EX-99.1 2 a6074699_ex991.htm EXHIBIT 99.1

Exhibit 99.1

Nara Bancorp Reports Net Income Available to Common Stockholders of $2.9 Million for the Third Quarter

Quarterly Highlights:

  • Return to profitability for the quarter
  • Increase in delinquencies and non-performing assets
  • Decline in net charge-offs and total watch list loans
  • Loan growth of $52 million
  • Liquidity and capital levels remain strong

LOS ANGELES--(BUSINESS WIRE)--October 15, 2009--Nara Bancorp, Inc. (the “Company”) (NASDAQ: NARA), the holding company of Nara Bank (the “Bank”) reported net income available to common stockholders of $2.9 million, or $0.11 per diluted share, for third quarter 2009, compared to net income available to common stockholders of $5.0 million, or $0.19 per diluted share, for third quarter 2008, and a net loss available to common stockholders of $7.1 million, or ($0.27) per diluted share, for second quarter 2009.

Min Kim, President and Chief Executive Officer, said, “As expected, our net interest margin expanded, and combined with net loan growth during the quarter, we had a meaningful increase in net interest income as compared with the second quarter of 2009. On the credit quality front, we continue to aggressively work through our problem loans. Although delinquencies and non-performing assets increased, we experienced lower net charge-offs and a lower loan loss provision for the quarter.”

“Our deposits continue to grow, but at a slower rate in the third quarter compared with the first half of the year. This was a direct result of our strategy to reduce pricing on deposits. We will continue to redeploy funds from deposit growth into higher yielding assets as the opportunities arise. In the meantime, our substantial liquidity provides us significant flexibility,” said Ms. Kim.

Financial Highlights

   

2009

Third Quarter

 

2008

Third Quarter

 

2009

Second Quarter

    (Dollars in thousands)
Net income (loss)   $ 3,941     $ 4,982     $ (6,008 )
Net income (loss) available to common stockholders   $ 2,872     $ 4,982     $ (7,077 )
Diluted earnings (loss) per share   $ 0.11     $ 0.19     $ (0.27 )
Net interest income   $ 24,233     $ 24,753     $ 21,260  
Net interest margin     3.14 %     4.02 %     2.94 %
Non-interest income   $ 4,894     $ 4,011     $ 3,785  
Non-interest expense   $ 14,668     $ 13,991     $ 16,822  
Net loans receivable   $ 2,099,223     $ 2,084,062     $ 2,049,738  
Deposits   $ 2,487,070     $ 1,946,843     $ 2,439,795  
Non-performing loans *   $ 35,510     $ 30,501     $ 30,850  
ALLL to gross loans *     2.49 %     1.33 %     2.42 %
ALLL to non-performing loans *     149 %     91 %     163 %
Provision for loan losses   $ 8,500     $ 6,180     $ 19,000  
Efficiency ratio     50.36 %     48.64 %     67.17 %
     
* Excludes the guaranteed portion of delinquent SBA loans totaling $20.9 million, $14.5 million and $19.8 million at third quarter 2009, third quarter 2008 and second quarter 2009, respectively.
 

Operating Results for Third Quarter 2009

Net Interest Income and Net Interest Margin. Third quarter 2009 net interest income before provision for loan losses was $24.2 million, a decrease of 2% from third quarter 2008. The decline in net interest income was due to the decline in the net interest margin, caused in part by an increase in liquid assets with lower yields resulting from the increase in deposits during the first half of 2009, substantially offset by an increase in average interest earning assets.

Third quarter 2009 net interest margin (net interest income divided by average interest-earning assets) decreased 88 basis points to 3.14% from 4.02% for third quarter 2008. During the twelve months ended September 30, 2009, market interest rates declined as the targeted federal funds rate declined 175 basis points, and the Bank’s interest-earning assets re-priced downward faster than its interest-bearing liabilities. Concurrently, average interest earning assets increased 26% year over year.

Total deposits grew 28% year over year, primarily from the growth in the first half of the year. Third quarter deposit growth was 2%, resulting in a loan to deposit ratio of 86% at September 30, 2009, compared to 108% at September 30, 2008.

Total loans grew 2% year over year, primarily due to net loan growth of $52 million during third quarter 2009. Cash and investments grew 144% year over year, as funds from deposit growth were invested in securities, federal funds and cash at the Federal Reserve, substantially increasing on-balance sheet liquidity, but adversely affecting net interest margin. As loan demand continues to improve, the Bank expects to convert liquid assets and short term investments into higher yielding loans.

The weighted average yield on the loan portfolio for third quarter 2009 decreased 87 basis points to 6.28% from 7.15% for the same period last year. The decrease was the result of the prime rate-based portion of the loan portfolio repricing downward as market interest rates continued to decline due to reductions in interest rates by the Federal Reserve throughout 2008. The prime rate decreased 175 basis points, consistent with the federal funds rate cuts. This was partially mitigated by the fixed rate loans in the portfolio. At September 30, 2009, fixed rate loans were 51% of the loan portfolio. The weighted average yield on the variable rate and fixed rate loan portfolios (excluding loan discount accretion) at September 30, 2009 was 4.79% and 7.52%, respectively, compared to 6.04% and 7.65% at September 30, 2008.

The weighted average yield on securities available-for-sale for third quarter 2009 decreased 25 basis points to 4.37% from 4.62% for the same period last year. The decrease was primarily due to downward repricing of variable rate agency CMO investment securities tied to one month LIBOR, as such rates declined over the past 12 months, and the rebalancing our investment portfolio to shorter duration securities to mitigate against interest rate risk. The variable rate agency CMO portfolio was $67.5 million at September 30, 2009, yielding 2.72%, compared to $112.9 million at September 30, 2008, yielding 4.12%.

The weighted average cost of deposits for third quarter 2009 decreased 50 basis points to 2.20% from 2.70% for the same period last year. The cost of time deposits decreased 64 basis points to 2.71% from 3.35% for the same period last year.

The weighted average cost of FHLB advances for third quarter 2009 also decreased 6 basis points to 3.76% for third quarter 2009, compared to 3.82% for third quarter 2008, due to refinancing of $10 million of advances during the quarter at a lower three-year rate.

Following are the weighted average rate data on a spot rate basis at September 30, 2009 and 2008:

    September 30,
    2009     2008  
Weighted average loan portfolio yield (excluding discounts)   6.19 %   6.87 %
Weighted average securities available-for-sale portfolio yield   4.35 %   4.89 %
Weighted average cost of deposits   2.06 %   2.69 %
Weighted average cost of total interest-bearing deposits   2.38 %   3.29 %
Weighted average cost of FHLB advances   3.67 %   3.78 %

Sequentially, third quarter 2009 net interest income before provision for loan losses increased $3.0 million, or 14%, from second quarter 2009. The increase was attributable to an increase in average interest-earning assets and improved net interest margin. Average interest-earning assets increased $193 million, or 7%, during third quarter 2009. The net interest margin increased 20 basis points to 3.14% for third quarter 2009 from 2.94% for second quarter 2009. The yield on interest-earning assets increased nine basis points reflecting the shift from federal funds and cash to loans, and the cost of interest-bearing liabilities decreased 17 basis points, reflecting the deposit lag effect as CDs mature, as well as the downward adjustments made by the Bank to rates offered to deposit customers.

Non-accrual loan interest reversed was $328 thousand, $273 thousand, and $169 thousand for third quarter 2009, third quarter 2008, and second quarter 2009, respectively. Excluding this effect, the net interest margin for third quarter 2009, third quarter 2008, and second quarter 2009 was 3.18%, 4.07%, and 2.96%, respectively.

Prepayment penalty income for third quarter 2009, third quarter 2008 and second quarter 2009 was $173 thousand, $434 thousand and $145 thousand, respectively. Excluding the effects of both non-accrual loan interest income and prepayment penalty income, the net interest margin for third quarter 2009, third quarter 2008 and second quarter 2009 was 3.16%, 4.00% and 2.94%, respectively.

Non-interest Income. Third quarter 2009 non-interest income was $4.9 million, an increase of $883 thousand, or 22% compared to third quarter 2008. The increase is primarily due to net gains on sales of securities available-for-sale of $1.7 million during the quarter. There were no gains on sales of securities available-for-sale for the same quarter 2008. A total of $85.2 million in available-for-sale GSE investment securities were sold as part of the rebalancing of duration and mix of our investment securities portfolio.

Sequentially, non-interest income increased 29% from second quarter 2009. The increase was primarily due to higher net gains on sale of securities available-for-sale during third quarter 2009, offset by a loss recognized from the sale of loans during third quarter 2009. Net gains on sales of securities available-for-sale were $1.7 million for third quarter 2009, compared to $220 thousand for second quarter 2009. Net losses on sales of non-performing loans were $126 thousand during third quarter 2009, compared to net gains of $542 thousand for second quarter 2009. Non-performing loans of $8.7 million were sold during third quarter 2009, compared to $1.7 million during second quarter 2009.

Non-interest Expense. Third quarter 2009 non-interest expense was $14.7 million, an increase of 5% from $14.0 million for the same period last year. The increase was primarily due to an increase in FDIC insurance premiums and credit related expenses. FDIC insurance premiums increased $554 thousand, or 129%, to $984 thousand for third quarter 2009, compared to $430 thousand for the same quarter of 2008. The increase is due to an increase in the assessment rate imposed by the FDIC starting with second quarter 2009. Credit related expenses, which includes loan collection and OREO expenses, increased 217% to $1.1 million for third quarter 2009, compared to $363 thousand for the same quarter of 2008.

Salaries and employee benefits expense decreased $814 thousand, or 12%, over the same quarter of the prior year, primarily due to decreases in bonus expense and in the number of full-time equivalent employees, which decreased to 348 at September 30, 2009 from 378 at September 30, 2008.

Sequentially, non-interest expense for third quarter 2009 decreased by 13% from $16.8 million in second quarter 2009, primarily due to the Company’s share of a special industry-wide FDIC assessment of $1.47 million expensed during second quarter 2009, partially offset by an increase in credit related expenses of $164 thousand in third quarter 2009.

Income Taxes. The effective income tax rate was 34% for third quarter 2009 compared to 42% for third quarter 2008 and a tax benefit of 44% for second quarter 2009. The lower effective tax for third quarter 2009 and higher benefit rates for the second quarter of 2009 were due to the effect of higher tax credits recognized in those periods.

Balance Sheet Summary

Gross loans receivable were $2.13 billion at September 30, 2009, an increase from $2.08 billion at June 30, 2009. New loan production, including $47.1 million in purchased loans, was $131.9 million during third quarter 2009, compared to $80.5 million during second quarter 2009 and $105.7 million during third quarter 2008. Loan pay-offs, pay- downs, amortization and other changes totaled $60.0 million during third quarter 2009, compared to $88.4 million during second quarter 2009 and $129.1 million during third quarter 2008.

Total deposits were $2.49 billion at September 30, 2009, an increase of 2% from $2.44 billion at June 30, 2009. During third quarter 2009, retail deposits increased $113 million, which was offset by a $66 million decrease in brokered deposits. Retail money market accounts increased $63 million and retail CDs increased $35 million, accounting for 87% of the increase in retail deposits. Brokered deposits decreased to $21 million at September 30, 2009 from $304 million at December 31, 2008.

Credit Quality

The Company recorded a provision for loan losses of $8.5 million in third quarter 2009, compared to $6.2 million for the same period of the prior year and $19.0 million in second quarter 2009. The decrease in the provision for loan losses from second quarter 2009 was primarily due to the impact of lower net charge offs and lower special mention and classified loans, partially offset by an increase in non-performing loans.

Total watch list loans, defined as special mention and classified assets, were $144.2 million at September 30, 2009, a decline from $170.2 million at June 30, 2009. Special mention loans decreased to $30.8 million at September 30, 2009, from $53.3 million at June 30, 2009, due to net loan upgrades to the pass category. Substandard loans also decreased to $110.7 million at September 30, 2009, from $112.6 million at June 30, 2009, as certain problem loans were resolved.

Total delinquent loans, 30 or more days delinquent, increased to $67.9 million at September 30, 2009, from $42.8 million at June 30, 2009. Loans past due 30 – 59 days increased significantly to $24.5 million at September 30, 2009, from $5.4 million at June 30, 2009. The increase in early stage delinquencies was primarily attributable to five loan relationships aggregating $18.3 million. The relationships consisted of $10.9 million in loans to a borrower with several car wash businesses, $6.0 million in loans to three motel operators, and a $1.4 million loan to a dry cleaner. These borrowers are experiencing a fall-off in revenues due to the economy.

Non-performing loans on non-accrual status at September 30, 2009, were $35.5 million, or 1.67% of total loans, compared to $30.9 million, or 1.48% of total loans, at June 30, 2009. Inflows to non-performing loans during third quarter 2009 included four loan relationships aggregating $8.6 million, primarily secured by commercial real estate.

Non-performing assets at September 30, 2009 were $84.9 million, or 3.98% of gross loans plus other real estate owned, compared to $71.7 million, or 3.44%, at June 30, 2009. In addition to the net increase in non-performing loans, other real estate owned increased $888 thousand to $4.7 million at September 30, 2009, from $3.8 million at June 30, 2009. This increase was primarily due to the foreclosure of one commercial real estate loan secured by a retail building in Georgia. Accruing troubled debt restructured loans included in non-performing assets, increased $7.7 million to $44.7 million at September 30, 2009, from $37.0 million at June 30, 2009. This increase was primarily due to five commercial real estate loans, aggregating $10.8 million that were restructured during the quarter. The underlying collateral for these loans related to hospitality, retail and a multi-family residential property, and a church.

Net loan charge-offs during third quarter 2009 were $5.9 million, or 1.1% of average loans on an annualized basis, compared to $6.3 million, or 1.2% during third quarter 2008, and $19.2 million, or 3.7% of average loans, during second quarter 2009. Third quarter 2009 charge offs included one commercial real estate loan of $1.2 million, and a commercial loan of $737 thousand. Excluding these two loans, the remaining charge-offs were comprised of 55 loans averaging $71 thousand.

The allowance for loan losses at September 30, 2009, was $53.0 million, or 2.49% of gross loans receivable (net of the guaranteed portion of delinquent SBA loans), compared to $50.3 million, or 2.42%, at June 30, 2009. The ratio of the allowance for loan losses to non-performing loans was 149% at September 30, 2009, compared to 163% at June 30, 2009.

Impaired loans at September 30, 2009, were $88.4 million, an increase from $81.7 million at June 30, 2009. New impaired loans during the quarter included ten significant loan relationships of approximately $1.0 million or more, and aggregating $23.7 million that were restructured. Specific reserves for impaired loans were $16.0 million, or 18.1% of the aggregate impaired loan amount at September 30, 2009, compared to $13.3 million, or 16.3%, at June 30, 2009. Excluding specific reserves for impaired loans, the allowance coverage on the remaining loan portfolio was 1.81% at September 30, 2009, compared to 1.85% at June 30, 2009.

Capital

At September 30, 2009, the Company continued to exceed the regulatory capital requirements to be classified as a “well-capitalized” institution. The Leverage Ratio was 9.95% at September 30, 2009, compared to 10.50% at June 30, 2009. The Tier 1 Risk-based Ratio was 13.51% at September 30, 2009, compared to 13.37% at June 30, 2009. The Total Risk-based Ratio was 14.77% at September 30, 2009, compared to 14.63% at June 30, 2009.

At September 30, 2009, common equity represented 6.92% of total assets, compared to 8.87% at September 30, 2008. Tangible common equity (TCE) represented 6.81% of tangible assets at September 30, 2009, compared to 8.72% at September 30, 2008. The decrease in both ratios is primarily attributable to the increase in assets between the periods indicated.

Tangible common equity to tangible assets is a non-GAAP financial measure that represents common equity less goodwill and other intangible assets, net divided by total assets less goodwill and other intangible assets, net. Management reviews tangible common equity to tangible assets in evaluating the Company’s capital levels and has included this ratio in response to market participant interest in tangible common equity as a measure of capital. See the accompanying financial information for a reconciliation of the ratio of tangible common equity to tangible assets with stockholders' equity and total assets.

Outlook

Commenting on the outlook for the remainder of 2009, Ms. Kim said, “As we move into the fourth quarter, we will continue to focus on taking an aggressive posture in resolving problem assets, growing core deposits, and maintaining strong liquidity and capital. We believe this focus positions us well for increasing profitability as economic conditions improve.”

Conference Call and Webcast

A conference call with simultaneous webcast to discuss the Company’s third quarter 2009 financial results will be held tomorrow, October 16, 2009 at 9:30 am Pacific / 12:30 pm Eastern. Interested participants and investors may access the conference call by dialing 877-941-6009 (domestic) or 480-629-9771 (international), conference ID# 4171948. There will also be a live webcast of the call available at the Investor Relations section of Nara Bank’s web site at www.narabank.com.

After the live webcast, a replay will remain available in the Investor Relations section of Nara Bancorp’s web site. A replay of the call will be available at 800-406-7325 (domestic) or 303-590-3030 (international) through October 23, 2009, conference ID# 4171948.

About Nara Bancorp, Inc.

Nara Bancorp, Inc. is the parent company of Nara Bank, which was founded in 1989. Nara Bank is a full-service community bank headquartered in Los Angeles, with 21 branches and 1 loan production office in the United States. Nara Bank operates full-service branches in California, New York and New Jersey, and a loan production office in Texas. Nara Bank was founded specifically to serve the needs of Korean-Americans. Presently, Nara Bank serves a diverse group of customers mirroring its communities. Nara Bank specializes in core business banking products for small and medium-sized companies, with an emphasis in commercial real estate and business lending, SBA lending and international trade financing. Nara Bank is a member of the FDIC and is an Equal Opportunity Lender.

Forward-Looking Statements

This press release contains forward-looking statements, including statements about future operations and projected full-year financial results that are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such forward looking statements. These risks and uncertainties include but are not limited to economic, competitive, governmental and technological factors affecting the Company’s operations, markets, products, services, and pricing. Readers should carefully review the risk factors and the information that could materially affect the Company’s financial results and business, described in documents the Company files from time to time with the Securities and Exchange Commission, including its quarterly reports on Form 10-Q and Annual Reports on Form 10-K, and particularly the discussions of business considerations and certain factors that may affect results of operations and stock price set forth therein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements.

 
Nara Bancorp, Inc.
Consolidated Statements of Financial Condition
Unaudited (Dollars in Thousands)
Nara Bancorp, Inc.
             
Assets   9/30/2009       6/30/2009     % change       12/31/2008     % change       9/30/2008     % change  
 
Cash and due from banks $ 182,150 $ 239,454 -24 % $ 30,057 506 % $ 41,281 341 %
Federal funds sold 20,000 40,000 -50 % 19,000 5 % 32,500 -38 %
Securities available for sale, at fair value 744,044 745,792 0 % 406,586 83 % 313,393 137 %
Federal Home Loan Bank and Federal Reserve Bank stock 24,325 24,325 0 % 22,255 9 % 21,836 11 %
Loans held for sale, at the lower of cost or market 14,137 13,664 3 % 9,821 44 % 4,705 200 %
Loans receivable 2,152,190 2,100,077 2 % 2,119,354 2 % 2,111,868 2 %
Allowance for loan losses   (52,967 )     (50,339 )   5 %     (43,419 )   22 %     (27,806 )   90 %
Net loans receivable   2,099,223       2,049,738     2 %     2,075,935     1 %     2,084,062     1 %
Accrued interest receivable 11,062 10,187 9 % 8,168 35 % 8,153 36 %
Premises and equipment, net 11,222 11,580 -3 % 11,987 -6 % 11,836 -5 %
Bank owned life insurance 23,518 23,462 0 % 23,349 1 % 23,291 1 %
Goodwill 2,509 2,509 0 % 2,509 0 % 2,509 0 %
Other intangible assets, net 1,186 1,330 -11 % 1,627 -27 % 1,795 -34 %
Other assets   79,314       98,768     -20 %     60,760     31 %     52,291     52 %
Total assets $ 3,212,690     $ 3,260,809     -1 %   $ 2,672,054     20 %   $ 2,597,652     24 %
 
Liabilities
 
Deposits $ 2,487,070 $ 2,439,795 2 % $ 1,938,603 28 % $ 1,946,843 28 %
Borrowings from Federal Home Loan Bank 350,000 350,000 0 % 350,000 0 % 350,000 0 %
Subordinated debentures 39,268 39,268 0 % 39,268 0 % 39,268 0 %
Accrued interest payable 12,550 10,921 15 % 8,549 47 % 8,599 46 %
Other liabilities   33,787       139,406     -76 %     45,681     -26 %   22,429     51 %
Total liabilities   2,922,675       2,979,390     -2 %     2,382,101     23 %   2,367,139     23 %
 
Stockholders' Equity
 
Preferred stock, $0.001 par value; authorized 10,000,000 undesignated shares; issued and outstanding 67,000, 67,000, 67,000 and 0 shares of Fixed Rate Cumulative Perpetual Preferred Stock, Series A with a liquidation preference of $67,000,000 at September 30, 2009, June 30, 2009, December 31, 2008 and September 30, 2008, respectively 67,000 67,000 0 % 67,000 0 % - 100 %
Preferred stock discount (3,970 ) (4,202 ) -6 % (4,664 ) -15 % - 100 %
Common stock, $0.001 par value; authorized, 40,000,000 shares; issued and outstanding, 26,316,576, 26,256,960, 26,246,560, and 26,201,560 shares at September 30, 2009, June 30, 2009, December 31, 2008 and September 30, 2008, respectively 26 26 0 % 26 0 % 26 0 %
Common stock warrant 4,766 4,766 0 % 4,766 0 % - 100 %
Capital surplus 83,453 83,064 0 % 82,077 2 % 81,426 2 %
Retained earnings 133,437 130,565 2 % 141,890 -6 % 152,939 -13 %
Accumulated other comprehensive income (loss), net   5,303       200     2552 %     (1,142 )   564 %     (3,878 )   237 %
Total stockholders' equity   290,015       281,419     3 %     289,953     0 %     230,513     26 %
 
Total liabilities and stockholders' equity $ 3,212,690     $ 3,260,809     -1 %   $ 2,672,054     20 %   $ 2,597,652     24 %
 
Nara Bancorp, Inc.
Consolidated Statements of Income (Loss)
Unaudited (Dollars in Thousands, Except for Per Share Data)
               
 
Three Months Ended, Nine Months Ended,
  9/30/2009       9/30/2008   % change       6/30/2009     % change     9/30/2009       9/30/2008     % change  
 
Interest income:
Interest and fees on loans $ 33,242 $ 37,801 -12 % $ 32,461 2 % $ 97,375 $ 115,864 -16 %
Interest on securities 8,063 3,358 140 % 5,710 41 % 18,093 10,597 71 %
Interest on federal funds sold and other investments   401       531   -24 %     239     68 %   707       1,376     -49 %
Total interest income   41,706       41,690   0 %     38,410     9 %   116,175       127,837     -9 %
 
Interest expense:
Interest on deposits 13,638 12,948 5 % 13,365 2 % 38,828 41,733 -7 %
Interest on other borrowings   3,835       3,989   -4 %     3,785     1 %   11,415       12,585     -9 %
Total interest expense   17,473       16,937   3 %     17,150     2 %   50,243       54,318     -8 %
 
Net interest income before provision for loan losses 24,233 24,753 -2 % 21,260 14 % 65,932 73,519 -10 %
Provision for loan losses   8,500       6,180   38 %     19,000     -55 %   43,170       20,825     107 %
Net interest income after provision for loan losses   15,733       18,573   -15 %     2,260     596 %   22,762       52,694     -57 %
 
Non-interest income:
Service fees on deposit accounts 1,701 1,895 -10 % 1,698 0 % 5,168 5,439 -5 %
Net gains (losses) on sales of loans (126 ) 268 -147 % 542 -123 % 866 1,694 -49 %
Net gains on sales of securities available-for-sale 1,722 - 100 % 220 683 % 2,727 860 217 %
Net valuation gains (losses) on interest rate swaps (85 ) 76 -212 % (151 ) -44 % (352 ) 251 -240 %
Net losses on sales of OREO 2 - 100 % (184 ) -101 % (312 ) -

-100

%
Other than temporary impairment on securities - - 0 % - 0 % - (1,713 )

100

%
Other income and fees   1,680       1,772   -5 %     1,660     1 %   4,947       5,404     -8 %
Total non-interest income   4,894       4,011   22 %     3,785     29 %   13,044       11,935     9 %
 
Non-interest expense:
Salaries and employee benefits 6,141 6,955 -12 % 6,551 -6 % 19,135 22,047 -13 %
Occupancy 2,526 2,353 7 % 2,484 2 % 7,436 6,663 12 %
Furniture and equipment 731 722 1 % 736 -1 % 2,162 2,138 1 %
Advertising and marketing 386 466 -17 % 505 -24 % 1,348 1,669 -19 %
Data processing and communications 896 754 19 % 990 -9 % 2,787 2,481 12 %
Professional fees 520 448 16 % 428 21 % 1,626 1,581 3 %
FDIC assessment 984 430 129 % 2,446 -60 % 4,180 1,031 305 %
Other   2,484       1,863   33 %     2,682     -7 %   8,064       5,652     43 %
Total non-interest expense   14,668       13,991   5 %     16,822     -13 %   46,738       43,262     8 %
Income (loss) before income taxes 5,959 8,593 -31 % (10,777 ) -155 % (10,932 ) 21,367 -151 %
Income tax provision (benefit)   2,018       3,611   -44 %     (4,769 )   -142 %   (5,685 )     8,759     -165 %
Net income (loss) $ 3,941     $ 4,982   -21 %   $ (6,008 )   -166 %   (5,247 )     12,608     -142 %
Dividends and discount accretion on preferred stock $ (1,069 )   $ -   100 %   $ (1,069 )   0 %   (3,206 )     -     100 %
Net income (loss) available to common stockholders $ 2,872     $ 4,982   -42 %   $ (7,077 )   -141 % $ (8,453 )   $ 12,608     -167 %
 
Earnings (Loss) Per Common Share:
Basic $ 0.11 $ 0.19 $ (0.27 ) $ (0.32 ) $ 0.48
Diluted $ 0.11 $ 0.19 $ (0.27 ) $ (0.32 ) $ 0.48
 
Average Shares Outstanding:
Basic 26,290,656 26,199,455 26,256,960 26,266,144 26,196,066
Diluted 26,360,505 26,443,893 26,256,960 26,266,144 26,431,197
 
 
Nara Bancorp, Inc.
Supplemental Data
Unaudited (Dollars in Thousands, Except for Per Share Data)
                 
(Annualized)

At or for the Three Months Ended,

(Annualized)

At or for the Nine Months Ended,

Profitability measures: 9/30/2009   9/30/2008   6/30/2009 9/30/2009   9/30/2008
ROA 1 0.49 % 0.77 % -0.80 % -0.24 % 0.66 %
ROE 1 5.54 % 8.56 % -8.26 % -2.42 % 7.27 %
Net interest margin * 3.14 % 4.02 % 2.94 % 3.08 % 4.05 %
Efficiency ratio 50.36 % 48.64 % 67.17 % 59.18 % 50.63 %
 
1 based on net income before effect of dividends and discount accretion on preferred stock
 
     
Three Months Ended Three Months Ended Three Months Ended
9/30/2009     9/30/2008     6/30/2009  
           
Interest Annualized Interest Annualized Interest Annualized
Average Income/ Average Average Income/ Average Average Income/ Average
Balance Expense Yield/Cost Balance Expense   Yield/Cost   Balance Expense Yield/Cost
(Dollars in thousands) (Dollars in thousands) (Dollars in thousands)
INTEREST EARNING ASSETS:
 
Gross loans*, includes loans held for sale $ 2,117,910 $ 33,242 6.28 % $ 2,113,917 $ 37,801 7.15 % $ 2,092,809 $ 32,461 6.20 %
Securities available for sale 737,471 8,063 4.37 % 290,641 3,358 4.62 % 530,322 5,710 4.31 %
FRB and FHLB stock and other investments 202,131 277 0.55 % 23,052 369 6.40 % 266,179 212 0.32 %
Federal funds sold   30,870   124   1.61 %   32,626   162   1.99 %   5,934   27   1.82 %
Total interest earning assets* $ 3,088,382 $ 41,706   5.40 % $ 2,460,236 $ 41,690   6.78 % $ 2,895,244 $ 38,410   5.31 %
 
INTEREST BEARING LIABILITIES:
Deposits:
Demand, interest-bearing $ 549,991 $ 2,569 1.87 % $ 291,134 $ 2,121 2.91 % $ 416,561 $ 2,417 2.32 %
Savings 134,998 1,040 3.08 % 140,295 1,229 3.50 % 117,948 1,008 3.42 %
Time deposits:
$100,000 or more 811,007 4,799 2.37 % 783,151 6,441 3.29 % 679,064 4,109 2.42 %
Other   670,465   5,230   3.12 %   362,804   3,157   3.48 %   763,999   5,831   3.05 %
Total time deposits   1,481,472   10,029   2.71 %   1,145,955   9,598   3.35 %   1,443,063   9,940   2.76 %
Total interest bearing deposits   2,166,461   13,638   2.52 %   1,577,384   12,948   3.28 %   1,977,572   13,365   2.70 %
FHLB advances 356,848 3,355 3.76 % 350,668 3,349 3.82 % 350,000 3,262 3.73 %
Other borrowings   37,769   480   5.08 %   37,741   640   6.78 %   37,764   523   5.54 %
Total interest bearing liabilities   2,561,078 $ 17,473   2.73 %   1,965,793 $ 16,937   3.45 %   2,365,336 $ 17,150   2.90 %
Non-interest bearing demand deposits   308,327   342,200   297,089
Total funding liabilities / cost of funds $ 2,869,405 2.44 % $ 2,307,993 2.94 % $ 2,662,425 2.58 %
Net interest income / net interest spread* $ 24,233   2.67 % $ 24,753   3.33 % $ 21,260   2.41 %
Net interest margin* 3.14 % 4.02 % 2.94 %

Net interest margin*, excluding effect of non-accrual loan income (expense)

3.18 % 4.07 % 2.96 %

Net interest margin*, excluding effect of non-accrual loan income (expense) and prepayment fee income

3.16 % 4.00 % 2.94 %
 
Non-accrual loan income (reversed) recognized $ (328 ) $ (273 ) $ (169 )
Prepayment fee income received   173     434     145  
Net $ (155 ) $ 161   $ (24 )
 
Cost of deposits:
Non-interest bearing demand deposits $ 308,327 $ - $ 342,200 $ - $ 297,089 $ -
Interest bearing deposits   2,166,461   13,638   2.52 %   1,577,384   12,948   3.28 %   1,977,572   13,365   2.70 %
Total deposits $ 2,474,788 $ 13,638   2.20 % $ 1,919,584 $ 12,948   2.70 % $ 2,274,661 $ 13,365   2.35 %
 
   
Nine Months Ended Nine Months Ended
9/30/2009     9/30/2008  
       
Interest Annualized Interest Annualized
Average Income/ Average Average Income/ Average
Balance Expense Yield/Cost Balance Expense   Yield/Cost
(Dollars in thousands) (Dollars in thousands)
INTEREST EARNING ASSETS:
 
Gross loans*, includes loans held for sale $ 2,106,172 $ 97,375 6.16 % $ 2,088,851 $ 115,864 7.40 %
Securities available for sale 565,059 18,093 4.27 % 288,909 10,597 4.89 %
FRB and FHLB stock and other investments 173,315 555 0.43 % 23,765 1,056 5.92 %
Federal funds sold   13,128   152   1.54 %   20,605   320   2.07 %
Total interest earning assets* $ 2,857,674 $ 116,175   5.42 % $ 2,422,130 $ 127,837   7.04 %
 
INTEREST BEARING LIABILITIES:
Deposits:
Demand, interest-bearing $ 437,224 $ 7,251 2.21 % $ 266,872 $ 5,851 2.92 %
Savings 121,480 3,056 3.35 % 140,018 3,877 3.69 %
Time deposits:
$100,000 or more 690,649 12,452 2.40 % 822,548 22,389 3.63 %
Other   690,686   16,069   3.10 %   286,841   9,616   4.47 %
Total time deposits   1,381,335   28,521   2.75 %   1,109,389   32,005   3.85 %
Total interest bearing deposits   1,940,039   38,828   2.67 %   1,516,279   41,733   3.67 %
FHLB advances 358,434 9,853 3.67 % 372,294 10,543 3.78 %
Other borrowings   37,920   1,562   5.49 %   37,882   2,042   7.19 %
Total interest bearing liabilities   2,336,393 $ 50,243   2.87 %   1,926,455 $ 54,318   3.76 %
Non-interest bearing demand deposits   298,418   339,169
Total funding liabilities / cost of funds $ 2,634,811 2.54 % $ 2,265,624 3.20 %
Net interest income / net interest spread* $ 65,932   2.55 % $ 73,519   3.28 %
Net interest margin* 3.08 % 4.05 %

Net interest margin*, excluding effect of non-accrual loan income (expense)

3.12 % 4.07 %

Net interest margin*, excluding effect of non-accrual loan income (expense) and prepayment fee income

3.10 % 4.00 %
 
Non-accrual loan income (reversed) recognized $ (888 ) $ (406 )
Prepayment fee income received   465     1,235  
Net $ (423 ) $ 829  
 
Cost of deposits:
Non-interest bearing demand deposits $ 298,418 $ - $ 339,169 $ -
Interest bearing deposits   1,940,039   38,828   2.67 %   1,516,279   41,733   3.67 %
Total deposits $ 2,238,457 $ 38,828   2.31 % $ 1,855,448 $ 41,733   3.00 %
 
  For the Three Months Ended         For the Nine Months Ended  
  9/30/2009       9/30/2008       % change       6/30/2009     % change       9/30/2009     9/30/2008     % change  
AVERAGE BALANCES          
Gross loans*, includes loans held for sale $ 2,117,910 $ 2,113,917 0 % $ 2,092,809 1 % 2,106,172 2,088,851 1 %
Investments 970,472 346,319 180 % 802,435 21 % 751,502 333,279 125 %
Interest-earning assets* 3,088,382 2,460,236 26 % 2,895,244 7 % 2,857,674 2,422,130 18 %
Total assets 3,208,774 2,573,286 25 % 3,007,256 7 % 2,972,856 2,532,671 17 %
 
Interest-bearing deposits 2,166,461 1,577,384 37 % 1,977,572 10 % 1,940,039 1,516,279 28 %
Interest-bearing liabilities 2,561,078 1,965,793 30 % 2,365,336 8 % 2,336,393 1,926,455 21 %
Non-interest-bearing demand deposits 308,327 342,200 -10 % 297,089 4 % 298,418 339,169 -12 %
Stockholders' Equity 284,676 232,918 22 % 290,959 -2 % 288,928 231,133 25 %
Net interest earning assets* 527,304 494,443 7 % 529,908 0 % 521,281 495,675 5 %
 
LOAN PORTFOLIO COMPOSITION: *   9/30/2009       6/30/2009       % change       12/31/2008     % change       9/30/2008     % change  
 
Commercial loans $ 546,328 $ 556,793 -2 % $ 598,556 -9 % $ 600,933 -9 %
Real estate loans 1,566,551 1,502,048 4 % 1,472,872 6 % 1,470,348 7 %
Consumer and other loans   20,142       23,069       -13 %     28,520     -29 %     27,574     -27 %
Loans outstanding* 2,133,021 2,081,910 2 % 2,099,948 2 % 2,098,855 2 %
Unamortized deferred loan fees - net of costs   (1,688 )     (1,598 )     6 %     (1,505 )   12 %     (1,522 )   11 %
Loans*, net of deferred loan fees and costs 2,131,333 2,080,312 2 % 2,098,443 2 % 2,097,333 2 %
Allowance for loan losses   (52,967 )     (50,339 )     5 %     (43,419 )   22 %     (27,806 )   90 %
Loan receivable*, net $ 2,078,366     $ 2,029,973       2 %   $ 2,055,024     1 %   $ 2,069,527     0 %
* The loan portfolio composition tables excludes the guaranteed portion of delinquent SBA loans for the amounts indicated at each period as these are 100% guaranteed by the SBA. $ 20,857 $ 19,765 $ 20,911 $ 14,535
 
DEPOSIT COMPOSITION   9/30/2009       6/30/2009       % Change       12/31/2008     % Change       9/30/2008     % Change  
Non-interest-bearing demand deposits $ 328,844 $ 318,874 3 % $ 303,656 8 % $ 352,252 -7 %
Money market and other 577,185 517,020 12 % 306,478 88 % 318,701 81 %
Saving deposits 143,476 129,120 11 % 113,186 27 % 128,490 12 %
Time deposits of $100,000 or more 855,261 763,088 12 % 626,850 36 % 737,273 16 %
Other time deposits   582,304       711,693       -18 %     588,433     -1 %     410,127     42 %
Total deposit balances $ 2,487,070     $ 2,439,795       2 %   $ 1,938,603     28 %   $ 1,946,843     28 %
 
DEPOSIT COMPOSITION (%)   9/30/2009       6/30/2009       12/31/2008       9/30/2008  
Non-interest-bearing demand deposits 13.2 % 13.1 % 15.7 % 18.1 %
Money market and other 23.2 % 21.2 % 15.8 % 16.4 %
Saving deposits 5.8 % 5.3 % 5.8 % 6.6 %
Time deposits of $100,000 or more 34.4 % 31.3 % 32.3 % 37.8 %
Other time deposits   23.4 %     29.1 %     30.4 %     21.1 %
Total deposit balances   100.0 %     100.0 %     100.0 %     100.0 %
 
 
CAPITAL RATIOS   9/30/2009       6/30/2009       12/31/2008       9/30/2008  
Total stockholders' equity $ 290,015 $ 281,419 $ 289,953 $ 230,513
Tier 1 risk-based capital ratio 13.51 % 13.37 % 14.32 % 11.84 %
Total risk-based capital ratio 14.77 % 14.63 % 15.58 % 13.08 %
Tier 1 leverage ratio 9.95 % 10.50 % 12.61 % 10.42 %
Book value per share $ 11.02 $ 10.72 $ 11.05 $ 8.80
Tangible common equity per share2 $ 8.30 $ 8.00 $ 8.33 $ 8.63
Tangible common equity to tangible assets2 6.81 % 6.45 % 8.20 % 8.72 %
 

2 Tangible common equity to tangible assets is a non-GAAP financial measure that represents common equity less goodwill and other intangible assets, net divided by total assets less goodwill and other intangible assets, net. Management reviews tangible common equity to tangible assets in evaluating the Company's capital levels and has included this ratio in response to market participant interest in tangible common equity as a measure of capital.

 
Reonciliation of GAAP financial measures to non-GAAP financial measures:
 
  9/30/2009       6/30/2009       12/31/2008       9/30/2008  
Total stockholders' equity $ 290,015 $ 281,419 $ 289,953 $ 230,513
Less: Preferred stock, net of discount (63,030 ) (62,798 ) (62,336 ) -
Common stock warrant (4,766 ) (4,766 ) (4,766 ) -
Goodwill and other intangible assets, net   (3,695 )     (3,839 )     (4,136 )     (4,304 )
Tangible common equity $ 218,524     $ 210,016     $ 218,715     $ 226,209  
 
Total assets $ 3,212,690 $ 3,260,809 $ 2,672,054 $ 2,597,652
Less: Goodwill and other intangible assets, net   (3,695 )     (3,839 )     (4,136 )     (4,304 )
Tangible assets $ 3,208,995     $ 3,256,970     $ 2,667,918     $ 2,593,348  
 
Common shares outstanding 26,316,576 26,256,960 26,246,560 26,201,560
 
Tangible common equity to tangible assets 6.81 % 6.45 % 8.20 % 8.72 %
Tangible common equity per share $ 8.30 $ 8.00 $ 8.33 $ 8.63
   
For the Three Months Ended For the Nine Months Ended
ALLOWANCE FOR LOAN LOSSES:   9/30/2009       6/30/2009       3/31/2009       12/31/2008       9/30/2008     9/30/2009       9/30/2008  
Balance at beginning of period $ 50,339   $ 50,504   $ 43,419   $ 27,806   $ 27,899 $ 43,419   $ 20,035
Provision for loan losses 8,500 19,000 15,670 28,000 6,180 43,170 20,825
Recoveries 179 251 83 124 23 513 128
Charge offs   (6,051 )     (19,416 )     (8,668 )     (12,511 )     (6,296 )   (34,135 )     (13,182 )
Balance at end of period $ 52,967     $ 50,339     $ 50,504     $ 43,419     $ 27,806   $ 52,967     $ 27,806  
Net charge-off/average gross loans* (annualized) 1.11 % 3.66 % 1.63 % 2.37 % 1.19 % 2.13 % 0.83 %
 
For the Three Months Ended, For the Nine Months Ended
NET CHARGED OFF LOANS BY TYPE   9/30/2009       6/30/2009       3/31/2009       12/31/2008       9/30/2008     9/30/2009       9/30/2008  
 
Real estate loans $ 2,572 $ 12,410 $ 2,121 $ 2,613 $ 2,128 $ 17,103 $ 4,764
Commercial loans 3,282 6,608 5,204 9,685 4,053 15,094 7,968
Consumer loans   18     147     1,260     89     92     1,425     322  
Total net charge-offs $ 5,872   $ 19,165   $ 8,585   $ 12,387   $ 6,273   $ 33,622   $ 13,054  
 
NON-PERFORMING ASSETS   9/30/2009       6/30/2009       3/31/2009       12/31/2008       9/30/2008  
Delinquent loans 90 days or more on non-accrual status* $ 35,510 $ 30,850 $ 41,330 $ 37,580 $ 30,501
Delinquent loans 90 days or more on accrual status   -       -     7       -       -  
Total non-performing loans* 35,510 30,850 41,337 37,580 30,501
Other real estate owned 4,693 3,805 4,822 2,969 2,623
Restructured loans   44,707       37,026     31,131       3,256       3,699  
Total non-performing assets* $ 84,910     $ 71,681   $ 77,290     $ 43,805     $ 36,823  
Non-performing assets*/ total assets 2.64 % 2.20 % 2.74 % 1.64 % 1.42 %
Non-performing assets*/ gross loans* & OREO 3.98 % 3.44 % 3.69 % 2.08 % 1.75 %
Non-performing loans*/gross loans* 1.67 % 1.48 % 1.98 % 1.79 % 1.45 %
Allowance for loan losses/ gross loans* 2.49 % 2.42 % 2.42 % 2.07 % 1.33 %
Allowance for loan losses/ non-performing loans* 149 % 163 % 122 % 116 % 91 %
 
DELINQUENT LOANS BY DAYS PAST DUE   9/30/2009       6/30/2009       3/31/2009       12/31/2008       9/30/2008  
 
30 - 59 days $ 24,507 $ 5,364 $ 8,272 $ 10,967 $ 10,486
60 - 89 days 7,931 6,593 838 2,668 2,792
90 days or more and accruing - - 7 - -
Non-accrual   35,510     30,850     41,330     37,580     30,501  
Total delinquent loans* $ 67,948   $ 42,807   $ 50,447   $ 51,215   $ 43,779  
 
DELINQUENT LOANS BY TYPE3   9/30/2009       6/30/2009       3/31/2009       12/31/2008       9/30/2008  
 
Real estate loans $ 54,129 $ 28,242 $ 31,823 $ 28,409 $ 18,681
Commercial loans 13,241 14,041 18,076 21,030 24,151
Consumer loans   578     524     548     1,776     947  
Total delinquent loans* $ 67,948   $ 42,807   $ 50,447   $ 51,215   $ 43,779  
3Delinquent over 30 days, including non-accrual loans
 
NON-ACCRUAL LOANS BY TYPE   9/30/2009       6/30/2009       3/31/2009       12/31/2008       9/30/2008  
 
Real estate loans $ 25,696 $ 20,515 $ 26,153 $ 21,759 $ 11,410
Commercial loans 9,521 10,072 14,876 14,379 18,885
Consumer loans   293     263     301     1,442     206  
Total non-accrual loans* $ 35,510   $ 30,850   $ 41,330   $ 37,580   $ 30,501  
 
WATCH LIST LOANS   9/30/2009       6/30/2009       3/31/2009       12/31/2008       9/30/2008  
Special mention $ 30,762 $ 53,277 $ 68,388 $ 71,169 $ 38,461
Substandard 110,669 112,641 98,412 55,622 44,580
Doubtful 2,767 4,237 7,288 9,883 7,306
Loss   -     -     8     -     -  
Total watch list loans $ 144,198   $ 170,155   $ 174,096   $ 136,674   $ 90,347  
 

CONTACT:
Investors and Financial Media:
Financial Relations Board
George Zagoudis, 312-640-6663