share -- that exclude the effects of the second-quarter 2008 goodwill impairment charge of $107.4 million and the fourth-quarter 2007 goodwill impairment charge of $102.9 million. We have provided it in the belief that it can be useful in evaluating our core operating performance. All references to non-GAAP metrics are to this table. These non-GAAP disclosures supplement our GAAP disclosures and should not be considered an alternative to the GAAP disclosures.
Fourth-quarter 2008 net interest income before provision for credit losses decreased by $5.1 million, or 14.2 percent, to $30.5 million, compared to $35.6 million in the third quarter of 2008. For the full year 2008, net interest income before provision for credit losses decreased by $17.4 million, or 11.5 percent, to $134.4 million, compared to $151.8 million in the prior year.
The average yield on the loan portfolio was 6.06 percent in the fourth quarter of 2008, a decrease of 62 basis points compared to 6.68 percent in the third quarter. The cost of average interest-bearing deposits was 3.38 percent in the fourth quarter of 2008, a decrease of 5 basis points compared to 3.43 percent in the third quarter. Net interest margin was 3.34 percent in the fourth quarter of 2008, a decrease of 56 basis points compared to 3.90 percent in the third quarter. The rather sharp decline in net interest margin was due to multiple Fed rate cuts totaling 175 basis points in the fourth quarter of 2008 and our inability to match our asset yield declines with a like decrease in liability costs substantially caused by the overall liquidity crunch in the current economy. We believe that we may see some margin expansion in the latter part of 2009 considering the recent decrease of deposit costs in our niche market and the government actions to speed the end of the liquidity crisis which continues to damage the economy.
The provision for credit losses in the fourth quarter of 2008 substantially increased to $25.5 million compared to $13.2 million in the preceding quarter, and the provision for the full year 2008 almost doubled to $75.7 million compared to $38.3 million in 2007. Such increases were made to keep pace with increases in non-performing loans and charge-offs. Fourth-quarter charge-offs, net of recoveries, were $18.6 million compared to $11.8 million in the prior quarter and $11.6 million in the fourth quarter of 2007. Included in fourth-quarter 2008 charge-offs was a $6.5 million charge-off related to a condominium project in Northern California and a $4.9 million charge-off related to a low-income housing project in Los Angeles. The remaining balance of our charge-offs related primarily to a number of small business loans that have been adversely affected by the economic downturn. For the full year 2008, charge-offs, net of recoveries, were $46.0 million compared to $22.6 million in 2007.
Total non-interest income in the fourth quarter of 2008 was $7.4 million compared to $5.3 million in the third quarter of 2008 and $9.8 million in the fourth quarter of 2007. The increase in non-interest income from the third quarter is largely attributable to the third quarter's other-than-temporary impairment ("OTTI") losses of $2.6 million on a Lehman Brothers corporate bond and a Community Reinvestment Act ("CRA") equity investment. In the fourth quarter the OTTI loss was relatively small at $494,000 attributable to the same CRA equity investment. For the full year 2008, total non-interest income decreased to $32.1 million from $40.0 million in 2007, due mainly to the increased OTTI losses on securities and the reduction in gain on sales of loans. In addition, the depressed international trading activities in this recessionary economy decreased our trade finance fee income from $4.5 million for 2007 to $3.1 million in 2008.
Total non-interest expense in the fourth quarter of 2008 was $21.1 million compared to $22.2 million in the third quarter, a decrease of $1.2 million, or 5.3 percent. In the fourth quarter of 2007, total non-interest expense was $126.2 million, which included the aforementioned non-cash goodwill impairment charge of $102.9 million; excluding the goodwill impairment charge, fourth-quarter 2007 non-GAAP total non-interest expense was $23.3 million. The $1.2 million sequential decline in total non-interest expense is largely attributable to a $1.9 million reduction in salaries and employee benefits (the result of our previously announced third-quarter staff reductions) and a decrease of $429,000 in data processing expense, offset by an increase of $1.1 million in other operating expenses. For the full year 2008, total non-interest expense was $194.3 million compared to $189.9 million in 2007, an increase of $4.4 million, or 2.3 percent. However, excluding the goodwill impairment charges, 2008 non-GAAP total non-interest expense was essentially unchanged at $86.9 million, compared to $87.0 million for 2007. With our ongoing efforts to streamline our operations, we expect improvement in our overall level of non-interest expense.
For the fourth quarter of 2008, the efficiency ratio (non-interest expense divided by the sum of net interest income before provision for credit losses and non-interest income) was 55.49 percent, compared to 54.33 percent in the third quarter and 266.31 percent in the comparable period a year ago.
Balance Sheet and Asset Quality
At December 31, 2008, total assets were $3.88 billion compared to $3.77 billion at September 30, 2008, an increase of $109.8 million, or 2.9 percent, and $3.98 billion at December 31, 2007, a decrease of $107.8 million, or 2.7 percent. At $3.36 billion, gross loans at December 31, 2008 were essentially unchanged from $3.35 billion at September 30, 2008, and increased by $77.4 million, or 2.4 percent, compared to $3.28 billion at December 31, 2007.
Total deposits increased by $270.7 million, or 9.7 percent, to $3.07 billion at December 31, 2008 compared to $2.80 billion at September 30, 2008, and increased by $68.4 million, or 2.3 percent, compared to $3.00 billion at December 31, 2007. The increase in deposits in the fourth quarter of 2008 reflects our utilization of broker deposits. Our broker deposits increased to $818.0 million at December 31, 2008 from $265.4 million at September 30, 2008 and $31.8 million at December 31, 2007. FHLB advances and other borrowings decreased by $162.0 million, or 27.7 percent, to $423.0 million at December 31, 2008 compared to $585.0 million at September 30, 2008, and decreased by $64.2 million, or 13.2 percent, compared to $487.2 million at December 31, 2007. Because of the extreme liquidity conditions that continue to exist, we aggressively chose to raise broker deposits during the fourth quarter. Even though we plan to replace them with customer deposits, broker deposits continue to be readily available as necessary.
Delinquent loans were $128.5 million (3.82 percent of total gross loans) at December 31, 2008, compared to $102.9 million (3.08 percent of total gross loans) at September 30, 2008, and $45.1 million (1.37 percent of total gross loans) at December 31, 2007; the largest contributor to the increase in delinquent loans was an $8.5 million loan to a private golf course near San Diego. Non-performing loans at December 31, 2008 were $121.9 million (3.62 percent of total gross loans), compared to $111.9 million (3.34 percent of gross loans) at September 30, 2008, and $54.5 million (1.66 percent of total gross loans) at December 31, 2007. As credit monitoring and risk management continue to be our highest priorities in 2009, we will work diligently to improve our asset quality with heightened collection efforts and other workout processes.
At December 31, 2008, the allowance for loan losses was $71.0 million, or 2.11 percent of gross loans (58.23 percent of total non-performing loans), compared to $63.9 million, or 1.91 percent of gross loans (57.16 percent of total non-performing loans), at September 30, 2008, and $43.6 million, or 1.33 percent of gross loans (80.05 percent of total non-performing loans), at December 31, 2007.
Capital Adequacy
The Bank's capital ratios exceed levels defined as "well-capitalized" by our regulators. At December 31, 2008, the Bank's Tier 1 Leverage, Tier 1 Risk-Based Capital and Total Risk-Based Capital ratios were 8.85 percent, 9.44 percent and 10.70 percent, respectively, compared to 8.94 percent, 9.57 percent and 10.84 percent, respectively, at September 30, 2008.
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 26 full-service offices in Los Angeles, Orange, San Bernardino, San Francisco, Santa Clara and San Diego counties, and six loan production offices in Colorado, Georgia, Illinois, Texas, Virginia and Washington. Hanmi Bank specializes in commercial, Small Business Administration ("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.
This release includes non-GAAP net income, non-GAAP earnings per share data, non-GAAP performance ratios, shares used in non-GAAP earnings per share calculation and non-GAAP total non-interest expense. These non-GAAP measures are not in accordance with, or an alternative for, measures prepared in accordance with GAAP and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. We believe that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP and that these measures should be used only to evaluate our results of operations in conjunction with the corresponding GAAP measures.
We believe that the presentation of non-GAAP net income, non-GAAP earnings per share data, non-GAAP performance ratios, shares used in non-GAAP earnings per share calculation, and non-GAAP total non-interest expense, when shown in conjunction with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to our financial condition and results of operations. In addition, we believe that the presentation of non-GAAP measures provides useful information to investors and management regarding operating activities for the periods presented.
For our internal budgeting process, our management uses financial statements that do not include impairment losses on goodwill. Our management also uses the foregoing non-GAAP measures, in addition to the corresponding GAAP measures, in reviewing our financial results.
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: 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; fluctuations in interest rates; risks of natural disasters related to our real estate portfolio; risks associated with SBA loans; 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; the availability of capital to fund the expansion of our business; 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, 2007 and Quarterly Reports on Form 10-Q filed thereafter, which could cause actual results to differ from those projected. You should understand that it is not possible to predict or identify all such risks. Consequently, you should not consider such disclosures to be a complete discussion of all potential risks or uncertainties. We undertake no obligation to update such forward-looking statements except as required by law.
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS(UNAUDITED)
(Dollars in Thousands)
December 31, September 30, % December 31, %
2008 2008 Change 2007 Change
ASSETS
Cash and Due from $ 85,188 $ 81,640 4.3 % $ 105,898 (19.6 )%
Banks
Federal Funds Sold 130,000 5,000 2,500.0 % 16,500 687.9 %
Cash and Cash 215,188 86,640 148.4 % 122,398 75.8 %
Equivalents
Investment 197,876 222,469 (11.1 )% 350,457 (43.5 )%
Securities
Loans:
Gross Loans, Net of 3,362,111 3,345,049 0.5 % 3,284,708 2.4 %
Deferred Loan Fees
Allowance for Loan (70,986 ) (63,948 ) 11.0 % (43,611 ) 62.8 %
Losses
Loans Receivable, 3,291,125 3,281,101 0.3 % 3,241,097 1.5 %
Net
Customers'
Liability on 4,295 7,382 (41.8 )% 5,387 (20.3 )%
Acceptances
Premises and 20,279 20,703 (2.0 )% 20,800 (2.5 )%
Equipment, Net
Accrued Interest 12,347 13,801 (10.5 )% 17,411 (29.1 )%
Receivable
Other Real Estate 823 2,988 (72.5 )% 287 186.8 %
Owned
Deferred Income 29,456 18,682 57.7 % 18,470 59.5 %
Taxes
Servicing Assets 3,791 4,018 (5.6 )% 4,336 (12.6 )%
Goodwill -- -- -- 107,100 (100.0 )%
Other Intangible 4,950 5,404 (8.4 )% 6,908 (28.3 )%
Assets
Federal Reserve
Bank and Federal 40,925 42,157 (2.9 )% 33,479 22.2 %
Home Loan Bank
Stock
Bank-Owned Life 25,476 25,239 0.9 % 24,525 3.9 %
Insurance
Other Assets 29,285 35,407 (17.3 )% 31,002 (5.5 )%
TOTAL ASSETS $ 3,875,816 $ 3,765,991 2.9 % $ 3,983,657 (2.7 )%
LIABILITIES AND
STOCKHOLDERS'
EQUITY
Liabilities:
Deposits:
Noninterest-Bearing $ 536,944 $ 634,593 (15.4 )% $ 680,282 (21.1 )%
Interest-Bearing 2,533,136 2,164,784 17.0 % 2,321,417 9.1 %
Total Deposits 3,070,080 2,799,377 9.7 % 3,001,699 2.3 %
Accrued Interest 18,539 11,344 63.4 % 21,828 (15.1 )%
Payable
Acceptances 4,295 7,382 (41.8 )% 5,387 (20.3 )%
Outstanding
FHLB Advances and 422,983 584,972 (27.7 )% 487,164 (13.2 )%
Other Borrowings
Junior Subordinated 82,406 82,406 -- 82,406 --
Debentures
Other Liabilities 13,598 13,314 2.1 % 14,617 (7.0 )%
Total Liabilities 3,611,901 3,498,795 3.2 % 3,613,101 --
Stockholders' 263,915 267,196 (1.2 )% 370,556 (28.8 )%
Equity
TOTAL LIABILITIES
AND STOCKHOLDERS' $ 3,875,816 $ 3,765,991 2.9 % $ 3,983,657 (2.7 )%
EQUITY
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS(UNAUDITED)
(Dollars in Thousands, Except Per Share Data)
Three Months Ended Year Ended
December 31, September 30, % December 31, % December 31, December 31, %
2008 2008 Change 2007 Change 2008 2007 Change
INTEREST AND
DIVIDEND INCOME:
Interest and Fees on $ 51,305 $ 56,134 (8.6 )% $ 67,505 (24.0 )% $ 223,942 $ 261,992 (14.5 )%
Loans
Taxable Interest on 1,649 2,053 (19.7 )% 3,186 (48.2 )% 9,397 13,399 (29.9 )%
Investments
Tax-Exempt Interest 646 650 (0.6 )% 765 (15.6 )% 2,717 3,055 (11.1 )%
on Investments
Dividends on FHLB 437 581 (24.8 )% 358 22.1 % 1,918 1,413 35.7 %
and FRB Stock
Interest on Federal 29 23 26.1 % 69 (58.0 )% 166 1,032 (83.9 )%
Funds Sold
Interest on Term 43 -- -- -- -- 43 5 760.0 %
Federal Funds Sold
Total Interest and 54,109 59,441 (9.0 )% 71,883 (24.7 )% 238,183 280,896 (15.2 )%
Dividend Income
INTEREST EXPENSE:
Interest on Deposits 19,654 19,365 1.5 % 27,544 (28.6 )% 84,353 108,517 (22.3 )%
Interest on FHLB
Advances and Other 2,623 3,329 (21.2 )% 5,074 (48.3 )% 14,373 13,949 3.0 %
Borrowings
Interest on Junior
Subordinated 1,293 1,150 12.4 % 1,670 (22.6 )% 5,056 6,644 (23.9 )%
Debentures
Total Interest 23,570 23,844 (1.1 )% 34,288 (31.3 )% 103,782 129,110 (19.6 )%
Expense
NET INTEREST INCOME
BEFORE PROVISION FOR 30,539 35,597 (14.2 )% 37,595 (18.8 )% 134,401 151,786 (11.5 )%
CREDIT LOSSES
Provision for Credit 25,450 13,176 93.2 % 20,704 22.9 % 75,676 38,323 97.5 %
Losses
NET INTEREST INCOME
AFTER PROVISION FOR 5,089 22,421 (77.3 )% 16,891 (69.9 )% 58,725 113,463 (48.2 )%
CREDIT LOSSES
NON-INTEREST INCOME:
Service Charges on 4,559 4,648 (1.9 )% 4,672 (2.4 )% 18,463 18,061 2.2 %
Deposit Accounts
Insurance 1,174 1,194 (1.7 )% 1,419 (17.3 )% 5,067 4,954 2.3 %
Commissions
Trade Finance Fees 614 784 (21.7 )% 944 (35.0 )% 3,088 4,493 (31.3 )%
Other Service 513 433 18.5 % 646 (20.6 )% 2,365 2,527 (6.4 )%
Charges and Fees
Remittance Fees 651 499 30.5 % 546 19.2 % 2,194 2,049 7.1 %
Bank-Owned Life 237 241 (1.7 )% 240 (1.3 )% 952 933 2.0 %
Insurance Income
Gain on Sales of -- -- -- 1,767 (100.0 )% 765 5,452 (86.0 )%
Loans
Gain (Loss) on Sales
of Securities (58 ) (483 ) (88.0 )% -- -- 77 -- --
Available for Sale
Other-Than-Temporary
Impairment Loss on (494 ) (2,621 ) (81.2 )% (1,074 ) (54.0 )% (3,115 ) (1,074 ) 190.0 %
Securities
Other Income 208 633 (67.1 )% 641 (67.6 )% 2,293 2,611 (12.2 )%
Total Non-Interest 7,404 5,328 39.0 % 9,801 (24.5 )% 32,149 40,006 (19.6 )%
Income
NON-INTEREST
EXPENSE:
Salaries and 8,846 10,782 (18.0 )% 13,075 (32.3 )% 42,209 47,036 (10.3 )%
Employee Benefits
Occupancy and 2,798 2,786 0.4 % 2,754 1.6 % 11,158 10,494 6.3 %
Equipment
Data Processing 1,069 1,498 (28.6 )% 1,622 (34.1 )% 5,799 6,390 (9.2 )%
Professional Fees 912 647 41.0 % 782 16.6 % 3,539 2,468 43.4 %
Advertising and 904 914 (1.1 )% 1,137 (20.5 )% 3,518 3,630 (3.1 )%
Promotion
Supplies and 510 681 (25.1 )% 596 (14.4 )% 2,518 2,592 (2.9 )%
Communications
Amortization of
Other Intangible 454 478 (5.0 )% 548 (17.2 )% 1,958 2,324 (15.7 )%
Assets
Impairment Loss on -- -- -- 102,891 (100.0 )% 107,393 102,891 4.4 %
Goodwill
Other Operating 5,563 4,449 25.0 % 2,816 97.5 % 16,230 12,104 34.1 %
Expenses
Total Non-Interest 21,056 22,235 (5.3 )% 126,221 (83.3 )% 194,322 189,929 2.3 %
Expense
INCOME (LOSS) BEFORE
PROVISION (BENEFIT) (8,563 ) 5,514 (255.3 )% (99,529 ) (91.4 )% (103,448 ) (36,460 ) 183.7 %
FOR INCOME TAXES
Provision (Benefit) (4,748 ) 1,166 (507.2 )% 514 (1,023.7 )% (1,355 ) 24,302 (105.6 )%
for Income Taxes
NET INCOME (LOSS) $ (3,815 ) $ 4,348 (187.7 )% $ (100,043 ) (96.2 )% $ (102,093 ) $ (60,762 ) 68.0 %
EARNINGS (LOSS) PER
SHARE:
Basic $ (0.08 ) $ 0.09 (188.9 )% $ (2.15 ) (96.3 )% $ (2.23 ) $ (1.27 ) 75.6 %
Diluted $ (0.08 ) $ 0.09 (188.9 )% $ (2.15 ) (96.3 )% $ (2.23 ) $ (1.27 ) 75.6 %
WEIGHTED-AVERAGE
SHARES OUTSTANDING:
Basic 45,884,462 45,881,549 46,465,973 45,872,541 47,787,213
Diluted 45,906,499 45,933,043 46,465,973 45,872,541 47,787,213
SHARES OUTSTANDING 45,905,549 45,905,549 45,860,941 45,905,549 45,860,941
AT PERIOD-END
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL DATA (UNAUDITED)
(Dollars in Thousands)
Three Months Ended Year Ended
December 31, September 30, % December 31, % December 31, December 31, %
2008 2008 Change 2007 Change 2008 2007 Change
AVERAGE
BALANCES:
Average Gross
Loans, Net of $ 3,366,601 $ 3,341,250 0.8 % $ 3,284,222 2.5 % $ 3,332,133 $ 3,080,544 8.2 %
Deferred Loan
Fees
Average
Investment 205,305 244,027 (15.9 )% 350,147 (41.4 )% 271,802 368,144 (26.2 )%
Securities
Average
Interest-Earning 3,637,232 3,630,755 0.2 % 3,669,436 (0.9 )% 3,653,720 3,494,758 4.5 %
Assets
Average Total 3,789,435 3,789,614 -- 4,053,801 (6.5 )% 3,866,856 3,882,891 (0.4 )%
Assets
Average Deposits 2,879,674 2,895,746 (0.6 )% 3,029,804 (5.0 )% 2,913,171 2,989,806 (2.6 )%
Average 602,838 590,401 2.1 % 496,513 21.4 % 591,930 355,819 66.4 %
Borrowings
Average
Interest-Bearing 2,913,723 2,835,917 2.7 % 2,845,775 2.4 % 2,874,470 2,643,296 8.7 %
Liabilities
Average
Stockholders' 271,544 267,433 1.5 % 485,934 (44.1 )% 323,462 492,637 (34.3 )%
Equity
Average Tangible 266,333 261,751 1.8 % 269,497 (1.2 )% 264,490 275,036 (3.8 )%
Equity
PERFORMANCE
RATIOS:
Return on (0.40 )% 0.46 % (9.79 )% (2.64 )% (1.56 )%
Average Assets
Return on
Average (5.59 )% 6.47 % (81.68 )% (31.56 )% (12.33 )%
Stockholders'
Equity
Return on
Average Tangible (5.70 )% 6.61 % (147.28 )% (38.60 )% (22.09 )%
Equity
Efficiency Ratio 55.49 % 54.33 % 266.31 % 116.67 % 99.03 %
Net Interest 2.70 % 3.17 % 2.99 % 2.91 % 3.16 %
Spread
Net Interest 3.34 % 3.90 % 4.06 % 3.68 % 4.34 %
Margin
ALLOWANCE FOR
LOAN LOSSES:
Balance at the
Beginning of $ 63,948 $ 62,977 1.5 % $ 34,503 85.3 % $ 43,611 $ 27,557 58.3 %
Period
Provision
Charged to 25,660 12,802 100.4 % 20,736 23.7 % 73,345 38,688 89.6 %
Operating
Expense
Charge-Offs, Net (18,622 ) (11,831 ) 57.4 % (11,628 ) 60.1 % (45,970 ) (22,634 ) 103.1 %
of Recoveries
Balance at End $ 70,986 $ 63,948 11.0 % $ 43,611 62.8 % $ 70,986 $ 43,611 62.8 %
of Period
Allowance for
Loan Losses to 2.11 % 1.91 % 1.33 % 2.11 % 1.33 %
Total Gross
Loans
Allowance for
Loan Losses to
Total 58.23 % 57.16 % 80.05 % 58.23 % 80.05 %
Non-Performing
Loans
ALLOWANCE FOR
OFF-BALANCE
SHEET ITEMS:
Balance at the
Beginning of $ 4,306 $ 3,932 9.5 % $ 1,797 139.6 % $ 1,765 $ 2,130 (17.1 )%
Period
Provision
Charged to (210 ) 374 (156.1 )% (32 ) 387.8 % 2,331 (365 ) (738.6 )%
Operating
Expense
Balance at End $ 4,096 $ 4,306 (4.9 )% $ 1,765 132.1 % $ 4,096 $ 1,765 132.1 %
of Period
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL DATA(UNAUDITED) (Continued)
(Dollars in Thousands)
December 31, September 30, % December 31, %
2008 2008 Change 2007 Change
NON-PERFORMING
ASSETS:
Non-Accrual Loans $ 120,823 $ 111,335 8.5 % $ 54,252 122.7 %
Loans 90 Days or
More Past Due and 1,075 535 100.9 % 227 373.6 %
Still Accruing
Total
Non-Performing 121,898 111,870 9.0 % 54,479 123.8 %
Loans
Other Real Estate 823 2,988 (72.5 )% 287 186.8 %
Owned
Total
Non-Performing $ 122,721 $ 114,858 6.8 % $ 54,766 124.1 %
Assets
Total
Non-Performing 3.62 % 3.34 % 1.66 %
Loans/Total Gross
Loans
Total
Non-Performing 3.17 % 3.05 % 1.37 %
Assets/Total Assets
Total
Non-Performing 172.9 % 179.6 % 125.6 %
Assets/Allowance
for Loan Losses
DELINQUENT LOANS $ 128,469 $ 102,917 24.8 % $ 45,086 184.9 %
Delinquent
Loans/Total Gross 3.82 % 3.08 % 1.37 %
Loans
LOAN PORTFOLIO:
Real Estate Loans $ 1,180,114 $ 1,166,436 1.2 % $ 1,101,907 7.1 %
Commercial and 2,099,732 2,096,222 0.2 % 2,094,719 0.2 %
Industrial Loans
Consumer Loans 83,525 84,031 (0.6 )% 90,449 (7.7 )%
Total Gross Loans 3,363,371 3,346,689 0.5 % 3,287,075 2.3 %
Deferred Loan Fees (1,260 ) (1,640 ) (23.2 )% (2,367 ) (46.8 )%
Gross Loans, Net of 3,362,111 3,345,049 0.5 % 3,284,708 2.4 %
Deferred Loan Fees
Allowance for Loan (70,986 ) (63,948 ) 11.0 % (43,611 ) 62.8 %
Losses
Loans Receivable, $ 3,291,125 $ 3,281,101 0.3 % $ 3,241,097 1.5 %
Net
LOAN MIX:
Real Estate Loans 35.1 % 34.9 % 33.5 %
Commercial and 62.4 % 62.6 % 63.7 %
Industrial Loans
Consumer Loans 2.5 % 2.5 % 2.8 %
Total Gross Loans 100.0 % 100.0 % 100.0 %
DEPOSIT PORTFOLIO:
Noninterest-Bearing $ 536,944 $ 634,593 (15.4 )% $ 680,282 (21.1 )%
Savings 81,869 86,157 (5.0 )% 93,099 (12.1 )%
Money Market
Checking and NOW 370,401 597,065 (38.0 )% 445,806 (16.9 )%
Accounts
Time Deposits of 849,800 863,034 (1.5 )% 1,441,683 (41.1 )%
$100,000 or More
Other Time Deposits 1,231,066 618,528 99.0 % 340,829 261.2 %
Total Deposits $ 3,070,080 $ 2,799,377 9.7 % $ 3,001,699 2.3 %
DEPOSIT MIX:
Noninterest-Bearing 17.5 % 22.7 % 22.7 %
Savings 2.7 % 3.1 % 3.1 %
Money Market
Checking and NOW 12.1 % 21.3 % 14.9 %
Accounts
Time Deposits of 27.7 % 30.8 % 48.0 %
$100,000 or More
Other Time Deposits 40.0 % 22.1 % 11.3 %
Total Deposits 100.0 % 100.0 % 100.0 %
CAPITAL RATIOS
(BANK ONLY):
Total Risk-Based 10.70 % 10.84 % 10.59 %
Tier 1 Risk-Based 9.44 % 9.57 % 9.34 %
Tier 1 Leverage 8.85 % 8.94 % 8.47 %
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
AVERAGE BALANCES, AVERAGE YIELDS EARNED AND AVERAGE RATES PAID (UNAUDITED)
(Dollars in Thousands)
Three Months Ended Year Ended
December 31, 2008 September 30, 2008 December 31, 2007 December 31, 2008 December 31, 2007
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 $ 902,367 $ 14,074 6.20 % $ 867,684 $ 14,604 6.70 % $ 787,721 $ 15,483 7.80 % $ 841,526 $ 56,968 6.77 % $ 771,386 $ 61,863 8.02 %
Property
Construction 186,080 1,881 4.02 % 199,969 2,539 5.05 % 235,851 5,471 9.20 % 202,879 9,962 4.91 % 223,017 20,359 9.13 %
Residential 91,366 1,174 5.11 % 90,739 1,209 5.30 % 89,184 1,160 5.16 % 90,395 4,758 5.26 % 87,180 4,537 5.20 %
Property
Total Real 1,179,813 17,129 5.78 % 1,158,392 18,352 6.30 % 1,112,756 22,114 7.88 % 1,134,800 71,688 6.32 % 1,081,583 86,759 8.02 %
Estate Loans
Commercial and 2,104,820 32,691 6.18 % 2,099,708 36,128 6.85 % 2,081,945 43,658 8.32 % 2,112,421 145,107 6.87 % 1,905,625 166,802 8.75 %
Industrial Loans
Consumer Loans 83,411 1,353 6.45 % 85,021 1,495 7.00 % 91,378 1,624 7.05 % 86,787 6,142 7.08 % 95,463 7,611 7.97 %
Total Gross 3,368,044 51,173 6.04 % 3,343,121 55,975 6.66 % 3,286,079 67,396 8.14 % 3,334,008 222,937 6.69 % 3,082,671 261,172 8.47 %
Loans
Prepayment -- 132 -- -- 159 -- -- 109 -- -- 1,005 -- -- 820 --
Penalty Income
Unearned Income
on Loans, Net of (1,443 ) -- -- (1,871 ) -- -- (1,857 ) -- -- (1,875 ) -- -- (2,127 ) -- --
Costs
Gross Loans, Net 3,366,601 51,305 6.06 % 3,341,250 56,134 6.68 % 3,284,222 67,505 8.15 % 3,332,133 223,942 6.72 % 3,080,544 261,992 8.50 %
Investment
Securities:
Municipal Bonds 59,718 646 4.33 % 60,979 650 4.26 % 72,097 765 4.24 % 63,918 2,717 4.25 % 71,937 3,055 4.25 %
U.S. Government
Agency 21,720 201 3.70 % 46,777 483 4.13 % 110,194 1,188 4.31 % 65,440 2,813 4.30 % 116,701 4,963 4.25 %
Securities
Mortgage-Backed 79,821 971 4.87 % 83,460 994 4.76 % 97,566 1,190 4.88 % 87,930 4,217 4.80 % 107,356 5,148 4.80 %
Securities
Collateralized
Mortgage 37,853 403 4.26 % 41,266 441 4.27 % 52,883 570 4.31 % 43,842 1,865 4.25 % 58,189 2,530 4.35 %
Obligations
Corporate Bonds 1,688 46 10.90 % 7,751 89 4.59 % 12,709 154 4.85 % 6,671 333 4.99 % 9,084 422 4.65 %
Other Securities 4,505 23 2.04 % 3,794 42 4.43 % 4,698 84 7.15 % 4,001 159 3.97 % 4,877 336 6.89 %
Total Investment 205,305 2,290 4.46 % 244,027 2,699 4.42 % 350,147 3,951 4.51 % 271,802 12,104 4.45 % 368,144 16,454 4.47 %
Securities
Other
Interest-Earning
Assets:
Equity 42,551 437 4.11 % 39,929 581 5.82 % 29,149 358 4.91 % 38,516 1,918 4.98 % 26,228 1,413 5.39 %
Securities
Federal Funds 14,410 29 0.80 % 4,797 23 1.92 % 5,918 69 4.66 % 8,934 166 1.86 % 19,746 1,032 5.23 %
Sold
Term Federal 7,609 43 2.26 % -- -- -- -- -- -- 1,913 43 2.25 % 96 5 5.21 %
Funds Sold
Interest-Earning 756 5 2.65 % 752 4 2.13 % -- -- -- 422 10 2.37 % -- -- --
Deposits
Total Other
Interest-Earning 65,326 514 3.15 % 45,478 608 5.35 % 35,067 427 4.87 % 49,785 2,137 4.29 % 46,070 2,450 5.32 %
Assets
TOTAL
INTEREST-EARNING $ 3,637,232 $ 54,109 5.92 % $ 3,630,755 $ 59,441 6.51 % $ 3,669,436 $ 71,883 7.77 % $ 3,653,720 $ 238,183 6.52 % $ 3,494,758 $ 280,896 8.04 %
ASSETS
INTEREST-BEARING
LIABILITIES
Interest-Bearing
Deposits:
Savings $ 83,777 $ 506 2.40 % $ 91,465 $ 533 2.32 % $ 93,413 $ 474 2.01 % $ 89,866 $ 2,093 2.33 % $ 97,173 $ 2,004 2.06 %
Money Market
Checking and NOW 506,062 3,963 3.12 % 693,718 5,579 3.20 % 478,501 4,144 3.44 % 618,779 19,909 3.22 % 452,825 15,446 3.41 %
Accounts
Time Deposits of 754,081 8,162 4.31 % 973,752 8,709 3.56 % 1,465,551 18,977 5.14 % 1,045,968 43,598 4.17 % 1,430,603 75,516 5.28 %
$100,000 or More
Other Time 966,965 7,023 2.89 % 486,581 4,544 3.72 % 311,797 3,949 5.02 % 527,927 18,753 3.55 % 306,876 15,551 5.07 %
Deposits
Total
Interest-Bearing 2,310,885 19,654 3.38 % 2,245,516 19,365 3.43 % 2,349,262 27,544 4.65 % 2,282,540 84,353 3.70 % 2,287,477 108,517 4.74 %
Deposits
Borrowings:
FHLB Advances
and Other 520,432 2,623 2.01 % 507,995 3,329 2.61 % 414,107 5,074 4.86 % 509,524 14,373 2.82 % 273,413 13,949 5.10 %
Borrowings
Junior
Subordinated 82,406 1,293 6.24 % 82,406 1,150 5.55 % 82,406 1,670 8.04 % 82,406 5,056 6.14 % 82,406 6,644 8.06 %
Debentures
Total Borrowings 602,838 3,916 2.58 % 590,401 4,479 3.02 % 496,513 6,744 5.39 % 591,930 19,429 3.28 % 355,819 20,593 5.79 %
TOTAL
INTEREST-BEARING $ 2,913,723 $ 23,570 3.22 % $ 2,835,917 $ 23,844 3.34 % $ 2,845,775 $ 34,288 4.78 % $ 2,874,470 $ 103,782 3.61 % $ 2,643,296 $ 129,110 4.88 %
LIABILITIES
NET INTEREST $ 30,539 $ 35,597 $ 37,595 $ 134,401 $ 151,786
INCOME
NET INTEREST 2.70 % 3.17 % 2.99 % 2.91 % 3.16 %
SPREAD
NET INTEREST 3.34 % 3.90 % 4.06 % 3.68 % 4.34 %
MARGIN
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
RECONCILIATIONS OF GAAP TO NON-GAAP (UNAUDITED)
(Dollars in Thousands)
Three Months Ended December 31, 2007 Year Ended December 31, 2008 Year Ended December 31, 2007
Net Weighted- Net Weighted- Net Weighted-
Income Average Per Income Average Per Income Average Per
(Loss) Shares Share (Loss) Shares Share (Loss) Shares Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
(Dollars in Thousands, Except Per Share Amounts)
GAAP $ (100,043 ) 46,465,973 $ (2.15 ) $ (102,093 ) 45,872,541 $ (2.23 ) $ (60,762 ) 47,787,213 $ (1.27 )
Impairment
Loss on 102,891 107,393 102,891
Goodwill
Additional
Dilutive 180,751 56,128 306,504
Securities -
Options
$ 2.21 $ 2.35 $ 2.15
Non-GAAP,
Excluding
Impairment $ 2,848 46,646,724 $ 0.06 $ 5,300 45,928,669 $ 0.12 $ 42,129 48,093,717 $ 0.88
Loss on
Goodwill
Three Months Ended December 31, 2007 Year Ended December 31, 2008 Year Ended December 31, 2007
Less Less Less
Impairment Impairment Impairment
Loss on Loss on Loss on
GAAP Goodwill Non-GAAP GAAP Goodwill Non-GAAP GAAP Goodwill Non-GAAP
(Dollars in Thousands)
Total
Non-Interest $ 126,221 $ (102,891 ) $ 23,330 $ 194,322 $ (107,393 ) $ 86,929 $ 189,929 $ (102,891 ) $ 87,038
Expense
Return on
Average (9.79 )% 10.07 % 0.28 % (2.64 )% 2.78 % 0.14 % (1.56 )% 2.64 % 1.08 %
Assets
Return on
Average (81.68 )% 84.01 % 2.33 % (31.56 )% 33.20 % 1.64 % (12.33 )% 20.88 % 8.55 %
Stockholders'
Equity
Return on
Average (147.28 )% 151.47 % 4.19 % (38.60 )% 40.60 % 2.00 % (22.09 )% 37.41 % 15.32 %
Tangible
Equity
Efficiency 266.31 % (217.09 )% 49.22 % 116.67 % (64.48 )% 52.19 % 99.03 % (53.65 )% 45.38 %
Ratio
Source: Hanmi Financial Corporation
Released January 29, 2009