Toggle SGML Header (+)


Section 1: 8-K (FORM 8-K)

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________

Form 8-K
_____________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event Reported): January 23, 2018  

HANMI FINANCIAL CORPORATION
(Exact Name of Registrant as Specified in Charter)

Delaware000-3042195-4788120
(State or Other Jurisdiction of Incorporation)(Commission File Number)(I.R.S. Employer Identification Number)

 

3660 Wilshire Boulevard, PH-A, Los Angeles, California 90010
(Address of Principal Executive Offices) (Zip Code)

(213) 382-2200
(Registrant's telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 [   ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 [   ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 [   ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 [   ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company [   ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [   ]

 
 

Item 2.02. Results of Operations and Financial Condition.

                This information set forth under “Item 2.02. Results of Operations and Financial Condition,” including Exhibit 99.1 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.

                On January 23, 2018, Hanmi Financial Corporation (“Hanmi Financial”) issued a press release announcing its financial results for the quarter ended December 31, 2017. A copy of the press release is attached as Exhibit 99.1 to this Form 8-K.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

         99.1     Press release issued by Hanmi Financial dated January 23, 2018.

Forward-Looking Statements

This press release contains 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. All statements other than statements of historical fact are “forward–looking statements” for purposes of federal and state securities laws, including, but not limited to, statements about anticipated future operating and financial performance, financial position and liquidity, business strategies, regulatory and competitive outlook, investment and expenditure plans, capital and financing needs and availability, plans and objectives of management for future operations, developments regarding our capital plans, strategic alternatives for a possible business combination, merger or sale transaction, and other similar forecasts and statements of expectation and statements of assumption underlying any of the foregoing. 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: failure to maintain adequate levels of capital and liquidity to support our operations; the effect of potential future supervisory action against us or Hanmi Bank; general economic and business conditions internationally, nationally and in those areas in which we operate; volatility and deterioration in the credit and equity markets; changes in consumer spending, borrowing and savings habits; availability of capital from private and government sources; demographic changes; competition for loans and deposits and failure to attract or retain loans and deposits; fluctuations in interest rates and a decline in the level of our interest rate spread; risks of natural disasters related to our real estate portfolio; risks associated with Small Business Administration loans; failure to attract or retain key employees; changes in governmental regulation, including, but not limited to, any increase in FDIC insurance premiums; ability of Hanmi Bank to make distributions to Hanmi Financial Corporation, which is restricted by certain factors, including Hanmi Bank’s retained earnings, net income, prior distributions made, and certain other financial tests; ability to identify a suitable strategic partner or to consummate a strategic transaction; adequacy of our allowance for loan and lease losses; credit quality and the effect of credit quality on our provision for loan and lease losses and allowance for loan and lease losses; changes in the financial performance and/or condition of our borrowers and the ability of our borrowers to perform under the terms of their loans and other terms of credit agreements; our ability to control expenses; and changes in securities markets. In addition, we set forth certain risks in our reports filed with the U.S. Securities and Exchange Commission, including, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2016, our Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K that we will file hereafter, which could cause actual results to differ from those projected. We undertake no obligation to update such forward-looking statements except as required by law.


SIGNATURE

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 hereunto duly authorized.

 HANMI FINANCIAL CORPORATION
   
  
Date: January 23, 2018By: /s/ C. G. Kum        
  C. G. Kum
  President and Chief Executive Officer
  


EXHIBIT INDEX

 

Exhibit
No.
 Description
   
99.1 Press release, dated January 23, 2018.*

Deemed “furnished” and not “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.

(Back To Top)

Section 2: EX-99.1 (PRESS RELEASE)

EdgarFiling

EXHIBIT 99.1

Hanmi Reports Strong Fourth Quarter and Full Year Results Driven by Loan Growth and Expanding Net Interest Income

2017 Fourth Quarter and Full Year Highlights:   

LOS ANGELES, Jan. 23, 2018 (GLOBE NEWSWIRE) -- Hanmi Financial Corporation (NASDAQ:HAFC) (or “Hanmi”), the parent company of Hanmi Bank (the “Bank”) today reported net income for the 2017 fourth quarter of $11.5 million or $0.36 per diluted share, compared with $14.9 million, or $0.46 per diluted share for the 2017 third quarter and $14.4 million, or $0.45 per diluted share for the 2016 fourth quarter.

For the 2017 year, net income was $54.7 million, or $1.69 per diluted share, compared with $56.5 million, or $1.75 per diluted share, for 2016.

On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Reform Act”) was enacted into law. Beginning in 2018, the Tax Reform Act reduces the Federal tax rate for corporations from 35% to 21% and changes or limits certain tax deductions. As a result of the lower corporate tax rate, during the fourth quarter of 2017,  Hanmi recorded a one-time revaluation adjustment of $3.9 million to reduce its deferred tax assets, which increased income tax expense and reduced fourth quarter and full year earnings by approximately $0.12 per diluted share.

Mr. C. G. Kum, President and Chief Executive Officer, said, “Hanmi’s excellent fourth quarter results concluded another year of safe and profitable growth for the Bank. I am pleased to report that the strong growth of the Loan and lease portfolio in 2017, continuing our trend of double-digit growth, was the primary driver of our top line revenue expansion. Our ability to sustain this growth trajectory in 2018 and beyond has strengthened with the fourth quarter opening of a de novo branch in the vibrant New York/New Jersey market. Importantly, the mix of our earning assets continue to improve as we ended 2017 with Commercial Real Estate loans constituting 71.2% of the total loan portfolio as compared to 76.3% at year-end 2016.”

Mr. Kum continued, “Cost effective deposit gathering was challenging in the Asian American market in 2017. We, however, were able to increase deposits 14% and, at the same time, maintain a stable net interest margin in 2017. Finally, even after accounting for the additional income tax provision stemming from the revaluation of our deferred tax assets, Hanmi’s 2017 net income represented an attractive full year return on average assets of 1.10%.”

Quarterly Highlights              
 (in thousands, except per share data)               
               
  As of or For the Three Months Ended  Amount Change 
 Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Q4-17 Q4-17 
 2017
 2017
 2017
 2017
 2016
 vs. Q3-17 vs. Q4-16 
               
Net income$11,500  $14,923  $14,457  $13,783  $14,416  $(3,423) $(2,916) 
Net income per diluted common share$0.36  $0.46  $0.45  $0.43  $0.45  $(0.10) $(0.09) 
               
Assets$5,210,485  $5,111,396  $4,973,346  $4,811,821  $4,701,346  $99,089  $509,139  
Loans and leases receivable$4,304,458  $4,195,355  $4,073,062  $3,943,951  $3,844,769  $109,103  $459,689  
Deposits$4,348,654  $4,299,010  $4,259,173  $4,083,165  $3,809,737  $49,644  $538,917  
               
Return on average assets 0.88%  1.18%  1.19%  1.18%  1.26%  -0.29   -0.38  
Return on average stockholders' equity 8.12%  10.73%  10.65%  10.46%  10.84%  -2.61   -2.72  
               
Net interest margin (1) 3.79%  3.79%  3.81%  3.89%  3.96%  0.00   -0.17  
Net interest margin excluding acquisition accounting (2) 3.76%  3.76%  3.76%  3.84%  3.86%  0.00   -0.10  
Efficiency ratio (3) 54.16%  53.33%  54.74%  54.95%  51.77%  0.83   2.38  
Efficiency ratio excluding merger and integration costs 54.16%  53.33%  54.75%  55.01%  51.15%  0.83   3.01  
               
Tangible common equity to tangible assets (2) 10.58%  10.72%  10.83%  10.98%  11.05%  -0.14   -0.47  
Tangible common equity per common share (2)$16.96  $16.86  $16.59  $16.26  $16.03  $0.09  $0.93  
               
(1)  Amounts calculated on a fully taxable equivalent basis using the statutory federal tax rate of 35%.           
(2)  Refer to "Non-GAAP Financial Measures" for further details.             
(3)  Noninterest expense divided by net interest income plus noninterest income             
               

Results of Operations 
Fourth quarter 2017 net interest income increased 3.2% to $46.3 million from $44.9 million in the third quarter reflecting the solid expansion of loans and leases receivables. Average loans and leases grew 3.3% quarter-over-quarter.  On a year-over-year basis, fourth quarter net interest income was up 10.2% from $42.1 million last year.

Net interest income of $176.8 million for the full year in 2017 increased 10.4% compared with $160.2 million for the full year in 2016. The year-over-year improvement in net interest income reflects the 18.0% growth in average loans and leases.

  For the Three Months Ended (in thousands) Percentage Change 
 Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Q4-17 Q4-17 
Net Interest Income2017 2017 2017 2017 2016 vs. Q3-17 vs. Q4-16 
               
Interest and fees on loans and leases(1)$52,176 $50,265 $47,971 $45,378 $43,780 3.8% 19.2% 
Interest on securities 3,194  3,188  2,949  2,520  2,550 0.2% 25.3% 
Dividends on FHLB stock 289  286  283  374  927 1.0% -68.8% 
Interest on deposits in other banks 125  123  123  77  55 1.6% 127.3% 
Total interest and dividend income 55,784  53,862  51,326  48,349  47,312 3.6% 17.9% 
               
Interest on deposits 7,402  7,071  6,463  5,154  4,799 4.7% 54.2% 
Interest on borrowings 363  198  49  468  207 83.3% 75.4% 
Interest on subordinated debentures 1,676  1,667  1,636  373  241 0.5% 595.4% 
Total interest expense 9,441  8,936  8,148  5,995  5,247 5.7% 79.9% 
Net interest income$46,343 $44,926 $43,178 $42,354 $42,065 3.2% 10.2% 
               
(1)  Includes loans held for sale.              
               

Net interest margin (on a taxable equivalent basis) for the fourth quarter of 2017 was 3.79%, unchanged from the prior quarter as loan yields increased by 3 basis points and cost of deposits increased by 2 basis points. Compared to the fourth quarter a year ago, net interest margin declined by 17 basis points, principally reflecting the subordinated debt issuance in the first quarter of 2017.   

For the full year of 2017, net interest margin was 3.82% compared with 3.95% a year ago. Excluding acquisition accounting, the net interest margin was little-changed year-over-year at 3.78% and 3.79% respectively.

  For the Three Months Ended (in thousands) Percentage Change
 Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Q4-17 Q4-17
Average Earning Assets and Interest-bearing Liabilities2017
 2017
 2017
 2017
 2016
 vs. Q3-17 vs. Q4-16
Loans and lease receivables (1)$4,227,259  $4,092,131  $3,951,934  $3,881,686  $3,690,955  3.3% 14.5%
Securities 611,181   611,538   585,384   526,549   530,241  -0.1% 15.3%
FHLB stock 16,385   16,385   16,385   16,385   16,385  0.0% 0.0%
Interest-bearing deposits in other banks 36,386   38,981   47,402   38,600   40,548  -6.7% -10.3%
Average interest-earning assets$4,891,211  $4,759,035  $4,601,105  $4,463,220  $4,278,129  2.8% 14.3%
              
Demand: interest-bearing$90,646  $90,720  $93,873  $97,602  $95,399  -0.1% -5.0%
Money market and savings 1,513,408   1,526,951   1,532,733   1,406,903   1,305,565  -0.9% 15.9%
Time deposits 1,408,227   1,384,724   1,320,005   1,173,184   1,165,828  1.7% 20.8%
Average interest-bearing deposits 3,012,281   3,002,395   2,946,611   2,677,689   2,566,792  0.3% 17.4%
Borrowings 119,946   67,935   20,000   270,500   174,674  76.6% -31.3%
Subordinated debentures 117,198   117,065   116,850   30,950   18,919  0.1% 519.5%
Average interest-bearing liabilities$3,249,425  $3,187,395  $3,083,461  $2,979,139  $2,760,385  1.9% 17.7%
              
              
              
  For the Three Months Ended
 Amount Change
 Dec 31, Sep 30, Jun 31, Mar 31, Dec 31, Q4-17 Q4-17
Average Yields and Rates2017
 2017
 2017
 2016
 2016
 vs. Q3-17 vs. Q4-16
Loans and lease receivables (1) 4.90%  4.87%  4.87%  4.74%  4.72% 0.03  0.18 
Securities (2) 2.37%  2.41%  2.35%  2.30%  2.31% -0.04  0.06 
FHLB stock 7.00%  6.93%  6.93%  9.26%  22.63% 0.07  -15.63 
Interest-bearing deposits in other banks 1.36%  1.25%  1.04%  0.81%  0.54% 0.11  0.82 
Interest-earning assets 4.56%  4.53%  4.52%  4.44%  4.45% 0.03  0.11 
              
Interest-bearing deposits 0.97%  0.93%  0.88%  0.78%  0.74% 0.04  0.23 
Borrowings 1.20%  1.16%  0.98%  0.70%  0.47% 0.04  0.73 
Subordinated debentures 5.70%  5.68%  5.59%  4.82%  5.07% 0.02  0.63 
Interest-bearing liabilities 1.15%  1.11%  1.06%  0.82%  0.76% 0.04  0.39 
              
Net interest margin (taxable equivalent basis) 3.79%  3.79%  3.81%  3.89%  3.96% 0.00  -0.17 
              
Cost of deposits 0.68%  0.66%  0.62%  0.54%  0.50% 0.02  0.18 
              
(1)  Includes loans held for sale.             
(2)  Amounts calculated on a fully taxable equivalent basis using the statutory federal tax rate of 35%.         
          

For the fourth quarter of 2017, Hanmi recorded a provision for loan losses of $0.2 million compared with $0.3 million for the preceding quarter.

For the full year of 2017, Hanmi recorded a provision for loan losses of $0.8 million, compared with a negative loan loss provision of $4.3 million for the full year of 2016.

Fourth quarter noninterest income decreased 12.9% to $7.7 million from $8.8 million for the third quarter of 2017 primarily due to a $0.9 million decrease in disposition gains on PCI loans and a $0.5 million decrease in gains on sales of SBA loans. Gains on sales of SBA loans were $2.1 million for the fourth quarter 2017, down from $2.5 million from the third quarter of 2017 as the volume of SBA loans sold decreased to $27.5 million from $32.5 million for the preceding quarter. Disposition gains on PCI loans were $0.1 million for the fourth quarter of 2017, compared with $1.0 million for the prior quarter. PCI loans from the 2014 acquisition were $7.7 million at the end of the fourth quarter of 2017, down 11.0% from the prior quarter.

For the year ended 2017, noninterest income increased $0.3 million, or 1.0%, to $33.4 million from $33.1 million for the same period last year primarily due to a $2.7 million increase in gains on sales of SBA loans and a $1.7 million increase in gains on sales of securities, partially offset by a $3.2 million reduction in disposition gains on PCI loans. Disposition gains on PCI loans were $1.8 million for the year ended 2017, compared with $5.0 million for the year ended 2016. Gains on sales of SBA loans were $8.7 million for the year ended 2017, compared with $6.0 million for the year ended 2016 as the volume of SBA loans sold increased to $112.0 million from $84.9 million for the same period last year.

  For the Three Months Ended (in thousands) Percentage Change
 Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Q4-17 Q4-17
Noninterest Income2017 2017 2017 2017 2016 vs. Q3-17 vs. Q4-16
Service charges on deposit accounts$2,729 $2,678 $2,461 $2,528 $2,599 1.9% 5.0%
Trade finance and other service charges and fees 1,047  1,133  1,269  1,047  1,132 -7.6% -7.5%
Other operating income 1,485  1,213  1,826  1,726  991 22.4% 49.8%
Service charges, fees & other 5,261  5,024  5,556  5,301  4,722 4.7% 11.4%
              
Gain on sale of SBA loans 2,056  2,546  2,668  1,464  1,787 -19.2% 15.1%
Disposition gain on PCI loans 91  979  540  183  1,559 -90.7% -94.2%
Net gain on sales of securities 275  267  938  269  - 3.0% 0.0%
Total noninterest income$7,683 $8,816 $9,702 $7,217 $8,068 -12.9% -4.8%
              

Noninterest expense for the fourth quarter increased 2.1% to $29.3 million from $28.7 million for the third quarter primarily due to a $0.3 million increase in professional fees and a $0.3 million increase in salaries and employee benefits expense. As a result of the increase in noninterest expense, as well as lower noninterest income, the efficiency ratio increased to 54.2% in the fourth quarter from 53.3% in the prior quarter.

For the year ended 2017, noninterest expense increased $5.9 million, or 5.4%, to $114.1 million from $108.2 million for the same period last year primarily due to increased salaries and employee benefits expense, higher data processing fees, and increased occupancy and equipment expense. As a result of the increase in noninterest expense, coupled with the improvements in revenue from the growth in earning assets, the efficiency ratio improved to 54.3% for the year ended 2017 from 56.0% for the year ended 2016.

  For the Three Months Ended (in thousands) Percentage Change
 Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Q4-17 Q4-17
 2017
 2017
 2017
 2017
 2016
 vs. Q3-17 vs. Q4-16
Noninterest Expense             
Salaries and benefits$17,270  $16,947  $16,623  $17,104  $16,246  1.9% 6.3%
Occupancy and equipment 3,997   3,883   3,878   3,982   3,641  2.9% 9.8%
Data processing 1,812   1,779   1,738   1,631   1,455  1.9% 24.5%
Professional fees 1,552   1,210   1,554   1,148   1,311  28.3% 18.4%
Supplies and communication 778   755   745   635   683  3.0% 13.9%
Advertising and promotion 988   1,147   1,015   802   1,140  -13.9% -13.3%
Other operating expenses 2,961   2,955   2,881   2,070   1,825  0.2% 62.2%
subtotal 29,358   28,676   28,434   27,372   26,301  2.4% 11.6%
              
OREO expense (income) (100)  (16)  519   (101)  (658) 525.0% -84.8%
Merger and integration costs -   -   (9)  (31)  312  0.0% -100.0%
Total noninterest expense$29,258  $28,660  $28,944  $27,240  $25,955  2.1% 12.7%
              

Hanmi recorded a provision for income taxes of $13.0 million for the fourth quarter of 2017, representing an effective tax rate of 53.2%, compared with $9.9 million, representing an effective tax rate of 39.9%, for the preceding quarter. For the full year ended December 31, 2017 and 2016, Hanmi recorded a provision for income taxes of $40.6 million and $32.9 million, respectively, representing effective tax rates of 42.6% and 36.8%, respectively. As noted previously, included in the provision for the quarter and year was the additional income tax expense of $3.9 million resulting from a one-time revaluation adjustment to reduce Hanmi’s deferred tax assets due to the change in the Federal corporate tax rate to 21% from 35%. The effective tax rate, before the additional income tax expense, was 37.5% and 38.6% for the 2017 fourth quarter and year, respectively.

Financial Position
Total assets were $5.21 billion at December 31, 2017, a 2.0% increase from $5.11 billion at September 30, 2017. The increase in total assets was primarily due to an increase in loans and leases receivable.

Loans and leases receivable, before the allowance for loan and lease losses, were $4.30 billion at December 31, 2017, up 2.6% from $4.20 billion at September 30, 2017. The increase in loans and leases from the prior quarter reflects Hanmi’s continued strong loan production. Loans held for sale, representing the guaranteed portion of SBA loans, were $6.4 million at December 31, 2017 compared with $6.5 million at the end of the 2017 third quarter.

Loans and leases receivable, before the allowance for loan and lease losses, increased 12.0% from $3.84 billion for the fourth quarter last year, primarily due to strong loan production over the last twelve months, as well as last year’s fourth quarter acquisition and commencement of the Commercial Equipment Leasing division.

 

  As of (in thousands) Percentage Change
 Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Q4-17 Q4-17
 2017 2017 2017 2017 2016 vs. Q3-17 vs. Q4-16
Loan and Lease Portfolio             
Commercial real estate loans$3,069,063 $3,108,931 $3,068,069 $2,991,123 $2,939,608 -1.3% 4.4%
Residential real estate loans 521,852  430,627  384,044  359,152  338,767 21.2% 54.0%
Commercial and industrial loans 399,197  364,456  346,150  316,284  300,220 9.5% 33.0%
Lease receivable 297,286  272,271  257,525  259,591  243,294 9.2% 22.2%
Consumer loans 17,060  19,070  17,274  17,801  22,880 -10.5% -25.4%
Loans and leases receivable 4,304,458  4,195,355  4,073,062  3,943,951  3,844,769 2.6% 12.0%
Loans held for sale 6,394  6,469  10,949  8,849  9,316 -1.2% -31.4%
Total loans$4,310,852 $4,201,824 $4,084,011 $3,952,800 $3,854,085 2.6% 11.9%
              
Acquired Loans(1)             
PCI loans, net of discounts$7,748 $8,704 $8,784 $8,960 $9,863 -11.0% -21.4%
Non-PCI loans, net of discounts 83,456  91,013  96,600  101,062  104,733 -8.3% -20.3%
Total acquired loans$91,204 $99,717 $105,384 $110,022 $114,596 -8.5% -20.4%
              
(1)  Includes UCB acquired only.             
              

New loan production for the 2017 fourth quarter was $262.4 million while payoffs and amortization was $222.2 million compared with $220.4 million and $145.4 million for the third quarter of 2017. Fourth quarter 2017 new loan production was comprised of $117.0 million of commercial real estate loans, $47.7 million of commercial and industrial loans, $43.5 million of SBA loans, $52.4 million of commercial leases and $1.8 million of consumer loans. Loan purchases for the 2017 fourth quarter were $105.0 million, compared with $88.2 million in the third quarter of 2017. For the fourth quarter of 2017, commercial real estate loans as a percentage of total loans and leases decreased to 71.3% compared with 76.5% for the same period last year.

Deposits increased to $4.35 billion at the end of the 2017 fourth quarter from $4.30 billion at the end of the preceding quarter. Time deposits and noninterest-bearing demand deposits led this growth. The loans to deposits ratio at December 31, 2017 increased to 99.0% from 97.6% at September 30, 2017.

Deposits increased 14.1% from $3.81 billion in the fourth quarter last year, primarily due to the strength of Hanmi’s retail branch network as time deposits increased 20.0% and money market and savings deposits increased 14.9% from a year ago.

  As of (in thousands) Percentage Change
 Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Q4-17 Q4-17
 2017 2017 2017 2017 2016 vs. Q3-17 vs. Q4-16
Deposit Portfolio             
Demand: noninterest-bearing$1,312,274 $1,293,538 $1,260,929 $1,241,272 $1,203,240 1.4% 9.1%
Demand: interest-bearing 92,948  90,734  93,390  99,433  96,856 2.4% -4.0%
Money market and savings 1,527,100  1,534,457  1,528,127  1,534,578  1,329,324 -0.5% 14.9%
Time deposits of $250,000 or less 954,104  949,826  916,197  731,445  734,383 0.5% 29.9%
Time deposits of more than $250,000 462,228  430,455  460,530  476,437  445,934 7.4% 3.7%
Total deposits$4,348,654 $4,299,010 $4,259,173 $4,083,165 $3,809,737 1.2% 14.1%
              

At December 31, 2017, stockholders’ equity was $562.5 million, compared with $559.2 million at September 30, 2017. Tangible common stockholders’ equity was $549.9 million, or 10.58% of tangible assets, compared with $546.6 million, or 10.72% of tangible assets at September 30, 2017. Tangible book value per share was $16.96, compared to $16.86 in the third quarter.

Hanmi continues to be well capitalized, with a preliminary Tier 1 risk-based capital ratio of 12.41% and a Total risk-based capital ratio of 15.32% at December 31, 2017, versus 12.56% and 15.58%, respectively, at September 30, 2017.

  As of Amount Change
 Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Q4-17 Q4-17
 2017
 2017
 2017
 2017
 2016
 vs. Q3-17 vs. Q4-16
Regulatory Capital ratios (1)             
Hanmi Financial             
Total risk-based capital15.32% 15.58% 15.69% 16.16% 13.86% -0.26 1.46
Tier 1 risk-based capital12.41% 12.56% 12.58% 12.93% 13.02% -0.15 -0.61
Common equity tier 1 capital12.05% 12.20% 12.22% 12.56% 12.73% -0.15 -0.68
Tier 1 leverage capital ratio10.79% 10.92% 11.08% 11.21% 11.53% -0.13 -0.74
Hanmi Bank             
Total risk-based capital15.16% 15.32% 15.44% 15.91% 13.64% -0.16 1.52
Tier 1 risk-based capital14.44% 14.55% 14.62% 15.07% 12.80% -0.11 1.64
Common equity tier 1 capital14.44% 14.55% 14.62% 15.07% 12.80% -0.11 1.64
Tier 1 leverage capital ratio12.56% 12.66% 12.89% 13.08% 11.33% -0.10 1.23
              
(1)  Preliminary ratios for December 31, 2017             
              

During the quarter, Hanmi declared a cash dividend on its common stock for the 2017 fourth quarter of $0.21 per common share, in line from the prior quarter. The dividend was paid on November 20, 2017, to stockholders of record as of the close of business on October 30, 2017.

Asset Quality
Nonperforming loans, excluding PCI loans, were $15.8 million at the end of the fourth quarter of 2017, or 0.37% of loans, compared with $14.6 million at the end of the third quarter of 2017, or 0.35% of loans. Loans past due 30 to 89 days and still accruing was 0.20% of loans at the end of the fourth quarter of 2017, compared with 0.12% of loans at the end of the third quarter.

OREO was $1.9 million at the end of the fourth quarter of 2017, unchanged from the prior quarter. Nonperforming assets were $17.8 million at the end of the fourth quarter of 2017, or 0.34% of assets, compared with 0.32% of assets at the end of the prior quarter.

Gross charge-offs for the fourth quarter of 2017 were $2.6 million compared with $2.4 million for the preceding quarter. Gross-charge-offs included a $1.3 million charge-off of a fully-reserved SBA loan originated in 2012. Recoveries of previously charged-off loans for the fourth quarter of 2017 were $973,000 compared with $871,000 for the preceding quarter. As a result, there were net charge-offs of $1.7 million for the fourth quarter of 2017, or 0.16% of average loans and leases, compared to net charge-offs of $1.5 million, or 0.15%, for the preceding quarter.

The allowance for loan and lease losses was $31.0 million as of December 31, 2017, generating an allowance to receivable ratio of 0.72% compared with 0.77% as of September 30, 2017.

 

  As of or for the Three Months Ended (in thousands) Amount Change
 Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Q4-17 Q4-17
 2017
 2017
 2017
 2017
 2016
 vs. Q3-17 vs. Q4-16
Asset Quality             
Nonperforming assets (1):             
Nonaccrual loans$15,805  $14,558  $16,464  $12,774  $11,406  $1,247 $4,399 
Loans 90 days or more past due and still accruing -   -   -   -   -   -  - 
Nonperforming loans 15,805   14,558   16,464   12,774   11,406   1,247  4,399 
OREO, net 1,946   1,946   4,321   4,636   7,484   -  (5,538)
Nonperforming assets$17,751  $16,504  $20,785  $17,410  $18,890  $1,247 $(1,139)
              
Delinquent loans:             
Loans, 30 to 89 days past due and still accruing$8,498  $4,993  $9,431  $6,273  $5,718  $3,505 $2,780 
Delinquent loans to loans 0.20%  0.12%  0.23%  0.16%  0.15%  0.08  0.05 
              
Allowance for loan and lease losses:             
Balance at beginning of period$32,492  $33,758  $33,152  $32,429  $38,972     
Loan and lease loss provision (income) 220   269   422   (80)  151     
Net loan charge-offs (recoveries) 1,669   1,535   (184)  (803)  6,694     
Balance at end of period$31,043  $32,492  $33,758  $33,152  $32,429     
              
Asset quality ratios:             
Nonperforming loans to loans (1) 0.37%  0.35%  0.41%  0.32%  0.30%    
Nonperforming assets to assets (1) 0.34%  0.32%  0.42%  0.36%  0.40%    
Net loan charge-offs (recoveries) to average loans (3) 0.16%  0.15%  -0.02%  -0.08%  0.73%    
Allowance for loan losses to loans 0.72%  0.77%  0.83%  0.84%  0.84%    
Allowance for loan losses to nonperforming loans (1) (2) 194.39%  217.74%  200.67%  252.54%  275.80%    
              
Allowance for off-balance sheet items:             
Balance at beginning of period$915  $1,135  $1,184  $1,184  $1,491     
Provision (income) for off-balance sheet items 381   (220)  (49)  -   (307)    
Balance at end of period$1,296  $915  $1,135  $1,184  $1,184     
              
(1)  Excludes PCI loans             
(2)  Excludes allowance for loan losses allocated to PCI loans            
(3)  Annualized             
              

Conference Call
Management will host a conference call today, January 23, 2018 at 2:00 p.m. PT (5:00 p.m. ET) to discuss these results. This call will also be broadcast live via the internet. Investment professionals and all current and prospective stockholders are invited to access the live call by dialing 1-877-407-9039 before 2:00 p.m. PT, using access code HANMI. To listen to the call online, either live or archived, visit the Investor Relations page of Hanmi’s website at www.hanmi.com.

About Hanmi Financial Corporation
Headquartered in Los Angeles, California, Hanmi Financial Corporation owns Hanmi Bank, which serves multi-ethnic communities through its network of 40 full-service branches and 8 loan production offices in California, Texas, Illinois, Virginia, New Jersey, New York, Colorado, Washington and Georgia. Hanmi Bank specializes in real estate, commercial, SBA and trade finance lending to small and middle market businesses. Additional information is available at www.hanmi.com.

Forward-Looking Statements
This press release contains 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. All statements other than statements of historical fact are “forward–looking statements” for purposes of federal and state securities laws, including, but not limited to, statements about anticipated future operating and financial performance, financial position and liquidity, business strategies, regulatory and competitive outlook, investment and expenditure plans, capital and financing needs and availability, plans and objectives of management for future operations, developments regarding our capital plans, strategic alternatives for a possible business combination, merger or sale transaction, and other similar forecasts and statements of expectation and statements of assumption underlying any of the foregoing. 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: failure to maintain adequate levels of capital and liquidity to support our operations; the effect of potential future supervisory action against us or Hanmi Bank; general economic and business conditions internationally, nationally and in those areas in which we operate; volatility and deterioration in the credit and equity markets; changes in consumer spending, borrowing and savings habits; availability of capital from private and government sources; demographic changes; competition for loans and deposits and failure to attract or retain loans and deposits; fluctuations in interest rates and a decline in the level of our interest rate spread; risks of natural disasters related to our real estate portfolio; risks associated with Small Business Administration loans; failure to attract or retain key employees; changes in governmental regulation, including, but not limited to, any increase in FDIC insurance premiums; ability of Hanmi Bank to make distributions to Hanmi Financial Corporation, which is restricted by certain factors, including Hanmi Bank’s retained earnings, net income, prior distributions made, and certain other financial tests; ability to identify a suitable strategic partner or to consummate a strategic transaction; adequacy of our allowance for loan and lease losses; credit quality and the effect of credit quality on our provision for loan and lease losses and allowance for loan and lease losses; changes in the financial performance and/or condition of our borrowers and the ability of our borrowers to perform under the terms of their loans and other terms of credit agreements; our ability to control expenses; and changes in securities markets. In addition, we set forth certain risks in our reports filed with the U.S. Securities and Exchange Commission, including, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2016, our Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K that we will file hereafter, which could cause actual results to differ from those projected. We undertake no obligation to update such forward-looking statements except as required by law.

Investor Contacts:
Romolo (Ron) Santarosa
Senior Executive Vice President & Chief Financial Officer
213-427-5636

Richard Pimentel
Senior Vice President & Corporate Finance Officer
213-427-3191

Lasse Glassen
Investor Relations
Addo Investor Relations
310-829-5400


Hanmi Financial Corporation and Subsidiaries 
Consolidated Balance Sheets (Unaudited) 
(In thousands) 
  
 December 31, September 30, Percentage December 31, Percentage 
 2017
 2017
 Change 2016
 Change 
Assets          
Cash and due from banks$153,826  $138,139  11.4% $147,235  4.5% 
Securities available for sale, at fair value 578,804   598,440  -3.3%  516,964  12.0% 
Loans held for sale, at the lower of cost or fair value 6,394   6,469  -1.2%  9,316  -31.4% 
Loans and leases receivable, net of allowance for loan and lease losses 4,273,415   4,162,863  2.7%  3,812,340  12.1% 
Accrued interest receivable 12,770   12,098  5.6%  10,987  16.2% 
Customers' liability on acceptances 803   647  24.1%  978  -17.9% 
Servicing assets 10,218   10,428  -2.0%  10,564  -3.3% 
Premises and equipment, net 26,655   26,648  0.0%  28,698  -7.1% 
Goodwill and other intangible assets, net 12,544   12,628  -0.7%  12,889  -2.7% 
Federal Home Loan Bank ("FHLB") stock, at cost 16,385   16,385  0.0%  16,385  0.0% 
Other real estate owned ("OREO"), net 1,946   1,946  0.0%  7,484  -74.0% 
Income tax asset 38,279   46,210  -17.2%  48,047  -20.3% 
Bank-owned life insurance 50,554   50,268  0.6%  49,440  2.3% 
Prepaid expenses and other assets 27,892   28,227  -1.2%  30,019  -7.1% 
Total assets$   5,210,485   $   5,111,396   1.9% $   4,701,346   10.8% 
           
Liabilities and Stockholders' Equity          
Liabilities:          
Deposits:          
Noninterest-bearing$1,312,274  $1,293,538  1.4% $1,203,240  9.1% 
Interest-bearing 3,036,380   3,005,472  1.0%  2,606,497  16.5% 
Total deposits 4,348,654   4,299,010  1.2%  3,809,737  14.1% 
Accrued interest payable 5,309   4,071  30.4%  2,567  106.8% 
Bank's liability on acceptances 803   657  22.2%  978  -17.9% 
Borrowings 150,000   110,000  36.4%  315,000  -52.4% 
Subordinated debentures 117,270   117,140  0.1%  18,978  517.9% 
Accrued expenses and other liabilities 25,972   21,271  22.1%  23,061  12.6% 
Total liabilities   4,648,008      4,552,149   2.1%    4,170,321   11.5% 
           
Stockholders' equity:          
Common stock 33   33  0.0%  33  0.0% 
Additional paid-in capital 565,627   564,787  0.1%  562,446  0.6% 
Accumulated other comprehensive income (loss) (1,869)  290  -744.5%  (2,394) -21.9% 
Retained earnings 70,575   65,858  7.2%  41,726  69.1% 
Less treasury stock (71,889)  (71,721) 0.2%  (70,786) 1.6% 
Total stockholders' equity   562,477      559,247   0.6%    531,025   5.9% 
Total liabilities and stockholders' equity$   5,210,485   $   5,111,396   1.9% $   4,701,346   10.8% 
           


 

Hanmi Financial Corporation and Subsidiaries 
Consolidated Statements of Income (Unaudited) 
(In thousands, except share and per share data) 
  Three Months Ended  
 December 31, September 30,  Percentage December 31, Percentage 
 2017 2017
  Change 2016
 Change 
Interest and dividend income:           
Interest and fees on loans and leases$52,176  $50,265   3.8% $43,780  19.2% 
Interest on securities 3,194   3,188   0.2%  2,550  25.3% 
Dividends on FHLB stock 289   286   1.0%  927  -68.8% 
Interest on deposits in other banks 125   123   1.6%  55  127.3% 
Total interest and dividend income 55,784   53,862   3.6%  47,312  17.9% 
Interest expense:           
Interest on deposits 7,402   7,071   4.7%  4,799  54.2% 
Interest on FHLB borrowings 363   198   83.3%  207  75.4
% 
Interest on subordinated debentures 1,676   1,667   0.5%  241  595.4
% 
Total interest expense 9,441   8,936   5.7%  5,247  79.9% 
Net interest income before provision for loan and lease losses 46,343   44,926   3.2%  42,065  10.2% 
Loan and lease loss provision 220   269   -18.2%  151  45.7% 
Net interest income after provision for loan and lease losses 46,123   44,657   3.3%  41,914  10.0% 
Noninterest income:           
Service charges on deposit accounts 2,729   2,678   1.9%  2,599  5.0% 
Trade finance and other service charges and fees 1,047   1,133   -7.6%  1,132  -7.5% 
Gain on sale of Small Business Administration ("SBA") loans 2,056   2,546   -19.2%  1,787  15.1% 
Disposition gains on Purchased Credit Impaired ("PCI") loans 91   979   -90.7%  1,559  -94.2% 
Net gain on sales of securities 275   267   3.0%  -  -  
Other operating income 1,485   1,213   22.4%  991  49.8% 
Total noninterest income 7,683   8,816   -12.9%  8,068  -4.8% 
Noninterest expense:           
Salaries and employee benefits 17,270   16,947   1.9%  16,246  6.3% 
Occupancy and equipment 3,997   3,883   2.9%  3,641  9.8% 
Data processing 1,812   1,779   1.9%  1,455  24.5% 
Professional fees 1,552   1,210   28.3%  1,311  18.4% 
Supplies and communications 778   755   3.0%  683  13.9% 
Advertising and promotion 988   1,147   -13.9%  1,140  -13.3% 
OREO (income) (100)  (16)  525.0%  (658) -84.8% 
Other operating expenses 2,961   2,955   0.2%  1,825  62.2% 
Merger and integration costs -   -   -   312  -100.0% 
Total noninterest expense 29,258   28,660   2.1%  25,955  12.7% 
Income before provision for income taxes 24,548   24,813   -1.1%  24,027  2.2% 
Income tax expense 13,048   9,890   31.9%  9,611  35.8% 
Net income$   11,500   $   14,923    -22.9% $   14,416   -20.2% 
          -  
Basic earnings per share:$0.36  $0.46     $0.45    
Diluted earnings per share:$0.36  $0.46     $0.45    
Weighted-average shares outstanding:           
Basic 32,109,792   32,095,286      31,956,822    
Diluted 32,299,838   32,255,814      32,149,625    
Common shares outstanding 32,431,630   32,413,082      32,330,747    
            
            
            
Hanmi Financial Corporation and Subsidiaries 
Consolidated Statements of Income (Unaudited) 
(In thousands, except share and per share data) 
  
  Twelve Months Ended      
 December 31, December 31,  Percentage     
 2017 2016  Change     
Interest and dividend income:           
Interest and fees on loans and leases$195,790  $164,642   18.9%     
Interest on securities 11,850   11,154   6.2%     
Dividends on FRB and FHLB stock 1,232   2,467   -50.1%     
Interest on deposits in other banks 449   208   115.9%     
Total interest and dividend income 209,321   178,471   17.3%     
Interest expense:           
Interest on deposits 26,089   16,570   57.4%     
Interest on FHLB borrowings 1,077   879   22.5%     
Interest on subordinated debentures 5,353   825   548.8%     
Total interest expense 32,519   18,274   78.0%     
Net interest income before provision for loan and lease losses 176,802   160,197   10.4%     
Loan and lease loss provision (income) 831   (4,339)  -119.2%     
Net interest income after provision for loan losses 175,971   164,536   6.9%     
Noninterest income:           
Service charges on deposit accounts 10,396   11,380   -8.6%     
Trade finance and other service charges and fees 4,495   4,232   6.2%     
Gain on sale of Small Business Administration ("SBA") loans 8,734   6,034   44.7%     
Net gain on sales of securities 1,748   46   3700.0%     
Disposition gains on Purchased Credit Impaired ("PCI") loans 1,792   4,970   -63.9%     
Other operating income 6,250   6,413   -2.5%     
Total noninterest income 33,415   33,075   1.0%     
Noninterest expense:           
Salaries and employee benefits 67,944   63,956   6.2%     
Occupancy and equipment 15,740   14,992   5.0%     
Data processing 6,960   5,674   22.7%     
Professional fees 5,464   5,374   1.7%     
Supplies and communications 2,912   2,949   -1.3%     
Advertising and promotion 3,952   3,910   1.1%     
OREO expense 302   63   379.4%     
Other operating expenses 10,868   10,993   -1.1%     
Merger and integration costs (income) (40)  312   -112.8%     
Total noninterest expense 114,102   108,223   5.4%     
Income before provision for income taxes 95,284   89,388   6.6%     
Income tax expense 40,624   32,899   23.5%     
Net income$   54,660   $   56,489    -3.2%     
      -      
Basic earnings per share:$1.70  $1.76         
Diluted earnings per share:$1.69  $1.75         
Weighted-average shares outstanding:           
Basic 32,071,585   31,899,582         
Diluted 32,249,918   32,048,704         
Common shares outstanding 32,431,630   32,330,747         
            


 

Hanmi Financial Corporation and Subsidiaries  
Average Balance, Average Yield Earned, and Average Rate Paid (Unaudited)  
(In thousands, except ratios)
 
   
 Three Months Ended  
 December 31, 2017 September 30, 2017 December 31, 2016  
  InterestAverage  InterestAverage  InterestAverage  
 AverageIncome /Yield / AverageIncome /Yield / AverageIncome /Yield /  
 BalanceExpenseRate BalanceExpenseRate BalanceExpenseRate  
Assets             
Interest-earning assets:             
Loans and leases receivable (1)$4,227,259 $52,1764.90% $4,092,131 $50,2654.87% $3,690,955 $43,7804.72%  
Securities (2) 611,181  3,6192.37%  611,538  3,6832.41%  530,241  3,0572.31%  
FHLB stock 16,385  2897.00%  16,385  2866.93%  16,385  92722.63%  
Interest-bearing deposits in other banks 36,386  1251.36%  38,981  1231.25%  40,548  550.54%  
Total interest-earning assets 4,891,211  56,2094.56%  4,759,035  54,3574.53%  4,278,129  47,8194.45%  
              
Noninterest-earning assets:             
Cash and due from banks 118,230     114,108     115,211     
Allowance for loan losses (32,469)    (34,252)    (39,235)    
Other assets 185,994     188,813     192,001     
Total assets$  5,162,966     $  5,027,704     $  4,546,106      
              
              
              
Liabilities and Stockholders' Equity             
Interest-bearing liabilities:             
Deposits:             
Demand: interest-bearing$90,646 $180.08% $90,720 $180.08% $95,399 $190.08%  
Money market and savings 1,513,408  3,3150.87%  1,526,951  3,3110.86%  1,305,565  2,3400.71%  
Time deposits 1,408,227  4,0691.15%  1,384,724  3,7421.07%  1,165,828  2,4400.83%  
Total interest-bearing Deposits 3,012,281  7,4020.97%  3,002,395  7,0710.93%  2,566,792  4,7990.74%  
Borrowings 119,946  3631.20%  67,935  1981.16%  174,674  2070.47%  
Subordinated debentures 117,198  1,6765.70%  117,065  1,6675.68%  18,919  2415.07%  
Total interest-bearing liabilities 3,249,425  9,4411.15%  3,187,395  8,9361.11%  2,760,385  5,2470.76%  
              
Noninterest-bearing liabilities and equity:             
Demand deposits: noninterest-bearing 1,321,182     1,257,954     1,229,042     
Other liabilities 30,482     30,592     27,497     
Stockholders' equity 561,877     551,763     529,182     
              
Total liabilities and stockholders' equity$  5,162,966     $  5,027,704     $  4,546,106      
              
Net interest income $   46,768    $   45,421    $  42,572    
              
Cost of deposits  0.68%   0.66%   0.50%  
Net interest spread  3.41%   3.42%   3.69%  
Net interest margin  3.79%   3.79%   3.96%  
              
              
(1)  Includes loans held for sale             
(2)  Amounts calculated on a fully taxable equivalent basis using the statutory federal tax rate of 35%.       
              
    
Hanmi Financial Corporation and Subsidiaries   
Average Balance, Average Yield Earned, and Average Rate Paid (Unaudited)   
(In thousands, except ratios)   
    
 Twelve Months Ended      
 December 31, 2017 December 31, 2016      
  InterestAverage  InterestAverage      
 AverageIncome /Yield / AverageIncome /Yield /      
 BalanceExpenseRate BalanceExpenseRate      
Assets             
Interest-earning assets:             
Loans and leases receivable (1)$4,039,346 $195,7904.85% $3,423,292 $164,6424.81%      
Securities (2) 583,971  13,7712.36%  614,749  13,1942.15%      
FRB and FHLB stock 16,385  1,2327.52%  24,189  2,46710.20%      
Interest-bearing deposits in other banks 40,333  4491.11%  41,730  2080.50%      
Total interest-earning assets 4,680,035  211,2424.51%  4,103,960  180,5114.40%      
              
Noninterest-earning assets:             
Cash and due from banks 116,716     115,229         
Allowance for loan losses (33,277)    (40,856)        
Other assets 188,992     194,365         
              
Total assets$  4,952,466     $  4,372,698          
              
Liabilities and Stockholders' Equity             
Interest-bearing liabilities:             
Deposits:             
Demand: interest-bearing$93,184 $740.08% $95,298 $750.08%      
Money market and savings 1,495,378  12,5150.84%  1,074,247  6,4700.60%      
Time deposits 1,322,352  13,5001.02%  1,255,883  10,0250.80%      
Total interest-bearing deposits 2,910,914  26,0890.90%  2,425,428  16,5700.68%      
Borrowings 119,041  1,0770.90%  196,708  8790.45%      
Subordinated debentures 95,811  5,3535.57%  18,817  8254.38%      
Total interest-bearing liabilities 3,125,766  32,5191.04%  2,640,953  18,2740.69%      
              
Noninterest-bearing liabilities and equity:             
Demand deposits: noninterest-bearing 1,249,158     1,182,157         
Other liabilities 29,407     30,721         
Stockholders' equity 548,135     518,867         
              
Total liabilities and stockholders' equity$  4,952,466     $  4,372,698          
              
Net interest income $   178,723    $   162,237        
              
Cost of deposits  0.63%   0.46%      
Net interest spread  3.47%   3.71%      
Net interest margin  3.82%   3.95%      
              
              
(1)  Includes loans held for sale             
(2)  Amounts calculated on a fully taxable equivalent basis using the statutory federal tax rate of 35%.       
        

Non-GAAP Financial Measures

Acquisition Accounting

Core loan yield, core deposit costs, net interest income and net interest margin excluding acquisition accounting are supplemental financial information determined by a method other than in accordance with U.S. generally accepted accounting principles (“GAAP”). These non-GAAP measures are used by management in the analysis of Hanmi’s results of operations. The calculation of these measures is illustrated below. Management believes the presentation of these financial measures excluding the impact of these items provides useful supplemental information that is essential to a proper understanding of the results of Hanmi. This disclosure should not be viewed as a substitution for results determined in accordance with GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies.

The following table reconciles these non-GAAP performance measures to the GAAP performance measures for the periods indicated:

  For the Three Months Ended           
 December 31, September 30, June 30, March 31, December 31,          
 2017 2017 2017 2016 2016          
Core loan yield 4.87% 4.84%  4.82% 4.68%  4.63%          
Accretion of discount on purchased loans 0.03% 0.03%  0.05% 0.06%  0.09%          
As reported 4.90% 4.87%  4.87% 4.74%  4.72%          
                    
Core deposit cost 0.69% 0.67%  0.63% 0.55%  0.54%          
Accretion of time deposits premium 0.01% 0.01%  0.01% 0.01%  0.04%          
As reported 0.68% 0.66%  0.62% 0.54%  0.50%          
                    
 
 For the Three Months Ended
 December 31, 2017 September 30, 2017 June 30, 2017 March 31, 2017 December 31, 2016
  Amount   Rate   Amount   Rate   Amount   Rate   Amount   Rate   Amount   Rate 
Net interest income and net interest margin excluding acquisition accounting (1)$   46,405   3.76% $   45,049   3.76% $   43,129   3.76% $   42,230   3.84% $   41,489   3.86%
Accretion of discount on Non-PCI loans 343  0.03%  303  0.03%  457  0.04%  527  0.05%  781  0.07%
Accretion of discount on PCI loans (9) 0.00%  38  0.00%  52  0.00%  54  0.00%  78  0.01%
Accretion of time deposits premium 115  0.01%  116  0.01%  116  0.01%  126  0.01%  314  0.03%
Amortization of subordinated debentures discount (86) -0.01%  (85) -0.01%  (81) -0.01%  (77) -0.01%  (90) -0.01%
Net impact 363  0.03%  372  0.03%  544  0.05%  630  0.05%  1,083  0.10%
As reported, on a fully taxable equivalent basis (1)$   46,768   3.79% $   45,421   3.79% $   43,673   3.81% $   42,860   3.89% $   42,572   3.96%
                    
(1)  Amounts calculated on a fully taxable equivalent basis using the statutory federal tax rate of 35%:  rates may not sum due to rounding.          
                    

Tangible Common Equity to Tangible Assets Ratio

Tangible common equity to tangible assets ratio is supplemental financial information determined by a method other than in accordance with U.S. generally accepted accounting principles (“GAAP”). This non-GAAP measure is used by management in the analysis of Hanmi’s capital strength. Tangible equity is calculated by subtracting goodwill and other intangible assets from stockholders’ equity. Banking and financial institution regulators also exclude goodwill and other intangible assets from stockholders’ equity when assessing the capital adequacy of a financial institution. Management believes the presentation of this financial measure excluding the impact of these items provides useful supplemental information that is essential to a proper understanding of the capital strength of Hanmi. This disclosure should not be viewed as a substitution for results determined in accordance with GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies.

The following table reconciles this non-GAAP performance measure to the GAAP performance measure for the periods indicated:

Tangible Common Equity to Tangible Assets Ratio (Unaudited) 
(In thousands, except share, per share data and ratios) 
           
 December 31, September 30, June 30, March 31, December 31, 
Hanmi Financial Corporation 2017   2017   2017   2017   2016  
Assets$5,210,485  $5,111,396  $4,973,346  $4,811,821  $4,701,346  
Less goodwill (11,031)  (11,031)  (11,031)  (11,031)  (11,031) 
Less other intangible assets (1,513)  (1,597)  (1,681)  (1,766)  (1,858) 
Tangible assets$5,197,941  $5,098,768  $4,960,634  $4,799,024  $4,688,457  
           
Stockholders' equity$562,477  $559,247  $550,140  $539,542  $531,025  
Less goodwill (11,031)  (11,031)  (11,031)  (11,031)  (11,031) 
Less other intangible assets (1,513)  (1,597)  (1,681)  (1,766)  (1,858) 
Tangible stockholders' equity$549,933  $546,619  $537,428  $526,745  $518,136  
           
Stockholders' equity to assets 10.80%  10.94%  11.06%  11.21%  11.30% 
Tangible common equity to tangible assets 10.58%  10.72%  10.83%  10.98%  11.05% 
           
Common shares outstanding 32,431,630   32,413,082   32,393,856   32,392,580   32,330,747  
Tangible common equity per common share$16.96  $16.86  $16.59  $16.26  $16.03  
           

 

 

(Back To Top)