þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 |
Delaware | 95-4788120 | |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |
3660 Wilshire Boulevard, Penthouse Suite A Los Angeles, California |
90010 | |
(Address of Principal Executive Offices) | (Zip Code) |
Large Accelerated Filer o | Accelerated Filer þ | Non-Accelerated Filer o | Smaller Reporting Company o | |||
(Do Not Check if a Smaller Reporting Company) |
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EX-31.1 | ||||||||
EX-31.1 | ||||||||
EX-32.1 | ||||||||
EX-32.2 | ||||||||
EX-101 INSTANCE DOCUMENT | ||||||||
EX-101 SCHEMA DOCUMENT | ||||||||
EX-101 CALCULATION LINKBASE DOCUMENT | ||||||||
EX-101 LABELS LINKBASE DOCUMENT | ||||||||
EX-101 PRESENTATION LINKBASE DOCUMENT | ||||||||
EX-101 DEFINITION LINKBASE DOCUMENT |
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
ASSETS |
||||||||
Cash and Due From Banks |
$ | 67,166 | $ | 60,983 | ||||
Interest-Bearing Deposits in Other Banks |
131,757 | 158,737 | ||||||
Federal Funds Sold |
| 30,000 | ||||||
Cash and Cash Equivalents |
198,923 | 249,720 | ||||||
Securities Held to Maturity, at Amortized Cost (Fair Value of $835 as of June 30, 2011 and
$847 as of December 31, 2010) |
833 | 845 | ||||||
Investment Securities Available for Sale, at Fair Value (Amortized Cost of $386,299 as of
June 30, 2011 and $415,491 as of December 31, 2010) |
390,212 | 413,118 | ||||||
Loans Receivable, Net of Allowance for Loan Losses of $109,029 as of June 30, 2011 and
$146,059 as of December 31, 2010 |
1,959,564 | 2,084,447 | ||||||
Loans Held for Sale, at the Lower of Cost or Fair Value |
44,105 | 36,620 | ||||||
Accrued Interest Receivable |
7,512 | 8,048 | ||||||
Premises and Equipment, Net |
16,869 | 17,599 | ||||||
Other Real Estate Owned, Net |
1,340 | 4,089 | ||||||
Customers Liability on Acceptances |
1,629 | 711 | ||||||
Servicing Assets |
2,545 | 2,890 | ||||||
Other Intangible Assets, Net |
1,825 | 2,233 | ||||||
Investment in Federal Home Loan Bank Stock, at Cost |
25,076 | 27,282 | ||||||
Investment in Federal Reserve Bank Stock, at Cost |
7,489 | 7,449 | ||||||
Income Taxes Receivable |
9,188 | 9,188 | ||||||
Bank-Owned Life Insurance |
27,813 | 27,350 | ||||||
Other Assets |
15,912 | 15,559 | ||||||
TOTAL ASSETS |
$ | 2,710,835 | $ | 2,907,148 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
LIABILITIES: |
||||||||
Deposits: |
||||||||
Noninterest-Bearing |
$ | 600,812 | $ | 546,815 | ||||
Interest-Bearing |
1,797,563 | 1,919,906 | ||||||
Total Deposits |
2,398,375 | 2,466,721 | ||||||
Accrued Interest Payable |
14,226 | 15,966 | ||||||
Banks Liability on Acceptances |
1,629 | 711 | ||||||
Federal Home Loan Bank Advances |
3,479 | 153,650 | ||||||
Other Borrowings |
1,034 | 1,570 | ||||||
Junior Subordinated Debentures |
82,406 | 82,406 | ||||||
Accrued Expenses and Other Liabilities |
11,321 | 12,868 | ||||||
Total Liabilities |
2,512,470 | 2,733,892 | ||||||
COMMITMENTS AND CONTINGENCIES |
||||||||
STOCKHOLDERS EQUITY: |
||||||||
Common Stock, $0.001 Par Value; Authorized 500,000,000 Shares; Issued 155,890,890
Shares (151,258,390 Shares Outstanding) and 155,830,890 Shares (151,198,390 Shares
Outstanding) as of June 30, 2011 and December 31, 2010, respectively |
156 | 156 | ||||||
Additional Paid-In Capital |
472,717 | 472,335 | ||||||
Unearned Compensation |
(219 | ) | (219 | ) | ||||
Accumulated Other Comprehensive Income (Loss) Unrealized Gain (Loss) on Securities
Available
for Sale and Interest-Only Strips, Net of Income Taxes of $602 as of June 30, 2011 and
December 31, 2010, respectively |
3,325 | (2,964 | ) | |||||
Accumulated Deficit |
(207,602 | ) | (226,040 | ) | ||||
Less Treasury Stock, at Cost: 4,632,500 Shares as of June 30, 2011 and December 31, 2010 |
(70,012 | ) | (70,012 | ) | ||||
Total Stockholders Equity |
198,365 | 173,256 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY |
$ | 2,710,835 | $ | 2,907,148 | ||||
1
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
INTEREST AND DIVIDEND INCOME: |
||||||||||||||||
Interest and Fees on Loans |
$ | 29,249 | $ | 34,486 | $ | 60,154 | $ | 71,181 | ||||||||
Taxable Interest on Investment Securities |
3,094 | 1,359 | 5,767 | 2,443 | ||||||||||||
Tax-Exempt Interest on Investment Securities |
37 | 77 | 77 | 154 | ||||||||||||
Dividends on Federal Reserve Bank Stock |
112 | 103 | 224 | 207 | ||||||||||||
Dividends on Federal Home Loan Bank Stock |
20 | 20 | 41 | 41 | ||||||||||||
Interest on Interest-Bearing Deposits in Other Banks |
79 | 99 | 168 | 154 | ||||||||||||
Interest on Federal Funds Sold |
9 | 16 | 17 | 33 | ||||||||||||
Interest on Term Federal Funds Sold |
18 | 11 | 45 | 11 | ||||||||||||
Total Interest and Dividend Income |
32,618 | 36,171 | 66,493 | 74,224 | ||||||||||||
INTEREST EXPENSE: |
||||||||||||||||
Interest on Deposits |
6,192 | 8,813 | 12,927 | 18,517 | ||||||||||||
Interest on Federal Home Loan Bank Advances |
239 | 339 | 572 | 685 | ||||||||||||
Interest on Other Borrowings |
1 | 31 | 1 | 31 | ||||||||||||
Interest on Junior Subordinated Debentures |
711 | 692 | 1,409 | 1,361 | ||||||||||||
Total Interest Expense |
7,143 | 9,875 | 14,909 | 20,594 | ||||||||||||
NET INTEREST INCOME BEFORE PROVISION FOR CREDIT LOSSES |
25,475 | 26,296 | 51,584 | 53,630 | ||||||||||||
Provision for Credit Losses |
| 37,500 | | 95,496 | ||||||||||||
NET INTEREST INCOME (LOSS) AFTER PROVISION FOR CREDIT LOSSES |
25,475 | (11,204 | ) | 51,584 | (41,866 | ) | ||||||||||
NON-INTEREST INCOME: |
||||||||||||||||
Service Charges on Deposit Accounts |
3,278 | 3,602 | 6,419 | 7,328 | ||||||||||||
Insurance Commissions |
1,203 | 1,206 | 2,463 | 2,484 | ||||||||||||
Remittance Fees |
499 | 523 | 961 | 985 | ||||||||||||
Trade Finance Fees |
328 | 412 | 625 | 763 | ||||||||||||
Other Service Charges and Fees |
368 | 372 | 701 | 784 | ||||||||||||
Bank-Owned Life Insurance Income |
233 | 235 | 463 | 466 | ||||||||||||
Net Gain (Loss) on Sales of Investment Securities |
(70 | ) | | (70 | ) | 105 | ||||||||||
Net Gain (Loss) on Sales of Loans |
(77 | ) | 220 | (415 | ) | 214 | ||||||||||
Other Operating Income |
255 | 106 | 378 | 552 | ||||||||||||
Total Non-Interest Income |
6,017 | 6,676 | 11,525 | 13,681 | ||||||||||||
NON-INTEREST EXPENSE: |
||||||||||||||||
Salaries and Employee Benefits |
8,762 | 9,011 | 17,886 | 17,797 | ||||||||||||
Deposit Insurance Premiums and Regulatory Assessments |
1,377 | 4,075 | 3,447 | 6,299 | ||||||||||||
Occupancy and Equipment |
2,650 | 2,674 | 5,215 | 5,399 | ||||||||||||
Directors and Officers Liability Insurance |
733 | 716 | 1,467 | 1,433 | ||||||||||||
Other Real Estate Owned Expense |
806 | 1,718 | 1,635 | 7,418 | ||||||||||||
Data Processing |
1,487 | 1,487 | 2,886 | 2,986 | ||||||||||||
Professional Fees |
1,138 | 1,022 | 1,927 | 2,088 | ||||||||||||
Supplies and Communication |
496 | 574 | 1,074 | 1,091 | ||||||||||||
Advertising and Promotion |
908 | 503 | 1,474 | 1,038 | ||||||||||||
Loan-Related Expense |
184 | 310 | 409 | 617 | ||||||||||||
Amortization of Other Intangible Assets |
190 | 301 | 408 | 629 | ||||||||||||
Expenses Related to Unconsummated Capital Offerings |
2,220 | | 2,220 | | ||||||||||||
Other Operating Expenses |
1,935 | 2,374 | 3,899 | 4,194 | ||||||||||||
Total Non-Interest Expense |
22,886 | 24,765 | 43,947 | 50,989 | ||||||||||||
INCOME (LOSS) BEFORE PROVISION (BENEFIT) FOR INCOME TAXES |
8,606 | (29,293 | ) | 19,162 | (79,174 | ) | ||||||||||
Provision (Benefit) for Income Taxes |
605 | (36 | ) | 724 | (431 | ) | ||||||||||
NET INCOME (LOSS) |
$ | 8,001 | $ | (29,257 | ) | $ | 18,438 | $ | (78,743 | ) | ||||||
EARNINGS (LOSS) PER SHARE: |
||||||||||||||||
Basic |
$ | 0.05 | $ | (0.57 | ) | $ | 0.12 | $ | (1.54 | ) | ||||||
Diluted |
$ | 0.05 | $ | (0.57 | ) | $ | 0.12 | $ | (1.54 | ) | ||||||
WEIGHTED-AVERAGE SHARES OUTSTANDING: |
||||||||||||||||
Basic |
151,104,636 | 51,036,573 | 151,082,945 | 51,017,885 | ||||||||||||
Diluted |
151,258,390 | 51,036,573 | 151,257,350 | 51,017,885 | ||||||||||||
DIVIDENDS DECLARED PER SHARE |
$ | | $ | | $ | | $ | |
2
Common Stock - Number of Shares | Stockholders Equity | |||||||||||||||||||||||||||||||||||||||||
Accumulated | ||||||||||||||||||||||||||||||||||||||||||
Additional | Other | Retained | Treasury | Total | ||||||||||||||||||||||||||||||||||||||
Treasury | Common | Paid-In | Unearned | Comprehensive | Earnings | Stock, | Stockholders | |||||||||||||||||||||||||||||||||||
Issued | Stock | Outstanding | Stock | Capital | Compensation | Income (Loss) | (Deficit) | at Cost | Equity | |||||||||||||||||||||||||||||||||
BALANCE AS OF JANUARY 1, 2010 |
55,814,890 | (4,632,500 | ) | 51,182,390 | $ | 56 | $ | 357,174 | $ | (302 | ) | $ | 859 | $ | (138,031 | ) | $ | (70,012 | ) | $ | 149,744 | |||||||||||||||||||||
Exercises of Stock Options and Stock Warrants |
16,000 | | 16,000 | | 22 | | | | | 22 | ||||||||||||||||||||||||||||||||
Share-Based Compensation Expense |
| | | | 445 | 41 | | | | 486 | ||||||||||||||||||||||||||||||||
Comprehensive Loss: |
||||||||||||||||||||||||||||||||||||||||||
Net Loss |
| | | | | | | (78,743 | ) | | (78,743 | ) | ||||||||||||||||||||||||||||||
Change in Unrealized Gain on Securities
Available for Sale and Interest-Only Strips,
Net of Income Taxes |
| | | | | | 1,671 | | | 1,671 | ||||||||||||||||||||||||||||||||
Total Comprehensive Loss |
(77,072 | ) | ||||||||||||||||||||||||||||||||||||||||
BALANCE AS OF JUNE 30, 2010 |
55,830,890 | (4,632,500 | ) | 51,198,390 | $ | 56 | $ | 357,641 | $ | (261 | ) | $ | 2,530 | $ | (216,774 | ) | $ | (70,012 | ) | $ | 73,180 | |||||||||||||||||||||
BALANCE AS OF JANUARY 1, 2011 |
155,830,890 | (4,632,500 | ) | 151,198,390 | $ | 156 | $ | 472,335 | $ | (219 | ) | $ | (2,964 | ) | $ | (226,040 | ) | $ | (70,012 | ) | $ | 173,256 | ||||||||||||||||||||
Share-Based Compensation Expense |
| | | | 304 | 78 | | | | 382 | ||||||||||||||||||||||||||||||||
Restricted Stock Awards |
60,000 | | 60,000 | | 78 | (78 | ) | | | | | |||||||||||||||||||||||||||||||
Comprehensive Income: |
||||||||||||||||||||||||||||||||||||||||||
Net Income |
| | | | | | | 18,438 | | 18,438 | ||||||||||||||||||||||||||||||||
Change in Unrealized Gain on Securities
Available for Sale and Interest-Only Strips,
Net of Income Taxes |
| | | | | | 6,289 | | | 6,289 | ||||||||||||||||||||||||||||||||
Total Comprehensive Income |
24,727 | |||||||||||||||||||||||||||||||||||||||||
BALANCE AS OF JUNE 30, 2011 |
155,890,890 | (4,632,500 | ) | 151,258,390 | $ | 156 | $ | 472,717 | $ | (219 | ) | $ | 3,325 | $ | (207,602 | ) | $ | (70,012 | ) | $ | 198,365 | |||||||||||||||||||||
3
Six Months Ended | ||||||||
June 30, | ||||||||
2011 | 2010 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
Net Income (Loss) |
$ | 18,438 | $ | (78,743 | ) | |||
Adjustments to Reconcile Net Loss to Net Cash Provided By Operating Activities: |
||||||||
Depreciation and Amortization of Premises and Equipment |
1,083 | 1,204 | ||||||
Amortization of Premiums and Accretion of Discounts on Investment Securities, Net |
1,227 | 288 | ||||||
Amortization of Other Intangible Assets |
408 | 629 | ||||||
Amortization of Servicing Assets |
345 | 496 | ||||||
Share-Based Compensation Expense |
382 | 486 | ||||||
Provision for Credit Losses |
| 95,496 | ||||||
Net Gain (Loss) on Sales of Investment Securities |
70 | (105 | ) | |||||
Net Gain on Sales of Loans |
(2,489 | ) | (214 | ) | ||||
(Gain) Loss on Sales of Other Real Estate Owned |
681 | (154 | ) | |||||
Provision for Valuation Allowance on Other Real Estate Owned |
470 | 6,503 | ||||||
Lower of Cost or Fair Value Adjustment for Loans Held for Sale |
2,903 | | ||||||
Deferred Tax Benefit |
| 3,608 | ||||||
Origination of Loans Held for Sale |
(16,056 | ) | (1,782 | ) | ||||
Net Proceeds
from Sales of Loans Held for Sale |
| 79,254 | ||||||
Loss on Investment in Affordable Housing Partnership |
440 | 440 | ||||||
Decrease in Accrued Interest Receivable |
536 | 1,690 | ||||||
Increase in Cash Surrender Value of Bank-Owned Life Insurance |
(463 | ) | (466 | ) | ||||
Increase in Other Assets |
(789 | ) | (3,489 | ) | ||||
Decrease in Income Tax Receivable |
| 46,857 | ||||||
(Decrease) Increase in Accrued Interest Payable |
(1,636 | ) | 1,418 | |||||
(Decrease) Increase in Other Liabilities |
(521 | ) | 682 | |||||
Net Cash Provided By Operating Activities |
5,029 | 154,098 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
Proceeds from Redemption of Federal Home Loan Bank and Federal Reserve Bank Stock |
2,206 | 2,236 | ||||||
Proceeds from Matured or Called Investment Securities Available for Sale |
70,841 | 37,023 | ||||||
Proceeds from Matured or Called Investment Securities Held to Maturity |
12 | 13 | ||||||
Proceeds from Sales of Investment Securities Available for Sale |
157,777 | 3,252 | ||||||
Net Proceeds
from Sales of Loans Held for Sale |
45,963 | | ||||||
Proceeds from Sales of Other Real Estate Owned |
3,736 | 5,042 | ||||||
Net Decrease in Loans Receivable |
83,809 | 163,888 | ||||||
Purchases of Federal Reserve Bank Stock |
(40 | ) | | |||||
Purchases of Investment Securities Available for Sale |
(200,724 | ) | (95,415 | ) | ||||
Purchases of Premises and Equipment |
(353 | ) | (464 | ) | ||||
Net Cash Provided By Investing Activities |
163,227 | 115,575 | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
Decrease in Deposits |
(68,346 | ) | (174,213 | ) | ||||
Proceeds from Exercise of Stock Options |
| 22 | ||||||
Repayment of Long-Term Federal Home Loan Bank Advances |
(171 | ) | (162 | ) | ||||
Net Change in Short-Term Federal Home Loan Bank Advances and Other Borrowings |
(150,536 | ) | 1,315 | |||||
Net Cash Used In Financing Activities |
(219,053 | ) | (173,038 | ) | ||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
(50,797 | ) | 96,635 | |||||
Cash and Cash Equivalents at Beginning of Period |
249,720 | 154,110 | ||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD |
$ | 198,923 | $ | 250,745 | ||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: |
||||||||
Cash Paid During the Period for: |
||||||||
Interest Paid |
$ | 16,649 | $ | 19,176 | ||||
Income Taxes Paid, Net of Refunds |
$ | 3 | $ | (49,971 | ) | |||
Non-Cash Activities: |
||||||||
Loan Provided in the Sale of Loans Held for Sale |
$ | 5,750 | $ | | ||||
Transfer of Loans to Other Real Estate Owned |
$ | 2,752 | $ | 10,366 | ||||
Transfer of Loans to Loans Held for Sale |
$ | 37,806 | $ | 101,620 | ||||
Loans Provided in the Sale of Other Real Estate Owned |
$ | 510 | $ | 1,217 |
4
5
6
To be Categorized as | ||||||||||||||||||||||||
Minimum | Well Capitalized | |||||||||||||||||||||||
Regulatory | under Prompt Corrective | |||||||||||||||||||||||
Actual | Requirement | Action Provision | ||||||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||||||
(Dollars in Thousands) | ||||||||||||||||||||||||
June 30, 2011 |
||||||||||||||||||||||||
Total Capital (to Risk-Weighted Assets): |
||||||||||||||||||||||||
Hanmi Financial |
$ | 301,045 | 13.92 | % | $ | 173,032 | 8.00 | % | N/A | N/A | ||||||||||||||
Hanmi Bank |
$ | 302,827 | 14.02 | % | $ | 172,802 | 8.00 | % | $ | 216,003 | 10.00 | % | ||||||||||||
Tier 1 Capital (to Risk-Weighted Assets): |
||||||||||||||||||||||||
Hanmi Financial |
$ | 257,911 | 11.92 | % | $ | 86,516 | 4.00 | % | N/A | N/A | ||||||||||||||
Hanmi Bank |
$ | 274,785 | 12.72 | % | $ | 86,401 | 4.00 | % | $ | 129,602 | 6.00 | % | ||||||||||||
Tier 1 Capital (to Average Assets): |
||||||||||||||||||||||||
Hanmi Financial |
$ | 257,911 | 9.09 | % | $ | 113,504 | 4.00 | % | N/A | N/A | ||||||||||||||
Hanmi Bank |
$ | 274,785 | 9.70 | % | $ | 113,260 | 4.00 | % | $ | 141,576 | 5.00 | % |
7
8
9
| Level 1 | Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. | |
| Level 2 | Significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, and other inputs that are observable or can be corroborated by observable market data. | |
| Level 3 | Significant unobservable inputs that reflect a companys own assumptions about the assumptions that market participants would use in pricing an asset or liability. |
10
Level 1 | Level 2 | Level 3 | ||||||||||||||
Significant | ||||||||||||||||
Observable | ||||||||||||||||
Inputs With | ||||||||||||||||
Quoted Prices in | No Active | Balance as of | ||||||||||||||
Active Markets | Market With | Significant | June 30, | |||||||||||||
for Identical | Identical | Unobservable | 2011 and December | |||||||||||||
Assets | Characteristics | Inputs | 31, 2010 | |||||||||||||
(In Thousands) | ||||||||||||||||
June 30, 2011 |
||||||||||||||||
ASSETS: |
||||||||||||||||
Debt Securities Available for Sale: |
||||||||||||||||
Collateralized Mortgage Obligations |
$ | | $ | 125,929 | $ | | $ | 125,929 | ||||||||
U.S. Government Agency Securities |
106,325 | | | 106,325 | ||||||||||||
Residential Mortgage-Backed Securities |
| 117,777 | | 117,777 | ||||||||||||
Corporate Bonds |
| 20,385 | | 20,385 | ||||||||||||
Municipal Bonds |
| 9,256 | | 9,256 | ||||||||||||
Asset-Backed Securities |
| 6,799 | | 6,799 | ||||||||||||
Other Securities |
| 3,281 | | 3,281 | ||||||||||||
Total Debt Securities Available for Sale |
$ | 106,325 | $ | 283,427 | $ | | $ | 389,752 | ||||||||
Equity Securities Available for Sale: |
||||||||||||||||
Financial Services Industry |
$ | 460 | | | $ | 460 | ||||||||||
Total Equity Securities Available for Sale |
$ | 460 | $ | | $ | | $ | 460 | ||||||||
Total Securities Available for Sale |
$ | 106,785 | $ | 283,427 | $ | | $ | 390,212 | ||||||||
LIABILITIES: |
||||||||||||||||
Stock Warrants |
$ | | $ | | $ | 1,289 | $ | 1,289 | ||||||||
December 31, 2010 |
||||||||||||||||
ASSETS: |
||||||||||||||||
Debt Securities Available for Sale: |
||||||||||||||||
Collateralized Mortgage Obligations |
$ | | $ | 137,193 | $ | | $ | 137,193 | ||||||||
U.S. Government Agency Securities |
113,334 | | | 113,334 | ||||||||||||
Residential Mortgage-Backed Securities |
| 109,842 | | 109,842 | ||||||||||||
Municipal Bonds |
| 21,028 | | 21,028 | ||||||||||||
Corporate Bonds |
| 20,205 | | 20,205 | ||||||||||||
Asset-Backed Securities |
| 7,384 | | 7,384 | ||||||||||||
Other Securities |
| 3,259 | | 3,259 | ||||||||||||
Total Debt Securities Available for Sale |
$ | 113,334 | $ | 298,911 | $ | | $ | 412,245 | ||||||||
Equity Securities Available for Sale: |
||||||||||||||||
Financial Services Industry |
$ | 873 | | | $ | 873 | ||||||||||
Total Equity Securities Available for Sale |
$ | 873 | $ | | $ | | $ | 873 | ||||||||
Total Securities Available for Sale |
$ | 114,207 | $ | 298,911 | $ | | $ | 413,118 | ||||||||
LIABILITIES: |
||||||||||||||||
Stock Warrants |
$ | | $ | | $ | 1,600 | $ | 1,600 |
11
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||||||
Realized and | ||||||||||||||||||||||||
Unrealized | ||||||||||||||||||||||||
Beginning | Realized and | Gains or Losses | Ending | |||||||||||||||||||||
Balance as of | Purchases, | Unrealized | in Other | Transfers | Balance as of | |||||||||||||||||||
March 31, | Issuances and | Gains or Losses | Comprehensive | In and/or Out | June 30, | |||||||||||||||||||
2011 | Settlements | in Earnings | Income | of Level 3 | 2011 | |||||||||||||||||||
(In Thousands) | ||||||||||||||||||||||||
LIABILITIES: |
||||||||||||||||||||||||
Stock Warrants(1) |
$ | 1,614 | $ | | $ | 325 | $ | | $ | | $ | 1,289 |
Realized and | ||||||||||||||||||||||||
Unrealized | ||||||||||||||||||||||||
Beginning | Realized and | Gains or Losses | Ending | |||||||||||||||||||||
Balance as of | Purchases, | Unrealized | in Other | Transfers | Balance as of | |||||||||||||||||||
December 31, | Issuances and | Gains or Losses | Comprehensive | In and/or Out | June 30, | |||||||||||||||||||
2010 | Settlements | in Earnings | Income | of Level 3 | 2011 | |||||||||||||||||||
(In Thousands) | ||||||||||||||||||||||||
LIABILITIES: |
||||||||||||||||||||||||
Stock Warrants(1) |
$ | 1,600 | $ | | $ | 311 | $ | | $ | | $ | 1,289 |
(1) | Reflects warrants for our common stock issued to Cappello Capital Corp. in connection with services it provided to us as a placement agent in connection with our best efforts public offering and as our financial adviser in connection with our completed rights offering. The warrants were immediately exercisable when issued at an exercise price of $1.20 per share and expire on October 14, 2015. See Note 8 Stockholders Equity for more details. |
Level 1 | Level 2 | Level 3 | |||||||||||||||||||
Quoted Prices in | Significant Observable Inputs With No Active |
Losses During The | Losses During The | ||||||||||||||||||
Active Markets | Market With | Significant | Three Months Ended | Six Months Ended | |||||||||||||||||
for Identical | Identical | Unobservable | June 30, | June 30, | |||||||||||||||||
Assets | Characteristics | Inputs | 2011 and 2010 | 2011 and 2010 | |||||||||||||||||
June 30, 2011 |
|||||||||||||||||||||
ASSETS: |
|||||||||||||||||||||
Non-Performing Loans
Held for Sale |
$ | | $ | | $ | 18,683 | (1) | $ | 682 | $ | 9,462 | ||||||||||
Impaired Loans |
$ | | $ | | $ | 178,090 | (2) | $ | 14,314 | $ | 23,940 | ||||||||||
Other Real Estate Owned |
$ | | $ | | $ | 1,298 | (3) | $ | 203 | $ | 770 | ||||||||||
June 30, 2010 |
|||||||||||||||||||||
ASSETS: |
|||||||||||||||||||||
Non-Performing Loans
Held for Sale |
$ | | $ | | $ | 23,663 | (4) | $ | 5,337 | $ | 7,053 | ||||||||||
Impaired Loans |
$ | | $ | | $ | 168,184 | (5) | $ | 19,857 | $ | 48,696 | ||||||||||
Other Real Estate Owned |
$ | | $ | | $ | 22,499 | (6) | $ | 966 | $ | 5,912 |
(1) | Includes commercial property loans of $418,000, commercial term loans of $12.0 million, SBA loans of $6.0 million and residential property loans of $266,000. | |
(2) | Includes real estate loans of $73.7 million, commercial and industrial loans of $103.7 million, and consumer loans of $732,000 . | |
(3) | Includes properties from the foreclosure of commercial property loans of $308,000 and SBA loans of $990,000. | |
(4) | Includes commercial term loans of $8.8 million and commercial property loans of $14.9 million. | |
(5) | Includes real estate loans of $43.7 million, commercial and industrial loans of $124.1 million, and consumer loans of $388,000. | |
(6) | Includes properties from the foreclosure of real estate loans of $19.4 million, and commercial and industrial loans of $3.1 million. |
12
13
June 30, 2011 | December 31, 2010 | |||||||||||||||
Carrying | Estimated | Carrying | Estimated | |||||||||||||
or Contract | Fair | or Contract | Fair | |||||||||||||
Amount | Value | Amount | Value | |||||||||||||
(In Thousands) | ||||||||||||||||
Financial Assets: |
||||||||||||||||
Cash and Cash Equivalents |
$ | 198,923 | $ | 198,923 | $ | 249,720 | $ | 249,720 | ||||||||
Investment Securities Held to Maturity |
833 | 835 | 845 | 847 | ||||||||||||
Investment Securities Available for Sale |
390,212 | 390,212 | 413,118 | 413,118 | ||||||||||||
Loans Receivable, Net of Allowance for Loan Losses |
1,959,564 | 1,943,118 | 2,084,447 | 2,025,368 | ||||||||||||
Loans Held for Sale |
44,105 | 44,105 | 36,620 | 36,620 | ||||||||||||
Accrued Interest Receivable |
7,512 | 7,512 | 8,048 | 8,048 | ||||||||||||
Investment in Federal Home Loan Bank Stock |
25,076 | 25,076 | 27,282 | 27,282 | ||||||||||||
Investment in Federal Reserve Bank Stock |
7,489 | 7,489 | 7,449 | 7,449 | ||||||||||||
Financial Liabilities: |
||||||||||||||||
Noninterest-Bearing Deposits |
600,812 | 600,812 | 546,815 | 546,815 | ||||||||||||
Interest-Bearing Deposits |
1,797,563 | 1,807,148 | 1,919,906 | 1,927,314 | ||||||||||||
Borrowings |
86,919 | 87,017 | 237,626 | 233,077 | ||||||||||||
Accrued Interest Payable |
14,226 | 14,226 | 15,966 | 15,966 | ||||||||||||
Off-Balance Sheet Items: |
||||||||||||||||
Commitments to Extend Credit |
167,018 | 100 | 178,424 | 130 | ||||||||||||
Standby Letters of Credit |
14,771 | 36 | 15,226 | 50 |
14
Gross | Gross | Estimated | ||||||||||||||
Amortized | Unrealized | Unrealized | Fair | |||||||||||||
Cost | Gain | Loss | Value | |||||||||||||
(In Thousands) | ||||||||||||||||
June 30, 2011: |
||||||||||||||||
Municipal Bonds |
$ | 697 | $ | | $ | | $ | 697 | ||||||||
Mortgage-Backed Securities (1) |
136 | 2 | | 138 | ||||||||||||
$ | 833 | $ | 2 | $ | | $ | 835 | |||||||||
December 31, 2010: |
||||||||||||||||
Municipal Bonds |
$ | 696 | $ | | $ | | $ | 696 | ||||||||
Mortgage-Backed Securities (1) |
149 | 2 | | 151 | ||||||||||||
$ | 845 | $ | 2 | $ | | $ | 847 | |||||||||
(1) | Collateralized by residential mortgages and guaranteed by U.S. government sponsored entities. |
15
Gross | Gross | Estimated | ||||||||||||||
Amortized | Unrealized | Unrealized | Fair | |||||||||||||
Cost | Gain | Loss | Value | |||||||||||||
(In Thousands) | ||||||||||||||||
June 30, 2011: |
||||||||||||||||
Collateralized Mortgage Obligations (1) |
$ | 124,940 | $ | 1,114 | $ | 125 | $ | 125,929 | ||||||||
Mortgage-Backed Securities (1) |
115,019 | 2,793 | 35 | 117,777 | ||||||||||||
U.S. Government Agency Securities |
106,162 | 260 | 97 | 106,325 | ||||||||||||
Corporate Bonds |
20,454 | 23 | 92 | 20,385 | ||||||||||||
Municipal Bonds |
9,296 | 80 | 120 | 9,256 | ||||||||||||
Asset-Backed Securities (2) |
6,476 | 323 | | 6,799 | ||||||||||||
Other Securities |
3,305 | 17 | 41 | 3,281 | ||||||||||||
Equity Securities (3) |
647 | | 187 | 460 | ||||||||||||
$ | 386,299 | $ | 4,610 | $ | 697 | $ | 390,212 | |||||||||
December 31, 2010: |
||||||||||||||||
Collateralized Mortgage Obligations (1) |
$ | 139,053 | $ | 470 | $ | 2,330 | $ | 137,193 | ||||||||
U.S. Government Agency Securities |
114,066 | 98 | 830 | 113,334 | ||||||||||||
Mortgage-Backed Securities (1) |
108,436 | 2,137 | 731 | 109,842 | ||||||||||||
Municipal Bonds |
22,420 | 48 | 1,440 | 21,028 | ||||||||||||
Corporate Bonds |
20,449 | 13 | 257 | 20,205 | ||||||||||||
Asset-Backed Securities (2) |
7,115 | 269 | | 7,384 | ||||||||||||
Other Securities |
3,305 | | 46 | 3,259 | ||||||||||||
Equity Securities (3) |
647 | 226 | | 873 | ||||||||||||
$ | 415,491 | $ | 3,261 | $ | 5,634 | $ | 413,118 | |||||||||
(1) | Collateralized by residential mortgages and guaranteed by U.S. government sponsored entities. | |
(2) | Collaterized debentures of small business investment companies and state and local development companies, and guaranteed by SBA. | |
(3) | Balances presented for amortized cost, representing two equity securities, were net of an OTTI charge of $790,000, which was related to a credit loss, as of December 31, 2010. We recorded an OTTI charge of $790,000 to write down the value of one equity investment to its fair value during the year ended December 31, 2010. |
Available for Sale | Held to Maturity | |||||||||||||||
Amortized | Estimated | Amortized | Estimated | |||||||||||||
Cost | Fair Value | Cost | Fair Value | |||||||||||||
(In Thousands) | ||||||||||||||||
Within One Year |
$ | | $ | | $ | | $ | | ||||||||
Over One Year Through Five Years |
103,279 | 103,360 | 697 | 697 | ||||||||||||
Over Five Years Through Ten Years |
32,191 | 32,199 | | | ||||||||||||
Over Ten Years |
3,747 | 3,688 | | | ||||||||||||
Collateralized Mortgage Obligations |
124,940 | 125,929 | | | ||||||||||||
Mortgage-Backed Securities |
115,019 | 117,777 | 136 | 138 | ||||||||||||
Asset-Backed Securities |
6,476 | 6,799 | | | ||||||||||||
Equity Securities |
647 | 460 | | | ||||||||||||
$ | 386,299 | $ | 390,212 | $ | 833 | $ | 835 | |||||||||
16
Holding Period | ||||||||||||||||||||||||||||||||||||
Less than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||||||||||||||
Gross | Estimated | Number | Gross | Estimated | Number | Gross | Estimated | Number | ||||||||||||||||||||||||||||
Investment Securities | Unrealized | Fair | of | Unrealized | Fair | of | Unrealized | Fair | of | |||||||||||||||||||||||||||
Available for Sale | Losses | Value | Securities | Losses | Value | Securities | Losses | Value | Securities | |||||||||||||||||||||||||||
(In Thousands) | ||||||||||||||||||||||||||||||||||||
June 30, 2011: |
||||||||||||||||||||||||||||||||||||
Mortgage-Backed Securities |
$ | 35 | $ | 4,744 | 1 | $ | | $ | | | $ | 35 | $ | 4,744 | 1 | |||||||||||||||||||||
Collateralized Mortgage
Obligations |
125 | 29,630 | 8 | | | | 125 | 29,630 | 8 | |||||||||||||||||||||||||||
Municipal Bonds |
59 | 2,827 | 5 | 61 | 2,323 | 2 | 120 | 5,150 | 7 | |||||||||||||||||||||||||||
U.S. Government Agency
Securities |
97 | 26,903 | 7 | | | | 97 | 26,903 | 7 | |||||||||||||||||||||||||||
Equity Securities |
187 | 460 | 2 | | | | 187 | 460 | 2 | |||||||||||||||||||||||||||
Other Securities |
| | | 41 | 958 | 1 | 41 | 958 | 1 | |||||||||||||||||||||||||||
Corporate Bonds |
74 | 12,895 | 3 | 18 | 2,982 | 1 | 92 | 15,877 | 4 | |||||||||||||||||||||||||||
$ | 577 | $ | 77,459 | 26 | $ | 120 | $ | 6,263 | 4 | $ | 697 | $ | 83,722 | 30 | ||||||||||||||||||||||
December 31, 2010: |
||||||||||||||||||||||||||||||||||||
Mortgage-Backed Securities |
$ | 731 | $ | 62,738 | 16 | $ | | $ | | | $ | 731 | $ | 62,738 | 16 | |||||||||||||||||||||
Collateralized Mortgage
Obligations |
2,330 | 99,993 | 20 | | | | 2,330 | 99,993 | 20 | |||||||||||||||||||||||||||
Municipal Bonds |
1,440 | 16,907 | 11 | | | | 1,440 | 16,907 | 11 | |||||||||||||||||||||||||||
U.S. Government Agency
Securities |
830 | 69,266 | 14 | | | | 830 | 69,266 | 14 | |||||||||||||||||||||||||||
Other Securities |
3 | 1,997 | 2 | 43 | 957 | 1 | 46 | 2,954 | 3 | |||||||||||||||||||||||||||
Corporate Bonds |
257 | 17,210 | 5 | | | | 257 | 17,210 | 5 | |||||||||||||||||||||||||||
$ | 5,591 | $ | 268,111 | 68 | $ | 43 | $ | 957 | 1 | $ | 5,634 | $ | 269,068 | 69 | ||||||||||||||||||||||
17
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(In Thousands) | ||||||||||||||||
Gross Realized Gains on Sales of Investment Securities |
$ | 969 | $ | | $ | 969 | $ | 210 | ||||||||
Gross Realized Losses on Sales of Investment Securities |
(1,039 | ) | | (1,039 | ) | (105 | ) | |||||||||
Net Realized Gains on Sales of Investment Securities |
$ | (70 | ) | $ | | $ | (70 | ) | $ | 105 | ||||||
Proceeds from Sales of Investment Securities |
$ | 157,777 | $ | | $ | 157,777 | $ | 3,252 | ||||||||
Tax Expense on Sales of Investment Securities |
$ | | $ | | $ | | $ | 45 |
18
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
(In Thousands) | ||||||||
Real Estate Loans: |
||||||||
Commercial Property |
$ | 688,842 | $ | 729,222 | ||||
Construction |
40,684 | 60,995 | ||||||
Residential Property |
58,059 | 62,645 | ||||||
Total Real Estate Loans |
787,585 | 852,862 | ||||||
Commercial and Industrial Loans: (1) |
||||||||
Commercial Term |
1,032,274 | 1,118,999 | ||||||
SBA |
105,049 | 105,688 | ||||||
Commercial Lines of Credit |
50,636 | 59,056 | ||||||
International |
46,560 | 44,167 | ||||||
Total Commercial and Industrial Loans |
1,234,519 | 1,327,910 | ||||||
Consumer Loans |
46,500 | 50,300 | ||||||
Total Gross Loans |
2,068,604 | 2,231,072 | ||||||
Allowance for Loans Losses |
(109,029 | ) | (146,059 | ) | ||||
Deferred Loan Fees |
(11 | ) | (566 | ) | ||||
Loans Receivable, Net |
$ | 1,959,564 | $ | 2,084,447 | ||||
(1) | Commercial and industrial loans include owner-occupied property loans of $846.5 million and $894.8 million as of June 30, 2011 and December 31, 2010, respectively. |
19
Commercial | ||||||||||||||||
Real Estate | and Industrial | Consumer | Total | |||||||||||||
(Dollars in Thousands) | ||||||||||||||||
June 30, 2011 |
||||||||||||||||
Loans Held for Sale: |
||||||||||||||||
Beginning Balance |
$ | 3,513 | $ | 44,136 | $ | | $ | 47,649 | ||||||||
Origination of Loans Held for Sale |
| 1,771 | | 1,771 | ||||||||||||
Reclassification from Loans
Receivable to Loans Held for sale |
266 | 9,567 | | 9,833 | ||||||||||||
Sales of Loans Held for sale |
(2,664 | ) | (11,557 | ) | | (14,221 | ) | |||||||||
Principal Payoffs and Amortization |
(8 | ) | (237 | ) | | (245 | ) | |||||||||
Valuation Adjustments |
(133 | ) | (549 | ) | | (682 | ) | |||||||||
Ending Balance |
$ | 974 | $ | 43,131 | $ | | $ | 44,105 | ||||||||
June 30, 2010 |
||||||||||||||||
Loans Held for Sale: |
||||||||||||||||
Beginning Balance |
$ | | $ | 10,104 | $ | | $ | 10,104 | ||||||||
Origination of Loans Held for Sale |
| 462 | | 462 | ||||||||||||
Reclassification from Loans
Receivable to Loans Held for sale |
22,584 | 60,500 | | 83,084 | ||||||||||||
Sales of Loans Held for sale |
(7,731 | ) | (55,257 | ) | | (62,988 | ) | |||||||||
Principal Payoffs and Amortization |
| (118 | ) | | (118 | ) | ||||||||||
Valuation Adjustments |
| | | | ||||||||||||
Ending Balance |
$ | 14,853 | $ | 15,691 | $ | | $ | 30,544 | ||||||||
Commercial | ||||||||||||||||
Real Estate | and Industrial | Consumer | Total | |||||||||||||
(Dollars in Thousands) | ||||||||||||||||
June 30, 2011 |
||||||||||||||||
Loans Held for Sale: |
||||||||||||||||
Beginning Balance |
$ | 3,666 | $ | 32,954 | $ | | $ | 36,620 | ||||||||
Origination of Loans Held for Sale |
| 16,056 | | 16,056 | ||||||||||||
Reclassification from Loans
Receivable to Loans Held for sale |
18,175 | 19,631 | | 37,806 | ||||||||||||
Sales of Loans Held for sale |
(20,653 | ) | (22,140 | ) | | (42,793 | ) | |||||||||
Principal Payoffs and Amortization |
(14 | ) | (667 | ) | | (681 | ) | |||||||||
Valuation Adjustments |
(200 | ) | (2,703 | ) | | (2,903 | ) | |||||||||
Ending Balance |
$ | 974 | $ | 43,131 | $ | | $ | 44,105 | ||||||||
June 30, 2010 |
||||||||||||||||
Loans Held for Sale: |
||||||||||||||||
Beginning Balance |
$ | | $ | 5,010 | $ | | $ | 5,010 | ||||||||
Origination of Loans Held for Sale |
| 1,782 | | 1,782 | ||||||||||||
Reclassification from Loans
Receivable to Loans Held for sale |
35,401 | 66,219 | | 101,620 | ||||||||||||
Sales of Loans Held for sale |
(20,548 | ) | (57,137 | ) | | (77,685 | ) | |||||||||
Principal Payoffs and Amortization |
| (183 | ) | | (183 | ) | ||||||||||
Valuation Adjustments |
| | | | ||||||||||||
Ending Balance |
$ | 14,853 | $ | 15,691 | $ | | $ | 30,544 | ||||||||
20
As of and for the | As of and for the | |||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||
June 30, | March 31, | June 30, | June 30, | June 30, | ||||||||||||||||
2011 | 2011 | 2010 | 2011 | 2010 | ||||||||||||||||
(In Thousands) | ||||||||||||||||||||
Allowance for Loan Losses: |
||||||||||||||||||||
Balance at Beginning of Period |
$ | 125,780 | $ | 146,059 | $ | 177,820 | $ | 146,059 | $ | 144,996 | ||||||||||
Actual Charge-Offs |
(20,652 | ) | (25,181 | ) | (40,718 | ) | (45,833 | ) | (70,832 | ) | ||||||||||
Recoveries on Loans Previously Charged Off |
4,151 | 3,626 | 1,772 | 7,777 | 5,493 | |||||||||||||||
Net Loan Charge-Offs |
(16,501 | ) | (21,555 | ) | (38,946 | ) | (38,056 | ) | (65,339 | ) | ||||||||||
Provision Charged to Operating Expenses |
(250 | ) | 1,276 | 37,793 | 1,026 | 97,010 | ||||||||||||||
Balance at End of Period |
$ | 109,029 | $ | 125,780 | $ | 176,667 | $ | 109,029 | $ | 176,667 | ||||||||||
Allowance for Off-Balance Sheet Items: |
||||||||||||||||||||
Balance at Beginning of Period |
$ | 2,141 | $ | 3,417 | $ | 2,655 | $ | 3,417 | $ | 3,876 | ||||||||||
Provision Charged to Operating Expenses |
250 | (1,276 | ) | (293 | ) | (1,026 | ) | (1,514 | ) | |||||||||||
Balance at End of Period |
$ | 2,391 | $ | 2,141 | $ | 2,362 | $ | 2,391 | $ | 2,362 | ||||||||||
Commercial | ||||||||||||||||||||
Real Estate | and Industrial | Consumer | Unallocated | Total | ||||||||||||||||
(Dollars in Thousands) | ||||||||||||||||||||
June 30, 2011 |
||||||||||||||||||||
Allowance for Loan Losses: |
||||||||||||||||||||
Beginning Balance |
$ | 25,884 | $ | 93,878 | $ | 1,732 | $ | 4,286 | $ | 125,780 | ||||||||||
Charge-Offs |
5,591 | 14,741 | 320 | | 20,652 | |||||||||||||||
Recoveries on Loans Previously Charged Off |
2,223 | 1,915 | 13 | | 4,151 | |||||||||||||||
Provision |
1,599 | 1,793 | 162 | (3,804 | ) | (250 | ) | |||||||||||||
Ending Balance |
$ | 24,115 | $ | 82,845 | $ | 1,587 | $ | 482 | $ | 109,029 | ||||||||||
Ending Balance: Individually Evaluated for Impairment |
$ | 3,324 | $ | 26,149 | $ | 223 | $ | | $ | 29,696 | ||||||||||
Ending Balance: Collectively Evaluated for Impairment |
$ | 20,791 | $ | 56,696 | $ | 1,364 | $ | 482 | $ | 79,333 | ||||||||||
Loans Receivable: |
||||||||||||||||||||
Ending Balance |
$ | 787,585 | $ | 1,234,519 | $ | 46,500 | $ | | $ | 2,068,604 | ||||||||||
Ending Balance: Individually Evaluated for Impairment |
$ | 78,065 | $ | 114,560 | $ | 870 | $ | | $ | 193,495 | ||||||||||
Ending Balance: Collectively Evaluated for Impairment |
$ | 709,520 | $ | 1,119,959 | $ | 45,630 | $ | | $ | 1,875,109 | ||||||||||
June 30, 2010 |
||||||||||||||||||||
Allowance for Loan Losses: |
||||||||||||||||||||
Beginning Balance |
$ | 31,597 | $ | 143,994 | $ | 2,229 | $ | | $ | 177,820 | ||||||||||
Charge-Offs |
12,412 | 27,951 | 355 | | 40,718 | |||||||||||||||
Recoveries on Loans Previously Charged Off |
162 | 1,530 | 80 | | 1,772 | |||||||||||||||
Provision |
12,698 | 22,931 | 244 | 1,920 | 37,793 | |||||||||||||||
Ending Balance |
$ | 32,045 | $ | 140,504 | $ | 2,198 | $ | 1,920 | $ | 176,667 | ||||||||||
Ending Balance: Individually Evaluated for Impairment |
$ | 3,963 | $ | 24,495 | $ | 23 | $ | | $ | 28,481 | ||||||||||
Ending Balance: Collectively Evaluated for Impairment |
$ | 28,082 | $ | 116,009 | $ | 2,175 | $ | 1,920 | $ | 148,186 | ||||||||||
Loans Receivable: |
||||||||||||||||||||
Ending Balance |
$ | 913,966 | $ | 1,503,948 | $ | 55,790 | $ | | $ | 2,473,704 | ||||||||||
Ending Balance: Individually Evaluated for Impairment |
$ | 100,854 | $ | 161,138 | $ | 388 | $ | | $ | 262,380 | ||||||||||
Ending Balance: Collectively Evaluated for Impairment |
$ | 813,112 | $ | 1,342,810 | $ | 55,402 | $ | | $ | 2,211,324 | ||||||||||
21
Commercial | ||||||||||||||||||||
Real Estate | and Industrial | Consumer | Unallocated | Total | ||||||||||||||||
(Dollars in Thousands) | ||||||||||||||||||||
June 30, 2011 |
||||||||||||||||||||
Allowance for Loan Losses: |
||||||||||||||||||||
Beginning Balance |
$ | 32,766 | $ | 108,986 | $ | 2,079 | $ | 2,228 | $ | 146,059 | ||||||||||
Charge-Offs |
12,644 | 32,693 | 496 | | 45,833 | |||||||||||||||
Recoveries on Loans Previously Charged Off |
2,744 | 5,011 | 22 | | 7,777 | |||||||||||||||
Provision |
1,249 | 1,541 | (18 | ) | (1,746 | ) | 1,026 | |||||||||||||
Ending Balance |
$ | 24,115 | $ | 82,845 | $ | 1,587 | $ | 482 | $ | 109,029 | ||||||||||
Ending Balance: Individually Evaluated for Impairment |
$ | 3,324 | $ | 26,149 | $ | 223 | $ | | $ | 29,696 | ||||||||||
Ending Balance: Collectively Evaluated for Impairment |
$ | 20,791 | $ | 56,696 | $ | 1,364 | $ | 482 | $ | 79,333 | ||||||||||
Loans Receivable: |
||||||||||||||||||||
Ending Balance |
$ | 787,585 | $ | 1,234,519 | $ | 46,500 | $ | | $ | 2,068,604 | ||||||||||
Ending Balance: Individually Evaluated for Impairment |
$ | 78,065 | $ | 114,560 | $ | 870 | $ | | $ | 193,495 | ||||||||||
Ending Balance: Collectively Evaluated for Impairment |
$ | 709,520 | $ | 1,119,959 | $ | 45,630 | $ | | $ | 1,875,109 | ||||||||||
June 30, 2010 |
||||||||||||||||||||
Allowance for Loan Losses: |
||||||||||||||||||||
Beginning Balance |
$ | 30,081 | $ | 112,225 | $ | 2,690 | $ | | $ | 144,996 | ||||||||||
Charge-Offs |
17,817 | 52,037 | 978 | | 70,832 | |||||||||||||||
Recoveries on Loans Previously Charged Off |
1,865 | 3,507 | 121 | | 5,493 | |||||||||||||||
Provision |
17,916 | 76,809 | 365 | 1,920 | 97,010 | |||||||||||||||
Ending Balance |
$ | 32,045 | $ | 140,504 | $ | 2,198 | $ | 1,920 | $ | 176,667 | ||||||||||
Ending Balance: Individually Evaluated for Impairment |
$ | 3,963 | $ | 24,495 | $ | 23 | $ | | $ | 28,481 | ||||||||||
Ending Balance: Collectively Evaluated for Impairment |
$ | 28,082 | $ | 116,009 | $ | 2,175 | $ | 1,920 | $ | 148,186 | ||||||||||
Loans Receivable: |
||||||||||||||||||||
Ending Balance |
$ | 913,966 | $ | 1,503,948 | $ | 55,790 | $ | | $ | 2,473,704 | ||||||||||
Ending Balance: Individually Evaluated for Impairment |
$ | 100,854 | $ | 161,138 | $ | 388 | $ | | $ | 262,380 | ||||||||||
Ending Balance: Collectively Evaluated for Impairment |
$ | 813,112 | $ | 1,342,810 | $ | 55,402 | $ | | $ | 2,211,324 | ||||||||||
22
23
Pass | Criticized | Classified | ||||||||||||||
(Grade 0-4) | (Grade 5) | (Grade 6-7) | Total Loans | |||||||||||||
(In Thousands) | ||||||||||||||||
June 30, 2011: |
||||||||||||||||
Real Estate Loans: |
||||||||||||||||
Commercial Property |
||||||||||||||||
Retail |
$ | 274,428 | $ | 11,015 | $ | 33,903 | $ | 319,346 | ||||||||
Land |
3,610 | | 26,256 | 29,866 | ||||||||||||
Other |
278,636 | 20,966 | 40,028 | 339,630 | ||||||||||||
Construction |
8,529 | 14,080 | 18,075 | 40,684 | ||||||||||||
Residential Property |
54,936 | | 3,123 | 58,059 | ||||||||||||
Commercial and Industrial Loans: |
||||||||||||||||
Commercial Term |
||||||||||||||||
Unsecured |
113,299 | 17,597 | 55,206 | 186,102 | ||||||||||||
Secured by Real Estate |
617,367 | 72,790 | 156,015 | 846,172 | ||||||||||||
Commercial Lines of Credit |
38,580 | 8,758 | 3,298 | 50,636 | ||||||||||||
SBA |
71,024 | 580 | 33,445 | 105,049 | ||||||||||||
International |
40,698 | 312 | 5,550 | 46,560 | ||||||||||||
Consumer Loans |
43,990 | 574 | 1,936 | 46,500 | ||||||||||||
Total |
$ | 1,545,097 | $ | 146,672 | $ | 376,835 | $ | 2,068,604 | ||||||||
December 31, 2010: |
||||||||||||||||
Real Estate Loans: |
||||||||||||||||
Commercial Property |
||||||||||||||||
Retail |
$ | 302,696 | $ | 18,507 | $ | 38,568 | $ | 359,771 | ||||||||
Land |
3,845 | | 37,353 | 41,198 | ||||||||||||
Other |
265,957 | 20,804 | 41,493 | 328,254 | ||||||||||||
Construction |
12,958 | 25,897 | 22,139 | 60,994 | ||||||||||||
Residential Property |
59,329 | | 3,315 | 62,644 | ||||||||||||
Commercial and Industrial Loans: |
||||||||||||||||
Commercial Term |
||||||||||||||||
Unsecured |
134,709 | 24,620 | 63,739 | 223,068 | ||||||||||||
Secured by Real Estate |
617,200 | 107,645 | 171,086 | 895,931 | ||||||||||||
Commercial Lines of Credit |
40,195 | 8,019 | 10,841 | 59,055 | ||||||||||||
SBA |
68,994 | 731 | 35,965 | 105,690 | ||||||||||||
International |
38,447 | 4,693 | 1,027 | 44,167 | ||||||||||||
Consumer Loans |
48,027 | 347 | 1,926 | 50,300 | ||||||||||||
Total |
$ | 1,592,357 | $ | 211,263 | $ | 427,452 | $ | 2,231,072 | ||||||||
24
30-59 Days Past | 90 Days or More | Accruing 90 Days or | ||||||||||||||||||||||||||
Due | 60-89 Days Past Due | Past Due | Total Past Due | Current | Total Loans | More Past Due | ||||||||||||||||||||||
(In Thousands) | ||||||||||||||||||||||||||||
June 30, 2011: |
||||||||||||||||||||||||||||
Real Estate Loans: |
||||||||||||||||||||||||||||
Commercial Property |
||||||||||||||||||||||||||||
Retail |
$ | | $ | | $ | | $ | | $ | 319,346 | $ | 319,346 | $ | | ||||||||||||||
Land |
| | 21,970 | 21,970 | 7,896 | 29,866 | | |||||||||||||||||||||
Other |
4,081 | | | 4,081 | 335,549 | 339,630 | | |||||||||||||||||||||
Construction |
| | 12,298 | 12,298 | 28,386 | 40,684 | | |||||||||||||||||||||
Residential Property |
1,883 | 895 | 695 | 3,473 | 54,586 | 58,059 | | |||||||||||||||||||||
Commercial and Industrial Loans: |
||||||||||||||||||||||||||||
Commercial Term |
||||||||||||||||||||||||||||
Unsecured |
1,874 | 759 | 1,237 | 3,870 | 182,232 | 186,102 | | |||||||||||||||||||||
Secured by Real Estate |
4,816 | 2,142 | 2,104 | 9,062 | 837,110 | 846,172 | | |||||||||||||||||||||
Commercial Lines of Credit |
| | 1,422 | 1,422 | 49,214 | 50,636 | | |||||||||||||||||||||
SBA |
3,136 | 3,740 | 9,943 | 16,819 | 88,230 | 105,049 | | |||||||||||||||||||||
International |
2,943 | 399 | | 3,342 | 43,218 | 46,560 | | |||||||||||||||||||||
Consumer Loans |
1,024 | 321 | 40 | 1,385 | 45,115 | 46,500 | | |||||||||||||||||||||
Total |
$ | 19,757 | $ | 8,256 | $ | 49,709 | $ | 77,722 | $ | 1,990,882 | $ | 2,068,604 | $ | | ||||||||||||||
December 31, 2010: |
||||||||||||||||||||||||||||
Real Estate Loans: |
||||||||||||||||||||||||||||
Commercial Property |
||||||||||||||||||||||||||||
Retail |
$ | | $ | | $ | 7,857 | $ | 7,857 | $ | 351,913 | $ | 359,770 | $ | | ||||||||||||||
Land |
| | 25,725 | 25,725 | 15,471 | 41,196 | | |||||||||||||||||||||
Other |
| | 7,212 | 7,212 | 321,043 | 328,255 | | |||||||||||||||||||||
Construction |
10,409 | | 8,477 | 18,886 | 42,108 | 60,994 | | |||||||||||||||||||||
Residential Property |
522 | | 1,240 | 1,762 | 60,883 | 62,645 | | |||||||||||||||||||||
Commercial and Industrial Loans: |
||||||||||||||||||||||||||||
Commercial Term |
||||||||||||||||||||||||||||
Unsecured |
2,208 | 2,781 | 6,842 | 11,831 | 211,237 | 223,068 | | |||||||||||||||||||||
Secured by Real Estate |
5,111 | 3,720 | 10,530 | 19,361 | 876,570 | 895,931 | | |||||||||||||||||||||
Commercial Lines of Credit |
454 | | 1,745 | 2,199 | 56,857 | 59,056 | | |||||||||||||||||||||
SBA |
2,287 | 8,205 | 13,957 | 24,449 | 81,241 | 105,690 | | |||||||||||||||||||||
International |
| | | | 44,167 | 44,167 | | |||||||||||||||||||||
Consumer Loans |
596 | 202 | 865 | 1,663 | 48,637 | 50,300 | | |||||||||||||||||||||
Total |
$ | 21,587 | $ | 14,908 | $ | 84,450 | $ | 120,945 | $ | 2,110,127 | $ | 2,231,072 | $ | | ||||||||||||||
25
26
Recorded | Unpaid Principal | With No Related | With an Allowance | Related | ||||||||||||||||
Investment | Balance | Allowance Recorded | Recorded | Allowance | ||||||||||||||||
(In Thousands) | ||||||||||||||||||||
June 30, 2011: |
||||||||||||||||||||
Real Estate Loans: |
||||||||||||||||||||
Commercial Property |
||||||||||||||||||||
Retail |
$ | 15,810 | $ | 16,329 | $ | 8,845 | $ | 6,963 | $ | 565 | ||||||||||
Land |
26,008 | 26,008 | 25,184 | 825 | 105 | |||||||||||||||
Other |
21,624 | 21,748 | 3,698 | 17,926 | 2,623 | |||||||||||||||
Construction |
12,298 | 12,396 | 12,298 | | | |||||||||||||||
Residential Property |
2,325 | 2,386 | 1,982 | 343 | 31 | |||||||||||||||
Commercial and Industrial Loans: |
||||||||||||||||||||
Commercial Term |
||||||||||||||||||||
Unsecured |
14,999 | 15,463 | 661 | 14,338 | 11,040 | |||||||||||||||
Secured by Real Estate |
83,382 | 85,570 | 41,163 | 42,219 | 9,092 | |||||||||||||||
Commercial Lines of Credit |
3,028 | 3,097 | 1,218 | 1,810 | 1,394 | |||||||||||||||
SBA |
17,780 | 19,437 | 7,340 | 10,441 | 1,380 | |||||||||||||||
International |
3,243 | 3,243 | | 3,243 | 3,243 | |||||||||||||||
Consumer Loans |
870 | 898 | 379 | 491 | 223 | |||||||||||||||
Total |
$ | 201,367 | $ | 206,575 | $ | 102,768 | $ | 98,599 | $ | 29,696 | ||||||||||
December 31, 2010: |
||||||||||||||||||||
Real Estate Loans: |
||||||||||||||||||||
Commercial Property |
||||||||||||||||||||
Retail |
$ | 17,606 | $ | 18,050 | $ | 6,336 | $ | 11,270 | $ | 1,543 | ||||||||||
Land |
35,207 | 35,295 | 5,482 | 29,725 | 1,485 | |||||||||||||||
Other |
11,357 | 11,476 | 10,210 | 1,147 | 33 | |||||||||||||||
Construction |
17,691 | 17,831 | 13,992 | 3,699 | 280 | |||||||||||||||
Residential Property |
1,926 | 1,990 | 1,926 | | | |||||||||||||||
Commercial and Industrial Loans: |
||||||||||||||||||||
Commercial Term |
||||||||||||||||||||
Unsecured |
17,847 | 18,799 | 6,465 | 11,382 | 10,313 | |||||||||||||||
Secured by Real Estate |
80,213 | 81,395 | 35,154 | 45,059 | 11,831 | |||||||||||||||
Commercial Lines of Credit |
4,067 | 4,116 | 1,422 | 2,645 | 1,321 | |||||||||||||||
SBA |
17,715 | 18,544 | 7,112 | 10,603 | 2,122 | |||||||||||||||
International |
127 | 141 | | 127 | 127 | |||||||||||||||
Consumer Loans |
934 | 951 | 393 | 541 | 393 | |||||||||||||||
Total |
$ | 204,690 | $ | 208,588 | $ | 88,492 | $ | 116,198 | $ | 29,448 | ||||||||||
27
Average | Interest | Average | Interest | |||||||||||||
Recorded | Income | Recorded | Income | |||||||||||||
Investment | Recognized | Investment | Recognized | |||||||||||||
for the Three | for the Three | for the Six | for the Six | |||||||||||||
Months | Months | Months | Months | |||||||||||||
Ended | Ended(1) | Ended | Ended(1) | |||||||||||||
(In Thousands) | ||||||||||||||||
June 30, 2011: |
||||||||||||||||
Real Estate Loans: |
||||||||||||||||
Commercial Property |
||||||||||||||||
Retail |
$ | 17,260 | $ | 26 | $ | 17,633 | $ | 51 | ||||||||
Land |
27,561 | | 29,023 | | ||||||||||||
Other |
21,849 | 60 | 21,864 | 121 | ||||||||||||
Construction |
12,535 | | 12,578 | | ||||||||||||
Residential Property |
2,371 | | 2,386 | | ||||||||||||
Commercial and Industrial Loans: |
||||||||||||||||
Commercial Term |
||||||||||||||||
Unsecured |
15,365 | 53 | 15,571 | 105 | ||||||||||||
Secured by Real Estate |
84,898 | 456 | 85,504 | 821 | ||||||||||||
Commercial Lines of Credit |
3,076 | 2 | 3,090 | 4 | ||||||||||||
SBA |
18,900 | 31 | 19,107 | 57 | ||||||||||||
International |
3,243 | | 2,255 | | ||||||||||||
Consumer Loans |
889 | 1 | 893 | 1 | ||||||||||||
Total |
$ | 207,947 | $ | 629 | $ | 209,904 | $ | 1,160 | ||||||||
June 30, 2010: |
||||||||||||||||
Real Estate Loans: |
||||||||||||||||
Commercial Property |
||||||||||||||||
Retail |
$ | 17,977 | $ | | $ | 25,664 | $ | | ||||||||
Land |
43,425 | 59 | 45,164 | 114 | ||||||||||||
Other |
16,492 | 55 | 18,524 | 216 | ||||||||||||
Construction |
9,823 | | 9,823 | | ||||||||||||
Residential Property |
2,725 | | 2,784 | | ||||||||||||
Commercial and Industrial Loans: |
||||||||||||||||
Commercial Term |
||||||||||||||||
Unsecured |
20,289 | | 18,278 | 9 | ||||||||||||
Secured by Real Estate |
111,388 | 67 | 104,745 | 293 | ||||||||||||
Commercial Lines of Credit |
6,132 | 56 | 5,499 | 82 | ||||||||||||
SBA |
25,573 | | 26,083 | | ||||||||||||
International |
284 | | 588 | | ||||||||||||
Consumer Loans |
396 | | 531 | | ||||||||||||
Total |
$ | 254,504 | $ | 237 | $ | 257,683 | $ | 714 | ||||||||
(1) | Represents interest income recognized on impaired loans subsequent to classification as impaired. |
28
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(In Thousands) | ||||||||||||||||
Interest Income That Would Have Been Recognized Had
Impaired
Loans Performed in Accordance With Their Original Terms |
$ | 2,001 | $ | 3,755 | $ | 4,475 | $ | 7,030 | ||||||||
Less: Interest Income Recognized on Impaired Loans |
(629 | ) | (237 | ) | (1,160 | ) | (714 | ) | ||||||||
Interest Foregone on Impaired Loans |
$ | 1,372 | $ | 3,518 | $ | 3,315 | $ | 6,316 | ||||||||
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
(In Thousands) | ||||||||
Real Estate Loans: |
||||||||
Commercial Property |
||||||||
Retail |
$ | 14,335 | $ | 10,998 | ||||
Land |
25,184 | 25,725 | ||||||
Other |
3,772 | 8,953 | ||||||
Construction |
12,298 | 17,691 | ||||||
Residential Property |
1,460 | 1,926 | ||||||
Commercial and Industrial Loans: |
||||||||
Commercial Term |
||||||||
Unsecured |
10,758 | 17,065 | ||||||
Secured by Real Estate |
46,454 | 31,053 | ||||||
Commercial Lines of Credit |
2,905 | 2,798 | ||||||
SBA |
23,263 | 25,054 | ||||||
International |
3,243 | 127 | ||||||
Consumer Loans |
824 | 1,047 | ||||||
Total |
$ | 144,496 | $ | 142,437 | ||||
29
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
(In Thousands) | ||||||||
Non-Accrual Loans |
$ | 144,496 | $ | 142,437 | ||||
Loans 90 Days or More Past Due and Still Accruing |
| | ||||||
Total Non-Performing Loans |
144,496 | 142,437 | ||||||
Other Real Estate Owned |
1,340 | 4,089 | ||||||
Total Non-Performing Assets |
$ | 145,836 | $ | 146,526 | ||||
Troubled Debt Restructurings on Accrual Status |
$ | 19,793 | $ | 47,395 | ||||
30
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(In Thousands) | ||||||||||||||||
Share-Based Compensation Expense |
$ | 69 | $ | 280 | $ | 382 | $ | 486 | ||||||||
Related Tax Benefits |
$ | 29 | $ | 118 | $ | 161 | $ | 205 |
Unrecognized | Average Expected | |||||||
Expense | Recognition Period | |||||||
(Dollars in Thousands) | ||||||||
Stock Option Awards |
$ | 192 | 1.9 years | |||||
Restricted Stock Awards |
219 | 2.2 years | ||||||
Total Unrecognized Share-Based Compensation Expense |
$ | 411 | 2.1 years | |||||
31
Weighted- | Weighted- | Aggregate | ||||||||||||||
Average | Average | Intrinsic | ||||||||||||||
Number | Exercise | Remaining | Value of | |||||||||||||
of | Price Per | Contractual | In-the-Money | |||||||||||||
Shares | Share | Life | Options | |||||||||||||
(Dollars in Thousands, Except Per Share Data) | ||||||||||||||||
Options Outstanding at Beginning of Period |
1,210,091 | $ | 10.58 | 5.7 years | $ | | (1) | |||||||||
Options Expired |
(17,200 | ) | $ | 16.15 | 1.1 years | |||||||||||
Options Outstanding at End of Period |
1,192,891 | $ | 10.50 | 5.5 years | $ | | (2) | |||||||||
Options Exercisable at End of Period |
927,291 | $ | 12.80 | 4.6 years | $ | | (2) |
(1) | Intrinsic value represents the excess of the closing stock price on the last trading day of the period, which was $1.24 as of March 31, 2011, over the exercise price, multiplied by the number of options. | |
(2) | Intrinsic value represents the excess of the closing stock price on the last trading day of the period, which was $1.07 as of June 30, 2011, over the exercise price, multiplied by the number of options. |
Weighted- | Weighted- | Aggregate | ||||||||||||||
Average | Average | Intrinsic | ||||||||||||||
Number | Exercise | Remaining | Value of | |||||||||||||
of | Price Per | Contractual | In-the-Money | |||||||||||||
Shares | Share | Life | Options | |||||||||||||
(Dollars in Thousands, Except Per Share Data) | ||||||||||||||||
Options Outstanding at Beginning of Period |
1,066,891 | $ | 11.93 | 5.3 years | $ | | (1) | |||||||||
Options Granted |
150,000 | $ | 1.30 | 9.7 years | ||||||||||||
Options Expired |
(21,200 | ) | $ | 16.54 | 4.1 years | |||||||||||
Options Forfeited |
(2,800 | ) | $ | 18.00 | 4.8 years | |||||||||||
Options Outstanding at End of Period |
1,192,891 | $ | 10.50 | 5.5 years | $ | | (2) | |||||||||
Options Exercisable at End of Period |
927,291 | $ | 12.80 | 4.6 years | $ | | (2) |
(1) | Intrinsic value represents the excess of the closing stock price on the last trading day of the period, which was $1.15 as of December 31, 2010, over the exercise price, multiplied by the number of options. | |
(2) | Intrinsic value represents the excess of the closing stock price on the last trading day of the period, which was $1.07 as of June 30, 2011, over the exercise price, multiplied by the number of options. |
32
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2011 | June 30, 2011 | |||||||||||||||
Weighted- | Weighted- | |||||||||||||||
Average | Average | |||||||||||||||
Number | Grant Date | Number | Grant Date | |||||||||||||
of | Fair Value | of | Fair Value | |||||||||||||
Shares | Per Share | Shares | Per Share | |||||||||||||
Restricted Stock at Beginning of Period |
185,600 | $ | 1.72 | 145,600 | $ | 1.77 | ||||||||||
Restricted Stock Granted |
| $ | | 60,000 | $ | 1.30 | ||||||||||
Restricted Stock Vested |
(35,000 | ) | $ | 1.40 | (55,000 | ) | $ | 1.33 | ||||||||
Restricted Stock at End of Period |
150,600 | $ | 1.75 | 150,600 | $ | 1.75 | ||||||||||
33
2011 | 2010 | |||||||||||||||||||||||
(Denominator) | (Denominator) | |||||||||||||||||||||||
(Numerator) | Weighted- | Per | (Numerator) | Weighted- | Per | |||||||||||||||||||
Net | Average | Share | Net | Average | Share | |||||||||||||||||||
Income | Shares | Amount | Loss | Shares | Amount | |||||||||||||||||||
(Dollars in Thousands, Except Per Share Data) | ||||||||||||||||||||||||
Three Months Ended June 30: |
||||||||||||||||||||||||
Basic EPS |
$ | 8,001 | 151,104,636 | $ | 0.05 | $ | (29,257 | ) | 51,036,573 | $ | (0.57 | ) | ||||||||||||
Effect of Dilutive Securities Options, Warrants
and Unvested Restricted Stock |
| 153,754 | | | | | ||||||||||||||||||
Diluted EPS |
$ | 8,001 | 151,258,390 | $ | 0.05 | $ | (29,257 | ) | 51,036,573 | $ | (0.57 | ) | ||||||||||||
Six Months Ended June 30: |
||||||||||||||||||||||||
Basic EPS |
$ | 18,438 | 151,082,945 | $ | 0.12 | $ | (78,743 | ) | 51,017,885 | $ | (1.54 | ) | ||||||||||||
Effect of Dilutive Securities Options, Warrants
and Unvested Restricted Stock |
| 174,405 | | | | | ||||||||||||||||||
Diluted EPS |
$ | 18,438 | 151,257,350 | $ | 0.12 | $ | (78,743 | ) | 51,017,885 | $ | (1.54 | ) | ||||||||||||
34
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
(In Thousands) | ||||||||
Commitments to Extend Credit |
$ | 167,018 | $ | 178,424 | ||||
Standby Letters of Credit |
14,771 | 15,226 | ||||||
Commercial Letters of Credit |
7,654 | 11,899 | ||||||
Unused Credit Card Lines |
17,058 | 24,649 | ||||||
Total Undisbursed Loan Commitments |
$ | 206,501 | $ | 230,198 | ||||
35
36
| failure to raise enough capital to support our operations or meet our regulatory requirements, including requirements under the Final Order and the Agreement; | ||
| failure to maintain adequate levels of capital to support our operations; | ||
| a significant number of customers failing to perform under their loans or other extensions of credit; | ||
| our compliance with and the effect of regulatory orders and agreements that we and Hanmi Bank have entered into with our respective regulators and potential future supervisory or governmental actions against us or Hanmi Bank; | ||
| fluctuations in interest rates and a decline in the level of our interest rate spread; | ||
| failure to attract or retain deposits and restrictions on taking brokered deposits; | ||
| sources of liquidity available to us and to Hanmi Bank becoming limited or our potential inability to access sufficient sources of liquidity when needed or the requirement that we obtain government waivers to do so; | ||
| adverse changes in domestic or global financial markets, economic conditions or business conditions; | ||
| regulatory restrictions on Hanmi Banks ability to pay dividends to us and on our ability to make payments on our obligations; | ||
| significant reliance on loans secured by real estate and the associated vulnerability to downturns in the local real estate market, natural disasters and other variables impacting the value of real estate; | ||
| our use of appraisals in deciding whether to make loans secured by real property, which does not ensure that the value of the real property collateral will be sufficient to pay our loans; | ||
| failure to attract or retain our key employees; | ||
| credit quality and the effect of credit quality on our provision for credit losses and allowance for loan losses; | ||
| our ability to raise capital on reasonable terms; | ||
| volatility and disruption in financial, credit and securities markets, and the price of our common stock; | ||
| deterioration in financial markets that may result in impairment charges relating to our securities portfolio; | ||
| competition and demographic changes in our primary market areas; | ||
| global hostilities, acts of war or terrorism, including but not limited to, conflict between North Korea and |
37
South Korea; | |||
| the effects of climate change and attendant regulation on our customers and borrowers; | ||
| the effects of litigation against us; | ||
| failed or circumvented internal controls and procedures; | ||
| adverse changes in the soundness of other financial institutions with whom we have trading, clearing, counterparty or other relationships; | ||
| risks associated with security breaches in our online banking services, and fears of security breaches that limit the growth of our online services; | ||
| significant government regulations, legislation and potential changes thereto; and | ||
| other risks described herein and in the other reports and statements we file with the SEC. |
38
As of and for the | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(Dollars in Thousands, Except Per Share Data) | ||||||||||||||||
AVERAGE BALANCES: |
||||||||||||||||
Average Gross Loans, Net (1) |
$ | 2,136,976 | $ | 2,611,178 | $ | 2,185,274 | $ | 2,688,012 | ||||||||
Average Investment Securities |
$ | 497,052 | $ | 158,543 | $ | 485,148 | $ | 142,034 | ||||||||
Average Interest-Earning Assets |
$ | 2,804,709 | $ | 2,965,975 | $ | 2,848,313 | $ | 2,988,332 | ||||||||
Average Total Assets |
$ | 2,836,967 | $ | 2,978,245 | $ | 2,871,419 | $ | 3,031,917 | ||||||||
Average Deposits |
$ | 2,427,934 | $ | 2,617,738 | $ | 2,443,299 | $ | 2,640,224 | ||||||||
Average Borrowings |
$ | 190,447 | $ | 240,189 | $ | 213,820 | $ | 248,614 | ||||||||
Average Interest-Bearing Liabilities |
$ | 2,025,392 | $ | 2,292,121 | $ | 2,078,947 | $ | 2,326,367 | ||||||||
Average Stockholders Equity |
$ | 189,528 | $ | 91,628 | $ | 183,906 | $ | 114,651 | ||||||||
PER SHARE DATA: |
||||||||||||||||
Earnings (Loss) Per Share Basic |
$ | 0.05 | $ | (0.57 | ) | $ | 0.12 | $ | (1.54 | ) | ||||||
Earnings (Loss) Per Share Diluted |
$ | 0.05 | $ | (0.57 | ) | $ | 0.12 | $ | (1.54 | ) | ||||||
Common Shares Outstanding |
151,258,390 | 51,198,390 | 151,258,390 | 51,198,390 | ||||||||||||
Book Value Per Share (2) |
$ | 1.31 | $ | 1.43 | $ | 1.31 | $ | 1.43 | ||||||||
SELECTED PERFORMANCE RATIOS: |
||||||||||||||||
Return on Average Assets (3) (4) |
1.13 | % | (3.94 | %) | 1.29 | % | (5.24 | %) | ||||||||
Return on Average Stockholders Equity (3) (5) |
16.93 | % | (128.07 | %) | 20.22 | % | (138.50 | %) | ||||||||
Efficiency Ratio (6) |
72.67 | % | 75.11 | % | 69.64 | % | 75.75 | % | ||||||||
Net Interest Spread (7) |
3.26 | % | 3.17 | % | 3.26 | % | 3.22 | % | ||||||||
Net Interest Margin (8) |
3.65 | % | 3.56 | % | 3.66 | % | 3.62 | % | ||||||||
Average Stockholders Equity to Average Total Assets |
6.68 | % | 3.08 | % | 6.40 | % | 3.78 | % | ||||||||
SELECTED CAPITAL RATIOS: (9) |
||||||||||||||||
Total Risk-Based Capital Ratio: |
||||||||||||||||
Hanmi Financial |
13.92 | % | 7.31 | % | ||||||||||||
Hanmi Bank |
14.02 | % | 7.35 | % | ||||||||||||
Tier 1 Risk-Based Capital Ratio: |
||||||||||||||||
Hanmi Financial |
11.92 | % | 3.69 | % | ||||||||||||
Hanmi Bank |
12.72 | % | 6.02 | % | ||||||||||||
Tier 1 Leverage Ratio: |
||||||||||||||||
Hanmi Financial |
9.09 | % | 3.06 | % | ||||||||||||
Hanmi Bank |
9.70 | % | 4.99 | % | ||||||||||||
SELECTED ASSET QUALITY RATIOS: |
||||||||||||||||
Non-Performing Loans to Total Gross Loans (10) (11) |
7.91 | % | 9.67 | % | 7.91 | % | 9.67 | % | ||||||||
Non-Performing Assets to Total Assets (12) |
6.21 | % | 9.13 | % | 6.21 | % | 9.13 | % | ||||||||
Net Loan Charge-Offs to Average Total Gross Loans (13) |
3.10 | % | 5.98 | % | 3.51 | % | 4.90 | % | ||||||||
Allowance for Loan Losses to Total Gross Loans |
5.16 | % | 7.05 | % | 5.16 | % | 7.05 | % | ||||||||
Allowance for Loan Losses to Non-Performing Loans |
65.25 | % | 72.96 | % | 65.25 | % | 72.96 | % |
(1) | Loans are net of deferred fees and related direct costs. | |
(2) | Total stockholders equity divided by common shares outstanding. | |
(3) | Calculation based upon annualized net loss. | |
(4) | Net loss divided by average total assets. | |
(5) | Net loss divided by average stockholders equity. | |
(6) | Total non-interest expenses divided by the sum of net interest income before provision for credit losses and total non-interest income. | |
(7) | Average yield earned on interest-earning assets less average rate paid on interest-bearing liabilities. Computed on a tax-equivalent basis using an effective marginal rate of 35 percent. | |
(8) | Net interest income before provision for credit losses divided by average interest-earning assets. Computed on a tax-equivalent basis using an effective marginal rate of 35 percent. | |
(9) | The required ratios for a well-capitalized institution, as defined by regulations of the Board of Governors of the Federal Reserve System, are 10 percent for the Total Risk-Based Capital Ratio (total capital divided by total risk-weighted assets); 6 percent for the Tier 1 Risk-Based Capital Ratio (Tier 1 capital divided by total risk-weighted assets); and 5 percent for the Tier 1 Leverage Ratio (Tier 1 capital divided by average total assets). | |
(10) | Non-performing loans consist of non-accrual loans and loans past due 90 days or more and still accruing interest. | |
(11) | This Quarterly Report on Form 10-Q includes corrected data regarding total non-performing loans as of and for the quarter ended June 30, 2011, which differ from and supersede data included in the Earnings Release dated July 21, 2011. These corrections had no effect on the statement of operations or earnings per share for the second quarter of 2011. | |
(12) | Non-performing assets consist of non-performing loans (see footnote (10) and (11) above) and other real estate owned. | |
(13) | Calculation based upon annualized net loan charge-offs. |
39
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
(In Thousands) | ||||||||
Total Assets |
$ | 2,705,997 | $ | 2,900,415 | ||||
Less Intangible Assets |
(184 | ) | (450 | ) | ||||
Tangible Assets |
$ | 2,705,813 | $ | 2,899,965 | ||||
Total Stockholders Equity |
$ | 279,712 | $ | 249,637 | ||||
Less Intangible Assets |
(184 | ) | (450 | ) | ||||
Tangible Stockholders Equity |
$ | 279,528 | $ | 249,187 | ||||
Total Stockholders Equity to Total Assets Ratio |
10.34 | % | 8.61 | % | ||||
Tangible Stockholders Equity to Tangible Assets Ratio |
10.33 | % | 8.59 | % |
40
| The Banks total risk-based capital ratio improved to 14.02 percent as of June 30, 2011 compared to 12.22 percent as of December 31, 2010. The Banks tangible common equity to tangible assets ratio also improved to 10.33 percent as of June 30, 2011 compared to 8.59 percent as of December 31, 2010. | ||
| Due to the success of recent marketing initiatives, core deposits (defined as total deposits less time deposits greater than $100,000) increased by $171.4 million, or 12.7 percent, to $1.52 billion as of June 30, 2011 from $1.35 billion as of December 31, 2010. At June 30, 2011, noninterest-bearing demand deposits represented 25.1 percent of total deposits compared to 22.2 percent of total deposits at December 31, 2010. | ||
| The average loan yield improved by 19 basis points to 5.49 percent in the second quarter of 2011 compared to 5.30 percent for the same period in 2010, and improved by 21 basis points to 5.55 percent for the first half of 2011 compared to 5.34 percent for the same period in 2010, reflecting the improvement in credit quality. | ||
| The cost of funds decreased primarily through downward re-pricing of matured time deposits. The average funding cost decreased by 32 basis points to 1.41 percent in the second quarter of 2011 compared to 1.73 percent for the same period in 2010, and decreased by 34 basis points to 1.45 percent for the first half of 2011 compared to 1.79 percent for the same period in 2010. | ||
| Net interest margin improved by 9 basis points to 3.65 percent in the second quarter of 2011 compared to 3.56 percent for the same period in 2010, and improved by 4 basis points to 3.66 percent for the first half of 2011 compared to 3.62 percent for the same period in 2010. |
41
42
Three Months Ended | ||||||||||||||||||||||||
June 30, 2011 | June 30, 2010 | |||||||||||||||||||||||
Interest | Average | Interest | Average | |||||||||||||||||||||
Average | Income/ | Yield/ | Average | Income/ | Yield/ | |||||||||||||||||||
Balance | Expense | Rate | Balance | Expense | Rate | |||||||||||||||||||
(Dollars in Thousands) | ||||||||||||||||||||||||
ASSETS |
||||||||||||||||||||||||
Interest-Earning Assets: |
||||||||||||||||||||||||
Gross Loans, Net (1) |
$ | 2,136,976 | $ | 29,248 | 5.49 | % | $ | 2,611,178 | $ | 34,486 | 5.30 | % | ||||||||||||
Municipal Securities: |
||||||||||||||||||||||||
Taxable |
13,603 | 140 | 4.12 | % | | | | |||||||||||||||||
Tax Exempt (2) |
4,125 | 57 | 5.53 | % | 7,484 | 119 | 6.36 | % | ||||||||||||||||
Obligations of Other U.S. Government Agencies |
152,438 | 629 | 1.65 | % | 65,894 | 560 | 3.40 | % | ||||||||||||||||
Other Debt Securities |
326,886 | 2,326 | 2.85 | % | 85,165 | 800 | 3.76 | % | ||||||||||||||||
Equity Securities (5) |
34,078 | 133 | 1.56 | % | 37,979 | 123 | 1.30 | % | ||||||||||||||||
Federal Funds Sold |
7,067 | 9 | 0.51 | % | 12,198 | 16 | 0.52 | % | ||||||||||||||||
Term Federal Funds Sold |
13,681 | 18 | 0.53 | % | 7,253 | 11 | 0.61 | % | ||||||||||||||||
Interest-Earning Deposits |
115,855 | 79 | 0.27 | % | 138,824 | 99 | 0.29 | % | ||||||||||||||||
Total Interest-Earning Assets (2) |
2,804,709 | 32,639 | 4.67 | % | 2,965,975 | 36,214 | 4.90 | % | ||||||||||||||||
Noninterest-Earning Assets: |
||||||||||||||||||||||||
Cash and Cash Equivalents |
68,371 | 68,536 | ||||||||||||||||||||||
Allowance for Loan Losses |
(125,152 | ) | (182,103 | ) | ||||||||||||||||||||
Other Assets |
89,039 | 125,837 | ||||||||||||||||||||||
Total Noninterest-Earning Assets |
32,258 | 12,270 | ||||||||||||||||||||||
TOTAL ASSETS |
$ | 2,836,967 | $ | 2,978,245 | ||||||||||||||||||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||||||||||||||||||
Interest-Bearing Liabilities: |
||||||||||||||||||||||||
Deposits: |
||||||||||||||||||||||||
Savings |
$ | 111,723 | 734 | 2.64 | % | $ | 125,016 | 922 | 2.96 | % | ||||||||||||||
Money Market Checking and NOW Accounts |
488,723 | 1,010 | 0.83 | % | 458,137 | 1,217 | 1.07 | % | ||||||||||||||||
Time Deposits of $100,000 or More |
926,024 | 3,477 | 1.51 | % | 1,090,412 | 5,057 | 1.86 | % | ||||||||||||||||
Other Time Deposits |
308,475 | 971 | 1.26 | % | 378,367 | 1,617 | 1.71 | % | ||||||||||||||||
Federal Home Loan Bank Advances |
106,710 | 239 | 0.90 | % | 153,859 | 339 | 0.88 | % | ||||||||||||||||
Other Borrowings |
1,331 | 1 | 0.30 | % | 3,924 | 31 | 3.17 | % | ||||||||||||||||
Junior Subordinated Debentures |
82,406 | 711 | 3.46 | % | 82,406 | 692 | 3.37 | % | ||||||||||||||||
Total Interest-Bearing Liabilities |
2,025,392 | 7,143 | 1.41 | % | 2,292,121 | 9,875 | 1.73 | % | ||||||||||||||||
Noninterest-Bearing Liabilities: |
||||||||||||||||||||||||
Demand Deposits |
592,989 | 565,806 | ||||||||||||||||||||||
Other Liabilities |
29,058 | 28,690 | ||||||||||||||||||||||
Total Noninterest-Bearing Liabilities |
622,047 | 594,496 | ||||||||||||||||||||||
Total Liabilities |
2,647,439 | 2,886,617 | ||||||||||||||||||||||
Stockholders Equity |
189,528 | 91,628 | ||||||||||||||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY |
$ | 2,836,967 | $ | 2,978,245 | ||||||||||||||||||||
NET INTEREST INCOME |
$ | 25,496 | $ | 26,339 | ||||||||||||||||||||
NET INTEREST SPREAD (2) (3) |
3.26 | % | 3.17 | % | ||||||||||||||||||||
NET INTEREST MARGIN (2) (4) |
3.65 | % | 3.56 | % | ||||||||||||||||||||
(1) | Loans are net of deferred fees and related direct costs, but excluding the allowance for loan losses. Non-accrual loans are included in the average loan balance. Loan fees have been included in the calculation of interest income. Loan fees were $570,000 and $477,000 for the three months ended June 30, 2011 and 2010, respectively. | |
(2) | Computed on a tax-equivalent basis using an effective marginal rate of 35 percent. | |
(3) | Represents the average rate earned on interest-earning assets less the average rate paid on interest-bearing liabilities. | |
(4) | Represents annualized net interest income as a percentage of average interest-earning assets. | |
(5) | Includes investment in Federal Home Loan Bank stock and Federal Reserve Bank stock. |
43
Three Months Ended June 30, 2011 vs. | ||||||||||||
Three Months Ended June 30, 2010 | ||||||||||||
Increases (Decreases) Due to Change in | ||||||||||||
Volume | Rate | Total | ||||||||||
(In Thousands) | ||||||||||||
Interest and Dividend Income: |
||||||||||||
Gross Loans, Net |
$ | (6,452 | ) | $ | 1,214 | $ | (5,238 | ) | ||||
Municipal Securities: |
||||||||||||
Taxable |
140 | | 140 | |||||||||
Tax Exempt |
(48 | ) | (14 | ) | (62 | ) | ||||||
Obligations of Other U.S. Government Agencies |
463 | (394 | ) | 69 | ||||||||
Other Debt Securities |
1,763 | (237 | ) | 1,526 | ||||||||
Equity Securities |
(14 | ) | 24 | 10 | ||||||||
Federal Funds Sold |
(7 | ) | | (7 | ) | |||||||
Term Federal Funds Sold |
8 | (1 | ) | 7 | ||||||||
Interest-Earning Deposits |
(16 | ) | (4 | ) | (20 | ) | ||||||
Total Interest and Dividend Income |
(4,163 | ) | 588 | (3,575 | ) | |||||||
Interest Expense: |
||||||||||||
Savings |
(93 | ) | (95 | ) | (188 | ) | ||||||
Money Market Checking and NOW Accounts |
77 | (284 | ) | (207 | ) | |||||||
Time Deposits of $100,000 or More |
(698 | ) | (882 | ) | (1,580 | ) | ||||||
Other Time Deposits |
(266 | ) | (380 | ) | (646 | ) | ||||||
Federal Home Loan Bank Advances |
(106 | ) | 6 | (100 | ) | |||||||
Other Borrowings |
(12 | ) | (18 | ) | (30 | ) | ||||||
Junior Subordinated Debentures |
| 19 | 19 | |||||||||
Total Interest Expense |
(1,098 | ) | (1,634 | ) | (2,732 | ) | ||||||
Change in Net Interest Income |
$ | (3,065 | ) | $ | 2,222 | $ | (843 | ) | ||||
44
45
Six Months Ended | ||||||||||||||||||||||||
June 30, 2011 | June 30, 2010 | |||||||||||||||||||||||
Interest | Average | Interest | Average | |||||||||||||||||||||
Average | Income/ | Yield/ | Average | Income/ | Yield/ | |||||||||||||||||||
Balance | Expense | Rate | Balance | Expense | Rate | |||||||||||||||||||
(Dollars in Thousands) | ||||||||||||||||||||||||
ASSETS |
||||||||||||||||||||||||
Interest-Earning Assets: |
||||||||||||||||||||||||
Gross Loans, Net (1) |
$ | 2,185,274 | $ | 60,153 | 5.55 | % | $ | 2,688,012 | $ | 71,181 | 5.34 | % | ||||||||||||
Municipal Securities: |
||||||||||||||||||||||||
Taxable |
15,556 | 318 | 4.09 | % | | | | |||||||||||||||||
Tax Exempt (2) |
4,294 | 119 | 5.54 | % | 7,517 | 237 | 6.31 | % | ||||||||||||||||
Obligations of Other U.S. Government Agencies |
149,392 | 1,252 | 1.68 | % | 49,100 | 943 | 3.84 | % | ||||||||||||||||
Other Debt Securities |
315,906 | 4,198 | 2.66 | % | 85,417 | 1,500 | 3.51 | % | ||||||||||||||||
Equity Securities (5) |
34,813 | 265 | 1.52 | % | 38,671 | 248 | 1.28 | % | ||||||||||||||||
Federal Funds Sold |
6,884 | 17 | 0.49 | % | 13,152 | 33 | 0.50 | % | ||||||||||||||||
Term Federal Funds Sold |
16,713 | 45 | 0.54 | % | 3,646 | 11 | 0.60 | % | ||||||||||||||||
Interest-Earning Deposits |
119,481 | 168 | 0.28 | % | 102,817 | 154 | 0.30 | % | ||||||||||||||||
Total Interest-Earning Assets (2) |
2,848,313 | 66,535 | 4.71 | % | 2,988,332 | 74,307 | 5.01 | % | ||||||||||||||||
Noninterest-Earning Assets: |
||||||||||||||||||||||||
Cash and Cash Equivalents |
68,115 | 67,850 | ||||||||||||||||||||||
Allowance for Loan Losses |
(135,411 | ) | (169,768 | ) | ||||||||||||||||||||
Other Assets |
90,402 | 145,503 | ||||||||||||||||||||||
Total Noninterest-Earning Assets |
23,106 | 43,585 | ||||||||||||||||||||||
TOTAL ASSETS |
$ | 2,871,419 | $ | 3,031,917 | ||||||||||||||||||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||||||||||||||||||
Interest-Bearing Liabilities: |
||||||||||||||||||||||||
Deposits: |
||||||||||||||||||||||||
Savings |
$ | 112,398 | 1,483 | 2.66 | % | $ | 120,347 | 1,745 | 2.92 | % | ||||||||||||||
Money Market Checking and NOW Accounts |
468,875 | 2,012 | 0.87 | % | 508,248 | 2,839 | 1.13 | % | ||||||||||||||||
Time Deposits of $100,000 or More |
988,336 | 7,536 | 1.54 | % | 1,007,693 | 9,734 | 1.95 | % | ||||||||||||||||
Other Time Deposits |
295,518 | 1,896 | 1.29 | % | 441,465 | 4,198 | 1.92 | % | ||||||||||||||||
Federal Home Loan Bank Advances |
130,030 | 572 | 0.89 | % | 163,407 | 685 | 0.85 | % | ||||||||||||||||
Other Borrowings |
1,384 | 1 | 0.15 | % | 2,801 | 31 | 2.23 | % | ||||||||||||||||
Junior Subordinated Debentures |
82,406 | 1,409 | 3.45 | % | 82,406 | 1,361 | 3.33 | % | ||||||||||||||||
Total Interest-Bearing Liabilities |
2,078,947 | 14,909 | 1.45 | % | 2,326,367 | 20,593 | 1.79 | % | ||||||||||||||||
Noninterest-Bearing Liabilities: |
||||||||||||||||||||||||
Demand Deposits |
578,172 | 562,471 | ||||||||||||||||||||||
Other Liabilities |
30,394 | 28,428 | ||||||||||||||||||||||
Total Noninterest-Bearing Liabilities |
608,566 | 590,899 | ||||||||||||||||||||||
Total Liabilities |
2,687,513 | 2,917,266 | ||||||||||||||||||||||
Stockholders Equity |
183,906 | 114,651 | ||||||||||||||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY |
$ | 2,871,419 | $ | 3,031,917 | ||||||||||||||||||||
NET INTEREST INCOME |
$ | 51,626 | $ | 53,714 | ||||||||||||||||||||
NET INTEREST SPREAD (3) |
3.26 | % | 3.22 | % | ||||||||||||||||||||
NET INTEREST MARGIN (4) |
3.66 | % | 3.62 | % | ||||||||||||||||||||
(1) | Loans are net of deferred fees and related direct costs, but excluding the allowance for loan losses. Non-accrual loans are included in the average loan balance. Loan fees have been included in the calculation of interest income. Loan fees were $1.1 million and $927,000 for the six months ended June 30, 2011 and 2010, respectively. | |
(2) | Computed on a tax-equivalent basis using an effective marginal rate of 35 percent. | |
(3) | Represents the average rate earned on interest-earning assets less the average rate paid on interest-bearing liabilities. | |
(4) | Represents annualized net interest income as a percentage of average interest-earning assets. | |
(5) | Includes investment in Federal Home Loan Bank stock and Federal Reserve Bank stock. |
46
Six Months Ended June 30, 2011 vs. | ||||||||||||
Six Months Ended June 30, 2010 | ||||||||||||
Increases (Decreases) Due to Change in | ||||||||||||
Volume | Rate | Total | ||||||||||
(In Thousands) | ||||||||||||
Interest and Dividend Income: |
||||||||||||
Gross Loans, Net |
$ | (13,747 | ) | $ | 2,719 | $ | (11,028 | ) | ||||
Municipal Securities: |
||||||||||||
Taxable |
318 | | 318 | |||||||||
Tax Exempt |
(92 | ) | (26 | ) | (118 | ) | ||||||
Obligations of Other U.S. Government Agencies |
1,908 | (1,599 | ) | 309 | ||||||||
Other Debt Securities |
3,814 | (1,116 | ) | 2,698 | ||||||||
Equity Securities |
(58 | ) | 75 | 17 | ||||||||
Federal Funds Sold |
(15 | ) | (1 | ) | (16 | ) | ||||||
Term Federal Funds Sold |
37 | (3 | ) | 34 | ||||||||
Interest-Earning Deposits |
38 | (24 | ) | 14 | ||||||||
Total Interest and Dividend Income |
(7,797 | ) | 25 | (7,772 | ) | |||||||
Interest Expense: |
||||||||||||
Savings |
(111 | ) | (151 | ) | (262 | ) | ||||||
Money Market Checking and NOW Accounts |
(207 | ) | (620 | ) | (827 | ) | ||||||
Time Deposits of $100,000 or More |
(184 | ) | (2,014 | ) | (2,198 | ) | ||||||
Other Time Deposits |
(1,160 | ) | (1,142 | ) | (2,302 | ) | ||||||
Federal Home Loan Bank Advances |
(146 | ) | 33 | (113 | ) | |||||||
Other Borrowings |
(11 | ) | (19 | ) | (30 | ) | ||||||
Junior Subordinated Debentures |
| 48 | 48 | |||||||||
Total Interest Expense |
(1,819 | ) | (3,865 | ) | (5,684 | ) | ||||||
Change in Net Interest Income |
$ | (5,978 | ) | $ | 3,890 | $ | (2,088 | ) | ||||
47
Three Months Ended | ||||||||||||||||
June 30, | Increase (Decrease) | |||||||||||||||
2011 | 2010 | Amount | Percentage | |||||||||||||
(Dollars in Thousands) | ||||||||||||||||
Service Charges on Deposit Accounts |
$ | 3,278 | $ | 3,602 | $ | (324 | ) | (9.0 | %) | |||||||
Insurance Commissions |
1,203 | 1,206 | (3 | ) | (0.2 | %) | ||||||||||
Remittance Fees |
499 | 523 | (24 | ) | (4.6 | %) | ||||||||||
Trade Finance Fees |
328 | 412 | (84 | ) | (20.4 | %) | ||||||||||
Other Service Charges and Fees |
368 | 372 | (4 | ) | (1.1 | %) | ||||||||||
Bank-Owned Life Insurance Income |
233 | 235 | (2 | ) | (0.9 | %) | ||||||||||
Net Loss on Sales of Investment Securities |
(70 | ) | | (70 | ) | | % | |||||||||
Net Gain (Loss) on Sales of Loans |
(77 | ) | 220 | (297 | ) | | % | |||||||||
Other Operating Income |
255 | 106 | 149 | | % | |||||||||||
Total Non-Interest Income |
$ | 6,017 | $ | 6,676 | $ | (659 | ) | (9.9 | %) | |||||||
48
Six Months Ended | ||||||||||||||||
June 30, | Increase (Decrease) | |||||||||||||||
2011 | 2010 | Amount | Percentage | |||||||||||||
(Dollars in Thousands) | ||||||||||||||||
Service Charges on Deposit Accounts |
$ | 6,419 | $ | 7,328 | $ | (909 | ) | (12.4 | %) | |||||||
Insurance Commissions |
2,463 | 2,484 | (21 | ) | (0.8 | %) | ||||||||||
Remittance Fees |
961 | 985 | (24 | ) | (2.4 | %) | ||||||||||
Other Service Charges and Fees |
701 | 784 | (83 | ) | (10.6 | %) | ||||||||||
Trade Finance Fees |
625 | 763 | (138 | ) | (18.1 | %) | ||||||||||
Bank-Owned Life Insurance Income |
463 | 466 | (3 | ) | (0.6 | %) | ||||||||||
Net Gain (Loss) on Sales of Loans |
(415 | ) | 214 | (629 | ) | | % | |||||||||
Net Gain (Loss) on Sales of Investment Securities |
(70 | ) | 105 | (175 | ) | | % | |||||||||
Other Operating Income |
378 | 552 | (174 | ) | (31.5 | %) | ||||||||||
Total Non-Interest Income |
$ | 11,525 | $ | 13,681 | $ | (2,156 | ) | (15.8 | %) | |||||||
49
Three Months Ended | ||||||||||||||||
June 30, | Increase (Decrease) | |||||||||||||||
2011 | 2010 | Amount | Percentage | |||||||||||||
(Dollars in Thousands) | ||||||||||||||||
Salaries and Employee Benefits |
$ | 8,762 | $ | 9,011 | $ | (249 | ) | (2.8 | %) | |||||||
Occupancy and Equipment |
2,650 | 2,674 | (24 | ) | (0.9 | %) | ||||||||||
Data Processing |
1,487 | 1,487 | | | % | |||||||||||
Deposit Insurance Premiums and Regulatory Assessments |
1,377 | 4,075 | (2,698 | ) | (66.2 | %) | ||||||||||
Professional Fees |
1,138 | 1,022 | 116 | 11.4 | % | |||||||||||
Advertising and Promotion |
908 | 503 | 405 | 80.5 | % | |||||||||||
Other Real Estate Owned Expense |
806 | 1,718 | (912 | ) | (53.1 | %) | ||||||||||
Directors and Officers Liability Insurance |
733 | 716 | 17 | 2.4 | % | |||||||||||
Supplies and Communications |
496 | 574 | (78 | ) | (13.6 | %) | ||||||||||
Amortization of Other Intangible Assets |
190 | 301 | (111 | ) | (36.9 | %) | ||||||||||
Loan-Related Expense |
184 | 310 | (126 | ) | (40.6 | %) | ||||||||||
Expenses Related to Unconsummated Capital Raises |
2,220 | | 2,220 | | % | |||||||||||
Other Operating Expenses |
1,935 | 2,374 | (439 | ) | (18.5 | %) | ||||||||||
Total Non-Interest Expense |
$ | 22,886 | $ | 24,765 | $ | (1,879 | ) | (7.6 | %) | |||||||
50
Six Months Ended | ||||||||||||||||
June 30, | Increase (Decrease) | |||||||||||||||
2011 | 2010 | Amount | Percentage | |||||||||||||
(Dollars in Thousands) | ||||||||||||||||
Salaries and Employee Benefits |
$ | 17,886 | $ | 17,797 | $ | 89 | 0.5 | % | ||||||||
Occupancy and Equipment |
5,215 | 5,399 | (184 | ) | (3.4 | %) | ||||||||||
Deposit Insurance Premiums and Regulatory Assessments |
3,447 | 6,299 | (2,852 | ) | (45.3 | %) | ||||||||||
Data Processing |
2,886 | 2,986 | (100 | ) | (3.3 | %) | ||||||||||
Professional Fees |
1,927 | 2,088 | (161 | ) | (7.7 | %) | ||||||||||
Other Real Estate Owned Expense |
1,635 | 7,418 | (5,783 | ) | (78.0 | %) | ||||||||||
Advertising and Promotion |
1,474 | 1,038 | 436 | 42.0 | % | |||||||||||
Directors and Officers Liability Insurance |
1,467 | 1,433 | 34 | 2.4 | % | |||||||||||
Supplies and Communications |
1,074 | 1,091 | (17 | ) | (1.6 | %) | ||||||||||
Loan-Related Expense |
409 | 617 | (208 | ) | (33.7 | %) | ||||||||||
Amortization of Other Intangible Assets |
408 | 629 | (221 | ) | (35.1 | %) | ||||||||||
Expenses Related to Unconsummated Capital Raises |
2,220 | | 2,220 | | % | |||||||||||
Other Operating Expenses |
3,899 | 4,194 | (295 | ) | (7.0 | %) | ||||||||||
Total Non-Interest Expense |
$ | 43,947 | $ | 50,989 | $ | (7,042 | ) | (13.8 | %) | |||||||
51
June 30, 2011 | December 31, 2010 | |||||||||||||||||||||||
Estimated | Unrealized | Estimated | Unrealized | |||||||||||||||||||||
Amortized | Fair | Gain | Amortized | Fair | Gain | |||||||||||||||||||
Cost | Value | (Loss) | Cost | Value | (Loss) | |||||||||||||||||||
(In Thousands) | ||||||||||||||||||||||||
Securities Held to Maturity: |
||||||||||||||||||||||||
Municipal Bonds |
$ | 697 | $ | 697 | $ | | $ | 696 | $ | 696 | $ | | ||||||||||||
Mortgage-Backed Securities (1) |
136 | 138 | 2 | 149 | 151 | 2 | ||||||||||||||||||
Total Securities Held to Maturity |
$ | 833 | $ | 835 | $ | 2 | $ | 845 | $ | 847 | $ | 2 | ||||||||||||
Securities Available for Sale: |
||||||||||||||||||||||||
Collateralized Mortgage Obligations |
$ | 124,940 | $ | 125,929 | $ | 989 | $ | 139,053 | $ | 137,193 | $ | (1,860 | ) | |||||||||||
Mortgage-Backed Securities (1) |
115,019 | 117,777 | 2,758 | 108,436 | 109,842 | 1,406 | ||||||||||||||||||
U.S. Government Agency Securities |
106,162 | 106,325 | 163 | 114,066 | 113,334 | (732 | ) | |||||||||||||||||
Corporate Bonds |
20,454 | 20,385 | (69 | ) | 20,449 | 20,205 | (244 | ) | ||||||||||||||||
Municipal Bonds |
9,296 | 9,256 | (40 | ) | 22,420 | 21,028 | (1,392 | ) | ||||||||||||||||
Asset-Backed Securities (2) |
6,476 | 6,799 | 323 | 7,115 | 7,384 | 269 | ||||||||||||||||||
Other Securities |
3,305 | 3,281 | (24 | ) | 3,305 | 3,259 | (46 | ) | ||||||||||||||||
Equity Securities (3) |
647 | 460 | (187 | ) | 647 | 873 | 226 | |||||||||||||||||
Total Securities Available for Sale |
$ | 386,299 | $ | 390,212 | $ | 3,913 | $ | 415,491 | $ | 413,118 | $ | (2,373 | ) | |||||||||||
(1) | Collateralized by residential mortgages and guaranteed by U.S. government sponsored entities. | |
(2) | Collateralized debentures of small business investment companies and state and local development companies, and guaranteed by SBA. | |
(3) | Balances presented for amortized cost, representing two equity securities, were net of an OTTI charge of $790,000, which was related to a credit loss, as of December 31, 2010. We recorded an OTTI charge of $790,000 to write down the value of one equity investment to its fair value during the year ended December 31, 2010. |
52
Available for Sale | Held to Maturity | |||||||||||||||
Estimated | Estimated | |||||||||||||||
Amortized | Fair | Amortized | Fair | |||||||||||||
Cost | Value | Cost | Value | |||||||||||||
(In Thousands) | ||||||||||||||||
Within One Year |
$ | | $ | | $ | | $ | | ||||||||
Over One Year Through Five Years |
103,279 | 103,360 | 697 | 697 | ||||||||||||
Over Five Years Through Ten Years |
32,191 | 32,199 | | | ||||||||||||
Over Ten Years |
3,747 | 3,688 | | | ||||||||||||
Collateralized Mortgage Obligations |
124,940 | 125,929 | | | ||||||||||||
Mortgage-Backed Securities |
115,019 | 117,777 | 136 | 138 | ||||||||||||
Asset-Backed Securities |
6,476 | 6,799 | | | ||||||||||||
Equity Securities |
647 | 460 | | | ||||||||||||
$ | 386,299 | $ | 390,212 | $ | 833 | $ | 835 | |||||||||
Holding Period | ||||||||||||||||||||||||||||||||||||
Less than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||||||||||||||
Gross | Estimated | Number | Gross | Estimated | Number | Gross | Estimated | Number | ||||||||||||||||||||||||||||
Investment Securities | Unrealized | Fair | of | Unrealized | Fair | of | Unrealized | Fair | of | |||||||||||||||||||||||||||
Available for Sale | Losses | Value | Securities | Losses | Value | Securities | Losses | Value | Securities | |||||||||||||||||||||||||||
(In Thousands) | ||||||||||||||||||||||||||||||||||||
June 30, 2011: |
||||||||||||||||||||||||||||||||||||
Mortgage-Backed Securities |
$ | 35 | $ | 4,744 | 1 | $ | | $ | | | $ | 35 | $ | 4,744 | 1 | |||||||||||||||||||||
Collateralized Mortgage
Obligations |
125 | 29,630 | 8 | | | | 125 | 29,630 | 8 | |||||||||||||||||||||||||||
Municipal Bonds |
59 | 2,827 | 5 | 61 | 2,323 | 2 | 120 | 5,150 | 7 | |||||||||||||||||||||||||||
U.S. Government Agency
Securities |
97 | 26,903 | 7 | | | | 97 | 26,903 | 7 | |||||||||||||||||||||||||||
Equity Securities |
187 | 460 | 2 | | | | 187 | 460 | 2 | |||||||||||||||||||||||||||
Other Securities |
| | | 41 | 958 | 1 | 41 | 958 | 1 | |||||||||||||||||||||||||||
Corporate Bonds |
74 | 12,895 | 3 | 18 | 2,982 | 1 | 92 | 15,877 | 4 | |||||||||||||||||||||||||||
$ | 577 | $ | 77,459 | 26 | $ | 120 | $ | 6,263 | 4 | $ | 697 | $ | 83,722 | 30 | ||||||||||||||||||||||
December 31, 2010: |
||||||||||||||||||||||||||||||||||||
Mortgage-Backed Securities |
$ | 731 | $ | 62,738 | 16 | $ | | $ | | | $ | 731 | $ | 62,738 | 16 | |||||||||||||||||||||
Collateralized Mortgage
Obligations |
2,330 | 99,993 | 20 | | | | 2,330 | 99,993 | 20 | |||||||||||||||||||||||||||
Municipal Bonds |
1,440 | 16,907 | 11 | | | | 1,440 | 16,907 | 11 | |||||||||||||||||||||||||||
U.S. Government Agency
Securities |
830 | 69,266 | 14 | | | | 830 | 69,266 | 14 | |||||||||||||||||||||||||||
Other Securities |
3 | 1,997 | 2 | 43 | 957 | 1 | 46 | 2,954 | 3 | |||||||||||||||||||||||||||
Corporate Bonds |
257 | 17,210 | 5 | | | | 257 | 17,210 | 5 | |||||||||||||||||||||||||||
$ | 5,591 | $ | 268,111 | 68 | $ | 43 | $ | 957 | 1 | $ | 5,634 | $ | 269,068 | 69 | ||||||||||||||||||||||
53
54
June 30, | December 31, | Increase (Decrease) | ||||||||||||||
2011 | 2010 | Amount | Percentage | |||||||||||||
(Dollars in Thousands) | ||||||||||||||||
Real Estate Loans: |
||||||||||||||||
Commercial Property (1) |
$ | 689,550 | $ | 731,482 | $ | (41,932 | ) | (5.7 | %) | |||||||
Construction (2) |
40,684 | 62,400 | (21,716 | ) | (34.8 | %) | ||||||||||
Residential Property |
58,325 | 62,645 | (4,320 | ) | (6.9 | %) | ||||||||||
Total Real Estate Loans |
788,559 | 856,527 | (67,968 | ) | (7.9 | %) | ||||||||||
Commercial and Industrial Loans: (3) |
||||||||||||||||
Commercial Term (4) |
1,045,131 | 1,133,892 | (88,761 | ) | (7.8 | %) | ||||||||||
Commercial Lines of Credit |
50,636 | 59,056 | (8,420 | ) | (14.3 | %) | ||||||||||
SBA (5) |
135,323 | 123,750 | 11,573 | 9.4 | % | |||||||||||
International |
46,560 | 44,167 | 2,393 | 5.4 | % | |||||||||||
Total Commercial and Industrial Loans |
1,277,650 | 1,360,865 | (83,215 | ) | (6.1 | %) | ||||||||||
Consumer Loans |
46,500 | 50,300 | (3,800 | ) | (7.6 | %) | ||||||||||
Total Loans Gross |
2,112,709 | 2,267,692 | (154,983 | ) | (6.8 | %) | ||||||||||
Deferred Loan Fees |
(11 | ) | (566 | ) | 555 | (98.1 | %) | |||||||||
Allowance for Loan Losses |
(109,029 | ) | (146,059 | ) | 37,030 | (25.4 | %) | |||||||||
Net Loans Receivable |
$ | 2,003,669 | $ | 2,121,067 | $ | (117,398 | ) | (5.5 | %) | |||||||
(1) | Includes loans held for sale, at the lower of cost or fair value, of $708,000 and $2.3 million as of June 30, 2011 and December 31, 2010, respectively. | |
(2) | Includes loans held for sale, at the lower of cost or fair value, of $0 and $1.4 million as of June 30, 2011 and December 31, 2010, respectively. | |
(3) | Includes owner-occupied property loans of $846.5 million and $894.8 million as of June 30, 2011 and December 31, 2010, respectively. | |
(4) | Includes loans held for sale, at the lower of cost or fair value, of $12.9 million and $14.9 million as of June 30, 2011 and December 31, 2010, respectively. | |
(5) | Includes loans held for sale, at the lower of cost or fair value, of $30.3 million and $18.1 million as of June 30, 2011 and December 31, 2010, respectively. |
55
Balance as of | Percentage of Total | |||||||
Industry | June 30, 2011 | Gross Loans Outstanding | ||||||
(In Thousands) | ||||||||
Lessors of Non-Residential Buildings |
$ | 372,732 | 17.6 | % | ||||
Accommodation/Hospitality |
$ | 307,428 | 14.6 | % | ||||
Gasoline Stations |
$ | 270,816 | 12.8 | % |
56
June 30, | December 31, | Increase (Decrease) | ||||||||||||||
2011 | 2010 | Amount | Percentage | |||||||||||||
(Dollars in Thousands) | ||||||||||||||||
Non-Performing Loans: |
||||||||||||||||
Non-Accrual Loans: |
||||||||||||||||
Real Estate Loans: |
||||||||||||||||
Commercial Property |
$ | 44,132 | $ | 47,937 | $ | (3,805 | ) | (7.9 | %) | |||||||
Construction |
12,298 | 19,097 | (6,799 | ) | (35.6 | %) | ||||||||||
Residential Property |
1,726 | 1,925 | (199 | ) | (10.3 | %) | ||||||||||
Commercial and Industrial Loans: |
||||||||||||||||
Commercial Term |
70,811 | 63,012 | 7,799 | 12.4 | % | |||||||||||
Commercial Lines of Credit |
2,905 | 2,798 | 107 | 3.8 | % | |||||||||||
SBA |
31,163 | 33,085 | (1,922 | ) | (5.8 | %) | ||||||||||
International |
3,243 | 127 | (3,116 | ) | | % | ||||||||||
Consumer Loans |
824 | 1,047 | (223 | ) | (21.3 | %) | ||||||||||
Total Non-Accrual Loans |
167,102 | 169,028 | (1,926 | ) | (1.1 | %) | ||||||||||
Loans 90 Days or More Past Due and Still Accruing
(as to Principal or Interest): |
| | | | ||||||||||||
Total Non-Performing Loans (1) (2) |
167,102 | 169,028 | (1,926 | ) | (1.1 | %) | ||||||||||
Other Real Estate Owned |
1,340 | 4,089 | (2,749 | ) | (67.2 | %) | ||||||||||
Total Non-Performing Assets |
$ | 168,442 | $ | 173,117 | $ | (4,675 | ) | (2.7 | %) | |||||||
Non-Performing Loans as a Percentage of Total Gross
Loans |
7.91 | % | 7.45 | % | ||||||||||||
Non-Performing Assets as a Percentage of Total Assets |
6.21 | % | 5.95 | % | ||||||||||||
Troubled Debt Restructured Performing Loans |
$ | 19,793 | $ | 47,395 | $ | (27,602 | ) | (58.2 | %) | |||||||
(1) | Includes troubled debt restructured non-performing loans of $66.0 million and $27.0 million as of June 30, 2011 and December 31, 2010, respectively. | |
(2) | Includes loans held for sale. |
57
Recorded | Unpaid Principal | With No Related | With an Allowance | |||||||||||||||||
Investment | Balance | Allowance Recorded | Recorded | Related Allowance | ||||||||||||||||
(In Thousands) | ||||||||||||||||||||
June 30, 2011: |
||||||||||||||||||||
Real Estate Loans: |
||||||||||||||||||||
Commercial Property |
||||||||||||||||||||
Retail |
$ | 15,810 | $ | 16,329 | $ | 8,845 | $ | 6,963 | $ | 565 | ||||||||||
Land |
26,008 | 26,008 | 25,184 | 825 | 105 | |||||||||||||||
Other |
21,624 | 21,748 | 3,698 | 17,926 | 2,623 | |||||||||||||||
Construction |
12,298 | 12,396 | 12,298 | | | |||||||||||||||
Residential Property |
2,325 | 2,386 | 1,982 | 343 | 31 | |||||||||||||||
Commercial and Industrial Loans: |
||||||||||||||||||||
Commercial Term |
||||||||||||||||||||
Unsecured |
14,999 | 15,463 | 661 | 14,338 | 11,040 | |||||||||||||||
Secured by Real Estate |
83,382 | 85,570 | 41,163 | 42,219 | 9,092 | |||||||||||||||
Commercial Lines of Credit |
3,028 | 3,097 | 1,218 | 1,810 | 1,394 | |||||||||||||||
SBA |
17,780 | 19,437 | 7,340 | 10,441 | 1,380 | |||||||||||||||
International |
3,243 | 3,243 | | 3,243 | 3,243 | |||||||||||||||
Consumer Loans |
870 | 898 | 379 | 491 | 223 | |||||||||||||||
Total |
$ | 201,367 | $ | 206,575 | $ | 102,768 | $ | 98,599 | $ | 29,696 | ||||||||||
December 31, 2010: |
||||||||||||||||||||
Real Estate Loans: |
||||||||||||||||||||
Commercial Property |
||||||||||||||||||||
Retail |
$ | 17,606 | $ | 18,050 | $ | 6,336 | $ | 11,270 | $ | 1,543 | ||||||||||
Land |
35,207 | 35,295 | 5,482 | 29,725 | 1,485 | |||||||||||||||
Other |
11,357 | 11,476 | 10,210 | 1,147 | 33 | |||||||||||||||
Construction |
17,691 | 17,831 | 13,992 | 3,699 | 280 | |||||||||||||||
Residential Property |
1,926 | 1,990 | 1,926 | | | |||||||||||||||
Commercial and Industrial Loans: |
||||||||||||||||||||
Commercial Term |
||||||||||||||||||||
Unsecured |
17,847 | 18,799 | 6,465 | 11,382 | 10,313 | |||||||||||||||
Secured by Real Estate |
80,213 | 81,395 | 35,154 | 45,059 | 11,831 | |||||||||||||||
Commercial Lines of Credit |
4,067 | 4,116 | 1,422 | 2,645 | 1,321 | |||||||||||||||
SBA |
17,715 | 18,544 | 7,112 | 10,603 | 2,122 | |||||||||||||||
International |
127 | 141 | | 127 | 127 | |||||||||||||||
Consumer Loans |
934 | 951 | 393 | 541 | 393 | |||||||||||||||
Total |
$ | 204,690 | $ | 208,588 | $ | 88,492 | $ | 116,198 | $ | 29,448 | ||||||||||
58
Average | Interest | Average | Interest | |||||||||||||
Recorded | Income | Recorded | Income | |||||||||||||
Investment | Recognized | Investment | Recognized | |||||||||||||
for the Three | for the Three | for the Six | for the Six | |||||||||||||
Months | Months | Months | Months | |||||||||||||
Ended | Ended (1) | Ended | Ended (1) | |||||||||||||
(In Thousands) | ||||||||||||||||
June 30, 2011: |
||||||||||||||||
Real Estate Loans: |
||||||||||||||||
Commercial Property |
||||||||||||||||
Retail |
$ | 17,260 | $ | 26 | $ | 17,633 | $ | 51 | ||||||||
Land |
27,561 | | 29,023 | | ||||||||||||
Other |
21,849 | 60 | 21,864 | 121 | ||||||||||||
Construction |
12,535 | | 12,578 | | ||||||||||||
Residential Property |
2,371 | | 2,386 | | ||||||||||||
Commercial and Industrial Loans: |
||||||||||||||||
Commercial Term |
||||||||||||||||
Unsecured |
15,365 | 53 | 15,571 | 105 | ||||||||||||
Secured by Real Estate |
84,898 | 456 | 85,504 | 821 | ||||||||||||
Commercial Lines of Credit |
3,076 | 2 | 3,090 | 4 | ||||||||||||
SBA |
18,900 | 31 | 19,107 | 57 | ||||||||||||
International |
3,243 | | 2,255 | | ||||||||||||
Consumer Loans |
889 | 1 | 893 | 1 | ||||||||||||
Total |
$ | 207,947 | $ | 629 | $ | 209,904 | $ | 1,160 | ||||||||
June 30, 2010: |
||||||||||||||||
Real Estate Loans: |
||||||||||||||||
Commercial Property |
||||||||||||||||
Retail |
$ | 17,977 | $ | | $ | 25,664 | $ | | ||||||||
Land |
43,425 | 59 | 45,164 | 114 | ||||||||||||
Other |
16,492 | 55 | 18,524 | 216 | ||||||||||||
Construction |
9,823 | | 9,823 | | ||||||||||||
Residential Property |
2,725 | | 2,784 | | ||||||||||||
Commercial and Industrial Loans: |
||||||||||||||||
Commercial Term |
||||||||||||||||
Unsecured |
20,289 | | 18,278 | 9 | ||||||||||||
Secured by Real Estate |
111,388 | 67 | 104,745 | 293 | ||||||||||||
Commercial Lines of Credit |
6,132 | 56 | 5,499 | 82 | ||||||||||||
SBA |
25,573 | | 26,083 | | ||||||||||||
International |
284 | | 588 | | ||||||||||||
Consumer Loans |
396 | | 531 | | ||||||||||||
Total |
$ | 254,504 | $ | 237 | $ | 257,683 | $ | 714 | ||||||||
(1) | Represents interest income recognized on impaired loans subsequent to classification as impaired. |
59
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(In Thousands) | ||||||||||||||||
Interest Income That Would Have Been Recognized Had
Impaired |
||||||||||||||||
Loans Performed in Accordance With Their Original Terms |
$ | 2,001 | $ | 3,755 | $ | 4,475 | $ | 7,030 | ||||||||
Less: Interest Income Recognized on Impaired Loans |
(629 | ) | (237 | ) | (1,160 | ) | (714 | ) | ||||||||
Interest Foregone on Impaired Loans |
$ | 1,372 | $ | 3,518 | $ | 3,315 | $ | 6,316 | ||||||||
60
61
| changes in lending policies and procedures, including underwriting standards and collection, charge-offs, and recovery practice; | ||
| changes in national and local economic and business conditions and developments, including the condition of various market segments; | ||
| changes in the nature and volume of the portfolio; | ||
| changes in the trend of the volume and severity of past due and classified loans, and trends in the volume of non-accrual loans, troubled debt restructurings, charge-offs and other loan modifications; | ||
| changes in the quality of the Banks loan review system and the degree of oversight by the Board of Directors; | ||
| the existence and effect of any concentrations of credit, and changes in the level of such concentrations; | ||
| transfer risk on cross-border lending activities; and | ||
| the effect of external factors such as competition and legal and regulatory requirements as well as declining collateral values on the level of estimated credit losses in the Banks current portfolio. |
June 30, 2011 | December 31, 2010 | |||||||||||||||
Allowance | Loans | Allowance | Loans | |||||||||||||
Allowance for Loan Losses Applicable To | Amount | Receivable | Amount | Receivable | ||||||||||||
(Dollars in Thousands) | ||||||||||||||||
Real Estate Loans: |
||||||||||||||||
Commercial Property |
$ | 21,298 | $ | 688,842 | $ | 26,248 | $ | 729,222 | ||||||||
Construction |
1,984 | 40,684 | 5,606 | 60,995 | ||||||||||||
Residential Property |
833 | 58,059 | 911 | 62,645 | ||||||||||||
Total Real Estate Loans (1) |
24,115 | 787,585 | 32,765 | 852,862 | ||||||||||||
Commercial and Industrial Loans: (1) |
82,845 | 1,234,519 | 108,986 | 1,327,910 | ||||||||||||
Consumer Loans |
1,587 | 46,500 | 2,077 | 50,300 | ||||||||||||
Unallocated |
482 | | 2,231 | | ||||||||||||
Total |
$ | 109,029 | $ | 2,068,604 | $ | 146,059 | $ | 2,231,072 | ||||||||
(1) | Excludes loans held for sale. |
62
As of and for the | As of and for the | ||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||
June 30, | March 31, | June 30, | June 30, | June 30, | |||||||||||||||||
2011 | 2011 | 2010 | 2011 | 2010 | |||||||||||||||||
(Dollars in Thousands) | |||||||||||||||||||||
Allowance for Loan Losses: |
|||||||||||||||||||||
Balance at Beginning of Period |
$ | 125,780 | $ | 146,059 | $ | 177,820 | $ | 146,059 | $ | 144,996 | |||||||||||
Actual Charge-Offs |
(20,652 | ) | (25,181 | ) | (40,718 | ) | (45,833 | ) | (70,832 | ) | |||||||||||
Recoveries on Loans Previously Charged Off |
4,151 | 3,626 | 1,772 | 7,777 | 5,493 | ||||||||||||||||
Net Loan Charge-Offs |
(16,501 | ) | (21,555 | ) | (38,946 | ) | (38,056 | ) | (65,339 | ) | |||||||||||
Provision Charged to Operating Expenses |
(250 | ) | 1,276 | 37,793 | 1,026 | 97,010 | |||||||||||||||
Balance at End of Period |
$ | 109,029 | $ | 125,780 | $ | 176,667 | $ | 109,029 | $ | 176,667 | |||||||||||
Allowance for Off-Balance Sheet Items: |
|||||||||||||||||||||
Balance at Beginning of Period |
$ | 2,141 | $ | 3,417 | $ | 2,655 | $ | 3,417 | $ | 3,876 | |||||||||||
Provision Charged to Operating Expenses |
250 | (1,276 | ) | (293 | ) | (1,026 | ) | (1,514 | ) | ||||||||||||
Balance at End of Period |
$ | 2,391 | $ | 2,141 | $ | 2,362 | $ | 2,391 | $ | 2,362 | |||||||||||
Ratios: |
|||||||||||||||||||||
Net Loan Charge-Offs to Average Total Gross Loans (1) |
3.10 | % | 3.91 | % | 5.98 | % | 3.51 | % | 4.90 | % | |||||||||||
Net Loan Charge-Offs to Total Gross Loans (1) |
3.13 | % | 4.02 | % | 6.24 | % | 3.63 | % | 5.26 | % | |||||||||||
Allowance for Loan Losses to Average Total Gross Loans |
5.10 | % | 5.63 | % | 6.76 | % | 4.99 | % | 6.57 | % | |||||||||||
Allowance for Loan Losses to Total Gross Loans |
5.16 | % | 5.79 | % | 7.05 | % | 5.16 | % | 7.05 | % | |||||||||||
Net Loan Charge-Offs to Allowance for Loan Losses (1) |
60.70 | % | 69.50 | % | 88.42 | % | 70.39 | % | 74.58 | % | |||||||||||
Net Loan Charge-Offs to Provision Charged to Operating Expenses |
| % | | % | 103.05 | % | | % | 67.35 | % | |||||||||||
Allowance for Loan Losses to Non-Performing Loans |
65.25 | % | 82.90 | % | 72.96 | % | 65.25 | % | 72.96 | % | |||||||||||
Balances: |
|||||||||||||||||||||
Average Total Gross Loans Outstanding During Period |
$ | 2,137,144 | $ | 2,234,570 | $ | 2,612,077 | $ | 2,185,587 | $ | 2,689,093 | |||||||||||
Total Gross Loans Outstanding at End of Period |
$ | 2,112,709 | $ | 2,173,692 | $ | 2,504,248 | $ | 2,112,709 | $ | 2,504,248 | |||||||||||
Non-Performing Loans at End of Period |
$ | 167,102 | $ | 151,730 | $ | 242,133 | $ | 167,102 | $ | 242,133 |
(1) | Net loan charge-offs are annualized to calculate the ratios. |
63
As of and for the | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(Dollars in Thousands) | ||||||||||||||||
Charge-offs: |
||||||||||||||||
Real Estate Loans |
$ | 5,591 | $ | 12,412 | $ | 12,644 | $ | 17,817 | ||||||||
Commercial Term Loans |
9,591 | 19,572 | 23,939 | 40,426 | ||||||||||||
SBA Loans |
577 | 3,354 | 3,730 | 6,334 | ||||||||||||
Commercial Lines of Credit |
4,453 | 4,831 | 4,904 | 5,083 | ||||||||||||
International Loans |
120 | 194 | 120 | 194 | ||||||||||||
Consumer Loans |
320 | 355 | 496 | 978 | ||||||||||||
Total Charge-offs |
20,652 | 40,718 | 45,833 | 70,832 | ||||||||||||
Recoveries: |
||||||||||||||||
Real Estate Loans |
2,223 | 162 | 2,744 | 1,865 | ||||||||||||
Commercial Term Loans |
1,666 | 1,015 | 4,594 | 2,596 | ||||||||||||
SBA Loans |
122 | 136 | 232 | 487 | ||||||||||||
Commercial Lines of Credit |
4 | 42 | 56 | 86 | ||||||||||||
International Loans |
123 | 337 | 129 | 338 | ||||||||||||
Consumer Loans |
13 | 80 | 22 | 121 | ||||||||||||
Total Recoveries |
4,151 | 1,772 | 7,777 | 5,493 | ||||||||||||
Net Charge-offs |
$ | 16,501 | $ | 38,946 | $ | 38,056 | $ | 65,339 | ||||||||
June 30, | December 31, | Increase (Decrease) | ||||||||||||||
2011 | 2010 | Amount | Percentage | |||||||||||||
(Dollars in Thousands) | ||||||||||||||||
Demand Noninterest-Bearing |
$ | 600,812 | $ | 546,815 | $ | 53,997 | 9.9 | % | ||||||||
Interest-Bearing: |
||||||||||||||||
Savings |
110,935 | 113,968 | (3,033 | ) | (2.7 | %) | ||||||||||
Money Market Checking and NOW Accounts |
484,132 | 402,481 | 81,651 | 20.3 | % | |||||||||||
Time Deposits of $100,000 or More |
878,871 | 1,118,621 | (239,750 | ) | (21.4 | %) | ||||||||||
Other Time Deposits |
323,625 | 284,836 | 38,789 | 13.6 | % | |||||||||||
Total Deposits |
$ | 2,398,375 | $ | 2,466,721 | $ | (68,346 | ) | (2.8 | %) | |||||||
64
65
After | ||||||||||||||||||||||||
Three | After One | |||||||||||||||||||||||
Months | Year But | |||||||||||||||||||||||
Within | But | Within | After | Non- | ||||||||||||||||||||
Three | Within | Five | Five | Interest- | ||||||||||||||||||||
Months | One Year | Years | Years | Sensitive | Total | |||||||||||||||||||
(Dollars in Thousands) | ||||||||||||||||||||||||
ASSETS |
||||||||||||||||||||||||
Cash and Due From Banks |
$ | | $ | | $ | | $ | | $ | 67,166 | $ | 67,166 | ||||||||||||
Interest-Bearing Deposits in Other Banks |
129,768 | 1,989 | | | | 131,757 | ||||||||||||||||||
Investment Securities: |
||||||||||||||||||||||||
Fixed Rate |
43,625 | 65,080 | 115,351 | 84,250 | 9,801 | 318,107 | ||||||||||||||||||
Floating Rate |
28,482 | 11,095 | 23,494 | 9,399 | 468 | 72,938 | ||||||||||||||||||
Loans: |
||||||||||||||||||||||||
Fixed Rate |
114,492 | 152,607 | 377,522 | 16,266 | | 660,887 | ||||||||||||||||||
Floating Rate |
1,233,939 | 30,110 | 24,782 | 1,230 | | 1,290,061 | ||||||||||||||||||
Non-Accrual |
| | | | 167,102 | 167,102 | ||||||||||||||||||
Deferred Loan Fees, Discounts,
Valuation Adjustment and Allowance for
Loan Losses |
| | | | (114,381 | ) | (114,381 | ) | ||||||||||||||||
Investment in Federal Home Loan Bank Stock
and Federal
Reserve Bank Stock |
| | | 32,565 | | 32,565 | ||||||||||||||||||
Other Assets |
| 27,813 | | 6,173 | 50,647 | 84,633 | ||||||||||||||||||
Total Assets |
$ | 1,550,306 | $ | 288,694 | $ | 541,149 | $ | 149,883 | $ | 180,803 | $ | 2,710,835 | ||||||||||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||||||||||||||||||
Liabilities: |
||||||||||||||||||||||||
Deposits: |
||||||||||||||||||||||||
Demand Noninterest-Bearing |
$ | | $ | | $ | | $ | | $ | 600,812 | $ | 600,812 | ||||||||||||
Savings |
10,983 | 26,358 | 53,748 | 19,846 | | 110,935 | ||||||||||||||||||
Money Market Checking and NOW Accounts |
35,242 | 168,756 | 215,821 | 64,313 | | 484,132 | ||||||||||||||||||
Time Deposits: |
||||||||||||||||||||||||
Fixed Rate |
185,241 | 790,547 | 226,650 | | | 1,202,438 | ||||||||||||||||||
Floating Rate |
58 | | | | | 58 | ||||||||||||||||||
Federal Home Loan Bank Advances |
61 | 277 | 3,141 | | | 3,479 | ||||||||||||||||||
Other Borrowings |
1,034 | | | | | 1,034 | ||||||||||||||||||
Junior Subordinated Debentures |
82,406 | | | | | 82,406 | ||||||||||||||||||
Other Liabilities |
| | | | 27,176 | 27,176 | ||||||||||||||||||
Stockholders Equity |
| | | | 198,365 | 198,365 | ||||||||||||||||||
Total Liabilities and Stockholders Equity |
$ | 315,025 | $ | 985,938 | $ | 499,360 | $ | 84,159 | $ | 826,353 | $ | 2,710,835 | ||||||||||||
Repricing Gap |
$ | 1,235,281 | $ | (697,244 | ) | $ | 41,789 | $ | 65,724 | $ | (645,550 | ) | $ | | ||||||||||
Cumulative Repricing Gap |
$ | 1,235,281 | $ | 538,037 | $ | 579,826 | $ | 645,550 | $ | | $ | | ||||||||||||
Cumulative Repricing Gap as a Percentage of
Total Assets |
45.57 | % | 19.85 | % | 21.39 | % | 23.81 | % | | |||||||||||||||
Cumulative Repricing Gap as a Percentage of
Interest-Earning Assets |
49.29 | % | 21.47 | % | 23.13 | % | 25.76 | % | |
66
Less Than Three Months | Less Than Twelve Months | |||||||||||||||
June 30, | December 31, | June 30, | December 31, | |||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(Dollars in Thousands) | ||||||||||||||||
Cumulative Repricing Gap |
$ | 1,235,281 | $ | 921,942 | $ | 538,037 | $ | 855,812 | ||||||||
Cumulative Repricing Gap as a Percentage of Total Assets |
45.57 | % | 31.71 | % | 19.85 | % | 29.44 | % | ||||||||
Cumulative Repricing Gap as a Percentage of Interest-Earning Assets |
49.29 | % | 33.67 | % | 21.47 | % | 31.25 | % |
Rate Shock Table | ||||||||||||||||
Percentage Changes | Change in Amount | |||||||||||||||
Change in | Net | Economic | Net | Economic | ||||||||||||
Interest | Interest | Value of | Interest | Value of | ||||||||||||
Rate | Income | Equity | Income | Equity | ||||||||||||
(Dollars in Thousands) | ||||||||||||||||
200% |
10.26 | % | (8.91 | )% | $ | 11,285 | $ | (30,908 | ) | |||||||
100% |
4.62 | % | (4.37 | )% | $ | 5,081 | $ | (15,174 | ) | |||||||
(100%) |
(1 | ) | (1 | ) | (1 | ) | (1 | ) | ||||||||
(200%) |
(1 | ) | (1 | ) | (1 | ) | (1 | ) |
(1) | The table above only reflects the impact of upward shocks due to the fact that a downward parallel shock of 100 basis points or more is not possible given that some short-term rates are currently less than one percent. |
67
68
69
70
71
As Previously Reported | Adjustment | As Adjusted | ||||||||||||||||||||||
(In Thousands) | ||||||||||||||||||||||||
Percentage | ||||||||||||||||||||||||
Balance | Percentage | Amount | Change | Balance | Percentage | |||||||||||||||||||
June 30, 2011: |
||||||||||||||||||||||||
Real Estate Loans: |
||||||||||||||||||||||||
Commercial Property |
||||||||||||||||||||||||
Retail |
$ | 14,335 | 9.0 | % | $ | | | $ | 14,335 | 8.6 | % | |||||||||||||
Land |
25,184 | 15.9 | % | | | 25,184 | 15.1 | % | ||||||||||||||||
Other |
3,672 | 2.3 | % | 941 | 0.5 | % | 4,613 | 2.8 | % | |||||||||||||||
Construction |
12,298 | 7.8 | % | | | 12,298 | 7.4 | % | ||||||||||||||||
Residential Property |
1,726 | 1.1 | % | | | 1,726 | 1.0 | % | ||||||||||||||||
Commercial and Industrial Loans: |
||||||||||||||||||||||||
Commercial Term
Unsecured |
8,389 | 5.3 | % | 2,369 | 1.1 | % | 10,758 | 6.4 | % | |||||||||||||||
Secured by Real Estate |
54,754 | 34.5 | % | 5,299 | 1.4 | % | 60,053 | 35.9 | % | |||||||||||||||
Commercial Lines of Credit |
2,905 | 1.8 | % | | | 2,905 | 1.7 | % | ||||||||||||||||
SBA |
31,163 | 19.7 | % | | | 31,163 | 18.6 | % | ||||||||||||||||
International |
3,243 | 2.0 | % | | | 3,243 | 1.9 | % | ||||||||||||||||
Consumer Loans |
824 | 0.5 | % | | | 824 | 0.5 | % | ||||||||||||||||
Total |
$ | 158,493 | 100.0 | % | $ | 8,609 | $ | 167,012 | 100.0 | % | ||||||||||||||
72
Exhibit | ||
Number | Document | |
31.1
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended | |
31.2
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended | |
32.1
|
Certification of Chief Executive Officer Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
32.2
|
Certification of Chief Financial Officer Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
101.INS
|
XBRL Instance Document * | |
101.SCH
|
XBRL Taxonomy Extension Schema Document * | |
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document * | |
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document * | |
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document * | |
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document * |
* | Attached as Exhibit 101 to this report are documents formatted in XBRL (Extensible Business Reporting Language). Users of this data are advised pursuant to Rule 406T of Regulation S-T that the interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of section 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise not subject to liability under these sections. The financial information contained in the XBRL-related documents is unaudited or unreviewed. |
73
HANMI FINANCIAL CORPORATION |
||||
Date: August 9, 2011 | By: | /s/ Jay S. Yoo | ||
Jay S. Yoo | ||||
President and Chief Executive Officer | ||||
By: | /s/ Brian E. Cho | |||
Brian E. Cho | ||||
Executive Vice President and Chief Financial Officer | ||||
74
1. | I have reviewed this Quarterly Report on Form 10-Q of Hanmi Financial Corporation; | |
2. | Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statement made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this Report; | |
4. | The Registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have: |
(a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared; | ||
(b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
(c) | evaluated the effectiveness of the Registrants disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and | ||
(d) | disclosed in this Report any change in the Registrants internal control over financial reporting that occurred during the Registrants most recent fiscal quarter (the Registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrants internal control over financial reporting. |
5. | The Registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrants auditors and the Audit Committee of the Registrants Board of Directors (or persons performing the equivalent functions): |
(a) | all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the Registrants ability to record, process, summarize and report financial information; and | ||
(b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrants internal control over financial reporting. |
Date: August 9, 2011 | /s/ Jay S. Yoo | |||
Jay S. Yoo | ||||
President and Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of Hanmi Financial Corporation; | |
2. | Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statement made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this Report; | |
4. | The Registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have: |
(a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared; | ||
(b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
(c) | evaluated the effectiveness of the Registrants disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and | ||
(d) | disclosed in this Report any change in the Registrants internal control over financial reporting that occurred during the Registrants most recent fiscal quarter (the Registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrants internal control over financial reporting. |
5. | The Registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrants auditors and the Audit Committee of the Registrants Board of Directors (or persons performing the equivalent functions): |
(a) | all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the Registrants ability to record, process, summarize and report financial information; and | ||
(b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrants internal control over financial reporting. |
Date: August 9, 2011 | /s/ Brian E. Cho | |||
Brian E. Cho | ||||
Chief Financial Officer |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: August 9, 2011 | /s/ Jay S. Yoo | |||
Jay S. Yoo | ||||
President and Chief Executive Officer |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: August 9, 2011 | /s/ Brian E. Cho | |||
Brian E. Cho | ||||
Chief Financial Officer | ||||
Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $)
In Thousands, except Share data |
Jun. 30, 2011
|
Dec. 31, 2010
|
---|---|---|
ASSETS | Â | Â |
Fair Value of securities held to maturity at amortized cost | $ 835 | $ 847 |
Amortized Cost of investment securities available for sale at fair value | 386,299 | 415,491 |
Allowance for Loan Losses of loans receivable | 109,029 | 146,059 |
STOCKHOLDERS' EQUITY: | Â | Â |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 155,890,890 | 155,830,890 |
Common stock, shares outstanding | 151,258,390 | 151,198,390 |
Unrealized gain on securities available for sale and interest only strips, net of income tax | $ 602 | $ 602 |
Treasury stock, shares | 4,632,500 | 4,632,500 |
Document and Entity Information (USD $)
|
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2011
|
Jul. 29, 2011
|
Jun. 30, 2010
|
|
Document and Entity Information [Abstract] | Â | Â | Â |
Entity Registrant Name | Hanmi Financial Corp | Â | Â |
Entity Central Index Key | 0001109242 | Â | Â |
Document Type | 10-Q | Â | Â |
Document Period End Date | Jun. 30, 2011 | ||
Amendment Flag | false | Â | Â |
Document Fiscal Year Focus | 2011 | Â | Â |
Document Fiscal Period Focus | Q2 | Â | Â |
Current Fiscal Year End Date | --12-31 | Â | Â |
Entity Well-known Seasoned Issuer | No | Â | Â |
Entity Voluntary Filers | No | Â | Â |
Entity Current Reporting Status | Yes | Â | Â |
Entity Filer Category | Accelerated Filer | Â | Â |
Entity Public Float | Â | Â | $ 59,235,000 |
Entity Common Stock, Shares Outstanding | Â | 151,258,390 | Â |
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Income Taxes
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Income taxes [Abstract] | Â |
INCOME TAXES |
NOTE 6 — INCOME TAXES
Under GAAP, a valuation allowance must be recorded if it is “more likely than not” that such
deferred tax assets will not be realized. Appropriate consideration is given to all available
evidence (both positive and negative) related to the realization of the deferred tax assets on a
quarterly basis.
In conducting our regular quarterly evaluation, we decided to maintain a full deferred tax
asset valuation allowance as of June 30, 2011 based primarily upon the existence of a three-year
cumulative loss position. Although our current financial forecasts indicate that sufficient
taxable income will be generated in the future to ultimately realize the existing deferred tax
benefits, those forecasts were not considered to constitute sufficient positive evidence to
overcome the observable negative evidence associated with the three-year cumulative loss position
determined as of June 30, 2011.
At June 30, 2011, the valuation allowance decreased to $82.7 million compared to $88.6 million
at March 31, 2011 and $92.7 million at December 31, 2010. This decrease was mainly due to a
decrease of deferred tax assets balance related to credit loss provision. We had zero balance of
net deferred tax assets as of June 30, 2011 and December 31, 2010. During the first half of 2010,
we recorded an additional valuation allowance of $37.8 million against our deferred tax assets,
resulting in $83.0 million of valuation allowance at June 30, 2010. There was $1.2 million of net
deferred tax liabilities as of June 30, 2010.
The tax expense recognized for the three and six months ended June 30, 2011 was primarily due
to an out-of-period adjustment of $605,000 and $718,000, respectively, to reserve for certain ASC
740-10(FIN 48) exposure items. During the fourth quarter of 2009, the Company recorded a tax
benefit upon electing a 5-year net operating loss carryback according to the IRS Code section IRC §
172(b)(1)(H) amended in November 2009. This out -of-period adjustment was to reinstate the
reserves that the Company released as the statute of limitations had expired in previous years. Due
to the Company filing amended tax returns as a result of the tax law revision, the Company needed
to reestablish these reserves. The tax benefit recognized during the first half of 2010 was
primarily due to the reversal of FIN 48 reserves related to lower assessment from the result of the
State of California Franchise Tax Board audit for the tax year 2005 through 2007.
|
Segment Reporting
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Segment Reporting [Abstract] | Â |
SEGMENT REPORTING |
NOTE 11 — SEGMENT REPORTING
Through our branch network and lending units, we provide a broad range of financial services
to individuals and companies located primarily in Southern California. These services include
demand, time and savings deposits; and commercial and industrial, real estate and consumer lending.
While our chief decision makers monitor the revenue streams of our various products and services,
operations are managed and financial performance is evaluated on a company-wide basis. Accordingly,
we consider all of our operations to be aggregated in one reportable operating segment.
|
Regulatory Matters
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Jun. 30, 2011
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Regulatory Matters [Abstract] | Â | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REGULATORY MATTERS |
NOTE 2 — REGULATORY MATTERS
On November 2, 2009, the members of the Board of Directors of the Bank consented to the
issuance of a Final Order (“Final Order”) with the California Department of Financial Institutions
(the “DFI”). On the same date, Hanmi Financial and the Bank entered into a Written Agreement (the
“Agreement”) with the Federal Reserve Bank of San Francisco (the “FRB”). The Final Order and the
Agreement contain a list of strict requirements ranging from a capital directive to developing a
contingency funding plan.
While Hanmi Financial intends to take such actions as may be necessary to enable Hanmi
Financial and the Bank to comply with the requirements of the Final Order and the Agreement, there
can be no assurance that Hanmi Financial or the Bank will be able to comply fully with the
provisions of the Final Order and the Agreement, or that compliance with the Final Order and the
Agreement will not have material and adverse effects on the operations and financial condition of
Hanmi Financial and the Bank. Any material failure to comply with the provisions of the Final Order
and the Agreement could result in further enforcement actions by both DFI and FRB, or the possible
placement of the Bank into conservatorship or receivership.
Final Order and Written Agreement
The Final Order and the Agreement contain substantially similar provisions, and require the Board of Directors of the Bank to prepare and submit written plans to
the DFI and the FRB that address the following items: (i) strengthening Board oversight of the
management and operation of the Bank; (ii) strengthening credit risk management practices; (iii)
improving credit administration policies and procedures; (iv) improving the Bank’s position with
respect to problem assets; (v) maintaining adequate reserves for loan and lease losses; (vi)
improving the capital position of the Bank and,
with respect to the Agreement, of Hanmi Financial; (vii) improving
the Bank’s earnings through
a strategic plan and a budget for 2010; and (viii) improving the Bank’s liquidity position,
funds management practices, and contingency funding plan. In addition, the Final Order and
the Agreement place restrictions on the Bank’s lending to
borrowers who have adversely classified loans with the Bank,
and require the Bank to charge off or collect certain problem loans
and to review and revise its methodology for calculating allowance
for loan and lease losses consistent with relevant supervisory guidance.
The Bank is also prohibited from paying dividends, incurring, increasing
or guaranteeing any debt, or making certain changes to its business without prior
approval from the DFI, and Hanmi Financial and the Bank must obtain prior approval from
the FRB prior to declaring and paying dividends.
Under the Final Order,
the Bank is required to increase its capital and maintain certain regulatory capital ratios
prior to certain dates as follows: 1) by July 31, 2010, the Bank was required to increase
its contributed equity capital by not less than an additional $100 million, and maintain a ratio of
tangible stockholders’ equity to total tangible assets of at least 9.0 percent, and 2) by
December 31, 2010, and thereafter during the life of the Final Order, the Bank will be required
to maintain a ratio of tangible stockholders’ equity to total tangible assets of not less than 9.5 percent.
If the Bank is not able to maintain the capital ratios identified in the Final Order, it must
notify the DFI, and Hanmi Financial and the Bank are required to notify the FRB if their respective
capital ratios fall below those set forth in the capital plan approved by the FRB. On July 27,
2010, we completed a registered rights and best efforts offering in which we raised $116.8 million
in net proceeds. As a result, we satisfied the $100 million capital contribution requirement set
forth in the Final Order. While the Bank’s tangible stockholders’ equity to total tangible assets
ratio was 8.59% at December 31, 2010, the ratio increased to 10.33 percent at June 30, 2011.
Therefore, the Bank is currently in compliance with the tangible capital ratio requirement.
Risk-Based Capital
Federal bank regulatory agencies require a minimum ratio of qualifying total capital to
risk-weighted assets of 8.0 percent and a minimum ratio of Tier 1 capital to risk-weighted assets
of 4.0 percent. In addition to the risk-based guidelines, the regulators require banking organizations
to maintain a minimum ratio of Tier 1 capital to average total assets, referred to as the leverage
ratio, of 4.0 percent. For a bank rated in the highest of the five categories used by the regulators to
rate banks, the minimum leverage ratio is 3.0 percent. In addition to these uniform risk-based
capital guidelines that apply across the industry, the regulators have the discretion to set
individual minimum capital requirements for specific institutions at rates significantly above the
minimum guidelines and ratios.
As of June 30, 2011, Hanmi Financial’s Tier 1 capital (stockholders’ equity plus qualified
junior subordinated debentures less intangible assets) was $257.9 million. This represented an
increase of $25.2 million, or 10.8 percent, over Tier 1 capital of $232.7 million as of December
31, 2010. The capital ratios of Hanmi Financial and the Bank were as follows as of June 30, 2011:
|
Stockholders Equity
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Stockholders Equity [Abstract] | Â |
STOCKHOLDERS EQUITY |
NOTE 8 — STOCKHOLDERS’ EQUITY
Stock Warrants
As part of the agreement executed on July 27, 2010 with Cappello Capital Corp, the placement
agent in connection with our best efforts offering and the financial advisor in connection with our
completed rights offering, we issued warrants to purchase two million shares of our common stock
for services performed. The warrants have an exercise price of $1.20 per share. According to the
agreement, the warrants vested on October 14, 2010 and are exercisable until its expiration on
October 14, 2015. The Company followed the guidance of FASB ASC Topic 815- 40, “Derivatives and
Hedging — Contracts in Entity’s Own Stock” (“ASC 815- 40”), which establishes a framework for
determining whether certain freestanding and embedded instruments are indexed to a company’s own
stock for purposes of evaluation of the accounting for such instruments under existing accounting
literature. Under GAAP, the issuer is required to measure the fair value of the equity instruments
in the transaction as of earlier of i) the date at which a commitment for performance by the
counterparty to earn the equity instruments is reached or ii) the date at which the counterparty’s
performance is complete. The fair value of the warrants at the date of issuance totaling $2.0
million was recorded as a liability and a cost of equity, which was determined by the Black-Scholes
option pricing model. The expected stock volatility is based on historical volatility of our common
stock over the expected term of the warrants. We used a weighted average expected stock volatility
of 111.46%. The expected life assumption is based on the contract term of five years. The dividend
yield of zero is based on the fact that we have no present intention to pay cash dividends. The
risk free rate of 2.07% used for the warrant is equal to the zero coupon rate in effect at the time
of the grant.
Upon re-measuring the fair value of the stock warrants at June 30, 2011, compared to $1.6
million at December 31, 2010, the fair value decreased by $311,000, which we have included in other
operating expenses for the six months ended June 30, 2011. We used a weighted average expected
stock volatility of 83.02% and a remaining contractual life of 4.3 years based on the contract
terms. We also used a dividend yield of zero as we have no present intention to pay cash dividends.
The risk free rate of 1.75% used for the warrant is equal to the zero coupon rate in effect at the
end of the measurement period.
|
Subsequent Events
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Subsequent Events [Abstract] | Â |
SUBSEQUENT EVENTS |
NOTE 13 — SUBSEQUENT EVENTS
Management has evaluated subsequent events through the date of issuance of the financial data
included herein. There have been no subsequent events that occurred during such period that would
require disclosure in this Form 10-Q or would be required to be recognized in the Consolidated
Financial Statements (Unaudited) as of June 30, 2011.
|
Earnings (Loss) Per Share
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
|
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Earnings Per Share [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS (LOSS) PER SHARE |
NOTE 9 — EARNINGS (LOSS) PER SHARE
Earnings (loss) per share (“EPS”) is calculated on both a basic and a diluted basis. Basic EPS
excludes dilution and is computed by dividing income available to common stockholders by the
weighted-average number of common shares outstanding for the period. Diluted EPS reflects the
potential dilution that could occur if securities or other contracts to issue common stock were
exercised or converted into common stock or resulted from the issuance of common stock that then
shared in earnings, excluding common shares in treasury. Unvested restricted stock is excluded from
the calculation of weighted-average common shares for basic EPS. For diluted EPS, weighted-average
common shares include the impact of restricted stock under the treasury method.
The following tables present a reconciliation of the components used to derive basic and
diluted EPS for the periods indicated:
For the three months ended June 30, 2011 and 2010, there were 3,192,891 and 1,266,115
options, warrants and unvested restricted stock outstanding, respectively, that were not included
in the computation of diluted EPS because their effect would be anti-dilutive. For the six months
ended June 30, 2011 and 2010, there were 1,192,891 and 1,266,115 options, warrants and unvested
restricted stock outstanding, respectively, that were not included in the computation of diluted
EPS because their effect would be anti-dilutive.
|
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