EXHIBIT 99.1
HANMI FINANCIAL CORPORATION REPORTS RECORD NET INCOME OF
$19.2 MILLION FOR 2003; EARNINGS PER SHARE INCREASE TO $1.34
-- TOTAL ASSETS GROW TO A RECORD $1.79 BILLION --
LOS ANGELES, CA. -- January 26, 2004 (Market Wire) - Hanmi Financial Corporation
(NASDAQ:HAFC), the holding company for Hanmi Bank, today reported net income for
the year ended December 31, 2003 of $19.2 million, an increase of 12.8 percent
compared with 2002 net income of $17.0 million. Fully diluted earnings per share
increased in 2003 to $1.34 compared with $1.20 in 2002.
Fourth quarter pre-tax income was $9.9 million, an increase of 37.0 percent
compared with $7.2 million in the same period of 2002. Fourth quarter earnings
were reduced by $929,000, or $0.06 per fully diluted share, as a result of the
reversal of certain net state tax benefits recorded in the first three quarters
of 2003. Fourth quarter income exclusive of such reversals was $6.0 million, or
$0.42 per fully diluted share.
Fourth quarter 2003 GAAP net income was $5.1 million, an increase of 5.9 percent
compared with $4.8 million in the same period of 2002. Fourth quarter 2003 fully
diluted earnings per share were $0.35, compared with $0.34 in the fourth quarter
of 2002.
"This was an extraordinary year both in terms of our financial performance and
the building of the foundation for a successful future for Hanmi Bank," said Jae
Whan Yoo, President and CEO. "We are pleased with our strong financial results:
our net interest income increased 18.0 percent and our total assets grew 22.6
percent in 2003 to a record $1.79 billion, and our net loans increased 28
percent during the year to $1.25 billion. From this position of strength, we are
looking forward to the next steps under our definitive agreement to acquire
Pacific Union Bank. The combination, which we hope to complete in the second
quarter of 2004, will position Hanmi Bank as the premier Korean-American bank,
second to none in the U.S. I am also pleased to report the progress of both
banks in developing a post-merger integration plan."
FOURTH QUARTER HIGHLIGHTS
- - Fourth quarter 2003 earnings before income taxes increased 37.0 percent to
$9.9 million, compared with $7.2 million during the same quarter in 2002.
- - Net interest income before provision for loan losses increased 32.7
percent to $16.5 million from $12.4 million the fourth quarter of 2002.
- - Service charges and fee income increased 14.1 percent to $3.9 million from
$3.4 million in the fourth quarter of 2002.
- - Gain on sale of investments declined 83.9 percent to $244,000 from $1.5
million in the fourth quarter of 2002.
- - Income taxes increased 98.6 percent from $2.4 million to $4.8 million, due
primarily to the higher pre-tax income in the fourth quarter and the
reversal of net
state tax benefits recorded in the first three quarters of 2003. The
company reversed the tax benefits in response to an announcement issued by
the California Franchise Tax Board in the fourth quarter of 2003.
- - Hanmi on December 22 announced a definitive agreement to acquire Pacific
Union Bank, a commercial bank based in Los Angeles with assets reported at
$1.1 billion.
- - Hanmi appointed new Chief Financial Officer, Michael J. Winiarski.
FULL-YEAR HIGHLIGHTS
- - Full year earnings before income taxes increased 21.5 percent to $31.6
million, compared with $26.0 million in 2002.
- - Net interest income before provision for loan losses increased 18.0
percent to $57.0 million from $48.3 million in 2002.
- - Service charges and fee income increased 14.1 percent to $15.1 million
from $13.2 million in 2002.
- - Total assets increased to a record $1.79 billion, an increase of 22.6
percent from $1.46 billion as of December 31, 2002.
- - Net loans increased 28.0 percent to $1.25 billion from $0.97 billion as of
December 31, 2002.
- - The efficiency ratio improved to 51.3 percent from 55.4 percent in 2002.
- - Hanmi opened two additional branches in Silicon Valley and Downtown Los
Angeles, bringing its total branches to fifteen.
NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES
Net interest income before provision for loan losses was $16.5 million for the
fourth quarter of 2003, an increase of $4.1 million, or 32.7 percent, compared
with $12.4 million for the same quarter in 2002. Net interest income before
provision for loan losses for the full year increased by $8.7 million, or 18
percent, to $57.0 million compared with $48.3 million for 2002. The increase in
net interest income was primarily due to an increase of average interest-earning
assets over average interest bearing liabilities. The net interest margin was
3.99 percent for the fourth quarter of 2003 and 3.73 percent for the full year.
Average interest-earning assets increased $333.8 million or 25.3 percent over
the fourth quarter of 2002 and provided an additional $3.7 million of interest
income compared with the fourth quarter of 2002. The majority of this growth was
funded by a $252 million, or a 20.2 percent, increase in total deposits and a
$48 million increase in the quarterly average balance of Federal Home Loan Bank
borrowings. However, interest expense decreased by $403,000 due to faster
re-pricing of interest-bearing liabilities.
PROVISION FOR LOAN LOSSES
The provision for loan losses represents the charge against current earnings
that is determined by management, through a disciplined credit review process,
as the amount needed to maintain an allowance that is sufficient to absorb loan
losses inherent in the Company's loan portfolio. The provision for loan losses
was $1.3 million in the fourth quarter of 2003 compared with $1.7 million for
the fourth quarter of 2002.
NON-INTEREST INCOME
Non-interest income was $5.1 million for the fourth quarter of 2003, which
represented a decrease of 10.2 percent compared with $5.7 million recognized
during the same quarter in 2002. The decrease was mainly due to a decrease in
the gain on sales of securities, offset by increases in service charges on
deposit accounts and international trade finance fees. The gain on sales of
available-for-sale securities decreased by $1.3 million to $244,000, compared
with $1.5 million during the fourth quarter of 2002. Other non-interest income
increased by 16.8 percent or $695,000, which includes a $291,000 increase in
service charges on deposit accounts and a $158,000 increase in trade finance
fees.
NON-INTEREST EXPENSE
Non-interest expense increased by $1.2 million or 12.7 percent to $10.4 million
in the fourth quarter of 2003 compared with $9.2 million in the fourth quarter
of 2002. The increase during the fourth quarter of 2003 was primarily
attributable to increases in salaries and employee benefits, due to the opening
of two new branches.
INCOME TAXES
The provision for taxes for the fourth quarter of 2003 was $4.8 million,
bringing the provision for the full year to $12.4 million, at an effective rate
of 39.3 percent. The provision for the fourth quarter includes the reversal of
California tax benefits arising from certain transactions involving a real
estate investment trust (REIT). The California Franchise Tax Board has taken the
position that such tax benefits will be disallowed pursuant to California Senate
Bill 614 and Assembly Bill 1601, which were enacted in October 2003. The Company
continues to believe that it is entitled to the benefits of them under the law.
However, realization of them in the near term is not assured, and for that
reason the Company has reversed all REIT consent dividend benefits recorded in
2003.
FINANCIAL POSITION
Total assets were $1.79 billion at December 31, 2003, up 22.6 percent from the
balance of $1.46 billion at December 31, 2002, primarily reflecting the growth
in commercial real estate loans and commercial loans. Hanmi Bank's investment
securities portfolio increased 49.4 percent to $417.7 million at December 31,
2003, up $138.1 million compared to $279.5 million at December 31, 2002.
At December 31, 2003, net loans totaled $1.25 billion, an increase of $272.9
million or 28.0 percent from $974.1 million at December 31, 2002. The majority
of the
growth was in commercial and real estate loans, which resulted primarily from
new business. Commercial loans grew by $138.1 million to $711.0 million at
December 31, 2003, compared to $572.9 million at December 31, 2002. Real estate
loans increased by $127.8 million to $499.4 million at December 31, 2003,
compared to $371.6 million at December 31, 2002.
The growth in total assets was funded by increases in customer deposits of
$161.9 million, up by 12.6 percent, to $1.45 billion. These rising balances were
led by increases in time deposits of $84.3 million, up 14.5 percent to $667.8
million, non-interest bearing accounts of $63.0 million, up 15.3 percent to
$475.1 million, money market checking accounts of $15.8 million, up 8.3 percent
to $206.1 million, and offset by a decrease in savings accounts of $1.3 million
or 1.3 percent to $96.9 million.
The Company's borrowings mostly take the form of advances from the Federal Home
Loan Bank of San Francisco ("FHLB") and repurchase agreements. Advances from the
FHLB were $148.4 million, and securities sold under agreements to repurchase
were $9.5 million at December 31, 2003.
ASSET QUALITY
Total non-performing assets ("NPAs"), which include accruing loans due 90 days
or more, non-accrual loans, and other real estate owned ("OREO") assets
increased by $2.2 million to $8.7 million at year end 2003 from $6.5 million at
December 31, 2002. Non-performing assets as a percentage of gross loans
increased to 0.68 percent at December 31, 2003 from 0.65 percent at December 31,
2002.
At December 31, 2003, accruing loans 90 days or more past due were $557,000,
down $60,000 from $617,000 at December 31, 2002. However, non-accrual loans were
$8.1 million, up $2.2 million from $5.9 million at December 31, 2002. There were
no OREO assets at December 31, 2003.
The allowance for loan losses was $14.7 million, and represented the amount
needed to maintain an allowance that the Company believes should be sufficient
to absorb loan losses inherent in its loan portfolio. The allowance for loan
losses represented 1.16 percent of gross loans and 170.1 percent of
non-performing loans at December 31, 2003. The comparable ratios were 1.24
percent of year-end 2002 gross loans and 189.5 percent of non-performing loans
at December 31, 2002.
ABOUT HANMI FINANCIAL CORPORATION:
Headquartered in Los Angeles, Hanmi Bank, a wholly owned subsidiary of Hanmi
Financial Corporation, provides services to the multi-ethnic communities of
California, with 15 full-service offices in Los Angeles, Orange, San Diego and
Santa Clara counties. Hanmi Bank specializes in commercial, SBA, trade finance
and consumer lending, and is a recognized community leader. Hanmi Bank's mission
is to
provide a full range of quality products and premier services to its customers
and to maximize shareholder value.
FORWARD-LOOKING STATEMENTS:
This release may contain forward-looking statements, which are included in
accordance with the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. In some cases, you can identify forward-looking
statements by terminology such as "may," "will," "should," "could," "expects,"
"plans," "intends," "anticipates," "believes," "estimates," "predicts,"
"potential," or "continue," or the negative of such terms and other comparable
terminology. Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. These statements involve known
and unknown risks, uncertainties and other factors that may cause our actual
results, levels of activity, performance or achievements to differ from those
expressed or implied by the forward-looking statement. These factors include the
following: risks associated with the Company's pending acquisition of Pacific
Union Bank, including potential deposit run-off; general economic and business
conditions in those areas in which the Company operates; demographic changes;
competition for loans and deposits; fluctuation in interest rates; risks of
natural disasters related to the Company's real estate portfolio; risks
associated with SBA loans; changes in governmental regulation; credit quality;
the availability of capital to fund the expansion of the Company's business; and
changes in securities markets. In addition, Hanmi sets forth certain risks in
its reports filed with the Securities and Exchange Commission, including the
Company's Form 10-Q for the quarter ended September 30, 2003 and its Annual
Report on Form 10-K for the fiscal year ended December 31, 2002 which could
cause actual results to differ from those projected.
FINANCIAL HIGHLIGHTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) FOR THE QUARTER ENDED FOR THE YEAR ENDED
- ----------------------------------------------------------- DECEMBER 31, DECEMBER 31,
----------------------------- -----------------------------
2003 2002 2003 2002
----------------------------- -----------------------------
CONDENSED INCOME STATEMENT
Interest income $ 21,623 $ 17,960 $ 77,761 $ 69,607
Interest expense 5,121 5,524 20,796 21,345
------------- ------------- ------------- -------------
Net interest income 16,502 12,436 56,965 48,262
Provision for loan losses 1,300 1,650 5,680 4,800
------------- ------------- ------------- -------------
Net interest income after provision 15,202 10,786 51,285 43,462
Service charge on deposit accounts 2,684 2,393 10,339 9,195
Trade finance fees 758 600 2,887 2,410
Remittance fees 264 232 952 786
Other service charges and fees 195 194 875 803
Bank owned life insurance income 116 141 499 552
Change in fair value of interest rate swap 35 -- 35 1,368
Gain on sales of loans 528 409 2,157 1,875
Gain on sale of investments 244 1,514 1,094 3,265
All other non-interest income 263 179 840 659
------------- ------------- ------------- -------------
Non interest income 5,087 5,662 19,678 20,913
Salaries and employee benefits 5,703 4,822 21,214 17,930
Expenses of premises and fixed assets 1,343 1,125 5,198 4,330
Data processing expense 770 717 3,080 2,784
Supplies and communications 383 370 1,496 1,466
Professional fees 229 201 1,167 1,003
Advertising and promotion 544 486 1,635 1,523
Loan referral fees 268 160 921 691
Impairment charge on investment -- 10 -- 4,416
Other non-interest expense 1,162 1,342 4,614 4,190
------------- ------------- ------------- -------------
Non-interest expense 10,402 9,233 39,325 38,333
------------- ------------- ------------- -------------
Income before income taxes 9,887 7,215 31,638 26,042
Income taxes 4,812 2,423 12,425 9,012
------------- ------------- ------------- -------------
Net Income $ 5,075 $ 4,792 $ 19,213 $ 17,030
============= ============= ============= =============
Basic EPS $ 0.36 $ 0.34 $ 1.37 $ 1.23
Diluted EPS $ 0.35 $ 0.34 $ 1.34 $ 1.20
Weighted average shares outstanding-- basic 14,144,497 13,823,785 14,046,354 13,823,785
Weighted average shares outstanding-- diluted 14,452,873 14,052,343 14,331,013 14,153,246
AS OF AS OF CHANGE
DECEMBER 31, 2003 DECEMBER 31, 2002 AMOUNT PERCENTAGE
----------------- ----------------- ----------- ----------
CONDENSED BALANCE SHEET
Assets
Cash and due from banks $ 59,595 $ 67,772 $ (8,177) -12.1%
Federal funds sold -- 55,000 (55,000) -100.0%
Term federal funds sold -- 30,000 (30,000) -100.0%
FRB and FHLB stock 10,355 4,579 5,776
Investment securities 417,616 279,548 138,068 49.4%
Loans:
Loans, net of unearned income 1,261,748 986,408 275,340 27.9%
Allowance for loan and lease losses 14,734 12,269 2,465 20.1%
------------- ------------- ----------- ------
Net loans 1,247,014 974,139 272,875 28.0%
Due from customers on acceptances 3,930 4,472 (542) -12.1%
Bank premises and equipments 8,435 8,240 195 2.4%
Accrued interest receivable 6,686 5,533 1,153 20.8%
Deferred income taxes 7,207 4,223 2,984 70.7%
Bank owned life insurance 11,137 10,637 500 4.7%
Other assets 13,779 12,155 1,624 13.4%
------------- ------------- ----------- ------
Total Assets $ 1,785,754 $ 1,456,298 $ 329,456 22.6%
============= ============= =========== ======
Liabilities and Stockholders'
equity
Noninterest-bearing deposits $ 475,100 $ 412,060 $ 63,040 15.3%
Interest-bearing deposits $ 970,735 $ 871,919 $ 98,816 11.3%
------------- ------------- ----------- ------
Total deposits 1,445,835 1,283,979 161,856 12.6%
Accrued interest payable 4,403 3,385 1,018 30.1%
Acceptances outstanding 3,930 4,472 (542) -12.1%
Borrowed funds 182,999 37,797 145,202 384.2%
Other liabilities 9,120 2,197 6,923 315.1%
------------- ------------- ----------- ------
Total Liabilities 1,646,287 1,331,830 314,457 23.6%
------------- ------------- ----------- ------
Shareholders' equity 139,467 124,468 14,999 12.1%
------------- ------------- ----------- ------
Total Liabilities and Equity $ 1,785,754 $ 1,456,298 $ 329,456 22.6%
============= ============= =========== ======
FOR THE YEAR ENDED
--------------------------------------
DECEMBER 31, 2003 DECEMBER 31, 2002
----------------- -----------------
AVERAGE BALANCE
Average net loans $ 1,103,765 $ 882,625
Average interest-earning assets 1,525,633 1,211,553
Average assets 1,623,214 1,308,886
Average interest-bearing liabilities 1,057,249 854,858
Average deposits 1,416,564 1,164,561
Average equity 132,369 112,927
SELECTED PERFORMANCE RATIOS
Return on average assets 1.18% 1.30%
Return on average equity 14.51% 15.08%
Efficiency ratio 51.31% 55.41%
Net interest margin 3.73% 3.98%
AS OF AS OF
DECEMBER 31, 2003 DECEMBER 31, 2002
------------------- -------------------
ALLOWANCE FOR LOAN LOSSES
Balance at the beginning of the year $ 12,269 $ 10,064
Provision for loan losses 5,680 4,800
Charge-offs, net of recoveries 3,215 2,595
--------- ---------
Balance at the end of the year $ 14,734 $ 12,269
========= =========
Loan loss allowance /Gross loans 1.16% 1.24%
Loan loss allowance/Non-performing loans 170.12% 189.48%
AS OF AS OF
DECEMBER 31, 2003 DECEMBER 31, 2002
------------------- -------------------
NON-PERFORMING ASSETS
Accruing loans - 90 days past due $ 557 $ 617
Non accrual loans 8,104 5,858
--------- ---------
Total Non-performing loans $ 8,661 $ 6,475
========= =========
Total Non-performing loans / Total gross loans 0.68% 0.65%
Total Non-performing assets $ 8,661 $ 6,475
========= =========
Total Non-performing assets / Total Assets 0.49% 0.44%
AS OF AS OF CHANGE
DECEMBER 31, 2003 DECEMBER 31, 2002 AMOUNT PERCENTAGE
----------------- ----------------- ----------- ----------
LOAN PORTFOLIO
Real estate loans $ 499,376 $ 371,593 $ 127,783 34.4%
Commercial loans 711,012 572,910 138,102 24.1%
Consumer loans 54,878 44,416 10,462 23.6%
------------- ----------- ----------- ----
Total gross loans 1,265,266 988,919 276,347 27.9%
Unearned loan fees (3,518) (2,511) (1,007) 40.1%
Allowance for loan losses (14,734) (12,269) (2,465) 20.1%
------------- ----------- ----------- ----
Net loans $ 1,247,014 $ 974,139 $ 272,875 28.0%
============= =========== =========== ====
LOAN MIX
Real estate loans 39.47% 37.58%
Commercial loans 56.19% 57.93%
Consumer loans 4.34% 4.49%
------------- -----------
Total gross loans 100.00% 100.00%
============= ===========
AS OF AS OF CHANGE
DECEMBER 31, 2003 DECEMBER 31, 2002 AMOUNT PERCENTAGE
----------------- ----------------- ----------- ----------
DEPOSIT PORTFOLIO
Non-interest bearing $ 475,100 $ 412,060 $ 63,040 15.3%
Money market checking 206,086 190,314 15,772 8.3%
Savings 96,869 98,121 (1,252) -1.3%
Time certificates of deposit $100,000
or more 388,944 323,544 65,400 20.2%
Other time deposits 278,836 259,940 18,896 7.3%
Total deposits $ 1,445,835 $ 1,283,979 $ 161,856 12.6%
============= ============= =========== ====
DEPOSIT MIX
Non-interest bearing 32.86% 32.09%
Money market checking 14.25% 14.82%
Savings 6.70% 7.64%
Time certificates of deposit $100,000
or more 26.90% 25.20%
Other time deposits 19.29% 20.24%
Total deposits 100.00% 100.00%
============= =============
Contact: Hanmi Financial Corporation
Michael J. Winiarski, CFO (213) 368-3200
Stephanie Yoon, Investor Relations (213) 427-5631