LOS ANGELES--(BUSINESS WIRE)--
Nara Bancorp, Inc. (the "Company") (NASDAQ:NARA), the holding
company of Nara Bank (the "Bank") reported net income of $9.4 million,
or $0.35 per diluted share, for fourth quarter 2006, an 18% increase
compared to net income of $7.9 million, or $0.30 per diluted share,
for fourth quarter 2005. The increase was primarily due to higher net
interest income and a credit to income tax expense of $772 thousand
during fourth quarter 2006 for resolution of certain tax
contingencies.
For the full year 2006, net income increased 26% to $33.8 million
from $26.9 million in 2005. Diluted earnings per share increased 20%
to $1.28 from $1.07 in 2005.
Min Kim, President and Chief Executive Officer, said, "Our fourth
quarter performance capped a memorable year for Nara Bancorp, in which
we produced record earnings while also strengthening our management
team, board leadership, and internal controls. In the fourth quarter,
we were able to offset compression in our net interest margin with our
strongest loan production of the year, driven by our increased focus
on C&I lending. We also continue to experience positive momentum in
our SBA business, as our SBA loan originations increased by 68% and
sales increased by 26% over the prior quarter. We are pleased with our
continued ability to win new business from customers, which helps us
to achieve our financial goals despite a highly competitive market for
deposits.
"We are also pleased to announce that we received a formal notice,
dated January 29, 2007, from the Federal Reserve Bank of San Francisco
that they no longer consider Nara Bank or Nara Bancorp, Inc. to be in
'troubled condition.' Our regulators, both Federal and State, have
been tremendously helpful as we reshaped our governance, internal
controls and leadership. We appreciate their confidence in our
progress, and we will continue to work towards full relief from the
MOU," said Ms. Kim.
Fourth Quarter Financial Highlights (2006 vs. 2005):
-- Net income increased 18% to $9.4 million
-- Diluted EPS increased 17% to $0.35 per share
-- Net interest income increased 9% to $24.2 million
-- Net interest margin decreased 13 basis points to 5.10%
-- Efficiency ratio improved to 46.01% from 48.63%
-- Net loans receivable increased 19% over prior year to $1.70
billion
-- Deposits increased 12% over prior year to $1.71 billion
-- Non-performing assets ratio decreased to 0.17% from 0.35%
Operating Results for Fourth Quarter 2006
Net Interest Income and Net Interest Margin. Fourth quarter net
interest income before provision for loan losses increased 9% to $24.2
million from $22.2 million for fourth quarter 2005. The improvement
was attributable to an increase in the net average interest-earning
assets which more than offset the decline in the net interest spread.
The resulting fourth quarter net interest margin (net interest income
divided by average interest-earning assets) decreased 13 basis points
to 5.10% from 5.23%.
The weighted average yield on the loan portfolio for fourth
quarter 2006 increased 60 basis points to 9.21% from 8.61% for the
same period last year. The increase was the result of the prime
rate-based portion of the loan portfolio repricing upward as interest
rates increased during the first half of the year.
The weighted average cost of deposits for fourth quarter 2006
increased 94 basis points to 3.68% from 2.74% for the same period last
year. The cost of time deposits increased 127 basis points to 5.22%
from 3.95%, accounting for a substantial portion of the increase.
Sequentially, 2006 fourth quarter net interest income before
provision for loan losses decreased $209 thousand, or 1% from the
third quarter. Average interest-earning assets increased nominally and
the net interest spread decreased by 17 basis points, resulting in a
decline in the net interest margin to 5.10% from 5.25%.
During the fourth quarter of 2006, the Bank had $244 million of
time deposits tied to prime that re-priced upward by approximately 34
basis points, as well as a large amount of other time deposits that
were renewed at significantly higher interest rates. As anticipated,
this put downward pressure on the net interest margin for the quarter.
The net interest margin however, benefited from the current
recognition of delinquent interest, totaling $238 thousand relating to
the recovery of delinquent interest from a non-accrual loan placed
back on accrual status. Excluding this item, the fourth quarter 2006
net interest margin was 5.05%.
Non-interest Income. Fourth quarter non-interest income was
relatively the same compared to fourth quarter 2005. However, during
the fourth quarter of 2006, the Company recognized a gain of $1.3
million on the sale of commercial real estate loans to reduce certain
industry concentrations within the commercial real estate portfolio.
Additionally, the Company recognized net gains of $1.1 million from
the sale of $19.4 million of SBA loans during the quarter,
representing an 18% increase over the net gains recognized during the
third quarter of 2006.
Sequentially, non-interest income increased 25%, primarily due to
the increased gains on sales of commercial real estate and SBA loans
discussed above. The increase was partially offset by the decrease in
other income and fees, which decreased 26%, due primarily to
write-offs of $230 thousand from disposals of premises and equipment
related to the corporate headquarters relocation and a branch
relocation.
Non-interest Expense. Fourth quarter non-interest expense
increased 1% to $13.6 million from $13.5 million for the same period
last year. Compensation expense increased 8% over the same quarter of
the prior year, due to an increase in the full-time equivalent
employee count from 376 to 408 and the recognition of $496 thousand in
stock option expense. These increases were partially offset by a
decrease of $827 thousand in accrued bonus expense. Occupancy expense
increased 9%, primarily due to lease renewals at higher lease rates
for four branches and a new lease related to the relocation of our
corporate headquarters. Reductions in expense were achieved in
professional fees, marketing, and data processing. Professional fees
decreased by $496 thousand primarily due to the completion of
consulting work related to MOU compliance. The decrease in marketing
expense was due to higher expenses related to a deposit promotion in
fourth quarter 2005. Data processing costs decreased as the Company
brought certain services in-house.
Sequentially, non-interest expense in fourth quarter 2006
increased 5% to $13.6 million from $13.0 million in third quarter
2006. This increase was primarily due to increases in compensation and
marketing, partially offset by decreases in data processing and
professional fees. Compensation expense increased due to growth in the
full time equivalent employee count from 396 to 408 and higher salary
and stock option expense. Advertising and marketing expenses increased
due to a deposit campaign, holiday and new branding promotions during
the fourth quarter. Data processing costs declined due to the reason
mentioned earlier, while professional fees declined as legal fees
normalized and consulting fees decreased.
Income Taxes. The effective tax rate was 36.2% for fourth quarter
2006 compared to 40.8% for fourth quarter 2005. The decrease in the
effective tax rate was due primarily to the resolution of certain tax
contingencies during fourth quarter 2006, resulting in a reduction of
deferred tax liabilities and a credit to income tax expense of $772
thousand.
Balance Sheet Summary
At December 31, 2006 total assets were $2.05 billion compared to
$1.78 billion at December 31, 2005, an increase of 15%.
Gross loans receivable were $1.71 billion at December 31, 2006, an
increase of 19% from the $1.45 billion at December 31, 2005. On a
sequential quarter basis, gross loans receivable increased 13%
(annualized) as loan production was $30 million higher during fourth
quarter 2006, and loan pay-offs were lower than the third quarter by
$25 million. Including the $31.9 million of commercial real estate
loans sold during the quarter, gross loans receivable increased at an
annualized rate of 21% in the fourth quarter of 2006.
SBA loan originations were $39.2 million during the quarter
compared to $23.3 million during third quarter 2006 and $46.9 million
during fourth quarter 2005. Sales of SBA loans during fourth quarter
2006 were $19.4 million, compared to $15.4 million during third
quarter 2006 and $38.4 million during fourth quarter 2005.
Total deposits were $1.71 billion at December 31, 2006, an
increase of 12% from $1.53 billion at December 31, 2005. On a
sequential quarter basis, deposits increased 15% (annualized). The
largest increases came in non-interest bearing deposits ("DDAs") and
certificates of deposit. DDAs increased $31 million during the latter
half of December 2006. By January 4, 2007 DDAs decreased by $31
million, reflecting the management of cash balances by customers at
year end.
FHLB advances were $76.0 million at December 31, 2006 compared to
$31.0 million at December 31, 2005. During 2006, FHLB advances were
used to augment deposits as a source of match-funding $50 million of
fixed-rate loan originations.
Asset Quality
The Company recorded a provision for loan losses of $1.4 million
in the fourth quarter 2006, compared to $857 thousand in the same
period of the prior year. The increase in the provision was due
primarily to the higher loan growth in 2006 compared to 2005.
Non-performing assets at December 31, 2006 were $3.6 million, or
0.17% of total assets, compared to $6.2 million, or 0.35% of total
assets, at December 31, 2005 and $4.6 million, or 0.23% of total
assets, at September 30, 2006.
Non-performing loans at December 31, 2006 were $3.3 million, or
0.19% of total loans, compared to $5.5 million, or 0.38% of total
loans, at December 31, 2005 and $4.0 million, or 0.24% of total loans,
at September 30, 2006.
Net loan charge-offs were $1.2 million during the quarter, or
0.27% of average loans on annualized basis, compared to $307 thousand,
or 0.08% of average loans on an annualized basis, for fourth quarter
2005, and $429 thousand, or 0.11% of average loan on an annualized
basis, for third quarter 2006. Fourth quarter charge-offs included
four commercial loans totaling $820 thousand. These businesses were
primarily retail businesses.
The allowance for loan losses at December 31, 2006 was $19.1
million, or 1.11% of gross loans receivable, compared to $17.6
million, or 1.22% of gross loans receivable at December 31, 2005, and
$18.9 million, or 1.14% of gross loans receivable, at September 30,
2006. The reduction in the allowance for loan losses ratio reflects a
50% decline in the level of special mention and classified loans
during 2006.
Performance Ratios
The annualized return on average equity (ROE) for fourth quarter
2006 was 20.56%, compared to 21.83% for fourth quarter 2005, and
20.36% for third quarter 2006. The 2006 fourth quarter ROE declined
from fourth quarter 2005 due to the increase in equity resulting from
the $20 million of capital raised in September 2005. For the full
year, the ROE was 20.34% in 2006 compared to 22.23% in 2005.
The annualized return on average assets (ROA) for fourth quarter
2006 was 1.88%, compared to 1.77% for fourth quarter 2005, and 1.77%
for third quarter 2006. For the full year, the ROA was 1.75% in 2006
compared to 1.59% in 2005.
The efficiency ratio for fourth quarter 2006 was 46.01%, compared
to 48.63% for fourth quarter 2005. The improvement in the efficiency
ratio was primarily due to improved operating leverage as revenues
increased 7.2% and expenses increased 1.4%. The increase in the
efficiency ratio comparing fourth quarter 2006 to 45.26% for third
quarter 2006 was due primarily to the effect of margin compression on
revenue growth.
Capital
At December 31, 2006, we continued to exceed the regulatory
capital requirements to be classified as a "well-capitalized
institution." The Leverage Ratio was 11.18% compared to 10.22% at
December 31, 2005. The Tier 1 Risk-based Ratio was 12.16% compared to
11.77% at December 31, 2005. The Total Risk-based Ratio was 13.21%
compared to 12.90% at December 31, 2005. During September 2005,
approximately $20 million of capital was raised from the sale of
common stock to the Company's chairman of the board of directors which
closed on September 12, 2005.
Earnings Outlook
For the full year of 2007, the Company expects fully diluted
earnings per share to range between $1.29 and $1.33.
Commenting on the outlook, Ms. Kim said, "We expect to continue
generating loan growth in the 15-20% range in 2007, while also seeing
further increases in our SBA loan production as we continue to build
our presence in newer markets. However, we expect that our earnings
growth will continue to be impacted by a decline in our net interest
margin due to the yield curve environment and higher expenses related
to FDIC insurance and professional fees. As we are able to expand our
footprint in the future, we believe we can increase our ability to
gather core deposits, lower our cost of funds, and drive higher levels
of earnings growth."
Conference Call and Webcast
A conference call with simultaneous webcast to discuss the
Company's fourth quarter 2006 financial results will be held tomorrow,
February 1, 2007 at 9:30 a.m. Pacific / 12:30 p.m. Eastern. Interested
participants and investors may access the conference call by dialing
800-901-5217 (domestic) or 617-786-2964 (international), passcode
62140641. 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. Web participants are encouraged to go to the web
site at least 15 minutes prior to the start of the call to register,
download and install any necessary audio software.
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 888-286-8010 (domestic) or 617-801-6888
(international) through February 8, 2007; the pass code is 86246930.
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 18 branches and 7 loan production
offices in the United States. Nara Bank operates full-service branches
in California and New York, with loan production offices in
California, Washington, , Texas, Georgia, Illinois, New Jersey, and
Virginia. Nara Bank was founded specifically to serve the needs of
Korean-Americans, one of the fastest-growing Asian ethnic communities
over the past decade. 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
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. For more information on Nara Bank,
visit our website at www.narabank.com. Nara Bancorp, Inc. stock is
listed on NASDAQ under the symbol "NARA."
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, including, but 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 discussion 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 for Share Data)
Assets % %
12/31/2006 9/30/2006 change 12/31/2005 change
----------- ----------- ------- ----------- -------
Cash and due from
banks $36,300 $33,799 7% $32,924 10%
Federal funds sold 44,500 2,500 1680% 33,100 34%
Term federal funds
sold - - 0% 7,000 -100%
Securities
available for
sale, at fair
value 162,851 200,461 -19% 174,709 -7%
Securities held to
maturity, at
amortized cost
(fair value:
December 31, 2006
- $1,002;
September 30, 2006
- $1,005; December
31, 2005 - $1,023) 1,000 1,000 0% 1,001 0%
Federal Home Loan
Bank and Federal
Reserve Bank stock 9,758 9,655 1% 8,266 18%
Loans held for
sale, at the lower
of cost or market 15,162 9,103 67% 17,083 -11%
Loans receivable 1,714,865 1,660,321 3% 1,445,740 19%
Allowance for loan
losses (19,112) (18,909) 1% (17,618) 8%
----------- ----------- ------- ----------- -------
Net loans 1,695,753 1,641,412 3% 1,428,122 19%
----------- ----------- ------- ----------- -------
Accrued interest
receivable 8,974 8,425 7% 7,620 18%
Premises and
equipment, net 11,941 11,575 3% 8,148 47%
Cash surrender
value of life
insurance 15,113 15,000 1% 14,640 3%
Goodwill 2,347 2,347 0% 2,347 0%
Other intangible
assets, net 2,899 3,071 -6% 3,589 -19%
Other assets 41,878 40,457 4% 37,273 12%
----------- ----------- ------- ----------- -------
Total assets $2,048,476 $1,978,805 4% $1,775,822 15%
=========== =========== ======= =========== =======
Liabilities
Deposits $1,712,235 $1,649,317 4% $1,526,486 12%
Borrowings from
Federal Home Loan
Bank 76,000 81,000 -6% 31,000 145%
Subordinated
debentures 39,268 39,268 0% 39,268 0%
Accrued interest
payable 8,258 9,933 -17% 8,755 -6%
Other liabilities 26,123 22,665 15% 23,559 11%
----------- ----------- ------- ----------- -------
Total liabilities 1,861,884 1,802,183 3% 1,629,068 14%
----------- ----------- ------- ----------- -------
Stockholders'
Equity
Common stock,
$0.001 par value;
authorized,
40,000,000 shares;
issued and
outstanding,
26,107,672,
26,100,672 and
25,444,442 shares
at December 31,
2006, September
30, 2006 and
December 31, 2005,
respectively $26 $26 0% $25 4%
Capital surplus 77,904 77,320 1% 69,451 12%
Retained earnings 111,978 103,338 8% 81,016 38%
Accumulated other
comprehensive
loss, net (3,316) (4,062) -18% (3,738) -11%
----------- ----------- ------- ----------- -------
Total
stockholders'
equity 186,592 176,622 6% 146,754 27%
----------- ----------- ------- ----------- -------
Total liabilities
and
stockholders'
equity $2,048,476 $1,978,805 4% $1,775,822 15%
=========== =========== ======= =========== =======
Nara Bancorp, Inc.
Consolidated Statements of Income
Unaudited (Dollars in Thousands, Except for Share and Per Share Data)
Three Months Ended,
---------------------------------------------------
% %
12/31/2006 9/30/2006 change 12/31/2005 change
---------------------------------------------------
Interest income:
Interest and fees
on loans $38,950 $37,818 3% $31,332 24%
Interest on
securities 2,151 2,340 -8% 1,871 15%
Interest on
federal funds
sold and other
investments 324 470 -31% 651 -50%
---------------------------------------------------
Total interest
income 41,425 40,628 2% 33,854 22%
---------------------------------------------------
Interest expense:
Interest on
deposits 15,245 14,799 3% 10,537 45%
Interest on other
borrowings 1,963 1,403 40% 1,121 75%
---------------------------------------------------
Total interest
expense 17,208 16,202 6% 11,658 48%
---------------------------------------------------
Net interest income
before provision
for loan losses 24,217 24,426 -1% 22,196 9%
Provision for loan
losses 1,362 1,170 16% 857 59%
---------------------------------------------------
Net interest income
after provision
for loan losses 22,855 23,256 -2% 21,339 7%
---------------------------------------------------
Non-interest
income:
Service fees on
deposit accounts 1,553 1,471 6% 1,569 -1%
Net gains on
sales of SBA
loans 1,091 922 18% 2,297 -53%
Net gains on
sales of other
loans 1,272 - - - -
Net gains on
sales of
securities
available-for-
sale 92 - - - -
Other income and
fees 1,440 1,952 -26% 1,606 -10%
---------------------------------------------------
Total non-
interest
income 5,448 4,345 25% 5,472 0%
---------------------------------------------------
Non-interest
expense:
Salaries and
employee
benefits 6,857 6,346 8% 6,361 8%
Occupancy 2,087 1,993 5% 1,907 9%
Furniture and
equipment 639 562 14% 589 8%
Advertising and
marketing 655 421 56% 789 -17%
Data processing
and
communications 781 1,029 -24% 920 -15%
Professional fees 663 815 -19% 1,159 -43%
Other 1,966 1,856 6% 1,729 14%
---------------------------------------------------
Total non-
interest
expense 13,648 13,022 5% 13,454 1%
---------------------------------------------------
Income before
income taxes 14,655 14,579 1% 13,357 10%
Income taxes 5,298 5,910 -10% 5,446 -3%
---------------------------------------------------
Net Income $9,357 $8,669 8% $7,911 18%
===================================================
Earnings Per Share:
Basic $0.36 $0.33 $0.31
Diluted $0.35 $0.33 $0.30
Average Shares
Outstanding
Basic 26,103,639 25,949,931 25,406,294
Diluted 26,533,757 26,407,185 26,180,117
Twelve Months Ended December 31,
---------------------------------
2006 2005 % change
---------------------------------
Interest income:
Interest and fees on loans $144,349 $108,915 33%
Interest on securities 8,435 6,217 36%
Interest on federal funds sold and
other investments 3,047 2,092 46%
---------------------------------
Total interest income 155,831 117,224 33%
---------------------------------
Interest expense:
Interest on deposits 55,557 32,698 70%
Interest on other borrowings 5,659 4,953 14%
---------------------------------
Total interest expense 61,216 37,651 63%
---------------------------------
Net interest income before provision
for loan losses 94,615 79,573 19%
Provision for loan losses 3,754 5,427 -31%
---------------------------------
Net interest income after provision
for loan losses 90,861 74,146 23%
---------------------------------
Non-interest income:
Service fees on deposit accounts 6,081 6,281 -3%
Net gains on sales of SBA loans 4,826 5,987 -19%
Net gains on sales of other loans 1,272 - -
Net gains on sales of securities
available-for-sale 92 143 -36%
Other income and fees 7,028 7,781 -10%
---------------------------------
Total non-interest income 19,299 20,192 -4%
---------------------------------
Non-interest expense:
Salaries and employee benefits 27,097 23,925 13%
Occupancy 7,814 6,963 12%
Furniture and equipment 2,269 2,100 8%
Advertising and marketing 2,352 2,149 9%
Data processing and communications 3,781 3,416 11%
Professional fees 2,938 3,714 -21%
Other 7,706 6,403 20%
---------------------------------
Total non-interest expense 53,957 48,670 11%
---------------------------------
Income before income taxes 56,203 45,668 23%
Income taxes 22,397 18,811 19%
---------------------------------
Net Income $33,806 $26,857 26%
=================================
Earnings Per Share:
Basic $1.31 $1.11
Diluted $1.28 $1.07
Average Shares Outstanding
Basic 25,786,700 24,119,107
Diluted 26,317,408 25,062,921
Nara Bancorp, Inc.
Supplemental Data
Unaudited (Dollars in Thousands)
(Annualized)
At or for the Three Months At or for the Twelve
Ended, Months Ended,
------------------------------------------------------
Profitability
measures: 12/31/2006 9/30/2006 12/31/2005 12/31/2006 12/31/2005
------------------------------------------------------
ROA 1.88% 1.77% 1.77% 1.75% 1.59%
ROE 20.56% 20.36% 21.83% 20.34% 22.23%
Net interest
margin,
including
loan
prepayment
fee income 5.10% 5.25% 5.23% 5.14% 5.00%
Net interest
margin,
excluding
loan
prepayment
fee income 4.99% 5.11% 5.13% 5.05% 4.95%
Efficiency
ratio 46.01% 45.26% 48.63% 47.37% 48.78%
Yield on loan
portfolio 9.21% 9.28% 8.61% 9.06% 7.87%
Yield on
interest-
earning
assets 8.73% 8.73% 7.98% 8.47% 7.36%
Cost of
interest-
bearing
deposits 4.78% 4.61% 3.57% 4.37% 3.03%
Cost of total
deposits 3.68% 3.55% 2.74% 3.38% 2.28%
Cost of
interest-
bearing
liabilities 4.91% 4.74% 3.74% 4.51% 3.20%
Cost of time
deposits 5.22% 5.06% 3.95% 4.80% 3.37%
Cost of funds 3.87% 3.70% 2.90% 3.54% 2.46%
Net interest
spread (yield
on average
interest-
earning
assets -
average cost
of funds) 4.86% 5.02% 5.08% 4.93% 4.91%
For the Three Months Ended,
--------------------------------------------------------
12/31/2006 9/30/2006 % change 12/31/2005 % change
--------------------------------------------------------
AVERAGE
BALANCES
Gross loans,
includes
loans held
for sale $1,691,340 $1,629,345 4% $1,454,930 16%
Interest-
earning
assets 1,898,348 1,862,304 2% 1,696,845 12%
Total assets 1,995,242 1,959,562 2% 1,790,975 11%
Interest-
bearing
deposits 1,276,231 1,284,143 -1% 1,179,585 8%
Interest-
bearing
liabilities 1,401,350 1,366,506 3% 1,247,753 12%
Non-interest-
bearing
demand
deposits 378,703 383,587 -1% 359,103 5%
Stockholders'
Equity 182,017 170,273 7% 144,963 26%
For the Twelve Months Ended,
---------------------------------
12/31/2006 12/31/2005 % change
---------------------------------
AVERAGE BALANCES
Gross loans, includes loans held for
sale 1,593,453 1,383,758 15%
Interest-earning assets 1,840,176 1,591,744 16%
Total assets 1,934,925 1,684,577 15%
Interest-bearing deposits 1,271,738 1,080,588 18%
Interest-bearing liabilities 1,357,874 1,177,600 15%
Non-interest-bearing demand deposits 373,789 355,431 5%
Stockholders' Equity 166,206 120,793 38%
LOAN PORTFOLIO
COMPOSITION: 12/31/2006 9/30/2006 % change 12/31/2005 % change
-------------------------------------------------------
Commercial
loans $565,759 $520,253 9% $483,231 17%
Real estate
loans 1,102,072 1,089,705 1% 900,699 22%
Consumer and
other loans 49,201 53,132 -7% 64,633 -24%
-------------------------------------------------------
Loans
outstanding 1,717,032 1,663,090 3% 1,448,563 19%
Unamortized
deferred loan
fees - net of
costs (2,167) (2,769) -22% (2,823) -23%
-------------------------------------------------------
Loans, net of
deferred
loan fees
and costs 1,714,865 1,660,321 3% 1,445,740 19%
Allowance for
loan losses (19,112) (18,909) 1% (17,618) 8%
-------------------------------------------------------
Loan
receivable,
net $1,695,753 $1,641,412 3% $1,428,122 19%
=======================================================
For the Three Months Ended,
------------------------------------------------------
ALLOWANCE FOR
LOAN LOSSES: 12/31/2006 9/30/2006 % Change 12/31/2005 % Change
------------------------------------------------------
Balance at
Beginning of
Period $18,909 $18,168 4% $17,068 11%
Provision for
Loan Losses 1,362 1,170 16% 857 59%
Recoveries 108 218 -50% 160 -33%
Charge Offs (1,267) (647) 96% (467) 171%
------------------------------------------------------
Balance at End
of Period $19,112 $18,909 1% $17,618 8%
======================================================
Net charge-
off/Average
gross loans
(annualized) 0.27% 0.11% 0.08%
For the Twelve Months
Ended,
---------------------------------
ALLOWANCE FOR LOAN LOSSES: 12/31/2006 12/31/2005 % Change
----------------------- ---------
Balance at Beginning of Period $17,618 $14,627 20%
Provision for Loan Losses 3,754 5,427 -31%
Recoveries 1,401 630 122%
Charge Offs (3,661) (3,066) 19%
---------------------------------
Balance at End of Period $19,112 $17,618 8%
=================================
Net charge-off/Average gross loans
(annualized) 0.14% 0.18%
NON-PERFORMING ASSETS 12/31/2006 9/30/2006 12/31/2005
----------------------------------
Delinquent Loans 90 days or more on
Non-Accrual Status $3,271 $3,983 $5,489
Delinquent Loans 90 days or more on
Accrual Status - - -
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Total Non-Performing Loans 3,271 3,983 5,489
Other real estate owned - - -
Restructured Loans 298 606 741
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Total Non-Performing Assets $3,569 $4,589 $6,230
==================================
Non-Performing Assets/ Total Assets 0.17% 0.23% 0.35%
Non-Performing Loans/Gross Loans 0.19% 0.24% 0.38%
Allowance for loan losses/ Gross
Loans 1.11% 1.14% 1.22%
Allowance for loan losses/ Non-
Performing Loans 584% 475% 321%
DEPOSIT
COMPOSITION 12/31/2006 9/30/2006 % Change 12/31/2005 % Change
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Non-interest-
bearing
demand
deposits $407,519 $386,263 6% $371,943 10%
Money market
and other 184,199 202,157 -9% 185,550 -1%
Saving
deposits 141,611 138,567 2% 120,948 17%
Time deposits
of $100,000
or more 768,727 726,900 6% 714,636 8%
Other time
deposits 210,179 195,430 8% 133,409 58%
----------------------- -------------------------------
Total
deposit
balances $1,712,235 $1,649,317 4% $1,526,486 12%
======================= ===============================
DEPOSIT COMPOSITION (%) 12/31/2006 9/30/2006 12/31/2005
----------------------------------
Non-interest-bearing demand
deposits 23.8% 23.4% 24.4%
Money market and other 10.7% 12.3% 12.2%
Saving deposits 8.3% 8.4% 7.9%
Time deposits of $100,000 or more 44.9% 44.1% 46.8%
Other time deposits 12.3% 11.8% 8.7%
----------------------------------
Total deposit balances 100.0% 100.0% 100.0%
==================================
CAPITAL RATIOS 12/31/2006 9/30/2006 12/31/2005
----------------------------------
Total stockholders' equity $186,592 176,622 $146,754
Tier 1 risk-based capital ratio 12.16% 12.09% 11.77%
Total risk-based capital ratio 13.21% 13.17% 12.90%
Tier 1 leverage ratio 11.18% 10.91% 10.22%
Book value per share $7.15 $6.77 $5.77
Tangible book value per share $6.95 $6.56 $5.53
Tangible equity to tangible assets 8.88% 8.68% 7.96%
Source: Nara Bancorp, Inc.
Contact: Financial Relations Board
Investors and Financial Media:
Tony Rossi, 310-854-8317