Exhibit 99.1
HANMI FINANCIAL CORPORATION REPORTS
RECORD NET INCOME OF $58.2 MILLION FOR 2005
EARNINGS PER SHARE INCREASE 39.3 PERCENT TO $1.17
LOS ANGELES — January 26, 2006 — Hanmi Financial Corporation (NASDAQ:HAFC), the holding company for Hanmi Bank, today reported record net income for the year ended December 31, 2005 of $58.2 million, an increase of 58.7 percent compared to 2004 net income of $36.7 million. Earnings per share were $1.17 (diluted), compared to $0.84 (diluted) in 2004.
For the three months ended December 31, 2005, net income was $14.9 million, an increase of 27.3 percent compared to net income of $11.7 million in the same period of 2004. Earnings per share were $0.30 (diluted), compared to $0.23 (diluted) in the same period of 2004.
“2005 as a whole marked what was by far the most successful year in Hanmi’s history,” said Sung Won Sohn, Ph.D., President and Chief Executive Officer. “Total assets were a record $3.41 billion, compared to $3.10 billion a year ago, and net income for the year was a record $58.2 million, compared to $36.7 million in 2004. The year is young, but current indications are that 2006 will be another record year for the Company.”
“The fourth quarter reflects a continuation of pricing pressures, in both loans and deposits, that we cited in our discussion of third-quarter results,” added Dr. Sohn. “Although strong, fourth-quarter 2005 loan originations were largely offset by a larger-than-anticipated volume of payoffs on existing loans as customers sought lower pricing at competing banks. And the increase in our cost of funds exceeded the increase in yield on the loan portfolio, with a commensurate effect on net margin.”
“But with recent changes in our management structure designed to promote stronger growth in loan originations among our branches, and with the implementation of changes in our compensation plans designed to encourage the accumulation of less costly deposits, we face the first quarter of 2006, and the year as a whole, with considerable optimism.”
FULL-YEAR HIGHLIGHTS
| • | | Net interest income before provision for credit losses for 2005 increased 34.6 percent to $137.0 million from $101.7 million for 2004. |
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| • | | The provision for credit losses was $5.4 million for 2005, compared to $2.9 million for 2004. |
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| • | | Non-interest income was $32.2 million for 2005, compared to $27.4 million for 2004. |
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| • | | Return on average assets for 2005 was 1.79 percent, compared to 1.37 percent for 2004. |
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| • | | Return on average shareholders’ equity for 2005 was 13.94 percent, compared to 12.51 percent for 2004. |
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| • | | Return on average tangible shareholders’ equity for 2005 was 29.33 percent, compared to 25.62 percent for 2004. |
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| • | | Net interest margin for 2005 increased to 4.77 percent from 4.26 percent for 2004. |
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| • | | The efficiency ratio for 2005 improved to 41.16 percent compared to 51.54 percent for 2004. |
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FOURTH QUARTER HIGHLIGHTS
| • | | Net interest income before provision for credit losses was $35.9 million in the fourth quarter of 2005, compared to $35.1 million for the third quarter of 2005 and $31.0 million for the same quarter in 2004. |
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| • | | The provision for credit losses was $1.7 million in the fourth quarter of 2005, compared to $3.2 million for the third quarter of 2005 and $1.2 million for the same quarter of 2004. |
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| • | | Non-interest income was $8.3 million in the fourth quarter of 2005, compared to $9.2 million for the third quarter of 2005 and $8.3 million for the same quarter in 2004. |
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| • | | Return on average assets for the fourth quarter of 2005 was 1.72 percent, compared to 1.80 percent for the third quarter of 2005 and 1.50 percent for the same quarter in 2004. |
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| • | | Return on average shareholders’ equity for the fourth quarter of 2005 was 13.94 percent, compared to 13.89 percent for the third quarter of 2005 and 11.80 percent for the same quarter in 2004. |
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| • | | Return on average tangible shareholders’ equity for the fourth quarter of 2005 was 28.74 percent, compared to 28.45 percent for the third quarter of 2005 and 26.91 percent for the same quarter in 2004. |
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| • | | Net interest margin for the fourth quarter of 2005 was 4.68 percent, compared to 4.78 percent for the third quarter of 2005 and 4.52 percent for the same quarter in 2004. |
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| • | | Total assets increased to $3.41 billion at December 31, 2005 from $3.37 billion at September 30, 2005 and $3.10 billion at December 31, 2004. |
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| • | | The loan portfolio increased by $10.1 million, or 0.4 percent, during the fourth quarter of 2005 to $2.47 billion from $2.46 billion at September 30, 2005. The loan portfolio totaled $2.23 billion at December 31, 2004. |
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| • | | Deposits grew by $79.3 million, or 2.9 percent, during the fourth quarter of 2005 to $2.83 billion from $2.75 billion at September 30, 2005. Deposits totaled $2.53 billion at December 31, 2004. |
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| • | | Borrowings decreased from $86.9 million at September 30, 2005 to $46.3 million at December 31, 2005. |
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| • | | The efficiency ratio for the fourth quarter of 2005 was 41.93 percent compared to 38.34 percent for the third quarter of 2005 and 49.51 percent for the same quarter in 2004. |
NET INTEREST INCOME BEFORE PROVISION FOR CREDIT LOSSES
Net interest income before provision for credit losses was $35.9 million for the fourth quarter of 2005, an increase of $747 thousand, or 2.1 percent, compared to $35.1 million in the third quarter of 2005, and an increase of $4.8 million, or 15.6 percent, compared to $31.0 million for the same quarter in 2004.
The sequential increase in net interest income was primarily due to an increase in average interest-earning assets, which increased by $125.6 million, or 4.3 percent, over the third quarter of 2005 and provided an additional $4.4 million of interest income compared with the third quarter of 2005. The majority of this growth was funded by a $167.5 million, or 6.3 percent, increase in average deposits.
The yield on the loan portfolio increased 38 basis points sequentially to 8.04 percent for the fourth quarter of 2005, while the yield on investment securities increased 20 basis points to 4.22 percent as a result of decreased premium amortization and the purchase of higher yielding agency bonds. The yield on interest-earning assets increased 28 basis points to 7.36 percent, while the Company’s cost of funds increased 44 basis points to 3.66 percent as a result of a strategic decision to match rates on time certificates of deposit offered to our customers by competitors.
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The year-over-year increase in net interest income was primarily due to an increase in average interest-earning assets, which increased by $308.3 million, or 11.3 percent, over the same quarter in 2004 and provided an additional $14.6 million of interest income compared with the same quarter in 2004. The majority of this growth was funded by a $355.2 million, or 14.4 percent, increase in average deposits.
PROVISION FOR CREDIT LOSSES
The provision for credit losses represents the charge against current earnings that is determined by management, through a disciplined credit review process, to be the amount needed to maintain an allowance that is sufficient to absorb probable loan losses inherent in the Company’s loan portfolio. The provision for credit losses was $1.7 million in the fourth quarter of 2005, compared with $3.2 million in the third quarter of 2005 and $1.2 million in the same quarter of 2004. In the fourth quarter of 2005, net charge-offs were $1.1 million, compared to $595 thousand in the third quarter of 2005 and $605 thousand in the same quarter of 2004. The decrease in provision for credit losses reflects lower loss severity associated with the $2.2 million increase in non-performing loans in the fourth quarter of 2005 compared to the loss severity levels associated with the $1.8 million increase in non-performing loans in the third quarter of 2005.
As of December 31, 2005, non-performing loans as a percentage of the total loan portfolio was 0.41 percent, compared to 0.32 percent at September 30, 2005 and 0.27 percent at December 31, 2004. As of December 31, 2005, the allowance for loan losses was 246.4 percent of non-performing loans, compared to 310.7 percent at September 30, 2005 and 377.5 percent at December 31, 2004.
NON-INTEREST INCOME
Non-interest income decreased by $888 thousand, or 9.7 percent, to $8.3 million in the fourth quarter of 2005, compared with $9.2 million in the third quarter of 2005 and increased by $48 thousand, or 0.6 percent, compared to $8.3 million in the fourth quarter of 2004. Gain on sales of loans was $945 thousand in the fourth quarter of 2005, compared to $1.7 million for the third quarter of 2005 and $1.3 million for the same quarter in 2004.
NON-INTEREST EXPENSES
Non-interest expenses increased by $1.5 million, or 9.0 percent, to $18.5 million in the fourth quarter of 2005, compared with $17.0 million for the third quarter of 2005. Salaries and employee benefits increased 8.9 percent to $10.0 million in the fourth quarter of 2005, compared with $9.2 million for the third quarter of 2005, and professional fees increased 95.7 percent to $769 thousand, compared with $393 thousand for the third quarter of 2005, due to increased regulatory compliance consulting fees.
Non-interest expenses decreased by $926 thousand, or 4.8 percent, to $18.5 million in the fourth quarter of 2005, compared with $19.5 million for the same quarter in 2004. Salaries and employee benefits decreased 4.7 percent to $10.0 million in the fourth quarter of 2005, compared with $10.5 million (which included non-recurring severance expense) for the same quarter in 2004.
The efficiency ratio (non-interest expenses divided by the sum of net interest income before provision for credit losses and non-interest income) for the fourth quarter of 2005 was 41.93 percent, compared to 38.34 percent in the third quarter of 2005 and 49.51 percent for the same quarter in 2004.
INCOME TAXES
The provision for income taxes was $9.1 million at a 38.0 percent effective tax rate for the fourth quarter of 2005, compared to $9.2 million at a 38.1 percent effective tax rate for the third quarter of 2005 and $7.0 million at a 37.4 percent effective tax rate for the same quarter in 2004.
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FINANCIAL POSITION
Total assets were $3.41 billion at December 31, 2005, an increase of $45.9 million, or 1.4 percent, compared to the September 30, 2005 balance of $3.37 billion, and an increase of $310.1 million, or 10.0 percent, compared to the December 31, 2004 balance of $3.10 billion.
At December 31, 2005, net loans totaled $2.47 billion, an increase of $10.1 million, or 0.4 percent, from $2.46 billion at September 30, 2005. Real estate loans increased by $7.1 million to $974.2 million at December 31, 2005, compared to $967.0 million at September 30, 2005. Commercial loans grew by $2.8 million to $1.43 billion at December 31, 2005, compared to $1.43 billion at September 30, 2005. Gross loan production increased 32.2 percent over the prior year. However, aggressive pricing on the part of competitors drove increased payoffs, limiting loan portfolio growth to 10.5 percent following the sale of SBA loans with a principal balance of $50.6 million.
The growth in total assets was funded by increases in customer deposits of $79.3 million, up 2.9 percent to $2.83 billion at December 31, 2005, compared to $2.75 billion at September 30, 2005. These rising balances included increases in time deposits of $100 thousand or more of $72.0 million, up 6.6 percent to $1.16 billion, other time deposits of $19.5 million, up 7.6 percent to $277.8 million, and money market checking accounts, up 3.8 percent to $526.2 million, partially offset by decreases in noninterest-bearing accounts of $25.8 million, down 3.4 percent to $738.6 million, and savings accounts of $5.8 million, down 4.5 percent to $121.6 million.
The Company’s borrowings mostly take the form of advances from the Federal Home Loan Bank of San Francisco (“FHLB”). Advances from the FHLB were $43.5 million at December 31, 2005, compared to $68.6 million at September 30, 2005 and $66.4 million at December 31, 2004.
ASSET QUALITY
Total non-performing assets, including accruing loans 90 days or more past due, non-accrual loans and other real estate owned (“OREO”) assets, increased by $2.2 million to $10.1 million at December 31, 2005 from $7.9 million at September 30, 2005. Non-performing loans as a percentage of gross loans increased to 0.41 percent at December 31, 2005 from 0.32 percent at September 30, 2005.
At December 31, 2005, accruing loans 90 days or more past due were $9 thousand, down $261 thousand from $270 thousand at September 30, 2005. At December 31, 2005, non-accrual loans were $10.1 million, up $2.5 million from $7.6 million at September 30, 2005. The increase reflects increased delinquent loans, which totaled $21.2 million at December 31, 2005, compared to $17.9 million at September 30, 2005, an increase of $3.3 million. There were no OREO assets at December 31, 2005 or September 30, 2005.
At December 31, 2005, the allowance for loan losses was $25.0 million, and represented management’s best estimate of the amount needed to maintain an allowance that management believes should be sufficient to absorb probable loan losses inherent in its loan portfolio in conformity with generally accepted accounting principles. In addition, the Company maintained a liability for off-balance sheet exposure totaling $2.1 million at December 31, 2005. The allowance for loan losses represented 1.00 percent of gross loans and 246.4 percent of non-performing loans at December 31, 2005. The comparable ratios were 0.99 percent of gross loans and 310.7 percent of non-performing loans at September 30, 2005.
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 22 full-service offices in Los Angeles, Orange, San Francisco, Santa Clara and San Diego counties. Hanmi Bank specializes in commercial, SBA, trade finance and consumer lending, and is a recognized community leader. Hanmi Bank’s mission is to provide a full range of quality products and premier services to its customers and to maximize shareholder value. Additional information is available atwww.hanmifinancial.com.
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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: the Company’s or Bank’s inability to satisfy the requirements of any supervisory letters, agreements or understandings with their regulators, or inability to address any of the deficiencies described therein; further supervisory or enforcement actions of the Bank’s or Company’s regulators; general economic and business conditions in those areas in which the Company operates; demographic changes; competition for loans and deposits; fluctuations in interest rates; risks of natural disasters related to the Company’s real estate portfolio; risks associated with SBA loans; changes in governmental regulation; credit quality; the availability of capital to fund the expansion of the Company’s business; and changes in securities markets. In addition, Hanmi sets forth certain risks in its reports filed with the Securities and Exchange Commission, including the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005 and its Annual Report on Form 10-K for the fiscal year ended December 31, 2004, which could cause actual results to differ from those projected. These forward-looking statements should not be relied on as representing our view as of any subsequent date and the Company undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date they were made.
CONTACT
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| Hanmi Financial Corporation | | |
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| | | Michael J. Winiarski | | Stephanie Yoon |
| | | Chief Financial Officer | | Investor Relations |
| | | (213) 368-3200 | | (213) 427-5631 |
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HANMI FINANCIAL CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS(UNAUDITED)
(Dollars in Thousands)
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| | | December 31, | | | September 30, | | | % | | | December 31, | | | % | |
| | | 2005 | | | 2005 | | | Change | | | 2004 | | | Change | |
ASSETS | | | | | | | | | | | | | | | | | | | | |
| Cash and Cash Equivalents | | $ | 163,477 | | | $ | 174,233 | | | | (6.2 | )% | | $ | 127,164 | | | | 28.6 | % |
| FRB and FHLB Stock | | | 24,587 | | | | 24,251 | | | | 1.4 | % | | | 21,961 | | | | 12.0 | % |
| Investment Securities | | | 443,912 | | | | 398,274 | | | | 11.5 | % | | | 418,973 | | | | 6.0 | % |
| Loans: | | | | | | | | | | | | | | | | | | | | |
| Loans, Net of Deferred Loan Fees | | | 2,494,043 | | | | 2,483,471 | | | | 0.4 | % | | | 2,257,544 | | | | 10.5 | % |
| Allowance for Loan Losses | | | (24,963 | ) | | | (24,523 | ) | | | 1.8 | % | | | (22,702 | ) | | | 10.0 | % |
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| Net Loans | | | 2,469,080 | | | | 2,458,948 | | | | 0.4 | % | | | 2,234,842 | | | | 10.5 | % |
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| Customers’ Liability on Acceptances | | | 8,432 | | | | 9,360 | | | | (9.9 | )% | | | 4,579 | | | | 84.1 | % |
| Premises and Equipment, Net | | | 20,784 | | | | 20,426 | | | | 1.8 | % | | | 19,691 | | | | 5.6 | % |
| Accrued Interest Receivable | | | 14,120 | | | | 12,157 | | | | 16.1 | % | | | 10,029 | | | | 40.8 | % |
| Deferred Income Taxes | | | 9,651 | | | | 8,159 | | | | 18.3 | % | | | 5,009 | | | | 92.7 | % |
| Servicing Asset | | | 3,910 | | | | 3,716 | | | | 5.2 | % | | | 3,846 | | | | 1.7 | % |
| Goodwill | | | 209,058 | | | | 209,058 | | | | — | | | | 209,643 | | | | (0.3 | )% |
| Core Deposit Intangible | | | 8,691 | | | | 9,336 | | | | (6.9 | )% | | | 11,476 | | | | (24.3 | )% |
| Bank-Owned Life Insurance | | | 22,713 | | | | 22,498 | | | | 1.0 | % | | | 21,868 | | | | 3.9 | % |
| Other Assets | | | 15,837 | | | | 17,972 | | | | (11.9 | )% | | | 15,107 | | | | 4.8 | % |
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Total Assets | | $ | 3,414,252 | | | $ | 3,368,388 | | | | 1.4 | % | | $ | 3,104,188 | | | | 10.0 | % |
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LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | | | | | | | | | | | | | |
| Liabilities: | | | | | | | | | | | | | | | | | | | | |
| Deposits: | | | | | | | | | | | | | | | | | | | | |
| Noninterest-Bearing | | $ | 738,618 | | | $ | 764,380 | | | | (3.4 | )% | | $ | 729,583 | | | | 1.2 | % |
| Interest-Bearing | | | 2,087,496 | | | | 1,982,390 | | | | 5.3 | % | | | 1,799,224 | | | | 16.0 | % |
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| Total Deposits | | | 2,826,114 | | | | 2,746,770 | | | | 2.9 | % | | | 2,528,807 | | | | 11.8 | % |
| Accrued Interest Payable | | | 11,911 | | | | 9,010 | | | | 32.2 | % | | | 7,100 | | | | 67.8 | % |
| Acceptances Outstanding | | | 8,432 | | | | 9,360 | | | | (9.9 | )% | | | 4,579 | | | | 84.1 | % |
| Other Borrowed Funds | | | 46,331 | | | | 86,931 | | | | (46.7 | )% | | | 69,293 | | | | (33.1 | )% |
| Junior Subordinated Debentures | | | 82,406 | | | | 82,406 | | | | — | | | | 82,406 | | | | — | |
| Other Liabilities | | | 12,281 | | | | 17,905 | | | | (31.4 | )% | | | 12,093 | | | | 1.6 | % |
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| Total Liabilities | | | 2,987,475 | | | | 2,952,382 | | | | 1.2 | % | | | 2,704,278 | | | | 10.5 | % |
| Shareholders’ Equity | | | 426,777 | | | | 416,006 | | | | 2.6 | % | | | 399,910 | | | | 6.7 | % |
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Total Liabilities and Shareholders’ Equity | | $ | 3,414,252 | | | $ | 3,368,388 | | | | 1.4 | % | | $ | 3,104,188 | | | | 10.0 | % |
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HANMI FINANCIAL CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME(UNAUDITED)
(Dollars in Thousands, Except Per Share Data)
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| | | For the Three Months Ended | |
| | | Dec. 31, | | | Sept. 30, | | | % | | | Dec. 31, | | | % | |
| | | 2005 | | | 2005 | | | Change | | | 2004 | | | Change | |
| INTEREST INCOME: | | | | | | | | | | | | | | | | | | | | |
| Interest and Fees on Loans | | $ | 50,581 | | | $ | 47,454 | | | | 6.6 | % | | $ | 37,149 | | | | 36.2 | % |
| Interest on Investments | | | 4,848 | | | | 4,277 | | | | 13.4 | % | | | 4,478 | | | | 8.3 | % |
| Interest on Federal Funds Sold | | | 910 | | | | 221 | | | | 311.8 | % | | | 83 | | | | 996.4 | % |
| | | | | | | | | | | | | | | | |
| Total Interest Income | | | 56,339 | | | | 51,952 | | | | 8.4 | % | | | 41,710 | | | | 35.1 | % |
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| INTEREST EXPENSE: | | | | | | | | | | | | | | | | | | | | |
| Interest on Deposits | | | 18,381 | | | | 14,655 | | | | 25.4 | % | | | 8,743 | | | | 110.2 | % |
| Interest on Borrowings | | | 2,090 | | | | 2,176 | | | | (4.0 | )% | | | 1,944 | | | | 7.5 | % |
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| Total Interest Expense | | | 20,471 | | | | 16,831 | | | | 21.6 | % | | | 10,687 | | | | 91.6 | % |
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| NET INTEREST INCOME BEFORE PROVISION FOR CREDIT LOSSES | | | 35,868 | | | | 35,121 | | | | 2.1 | % | | | 31,023 | | | | 15.6 | % |
| Provision for Credit Losses | | | 1,652 | | | | 3,157 | | | | (47.7 | )% | | | 1,157 | | | | 42.8 | % |
| | | | | | | | | | | | | | | | |
| NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES | | | 34,216 | | | | 31,964 | | | | 7.0 | % | | | 29,866 | | | | 14.6 | % |
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| NON-INTEREST INCOME: | | | | | | | | | | | | | | | | | | | | |
| Service Charges on Deposit Accounts | | | 4,125 | | | | 4,059 | | | | 1.6 | % | | | 4,053 | | | | 1.8 | % |
| Trade Finance Fees | | | 1,126 | | | | 1,162 | | | | (3.1 | )% | | | 956 | | | | 17.8 | % |
| Remittance Fees | | | 577 | | | | 527 | | | | 9.5 | % | | | 504 | | | | 14.5 | % |
| Other Service Charges and Fees | | | 548 | | | | 680 | | | | (19.4 | )% | | | 391 | | | | 40.2 | % |
| Bank-Owned Life Insurance Income | | | 215 | | | | 215 | | | | — | | | | 218 | | | | (1.4 | )% |
| Increase in Fair Value of Derivatives | | | 140 | | | | 176 | | | | (20.5 | )% | | | 213 | | | | (34.3 | )% |
| Other Income | | | 636 | | | | 648 | | | | (1.9 | )% | | | 576 | | | | 10.4 | % |
| Gain on Sales of Loans | | | 945 | | | | 1,712 | | | | (44.8 | )% | | | 1,343 | | | | (29.6 | )% |
| Gain on Sales of Securities Available for Sale | | | — | | | | 21 | | | | (100.0 | )% | | | 10 | | | | (100.0 | )% |
| | | | | | | | | | | | | | | | |
| Total Non-Interest Income | | | 8,312 | | | | 9,200 | | | | (9.7 | )% | | | 8,264 | | | | 0.6 | % |
| | | | | | | | | | | | | | | | |
| NON-INTEREST EXPENSES: | | | | | | | | | | | | | | | | | | | | |
| Salaries and Employee Benefits | | | 9,972 | | | | 9,155 | | | | 8.9 | % | | | 10,461 | | | | (4.7 | )% |
| Occupancy and Equipment | | | 2,397 | | | | 2,179 | | | | 10.0 | % | | | 2,282 | | | | 5.0 | % |
| Data Processing | | | 1,181 | | | | 1,253 | | | | (5.7 | )% | | | 1,214 | | | | (2.7 | )% |
| Supplies and Communications | | | 689 | | | | 559 | | | | 23.3 | % | | | 474 | | | | 45.4 | % |
| Professional Fees | | | 769 | | | | 393 | | | | 95.7 | % | | | 585 | | | | 31.5 | % |
| Advertising and Promotion | | | 930 | | | | 726 | | | | 28.1 | % | | | 948 | | | | (1.9 | )% |
| Amortization of Core Deposit Intangible | | | 645 | | | | 694 | | | | (7.1 | )% | | | 687 | | | | (6.1 | )% |
| Decrease in Fair Value of Embedded Option | | | — | | | | 173 | | | | — | | | | — | | | | — | |
| Other Operating Expenses | | | 1,942 | | | | 1,859 | | | | 4.5 | % | | | 2,800 | | | | (30.6 | )% |
| | | | | | | | | | | | | | | | |
| Total Non-Interest Expenses | | | 18,525 | | | | 16,991 | | | | 9.0 | % | | | 19,451 | | | | (4.8 | )% |
| | | | | | | | | | | | | | | | |
| INCOME BEFORE PROVISION FOR INCOME TAXES | | | 24,003 | | | | 24,173 | | | | (0.7 | )% | | | 18,679 | | | | 28.5 | % |
| Provision for Income Taxes | | | 9,113 | | | | 9,204 | | | | (1.0 | )% | | | 6,979 | | | | 30.6 | % |
| | | | | | | | | | | | | | | | |
NET INCOME | | $ | 14,890 | | | $ | 14,969 | | | | (0.5 | )% | | $ | 11,700 | | | | 27.3 | % |
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EARNINGS PER SHARE: | | | | | | | | | | | | | | | | | | | | |
| Basic | | $ | 0.31 | | | $ | 0.30 | | | | 3.3 | % | | $ | 0.24 | | | | 29.2 | % |
| Diluted | | $ | 0.30 | | | $ | 0.30 | | | | — | | | $ | 0.23 | | | | 30.4 | % |
WEIGHTED-AVERAGE SHARES OUTSTANDING: | | | | | | | | | | | | | | | | | | | | |
| Basic | | | 48,548,081 | | | | 49,144,508 | | | | (1.2 | )% | | | 49,170,938 | | | | (1.3 | )% |
| Diluted | | | 49,318,671 | | | | 49,914,432 | | | | (1.2 | )% | | | 50,377,919 | | | | (2.1 | )% |
SHARES OUTSTANDING AT PERIOD-END | | | 48,658,798 | | | | 48,606,245 | | | | 0.1 | % | | | 49,330,704 | | | | (1.4 | )% |
- 7 -
HANMI FINANCIAL CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME(UNAUDITED)
(Dollars in Thousands, Except Per Share Data)
| | | | | | | | | | | | | |
| | | For the Year Ended December 31, | |
| | | | | | | | | | | % | |
| | | 2005 | | | 2004 | | | Change | |
| | | | | | | | | | | | | |
| INTEREST INCOME: | | | | | | | | | | | | |
| Interest and Fees on Loans | | $ | 179,011 | | | $ | 116,811 | | | | 53.2 | % |
| Interest on Investments | | | 18,507 | | | | 17,372 | | | | 6.5 | % |
| Interest on Federal Funds Sold | | | 1,589 | | | | 183 | | | | 768.3 | % |
| | | | | | | | | | |
| Total Interest Income | | | 199,107 | | | | 134,366 | | | | 48.2 | % |
| | | | | | | | | | |
| INTEREST EXPENSE: | | | | | | | | | | | | |
| Interest on Deposits | | | 54,192 | | | | 26,268 | | | | 106.3 | % |
| Interest on Borrowings | | | 7,919 | | | | 6,349 | | | | 24.7 | % |
| | | | | | | | | | |
| Total Interest Expense | | | 62,111 | | | | 32,617 | | | | 90.4 | % |
| | | | | | | | | | |
| NET INTEREST INCOME BEFORE PROVISION FOR CREDIT LOSSES | | | 136,996 | | | | 101,749 | | | | 34.6 | % |
| Provision for Credit Losses | | | 5,395 | | | | 2,907 | | | | 85.6 | % |
| | | | | | | | | | |
| NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES | | | 131,601 | | | | 98,842 | | | | 33.1 | % |
| | | | | | | | | | |
| NON-INTEREST INCOME: | | | | | | | | | | | | |
| Service Charges on Deposit Accounts | | | 15,782 | | | | 14,441 | | | | 9.3 | % |
| Trade Finance Fees | | | 4,269 | | | | 4,044 | | | | 5.6 | % |
| Remittance Fees | | | 2,122 | | | | 1,653 | | | | 28.4 | % |
| Other Service Charges and Fees | | | 2,496 | | | | 1,486 | | | | 68.0 | % |
| Bank-Owned Life Insurance Income | | | 845 | | | | 731 | | | | 15.6 | % |
| Increase in Fair Value of Derivatives | | | 1,105 | | | | 232 | | | | 376.3 | % |
| Other Income | | | 2,459 | | | | 1,681 | | | | 46.3 | % |
| Gain on Sales of Loans | | | 3,021 | | | | 2,997 | | | | 0.8 | % |
| Gain on Sales of Securities Available for Sale | | | 117 | | | | 134 | | | | (12.7 | )% |
| | | | | | | | | | |
| Total Non-Interest Income | | | 32,216 | | | | 27,399 | | | | 17.6 | % |
| | | | | | | | | | |
| NON-INTEREST EXPENSES: | | | | | | | | | | | | |
| Salaries and Employee Benefits | | | 36,839 | | | | 33,540 | | | | 9.8 | % |
| Occupancy and Equipment | | | 8,978 | | | | 8,098 | | | | 10.9 | % |
| Data Processing | | | 4,844 | | | | 4,540 | | | | 6.7 | % |
| Supplies and Communications | | | 2,556 | | | | 2,433 | | | | 5.1 | % |
| Professional Fees | | | 2,201 | | | | 2,068 | | | | 6.4 | % |
| Advertising and Promotion | | | 2,913 | | | | 3,001 | | | | (2.9 | )% |
| Amortization of Core Deposit Intangible | | | 2,785 | | | | 1,872 | | | | 48.8 | % |
| Decrease in Fair Value of Embedded Option | | | 748 | | | | — | | | | — | |
| Other Operating Expenses | | | 7,778 | | | | 8,961 | | | | (13.2 | )% |
| Merger-Related Expenses | | | (509 | ) | | | 2,053 | | | | (124.8 | )% |
| | | | | | | | | | |
| Total Non-Interest Expenses | | | 69,133 | | | | 66,566 | | | | 3.9 | % |
| | | | | | | | | | |
| INCOME BEFORE PROVISION FOR INCOME TAXES | | | 94,684 | | | | 59,675 | | | | 58.7 | % |
| Provision for Income Taxes | | | 36,455 | | | | 22,975 | | | | 58.7 | % |
| | | | | | | | | | |
NET INCOME | | $ | 58,229 | | | $ | 36,700 | | | | 58.7 | % |
| | | | | | | | | | |
| |
EARNINGS PER SHARE: | | | | | | | | | | | | |
| Basic | | $ | 1.18 | | | $ | 0.87 | | | | 35.6 | % |
| Diluted | | $ | 1.17 | | | $ | 0.84 | | | | 39.3 | % |
WEIGHTED-AVERAGE SHARES OUTSTANDING: | | | | | | | | | | | | |
| Basic | | | 49,174,885 | | | | 42,268,964 | | | | 16.3 | % |
| Diluted | | | 49,942,356 | | | | 43,517,257 | | | | 14.8 | % |
SHARES OUTSTANDING AT PERIOD-END | | | 48,658,798 | | | | 49,330,704 | | | | (1.4 | )% |
- 8 -
HANMI FINANCIAL CORPORATION AND SUBSIDIARY
SELECTED FINANCIAL DATA(UNAUDITED)
(Dollars in Thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | For the Three Months Ended | | | For the Year Ended | |
| | | Dec. 31, | | | Sept. 30, | | | % | | | Dec. 31, | | | % | | | Dec. 31, | | | Dec. 31, | | | % | |
| | | 2005 | | | 2005 | | | Change | | | 2004 | | | Change | | | 2005 | | | 2004 | | | Change | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
AVERAGE BALANCES: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Average Gross Loans, Net of Deferred Loan Fees | | $ | 2,495,309 | | | $ | 2,456,033 | | | | 1.6 | % | | $ | 2,269,170 | | | | 10.0 | % | | $ | 2,382,230 | | | $ | 1,933,761 | | | | 23.2 | % |
| Average Interest-Earning Assets | | | 3,038,836 | | | | 2,913,198 | | | | 4.3 | % | | | 2,730,506 | | | | 11.3 | % | | | 2,871,564 | | | | 2,387,412 | | | | 20.3 | % |
| Average Total Assets | | | 3,429,114 | | | | 3,299,551 | | | | 3.9 | % | | | 3,105,266 | | | | 10.4 | % | | | 3,249,190 | | | | 2,670,701 | | | | 21.7 | % |
| Average Deposits | | | 2,818,099 | | | | 2,650,581 | | | | 6.3 | % | | | 2,462,909 | | | | 14.4 | % | | | 2,632,254 | | | | 2,129,724 | | | | 23.6 | % |
| Average Interest-Bearing Liabilities | | | 2,218,902 | | | | 2,075,091 | | | | 6.9 | % | | | 1,950,290 | | | | 13.8 | % | | | 2,046,227 | | | | 1,687,688 | | | | 21.2 | % |
| Average Shareholders’ Equity | | | 423,702 | | | | 427,535 | | | | (0.9 | )% | | | 394,488 | | | | 7.4 | % | | | 417,813 | | | | 293,313 | | | | 42.4 | % |
| Average Tangible Shareholders’ Equity | | | 205,576 | | | | 208,729 | | | | (1.5 | )% | | | 172,988 | | | | 18.8 | % | | | 198,527 | | | | 143,262 | | | | 38.6 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
PERFORMANCE RATIOS: (Annualized) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Return on Average Assets | | | 1.72 | % | | | 1.80 | % | | | | | | | 1.50 | % | | | | | | | 1.79 | % | | | 1.37 | % | | | | |
| Return on Average Shareholders’ Equity | | | 13.94 | % | | | 13.89 | % | | | | | | | 11.80 | % | | | | | | | 13.94 | % | | | 12.51 | % | | | | |
| Return on Average Tangible Shareholders’ Equity | | | 28.74 | % | | | 28.45 | % | | | | | | | 26.91 | % | | | | | | | 29.33 | % | | | 25.62 | % | | | | |
| Efficiency Ratio * | | | 41.93 | % | | | 38.34 | % | | | | | | | 49.51 | % | | | | | | | 41.16 | % | | | 51.54 | % | | | | |
| Net Interest Margin | | | 4.68 | % | | | 4.78 | % | | | | | | | 4.52 | % | | | | | | | 4.77 | % | | | 4.26 | % | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
ALLOWANCE FOR LOAN LOSSES: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance at the Beginning of Period | | $ | 24,523 | | | $ | 22,049 | | | | 11.2 | % | | $ | 22,150 | | | | 10.7 | % | | $ | 22,702 | | | $ | 13,349 | | | | 70.1 | % |
| Acquired in PUB Acquisition | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 10,566 | | | | (100.0 | )% |
| Provision Charged to Operating Expense | | | 1,546 | | | | 3,069 | | | | (49.6 | )% | | | 1,157 | | | | 33.6 | % | | | 5,065 | | | | 2,492 | | | | 103.3 | % |
| Charge-Offs, Net of Recoveries | | | (1,106 | ) | | | (595 | ) | | | 85.9 | % | | | (605 | ) | | | 82.8 | % | | | (2,804 | ) | | | (3,705 | ) | | | (24.3 | )% |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance at the End of Period | | | $24,963 | | | $ | 24,523 | | | | 1.8 | % | | $ | 22,702 | | | | 10.0 | % | | $ | 24,963 | | | $ | 22,702 | | | | 10.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Allowance for Loan Losses to Total Gross Loans | | | 1.00 | % | | | 0.99 | % | | | | | | | 1.00 | % | | | | | | | 1.00 | % | | | 1.00 | % | | | | |
Allowance for Loan Losses to Total Non-Performing Loans | | | 246.4 | % | | | 310.7 | % | | | | | | | 377.5 | % | | | | | | | 246.4 | % | | | 377.5 | % | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
ALLOWANCE FOR OFF-BALANCE SHEET ITEMS: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance at the Beginning of Period | | $ | 2,024 | | | $ | 1,936 | | | | 4.5 | % | | $ | 1,800 | | | | 12.4 | % | | $ | 1,800 | | | $ | 1,385 | | | | 30.0 | % |
| Provision Charged to Operating Expense | | | 106 | | | | 88 | | | | 20.5 | % | | | — | | | | — | | | | 330 | | | | 415 | | | | (20.5 | )% |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance at the End of Period | | $ | 2,130 | | | $ | 2,024 | | | | 5.2 | % | | $ | 1,800 | | | | 18.3 | % | | $ | 2,130 | | | $ | 1,800 | | | | 18.3 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | |
| * | | Excluding reversal of merger-related expenses totaling $509,000 for the year ended December 31, 2005. |
- 9 -
HANMI FINANCIAL CORPORATION AND SUBSIDIARY
SELECTED FINANCIAL DATA(UNAUDITED) (Continued)
(Dollars in Thousands)
| | | | | | | | | | | | | | | | | | | | | |
| | | Dec. 31, | | | Sept. 30, | | | % | | | Dec. 31, | | | % | |
| | | 2005 | | | 2005 | | | Change | | | 2004 | | | Change | |
| | | | | | | | | | | | | | | | | | | | | |
NON-PERFORMING ASSETS: | | | | | | | | | | | | | | | | | | | | |
| Non-Accrual Loans | | $ | 10,122 | | | $ | 7,622 | | | | 32.8 | % | | $ | 5,806 | | | | 74.3 | % |
| Loans 90 Days or More Past Due and Still Accruing | | | 9 | | | | 270 | | | | (96.7 | )% | | | 208 | | | | (95.7 | )% |
| | | | | | | | | | | | | | | | |
| Total Non-Performing Loans | | | 10,131 | | | | 7,892 | | | | 28.4 | % | | | 6,014 | | | | 68.5 | % |
| Real Estate Owned | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | |
| Total Non-Performing Assets | | $ | 10,131 | | | $ | 7,892 | | | | 28.4 | % | | $ | 6,014 | | | | 68.5 | % |
| | | | | | | | | | | | | | | | |
| |
Total Non-Performing Loans/Total Gross Loans | | | 0.41 | % | | | 0.32 | % | | | | | | | 0.27 | % | | | | |
Total Non-Performing Assets/Total Assets | | | 0.30 | % | | | 0.23 | % | | | | | | | 0.19 | % | | | | |
| | | | | | | | | | | | | | | | | | | | | |
LOAN PORTFOLIO: | | | | | | | | | | | | | | | | | | | | |
| Real Estate Loans | | $ | 974,172 | | | $ | 967,025 | | | | 0.7 | % | | $ | 956,846 | | | | 1.8 | % |
| Commercial and Industrial Loans | | | 1,431,492 | | | | 1,428,708 | | | | 0.2 | % | | | 1,218,269 | | | | 17.5 | % |
| Consumer Loans | | | 92,154 | | | | 91,799 | | | | 0.4 | % | | | 87,526 | | | | 5.3 | % |
| | | | | | | | | | | | | | | | |
| Total Gross Loans | | | 2,497,818 | | | | 2,487,532 | | | | 0.4 | % | | | 2,262,641 | | | | 10.4 | % |
| Deferred Loan Fees, Net | | | (3,775 | ) | | | (4,061 | ) | | | (7.0 | )% | | | (5,097 | ) | | | (25.9 | )% |
| Allowance for Loan Losses | | | (24,963 | ) | | | (24,523 | ) | | | 1.8 | % | | | (22,702 | ) | | | 10.0 | % |
| | | | | | | | | | | | | | | | |
| Loans Receivable, Net | | $ | 2,469,080 | | | $ | 2,458,948 | | | | 0.4 | % | | $ | 2,234,842 | | | | 10.5 | % |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
LOAN MIX: | | | | | | | | | | | | | | | | | | | | |
| Real Estate Loans | | | 39.00 | % | | | 38.87 | % | | | | | | | 42.29 | % | | | | |
| Commercial and Industrial Loans | | | 57.31 | % | | | 57.43 | % | | | | | | | 53.84 | % | | | | |
| Consumer Loans | | | 3.69 | % | | | 3.70 | % | | | | | | | 3.87 | % | | | | |
| | | | | | | | | | | | | | | | | | |
| Total Gross Loans | | | 100.00 | % | | | 100.00 | % | | | | | | | 100.00 | % | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
DEPOSIT PORTFOLIO: | | | | | | | | | | | | | | | | | | | | |
| Demand — Noninterest-Bearing | | $ | 738,618 | | | $ | 764,380 | | | | (3.4 | )% | | $ | 729,583 | | | | 1.2 | % |
| Money Market | | | 526,171 | | | | 506,843 | | | | 3.8 | % | | | 613,662 | | | | (14.3 | )% |
| Savings | | | 121,574 | | | | 127,349 | | | | (4.5 | )% | | | 153,862 | | | | (21.0 | )% |
| Time Deposits of $100,000 or More | | | 1,161,950 | | | | 1,089,917 | | | | 6.6 | % | | | 756,580 | | | | 53.6 | % |
| Other Time Deposits | | | 277,801 | | | | 258,281 | | | | 7.6 | % | | | 275,120 | | | | 1.0 | % |
| | | | | | | | | | | | | | | | |
| Total Deposits | | $ | 2,826,114 | | | $ | 2,746,770 | | | | 2.9 | % | | $ | 2,528,807 | | | | 11.8 | % |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
DEPOSIT MIX: | | | | | | | | | | | | | | | | | | | | |
| Demand — Noninterest-Bearing | | | 26.14 | % | | | 27.83 | % | | | | | | | 28.85 | % | | | | |
| Money Market | | | 18.62 | % | | | 18.45 | % | | | | | | | 24.27 | % | | | | |
| Savings | | | 4.30 | % | | | 4.64 | % | | | | | | | 6.08 | % | | | | |
| Time Deposits of $100,000 or More | | | 41.11 | % | | | 39.68 | % | | | | | | | 29.92 | % | | | | |
| Other Time Deposits | | | 9.83 | % | | | 9.40 | % | | | | | | | 10.88 | % | | | | |
| | | | | | | | | | | | | | | | | | |
| Total Deposits | | | 100.00 | % | | | 100.00 | % | | | | | | | 100.00 | % | | | | |
| | | | | | | | | | | | | | | | | | |
- 10 -
