Hanmi Financial Corporation Reports Third-Quarter 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 third-quarter net income of $4.3 million, or $0.09 per diluted share, compared to net income of $11.0 million, or $0.23 per diluted share, in the third quarter of 2007.
For the nine months ended September 30, 2008, Hanmi reported a net loss of $98.3 million, or ($2.14) per share, which includes a second-quarter non-cash goodwill impairment charge of $107.4 million, compared to net income of $39.3 million, or $0.81 per diluted share, in the first nine months of 2007. Excluding the second-quarter goodwill impairment charge, for the nine months ended September 30, 2008, non-GAAP net income was $9.1 million, or $0.20 per diluted share.
Commenting on the quarter, Jay S. Yoo, Hanmi's President and Chief Executive Officer, noted that third-quarter net income of $4.3 million was more than double second-quarter non-GAAP net income of $1.8 million. "While the overall environment remains extremely challenging, we are pleased to report another profitable operating quarter," said Yoo.
"We have spoken in the past of our focus on improving credit quality rather than growing the asset base, which in fact declined by $79.1 million to $3.77 billion at September 30 from June 30, 2008," said Yoo. "Gross loans were essentially unchanged at $3.35 billion, but total deposits declined by $162.2 million, or 5.5 percent, to $2.80 billion from $2.96 billion at June 30. The decline in deposits mirrors the experience of many community banks and other financial institutions in a time of extraordinary turmoil in the credit markets.
"The restructuring program about which we spoke last quarter is complete, and in time we expect to realize measurable improvements in operating efficiency," added Yoo. "Headcount has been reduced by approximately 10 percent, with a commensurate decrease in salaries and related overhead."
"Consistent with our program to enhance credit quality, in August we were pleased to announce the appointment of John Park as Chief Credit Officer. John is an important addition to our senior management team. With this team," concluded Yoo, "I believe we are well positioned to handle the challenges of what continues to be a very difficult environment for financial institutions."
Results of Operations
At the end of this release is a table titled "Reconciliation of GAAP to Non-GAAP" that provides reconciliations between various GAAP and non-GAAP metrics -- including non-interest expenses, net income and earnings per share -- that exclude the effect of the second-quarter $107.4 million goodwill impairment charge for the nine-month period ended September 30, 2008. We have provided them in the belief that they can be useful in evaluating our core operating performance. All subsequent references to non-GAAP metrics are to these tables.
Net interest income before provision for credit losses increased by $1.5 million, or 4.5 percent, to $35.6 million, compared to $34.1 million in the second quarter of 2008. The provision for credit losses was $13.2 million in the third quarter of 2008 compared to $19.2 million in the second quarter and $8.5 million in the third quarter of 2007.
Total non-interest income in the third quarter of 2008 was $5.3 million compared to $9.7 million in the second quarter and $9.5 million a year ago. Second-quarter non-interest income included a gain on sales of loans of $552,000, for which there were no comparable sales in the third quarter. The sequential decline in non-interest income also reflects a loss on the sale of securities available for sale of $483,000, as well as an other-than-temporary impairment loss on securities of $2.6 million; the latter consists of an impairment loss of $2.4 million on a Lehman Brothers corporate bond, and an impairment loss of $212,000 on a Community Reinvestment Act ("CRA") equity investment.
Total non-interest expenses in the third quarter of 2008 were $22.2 million compared to $129.4 million in the second quarter, which included the aforementioned non-cash impairment loss on goodwill, and $21.2 million a year ago; excluding the goodwill impairment charge, second-quarter 2008 non-GAAP non-interest expenses were $22.1 million. Total non-interest expenses include a total of $1.1 million in losses (included under "Other Operating Expenses") related to a derivative transaction to which Lehman Brothers was a party.
For the third quarter of 2008, the efficiency ratio (non-interest expenses divided by the sum of net interest income before provision for credit losses and non-interest income) was 54.33 percent, compared to 296.07 percent, or 50.43 percent excluding the goodwill impairment charge in the second quarter, and 44.95 percent in the comparable period a year ago.
"The provision for credit losses is the product of a comprehensive evaluation of the loan portfolio, and it reflects in large part the economic stress under which some of our borrowers find themselves," said Brian Cho, Chief Financial Officer. "However, we are encouraged by the fact that it is lower than in the prior quarter. The lower provision reflects improvements in some significant loans previously more adversely classified." Third-quarter charge-offs, net of recoveries, were $11.8 million compared to $8.2 million in the prior quarter and $6.1 million in the third quarter of 2007. The third-quarter charge-offs included approximately $2.7 million related to the loans fully reserved in the prior quarter.
The yield on the loan portfolio was 6.68 percent, a decline of 10 basis points compared to the second quarter, when the yield was 6.78 percent. The decline in yield, however, was offset by a decline in the cost of average interest-bearing deposits, which decreased by 27 basis points to 3.43 percent from 3.70 percent in the second quarter. This contributed to an improvement in net interest margin, which in the third quarter was 3.90 percent compared to 3.75 percent in the second quarter of 2008.
Balance Sheet and Asset Quality
At September 30, 2008, total assets were $3.77 billion compared to $3.85 billion at June 30, 2008, a decrease of $79.1 million, or 2.1 percent. Gross loans were essentially unchanged at $3.35 billion at September 30, 2008. Total deposits declined by $162.2 million, or 5.5 percent, to $2.80 billion at September 30, 2008, compared to $2.96 billion at June 30, 2008. FHLB advances and other borrowings increased by $84.9 million, or 17.0 percent, to $585.0 million at September 30, 2008, compared to $500.1 million at June 30, 2008.
As of September 30, 2008, the allowance for loan losses was $63.9 million, or 1.91 percent of gross loans (57.16 percent of total non-performing loans), compared to $63.0 million, or 1.88 percent of gross loans (56.14 percent of total non-performing loans), at June 30, 2008, and $34.5 million, or 1.07 percent of gross loans (77.19 percent of total non-performing loans), at September 30, 2007.
Delinquent loans were $102.9 million (3.08 percent of total gross loans) at September 30, 2008, compared to $138.4 (4.12 percent of total gross loans) at June 30, 2008. Although non-performing loans as of September 30, 2008 were substantially unchanged from the prior quarter at $111.9 million (3.34 percent of gross loans), this amount included a $24 million loan which was brought current during the quarter.
Capital Adequacy
The Bank's capital ratios exceed levels defined as "well-capitalized" by our regulators. At September 30, 2008, the Bank's Tier 1 Leverage, Tier 1 Risk-Based Capital and Total Risk-Based Capital ratios were 8.97 percent, 9.57 percent and 10.84 percent, respectively, compared to 8.60 percent, 9.39 percent and 10.64 percent, respectively, at June 30, 2008. "We continue to monitor our capital adequacy and our ability to address the economic challenges that face most financial institutions in the United States," said Yoo.
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, shares used in non-GAAP earnings per share calculation and non-GAAP non-interest expenses. 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 non-interest expenses, 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 income provides useful information to investors and management regarding operating activities for the periods presented.
For the 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 in those areas in which we operate; deterioration in the credit markets; 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; 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; the ability of borrowers to perform under the terms of their loans and other terms of credit agreements; our ability to successfully integrate acquisitions we may make; 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. 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)
September 30, December 31, %
2008 2007 Change
------------- ------------ --------
ASSETS
----------------------------------
Cash and Due from Banks $ 81,640 $ 105,898 (22.9)%
Federal Funds Sold 5,000 16,500 (69.7)%
------------- ------------ --------
Cash and Cash Equivalents 86,640 122,398 (29.2)%
------------- ------------ --------
Investment Securities 222,469 350,457 (36.5)%
Loans:
Gross Loans, Net of Deferred
Loan Fees 3,345,049 3,284,708 1.8%
Allowance for Loan Losses (63,948) (43,611) 46.6%
------------- ------------ --------
Loans Receivable, Net 3,281,101 3,241,097 1.2%
------------- ------------ --------
Customers' Liability on
Acceptances 7,382 5,387 37.0%
Premises and Equipment, Net 20,703 20,800 (0.5)%
Accrued Interest Receivable 13,801 17,411 (20.7)%
Other Real Estate Owned 2,988 287 941.1%
Servicing Assets 4,018 4,336 (7.3)%
Goodwill -- 107,100 (100.0)%
Other Intangible Assets 5,404 6,908 (21.8)%
Federal Reserve Bank and Federal
Home Loan Bank Stock 42,157 33,479 25.9%
Bank-Owned Life Insurance 25,239 24,525 2.9%
Other Assets 54,089 49,472 9.3%
------------- ------------ --------
TOTAL ASSETS $3,765,991 $3,983,657 (5.5)%
============= ============ ========
LIABILITIES AND STOCKHOLDERS'
EQUITY
----------------------------------
Liabilities:
Deposits:
Noninterest-Bearing $ 634,593 $ 680,282 (6.7)%
Interest-Bearing 2,164,784 2,321,417 (6.7)%
------------- ------------ --------
Total Deposits 2,799,377 3,001,699 (6.7)%
Accrued Interest Payable 11,344 21,828 (48.0)%
Acceptances Outstanding 7,382 5,387 37.0%
FHLB Advances and Other
Borrowings 584,972 487,164 20.1%
Junior Subordinated Debentures 82,406 82,406 --
Other Liabilities 13,314 14,617 (8.9)%
------------- ------------ --------
Total Liabilities 3,498,795 3,613,101 (3.2)%
Stockholders' Equity 267,196 370,556 (27.9)%
------------- ------------ --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $3,765,991 $3,983,657 (5.5)%
============= ============ ========
September 30, %
2007 Change
------------- --------
ASSETS
-----------------------------------------------
Cash and Due from Banks $ 103,789 (21.3)%
Federal Funds Sold -- --
------------- --------
Cash and Cash Equivalents 103,789 (16.5)%
------------- --------
Investment Securities 357,616 (37.8)%
Loans:
Gross Loans, Net of Deferred Loan Fees 3,219,871 3.9%
Allowance for Loan Losses (34,503) 85.3%
------------- --------
Loans Receivable, Net 3,185,368 3.0%
------------- --------
Customers' Liability on Acceptances 5,357 37.8%
Premises and Equipment, Net 20,597 0.5%
Accrued Interest Receivable 17,619 (21.7)%
Other Real Estate Owned 287 941.1%
Servicing Assets 4,328 (7.2)%
Goodwill 209,991 (100.0)%
Other Intangible Assets 7,457 (27.5)%
Federal Reserve Bank and Federal Home Loan Bank
Stock 25,525 65.2%
Bank-Owned Life Insurance 24,285 3.9%
Other Assets 49,396 9.5%
------------- --------
TOTAL ASSETS $4,011,615 (6.1)%
============= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
-----------------------------------------------
Liabilities:
Deposits:
Noninterest-Bearing $ 690,513 (8.1)%
Interest-Bearing 2,357,044 (8.2)%
------------- --------
Total Deposits 3,047,557 (8.1)%
Accrued Interest Payable 20,449 (44.5)%
Acceptances Outstanding 5,357 37.8%
FHLB Advances and Other Borrowings 361,344 61.9%
Junior Subordinated Debentures 82,406 --
Other Liabilities 12,525 6.3%
------------- --------
Total Liabilities 3,529,638 (0.9)%
Stockholders' Equity 481,977 (44.6)%
------------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $4,011,615 (6.1)%
============= ========
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in Thousands, Except Per Share Data)
Three Months Ended
------------------------------------------------------
Sept. 30, June 30, % Sept. 30, %
2008 2008 Change 2007 Change
------------------------ -------- ----------- --------
INTEREST AND
DIVIDEND
INCOME:
Interest and
Fees on Loans $ 56,134 $ 55,905 0.4% $ 66,714 (15.9)%
Taxable
Interest on
Investments 2,053 2,579 (20.4)% 3,308 (37.9)%
Tax-Exempt
Interest on
Investments 650 662 (1.8)% 764 (14.9)%
Dividends on
FHLB and FRB
Stock 581 486 19.5% 350 66.0%
Interest on
Federal Funds
Sold 23 31 (25.8)% 61 (62.3)%
Interest on
Term Federal
Funds Sold -- -- -- -- --
------------------------ -------- ----------- --------
Total
Interest
and
Dividend
Income 59,441 59,663 (0.4)% 71,197 (16.5)%
------------------------ -------- ----------- --------
INTEREST
EXPENSE:
Interest on
Deposits 19,365 20,487 (5.5)% 27,987 (30.8)%
Interest on FHLB
Advances and
Other
Borrowings 3,329 3,944 (15.6)% 3,785 (12.0)%
Interest on
Junior
Subordinated
Debentures 1,150 1,164 (1.2)% 1,675 (31.3)%
------------------------ -------- ----------- --------
Total
Interest
Expense 23,844 25,595 (6.8)% 33,447 (28.7)%
------------------------ -------- ----------- --------
NET INTEREST
INCOME BEFORE
PROVISION FOR
CREDIT LOSSES 35,597 34,068 4.5% 37,750 (5.7)%
Provision for
Credit Losses 13,176 19,229 (31.5)% 8,464 55.7%
------------------------ -------- ----------- --------
NET INTEREST
INCOME AFTER
PROVISION FOR
CREDIT LOSSES 22,421 14,839 51.1% 29,286 (23.4)%
------------------------ -------- ----------- --------
NON-INTEREST
INCOME:
Service Charges
on Deposit
Accounts 4,648 4,539 2.4% 4,463 4.1%
Insurance
Commissions 1,194 1,384 (13.7)% 1,131 5.6%
Trade Finance
Fees 784 825 (5.0)% 1,082 (27.5)%
Other Service
Charges and
Fees 433 703 (38.4)% 691 (37.3)%
Remittance Fees 499 539 (7.4)% 512 (2.5)%
Gain on Sales
of Loans -- 552 (100.0)% 523 (100.0)%
Bank-Owned Life
Insurance
Income 241 234 3.0% 234 3.0%
Gain (Loss) on
Sales of
Securities
Available for
Sale (483) -- -- -- --
Other-Than-
Temporary
Impairment
Loss on
Securities (2,621) -- -- -- --
Other Income 633 876 (27.7)% 890 (28.9)%
------------------------ -------- ----------- --------
Total Non-
Interest
Income 5,328 9,652 (44.8)% 9,526 (44.1)%
------------------------ -------- ----------- --------
NON-INTEREST
EXPENSES:
Salaries and
Employee
Benefits 10,782 11,301 (4.6)% 11,418 (5.6)%
Occupancy and
Equipment 2,786 2,792 (0.2)% 2,657 4.9%
Data Processing 1,498 1,698 (11.8)% 1,540 (2.7)%
Professional
Fees 647 995 (35.0)% 565 14.5%
Advertising and
Promotion 914 888 2.9% 943 (3.1)%
Supplies and
Communications 681 623 9.3% 704 (3.3)%
Amortization of
Other
Intangible
Assets 478 502 (4.8)% 570 (16.1)%
Impairment Loss
on Goodwill -- 107,393 (100.0)% -- --
Other Operating
Expenses 4,449 3,251 36.9% 2,852 56.0%
------------------------ -------- ----------- --------
Total Non-
Interest
Expenses 22,235 129,443 (82.8)% 21,249 4.6%
------------------------ -------- ----------- --------
INCOME (LOSS)
BEFORE
PROVISION FOR
INCOME TAXES 5,514 (104,952) (105.3)% 17,563 (68.6)%
Provision for
Income Taxes 1,166 595 96.0% 6,536 (82.2)%
------------------------ -------- ----------- --------
NET INCOME
(LOSS) $ 4,348 $ (105,547) (104.1)% $ 11,027 (60.6)%
======================== ======== =========== ========
EARNINGS (LOSS)
PER SHARE:
Basic $ 0.09 $ (2.30) (103.9)% $ 0.23 (60.9)%
Diluted $ 0.09 $ (2.30) (103.9)% $ 0.23 (60.9)%
WEIGHTED-AVERAGE
SHARES
OUTSTANDING:
Basic 45,881,549 45,881,549 47,355,143
Diluted 45,933,043 45,881,549 47,536,078
SHARES
OUTSTANDING AT
PERIOD-END 45,905,549 45,900,549 46,986,341
Nine Months Ended
---------------------------------
Sept. 30, Sept. 30, %
2008 2007 Change
------------ ----------- --------
INTEREST AND DIVIDEND INCOME:
Interest and Fees on Loans $ 172,637 $ 194,487 (11.2)%
Taxable Interest on Investments 7,748 10,213 (24.1)%
Tax-Exempt Interest on Investments 2,071 2,290 (9.6)%
Dividends on FHLB and FRB Stock 1,481 1,055 40.4%
Interest on Federal Funds Sold 137 963 (85.8)%
Interest on Term Federal Funds Sold -- 5 (100.0)%
------------ ----------- --------
Total Interest and Dividend
Income 184,074 209,013 (11.9)%
------------ ----------- --------
INTEREST EXPENSE:
Interest on Deposits 64,699 80,973 (20.1)%
Interest on FHLB Advances and Other
Borrowings 11,750 8,875 32.4%
Interest on Junior Subordinated
Debentures 3,763 4,974 (24.3)%
------------ ----------- --------
Total Interest Expense 80,212 94,822 (15.4)%
------------ ----------- --------
NET INTEREST INCOME BEFORE PROVISION
FOR CREDIT LOSSES 103,862 114,191 (9.0)%
Provision for Credit Losses 50,226 17,619 185.1%
------------ ----------- --------
NET INTEREST INCOME AFTER PROVISION
FOR CREDIT LOSSES 53,636 96,572 (44.5)%
------------ ----------- --------
NON-INTEREST INCOME:
Service Charges on Deposit Accounts 13,904 13,389 3.8%
Insurance Commissions 3,893 3,535 10.1%
Trade Finance Fees 2,474 3,549 (30.3)%
Other Service Charges and Fees 1,852 1,881 (1.5)%
Remittance Fees 1,543 1,503 2.7%
Gain on Sales of Loans 765 3,685 (79.2)%
Bank-Owned Life Insurance Income 715 693 3.2%
Gain (Loss) on Sales of Securities
Available for Sale 135 -- --
Other-Than-Temporary Impairment
Loss on Securities (2,621) -- --
Other Income 2,085 1,970 5.8%
------------ ----------- --------
Total Non-Interest Income 24,745 30,205 (18.1)%
------------ ----------- --------
NON-INTEREST EXPENSES:
Salaries and Employee Benefits 33,363 33,961 (1.8)%
Occupancy and Equipment 8,360 7,740 8.0%
Data Processing 4,730 4,768 (0.8)%
Professional Fees 2,627 1,686 55.8%
Advertising and Promotion 2,614 2,493 4.9%
Supplies and Communications 2,008 1,996 0.6%
Amortization of Other Intangible
Assets 1,504 1,776 (15.3)%
Impairment Loss on Goodwill 107,393 -- --
Other Operating Expenses 10,667 9,288 14.8%
------------ ----------- --------
Total Non-Interest Expenses 173,266 63,708 172.0%
------------ ----------- --------
INCOME (LOSS) BEFORE PROVISION FOR
INCOME TAXES (94,885) 63,069 (250.4)%
Provision for Income Taxes 3,393 23,788 (85.7)%
------------ ----------- --------
NET INCOME (LOSS) $ (98,278) $ 39,281 (350.2)%
============ =========== ========
EARNINGS (LOSS) PER SHARE:
Basic $ (2.14) $ 0.81 (364.2)%
Diluted $ (2.14) $ 0.81 (364.2)%
WEIGHTED-AVERAGE SHARES OUTSTANDING:
Basic 45,869,069 48,232,464
Diluted 45,869,069 48,569,863
SHARES OUTSTANDING AT PERIOD-END 45,905,549 46,986,341
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL DATA (UNAUDITED)
(Dollars in Thousands)
Three Months Ended
------------------------------------------------------
September June September
30, 30, % 30, %
2008 2008 Change 2007 Change
----------- ------------ ------- ----------- ---------
AVERAGE
BALANCES:
Average Gross
Loans, Net of
Deferred Loan
Fees $3,341,250 $3,317,061 0.7% $3,135,531 6.6%
Average
Investment
Securities 244,027 296,790 (17.8)% 360,626 (32.3)%
Average
Interest-
Earning
Assets 3,630,755 3,657,676 (0.7)% 3,526,493 3.0%
Average Total
Assets 3,789,614 3,920,796 (3.3)% 3,915,517 (3.2)%
Average
Deposits 2,895,746 2,882,506 0.5% 3,016,118 (4.0)%
Average
Borrowings 590,401 621,239 (5.0)% 367,605 60.6%
Average
Interest-
Bearing
Liabilities 2,835,917 2,851,021 (0.5)% 2,683,930 5.7%
Average
Stockholders'
Equity 267,433 377,096 (29.1)% 487,006 (45.1)%
Average
Tangible
Equity 261,751 264,710 (1.1)% 269,255 (2.8)%
PERFORMANCE
RATIOS:
Return on
Average
Assets 0.46% (10.83)% 1.12%
Return on
Average
Stockholders'
Equity 6.47% (112.57)% 8.98%
Return on
Average
Tangible
Equity 6.61% (160.37)% 16.25%
Efficiency
Ratio 54.33% 296.07% 44.95%
Net Interest
Spread 3.17% 2.95% 3.07%
Net Interest
Margin 3.90% 3.75% 4.25%
ALLOWANCE FOR
LOAN LOSSES:
Balance at the
Beginning of
Period $ 62,977 $ 52,986 18.9% $ 32,190 95.6%
Provision
Charged to
Operating
Expense 12,802 18,211 (29.7)% 8,397 52.5%
Charge-Offs,
Net of
Recoveries (11,831) (8,220) 43.9% (6,084) 94.5%
----------- ------------ ------- ----------- ---------
Balance at
End of
Period $ 63,948 $ 62,977 1.5% $ 34,503 85.3%
=========== ============ ======= =========== =========
Allowance for
Loan Losses
to Total
Gross Loans 1.91% 1.88% 1.07%
Allowance for
Loan Losses
to Total Non-
Performing
Loans 57.16% 56.14% 77.19%
ALLOWANCE FOR
OFF-BALANCE
SHEET ITEMS:
Balance at the
Beginning of
Period $ 3,932 $ 2,914 34.9% $ 1,730 127.3%
Provision
Charged to
Operating
Expense 374 1,018 (63.3)% 67 (194.5)%
----------- ------------ ------- ----------- ---------
Balance at
End of
Period $ 4,306 $ 3,932 9.5% $ 1,797 139.6%
=========== ============ ======= =========== =========
Nine Months Ended
---------------------------------
September September
30, 30, %
2008 2007 Change
------------ ----------- --------
AVERAGE BALANCES:
Average Gross Loans, Net of
Deferred Loan Fees $3,320,559 $3,011,946 10.2%
Average Investment Securities 294,130 374,209 (21.4)%
Average Interest-Earning Assets 3,659,255 3,435,932 6.5%
Average Total Assets 3,892,197 3,825,784 1.7%
Average Deposits 2,924,416 2,976,676 (1.8)%
Average Borrowings 588,267 308,406 90.7%
Average Interest-Bearing
Liabilities 2,861,288 2,575,061 11.1%
Average Stockholders' Equity 340,894 494,731 (31.1)%
Average Tangible Equity 263,870 276,627 (4.6)%
PERFORMANCE RATIOS:
Return on Average Assets (3.37)% 1.37%
Return on Average Stockholders'
Equity (38.51)% 10.62%
Return on Average Tangible Equity (49.75)% 18.99%
Efficiency Ratio 134.73% 44.12%
Net Interest Spread 2.98% 3.21%
Net Interest Margin 3.79% 4.44%
ALLOWANCE FOR LOAN LOSSES:
Balance at the Beginning of Period $ 43,611 $ 27,557 58.3%
Provision Charged to Operating
Expense 47,685 17,952 165.6%
Charge-Offs, Net of Recoveries (27,348) (11,006) 148.5%
------------ ----------- --------
Balance at End of Period $ 63,948 $ 34,503 85.3%
============ =========== ========
Allowance for Loan Losses to Total
Gross Loans 1.91% 1.07%
Allowance for Loan Losses to Total
Non-Performing Loans 57.16% 77.19%
ALLOWANCE FOR OFF-BALANCE SHEET
ITEMS:
Balance at the Beginning of Period $ 1,765 $ 2,130 (17.1)%
Provision Charged to Operating
Expense 2,541 (333) (863.1)%
------------ ----------- --------
Balance at End of Period $ 4,306 $ 1,797 139.6%
============ =========== ========
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL DATA (UNAUDITED) (Continued)
(Dollars in Thousands)
September December September
30, 31, % 30, %
2008 2007 Change 2007 Change
----------- ----------- ------- ----------- -------
NON-PERFORMING
ASSETS:
Non-Accrual Loans $ 111,335 $ 54,252 105.2% $ 44,497 150.2%
Loans 90 Days or
More Past Due
and Still
Accruing 535 227 135.7% 199 168.8%
----------- ----------- ------- ----------- -------
Total Non-
Performing
Loans 111,870 54,479 105.3% 44,696 150.3%
Other Real
Estate Owned 2,988 287 941.1% 287 941.1%
----------- ----------- ------- ----------- -------
Total Non-
Performing
Assets $ 114,858 $ 54,766 109.7% $ 44,983 155.3%
=========== =========== ======= =========== =======
Total Non-
Performing
Loans/Total
Gross Loans 3.34% 1.66% 1.39%
Total Non-
Performing
Assets/Total
Assets 3.05% 1.37% 1.12%
Total Non-
Performing
Assets/Allowance
for Loan Losses 179.6% 125.6% 130.4%
DELINQUENT LOANS $ 102,917 $ 45,086 128.3% $ 54,954 87.3%
=========== =========== ======= =========== =======
Delinquent
Loans/Total
Gross Loans 3.08% 1.37% 1.71%
LOAN PORTFOLIO:
Real Estate Loans $1,166,436 $1,101,907 5.9% $1,099,100 6.1%
Commercial and
Industrial Loans 2,096,222 2,094,719 0.1% 2,033,009 3.1%
Consumer Loans 84,031 90,449 (7.1)% 90,416 (7.1)%
----------- ----------- ------- ----------- -------
Total Gross
Loans 3,346,689 3,287,075 1.8% 3,222,525 3.9%
Deferred Loan
Fees (1,640) (2,367) (30.7)% (2,654) (38.2)%
----------- ----------- ------- ----------- -------
Gross Loans,
Net of
Deferred Loan
Fees 3,345,049 3,284,708 1.8% 3,219,871 3.9%
Allowance for
Loan Losses (63,948) (43,611) 46.6% (34,503) 85.3%
----------- ----------- ------- ----------- -------
Loans
Receivable,
Net $3,281,101 $3,241,097 1.2% $3,185,368 3.0%
=========== =========== ======= =========== =======
LOAN MIX:
Real Estate Loans 34.9% 33.5% 34.1%
Commercial and
Industrial Loans 62.6% 63.7% 63.1%
Consumer Loans 2.5% 2.8% 2.8%
----------- ----------- -----------
Total Gross
Loans 100.0% 100.0% 100.0%
=========== =========== ===========
DEPOSIT PORTFOLIO:
Noninterest-
Bearing $ 634,593 $ 680,282 (6.7)% $ 690,513 (8.1)%
Savings 86,157 93,099 (7.5)% 94,150 (8.5)%
Money Market
Checking and NOW
Accounts 597,065 445,806 33.9% 476,257 25.4%
Time Deposits of
$100,000 or More 655,659 1,441,683 (54.5)% 1,474,764 (55.5)%
Other Time
Deposits 825,903 340,829 142.3% 311,873 164.8%
----------- ----------- ------- ----------- -------
Total Deposits $2,799,377 $3,001,699 (6.7)% $3,047,557 (8.1)%
=========== =========== ======= =========== =======
DEPOSIT MIX:
Noninterest-
Bearing 22.7% 22.7% 22.7%
Savings 3.1% 3.1% 3.1%
Money Market
Checking and NOW
Accounts 21.3% 14.9% 15.6%
Time Deposits of
$100,000 or More 23.4% 48.0% 48.4%
Other Time
Deposits 29.5% 11.3% 10.2%
----------- ----------- -----------
Total
Deposits 100.0% 100.0% 100.0%
=========== =========== ===========
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
AVERAGE BALANCES, AVERAGE YIELDS EARNED AND AVERAGE RATES PAID
(UNAUDITED)
(Dollars in Thousands)
Three Months Ended
------------------------------
September 30, 2008
---------------------------
Interest Average
Average Income/ Yield/
Balance Expense Rate
------------------- ------- --
INTEREST-EARNING ASSETS
Loans:
Real Estate Loans:
Commercial Property $867,684 $14,604 6.70%
Construction 199,969 2,539 5.05%
Residential Property 90,739 1,209 5.30%
------------------- -------
Total Real Estate Loans 1,158,392 18,352 6.30%
Commercial and Industrial Loans 2,099,708 36,128 6.85%
Consumer Loans 85,021 1,495 7.00%
------------------- -------
Total Gross Loans 3,343,121 55,975 6.66%
Prepayment Penalty Income -- 159 --
Unearned Income on Loans, Net of
Costs (1,871) -- --
------------------- -------
Gross Loans, Net 3,341,250 56,134 6.68%
------------------- -------
Investment Securities:
Municipal Bonds 60,979 650 4.26%
U.S. Government Agency Securities 46,777 483 4.13%
Mortgage-Backed Securities 83,460 994 4.76%
Collateralized Mortgage Obligations 41,266 441 4.27%
Corporate Bonds 7,751 89 4.59%
Other Securities 3,794 42 4.43%
------------------- -------
Total Investment Securities 244,027 2,699 4.42%
------------------- -------
Other Interest-Earning Assets:
Equity Securities (includes FHLB and
FRB Stock) 39,929 581 5.82%
Federal Funds Sold 4,797 23 1.92%
Term Federal Funds Sold -- -- --
Interest-Earning Deposits 752 4 2.13%
------------------- -------
Total Other Interest-Earning
Assets 45,478 608 5.35%
------------------- -------
TOTAL INTEREST-EARNING ASSETS $3,630,755 $59,441 6.51%
=================== =======
INTEREST-BEARING LIABILITIES
Interest-Bearing Deposits:
Savings $91,465 $533 2.32%
Money Market Checking and NOW
Accounts 693,718 5,579 3.20%
Time Deposits of $100,000 or More 903,895 8,063 3.55%
Other Time Deposits 556,438 5,190 3.71%
------------------- -------
Total Interest-Bearing Deposits 2,245,516 19,365 3.43%
------------------- -------
Borrowings:
FHLB Advances and Other Borrowings 507,995 3,329 2.61%
Junior Subordinated Debentures 82,406 1,150 5.55%
------------------- -------
Total Borrowings 590,401 4,479 3.02%
------------------- -------
TOTAL INTEREST-BEARING LIABILITIES $2,835,917 $23,844 3.34%
=================== =======
NET INTEREST INCOME $35,597
========
NET INTEREST SPREAD 3.17%
=======
NET INTEREST MARGIN 3.90%
=======
Three Months Ended
-------------------------------
June 30, 2008
-----------------------------
Interest Average
Average Income/ Yield/
Balance Expense Rate
------------ -------- -------
INTEREST-EARNING ASSETS
Loans:
Real Estate Loans:
Commercial Property $804,745 $13,810 6.90%
Construction 208,074 2,649 5.12%
Residential Property 89,949 1,205 5.39%
------------ -------- -------
Total Real Estate Loans 1,102,768 17,664 6.44%
Commercial and Industrial Loans 2,127,882 36,236 6.85%
Consumer Loans 88,491 1,596 7.25%
------------ -------- -------
Total Gross Loans 3,319,141 55,496 6.72%
Prepayment Penalty Income -- 409 --
Unearned Income on Loans, Net of
Costs (2,080) -- --
------------ -------- -------
Gross Loans, Net 3,317,061 55,905 6.78%
------------ -------- -------
Investment Securities:
Municipal Bonds 63,177 662 4.19%
U.S. Government Agency Securities 84,088 884 4.21%
Mortgage-Backed Securities 91,488 1,076 4.70%
Collateralized Mortgage Obligations 46,411 487 4.20%
Corporate Bonds 7,779 89 4.58%
Other Securities 3,847 42 4.37%
------------ -------- -------
Total Investment Securities 296,790 3,240 4.37%
------------ -------- -------
Other Interest-Earning Assets:
Equity Securities (includes FHLB and
FRB Stock) 38,031 486 5.11%
Federal Funds Sold 5,621 31 2.21%
Term Federal Funds Sold -- -- --
Interest-Earning Deposits 173 1 2.31%
------------ -------- -------
Total Other Interest-Earning
Assets 43,825 518 4.73%
-----------------------------
TOTAL INTEREST-EARNING ASSETS $3,657,676 $59,663 6.56%
============ ======== =======
INTEREST-BEARING LIABILITIES
Interest-Bearing Deposits:
Savings $91,803 $527 2.31%
Money Market Checking and NOW
Accounts 718,257 5,707 3.20%
Time Deposits of $100,000 or More 1,098,990 11,040 4.04%
Other Time Deposits 320,732 3,213 4.03%
------------ -------- -------
Total Interest-Bearing Deposits 2,229,782 20,487 3.70%
------------ -------- -------
Borrowings:
FHLB Advances and Other Borrowings 538,833 3,944 2.94%
Junior Subordinated Debentures 82,406 1,164 5.68%
------------ -------- -------
Total Borrowings 621,239 5,108 3.31%
------------ -------- -------
TOTAL INTEREST-BEARING LIABILITIES $2,851,021 $25,595 3.61%
============ ======== =======
NET INTEREST INCOME $34,068
========
NET INTEREST SPREAD 2.95%
=======
NET INTEREST MARGIN 3.75%
=======
Three Months Ended
------------------------------
September 30, 2007
----------------------------
Interest Average
Average Income/ Yield/
Balance Expense Rate
------------- -------- -------
INTEREST-EARNING ASSETS
Loans:
Real Estate Loans:
Commercial Property $775,605 $15,678 8.02%
Construction 227,779 4,814 8.38%
Residential Property 87,864 1,124 5.08%
----------- -------- -------
Total Real Estate Loans 1,091,248 21,616 7.86%
Commercial and Industrial Loans 1,951,478 43,169 8.78%
Consumer Loans 94,751 1,798 7.53%
----------- -------- -------
Total Gross Loans 3,137,477 66,583 8.42%
Prepayment Penalty Income -- 131 --
Unearned Income on Loans, Net of
Costs (1,946) -- --
----------- -------- -------
Gross Loans, Net 3,135,531 66,714 8.44%
----------- -------- -------
Investment Securities:
Municipal Bonds 70,984 764 4.31%
U.S. Government Agency Securities 119,704 1,286 4.30%
Mortgage-Backed Securities 101,688 1,237 4.87%
Collateralized Mortgage Obligations 55,619 612 4.40%
Corporate Bonds 7,811 89 4.56%
Other Securities 4,820 84 6.97%
----------- -------- -------
Total Investment Securities 360,626 4,072 4.52%
----------- -------- -------
Other Interest-Earning Assets:
Equity Securities (includes FHLB and
FRB Stock) 25,431 350 5.51%
Federal Funds Sold 4,905 61 4.97%
Term Federal Funds Sold -- -- --
Interest-Earning Deposits -- -- --
----------- -------- -------
Total Other Interest-Earning
Assets 30,336 411 5.42%
----------- -------- -------
TOTAL INTEREST-EARNING ASSETS $3,526,493 $71,197 8.01%
=========== ======== =======
INTEREST-BEARING LIABILITIES
Interest-Bearing Deposits:
Savings $95,147 $567 2.36%
Money Market Checking and NOW
Accounts 471,756 4,164 3.50%
Time Deposits of $100,000 or More 1,438,711 19,263 5.31%
Other Time Deposits 310,711 3,993 5.10%
----------- -------- -------
Total Interest-Bearing Deposits 2,316,325 27,987 4.79%
----------- -------- -------
Borrowings:
FHLB Advances and Other Borrowings 285,199 3,785 5.27%
Junior Subordinated Debentures 82,406 1,675 8.06%
----------- -------- -------
Total Borrowings 367,605 5,460 5.89%
----------- -------- -------
TOTAL INTEREST-BEARING LIABILITIES $2,683,930 $33,447 4.94%
=========== ======== =======
NET INTEREST INCOME $37,750
========
NET INTEREST SPREAD 3.07%
=======
NET INTEREST MARGIN 4.25%
=======
Nine Months Ended
------------------------------
September 30, 2008
----------------------------
Interest Average
Average Income/ Yield/
Balance Expense Rate
------------ -------- -------
INTEREST-EARNING ASSETS
Loans:
Real Estate Loans:
Commercial Property $821,097 $42,894 6.98%
Construction 208,519 8,081 5.18%
Residential Property 90,069 3,584 5.32%
----------- -------- -------
Total Real Estate Loans 1,119,685 54,559 6.51%
Commercial and Industrial Loans 2,114,974 112,416 7.10%
Consumer Loans 87,920 4,789 7.28%
----------- -------- -------
Total Gross Loans 3,322,579 171,764 6.91%
Prepayment Penalty Income -- 873 --
Unearned Income on Loans, Net of
Costs (2,020) -- --
----------- -------- -------
Gross Loans, Net 3,320,559 172,637 6.94%
----------- -------- -------
Investment Securities:
Municipal Bonds 65,329 2,071 4.23%
U.S. Government Agency Securities 80,120 2,612 4.35%
Mortgage-Backed Securities 90,652 3,246 4.77%
Collateralized Mortgage Obligations 45,853 1,462 4.25%
Corporate Bonds 8,344 287 4.59%
Other Securities 3,832 136 4.73%
----------- -------- -------
Total Investment Securities 294,130 9,814 4.45%
----------- -------- -------
Other Interest-Earning Assets:
Equity Securities (includes FHLB and
FRB Stock) 37,160 1,481 5.31%
Federal Funds Sold 7,096 137 2.57%
Term Federal Funds Sold -- -- --
Interest-Earning Deposits 310 5 2.15%
----------- -------- -------
Total Other Interest-Earning
Assets 44,566 1,623 4.86%
----------- -------- -------
TOTAL INTEREST-EARNING ASSETS $3,659,255 $184,074 6.72%
=========== ======== =======
INTEREST-BEARING LIABILITIES
Interest-Bearing Deposits:
Savings $91,910 $1,587 2.31%
Money Market Checking and NOW
Accounts 656,625 15,946 3.24%
Time Deposits of $100,000 or More 1,118,331 34,790 4.16%
Other Time Deposits 406,155 12,376 4.07%
----------- -------- -------
Total Interest-Bearing Deposits 2,273,021 64,699 3.80%
----------- -------- -------
Borrowings:
FHLB Advances and Other Borrowings 505,861 11,750 3.10%
Junior Subordinated Debentures 82,406 3,763 6.10%
----------- -------- -------
Total Borrowings 588,267 15,513 3.52%
----------- -------- -------
TOTAL INTEREST-BEARING LIABILITIES $2,861,288 $80,212 3.74%
=========== ======== =======
NET INTEREST INCOME $103,862
========
NET INTEREST SPREAD 2.98%
=======
NET INTEREST MARGIN 3.79%
=======
Nine Months Ended
------------------------------
September 30, 2007
----------------------------
Interest Average
Average Income/ Yield/
Balance Expense Rate
------------- -------- -------
INTEREST-EARNING ASSETS
Loans:
Real Estate Loans:
Commercial Property $765,880 $46,380 8.10%
Construction 218,693 14,889 9.10%
Residential Property 86,505 3,378 5.22%
----------- -------- -------
Total Real Estate Loans 1,071,078 64,647 8.07%
Commercial and Industrial Loans 1,846,247 123,143 8.92%
Consumer Loans 96,839 5,987 8.27%
----------- -------- -------
Total Gross Loans 3,014,164 193,777 8.60%
Prepayment Penalty Income -- 710 --
Unearned Income on Loans, Net of Costs (2,218) -- --
----------- -------- -------
Gross Loans, Net 3,011,946 194,487 8.63%
----------- -------- -------
Investment Securities:
Municipal Bonds 71,883 2,290 4.25%
U.S. Government Agency Securities 118,894 3,775 4.23%
Mortgage-Backed Securities 110,656 3,958 4.77%
Collateralized Mortgage Obligations 59,977 1,960 4.36%
Corporate Bonds 7,862 268 4.55%
Other Securities 4,937 252 6.81%
----------- -------- -------
Total Investment Securities 374,209 12,503 4.45%
----------- -------- -------
Other Interest-Earning Assets:
Equity Securities (includes FHLB and
FRB Stock) 25,244 1,055 5.57%
Federal Funds Sold 24,405 963 5.26%
Term Federal Funds Sold 128 5 5.21%
Interest-Earning Deposits -- -- --
----------- -------- -------
Total Other Interest-Earning
Assets 49,777 2,023 5.42%
----------- -------- -------
TOTAL INTEREST-EARNING ASSETS $3,435,932 $209,013 8.13%
=========== ======== =======
INTEREST-BEARING LIABILITIES
Interest-Bearing Deposits:
Savings $98,440 $1,530 2.08%
Money Market Checking and NOW Accounts 444,173 11,302 3.40%
Time Deposits of $100,000 or More 1,418,825 56,539 5.33%
Other Time Deposits 305,217 11,602 5.08%
----------- -------- -------
Total Interest-Bearing Deposits 2,266,655 80,973 4.78%
----------- -------- -------
Borrowings:
FHLB Advances and Other Borrowings 226,000 8,875 5.25%
Junior Subordinated Debentures 82,406 4,974 8.07%
----------- -------- -------
Total Borrowings 308,406 13,849 6.00%
----------- -------- -------
TOTAL INTEREST-BEARING LIABILITIES $2,575,061 $94,822 4.92%
=========== ======== =======
NET INTEREST INCOME $114,191
========
NET INTEREST SPREAD 3.21%
=======
NET INTEREST MARGIN 4.44%
=======
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
RECONCILIATIONS OF GAAP TO NON-GAAP (UNAUDITED)
(Dollars in Thousands, Except Per Share Amounts)
Three Months Ended June 30, 2008
----------------------------------
Net Weighted-
Income Average Per
(Loss) Shares Share
(Numerator) (Denominator) Amount
----------- ------------- -------
GAAP Net Loss $(105,547) 45,881,549 $(2.30)
Impairment Loss on Goodwill 107,393
-----------
Additional Dilutive
Securities - Options 62,684
-------------
$ 2.34
-------
Non-GAAP Net Income, Excluding
Impairment Loss on Goodwill $ 1,846 45,944,233 $ 0.04
=========== ============= =======
Nine Months Ended September 30, 2008
------------------------------------
Net Weighted-
Income Average Per
(Loss) Shares Share
(Numerator) (Denominator) Amount
------------- ------------- -------
GAAP Net Loss $(98,278) 45,869,069 $(2.14)
Impairment Loss on Goodwill 107,393
-------------
Additional Dilutive
Securities - Options 61,902
-------------
$ 2.34
-------
Non-GAAP Net Income, Excluding
Impairment Loss on Goodwill $ 9,115 45,930,971 $ 0.20
============= ============= =======
Three Months Ended June 30, 2008
--------------------------------
Less
Impairment
Loss on
GAAP Goodwill Non-GAAP
---------- ------------ --------
Total Non-Interest Expenses $129,443 $(107,393) $22,050
Return on Average Assets (10.83)% 11.02% 0.19%
Return on Average Shareholders'
Equity (112.57)% 114.54% 1.97%
Return on Average Tangible Equity (160.36)% 163.16% 2.80%
Efficiency Ratio 296.07% (245.64)% 50.43%
Nine Months Ended September 30, 2008
------------------------------------
Less
Impairment
Loss on
GAAP Goodwill Non-GAAP
-------------- ------------ --------
Total Non-Interest Expenses $173,266 $(107,393) $65,873
Return on Average Assets (3.37)% 3.68% 0.31%
Return on Average Shareholders'
Equity (38.51)% 42.08% 3.57%
Return on Average Tangible Equity (49.75)% 54.36% 4.61%
Efficiency Ratio 134.73% (83.51)% 51.22%
Source: Hanmi Financial Corporation
Released October 23, 2008