Exhibit 99.1
Nara Bancorp Reports First Quarter Financial Results
Quarterly Highlights:
- Core Deposits Increased $274 Million
- Allowance for Loan Losses Increased to 2.42% of Total Loans
- Senior Management Team Strengthened
LOS ANGELES--(BUSINESS WIRE)--April 20, 2009--Nara Bancorp, Inc. (the “Company”) (NASDAQ: NARA), the holding company of Nara Bank (the “Bank”) reported a net loss of $3.2 million, or ($0.16) per diluted share, for first quarter 2009, compared to net income of $5.8 million, or $0.22 per diluted share, for first quarter 2008, and net loss of $9.9 million, or ($0.39) per diluted share, for fourth quarter 2008.
Min Kim, President and Chief Executive Officer, said, “As expected, we continued to see elevated levels of charge-offs and provision for loan losses, as the recessionary conditions are having a negative impact on both commercial business and commercial real estate borrowers. We are aggressively managing our problem assets and have allocated increased resources to our credit administration department to help bring about satisfactory resolutions more quickly. Despite the credit losses we have incurred, we continue to have strong capital levels and a substantial allowance for loan losses, which position us well to absorb any inherent losses without impairing the fundamental health and soundness of the bank.
“Very positively, we increased our core deposits by $274 million during the first quarter, partially due to successful marketing programs targeting non-Korean-American customers. As a result, our loan-to-deposit ratio declined significantly to under 100 percent at first quarter end. Not only are we very pleased with the substantial progress we have made to improve our liquidity, the growth in deposits provides the Company with much greater financial flexibility going forward.
“While the current environment remains challenging, we are committed to investing in the business to enhance our position as a leader in the Korean-American banking industry. With the additions of Bonnie Lee as Chief Operating Officer and Mark Lee as Chief Credit Officer, we have substantially strengthened the depth and quality of our management team, ” said Ms. Kim.
Financial Highlights
| | | 2009 First Quarter | | 2008 First Quarter | | 2008 Fourth Quarter |
| | | (Dollars in thousands) |
| Net Income (Loss) | | $ | (3,180 | ) | | $ | 5,773 | | | $ | (9,853 | ) |
Diluted Earnings (Loss) Per Share | | $ | (0.16 | ) | | $ | 0.22 | | | $ | (0.39 | ) |
| Net interest income | | $ | 20,421 | | | $ | 24,610 | | | $ | 22,702 | |
| Net interest margin | | | 3.19 | % | | | 4.15 | % | | | 3.71 | % |
| Non-interest income | | $ | 4,383 | | | $ | 4,599 | | | $ | 2,058 | |
| Non-interest expense | | $ | 15,248 | | | $ | 14,431 | | | $ | 13,747 | |
| Net Loans receivable | | $ | 2,037,724 | | | $ | 2,050,735 | | | $ | 2,055,024 | |
| Deposits | | $ | 2,098,312 | | | $ | 1,854,349 | | | $ | 1,938,603 | |
| Non-performing loans | | $ | 41,337 | | | $ | 19,080 | | | $ | 37,580 | |
| ALLL to total loans | | | 2.42 | % | | | 1.11 | % | | | 2.07 | % |
| ALLL to non-performing loans | | | 122 | % | | | 121 | % | | | 116 | % |
| Provision for loan losses | | $ | 15,670 | | | $ | 4,993 | | | $ | 28,000 | |
| Efficiency ratio | | | 61.47 | % | | | 49.41 | % | | | 55.52 | % |
Operating Results for First Quarter 2009
Net Interest Income and Net Interest Margin. First quarter 2009 net interest income before provision for loan losses was $20.4 million, a decrease of 17% from first quarter 2008. The decline in net interest income was due to the decline in net interest margin and a shift in asset allocation from loans to investment securities and liquid assets. The change in asset mix was part of a plan to improve liquidity and strengthen the balance sheet. First quarter 2009 net interest margin (net interest income divided by average interest-earning assets) decreased 96 basis points to 3.19% from 4.15% in the first quarter of 2008, due to the fed fund rate cuts by the Federal Reserve of 200 basis points during the twelve months ended March 31, 2009.
The weighted average yield on the loan portfolio for first quarter 2009 decreased 184 basis points to 6.01% from 7.85% for the same period last year. The decrease was the result of the prime rate-based portion of the loan portfolio repricing downward as market interest rates continued to decline due to further reductions in interest rates by the Federal Reserve throughout 2008. The prime rate decreased 200 basis points, consistent with the fed funds rate cuts. This was partially mitigated by the 49% of fixed rate loans in the portfolio at March 31, 2009. At March 31, 2008, fixed rate loans were 55% of the loan portfolio. The weighted average yield on the variable rate and fixed rate portfolios (excluding loan discount accretion) at March 31, 2009 was 4.52% and 7.63%, respectively, compared to 6.63% and 7.69% at March 31, 2008.
The weighted average yield on securities available for sale for first quarter 2009 decreased 94 basis points to 4.08% from 5.02% for the same period last year. The decrease was primarily due to variable rate agency CMO investment securities repricing downward as one month LIBOR rates declined. The variable rate agency CMO portfolio was $96.4 million at March 31, 2009, compared to $78.9 million at March 31, 2008.
The weighted average cost of deposits for first quarter 2009 decreased 101 basis points to 2.42% from 3.43% for the same period last year. The cost of time deposits decreased 175 basis points to 2.81% from 4.56%. Due to the lag in repricing deposits, the year over year decline in loan yield exceeded the year over year decline in the cost of deposits by 83 basis points during first quarter 2009.
The weighted average cost of FHLB advances for first quarter 2009 decreased 26 basis points to 3.51% from 3.77% for first quarter 2008, reflecting the decline in market interest rates for short-term advances.
Following are the weighted average data at March 31, 2009 and 2008:
| | | March 31, |
| | | 2009 | | 2008 |
| Weighted average loan portfolio yield (excluding discounts) | | 6 | .06% | | 7 | .21% |
| Weighted average securities available-for-sale portfolio yield | | 4 | .25% | | 4 | .89% |
| Weighted average cost of deposits | | 2 | .42% | | 3 | .09% |
| Weighted average cost of total interest-bearing deposits | | 2 | .83% | | 3 | .82% |
| Weighted average cost of FHLB advances | | 3 | .70% | | 3 | .62% |
Sequentially, first quarter 2009 net interest income before provision for loan losses decreased $2.3 million, or 10%, from fourth quarter 2008. The decrease was attributable to a decline in net interest margin resulting from the repricing of quarterly adjusting variable rate loans, after the 175 basis points in rate cuts by the Federal Reserve during the fourth quarter of 2008. The net interest margin decreased 52 basis points to 3.19% for first quarter 2009 from 3.71% for fourth quarter 2008. In addition, the build up of short-term liquidity, supported by the growth in core deposits affected both the net interest margin as well as net interest income.
Non-accrual loan interest income recognized or (reversed) was ($394) thousand, $159 thousand, and ($283) thousand for first quarter 2009, first quarter 2008, and fourth quarter 2008, respectively. Excluding this effect, the net interest margin for first quarter 2009, first quarter 2008, and fourth quarter 2008 was 3.26%, 4.12% and 3.75%, respectively.
Prepayment penalty income for first quarter 2009, first quarter 2008 and fourth quarter 2008 was $147 thousand, $221 thousand and $433 thousand, respectively. Excluding the effects of both non-accrual loan interest income and prepayment penalty income, the net interest margin for first quarter 2009, first quarter 2008 and fourth quarter 2008 was 3.23%, 4.09% and 3.68%, respectively.
Non-interest Income. First quarter 2009 non-interest income was $4.4 million, a decrease of $216 thousand, or 5% compared to first quarter 2008. The decrease is due to a decline in net gains on sales of SBA and other loans and losses on sales of OREO, offset by an increase in net gains on sales of securities available-for-sale.
Net gains on sales of SBA and other loans were $450 thousand for first quarter 2009, a decrease of 44% from $800 thousand for first quarter 2008. Included in the results for first quarter 2009 was a net gain of $387 thousand recognized from the sale of a non-SBA problem loan that had been written down during fourth quarter 2008 and $63 thousand due to loan discounts recognized on loans that were paid off. During first quarter 2008, the Company had net gains of $715 thousand on the sales of SBA loans, and net gains of $85 thousand from the sale of other loans.
There were no sales of SBA loans during first quarter 2009 compared to $24.4 million during first quarter 2008.
Net gains on sales of securities available-for-sale were $785 thousand for first quarter 2009, an increase of 68% from $467 thousand for first quarter 2008. During first quarter 2009, a total of $43 million in available-for-sale MBS securities were sold, compared to $54 million during first quarter 2008. The securities sold during the quarter had faster prepayment characteristics, and the proceeds were reinvested into securities with slower prepayment characteristics.
Sequentially, non-interest income increased 113% from fourth quarter 2008. The increase was primarily due to the net gains recognized from the sale of a non-SBA problem loan and securities available-for-sale as discussed above, as well as a decrease in the loss recognized from the mark-to-market valuation adjustment on interest rate swaps. Net losses recognized from the mark-to-market valuation adjustment and amortization on interest rate swaps was $117 thousand during first quarter 2009, compared to $800 thousand during fourth quarter 2008.
Non-interest Expense. First quarter 2009 non-interest expense was $15.2 million, an increase of 6% from $14.4 million for the same period last year. Salaries and employee benefits expense decreased by 16% over the same quarter of the prior year, primarily due to decreases in bonus expense and in the number of full-time equivalent employees to 367 at March 31, 2009 from 409 at March 31, 2008.
Occupancy expense increased by 12% due to higher depreciation and amortization costs for the new branches opened in 2008. Professional fees increased by 27% over the same quarter of the prior year, primarily due to higher legal fees.
Other non-interest expense increased 81% to $3.6 million for first quarter 2009, compared to $2.0 million for the same period last year. The increase is primarily due to a 143% increase in FDIC insurance premiums to $750 thousand for first quarter 2009, and credit related expenses of $1.5 million, which included expenses related to OREO.
Sequentially, non-interest expense for first quarter 2009 increased by 11% from $13.7 million in fourth quarter 2008, due to increased credit related expenses, including an allowance for doubtful SBA receivables, and legal fees, offset by lower compensation costs.
Income Taxes. The effective income tax benefit was 48% for first quarter 2009 compared to the effective income tax rate of 41% for first quarter 2008 and tax benefit of 42% for fourth quarter 2008. The higher tax benefit of 48% for the first quarter 2009 was due to higher tax credits in that period.
Balance Sheet Summary
At March 31, 2009, total assets were $2.83 billion, an increase of 23% (annualized) from $2.67 billion at December 31, 2008, and an increase of 11% from $2.55 billion at March 31, 2008. The increases in liquid assets and investments accounted for the asset increases.
Gross loans receivable were $2.09 billion at March 31, 2009, a slight decrease from $2.10 billion at December 31, 2008. Loan growth was impacted by management’s strategy to reduce the loan to deposit ratio as well as to stricter loan underwriting criteria. New loan production was $62.8 million during first quarter 2009, compared to $81.3 million during fourth quarter 2008 and $176.4 million during the first quarter 2008. Loan pay-offs, paydowns, amortization and other changes totaled $73.1 million during first quarter 2009, compared to $80.2 million during fourth quarter 2008 and $84.0 million during first quarter 2008.
SBA loan originations were $570 thousand during first quarter 2009 compared to $8.0 million during fourth quarter 2008 and $21.4 million during first quarter 2008. There were no sales of SBA loans during first quarter 2009 and fourth quarter 2008, compared to $24.4 million of SBA loan sales during first quarter 2008.
Total deposits were $2.10 billion at March 31, 2009, an increase of 33.0% (annualized) from $1.94 billion at December 31, 2008 and a 13% increase from $1.85 billion at March 31, 2008. During first quarter 2009, core deposits increased $274 million, which was offset by a $78 million decrease in brokered deposits and a $36 million decrease in retail jumbo CDs. The growth in core deposits was the result of successful marketing to non-Korean customers.
FHLB advances were $350.0 million at both March 31, 2009 and December 31, 2008 and $393.0 million at March 31, 2008. Advances are primarily long-term advances with an expected average remaining term to maturity of 3.2 years.
Provision and Allowance for Loan Losses
The Company recorded a provision for loan losses of $15.7 million in first quarter 2009, compared to $5.0 million for the same period of the prior year and $28.0 million in fourth quarter 2008. Although net charge-offs for first quarter 2009 declined to $8.6 million from $12.5 million for fourth quarter 2008, an increase in impaired loans, additional loan downgrades and higher loss migration factors resulted in an increase in the allowance for loan losses.
Total watch list loans, defined as special mention and classified assets, increased to $174.1 million at March 31, 2009, from $136.7 million at December 31, 2008. Special mention loans decreased to $68.4 million at March 31, 2009, from $71.2 million at December 31, 2008. Substandard loans increased to $98.4 million at March 31, 2009, from $55.6 million at December 31, 2008.
Non-performing loans at March 31, 2009 were $41.3 million, or 1.98% of total loans, compared to $37.6 million, or 1.79% of total loans at December 31, 2008. Inflows to non-performing loans during first quarter 2009 included eight loans totaling approximately $8.0 million.
Non-performing assets at March 31, 2009 were $77.3 million, or 2.74% of total assets, compared to $43.8 million, or 1.64% of total assets at December 31, 2008. The increase was due to higher levels of accruing troubled debt restructurings and other real estate owned.
Net loan charge-offs during first quarter 2009 were $8.6 million, or 1.63% of average loans on an annualized basis, compared to $12.4 million, or 2.37% of average loans on an annualized basis, during fourth quarter 2008. First quarter 2009 charge-offs included partial charge-offs, aggregating $4.1 million, on three loans.
The remaining $4.5 million of charge-offs in first quarter 2009 primarily consisted of loans to retail businesses and consumer auto loans, averaging approximately $64 thousand per loan.
The allowance for loan losses at March 31, 2009 was $50.5 million, or 2.42% of gross loans receivable, compared to $43.4 million, or 2.07% of gross loan receivable at December 31, 2008. The allowance for loan losses to non-performing loans was 122% and 116% at March 31, 2009 and December 31, 2008, respectively. The allowance for loan losses reflects an increase in specific allowances for impaired loans, as well as general allowances, based on quantitative and qualitative factors.
Impaired loans at March 31, 2009 were $82.9 million, compared to $50.3 million at December 31, 2008. The increase during the quarter included 4 loans aggregating $21.3 million. Specific reserves for impaired loans were $20.9 million, or 25.2% of the aggregate gross loan amount at March 31, 2009. Excluding specific allowances for impaired loans, the allowance coverage on non-impaired loans was 1.49%, compared to 1.41% at December 31, 2008.
Capital
At March 31, 2009, the Company continued to exceed the regulatory capital requirements to be classified as a “well-capitalized institution.” The Leverage Ratio was 11.94% at March 31, 2009 compared to 12.61% at December 31, 2008 and 10.56% at March 31, 2008. The Tier 1 Risk-based Ratio was 14.03% at March 31, 2009, compared to 14.32% at December 31, 2008 and 11.56% at March 31, 2008. The Total Risk-based Ratio was 15.30% at March 31, 2009, compared to 15.58% at December 31, 2008 and 12.59% at March 31, 2008.
At March 31, 2009, tangible common equity was 7.74% of tangible assets, slightly lower compared to December 31, 2008 due to a 6% increase in assets. Despite the net loss for the quarter, tangible common equity remained at a high level due to the $3.2 million increase in the fair value of securities available-for-sale, net of tax, which is part of Other Comprehensive Income in stockholders’ equity.
Outlook
Commenting on the outlook for the remainder of 2009, Ms. Kim said, “Although we expect that credit costs will remain elevated in the near-term, we believe we have positioned the Bank to generate improvements in pre-provision earnings going forward. With the improved financial flexibility in our balance sheet, we intend to increase our loan production and fund this growth with core deposits. For the full year, we are targeting 5% loan growth. During the second half of the year, we also expect an increase in our net interest margin, as deposits reprice lower and we see improvements in loan pricing.
“As mentioned before, we strengthened our senior management team with two highly regarded veterans of the banking industry. We believe these investments in top quality executives, as well as our commitment to providing top quality service to our customers, will position Nara Bancorp for sustained growth and profitability as economic conditions improve,” said Ms. Kim.
Conference Call and Webcast
A conference call with simultaneous webcast to discuss the Company’s first quarter 2009 financial results will be held tomorrow, April 21, 2009 at 9:30 a.m. Pacific / 12:30 p.m. Eastern. Interested participants and investors may access the conference call by dialing 800-762-8779 (domestic) or 480-248-5081 (international). There will also be a live webcast of the call available at the Investor Relations section of Nara Bank’s web site at www.narabank.com.
After the live webcast, a replay will remain available in the Investor Relations section of Nara Bancorp’s web site. A replay of the call will be available at 800-406-7325 (domestic) or 303-590-3030 (international) through April 28, 2009; the passcode is 4055954.
About Nara Bancorp, Inc.
Nara Bancorp, Inc. is the parent company of Nara Bank, which was founded in 1989. Nara Bank is a full-service community bank headquartered in Los Angeles, with 21 branches and 4 loan production offices in the United States. Nara Bank operates full-service branches in California, New York and New Jersey, with loan production offices in California, Nevada, Texas, Georgia, 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, 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 contains forward-looking statements including statements about future operations and projected full-year financial results 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 the Company’s operations, markets, products, services, and pricing. Readers should carefully review the risk factors and the information that could materially affect the Company’s financial results and business, described in documents the Company files from time to time with the Securities and Exchange Commission, including its quarterly reports on Form 10-Q and Annual Reports on Form 10-K, 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. The Company undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements.
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| Nara Bancorp, Inc. |
| Consolidated Statements of Financial Condition |
| Unaudited (Dollars in Thousands) |
| Nara Bancorp, Inc. |
| | | | | | | | | | |
| Assets | | | 3/31/2009 | | | | 12/31/2008 | | | % change | | | | 3/31/2008 | | | % change | |
| | | | | | | | | | |
| Cash and due from banks | | $ | 44,705 | | | $ | 30,057 | | | 49 | % | | $ | 41,353 | | | 8 | % |
| Federal funds sold | | | 150,000 | | | | 19,000 | | | 689 | % | | | 21,000 | | | 614 | % |
| Securities available for sale, at fair value | | | 430,219 | | | | 406,586 | | | 6 | % | | | 273,779 | | | 57 | % |
| Federal Home Loan Bank and Federal Reserve Bank stock | | | 22,255 | | | | 22,255 | | | 0 | % | | | 26,419 | | | -16 | % |
| Loans held for sale, at the lower of cost or market | | | 10,965 | | | | 9,821 | | | 12 | % | | | 7,571 | | | 45 | % |
| Loans receivable | | | 2,088,228 | | | | 2,098,443 | | | 0 | % | | | 2,073,851 | | | 1 | % |
| Allowance for loan losses | | | (50,504 | ) | | | (43,419 | ) | | 16 | % | | | (23,116 | ) | | 118 | % |
| Net loans receivable | | | 2,037,724 | | | | 2,055,024 | | | -1 | % | | | 2,050,735 | | | -1 | % |
| Accrued interest receivable | | | 8,276 | | | | 8,168 | | | 1 | % | | | 9,014 | | | -8 | % |
| Premises and equipment, net | | | 11,749 | | | | 11,987 | | | -2 | % | | | 11,293 | | | 4 | % |
| Bank owned life insurance | | | 23,402 | | | | 23,349 | | | 0 | % | | | 23,096 | | | 1 | % |
| Goodwill | | | 2,509 | | | | 2,509 | | | 0 | % | | | 2,509 | | | 0 | % |
| Other intangible assets, net | | | 1,474 | | | | 1,627 | | | -9 | % | | | 2,132 | | | -31 | % |
| Other assets | | | 82,259 | | | | 81,671 | | | 1 | % | | | 77,212 | | | 7 | % |
| Total assets | | $ | 2,825,537 | | | $ | 2,672,054 | | | 6 | % | | $ | 2,546,113 | | | 11 | % |
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| Liabilities | | | | | | | | | | |
| | | | | | | | | | |
| Deposits | | $ | 2,098,312 | | | $ | 1,938,603 | | | 8 | % | | $ | 1,854,349 | | | 13 | % |
| Borrowings from Federal Home Loan Bank | | | 350,000 | | | | 350,000 | | | 0 | % | | | 393,000 | | | -11 | % |
| Subordinated debentures | | | 39,268 | | | | 39,268 | | | 0 | % | | | 39,268 | | | 0 | % |
| Accrued interest payable | | | 9,273 | | | | 8,549 | | | 8 | % | | | 10,182 | | | -9 | % |
| Other liabilities | | | 38,999 | | | | 45,681 | | | -15 | % | | | 21,920 | | | 78 | % |
| Total liabilities | | | 2,535,852 | | | | 2,382,101 | | | 6 | % | | | 2,318,719 | | | 9 | % |
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| Stockholders' Equity | | | | | | | | | | |
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| Preferred stock, $0.001 par value; authorized 10,000,000 undesignated shares; issued and outstanding 67,000, 67,000 and 0 shares of Fixed Rate Cumulative Perpetual Preferred Stock, Series A with a liquidation preference of $1,000 per share at March 31, 2009, December 31, 2008 and March 31, 2008, respectively | | | 67,000 | | | | 67,000 | | | 0 | % | | | - | | | 100 | % |
| Preferred stock discount | | | (4,434 | ) | | | (4,664 | ) | | -5 | % | | | - | | | 100 | % |
| Common stock, $0.001 par value; authorized, 40,000,000 shares; issued and outstanding, 26,256,960, 26,246,560, and 26,193,560 shares at March 31, 2009, December 31, 2008 and March 31, 2008, respectively | | | 26 | | | | 26 | | | 0 | % | | | 26 | | | 0 | % |
| Common stock warrant | | | 4,766 | | | | 4,766 | | | 0 | % | | | - | | | 100 | % |
| Capital surplus | | | 82,669 | | | | 82,077 | | | 1 | % | | | 80,567 | | | 3 | % |
| Retained earnings | | | 137,643 | | | | 141,890 | | | -3 | % | | | 147,544 | | | -7 | % |
| Accumulated other comprehensive income (loss), net | | | 2,015 | | | | (1,142 | ) | | -276 | % | | | (743 | ) | | -371 | % |
| Total stockholders' equity | | | 289,685 | | | | 289,953 | | | 0 | % | | | 227,394 | | | 27 | % |
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| Total liabilities and stockholders' equity | | $ | 2,825,537 | | | $ | 2,672,054 | | | 6 | % | | $ | 2,546,113 | | | 11 | % |
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| Nara Bancorp, Inc. |
| Consolidated Statements of Income (Loss) |
| Unaudited (Dollars in Thousands, Except for Per Share Data) |
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| | Three Months Ended, |
| | 3/31/2009 | | 3/31/2008 | | % change | | 12/31/2008 | | % change |
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| Interest income: | | | | | | | | | | |
| Interest and fees on loans | | $ | 31,672 | | | $ | 40,364 | | -22 | % | | $ | 35,308 | | | -10 | % |
| Interest on securities | | | 4,320 | | | | 3,668 | | 18 | % | | | 3,819 | | | 13 | % |
| Interest on federal funds sold and other investments | | | 49 | | | | 328 | | -85 | % | | | (36 | ) | | -236 | % |
| Total interest income | | | 36,041 | | | | 44,360 | | -19 | % | | | 39,091 | | | -8 | % |
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| Interest expense: | | | | | | | | | | |
| Interest on deposits | | | 11,825 | | | | 15,206 | | -22 | % | | | 12,347 | | | -4 | % |
| Interest on other borrowings | | | 3,795 | | | | 4,544 | | -16 | % | | | 4,042 | | | -6 | % |
| Total interest expense | | | 15,620 | | | | 19,750 | | -21 | % | | | 16,389 | | | -5 | % |
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| Net interest income before provision for loan losses | | | 20,421 | | | | 24,610 | | -17 | % | | | 22,702 | | | -10 | % |
| Provision for loan losses | | | 15,670 | | | | 4,993 | | 214 | % | | | 28,000 | | | -44 | % |
| Net interest (expense) income after provision for loan losses | | | 4,751 | | | | 19,617 | | -76 | % | | | (5,298 | ) | | -190 | % |
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| Non-interest income: | | | | | | | | | | |
| Service fees on deposit accounts | | | 1,769 | | | | 1,821 | | -3 | % | | | 1,940 | | | -9 | % |
| Net gains on sales of SBA and other loans | | | 450 | | | | 800 | | -44 | % | | | 87 | | | 417 | % |
| Net gains on sales of securities available-for-sale | | | 785 | | | | 467 | | 68 | % | | | - | | | 0 | % |
| Net losses on sales of OREO | | | (130 | ) | | | - | | 100 | % | | | (1,003 | ) | | 100 | % |
| Other income and fees | | | 1,509 | | | | 1,511 | | 0 | % | | | 1,034 | | | 46 | % |
| Total non-interest income | | | 4,383 | | | | 4,599 | | -5 | % | | | 2,058 | | | 113 | % |
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| Non-interest expense: | | | | | | | | | | |
| Salaries and employee benefits | | | 6,443 | | | | 7,636 | | -16 | % | | | 6,840 | | | -6 | % |
| Occupancy | | | 2,426 | | | | 2,163 | | 12 | % | | | 2,469 | | | -2 | % |
| Furniture and equipment | | | 695 | | | | 709 | | -2 | % | | | 691 | | | 1 | % |
| Advertising and marketing | | | 457 | | | | 550 | | -17 | % | | | 360 | | | 27 | % |
| Data processing and communications | | | 901 | | | | 830 | | 9 | % | | | 794 | | | 13 | % |
| Professional fees | | | 678 | | | | 532 | | 27 | % | | | 380 | | | 78 | % |
| Other | | | 3,648 | | | | 2,011 | | 81 | % | | | 2,213 | | | 65 | % |
| Total non-interest expense | | | 15,248 | | | | 14,431 | | 6 | % | | | 13,747 | | | 11 | % |
| Income (loss) before income taxes | | | (6,114 | ) | | | 9,785 | | -162 | % | | | (16,987 | ) | | -64 | % |
| Income tax provision (benefit) | | | (2,934 | ) | | | 4,012 | | -173 | % | | | (7,134 | ) | | -59 | % |
| Net income (loss) | | $ | (3,180 | ) | | $ | 5,773 | | -155 | % | | $ | (9,853 | ) | | -68 | % |
| Dividends and discount accretion on preferred stock | | $ | (1,068 | ) | | $ | - | | 100 | % | | $ | (474 | ) | | 100 | % |
| Net income (loss) available to common stockholders | | $ | (4,248 | ) | | $ | 5,773 | | -174 | % | | $ | (10,327 | ) | | -59 | % |
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| | | | | | | | | | |
| Earnings (Loss) Per Common Share: | | | | | | | | | | |
| Basic | | $ | (0.16 | ) | | $ | 0.22 | | | | $ | (0.39 | ) | | |
| Diluted | | $ | (0.16 | ) | | $ | 0.22 | | | | $ | (0.39 | ) | | |
| | | | | | | | | | |
| Average Shares Outstanding | | | | | | | | | | |
| Basic | | | 26,250,258 | | | | 26,193,672 | | | | | 26,213,085 | | | |
| Diluted | | | 26,250,258 | | | | 26,400,802 | | | | | 26,213,085 | | | |
| Nara Bancorp, Inc. |
| Supplemental Data |
| Unaudited (Dollars in Thousands, Except for Per Share Data) |
| (Annualized) At or for the Three Months Ended, |
| Profitability measures: | 3/31/2009 | | 3/31/2008 | | 12/31/2008 |
| ROA | -0 | .47% | | 0 | .93% | | -1 | .54% |
| ROE | -4 | .36% | | 10 | .15% | | -15 | .06% |
| Net interest margin | 3 | .19% | | 4 | .15% | | 3 | .71% |
| Efficiency ratio | 61 | .47% | | 49 | .41% | | 55 | .52% |
| | | | | | |
| | Three Months Ended | | Three Months Ended | | Three Months Ended |
| | 3/31/2009 | | 3/31/2008 | | 12/31/2008 |
| | | | | | | | | | | | | | | | | | |
| | | | Interest | | Annualized | | | | Interest | | Annualized | | | | Interest | | Annualized |
| | Average | | Income/ | | Average | | Average | | Income/ | | Average | | Average | | Income/ | | Average |
| | Balance | | Expense | | Yield/Cost | | Balance | | Expense | | Yield/Cost | | Balance | | Expense | | Yield/Cost |
| | (Dollars in thousands) | | (Dollars in thousands) | | (Dollars in thousands) |
| INTEREST EARNING ASSETS: | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| Gross loans, includes loans held for sale | | $ | 2,107,685 | | $ | 31,672 | | | 6.01 | % | | $ | 2,055,535 | | $ | 40,364 | | 7.85 | % | | $ | 2,092,641 | | $ | 35,308 | | | 6.75 | % |
| Securities available for sale | | | 423,907 | | | 4,320 | | | 4.08 | % | | | 292,283 | | | 3,668 | | 5.02 | % | | | 328,601 | | | 3,819 | | | 4.65 | % |
| FRB and FHLB stock and other investments | | | 22,880 | | | 48 | | | 0.84 | % | | | 22,940 | | | 316 | | 5.51 | % | | | 22,705 | | | (46 | ) | | -0.81 | % |
| Federal funds sold | | | 2,267 | | | 1 | | | 0.18 | % | | | 1,506 | | | 12 | | 3.19 | % | | | 5,528 | | | 10 | | | 0.72 | % |
| Total interest earning assets | | $ | 2,556,739 | | $ | 36,041 | | | 5.64 | % | | $ | 2,372,264 | | $ | 44,360 | | 7.48 | % | | $ | 2,449,475 | | $ | 39,091 | | | 6.38 | % |
| | | | | | | | | | | | | | | | | | |
| INTEREST BEARING LIABILITIES: | | | | | | | | | | | | | | | | | | |
| Deposits: | | | | | | | | | | | | | | | | | | |
| Demand, interest-bearing | | $ | 331,870 | | $ | 2,265 | | | 2.73 | % | | $ | 246,120 | | $ | 1,912 | | 3.11 | % | | $ | 319,318 | | $ | 2,413 | | | 3.02 | % |
| Savings | | | 111,233 | | | 1,008 | | | 3.62 | % | | | 136,596 | | | 1,308 | | 3.83 | % | | | 115,245 | | | 1,043 | | | 3.62 | % |
| Time deposits: | | | | | | | | | | | | | | | | | | |
| $100,000 or more | | | 579,333 | | | 3,544 | | | 2.45 | % | | | 606,746 | | | 7,515 | | 4.95 | % | | | 661,172 | | | 4,844 | | | 2.93 | % |
| Other | | | 637,226 | | | 5,008 | | | 3.14 | % | | | 443,570 | | | 4,471 | | 4.03 | % | | | 465,236 | | | 4,047 | | | 3.48 | % |
| Total time deposits | | | 1,216,559 | | | 8,552 | | | 2.81 | % | | | 1,050,316 | | | 11,986 | | 4.56 | % | | | 1,126,408 | | | 8,891 | | | 3.16 | % |
| Total interest bearing deposits | | | 1,659,662 | | | 11,825 | | | 2.85 | % | | | 1,433,032 | | | 15,206 | | 4.24 | % | | | 1,560,971 | | | 12,347 | | | 3.16 | % |
| FHLB advances | | | 368,584 | | | 3,237 | | | 3.51 | % | | | 401,148 | | | 3,783 | | 3.77 | % | | | 371,038 | | | 3,385 | | | 3.65 | % |
| Other borrowings | | | 39,734 | | | 558 | | | 5.62 | % | | | 37,618 | | | 761 | | 8.09 | % | | | 39,268 | | | 657 | | | 6.69 | % |
| Total interest bearing liabilities | | | 2,067,980 | | $ | 15,620 | | | 3.02 | % | | | 1,871,798 | | $ | 19,750 | | 4.22 | % | | | 1,971,277 | | $ | 16,389 | | | 3.33 | % |
| Non-interest bearing demand deposits | | | 291,324 | | | | | | | 338,043 | | | | | | | 240,142 | | | | |
| Total funding liabilities / cost of funds | | $ | 2,359,304 | | | | 2.65 | % | | $ | 2,209,841 | | | | 3.57 | % | | $ | 2,211,419 | | | | 2.96 | % |
| Net interest income / net interest spread | | | | $ | 20,421 | | | 2.62 | % | | | | $ | 24,610 | | 3.26 | % | | | | $ | 22,702 | | | 3.05 | % |
| Net interest margin | | | | | | 3.19 | % | | | | | | 4.15 | % | | | | | | 3.71 | % |
Net interest margin, excluding effect of non-accrual loan income(expense) | | | | | | 3.26 | % | | | | | | 4.12 | % | | | | | | 3.75 | % |
Net interest margin, excluding effect of non-accrual loan income(expense) and prepayment fee income | | | | | | 3.23 | % | | | | | | 4.09 | % | | | | | | 3.68 | % |
| | | | | | | | | | | | | | | | | | |
| Non-accrual loan income (reversed) recognized | | | | $ | (394 | ) | | | | | | $ | 159 | | | | | | $ | (283 | ) | | |
| Prepayment fee income received | | | | | 147 | | | | | | | | 221 | | | | | | | 433 | | | |
| Net | | | | $ | (247 | ) | | | | | | $ | 380 | | | | | | $ | 150 | | | |
| | | | | | | | | | | | | | | | | | |
| Cost of deposits: | | | | | | | | | | | | | | | | | | |
| Non-interest bearing demand deposits | | $ | 291,324 | | $ | - | | | | | $ | 338,043 | | $ | - | | | | $ | 240,142 | | $ | - | | | |
| Interest bearing deposits | | | 1,659,662 | | | 11,825 | | | 2.85 | % | | | 1,433,032 | | | 15,206 | | 4.24 | % | | | 1,560,971 | | | 12,347 | | | 3.16 | % |
| Total deposits | | $ | 1,950,986 | | $ | 11,825 | | | 2.42 | % | | $ | 1,771,075 | | $ | 15,206 | | 3.43 | % | | $ | 1,801,113 | | $ | 12,347 | | | 2.74 | % |
| | |
| | For the Three Months Ended |
| | 3/31/2009 | | 3/31/2008 | | % change | | 12/31/2008 | | % change |
| AVERAGE BALANCES | | | | | | | | | | |
| Gross loans, includes loans held for sale | | $ | 2,107,685 | | | $ | 2,055,535 | | | 3 | % | | $ | 2,092,641 | | | 1 | % |
| Investments | | | 449,054 | | | | 316,729 | | | 42 | % | | | 356,834 | | | 26 | % |
| Interest-earning assets | | | 2,556,739 | | | | 2,372,264 | | | 8 | % | | | 2,449,475 | | | 4 | % |
| Total assets | | | 2,697,622 | | | | 2,479,042 | | | 9 | % | | | 2,559,289 | | | 5 | % |
| | | | | | | | | | |
| Interest-bearing deposits | | | 1,659,662 | | | | 1,433,032 | | | 16 | % | | | 1,560,971 | | | 6 | % |
| Interest-bearing liabilities | | | 2,067,980 | | | | 1,871,798 | | | 10 | % | | | 1,971,277 | | | 5 | % |
| Non-interest-bearing demand deposits | | | 291,324 | | | | 338,043 | | | -14 | % | | | 240,142 | | | 21 | % |
| Stockholders' Equity | | | 291,908 | | | | 227,598 | | | 28 | % | | | 261,635 | | | 12 | % |
| Net interest earning assets | | | 488,759 | | | | 500,466 | | | -2 | % | | | 478,198 | | | 2 | % |
| | | | | | | | | | |
| LOAN PORTFOLIO COMPOSITION: | | 3/31/2009 | | 12/31/2008 | | % change | | 3/31/2008 | | % change |
| | | | | | | | | | |
| Commercial loans | | $ | 573,615 | | | $ | 598,556 | | | -4 | % | | $ | 593,905 | | | -3 | % |
| Real estate loans | | | 1,491,480 | | | | 1,472,872 | | | 1 | % | | | 1,448,840 | | | 3 | % |
| Consumer and other loans | | | 24,633 | | | | 28,520 | | | -14 | % | | | 32,768 | | | -25 | % |
| Loans outstanding | | | 2,089,728 | | | | 2,099,948 | | | 0 | % | | | 2,075,513 | | | 1 | % |
| Unamortized deferred loan fees - net of costs | | | (1,500 | ) | | | (1,505 | ) | | 0 | % | | | (1,662 | ) | | -10 | % |
| Loans, net of deferred loan fees and costs | | | 2,088,228 | | | | 2,098,443 | | | 0 | % | | | 2,073,851 | | | 1 | % |
| Allowance for loan losses | | | (50,504 | ) | | | (43,419 | ) | | 16 | % | | | (23,116 | ) | | 118 | % |
| Loan receivable, net | | $ | 2,037,724 | | | $ | 2,055,024 | | | -1 | % | | $ | 2,050,735 | | | -1 | % |
| | | | | | | | | | |
| | | | | | | | | | |
| DEPOSIT COMPOSITION | | 3/31/2009 | | 12/31/2008 | | % Change | | 3/31/2008 | | % Change |
| Non-interest-bearing demand deposits | | $ | 297,540 | | | $ | 303,656 | | | -2 | % | | $ | 353,314 | | | -16 | % |
| Money market and other | | | 364,297 | | | | 306,478 | | | 19 | % | | | 234,425 | | | 55 | % |
| Saving deposits | | | 113,614 | | | | 113,186 | | | 0 | % | | | 144,543 | | | -21 | % |
| Time deposits of $100,000 or more | | | 590,342 | | | | 626,850 | | | -6 | % | | | 573,455 | | | 3 | % |
| Other time deposits | | | 732,519 | | | | 588,433 | | | 24 | % | | | 548,612 | | | 34 | % |
| Total deposit balances | | $ | 2,098,312 | | | $ | 1,938,603 | | | 8 | % | | $ | 1,854,349 | | | 13 | % |
| DEPOSIT COMPOSITION (%) | 3/31/2009 | | 12/31/2008 | | 3/31/2008 |
| Non-interest-bearing demand deposits | | 14.2 | % | | | 15.7 | % | | | 19.1 | % |
| Money market and other | | 17.4 | % | | | 15.8 | % | | | 12.6 | % |
| Saving deposits | | 5.4 | % | | | 5.8 | % | | | 7.8 | % |
| Time deposits of $100,000 or more | | 28.1 | % | | | 32.3 | % | | | 30.9 | % |
| Other time deposits | | 34.9 | % | | | 30.4 | % | | | 29.6 | % |
| Total deposit balances | | 100.0 | % | | | 100.0 | % | | | 100.0 | % |
| | | | | |
| | | | | |
| CAPITAL RATIOS | 3/31/2009 | | 12/31/2008 | | 3/31/2008 |
| Total stockholders' equity | $ | 289,685 | | | $ | 289,953 | | | $ | 227,394 | |
| Tier 1 risk-based capital ratio | | 14.03 | % | | | 14.32 | % | | | 11.56 | % |
| Total risk-based capital ratio | | 15.30 | % | | | 15.58 | % | | | 12.59 | % |
| Tier 1 leverage ratio | | 11.95 | % | | | 12.61 | % | | | 10.56 | % |
| Book value per share * | $ | 8.47 | | | $ | 8.49 | | | $ | 8.68 | |
| Tangible equity per share * | $ | 8.32 | | | $ | 8.33 | | | $ | 8.50 | |
| Tangible equity to tangible assets * | | 7.74 | % | | | 8.20 | % | | | 8.76 | % |
| | | | | |
| * excludes TARP preferred stock and stock warrants of $67.3 million |
| | For the Three Months Ended |
| ALLOWANCE FOR LOAN LOSSES: | | 3/31/2009 | | 12/31/2008 | | % Change | | 3/31/2008 | | % Change |
| Balance at Beginning of Period | | $ | 43,419 | | | $ | 27,806 | | | 56 | % | | $ | 20,035 | | | 117 | % |
| Provision for Loan Losses | | | 15,670 | | | | 28,000 | | | -44 | % | | | 4,993 | | | 214 | % |
| Recoveries | | | 83 | | | | 124 | | | -33 | % | | | 47 | | | 77 | % |
| Charge Offs | | | (8,668 | ) | | | (12,511 | ) | | -31 | % | | | (1,959 | ) | | 342 | % |
| Balance at End of Period | | $ | 50,504 | | | $ | 43,419 | | | 16 | % | | $ | 23,116 | | | 118 | % |
| Net charge-off/Average gross loans (annualized) | | | 1.63 | % | | | 2.37 | % | | | | | 0.37 | % | | |
| NON-PERFORMING ASSETS | | 3/31/2009 | | 12/31/2008 | | 3/31/2008 |
| Delinquent Loans 90 days or more on Non-Accrual Status | | $ | 41,330 | | | $ | 37,580 | | | $ | 18,653 | |
| Delinquent Loans 90 days or more on Accrual Status | | | 7 | | | | - | | | | 427 | |
| Total Non-Performing Loans | | | 41,337 | | | | 37,580 | | | | 19,080 | |
| Other real estate owned | | | 4,822 | | | | 2,969 | | | | - | |
| Restructured Loans | | | 31,131 | | | | 3,256 | | | | 1,135 | |
| Total Non-Performing Assets | | $ | 77,290 | | | $ | 43,805 | | | $ | 20,215 | |
| Non-Performing Assets/ Total Assets | | | 2.74 | % | | | 1.64 | % | | | 0.79 | % |
| Non-Performing Loans/Gross Loans | | | 1.98 | % | | | 1.79 | % | | | 0.92 | % |
| Allowance for loan losses/ Gross Loans | | | 2.42 | % | | | 2.07 | % | | | 1.11 | % |
| Allowance for loan losses/ Non-Performing Loans | | | 122 | % | | | 116 | % | | | 121 | % |
| | Three Months Ended, |
| PTPP COVERAGE | | 3/31/2009 | | 12/31/2008 | | 9/30/2008 | | 6/30/2008 | | 3/31/2008 |
| | | | | | | | | | |
| Pre Tax - Pre Provision income | | $ | 9,556 | | | $ | 11,013 | | | $ | 14,773 | | | $ | 12,641 | | | $ | 14,778 | |
| Provision for loan losses | | | (15,670 | ) | | | (28,000 | ) | | | (6,180 | ) | | | (9,652 | ) | | | (4,993 | ) |
| Income (loss) before income taxes | | $ | (6,114 | ) | | $ | (16,987 | ) | | $ | 8,593 | | | $ | 2,989 | | | $ | 9,785 | |
| | | | | | | | | | |
| | | | | | | | | | |
| | For the Three Months Ended |
| GROSS CHARGED OFF LOANS BY TYPE | | 3/31/2009 | | 12/31/2008 | | 9/30/2008 | | 6/30/2008 | | 3/31/2008 |
| | | | | | | | | | |
| Real Estate Loans | | $ | 2,132 | | | $ | 2,613 | | | $ | 2,127 | | | $ | 2,443 | | | $ | 194 | |
| Commercial Loans | | | 3,931 | | | | 8,333 | | | | 2,371 | | | | 1,609 | | | | 1,195 | |
| SBA Loans | | | 1,313 | | | | 1,421 | | | | 1,696 | | | | 757 | | | | 419 | |
| Consumer Loans | | | 1,292 | | | | 144 | | | | 102 | | | | 118 | | | | 151 | |
| Total Gross Charge-offs | | $ | 8,668 | | | $ | 12,511 | | | $ | 6,296 | | | $ | 4,927 | | | $ | 1,959 | |
| | | | | | | | | | |
| | | | | | | | | | |
| DELINQUENT LOANS BY TYPE* | | 3/31/2009 | | 12/31/2008 | | 9/30/2008 | | 6/30/2008 | | 3/31/2008 |
| | | | | | | | | | |
| Real Estate Loans | | $ | 31,823 | | | $ | 28,409 | | | $ | 18,681 | | | $ | 19,247 | | | $ | 17,433 | |
| Commercial Loans | | | 13,607 | | | | 15,202 | | | | 18,526 | | | | 9,035 | | | | 7,557 | |
| SBA Loans | | | 4,469 | | | | 5,828 | | | | 5,625 | | | | 4,050 | | | | 2,759 | |
| Consumer Loans | | | 548 | | | | 1,776 | | | | 947 | | | | 648 | | | | 994 | |
| Total Delinquent Loans | | $ | 50,447 | | | $ | 51,215 | | | $ | 43,779 | | | $ | 32,980 | | | $ | 28,743 | |
| * Delinquent over 30 days, including non-accrual loans | | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| NON-ACCRUAL LOANS BY TYPE | | 3/31/2009 | | 12/31/2008 | | 9/30/2008 | | 6/30/2008 | | 3/31/2008 |
| | | | | | | | | | |
| Real Estate Loans | | $ | 26,153 | | | $ | 21,759 | | | $ | 11,410 | | | $ | 15,451 | | | $ | 11,701 | |
| Commercial Loans | | | 13,863 | | | | 13,676 | | | | 18,240 | | | | 9,123 | | | | 6,225 | |
| SBA Loans | | | 1,013 | | | | 703 | | | | 645 | | | | 344 | | | | 432 | |
| Consumer Loans | | | 301 | | | | 1,442 | | | | 206 | | | | 304 | | | | 295 | |
| Total Non-accrual Loans | | $ | 41,330 | | | $ | 37,580 | | | $ | 30,501 | | | $ | 25,222 | | | $ | 18,653 | |
| | | | | | | | | | |
| | | | | | | | | | |
| WATCH LIST LOANS | | 3/31/2009 | | 12/31/2008 | | 9/30/2008 | | 6/30/2008 | | 3/31/2008 |
Special Mention | | $ | 68,388 | | | $ | 71,169 | | | $ | 38,461 | | | $ | 12,835 | | | $ | 8,336 | |
| Substandard | | | 98,412 | | | | 55,622 | | | | 44,580 | | | | 41,991 | | | | 30,521 | |
| Doubtful | | | 7,288 | | | | 9,883 | | | | 7,306 | | | | 3,246 | | | | 2,161 | |
| Loss | | | 8 | | | | - | | | | - | | | | 11 | | | | 2 | |
| Total Watch List Loans | | $ | 174,096 | | | $ | 136,674 | | | $ | 90,347 | | | $ | 58,083 | | | $ | 41,020 | |
CONTACT:
Investors and Financial Media:
Financial Relations Board
Tony Rossi, 213-486-6545
