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For the six months ended June 30, 2009, we reported a net loss of $26.7 million, or ($0.58) per share, compared to a net loss of $102.6 million, or ($2.24) per share, for the comparable period of 2008.
In a related matter, following the findings of a recent regulatory examination of the Bank, Hanmi determined that it will restate its Quarterly Report on Form 10-Q for the period ended March 31, 2009. The restatement includes an increase of the allowance for loan losses by $21.0 million to reflect an adjustment to the qualitative reserve factors that the Bank utilized in calculating its allowance for loan losses as of March 31, 2009. The adjustments in the qualitative reserve factors were the result of management incorporating first quarter trends in delinquent, classified and non-performing loans that the Bank's loan portfolio is experiencing. The restatement also reflects certain loan grading changes that occurred as a result of the recent regulatory examination.
According to Jay S. Yoo, President and Chief Executive Officer of Hanmi, "As a result of the restatement, the first-quarter net loss increased to $17.2 million, or ($0.37) per share. The higher allowance for loan losses is attributable to the more defensive application of applying the Bank's methodology to reflect the prolonged downturn in the economy that has led to a further deterioration in commercial real estate values in Southern California.
"Second-quarter results point to the same factors that led us to our decision to restate first-quarter results -- namely, the continuing recession and its effect on a growing number of our customers who are increasingly having difficulty meeting their financial obligations to the Bank," continued Mr. Yoo. "Their difficulties are evident in growing delinquencies and an increase in the number of non-performing loans. With that understood, and consistent with our longstanding commitment to ensuring that loan loss provisions fully reflect the economic realities of the day, we continue to be vigilant in fully and proactively addressing the challenges of our current credit environment. With no quick end to the recession in sight, we continue to diligently monitor loans with the aim of addressing problematic credits in a timely fashion. Similarly, we are carefully evaluating credits that are subject to renewal and accepting only those that are of the highest quality; this was in part responsible for the decrease of $160.4 million in the loan portfolio compared to March 31, 2009.
"On a positive note," concluded Mr. Yoo, "as previously announced, on June 12, 2009, we entered into a Securities Purchase Agreement, subsequently amended on July 31, 2009, with Leading Investment & Securities Co., Ltd. ("Leading"), a Korean securities broker-dealer, for a total capital infusion of $11.0 million. The initial investment of $6.9 million is in an escrow account awaiting regulatory consents. We expect to close the initial investment in the near future and to receive an additional $4.1 million from Leading by the end of September. Furthermore, we remain in active negotiations with another Korean institutional investor regarding a considerably larger infusion of equity capital."
Results of Operations
Second-quarter 2009 net interest income before provision for credit losses was unchanged at $23.1 million compared to the prior quarter. Interest and fees on loans decreased by $367,000, or 0.8 percent, from the first quarter of 2009, reflecting a decrease in the size of the loan portfolio. Interest paid on deposits declined by only $99,000, or 0.4 percent, from the first quarter of 2009 as a decline in the cost of funds was partially offset by a $91.8 million increase in the deposit portfolio in the second quarter.
During the second quarter, the high-cost six-month time deposits offered from December 2008 through March 2009 started to mature and a substantial number of them were rolled over into lower-cost deposits. The average cost of interest-bearing deposits accordingly decreased by eight basis points to 3.37 percent in the second quarter of 2009 from 3.45 percent in the first quarter. The average yield on the loan portfolio was unchanged at 5.46 percent in both the first and second quarters of 2009. Net interest margin likewise was essentially unchanged at 2.49 percent compared to 2.50 percent in the first quarter. It is anticipated that net interest margin will improve in the third quarter as $839.3 million of the aforementioned promotional time deposits will mature and are expected to be replaced by lower-cost deposits.
The provision for credit losses in the second quarter of 2009 was $23.9 million compared to $46.0 million in the prior quarter and $19.2 million in the second quarter of 2008. Second-quarter charge-offs, net of recoveries, were $23.6 million compared to $11.8 million in the prior quarter and $8.2 million in the second quarter of 2008. Second-quarter charge-offs consisted primarily of unsecured commercial and industrial loans. Management's analysis of the third-party loan review that was completed during the second quarter, and the expectation of a prolonged recession, led to another significant provision for credit losses in the second quarter.
Total non-interest income in the second quarter of 2009 was $6.7 million compared to $8.4 million in the prior quarter and $9.7 million in the second quarter of 2008. The sequential decrease in non-interest income reflects a $909,000 other-than-temporary impairment ("OTTI") loss on securities during the second quarter of 2009. There was also a $1.2 million net gain on sales of investment securities in the first quarter of 2009 and no comparable sales in the second quarter of 2009.
Total non-interest expense in the second quarter of 2009 was $24.7 million compared to $18.3 million in the first quarter, an increase of $6.4 million, or 35.3 percent, and $129.4 million in the second quarter of 2008, a decrease of $104.7 million, or 80.9 percent; second-quarter 2008 non-interest expense included a non-cash goodwill impairment charge of $107.4 million. The sequential increase in total non-interest expense is attributable mainly to a $2.4 million increase in deposit insurance premiums, including a $1.8 million accrual for a FDIC special assessment, a $1.4 million increase in other real estate owned ("OREO") expense and a $1.0 million increase in loan-related expense. In addition, salaries and employee benefits increased to $8.5 million from the prior quarter's $7.5 million, which had been reduced by the reversal of a $2.5 million post-retirement benefit obligation related to bank-owned life insurance. Absent this one-time reversal of expense, salaries and employee benefits in the second quarter decreased by $1.5 million from the prior quarter and by $2.8 million from $11.3 million in the second quarter of 2008, reflecting the progress of our cost-cutting efforts.
Due primarily to the increase in non-interest expense, the efficiency ratio (non-interest expense divided by the sum of net interest income before provision for credit losses and non-interest income) increased to 82.85 percent, compared to 57.92 percent in the prior quarter and 296.07 percent in the second quarter of 2008.
Balance Sheet and Asset Quality
Total assets at June 30, 2009 decreased by $5.0 million, or 0.1 percent, to $3.87 billion from $3.88 billion at December 31, 2008 and increased by $25.7 million, or 0.7 percent, compared to $3.85 billion at June 30, 2008. Beginning in the second quarter of 2009, we carefully evaluated credit extensions subject to renewal and approved only those with the highest quality, which meaningfully reduced our loan portfolio. At June 30, 2009, gross loans, net of deferred loan fees, decreased by $204.2 million, or 6.1 percent, to $3.16 billion, compared to $3.36 billion at December 31, 2008, and decreased by $194.9 million, or 5.8 percent, compared to $3.35 billion at June 30, 2008.
During the second quarter of 2009, we launched a core-deposit campaign in order to secure sufficient funds in this time of uncertainty in the capital markets. Total deposits increased by $217.8 million, or 7.1 percent, to $3.29 billion at June 30, 2009, compared to $3.07 billion at December 31, 2008, and increased by $326.4 million, or 11.0 percent, compared to $2.96 billion at June 30, 2008. This increase in total deposits was mainly used to reduce our reliance on wholesale funds such as FHLB advances and broker deposits.
FHLB advances decreased by $211.2 million, or 50.0 percent, to $211.0 million at June 30, 2009, compared to $422.2 million at December 31, 2008, and decreased by $285.5 million, or 57.5 percent, compared to $496.4 million at June 30, 2008. At June 30, 2009, broker deposits were $475.0 million, a decline of $399.2 million, or 45.7 percent, compared to $874.1 million at December 31, 2008, and an increase of $279.9 million, or 143.5 percent, compared to $195.1 million at June 30, 2008.
"With a sizable positive cash position of $382.8 million that resulted from the decrease in loans and the increase in deposits, we are well positioned to rebuild our core deposit base even as we anticipate some run-off of the high-cost time deposits maturing in next few months," said Brian Cho, Chief Financial Officer. "In the same process, we anticipate lowering our overall cost of deposits during the remainder of the year by replacing them with lower-cost deposits."
Delinquent loans were $178.7 million (5.66 percent of total gross loans) at June 30, 2009, compared to $128.5 million (3.82 percent of total gross loans) at December 31, 2008, and $138.4 million (4.12 percent of total gross loans) at June 30, 2008. The majority of the increase in delinquencies was attributable to business property loans suffering during this economic downturn. Non-performing loans at June 30, 2009 were $167.3 million (5.30 percent of total gross loans), compared to $121.9 million (3.62 percent of total gross loans) at December 31, 2008, and $112.2 million (3.34 percent of total gross loans) at June 30, 2008. As of June 30, 2009, total non-performing assets included OREO of $34.0 million, a $33.2 million increase compared to $823,000 as of December 31, 2008. The increase in OREO during the second quarter is mostly attributable to two previously mentioned California properties that have been foreclosed: a condominium project in Oakland, and a private golf course in Fallbrook.
At June 30, 2009, the allowance for loan losses was $105.3 million, or 3.33 percent of total gross loans (62.92 percent of total non-performing loans), compared to $104.9 million, or 3.16 percent of total gross loans (67.13 percent of total non-performing loans), at March 31, 2009, and $63.0 million, or 1.88 percent of total gross loans (56.14 percent of total non-performing loans), at June 30, 2008.
Capital Adequacy
At June 30, 2009, the Bank's Tier 1 Leverage, Tier 1 Risk-Based Capital and Total Risk-Based Capital ratios were 8.01 percent, 9.42 percent and 10.70 percent, respectively, compared to 8.85 percent, 9.44 percent and 10.71 percent, respectively, at December 31, 2008.
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: failure to maintain adequate levels of capital and liquidity to support our operations; the effect of regulatory orders we have entered into and 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; the ability of Leading to complete the transactions contemplated by the Securities Purchase Agreement; 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 ("SBA") loans; failure to attract or retain key employees; changes in governmental regulation, including, but not limited to, any increase in FDIC insurance premiums; ability to receive regulatory approval for Hanmi Bank to declare dividends to Hanmi Financial; adequacy of our allowance for loan losses, credit quality and the effect of credit quality on our provision for credit losses and allowance for loan losses; 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 successfully integrate acquisitions we may make; our ability to control expenses; 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, 2008 and current and periodic reports filed with the Securities and Exchange Commission thereafter, which could cause actual results to differ from those projected. You should understand that it is not possible to predict or identify all such risks. Consequently, you should not consider such disclosures to be a complete discussion of all potential risks or uncertainties. We undertake no obligation to update such forward-looking statements except as required by law.
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 Bernardino, San Francisco, Santa Clara and San Diego counties, and two loan production offices in Virginia and Washington State. Hanmi Bank specializes in commercial, SBA and trade finance lending, and is a recognized community leader. Hanmi Bank's mission is to provide a full range of quality products and premier services to its customers and to maximize shareholder value. Additional information is available at www.hanmifinancial.com.
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in Thousands)
June 30, December 31, % June 30, %
2009 2008 Change 2008 Change
ASSETS
Cash and Due from Banks $ 382,826 $ 85,188 349.4 % $ 110,222 247.3 %
Federal Funds Sold and Securities Purchased Under Resale Agreements -- 130,000 (100.0 )% 10,000 (100.0 )%
Cash and Cash Equivalents 382,826 215,188 77.9 % 120,222 218.4 %
Investment Securities 218,823 197,876 10.6 % 262,601 (16.7 )%
Loans:
Gross Loans, Net of Deferred Loan Fees 3,157,947 3,362,111 (6.1 )% 3,352,879 (5.8 )%
Allowance for Loan Losses (105,268 ) (70,986 ) 48.3 % (62,977 ) 67.2 %
Loans Receivable, Net 3,052,679 3,291,125 (7.2 )% 3,289,902 (7.2 )%
Due from Customers on Acceptances 1,916 4,295 (55.4 )% 6,717 (71.5 )%
Premises and Equipment, Net 19,833 20,279 (2.2 )% 20,801 (4.7 )%
Accrued Interest Receivable 12,118 12,347 (1.9 )% 13,155 (7.9 )%
Other Real Estate Owned, Net 34,018 823 4,033.4 % -- --
Servicing Assets 3,444 3,791 (9.2 )% 4,328 (20.4 )%
Other Intangible Assets, Net 4,115 4,950 (16.9 )% 5,882 (30.0 )%
Investment in Federal Home Loan Bank Stock, at Cost 30,697 30,697 -- 29,397 4.4 %
Investment in Federal Reserve Bank Stock, at Cost 10,053 10,228 (1.7 )% 11,733 (14.3 )%
Bank-Owned Life Insurance 25,937 25,476 1.8 % 24,998 3.8 %
Other Assets 74,392 58,741 26.6 % 55,371 34.4 %
TOTAL ASSETS $ 3,870,851 $ 3,875,816 (0.1 )% $ 3,845,107 0.7 %
LIABILITIES AND STOCKHOLDERS'
EQUITY
Liabilities:
Deposits:
Noninterest-Bearing $ 547,737 $ 536,944 2.0 % $ 683,846 (19.9 )%
Interest-Bearing 2,740,186 2,533,136 8.2 % 2,277,714 20.3 %
Total Deposits 3,287,923 3,070,080 7.1 % 2,961,560 11.0 %
Accrued Interest Payable 31,859 18,539 71.8 % 16,583 92.1 %
Bank Acceptances Outstanding 1,916 4,295 (55.4 )% 6,717 (71.5 )%
Federal Home Loan Bank Advances 210,952 422,196 (50.0 )% 496,433 (57.5 )%
Other Borrowings 2,532 787 221.7 % 3,674 (31.1 )%
Junior Subordinated Debentures 82,406 82,406 -- 82,406 --
Accrued Expenses and Other Liabilities 14,137 13,598 4.0 % 16,229 (12.9 )%
Total Liabilities 3,631,725 3,611,901 0.5 % 3,583,602 1.3 %
Stockholders' Equity 239,126 263,915 (9.4 )% 261,505 (8.6 )%
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,870,851 $ 3,875,816 (0.1 )% $ 3,845,107 0.7 %
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in Thousands, Except Per Share Data)
Three Months Ended Six Months Ended
June 30, March 31, % June 30, % June 30, June 30, %
2009 2009 Change 2008 Change 2009 2008 Change
(Restated)
INTEREST AND DIVIDEND INCOME:
Interest and Fees on Loans $ 44,718 $ 45,085 (0.8 )% $ 55,905 (20.0 )% $ 89,803 $ 116,503 (22.9 )%
Taxable Interest on Investment Securities 1,381 1,352 2.1 % 2,579 (46.5 )% 2,733 5,695 (52.0 )%
Tax-Exempt Interest on Investment Securities 621 643 (3.4 )% 662 (6.2 )% 1,264 1,421 (11.0 )%
Dividends on Federal Home Loan Bank Stock -- -- -- 310 (100.0 )% -- 548 (100.0 )%
Dividends on Federal Reserve Bank Stock 153 153 -- 176 (13.1 )% 306 352 (13.1 )%
Interest on Federal Funds Sold and Securities Purchased Under Resale 112 82 36.6 % 31 261.3 % 194 114 70.2 %
Agreements
Interest on Term Federal Funds Sold 695 700 (0.7 )% -- -- 1,395 -- --
Total Interest and Dividend Income 47,680 48,015 (0.7 )% 59,663 (20.1 )% 95,695 124,633 (23.2 )%
INTEREST EXPENSE:
Interest on Deposits 22,686 22,785 (0.4 )% 20,487 10.7 % 45,471 45,334 0.3 %
Interest on Federal Home Loan Bank Advances 1,010 1,112 (9.2 )% 3,929 (74.3 )% 2,122 8,082 (73.7 )%
Interest on Other Borrowings 2 -- -- 15 (86.7 )% 2 339 (99.4 )%
Interest on Junior Subordinated Debentures 846 988 (14.4 )% 1,164 (27.3 )% 1,834 2,613 (29.8 )%
Total Interest Expense 24,544 24,885 (1.4 )% 25,595 (4.1 )% 49,429 56,368 (12.3 )%
NET INTEREST INCOME BEFORE PROVISION FOR CREDIT LOSSES 23,136 23,130 -- 34,068 (32.1 )% 46,266 68,265 (32.2 )%
Provision for Credit Losses 23,934 45,953 (47.9 )% 19,229 24.5 % 69,887 37,050 88.6 %
NET INTEREST INCOME (LOSS) AFTER PROVISION FOR CREDIT LOSSES (798 ) (22,823 ) (96.5 )% 14,839 (105.4 )% (23,621 ) 31,215 (175.7 )%
NON-INTEREST INCOME:
Service Charges on Deposit Accounts 4,442 4,315 2.9 % 4,539 (2.1 )% 8,757 9,256 (5.4 )%
Insurance Commissions 1,185 1,182 0.3 % 1,384 (14.4 )% 2,367 2,699 (12.3 )%
Remittance Fees 545 523 4.2 % 539 1.1 % 1,068 1,044 2.3 %
Trade Finance Fees 499 506 (1.4 )% 825 (39.5 )% 1,005 1,690 (40.5 )%
Other Service Charges and Fees 467 483 (3.3 )% 703 (33.6 )% 950 1,419 (33.1 )%
Bank-Owned Life Insurance Income 227 234 (3.0 )% 234 (3.0 )% 461 474 (2.7 )%
Gain on Sales of Investment Securities 1 1,276 (99.9 )% -- -- 1,277 618 106.6 %
Loss on Sales of Investment Securities -- (109 ) (100.0 )% -- -- (109 ) -- --
Net Gain on Sales of Loans -- 2 (100.0 )% 552 (100.0 )% 2 765 (99.7 )%
Other-Than-Temporary Impairment Loss on Securities (909 ) (98 ) 827.6 % -- -- (1,007 ) -- --
Other Operating Income 214 66 224.2 % 876 (75.6 )% 280 1,452 (80.7 )%
Total Non-Interest Income 6,671 8,380 (20.4 )% 9,652 (30.9 )% 15,051 19,417 (22.5 )%
NON-INTEREST EXPENSE:
Salaries and Employee Benefits 8,508 7,503 13.4 % 11,301 (24.7 )% 16,011 22,581 (29.1 )%
Occupancy and Equipment 2,788 2,884 (3.3 )% 2,792 (0.1 )% 5,672 5,574 1.8 %
Deposit Insurance Premiums and Regulatory Assessments 3,929 1,490 163.7 % 758 418.3 % 5,419 1,318 311.2 %
Data Processing 1,547 1,536 0.7 % 1,698 (8.9 )% 3,083 3,232 (4.6 )%
Other Real Estate Owned Expense 1,502 143 950.3 % -- -- 1,645 139 1,083.5 %
Professional Fees 890 616 44.5 % 995 (10.6 )% 1,506 1,980 (23.9 )%
Loan-Related Expense 1,217 181 572.4 % 240 407.1 % 1,398 399 250.4 %
Advertising and Promotion 624 569 9.7 % 888 (29.7 )% 1,193 1,700 (29.8 )%
Supplies and Communications 599 570 5.1 % 623 (3.9 )% 1,169 1,327 (11.9 )%
Amortization of Other Intangible Assets 406 429 (5.4 )% 502 (19.1 )% 835 1,026 (18.6 )%
Other Operating Expenses 2,686 2,331 15.2 % 2,253 19.2 % 5,017 4,362 15.0 %
Impairment Loss on Goodwill -- -- -- 107,393 (100.0 )% -- 107,393 (100.0 )%
Total Non-Interest Expense 24,696 18,252 35.3 % 129,443 (80.9 )% 42,948 151,031 (71.6 )%
LOSS BEFORE PROVISION (BENEFIT) FOR INCOME TAXES (18,823 ) (32,695 ) (42.4 )% (104,952 ) (82.1 )% (51,518 ) (100,399 ) (48.7 )%
Provision (Benefit) for Income Taxes (9,288 ) (15,499 ) (40.1 )% 595 (1,661.0 )% (24,787 ) 2,227 (1,213.0 )%
NET LOSS $ (9,535 ) $ (17,196 ) (44.6 )% $ (105,547 ) (91.0 )% $ (26,731 ) $ (102,626 ) (74.0 )%
LOSS PER SHARE:
Basic $ (0.21 ) $ (0.37 ) (43.2 )% $ (2.30 ) (90.9 )% $ (0.58 ) $ (2.24 ) (74.1 )%
Diluted $ (0.21 ) $ (0.37 ) (43.2 )% $ (2.30 ) (90.9 )% $ (0.58 ) $ (2.24 ) (74.1 )%
WEIGHTED-AVERAGE SHARES OUTSTANDING:
Basic 45,924,767 45,891,043 45,881,549 45,907,998 45,861,963
Diluted 45,924,767 45,891,043 45,881,549 45,907,998 45,861,963
SHARES OUTSTANDING AT PERIOD-END 46,130,967 45,940,967 45,900,549 46,130,967 45,900,549
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL DATA (UNAUDITED)
(Dollars in Thousands)
Three Months Ended Six Months Ended
June 30, March 31, % June 30, % June 30, June 30, %
2009 2009 Change 2008 Change 2009 2008 Change
(Restated)
AVERAGE BALANCES:
Average Gross Loans, Net of Deferred Loan Fees $ 3,282,152 $ 3,349,085 (2.0 )% $ 3,317,061 (1.1 )% $ 3,315,434 $ 3,310,101 0.2 %
Average Investment Securities 179,129 182,284 (1.7 )% 296,790 (39.6 )% 180,698 319,457 (43.4 )%
Average Interest-Earning Assets 3,786,788 3,806,186 (0.5 )% 3,657,676 3.5 % 3,796,434 3,673,663 3.3 %
Average Total Assets 3,900,158 3,946,727 (1.2 )% 3,920,796 (0.5 )% 3,924,155 3,944,199 (0.5 )%
Average Deposits 3,223,309 3,202,032 0.7 % 2,882,506 11.8 % 3,212,728 2,938,910 9.3 %
Average Borrowings 386,477 440,053 (12.2 )% 621,239 (37.8 )% 413,117 587,189 (29.6 )%
Average Interest-Bearing Liabilities 3,083,774 3,115,332 (1.0 )% 2,851,021 8.2 % 3,099,465 2,874,115 7.8 %
Average Stockholders' Equity 243,207 263,553 (7.7 )% 377,096 (35.5 )% 254,166 378,030 (32.8 )%
Average Tangible Equity 238,850 258,775 (7.7 )% 264,710 (9.8 )% 249,600 264,943 (5.8 )%
PERFORMANCE RATIOS: (Annualized)
Return on Average Assets (0.98 )% (1.77 )% (10.83 )% (1.37 )% (5.23 )%
Return on Average Stockholders' Equity (15.73 )% (26.46 )% (112.57 )% (21.21 )% (54.59 )%
Return on Average Tangible Equity (16.01 )% (26.95 )% (160.37 )% (21.60 )% (77.90 )%
Efficiency Ratio 82.85 % 57.92 % 296.07 % 70.04 % 172.25 %
Net Interest Spread (1) 1.90 % 1.91 % 2.99 % 1.90 % 2.92 %
Net Interest Margin (1) 2.49 % 2.50 % 3.79 % 2.49 % 3.78 %
ALLOWANCE FOR LOAN LOSSES:
Balance at Beginning of Period $ 104,943 $ 70,986 47.8 % $ 52,986 98.1 % $ 70,986 $ 43,611 62.8 %
Provision Charged to Operating Expense 23,922 45,770 (47.7 )% 18,211 31.4 % 69,692 34,883 99.8 %
Charge-Offs, Net of Recoveries (23,597 ) (11,813 ) 99.8 % (8,220 ) 187.1 % (35,410 ) (15,517 ) 128.2 %
Balance at End of Period $ 105,268 $ 104,943 0.3 % $ 62,977 67.2 % $ 105,268 $ 62,977 67.2 %
Allowance for Loan Losses to Total Gross Loans 3.33 % 3.16 % 1.88 % 3.33 % 1.88 %
Allowance for Loan Losses to Total Non-Performing Loans 62.92 % 67.13 % 56.14 % 67.10 % 56.14 %
ALLOWANCE FOR OFF-BALANCE SHEET ITEMS:
Balance at Beginning of Period $ 4,279 $ 4,096 4.5 % $ 2,914 46.8 % $ 4,096 $ 1,765 132.1 %
Provision Charged to Operating Expense 12 183 (93.4 )% 1,018 (109.2 )% 195 2,167 (91.0 )%
Balance at End of Period $ 4,291 $ 4,279 0.3 % $ 3,932 9.1 % $ 4,291 $ 3,932 9.1 %
(1) Amounts calculated on a fully taxable
equivalent basis using the current statutory federal tax rate.
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL DATA (UNAUDITED) (Continued)
(Dollars in Thousands)
June 30, December 31, % June 30, %
2009 2008 Change 2008 Change
NON-PERFORMING ASSETS:
Non-Accrual Loans $ 167,255 $ 120,823 38.4 % $ 112,024 49.3 %
Loans 90 Days or More Past Due and Still Accruing 41 1,075 (96.2 )% 158 (74.1 )%
Total Non-Performing Loans 167,296 121,898 37.2 % 112,182 49.1 %
Other Real Estate Owned, Net 34,018 823 4,033.4 % -- --
Total Non-Performing Assets $ 201,314 $ 122,721 64.0 % $ 112,182 79.5 %
Total Non-Performing Loans/Total Gross Loans 5.30 % 3.62 % 3.34 %
Total Non-Performing Assets/Total Assets 5.20 % 3.17 % 2.92 %
Total Non-Performing Assets/Allowance for Loan Losses 191.2 % 116.9 % 178.1 %
DELINQUENT LOANS $ 178,663 $ 128,469 39.1 % $ 138,373 29.1 %
Delinquent Loans/Total Gross Loans 5.66 % 3.82 % 4.12 %
LOAN PORTFOLIO:
Real Estate Loans $ 1,137,395 $ 1,180,114 (3.6 )% $ 1,158,480 (1.8 )%
Commercial and Industrial Loans 1,945,816 2,099,732 (7.3 )% 2,108,506 (7.7 )%
Consumer Loans 76,098 83,525 (8.9 )% 88,062 (13.6 )%
Total Gross Loans 3,159,309 3,363,371 (6.1 )% 3,355,048 (5.8 )%
Deferred Loan Fees (1,362 ) (1,260 ) 8.1 % (2,169 ) (37.2 )%
Gross Loans, Net of Deferred Loan Fees 3,157,947 3,362,111 (6.1 )% 3,352,879 (5.8 )%
Allowance for Loan Losses (105,268 ) (70,986 ) 48.3 % (62,977 ) 67.2 %
Loans Receivable, Net $ 3,052,679 $ 3,291,125 (7.2 )% $ 3,289,902 (7.2 )%
LOAN MIX:
Real Estate Loans 36.0 % 35.1 % 34.5 %
Commercial and Industrial Loans 61.6 % 62.4 % 62.8 %
Consumer Loans 2.4 % 2.5 % 2.7 %
Total Gross Loans 100.0 % 100.0 % 100.0 %
DEPOSIT PORTFOLIO:
Demand - Noninterest-Bearing $ 547,737 $ 536,944 2.0 % $ 683,846 (19.9 )%
Savings 88,477 81,869 8.1 % 93,747 (5.6 )%
Money Market Checking and NOW Accounts 424,760 370,401 14.7 % 728,601 (41.7 )%
Time Deposits of $100,000 or More 1,284,491 849,800 51.2 % 1,050,942 22.2 %
Other Time Deposits 942,458 1,231,066 (23.4 )% 404,424 133.0 %
Total Deposits $ 3,287,923 $ 3,070,080 7.1 % $ 2,961,560 11.0 %
DEPOSIT MIX:
Demand - Noninterest-Bearing 16.7 % 17.5 % 23.1 %
Savings 2.7 % 2.7 % 3.2 %
Money Market Checking and NOW Accounts 12.9 % 12.1 % 24.6 %
Time Deposits of $100,000 or More 39.1 % 27.7 % 35.5 %
Other Time Deposits 28.6 % 40.0 % 13.6 %
Total Deposits 100.0 % 100.0 % 100.0 %
CAPITAL RATIOS (Bank Only):
Total Risk-Based 10.70 % 10.71 % 10.64 %
Tier 1 Risk-Based 9.42 % 9.44 % 9.39 %
Tier 1 Leverage 8.01 % 8.85 % 8.60 %
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
AVERAGE BALANCES, AVERAGE YIELDS EARNED AND AVERAGE RATES PAID
(UNAUDITED)
(Dollars in Thousands)
Three Months Ended Six Months Ended
June 30, 2009 March 31, 2009 June 30, 2008 June 30, 2009 June 30, 2008
Average Balance Interest Income/ Expense Average Yield/ Rate Average Balance Interest Income/ Expense Average Yield/ Rate Average Balance Interest Income/ Expense Average Yield/ Rate Average Balance Interest Income/ Expense Average Yield/ Rate Average Balance Interest Income/ Expense Average Yield/ Rate
INTEREST-EARNING ASSETS
Loans:
Real Estate Loans:
Commercial Property $ 914,802 $ 13,041 5.72 % $ 914,632 $ 12,937 5.74 % $ 804,745 $ 13,810 6.90 % $ 914,717 $ 25,978 5.73 % $ 797,548 $ 28,290 7.13 %
Construction 178,456 1,594 3.58 % 180,026 1,547 3.49 % 208,074 2,649 5.12 % 179,237 3,141 3.53 % 212,842 5,542 5.24 %
Residential Property 86,913 1,119 5.16 % 90,490 1,163 5.21 % 89,949 1,205 5.39 % 88,692 2,282 5.19 % 89,730 2,375 5.32 %
Total Real Estate Loans 1,180,171 15,754 5.35 % 1,185,148 15,647 5.35 % 1,102,768 17,664 6.44 % 1,182,646 31,401 5.35 % 1,100,120 36,207 6.62 %
Commercial and Industrial Loans 2,025,414 27,774 5.50 % 2,083,951 28,237 5.50 % 2,127,882 36,236 6.85 % 2,054,521 56,011 5.50 % 2,122,691 76,288 7.23 %
Consumer Loans 77,989 1,108 5.70 % 81,244 1,153 5.76 % 88,491 1,596 7.25 % 79,608 2,261 5.73 % 89,385 3,294 7.41 %
Total Gross Loans 3,283,574 44,636 5.45 % 3,350,343 45,037 5.45 % 3,319,141 55,496 6.72 % 3,316,775 89,673 5.45 % 3,312,196 115,789 7.03 %
Prepayment Penalty Income -- 82 -- -- 48 -- -- 409 -- -- 130 -- -- 714 --
Unearned Income on Loans, Net of Costs (1,422 ) -- -- (1,258 ) -- -- (2,080 ) -- -- (1,341 ) -- -- (2,095 ) -- --
Gross Loans, Net 3,282,152 44,718 5.46 % 3,349,085 45,085 5.46 % 3,317,061 55,905 6.78 % 3,315,434 89,803 5.46 % 3,310,101 116,503 7.08 %
Investment Securities:
Municipal Bonds (1) 59,222 956 6.46 % 58,886 989 6.72 % 63,177 1,018 6.45 % 59,055 1,945 6.59 % 67,528 2,186 6.47 %
U.S. Government Agency Securities 13,177 144 4.37 % 9,578 96 4.01 % 84,088 884 4.21 % 11,387 240 4.22 % 96,974 2,129 4.39 %
Mortgage-Backed Securities 74,939 880 4.70 % 75,716 895 4.73 % 91,488 1,076 4.70 % 75,326 1,775 4.71 % 94,288 2,252 4.78 %
Collateralized Mortgage Obligations 20,713 215 4.15 % 33,631 348 4.14 % 46,411 487 4.20 % 27,136 563 4.15 % 48,172 1,021 4.24 %
Corporate Bonds 233 22 37.77 % 159 (22 ) -55.35 % 7,779 89 4.58 % 196 -- -- 8,644 198 4.58 %
Other Securities 10,845 109 4.02 % 4,314 33 3.06 % 3,847 42 4.37 % 7,598 142 3.74 % 3,851 94 4.88 %
Total Investment Securities (1) 179,129 2,326 5.19 % 182,284 2,339 5.13 % 296,790 3,596 4.85 % 180,698 4,665 5.16 % 319,457 7,880 4.93 %
Other Interest-Earning Assets:
Equity Securities 41,532 153 1.47 % 41,727 153 1.47 % 38,031 486 5.11 % 41,629 306 1.47 % 35,760 900 5.03 %
Federal Funds Sold and Securities Purchased
Under Resale Agreements 135,362 112 0.33 % 94,585 82 0.35 % 5,621 31 2.21 % 115,086 194 0.34 % 8,258 114 2.76 %
Term Federal Funds Sold 147,692 695 1.88 % 138,344 700 2.02 % -- -- -- 143,044 1,395 1.95 % -- -- --
Interest-Earning Deposits 921 11 4.78 % 161 2 4.97 % 173 1 2.31 % 543 13 4.79 % 87 1 2.30 %
Total Other Interest-Earning Assets 325,507 971 1.19 % 274,817 937 1.36 % 43,825 518 4.75 % 300,302 1,908 1.27 % 44,105 1,015 4.60 %
TOTAL INTEREST-EARNING ASSETS (1) $ 3,786,788 $ 48,015 5.09 % $ 3,806,186 $ 48,361 5.15 % $ 3,657,676 $ 60,019 6.60 % $ 3,796,434 $ 96,376 5.12 % $ 3,673,663 $ 125,398 6.86 %
INTEREST-BEARING LIABILITIES
Interest-Bearing Deposits:
Savings $ 84,588 $ 527 2.50 % $ 82,029 $ 505 2.50 % $ 91,803 $ 527 2.31 % $ 83,315 $ 1,032 2.50 % $ 92,135 $ 1,054 2.30 %
Money Market Checking and NOW Accounts 319,319 1,426 1.79 % 343,354 1,854 2.19 % 718,257 5,707 3.20 % 331,270 3,280 2.00 % 637,875 10,367 3.27 %
Time Deposits of $100,000 or More 1,313,683 12,108 3.70 % 1,078,650 10,322 3.88 % 1,098,990 11,040 4.04 % 1,196,816 22,430 3.78 % 1,226,728 26,727 4.38 %
Other Time Deposits 979,707 8,625 3.53 % 1,171,246 10,104 3.50 % 320,732 3,213 4.03 % 1,074,947 18,729 3.51 % 330,188 7,186 4.38 %
Total Interest-Bearing Deposits 2,697,297 22,686 3.37 % 2,675,279 22,785 3.45 % 2,229,782 20,487 3.70 % 2,686,348 45,471 3.41 % 2,286,926 45,334 3.99 %
Borrowings:
FHLB Advances 302,220 1,010 1.34 % 356,190 1,112 1.27 % 536,412 3,929 2.95 % 329,056 2,122 1.30 % 485,157 8,082 3.35 %
Other Borrowings 1,851 2 0.43 % 1,457 -- -- 2,421 15 2.49 % 1,655 2 0.24 % 19,626 339 3.47 %
Junior Subordinated Debentures 82,406 846 4.12 % 82,406 988 4.86 % 82,406 1,164 5.68 % 82,406 1,834 4.49 % 82,406 2,613 6.38 %
Total Borrowings 386,477 1,858 1.93 % 440,053 2,100 1.94 % 621,239 5,108 3.31 % 413,117 3,958 1.93 % 587,189 11,034 3.78 %
TOTAL INTEREST-BEARING LIABILITIES $ 3,083,774 $ 24,544 3.19 % $ 3,115,332 $ 24,885 3.24 % $ 2,851,021 $ 25,595 3.61 % $ 3,099,465 $ 49,429 3.22 % $ 2,874,115 $ 56,368 3.94 %
NET INTEREST INCOME (1) $ 23,471 $ 23,476 $ 34,424 $ 46,947 $ 69,030
NET INTEREST SPREAD (1) 1.90 % 1.91 % 2.99 % 1.90 % 2.92 %
NET INTEREST MARGIN (1) 2.49 % 2.50 % 3.79 % 2.49 % 3.78 %
(1) Amounts calculated on a fully taxable
equivalent basis using the current statutory federal tax rate.
SOURCE: Hanmi Financial Corporation
Hanmi Financial Corporation Brian E. Cho, Chief Financial Officer 213-368-3200 or Stephanie Yoon, Investor Relations 213-427-5631
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