EXHIBIT 99.1
Hanmi’s Second Quarter Results Highlighted by Continued Strong Loan Production
2018 Second Quarter Highlights:
LOS ANGELES, July 24, 2018 (GLOBE NEWSWIRE) -- Hanmi Financial Corporation (NASDAQ:HAFC) (or “Hanmi”), the parent company of Hanmi Bank (the “Bank”), today reported net income for the 2018 second quarter of $15.5 million, or $0.48 per diluted share, compared with $14.9 million, or $0.46 per diluted share for the 2018 first quarter and $14.5 million, or $0.45 per diluted share for the 2017 second quarter.
C. G. Kum, Chief Executive Officer, said, “Hanmi’s second quarter results reflect strong loan and lease production, excellent asset quality and careful expense management as we continue to operate in a highly competitive banking environment. New loan and lease production in the quarter totaled $309 million, up nearly 26% from the prior quarter and 11% from a year ago. Importantly, asset quality remains excellent. We continue to maintain disciplined underwriting standards and we will not loosen our credit criteria in spite of increasing competition. In addition, I am pleased with our ability to prudently manage expenses and maintain noninterest expense in a tight range over the past year. However, the flattening of the yield curve coupled with strong competition has resulted in the cost of attracting deposits outpacing the growth in loan yields, which has put pressure on our net interest margin.”
Mr. Kum concluded, “To augment our organic growth, during the quarter, we announced the acquisition of SWNB Bancorp, Inc., which will significantly expand Hanmi’s presence in attractive markets throughout Texas as well as provide excess liquidity to help fund future growth. While expenses associated with the SWNB acquisition totaled $0.4 million and reduced Hanmi’s earnings per share by $0.01 during the second quarter, integration activities are proceeding according to plan and we continue to expect the transaction to be completed in the second half of the year.”
Quarterly Highlights
(Dollars in thousands, except per share data)
As of or for the Three Months Ended | Amount Change | |||||||||||||||||||||||||
June 30, | March 31, | December 31, | September 30, | June 30, | Q2-18 | Q2-18 | ||||||||||||||||||||
2018 | 2018 | 2017 | 2017 | 2017 | vs. Q1-18 | vs. Q2-17 | ||||||||||||||||||||
Net income | $ | 15,548 | $ | 14,855 | $ | 11,500 | $ | 14,923 | $ | 14,457 | $ | 693 | $ | 1,091 | ||||||||||||
Net income per diluted common share | $ | 0.48 | $ | 0.46 | $ | 0.36 | $ | 0.46 | $ | 0.45 | $ | 0.02 | $ | 0.03 | ||||||||||||
Assets | $ | 5,415,202 | $ | 5,305,641 | $ | 5,210,485 | $ | 5,111,396 | $ | 4,973,346 | $ | 109,561 | $ | 441,856 | ||||||||||||
Loans and leases receivable | $ | 4,542,126 | $ | 4,413,557 | $ | 4,304,458 | $ | 4,195,355 | $ | 4,073,062 | $ | 128,569 | $ | 469,064 | ||||||||||||
Deposits | $ | 4,426,535 | $ | 4,378,101 | $ | 4,348,654 | $ | 4,299,010 | $ | 4,259,173 | $ | 48,434 | $ | 167,362 | ||||||||||||
Return on average assets | 1.17 | % | 1.16 | % | 0.88 | % | 1.18 | % | 1.19 | % | 0.02 | -0.02 | ||||||||||||||
Return on average stockholders' equity | 10.81 | % | 10.65 | % | 8.12 | % | 10.73 | % | 10.65 | % | 0.16 | 0.16 | ||||||||||||||
Net interest margin (1) | 3.60 | % | 3.70 | % | 3.79 | % | 3.79 | % | 3.81 | % | -0.10 | -0.21 | ||||||||||||||
Efficiency ratio (2) | 57.80 | % | 58.36 | % | 54.16 | % | 53.33 | % | 54.74 | % | -0.57 | 3.06 | ||||||||||||||
Tangible common equity to tangible assets (3) | 10.35 | % | 10.43 | % | 10.58 | % | 10.72 | % | 10.83 | % | -0.07 | -0.48 | ||||||||||||||
Tangible common equity per common share (3) | $ | 17.20 | $ | 16.98 | $ | 16.96 | $ | 16.86 | $ | 16.59 | $ | 0.23 | $ | 0.61 | ||||||||||||
(1) Amounts calculated on a fully taxable equivalent basis using the federal tax rate in effect for the periods presented. | ||||||||||||||||||||||||||
(2) Noninterest expense divided by net interest income plus noninterest income. | ||||||||||||||||||||||||||
(3) Refer to "Non-GAAP Financial Measures" for further details. | ||||||||||||||||||||||||||
Results of Operations
Net interest income was $45.1 million for the second quarter of 2018 compared with $44.9 million for the first quarter of 2018. Net interest margin on a tax equivalent basis was 3.60% for the second quarter of 2018 compared with 3.70% for the first quarter of 2018. Interest and fees on loans and leases increased 4.1%, or $2.1 million, from the preceding quarter due to a 2.4% increase in average loan and lease receivables and a three basis point increase in the average yield. Loan prepayment fees were nominal at $28 thousand for the second quarter compared with $83 thousand in the first quarter.
As of or For the Three Months Ended (in thousands) | Percentage Change | |||||||||||||||||||||||||||
Jun 30, | Mar 31, | Dec 31, | Sep 30, | Jun 30, | Q2-18 | Q2-18 | ||||||||||||||||||||||
Net Interest Income | 2018 | 2018 | 2017 | 2017 | 2017 | vs. Q1-18 | vs. Q2-17 | |||||||||||||||||||||
Interest and fees on loans and leases(1) | $ | 53,708 | $ | 51,574 | $ | 52,176 | $ | 50,265 | $ | 47,971 | 4.1 | % | 12.0 | % | ||||||||||||||
Interest on securities | 3,198 | 3,105 | 3,194 | 3,188 | 2,949 | 3.0 | % | 8.4 | % | |||||||||||||||||||
Dividends on FHLB stock | 283 | 289 | 289 | 286 | 283 | -2.1 | % | 0.0 | % | |||||||||||||||||||
Interest on deposits in other banks | 133 | 114 | 125 | 123 | 123 | 16.7 | % | 8.1 | % | |||||||||||||||||||
Total interest and dividend income | $ | 57,322 | $ | 55,082 | $ | 55,784 | $ | 53,862 | $ | 51,326 | 4.1 | % | 11.7 | % | ||||||||||||||
Interest on deposits | 9,465 | 7,785 | 7,402 | 7,071 | 6,463 | 21.6 | % | 46.4 | % | |||||||||||||||||||
Interest on borrowings | 1,015 | 679 | 363 | 198 | 49 | 49.5 | % | 1971.4 | % | |||||||||||||||||||
Interest on subordinated debentures | 1,728 | 1,694 | 1,676 | 1,667 | 1,636 | 2.0 | % | 5.6 | % | |||||||||||||||||||
Total interest expense | 12,208 | 10,158 | 9,441 | 8,936 | 8,148 | 20.2 | % | 49.8 | % | |||||||||||||||||||
Net interest income | $ | 45,114 | $ | 44,924 | $ | 46,343 | $ | 44,926 | $ | 43,178 | 0.4 | % | 4.5 | % | ||||||||||||||
(1) Includes loans held for sale. | ||||||||||||||||||||||||||||
The average earning asset yield (tax equivalent) was 4.57% for the second quarter of 2018 compared with 4.53% for the first quarter of 2018. The four basis point increase was primarily due to the increase in average yield for loans and leases receivable. The cost of interest-bearing liabilities was 1.44% for the second quarter of 2018 compared with 1.25% for the first quarter of 2018. The 19 basis point increase was primarily due to an increase in higher costing time deposits and an increase in the average rate paid on overnight borrowings.
For the Three Months Ended (in thousands) | Percentage Change | |||||||||||||||||||||||||||
Jun 30, | Mar 31, | Dec 31, | Sep 30, | Jun 30, | Q2-18 | Q2-18 | ||||||||||||||||||||||
Average Earning Assets and Interest-bearing Liabilities | 2018 | 2018 | 2017 | 2017 | 2017 | vs. Q1-18 | vs. Q2-17 | |||||||||||||||||||||
Loans and leases receivable (1) | $ | 4,414,217 | $ | 4,310,964 | $ | 4,227,259 | $ | 4,092,131 | $ | 3,951,934 | 2.4 | % | 11.7 | % | ||||||||||||||
Securities | 591,493 | 588,738 | 611,181 | 611,538 | 585,384 | 0.5 | % | 1.0 | % | |||||||||||||||||||
FHLB stock | 16,385 | 16,385 | 16,385 | 16,385 | 16,385 | 0.0 | % | 0.0 | % | |||||||||||||||||||
Interest-bearing deposits in other banks | 28,831 | 32,401 | 36,386 | 38,981 | 47,402 | -11.0 | % | -39.2 | % | |||||||||||||||||||
Average interest-earning assets | $ | 5,050,926 | $ | 4,948,488 | $ | 4,891,211 | $ | 4,759,035 | $ | 4,601,105 | 2.1 | % | 9.8 | % | ||||||||||||||
Demand: interest-bearing | $ | 92,552 | $ | 91,378 | $ | 90,646 | $ | 90,720 | $ | 93,873 | 1.3 | % | -1.4 | % | ||||||||||||||
Money market and savings | 1,412,118 | 1,478,795 | 1,513,408 | 1,526,951 | 1,532,733 | -4.5 | % | -7.9 | % | |||||||||||||||||||
Time deposits | 1,553,692 | 1,440,382 | 1,408,227 | 1,384,724 | 1,320,005 | 7.9 | % | 17.7 | % | |||||||||||||||||||
Average interest-bearing deposits | 3,058,362 | 3,010,555 | 3,012,281 | 3,002,395 | 2,946,611 | 1.6 | % | 3.8 | % | |||||||||||||||||||
Borrowings | 214,066 | 179,000 | 119,946 | 67,935 | 20,000 | 19.6 | % | 970.3 | % | |||||||||||||||||||
Subordinated debentures | 117,456 | 117,323 | 117,198 | 117,065 | 116,850 | 0.1 | % | 0.5 | % | |||||||||||||||||||
Average interest-bearing liabilities | $ | 3,389,884 | $ | 3,306,878 | $ | 3,249,425 | $ | 3,187,395 | $ | 3,083,461 | 2.5 | % | 9.9 | % | ||||||||||||||
(1) Includes loans held for sale. | ||||||||||||||||||||||||||||
For the Three Months Ended | Amount Change | |||||||||||||||||||||||||||
Jun 30, | Mar 31, | Dec 31, | Sep 30, | Jun 30, | Q2-18 | Q2-18 | ||||||||||||||||||||||
Average Yields and Rates | 2018 | 2018 | 2017 | 2017 | 2017 | vs. Q1-18 | vs. Q2-17 | |||||||||||||||||||||
Loans and leases receivable(1) | 4.88 | % | 4.85 | % | 4.90 | % | 4.87 | % | 4.87 | % | 0.03 | 0.01 | ||||||||||||||||
Securities (2) | 2.29 | % | 2.24 | % | 2.37 | % | 2.41 | % | 2.35 | % | 0.05 | -0.06 | ||||||||||||||||
FHLB stock | 6.93 | % | 7.15 | % | 7.00 | % | 6.93 | % | 6.93 | % | -0.22 | 0.00 | ||||||||||||||||
Interest-bearing deposits in other banks | 1.85 | % | 1.43 | % | 1.36 | % | 1.25 | % | 1.04 | % | 0.42 | 0.81 | ||||||||||||||||
Interest-earning assets | 4.57 | % | 4.53 | % | 4.56 | % | 4.53 | % | 4.52 | % | 0.04 | 0.05 | ||||||||||||||||
Interest-bearing deposits | 1.24 | % | 1.05 | % | 0.97 | % | 0.93 | % | 0.88 | % | 0.19 | 0.36 | ||||||||||||||||
Borrowings | 1.90 | % | 1.54 | % | 1.20 | % | 1.16 | % | 0.98 | % | 0.36 | 0.92 | ||||||||||||||||
Subordinated debentures | 5.87 | % | 5.77 | % | 5.70 | % | 5.68 | % | 5.59 | % | 0.10 | 0.28 | ||||||||||||||||
Interest-bearing liabilities | 1.44 | % | 1.25 | % | 1.15 | % | 1.11 | % | 1.06 | % | 0.19 | 0.38 | ||||||||||||||||
Net interest margin (taxable equivalent basis) | 3.60 | % | 3.70 | % | 3.79 | % | 3.79 | % | 3.81 | % | -0.10 | -0.21 | ||||||||||||||||
Cost of deposits | 0.87 | % | 0.73 | % | 0.68 | % | 0.66 | % | 0.62 | % | 0.14 | 0.25 | ||||||||||||||||
(1) Includes loans held for sale. | ||||||||||||||||||||||||||||
(2) Amounts calculated on a fully taxable equivalent basis using the federal tax rate in effect for the periods presented. | ||||||||||||||||||||||||||||
For the second quarter of 2018, the loan and lease loss provision was $0.1 million compared with $0.6 million for the preceding quarter reflecting the continued strong asset quality of the portfolio of loans and leases.
Second quarter noninterest income decreased 1.9% to $5.9 million from $6.1 million for the first quarter, primarily due to a $0.2 million decrease in service charges on deposit accounts and a $0.2 million decrease in servicing income. The second quarter included a small gain from the sales of securities compared with a $0.4 million loss on sales of securities in the first quarter.
For the Three Months Ended (in thousands) | Percentage Change | |||||||||||||||||||||||||||
Jun 30, | Mar 31, | Dec 31, | Sep 30, | Jun 30, | Q2-18 | Q2-18 | ||||||||||||||||||||||
Noninterest Income | 2018 | 2018 | 2017 | 2017 | 2017 | vs. Q1-18 | vs. Q2-17 | |||||||||||||||||||||
Service charges on deposit accounts | $ | 2,328 | $ | 2,511 | $ | 2,729 | $ | 2,678 | $ | 2,461 | -7.3 | % | -5.4 | % | ||||||||||||||
Trade finance and other service charges and fees | 1,149 | 1,173 | 1,047 | 1,133 | 1,269 | -2.0 | % | -9.5 | % | |||||||||||||||||||
Servicing income | 421 | 662 | 564 | 644 | 625 | -36.4 | % | -32.6 | % | |||||||||||||||||||
Bank-owned life insurance income | 256 | 277 | 285 | 286 | 260 | -7.6 | % | -1.5 | % | |||||||||||||||||||
Other operating income | 305 | 285 | 636 | 283 | 941 | 7.0 | % | -67.6 | % | |||||||||||||||||||
Service charges, fees & other | 4,459 | 4,908 | 5,261 | 5,024 | 5,556 | -9.1 | % | -19.7 | % | |||||||||||||||||||
Gain on sale of SBA loans | 1,408 | 1,448 | 2,056 | 2,546 | 2,668 | -2.8 | % | -47.2 | % | |||||||||||||||||||
Disposition gain on PCI loans | 11 | 133 | 91 | 979 | 540 | -91.7 | % | -98.0 | % | |||||||||||||||||||
Net gain (loss) on sales of securities | 67 | (428 | ) | 275 | 267 | 938 | -115.7 | % | -92.9 | % | ||||||||||||||||||
Total noninterest income | $ | 5,945 | $ | 6,061 | $ | 7,683 | $ | 8,816 | $ | 9,702 | -1.9 | % | -38.7 | % | ||||||||||||||
Noninterest expense has remained within a relatively tight range over the past year. During the second quarter, noninterest expense decreased 0.8% to $29.5 million from $29.8 million in the first quarter primarily due to a $1.2 million decrease in salaries and employee benefits and $0.2 million decrease in professional fees, partially offset by a $0.6 million increase in other operating expenses. Salaries and employee benefit expenses are typically higher in the first quarter due to the seasonal impact of elevated payroll taxes and employee benefits. As a result of the decrease in noninterest expense, as well as the increase in net interest income, the efficiency ratio improved to 57.80% in the second quarter from 58.36% in the prior quarter.
For the Three Months Ended (in thousands) | Percentage Change | |||||||||||||||||||||||||||
Jun 30, | Mar 31, | Dec 31, | Sep 30, | Jun 30, | Q2-18 | Q2-18 | ||||||||||||||||||||||
2018 | 2018 | 2017 | 2017 | 2017 | vs. Q1-18 | vs. Q2-17 | ||||||||||||||||||||||
Noninterest Expense | ||||||||||||||||||||||||||||
Salaries and employee benefits | $ | 17,453 | $ | 18,702 | $ | 17,270 | $ | 16,947 | $ | 16,623 | -6.7 | % | 5.0 | % | ||||||||||||||
Occupancy and equipment | 4,082 | 4,072 | 3,997 | 3,883 | 3,878 | 0.2 | % | 5.3 | % | |||||||||||||||||||
Data processing | 1,554 | 1,678 | 1,812 | 1,779 | 1,738 | -7.4 | % | -10.6 | % | |||||||||||||||||||
Professional fees | 1,214 | 1,369 | 1,552 | 1,210 | 1,554 | -11.3 | % | -21.9 | % | |||||||||||||||||||
Supplies and communication | 693 | 708 | 778 | 755 | 745 | -2.1 | % | -7.0 | % | |||||||||||||||||||
Advertising and promotion | 1,034 | 876 | 988 | 1,147 | 1,015 | 18.0 | % | 1.9 | % | |||||||||||||||||||
Merger and integration costs | 380 | - | - | - | (9 | ) | 0.0 | % | -4322.2 | % | ||||||||||||||||||
Other operating expenses | 2,854 | 2,273 | 2,961 | 2,955 | 2,881 | 25.6 | % | -0.9 | % | |||||||||||||||||||
subtotal | 29,264 | 29,678 | 29,358 | 28,676 | 28,425 | -1.4 | % | 3.0 | % | |||||||||||||||||||
Other real estate owned expense (income) | 246 | 79 | (100 | ) | (16 | ) | 519 | 211.4 | % | -52.6 | % | |||||||||||||||||
Total noninterest expense | $ | 29,510 | $ | 29,757 | $ | 29,258 | $ | 28,660 | $ | 28,944 | -0.8 | % | 2.0 | % | ||||||||||||||
Hanmi recorded a provision for income taxes of $5.9 million for the second quarter of 2018, representing an effective tax rate of 27.5%, compared with $5.7 million, representing an effective tax rate of 27.8%, for the first quarter. Our effective tax rate for the second quarter of 2017 was 38.5% with a provision of $9.1 million. The year-over-year decrease was a result of the lower Federal corporate tax rate beginning in 2018.
Financial Position
Total assets were $5.42 billion at June 30, 2018, a 2.1% increase from $5.31 billion at March 31, 2018. The increase in total assets was primarily due to an increase in loans and leases receivable.
Loans and leases receivable, before the allowance for loan and lease losses, were $4.54 billion at June 30, 2018, up 2.9% from $4.41 billion at the end of the prior quarter. The increase in loans and leases from the first quarter reflects Hanmi’s continued strong loan and lease production. Loans held for sale, representing the guaranteed portion of SBA loans, were $5.3 million at June 30, 2018 compared with $6.0 million at the end of the first quarter.
Loans and leases receivable, before the allowance for loan and lease losses, increased 11.5% from $4.07 billion for the second quarter last year, primarily due to strong loan and lease production over the last twelve months.
As of (in thousands) | Percentage Change | |||||||||||||||||||||||||||
Jun 30, | Mar 31, | Dec 31, | Sep 30, | Jun 30, | Q2-18 | Q2-18 | ||||||||||||||||||||||
2018 | 2018 | 2017 | 2017 | 2017 | vs. Q1-18 | vs. Q2-17 | ||||||||||||||||||||||
Loan and Lease Portfolio | ||||||||||||||||||||||||||||
Commercial real estate loans | $ | 3,241,348 | $ | 3,122,745 | $ | 3,069,063 | $ | 3,108,931 | $ | 3,068,069 | 3.8 | % | 5.6 | % | ||||||||||||||
Residential real estate loans | 539,861 | 545,053 | 521,852 | 430,627 | 384,044 | -1.0 | % | 40.6 | % | |||||||||||||||||||
Commercial and industrial loans | 396,522 | 409,380 | 399,197 | 364,456 | 346,150 | -3.1 | % | 14.6 | % | |||||||||||||||||||
Lease receivable | 350,578 | 321,480 | 297,286 | 272,271 | 257,525 | 9.1 | % | 36.1 | % | |||||||||||||||||||
Consumer loans | 13,817 | 14,899 | 17,060 | 19,070 | 17,274 | -7.3 | % | -20.0 | % | |||||||||||||||||||
Loans and leases receivable | 4,542,126 | 4,413,557 | 4,304,458 | 4,195,355 | 4,073,062 | 2.9 | % | 11.5 | % | |||||||||||||||||||
Loans held for sale | 5,349 | 6,008 | 6,394 | 6,469 | 10,949 | -11.0 | % | -51.1 | % | |||||||||||||||||||
Total loans and leases | $ | 4,547,475 | $ | 4,419,565 | $ | 4,310,852 | $ | 4,201,824 | $ | 4,084,011 | 2.9 | % | 11.3 | % | ||||||||||||||
New loan and lease production for the 2018 second quarter was $308.8 million while payoffs, amortization and net line utilization was $186.2 million compared with $245.3 million and $154.3 million, respectively, for the first quarter. Second quarter 2018 new loan and lease production was comprised of $198.3 million of commercial real estate loans, $19.2 million of commercial and industrial loans, $29.6 million of SBA loans, $60.3 million of commercial leases and $1.3 million of consumer loans. Loan purchases for the 2018 second quarter were $25.9 million, compared with $38.9 million in the first quarter. For the second quarter of 2018, commercial real estate loans as a percentage of loans and leases receivable decreased to 71.4% compared with 75.3% for the same period last year.
Bonnie Lee, President and Chief Operating Officer, said, “Hanmi continues to deliver strong new loan and lease production. During the quarter we saw meaningful contributions from the Illinois market, as well as our new branch in New York City that provides access to one of the top Asian American banking markets in the country. I am also pleased with our Commercial Equipment Leasing division, which originated the most leases since we acquired this business in the fourth quarter of 2016.”
Deposits increased to $4.43 billion at the end of the second quarter from $4.38 billion at the end of the preceding quarter. Time deposits and interest bearing demand deposits led this growth with increases of 8.6% and 13.1%, respectively. The loans to deposits ratio at June 30, 2018 increased to 102.6% from 100.8% in the first quarter.
Deposits increased 3.9% from $4.26 billion in the second quarter last year, as total time deposits, noninterest-bearing demand deposits and interest-bearing demand deposits increased 15.4%, 7.1% and 13.3%, respectively, from a year ago. Noninterest-bearing demand deposits as a percentage of total deposits have remained stable in a range of 30% to 31% even as overall deposits have increased.
As of (in thousands) | Percentage Change | |||||||||||||||||||||||||||
Jun 30, | Mar 31, | Dec 31, | Sep 30, | Jun 30, | Q2-18 | Q2-18 | ||||||||||||||||||||||
2018 | 2018 | 2017 | 2017 | 2017 | vs. Q1-18 | vs. Q2-17 | ||||||||||||||||||||||
Deposit Portfolio | ||||||||||||||||||||||||||||
Demand: noninterest-bearing | $ | 1,350,383 | $ | 1,352,162 | $ | 1,312,274 | $ | 1,293,538 | $ | 1,260,929 | -0.1 | % | 7.1 | % | ||||||||||||||
Demand: interest-bearing | 105,825 | 93,591 | 92,948 | 90,734 | 93,390 | 13.1 | % | 13.3 | % | |||||||||||||||||||
Money market and savings | 1,381,038 | 1,469,010 | 1,527,100 | 1,534,457 | 1,528,127 | -6.0 | % | -9.6 | % | |||||||||||||||||||
Time deposits | 1,589,289 | 1,463,338 | 1,416,332 | 1,380,281 | 1,376,727 | 8.6 | % | 15.4 | % | |||||||||||||||||||
Total deposits | $ | 4,426,535 | $ | 4,378,101 | $ | 4,348,654 | $ | 4,299,010 | $ | 4,259,173 | 1.1 | % | 3.9 | % | ||||||||||||||
At June 30, 2018, stockholders’ equity was $571.7 million, compared with $564.3 million at March 31, 2018. Tangible common stockholders’ equity was $559.3 million, or 10.35% of tangible assets, compared with $551.8 million, or 10.43% of tangible assets at the end of the first quarter. Tangible book value per share increased to $17.20 from $16.98 in the prior quarter.
Hanmi continues to be well capitalized, with a preliminary Tier 1 risk-based capital ratio of 12.52% and a Total risk-based capital ratio of 15.36% at June 30, 2018, versus 12.52% and 15.43%, respectively, for the first quarter.
As of | Amount Change | |||||||||||||||||||||||||||
Jun 30, | Mar 31, | Dec 31, | Sep 30, | Jun 30, | Q2-18 | Q2-18 | ||||||||||||||||||||||
2018 | 2018 | 2017 | 2017 | 2017 | vs. Q1-18 | vs. Q2-17 | ||||||||||||||||||||||
Regulatory Capital ratios (1) | ||||||||||||||||||||||||||||
Hanmi Financial | ||||||||||||||||||||||||||||
Total risk-based capital | 15.36 | % | 15.43 | % | 15.50 | % | 15.58 | % | 15.69 | % | -0.07 | -0.33 | ||||||||||||||||
Tier 1 risk-based capital | 12.52 | % | 12.52 | % | 12.55 | % | 12.56 | % | 12.58 | % | 0.00 | -0.06 | ||||||||||||||||
Common equity tier 1 capital | 12.09 | % | 12.09 | % | 12.19 | % | 12.20 | % | 12.22 | % | 0.00 | -0.13 | ||||||||||||||||
Tier 1 leverage capital ratio | 10.89 | % | 10.88 | % | 10.79 | % | 10.92 | % | 11.08 | % | 0.01 | -0.19 | ||||||||||||||||
Hanmi Bank | ||||||||||||||||||||||||||||
Total risk-based capital | 15.04 | % | 15.13 | % | 15.20 | % | 15.32 | % | 15.44 | % | -0.09 | -0.40 | ||||||||||||||||
Tier 1 risk-based capital | 14.32 | % | 14.39 | % | 14.47 | % | 14.55 | % | 14.62 | % | -0.07 | -0.30 | ||||||||||||||||
Common equity tier 1 capital | 14.32 | % | 14.39 | % | 14.47 | % | 14.55 | % | 14.62 | % | -0.07 | -0.30 | ||||||||||||||||
Tier 1 leverage capital ratio | 12.46 | % | 12.51 | % | 12.44 | % | 12.66 | % | 12.89 | % | -0.05 | -0.43 | ||||||||||||||||
(1) Preliminary ratios for June 30, 2018 | ||||||||||||||||||||||||||||
Hanmi declared a cash dividend of $0.24 per common share on its common stock in the second quarter. The dividend was paid on May 29, 2018, to stockholders of record as of the close of business on May 7, 2018.
Asset Quality
Nonperforming loans were $15.8 million at the end of the second quarter of 2018, or 0.35% of loans, compared with $15.4 million at the end the prior quarter, or 0.35% of loans. Loans 30 to 89 days past due and still accruing were 0.20% of loans at the end of the second quarter of 2018, compared with 0.16% of loans at the end of the first quarter.
Nonperforming assets were $16.1 million at the end of the second quarter of 2018, or 0.30% of assets, compared with 0.32% of assets at the end of the prior quarter.
Gross charge-offs for the second quarter of 2018 were $0.7 million compared with $1.6 million for the preceding quarter. Recoveries of previously charged-off loans for the second quarter of 2018 were $0.6 million compared with $1.7 million for the preceding quarter. As a result, there were net charge offs totaling $59,000 for the second quarter of 2018, compared to net recoveries of $85,000 for the preceding quarter. For the second quarter of 2018, net charge offs were 0.01% of average loans and leases compared to net recoveries of 0.01% of average loans for the preceding quarter.
The allowance for loan and lease losses was $31.8 million as of June 30, 2018, generating an allowance of loan and lease losses to loans and leases of 0.70%, down from 0.72% the prior quarter due to higher loan volume.
As of or for the Three Months Ended (in thousands) | Amount Change | |||||||||||||||||||||||||||
Jun 30, | Mar 31, | Dec 31, | Sep 30, | Jun 30, | Q2-18 | Q2-18 | ||||||||||||||||||||||
2018 | 2018 | 2017 | 2017 | 2017 | vs. Q1-18 | vs. Q2-17 | ||||||||||||||||||||||
Asset Quality | ||||||||||||||||||||||||||||
Non-performing assets: | ||||||||||||||||||||||||||||
Nonaccrual loans | $ | 15,804 | $ | 15,345 | $ | 15,805 | $ | 14,558 | $ | 16,464 | $ | 459 | $ | (660 | ) | |||||||||||||
Loans 90 days or more past due and still accruing | - | 17 | - | - | - | (17 | ) | - | ||||||||||||||||||||
Non-performing loans and leases | 15,804 | 15,362 | 15,805 | 14,558 | 16,464 | 442 | (660 | ) | ||||||||||||||||||||
Other real estate, net | 280 | 1,660 | 1,946 | 1,946 | 4,321 | (1,380 | ) | (4,041 | ) | |||||||||||||||||||
Nonperforming assets | $ | 16,084 | $ | 17,022 | $ | 17,751 | $ | 16,504 | $ | 20,785 | $ | (938 | ) | $ | (4,701 | ) | ||||||||||||
Delinquent loans: | ||||||||||||||||||||||||||||
Loans, 30 to 89 days past due and still accruing | $ | 9,089 | $ | 7,270 | $ | 8,666 | $ | 5,682 | $ | 9,602 | $ | 1,819 | $ | (513 | ) | |||||||||||||
Delinquent loans to loans | 0.20 | % | 0.16 | % | 0.20 | % | 0.14 | % | 0.24 | % | 3.5 | % | -3.6 | % | ||||||||||||||
Allowance for loan and lease losses: | ||||||||||||||||||||||||||||
Balance at beginning of period | $ | 31,777 | $ | 31,043 | $ | 32,492 | $ | 33,758 | $ | 33,152 | ||||||||||||||||||
Loan and lease loss provision | 100 | 649 | 220 | 269 | 422 | |||||||||||||||||||||||
Net loan charge-offs (recoveries) | 59 | (85 | ) | 1,669 | 1,535 | (184 | ) | |||||||||||||||||||||
Balance at end of period | $ | 31,818 | $ | 31,777 | $ | 31,043 | $ | 32,492 | $ | 33,758 | ||||||||||||||||||
Asset quality ratios: | ||||||||||||||||||||||||||||
Non-performing loans and leases to loans and leases | 0.35 | % | 0.35 | % | 0.37 | % | 0.35 | % | 0.41 | % | ||||||||||||||||||
Non-performing assets to assets | 0.30 | % | 0.32 | % | 0.34 | % | 0.32 | % | 0.42 | % | ||||||||||||||||||
Net loan and lease charge-offs (recoveries) to average loans and leases (1) | 0.01 | % | -0.01 | % | 0.16 | % | 0.15 | % | -0.02 | % | ||||||||||||||||||
Allowance for loan and lease losses to loans and leases | 0.70 | % | 0.72 | % | 0.72 | % | 0.77 | % | 0.83 | % | ||||||||||||||||||
Allowance for loan and lease losses to non-performing loans and leases | 201.33 | % | 206.85 | % | 196.41 | % | 223.19 | % | 205.04 | % | ||||||||||||||||||
Allowance for off-balance sheet items: | ||||||||||||||||||||||||||||
Balance at beginning of period | $ | 1,323 | $ | 1,296 | $ | 915 | $ | 1,135 | $ | 1,184 | ||||||||||||||||||
Provision (income) for off-balance sheet items | 34 | 27 | 381 | (220 | ) | (49 | ) | |||||||||||||||||||||
Balance at end of period | $ | 1,357 | $ | 1,323 | $ | 1,296 | $ | 915 | $ | 1,135 | ||||||||||||||||||
(1) Annualized | ||||||||||||||||||||||||||||
Conference Call
Management will host a conference call today, July 24, 2018 at 2:00 p.m. PT (5:00 p.m. ET) to discuss these results. This call will also be broadcast live via the internet. Investment professionals and all current and prospective stockholders are invited to access the live call by dialing 1-877-407-9039 before 2:00 p.m. PT, using access code HANMI. To listen to the call online, either live or archived, visit the Investor Relations page of Hanmi’s website at www.hanmi.com.
About Hanmi Financial Corporation
Headquartered in Los Angeles, California, Hanmi Financial Corporation owns Hanmi Bank, which serves multi-ethnic communities through its network of 40 full-service branches and 9 loan production offices in California, Texas, Illinois, Virginia, New Jersey, New York, Colorado, Washington and Georgia. Hanmi Bank specializes in real estate, commercial, SBA and trade finance lending to small and middle market businesses. Additional information is available at www.hanmi.com.
Forward-Looking Statements
This press 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. All statements other than statements of historical fact are “forward–looking statements” for purposes of federal and state securities laws, including, but not limited to, statements about anticipated future operating and financial performance, financial position and liquidity, business strategies, regulatory and competitive outlook, investment and expenditure plans, capital and financing needs and availability, plans and objectives of management for future operations, developments regarding our capital plans, strategic alternatives for a possible business combination, merger or sale transaction, and other similar forecasts and statements of expectation and statements of assumption underlying any of the foregoing. 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: failure to maintain adequate levels of capital and liquidity to support our operations; the effect of potential future supervisory action against us or Hanmi Bank; general economic and business conditions internationally, nationally and in those areas in which we operate; volatility and deterioration in the credit and equity markets; changes in consumer spending, borrowing and savings habits; availability of capital from private and government sources; demographic changes; competition for loans and deposits and failure to attract or retain loans and deposits; fluctuations in interest rates and a decline in the level of our interest rate spread; risks of natural disasters related to our real estate portfolio; risks associated with Small Business Administration loans; failure to attract or retain key employees; changes in governmental regulation, including, but not limited to, any increase in FDIC insurance premiums; ability of Hanmi Bank to make distributions to Hanmi Financial Corporation, which is restricted by certain factors, including Hanmi Bank’s retained earnings, net income, prior distributions made, and certain other financial tests; ability to identify a suitable strategic partner or to consummate a strategic transaction; adequacy of our allowance for loan and lease losses; credit quality and the effect of credit quality on our provision for loan and lease losses and allowance for loan and lease losses; changes in the financial performance and/or condition of our borrowers and the ability of our borrowers to perform under the terms of their loans and other terms of credit agreements; our ability to control expenses; and changes in securities markets. In addition, we set forth certain risks in our reports filed with the U.S. Securities and Exchange Commission, including, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2017, our Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K that we will file hereafter, 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.
Investor Contacts:
Romolo (Ron) Santarosa
Senior Executive Vice President & Chief Financial Officer
213-427-5636
Richard Pimentel
Senior Vice President & Corporate Finance Officer
213-427-3191
Lasse Glassen
Investor Relations
Addo Investor Relations
310-829-5400
Hanmi Financial Corporation and Subsidiaries
Consolidated Balance Sheets (Unaudited)
(In thousands)
June 30, | March 31, | Percentage | June 30, | Percentage | ||||||||||||||
2018 | 2018 | Change | 2017 | Change | ||||||||||||||
Assets | ||||||||||||||||||
Cash and due from banks | $ | 136,474 | $ | 151,611 | -10 | % | $ | 138,507 | -1.5 | % | ||||||||
Securities available for sale, at fair value | 565,529 | 570,351 | -0.8 | % | 571,846 | -1.1 | % | |||||||||||
Loans held for sale, at the lower of cost or fair value | 5,349 | 6,008 | -11.0 | % | 10,949 | -51.1 | % | |||||||||||
Loans receivable, net of allowance for loan losses | 4,510,308 | 4,381,780 | 2.9 | % | 4,039,304 | 11.7 | % | |||||||||||
Accrued interest receivable | 12,940 | 12,751 | 1.5 | % | 11,167 | 15.9 | % | |||||||||||
Premises and equipment, net | 26,324 | 26,465 | -0.5 | % | 26,869 | -2.0 | % | |||||||||||
Customers' liability on acceptances | 971 | 870 | 11.6 | % | 1,481 | -34.4 | % | |||||||||||
Servicing assets | 9,255 | 9,867 | -6.2 | % | 10,480 | -11.7 | % | |||||||||||
Goodwill and other intangible assets, net | 12,363 | 12,454 | -0.7 | % | 12,712 | -2.7 | % | |||||||||||
Federal Home Loan Bank ("FHLB") stock, at cost | 16,385 | 16,385 | 0.0 | % | 16,385 | 0.0 | % | |||||||||||
Bank-owned life insurance | 51,087 | 50,831 | 0.5 | % | 49,982 | 2.2 | % | |||||||||||
Prepaid expenses and other assets | 68,217 | 66,268 | 2.9 | % | 83,664 | -18.5 | % | |||||||||||
Total assets | $ | 5,415,202 | $ | 5,305,641 | 2.1 | % | $ | 4,973,346 | 8.9 | % | ||||||||
Liabilities and Stockholders' Equity | ||||||||||||||||||
Liabilities: | ||||||||||||||||||
Deposits: | ||||||||||||||||||
Noninterest-bearing | $ | 1,350,383 | $ | 1,352,162 | -0.1 | % | $ | 1,260,929 | 7.1 | % | ||||||||
Interest-bearing | 3,076,152 | 3,025,939 | 1.7 | % | 2,998,244 | 2.6 | % | |||||||||||
Total deposits | 4,426,535 | 4,378,101 | 1.1 | % | 4,259,173 | 3.9 | % | |||||||||||
Accrued interest payable | 5,775 | 5,931 | -2.6 | % | 3,432 | 68.3 | % | |||||||||||
Bank's liability on acceptances | 971 | 870 | 11.6 | % | 1,481 | -34.4 | % | |||||||||||
Borrowings | 270,000 | 220,000 | 22.7 | % | 20,000 | 1250.0 | % | |||||||||||
Subordinated debentures | 117,532 | 117,400 | 0.1 | % | 117,011 | 0.4 | % | |||||||||||
Accrued expenses and other liabilities | 22,682 | 19,061 | 19.0 | % | 22,109 | 2.6 | % | |||||||||||
Total liabilities | 4,843,495 | 4,741,363 | 2.2 | % | 4,423,206 | 9.5 | % | |||||||||||
Stockholders' equity: | ||||||||||||||||||
Common stock | 33 | 33 | 0.0 | % | 33 | 0.0 | % | |||||||||||
Additional paid-in capital | 568,011 | 567,081 | 0.2 | % | 563,948 | 0.7 | % | |||||||||||
Accumulated other comprehensive (loss) income | (9,324 | ) | (8,207 | ) | 13.6 | % | 137 | -6905.8 | % | |||||||||
Retained earnings | 85,465 | 77,691 | 10.0 | % | 57,717 | 48.1 | % | |||||||||||
Less treasury stock | (72,478 | ) | (72,320 | ) | 0.2 | % | (71,695 | ) | 1.1 | % | ||||||||
Total stockholders' equity | 571,707 | 564,278 | 1.3 | % | 550,140 | 3.9 | % | |||||||||||
Total liabilities and stockholders' equity | $ | 5,415,202 | $ | 5,305,641 | 2.1 | % | $ | 4,973,346 | 8.9 | % | ||||||||
Hanmi Financial Corporation and Subsidiaries
Consolidated Statements of Income (Unaudited)
(In thousands, except share and per share data)
Three Months Ended | |||||||||||||||||
June 30, | March 31, | Percentage | June 30, | Percentage | |||||||||||||
2018 | 2018 | Change | 2017 | Change | |||||||||||||
Interest and dividend income: | |||||||||||||||||
Interest and fees on loans and leases | $ | 53,708 | $ | 51,574 | 4.1 | % | $ | 47,971 | 12.0 | % | |||||||
Interest on securities | 3,198 | 3,105 | 3.0 | % | 2,949 | 8.4 | % | ||||||||||
Dividends on FHLB stock | 283 | 289 | -2.1 | % | 283 | 0.0 | % | ||||||||||
Interest on deposits in other banks | 133 | 114 | 16.7 | % | 123 | 8.1 | % | ||||||||||
Total interest and dividend income | 57,322 | 55,082 | 4.1 | % | 51,326 | 11.7 | % | ||||||||||
Interest expense: | |||||||||||||||||
Interest on deposits | 9,465 | 7,785 | 21.6 | % | 6,463 | 46.4 | % | ||||||||||
Interest on borrowings | 1,015 | 679 | 49.5 | % | 49 | 1971.4 | % | ||||||||||
Interest on subordinated debentures | 1,728 | 1,694 | 2.0 | % | 1,636 | 5.6 | % | ||||||||||
Total interest expense | 12,208 | 10,158 | 20.2 | % | 8,148 | 49.8 | % | ||||||||||
Net interest income before provision for loan and lease losses | 45,114 | 44,924 | 0.4 | % | 43,178 | 4.5 | % | ||||||||||
Loan and lease loss provision | 100 | 649 | -84.6 | % | 422 | -76.3 | % | ||||||||||
Net interest income after provision for loan and lease losses | 45,014 | 44,275 | 1.7 | % | 42,756 | 5.3 | % | ||||||||||
Noninterest income: | |||||||||||||||||
Service charges on deposit accounts | 2,328 | 2,511 | -7.3 | % | 2,461 | -5.4 | % | ||||||||||
Trade finance and other service charges and fees | 1,149 | 1,173 | -2.0 | % | 1,269 | -9.5 | % | ||||||||||
Gain on sale of Small Business Administration ("SBA") loans | 1,408 | 1,448 | -2.8 | % | 2,668 | -47.2 | % | ||||||||||
Servicing income | 421 | 662 | -36.4 | % | 625 | -32.6 | % | ||||||||||
Bank-owned life insurance income | 256 | 277 | -7.6 | % | 260 | -1.5 | % | ||||||||||
Disposition gains on Purchased Credit Impaired ("PCI") loans | 11 | 133 | -91.7 | % | 540 | -98.0 | % | ||||||||||
Net gain (loss) on sales of securities | 67 | (428 | ) | -115.7 | % | 938 | -92.9 | % | |||||||||
Other operating income | 305 | 285 | 7.0 | % | 941 | -67.6 | % | ||||||||||
Total noninterest income | 5,945 | 6,061 | -1.9 | % | 9,702 | -38.7 | % | ||||||||||
Noninterest expense: | |||||||||||||||||
Salaries and employee benefits | 17,453 | 18,702 | -6.7 | % | 16,623 | 5.0 | % | ||||||||||
Occupancy and equipment | 4,082 | 4,072 | 0.2 | % | 3,878 | 5.3 | % | ||||||||||
Data processing | 1,554 | 1,678 | -7.4 | % | 1,738 | -10.6 | % | ||||||||||
Professional fees | 1,214 | 1,369 | -11.3 | % | 1,554 | -21.9 | % | ||||||||||
Supplies and communications | 693 | 708 | -2.1 | % | 745 | -7.0 | % | ||||||||||
Advertising and promotion | 1,034 | 876 | 18.0 | % | 1,015 | 1.9 | % | ||||||||||
Other real estate owned expense | 246 | 79 | 211.4 | % | 519 | -52.6 | % | ||||||||||
Merger and integration costs | 380 | - | - | (9 | ) | -4322.2 | % | ||||||||||
Other operating expenses | 2,854 | 2,273 | 25.6 | % | 2,881 | -0.9 | % | ||||||||||
Total noninterest expense | 29,510 | 29,757 | -0.8 | % | 28,944 | 2.0 | % | ||||||||||
Income before provision for income taxes | 21,449 | 20,579 | 4.2 | % | 23,514 | -8.8 | % | ||||||||||
Provision for income taxes | 5,901 | 5,724 | 3.1 | % | 9,057 | -34.8 | % | ||||||||||
Net income | $ | 15,548 | $ | 14,855 | 4.7 | % | $ | 14,457 | 7.6 | % | |||||||
Basic earnings per share: | $ | 0.48 | $ | 0.46 | $ | 0.45 | |||||||||||
Diluted earnings per share: | $ | 0.48 | $ | 0.46 | $ | 0.45 | |||||||||||
Weighted-average shares outstanding: | |||||||||||||||||
Basic | 32,189,096 | 32,145,214 | 32,078,038 | ||||||||||||||
Diluted | 32,336,775 | 32,301,095 | 32,243,034 | ||||||||||||||
Common shares outstanding | 32,513,518 | 32,502,658 | 32,393,856 | ||||||||||||||
Hanmi Financial Corporation and Subsidiaries | |||||||||||||||||
Consolidated Statements of Income (Unaudited) | |||||||||||||||||
(In thousands, except share and per share data) | |||||||||||||||||
Six Months Ended | |||||||||||||||||
June 30, | June 30, | Percentage | |||||||||||||||
2018 | 2017 | Change | |||||||||||||||
Interest and dividend income: | |||||||||||||||||
Interest and fees on loans | $ | 105,283 | $ | 93,349 | 12.8 | % | |||||||||||
Interest on securities | 6,302 | 5,468 | 15.3 | % | |||||||||||||
Dividends on FHLB stock | 572 | 657 | -12.9 | % | |||||||||||||
Interest on deposits in other banks | 247 | 200 | 23.5 | % | |||||||||||||
Total interest and dividend income | 112,404 | 99,674 | 12.8 | % | |||||||||||||
Interest expense: | |||||||||||||||||
Interest on deposits | 17,250 | 11,617 | 48.5 | % | |||||||||||||
Interest on borrowings | 1,694 | 517 | 227.8 | % | |||||||||||||
Interest on subordinated debentures | 3,421 | 2,009 | 70.3 | % | |||||||||||||
Total interest expense | 22,365 | 14,143 | 58.1 | % | |||||||||||||
Net interest income before provision for loan and lease losses | 90,039 | 85,531 | 5.3 | % | |||||||||||||
Loan and lease loss provision | 749 | 342 | 119.0 | % | |||||||||||||
Net interest income after provision for loan and lease losses | 89,290 | 85,189 | 4.8 | % | |||||||||||||
Noninterest income: | |||||||||||||||||
Service charges on deposit accounts | 4,839 | 4,989 | -3.0 | % | |||||||||||||
Trade finance and other service charges and fees | 2,322 | 2,316 | 0.3 | % | |||||||||||||
Gain on sale of Small Business Administration ("SBA") loans | 2,856 | 4,132 | -30.9 | % | |||||||||||||
Servicing income | 1,083 | 1,423 | -23.9 | % | |||||||||||||
Bank-owned life insurance income | 533 | 542 | -1.6 | % | |||||||||||||
Disposition gains on Purchased Credit Impaired ("PCI") loans | 144 | 723 | -80.1 | % | |||||||||||||
Net gain (loss) on sales of securities | (361 | ) | 1,206 | -129.9 | % | ||||||||||||
Other operating income | 590 | 1,586 | -62.8 | % | |||||||||||||
Total noninterest income | 12,006 | 16,917 | -29.0 | % | |||||||||||||
Noninterest expense: | |||||||||||||||||
Salaries and employee benefits | 36,155 | 33,727 | 7.2 | % | |||||||||||||
Occupancy and equipment | 8,154 | 7,861 | 3.7 | % | |||||||||||||
Data processing | 3,231 | 3,369 | -4.1 | % | |||||||||||||
Professional fees | 2,583 | 2,702 | -4.4 | % | |||||||||||||
Supplies and communications | 1,401 | 1,379 | 1.6 | % | |||||||||||||
Advertising and promotion | 1,911 | 1,817 | 5.2 | % | |||||||||||||
Other real estate owned expense | 325 | 418 | -22.2 | % | |||||||||||||
Merger and integration costs | 380 | (40 | ) | -1050.0 | % | ||||||||||||
Other operating expenses | 5,128 | 4,948 | 3.6 | % | |||||||||||||
Total noninterest expense | 59,268 | 56,181 | 5.5 | % | |||||||||||||
Income before provision for income taxes | 42,028 | 45,925 | -8.5 | % | |||||||||||||
Income tax expense | 11,625 | 17,685 | -34.3 | % | |||||||||||||
Net income | $ | 30,403 | $ | 28,240 | 7.7 | % | |||||||||||
Basic earnings per share: | $ | 0.94 | $ | 0.88 | |||||||||||||
Diluted earnings per share: | $ | 0.94 | $ | 0.87 | |||||||||||||
Weighted-average shares outstanding: | |||||||||||||||||
Basic | 32,167,111 | 32,040,113 | |||||||||||||||
Diluted | 32,316,648 | 32,216,671 | |||||||||||||||
Common shares outstanding | 32,513,518 | 32,393,856 | |||||||||||||||
Hanmi Financial Corporation and Subsidiaries
Average Balance, Average Yield Earned, and Average Rate Paid (Unaudited)
(In thousands, except ratios)
Three Months Ended | ||||||||||||||||||||||||
June 30, 2018 | March 31, 2018 | June 30, 2017 | ||||||||||||||||||||||
Interest | Average | Interest | Average | Interest | Average | |||||||||||||||||||
Average | Income / | Yield / | Average | Income / | Yield / | Average | Income / | Yield / | ||||||||||||||||
Balance | Expense | Rate | Balance | Expense | Rate | Balance | Expense | Rate | ||||||||||||||||
Assets | ||||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||
Loans and leases receivable (1) | $ | 4,414,217 | $ | 53,708 | 4.88 | % | $ | 4,310,964 | $ | 51,574 | 4.85 | % | $ | 3,951,934 | $ | 47,971 | 4.87 | % | ||||||
Securities (2) | 591,493 | 3,384 | 2.29 | % | 588,738 | 3,296 | 2.24 | % | 585,384 | 3,444 | 2.35 | % | ||||||||||||
FHLB stock | 16,385 | 283 | 6.93 | % | 16,385 | 289 | 7.15 | % | 16,385 | 283 | 6.93 | % | ||||||||||||
Interest-bearing deposits in other banks | 28,831 | 133 | 1.85 | % | 32,401 | 114 | 1.43 | % | 47,402 | 123 | 1.04 | % | ||||||||||||
Total interest-earning assets | 5,050,926 | 57,508 | 4.57 | % | 4,948,488 | 55,273 | 4.53 | % | 4,601,105 | 51,821 | 4.52 | % | ||||||||||||
Noninterest-earning assets: | ||||||||||||||||||||||||
Cash and due from banks | 124,371 | 122,580 | 116,750 | |||||||||||||||||||||
Allowance for loan and lease losses | (31,871 | ) | (32,487 | ) | (33,540 | ) | ||||||||||||||||||
Other assets | 175,277 | 175,209 | 191,158 | |||||||||||||||||||||
Total assets | $ | 5,318,703 | $ | 5,213,790 | $ | 4,875,473 | ||||||||||||||||||
Liabilities and Stockholders' Equity | ||||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||||
Demand: interest-bearing | $ | 92,552 | $ | 18 | 0.08 | % | $ | 91,378 | $ | 18 | 0.08 | % | $ | 93,873 | $ | 18 | 0.08 | % | ||||||
Money market and savings | 1,412,118 | 3,546 | 1.01 | % | 1,478,795 | 3,326 | 0.91 | % | 1,532,733 | 3,224 | 0.84 | % | ||||||||||||
Time deposits | 1,553,692 | 5,901 | 1.52 | % | 1,440,382 | 4,441 | 1.25 | % | 1,320,005 | 3,221 | 0.98 | % | ||||||||||||
Total interest-bearing deposits | 3,058,362 | 9,465 | 1.24 | % | 3,010,555 | 7,785 | 1.05 | % | 2,946,611 | 6,463 | 0.88 | % | ||||||||||||
Borrowings | 214,066 | 1,015 | 1.90 | % | 179,000 | 679 | 1.54 | % | 20,000 | 49 | 0.98 | % | ||||||||||||
Subordinated debentures | 117,456 | 1,728 | 5.87 | % | 117,323 | 1,694 | 5.77 | % | 116,850 | 1,636 | 5.59 | % | ||||||||||||
Total interest-bearing liabilities | 3,389,884 | 12,208 | 1.44 | % | 3,306,878 | 10,158 | 1.25 | % | 3,083,461 | 8,148 | 1.06 | % | ||||||||||||
Noninterest-bearing liabilities and equity: | ||||||||||||||||||||||||
Demand deposits: noninterest-bearing | 1,325,195 | 1,307,072 | 1,219,876 | |||||||||||||||||||||
Other liabilities | 26,651 | 33,973 | 27,853 | |||||||||||||||||||||
Stockholders' equity | 576,973 | 565,867 | 544,283 | |||||||||||||||||||||
Total liabilities and stockholders' equity | $ | 5,318,703 | $ | 5,213,790 | $ | 4,875,473 | ||||||||||||||||||
Net interest income (tax equivalent basis) | $ | 45,300 | $ | 45,115 | $ | 43,673 | ||||||||||||||||||
Cost of deposits | 0.87 | % | 0.73 | % | 0.62 | % | ||||||||||||||||||
Net interest spread (taxable equivalent basis) | 3.13 | % | 3.28 | % | 3.46 | % | ||||||||||||||||||
Net interest margin (taxable equivalent basis) | 3.60 | % | 3.70 | % | 3.81 | % | ||||||||||||||||||
(1) Includes loans held for sale | ||||||||||||||||||||||||
(2) Amounts calculated on a fully taxable equivalent basis using the federal tax rate in effect for the periods presented. | ||||||||||||||||||||||||
Hanmi Financial Corporation and Subsidiaries | ||||||||||||||||||||||||
Average Balance, Average Yield Earned and Average Rate Paid (Unaudited) | ||||||||||||||||||||||||
(In thousands, except ratios) | ||||||||||||||||||||||||
Six Months Ended | ||||||||||||||||||||||||
June 30, 2018 | June 30, 2017 | |||||||||||||||||||||||
Interest | Average | Interest | Average | |||||||||||||||||||||
Average | Income / | Yield / | Average | Income / | Yield / | |||||||||||||||||||
Balance | Expense | Rate | Balance | Expense | Rate | |||||||||||||||||||
Assets | ||||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||
Loans and leases receivable (1) | $ | 4,362,876 | $ | 105,283 | 4.87 | % | $ | 3,917,004 | $ | 93,349 | 4.81 | % | ||||||||||||
Securities (2) | 590,123 | 6,678 | 2.26 | % | 556,129 | 6,468 | 2.33 | % | ||||||||||||||||
FHLB stock | 16,385 | 572 | 7.04 | % | 16,385 | 657 | 8.09 | % | ||||||||||||||||
Interest-bearing deposits in other banks | 30,606 | 247 | 1.63 | % | 43,026 | 200 | 0.94 | % | ||||||||||||||||
Total interest-earning assets | 4,999,990 | 112,780 | 4.55 | % | 4,532,544 | 100,674 | 4.48 | % | ||||||||||||||||
Noninterest-earning assets: | ||||||||||||||||||||||||
Cash and due from banks | 123,480 | 117,273 | ||||||||||||||||||||||
Allowance for loan and lease losses | (32,177 | ) | (33,193 | ) | ||||||||||||||||||||
Other assets | 175,245 | 190,602 | ||||||||||||||||||||||
Total assets | $ | 5,266,538 | $ | 4,807,226 | ||||||||||||||||||||
Liabilities and Stockholders' Equity | ||||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||||
Demand: interest-bearing | $ | 91,968 | $ | 36 | 0.08 | % | $ | 95,727 | $ | 38 | 0.08 | % | ||||||||||||
Money market and savings | 1,445,272 | 6,872 | 0.96 | % | 1,470,165 | 5,890 | 0.81 | % | ||||||||||||||||
Time deposits | 1,497,349 | 10,342 | 1.39 | % | 1,247,000 | 5,689 | 0.92 | % | ||||||||||||||||
Total interest-bearing deposits | 3,034,589 | 17,250 | 1.15 | % | 2,812,892 | 11,617 | 0.83 | % | ||||||||||||||||
Borrowings | 196,630 | 1,694 | 1.74 | % | 144,558 | 517 | 0.72 | % | ||||||||||||||||
Subordinated debentures | 117,390 | 3,421 | 5.82 | % | 74,137 | 2,009 | 5.41 | % | ||||||||||||||||
Total interest-bearing liabilities | 3,348,609 | 22,365 | 1.35 | % | 3,031,587 | 14,143 | 0.94 | % | ||||||||||||||||
Noninterest-bearing liabilities: | ||||||||||||||||||||||||
Demand deposits: noninterest-bearing | 1,316,184 | 1,208,079 | ||||||||||||||||||||||
Other liabilities | 30,292 | 28,255 | ||||||||||||||||||||||
Stockholders' equity | 571,453 | 539,305 | ||||||||||||||||||||||
Total liabilities and stockholders' equity | $ | 5,266,538 | $ | 4,807,226 | ||||||||||||||||||||
Net interest income (tax equivalent basis) | $ | 90,415 | $ | 86,531 | ||||||||||||||||||||
Cost of deposits | 0.80 | % | 0.58 | % | ||||||||||||||||||||
Net interest spread (taxable equivalent basis) | 3.20 | % | 3.54 | % | ||||||||||||||||||||
Net interest margin (taxable equivalent basis) | 3.65 | % | 3.85 | % | ||||||||||||||||||||
(1) Includes loans held for sale | ||||||||||||||||||||||||
(2) Amounts calculated on a fully taxable equivalent basis using the federal tax rate in effect for the periods presented. |
Non-GAAP Financial Measures
Tangible Common Equity to Tangible Assets Ratio
Tangible common equity to tangible assets ratio is supplemental financial information determined by a method other than in accordance with U.S. generally accepted accounting principles (“GAAP”). This non-GAAP measure is used by management in the analysis of Hanmi’s capital strength. Tangible equity is calculated by subtracting goodwill and other intangible assets from stockholders’ equity. Banking and financial institution regulators also exclude goodwill and other intangible assets from stockholders’ equity when assessing the capital adequacy of a financial institution. Management believes the presentation of this financial measure excluding the impact of these items provides useful supplemental information that is essential to a proper understanding of the capital strength of Hanmi. This disclosure should not be viewed as a substitution for results determined in accordance with GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies.
The following table reconciles this non-GAAP performance measure to the GAAP performance measure for the periods indicated:
Tangible Common Equity to Tangible Assets Ratio (Unaudited)
(In thousands, except share, per share data and ratios)
June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||||
Hanmi Financial Corporation | 2018 | 2018 | 2017 | 2017 | 2017 | ||||||||||||||
Assets | $ | 5,415,202 | $ | 5,305,641 | $ | 5,210,485 | $ | 5,111,396 | $ | 4,973,346 | |||||||||
Less goodwill and other intangible assets | (12,363 | ) | (12,454 | ) | (12,544 | ) | (12,628 | ) | (12,712 | ) | |||||||||
Tangible assets | $ | 5,402,839 | $ | 5,293,187 | $ | 5,197,941 | $ | 5,098,768 | $ | 4,960,634 | |||||||||
Stockholders' equity | $ | 571,707 | $ | 564,278 | $ | 562,477 | $ | 559,247 | $ | 550,140 | |||||||||
Less goodwill and other intangible assets | (12,363 | ) | (12,454 | ) | (12,544 | ) | (12,628 | ) | (12,712 | ) | |||||||||
Tangible stockholders' equity | $ | 559,344 | $ | 551,824 | $ | 549,933 | $ | 546,619 | $ | 537,428 | |||||||||
Stockholders' equity to assets | 10.56 | % | 10.64 | % | 10.80 | % | 10.94 | % | 11.06 | % | |||||||||
Tangible common equity to tangible assets | 10.35 | % | 10.43 | % | 10.58 | % | 10.72 | % | 10.83 | % | |||||||||
Common shares outstanding | 32,513,518 | 32,502,658 | 32,431,627 | 32,413,082 | 32,393,856 | ||||||||||||||
Tangible common equity per common share | $ | 17.20 | $ | 16.98 | $ | 16.96 | $ | 16.86 | $ | 16.59 | |||||||||