Hanmi Financial Corporation Reports Net Income of $2.9 Million for First Quarter of 2008
LOS ANGELES--(BUSINESS WIRE)--
Hanmi Financial Corporation (NASDAQ:HAFC), the holding company for Hanmi Bank, reported that for the three months ended March 31, 2008, it earned net income of $2.9 million, compared to a net loss of $100.0 million for the fourth quarter of 2007 and net income of $13.0 million for the comparable period a year ago. Earnings per share were $0.06 (diluted), compared to $0.26 (diluted) for the same period in 2007.
"Our first-quarter results are indicative of an overall economic environment that, by most measures, has changed little in the last three months," said Chung Hoon Youk, Chief Credit Officer and Interim Chief Executive Officer. "With that in mind, the single biggest factor affecting net income was a $17.8 million provision for credit losses. The provision -- although lower than the prior quarter's $20.7 million -- reflects a persistently soft economy that is affecting some of our borrowers' ability to honor their commitments.
"Contributing to the disappointing bottom-line performance was a compression in net interest margin -- to 3.73 percent from 4.06 percent in the prior quarter -- that continues to be driven by two factors in particular: intense competition among Korean-American banks, particularly in the pricing of deposits; and the Federal Reserve Bank's further 200-basis-point cut in short-term interest rates during the quarter. Despite growing concerns about inflation, our outlook for the year remains cautious and does not assume any near-term tightening on the part of the Fed; that being the case, and given our balance sheet composition," concluded Mr. Youk, "we expect that historically low short-term rates will continue to put pressure on margins."
BALANCE SHEET SUMMARY
In the first quarter of 2008, changes in our balance sheet growth were moderate. Total assets decreased by $42.7 million, or 1.1 percent, to $3.94 billion at March 31, 2008, compared to $3.98 billion at December 31, 2007. Gross loans increased by $19.3 million, or 0.6 percent, to $3.30 billion at March 31, 2008, compared to $3.28 billion at December 31, 2007. Total deposits increased by $26.1 million, or 0.9 percent, to $3.03 billion at March 31, 2008, compared to $3.00 billion at December 31, 2007. FHLB advances and other borrowings decreased by $71.6 million, or 14.7 percent, to $415.6 million at March 31, 2008, compared to $487.2 million at December 31, 2007.
NET INTEREST INCOME AND NET INTEREST MARGIN
Net interest income was $34.2 million for the first quarter of 2008, compared to $37.6 million for the fourth quarter of 2007 and $38.0 million for the first quarter of 2007. The decrease in net interest income was mainly caused by compression in the net interest margin. Net interest margin for the first quarter of 2008 was 3.73 percent, compared to 4.06 percent for the fourth quarter of 2007 and 4.59 percent for the first quarter of 2007. Net interest margin has decreased due to the Federal Reserve Bank lowering short-term interest rates and intense competition for loans and deposits. The net reversal of $1.2 million of accrued interest on loans placed on non-accrual status further compressed our margin during the first quarter of 2008.
Average interest-earning assets increased by $20.2 million, or 0.6 percent, to $3.69 billion for the first quarter of 2008, compared to $3.67 billion for the fourth quarter of 2007, and increased by $339.4 million, or 10.1 percent, compared to $3.35 billion for the first quarter of 2007. Average gross loans increased by $18.9 million, or 0.6 percent, to $3.30 billion for the first quarter of 2008, compared to $3.28 billion for the fourth quarter of 2007, and increased by $420.5 million, or 14.6 percent, compared to $2.88 billion for the first quarter of 2007.
The yield on average interest-earning assets was 7.08 percent for the first quarter of 2008, a decrease of 69 basis points compared to 7.77 percent for the fourth quarter of 2007, and a decrease of 115 basis points compared to 8.23 percent for the first quarter of 2007. The yield on the loan portfolio was 7.38 percent for the first quarter of 2008, a decrease of 77 basis points compared to 8.15 percent for the fourth quarter of 2007, and a decrease of 142 basis points compared to 8.80 percent for the first quarter of 2007.
Average interest-bearing liabilities increased by $51.4 million, or 1.8 percent, to $2.90 billion for the first quarter of 2008, compared to $2.85 billion for the fourth quarter of 2007, and increased by $409.8 million, or 16.5 percent, compared to $2.49 billion for the first quarter of 2007. Average interest-bearing deposits decreased by $5.2 million, or 0.2 percent, to $2.34 billion for the first quarter of 2008, compared to $2.35 billion for the fourth quarter of 2007, and increased by $108.2 million, or 4.8 percent, compared to $2.24 billion for the first quarter of 2007. Average borrowings increased by $56.6 million, or 11.4 percent, to $553.1 million for the first quarter of 2008, compared to $496.5 million for the fourth quarter of 2007, and increased by $301.5 million, or 119.9 percent, compared to $251.6 billion for the first quarter of 2007.
The cost of average interest-bearing liabilities was 4.27 percent for the first quarter of 2008, a decrease of 51 basis points compared to 4.78 percent for the fourth quarter of 2007, and a decrease of 62 basis points compared to 4.89 percent for the first quarter of 2007. The cost of average interest-bearing deposits was 4.26 percent for the first quarter of 2008, a decrease of 39 basis points compared to 4.65 percent for the fourth quarter of 2007, and a decrease of 49 basis points compared to 4.75 percent for the first quarter of 2007. The cost of average borrowings was 4.31 percent for the first quarter of 2008, a decrease of 108 basis points compared to 5.39 percent for the fourth quarter of 2007, and a decrease of 183 basis points compared to 6.14 percent for the first quarter of 2007.
ASSET QUALITY
Starting in the fourth quarter of 2007, the Bank expanded its portfolio monitoring activities in an attempt to identify problematic loans. Given the deteriorating economy in which the Bank's borrowers operate, and in light of the unusually high levels of loan delinquencies and defaults, we believe that early detection is a key factor in lowering the financial impact on the Bank.
Net charge-offs were $7.3 million and $11.6 million for the first quarter of 2008 and the fourth quarter of 2007, respectively, significantly higher than $2.4 million for the first quarter of 2007. Non-performing loans were $88.7 million at March 31, 2008, compared to $54.8 million at December 31, 2007 and $19.5 million at March 31, 2007. The majority of the $33.9 million increase during the first quarter of 2008 was caused by one construction loan whose balance was approximately $28.0 million. Non-performing loans as a percentage of gross loans increased to 2.68 percent at March 31, 2008, compared to 1.66 percent at December 31, 2007 and 0.67 percent at March 31, 2007. Delinquent loans increased to $105.8 million at March 31, 2008, compared to $45.1 million at December 31, 2007 and $37.3 million at March 31, 2007.
As our borrowers are negatively affected by the downward economy, the provision for credit losses has risen to historically high levels -- $20.7 million in the fourth quarter of 2007, and $17.8 million in the first quarter of 2008, compared with $6.1 million for the first quarter of 2007.
The provision for credit losses, net of net charge-offs, increased the allowance for loan losses to $53.0 million, or 1.60 percent, of the gross loan portfolio, at March 31, 2008, compared to 1.33 percent and 1.08 percent at December 31, 2007 and March 31, 2007, respectively. We also have an allowance for off-balance sheet exposure, primarily unfunded loan commitments, of $2.9 million (recorded in other liabilities). As of March 31, 2008, the allowance for loan losses was 59.7 percent of non-performing loans, compared to 80.1 percent at December 31, 2007 and 161.6 percent at March 31, 2007. Based on management's evaluation and analysis of portfolio credit quality and prevailing economic conditions, we believe these reserves are adequate for losses inherent in the loan portfolio and off-balance sheet exposure at March 31, 2008.
NON-INTEREST INCOME
Non-interest income was $9.8 million for the first quarter of 2008, compared to $9.8 million and $10.0 million for the fourth quarter of 2007 and the first quarter of 2007, respectively. Overall increase in various fee income sources including gain on sales of securities of $618,000 for the first quarter of 2008 was offset by the decrease in gain on sales of loans. The gain on sales of loans decreased to $213,000 for the first quarter of 2008, compared to $1.8 million for the fourth quarter of 2007 and $1.4 million for the first quarter of 2007. The gains in the prior quarters were relatively high since they included $1.2 million of sales gain on unguaranteed SBA loans sold in the fourth quarter of 2007 and $867,000 sales gain on SBA loans originated prior to 2007 and sold in the first quarter of 2007 while there was no such sales in the first quarter of 2008.
NON-INTEREST EXPENSES
Non-interest expenses decreased by $104.6 million, or 82.9 percent, to $21.6 million for the first quarter of 2008, compared to $126.2 million, which included a $102.9 million goodwill impairment charges, for the fourth quarter of 2007. As compared with $21.0 million for the first quarter of 2007, our non-interest expenses in the first quarter of 2008 increased by $619,000, or 3.0 percent, due mainly to the additional professional fees incurred in 2008 for credit, legal and valuation services.
The efficiency ratio (non-interest expenses divided by the sum of net interest income before provision for credit losses and non-interest income) for the first quarter of 2008 was 49.11 percent, compared to 266.31 percent (49.22 percent excluding the goodwill impairment charge) for the fourth quarter of 2007 and 43.74 percent for the first quarter of 2007.
CAPITAL
As of January 1, 2008, the beginning balance of retained earnings was adjusted downward by $2.2 million for the recognition of a liability, which was related to postretirement benefits covered by an endorsement split-dollar life insurance arrangement, upon the adoption of Emerging Issues Task Force Issue No 06-04. In addition, we corrected the prior period financial statements for immaterial errors related to interest expense on deposits totaling $989,000. For the years ended December 31, 2007, 2006, 2005 and 2004, net income was adjusted downward by $428,000, $299,000, $242,000 and $20,000, respectively. For the three months ended December 31, 2007 and March 31, 2007, net income was adjusted downward by $57,000 and $63,000, respectively.
Our capital exceeds the levels defined as "well capitalized" by our regulators. Hanmi Bank's capital ratios were as follows:
March 31, December 31, March 31,
2008 2007 2007
--------- ------------ ---------
Tier 1 Leverage Ratio 8.74% 8.47% 10.18%
Tier 1 Risk-Based Capital Ratio 9.54% 9.31% 11.25%
Total Risk-Based Capital Ratio 10.79% 10.58% 12.30%
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 25 full-service offices in Los Angeles County, Orange County, San Bernardino County, San Diego County, the San Francisco Bay area, and the Silicon Valley area in Santa Clara County, and eight loan production offices in California, Colorado, Georgia, Illinois, Texas, Virginia and Washington. Hanmi Bank specializes in commercial, SBA, trade finance and consumer 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.
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; 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; 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, 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)
March 31, December 31, %
2008 2007 Change
----------- ------------ --------
ASSETS
------------------------------------
Cash and Due from Banks $ 101,306 $ 105,898 (4.3)%
Federal Funds Sold 2,000 16,500 (87.9)%
----------- ------------ --------
Cash and Cash Equivalents 103,306 122,398 (15.6)%
----------- ------------ --------
Investment Securities 323,636 350,457 (7.7)%
Loans:
Gross Loans, Net of Deferred Loan
Fees 3,304,039 3,284,708 0.6%
Allowance for Loan Losses (52,986) (43,611) 21.5%
----------- ------------ --------
Loans Receivable, Net 3,251,053 3,241,097 0.3%
----------- ------------ --------
Customers' Liability on Acceptances 7,119 5,387 32.2%
Premises and Equipment, Net 20,679 20,800 (0.6)%
Accrued Interest Receivable 15,417 17,411 (11.5)%
Other Real Estate Owned -- 287 (100.0)%
Deferred Income Taxes 17,530 18,470 (5.1)%
Servicing Assets 4,220 4,336 (2.7)%
Goodwill 107,943 107,100 0.8%
Other Intangible Assets 6,384 6,908 (7.6)%
Federal Reserve Bank and Federal
Home Loan Bank Stock 33,718 33,479 0.7%
Bank-Owned Life Insurance 24,760 24,525 1.0%
Other Assets 25,180 31,002 (18.8)%
----------- ------------ --------
TOTAL ASSETS $3,940,945 $3,983,657 (1.1)%
=========== ============ ========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Liabilities:
Deposits:
Noninterest-Bearing $ 676,471 $ 680,282 (0.6)%
Interest-Bearing 2,351,297 2,321,417 1.3%
----------- ------------ --------
Total Deposits 3,027,768 3,001,699 0.9%
Accrued Interest Payable 17,857 21,828 (18.2)%
Acceptances Outstanding 7,119 5,387 32.2%
FHLB Advances and Other Borrowings 415,553 487,164 (14.7)%
Junior Subordinated Debentures 82,406 82,406 --
Other Liabilities 19,328 14,617 32.2%
----------- ------------ --------
Total Liabilities 3,570,031 3,613,101 (1.2)%
Shareholders' Equity 370,914 370,556 0.1%
----------- ------------ --------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $3,940,945 $3,983,657 (1.1)%
=========== ============ ========
March 31, %
2007 Change
----------- -------
ASSETS
--------------------------------------------------
Cash and Due from Banks $ 93,174 8.7%
Federal Funds Sold 55,000 (96.4)%
----------- -------
Cash and Cash Equivalents 148,174 (30.3)%
----------- -------
Investment Securities 381,237 (15.1)%
Loans:
Gross Loans, Net of Deferred Loan Fees 2,917,187 13.3%
Allowance for Loan Losses (31,527) 68.1%
----------- -------
Loans Receivable, Net 2,885,660 12.7%
----------- -------
Customers' Liability on Acceptances 10,974 (35.1)%
Premises and Equipment, Net 20,324 1.7%
Accrued Interest Receivable 16,739 (7.9)%
Other Real Estate Owned -- --
Deferred Income Taxes 10,683 64.1%
Servicing Assets 4,528 (6.8)%
Goodwill 209,941 (48.6)%
Other Intangible Assets 8,619 (25.9)%
Federal Reserve Bank and Federal Home Loan Bank
Stock 25,115 34.3%
Bank-Owned Life Insurance 23,822 3.9%
Other Assets 31,768 (20.7)%
----------- -------
TOTAL ASSETS $3,777,584 4.3%
=========== =======
LIABILITIES AND SHAREHOLDERS' EQUITY
--------------------------------------------------
Liabilities:
Deposits:
Noninterest-Bearing $ 738,396 (8.4)%
Interest-Bearing 2,245,611 4.7%
----------- -------
Total Deposits 2,984,007 1.5%
Accrued Interest Payable 22,379 (20.2)%
Acceptances Outstanding 10,974 (35.1)%
FHLB Advances and Other Borrowings 168,114 147.2%
Junior Subordinated Debentures 82,406 --
Other Liabilities 17,460 10.7%
----------- -------
Total Liabilities 3,285,340 8.7%
Shareholders' Equity 492,244 (24.6)%
----------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $3,777,584 4.3%
=========== =======
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in Thousands, Except Per Share Data)
Three Months Ended
----------------------------------
March 31, December 31, %
2008 2007 Change
----------- ------------ ---------
INTEREST AND DIVIDEND INCOME:
Interest and Fees on Loans $ 60,598 $ 67,505 (10.2)%
Taxable Interest on Investments 3,116 3,186 (2.2)%
Tax-Exempt Interest on
Investments 759 765 (0.8)%
Dividends on FHLB and FRB Stock 414 358 15.6%
Interest on Federal Funds Sold 83 69 20.3%
Interest on Term Federal Funds
Sold -- -- --
----------- ------------ ---------
Total Interest Income 64,970 71,883 (9.6)%
----------- ------------ ---------
INTEREST EXPENSE:
Interest on Deposits 24,847 27,544 (9.8)%
Interest on FHLB Advances and
Other Borrowings 4,477 5,074 (11.8)%
Interest on Junior Subordinated
Debentures 1,449 1,670 (13.2)%
----------- ------------ ---------
Total Interest Expense 30,773 34,288 (10.3)%
----------- ------------ ---------
NET INTEREST INCOME BEFORE
PROVISION FOR CREDIT LOSSES 34,197 37,595 (9.0)%
--
Provision for Credit Losses 17,821 20,704 (13.9)%
----------- ------------ ---------
NET INTEREST INCOME AFTER PROVISION
FOR CREDIT LOSSES 16,376 16,891 (3.0)%
----------- ------------ ---------
NON-INTEREST INCOME:
Service Charges on Deposit
Accounts 4,717 4,672 1.0%
Insurance Commissions 1,315 1,419 (7.3)%
Trade Finance Fees 865 944 (8.4)%
Remittance Fees 505 546 (7.5)%
Other Service Charges and Fees 716 646 10.8%
Bank-Owned Life Insurance Income 240 240 --
Increase in Fair Value of
Derivatives 239 162 47.5%
Other Income 337 479 (29.6)%
Gain on Sales of Loans 213 1,767 (87.9)%
Gain on Sales of Securities
Available for Sale 618 -- --
Other-Than-Temporary Impairment
Loss on Securities -- (1,074) (100.0)%
----------- ------------ ---------
Total Non-Interest Income 9,765 9,801 (0.4)%
----------- ------------ ---------
NON-INTEREST EXPENSES:
Salaries and Employee Benefits 11,280 13,075 (13.7)%
Occupancy and Equipment 2,782 2,754 1.0%
Data Processing 1,534 1,622 (5.4)%
Advertising and Promotion 812 1,137 (28.6)%
Supplies and Communications 704 596 18.1%
Professional Fees 985 782 26.0%
Amortization of Other Intangible
Assets 525 548 (4.2)%
Other Operating Expenses 2,966 2,816 5.3%
Impairment Loss on Goodwill -- 102,891 (100.0)%
----------- ------------ ---------
Total Non-Interest Expenses 21,588 126,221 (82.9)%
----------- ------------ ---------
INCOME (LOSS) BEFORE PROVISION FOR
INCOME TAXES 4,553 (99,529) (104.6)%
Provision for Income Taxes 1,632 514 217.5%
----------- ------------ ---------
NET INCOME (LOSS) $ 2,921 $ (100,043) (102.9)%
=========== ============ =========
EARNINGS (LOSS) PER SHARE:
Basic $ 0.06 $ (2.15) (102.8)%
Diluted $ 0.06 $ (2.15) (102.8)%
WEIGHTED-AVERAGE SHARES
OUTSTANDING:
Basic 45,842,376 46,465,973
Diluted 45,918,143 46,465,973
SHARES OUTSTANDING AT PERIOD-END 45,905,549 45,860,941
Three Months Ended
----------------------
March 31, %
2007 Change
----------- --------
INTEREST AND DIVIDEND INCOME:
Interest and Fees on Loans $ 62,561 (3.1)%
Taxable Interest on Investments 3,531 (11.8)%
Tax-Exempt Interest on Investments 764 (0.7)%
Dividends on FHLB and FRB Stock 369 12.2%
Interest on Federal Funds Sold 726 (88.6)%
Interest on Term Federal Funds Sold 5 (100.0)%
----------- --------
Total Interest Income 67,956 (4.4)%
----------- --------
INTEREST EXPENSE:
Interest on Deposits 26,189 (5.1)%
Interest on FHLB Advances and Other Borrowings 2,171 106.2%
Interest on Junior Subordinated Debentures 1,639 (11.6)%
----------- --------
Total Interest Expense 29,999 2.6%
----------- --------
NET INTEREST INCOME BEFORE PROVISION FOR CREDIT
LOSSES 37,957 (9.9)%
--
Provision for Credit Losses 6,132 190.6%
----------- --------
NET INTEREST INCOME AFTER PROVISION FOR CREDIT
LOSSES 31,825 (48.5)%
----------- --------
NON-INTEREST INCOME:
Service Charges on Deposit Accounts 4,488 5.1%
Insurance Commissions 1,125 16.9%
Trade Finance Fees 1,290 (32.9)%
Remittance Fees 471 7.2%
Other Service Charges and Fees 616 16.2%
Bank-Owned Life Insurance Income 230 4.3%
Increase in Fair Value of Derivatives 92 159.8%
Other Income 275 22.5%
Gain on Sales of Loans 1,400 (84.8)%
Gain on Sales of Securities Available for Sale -- --
Other-Than-Temporary Impairment Loss on
Securities -- --
----------- --------
Total Non-Interest Income 9,987 (2.2)%
----------- --------
NON-INTEREST EXPENSES:
Salaries and Employee Benefits 11,761 (4.1)%
Occupancy and Equipment 2,512 10.7%
Data Processing 1,563 (1.9)%
Advertising and Promotion 661 22.8%
Supplies and Communications 588 19.7%
Professional Fees 474 107.8%
Amortization of Other Intangible Assets 614 (14.5)%
Other Operating Expenses 2,796 6.1%
Impairment Loss on Goodwill -- --
----------- --------
Total Non-Interest Expenses 20,969 3.0%
----------- --------
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES 20,843 (78.2)%
Provision for Income Taxes 7,851 (79.2)%
----------- --------
NET INCOME (LOSS) $ 12,992 (77.5)%
=========== ========
EARNINGS (LOSS) PER SHARE:
Basic $ 0.27 (77.8)%
Diluted $ 0.26 (76.9)%
WEIGHTED-AVERAGE SHARES OUTSTANDING:
Basic 48,962,089
Diluted 49,500,312
SHARES OUTSTANDING AT PERIOD-END 48,825,537
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL DATA (UNAUDITED)
(Dollars in Thousands)
Three Months Ended
------------------------------------
March 31, December 31, %
2008 2007 Change
----------- ------------ ----------
AVERAGE BALANCES:
Average Gross Loans, Net of
Deferred Loan Fees $3,303,141 $3,284,222 0.6%
Average Investment Securities 342,123 350,147 (2.3)%
Average Interest-Earning Assets 3,689,650 3,669,436 0.6%
Average Total Assets 3,965,369 4,053,801 (2.2)%
Average Deposits 2,995,315 3,029,804 (1.1)%
Average Borrowings 553,138 496,513 11.4%
Average Interest-Bearing
Liabilities 2,897,209 2,845,775 1.8%
Average Stockholders' Equity 377,365 485,934 (22.3)%
Average Tangible Equity 263,572 269,497 (2.2)%
PERFORMANCE RATIOS:
Return on Average Assets 0.30% (9.79)%
Return on Average Stockholders'
Equity 3.11% (81.68)%
Return on Average Tangible
Equity 4.46% (147.28)%
Efficiency Ratio 49.11% 266.31%
Net Interest Margin 3.73% 4.06%
ALLOWANCE FOR LOAN LOSSES:
Balance at the Beginning of
Period $ 43,611 $ 34,503 26.4%
Provision Charged to Operating
Expense 16,672 20,736 (19.6)%
Charge-Offs, Net of Recoveries (7,297) (11,628) (37.2)%
----------- ------------ -----------
Balance at the End of Period $ 52,986 $ 43,611 21.5%
=========== ============ ===========
Allowance for Loan Losses to
Total Gross Loans 1.60% 1.33%
Allowance for Loan Losses to
Total Non-Performing Loans 59.72% 80.05%
ALLOWANCE FOR OFF-BALANCE SHEET
ITEMS:
Balance at the Beginning of
Period $ 1,765 $ 1,797 (1.8)%
Provision Charged to Operating
Expense 1,149 (32) (3,690.6)%
----------- ------------ -----------
Balance at the End of Period $ 2,914 $ 1,765 65.1%
=========== ============ ===========
Three Months Ended
-----------------------
March 31, %
2007 Change
----------- ---------
AVERAGE BALANCES:
Average Gross Loans, Net of Deferred Loan
Fees $2,882,632 14.6%
Average Investment Securities 386,688 (11.5)%
Average Interest-Earning Assets 3,350,245 10.1%
Average Total Assets 3,740,936 6.0%
Average Deposits 2,945,386 1.7%
Average Borrowings 251,594 119.9%
Average Interest-Bearing Liabilities 2,487,429 16.5%
Average Stockholders' Equity 495,832 (23.9)%
Average Tangible Equity 276,918 (4.8)%
PERFORMANCE RATIOS:
Return on Average Assets 1.41%
Return on Average Stockholders' Equity 10.63%
Return on Average Tangible Equity 19.03%
Efficiency Ratio 43.74%
Net Interest Margin 4.59%
ALLOWANCE FOR LOAN LOSSES:
Balance at the Beginning of Period $ 27,557 58.3%
Provision Charged to Operating Expense 6,374 161.6%
Charge-Offs, Net of Recoveries (2,404) 203.5%
----------- ---------
Balance at the End of Period $ 31,527 68.1%
=========== =========
Allowance for Loan Losses to Total Gross
Loans 1.08%
Allowance for Loan Losses to Total Non-
Performing Loans 161.55%
ALLOWANCE FOR OFF-BALANCE SHEET ITEMS:
Balance at the Beginning of Period $ 2,130 (17.1)%
Provision Charged to Operating Expense (242) 1,425.0%
----------- ---------
Balance at the End of Period $ 1,888 54.3%
=========== =========
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL DATA (UNAUDITED) (Continued)
(Dollars in Thousands)
March 31, December 31, %
2008 2007 Change
----------- ------------ --------
NON-PERFORMING ASSETS:
Non-Accrual Loans $ 88,529 $ 54,252 63.2%
Loans 90 Days or More Past Due and
Still Accruing 191 227 (15.9)%
----------- ------------ --------
Total Non-Performing Loans 88,720 54,479 62.9%
Other Real Estate Owned -- 287 (100.0)%
----------- ------------ --------
Total Non-Performing Assets $ 88,720 $ 54,766 62.0%
=========== ============ ========
Total Non-Performing Loans/Total
Gross Loans 2.68% 1.66%
Total Non-Performing Assets/Total
Assets 2.25% 1.37%
Total Non-Performing
Assets/Allowance for Loan Losses 167.4% 125.6%
DELINQUENT LOANS $ 105,842 $ 45,086 134.8%
=========== ============ ========
Delinquent Loans/Total Gross Loans 3.20% 1.37%
LOAN PORTFOLIO:
Real Estate Loans $1,092,121 $1,101,907 (0.9)%
Commercial and Industrial Loans 2,123,741 2,094,719 1.4%
Consumer Loans 90,087 90,449 (0.4)%
----------- ------------ --------
Total Gross Loans 3,305,949 3,287,075 0.6%
Deferred Loan Fees (1,910) (2,367) (19.3)%
----------- ------------ --------
Gross Loans, Net of Deferred
Loan Fees 3,304,039 3,284,708 0.6%
Allowance for Loan Losses (52,986) (43,611) 21.5%
----------- ------------ --------
Loans Receivable, Net $3,251,053 $3,241,097 0.3%
=========== ============ ========
LOAN MIX:
Real Estate Loans 33.0% 33.5%
Commercial and Industrial Loans 64.2% 63.7%
Consumer Loans 2.8% 2.8%
----------- ------------
Total Gross Loans 100.0% 100.0%
=========== ============
DEPOSIT PORTFOLIO:
Noninterest-Bearing $ 676,471 $ 680,282 (0.6)%
Savings 92,189 93,099 (1.0)%
Money Market Checking and NOW
Accounts 696,552 445,806 56.2%
Time Deposits of $100,000 or More 1,248,853 1,441,683 (13.4)%
Other Time Deposits 313,703 340,829 (8.0)%
----------- ------------ --------
Total Deposits $3,027,768 $3,001,699 0.9%
=========== ============ ========
DEPOSIT MIX:
Noninterest-Bearing 22.3% 22.7%
Savings 3.0% 3.1%
Money Market Checking and NOW
Accounts 23.0% 14.9%
Time Deposits of $100,000 or More 41.2% 48.0%
Other Time Deposits 10.5% 11.3%
----------- ------------
Total Deposits 100.0% 100.0%
=========== ============
March 31, %
2007 Change
----------- ---------
NON-PERFORMING ASSETS:
Non-Accrual Loans $ 19,509 353.8%
Loans 90 Days or More Past Due and Still
Accruing 6 3,083.3%
----------- ---------
Total Non-Performing Loans 19,515 354.6%
Other Real Estate Owned -- --
----------- ---------
Total Non-Performing Assets $ 19,515 354.6%
=========== =========
Total Non-Performing Loans/Total Gross Loans 0.67%
Total Non-Performing Assets/Total Assets 0.52%
Total Non-Performing Assets/Allowance for Loan
Losses 61.9%
DELINQUENT LOANS $ 37,280 183.9%
=========== =========
Delinquent Loans/Total Gross Loans 1.28%
LOAN PORTFOLIO:
Real Estate Loans $1,061,890 2.8%
Commercial and Industrial Loans 1,758,801 20.7%
Consumer Loans 98,909 (8.9)%
----------- ---------
Total Gross Loans 2,919,600 13.2%
Deferred Loan Fees (2,413) (20.8)%
----------- ---------
Gross Loans, Net of Deferred Loan Fees 2,917,187 13.3%
Allowance for Loan Losses (31,527) 68.1%
----------- ---------
Loans Receivable, Net $2,885,660 12.7%
=========== =========
LOAN MIX:
Real Estate Loans 36.4%
Commercial and Industrial Loans 60.2%
Consumer Loans 3.4%
-----------
Total Gross Loans 100.0%
===========
DEPOSIT PORTFOLIO:
Noninterest-Bearing $ 738,396 (8.4)%
Savings 101,526 (9.2)%
Money Market Checking and NOW Accounts 424,774 64.0%
Time Deposits of $100,000 or More 1,418,335 (11.9)%
Other Time Deposits 300,976 4.2%
----------- ---------
Total Deposits $2,984,007 1.5%
=========== =========
DEPOSIT MIX:
Noninterest-Bearing 24.7%
Savings 3.4%
Money Market Checking and NOW Accounts 14.2%
Time Deposits of $100,000 or More 47.5%
Other Time Deposits 10.2%
-----------
Total Deposits 100.0%
===========
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
AVERAGE BALANCES, AVERAGE YIELDS EARNED AND AVERAGE RATES PAID
(UNAUDITED)
(Dollars in Thousands)
Three Months Ended
------------------------------
March 31, 2008
------------------------------
Average Interest Average
Balance Income/ Yield/
Expense Rate
----------- --------- --------
INTEREST-EARNING ASSETS
Loans:
Real Estate Loans:
Commercial Property $ 790,350 $14,480 7.37%
Construction 217,609 2,893 5.35%
Residential Property 89,512 1,170 5.26%
----------- --------- --------
Total Real Estate Loans 1,097,471 18,543 6.80%
Commercial and Industrial Loans 2,117,501 40,125 7.62%
Consumer Loans 90,280 1,625 7.24%
----------- --------- --------
Total Gross Loans 3,305,252 60,293 7.34%
Prepayment Penalty Income -- 305 --
Unearned Income on Loans, Net of
Costs (2,111) -- --
----------- --------- --------
Gross Loans, Net 3,303,141 60,598 7.38%
----------- --------- --------
Investment Securities:
Municipal Bonds 71,879 759 4.22%
U.S. Government Agency Securities 109,860 1,245 4.53%
Mortgage-Backed Securities 97,088 1,176 4.85%
Collateralized Mortgage Obligations 49,932 534 4.28%
Corporate Bonds 9,509 109 4.59%
Other Securities 3,855 52 5.40%
----------- --------- --------
Total Investment Securities 342,123 3,875 4.53%
----------- --------- --------
Other Interest-Earning Assets:
Equity Securities (FHLB and FRB
Stock) 33,490 414 4.94%
Federal Funds Sold 10,896 83 3.05%
Term Federal Funds Sold -- -- --
----------- --------- --------
Total Other Interest-Earning
Assets 44,386 497 4.48%
----------- --------- --------
TOTAL INTEREST-EARNING ASSETS $3,689,650 $64,970 7.08%
=========== ========= ========
INTEREST-BEARING LIABILITIES
Interest-Bearing Deposits:
Savings $ 92,467 $ 527 2.29%
Money Market Checking and NOW
Accounts 557,493 4,660 3.36%
Time Deposits of $100,000 or More 1,354,466 15,687 4.66%
Other Time Deposits 339,645 3,973 4.70%
----------- --------- --------
Total Interest-Bearing Deposits 2,344,071 24,847 4.26%
----------- --------- --------
Borrowings:
FHLB Advances and Other Borrowings 470,732 4,477 3.83%
Junior Subordinated Debentures 82,406 1,449 7.07%
----------- --------- --------
Total Borrowings 553,138 5,926 4.31%
----------- --------- --------
TOTAL INTEREST-BEARING LIABILITIES $2,897,209 $30,773 4.27%
=========== ========= ========
NET INTEREST INCOME $34,197
=========
NET INTEREST SPREAD 2.81%
========
NET INTEREST MARGIN 3.73%
========
Three Months Ended
--------------------------------
December 31, 2007
------------------------------
Average Interest Average
Balance Income/ Yield/
Expense Rate
----------- --------- --------
INTEREST-EARNING ASSETS
Loans:
Real Estate Loans:
Commercial Property $ 787,721 $15,483 7.80%
Construction 235,851 5,471 9.20%
Residential Property 89,184 1,160 5.16%
----------- --------- --------
Total Real Estate Loans 1,112,756 22,114 7.88%
Commercial and Industrial Loans 2,081,945 43,658 8.32%
Consumer Loans 91,378 1,624 7.05%
----------- --------- --------
Total Gross Loans 3,286,079 67,396 8.14%
Prepayment Penalty Income -- 109 --
Unearned Income on Loans, Net of
Costs (1,857) -- --
----------- --------- --------
Gross Loans, Net 3,284,222 67,505 8.15%
----------- --------- --------
Investment Securities:
Municipal Bonds 72,097 765 4.24%
U.S. Government Agency Securities 110,194 1,188 4.31%
Mortgage-Backed Securities 97,566 1,190 4.88%
Collateralized Mortgage Obligations 52,883 570 4.31%
Corporate Bonds 12,709 154 4.85%
Other Securities 4,698 84 7.15%
----------- --------- --------
Total Investment Securities 350,147 3,951 4.51%
----------- --------- --------
Other Interest-Earning Assets:
Equity Securities (FHLB and FRB
Stock) 29,149 358 4.91%
Federal Funds Sold 5,918 69 4.66%
Term Federal Funds Sold -- -- --
----------- --------- --------
Total Other Interest-Earning
Assets 35,067 427 4.87%
----------- --------- --------
TOTAL INTEREST-EARNING ASSETS $3,669,436 $71,883 7.77%
=========== ========= ========
INTEREST-BEARING LIABILITIES
Interest-Bearing Deposits:
Savings $ 93,413 $ 474 2.01%
Money Market Checking and NOW
Accounts 478,501 4,144 3.44%
Time Deposits of $100,000 or More 1,465,551 18,977 5.14%
Other Time Deposits 311,797 3,949 5.02%
----------- --------- --------
Total Interest-Bearing
Deposits 2,349,262 27,544 4.65%
----------- --------- --------
Borrowings:
FHLB Advances and Other Borrowings 414,107 5,074 4.86%
Junior Subordinated Debentures 82,406 1,670 8.04%
----------- --------- --------
Total Borrowings 496,513 6,744 5.39%
----------- --------- --------
TOTAL INTEREST-BEARING LIABILITIES $2,845,775 $34,288 4.78%
=========== ========= ========
NET INTEREST INCOME $37,595
=========
NET INTEREST SPREAD 2.99%
========
NET INTEREST MARGIN 4.06%
========
Three Months Ended
-------------------------------
March 31, 2007
-----------------------------
Average Interest Average
Balance Income/ Yield/
Expense Rate
----------- --------- -------
INTEREST-EARNING ASSETS
Loans:
Real Estate Loans:
Commercial Property $ 752,673 $15,168 8.17%
Construction 212,370 4,937 9.43%
Residential Property 85,022 1,097 5.23%
----------- --------- -------
Total Real Estate Loans 1,050,065 21,202 8.19%
Commercial and Industrial Loans 1,736,530 38,769 9.05%
Consumer Loans 98,634 2,173 8.93%
----------- --------- -------
Total Gross Loans 2,885,229 62,144 8.74%
Prepayment Penalty Income 417 --
Unearned Income on Loans, Net of
Costs (2,597) -- --
----------- --------- -------
Gross Loans, Net 2,882,632 62,561 8.80%
----------- --------- -------
Investment Securities:
Municipal Bonds 72,396 764 4.22%
U.S. Government Agency Securities 118,267 1,256 4.25%
Mortgage-Backed Securities 118,899 1,404 4.72%
Collateralized Mortgage Obligations 64,208 697 4.34%
Corporate Bonds 7,869 90 4.57%
Other Securities 5,049 84 6.65%
----------- --------- -------
Total Investment Securities 386,688 4,295 4.44%
----------- --------- -------
Other Interest-Earning Assets:
Equity Securities (FHLB and FRB
Stock) 25,008 369 5.90%
Federal Funds Sold 55,528 726 5.23%
Term Federal Funds Sold 389 5 5.14%
----------- --------- -------
Total Other Interest-Earning
Assets 80,925 1,100 5.44%
----------- --------- -------
TOTAL INTEREST-EARNING ASSETS $3,350,245 $67,956 8.23%
=========== ========= =======
INTEREST-BEARING LIABILITIES
Interest-Bearing Deposits:
Savings $ 100,777 $ 461 1.86%
Money Market Checking and NOW
Accounts 427,871 3,472 3.29%
Time Deposits of $100,000 or More 1,406,311 18,498 5.33%
Other Time Deposits 300,876 3,757 5.06%
----------- --------- -------
Total Interest-Bearing Deposits 2,235,835 26,188 4.75%
----------- --------- -------
Borrowings:
FHLB Advances and Other Borrowings 169,188 2,171 5.20%
Junior Subordinated Debentures 82,406 1,639 8.07%
----------- --------- -------
Total Borrowings 251,594 3,810 6.14%
----------- --------- -------
TOTAL INTEREST-BEARING LIABILITIES $2,487,429 $29,998 4.89%
=========== ========= =======
NET INTEREST INCOME $37,958
=========
NET INTEREST SPREAD 3.34%
=======
NET INTEREST MARGIN 4.59%
=======
Source: Hanmi Financial Corporation
Released April 29, 2008