Hanmi Financial Corporation Reports Net Income of $15.3 Million for Second Quarter of 2007
LOS ANGELES--(BUSINESS WIRE)--
Hanmi Financial Corporation (NASDAQ:HAFC), the holding company for Hanmi Bank, reported that for the three months ended June 30, 2007, it earned net income of $15.3 million, an increase of 17.4 percent compared to net income of $13.1 million in the first quarter of 2007. Earnings per share were $0.31 (diluted), an increase of 19.2 percent compared to $0.26 per share (diluted) for the first quarter of 2007.
"The sequential increase of $2.2 million in net income -- to $15.3 million from $13.1 million in the prior quarter -- points to continuing solid performance in our core operations, including a loan portfolio that grew by $191.0 million, or 6.7 percent, since the beginning of the year," said Sung Won Sohn, Ph.D., President and Chief Executive Officer. "It points as well to the quality of the loan portfolio and the fact that the second-quarter provision for credit losses was only $3.0 million compared to $6.1 million in the first quarter."
"We grew our net interest income before provision for credit losses by $525,000, or 1.4 percent, compared to the first quarter, despite a modest decline in the net interest margin to 4.51 percent from 4.61 percent," added Dr. Sohn. "This illustrates the state of the markets we serve, particularly the Southern California commercial real estate market: they present numerous business opportunities, but at the same time remain fiercely competitive."
"We anticipate that this competition -- which is coming from mainstream banks as well as other Korean-American banks -- will in the near term continue to put pressure on margins. With that understood," concluded Dr. Sohn, "the message I would leave with investors is that while we will continue to focus on growth in assets and net interest income, our foremost concern will continue to be credit quality."
SECOND-QUARTER HIGHLIGHTS
-- Net interest income before provision for credit losses was $38.6 million for the second quarter of 2007, compared to $38.1 million for the first quarter of 2007 and $38.4 million for the second quarter of 2006, reflecting a 2.4 percent and 7.8 percent, respectively, sequential increase in average interest-earning assets. Net interest margin for the second quarter of 2007 was 4.51 percent, compared to 4.61 percent for the first quarter of 2007 and 4.84 percent for the second quarter of 2006.
-- The loan portfolio increased by $191.0 million, or 6.7 percent, to $3.06 billion at June 30, 2007, compared to $2.86 billion at December 31, 2006, reflecting continued growth in commercial and industrial loans.
-- Non-performing loans increased by $3.1 million to $22.6 million, or 0.74 percent of the portfolio, at June 30, 2007, compared to $19.5 million, or 0.67 percent of the portfolio, at March 31, 2007. Loans over 30 days delinquent decreased from $37.3 million at March 31, 2007 to $32.0 million at June 30, 2007.
-- The provision for credit losses was $3.0 million for the second quarter of 2007, compared to $6.1 million for the first quarter of 2007 and $900,000 for the second quarter of 2006.
-- The allowance for loan losses was 1.05 percent, 1.08 percent and 0.98 percent of the gross loan portfolio at June 30, 2007, March 31, 2007 and June 30, 2006, respectively.
-- During the second quarter, the Company repurchased 923,800 of its shares at a cost of $15.9 million, or $17.19 per share.
NET INTEREST INCOME BEFORE PROVISION FOR CREDIT LOSSES
Net interest income before provision for credit losses was $38.6 million for the second quarter of 2007, an increase of $525,000, or 1.4 percent, compared to $38.1 million for the first quarter of 2007, and an increase of $193,000, or 0.5 percent, compared to $38.4 million for the second quarter of 2006.
The yield on the loan portfolio was 8.68 percent for the second quarter of 2007, a decrease of 12 basis points compared to 8.80 percent for the first quarter of 2007, and an increase of 3 basis points compared to 8.65 percent for the second quarter of 2006. The yield on investment securities was 4.40 percent for the second quarter of 2007, a decrease of 4 basis points compared to 4.44 percent for the first quarter of 2007, and the same as the second quarter of 2006.
The yield on average interest-earning assets was 8.17 percent for the second quarter of 2007, a decrease of 6 basis points compared to 8.23 percent for the first quarter of 2007, and an increase of 11 basis points compared to 8.06 percent for the second quarter of 2006. The cost of interest-bearing liabilities was 4.92 percent for the second quarter of 2007, an increase of 5 basis points compared to 4.87 percent for the first quarter of 2007, and an increase of 55 basis points compared to 4.37 percent for the second quarter of 2006, as the competitive deposit rate environment continued to stabilize.
PROVISION FOR CREDIT LOSSES
The provision for credit losses was $3.0 million for the second quarter of 2007, compared to $6.1 million for the first quarter of 2007 and $900,000 for the same quarter last year. In the second quarter of 2007, net charge-offs were $2.5 million, compared to $2.4 million for the first quarter of 2007 and $353,000 for the same quarter last year.
The sequential decrease in the provision for credit losses is attributable primarily to decreased migration of loans into the Company's more adverse risk rating categories and the resolution of certain non-performing loans in the second quarter.
The sequential decrease in the provision for credit losses also reflects a reduced rate of increase in non-performing assets, which increased $4.2 million in the second quarter to a balance of $23.7 million at June 30, 2007, compared to an increase of $5.3 million to a balance of $19.5 million at March 31, 2007. Delinquent loans decreased to $32.0 million, or 1.05 percent of gross loans, at June 30, 2007 from $37.3 million, or 1.28 percent of gross loans, at March 31, 2007. While the level of non-performing assets and delinquent loans are indicators of the credit quality of the portfolio, the provision for credit losses is determined primarily on the basis of loan classifications and the Company's historical loss experience with similarly situated credits.
NON-INTEREST INCOME
Non-interest income increased by $705,000, or 7.1 percent, to $10.7 million for the second quarter of 2007, compared to $10.0 million for the first quarter of 2007, and increased by $2.0 million, or 23.4 percent, compared to $8.7 million for the second quarter of 2006. The increases in non-interest income are primarily attributable to increases in the amount of gain on sales of loans and increased insurance commissions as a result of the acquisition of two insurance agencies in the first quarter of 2007.
NON-INTEREST EXPENSES
Non-interest expenses increased by $521,000, or 2.5 percent, to $21.5 million for the second quarter of 2007, compared to $21.0 million for the first quarter of 2007, and increased by $1.7 million, or 8.6 percent, compared to $19.8 million for the second quarter of 2006. Salaries and employee benefits decreased $979,000, or 8.3 percent, sequentially from $11.8 million for the quarter ended March 31, 2007 to $10.8 million for the quarter ended June 30, 2007 because of decreased accruals for incentive compensation. In addition, a larger percentage of payroll costs were capitalized as direct loan origination costs, as a result of higher loan volume, and the employer's portion of payroll taxes decreased. Other operating expenses increased $648,000, or 23.2 percent, sequentially from $2.8 million for the quarter ended March 31, 2007 to $3.4 million for the quarter ended June 30, 2007 as the Company incurred increased deposit operations losses and increased the amortization and write-downs of loan servicing assets.
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 second quarter of 2007 was 43.61 percent, compared to 43.64 percent for the first quarter of 2007 and 42.06 percent for the second quarter of 2006, reflecting the acquisitions of two insurance agencies in the first quarter of 2007.
PROVISION FOR INCOME TAXES
The provision for income taxes reflects a 38.1 percent effective tax rate for the second quarter of 2007, compared to a 37.7 percent effective tax rate for the first quarter of 2007 and a 39.5 percent effective tax rate for the second quarter of 2006. The periodic effective tax rates reflect a stable level of Enterprise Zone and low-income housing tax credits in periods in which there were fluctuations in taxable income.
FINANCIAL POSITION
Total assets were $3.87 billion at June 30, 2007, an increase of $145.7 million, or 3.9 percent, compared to $3.73 billion at December 31, 2006, and an increase of $247.2 million, or 6.8 percent, from the June 30, 2006 balance of $3.62 billion.
At June 30, 2007, net loans totaled $3.02 billion, an increase of $186.3 million, or 6.6 percent, from $2.84 billion at December 31, 2006. Real estate loans increased by $21.1 million, or 2.0 percent, to $1.06 billion at June 30, 2007, compared to $1.04 billion at December 31, 2006, and commercial and industrial loans grew by $171.7 million, or 9.9 percent, to $1.90 billion at June 30, 2007, compared to $1.73 billion at December 31, 2006.
The growth in total assets was funded primarily by an increase in FHLB advances and other borrowings of $109.7 million, up 64.9 percent to $278.8 million at June 30, 2007, compared to $169.0 million at December 31, 2006. In addition, deposits increased $28.4 million, up 1.0 percent to $2.97 billion at June 30, 2007 from $2.94 billion at December 31, 2006. The increase in deposits included increases in time deposits of $100,000 or more of $24.9 million, up 1.8 percent to $1.41 billion, in other time deposits of $13.2 million, up 4.5 percent to $308.7 million, and in money market checking accounts of $706,000, up 0.2 percent to $439.0 million, partially offset by decreases in noninterest-bearing demand deposits of $8.1 million, down 1.1 percent to $720.2 million, and in savings accounts of $2.2 million, down 2.3 percent to $97.0 million.
ASSET QUALITY
Total non-performing assets, including loans 90 days or more past due and still accruing, non-accrual loans and other real estate owned ("OREO") assets, increased by $9.5 million to $23.7 million at June 30, 2007 from $14.2 million at December 31, 2006, and increased by $11.6 million from $12.1 million at June 30, 2006. Non-performing loans as a percentage of gross loans increased to 0.74 percent at June 30, 2007 from 0.50 percent at December 31, 2006 and 0.43 percent at June 30, 2006.
At June 30, 2007, delinquent loans were $32.0 million, or 1.05 percent of gross loans, compared to $19.6 million, or 0.68 percent of gross loans, at December 31, 2006, and $23.1 million, or 0.83 percent of gross loans, at June 30, 2006.
At June 30, 2007, the Company maintained an allowance for loan losses of $32.2 million and a liability for off-balance sheet exposure, primarily unfunded loan commitments, of $1.7 million. The allowance for loan losses represented 1.05 percent of gross loans at June 30, 2007, compared to 0.96 percent and 0.98 percent at December 31, 2006 and June 30, 2006, respectively. As of June 30, 2007, the allowance for loan losses was 142.3 percent of non-performing loans, compared to 193.9 percent at December 31, 2006 and 224.5 percent at June 30, 2006.
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 23 full-service offices in Los Angeles, Orange, San Francisco, Santa Clara and San Diego counties, and nine 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; credit quality; 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, 2006, 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)
December
June 30, 31, % June 30, %
2007 2006 Change 2006 Change
---------- ---------- -------- ---------- ---------
ASSETS
-----------------
Cash and Due from
Banks $98,020 $97,501 0.5 % $110,271 (11.1)%
Federal Funds
Sold 23,800 41,000 (42.0)% 1,100 2,063.6 %
---------- ---------- -------- ---------- ---------
Cash and Cash
Equivalents 121,820 138,501 (12.0)% 111,371 9.4 %
---------- ---------- -------- ---------- ---------
Term Federal
Funds Sold -- 5,000 (100.0)% -- --
Investment
Securities 364,732 391,579 (6.9)% 410,050 (11.1)%
Loans:
Loans, Net of
Deferred
Loan Fees 3,055,921 2,864,947 6.7 % 2,787,970 9.6 %
Allowance for
Loan Losses (32,190) (27,557) 16.8 % (27,250) 18.1 %
---------- ---------- -------- ---------- ---------
Net Loans 3,023,731 2,837,390 6.6 % 2,760,720 9.5 %
---------- ---------- -------- ---------- ---------
Customers'
Liability on
Acceptances 12,753 8,403 51.8 % 11,057 15.3 %
Premises and
Equipment, Net 20,361 20,075 1.4 % 20,312 0.2 %
Accrued Interest
Receivable 17,313 16,919 2.3 % 14,899 16.2 %
Other Real Estate
Owned 1,080 -- -- -- --
Deferred Income
Taxes 13,742 13,064 5.2 % 11,681 17.6 %
Servicing Asset 4,417 4,579 (3.5)% 4,302 2.7 %
Goodwill 209,941 207,646 1.1 % 207,646 1.1 %
Other Intangible
Assets 8,027 6,312 27.2 % 7,461 7.6 %
Federal Reserve
Bank and Federal
Home Loan Bank
Stock 25,352 24,922 1.7 % 24,603 3.0 %
Bank-Owned Life
Insurance 24,051 23,592 1.9 % 23,146 3.9 %
Other Assets 23,577 27,261 (13.5)% 16,401 43.8 %
---------- ---------- -------- ---------- ---------
Total Assets $3,870,897 $3,725,243 3.9 % $3,623,649 6.8 %
========== ========== ======== ========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------------------
Liabilities:
Deposits:
Non
interest-
Bearing $720,214 $728,348 (1.1)% $778,445 (7.5)%
Interest-
Bearing 2,252,932 2,216,367 1.6 % 2,116,567 6.4 %
---------- ---------- -------- ---------- ---------
Total Deposits 2,973,146 2,944,715 1.0 % 2,895,012 2.7 %
Accrued
Interest
Payable 23,343 22,582 3.4 % 15,319 52.4 %
Acceptances
Outstanding 12,753 8,403 51.8 % 11,057 15.3 %
FHLB Advances
and Other
Borrowings 278,784 169,037 64.9 % 156,872 77.7 %
Junior
Subordinated
Debentures 82,406 82,406 -- 82,406 --
Other
Liabilities 14,431 10,983 31.4 % 12,253 17.8 %
---------- ---------- -------- ---------- ---------
Total
Liabili-
ties 3,384,863 3,238,126 4.5 % 3,172,919 6.7 %
Shareholders'
Equity 486,034 487,117 (0.2)% 450,730 7.8 %
---------- ---------- -------- ---------- ---------
Total Liabilities
and
Shareholders'
Equity $3,870,897 $3,725,243 3.9 % $3,623,649 6.8 %
========== ========== ======== ========== =========
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in Thousands, Except Per Share Data)
For the Three Months Ended
----------------------------------------------------
June 30, March 31, % June 30, %
2007 2007 Change 2006 Change
----------- ----------- -------- ----------- -------
INTEREST INCOME:
Interest and
Fees on
Loans $ 65,212 $ 62,561 4.2% $ 58,870 10.8%
Interest
on Invest-
ments 4,472 4,664 (4.1)% 5,013 (10.8)%
Interest on
Federal
Funds Sold 176 726 (75.8)% 23 665.2%
Interest on
Term
Federal
Funds Sold -- 5 (100.0)% -- --
----------- ----------- -------- ----------- -------
Total
Interest
Income 69,860 67,956 2.8% 63,906 9.3%
----------- ----------- -------- ----------- -------
INTEREST
EXPENSE:
Interest on
Deposits 26,691 26,081 2.3% 21,921 21.8%
Interest on
FHLB Advances
and Other
Borrowings 2,919 2,171 34.5% 2,001 45.9%
Interest on
Junior
Subordi-
nated
Debentures 1,660 1,639 1.3% 1,587 4.6%
----------- ----------- -------- ----------- -------
Total
Interest
Expense 31,270 29,891 4.6% 25,509 22.6%
----------- ----------- -------- ----------- -------
NET INTEREST
INCOME BEFORE
PROVISION FOR
CREDIT LOSSES 38,590 38,065 1.4% 38,397 0.5%
-- --
Provision for
Credit Losses 3,023 6,132 (50.7)% 900 235.9%
----------- ----------- -------- ----------- -------
NET INTEREST
INCOME AFTER
PROVISION FOR
CREDIT LOSSES 35,567 31,933 11.4% 37,497 (5.1)%
----------- ----------- -------- ----------- -------
NON-INTEREST
INCOME:
Service
Charges on
Deposit
Accounts 4,438 4,488 (1.1)% 4,183 6.1%
Insurance
Commissions 1,279 1,125 13.7% 243 426.3%
Trade
Finance
Fees 1,177 1,290 (8.8)% 1,116 5.5%
Remittance
Fees 520 471 10.4% 532 (2.3)%
Other
Service
Charges and
Fees 574 616 (6.8)% 614 (6.5)%
Bank-Owned
Life
Insurance
Income 229 230 (0.4)% 215 6.5%
Increase in
Fair Value
of
Derivatives 222 92 141.3% 109 103.7%
Other Income 491 275 78.5% 345 42.3%
Gain on
Sales of
Loans 1,762 1,400 25.9% 1,311 34.4%
Gain on
Sales of
Securities
Available
for Sale -- -- -- -- --
----------- ----------- -------- ----------- -------
Total
Non-
Interest
Income 10,692 9,987 7.1% 8,668 23.4%
----------- ----------- -------- ----------- -------
NON-INTEREST
EXPENSES:
Salaries and
Employee
Benefits 10,782 11,761 (8.3)% 10,691 0.9%
Occupancy
and
Equipment 2,571 2,512 2.3% 2,670 (3.7)%
Data
Processing 1,665 1,563 6.5% 1,218 36.7%
Advertising
and
Promotion 889 661 34.5% 811 9.6%
Supplies
and Communi-
cations 704 588 19.7% 576 22.2%
Professional
Fees 647 474 36.5% 492 31.5%
Amortization
of Other
Intangible
Assets 592 614 (3.6)% 605 (2.1)%
Decrease in
Fair Value
of Embedded
Option 196 -- -- 112 75.0%
Other
Operating
Expenses 3,444 2,796 23.2% 2,622 31.4%
----------- ----------- -------- ----------- -------
Total
Non-
Interest
Expenses 21,490 20,969 2.5% 19,797 8.6%
----------- ----------- -------- ----------- -------
INCOME BEFORE
PROVISION FOR
INCOME TAXES 24,769 20,951 18.2% 26,368 (6.1)%
Provision for
Income Taxes 9,446 7,896 19.6% 10,428 (9.4)%
----------- ----------- -------- ----------- -------
NET INCOME $ 15,323 $ 13,055 17.4% $ 15,940 (3.9)%
=========== =========== ======== =========== =======
EARNINGS PER
SHARE:
Basic $ 0.32 $ 0.27 18.5% $ 0.33 (3.0)%
Diluted $ 0.31 $ 0.26 19.2% $ 0.32 (3.1)%
WEIGHTED-AVERAGE
SHARES
OUTSTANDING:
Basic 48,397,824 48,962,089 48,822,729
Diluted 48,737,574 49,500,312 49,404,204
SHARES
OUTSTANDING AT
PERIOD-END 47,950,929 48,825,537 48,908,580
For the Six Months Ended
---------------------------------
June 30, June 30, %
2007 2006 Change
------------ ----------- --------
INTEREST INCOME:
Interest and Fees on Loans $ 127,773 $ 112,017 14.1%
Interest
on Invest-
ments 9,136 10,112 (9.7)%
Interest on Federal Funds Sold 902 312 189.1%
Interest on Term Federal Funds
Sold 5 -- --
------------ ----------- --------
Total Interest Income 137,816 122,441 12.6%
------------ ----------- --------
INTEREST EXPENSE:
Interest on Deposits 52,772 41,512 27.1%
Interest on FHLB Advances and Other
Borrowings 5,090 2,615 94.6%
Interest on Junior Subordi-
nated Debentures 3,299 3,062 7.7%
------------ ----------- --------
Total Interest Expense 61,161 47,189 29.6%
------------ ----------- --------
NET INTEREST INCOME BEFORE PROVISION
FOR CREDIT LOSSES 76,655 75,252 1.9%
--
Provision for Credit Losses 9,155 3,860 137.2%
------------ ----------- --------
NET INTEREST INCOME AFTER PROVISION
FOR CREDIT LOSSES 67,500 71,392 (5.5)%
----------- ----------- --------
NON-INTEREST INCOME:
Service Charges on Deposit
Accounts 8,926 8,414 6.1%
Insurance Commissions 2,404 396 507.1%
Trade Finance Fees 2,467 2,187 12.8%
Remittance Fees 991 1,020 (2.8)%
Other Service Charges and Fees 1,190 1,148 3.7%
Bank-Owned Life Insurance Income 459 433 6.0%
Increase in Fair Value of
Derivatives 314 334 (6.0)%
Other Income 766 626 22.4%
Gain on Sales of Loans 3,162 2,150 47.1%
Gain on Sales of Securities
Available for Sale -- 5 (100.0)%
------------ ----------- --------
Total Non-Interest Income 20,679 16,713 23.7%
------------ ----------- --------
NON-INTEREST EXPENSES:
Salaries and Employee Benefits 22,543 19,852 13.6%
Occupancy and Equipment 5,083 4,876 4.2%
Data Processing 3,228 2,647 21.9%
Advertising and Promotion 1,550 1,457 6.4%
Supplies
and Communi-
cations 1,292 1,212 6.6%
Professional Fees 1,121 1,160 (3.4)%
Amortization of Other Intangible
Assets 1,206 1,230 (2.0)%
Decrease in Fair Value of
Embedded Option 196 214 (8.4)%
Other Operating Expenses 6,240 4,889 27.6%
------------ ----------- --------
Total Non-Interest Expenses 42,459 37,537 13.1%
------------ ----------- --------
INCOME BEFORE PROVISION FOR INCOME
TAXES 45,720 50,568 (9.6)%
Provision for Income Taxes 17,342 19,826 (12.5)%
------------ ----------- --------
NET INCOME $ 28,378 $ 30,742 (7.7)%
============ =========== ========
EARNINGS PER SHARE:
Basic $ 0.58 $ 0.63 (7.9)%
Diluted $ 0.58 $ 0.62 (6.5)%
WEIGHTED-AVERAGE SHARES OUTSTANDING:
Basic 48,678,399 48,768,881
Diluted 49,110,835 49,366,709
SHARES OUTSTANDING AT PERIOD-END 47,950,929 48,908,580
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL DATA (UNAUDITED)
(Dollars in Thousands)
For the Three Months Ended
-------------------------------------------------
June 30, March 31, % June 30, %
2007 2007 Change 2006 Change
---------------------- --------------------------
AVERAGE BALANCES:
Average Gross
Loans, Net of
Deferred Loan
Fees $3,014,895 $2,882,632 4.6% $2,729,218 10.5%
Average
Investment
Securities 375,598 386,688 (2.9)% 425,371 (11.7)%
Average
Interest-
Earning Assets 3,429,123 3,350,245 2.4% 3,180,999 7.8%
Average Total
Assets 3,818,170 3,740,936 2.1% 3,570,389 6.9%
Average
Deposits 2,967,748 2,945,386 0.8% 2,832,218 4.8%
Average
Borrow-
ings 304,744 251,594 21.1% 248,480 22.6%
Average
Interest-
Bearing
Liabilities 2,551,665 2,487,429 2.6% 2,341,481 9.0%
Average Share-
holders' Equity 495,719 495,832 -- 449,664 10.2%
Average
Tangible
Equity 277,414 276,918 0.2% 232,802 19.2%
PERFORMANCE
RATIOS:
Return on
Average
Assets 1.61% 1.42% 1.79%
Return on
Average
Shareholders'
Equity 12.40% 10.68% 14.22%
Return on
Average
Tangible
Equity 22.15% 19.12% 27.46%
Effi-
ciency Ratio 43.61% 43.64% 42.06%
Net Interest
Margin 4.51% 4.61% 4.84%
ALLOWANCE FOR LOAN
LOSSES:
Balance at the
Beginning of
Period $ 31,527 $ 27,557 14.4% $ 26,703 18.1%
Provision
Charged to
Operating
Expense 3,181 6,374 (50.1)% 900 253.4%
Charge-Offs,
Net of
Recoveries (2,518) (2,404) 4.7% (353)613.3%
---------------------- ------- ------------------
Balance at
the End of
Period $ 32,190 $ 31,527 2.1% $ 27,250 18.1%
====================== ======= ==================
Allowance for
Loan Losses to
Total Gross
Loans 1.05% 1.08% 0.98%
Allowance for
Loan Losses to
Total Non-
Performing
Loans 142.30% 161.55% 224.54%
ALLOWANCE FOR
OFF-BALANCE
SHEET ITEMS:
Balance at the
Beginning of
Period $ 1,888 $ 2,130 (11.4)% $ 2,130 (11.4)%
Provision
Charged to
Operating
Expense (158) (242) (34.7)% -- --
---------------------- ------- ------------------
Balance at
the End of
Period $ 1,730 $ 1,888 (8.4)% $ 2,130 (18.8)%
====================== ======= ==================
For the Six Months Ended
------------------------------
June 30, June 30, %
2007 2006 Change
------------------------------
AVERAGE BALANCES:
Average Gross Loans, Net of Deferred
Loan Fees $2,949,129 $2,638,822 11.8%
Average Investment Securities 381,113 431,440 (11.7)%
Average Interest-Earning Assets 3,414,585 3,109,051 9.8%
Average Total Assets 3,780,147 3,497,310 8.1%
Average Deposits 2,956,629 2,821,648 4.8%
Average Borrow-
ings 278,316 193,691 43.7%
Average Interest-Bearing Liabilities 2,519,725 2,278,944 10.6%
Average Share-
holders' Equity 497,444 443,507 12.2%
Average Tangible Equity 277,778 226,645 22.6%
PERFORMANCE RATIOS:
Return on Average Assets 1.51% 1.77%
Return on Average Shareholders'
Equity 11.50% 13.98%
Return on Average Tangible Equity 20.60% 27.35%
Effi-
ciency Ratio 43.62% 40.82%
Net Interest Margin 4.53% 4.88%
ALLOWANCE FOR LOAN LOSSES:
Balance at the Beginning of Period $ 27,557 $ 24,963 10.4%
Provision Charged to Operating
Expense 9,555 3,860 147.5%
Charge-Offs, Net of Recoveries (4,922) (1,573)212.9%
------------------------------
Balance at the End of Period $ 32,190 $ 27,250 18.1%
==============================
Allowance for Loan Losses to Total
Gross Loans 1.05% 0.98%
Allowance for Loan Losses to Total
Non-Performing Loans 142.30% 224.54%
ALLOWANCE FOR
OFF-BALANCE
SHEET ITEMS:
Balance at the Beginning of Period $ 2,130 $ 2,130 --
Provision Charged to Operating
Expense (400) -- --
------------------------------
Balance at the End of Period $ 1,730 $ 2,130 (18.8)%
==============================
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL DATA (UNAUDITED) (Continued)
(Dollars in Thousands)
June 30, December 31, % June 30, %
2007 2006 Change 2006 Change
---------------------- ---------------------------
NON-PERFORMING
ASSETS:
Non-Accrual
Loans $ 22,442 $ 14,213 57.9% $ 12,001 87.0%
Loans 90 Days or
More Past Due
and Still
Accruing 179 2 8,850.0% 135 32.6%
---------------------- ---------------------------
Total Non-
Performing
Loans 22,621 14,215 59.1% 12,136 86.4%
Other Real
Estate
Owned 1,080 -- -- -- --
---------------------- ---------------------------
Total Non-
Performing
Assets $ 23,701 $ 14,215 66.7% $ 12,136 95.3%
====================== ===========================
Total Non-
Performing
Loans/Total
Gross Loans 0.74% 0.50% 0.43%
Total Non-
Performing
Assets/Total
Assets 0.61% 0.38% 0.33%
Total Non-
Performing
Assets/
Allowance for
Loan Losses 73.6% 51.6% 44.5%
DELINQUENT LOANS $ 31,979 $ 19,616 63.0% $ 23,084 38.5%
====================== ===========================
Delinquent
Loans/Total
Gross Loans 1.05% 0.68% 0.83%
LOAN PORTFOLIO:
Real Estate
Loans $1,062,460 $1,041,393 2.0% $1,029,462 3.2%
Commercial and
Industrial
Loans 1,898,097 1,726,434 9.9% 1,663,449 14.1%
Consumer
Loans 97,496 100,121 (2.6)% 98,974 (1.5)%
---------------------- ---------------------------
Total
Gross
Loans 3,058,053 2,867,948 6.6% 2,791,885 9.5%
Deferred Loan
Fees (2,132) (3,001) (29.0)% (3,915)(45.5)%
Allowance for
Loan Losses (32,190) (27,557) 16.8% (27,250) 18.1%
---------------------- ---------------------------
Loans Receivable,
Net $3,023,731 $2,837,390 6.6% $2,760,720 9.5%
====================== ===========================
LOAN MIX:
Real Estate
Loans 34.7% 36.3% 36.9%
Commercial and
Industrial
Loans 62.1% 60.2% 59.6%
Consumer
Loans 3.2% 3.5% 3.5%
---------------------- -----------
Total
Gross
Loans 100.0% 100.0% 100.0%
====================== ===========
DEPOSIT
PORTFOLIO:
Demand -
Noninterest-
Bearing $ 720,214 $ 728,348 (1.1)%$ 778,445 (7.5)%
Savings 97,019 99,254 (2.3)% 110,492 (12.2)%
Money Market
Checking and
NOW Accounts 438,973 438,267 0.2% 440,970 (0.5)%
Time Deposits
of $100,000 or
More 1,408,237 1,383,358 1.8% 1,287,257 9.4%
Other Time
Deposits 308,703 295,488 4.5% 277,848 11.1%
---------------------- ---------------------------
Total
Deposits $2,973,146 $2,944,715 1.0% $2,895,012 2.7%
====================== ===========================
DEPOSIT MIX:
Demand -
Noninterest-
Bearing 24.2% 24.7% 26.9%
Savings 3.3% 3.4% 3.8%
Money Market
Checking and
NOW Accounts 14.8% 14.9% 15.2%
Time Deposits
of $100,000 or
More 47.4% 47.0% 44.5%
Other Time
Deposits 10.3% 10.0% 9.6%
---------------------- -----------
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)
For the Three Months Ended
---------------------------------------------------------
June 30, 2007 March 31, 2007
-------------------------- ----------------------------
Average Inter- Aver- Average Inter- Aver-
Balance est age Balance est age
Income/ Yield/ Income/ Yield/
Expense Rate Expense Rate
-------------------- ---------------------------- -------
INTEREST-
EARNING
ASSETS
LOANS:
Real Estate
Loans:
Commercial
Property $ 769,112 $ 15,534 8.10% $ 752,673 $ 15,168 8.17%
Construc-
tion 215,760 5,137 9.55% 212,370 4,937 9.43%
Residen-
tial
Property 86,596 1,157 5.36% 85,022 1,097 5.23%
-------------------- ----- -------------------- -------
Total Real
Estate Loans 1,071,468 21,828 8.17% 1,050,065 21,202 8.19%
Commercial
and
Industrial
Loans 1,848,369 41,206 8.94% 1,736,530 38,769 9.05%
Consumer
Loans 97,175 2,016 8.32% 98,634 2,173 8.93%
-------------------- ----- -------------------- -------
Total Loans
- Gross 3,017,012 65,050 8.65% 2,885,229 62,144 8.74%
Prepayment
Penalty
Income -- 162 -- 417
Unearned
Income on
Loans, Net
of Costs (2,117) -- (2,597) --
-------------------- --------------------
Gross
Loans,
Net $3,014,895 $ 65,212 8.68% $2,882,632 $ 62,561 8.80%
==================== ===== ==================== =======
INVESTMENT
SECURI-
TIES:
Municipal
Bonds $ 72,284 $ 762 4.22% $ 72,396 $ 764 4.22%
U.S.
Government
Agency
Securities 118,696 1,233 4.16% 118,267 1,256 4.25%
Mortgage-
Backed
Securities 111,568 1,317 4.72% 118,899 1,404 4.72%
Collatera-
lized
Mortgage
Obligations 60,199 651 4.33% 64,208 697 4.34%
Corporate
Bonds 7,907 89 4.50% 7,869 90 4.57%
Other
Securi-
ties 4,944 84 6.80% 5,049 84 6.65%
-------------------- ----- -------------------- -------
Total
Invest-
ment
Securi-
ties $ 375,598 $ 4,136 4.40% $ 386,688 $ 4,295 4.44%
==================== ===== ==================== =======
OTHER INTEREST-EARNING ASSETS:
Equity
Securities
(FHLB and
FRB Stock) $ 25,290 $ 336 5.31% $ 25,008 $ 369 5.90%
Federal
Funds Sold 13,340 176 5.28% 55,528 726 5.23%
Term
Federal
Funds Sold -- -- -- 389 5 5.14%
Interest-
Earning
Deposits -- -- -- -- -- --
-------------------- ----- -------------------- -------
Total
Other
Interest-
Earning
Assets $ 38,630 $ 512 5.30% $ 80,925 $ 1,100 5.44%
==================== ===== ==================== =======
TOTAL
INTEREST-
EARNING
ASSETS $3,429,123 $ 69,860 8.17% $3,350,245 $ 67,956 8.23%
==================== ===== ==================== =======
INTEREST-BEARING
LIABILITIES
INTEREST-BEARING
DEPOSITS:
Savings $ 99,457 $ 502 2.02% $ 100,777 $ 461 1.86%
Money Market
Checking and
NOW Accounts 432,408 3,666 3.40% 427,871 3,472 3.29%
Time Deposits
of $100,000
or More 1,411,099 18,778 5.34% 1,406,311 18,498 5.33%
Other Time
Deposits 303,957 3,745 4.94% 300,876 3,650 4.92%
-------------------- ----- -------------------- -------
Total
Interest-
Bearing
Deposits $2,246,921 $ 26,691 4.76% $2,235,835 $ 26,081 4.73%
==================== ===== ==================== =======
BORROWINGS:
FHLB Advances
and Other
Borrowings $ 222,338 $ 2,919 5.27% $ 169,188 $ 2,171 5.20%
Junior
Subordinated
Debentures 82,406 1,660 8.08% 82,406 1,639 8.07%
-------------------- ----- -------------------- -------
Total
Borrow-
ings $ 304,744 $ 4,579 6.03% $ 251,594 $ 3,810 6.14%
==================== ===== ==================== =======
TOTAL
INTEREST-
BEARING
LIABILITIES $2,551,665 $ 31,270 4.92% $2,487,429 $ 29,891 4.87%
==================== ===== ==================== =======
NET
INTEREST
SPREAD 3.25% 3.36%
===== =======
NET
INTEREST
MARGIN 4.51% 4.61%
===== =======
For the Three Months Ended
-----------------------------
June 30, 2006
---------------------------
Average Interest Average
Balance Income/ Yield/
Expense Rate
------------------------------
INTEREST-EARNING ASSETS
LOANS:
Real Estate Loans:
Commercial Property $ 761,626 $15,425 8.12%
Construc-
tion 179,588 4,286 9.57%
Residen-
tial Property 86,091 1,107 5.16%
---------------------------
Total Real Estate Loans 1,027,305 20,818 8.13%
Commercial and Industrial Loans 1,608,638 35,905 8.95%
Consumer Loans 97,169 2,081 8.59%
---------------------------
Total Loans - Gross 2,733,112 58,804 8.63%
Prepayment Penalty Income 66
Unearned Income on Loans, Net of Costs (3,894) --
--------------------
Gross Loans, Net $2,729,218 $58,870 8.65%
===========================
INVESTMENT SECURI-
TIES:
Municipal Bonds $ 73,061 $ 773 4.23%
U.S. Government Agency Securities 127,184 1,316 4.14%
Mortgage-Backed Securities 136,514 1,612 4.72%
Collatera-
lized Mortgage Obligations 75,728 810 4.28%
Corporate Bonds 7,903 89 4.50%
Other Securi-
ties 4,981 83 6.67%
---------------------------
Total Invest-
ment Securi-
ties $ 425,371 $ 4,683 4.40%
===========================
OTHER INTEREST-EARNING ASSETS:
Equity Securities (FHLB and FRB Stock) $ 24,524 $ 330 5.38%
Federal Funds Sold 1,859 23 4.95%
Term Federal Funds Sold -- -- --
Interest-Earning Deposits 27 -- 3.64%
---------------------------
Total Other Interest-Earning Assets $ 26,410 $ 353 5.35%
===========================
TOTAL INTEREST-EARNING ASSETS $3,180,999 $63,906 8.06%
===========================
INTEREST-BEARING LIABILITIES
INTEREST-BEARING DEPOSITS:
Savings $ 112,341 $ 480 1.71%
Money Market Checking and NOW Accounts 484,039 3,638 3.01%
Time Deposits of $100,000 or More 1,223,118 14,869 4.88%
Other Time Deposits 273,503 2,934 4.30%
---------------------------
Total Interest-Bearing Deposits $2,093,001 $21,921 4.20%
===========================
BORROWINGS:
FHLB Advances and Other Borrowings $ 166,074 $ 2,001 4.83%
Junior Subordinated Debentures 82,406 1,587 7.72%
---------------------------
Total Borrow-
ings $ 248,480 $ 3,588 5.79%
===========================
TOTAL INTEREST-BEARING LIABILITIES $2,341,481 $25,509 4.37%
===========================
NET INTEREST SPREAD 3.69%
=======
NET INTEREST MARGIN 4.84%
=======
For the Six Months Ended
--------------------------------------------------------
June 30, 2007 June 30, 2006
---------------------------- ---------------------------
Average Interest Aver- Average Interest Aver-
Balance Income/ age Balance Income/ age
Expense Yield/ Expense Yield/
Rate Rate
--------------------- -------------------------- -------
INTEREST-
EARNING
ASSETS
LOANS:
Real Estate
Loans:
Commercial
Property $ 760,938 $ 30,702 8.14% $ 747,442 $ 29,931 8.08%
Construc-
tion 214,074 10,075 9.49% 170,293 8,052 9.54%
Residen-
tial Property 85,813 2,254 5.30% 86,352 2,189 5.11%
-------------------- ------ ------------------- -------
Total Real
Estate Loans 1,060,825 43,031 8.18% 1,004,087 40,172 8.07%
Commercial and
Industrial
Loans 1,792,760 79,973 9.00% 1,543,507 67,737 8.85%
Consumer
Loans 97,900 4,189 8.63% 95,079 3,964 8.41%
-------------------- ------ ------------------- -------
Total Loans -
Gross 2,951,485 127,193 8.69% 2,642,673 111,873 8.54%
Prepayment
Penalty
Income -- 580 -- 144
Unearned
Income on
Loans, Net of
Costs (2,356) -- (3,851) --
-------------------- -------------------
Gross
Loans,
Net $2,949,129 $127,773 8.74% $2,638,822 $112,017 8.56%
==================== ====== =================== =======
INVESTMENT
SECURI-
TIES:
Municipal
Bonds $ 72,340 $ 1,526 4.22% $ 73,414 $ 1,551 4.23%
U.S.
Government
Agency
Securities 118,483 2,489 4.20% 126,843 2,619 4.13%
Mortgage-
Backed
Securities 115,213 2,721 4.72% 140,511 3,282 4.67%
Collatera-
lized Mortgage
Obligations 62,193 1,348 4.33% 77,703 1,657 4.26%
Corporate
Bonds 7,888 179 4.54% 7,968 179 4.49%
Other Securi-
ties 4,996 168 6.73% 5,001 168 6.72%
-------------------- ------ ------------------- -------
Total
Invest-
ment
Securi-
ties $ 381,113 $ 8,431 4.42% $ 431,440 $ 9,456 4.38%
==================== ====== =================== =======
OTHER INTEREST-EARNING
ASSETS:
Equity
Securities
(FHLB and FRB
Stock) $ 49,833 $ 705 2.83% $ 24,567 $ 655 5.33%
Federal Funds
Sold 34,317 902 5.26% 14,158 312 4.41%
Term Federal
Funds Sold 193 5 5.18% -- -- --
Interest-
Earning
Deposits -- -- -- 64 1 4.01%
-------------------- ------ ------------------- -------
Total Other
Interest-
Earning
Assets $ 84,343 $ 1,612 3.82% $ 38,789 $ 968 4.99%
==================== ====== =================== =======
TOTAL
INTEREST-
EARNING
ASSETS $3,414,585 $137,816 8.14% $3,109,051 $122,441 7.94%
==================== ====== =================== =======
INTEREST-
BEARING
LIABILITIES
INTEREST-
BEARING
DEPOSITS:
Savings $ 100,114 $ 963 1.94% $ 115,036 $ 962 1.69%
Money Market
Checking and
NOW Accounts 430,152 7,138 3.35% 501,735 7,352 2.95%
Time Deposits
of $100,000
or More 1,408,718 37,276 5.34% 1,195,348 27,653 4.67%
Other Time
Deposits 302,425 7,395 4.93% 273,134 5,545 4.09%
-------------------- ------ ------------------- -------
Total
Interest-
Bearing
Deposits $2,241,409 $ 52,772 4.75% $2,085,253 $ 41,512 4.01%
==================== ====== =================== =======
BORROWINGS:
FHLB Advances
and Other
Borrowings $ 195,910 $ 5,090 5.24% $ 111,285 $ 2,615 4.74%
Junior
Subordinated
Debentures 82,406 3,299 8.07% 82,406 3,062 7.49%
-------------------- ------ ------------------- -------
Total
Borrow-
ings $ 278,316 $ 8,389 6.08% $ 193,691 $ 5,677 5.91%
==================== ====== =================== =======
TOTAL
INTEREST-
BEARING
LIABILITIES $2,519,725 $ 61,161 4.89% $2,278,944 $ 47,189 4.18%
==================== ====== =================== =======
NET INTEREST
SPREAD 3.25% 3.76%
====== =======
NET INTEREST
MARGIN 4.53% 4.88%
====== =======
Source: Hanmi Financial Corporation
Released July 26, 2007