EXHIBIT 99.1
HANMI FINANCIAL CORPORATION REPORTS
RECORD QUARTERLY RESULTS
LOS ANGELES - July 27, 2004 - Hanmi Financial Corporation (NASDAQ:HAFC), the
holding company for Hanmi Bank, reported that for the three months ended June
30, 2004, it earned record net income of $7.55 million, or $0.35 per share
(diluted), an increase of 52.3 percent over net income of $4.95 million, or
$0.35 per share (diluted), in the comparable period a year ago.
Second-quarter 2004 net income reflects pre-tax restructuring costs totaling
$1.73 million related to the April 30, 2004 acquisition of Pacific Union Bank,
which reduced after-tax earnings by $0.05 per share (diluted). Excluding these
costs, second-quarter 2004 net operating income was $8.60 million, or $0.40 per
share (diluted), compared to net operating income of $4.95 million, or $0.35 per
share (diluted), in the second quarter of 2003, when there were no restructuring
costs.
For the six months ended June 30, 2004, net income was $13.9 million, or $0.78
per share (diluted), an increase of 51.6 percent over net income of $9.2
million, or $0.64 per share (diluted), in the first six months of 2003.
"We are extremely pleased that despite the one-time costs associated with the
April 30, 2004 acquisition of Pacific Union Bank, we have nonetheless reported
our best quarterly results ever," said J.W. Yoo, president and chief executive
officer. "These record results are a testament to the hard work and dedication
of people from both organizations. Moreover, our program to fully integrate the
two banks' systems and facilities is on schedule and is expected to be completed
in the fourth quarter. In the meantime, I am delighted at our success in
retaining PUB customers while continuing Hanmi's strong organic growth."
SECOND-QUARTER HIGHLIGHTS
- The Company completed its acquisition of Pacific Union Bank, a $1.2
billion (assets) commercial bank headquartered in Los Angeles that,
like Hanmi, serves primarily the Korean-American community.
- Second-quarter 2004 pre-tax income increased 60.5 percent to $12.4
million, compared to $7.7 million during the same quarter a year ago.
- Second-quarter net interest income after provision for loan losses
increased 88.9 percent to $23.4 million from $12.4 million in 2003.
- Total assets increased to $3.10 billion at June 30, 2004 from $1.76
billion at March 31, 2004 and $1.65 billion at June 30, 2003.
- Return on average assets for second quarter was 1.23 percent, compared
to 1.26 percent for the same period a year ago.
- Return on average equity was 13.37 percent, and return on tangible
equity was 19.72 percent, compared to 15.21 percent and 15.47 percent,
respectively, in the period a year ago.
- Net interest margin increased to 4.10 percent from 3.74 percent for
the same quarter last year.
NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES
Net interest income before provision for loan losses was $24.2 million, an
increase of $10.3 million, or 74.6 percent, compared to the same period of the
prior year. This is an increase of $7.3 million, or 42.9 percent, compared to
the first quarter of 2004. The increase was primarily due to the acquisition of
interest-earning assets totaling $1.1 billion as part of the merger with PUB.
However, existing Hanmi lending units continued their strong growth and
increased their net loans outstanding by $83.5 million, or 6.5 percent, during
the quarter.
Average interest-earning assets increased by $692 million, or 41.4 percent, over
the first quarter of 2004 and provided an additional $9.6 million of interest
income. These increases were funded primarily by $936 million of deposits
acquired in the merger with PUB. The net interest margin was 4.10 percent for
the second quarter of 2004, compared to 3.74 percent for the second quarter of
2003 and 4.05 percent for the first quarter of 2004.
PROVISION FOR LOAN LOSSES
The provision for loan losses represents the charge against current earnings
that is determined by management, through a disciplined credit review process,
to be the amount needed to maintain an allowance that is sufficient to absorb
loan losses inherent in the Company's loan portfolio. The provision for loan
losses was $850,000 in the second quarter of 2004, compared to $1.5 million for
the second quarter of 2003. As discussed below, non-performing assets were 0.38
percent of the loan portfolio and 33.0 percent of the allowance for loan losses
at June 30, 2004.
NON-INTEREST INCOME
Non-interest income was $6.8 million in the second quarter of 2004, an increase
of $1.2 million, or 20.6 percent, compared to $5.6 million recognized in the
second quarter of 2003. The increase was mainly due to an increase of $1.6
million, or 44.2 percent, in service charges and fee income, offset by a
decrease of $701,000 in gain on sales of securities. Other non-interest income
increased $301,000, or 70.7 percent, primarily as a result of the acquisition of
PUB.
NON-INTEREST EXPENSES
Non-interest expenses increased from $10.4 million to $17.8 million, an increase
of $7.4 million, or 71.2 percent, over the second quarter of 2003. Recurring
non-interest expenses (non-interest expenses excluding restructuring charges)
increased to $16.1 million from $10.3 million in the second quarter of 2003 and
$10.4 million in the first quarter of 2004. The recurring cash efficiency ratio
(recurring non-interest expenses divided by the sum of net interest income
before provision for loan losses and non-interest income) was 51.8 percent in
the second quarter of 2004, compared to 52.8 percent in the second quarter of
2003 and 47.8 percent in the first quarter of 2004, reflecting additional
salaries and benefits, occupancy, professional fees, and data processing
expenses incurred during the post-merger integration period.
INCOME TAXES
The provision for income taxes for the second quarter was $4.8 million at a 39.0
percent effective tax rate in 2004 and $2.8 million at a 35.8 percent effective
tax rate in 2003. The effective rate for the year ended December 31, 2003 was
39.3 percent. In the fourth quarter of 2003, certain tax benefits recognized in
the first three quarters of 2003 arising from certain transactions involving a
real estate investment trust were reversed.
ACQUISITION OF PACIFIC UNION BANK
On April 30, 2004, the Company completed its acquisition of PUB for a total
purchase price of $325 million, consisting of $165 million cash, Hanmi stock
valued at $156 million, options exchanged of $1 million, and direct transaction
costs of $3 million. The purchase price was allocated to the fair value of net
assets acquired (which exceeded their $113 million book value by approximately
$3 million), core deposit intangible assets of $13 million, deferred tax
liabilities of $8 million, merger-related liabilities assumed of approximately
$5 million, and goodwill totaling $207 million.
FINANCIAL POSITION
Total assets were $3.10 billion at June 30, 2004, an increase of $1.34 billion
from the March 31, 2004 balance of $1.76 billion.
At June 30, 2004, net loans totaled $2.20 billion, an increase of $916 million,
or 71.5 percent, from $1.28 billion at March 31, 2004. Net loans acquired in the
merger with PUB accounted for $865 million of the increase.
Real estate loans increased to $1.02 billion at June 30, 2004 from $493 million
at March 31, 2004, an increase of 107.6 percent. Real estate loans held by
existing Hanmi branches (i.e., branches other that the acquired PUB branches)
increased $31 million, or 6.3 percent, during the quarter. Commercial loans
increased to $1.12 billion at June 30, 2004 from $747 million at March 31, 2004,
an increase of 49.7 percent. Commercial loans held by existing Hanmi branches
increased $52 million, an increase of 6.9 percent.
Total deposits increased to $2.35 billion at June 30, 2004 from $1.48 billion at
March 31, 2004, an increase of $868 million, or 58.8 percent. The Company
obtained $936 million in deposits as part of the merger with PUB. Demand
deposits increased to $763 million
at June 30, 2004 from $488 million at March 31, 2004. Demand deposits held by
existing Hanmi branches increased $21 million, or 4.4 percent, during the
quarter.
Money market accounts increased to $506 million at June 30, 2004 from $292
million at March 31, 2004, an increase of 73 percent. Growth in money market
accounts at existing Hanmi branches totaled $59 million, an increase of 20
percent during the quarter. Time deposits increased to $926 million at June 30,
2004, an increase of $321 million, or 53 percent from the March 31, 2004 balance
of $605 million.
During the quarter, the Company reevaluated the profitability of its
relationships with certain large former PUB depositors, which caused declines of
$50 million in brokered certificates of deposit and $54 million in volatile
money market accounts following the acquisition.
Borrowings increased to $264 million at June 30, 2004, from $57 million at March
31, 2004, an increase of $207 million. PUB's borrowings were $105 million at the
acquisition date, April 30, 2004, and the Company opted to replace certain
high-cost, volatile deposits discussed above with short-term borrowings. The
Company also issued $20 million trust preferred securities at the three-month
LIBOR plus 2.63 percent to provide additional capital and liquidity.
ASSET QUALITY
Total non-performing assets, which include accruing loans past due 90 days or
more and non-accrual loans, increased to $8.4 million at June 30, 2004 from $5.2
million at March 31, 2004. Non-performing assets as a percentage of gross loans
decreased to 0.38 percent at June 30, 2003 from 0.40 percent at March 31, 2004.
The allowance for loan losses at June 30, 2004 was $25.4 million and represented
the amount needed to absorb loan losses inherent in the Company's loan
portfolio. The allowance for loan losses represented 1.14 percent of gross loans
and 302.8 percent of non-performing loans at June 30, 2004. The comparable
ratios were 1.06 percent of gross loans and 264.6 percent of non-performing
loans at March 31, 2004.
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION
Three Months Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
NET OPERATING INCOME (EXCLUDING RESTRUCTURING CHARGES):
Net operating income (excluding
restructuring charges) $ 8,599 $ 4,953 $ 14,985 $ 9,192
Restructuring charge (1,728) - (1,728) -
Income tax benefit 674 - 674 -
Net income $ 7,545 $ 4,953 $ 13,931 $ 9,192
NET OPERATING INCOME (EXCLUDING RESTRUCTURING CHARGES)
PER SHARE DATA (DILUTED):
Net operating income per share
(excluding restructuring charges) $ 0.40 $ 0.35 $ 0 .83 $ 0.64
Restructuring charge (0.08) - (0.08) -
Income tax benefit 0.03 - 0.03 -
Earnings per share $ 0.35 $ 0.35 $ 0 .78 $ 0.64
Note: Certain amounts may not total due to rounding of individual components.
About Hanmi Financial Corporation:
Headquartered in Los Angeles, Hanmi Bank, a wholly owned subsidiary of Hanmi
Financial Corporation, provides services to the multi-ethnic communities of
California, with 27 full-service offices in Los Angeles, Orange, San Francisco,
Santa Clara and San Diego counties. Hanmi Bank specializes in commercial, SBA,
trade finance and consumer lending, and is a recognized community leader. Hanmi
Bank's mission is to provide varied quality products and premier services to its
customers and to maximize shareholder value. Additional information is available
at www.hanmifinancial.com.
Forward-Looking Statements:
Statements contained in this release which are not historical facts are
forward-looking statements as that term is defined in the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements are subject to
risks and uncertainties which could cause actual results to differ materially
from those currently anticipated due to a number of factors. Words such as
"expect," "feel," "believe," "will," "may," "anticipate," "plan," "estimate,"
"intend," "should," and similar expressions are intended to identify
forward-looking statements. These statements include, but are not limited to,
financial projections and estimates and their underlying assumptions; statements
regarding plans, objectives and expectations with respect to future operations,
products and services; and statements regarding future performance. Such
statements are subject to certain risks and uncertainties, many of which are
difficult to predict and generally beyond the control of
Hanmi Financial Corp., Hanmi Bank and Pacific Union Bank, that could cause
actual results to differ materially from those expressed in, or implied or
projected by, the forward-looking information and statements. The following
factors, among others, could cause actual results to differ materially from the
anticipated results or other expectations expressed in the forward-looking
statements: (1) the businesses of Hanmi Bank and Pacific Union Bank may not be
combined successfully, and the growth opportunities and cost savings from the
merger may not be fully realized or may take longer to realize than expected;
(2) operating costs and business disruptions following the merger, including
adverse effects on relationships with employees, may be greater than expected;
(3) competitive factors which could affect net interest income and non-interest
income, general economic conditions which could affect the volume of loan
originations, deposit flows and real estate values; and (4) the levels of
non-interest income and the amount of loan losses as well as other factors
discussed in the documents filed by Hanmi Financial Corp. with the Securities
and Exchange Commission or FDIC, as the case may be, from time to time. Hanmi
Financial Corp. undertakes no obligation to update these forward-looking
statements to reflect events or circumstances that occur after the date on which
such statements were made.
(financial tables follow)
Contact: Hanmi Financial Corporation
Michael J. Winiarski, CFO (213) 368-3200
Stephanie Yoon, Investor Relations (213) 427-5631
INCOME STATEMENT
(Dollars in thousands, except per share data)
For the quarter ended For the six months ended
---------------------------------------------- -----------------------------
June 30, 2004 March 31, 2004 June 30, 2003 June 30, 2004 June 30, 2003
------------- -------------- ------------- ------------- -------------
Interest income $ 31,692 $ 22,106 $ 19,119 $ 53,798 $ 36,578
Interest expense 7,484 5,170 5,252 12,654 10,564
----------- ----------- ----------- ----------- -----------
Net interest income before provision
for loan losses 24,208 16,936 13,867 41,144 26,014
Provision for loan losses 850 900 1,500 1,750 2,680
----------- ----------- ----------- ----------- -----------
Net interest income after provision for
loan losses 23,358 16,036 12,367 39,394 23,334
Service charges on deposit accounts 3,524 2,667 2,512 6,191 4,975
Trade finance fees 1,030 805 672 1,835 1,418
Remittance fees 436 257 243 693 455
Other service charges and fees 251 187 207 438 465
Bank-owned life insurance income 183 114 130 297 257
All other non-interest income 544 329 296 873 397
Gain on sales of loans 833 469 878 1,302 1,322
Gain on sales of investments 6 3 707 9 858
----------- ----------- ----------- ----------- -----------
Non-interest income 6,807 4,831 5,645 11,638 10,147
Salaries and employee benefits 7,958 5,684 5,569 13,642 10,252
Expenses of premises and fixed assets 2,132 1,385 1,283 3,517 2,467
Data processing expense 1,064 820 775 1,884 1,535
Supplies and communications 621 357 367 978 779
Professional fees 613 270 426 883 723
Advertising and promotion 878 545 362 1,423 773
Loan referral fees 470 159 209 629 435
Other operating expenses 2,332 1,178 1,312 3,510 2,285
Restructuring expense 1,728 - - 1,728 -
----------- ----------- ----------- ----------- -----------
Non-interest expenses 17,796 10,398 10,303 28,194 19,249
----------- ----------- ----------- ----------- -----------
Income before income taxes 12,369 10,469 7,709 22,838 14,232
Income taxes 4,824 4,083 2,756 8,907 5,040
----------- ----------- ----------- ----------- -----------
Net Income $ 7,545 $ 6,386 $ 4,953 $ 13,931 $ 9,192
=========== =========== =========== =========== ===========
Basic earnings per share $ 0.36 $ 0.45 $ 0.35 $ 0.79 $ 0.66
Diluted earnings per share $ 0.35 $ 0.44 $ 0.35 $ 0.78 $ 0.64
Shares outstanding 24,438,017 14,267,856
Weighted average shares outstanding - basic 21,078,773 14,201,594 14,025,792 17,640,184 13,973,809
Weighted average shares outstanding - diluted 21,421,856 14,486,213 14,279,881 17,962,399 14,259,383
CONDENSED BALANCE SHEET
As of As of As of As of
June 30, 2004 March 31, 2004 December 31, 2003 June 30, 2003
------------- -------------- ----------------- -------------
Cash and due from banks $ 107,528 $ 50,707 $ 62,595 $ 119,053
FRB and FHLB stock 17,514 10,398 10,355 6,062
Investment securities 459,686 362,446 414,616 367,015
Loans:
Loans, net of unearned income 2,222,918 1,295,412 1,261,748 1,126,617
Allowance for loan and lease losses 25,408 13,781 14,734 (13,147)
----------- ----------- ----------- -----------
Net loans 2,197,510 1,281,631 1,247,014 1,113,470
Due from customers on acceptances 4,848 6,281 3,930 2,666
Bank premises and equipment 19,514 8,126 8,435 8,520
Accrued interest receivable 9,930 6,590 6,686 5,710
Prepaid and deferred income taxes 20,989 5,130 7,207 4,010
Goodwill 209,046 1,830 1,831 1,860
Core deposit intangible 12,850 182 212 273
Bank-owned life insurance 21,434 11,251 11,137 10,894
Other assets 15,857 16,233 11,736 9,330
----------- ----------- ----------- -----------
Total Assets $ 3,096,706 $ 1,760,805 $ 1,785,754 $ 1,648,863
=========== =========== =========== ===========
Noninterest-bearing deposits $ 763,163 $ 487,728 $ 475,100 $ 438,418
Interest-bearing deposits 1,582,077 989,238 970,735 1,013,295
----------- ----------- ----------- -----------
Total deposits 2,345,240 1,476,966 1,445,835 1,451,713
Accrued interest payable 6,136 2,841 4,403 3,943
Acceptances outstanding 4,848 6,281 3,930 2,666
Borrowed funds 263,860 56,514 182,999 51,950
Junior subordinated debt 82,406 61,846 - -
Other liabilities 20,419 7,844 9,120 6,302
----------- ----------- ----------- -----------
Total Liabilities 2,722,909 1,612,292 1,646,287 1,516,574
----------- ----------- ----------- -----------
Shareholders' equity 373,797 148,513 139,467 132,289
----------- ----------- ----------- -----------
Total Liabilities and
Shareholders' Equity $ 3,096,706 $ 1,760,805 $ 1,785,754 $ 1,648,863
=========== =========== =========== ===========
AVERAGE BALANCES
For the quarter ended
June 30, 2004 March 31, 2004
------------- ----------------------
Average net loans $ 1,887,652 $ 1,263,631
Average interest-earning assets 2,363,328 1,671,275
Average assets 2,450,939 1,779,240
Average deposits 2,120,450 1,456,814
Average interest-bearing liabilities 1,672,371 1,155,664
Average equity 302,765 142,773
Average tangible equity 153,057 140,743
AVERAGE BALANCES
For the six months ended
June 30, 2004 June 30, 2003
------------- ------------------------
Average net loans $ 1,575,642 $ 1,028,406
Average interest-earning assets 2,017,239 1,438,202
Average assets 2,219,411 1,534,589
Average deposits 1,805,276 1,344,782
Average interest-bearing liabilities 1,424,531 1,000,079
Average equity 224,489 127,710
Average tangible equity 148,620 125,549
SELECTED PERFORMANCE RATIOS
For the quarter ended
June 30, 2004 March 31, 2004
------------- ---------------------
Return on average assets 1.23% 1.44%
Return on equity 13.37% 17.89%
Return on tangible equity 19.72% 18.15%
Efficiency ratio 57.38% 47.77%
Net interest margin 4.10% 4.05%
SELECTED PERFORMANCE RATIOS
For the six months ended
June 30, 2004 June 30, 2003
------------- ------------------------
Return on average assets 1.26% 1.21%
Return on equity 12.41% 14.48%
Return on tangible equity 18.75% 14.76%
Efficiency ratio 53.42% 53.23%
Net interest margin 4.08% 3.62%
ALLOWANCE FOR LOAN LOSSES
As of As of
June 30, 2004 December 31, 2003
------------- -----------------
Balance at the beginning of the period $ 14,734 $ 12,269
Allowance for loan losses acquired 10,566 0
Provision for loan losses 1,750 5,680
Charge-offs, net of recoveries (1,642) (3,215)
------------- ----------------
Balance at the end of the period $ 25,408 $ 14,734
============= ================
Loan loss allowance/Gross loans 1.14% 1.16%
Loan loss allowance/Non-performing loans 302.80% 170.12%
NON-PERFORMING ASSETS
As of As of As of
June 30, 2004 March 31, 2004 December 31, 2003
------------- -------------- -----------------
Accruing loans - 90 days past due $ 325 $ 101 $ 557
Non-accrual loans 8,066 5,108 8,104
------------- -------------- -----------------
Total non-performing assets $ 8,391 $ 5,209 $ 8,661
============= ============== =================
Total non-performing loans / Total gross loans 0.38% 0.40% 0.68%
Total non-performing assets / Total assets 0.27% 0.30% 0.49%
LOAN PORTFOLIO
As of As of As of
June 30, 2004 March 31, 2004 December 31, 2003
------------- -------------- -----------------
Real estate loans $ 1,022,649 $ 492,673 $ 499,376
Commercial loans 1,118,339 747,092 711,012
Consumer loans 87,269 59,187 54,878
------------- -------------- -----------------
Total gross loans 2,228,257 1,298,952 1,265,266
Unearned loan fees (5,339) (3,540) (3,518)
Allowance for loan losses (25,408) (13,781) (14,734)
------------- -------------- -----------------
Net loans $ 2,197,510 $ 1,281,631 $ 1,247,014
============= ============== =================
LOAN MIX
Real estate loans 45.89% 37.93% 39.47%
Commercial loans 50.19% 57.51% 56.19%
Consumer loans 3.92% 4.56% 4.34%
------ ------ ------
Total gross loans 100.00% 100.00% 100.00%
====== ====== ======
DEPOSIT PORTFOLIO
As of As of As of
June 30, 2004 March 31, 2004 December 31, 2003
------------- -------------- -----------------
Non-interest bearing $ 763,163 $ 487,728 $ 475,100
Money market checking 505,872 292,303 206,086
Savings 150,403 91,793 96,869
Time certificates of deposits, $100,000 or more 648,238 386,802 388,944
Other time deposits 277,564 218,340 278,836
------------- -------------- -----------------
Total deposits $ 2,345,240 $ 1,476,966 $ 1,445,835
============= ============== =================
DEPOSIT MIX
Non-interest bearing 32.54% 33.03% 32.86%
Money market checking 21.57% 19.79% 14.25%
Savings 6.41% 6.21% 6.70%
Time certificates of deposit, $100,000 or more 27.64% 26.19% 26.90%
Other time deposits 11.84% 14.78% 19.29%
------ ------ ------
Total deposits 100.00% 100.00% 100.00%
====== ====== ======