1
EXHIBIT 99.1
OFFICE OF THE COMPTROLLER OF THE CURRENCY
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 2000 or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _____________ to _____________
NARA BANK, N.A.
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(Exact name of registrant as specified in its charter)
California 95-4170121
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
3701 Wilshire Boulevard, Suite 220, Los Angeles, California 90010
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(Address of Principal executive offices) (ZIP Code)
(213) 639-1700
(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
As of March 31, 2000, there were 4,403,753 outstanding shares of the
issuer's Common Stock, $3.00 par value.
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PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENT
STATEMENT OF FINANCIAL CONDITION
March 31, December 31,
-------------- -------------
2000 1999
-------------- -------------
(Unaudited) (Audited)
ASSETS
Cash and due from banks $ 29,490,562 $ 20,189,328
Interest-bearing deposits in other banks 4,162,645 3,274,034
Investment securities 45,537,707 33,331,258
FRB Stock 666,950 666,950
Interest-only strips (Note 2) 479,004 496,517
Federal funds sold 40,900,000 42,500,000
Loans receivable, net of allowancem (Note 3) 289,553,923 235,119,175
Loans held for sale, at the lower of cost or market 4,604,334 168,250
Premises and equipment 17,394,878 4,719,147
Accrued interest receivable 2,762,807 1,907,279
Deferred income taxes, net 1,102,223 992,302
Customers' acceptance liabilities 5,544,983 4,859,180
Cash surrender value 4,892,328 4,850,529
Goodwill and intangible assets, net 1,697,639 1,747,725
Other assets 4,186,825 4,076,723
------------- -------------
TOTAL $ 452,976,809 $ 358,898,397
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits:
Noninterest-bearing $ 150,817,142 $ 115,623,519
Interest-bearing:
Money market and other 57,613,967 37,288,132
Savings deposits 43,312,382 38,528,628
Time deposits of $100,000 or more 95,632,417 76,624,977
Other time deposits 61,373,028 51,803,781
------------- -------------
Total Deposits 408,748,936 319,869,037
Subordinated notes 4,300,000 4,300,000
Accrued interest payable 1,983,389 1,591,486
Acceptances outstanding 5,544,983 4,859,180
Other liabilities 3,497,685 1,552,436
------------- -------------
Total liabilities 424,074,993 332,172,139
Stockholders' equity:
Common stock, $3 par value;
authorized, 10,000,000 shares;
issued and outstanding, 4,403,753
shares at March 31, 2000 and December 31, 1999 13,211,259 13,211,259
Capital Surplus 9,019,706 9,019,706
Retained earnings 6,991,876 4,652,655
Accumulated other comprehensive income --
unrealized gain (loss) on AFS securities and interest
only strips, net of taxes of $221,600 and $111,325
at March 31, 2000 and December 31, 1999, respectively (321,025) (157,362)
------------- -------------
Total stockholders' equity 28,901,816 26,726,258
Total liabilities and
stockholders' equity $ 452,976,809 $ 358,898,397
============= =============
3
STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(UNAUDITED)
Three Months Ended March 31,
----------------------------
2000 1999
------------ -----------
INTEREST INCOME:
Interest and fees on loans $ 6,848,453 $ 4,532,527
Interest on securities 669,219 333,349
Interest on federal funds sold and interest-bearing
deposits with other financial institutions 636,946 559,537
----------- -----------
Total interest income 8,154,619 5,425,413
----------- -----------
INTEREST EXPENSE:
Interest expense on deposits 2,623,775 1,748,717
Interest on subordinated notes and others 99,054 0
----------- -----------
Total interest expense 2,722,829 1,748,717
----------- -----------
Net interest income before provision for 5,431,790 3,676,696
loan losses
Provision for loan losses 0 350,000
----------- -----------
Net interest income (loss) after provision
for loan losses 5,431,790 3,326,696
----------- -----------
OTHER OPERATING INCOME:
Service charges on deposit accounts 1,133,917 651,872
Other charges and fees 1,369,051 829,634
Gain on sale of securities 255 0
Gain/Loss on sale of fixed assets 0 (1,077)
Gain/Loss on sale of OREO 0 (395)
Net gain on sale of SBA loans 160,293 241,939
----------- -----------
Total other operating income 2,663,515 1,721,973
----------- -----------
OTHER OPERATING EXPENSE:
Salaries, wages and employee benefits 2,376,545 1,741,915
Net Occupancy expense 573,963 462,810
Furniture and equipment expense 204,020 195,389
Other operating expenses 1,377,552 1,344,029
Reserve for Investment Securities 0 (212,515)
----------- -----------
Total other operating expense 4,532,080 3,531,628
----------- -----------
EARNINGS BEFORE INCOME TAX PROVISION 3,563,226 1,517,040
INCOME TAX PROVISION 1,224,000 614,000
----------- -----------
NET EARNINGS $ 2,339,226 $ 903,040
=========== ===========
EARNINGS PER SHARE
Basic $ 0.53 $ 0.21
Diluted $ 0.51 $ 0.20
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STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
2000 1999
------------ -------------
CASH FLOW FROM OPERATING ACTIVITIES
Net Earnings from Operation $ 2,339,221 $ 903,040
Adjustment to reconcile net earnings
Depreciation, amortization, and accretion 123,070 95,483
Provision for loan losses 0 350,000
Provision for investment securities 0 (212,515)
Proceeds from Sales of SBA Loans 3,181,900 4,009,056
Origination of SBA Loans (14,266,100) (8,936,100)
Net gain on sale of SBA loans (160,293) (241,939)
(Gain) Loss on Sales of furniture and equipments 0 1,077
Decrease (Increase) in accrued interest receivable (553,406) (222,913)
Decrease (Increase) in other assets 173,769 (100,365)
Increase(Decrease) in accrued interest payable (99,374) (97,726)
Increase(Decrease) in other liabilites 222,313 61,380
------------ ------------
Net Cash Provided by Operating Activities (9,038,901) (4,391,523)
------------ ------------
CASH FLOWS FROM INVESTINT ACTIVITIES
Net increase in loans receivable (16,890,141) (19,738,812)
Net increase in cash surrender value (41,799) (16,933)
Purchase of premises and equipment (104,620) (111,171)
Purchase of investment securities (2,400,000) (3,000,000)
Proceeds from sale of equipment 0 10,000
Proceeds from matured or called securities held to maturity 0 1,000,000
Proceeds from matured or called investment securities available for sale 0 0
(Increase) Decrease in interest only strip 17,513 9,213
(Increase) Decrease in interest-bearing deposits with other financial institutions (1,077,000) (961,000)
Proceeds from matured interest-bearing deposits with other institution 190,000 0
Cash paid for the acquisition of KFBNY (8,699,445) 0
Cash & cash equivalents acquired from business conbination 24,081,068 0
------------ ------------
Net Cash Used in Investing Activities (4,924,424) (22,808,703)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits 21,664,559 4,655,386
Proceeds for stock option 0 30,000
------------ ------------
Net Cash Provided by financing Activities 21,664,559 4,685,386
NET INCREASE (DECREASE) IN CASH AND 7,701,234 (22,514,840)
CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 62,689,328 75,029,573
------------ ------------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 70,390,562 $ 52,514,733
============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest Paid 2,330,925 1,845,969
Income Taxes Paid 0 0
SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTMENT ACTIVITIES
Transfer of Loans to Other Real Estate Owned 0 40,558
The Bank purchased three branches of Korea First Bank of New York
In conjunction of the acquisition, net liabilities were assumed as follows:
Fair value of assets acquired 78,129,357
Cash paid for the acquisition 8,699,445
Fair value of liabilities assumed 69,429,912
Goodwill and intangible assets 0
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NOTES TO FINANCIAL STATEMENTS
Balance Sheets at March 31, 2000 and December 31, 1999
Income Statements at March 31, 2000 and March 31, 1999
NOTE 1. BASIS OF PRESENTATION
The accounting and reporting policies of Nara Bank, National Association
("the Bank") are in accordance with generally accepted accounting principles and
conform to practices within the banking industry. In the opinion of management,
the accompanying financial statements reflect all the material adjustments
necessary to a fair statement of the results for the interim period ended March
31, 2000 but are not necessarily indicative of the results which will be
reported for the entire year.
NOTES 2. INTEREST-ONLY STRIPS
Certain Small Business Administration (SBA) loans that may be sold prior to
maturity have been designated as held for sale and are recorded at the lower of
cost of market value on an aggregate basis. Under new SFAS No. 125, the
servicing fees on SBA sold will be two separate categories called "Servicing
Assets" and "Interest-only Strip Receivable". The interest-only strip receivable
is the interest income retained by the Bank that exceeds the contractually
specified servicing fees (100 basis points). SFAS 125 treats this receivable as
a financial asset and it should be subsequently measured like investments in
debt securities classified as available-for-sales. Bank had adopted SFAS No. 125
as of December 31, 1997.
NOTE 3. LOANS AND ALLOWANCE FOR LOAN LOSSES
Loans are carried at the principal amount outstanding. Interest revenue on
non-discounted loans is generally accrued based on the principal amount
outstanding. Interest revenue on discounted loans is accrued based on the
methods that generally approximated the interest method. Interest income is not
recognized on loans if collection of the interest is deemed to be unlikely. In
1995 the Bank adopted FASB Statement 114, Accounting by Creditors for Impairment
of a Loan, as amended by FASB Statement No. 118. SFAS No. 114 generally requires
impaired loans to be measured based on the present value of expected future cash
flows discounted at the loans' effective interest rate or, as an expedient, at
the loan's observable market price or the fair value of the collateral if the
loan is collateral-dependent. Creditors may select the measurement method on a
loan-by-loan basis except that collateral-dependent loans for which foreclosure
is probable must be measured at the fair value of the collateral. SFAS No. 114
also prescribes measuring impairment of a restructured loan by discounting the
total expected future cash flows at the loan's effective rate of interest in the
original loan agreement. The adoption of SFAS No. 114 did not have a material
effect on the financial position of
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the bank on March 31, 2000 or the results of operations for the nine months
ended March 31, 2000 as a whole.
The allowance is an amount that management believes will be adequate to
absorb possible losses on existing loans that may become uncollectible, based on
evaluations of the collectibility of loans and prior loan loss experience. The
evaluations take into consideration such factors as changes in the nature and
volume of the loan portfolio, overall portfolio quality review of specific
problem loans, and current economic conditions and trends that may affect the
borrowers' ability to pay.
DIVIDEND
On March 22, 2000, the Bank declared a 8.0% stock dividend payable on May
10, 2000 to shareholders of record at the close of business on April 14, 2000.
The shares and per share data did not reflect 2000 stock dividend. In June,
1999, the Bank paid an 8.0% stock dividend to shareholders of record on May 10,
1999. The shares and per share data for the 1999 dividend have been
retroactively restated to reflect the 8.0% dividend.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RECENT DEVELOPMENTS
The following is management's discussion and analysis of the major factors
that influenced the Bank's results of operations and financial condition for the
three months ended March 31, 2000. This analysis should be read in conjunction
with the Bank's Annual Report on Form 10-KSB for the year ended December 31,
1999 and with the unaudited financial statements and notes as set forth in this
report.
SELECTED FINANCIAL DATA
The following table sets forth certain selected financial data concerning the
Bank for the periods indicated (dollars in thousands):
AT OF FOR THE THREE MONTHS ENDED
--------------------------------
3/31/2000 3/31/1999
------------ -----------
AVERAGE BALANCES:
Average loans $ 256,607 $ 180,771
Average investment securities 34,749 16,921
Average assets 377,702 278,976
Average deposits 336,955 250,795
Average equity 27,942 23,337
PERFORMANCE RATIOS:
Return on average asset (1) 2.48% 1.28%
Return on average common equity (1) 33.48% 15.48%
Operating expense to average assets 1.20% 1.27%
Efficiency ratio (2) 56% 65.4%
Net interest margin (3) 6.6% 6.2%
CAPITAL RATIOS (4)
Leverage capital ratio (5) 7.32% 7.88%
Tier 1 risk-based capital ratio 7.79% 9.64%
Total risk-based capital ratio 10.02% 10.81%
ASSET QUALITY RATIOS
Allowance for loan losses to total gross loans 2.49% 1.38%
Allowance for loan losses to non-accrual loans 452.0% 210.0%
Total non-performing assets to total assets (6) 0.37% 0.45%
- ---------------------------------------
(1) Calculations are based upon annualized net income.
(2) Efficiency ratio is defined as operating expense divided by the sum of net
interest income and other non-interest income.
(3) Net interest margin is calculated by dividing annualized net interest
income by total average interest-earning assets.
(4) The required ratios for a "well-capitalized" institution are 5% leverage
capital, 6% tier 1 risk-based capital and 10% total risk-based capital.
(5) Calculations are based on average quarterly assets balances of Nara Bank
(6) Non-performing assets include non-accrual loans and OREO.
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FORWARD-LOOKING INFORMATION
Certain matters discussed under this caption may constitute forward-looking
statements under Section 27A of the Securities Act and Section 21E of the
Securities Exchange Act of 1934. There can be no assurance that the results
described or implied in such forward-looking statements will, in fact, be
achieved and actual results, performance, and achievements could differ
materially because the business of the business of the Bank involves inherent
risks and uncertainties. Risks and uncertainties include possible future
deteriorating economic conditions in the Bank's areas of operation; interest
rate risk associated with volatile interest rates and related asset-liability
matching risk; liquidity risks; risk of significant non-earning assets, and net
credit losses that could occur, particularly in times of weak economic
conditions or times of rising interest rates; risks of available for sale
securities declining significantly in value as interest rates rise; and
regulatory risks associated with the variety of current and future regulations
to which the Bank is subject. For additional information concerning these
factors, see "Item 1. Business - Investment Considerations That May Affect
Future Results" contained in the Bank's Form 10-KSB for the year ended December
31, 1999.
DIVIDENDS
On March 22, 2000, the Bank declared a 8.0% stock dividend payable on May
10, 2000 to shareholders of record at the close of business on April 14 , 2000.
In June, 1999 the Bank paid an 8.0% stock dividend to shareholders of record on
May 10, 1999. The shares and per share data for the 1999 dividend have been
retroactively restate to reflect the 8% dividend. Other than those stock
dividends, the Bank has previously paid no other dividends on its common stock.
ACQUISITION OF KOREA FIRST BANK OF NEW YORK
Effective February 25, 2000, the Bank completed its acquisition of Korea
First Bank of New York, a New York-chartered banking corporation ("KFBNY"),
pursuant to the Agreement and Plan of Reorganization dated as of November 9,
1999, between Nara, KFBNY and KFBNY's sole shareholder (the "Acquisition). The
Acquisition was accomplished by merging federally chartered, non-insured interim
bank subsidiary of the Bank with and into KFBNY, followed immediately by the
merger of KFBNY into the Bank, for which the Bank paid $8,699,445 to the Korea
Deposit Insurance Corporation (the sole shareholder of KFBNY) for all of the
shares of stock of KFBNY, which were then canceled in connection with the
Acquisition.
The underlying assets acquired primarily included loans, cash, real estate
and bank premise and equipment while the primary liabilities assumed included
deposit accounts and accrued liabilities related to ongoing business. The
acquisition is accounted for as a purchase. However, the Bank did not expect a
significant goodwill from this acquisition. The purchase price of $8,699,445 was
paid in cash from the Bank's available capital reserves.
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Prior to the date of the Acquisition, KFBNY was engaged in the business of
banking in the cities of Manhattan, Flushing and Jackson Heights, New York.
RESULTS OF OPERATION
The Bank's net income for the quarter ended March 31, 2000 was $2.3 million
or $0.51 per diluted share compared to $0.9 million or $0.20 per diluted share
for the quarter ended March 31,1999. The increase in net income for 2000 as
compared to 1999 was the result of both the beneficial economies of scale
achieved by the acquisition of KFBNY and an increase in operating income from
the various branches and loan production offices that the Bank has established
over last two years. The annualized return on average assets was 2.47% for the
first quarter of 2000 compared to a return on average assets of 1.29% for the
first quarter of 1999, an increase of 1.18%. The annualized return on average
equity was 33.49% for the first quarter of 2000, compared to a return on average
equity of 15.48% for the same period in 1999, an increase of 18.01%.
NET INTEREST INCOME
The principal component of the Bank's earnings is net interest income,
which is the difference between the interest and fees earned on loans and
investments and the interest paid on deposits and other borrowed funds. When net
interest income is expressed as a percentage of average interest-earning assets,
the result is the net interest margin. The net interest spread is the yield on
average interest-earning assets less the average cost of interest-bearing
deposits and borrowed funds.
For the first three months ended March 31, 2000, the Bank's net interest
income was $5.4 million. This represented an increase of $1.7 million or 47.7%
over net interest income of $3.7 million for the three months ended March 31,
1999. Net interest margin increased to 6.6% for the three months ended March 31,
2000, from 6.2% for the same period in 1999. In addition, net interest spread
increased to 5.0% for the three months ended March 31, 2000, from 4.6% for the
same period in 1999.
The Bank's volume growth in interest-earning assets, primarily loan growth
and investment securities as a result of the KFBNY acquisition, resulted in a
51.9% increase in total interest income to $8.1 million for the three months
ended March 31, 2000 from $5.4 million for the three months ended March 31,
1999. Interest-earning assets averaged $329.9 million for the first three months
of 2000, which represented an increase of $88 million or 36.3%, from $242.1
million for the first three months of 1999.
The Bank's total interest income for the first quarter of 2000 increased
$2.8 million or 51.9% to $8.2 million from $5.4 million in the first quarter of
1999. This increase reflected the greater volume of interest-earning assets
noted above. The yield on
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average interest-earning assets increased to 9.8% for the three months ended
March 31, 2000, from a yield of 9.0% for the three months ended March 31, 1999.
This is primarily due to an increase in the Bank's prime rate. Approximately
78.5% of Nara Bank's net loans were variable rate loans at March 31, 2000.
The Bank's interest expense on deposits for the quarter ended March 31,
2000 increased by approximately $875,000 or 51.5% to $2.6 million from $1.7
million for the quarter ended March 31, 1999. This increase reflected an
increase in the average volume of interest-bearing liabilities. Average
interest-bearing liabilities were $222.7 million for the first quarter of 2000,
which represented an increase of $62.3 million or 38.8% from average
interest-bearing liabilities of $160.4 million for the first quarter of 1999.
The cost of average interest-bearing liabilities increased to 4.8% for the first
quarter ended March 31, 2000, compared to a cost of 4.4% for the same period of
1999. Overall interest on deposits increased due to an increase in market rates
and also due to an increase in competition among our peer banks, especially in
the Korean-American community.
The table below presents the average yield on each category of
interest-earning assets, average rate paid on each category of interest-bearing
liabilities, and the resulting interest rate spread and net yield on
interest-earning assets for periods indicated. All average balances are daily
average balances.
MARCH 31, 2000 MARCH 31, 1999
---------------------------------- ---------------------------------
INTEREST AVERAGE INTEREST AVERAGE
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
BALANCE EXPENSE COST BALANCE EXPENSE COST
---------- --------- --------- ---------- --------- ---------
(DOLLARS IN THOUSANDS)
INTEREST EARNING ASSETS:
Net loans ......................... $256,607 $ 6,848 10.7% $180,771 $ 4,587 10.1%
Time deposit with others .......... 3,841 57 5.9% 908 14 6.0%
Securities ........................ 34,749 659 7.6% 17,421 333 7.4%
Federal funds sold ................ 34,669 517 6.0% 42,954 546 5.1%
TOTAL INTEREST EARNING ASSETS .. $329,867 $ 8,082 9.8% $242,054 5,471 9.0%
INTEREST BEARING LIABILITIES:
Demand, interest-bearing .......... 47,739 475 4.0% 35,560 308 3.5%
Savings ........................... 35,780 239 2.7% 24,509 196 3.2%
Time certificates of deposit....... 134,787 1,835 5.4% 100,297 1,245 5.0%
Subordinated notes ................ 4,300 97 9.0% -- -- --
TOTAL INTEREST BEARING LIABILITIES $222,688 $ 2,648 4.8% $160,436 $ 1,749 4.4%
Net interest income ................. $ 5,434 $ 3,722
Net interest spread ................. 5.0% 4.6%
Average interest-earning assets
to average interest-bearing
liabilities ................... 148.1% 150.9%
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The following table shows changes in interest income and interest expense
and the amount attributable to variations in interest rates and volumes for the
periods indicated. The variances attributable to simultaneous volume and rate
changes have been allocated to the change due to volume and the change due to
rate categories in proportion to the relationship of the absolute dollar amount
attributable solely to the change in volume and to the change in rate.
MARCH 31, 2000 OVER MARCH 31, 1999
--------------------------------------
NET CHANGE DUE TO
INCREASE/ -----------------------
(DECREASE) RATE VOLUME
---------- ------- --------
(DOLLARS IN THOUSANDS)
INTEREST INCOME:
Interest and fees on net loans ..... $ 2,262 $ 249 $ 2,013
Interest on time deposit with others 43 0 43
Interest on securities ............. 334 6 329
Interest on fed funds sold ......... (29) 265 (293)
TOTAL INTEREST INCOME: ........... 2,610 518 2,092
------- ------- -------
INTEREST EXPENSE
Interest on demand deposits ........ 168 51 117
Interest on savings ................ 43 (24) 67
Interest on time certificates of
deposits ....................... 590 130 460
Interest on subordinated notes ...... 97 0 97
Interest on others .................. 1 0 1
TOTAL INTEREST EXPENSE: .......... $ 899 $ 157 $ 742
------- ------- -------
PROVISION FOR LOAN LOSSES
No provision for loan losses was made for the first three month ended March
31, 2000, compared to $350,000 for the same period in 1999. The management
believes that the reserves were sufficient for the inherent losses at March 31,
2000, especially with the reserves of $7.8 million provided from the KFBNY
acquisition.
NON-INTEREST INCOME
Non-interest income includes revenues earned from sources other than
interest income. It is primarily comprised of service charges and fees on
deposits accounts, fees received from the letter of credit operations, and gain
on sale of SBA loans.
Non-interest income increased $1.0 million or 54.6% to $2.7 million for the
quarter ended March 31, 2000 from $1.7 million for the same period in 1999. The
service charge income increased approximately $482,000 or 74.0% to $1.1 million
for the quarter ended March 31, 2000 from $652,000 for the same period in 1999.
Most of the increase came from the increase in service charges due primarily to
the accounts
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acquired from KFBNY and partly due to internal growth in transaction accounts.
The fee income generated by international transactions increased $241,000 or
67.2% to $600,000 for the first quarter of 2000 from $359,000 for the same
period in 1999. The increase in international transactions from the Silicon
Valley Office and our New York offices contributed much to this fee income. Gain
on sale of SBA loans decreased $82,000 or 33.7% during three months ended March
31, 2000 to $160,000, compared to $242,000 during the same period in 1999.
Premiums received from the sale of SBA loans decreased by approximately 50%
during 1999 and these reduced premiums are expected to extend through the year
2000. The Bank currently plans to retain a significant number of its SBA loans,
earning interest income rather than selling them at the reduced premium. The
Bank also currently receives monthly lease income of approximately $55,000
generated by the Manhattan office building, acquired in connection with the
KFBNY transaction. The breakdown of non-interest income by category is reflected
below:
QUARTER ENDED INCREASE (DECREASE) QUARTER ENDED
------------- ---------------------- -------------
3/31/00 AMOUNT PERCENT(%) 3/31/99
------- ------ ----------- -------
(Dollars in thousands)
NON-INTEREST INCOME
Service charges on deposits ..... $1,134 $ 482 73.9% $ 652
Gain on sale of SBA loans ....... 160 (82) -33.7% 242
International service fee income 600 241 67.2% 359
Wire transfer fees .............. 165 80 93.1% 86
Service fee income from SBA ..... 166 15 9.6% 151
Earnings on cash surrender value 67 3 5.4% 64
Lease income .................... 70 70 100.0% 0
Loan servicing fee income ....... 50 50 100.0% 0
Others .......................... 251 81 47.6% 170
TOTAL NON-INTEREST INCOME: ......... $2,663 $ 940 54.6% $1,723
------ ------ ----- ------
NON-INTEREST EXPENSES
Non-interest expenses for the first quarter of 2000 increased approximately
$1.0 million or 28.3% to $4.5 million from $3.5 million for the same period in
1999. This increase was primarily due to internal growth and expenses generated
by the newly acquired branches of KFBNY.
Salaries and employee benefits expenses for the first quarter of 2000
increased $634,000 or 36.4% to $2.4 million from $1.7 million for the same
period in 1999. This increase was primarily due to expenses associated with
additional employees added as a results of the KFBNY acquisition. The occupancy
and equipment expenses for the first quarter of 2000 increased approximately
$119,000 or 18.1% to $777,000 from $658,000 for the same period in 1999. This
increase is also a result of the Bank's recent growth and expansion. The
breakdown on non-interest expenses is reflected below:
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QUARTER ENDED INCREASE (DECREASE) QUARTER ENDED
------------- ----------------------- --------------
3/31/00 AMOUNT PERCENT(%) 3/31/99
------- ------ ---------- -------
(Dollars in thousands)
NON-INTEREST EXPENSE
Salaries and benefits ............ $ 2,377 $ 634 36.4% $ 1,743
Net occupancy .................... 574 111 24.0% 463
Furniture and equipment .......... 204 9 4.4% 195
Advertising & marketing realted .. 163 5 3.2% 158
Communications ................... 59 (0) -0.6% 60
Data processing .................. 431 59 16.0% 371
Professional fees ................ 181 24 15.5% 157
Office supplies & forms .......... 86 6 8.0% 79
Directors' fees .................. 78 (11) -12.5% 89
Credit related expenses .......... 74 (100) -57.4% 174
Others ........................... 305 263 615.9% 43
TOTAL NON-INTEREST EXPENSE: ......... $ 4,532 $ 1,000 28.3% $ 3,532
------- ------- ----- -------
FINANCIAL CONDITION
SUMMARY OF CHANGES IN BALANCE SHEETS MARCH 31, 2000 COMPARED TO DECEMBER 31,
1999
At March 31, 2000, the Bank's total assets increased $94.1 million or 26.2%
to $453.0 million from $358.9 million at December 31, 1999. Gross loans, net of
unearned loan fees, totaled $301.7 million at March 31, 2000, which represents
an increase of $62.8 million or 26.3% from $238.9 million at December 31, 1999.
Total deposits also increased $88.8 million or 27.8% to $408.7 million at March
31, 2000 from $319.9 million at December 31, 2000. These increases are mainly
due to the acquisition of KFBNY.
INVESTMENT SECURITY PORTFOLIO
At March 31, 2000, the Bank classified its securities as held-to-maturity
or available-for-sale under FASB 115. Those securities that the Bank has the
ability and intent to hold to maturity are classified as "held-to-maturity
securities". All other securities are classified as "available-for-sale". The
Bank owned no trading securities at March 31, 2000; nor did the Bank hold any
derivative financial instruments. Securities are stated at cost, adjusted for
amortization of premiums and accretion of discounts. The securities currently
held by the Bank are government-sponsored agency bonds, corporate bonds, and
collateralized mortgage obligations, which were transferred from KFBNY to the
Bank upon completion of the acquisition.
As of March 31, 2000, held-to-maturity securities totaled $17.4 million and
available-for-sale securities totaled $28.6 million, compared to $17.3 million
and $16.0 million, respectively. Of the securities, the amortized cost of $4.0
million were pledged to secure public deposits and for other purposes as
required or permitted by law at March 31, 2000.
14
AT MARCH 31, 2000
(UNAUDITED)
----------------------------------------------------------
AMORTIZED MARKET UNREALIZED UNREALIZED
COST VALUE GAIN LOSS
--------- ------ ---------- ----------
(Dollars in thousands)
HELD- TO-MATURITY
U.S. Government Securities ......... $14,757 $13,932 $ -- ($ 825)
U.S. Corporate Notes ............... 2,639 2,364 -- (275)
AVAILABLE-FOR-SALE
U.S. Government Securities ......... 12,052 11,862 -- (190)
CMOs ............................... 9,991 9,803 -- (188)
U.S. Corporate Notes ............... 4,839 4,771 12 (80)
Korean Corporate Notes ............. 1,707 1,706 3 (4)
TOTAL INVESTMENT PORTFOLIO: ........... $45,986 $44,438 $ 15 ($1,563)
------- ------- ------- -------
MARCH 31, 2000
(UNAUDITED)
-----------------------------------------------
WEIGHTED
AMORTIZED MARKET AVERAGE
COST VALUE YIELD
------------- ------------- -------------
HELD- TO- MATURITY
U.S. Government:
Due within one year .................... $ -- $ -- --
One to five years ...................... 8,489 8,250 6.17%
Five to ten years ...................... 1,000 972 6.75%
After ten years ........................ 5,268 4,710 7.71%
U.S. Corporate Notes ...................... 2,639 2,364 7.17%
AVAILABLE FOR SALE
U.S. Government:
Due within one year .................... $ -- $ -- --
One to five years ...................... 6,555 6,503 6.68%
Five to ten years ...................... 5,497 5,359 7.22%
After ten years ........................ -- -- --
CMOs:
Due within one year .................... -- -- --
One to five years ...................... -- -- --
Five to ten years ...................... 1,233 1,211 6.70%
After ten years ........................ 8,758 8,592 7.00%
U.S. Corporate Notes ....................... 4,839 4,771 7.23%
Korean Corporate Notes ..................... 1,707 1,706 8.68%
TOTAL INVESTMENT PORTFOLIO: .................. $45,985 $44,438 6.99%
------- ------- ----
LOAN PORTFOLIO
The Bank carries all loans at face amount, less payments collected, net of
deferred loan origination fees and the allowance for possible loan losses.
Interest on all loans is accrued daily on a simple interest basis. Once a loan
is placed on non-accrual status, accrual of interest is discontinued and
previously accrued interest is reversed. Loans are
15
placed on a non-accrual status when principal and interest on a loan is past due
90 days or more, unless a loan is both well-secured and in process of
collection.
The Bank's net loans were $294.2 million at March 31, 2000. This
represented an increase of $58.9 million or 25.0% over net loans of $235.3
million at December 31, 1999. This increase was primarily attributable to the
acquisition of KFBNY, which contributed $30.8 million in net loans.
Total commercial loans, comprised of domestic commercial, international
loans, SBA commercial loans and equipment financing, at March 31, 2000, were
approximately $183.4 million, which represented an increase of $35.9 million or
24.4% from $147.5 million at December 31, 1999. Approximately $30 million of the
$35.9 million increase is attributable to the acquisition of KFBNY.
International loans, at March 31, 2000, totaled $28.2 million, which represented
an increase of $4.6 million or 19.5% from $23.6 million at December 31, 1999.
Small Business Administration loans (SBA loans) increased $21.4 million or 65.6%
during the first quarter of 2000 to $54.1 million from $32.7 million at December
31, 1999. This large increase is due to the retention of significant number of
SBA loans rather than sell them to secondary markets as a result of a decrease
in the premiums paid on such sales.
The following table shows the Bank's loan composition by type:
MARCH 31, 2000 DECEMBER 31,1999
(UNAUDITED) (AUDITED)
------------------------------ -------------------------
AMOUNT PERCENT AMOUNT PERCENT
----------- ----------- ---------- ---------
(Dollars in thousands)
LOAN PORTFOLIO COMPOSITION:
Commercial loans .......................... $ 110,068 36.5% $ 100,411 42.0%
Real estate and construction loans ........ 155,616 51.5% 103,311 43.2%
Consumer loans ............................ 36,302 12.0% 35,295 14.8%
Total loans outstanding ............... 301,986 100.0% 239,017 100.0%
Unamortized loan fees, net of costs ....... (319) (86)
Less: Allowance for Loan Losses .......... (7,509) (3,644)
NET LOANS RECEIVABLE ......................... $ 294,158 $ 235,287
--------- ----------
At March 31, 2000, the Bank's nonperforming assets (nonaccrual loans, loans
90 days or more past due and still accruing interest, restructured loans, and
other real estate owned) totaled $1.7 million. This represented a slight
increase of $137,000 or 8.7 % from non-performing assets of $1.5 million at
December 31, 1999. As a percentage of total assets, nonperforming assets
decreased to 0.38% at March 31, 2000, from 0.44 % at December 31, 1999. The
following table shows the composition of the Bank's nonperforming assets as of
the dates indicated.
16
MARCH 31, 2000 DECEMBER 31, 1999
(UNAUDITED) (AUDITED)
---------------- ----------------
(DOLLARS IN THOUSANDS)
Nonaccrual loans ................................................... $1,660 $1,523
Loan past due 90 days or more, still accruing ...................... -- --
Restructured loans
TOTAL NONPERFORMING LOANS ....................................... 1,660 1,523
------ ------
Other real estate owned ............................................ 44 44
TOTAL NONPERFORMING ASSETS ....................................... $1,704 $1,567
------ ------
ALLOWANCE AND PROVISION FOR LOAN LOSSES
The allowance for loan losses represents the amounts that the Bank has set
aside for the specific purpose of absorbing losses that may occur in the Bank's
loan portfolio. The provision for loan losses is an expense charged against
operating income and added to the allowance for loan losses. Management of the
Bank continues to carefully monitor the allowance for loan losses in relation to
the size of the Bank's loan portfolio and known risks or problem loans.
The allowance for loan losses was $7.5 million at March 31, 2000, compared
to $3.6 million at December 31, 1999. The allowance for loan losses was 2.49% of
gross loans at March 31, 2000 compared to 1.53% at December 31, 1999. Because
the Bank aggressively charged off nonperforming loans and provided additional
reserves in 1999, and because KFBNY provided reserves for its nonperforming
loans in 1999, the Bank did not make an addition to the loan loss reserves for
the first quarter of 2000. Management believes the level of allowance as of
March 31, 2000 is adequate to absorb losses inherent in the loan portfolio.
The following table shows the provisions made for loan losses, the amount
of loans charged off, the recoveries on loans previously charged off together
with the balance in the allowance for possible loan losses at the beginning and
end of each period, the amount of average and total loans outstanding, and other
pertinent ratios as of the dates and for the periods indicated:
MARCH 31, 2000 DECEMBER 31, 1999
(UNAUDITED) (AUDITED)
---------------- -----------------
(DOLLARS IN THOUSANDS)
LOANS:
Average total loans .............................................. $260,603 $208,895
Total loans at end of period ..................................... 301,668 238,931
ALLOWANCE:
BALANCE - BEGINNING OF PERIOD .................................... 3,644 2,961
Loans charged off:
Commercial .................................................. 4,011 2,785
Consumer .................................................... 47 154
Real estate ................................................. -- --
Total loans charged off .................................. 4,058 2,939
17
Less: Recoveries on loan previous charged off
Commercial ................................................... 43 151
Consumer ..................................................... 2 76
Real estate .................................................. -- --
Total recoveries ......................................... 45 227
Net loan charged-off ............................................. 4,012 2,712
Provision for loan losses ........................................ -- 3,395
Allowance transferred with business acquisition .................. 7,878 --
BALANCE - END OF PERIOD .......................................... $ 7,509 $ 3,644
-------- --------
RATIO
Net loan charge-offs to average total loans ....................... 1.54% 1.30%
Net loan charge-offs to total loans at end of period .............. 1.33% 1.14%
Allowance for loan losses to average total loans .................. 2.88% 1.74%
Allowance for loan losses to total loans at end of period ......... 2.49% 1.53%
Net loan charge-offs to beginning allowance ....................... 110.11% 91.59%
Net loan charge-offs to provision for loan losses ................. N/A 79.88%
DEPOSITS AND OTHER BORROWINGS
At March 31, 2000, the Bank's total deposits were $408.7 million. This
represented an increase of $88.8 million or 27.8%, from total deposits of $319.9
million at December 31, 1999. This increase resulted primarily from the three
branches of KFBNY that the Bank acquired on February 25, 2000. Total deposits of
$67.2 million were contributed by the three newly acquired branches. Demand
deposits totaled $150.8 million, representing an increase of approximately $35.2
million or 30.4% from total demand deposits of $115.6 million at December 31,
1999. This increase is primarily attributable to the approximately $30.7 million
in demand deposits acquired in connection with the KFBNY transaction.
Time deposits over $100,000 totaled $95.6 million at March 31, 2000. This
represented an increase of approximately $19.0 million or 24.8%, compared to
$76.6 million at December 31, 1999. The acquisition of KFBNY accounted for $9.6
million of such increase. Other time deposit increased approximately $9.6
million or 18.5% to $61.3 million during the same periods of which approximately
$8.7 million was attributable to the newly acquired KFBNY branches.
On September 31, 1999, the Bank issued five-year subordinated capital notes
in the aggregate amount of $4.3 million with a stated interest rate of 9.0%,
maturing on September 31, 2004. Interest on the notes is payable quarterly and
no scheduled payments of principal are due prior to maturity. At March 31, 2000,
$3.4 million , which represents 80% of the total outstanding amount of the
notes, qualified as risk-based Tier 2 capital.
SHAREHOLDERS' EQUITY AND REGULATORY CAPITAL
In order to ensure adequate levels of capital, the Bank conducts an ongoing
assessment of projected sources and uses of capital in conjunction with
projected
18
increases in assets and levels of risk. Management considers, among other
things, on an ongoing basis, cash generated from operations, access to capital
from financial markets or the issuance of additional securities, including
common stock or notes, to meet the Bank's capital needs. Total shareholders'
equity was $28.9 million at March 31, 2000. This represented an increase of $2.2
million or 8.2% over total shareholders' equity of $26.7 million at December 31,
1999.
The federal banking agencies require a minimum ratio of qualifying total
capital to risk-adjusted assets of 8% and a minimum ratio of Tier 1 capital to
risk-adjusted assets of 4%. In addition to the risk-based guidelines, federal
banking regulators require banking organizations to maintain a minimum amount of
Tier 1 capital to total assets, referred to as the leverage ratio. For a banking
organization rated in the highest of the five categories used by regulators to
rate banking organizations, the minimum leverage ratio of Tier 1 capital to
total assets must be 3%. In addition to these uniform risk-based capital
guidelines and leverage ratios that apply across the industry, the regulators
have the discretion to set individual minimum capital requirements for specific
institutions at rates significantly above the minimum guidelines and ratios.
At March 31, 2000, Tier 1 capital, shareholders' equity less intangible
assets, was $27.5 million. This represented an increase of $2.3 million or 9.1%
over total Tier 1 capital of $25.2 million at December 31, 1999. At March 31,
2000, the Bank had a ratio of total capital to total risk-weighted assets of
10.03 % and a ratio of Tier 1 capital to total risk weighted assets of 7.80%.
The Tier 1 leverage ratio was 7.32% at March 31, 2000. The following table sets
forth Bank's regulatory capital ratios at March 31, 2000.
The following table presents the amounts of regulatory capital and the
capital ratio for the Bank, compared to its minimum regulatory capital
requirements as of March 31, 2000.
AS OF MARCH 31, 2000 (DOLLARS IN THOUSANDS)
-----------------------------------------------------------------------------
ACTUAL REQUIRED EXCESS
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
------ ----- ------ ----- ------ -----
Leverage ratio............. $27,525 7.32% $15,041 4.0% $12,484 3.32%
Tier 1 risk-based ratio.... $27,525 7.80% $14,115 4.0% $13,410 3.80%
Total risk-based ratio..... $35,416 $10.03% $28,248 8.0% $7,168 2.03%
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
GENERAL
Market risk is the risk of loss to future earnings, to fair values, or to
future cash flow that may result from changes in the price of a financial
institution. The value of a financial instrument may change as a result of
changes in interest rates, foreign currency exchange rates, commodity prices,
equity prices, and other market changes that affect
19
market risk sensitive instruments. Market risk is attributed to all market risk
sensitive financial instruments, including securities, loans, deposits, and
borrowings, as well as derivative instruments. Our exposure to market risk is a
function of our asset and liability management activities and other role as a
financial intermediary in customer-related transactions. The objective of market
risk management is to avoid excessive exposure of our earnings and equity to
loss and to reduce the volatility inherent in certain financial instruments.
The management of market risk is governed by policies reviewed and approved
annually by the Board of Directors ("Board"). The Board delegates responsibility
for market risk management to the Asset and Liability Management Committee
(ALCO), which is composed of Bank's senior executives and other designated
officers. ALCO makes changes in the mix of assets and liabilities. ALCO also
reviews and approves market risk-management programs and market risk limits
LIQUIDITY AND INTEREST RATE SENSITIVITY
Liquidity risk is the risk to earnings or capital resulting from the Bank's
inability to meet its obligations when they come due without incurring
unacceptable losses. Liquidity Risk includes the ability to manage unplanned
decreases or changes in funding sources and to recognize or address changes in
market conditions that affect the Bank's ability to liquidate assets quickly and
with a minimum loss of value. Factors considered in liquidity risk management
are stability of the deposit base, marketability, maturity, and pledging of
investments, and demand for credit.
In general, the Bank manages liquidity risk daily by controlling the level
of federal funds and the use of funds provided by the cash flow from the
investment portfolio. To meet unexpected demands, lines of credit are maintained
with correspondent banks, and the Federal Reserve Bank. The sale of securities
available-for-sale also can also serve as a contingent source of funds.
Increases in deposit rates are considered a last resort as a means of raising
funds to increase liquidity.
The Bank's liquid assets include cash and cash equivalents,
interest-bearing deposits in corresponding banks, federal funds sold and
securities available-for-sale. The aggregate of these assets totaled $103.1
million at March 31, 2000, compared to $79.8 million at December 31, 1999.
Because the primary sources and uses of funds are loans and deposits, the
relationship between gross loans and deposits provides a useful measure of the
Bank's liquidity. Typically, the closer the ratio of loans to deposits is to
100%, the more reliant the Bank relies on its loan portfolio to provide for
short- term liquidity needs. Because repayment of loans tends to be less
predictable than the maturity of investments and other liquid resources, the
higher the loan to deposit ratio, the less liquid are the Bank's assets. For the
first three months of 2000, the Bank's loan to deposit ratio averaged 77.3%,
compared to an average ratio of 73.3% for the same period last year.
20
The Bank is engaged in asset and liability management activities with the
objective of reducing adverse changes in earnings as a result of changes in
interest rates. The management of interest rate risk relates to the timing and
magnitude of the repricing of assets compared to liabilities and has the control
of risks associated with movements in interest rates.
The ALCO meets monthly to monitor the interest rate risk and may direct
changes in the composition of the balance sheet. The Bank's balance sheet is
inherently asset sensitive, which means that assets generally reprice more often
than liabilities. Since an asset-sensitive balance sheet tends to reduce net
interest income when interest rates decline and to increase net interest income
when interest rate rise, careful forecast of interest rate and security
portfolio changes are used to manage the interest rate risk.
The Bank currently uses the interest rate gap to measure interest rate
risk. It is the difference between interest-earning assets and interest-bearing
liabilities maturing or repricing within specified periods. The gap analysis
presented below indicates that assets that are rate sensitive within one year
exceeded liabilities within that same period by $65.7 million at March 31, 2000.
The following table shows the Bank's gap position as of March 31, 2000.
0-90 DAYS 91-365 DAYS 1-3 YEARS OVER 3 YRS TOTAL
--------- ----------- --------- ---------- -----
(Dollars in thousands)
INVESTMENTS:
Federal funds sold $40,100 -- -- -- $40,100
Due from time deposit 868 2,244 769 285 4,166
Investment securities 6,000 15,007 2,498 22,481 45,986
FRB stock -- -- -- 667 667
Total Investments 46,968 17,251 3,267 23,433 90,919
LOANS:
Commercial Variable 218,263 11,901 348 -- 230,511
Commercial Fixed 8,589 1,712 6,389 15,442 32,132
Equipment Leasing 19 219 2,181 2,347 4,766
Consumer Variable 6,756 -- -- -- 6,756
Consumer Fixed 750 1,456 9,699 15,915 27,821
Total Loans: 234,377 15,288 18,617 33,704 301,986
RATE SENSITIVE ASSETS: $281,345 $32,539 $21,884 $57,138 $392,905
======== ======= ======= ======= ========
DEPOSITS:
Time certificate of deposit 42,760 50,846 1,805 108 95,518
$100,000 or more
Time certificate of deposit 24,618 34,859 1,894 -- 61.372
Under $100,000
Money market 49,049 -- -- -- 49,049
Now account 8,565 -- -- -- 8,565
Savings Accounts 33,851 3,590 3,653 2,289 43,382
OTHER LIABILITIES:
Subordinated notes -- -- -- 4,300 4,300
RATE SENSITIVE LIABILITIES: $158,843 $89,295 $7,352 $6,697 $262,187
======== ======= ====== ====== ========
21
Net gap position 122,502 (56,756) 14,532 50,441
Net cumulative gap position 122,502 65,746 80,277 130,718
Periodic gap/assets 27.0% -12.5% 3.2% 11.1%
Cumulative gap/assets 27.0% 14.5% 17.7% 28.9%
22
PART II
ITEM 1. LEGAL PROCEEDINGS
The Bank is a party to routine litigation incidental to its business, none
of which is considered likely to have a materially adverse effect on the Bank.
Neither the Bank nor any of its property is subject to any material pending
legal proceedings except as described below. In connection with the acquisition
of KFBNY, the Bank assumed certain litigation pending against KFBNY. One case,
Noah Enterprises Ltd ("Noah") vs. Korea First Bank of New York, filed in the
Supreme Court of the State of New York County of New York on October 21, 1999
arose in connection with KFBNY granting a revolving credit line of $2.5MM to
Noah with the loan being secured by a UCC-1 filed by KFBNY. When KFBNY decreased
Noah's revolving line from $2.5MM to $1.0MM due to KFBNY's internal problems,
the loan was restructured with new documentation, except for the UCC-1 and
Security Agreement. Noah alleges that because the UCC-1 was not released, Noah
was not able to obtain financing from other institutions. Noah has sued KFBNY
for $25MM for the punitive and consequential damages resulting from the
non-release.
The Bank also obtained full indemnification from the Korea Deposit
Insurance Corporation for all litigation up to $3.0 million plus 50%
indemnification for any amounts over $3.0 million. The Bank believes such
indemnification is sufficient to cover any potential liabilities
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On February 2, 2000, the Bank held a special meeting of its stockholders
for the purpose of seeking their approval of the acquisition of KFBNY by the
Bank. Of the 4,403,753 shares of common stock eligible to be voted at the
meeting, 3,389,833 shares were voted n total; 3,272,296 shares were voted for
the acquisition, 60,568 shares were voted against the acquisition (including
broker non votes), and 56,969 shares abstained from voting. Accordingly, the
acquisition of KFBNY was aproved by at least two-thirds of the Bank's
stockholders as required by OCC regulations and the transaction as consummated
on February 25, 2000.
23
ITEM 5. OTHER INFORMATION
Inapplicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit No. Description
- ----------- -----------
2.1 Agreement and Plan of Reorganization between Nara Bank, N.A.,
Korea First Bank of New York and Korea First Ltd., dated November
9, 1999*
3.1 Amended Articles of Association**
3.2 Bylaws**
4.1 Common Stock Certificate**
4.2 Warrant Certificate**
4.3 Subordinated Note Materials*****
10.1 Lease for premises located at 1122 Wall Street, Los Angeles,
California**
10.2 1989 Stock Option Plan and Form of Agreement**
10.3 Employment Agreement for Benjamin Hong dated July 1, 1994 **
10.4 Lease for premises located at 3030 West Sepulveda Blvd., Los
Angeles, California***
10.5 Lease for premises located at 17639 Sherman Way, Unit C, Van Nuys,
California***
10.6 Lease for premises located at 1102 E. El Camino Real, Sunnyvale,
California***
10.7 Lease for premises located at 831 N. Pacific Avenue, Glendale,
California****
10.8 Lease for premises located at 5301 Beach Blvd., Buena Park,
California****
10.9 Lease for premises located at 1010 S 336th Street, Federal Way,
Washington****
24
10.10 Lease for premises located at 3701 Wilshire Blvd., Suite 220 and
201, Los Angeles, California****
10.11 Lease for premises located at 5901 N. Cicero Avenue, #508,
Chicago, Illinois
- -------------------------
* Incorporated by reference to Registrant's Form 8-K filed with the Comptroller
of the Currency on November 13, 1999.
** Incorporated by reference to Registrant's Form 10-KSB for the year ended
December 31, 1996 filed with the Comptroller on or about March 31, 1997.
*** Incorporated by reference to Registrant's Form 10-KSB for the year ended
December 31, 1997 filed with the Comptroller on or about March 31, 1998.
***** Incorporated by reference to Registrant's Form 10-KSB for the year ended
December 31, 1998 filed with the Comptroller on or about March 31, 1999.
***** Incorporated by reference to Registrant's Form 10-KSB for the year ended
December 31, 1999 filed with the Comptroller on or about March 30, 2000.
(b) Reports on Form 8-K
The registrant filed a current report on Form 8-K on March 10, 2000
relating to its acquisition of KFBNY.
25
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Nara Bank, N.A.
Date: May 11, 2000 By /s/ BON T. GOO
---------------------------------------
Bon T. Goo
Chief Financial Officer
(Principal financial or accounting officer
and duly authorized signatory)