Full-Year Net Income of $49.8 Million, Up
24.8% Year-Over-Year
Loan Portfolio Increases to $2.74
Billion, Up 25.7% Year-Over-Year
Integration of Central
Bancorp, Inc. Remains on Track
Hanmi Financial Corporation (Nasdaq:HAFC) (or "Hanmi"), the holding
company for Hanmi Bank (the "Bank"), today reported solid growth in
2014. For the full year 2014, net income increased 24.8% to $49.8
million, or $1.56 per diluted share, compared to $39.9 million, or
$1.26 per diluted share a year ago. In 2014, pretax income from
continuing operations grew 16.1% to $72.6 million from $62.5
million in 2013.
Hanmi's acquisition of Central Bancorp, Inc. ("CBI"), the parent
company of United Central Bank, was completed on August 31, 2014.
The combined companies began operating as Hanmi Financial
Corporation and Hanmi Bank, respectively, with banking operations
conducted under the Hanmi Bank brand effective as of September 1,
2014. The 2014 financial results reflect eight months of
stand-alone operations of Hanmi and four months of combined
operations. Hanmi's accounting for this business combination is
incomplete and has been recorded based on provisional amounts. The
accounting is updated during the measurement period to reflect new
information obtained about facts and circumstances that existed at
the acquisition date. Adjustments to the provisional amounts during
the measurement period are recognized as retrospective adjustments
as of the date of the acquisition. During the fourth quarter Hanmi
identified a retrospective adjustment of $8.0 million to the
bargain purchase gain that was provisionally reported for the third
quarter of 2014. This retrospective adjustment revises the reported
third quarter net income to $21.2 million from $13.3 million as
previously reported.
Fourth quarter 2014 net income totaled $6.5 million, or $0.20
per diluted share, compared $21.2 million, or $0.66 per diluted
share, in the third quarter of 2014 and $9.9 million, or $0.31 per
diluted share, in the fourth quarter a year ago.
Full year financial results reflect the impact of the following
significant items recorded in conjunction with the CBI
acquisition:
- $14.6 million provisional bargain purchase gain recorded in
2014
- $6.6 million in merger and integration related expenses in
2014
- $7.6 million in professional fees for the year, which included
significant costs to strengthen Hanmi's infrastructure and to meet
heightened control standards
Mr. C. G. Kum, President and Chief Executive Officer, said,
"2014 was a transformative year for Hanmi highlighted by the
acquisition of CBI, strong loan growth and solid credit quality to
help continue the growth trajectory across our enterprise. Full
year profitability increased sharply with net income of $49.8
million, up 24.8% from 2013. Strong organic loan production from
the legacy Hanmi team helped expand our loan portfolio by 25.7% to
$2.74 billion at year end. Credit quality improved throughout the
year with classified loans, excluding PCI loans, declining 42.0%
during the year to $47.7 million, or 1.71% of gross loans at year
end. Importantly, our activities to integrate the acquisition of
CBI into Hanmi are proceeding as planned."
Full Year
Results |
(In thousands, except per share
data) |
|
|
As of or for the
Year Ended |
|
December 31, |
December 31, |
|
2014 |
2013 (1) |
|
|
|
Net income |
$ 49,761 |
$ 39,857 |
Net income per diluted common share |
$ 1.56 |
$ 1.26 |
|
|
|
Assets |
$ 4,234,768 |
$ 3,054,379 |
Loans receivable, net |
$ 2,738,157 |
$ 2,177,498 |
Deposits |
$ 3,556,746 |
$ 2,512,325 |
|
|
|
Return on average assets (2) |
1.47% |
1.41% |
Pre-tax, pre-provision earnings on average
assets (2) |
1.95% |
2.21% |
Return on average stockholders' equity
(2) |
11.79% |
10.13% |
Net interest margin |
3.88% |
3.94% |
Efficiency ratio |
59.73% |
53.18% |
Efficiency ratio (excluding merger and
integration costs) |
55.70% |
52.64% |
|
|
|
Tangible common equity to tangible
assets |
10.66% |
13.07% |
Tangible common equity per common share |
$ 14.14 |
$ 12.56 |
|
|
|
(1) Results for December
31, 2013 have been adjusted to reflect the adoption of FASB ASU
2014-01, Accounting for Investment in Qualified Affordable Housing
Projects. See section of Change in Accounting Principle. |
(2) Amount calculated based
on net income from continuing operations. |
Financial Highlights (at or for the year ended December
31, 2014, compared to December 31, 2013)
- Assets grew 38.6% during 2014 to $4.23 billion, compared to
$3.05 billion a year ago.
- Gross loans increased $553.5 million (24.8%) over the prior
year.
- Fourth quarter new loan production (excluding loan purchases)
totaled $204.3 million, representing a $34.4 million increase from
the preceding quarter; the composition of the fourth quarter
production was $159.4 million of commercial real estate loans,
$25.5 million of C&I loans, $17.2 million of SBA loans and $2.2
million of consumer loans.
- Deposits grew 41.6% year-over-year, including a 24.9% increase
in noninterest bearing deposits, which represent 28.8% of total
deposits.
- Asset quality improved with classified loans, excluding PCI
loans, down 42.0% year-over-year.
- A cash dividend of $0.07 per share was paid on January 15,
2015.
Acquisition Accounting Adjustments
As a result of the acquisition of CBI on August 31, 2014, Hanmi
became the second largest Korean American bank in the United States
with 49 banking offices and five loan production offices serving
communities across California, Colorado, Illinois, New Jersey, New
York, Texas, Virginia and Washington. The combined entity has the
leading deposit market share among Korean American banks in
Illinois, Texas and Virginia which complements Hanmi's substantial
market share in California.
The following table reflects the retrospectively adjusted
acquisition accounting as of August 31, 2014:
|
(In thousands) |
Consideration paid: |
|
CBI stockholders |
$ 50,000 |
Redemption of preferred and cumulative
unpaid dividends |
28,675 |
|
78,675 |
Assets acquired: |
|
Cash and cash equivalents |
197,209 |
Securities available for sale |
663,497 |
Loans |
297,272 |
Premises and equipment |
17,925 |
Other real estate owned |
25,952 |
Income tax assets, net |
12,011 |
Core deposit intangible |
2,213 |
FDIC loss sharing assets |
11,413 |
Bank-owned life insurance |
18,296 |
Other assets |
16,094 |
Total assets acquired |
1,261,882 |
Liabilities assumed: |
|
Deposits |
1,098,997 |
Subordinated debentures |
18,473 |
Rescinded stock obligation |
15,485 |
FHLB advances |
10,000 |
Other liabilities |
25,675 |
Total liabilities assumed |
1,168,630 |
Total identifiable net
assets |
$ 93,252 |
Bargain purchase gain, net of
deferred taxes |
$ 14,577 |
Results of Operations
Full year net interest income before provision for credit losses
improved 16.2% to $122.7 million compared to $105.6 million for the
full year 2013.
Net interest margin for 2014 was 3.88% compared to 3.94% in
2013. The decrease was primarily due to declining market interest
rates partially offset by the impact of acquisition accounting
adjustments. The following table details the asset yields,
liability costs, spread and margin.
|
Year Ended
December 31, |
|
2014 |
2013 |
|
|
|
Interest-earning assets |
4.33% |
4.44% |
Interest-bearing liabilities |
0.68% |
0.80% |
Net interest spread |
3.65% |
3.64% |
Net interest margin |
3.88% |
3.94% |
Excluding the effects of acquisition accounting adjustments, the
net interest margin for 2014 was 3.66%. The impact of
acquisition accounting adjustments on core loan yield and NIM are
summarized in the following tables:
|
Year Ended |
|
December
31,2014 |
Core loan yield |
4.82% |
Accretion of discount on purchased
loans |
0.19% |
As reported |
5.01% |
|
|
|
Year Ended
December 31, 2014 |
|
Amount |
NIM
Impact |
|
(In thousands) |
NIM excluding purchase
accounting |
$ 115,572 |
3.66% |
Accretion of discount on Non-PCI
loans |
3,821 |
0.12% |
Accretion of discount on PCI loans |
1,114 |
0.03% |
Accretion of time deposits premium |
2,338 |
0.07% |
Amortization of subordinated debentures
discount |
(71) |
-- |
Net impact |
7,202 |
0.22% |
As reported |
$ 122,774 |
3.88% |
For the full year in 2014, net interest income, after provision
for credit losses, increased 22.0% to $128.8 million, compared to
$105.6 million in 2013. Hanmi recorded a negative loan loss
provision totaling $6.1 million during 2014 and no loan loss
provisions in the prior year.
Noninterest income was $42.3 million in 2014, compared to $27.9
million in the preceding year. In 2014, Hanmi provisionally
recorded a bargain purchase gain of $14.6 million associated with
the acquisition of CBI. Service charges on deposit accounts were
$11.4 million in 2014, compared to $11.3 million in the preceding
year. Gains on sales of SBA loans were $3.5 million in 2014,
compared to $8.0 million a year ago. Disposition gains on PCI loans
were $1.4 million in 2014, compared to no disposition gains in the
prior year. Other operating income increased to $3.6 million
in 2014, compared to $2.5 million in the preceding year. The
increase in other operating income for 2014 compared to the prior
year was primarily due to an $807,000 nonrecurring gain on the
early termination of CBI's retirement plan in 2014.
Noninterest expense increased 38.8% to $98.6 million in 2014,
compared to $71.0 million a year ago. Salary and employee
benefits costs increased 42.8% to $50.2 million in 2014, compared
to $35.1 million in 2013. Merger and integration costs increased to
$6.6 million in 2014, compared to $730,000 in 2013. Professional
fees increased to $7.6 million in 2014, compared to $5.3 million in
the preceding year primarily due to significant costs to strengthen
the Company's infrastructure and to meet heightened control
standards.
Hanmi recorded a provision for income taxes of $22.9 million in
2014, representing an effective tax rate of 31.5%, compared to
$22.8 million and an effective rate of 36.4% in 2013. The
year-over-year reduction in tax rate can be attributed to the
bargain purchase gain (excluding this gain and transaction costs,
an effective tax rate for 2014 would be 39.4%).
"We continue to make good progress on our ongoing initiatives to
improve operating efficiencies. As part of the CBI acquisition
integration, we are closing three legacy CBI branches this month
and finalizing the process of right-sizing personnel. We look
forward to completing the integration process as quickly as
possible to realize the strategic value of the combined bank," said
Kum.
Balance Sheet
Total assets were $4.23 billion at December 31, 2014, a 38.6%
increase from $3.05 billion a year ago. The increase in total
assets was primarily due to the acquisition of CBI. The
investment portfolio was $1.1 billion at December 31, 2014,
compared to $530.9 million at December 31, 2013.
Loans receivable, net of allowance for loan losses, were $2.74
billion at December 31, 2014, up 25.7 % from $2.18 billion at
December 31, 2013. Loans held for sale at December 31, 2014
totaled $5.5 million, up from $0 in loans held for sale at the end
of 2013.
The year-end deposit mix is detailed in the table below.
|
December 31, |
December 31, |
|
2014 |
2013 |
|
|
|
Demand-noninterest-bearing |
28.8% |
32.5% |
Savings |
3.4% |
4.6% |
Money market checking and NOW accounts |
22.4% |
22.9% |
Time deposits of $100,000 or more |
25.6% |
20.2% |
Other time deposits |
19.8% |
19.8% |
Total deposits |
100.0% |
100.0% |
At December 31, 2014, stockholders' equity was $453.4
million. Tangible common stockholders' equity was $451.3
million, or 10.66% of tangible assets, compared to $398.9 million,
or 13.07%, of tangible assets, a year ago. Tangible book value
per share was $14.14, compared to $12.56 at December 31,
2013. On January 15, 2015, Hanmi paid a cash dividend of $0.07
per share, representing an aggregate dividend of $2.2 million.
Asset Quality
Asset quality continued to improve with classified loans
declining 42.0% for the full year 2014. Nonperforming loans
("NPLs"), excluding PCI loans, were down 1.4% to $25.5 million at
the end of the year, compared to $25.9 million at the end of
2013. Troubled debt restructurings ("TDRs") totaled $26.3
million at December 31, 2014 compared to $29.9 million at December
31, 2013. Of these TDRs, $12.5 million were included in NPLs
at December 31, 2014, compared to $10.5 million in 2013. The
following table shows NPLs in each category:
|
December 31,
2014 |
December 31,
2013 |
|
|
% of Total |
|
% of Total |
|
Amount |
NPLs |
Amount |
NPLs |
|
|
|
|
|
Real estate loans: |
|
|
|
|
Commercial property |
|
|
|
|
Retail |
$ 2,160 |
8.5% |
$ 2,946 |
11.4% |
Hotel/Motel |
4,028 |
15.8% |
5,200 |
20.1% |
Gas station |
3,514 |
13.8% |
2,492 |
9.6% |
Other |
4,961 |
19.4% |
4,808 |
18.6% |
Residential property |
1,588 |
6.2% |
1,365 |
5.3% |
Commercial and industrial loans: |
|
|
|
|
Commercial term |
7,052 |
27.6% |
7,146 |
27.6% |
Commercial lines of credit |
466 |
1.8% |
423 |
1.6% |
Consumer loans |
1,742 |
6.8% |
1,497 |
5.8% |
Total Nonperforming Non-PCI
loans |
$ 25,511 |
100.0% |
$ 25,877 |
100.0% |
Compared to a year ago, asset quality improved in all major
aspects. Classified loans were $47.7 million, or 1.71% of gross
loans, at December 31, 2014, compared to $82.2 million, or 3.78%, a
year ago. The allowance for loan losses totaled $52.7 million as of
December 31, 2014, generating an allowance of loan losses to gross
loans ratio of 1.89% as compared to 2.58% as of December 31, 2013.
The decline in the allowance of loan losses to gross loans ratio
was due to growth in loans.
Conference Call
Management will host a conference call today, February 5, 2014,
at 1:30 p.m. PT (4:30 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
1:30 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, Hanmi Bank, a wholly-owned
subsidiary of Hanmi Financial Corporation, provides services to the
multi-ethnic communities across California, Texas, Illinois,
Virginia, New Jersey and New York with 49 full-service branches as
well as loan production offices in California, Colorado, Texas,
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.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, 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 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 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, 2013, 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.
Hanmi Financial
Corporation and Subsidiaries |
Consolidated Balance
Sheets (Unaudited) |
(In thousands) |
|
|
December 31, |
December 31, |
Percentage |
|
2014 |
2013 (1) |
Change |
Assets |
|
|
|
Cash and cash equivalents |
$ 158,320 |
$ 179,357 |
-11.7% |
Securities available for sale, at fair
value |
1,060,717 |
530,926 |
99.8% |
Loans held for sale, at the lower of cost
or fair value |
5,451 |
-- |
-- |
Loans receivable, net of allowance for
loan losses |
2,738,157 |
2,177,498 |
25.7% |
Accrued interest receivable |
9,749 |
7,055 |
38.2% |
Premises and equipment, net |
30,912 |
14,221 |
117.4% |
Other real estate owned ("OREO"),
net |
15,790 |
756 |
1988.6% |
Customers' liability on acceptances |
1,847 |
2,018 |
-8.5% |
Servicing assets |
13,773 |
6,833 |
101.6% |
Other intangible assets, net |
2,080 |
1,171 |
77.6% |
Investment in Federal Home Loan Bank
("FHLB") stock, at cost |
17,580 |
14,060 |
25.0% |
Investment in Federal Reserve Bank
("FRB") stock, at cost |
12,273 |
11,196 |
9.6% |
Income tax asset |
84,371 |
63,841 |
32.2% |
Bank-owned life insurance |
48,866 |
29,699 |
64.5% |
Prepaid expenses |
2,672 |
1,415 |
88.8% |
Other assets |
32,210 |
14,333 |
124.7% |
Total assets |
$ 4,234,768 |
$ 3,054,379 |
38.6% |
|
|
|
|
Liabilities and Stockholders'
Equity |
|
|
|
Liabilities: |
|
|
|
Deposits: |
|
|
|
Noninterest-bearing |
$ 1,022,972 |
$ 819,015 |
24.9% |
Interest-bearing |
2,533,774 |
1,693,310 |
49.6% |
Total deposits |
3,556,746 |
2,512,325 |
41.6% |
Accrued interest payable |
3,450 |
3,366 |
2.5% |
Bank's liability on acceptances |
1,847 |
2,018 |
-8.5% |
FHLB advances |
150,000 |
127,546 |
17.6% |
FDIC loss sharing liability |
1,139 |
-- |
-- |
Servicing liabilities |
5,971 |
-- |
-- |
Rescinded stock obligation |
933 |
-- |
-- |
Subordinated debentures |
18,544 |
-- |
-- |
Accrued expenses and other
liabilities |
42,751 |
9,047 |
372.5% |
Total liabilities |
3,781,381 |
2,654,302 |
42.5% |
|
|
|
|
Stockholders' equity: |
|
|
|
Common stock |
257 |
257 |
0.0% |
Additional paid-in capital |
554,904 |
552,270 |
0.5% |
Accumulated other comprehensive income
(loss) |
463 |
(9,380) |
-104.9% |
Accumulated deficit |
(32,379) |
(73,212) |
-55.8% |
Less treasury stock |
(69,858) |
(69,858) |
0.0% |
Total stockholders'
equity |
453,387 |
400,077 |
13.3% |
Total liabilities and stockholders'
equity |
$ 4,234,768 |
$ 3,054,379 |
38.6% |
|
|
|
|
(1) Results for December
31, 2013 have been adjusted to reflect the adoption of FASB ASU
2014-01, Accounting for Investment in Qualified Affordable Housing
Projects. See section of Change in Accounting Principle. |
|
|
|
|
Hanmi Financial
Corporation and Subsidiaries |
Consolidated Statements
of Income (Unaudited) |
(In thousands, except share and
per share data) |
|
|
For the Year
Ended |
|
December 31, |
December 31, |
Percentage |
|
2014 |
2013 (1) |
Change |
Interest and Dividend
Income: |
|
|
|
Interest and fees on loans |
$ 122,222 |
$ 108,804 |
12.3% |
Taxable interest on investment
securities |
12,502 |
8,434 |
48.2% |
Tax-exempt interest on investment
securities |
136 |
283 |
-51.9% |
Interest on federal funds sold |
-- |
6 |
-100.0% |
Interest on interest-bearing deposits in
other banks |
107 |
209 |
-48.8% |
Dividends on FRB stock |
698 |
754 |
-7.4% |
Dividends on FHLB stock |
1,069 |
650 |
64.5% |
Total Interest and Dividend Income |
136,734 |
119,140 |
14.8% |
Interest Expense: |
|
|
|
Interest on deposits |
13,560 |
12,678 |
7.0% |
Interest on FHLB advances |
151 |
151 |
0.0% |
Interest on subordinated debentures |
235 |
678 |
-65.3% |
Interest on rescinded stock
obligation |
87 |
-- |
-- |
Total interest expense |
14,033 |
13,507 |
3.9% |
Net interest income before provision for
credit losses |
122,701 |
105,633 |
16.2% |
Negative provision for credit losses |
(6,140) |
-- |
-- |
Net interest income after provision for
credit losses |
128,841 |
105,633 |
22.0% |
Noninterest Income: |
|
|
|
Bargain purchase gain, net of deferred
taxes |
14,577 |
-- |
-- |
Service charges on deposit accounts |
11,374 |
11,307 |
0.6% |
Trade finance and other service charges
and fees |
4,946 |
4,475 |
10.5% |
Bank-owned life insurance income |
879 |
1,171 |
-24.9% |
Gain on sale of SBA loans |
3,494 |
8,000 |
-56.3% |
Net loss on sales of other loans |
-- |
(557) |
-100.0% |
Net gain on sales of investment
securities |
2,011 |
1,039 |
93.6% |
Disposition gains on PCI loans |
1,432 |
-- |
-- |
Other operating income |
3,583 |
2,465 |
45.4% |
Total noninterest income |
42,296 |
27,900 |
51.6% |
Noninterest Expense: |
|
|
|
Salaries and employee benefits |
50,177 |
35,129 |
42.8% |
Occupancy and equipment |
12,295 |
10,017 |
22.7% |
Merger and integration costs |
6,646 |
730 |
810.4% |
Unconsummated acquisition costs |
-- |
1,331 |
-100.0% |
Deposit insurance premiums and regulatory
assessments |
2,031 |
1,435 |
41.5% |
Data processing |
6,080 |
4,582 |
32.7% |
Other real estate owned expense |
(49) |
(59) |
-16.9% |
Professional fees |
7,564 |
5,335 |
41.8% |
Directors and officers liability
insurance |
696 |
876 |
-20.5% |
Supplies and communications |
2,612 |
2,155 |
21.2% |
Advertising and promotion |
3,435 |
3,411 |
0.7% |
Loan-related expense |
521 |
396 |
31.6% |
Amortization of other intangible
assets |
133 |
-- |
-- |
Other operating expenses |
6,412 |
5,679 |
12.9% |
Total noninterest expense |
98,553 |
71,017 |
38.8% |
Income from continuing operations before
provision for income taxes |
72,584 |
62,516 |
16.1% |
Provision for income taxes |
22,379 |
22,732 |
-1.6% |
Income from continuing operations,
net of taxes |
$ 50,205 |
$ 39,784 |
26.2% |
Discontinued operations |
|
|
|
Income from operations of discontinued
subsidiary (including gain on disposal of $51 in the second quarter
of 2014) |
$ 37 |
$ 115 |
-67.8% |
Income tax expense |
481 |
42 |
1045.2% |
(Loss) income from discontinued
operations |
(444) |
73 |
-708.2% |
Net income |
$ 49,761 |
$ 39,857 |
24.8% |
|
|
|
|
Basic earnings per share: |
|
|
|
Income from continuing operations, net of
taxes |
$ 1.58 |
$ 1.26 |
|
Income from discontinued operations, net
of taxes |
(0.01) |
-- |
|
Basic earnings per share |
$ 1.57 |
$ 1.26 |
|
Diluted earnings per share: |
|
|
|
Income from continuing operations, net of
taxes |
$ 1.57 |
$ 1.26 |
|
Income from discontinued operations, net
of taxes |
(0.01) |
-- |
|
Diluted earnings per share |
$ 1.56 |
$ 1.26 |
|
|
|
|
|
Weighted-average shares outstanding: |
|
|
|
Basic |
31,696,100 |
31,598,913 |
|
Diluted |
31,978,064 |
31,696,520 |
|
Common shares outstanding |
31,910,203 |
31,761,550 |
|
|
|
|
|
(1) Results for December
31, 2013 have been adjusted to reflect the adoption of FASB ASU
2014-01, Accounting for Investment in Qualified Affordable Housing
Projects. See section of Change in Accounting Principle. |
|
|
|
|
Hanmi Financial
Corporation and Subsidiaries |
Selected Financial
Data (Unaudited) |
(In thousands) |
|
|
As of or
for the Year Ended |
|
December 31, |
December 31, |
|
2014 |
2013 (3) |
Average balances: |
|
|
Average gross loans, net of deferred loan
costs (1) |
$ 2,440,682 |
$ 2,156,626 |
Average investment securities |
676,729 |
446,563 |
Average interest-earning assets |
3,163,141 |
2,687,799 |
Average assets |
3,410,751 |
2,827,508 |
Average deposits |
2,872,029 |
2,391,248 |
Average borrowings |
81,110 |
27,815 |
Average interest-bearing liabilities |
2,054,680 |
1,678,618 |
Average stockholders' equity |
425,913 |
392,601 |
Average tangible equity |
425,018 |
391,342 |
|
|
|
Performance ratios: |
|
|
Return on average assets (4) |
1.47% |
1.41% |
Pre-tax, pre-provision earnings on
average assets (4) |
1.95% |
2.21% |
Return on average stockholders' equity
(4) |
11.79% |
10.13% |
Return on average tangible equity
(4) |
11.81% |
10.17% |
Efficiency ratio |
59.73% |
53.18% |
Efficiency ratio (excluding merger and
integration costs) |
55.70% |
52.64% |
Net interest spread (2) |
3.65% |
3.64% |
Net interest margin (2) |
3.88% |
3.94% |
Average stockholders' equity to average
assets |
12.49% |
13.89% |
|
|
|
Allowance for loan
losses: |
|
|
Balance at beginning of period |
$ 57,555 |
$ 63,305 |
(Negative provision) provision charged to
operating expense |
(6,258) |
576 |
Net recoveries (charge-offs) |
1,369 |
(6,326) |
Balance at end of period |
$ 52,666 |
$ 57,555 |
|
|
|
Asset quality ratios: |
|
|
Nonperforming assets to assets (5) |
0.98% |
0.87% |
Nonperforming loans to gross loans
(5) |
0.92% |
1.16% |
Nonperforming loans to allowance for loan
losses (5) |
48.44% |
44.96% |
Net loan (recoveries) charge-offs to
average gross loans |
-0.06% |
0.29% |
Allowance for loan losses to gross
loans |
1.89% |
2.58% |
Allowance for loan losses to
nonperforming loans |
206.44% |
222.42% |
|
|
|
Allowance for off-balance sheet
items: |
|
|
Balance at beginning of period |
$ 1,248 |
$ 1,824 |
Provision (negative provision) charged to
operating expense |
117 |
(576) |
Balance at end of period |
$ 1,365 |
$ 1,248 |
|
|
|
Nonperforming assets
(5): |
|
|
Nonaccrual loans |
$ 25,511 |
$ 25,877 |
Loans 90 days or more past due and still
accruing |
-- |
-- |
Nonperforming loans |
25,511 |
25,877 |
Other real estate owned, net |
15,790 |
756 |
Nonperforming assets |
41,301 |
26,633 |
Nonperforming loans in loans held for
sale |
-- |
-- |
Nonperforming assets |
$ 41,301 |
$ 26,633 |
|
|
|
Delinquent loans, 30 to 89
days past due and still accruing |
$ 9,515 |
$ 6,756 |
|
|
|
Delinquent loans to gross loans |
0.34% |
0.30% |
|
|
|
Hanmi Financial
Corporation and Subsidiaries |
Selected Financial
Data, Continued (Unaudited) |
(In thousands) |
|
|
December 31, |
December 31, |
|
2014 |
2013 (3) |
Loan portfolio: |
|
|
Commercial real estate loans |
$ 2,375,538 |
$ 1,890,720 |
Residential loans |
135,303 |
79,078 |
Commercial and industrial loans |
249,188 |
231,786 |
Consumer loans |
27,557 |
32,505 |
Gross loans |
2,787,586 |
2,234,089 |
Deferred loan costs |
3,237 |
964 |
Gross loans, net of deferred loan
costs |
2,790,823 |
2,235,053 |
Allowance for loan losses |
(52,666) |
(57,555) |
Loans receivable, net |
2,738,157 |
2,177,498 |
Loans held for sale, at the lower of cost
or fair value |
5,451 |
-- |
Total loans receivable, net |
$ 2,743,608 |
$ 2,177,498 |
|
|
|
Loan mix: |
|
|
Real estate loans |
85.2% |
84.6% |
Residential loans |
4.9% |
3.5% |
Commercial and industrial loans |
8.9% |
10.4% |
Consumer loans |
1.0% |
1.5% |
Total loans |
100.0% |
100.0% |
|
|
|
Deposit portfolio: |
|
|
Demand-noninterest-bearing |
$ 1,022,972 |
$ 819,015 |
Savings |
120,659 |
115,371 |
Money market checking and NOW
accounts |
796,490 |
574,334 |
Time deposits of $100,000 or more |
910,340 |
506,946 |
Other time deposits |
706,285 |
496,659 |
Total deposits |
$ 3,556,746 |
$ 2,512,325 |
|
|
|
Deposit mix: |
|
|
Demand-noninterest-bearing |
28.8% |
32.5% |
Savings |
3.4% |
4.6% |
Money market checking and NOW
accounts |
22.4% |
22.9% |
Time deposits of $100,000 or more |
25.6% |
20.2% |
Other time deposits |
19.8% |
19.8% |
Total deposits |
100.0% |
100.0% |
|
|
|
Capital ratios: |
|
|
Hanmi Financial |
|
|
Total risk-based capital ratio |
15.63% |
17.53% |
Tier 1 risk-based capital ratio |
14.37% |
16.26% |
Tier 1 leverage capital ratio |
10.88% |
13.66% |
Hanmi Bank |
|
|
Total risk-based capital ratio |
15.13% |
16.84% |
Tier 1 risk-based capital ratio |
13.88% |
15.58% |
Tier 1 leverage capital ratio |
10.34% |
13.09% |
|
|
|
(1) Includes loans held for
sale |
(2) Amounts calculated on a
fully taxable equivalent basis using the current statutory federal
tax rate. |
(3) Results for December
31, 2013 have been adjusted to reflect the adoption of FASB ASU
2014-01, Accounting for Investment in Qualified Affordable Housing
Projects. See section of Change in Accounting Principle. |
(4) Amount calculated based
on net income from continuing operations. |
(5) Excludes PCI loans |
|
|
|
Hanmi Financial
Corporation and Subsidiaries |
Average Balance, Average
Yield Earned, and Average Rate Paid (Unaudited) |
(In thousands) |
|
|
For the Year
Ended |
|
December 31,
2014 |
December 31, 2013
(1) |
|
|
Interest |
Average |
|
Interest |
Average |
|
Average |
Income / |
Yield / |
Average |
Income / |
Yield / |
|
Balance |
Expense |
Rate |
Balance |
Expense |
Rate |
Assets |
|
|
|
|
|
|
Interest-earning assets: |
|
|
|
|
|
|
Gross loans, net of deferred loan
costs |
$ 2,440,682 |
$ 122,222 |
5.01% |
$ 2,156,626 |
$ 108,804 |
5.05% |
Municipal securities-taxable |
20,881 |
847 |
4.06% |
42,387 |
1,707 |
4.03% |
Municipal securities-tax exempt |
6,593 |
209 |
3.17% |
10,141 |
435 |
4.29% |
Obligations of other U.S. government
agencies |
98,387 |
1,896 |
1.93% |
90,956 |
1,733 |
1.91% |
Other debt securities |
523,076 |
9,759 |
1.87% |
274,789 |
4,994 |
1.82% |
Equity securities |
27,792 |
1,767 |
6.36% |
28,290 |
1,404 |
4.96% |
Federal funds sold |
3 |
-- |
0.00% |
1,555 |
6 |
0.39% |
Interest-bearing deposits in other
banks |
45,727 |
107 |
0.23% |
83,055 |
209 |
0.25% |
Total interest-earning assets |
3,163,141 |
136,807 |
4.33% |
2,687,799 |
119,292 |
4.44% |
|
|
|
|
|
|
|
Noninterest-earning assets: |
|
|
|
|
|
|
Cash and cash equivalents |
76,828 |
|
|
67,859 |
|
|
Allowance for loan losses |
(54,817) |
|
|
(60,119) |
|
|
Other assets |
225,599 |
|
|
131,969 |
|
|
Total noninterest-earning assets |
247,610 |
|
|
139,709 |
|
|
|
|
|
|
|
|
|
Total assets |
$ 3,410,751 |
|
|
$ 2,827,508 |
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders'
Equity |
|
|
|
|
|
|
Interest-bearing liabilities: |
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
Savings |
$ 116,254 |
$ 1,646 |
1.42% |
$ 114,968 |
$ 1,812 |
1.58% |
Money market checking and NOW
accounts |
653,793 |
3,213 |
0.49% |
567,860 |
2,912 |
0.51% |
Time deposits of $100,000 or
more |
643,017 |
4,321 |
0.67% |
546,588 |
4,094 |
0.75% |
Other time deposits |
560,506 |
4,380 |
0.78% |
421,387 |
3,860 |
0.92% |
FHLB advances |
69,781 |
151 |
0.22% |
6,573 |
151 |
2.30% |
Other Borrowings |
315 |
-- |
0.00% |
8 |
-- |
0.00% |
Rescinded stock obligation |
4,778 |
87 |
1.82% |
-- |
-- |
0.00% |
Subordinated debentures |
6,236 |
235 |
3.77% |
21,234 |
678 |
3.19% |
Total interest-bearing liabilities |
2,054,680 |
14,033 |
0.68% |
1,678,618 |
13,507 |
0.80% |
|
|
|
|
|
|
|
Noninterest-bearing liabilities: |
|
|
|
|
|
|
Demand deposits |
898,459 |
|
|
740,445 |
|
|
Other liabilities |
31,699 |
|
|
15,844 |
|
|
Total noninterest-bearing
liabilities |
930,158 |
|
|
756,289 |
|
|
|
|
|
|
|
|
|
Total liabilities |
2,984,838 |
|
|
2,434,907 |
|
|
Stockholders' equity |
425,913 |
|
|
392,601 |
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders'
equity |
$ 3,410,751 |
|
|
$ 2,827,508 |
|
|
|
|
|
|
|
|
|
Net interest income |
|
$ 122,774 |
|
|
$ 105,785 |
|
|
|
|
|
|
|
|
Cost of deposits |
|
|
0.47% |
|
|
0.53% |
Net interest spread |
|
|
3.65% |
|
|
3.64% |
Net interest margin |
|
|
3.88% |
|
|
3.94% |
|
|
|
|
|
|
|
(1) Results for December
31, 2013 have been adjusted to reflect the adoption of FASB ASU
2014-01, Accounting for Investment in Qualified Affordable Housing
Projects. See section of Change in Accounting Principle. |
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 and
per share data) |
|
|
December 31, |
December 31, |
Hanmi Financial
Corporation |
2014 |
2013 (1) |
Assets |
$ 4,234,768 |
$ 3,054,379 |
Less other intangible assets |
(2,080) |
(1,171) |
Tangible assets |
$ 4,232,688 |
$ 3,053,208 |
|
|
|
Stockholders' equity |
$ 453,387 |
$ 400,077 |
Less other intangible assets |
(2,080) |
(1,171) |
Tangible stockholders' equity |
$ 451,307 |
$ 398,906 |
|
|
|
Stockholders' equity to assets |
10.71% |
13.10% |
Tangible common equity to tangible
assets |
10.66% |
13.07% |
|
|
|
Common shares outstanding |
31,910,203 |
31,761,550 |
Tangible common equity per common
share |
$ 14.14 |
$ 12.56 |
|
|
|
(1) Results for December
31, 2013 have been adjusted to reflect the adoption of FASB ASU
2014-01, Accounting for Investment in Qualified Affordable Housing
Projects. See section of Change in Accounting Principle. |
Change in Accounting Principle
As of April 1, 2014, the Bank changed its method of accounting
for investment in low-income housing tax credit, as required by
FASB ASU 2014-01, Accounting for Investment in Qualified Affordable
Housing Projects. Previously, the investment in low-income housing
tax credit was accounted for under equity method.
Effective April 1, 2014, the Bank began recording amortization
of the initial cost of the investment in proportion to the tax
credits and other tax benefits received and recognizing the net
investment performance in the income statement as a component of
income tax expense (proportional amortization method). The Bank
recorded this change in accounting principle in accordance with ASU
2014-01 which requires retrospective application of the new
accounting principle to all practicable prior accounting periods as
if the principle had always been used. The accounting principle was
retrospectively applied from the period beginning on January 1,
1998, and to each period thereafter. Net income for the year ended
December 31, 2013 decreased by $48,000 due to this change in
accounting principle.
CONTACT: Michael McCall
EVP & Chief Financial Officer
213-427-5701
Christina Lee
FVP & Senior Strategy Officer
213-427-5631
Lasse Glassen
Investor Relations (Addo Communications)
310-829-5400
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