HAFC 1.33 LOS ANGELES, April 21, 2011 (GLOBE NEWSWIRE) -- Hanmi Financial Corporation (Nasdaq:HAFC - News), the holding company for Hanmi Bank, today reported it earned $10.4 million, or $0.07 per diluted share, for the first quarter of 2011, up 96.5% from $5.3 million, or $0.04 per diluted share, in the fourth quarter of 2010, and a substantial improvement from its net loss of $49.5 million, or $0.97 per share, in the year ago quarter.
"As we start 2011, we are pleased that our first quarter financial results reflect improvement in the strength of our franchise. Our increasing profitability in this quarter reflects continuing improvements in credit quality, net interest margin, and efficiency," said Jay S. Yoo, President and Chief Executive Officer. "Hanmi is emerging from this credit cycle with a stronger balance sheet than a year ago, and we anticipate improved operating results for the rest of 2011 and going forward. We believe our recent performance reflects the work of our employees and the confidence our customers show in us."
First Quarter 2011 Highlights (at or for the period ended March 31, 2011)
* Hanmi's first quarter net income of $10.4 million, or $0.07 per diluted share, was the second consecutive quarterly profit and the largest quarterly profit since the second quarter of 2007.
* Non-performing assets (NPA) declined 10.8 % to $154.4 million, or 5.36% of total assets, from $173.1 million, or 5.95% of total assets in the fourth quarter, which represents the lowest level since the first quarter of 2009. Nonperforming assets were down 45.8% from $284.6 million, or 9.43% of total assets a year ago.
* Delinquent loans, which are 30 to 89 days past due, were $20.7 million, a slight decrease of $746,000 from the fourth quarter of 2010, and significantly improved year-over-year, declining 69.8% from $68.6 million a year ago.
* There was no provision for credit losses during the first-quarter of 2011. Total net charge-offs declined to $21.6 million in the first quarter of 2011, a $13.7 million reduction from $35.2 million in the fourth quarter of 2010. While net charge-offs continued to exceed the provision for loan losses in the first quarter, the improving credit quality of the loan portfolio allowed for the reduction of the allowance this quarter.
* The coverage ratio of the loan loss allowance to non-performing loans increased to 82.9% at March 31, 2011, compared to 67.8% a year ago.
* Total assets were $2.88 billion, a decline of $27.5 million, or 0.9%, on a sequential quarter basis. Similarly, total deposits were $2.43 billion, down 1.5% from the fourth quarter of 2010. Consistent with previous quarters, the balance-sheet deleveraging slowed substantially in the first quarter of 2011.
* Total deposits decreased $35.8 million, or 1.5%, to $2.43 billion during the quarter from $2.47 billion in the prior quarter while core deposits, which are total deposits less time deposits greater than $100,000, increased to $1.45 billion, up $105.1 million, or 7.8%, on a sequential quarter basis, due to a continued core-deposit campaign.
* Net interest margin (NIM) improved to 3.66% in the first quarter of 2011, up 18 basis points from 3.48% in the fourth quarter of 2010 and down just 3 basis points from the first quarter a year ago.
* Capital ratios remained strong with total risk based capital to assets at 13.0% up from 12.22% at the end of 2010.
Capital Management
"With the $120 million capital raise last year and positive earnings for the last two quarters, our capital levels at Hanmi Bank have continued to improve and reached their highest level since the third quarter of 2009," Yoo stated. "We are continuing to work on strengthening our balance sheet and fulfilling all current regulatory requirements. While internally our asset quality is improving, and externally the economy appears to be gradually recovering, we remain focused on continuing to improve our performance and condition. We continue to evaluate opportunities to further enhance our capital position with additional capital, so as to strengthen our balance sheet for future growth as well as unexpected events. We are actively considering various alternatives for raising capital, including Woori Finance's proposed investment, and expect to make progress during the second quarter of 2011."
At March 31, 2011, the Bank's Total Risk-Based Capital Ratio was 13.0% compared to 12.22% in the immediate prior quarter and 7.81% a year ago. Tier 1 Risk-Based Capital Ratio was 11.70% compared to 10.91% at December 31, 2010, and 6.49% a year ago. First quarter Tier 1 Leverage Ratio was 9.08% compared to 8.55% in the fourth quarter and 5.68% in the first quarter of 2010. The Bank's Tangible Common Equity to Tangible Assets at March 31, 2011was 9.10% compared to 8.59% in the linked quarter and 5.89% a year ago. All of the Bank's capital ratios were above the minimum regulatory standards for being considered to be "well-capitalized" for regulatory purposes. The Bank's Tangible Common Equity to Tangible Assets at March 31, 2011, is still below the requirements set forth in the Final Order issued to Hanmi Bank by the California Department of Financial Institutions requiring 9.5%.
Asset Quality
"Our efforts to improve our credit risk management system are bringing positive results," said J.H. Son, Executive Vice President and Chief Credit Officer. "We have committed additional resources to credit underwriting, monitoring and review, as well as devoting time and resources to problem asset resolution and asset sales. We believe that these initiatives have significantly reduced nonperforming assets from the peak reached in the first quarter of last year."
Non-performing loans (NPLs) declined 10% to $151.7 million at March 31, 2011, from $169.0 million at December 31, 2010, and are down 42% from $262.2 million at March 31, 2010. Of the total NPLs, $53.4 million, or 35%, were current on payments. In addition, $20.9 million, or 14%, were recorded at the lower of cost or fair value as we have classified these loans as held for sale. During the quarter, we sold 18 NPLs with net proceeds of $27.9 million, which generated a net gain of $1.9 million and a recovery of $578,000 in the first quarter of 2011. Hanmi actively manages its loan portfolio and regularly sells NPLs prior to foreclosure, which partially accounts for the reduction in NPAs. The following table shows non-performing loans by loan category:
Total Non-Performing Loans
(Dollars in Thousands) 3/31/2011 % of Total
NPL 12/31/2010 % of Total
NPL 3/31/2010 % of Total
NPL
Real Estate Loans:
Commercial Property
Retail 8,669 5.7% 10,998 6.5% 31,604 12.1%
Land 22,523 14.8% 26,808 15.9% 46,388 17.7%
Other 5,108 3.4% 10,131 6.0% 16,498 6.3%
Construction 23,421 15.4% 19,097 11.3% 9,823 3.7%
Residential Property 2,014 1.3% 1,926 1.1% 2,813 1.1%
Commercial & Industrial Loans:
Commercial Term
