Nara Bancorp, Inc. (the “Company”) (NASDAQ: NARA), the holding
company of Nara Bank (the “Bank”), reported net income available to
common stockholders of $5.2 million, or $0.14 per diluted common
share, for the second quarter 2011, compared to net loss available
to common stockholders of ($17.0) million, or ($0.45) per diluted
common share, for the second quarter 2010, and net income available
to common stockholders of $5.7 million, or $0.15 per diluted common
share, for the first quarter 2011.
Alvin Kang, President and Chief Executive Officer, said, “We
executed well on a number of key initiatives during the second
quarter, which resulted in solid financial results. Our continued
emphasis on building our commercial lending presence helped drive
our highest level of loan production in six quarters, while also
generating strong growth in core deposits from new commercial
relationships. Our strong capital position also enabled us to
accelerate our disposition of problem assets, which substantially
improved our asset quality metrics. Non-performing assets to total
assets declined to 1.87% from 2.70% at the prior quarter-end. We
believe we can continue generating prudent balance sheet growth and
making further improvement in our asset quality, which should
enable us to continue being solidly profitable.”
Financial Highlights
2011 2010 2011
Second Quarter Second Quarter
First Quarter (Dollars in thousands)
Net income (loss) $ 6,318 $ (15,877 ) $
6,746 Net income (loss) available to common stockholders
$ 5,243 $ (16,950 ) $ 5,671
Diluted earnings (loss) per share $ 0.14 $
(0.45 ) $ 0.15 Net interest income $ 29,331
$ 26,808 $ 28,883 Net interest
margin 4.16 % 3.86 % 4.13
% Non-interest income $ 7,684 $ 3,460
$ 4,510 Non-interest expense $ 16,886
$ 15,967 $ 16,695 Net loans receivable
$ 2,142,750 $ 2,063,726 $
2,090,773 Deposits $ 2,232,180 $
2,130,389 $ 2,176,098 Non-performing loans
(excludes accruing restructured loans) * $ 35,385
$ 48,019 $ 46,961 Non-performing loans
(includes accruing restructured loans) * $ 51,172
$ 81,969 $ 76,380 ALLL to gross loans *
2.73 % 2.98 % 2.96 % ALLL
to non-performing loans (excludes accruing restructured loans) *
169 % 131 % 135 % ALLL to
non-performing loans (includes accruing restructured loans) *
117 % 77 % 83 % ALLL to
non-performing assets * 107 % 73 %
80 % Provision for loan losses $ 10,047
$ 42,323 $ 5,262 Efficiency ratio **
45.62 % 52.75 % 50.00 %
* Excludes the
guaranteed portion of delinquent SBA loans totaling $12.4 million,
$15.8 million and $14.2 million at second quarter 2011, second
quarter 2010 and first quarter 2011, respectively.
** See non-interest income and
non-interest expense discussion below for detail.
Operating Results for Second Quarter
2011
Net Interest Income and Net Interest Margin. Second
quarter 2011 net interest income before provision for loan losses
was $29.3 million, an increase of 9% from second quarter 2010. The
increase in net interest income was due primarily to an improvement
in the net interest margin.
Second quarter 2011 net interest margin (net interest income
divided by average interest-earning assets) increased 30 basis
points to 4.16% from 3.86% for second quarter 2010. The improvement
in the net interest margin was primarily due to lower rates paid on
time deposits and interest-bearing demand deposits. The cost of
time deposits decreased to 1.20% for second quarter 2011 from 1.49%
for second quarter 2010. The cost of interest-bearing demand
deposits also decreased to 0.87% for second quarter 2011 from 1.08%
for second quarter 2010.
The weighted average yield on the loan portfolio for second
quarter 2011 decreased 10 basis points to 6.07% from 6.17% for the
same period last year. At June 30, 2011, fixed rate loans were 45%
of the loan portfolio, compared to 51% at June 30, 2010, reflecting
the emphasis on variable rate C&I lending. The weighted average
yield on the variable rate and fixed rate loan portfolios
(excluding loan discount accretion) at June 30, 2011 was 4.91% and
7.06%, respectively, compared to 4.76% and 7.19% at June 30,
2010.
The weighted average yield on securities available-for-sale for
second quarter 2011 increased 65 basis points to 3.16% from 2.51%
for the same period 2010. The increase was primarily
attributable to a higher level of premium amortization for FNMA and
FHLMC mortgage related securities in second quarter 2010. The
higher level of premium amortization was due to accelerated
prepayments resulting from the buyouts of seriously delinquent
mortgage loans from the special purpose entities of FNMA and
FHLMC.
The weighted average cost of deposits for second quarter 2011
decreased 26 basis points to 0.93% from 1.19% for the same period
last year, driven primarily by the decrease in the cost of time
deposits and interest-bearing demand deposits and the increase in
the average balance of non-interest bearing demand deposits.
The weighted average cost of FHLB advances for second quarter
2011 decreased 19 basis points to 3.23% for second quarter 2011,
compared to 3.42% for second quarter 2010, as maturing advances
with higher rates were paid in full or refinanced at lower
rates.
Following are the weighted average rate data on a spot rate
basis at June 30, 2011 and 2010:
June
30,
2011 2010 Weighted average loan
portfolio yield (excluding discounts) 5.89% 5.99%
Weighted average available-for-sale securities portfolio yield
3.29% 2.93% Weighted average cost of deposits
0.89% 1.07% Weighted average cost of total interest-bearing
deposits 1.11% 1.28% Weighted average cost of FHLB
advances 3.19% 3.42% Net interest margin 4.05%
3.83%
Second quarter 2011 net interest income before provision for
loan losses increased $448 thousand, or 2%, from first quarter
2011. The increase was attributable to an improvement in the net
interest margin, which increased 3 basis points. This was offset by
a slight decrease of $6.5 million in average net interest earning
assets from first quarter 2011. The increase in net interest margin
resulted primarily from an increase in yield on securities
available-for-sale and a reduction in the weighted average cost of
interest-bearing liabilities.
Non-interest Income. Second quarter 2011 non-interest
income was $7.7 million, an increase of $4.2 million, or 122%,
compared to second quarter 2010. The increase was primarily due to
an increase of $4.0 million in net gains on sales of SBA loans. Net
gains on sale of SBA loans were $4.4 million for second quarter
2011, an increase of $4.0 million from $329 thousand for the same
quarter of 2010. The increase reflected higher levels of SBA loan
production and sales. Of the net gains of $4.4 million, $1.5
million was due to recognition of deferred gains from sales of
$15.3 million in SBA loans during first quarter 2011, and $2.9
million was from sales of $31.7 million in SBA loans during second
quarter of 2011.
Non-interest income increased $3.2 million, or 70%, from first
quarter 2011. The increase was primarily due to the increase of
$3.2 million in the net gains on sale of SBA loans.
Non-interest Expense. Second quarter 2011 non-interest
expense was $16.9 million, an increase of $919 thousand, or 6%,
from $16.0 million for the same period last year. The increase was
primarily due to increases in salaries and benefits expense,
partially offset by a decrease in credit related expense.
Salaries and benefits expense increased $1.6 million, or 28%, to
$7.6 million for second quarter 2011, compared to $6.0 million for
the same quarter of 2010. The increase is due to an increase in the
number of full-time equivalent (FTE) employees, which increased to
369 at June 30, 2011 from 347 at June 30, 2010, an increase of $546
thousand in vacation and bonus accrual, an increase of $146
thousand in group insurance expense due to the increase in premium
costs, and an increase of $141 thousand in 401(k) plan
contributions, as the Company reinstated the company matching
program effective January 1, 2011. The year-over-year increase in
FTE employees was due to a number of factors including the opening
of two new branches in our Eastern Region, the addition of business
development and servicing staff, and increasing our staffing in
Information Technology and Risk Management.
Credit related expense decreased $738 thousand, or 42%, to $1.0
million for second quarter 2011, compared to $1.7 million for the
same period last year. The decrease was primarily due to higher
OREO valuation allowances in second quarter 2010.
Income Taxes. The effective income tax provision
(benefit) rate was 37%, (43%) and 41% for second quarter 2011 and
2010 and first quarter 2011, respectively. The lower provision rate
for the second quarter 2011 and higher benefit rate for the second
quarter of 2010 was due to the impact of tax credits.
Balance Sheet Summary
Gross loans receivable increased $48.3 million to $2.20 billion
at June 30, 2011 from $2.15 million at March 31, 2011. New loan
production was $116.1 million during second quarter 2011, compared
to $88.1 million during first quarter 2011, and $102.4 million
during second quarter 2010. Total loan pay-offs, pay-downs,
amortization and other adjustments totaled $67.8 million during
second quarter 2011, compared to $81.7 million during first quarter
2011 and $139.0 million during second quarter 2010.
Total deposits increased $56.1 million to $2.23 billion at June
30, 2011 from $2.18 billion at March 31, 2011. The increase was
driven by $30 million growth in non-interest bearing demand
deposits and $22 million growth in money market accounts.
Credit Quality
The Company recorded a provision for loan losses of $10.0
million in second quarter 2011, compared to $42.3 million for the
same period of the prior year and $5.3 million in first quarter
2011. The larger provision for loan losses for second quarter 2011
compared to first quarter 2011 reflects an increase in problem
loans sold at a discount in order to more quickly resolve problem
loans.
During the second quarter 2011, the Company completed or entered
into loan sale contracts totaling $25.6 million, compared to $2.7
million during the first quarter 2011. Loans totaling $10.5
million, against which the Company had a $2.8 million reserve, were
sold in private transactions at a discount of 27% or $2.9 million.
The remaining $15.1 million of loans, against which the Company had
a $1.4 million reserve, were sold in a pool transaction at a
discount of 52%, or $7.9 million. The larger discount on the loan
pool sale was primarily due to diverse location, loan types and
loan size. The Company determined that the sale of problem loans
was a better alternative than holding such loans, which would have
required a long workout period.
Total Watchlist loans, defined as Special Mention and Classified
loans, were $137.1 million at June 30, 2011, a decrease from $168.5
million at March 31, 2011. Watchlist loans decreased $31.4 million
primarily due to the sale of 21 loans totaling $23.9 million.
Classified loans decreased to $121.7 million at June 30, 2011 from
$147.2 million at March 31, 2011. Classified loans decreased $25.5
million primarily due to the sale of 16 loans totaling $18.2
million.
Total delinquent loans, 30 to 89 days past due, were $3.3
million at June 30, 2011, compared to $8.4 million at March 31,
2011. The decrease in early delinquencies was the result of $3.4
million in loans becoming current during the second quarter
2011.
Non-performing loans (loans past due 90 days or more and
non-accrual loans) at June 30, 2011 were $35.4 million, or 1.62% of
total loans, compared to $47.0 million, or 2.19% of total loans, at
March 31, 2011. The decrease was primarily due to the sale of 11
non-performing loans totaling $11.0 million. Non-Performing loans
including accruing TDR were $51.2 million, or 2.34% of total loans,
compared to $76.4 million, or 3.57% of total loans, at March 31,
2011.
Non-performing assets at June 30, 2011 were $55.6 million, or
1.87% of total assets, compared to $79.1 million, or 2.70% of total
assets, at March 31, 2011. The $23.5 million decrease in
non-performing assets was due to an $11.6 million net reduction in
non-accrual loans ($11.0 million of which was attributable to the
loan sales) and a $13.6 million net reduction in accruing TDRs
($7.2 million of which was attributable to the loan sales). These
reductions were offset by a slight increase in OREO assets. The
coverage ratio of the allowance for loan losses to non-performing
assets was 107% at June 30, 2011, compared to 80% at March 31,
2011.
Net loan charge-offs during the second quarter 2011 were $13.7
million, or 2.50% of average loans on an annualized basis, compared
to $4.2 million, or 0.78%, during the first quarter 2011.
Charge-offs of $10.4 million resulted from the discounts on loans
sold. Excluding the loan sales, the net charge-offs would have been
$3.3 million with an average individual loan net charge-off of $73
thousand during the quarter. CRE and C&I loan charge-offs were
89.4% and 10.8%, respectively, of total charge-offs.
The allowance for loan losses at June 30, 2011 was $59.7
million, or 2.73% of gross loans receivable (excluding the
guaranteed portion of delinquent SBA loans and loans held for
sale), compared to $63.3 million, or 2.96%, at March 31, 2011. The
coverage ratio of the allowance for loan losses to non-performing
loans increased to 169% at June 30, 2011, compared to 135% at March
31, 2011.
Impaired loans (defined as loans for which it is probable that
not all principal and interest payments due will be collectible
according to contractual terms) at June 30, 2011 were $76.2
million, a net decrease of $33.4 million from $109.6 million at
March 31, 2011. This net decrease in impaired loans is primarily
due to the sale of 16 impaired loans, totaling $18.2 million, and
the return of eight loans totaling $10.0 million to non-impaired
status. The return to non-impaired status was based on the review
of current financial information and payment performance.
Specific reserves for impaired loans were $13.2 million, or
17.32% of the aggregate impaired loan amount at June 30, 2011,
compared to $18.5 million, or 16.87%, at March 31, 2011. Excluding
specific reserves for impaired loans, the allowance coverage on the
remaining loan portfolio was 2.20% at June 30, 2011, compared to
2.21% at March 31, 2011.
Capital
At June 30, 2011, the Company continued to be in excess of the
regulatory capital requirements to be classified as a
“well-capitalized” institution. The Leverage Ratio was 13.32% at
June 30, 2011, compared to 12.92% at March 31, 2011. The Tier 1
Risk-based Ratio was 16.42% at June 30, 2011, compared to 16.47% at
March 31, 2011. The Total Risk-based Ratio was 17.69% at June 30,
2011, compared to 17.74% at March 31, 2011.
At June 30, 2011, tangible common equity represented 10.21% of
tangible assets, compared to 10.08% of tangible assets at March 31,
2011. Tangible common equity per share was $7.94 at June 30, 2011,
compared to $7.75 at March 31, 2011.
Tangible common equity to tangible assets is a non-GAAP
financial measure that represents common equity less goodwill and
net other intangible assets divided by total assets less goodwill
and net other intangible assets. 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.
Conference Call and
Webcast
A conference call with simultaneous webcast to discuss the
Company's second quarter 2011 financial results will be held
tomorrow, July 26, 2011 at 9:30 am Pacific / 12:30 pm Eastern.
Interested participants and investors may access the conference
call by dialing 877-941-0844 (domestic) or 480-629-9645
(international), conference ID# 4455968. 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 August 3, 2011, conference ID#
4455968.
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 23 branches and one 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.
Additional Information and Where to Find It
In connection with the proposed merger of Nara Bancorp, Inc. and
Center Financial Corporation, we have filed a registration
statement on Form S-4 (Registration No. 333-173511), and two
amendments thereto with the Securities and Exchange Commission
(“SEC”), that includes a joint proxy statement/prospectus of Nara
Bancorp and Center Financial, as well as other relevant documents
concerning the proposed merger. Stockholders are urged to read the
registration statement and the joint proxy statement/prospectus
regarding the merger and any other relevant documents filed with
the SEC as well as any amendments or supplements to them, because
they contain or will contain important information about the
merger. You may obtain a free copy of the joint proxy
statement/prospectus, as well as other filings containing
information about Nara Bancorp and Center Financial at the SEC's
Internet site (www.sec.gov). You may
also obtain these documents, free of charge, from Nara at
www.narabank.com under the tab
“Investor Relations” and then under the heading “SEC Filings” or
from Center Financial at www.centerbank.com under the tab “Investor
Relations” and then under the heading “SEC Filings.”
Participants in Solicitation
Nara Bancorp, Center Financial and their respective directors,
executive officers, management and employees may be deemed to be
participants in the solicitation of proxies in respect of the
merger. Information concerning Nara Bancorp's participants is set
forth in its Form 10-K Annual Report filed with the SEC for the
year ended December 31, 2010, as amended by Form 10-K/A filed with
the SEC on April 26, 2011. Information concerning Center
Financial's participants is set forth in its Form 10-K Annual
Report filed with the SEC for the year ended December 31, 2010, as
amended by Form 10-K/A filed with the SEC on April 29, 2011.
Additional information regarding the interests of participants of
Nara Bancorp and Center Financial in the solicitation of proxies in
respect of the merger is included in the registration statement and
joint proxy statement as amended and filed with the SEC.
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, Except per Share
Data)
Assets 6/30/2011
3/31/2011 % change
12/31/2010 % change
6/30/2010 % change Cash and due from
banks $ 171,129 $ 135,341 26% $ 172,331 -1% $ 203,135 -16%
Securities available for sale, at fair value 472,420 512,000 -8%
528,262 -11% 426,158 11% Federal Home Loan Bank and Federal Reserve
Bank stock 22,657 23,382 -3% 24,084 -6% 25,556 -11% Loans held for
sale, at the lower of cost or fair value 27,120 40,688 -33% 26,927
1% 41,472 -35% Loans receivable 2,202,446 2,154,113 2% 2,147,745 3%
2,126,714 4% Allowance for loan losses (59,696 )
(63,340 ) 6% (62,320 ) 4%
(62,988 ) 5% Net loans receivable 2,142,750
2,090,773 2%
2,085,425 3% 2,063,726 4%
Accrued interest receivable 8,069 8,731 -8% 8,648 -7% 8,272 -2%
Premises and equipment, net 9,938 10,540 -6% 10,915 -9% 10,896 -9%
Bank owned life insurance 24,489 24,301 1% 24,117 2% 23,768 3%
Goodwill 2,509 2,509 0% 2,509 0% 2,509 0% Other intangible assets,
net 379 456 -17% 534 -29% 788 -52% Other assets 85,828
77,422 11% 79,544
8% 94,785 -9% Total
assets $ 2,967,288 $ 2,926,143 1%
$ 2,963,296 0% $ 2,901,065
2%
Liabilities Deposits $ 2,232,180 $
2,176,098 3% $ 2,176,114 3% $ 2,130,389 5% Borrowings from Federal
Home Loan Bank 300,000 300,000 0% 350,000 -14% 350,000 -14%
Subordinated debentures 39,268 39,268 0% 39,268 0% 39,268 0%
Secured borrowings - 15,308 -100% 11,758 -100% 3,325 -100% Accrued
interest payable 3,382 4,733 -29% 4,830 -30% 3,863 -12% Other
liabilities 19,919 26,400
-25% 22,763 -12% 22,591
-12% Total liabilities 2,594,749
2,561,807 1% 2,604,733
0% 2,549,436 2%
Stockholders' Equity Preferred stock, $0.001 par
value; authorized 10,000,000 undesignated shares; issued and
outstanding 67,000 shares of Fixed Rate Cumulative Perpetual
Preferred Stock, Series A with a liquidation preference of
$67,428,000 at June 30, 2011, March 31, 2011, December 31, 2010 and
June 30, 2010 67,000 67,000 0% 67,000 0% 67,000 0% Preferred stock
discount (2,321 ) (2,559 ) 9% (2,797 ) 17% (3,269 ) 29% Common
stock, $0.001 par value; authorized, 100,000,000 shares at June 30,
2011, March 31, 2011 and December 31, 2010 and 40,000,000 shares at
June 30, 2010, respectively; issued and outstanding, 38,097,327,
37,993,327, 37,983,027 and 37,956,527 shares at June 30, 2011,
March 31, 2011, December 31, 2010 and June 30, 2010, respectively
38 38 0% 38 0% 38 0% Capital surplus 172,066 171,397 0% 171,364 0%
171,080 1% Retained earnings 131,275 126,032 4% 120,361 9% 111,338
18% Accumulated other comprehensive income, net 4,481
2,428 85% 2,597
-73% 5,442 18% Total
stockholders' equity 372,539 364,336
2% 358,563 4%
351,629 6% Total liabilities and
stockholders' equity $ 2,967,288 $ 2,926,143
1% $ 2,963,296 0% $ 2,901,065
2%
Nara Bancorp, Inc. Consolidated
Statements of Income (Loss) Unaudited (Dollars in Thousands,
Except for Per Share Data)
Three Months Ended Six Months
Ended, 6/30/2011
6/30/2010 % change
3/31/2011 % change
6/30/2011 6/30/2010
% change Interest income: Interest and fees on
loans $ 33,150 $ 33,510 -1 % $ 33,085 0 % $ 66,235 $ 66,858 -1 %
Interest on securities 3,965 2,884 37 % 3,930 1 % 7,895 7,972 -1 %
Interest on federal funds sold and other investments 179
199 -10 %
179 0 % 358 424
-16 % Total interest income 37,294
36,593 2 % 37,194
0 % 74,488 75,254
-1 % Interest expense: Interest on deposits
5,090 6,279 -19 % 5,131 -1 % 10,221 16,226 -37 % Interest on other
borrowings 2,873 3,506
-18 % 3,180 -10 %
6,053 6,977 -13 % Total interest
expense 7,963 9,785
-19 % 8,311 -4 %
16,274 23,203 -30 % Net
interest income before provision for loan losses 29,331 26,808 9 %
28,883 2 % 58,214 52,051 12 % Provision for loan losses
10,047 42,323 -76 %
5,262 91 % 15,309
67,730 -77 % Net interest income after
provision for loan losses 19,284
(15,515 ) N/A 23,621
-18 % 42,905 (15,679 )
N/A Non-interest income: Service fees on
deposit accounts 1,413 1,572 -10 % 1,497 -6 % 2,910 3,191 -9 % Net
gains on sales of loans 4,354 979 345 % 1,160 275 % 5,514 1,022 440
% Net gains on sales of securities available-for-sale 6 96 -94 % -
N/A 6 6,392 -100 % Net valuation gains (losses) on interest rate
swaps (106 ) (495 ) 79 % (11 ) -864 % (117 ) (726 ) 84 % Net gains
(losses) on sales of OREO 25 (567 ) 104 % 2 1150 % 27 (552 ) 105 %
Other income and fees 1,992 1,875
6 % 1,862 7
% 3,854 3,517 10 % Total
non-interest income 7,684 3,460
122 % 4,510 70 %
12,194 12,844 -5 %
Non-interest expense: Salaries and employee benefits 7,625 5,977 28
% 7,154 7 % 14,779 11,570 28 % Occupancy 2,445 2,424 1 % 2,437 0 %
4,882 4,851 1 % Furniture and equipment 934 884 6 % 935 0 % 1,869
1,662 12 % Advertising and marketing 594 612 -3 % 579 3 % 1,173
1,071 10 % Data processing and communications 923 1,051 -12 % 983
-6 % 1,906 1,984 -4 % Professional fees 769 756 2 % 709 8 % 1,478
1,458 1 % FDIC assessment 877 1,191 -26 % 1,289 -32 % 2,166 2,558
-15 % Other 2,719 3,072
-11 % 2,609 4 %
5,328 4,997 7 % Total
non-interest expense 16,886 15,967
6 % 16,695
1 % 33,581 30,151 11 %
Income (loss) before income taxes 10,082 (28,022 ) N/A 11,436 -12 %
21,518 (32,986 ) N/A Income tax provision (benefit) 3,764
(12,145 ) N/A
4,690 -20 % 8,454
(14,577 ) N/A
Net income (loss)
$ 6,318 $ (15,877
) N/A $
6,746 -6 %
13,064 (18,409 )
N/A Dividends and discount accretion on preferred
stock $ (1,075 ) $ (1,073 ) 0 % $
(1,075 ) 0 % (2,150 ) (2,144 )
0 %
Net income (loss) available to common
stockholders $ 5,243 $
(16,950 ) N/A
$ 5,671 -8 %
$ 10,914 $ (20,553
) N/A Earnings (Loss) Per Common
Share: Basic $ 0.14 $ (0.45 ) $ 0.15 $ 0.29 $ (0.54 ) Diluted $
0.14 $ (0.45 ) $ 0.15 $ 0.29 $ (0.54 ) Average Shares
Outstanding: Basic 38,047,371 37,921,885 37,987,345 38,017,473
37,875,494 Diluted 38,082,023 37,921,885 38,098,848 38,079,650
37,875,494
Three months ended Six Months
Ended, 6/30/2011
3/31/2011 12/31/2010
9/30/2010
6/30/2010 6/30/2011
6/30/2010 Net interest income $ 29,331
$ 28,883 $ 28,723 $ 27,610 $ 26,808 $ 58,214 $ 52,051 Non-interest
income 7,684 4,510 4,298 7,339 3,460 12,194 12,844 Non-interest
expense 16,886 16,695
17,530 15,693
15,967 33,581 30,151
Pre Tax - Pre Provision income 20,129 16,698
15,491 19,256 14,301 36,827
34,744 Provision for loan losses 10,047
5,262 5,800 11,100
42,323 15,309
67,730 Income (loss) before income taxes $ 10,082
$ 11,436 $ 9,691 $ 8,156
$ (28,022 ) $ 21,518 $ (32,986 )
PTPP to average assets (annualized) 2.75 % 2.27 % 2.07 % 2.60 %
1.97 % 2.51 % 2.29 %
Nara Bancorp, Inc.
Supplemental Data Unaudited (Dollars in Thousands, Except
for Per Share Data)
(Annualized)
(Annualized)
At or for the Three Months Ended
At or for the Six Months Ended
Profitability measures:
6/30/2011
6/30/2010 3/31/2011
6/30/2011 6/30/2010 ROA 1 0.86 %
-2.19 % 0.92% 0.89% -1.21 % ROE 1 6.84 % -17.30 % 7.43% 7.13% -9.96
% Net interest margin4 4.16 % 3.86 % 4.13% 4.15% 3.60 % Efficiency
ratio 45.62 % 52.75 % 50.00% 47.69% 46.46 % 1 based on net
income before effect of dividends and discount accretion on
preferred stock
Three Months Ended Three Months
Ended Three Months Ended 6/30/2011
6/30/2010 3/31/2011 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)
INTEREST EARNING ASSETS: Gross loans4, includes loans
held for sale $ 2,190,436 $ 33,150 6.07% $ 2,177,523 $ 33,510 6.17%
$ 2,167,739 $ 33,085 6.19% Securities available for sale 501,298
3,965 3.16% 459,883 2,884 2.51% 526,341 3,930 2.99% FRB and FHLB
stock and other investments 132,957 179 0.54% 142,210 192 0.54%
137,094 179 0.52% Federal funds sold - -
N/A 4,615 7 0.61% -
- N/A Total interest earning assets4 $ 2,824,691
$ 37,294 5.29% $ 2,784,231 $ 36,593 5.27% $
2,831,174 $ 37,194 5.32%
INTEREST BEARING
LIABILITIES: Deposits: Demand, interest-bearing $ 710,948 $
1,545 0.87% $ 591,012 $ 1,603 1.08% $ 680,254 $ 1,464 0.87% Savings
126,238 729 2.32% 135,906 828 2.44% 126,661 709 2.27% Time
deposits: $100,000 or more 315,278 381 0.49% 461,708 1,349 1.17%
321,708 455 0.57% Other 623,361 2,435
1.57% 571,790 2,499 1.75% 640,549
2,503 1.58% Total time deposits 938,639
2,816 1.20% 1,033,498 3,848
1.49% 962,257 2,958 1.25% Total
interest bearing deposits 1,775,825 5,090
1.15% 1,760,416 6,279 1.43%
1,769,172 5,131 1.18% FHLB advances 300,000
2,412 3.23% 350,000 2,981 3.42% 324,611 2,572 3.21% Other
borrowings 42,624 461 4.27%
40,927 525 5.07% 55,088 608
4.42% Total interest bearing liabilities 2,118,449
$ 7,963 1.51% 2,151,343 $ 9,785 1.82%
2,148,871 $ 8,311 1.57% Non-interest bearing
demand deposits 417,366 348,687 388,928
Total funding liabilities / cost of funds $ 2,535,815
1.26% $ 2,500,030 1.57% $ 2,537,799 1.33% Net interest
income / net interest spread4 $ 29,331 3.78% $ 26,808
3.45% $ 28,883 3.75% Net interest margin4 4.16% 3.86% 4.13%
Net interest margin4, excluding effect of
non-accrual loan income(expense)
4.20% 3.91% 4.14%
Net interest margin4, excluding effect of
non-accrual loan income(expense) and prepayment fee income
4.19% 3.89% 4.11% Non-accrual loan income (reversed)
recognized $ (237 ) $ (304 ) $ (100 ) Prepayment fee income
received 34 123 229 Net $
(203 ) $ (181 ) $ 129 Cost of deposits: Non-interest
bearing demand deposits $ 417,366 $ - $ 348,687 $ - $ 388,928 $ -
Interest bearing deposits 1,775,825 5,090
1.15% 1,760,416 6,279 1.43%
1,769,172 5,131 1.18% Total deposits $
2,193,191 $ 5,090 0.93% $ 2,109,103 $ 6,279
1.19% $ 2,158,100 $ 5,131 0.96%
Six Months Ended Six Months Ended
6/30/2011 6/30/2010
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
loans4, includes loans held for sale $ 2,179,150 $ 66,235 6.13% $
2,188,942 $ 66,858 6.16 % Securities available for sale 513,751
7,895 3.07% 560,394 7,972 2.85 % FRB and FHLB stock and other
investments 135,016 358 0.53% 154,135 375 0.49 % Federal funds sold
- - N/A 12,265 49 0.79 %
Total interest earning assets4 $ 2,827,917 $ 74,488 5.31% $
2,915,736 $ 75,254 5.20 %
INTEREST BEARING
LIABILITIES: Deposits: Demand, interest-bearing $ 695,686 $
3,009 0.87% $ 548,077 $ 2,894 1.06 % Savings 126,449 1,439 2.29%
135,177 1,633 2.44 % Time deposits: $100,000 or more 318,475 837
0.53% 681,366 6,308 1.87 % Other 631,907 4,936
1.58% 536,128 5,391 2.03 % Total time deposits
950,382 5,773 1.23% 1,217,494
11,699 1.94 % Total interest bearing deposits
1,772,517 10,221 1.16% 1,900,748 16,226
1.72 % FHLB advances 312,238 4,984 3.22% 350,000 5,997 3.45
% Other borrowings 48,822 1,069 4.35%
40,350 980 4.83 % Total interest bearing liabilities
2,133,577 $ 16,274 1.54% 2,291,098 $ 23,203
2.04 % Non-interest bearing demand deposits 403,229
340,329 Total funding liabilities / cost of funds $
2,536,806 1.29% $ 2,631,427 1.78 % Net interest income / net
interest spread4 $ 58,214 3.77% $ 52,051 3.16 % Net
interest margin4 4.15% 3.60 %
Net interest margin4, excluding effect of
non-accrual loan income(expense)
4.17% 3.67 %
Net interest margin4, excluding effect of
non-accrual loan income(expense) and prepayment fee income
4.15% 3.65 % Non-accrual loan income (reversed) recognized $
(337 ) $ (1,092 ) Prepayment fee income received 263
296 Net $ (74 ) $ (796 ) Cost of deposits:
Non-interest bearing demand deposits $ 403,229 $ - $ 340,329 $ -
Interest bearing deposits 1,772,517 10,221
1.16% 1,900,748 16,226 1.72 % Total deposits $
2,175,746 $ 10,221 0.95% $ 2,241,077 $ 16,226 1.46 %
For the Three Months Ended For the Six
Months Ended 6/30/2011
6/30/2010 % change
3/31/2011 % change
6/30/2011 6/30/2010 % change
AVERAGE BALANCES Gross loans4, includes loans held for sale
$ 2,190,436 $ 2,177,523 1% $ 2,167,739 1 % 2,179,150 2,188,942 0%
Investments 634,255 606,708 5% 663,435 -4 % 648,767 726,794 -11%
Interest-earning assets4 2,824,691 2,784,231 1% 2,831,174 0 %
2,827,917 2,915,736 -3% Total assets 2,933,003 2,899,677 1%
2,936,114 0 % 2,934,546 3,037,248 -3% Interest-bearing
deposits 1,775,825 1,760,416 1% 1,769,172 0 % 1,772,517 1,900,748
-7% Interest-bearing liabilities 2,118,449 2,151,343 -2% 2,148,871
-1 % 2,133,577 2,291,098 -7% Non-interest-bearing demand deposits
417,366 348,687 20% 388,928 7 % 403,229 340,329 18% Stockholders'
Equity 369,485 367,038 1% 363,166 2 % 366,343 369,686 -1% Net
interest earning assets4 706,242 632,888 12% 682,303 4 % 694,340
624,638 11%
LOAN PORTFOLIO COMPOSITION4:
6/30/2011 3/31/2011
% change
12/31/2010 %
change
6/30/2010 % change
Commercial loans $ 578,508 $ 552,868 5% $ 549,240 5% $ 531,588 9%
Real estate loans 1,602,162 1,576,477 2% 1,573,814 2% 1,564,627 2%
Consumer and other loans 11,755 12,635
-7% 13,268 -11%
17,149 -31% Loans outstanding4 2,192,425 2,141,980 2%
2,136,322 3% 2,113,364 4% Unamortized deferred loan fees - net of
costs (2,386 ) (2,047 ) -17%
(2,261 ) -6% (2,491 ) 4% Loans4, net of
deferred loan fees and costs 2,190,039 2,139,933 2% 2,134,061 3%
2,110,873 4% Allowance for loan losses (59,696 )
(63,340 ) 6% (62,320 ) 4%
(62,988 ) 5% Loan receivable4, net $ 2,130,343
$ 2,076,593 3% $ 2,071,741 3% $
2,047,885 4% 4 The loan portfolio composition tables
and net interest margin excludes the guaranteed portion of
delinquent SBA loans for the amounts indicated at each period as
these are 100% guaranteed by the SBA. $ 12,407 $ 14,180 $ 13,684 $
15,841
REAL ESTATE LOANS BY PROPERTY TYPE:
6/30/2011 3/31/2011
% change
12/31/2010 %
change
6/30/2010 % change Retail
buildings $ 386,380 $ 378,900 2% $ 361,774 7% $ 363,040 6%
Hotels/motels 256,129 272,812 -6% 275,433 -7% 285,032 -10% Gas
stations/ car washes 309,914 274,896 13% 270,788 14% 259,367 19%
Mixed-use facilities 161,285 163,201 -1% 160,498 0% 145,793 11%
Warehouses 116,461 117,151 -1% 112,415 4% 110,668 5% Multifamily
98,464 92,635 6% 88,094 12% 83,683 18% Other 273,525
276,882 -1% 304,812
-10% 317,044 -14% Total $
1,602,158 $ 1,576,477 2% $
1,573,814 2% $ 1,564,627 2%
DEPOSIT COMPOSITION 6/30/2011
3/31/2011 % Change
12/31/2010 % Change
6/30/2010 % Change Non-interest-bearing
demand deposits $ 432,616 $ 402,579 7% $ 388,731 11% $ 342,409 26%
Money market and other 712,028 690,398 3% 688,593 3% 599,995 19%
Saving deposits 126,694 127,905 -1% 126,255 0% 135,917 -7% Time
deposits of $100,000 or more 343,366 318,861 8% 321,542 7% 386,629
-11% Other time deposits 617,476
636,355 -3% 650,993 -5%
665,439 -7% Total deposit balances $
2,232,180 $ 2,176,098 3% $
2,176,114 3% $ 2,130,389 5%
DEPOSIT COMPOSITION (%) 6/30/2011
3/31/2011
12/31/2010 6/30/2010
Non-interest-bearing demand deposits 19.4 % 18.5 % 17.9% 16.1 %
Money market and other 31.9 % 31.7 % 31.6% 28.2 % Saving deposits
5.7 % 5.9 % 5.8% 6.4 % Time deposits of $100,000 or more 15.4 %
14.7 % 14.8% 18.1 % Other time deposits 27.6 %
29.2 % 29.9% 31.2 % Total deposit balances
100.0 % 100.0 % 100.0%
100.0 %
CAPITAL
RATIOS 6/30/2011
3/31/2011 12/31/2010
6/30/2010 Total stockholders' equity $
372,539 $ 364,336 $ 358,563 $ 351,629 Tier 1 risk-based capital
ratio 16.42 % 16.47 % 16.42 % 16.01 % Total risk-based capital
ratio 17.69 % 17.74 % 17.69 % 17.28 % Tier 1 leverage ratio 13.32 %
12.92 % 12.61 % 12.69 % Book value per common share $ 8.02 $ 7.83 $
7.69 $ 7.52 Tangible common equity per share2 $ 7.94 $ 7.75 $ 7.61
$ 7.44 Tangible common equity to tangible assets2 10.21 % 10.08 %
9.76 % 9.74 %
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.
Reconciliation of GAAP financial
measures to non-GAAP financial measures:
6/30/2011
3/31/2011 12/31/2010
6/30/2010 Total stockholders' equity $
372,539 $ 364,336 $ 358,563 $ 351,629 Less: Preferred stock, net of
discount (64,679 ) (64,441 ) (64,203 ) (63,731 ) Common stock
warrant (2,383 ) (2,383 ) (2,383 ) (2,383 ) Goodwill and other
intangible assets, net (2,888 ) (2,965 )
(3,043 ) (3,297 ) Tangible common
equity $ 302,589 $ 294,547 $ 288,934
$ 282,218 Total assets $ 2,967,288 $
2,926,143 $ 2,963,296 $ 2,901,065 Less: Goodwill and other
intangible assets, net (2,888 ) (2,965 )
(3,043 ) (3,297 ) Tangible assets $
2,964,400 $ 2,923,178 $ 2,960,253
$ 2,897,768 Common shares outstanding
38,097,327 37,993,327 37,983,027 37,956,527 Tangible common
equity to tangible assets 10.21 % 10.08 % 9.76 % 9.74 % Tangible
common equity per share $ 7.94 $ 7.75 $ 7.61 $ 7.44
For the Three Months Ended For the Six Months Ended
ALLOWANCE FOR LOAN LOSSES: 6/30/2011
3/31/2011
12/31/2010 9/30/2010
6/30/2010 6/30/2011
6/30/2010 Balance at beginning
of period $ 63,340 $ 62,320 $ 63,692 $ 62,988 $ 63,995 $ 62,320 $
59,424 Provision for loan losses 10,047 5,262 5,800 11,100 42,323
15,309 67,730 Recoveries 1,500 1,068 917 432 1,348 2,568 1,569
Charge offs (15,191 ) (5,310 )
(8,089 ) (10,828 ) (44,678 )
(20,501 ) (65,735 ) Balance at end of period $ 59,696
$ 63,340 $ 62,320 $
63,692 $ 62,988 $ 59,696 $
62,988 Net charge-off/average gross loans4 (annualized) 2.50
% 0.78 % 1.33 % 1.93 % 7.96 % 1.65 % 5.86 %
For the Three
Months Ended For the Six Months Ended NET CHARGED OFF
LOANS BY TYPE 6/30/2011
3/31/2011 12/31/2010
9/30/2010
6/30/2010 6/30/2011
6/30/2010 Real estate loans $ 12,242 $
2,847 $ 5,400 $ 5,821 $ 34,876 $ 15,089 $ 47,699 Commercial loans
1,474 1,455 1,663 4,549 8,243 2,929 15,444 Consumer loans
(25 ) (60 ) 109 26 211
(85 ) 1,023 Total net charge-offs $
13,691 $ 4,242 $ 7,172 $ 10,396 $
43,330 $ 17,933 $ 64,166
NON-PERFORMING ASSETS 6/30/2011
3/31/2011
12/31/2010 9/30/2010
6/30/2010 Delinquent loans 90 days or
more on non-accrual status4 $ 35,385 $ 46,961 $ 43,803 $ 50,521 $
46,174 Delinquent loans 90 days or more on accrual status -
- - -
1,845
Total non-performing
loans4 35,385 46,961 43,803
50,521 48,019 Other real estate owned 4,404 2,708 -
3,591 4,709 Accruing restructured loans 15,787
29,419 35,103 34,391
33,950
Total non-performing
assets4 $ 55,576 $
79,088 $ 78,906 $
88,503 $ 86,678
Non-performing assets4/ total assets 1.87 % 2.70 % 2.72 % 2.96 %
2.99 % Non-performing assets4/ gross loans4 & OREO 2.53 % 3.69
% 3.77 % 4.11 % 4.10 % Non-performing loans (excludes accruing
restructured loans)4/gross loans4 1.62 % 2.19 % 2.05 % 2.35 % 2.27
%
Non-performing loans (includes accruing
restructured loans)4/gross loans4
2.34 % 3.57 % 3.70 % 3.95 % 3.88 % Allowance for loan losses/ gross
loans4 2.73 % 2.96 % 2.92 % 2.97 % 2.98 % Allowance for loan
losses/ non-performing loans (excludes accruing restructured
loans)4 168.70 % 134.88 % 142.27 % 126.07 % 131.17 % Allowance for
loan losses/ non-performing loans (includes accruing restructured
loans)4 116.66 % 82.93 % 78.98 % 75.01 % 76.84 % Allowance for loan
losses/ non-performing assets4 107.41 % 80.09 % 78.98 % 71.97 %
72.67 %
BREAKDOWN OF ACCRUING RESTRUCTURED LOANS
BY TYPE: 6/30/2011
3/31/2011 12/31/2010
9/30/2010
6/30/2010 Retail buildings $ - $ 1,192 $ 4,832 $
2,396 $ 3,353 Hotels/motels 12,027 17,503 6,193 8,589 8,612 Gas
stations/ car washes - 566 1,475 910 365 Mixed-use facilities 953
953 - - - Warehouses - - - - - Multifamily - - - - - Other3
2,807 9,205 22,603 22,496
21,620 Total $ 15,787 $ 29,419 $
35,103 $ 34,391 $ 33,950
3 Includes commercial business and other
loans
DELINQUENT LOANS LESS THAN 90 DAYS PAST DUE
6/30/2011 3/31/2011
12/31/2010
9/30/2010 6/30/2010
30 - 59 days $ 1,448 $ 5,618 $ 3,012 $ 2,192 $ 5,716 60 - 89
days 1,870 2,741 1,284
757 598 Total delinquent loans less
than 90 days past due4 $ 3,318 $ 8,359 $ 4,296
$ 2,949 $ 6,314
DELINQUENT LOANS LESS THAN
90 DAYS PAST DUE BY TYPE 6/30/2011
3/31/2011 12/31/2010
9/30/2010
6/30/2010 Real estate loans $ 1,701 $ 7,200 $
2,714 $ 1,369 $ 3,696 Commercial loans 1,606 1,138 1,539 1,540
2,513 Consumer loans 11 21 43
40 105 Total delinquent loans
less than 90 days past due4 $ 3,318 $ 8,359 $ 4,296
$ 2,949 $ 6,314
NON-PERFORMING LOANS BY TYPE 6/30/2011
3/31/2011
12/31/2010 9/30/2010
6/30/2010 Real estate loans $
20,661 $ 31,096 $ 26,895 $ 31,153 $ 33,805 Commercial loans 14,342
15,465 16,460 18,680 13,680 Consumer loans 382
400 448 688 534
Total non-performing loans4 $ 35,385 $ 46,961 $
43,803 $ 50,521 $ 48,019
WATCH LIST
LOANS 6/30/2011
3/31/2011 12/31/2010
9/30/2010
6/30/2010 Special mention $ 15,342 $ 21,272 $ 29,573
$ 30,767 $ 46,449 Substandard 116,561 142,191 135,774 147,641
116,069 Doubtful 5,174 5,057 260 413 783 Loss -
- - - -
Total watch list loans4 $ 137,077 $ 168,520 $ 165,607
$ 178,821 $ 163,301
4 The loan portfolio composition tables
and net interest margin excludes the guaranteed portion of
delinquent SBA loans for the amounts indicated at each period as
these are 100% guaranteed by the SBA.
Nara Bancorp (NASDAQ:NARA)
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