EXHIBIT 99.1
NARA BANCORP, INC. ANNOUNCES 28% INCREASE IN 2004 FIRST QUARTER INCOME
LOS ANGELES – April 26, 2004 – Nara Bancorp, Inc. (Nasdaq: NARA), the holding company of Nara Bank, N.A., today announced preliminary unaudited financial results for 2004 first quarter. The Company reported net income of $4.1 million, or $0.35 per diluted share, for the quarter ended March 31, 2004 compared with $3.2 million, or $0.29 per diluted share for the same quarter last year.
First Quarter Highlights:
General
| | • | | 18.66% ROE compared with 19.32% for first quarter of 2003 |
| | • | | 1.31% ROA compared with 1.32% for first quarter of 2003 |
| | • | | Declared $0.05 dividend for the first quarter of 2004 |
Balance Sheet Items – (March 31, 2004 vs. December 31, 2003)
| | • | | 20% annualized or $52.7 million loan growth to $1,054.0 million |
| | • | | 7% annualized or $19.2 million deposit growth to $1,080.7 million |
| | • | | Maintained a low 0.43% non-performing assets to total assets ratio compared to 0.44% |
Income Statement Items – (2004 First Quarter vs. 2003 First Quarter)
| | • | | 28% increase in net income to $4.1 million compared to $3.2 million |
| | • | | 21% increase in diluted EPS to $0.35 compared to $0.29 |
| | • | | 24% increase in interest income to $17.2 million compared to $13.9 million |
| | • | | 3% decrease in interest expense to $3.9 million compared to $4.1 million |
| | • | | 24% increase in non-interest income to $6.0 million compared to $4.9 million |
| | • | | 33% increase in non-interest expense to $11.0 million compared to $8.3 million |
Financial Summary
The Company reported net income of $4.1 million, or $0.35 diluted earnings per share, an increase of 28%, for the first quarter of 2004 compared with $3.2 million, or $0.29 per diluted earnings per share for the first quarter of 2003.
The resulting annualized return on average assets for the first quarter of March 2004 was 1.31% and the annualized return on average equity was 18.66%. The ROA and ROE for the first quarter of 2003 were 1.32% and 19.32%, respectively. The efficiency ratio was 56.98% in the first quarter of 2004 compared to 56.19% for the corresponding period of the previous year.
Benjamin Hong, President and Chief Executive Officer, commented, “We are very pleased with another strong financial performance during the first quarter of 2004. This is our seventh consecutive quarters of earnings growth. Our consistent and continuing earnings growth reflects our success in executing a balanced growth in all regions.
“Without our recent pretax impairment charge of $1.6 million on investment securities as a result of and decline in market value due to the interest rate environment, our first quarter efficiency ratio was below 50% compared with 56% in the first quarter of 2003. We have been successful in expanding our franchise by opening new branches in key market places while controlling our expenses. Based on our first quarter performance and our current interest rate environment, we are increasing our estimate for 2004 full year diluted EPS from our previous estimate of between $1.46 to $1.50 to between $1.48 and $1.51.”
Net Income and Net Interest Income
Net income increased by 28% to $4.1 million for the quarter ended March 31, 2004 from $3.2 million for the corresponding quarter ended March 31, 2003. Net interest income before provision for loan losses for the quarter increased by $3.4 million, or 35%, to $13.3 million compared with $9.9 million in 2003. The increase was due to an increase of $252 million in average net interest earning assets to $1,171.1 million in the first quarter of 2004 compared with $918.9 million in the first quarter of 2003. Net interest margin increased to 4.55% for the first quarter of 2004 compared with 4.30% for the same period in 2003. The increase in net interest margin is attributable to the decrease in cost of interest bearing liabilities offset by a decline in yield of the interest earning assets.
Non-interest Income
Non-interest income increased $1.1 million to $6.0 million for the quarter ended March 31, 2004 compared with $4.9 million for the corresponding quarter of 2003. The increase was primarily due to an increase in service charge on deposits, gains on sale of securities, and gains on interest rate hedge valuation offset by a decrease in gains on sale of SBA loans. During the first quarter of 2004, service charge on deposits increased $303,000, or 18%, to $2.0 million compared with $1.7 million in the first quarter of 2003. Gains on sale of securities were $305,000 during the first quarter of 2004 compared with $159,000 in the same period of 2003. Gains on interest rate hedge valuation were $720,000 during the first quarter of 2004 compared with $148,000 in the same period of 2003. Gains on sale of SBA loans decreased $262,000 to $938,000 during the first quarter of 2004 compared with $1.2 million in the same period of 2003.
Non-interest Expense
Non-interest expense for the first quarter increased by $2.7 million to $11.0 million from $8.3 million for the corresponding quarter of 2003, primarily due to a recognition of an other than temporary impairment charge of $1.6 million on investment securities and an increase in expenses related to personnel and occupancy. Personnel expenses increased $321,000 to $4.9 million due to acquisitions (Asiana Bank in August of 2003 and Korea Exchange Bank of New York, Broadway Branch in October 2003) and opening of new branches (Diamond Bar Branch in June 2003 and Wilshire Branch in August 2003) and loan production offices (Virginia in May 2003 and Denver in January 2004). Occupancy expenses also increased $334,000 to $1.4 million due to the Asiana Bank acquisition, the opening of new branches and loan production offices, and the general increases to the existing building leases.
Loan Growth
Highest growth in the loan portfolio came from the commercial real estate, which increased $46.2 million to $622.1 million at March 31, 2004 compared with December 31, 2003. Commercial loans increased $6.4 million to $245.2 million. Trade finance decreased $3.3 million to $59.5 million. SBA loans increased $2.1 million to $64.7 million. During the first quarter of 2004, the SBA department funded $17.0 million in SBA loans and sold $11.2 million. Consumer loans increased $1.6 million to $65.0 million.
Credit Quality
Non-performing assets decreased $161,000 to $5.4 million at March 31, 2004 compared with $5.6 million at December 31, 2003. Non-performing assets consist of $5.1 million in non-accrual loans, $179,000 in delinquent loans on accrual status, and $198,000 in troubled debt restructured loans. Of the $5.1 million in non-accrual loans, approximately $4.0 million are fully secured. The entire balance of the restructured loans is currently fully performing.
Net loan charge-offs were $407,000 for the quarter ended March 31, 2004 compared with net charge-offs of $351,000 for the corresponding quarter of the prior year. Annualized net loan charge-off ratio for the first quarter of 2004 was 0.16% compared with 0.05% for the corresponding quarter of 2003. The ratio of allowance for loan losses was 1.29% at March 31, 2004 compared with 1.25% at December 31, 2003.
The Company provided $1.5 million in provisions for loan losses during the first quarter of 2004 compared with $1.3 million in the corresponding quarter of 2003. Additional provisions during the quarter brought the allowance for loan losses to $13.6 million compared with $12.5 million at December 31, 2003. The increase in the allowance for loan losses reflects the growth of the loan portfolio.
Securities
Securities, including those available for sale and held to maturity, totaled $127.4 million at March 31, 2004, a decrease of $1.0 million compared with December 31, 2003. During the first quarter, the Company purchased $17.4 in securities and $16.0 million in securities were sold or matured. In March 2004, as a result of an other than temporary decline in market value due to interest rates a $1.6 million charge was taken for floating rate agency preferred stocks with a cost basis of $9.9 million.
Deposits
Deposits increased $19.2 million to $1,081 million at March 31, 2004 from December 31, 2003. The average cost of deposits for the quarter ended March 31, 2004 decreased to 1.16% from 1.21% for the quarter ended December 31, 2003.
Income Taxes
The effective tax rate for the quarter ended March 31, 2004 was 39% compared with 37% in the first quarter of 2003.
Capital
Stockholders’ equity increased by $6.7 million to $91.7 million at the end of the 2004 first quarter from $85.0 million at December 31, 2003. The Tier 1 Leverage Ratio of the Company was 8.95% at March 31, 2004 compared with 8.84% at December 31, 2003. The total risk based capital ratio was 12.00% at March 31, 2004 compared with 11.78% at December 31, 2003. The Company’s capital ratios exceed regulatory requirements, and the Company continues to be categorized as “Well Capitalized.”
2004 First Quarter Earnings Teleconference and Webcast
Nara will hold a conference call and audio webcast, Tuesday, April 27, 2004, at 8:00 a.m. Pacific time to discuss the financial results of the 2004 first quarter. The webcast will be available through a link on the Investor Relations page of the Company’s website at www.narabank.com and may be accessed through CCBN at www.companyboardroom.com. The dial in number is (800) 901 – 5217 and the passcode is 17256728. If you are unable to listen to the webcast, a replay will be available at both websites temporarily.
About Nara Bancorp, Inc.
Nara Bancorp, Inc. is the parent company of Nara Bank, N.A., which was founded in 1989. Nara Bank is a full-service commercial bank headquartered in Los Angeles with twenty-four branches and offices in the United States and one representative office in Seoul, Korea. Nara Bank operates full-service branches in California and New York with loan production offices in California, Washington, Colorado, Georgia, Illinois, New Jersey, and Virginia. Nara Bank was founded specifically to serve the needs of Korean-Americans, one of the fastest-growing Asian ethnic communities over the past decade. Presently, Nara Bank serves a diverse group of customers mirroring its communities. Nara Bank specializes in core business banking products for small and medium-sized companies with emphasis in commercial real estate and business lending, SBA lending and international trade financing. Nara Bank is a member of the FDIC and is an Equal Opportunity Lender. For more information on Nara Bank call our Los Angeles office at 213-639-1700 or New York office at 212-279-2790 or visit our website at www.narabank.com. Nara Bancorp, Inc. stock is listed on Nasdaq under the symbol “NARA.”
Forward-Looking Statements
This press release may contain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such forward-looking statements, including, but not limited to economic, competitive, governmental and technological factors affecting Nara Bancorp’s operations, markets, products, services, and pricing. Nara Bancorp undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements. Readers should carefully review the risk factors and the information that could materially affect the Nara Bancorp’s financial results, described in other documents the Company files from time to time with the Securities and Exchange Commission, including its Annual Report on Form 10-K/A for the fiscal year ended December 31, 2003, and particularly the discussion of business considerations and certain factors that may affect results of operations and stock price set forth therein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release.
CONTACT INFORMATION:
Benjamin B. Hong, President and Chief Executive Officer
213-639–1700
Timothy T. Chang, Chief Financial Officer
213-637-2596
Annie Ahn, Public Relations
213-427-6315
Nara Bancorp, Inc.
Consolidated Balance Sheets
(Dollars in Thousands) (Unaudited)
| | | | | | | | | |
| | | March 31, 2004 | | December 31, 2003 |
| | | Unaudited
| | Unaudited
|
Assets | | | | | | | | |
| Cash and due from banks | | $ | 44,323 | | | $ | 34,238 | |
| Term fed funds sold | | | 7,000 | | | | 5,000 | |
| Federal funds sold | | | 7,000 | | | | 37,200 | |
| Securities available for sale, at fair value | | | 125,383 | | | | 126,412 | |
| Securities held to maturity, at cost (fair value $2,174 at March 31, 2004 and $2,149 at December 31, 2003) | | | 2,001 | | | | 2,001 | |
| FHLB and other equity securities | | | 5,312 | | | | 5,958 | |
| Loans | | | 1,054,012 | | | | 1,001,265 | |
| Allowance for loan losses | | | (13,564 | ) | | | (12,471 | ) |
| | | |
| | | |
| |
| Net loans | | | 1,040,448 | | | | 988,794 | |
| | | |
| | | |
| |
| Accrued interest receivable | | | 4,338 | | | | 4,718 | |
| Premises and equipment, net | | | 6,606 | | | | 6,766 | |
| Goodwill, net | | | 1,909 | | | | 1,909 | |
| Intangible assets, net | | | 4,647 | | | | 4,855 | |
| Other assets | | | 29,020 | | | | 42,177 | |
| | | |
| | | |
| |
| Total assets | | $ | 1,277,987 | | | $ | 1,260,028 | |
| | | |
| | | |
| |
Liabilities | | | | | | | | |
| Deposits | | $ | 1,080,655 | | | $ | 1,061,415 | |
| Borrowings | | | 52,000 | | | | 60,000 | |
| Junior subordinated debentures | | | 39,268 | | | | 39,268 | |
| Accrued interest payable | | | 3,413 | | | | 3,291 | |
| Other liabilities | | | 10,979 | | | | 11,057 | |
| | | |
| | | |
| |
| Total liabilities | | | 1,186,315 | | | | 1,175,031 | |
| | | |
| | | |
| |
Stockholders’ Equity | | | | | | | | |
| Common stock, $0.001 par value, authorized 20,000,000 shares at March 31, 2004 and at December 31, 2003, shares issued and outstanding 11,585,089 at March 31, 2004 and 11,560,089 at December 31, 2003 | | $ | 12 | | | $ | 12 | |
| Capital surplus | | | 43,492 | | | | 43,058 | |
| Deferred compensation | | | (8 | ) | | | (10 | ) |
| Retained earnings | | | 45,555 | | | | 41,992 | |
| Accumulated other comprehensive income (loss) | | | 2,621 | | | | (55 | ) |
| | | |
| | | |
| |
| Total stockholders’ equity | | | 91,672 | | | | 84,997 | |
| | | |
| | | |
| |
| Total liabilities and stockholders’ equity | | $ | 1,277,987 | | | $ | 1,260,028 | |
| | | |
| | | |
| |
Nara Bancorp, Inc.
Consolidated Statements of Operations
(Unaudited: Dollars in Thousands, Except for Per Share Data)
| | | | | | | | | |
| | | Three Months Ended March 31,
|
| | | 2004
| | 2003
|
INCOME STATEMENT | | | | | | | | |
| Interest income: | | | | | | | | |
| Loans | | $ | 14,880 | | | $ | 11,467 | |
| Securities | | | 1,396 | | | | 1,403 | |
| Interest rate swaps | | | 905 | | | | 833 | |
| Federal funds sold and interest-bearing deposits with other financial institutions | | | 65 | | | | 238 | |
| | | |
| | | |
| |
| Total interest income | | | 17,246 | | | | 13,941 | |
| | | |
| | | |
| |
| Interest expenses: | | | | | | | | |
| Deposits | | | 3,083 | | | | 3,296 | |
| Junior subordinated debentures | | | 559 | | | | 354 | |
| Borrowings | | | 292 | | | | 419 | |
| | | |
| | | |
| |
| Total interest expense | | | 3,934 | | | | 4,069 | |
| | | |
| | | |
| |
| Net interest income | | | 13,312 | | | | 9,872 | |
| Provision for loan losses | | | 1,500 | | | | 1,300 | |
| | | |
| | | |
| |
| Net interest income after provision for loan losses | | | 11,812 | | | | 8,572 | |
| | | |
| | | |
| |
| Noninterest income: | | | | | | | | |
| Service charge on deposits | | | 2,027 | | | | 1,724 | |
| Other charges and fees | | | 2,018 | | | | 1,633 | |
| Gain on sale of loans and securities | | | 1,243 | | | | 1,359 | |
| Gain on interest rate swaps | | | 720 | | | | 148 | |
| | | |
| | | |
| |
| Total noninterest income | | | 6,008 | | | | 4,864 | |
| | | |
| | | |
| |
| Noninterest expense: | | | | | | | | |
| Personnel | | | 4,882 | | | | 4,561 | |
| Occupancy | | | 1,386 | | | | 1,052 | |
| Furniture and equipment | | | 419 | | | | 376 | |
| Advertising and marketing | | | 307 | | | | 335 | |
| Communications | | | 161 | | | | 149 | |
| Data processing | | | 572 | | | | 466 | |
| Professional fees | | | 552 | | | | 453 | |
| Office supplies and forms | | | 99 | | | | 84 | |
| Other than temporary impairment | | | 1,633 | | | | — | |
| Miscellaneous expense | | | 997 | | | | 804 | |
| | | |
| | | |
| |
| Total noninterest expense | | | 11,008 | | | | 8,280 | |
| | | |
| | | |
| |
| Income before income taxes | | | 6,812 | | | | 5,156 | |
| Income taxes provision | | | 2,669 | | | | 1,919 | |
| | | |
| | | |
| |
| Net income | | $ | 4,143 | | | $ | 3,237 | |
| | | |
| | | |
| |
| Earnings Per Share: | | | | | | | | |
| Basic | | $ | 0.36 | | | $ | 0.30 | |
| Diluted | | | 0.35 | | | | 0.29 | |
| Average Shares Outstanding | | | | | | | | |
| Basic | | | 11,578,111 | | | | 10,697,812 | |
| Diluted | | | 12,006,349 | | | | 11,225,321 | |
Nara Bancorp, Inc.
Supplemental Data
(Unaudited: Dollars in Thousands, Except for Per Share Data)
| | | | | | | | | |
| | | At or for the three months ended March 31,
|
| | | 2004
| | 2003
|
Profitability measures: | | | | | | | | |
| ROA | | | 1.31 | % | | | 1.32 | % |
| ROE | | | 18.66 | % | | | 19.32 | % |
| Net interest margin | | | 4.55 | % | | | 4.30 | % |
| Efficiency ratio | | | 56.98 | % | | | 56.19 | % |
| Yield on average interest-earning assets | | | 5.89 | % | | | 6.07 | % |
| Cost of interest bearing liabilities | | | 1.87 | % | | | 2.44 | % |
| Net charge off /Average gross loans | | | 0.16 | % | | | 0.05 | % |
| | | | | | | | | |
| | | For the three months ended
|
| | | March 31, 2004
| | March 31, 2003
|
AVERAGE BALANCES | | | | | | | | |
| Net interest earning assets | | $ | 1,171,064 | | | $ | 918,947 | |
| Gross Loans | | | 1,027,993 | | | | 739,791 | |
| Other Assets | | | 92,044 | | | | 62,252 | |
| | | |
| | | |
| |
| Total assets | | | 1,263,108 | | | | 981,199 | |
| | | |
| | | |
| |
| Deposits: | | | | | | | | |
| Noninterest bearing demand deposits | | | 319,087 | | | | 232,717 | |
| Savings and interest bearing demand deposits | | | 303,570 | | | | 222,053 | |
| Time deposits | | | 439,718 | | | | 362,581 | |
| Total deposits | | | 1,062,375 | | | | 817,351 | |
| Borrowings | | | 59,353 | | | | 64,701 | |
| Junior subordinated debentures | | | 39,268 | | | | 17,415 | |
| Interest bearing liabilities | | | 841,909 | | | | 666,750 | |
| Other Liabilities | | | 13,289 | | | | 14,7022 | |
| | | |
| | | |
| |
| Total liabilities | | | 1,174,285 | | | | 914,169 | |
| | | |
| | | |
| |
| Equity | | | 88,823 | | | | 67,030 | |
| | | | | | | | | |
| | | March 31, 2004
| | December 31, 2003
|
LOAN PORTFOLIO ANALYSIS: | | | | | | | | |
| Real Estate | | $ | 622,117 | | | $ | 575,930 | |
| Commercial | | | 245,200 | | | | 238,798 | |
| Trade Finance | | | 59,460 | | | | 62,741 | |
| SBA Loans | | | 64,651 | | | | 62,589 | |
| Consumer and Other Loans | | | 64,985 | | | | 63,371 | |
| | | |
| | | |
| |
| Loans outstanding | | | 1,056,413 | | | | 1,003,429 | |
| Unamortized Deferred Loan Fees | | | (2,400 | ) | | | (2,164 | ) |
| | | |
| | | |
| |
| Loans, net of unearned loan fees | | $ | 1,054,013 | | | $ | 1,001,265 | |
| | | |
| | | |
| |
| | | | | | | | | |
| | | March 31, 2004
| | March 31, 2003
|
ALLOWANCE FOR LOAN LOSSES: | | | | | | | | |
| Balance at Beginning of Period | | $ | 12,471 | | | $ | 8,458 | |
| Provision for Loan Losses | | | 1,500 | | | | 1,300 | |
| Recoveries | | | 310 | | | | 75 | |
| Charge Offs | | | (717 | ) | | | (426 | ) |
| | | |
| | | |
| |
| Balance at End of Period | | $ | 13,564 | | | $ | 9,407 | |
| | | |
| | | |
| |
| | | | | | | | | | | | | |
| | | March 31, 2004 | | December 31, 2003 | | March 31, 2003 |
NON-PERFORMING ASSETS: | | | | | | | | | | | | |
| Delinquent Loans on Non-Accrual Status | | $ | 5,055 | | | $ | 4,855 | | | $ | 1,540 | |
| Delinquent Loans on Accrual Status | | | 179 | | | | 209 | | | | 100 | |
| | | |
| | | |
| | | |
| |
| Total Non-Performing Loans | | $ | 5,234 | | | $ | 5,064 | | | $ | 1,640 | |
| OREO | | | — | | | | — | | | | 16 | |
| Restructured Loans | | | 198 | | | | 529 | | | | 445 | |
| | | |
| | | |
| | | |
| |
| Total Non-Performing Assets | | $ | 5,432 | | | $ | 5,593 | | | $ | 2,101 | |
| | | |
| | | |
| | | |
| |
| Non-Performing Assets/ Total Assets | | | 0.43 | % | | | 0.44 | % | | | 0.21 | % |
| Non-Performing Loans/Gross Loans | | | 0.50 | % | | | 0.51 | % | | | 0.22 | % |
| Loan Loss Allowance/ Gross Loans | | | 1.29 | % | | | 1.25 | % | | | 1.24 | % |
| Loan Loss Allowance/ Non-Performing Loans | | | 259 | % | | | 246 | % | | | 574 | % |
| | | | | | | | | |
| | | March 31, 2004 | | December 31, 2003 |
SELECTED DEPOSIT DATA: | | | | | | | | |
| Noninterest bearing demand deposits | | $ | 325,712 | | | $ | 325,647 | |
| Savings and interest bearing demand deposits | | | 296,674 | | | | 291,628 | |
| Time deposits | | | 458,267 | | | | 444,140 | |
| | | |
| | | |
| |
| Total deposit balances | | $ | 1,080,653 | | | $ | 1,061,415 | |
| | | |
| | | |
| |
| Average cost of deposit at quarter end | | | 1.16 | % | | | 1.21 | % |
| | | | | | | | | |
| | | March 31, 2004 | | December 31, 2003 |
SELECTED EQUITY DATA: | | | | | | | | |
| Total stockholders’ equity | | | 91,672 | | | | 84,997 | |
| Tier 1 risk-based capital ratio | | | 10.19 | % | | | 9.82 | % |
| Total risk-based capital ratio | | | 12.00 | % | | | 11.78 | % |
| Tier 1 leverage ratio | | | 8.95 | % | | | 8.84 | % |
| Book value per share | | $ | 7.91 | | | $ | 7.35 | |
