Exhibit 99.1
Nara Bancorp Reports $0.33 Earnings Per
Diluted Share for Third Quarter 2007
LOS ANGELES--(BUSINESS WIRE)--Oct. 23, 2007--Nara Bancorp, Inc.
(the "Company") (NASDAQ: NARA), the holding company of Nara Bank (the
"Bank"), reported net income of $8.8 million, or $0.33 per diluted
share, for third quarter 2007, compared to $8.7 million, or $0.33 per
diluted share, for third quarter 2006. The settlement of the
previously announced arbitration matter reduced net income by $394
thousand, net of $274 thousand in income taxes. On a pro forma basis,
third quarter net income would have been $9.2 million, or $0.35 per
diluted share, excluding the settlement charges.
Min Kim, President and Chief Executive Officer, said, "We
delivered a solid quarter despite a highly competitive deposit pricing
environment that negatively impacted our net interest margin. We
continued to generate strong loan production in both our commercial
real estate and C&I portfolios, as well as our SBA lending business.
Importantly, asset quality remained healthy as non-performing assets
to total assets remained stable compared to the prior quarter. We also
made progress on an important strategic initiative during the quarter
with our acquisition of a branch in New Jersey. This acquisition,
which is subject to regulatory approval, will provide branching rights
in the state of New Jersey that will facilitate the further expansion
of our East Coast franchise," said Ms. Kim.
Third Quarter Financial Highlights (2007 vs. 2006):
-- Net interest income increased 3% to $25.1 million
-- Net interest margin of 4.67% compared to 5.25%
-- Non-interest income increased 36% to $5.9 million
-- Non-interest expense increased 12% to $14.6 million
-- Net loans receivable increased 18% to $1.94 billion
-- Deposits increased 10% to $1.81 billion
-- Non-performing assets to total assets of 0.26% compared to
0.23%
Operating Results for Third Quarter 2007
Net Interest Income and Net Interest Margin. Third quarter 2007
net interest income before provision for loan losses increased 3% to
$25.1 million from $24.4 million for third quarter 2006. The
improvement was attributable to a $20.8 million, or 4%, increase in
net average interest-earning assets (average interest-earning assets
minus average interest-bearing liabilities), which offset the 52 basis
point decline in the net interest spread (yield on average
interest-earning assets minus cost of average interest-earning
liabilities). The resulting third quarter net interest margin (net
interest income divided by average interest-earning assets) decreased
58 basis points to 4.67% from 5.25%.
The weighted average yield on the loan portfolio for third quarter
2007 decreased 41 basis points to 8.87% from 9.28% for the same period
last year. The decline was the result of an increase in the percentage
of fixed-rate loans in the loan portfolio that have lower yields, as
borrowers migrated to fixed-rate loans offered at lower interest rates
than the interest rates offered for adjustable rate loans during 2006
and 2007. The 50 basis point rate cut by the Federal Reserve Bank on
September 18, 2007 had a nominal impact on the quarter, but will have
a negative effect in future quarters, as the Company's adjustable rate
loans are expected to reprice downward at a faster rate than its
deposit liabilities. The weighted average yield on the adjustable rate
and fixed rate loan portfolios at September 30, 2007 were 8.79% and
7.72%, respectively, compared to 9.38% and 7.63% at September 30,
2006. At September 30, 2007, 48% of the loan portfolio consisted of
fixed-rate loans, compared to 35% at September 30, 2006.
The weighted average cost of deposits for third quarter 2007
increased 39 basis points to 3.94% from 3.55% for the same period last
year. The increase in the cost of deposits was partially affected by
the decrease in the average balance of non-interest bearing demand
deposits. At September 30, 2007, non-interest bearing demand deposits
accounted for 20.4% of total deposits, compared to 23.4% of total
deposits at September 30, 2006. The cost of the interest-bearing
demand deposits, primarily money market accounts, increased 70 basis
points to 4.33% for third quarter 2007 from 3.63% for third quarter of
2006. The increase was due to a money market account deposit campaign
initiated during fourth quarter 2006, which carried over into 2007.
The cost of time deposits increased 23 basis points to 5.29% for third
quarter 2007 from 5.06% for third quarter 2006, accounting for a
substantial portion of the increase in deposit interest costs.
The weighted average cost of other borrowings for third quarter
2007 decreased 159 basis points to 5.22% from 6.81% for third quarter
2006. The reduction in the weighted average cost of borrowings is
primarily attributable to lower rates on FHLB advances and trust
preferred securities. The average cost for FHLB advances was 4.47% for
third quarter 2007, compared to 4.74% for third quarter 2006, and the
average cost of trust preferred securities was 8.81% for third quarter
2007, compared to 9.34% for third quarter 2006.
Sequentially, third quarter 2007 net interest income before
provision for loan losses increased $925 thousand, or 4%, from second
quarter 2007. Net average interest-earning assets decreased by $9.6
million, or 2%, and the net interest spread increased by 2 basis
points, resulting in a decline of 5 basis points in the net interest
margin to 4.67% from 4.72%.
Compared to second quarter 2007, the cost of total deposits
increased 12 basis points to 3.94% from 3.82%. The cost of time
deposits was 5.29%, 4 basis points higher than second quarter 2007.
However, at September 30, 2007, the spot rate for time deposits was
5.20%, compared to 5.29% at June 30, 2007, a decline of 9 basis
points.
Prepayment penalty income for third quarter 2007, second quarter
2007 and third quarter 2006 was $654 thousand, $524 thousand, and $618
thousand, respectively. Excluding the effect of prepayment penalty
income, the net interest margin for third quarter 2007, second quarter
2007, and third quarter 2006 was 4.55%, 4.61%, and 5.11%,
respectively.
Non-interest Income. Third quarter 2007 non-interest income was
higher by $1.5 million, or 36%, compared to third quarter 2006. This
increase was primarily due to an increase in net gains on sales of SBA
and other loans. Net gains on sales of SBA loans increased $737
thousand, or 80%, to $1.7 million for third quarter 2007 from $922
thousand for third quarter 2006. The increase was primarily due to a
151% increase in loans originated and a 180% increase in SBA loans
sold. The Bank also sold $12.0 million of commercial real estate loans
during third quarter 2007 to help manage portfolio concentration and
liquidity, which resulted in gains of $518 thousand.
Sequentially, non-interest income decreased 4%, primarily due to
the decrease in net gains on sales of SBA and other loans. Net gains
on sales of SBA and other loans decreased 13% to $2.2 million during
third quarter 2007, compared to $2.5 million in second quarter 2007.
Although SBA sales volume increased, the premium received on sales
decreased, due primarily to market expectations of faster prepayments.
Non-interest Expense. Third quarter non-interest expense was $14.6
million, higher by $1.6 million, or 12%, compared to third quarter
2006. Salaries and employee benefits expense increased 15% over the
same quarter of the prior year, primarily due to increased salaries
and bonuses. Occupancy expense increased 8%, primarily due to
increased lease expense for lease renewals and the relocation of the
corporate headquarters during October 2006. Furniture and equipment
expense increased 24%, primarily due to higher amortization and
depreciation expenses related to furniture and equipment purchased for
the new corporate headquarters, and IT-related equipment purchased to
support and enhance the Company's technology. Professional fees
decreased by $274 thousand, or 34%, over the same quarter of the prior
year primarily due to non-recurring executive search fees in 2006.
Data processing and communication expense decreased $231 thousand, or
22%, over the same quarter of the prior year primarily due to purging
of closed accounts and closing of unused telephone lines. Other
expense increased by $783 thousand, or 42%, over the same quarter of
the prior year. Included in other expense was the settlement from the
arbitration matter mentioned in previous quarters in the amount of
$668 thousand. Excluding such settlement, other expense increased 6%
from third quarter 2006.
Sequentially, non-interest expense in third quarter 2007 increased
4% to $14.6 million from $14.1 million in second quarter 2007.
Salaries and employee benefits increased $575 thousand, or 9%,
primarily due to an increase in accrued bonuses. Professional fees
decreased $508 thousand, or 48%, primarily due to the higher legal
fees incurred during the second quarter 2007 related to the
arbitration matter which was settled during third quarter 2007.
Income Taxes. The effective tax rate was 41.0% for third quarter
2007 compared to 41.2% for second quarter 2007 and 40.5% for third
quarter 2006. During third quarter 2006, certain tax contingencies
were resolved resulting in a reduction in deferred tax liabilities and
tax expense of approximately $180,000.
Balance Sheet Summary
At September 30, 2007 total assets were $2.34 billion, compared to
$2.22 billion at June 30, 2007, an increase of 23% (annualized).
Gross loans receivable were $1.96 billion at September 30, 2007,
an increase of 17% (annualized) from the $1.88 billion at June 30,
2007. New loan production was $245 million during third quarter 2007,
compared to $282 million during second quarter 2007, and $195 million
during third quarter 2006. Loan pay-offs during third quarter 2007,
second quarter 2007, and third quarter 2006 were $85 million, $106
million, and $112 million, respectively.
SBA loan originations were $58.5 million during third quarter 2007
compared to $57.3 million during second quarter 2007, and $23.3
million during third quarter 2006. Sales of SBA loans during third
quarter 2007 were $43.1 million, compared to $33.4 million during
second quarter 2007, and $15.4 million during third quarter 2006.
Total deposits were $1.81 billion at September 30, 2007, an
increase of 4% (annualized) from $1.80 billion at June 30, 2007. Money
market deposits increased $6 million, or 10% (annualized). Retail CDs
declined by $25 million or 12% (annualized), while State Treasurer and
brokered deposits increased by $56 million, or 124% (annualized).
Total CDs increased $32 million, or 13% (annualized) since June 30,
2007.
FHLB advances were $240.0 million at September 30, 2007, compared
to $120.0 million at June 30, 2007. The increase in FHLB advances
reflects the continuation of the Company's strategy to augment
deposits with borrowings as a source of match-funding fixed-rate loan
originations. The weighted average cost of FHLB advances was 4.47%
during third quarter 2007, compared to 4.31% during second quarter of
2007, and 4.74% during third quarter of 2006.
Asset Quality
The Company recorded a provision for loan losses of $1.6 million
in third quarter 2007, compared to $1.4 million in the second quarter
of 2007 and $1.2 million in the same period of the prior year. The
increase in provision for loan losses primarily reflects the growth in
the loan portfolio and a year over year increase in the level of net
charge-offs.
Non-performing assets at September 30, 2007 were $6.1 million, or
0.26% of total assets, compared to $6.0 million, or 0.27% of total
assets, at June 30, 2007, and $4.6 million, or 0.23% of total assets,
at September 30, 2006. Since 2002, non-performing assets have averaged
0.28% of total assets on an annual basis. The Company also noted that
it has no exposure to sub-prime residential real estate mortgages in
either its loan or securities portfolios.
Non-performing loans at September 30, 2007 were $5.5 million, or
0.28% of total loans, compared to $5.8 million, or 0.31% of total
loans, at June 30, 2007, and $4.0 million, or 0.24% of total loans at
September 30, 2006. Included in non-performing loans at September 30,
2007 were two loans placed on non-accrual during first quarter 2007.
One loan for $1.3 million was put on an interest-only workout for six
months during the second quarter 2007 and has been paying as agreed,
and the other loan for $1.6 million is currently in process of a
similar workout arrangement with guarantors of the loan. No loss is
anticipated on either loan.
Total delinquencies were $10.0 million at September 30, 2007, up
slightly from $9.4 million at June 30, 2007, but down significantly
from $12.0 million at March 31, 2007 and $13.0 million at September
30, 2006.
Net loan charge-offs during third quarter 2007 were $1.2 million,
or 0.25% of average loans on an annualized basis, compared to $1.0
million during second quarter 2007, or 0.22% of average loans on an
annualized basis, and $0.43 million during third quarter 2006, or
0.11% of average loans on an annualized basis. Annual charge-offs have
averaged 18 basis points since 2002.
The allowance for loan losses at September 30, 2007 was $19.4
million, or 0.99% of gross loans receivable, compared to $19.1
million, or 1.02% of gross loans receivable, at June 30, 2007, and
$18.9 million, or 1.14% of gross loans receivable at September 30,
2006. The allowance to non-performing loans was 354%, 332% and 475% at
September 30, 2007, June 30, 2007, and September 30, 2006,
respectively.
Performance Ratios
The annualized return on average equity (ROE) for third quarter
2007 was 16.85%, compared to 17.53% for second quarter 2007 and 20.36%
for third quarter 2006.
The annualized return on average assets (ROA) for third quarter
2007 was 1.56%, compared to 1.63% for second quarter 2007 and 1.77%
for third quarter 2006.
The efficiency ratio for third quarter 2007 was 47.01%, compared
to 46.38% for second quarter 2007 and 45.26% for third quarter 2006.
The increase in the efficiency ratio over second quarter 2007 was due
to the decrease in loan sale gains and the increase in salaries and
employee benefits expense and an increase in other expense, as a
result of the $668 thousand arbitration settlement during the third
quarter of 2007.
Capital
At September 30, 2007, the Company continued to exceed the
regulatory capital requirements to be classified as a
"Well-Capitalized." The Leverage Ratio was 10.98% compared to 11.10%
June 30, 2007 and 10.91% at September 30, 2006. The Total Risk-based
Capital Ratio was 12.60%, compared to 12.83% at June 30, 2007 and
13.17% at September 30, 2006.
Earnings Outlook
Based on the year-to-date results and the outlook for the fourth
quarter of 2007, the Company now expects fully diluted earnings per
share to range between $1.25 and $1.27.
Commenting on the outlook, Ms. Kim said, "We expect that our
fourth quarter results will be negatively impacted by three trends: 1)
we expect to see further compression in our net interest margin as a
result of the Fed rate cut; 2) the premiums received on SBA loan sales
are declining due to investor expectation of faster prepayment speeds;
and 3) deposit growth will continue to be challenging. On the positive
side, we expect that these trends will be offset by continued strong
loan production and solid asset quality."
Conference Call and Webcast
A conference call with simultaneous webcast to discuss the
Company's third quarter 2007 financial results will be held tomorrow,
October 24 2007 at 9:30 a.m. Pacific / 12:30 p.m. Eastern. Interested
participants and investors may access the conference call by dialing
866-510-0704 (domestic) or 617-597-5362 (international), passcode
27862857. 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 888-286-8010 (domestic) or 617-801-6888
(international) through October 31, 2007; the passcode is 36743061.
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 19 branches and 8 loan production
offices in the United States. Nara Bank operates full-service branches
in California and New York, with loan production offices in
California, Washington, Texas, Georgia, Illinois, New Jersey, and
Virginia. Nara Bank was founded specifically to serve the needs of
Korean-Americans, one of the fastest-growing Asian ethnic communities
over the past decade. Presently, Nara Bank serves a diverse group of
customers mirroring its communities. Nara Bank specializes in core
business banking products for small and medium-sized companies, with
emphasis in commercial real estate and business lending, SBA lending
and international trade financing. Nara Bank is a member of the FDIC
and is an Equal Opportunity Lender. For more information on Nara Bank,
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.
Nara Bancorp, Inc.
Consolidated Statements of Financial Condition
Unaudited (Dollars in Thousands)
Assets %
9/30/2007 6/30/2007 change
---------------------------------
Cash and due from banks $ 27,936 $ 34,434 -19%
Federal funds sold 2,000 10,000 -80%
Securities available for sale, at
fair value 237,626 194,925 22%
Securities held to maturity, at
amortized cost (fair value:
December 31, 2006 - $1,002;
September 30, 2006 - $1,005) - - -
Federal Home Loan Bank and Federal
Reserve Bank stock 14,055 10,772 30%
Loans held for sale, at the lower of
cost or market 20,626 17,154 20%
Loans receivable 1,958,693 1,878,970 4%
Allowance for loan losses (19,431) (19,101) 2%
----------------------------------
Net loans receivable 1,939,262 1,859,869 4%
----------------------------------
Accrued interest receivable 10,257 9,074 13%
Premises and equipment, net 11,476 11,585 -1%
Cash surrender value of life
insurance 22,695 15,660 45%
Goodwill 2,347 2,347 0%
Other intangible assets, net 2,406 2,570 -6%
Other assets 53,813 47,583 13%
----------------------------------
Total assets $2,344,499 $2,215,973 6%
==================================
Liabilities
Deposits $1,814,463 $1,798,460 1%
Borrowings from the Federal Home
Loan Bank 240,000 120,000 100%
Subordinated debentures 39,268 39,268 0%
Accrued interest payable 11,445 10,586 8%
Other liabilities 26,696 45,332 -41%
----------------------------------
Total liabilities 2,131,872 2,013,646 6%
----------------------------------
Stockholders' Equity
Common stock, $0.001 par value;
authorized, 40,000,000 shares;
issued and outstanding, 26,193,672,
26,181,672, 26,107,672 and
26,100,672 shares at September 30,
2007, June 30 2007, December 31,
2006 and September 30, 2006,
respectively $ 26 $ 26 0%
Capital surplus 79,596 79,108 1%
Retained earnings 134,874 126,811 6%
Accumulated other comprehensive
income (loss), net (1,869) (3,618) -48%
---------------------------------
Total stockholders' equity 212,627 202,327 5%
---------------------------------
Total liabilities and
stockholders' equity $2,344,499 $2,215,973 6%
=================================
Assets % %
12/31/2006 change 9/30/2006 change
---------------------- ---------------------
Cash and due from banks $ 36,300 -23% $ 33,799 -17%
Federal funds sold 44,500 -96% 2,500 -20%
Securities available for
sale, at fair value 162,851 46% 200,461 19%
Securities held to
maturity, at amortized
cost (fair value:
December 31, 2006 -
$1,002; September 30,
2006 - $1,005) 1,000 -100% 1,000 -100%
Federal Home Loan Bank and
Federal Reserve Bank
stock 9,758 44% 9,655 46%
Loans held for sale, at
the lower of cost or
market 15,162 36% 9,103 127%
Loans receivable 1,714,865 14% 1,660,321 18%
Allowance for loan losses (19,112) 2% (18,909) 3%
--------------------------------------------
Net loans receivable 1,695,753 14% 1,641,412 18%
--------------------------------------------
Accrued interest
receivable 8,974 14% 8,425 22%
Premises and equipment,
net 11,941 -4% 11,575 -1%
Cash surrender value of
life insurance 15,113 50% 15,000 51%
Goodwill 2,347 0% 2,347 0%
Other intangible assets,
net 2,899 -17% 3,071 -22%
Other assets 40,387 33% 40,457 33%
--------------------------------------------
Total assets $ 2,046,985 15% $1,978,805 18%
============================================
Liabilities
Deposits $ 1,712,235 6% $1,649,317 10%
Borrowings from the
Federal Home Loan Bank 76,000 216% 81,000 196%
Subordinated debentures 39,268 0% 39,268 0%
Accrued interest payable 8,258 39% 9,933 15%
Other liabilities 24,597 9% 22,665 18%
--------------------------------------------
Total liabilities 1,860,358 15% 1,802,183 18%
--------------------------------------------
Stockholders' Equity
Common stock, $0.001 par
value; authorized,
40,000,000 shares; issued
and outstanding,
26,193,672, 26,181,672,
26,107,672 and 26,100,672
shares at September 30,
2007, June 30 2007,
December 31, 2006 and
September 30, 2006,
respectively $ 26 0% $ 26 0%
Capital surplus 77,939 2% 77,320 3%
Retained earnings 111,978 20% 103,338 31%
Accumulated other
comprehensive income
(loss), net (3,316) -44% (4,062) -54%
--------------------------------------------
Total stockholders'
equity 186,627 14% 176,622 20%
--------------------------------------------
Total liabilities and
stockholders' equity $ 2,046,985 15% $1,978,805 18%
============================================
Nara Bancorp, Inc.
Consolidated Statements of Income
Unaudited (Dollars in Thousands, Except for Per Share Data)
Three Months Ended,
---------------------------------------------------
% %
9/30/2007 6/30/2007 change 9/30/2006 change
---------------------------------------------------
Interest income:
Interest and fees
on loans $ 42,752 $ 40,289 6% $ 37,818 13%
Interest on
securities 2,613 2,105 24% 2,340 12%
Interest on
federal funds
sold and other
investments 201 682 -71% 470 -57%
---------------------------------------------------
Total interest
income 45,566 43,076 6% 40,628 12%
---------------------------------------------------
Interest expense:
Interest on
deposits 17,613 16,903 4% 14,799 19%
Interest on other
borrowings 2,818 1,963 44% 1,403 101%
---------------------------------------------------
Total interest
expense 20,431 18,866 8% 16,202 26%
---------------------------------------------------
Net interest
income before
provision for
loan losses 25,135 24,210 4% 24,426 3%
Provision for loan
losses 1,550 1,350 15% 1,170 32%
---------------------------------------------------
Net interest
income after
provision for
loan losses 23,585 22,860 3% 23,256 1%
---------------------------------------------------
Non-interest
income:
Service fees on
deposit accounts 1,841 1,685 9% 1,471 25%
Net gains on
sales of SBA and
other loans 2,177 2,491 -13% 922 136%
Other income and
fees 1,872 1,935 -3% 1,951 -4%
---------------------------------------------------
Total non-
interest income 5,890 6,111 -4% 4,344 36%
---------------------------------------------------
Non-interest
expense:
Salaries and
employee
benefits 7,298 6,723 9% 6,346 15%
Occupancy 2,155 2,109 2% 1,993 8%
Furniture and
equipment 699 684 2% 562 24%
Advertising and
marketing 456 484 -6% 421 8%
Data processing
and
communications 798 870 -8% 1,029 -22%
Professional fees 541 1,049 -48% 815 -34%
Other 2,638 2,144 23% 1,855 42%
---------------------------------------------------
Total non-
interest
expense 14,585 14,063 4% 13,021 12%
---------------------------------------------------
Income before
income taxes 14,890 14,908 0% 14,579 2%
Income taxes 6,108 6,138 0% 5,910 3%
---------------------------------------------------
Net Income $ 8,782 $ 8,770 0% $ 8,669 1%
===================================================
Earnings Per
Share:
Basic $ 0.34 $ 0.34 $ 0.33
Diluted $ 0.33 $ 0.33 $ 0.33
Average Shares
Outstanding
Basic 26,189,368 26,165,254 25,949,931
Diluted 26,497,773 26,502,862 26,407,185
Nine Months Ended September 30,
-------------------------------
%
2007 2006 change
-------------------------------
Interest income:
Interest and fees on loans $ 121,285 $ 105,399 15%
Interest on securities 6,771 6,284 8%
Interest on federal funds sold and
other investments 1,378 2,723 -49%
-------------------------------
Total interest income 129,434 114,406 13%
-------------------------------
Interest expense:
Interest on deposits 50,815 40,312 26%
Interest on other borrowings 6,539 3,696 77%
-------------------------------
Total interest expense 57,354 44,008 30%
-------------------------------
Net interest income before provision
for loan losses 72,080 70,398 2%
Provision for loan losses 3,880 2,392 62%
-------------------------------
Net interest income after provision
for loan losses 68,200 68,006 0%
-------------------------------
Non-interest income:
Service fees on deposit accounts 5,146 4,528 14%
Net gains on sales of SBA and other
loans 5,888 3,735 58%
Other income and fees 5,571 5,559 0%
-------------------------------
Total non-interest income 16,605 13,822 20%
-------------------------------
Non-interest expense:
Salaries and employee benefits 20,735 20,240 2%
Occupancy 6,339 5,727 11%
Furniture and equipment 2,008 1,630 23%
Advertising and marketing 1,602 1,697 -6%
Data processing and communications 2,622 3,000 -13%
Professional fees 2,436 2,275 7%
Other 6,852 5,711 20%
-------------------------------
Total non-interest expense 42,594 40,280 6%
-------------------------------
Income before income taxes 42,211 41,548 2%
Income taxes 17,351 17,099 1%
-------------------------------
Net Income $ 24,860 $ 24,449 2%
===============================
Earnings Per Share:
Basic $ 0.95 $ 0.95
Diluted $ 0.94 $ 0.93
Average Shares Outstanding
Basic 26,159,584 25,679,893
Diluted 26,514,819 26,247,283
Nara Bancorp, Inc.
Supplemental Data
Unaudited (Dollars in Thousands, Except for Per Share Data)
(Annualized) (Annualized)
At or for the Three At or for the Nine
Months Ended, Months Ended,
---------------------------------------------------
Profitability
measures: 9/30/2007 6/30/2007 9/30/2006 9/30/2007 9/30/2006
------------------------------ --------------------
ROA 1.56% 1.63% 1.77% 1.53% 1.70%
ROE 16.85% 17.53% 20.36% 16.56% 20.26%
Net interest
margin, including
loan prepayment
fee income 4.67% 4.72% 5.25% 4.67% 5.16%
Net interest
margin, excluding
loan prepayment
fee income 4.55% 4.61% 5.11% 4.58% 5.07%
Efficiency ratio 47.01% 46.38% 45.26% 48.03% 47.83%
Yield on loan
portfolio 8.87% 8.84% 9.28% 8.81% 9.01%
Cost of total
deposits 3.94% 3.82% 3.55% 3.85% 3.27%
Primary
interest
spread 4.93% 5.02% 5.73% 4.96% 5.74%
Yield on interest-
earning assets 8.47% 8.39% 8.73% 8.39% 8.38%
Cost of interest-
bearing
liabilities 5.00% 4.94% 4.74% 4.95% 4.37%
Net interest
spread 3.47% 3.45% 3.99% 3.44% 4.01%
Cost of funds 4.08% 3.94% 3.70% 3.98% 3.42%
Net interest
spread
(including
effect of non-
interest
bearing demand
deposits) 4.39% 4.45% 5.03% 4.41% 4.96%
Cost of interest-
bearing deposits 4.96% 4.89% 4.61% 4.90% 4.23%
Cost of jumbo
deposits 5.35% 5.33% 5.18% 5.32% 4.72%
Cost of time
deposits 5.29% 5.25% 5.06% 5.25% 4.65%
Cost of FHLB
advances 4.47% 4.31% 4.74% 4.35% 4.51%
Cost of other
borrowings 5.22% 5.46% 6.81% 5.40% 6.75%
For the Three Months Ended
---------------------------------------------------
% %
9/30/2007 6/30/2007 change 9/30/2006 change
---------------------------------------------------
AVERAGE BALANCES
Gross loans,
includes loans
held for sale $1,928,293 $1,823,323 6% $1,629,345 18%
Interest-earning
assets 2,152,115 2,053,087 5% 1,862,304 16%
Total assets 2,258,958 2,156,121 5% 1,959,562 15%
Interest-bearing
deposits 1,419,778 1,383,014 3% 1,284,143 11%
Interest-bearing
liabilities 1,635,547 1,526,908 7% 1,366,506 20%
Non-interest-
bearing demand
deposits 368,321 387,143 -5% 383,587 -4%
Net interest
earning assets 516,568 526,179 -2% 495,798 4%
Stockholders'
equity 208,496 200,162 4% 170,273 22%
For the Nine Months Ended
-------------------------------
%
9/30/2007 9/30/2006 change
-------------------------------
AVERAGE BALANCES
Gross loans, includes loans held for
sale 1,836,424 1,560,465 18%
Interest-earning assets 2,058,125 1,820,573 13%
Total assets 2,161,190 1,914,598 13%
Interest-bearing deposits 1,383,889 1,270,224 9%
Interest-bearing liabilities 1,545,279 1,343,223 15%
Non-interest-bearing demand deposits 374,504 372,133 1%
Net interest earning assets 512,846 477,350 7%
Stockholders' equity 200,150 160,878 24%
LOAN PORTFOLIO COMPOSITION: %
9/30/2007 6/30/2007 change
----------------------------------
Commercial loans $ 658,298 $ 624,873 5%
Real estate loans 1,269,092 1,217,296 4%
Consumer and other loans 33,207 38,792 -14%
----------------------------------
Loans outstanding 1,960,597 1,880,961 4%
Unamortized deferred loan fees - net
of costs (1,904) (1,991) -4%
----------------------------------
Loans, net of deferred loan fees
and costs 1,958,693 1,878,970 4%
Allowance for loan losses (19,431) (19,101) 2%
----------------------------------
Loan receivable, net $1,939,262 $1,859,869 4%
==================================
LOAN PORTFOLIO COMPOSITION: % %
12/31/2006 change 9/30/2006 change
----------------------------------------
Commercial loans $ 565,759 16% $ 520,253 27%
Real estate loans 1,102,072 15% 1,089,705 16%
Consumer and other loans 49,201 -33% 53,132 -38%
----------------------------------------
Loans outstanding 1,717,032 14% 1,663,090 18%
Unamortized deferred loan
fees - net of costs (2,167) -12% (2,769) -31%
----------------------------------------
Loans, net of deferred
loan fees and costs 1,714,865 14% 1,660,321 18%
Allowance for loan losses (19,112) 2% (18,909) 3%
----------------------------------------
Loan receivable, net $ 1,695,753 14% $1,641,412 18%
========================================
For the Three Months Ended
-----------------------------------------------------
ALLOWANCE FOR % %
LOAN LOSSES: 9/30/2007 6/30/2007 Change 9/30/2006 Change
----------- ----------- --------- -------------------
Balance at
Beginning of
Period $ 19,101 $ 18,752 2% $ 18,168 5%
Provision for
Loan Losses 1,550 1,350 15% 1,170 32%
Recoveries 87 396 -78% 218 -60%
Charge Offs (1,307) (1,397) -6% (647) 102%
----------- ----------- --------- -------------------
Balance at End
of Period $ 19,431 $ 19,101 2% $ 18,909 3%
=========== =========== ========= ===================
Net charge-
off/Average
gross loans
(annualized) 0.25% 0.22% 0.11%
For the Nine Months Ended
------------------------------
ALLOWANCE FOR LOAN LOSSES: %
9/30/2007 9/30/2006 Change
------------------------------
Balance at Beginning of Period $ 19,112 $ 17,618 8%
Provision for Loan Losses 3,880 2,392 62%
Recoveries 674 1,293 -48%
Charge Offs (4,235) (2,394) 77%
------------------------------
Balance at End of Period $ 19,431 $ 18,909 3%
==============================
Net charge-off/Average gross loans
(annualized) 0.26% 0.09%
NON-PERFORMING
ASSETS 9/30/2007 6/30/2007 12/31/2006 9/30/2006
----------- ----------- ------------ -----------
Delinquent Loans
90 days or more
on Non-Accrual
Status $ 5,491 $ 5,757 $ 3,271 $ 3,983
Delinquent Loans
90 days or more
on Accrual
Status - - - -
----------- ----------- ------------ -----------
Total Non-
Performing
Loans 5,491 5,757 3,271 3,983
Other real
estate owned - - - -
Restructured
Loans 621 222 298 606
----------- ----------- ------------ -----------
Total Non-
Performing
Assets $ 6,112 $ 5,979 $ 3,569 $ 4,589
=========== =========== ============ ===========
Non-Performing
Assets/ Total
Assets 0.26% 0.27% 0.17% 0.23%
Non-Performing
Loans/Gross
Loans 0.28% 0.31% 0.19% 0.24%
Allowance for
loan losses/
Gross Loans 0.99% 1.02% 1.11% 1.14%
Allowance for
loan losses/
Non-Performing
Loans 354% 332% 584% 475%
DEPOSIT COMPOSITION %
9/30/2007 6/30/2007 Change
----------- ----------- ---------
Non-interest-bearing demand
deposits $ 370,100 $ 396,074 -7%
Money market and other 266,039 259,241 3%
Saving deposits 147,987 144,381 2%
Time deposits of $100,000 or more 869,879 829,940 5%
Other time deposits 160,458 168,824 -5%
----------- ----------- ---------
Total deposit balances $1,814,463 $1,798,460 1%
=========== =========== =========
DEPOSIT COMPOSITION % %
12/31/2006 Change 9/30/2006 Change
-------------------- --------------------
Non-interest-bearing
demand deposits $ 407,519 -9% $ 386,263 -4%
Money market and other 184,199 44% 202,157 32%
Saving deposits 141,611 5% 138,567 7%
Time deposits of $100,000
or more 768,727 13% 726,900 20%
Other time deposits 210,179 -24% 195,430 -18%
-------------------- --------------------
Total deposit balances $ 1,712,235 6% $1,649,317 10%
==================== ====================
DEPOSIT
COMPOSITION (%) 9/30/2007 6/30/2007 12/31/2006 9/30/2006
----------- ----------- ------------ -----------
Non-interest-
bearing
demand
deposits 20.4% 22.1% 23.8% 23.4%
Money market
and other 14.7% 14.4% 10.7% 12.3%
Saving
deposits 8.2% 8.0% 8.3% 8.4%
Time deposits
of $100,000
or more 47.9% 46.1% 44.9% 44.1%
Other time
deposits 8.8% 9.4% 12.3% 11.8%
----------- ----------- ------------ -----------
Total
deposit
balances 100.0% 100.0% 100.0% 100.0%
=========== =========== ============ ===========
CAPITAL RATIOS 9/30/2007 6/30/2007 12/31/2006 9/30/2006
----------- ----------- ------------ -----------
Total
stockholders'
equity $ 212,627 $ 202,327 $ 186,627 $ 176,622
Tier 1 risk-
based capital
ratio 11.67% 11.87% 12.16% 12.09%
Total risk-based
capital ratio 12.60% 12.83% 13.21% 13.17%
Tier 1 leverage
ratio 10.98% 11.10% 11.18% 10.91%
Book value per
share $ 8.12 $ 7.73 $ 7.15 $ 6.77
Tangible book
value per share $ 7.94 $ 7.54 $ 6.95 $ 6.56
Tangible equity
to tangible
assets 8.88% 8.93% 8.88% 8.68%
Non-GAAP Disclosure Reconciliation
For the Three and Nine Months Ended September 30, 2007
Net Income as Adjusted is a measure of income that differs from net
income measured in accordance with generally accepted accounting
principles ("GAAP"). Net income as Adjusted excludes the $668
thousand arbitration settlement costs incurred during the quarter.
(Dollars in Thousands, Except for
Per Share Data)
Net
3rd Quarter 2007 Income
as
Net Income Adjustments Adjusted
------------ ----------- ---------
Income before income taxes $ 14,890 $ 668 $15,558
Income taxes 6,108 274 6,382
------------ ----------- ---------
Net income $ 8,782 $ 394 $ 9,176
============ =========== =========
EPS - diluted $ 0.331 $0.015 $ 0.346
============ =========== =========
Diluted Average Shares outstanding 26,497,773
Quarterly Effective Tax Rate 41.02%
(Dollars in Thousands, Except for
Per Share Data)
Net
YTD 2007 Income
as
Net Income Adjustments Adjusted
------------ ----------- ---------
Income before income taxes $ 42,211 $ 668 $42,879
Income taxes 17,351 274 17,625
------------ ----------- ---------
Net income $ 24,860 $ 394 $25,254
============ =========== =========
EPS - diluted $ 0.938 $0.015 $ 0.952
============ =========== =========
Diluted Average Shares outstanding 26,514,819
YTD Effective Tax Rate 41.11%
CONTACT: Investors and Financial Media:
Tony Rossi
Financial Relations Board
213-486-6545