Authorization

Hanmi Reports Fourth Quarter 2018 Results

2018 Fourth Quarter and Full Year Highlights:A A


Fourth quarter net income of $11.4 million, or $0.37 per diluted share, down from $16.1 million, or $0.50 per diluted share from the prior quarter; Full year 2018 net income of $57.9 million, or $1.79 per diluted share, compared with $54.7 million, or $1.69 per diluted share in 2017.

Income tax expense for the quarter includes a net charge of $2.7 million, or $0.09 per diluted share, reflecting changes in the valuation of deferred tax assets.





Loans and leases receivable of $4.60 billion, up 1.6% in the fourth quarter on an annualized basis and up 6.9% year-over-year.



Deposits of $4.75 billion, up 11.6% in the fourth quarter on an annualized basis and up 9.2% year-over-year driven by an increase of $385 million in time deposits; Loan-to-deposit ratio declined to 96.9% from 99.3% in the prior quarter and 99.0% a year ago.



Excellent asset quality; nonperforming assets at 0.29% of total assets and net charge-offs of 0.07% for the year; allowance to loans and leases at 0.70%.



Fourth quarter net interest income was $45.6 million, up 0.7% from the prior quarter (includes FHLB special dividend and loan prepayment penalties of $0.6 million); for the full year, net interest income was $181.0 million compared with $176.8 million last year.



Fourth quarter net interest margin was 3.51%, up 3 basis points from the prior quarter; net interest margin for the full year was 3.57% compared with 3.82% last year; the FHLB special dividend and loan prepayment penalties represent 5 basis points of the fourth quarter net interest margin.



Fourth quarter noninterest income was $6.3 million, up 1.4% from the prior quarter; for the full year, noninterest income was $24.5 million compared with $33.4 million last year.



Fourth quarter noninterest expense of $29.3 million, up 1.0% from the prior quarter, included $0.4 million related to branch closures and staff reductions; noninterest expense for the full year was $117.6 million compared with $114.1 million last year.



Return on average assets was 0.83% and return on average equity was 7.92% for the fourth quarter; Full year return on average assets and average equity was 1.08% and 10.07%, respectively.



Repurchased approximately 5.0% or 1.6 million shares, of Hanmi common stock under the previously announced share repurchase program; tangible common equity ratio remains strong at 9.84%

LOS ANGELES, Jan. 15, 2019 (GLOBE NEWSWIRE) -- Hanmi Financial Corporation (NASDAQ: HAFC, or a??Hanmia??), the parent company of Hanmi Bank (the a??Banka??), today reported net income for the 2018 fourth quarter of $11.4 million, or $0.37 per diluted share, compared with $16.1 million, or $0.50 per diluted share for the 2018 third quarter and $11.5 million, or $0.36 per diluted share for the 2017 fourth quarter.For the 2018 year, net income was $57.9 million, or $1.79 per diluted share, compared with $54.7 million, or $1.69 per diluted share, for 2017.During the fourth quarter, Hanmi recorded charges for a state deferred tax asset valuation allowance and the finalization of the re-measurement of deferred tax assets due to the change in the 2018 Federal corporate tax rate. This was partially offset by a benefit due to the lapse of the statute of limitations for certain unrecognized tax benefits. As a result, income tax expense increased by $2.7 million and reduced fourth quarter earnings by approximately $0.09 per diluted share.C. G. Kum, Chief Executive Officer, said, a??Our results in the fourth quarter reflect our strategic decision to moderate loan growth, protect net interest margin and reduce expenses given the increasingly challenging banking environment. Although net interest income increased in the quarter, one-time income tax adjustments and a higher loan loss provision resulted in a sequential decline in net income. Consistent with our previously announced growth strategy, our loan and lease portfolio increased slightly from the prior quarter and grew 6.9% for the year, with net interest margin remaining relatively stable. Credit quality continues to be excellent with non-performing assets to total assets at just 29 basis points. Underpinning our cost management initiatives are staff reductions and the rationalization of our branch network. During the quarter we closed two branches and opened one new branch. We also have four additional branch closures scheduled in the first quarter of 2019. In total, we continue to expect our cost management initiatives will reduce non-interest expenses by at least $5 million, or approximately $0.12 per share, in 2019.a??Mr. Kum concluded, a??During the fourth quarter we purchased 1.2 million shares of our common stock. This completed the previously authorized stock repurchase program of up to 5%, or 1.6 million shares at an average price of $22.57 per share. Notwithstanding these actions, Hanmia??s tangible common equity ratio remains very strong at 9.84% as do all of our regulatory capital ratios. I believe the share repurchase highlights our confidence in the Hanmi franchise and we see buying shares at this level as a timely and appropriate use of our capital resources.a??Quarterly Highlights
(Dollars in thousands, except per share data)

A



AAs ofA or for the Three Months EndedA



A



Amount Change



A



A



December 31,



A



September 30,



A



June 30,



A



March 31,



A



December 31,



A



Q4-18



A



Q4-18



A



A



2018




A



2018




A



2018




A



2018




A



2017




A



vs. Q3-18



A



vs. Q4-17



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



Net income



$



11,385



A



A



$



16,081



A



A



$



15,548



A



A



$



14,855



A



A



$



11,500



A



A



$



(4,696



)



A



$



(115



)



A



Net income per diluted common share



$



0.37



A



A



$



0.50



A



A



$



0.48



A



A



$



0.46



A



A



$



0.36



A



A



$



(0.13



)



A



$



0.01



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



Assets



$



5,502,219



A



A



$



5,487,042



A



A



$



5,415,202



A



A



$



5,305,641



A



A



$



5,210,485



A



A



$



15,177



A



A



$



291,734



A



A



Loans and leases receivable



$



4,600,540



A



A



$



4,582,883



A



A



$



4,542,126



A



A



$



4,413,557



A



A



$



4,304,458



A



A



$



17,657



A



A



$



296,082



A



A



Deposits



$



4,747,235



A



A



$



4,614,422



A



A



$



4,426,535



A



A



$



4,378,101



A



A



$



4,348,654



A



A



$



132,813



A



A



$



398,581



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



Return on average assets



A



0.83



%



A



A



1.17



%



A



A



1.17



%



A



A



1.16



%



A



A



0.88



%



A



A



-0.34



A



A



A



-0.05



A



A



Return on average stockholders' equity



A



7.92



%



A



A



10.91



%



A



A



10.81



%



A



A



10.65



%



A



A



8.12



%



A



A



-2.99



A



A



A



-0.20



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



Net interest margin (1)



A



3.51



%



A



A



3.48



%



A



A



3.60



%



A



A



3.70



%



A



A



3.79



%



A



A



0.03



A



A



A



-0.28



A



A



Efficiency ratio (2)



A



56.40



%



A



A



56.28



%



A



A



57.80



%



A



A



58.36



%



A



A



54.16



%



A



A



0.12



A



A



A



2.24



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



Tangible common equity to tangible assets (3)



A



9.84



%



A



A



10.15



%



A



A



10.35



%



A



A



10.43



%



A



A



10.58



%



A



A



-0.30



A



A



A



-0.74



A



A



Tangible common equity per common share (3)



$



17.47



A



A



$



17.31



A



A



$



17.20



A



A



$



16.98



A



A



$



16.96



A



A



$



0.16



A



A



$



0.51



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



(1)A Amounts calculated on a fully taxable equivalent basis using the federal tax rate in effect for the periods presented.



A



A



A



A



A



A



A



(2)A Noninterest expense divided by net interest income plus noninterest income.



A



A



A



A



A



A



A



A



A



A



A



(3)A Refer to "Non-GAAP Financial Measures" for further details.



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A

Results of Operations
Net interest income was $45.6 million for the fourth quarter of 2018 compared with $45.3 million for the third quarter of 2018. Fourth quarter interest and fees on loans and leases increased 2.8%, or $1.6 million, from the preceding quarter due to an increase in the average yield and an increase in loan prepayment fees. In addition, borrowing costs decreased $0.8 million in the fourth quarter as deposits increased and borrowings declined.A However, these benefits were partially offset by an increase in interest expense on deposits of 20.9%, or $2.4 million, from the preceding quarter due to a 6.1% increase in average interest-bearing deposits.Net interest income of $181.0 million for the full year in 2018 increased 2.4% compared with $176.8 million for the full year in 2017.The year-over-year improvement in net interest income reflects an increase in average yield on higher average loan and lease balances offset by an increase in interest expense on average deposits.

A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



AAs of or For the Three Months Ended (in thousands)A



A



Percentage Change



A



A



Dec 31,



A



Sep 30,



A



Jun 30,



A



Mar 31,



A



Dec 31,



A



Q4-18



A



Q4-18



A



Net Interest Income



2018




A



2018




A



2018




A



2018




A



2017




A



vs. Q3-18



A



vs. Q4-17



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



Interest and fees on loans and leases(1)



$



57,947



A



A



$



56,361



A



A



$



53,708



A



A



$



51,574



A



A



$



52,176



A



A



A



2.8



%



A



A



11.1



%



A



Interest on securities



A



3,278



A



A



A



3,238



A



A



A



3,198



A



A



A



3,105



A



A



A



3,194



A



A



A



1.2



%



A



A



2.6



%



A



Dividends on FHLB stock



A



555



A



A



A



286



A



A



A



283



A



A



A



289



A



A



A



289



A



A



A



94.1



%



A



A



92.0



%



A



Interest on deposits in other banks



A



179



A



A



A



151



A



A



A



133



A



A



A



114



A



A



A



125



A



A



A



18.5



%



A



A



43.2



%



A



Total interest and dividend income



$



61,959



A



A



$



60,036



A



A



$



57,322



A



A



$



55,082



A



A



$



55,784



A



A



A



3.2



%



A



A



11.1



%



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



Interest on deposits



A



14,139



A



A



A



11,694



A



A



A



9,465



A



A



A



7,785



A



A



A



7,402



A



A



A



20.9



%



A



A



91.0



%



A



Interest on borrowings



A



420



A



A



A



1,264



A



A



A



1,015



A



A



A



679



A



A



A



363



A



A



A



-66.8



%



A



A



15.7



%



A



Interest on subordinated debentures



A



1,754



A



A



A



1,749



A



A



A



1,728



A



A



A



1,694



A



A



A



1,676



A



A



A



0.3



%



A



A



4.7



%



A



Total interest expense



A



16,313



A



A



A



14,707



A



A



A



12,208



A



A



A



10,158



A



A



A



9,441



A



A



A



10.9



%



A



A



72.8



%



A



Net interest income



$



45,646



A



A



$



45,329



A



A



$



45,114



A



A



$



44,924



A



A



$



46,343



A



A



A



0.7



%



A



A



-1.5



%



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



(1)A Includes loans held for sale.



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A

Net interest margin on a tax equivalent basis was 3.51% for the fourth quarter of 2018 compared with 3.48% for the third quarter of 2018, up three basis points primarily due to an increase in prepayment fees (two basis points) and a FHLB special dividend (two basis points), partially offset by higher costs of deposits. For the full year, net interest margin was 3.57% compared with 3.82% for 2017.The average earning asset yield (tax equivalent) was 4.76% for the fourth quarter of 2018 compared with 4.60% for the third quarter of 2018. The 16 basis point increase was due to the increase in average yields for loans and leases receivable and the FHLB special dividend. Full year yields increased 11 basis points year-over-year to 4.62%.The cost of interest-bearing liabilities was 1.83% for the fourth quarter of 2018 compared with 1.66% for the third quarter of 2018. The 17 basis point increase was primarily due to a 6.1% increase in interest bearing deposits and a 20 basis point increase in the average rate paid on interest bearing deposits. For 2018, the cost of interest-bearing liabilities was 1.55% compared to 1.04% for the full year 2017, reflecting the rising interest rate environment throughout the past year.

A



A



AFor the Three Months Ended (in thousands)A



A



Percentage Change



A



A



Dec 31,



A



Sep 30,



A



Jun 30,



A



Mar 31,



A



Dec 31,



A



Q4-18



A



Q4-18



A



Average Earning Assets and Interest-bearing Liabilities



2018




A



2018




A



2018




A



2018




A



2017




A



vs. Q3-18



A



vs. Q4-17



A



Loans and leases receivable (1)



$



4,544,722



A



A



$



4,551,284



A



A



$



4,414,217



A



A



$



4,310,964



A



A



$



4,227,259



A



A



-0.1



%



A



7.5



%



A



Securities



A



581,550



A



A



A



589,939



A



A



A



591,493



A



A



A



588,738



A



A



A



611,181



A



A



-1.4



%



A



-4.8



%



A



FHLB stock



A



16,385



A



A



A



16,385



A



A



A



16,385



A



A



A



16,385



A



A



A



16,385



A



A



0.0



%



A



0.0



%



A



Interest-bearing deposits in other banks



A



34,301



A



A



A



30,368



A



A



A



28,831



A



A



A



32,401



A



A



A



36,386



A



A



13.0



%



A



-5.7



%



A



Average interest-earning assets



$



5,176,958



A



A



$



5,187,976



A



A



$



5,050,926



A



A



$



4,948,488



A



A



$



4,891,211



A



A



-0.2



%



A



5.8



%



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



Demand: interest-bearing



$



89,971



A



A



$



92,090



A



A



$



92,552



A



A



$



91,378



A



A



$



90,646



A



A



-2.3



%



A



-0.7



%



A



Money market and savings



A



1,510,428



A



A



A



1,377,739



A



A



A



1,412,118



A



A



A



1,478,795



A



A



A



1,513,408



A



A



9.6



%



A



-0.2



%



A



Time deposits



A



1,751,429



A



A



A



1,687,827



A



A



A



1,553,692



A



A



A



1,440,382



A



A



A



1,408,227



A



A



3.8



%



A



24.4



%



A



Average interest-bearing deposits



A



3,351,828



A



A



A



3,157,656



A



A



A



3,058,362



A



A



A



3,010,555



A



A



A



3,012,281



A



A



6.1



%



A



11.3



%



A



Borrowings



A



65,217



A



A



A



240,054



A



A



A



214,066



A



A



A



179,000



A



A



A



119,946



A



A



-72.8



%



A



-45.6



%



A



Subordinated debentures



A



117,728



A



A



A



117,584



A



A



A



117,456



A



A



A



117,323



A



A



A



117,198



A



A



0.1



%



A



0.5



%



A



Average interest-bearing liabilities



$



3,534,773



A



A



$



3,515,294



A



A



$



3,389,884



A



A



$



3,306,878



A



A



$



3,249,425



A



A



0.6



%



A



8.8



%



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



(1)A Includes loans held for sale.



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



AFor the Three Months EndedA



A



Amount Change



A



A



Dec 31,



A



Sep 30,



A



Jun 30,



A



Mar 31,



A



Dec 31,



A



Q4-18



A



Q4-18



A



Average Yields and Rates



2018




A



2018




A



2018




A



2018




A



2017




A



vs. Q3-18



A



vs. Q4-17



A



Loans and leases receivable(1)



A



5.06



%



A



A



4.91



%



A



A



4.88



%



A



A



4.85



%



A



A



4.90



%



A



0.15



A



A



0.16



A



A



Securities (2)



A



2.37



%



A



A



2.31



%



A



A



2.29



%



A



A



2.24



%



A



A



2.37



%



A



0.06



A



A



0.00



A



A



FHLB stock



A



13.44



%



A



A



6.93



%



A



A



6.93



%



A



A



7.15



%



A



A



7.00



%



A



6.51



A



A



6.44



A



A



Interest-bearing deposits in other banks



A



2.07



%



A



A



1.97



%



A



A



1.85



%



A



A



1.43



%



A



A



1.36



%



A



0.10



A



A



0.71



A



A



Interest-earning assets



A



4.76



%



A



A



4.60



%



A



A



4.57



%



A



A



4.53



%



A



A



4.56



%



A



0.16



A



A



0.20



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



Interest-bearing deposits



A



1.67



%



A



A



1.47



%



A



A



1.24



%



A



A



1.05



%



A



A



0.97



%



A



0.20



A



A



0.70



A



A



Borrowings



A



2.56



%



A



A



2.09



%



A



A



1.90



%



A



A



1.54



%



A



A



1.20



%



A



0.47



A



A



1.36



A



A



Subordinated debentures



A



5.94



%



A



A



5.92



%



A



A



5.87



%



A



A



5.77



%



A



A



5.70



%



A



0.02



A



A



0.24



A



A



Interest-bearing liabilities



A



1.83



%



A



A



1.66



%



A



A



1.44



%



A



A



1.25



%



A



A



1.15



%



A



0.17



A



A



0.68



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



Net interest margin (taxable equivalent basis)



A



3.51



%



A



A



3.48



%



A



A



3.60



%



A



A



3.70



%



A



A



3.79



%



A



0.03



A



A



-0.28



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



Cost of deposits



A



1.20



%



A



A



1.04



%



A



A



0.87



%



A



A



0.73



%



A



A



0.68



%



A



0.16



A



A



0.52



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



(1)A Includes loans held for sale.



A



A



A



A



A



A



A



A



A



A



A



A



A



A



(2)A Amounts calculated on a fully taxable equivalent basis using the federal tax rate in effect for the periods presented.



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A

For the fourth quarter of 2018, the loan and lease loss provision was $3.0 million compared with $0.2 million for the preceding quarter, and $0.2 million for fourth quarter 2017. AFourth quarter noninterest income increased 1.4% to $6.3 million from $6.2 million for the third quarter, primarily due to a $0.1 million increase in service charges on deposit accounts and a $0.1 million increase in other operating income. This was partially offset by a $0.1 million decrease in gain on sale of SBA loans. Gains on sales of SBA loans were $1.0 million for the fourth quarter 2018, down from $1.1 million for the preceding quarter reflecting lower trade premiums. The volume of SBA loans sold for the 2018 fourth quarter and third quarter were $17.9 million and $19.8 million, respectively.AA
Noninterest income was $24.5 million for the full year 2018 compared with $33.4 million for 2017 primarily due to lower gain on sale of SBA loans and securities and a decrease in disposition gains on PCI loans.

A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



AFor the Three Months Ended (in thousands)A



A



Percentage Change



A



A



Dec 31,



A



Sep 30,



A



Jun 30,



A



Mar 31,



A



Dec 31,



A



Q4-18



A



Q4-18



A



Noninterest Income



2018



A



2018



A



2018



A



2018



A



A



2017



A



vs. Q3-18



A



vs. Q4-17



A



Service charges on deposit accounts



$



2,648



A



$



2,513



A



$



2,328



A



$



2,511



A



A



$



2,729



A



5.4



%



A



-3.0



%



A



Trade finance and other service charges and fees



A



1,167



A



A



1,128



A



A



1,149



A



A



1,173



A



A



A



1,047



A



3.5



%



A



11.5



%



A



Servicing income



A



630



A



A



673



A



A



421



A



A



662



A



A



A



564



A



-6.4



%



A



11.7



%



A



Bank-owned life insurance income



A



288



A



A



285



A



A



256



A



A



277



A



A



A



285



A



1.1



%



A



1.1



%



A



Other operating income



A



584



A



A



462



A



A



305



A



A



285



A



A



A



636



A



26.4



%



A



-8.2



%



A



Service charges, fees & other



A



5,317



A



A



5,061



A



A



4,459



A



A



4,908



A



A



A



5,261



A



5.1



%



A



1.1



%



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



A



Gain on sale of SBA loans



A



983



A



A



1,114



A



A



1,408



A



A



1,448



A



A



A



2,056



A



-11.8



%



A



-52.2



%



A



Disposition gain on PCI loans



A



-



A



A



21



A



A



11



A



A



133



A



A



A



91



A



-100.0



%



A



-100.0



%



A



Net gain (loss) on sales of securities



A



-



A



A



19



A



A



67



A



A


See also:
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