LOS ANGELES--(BUSINESS WIRE)--
Nara Bancorp, Inc. (the "Company") (NASDAQ:NARA), the holding company of
Nara Bank (the "Bank") reported a net loss of $6.0 million, or ($0.27)
per diluted share, for second quarter 2009, compared to net income of
$1.9 million, or $0.07 per diluted share, for second quarter 2008, and
net loss of $3.2 million, or ($0.16) per diluted share, for first
quarter 2009.
Min Kim, President and Chief Executive Officer, said, "As expected, net
charge-offs and the provision for loan losses remained elevated during
the second quarter, as we continued to aggressively work through our
problem loans. However, we are beginning to see some encouraging signs
of stabilization in our loan portfolio. During the second quarter,
inflows into early-stage delinquencies slowed and the total dollar
amount of loans on our 'watch list' declined for the first time in more
than a year. The credit costs we incurred in the second quarter are
primarily related to lending relationships that we had previously
identified as problem loans. The continuation of these stabilizing
trends, in addition to our strong levels of capital and allowance for
loan losses, positions us well to effectively manage through the
economic downturn.
"We were also pleased with our continued success in deposit gathering.
During the second quarter, we increased core deposits by $328 million,
which was partially driven by the opening of our new branch in Fort Lee,
New Jersey. The growth in core deposits has a short-term negative impact
on our net interest margin, as we do not have sufficient opportunities
to immediately redeploy these funds into higher yielding assets.
However, the substantial liquidity we have built provides the Bank with
good opportunities to acquire assets or reduce higher cost liabilities
going forward," said Ms. Kim.
Financial Highlights
2009 2008 2009
Second Quarter Second Quarter First Quarter
(Dollars in thousands)
Net income (loss) $ (6,008 ) $ 1,853 $ (3,180 )
Diluted earnings (loss) per share $ (0.27 ) $ 0.07 $ (0.16 )
Net interest income $ 21,260 $ 24,156 $ 20,439
Net interest margin 2.94 % 3.97 % 3.16 %
Non-interest income $ 3,785 $ 3,325 $ 4,365
Non-interest expense $ 16,822 $ 14,840 $ 15,248
Net loans receivable $ 2,029,973 $ 2,092,807 $ 2,037,724
Deposits $ 2,439,795 $ 1,928,580 $ 2,098,312
Non-performing loans $ 30,850 $ 25,222 $ 41,337
ALLL to total loans 2.42 % 1.32 % 2.42 %
ALLL to non-performing loans 163 % 111 % 122 %
Provision for loan losses $ 19,000 $ 9,652 $ 15,670
Efficiency ratio 67.17 % 54.00 % 61.47 %
Operating Results for Second Quarter
2009
Net Interest Income and Net Interest Margin. Second
quarter 2009 net interest income before provision for loan losses was
$21.3 million, a decrease of 12% from second quarter 2008. The decline
in net interest income was due to the decline in the net interest
margin, as well as a significant shift in asset allocation from loans
receivable to liquid assets and investment securities with lower yields.
Second quarter 2009 net interest margin (net interest income divided by
average interest-earning assets) decreased 103 basis points to 2.94%
from 3.97% for second quarter 2008. For the twelve months ended June 30,
2009, the targeted Fed funds rate declined 175 basis points, and the
Bank's interest-earning assets re-priced downward faster than its
interest-bearing liabilities.
As the recession unfolded during 2008 and 2009, the Bank focused on
building strong on-balance sheet liquidity. Total deposits grew 27% year
over year, with a substantial portion of the growth occurring during
second quarter 2009. These funds were invested into securities, federal
funds and cash at the Federal Reserve, which enabled the Bank to
substantially increase its liquidity position. However, the lower yield
on the more liquid assets adversely affected the net interest margin.
During this same twelve month period, the reduced demand for loans by
borrowers, as well as the stricter underwriting, caused gross loans
receivable to decline 2%. As loan demand improves, the Bank will be able
to convert liquid assets to higher-yielding assets without resorting to
wholesale funding sources.
The weighted average yield on the loan portfolio for second quarter 2009
decreased 99 basis points to 6.20% from 7.19% 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 fed funds rate cuts. This was partially mitigated by the fixed
rate loans in the portfolio. At June 30, 2009, fixed rate loans were 50%
of the loan portfolio. The weighted average yield on the variable rate
and fixed rate portfolios (excluding loan discount accretion) at June
30, 2009 was 4.66% and 7.61%, respectively, compared to 6.02% and 7.67%
at June 30, 2008.
The weighted average yield on securities available for sale for second
quarter 2009 decreased 72 basis points to 4.31% from 5.03% for the same
period last year. The decrease was primarily due to variable rate agency
CMO investment securities repricing downward as one month LIBOR rates
declined. The variable rate agency CMO portfolio was $77.4 million at
June 30, 2009, compared to $112.9 million at June 30, 2008.
The weighted average cost of deposits for second quarter 2009 decreased
55 basis points to 2.35% from 2.90% for the same period last year. The
cost of time deposits decreased 92 basis points to 2.76% from 3.68% for
the same period last year.
The weighted average cost of FHLB advances for second quarter 2009
remained stable at 3.73% for second quarter 2009, compared to 3.74% for
second quarter 2008.
Following are the weighted average data on a spot rate basis at June 30,
2009 and 2008:
June 30,
2009 2008
Weighted average loan portfolio yield (excluding discounts) 6.13 % 6.87 %
Weighted average securities available-for-sale portfolio yield 4.60 % 4.88 %
Weighted average cost of deposits 2.27 % 2.75 %
Weighted average cost of total interest-bearing deposits 2.62 % 3.36 %
Weighted average cost of FHLB advances 3.75 % 3.76 %
Sequentially, second quarter 2009 net interest income before provision
for loan losses increased $821 thousand, or 4%, from first quarter 2009.
The increase was attributable to an increase in average earning assets,
offset by a decline in net interest margin. Average interest-earning
assets increased $311.4 million, or 12%, during second quarter 2009. The
net interest margin decreased 22 basis points to 2.94% for second
quarter 2009 from 3.16% for first quarter 2009.
Non-accrual loan interest reversed was $169 thousand, $292 thousand, and
$394 thousand for second quarter 2009, second quarter 2008, and first
quarter 2009, respectively. Excluding this effect, the net interest
margin for second quarter 2009, second quarter 2008, and first quarter
2009 was 2.96%, 4.02%, and 3.23%, respectively.
Prepayment penalty income for second quarter 2009, second quarter 2008
and first quarter 2009 was $145 thousand, $580 thousand and $147
thousand, respectively. Excluding the effects of both non-accrual loan
interest income and prepayment penalty income, the net interest margin
for second quarter 2009, second quarter 2008 and first quarter 2009 was
2.94%, 3.92% and 3.20%, respectively.
Non-interest Income. Second quarter 2009 non-interest
income was $3.8 million, an increase of $460 thousand, or 14% compared
to second quarter 2008. The increase is primarily due to recognition of
an other-than-temporary impairment ("OTTI") charge on a non-agency asset
backed security of $1.7 million during second quarter 2008. Excluding
this charge, non-interest income decreased $1.3 million, or 25%. This
decrease was primarily due to a $633 thousand valuation difference in
interest swaps. In addition, during second quarter 2009, the Bank
recognized a loss on sale of OREO of $184 thousand and lower gains on
sales of securities available for sale.
Net gains on sales of loans were $542 thousand for second quarter 2009,
a decrease of $84 thousand from $626 thousand for second quarter 2008.
Included in the results for second quarter 2009 was a net gain of $523
thousand recognized from the sale of a problem loan that had been
transferred to loans held for sale during first quarter 2009 and $32
thousand in loan discounts recognized on SBA loans that were paid off.
During second quarter 2008, the Company had net gains of $459 thousand
on the sales of SBA loans, $71 thousand from the recognition of discount
from paid-off loans, and $95 thousand from the sale of other commercial
real estate loans.
There were no sales of SBA loans during second quarter 2009 compared to
$12.0 million during second quarter 2008.
Net gains on sales of securities available-for-sale were $220 thousand
for second quarter 2009, a decrease of 44% from $393 thousand for second
quarter 2008. During second quarter 2009, a total of $32.3 million in
available-for-sale MBS securities were sold, compared to $21.9 million
during second quarter 2008.
Sequentially, non-interest income decreased 13% from first quarter 2009.
The decrease was primarily due to lower net gains on sale of securities
available-for-sale during second quarter 2009. Net gains on sales of
securities available-for-sale were $220 thousand for second quarter
2009, compared to $785 thousand for first quarter 2009.
Non-interest Expense. Second quarter 2009 non-interest
expense was $16.8 million, an increase of 13% from $14.8 million for the
same period last year, primarily due to the increased FDIC insurance
premiums. FDIC insurance premiums increased $2.2 million, or 738%, to
$2.4 million for second quarter 2009, compared to $292 thousand for the
same quarter of 2008. A portion of the increase is due to a one-time
assessment fee of approximately $1.47 million in second quarter 2009.
Salaries and employee benefits expense decreased $905 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 to 368
at June 30, 2009 from 410 at June 30, 2008.
Occupancy expense increased $337 thousand, or 16%, due to higher
depreciation and amortization costs for the new branches opened in 2008
and 2009. Professional fees decreased $173 thousand, or 29%, over the
same quarter of the prior year, primarily due to lower legal fees.
Sequentially, non-interest expense for second quarter 2009 increased by
7% from $15.2 million in first quarter 2009, primarily due to the
one-time FDIC assessment of $1.47 million, partially offset by a
decrease in credit related expenses of $502 thousand in second quarter
2009.
Income Taxes. The effective income tax benefit was 44% for
second quarter 2009 compared to the effective income tax rate of 38% for
second quarter 2008 and tax benefit of 48% for first quarter 2009. The
effective tax benefit rates for the first and second quarters of 2009
were due to the effect of tax credits recognized in those periods.
Balance Sheet Summary
At June 30, 2009, total assets were $3.26 billion, an increase of 15%
from $2.83 billion at March 31, 2009. The increase in assets was driven
by substantial growth in core deposits, which were subsequently invested
in liquid assets and securities.
Gross loans receivable were $2.08 billion at June 30, 2009, a decrease
from $2.09 billion at March 31, 2009. Loan growth was impacted by
stricter loan underwriting criteria and decreased loan demand during the
first several months this year. New loan production was $80.5 million
during second quarter 2009, compared to $62.8 million during first
quarter 2009 and $146.2 million during second quarter 2008. Loan
pay-offs, pay downs, amortization and other changes totaled $88.4
million during second quarter 2009, compared to $73.1 million during
first quarter 2009 and $99.3 million during second quarter 2008. The
Bank anticipates that loan originations will continue to increase in the
second half of 2009, as the economy improves.
SBA loan originations were $2.9 million during second quarter 2009
compared to $570 thousand during first quarter 2009 and $12.9 million
during second quarter 2008. There were no sales of SBA loans during the
first and second quarters of 2009, compared to $12.0 million of SBA loan
sales during second quarter 2008.
Total deposits were $2.44 billion at June 30, 2009, an increase of 16%
from $2.10 billion at March 31, 2009. During second quarter 2009, core
deposits increased $328.7 million, which was partially offset by an
$87.6 million decrease in brokered deposits. The growth in core deposits
was the result of successful marketing to non-Korean customers and a
successful deposit campaign in connection with the opening of the Fort
Lee, New Jersey branch during second quarter 2009.
Credit Quality
The Company recorded a provision for loan losses of $19.0 million in
second quarter 2009, compared to $9.7 million for the same period of the
prior year and $15.7 million in first quarter 2009. The increase in the
provision for loan losses from first quarter 2009 was primarily due to
the impact of higher net charge offs and higher loss migration factors
on the allowance for loan losses.
Total watch list loans, defined as special mention and classified
assets, were $170.2 million at June 30, 2009, a decline from $174.1
million at March 31, 2009. Special mention loans decreased to $53.3
million at June 30, 2009, from $68.4 million at March 31, 2009.
Substandard loans increased to $112.6 million at June 30, 2009, from
$98.4 million at March 31, 2009.
Total delinquent loans, 30 or more days delinquent, declined to $42.8
million at June 30, 2009 from $50.4 million at March 31, 2009. Since
December 31, 2008, loans past due 30 - 59 days declined $5.6 million,
loans past due 60 - 89 days increased $3.9 million, and loans over 90
days past due, including non-accrual loans, decreased $6.7 million,
reflecting: 1) a decline in early stage delinquencies; and 2) the
migration of previously identified delinquencies to resolution.
Non-performing loans at June 30, 2009 were $30.9 million, or 1.48% of
total loans, compared to $41.3 million, or 1.98% of total loans, at
March 31, 2009. Inflows to non-performing loans during second quarter
2009 included 30 loans totaling $5.9 million, of which three were large
commercial real estate loans aggregating $3.5 million. Excluding the
three loans mentioned above, the remaining inflows to non-performing
loans averaged $88 thousand.
Non-performing assets at June 30, 2009 were $71.7 million, or 2.20% of
total assets, compared to $77.3 million, or 2.74%, at March 31, 2009.
Net loan charge-offs during second quarter 2009 were $19.2 million, or
3.66% of average loans on an annualized basis, compared to $4.9 million,
or 0.93% during second quarter 2008, and $8.6 million, or 1.63%, during
first quarter 2009. Second quarter 2009 charge-offs included 73 loans
averaging $266 thousand, of which four were large commercial real estate
relationships aggregating $9.2 million and two were commercial loans
aggregating $2.6 million. The remaining $7.4 million of charge-offs in
second quarter 2009 primarily consisted of loans to retail businesses,
averaging approximately $110 thousand per loan.
The allowance for loan losses at June 30, 2009 was $50.3 million, or
2.42% of gross loans receivable, compared to $50.5 million, or 2.42%, at
March 31, 2009. The allowance for loan losses to non-performing loans
was 163% at June 30, 2009, compared to 122% at March 31, 2009. Although
the ending allowance at June 30, 2009 was comparable to March 31, 2009,
the specific allowance for impaired loans declined due to higher net
charge-offs, and the quantitative loss allowance increased to reflect
higher loss migration factors due to charge-offs and loan classification
downgrades. The qualitative loss allowance remained stable.
Impaired loans at June 30, 2009 were $81.7 million, a slight decline
from $82.9 million at March 31, 2009. New impaired loans during the
quarter included five commercial real estate loans aggregating $11.0
million and two commercial loans aggregating $2.4 million. Specific
reserves for impaired loans were $13.3 million, or 16.3% of the
aggregate gross loan amount at June 30, 2009, compared to $20.9 million,
or 25.2%, at March 31, 2009. Excluding specific allowances for impaired
loans, the allowance coverage on non-impaired loans was 1.85% at June
30, 2009, compared to 1.48% at March 31, 2009.
Capital
At June 30, 2009, the Company continued to exceed the regulatory capital
requirements to be classified as a "well-capitalized institution." The
Leverage Ratio was 10.50% at June 30, 2009 compared to 11.95% at March
31, 2009. The Tier 1 Risk-based Ratio was 13.37% at June 30, 2009,
compared to 14.03% at March 31, 2009. The Total Risk-based Ratio was
14.63% at June 30, 2009, compared to 15.30% at March 31, 2009.
At June 30, 2009, tangible common equity (TCE) represented 6.45% of
tangible assets, compared to 7.74% at March 31, 2009. The decline in the
TCE ratio is primarily attributable to the increase in assets during the
quarter, most of which were liquid assets and GSE investment securities.
Outlook
Commenting on the outlook for the remainder of 2009, Ms. Kim said, "We
are cautiously optimistic that the asset quality problems have leveled
off. If so, it would most likely result in a lower level of charge-offs
and loan loss provisioning going forward. In addition, we are well
positioned to experience expansion in our net interest margin driven by
gradually increasing loan yields in the existing portfolio, declining
deposit costs as CDs re-price lower over the next two quarters, and the
anticipated conversion of our excess liquidity into higher yielding
loans. We believe that the combination of lower credit costs and an
expanding net interest margin creates a more favorable profit outlook
going forward," said Ms. Kim.
Conference Call and Webcast
A conference call with simultaneous webcast to discuss the Company's
second quarter 2009 financial results will be held today, July 23, 2009
at 2:30 p.m. Pacific / 5:30 p.m. Eastern. Interested participants and
investors may access the conference call by dialing 877-941-2927
(domestic) or 480-629-9725 (international), conference ID# 4116663.
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 July 30, 2009, conference ID# 4116663.
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 22 branches and 2 loan production offices in the United
States. Nara Bank operates full-service branches in California, New York
and New Jersey, with loan production offices in Texas and Georgia. 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)
Nara Bancorp, Inc.
Assets 6/30/2009 3/31/2009 % 12/31/2008 % 6/30/2008 %
change change change
Cash and due $ 239,454 $ 44,705 436 % $ 30,057 697 % $ 41,963 471 %
from banks
Federal funds 40,000 150,000 -73 % 19,000 111 % 14,500 176 %
sold
Securities
available for 745,792 430,219 73 % 406,586 83 % 291,343 156 %
sale, at fair
value
Federal Home
Loan Bank and
Federal 24,325 22,255 9 % 22,255 9 % 23,817 2 %
Reserve Bank
stock
Loans held
for sale, at
the lower of 13,664 10,965 25 % 9,821 39 % 6,100 124 %
cost or
market
Loans 2,080,312 2,088,228 0 % 2,098,443 -1 % 2,120,706 -2 %
receivable
Allowance for (50,339 ) (50,504 ) 0 % (43,419 ) 16 % (27,899 ) 80 %
loan losses
Net loans 2,029,973 2,037,724 0 % 2,055,024 -1 % 2,092,807 (0 )
receivable
Accrued
interest 10,187 8,276 23 % 8,168 25 % 8,334 22 %
receivable
Premises and
equipment, 11,580 11,749 -1 % 11,987 -3 % 11,683 -1 %
net
Bank owned
life 23,462 23,402 0 % 23,349 0 % 23,219 1 %
insurance
Goodwill 2,509 2,509 0 % 2,509 0 % 2,697 -7 %
Other
intangible 1,330 1,474 -10 % 1,627 -18 % 1,963 -32 %
assets, net
Other assets 118,533 82,259 44 % 81,671 45 % 55,158 115 %
Total assets $ 3,260,809 $ 2,825,537 15 % $ 2,672,054 22 % $ 2,573,584 27 %
Liabilities
Deposits $ 2,439,795 $ 2,098,312 16 % $ 1,938,603 26 % $ 1,928,580 27 %
Borrowings
from Federal 350,000 350,000 0 % 350,000 0 % 350,000 0 %
Home Loan
Bank
Subordinated 39,268 39,268 0 % 39,268 0 % 39,268 0 %
debentures
Accrued
interest 10,921 9,273 18 % 8,549 28 % 7,943 37 %
payable
Other 139,406 38,999 257 % 45,681 205 % 20,114 593 %
liabilities
Total 2,979,390 2,535,852 17 % 2,382,101 25 % 2,345,905 27 %
liabilities
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 67,000 67,000 0 % 67,000 0 % - 100 %
Perpetual
Preferred
Stock, Series
A with a
liquidation
preference of
$67,000,000
at June 30,
2009, March
31, 2009,
December 31,
2008 and June
30, 2008,
respectively
Preferred
stock (4,202 ) (4,434 ) -5 % (4,664 ) -10 % - 100 %
discount
Common stock,
$0.001 par
value;
authorized,
40,000,000
shares;
issued and
outstanding,
26,256,960,
26,256,960,
26,246,560, 26 26 0 % 26 0 % 26 0 %
and
26,197,560
shares at
June 30,
2009, March
31, 2009,
December 31,
2008 and June
30, 2008,
respectively
Common stock 4,766 4,766 0 % 4,766 0 % - 100 %
warrant
Capital 83,064 82,669 0 % 82,077 1 % 81,006 3 %
surplus
Retained 130,565 137,643 -5 % 141,890 -8 % 148,677 -12 %
earnings
Accumulated
other
comprehensive 200 2,015 -90 % (1,142 ) 118 % (2,030 ) 110 %
income
(loss), net
Total
stockholders' 281,419 289,685 -3 % 289,953 -3 % 227,679 24 %
equity
Total
liabilities
and $ 3,260,809 $ 2,825,537 15 % $ 2,672,054 22 % $ 2,573,584 27 %
stockholders'
equity
Nara Bancorp, Inc.
Consolidated Statements of Income (Loss)
Unaudited (Dollars in Thousands, Except for Per Share Data)
Three Months Ended, Six Months Ended,
6/30/2009 6/30/2008 % 3/31/2009 % 6/30/2009 6/30/2008 %
change change change
Interest income:
Interest and fees $ 32,461 $ 37,699 -14 % $ 31,672 2 % $ 64,133 $ 78,063 -18 %
on loans
Interest on 5,710 3,571 60 % 4,320 32 % 10,030 7,239 39 %
securities
Interest on
federal funds sold 239 517 -54 % 67 257 % 306 845 -64 %
and other
investments
Total interest 38,410 41,787 -8 % 36,059 7 % 74,469 86,147 -14 %
income
Interest expense:
Interest on 13,365 13,578 -2 % 11,825 13 % 25,190 28,785 -12 %
deposits
Interest on other 3,785 4,053 -7 % 3,795 0 % 7,580 8,596 -12 %
borrowings
Total interest 17,150 17,631 -3 % 15,620 10 % 32,770 37,381 -12 %
expense
Net interest
income before 21,260 24,156 -12 % 20,439 4 % 41,699 48,766 -14 %
provision for loan
losses
Provision for loan 19,000 9,652 97 % 15,670 21 % 34,670 14,645 137 %
losses
Net interest
(expense) income 2,260 14,504 -84 % 4,769 -53 % 7,029 34,121 -79 %
after provision
for loan losses
Non-interest
income:
Service fees on 1,698 1,723 -1 % 1,769 -4 % 3,467 3,544 -2 %
deposit accounts
Net gains on sales 542 626 -13 % 450 20 % 992 1,426 -30 %
of loans
Net gains on sales
of securities 220 393 -44 % 785 -72 % 1,005 860 17 %
available-for-sale
Net valuation
gains (losses) on (151 ) 482 -131 % (116 ) 30 % (267 ) 175 -253 %
interest rate
swaps
Net losses on (184 ) - 100 % (130 ) 42 % (314 ) - 100 %
sales of OREO
Other than
temporary - (1,713 ) 100 % - 0 % - (1,713 ) 100 %
impairment on
securities
Other income and 1,660 1,814 -8 % 1,607 3 % 3,267 3,632 -10 %
fees
Total non-interest 3,785 3,325 14 % 4,365 -13 % 8,150 7,924 3 %
income
Non-interest
expense:
Salaries and 6,551 7,456 -12 % 6,443 2 % 12,994 15,092 -14 %
employee benefits
Occupancy 2,484 2,147 16 % 2,426 2 % 4,910 4,310 14 %
Furniture and 736 707 4 % 695 6 % 1,431 1,416 1 %
equipment
Advertising and 505 653 -23 % 457 11 % 962 1,203 -20 %
marketing
Data processing 990 897 10 % 901 10 % 1,891 1,727 9 %
and communications
Professional fees 428 601 -29 % 678 -37 % 1,106 1,133 -2 %
FDIC assessment 2,446 292 738 % 750 226 % 3,196 601 432 %
Other 2,682 2,087 29 % 2,898 -7 % 5,580 3,789 47 %
Total non-interest 16,822 14,840 13 % 15,248 10 % 32,070 29,271 10 %
expense
Income (loss)
before income (10,777 ) 2,989 -461 % (6,114 ) 76 % (16,891 ) 12,774 -232 %
taxes
Income tax
provision (4,769 ) 1,136 -520 % (2,934 ) 63 % (7,703 ) 5,148 -250 %
(benefit)
Net income (loss) $ (6,008 ) $ 1,853 -424 % $ (3,180 ) 89 % (9,188 ) 7,626 -220 %
Dividends and
discount accretion $ (1,069 ) $ - 100 % $ (1,068 ) 0 % (2,137 ) - 100 %
on preferred stock
Net income (loss)
available to $ (7,077 ) $ 1,853 -482 % $ (4,248 ) 67 % $ (11,325 ) $ 7,626 -249 %
common
stockholders
Earnings (Loss)
Per Common Share:
Basic $ (0.27 ) $ 0.07 $ (0.16 ) $ (0.43 ) $ 0.29
Diluted $ (0.27 ) $ 0.07 $ (0.16 ) $ (0.43 ) $ 0.29
Average Shares
Outstanding:
Basic 26,256,960 26,195,035 26,250,258 26,253,627 26,194,353
Diluted 26,256,960 26,450,222 26,250,258 26,253,627 26,424,045
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 6/30/2009 6/30/2008 3/31/2009 6/30/2009 6/30/2008
measures:
ROA * -0.80 % 0.29 % -0.47 % -0.64 % 0.61 %
ROE * -8.26 % 3.18 % -4.36 % -6.31 % 6.62 %
Net interest margin 2.94 % 3.97 % 3.16 % 3.04 % 4.06 %
Efficiency ratio 67.17 % 54.00 % 61.47 % 64.33 % 51.63 %
* based on net
income before effect
of dividends and
discount accretion
on preferred stock
Three Months Ended Three Months Ended Three Months Ended
6/30/2009 6/30/2008 3/31/2009
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 $ 2,092,809 $ 32,461 6.20 % $ 2,096,825 $ 37,699 7.19 % $ 2,107,685 $ 31,672 6.01 %
for sale
Securities available 530,322 5,710 4.31 % 283,782 3,571 5.03 % 423,907 4,320 4.08 %
for sale
FRB and FHLB stock
and other 266,179 212 0.32 % 25,311 371 5.86 % 50,012 66 0.53 %
investments
Federal funds sold 5,934 27 1.82 % 27,552 146 2.12 % 2,267 1 0.18 %
Total interest $ 2,895,244 $ 38,410 5.31 % $ 2,433,470 $ 41,787 6.87 % $ 2,583,871 $ 36,059 5.58 %
earning assets
INTEREST BEARING
LIABILITIES:
Deposits:
Demand, $ 416,561 $ 2,417 2.32 % $ 263,094 $ 1,819 2.77 % $ 342,843 $ 2,265 2.64 %
interest-bearing
Savings 117,948 1,008 3.42 % 143,161 1,340 3.74 % 111,233 1,008 3.62 %
Time deposits:
$100,000 or more 679,064 4,109 2.42 % 769,301 7,046 3.66 % 579,333 3,544 2.45 %
Other 763,999 5,831 3.05 % 362,194 3,373 3.73 % 637,226 5,008 3.14 %
Total time deposits 1,443,063 9,940 2.76 % 1,131,495 10,419 3.68 % 1,216,559 8,552 2.81 %
Total interest 1,977,572 13,365 2.70 % 1,537,750 13,578 3.53 % 1,670,635 11,825 2.83 %
bearing deposits
FHLB advances 350,000 3,263 3.73 % 365,379 3,413 3.74 % 368,584 3,237 3.51 %
Other borrowings 37,764 522 5.53 % 38,214 640 6.70 % 38,232 558 5.84 %
Total interest 2,365,336 $ 17,150 2.90 % 1,941,343 $ 17,631 3.63 % 2,077,451 $ 15,620 3.01 %
bearing liabilities
Non-interest bearing 297,089 337,229 289,637
demand deposits
Total funding
liabilities / cost $ 2,662,425 2.58 % $ 2,278,572 3.10 % $ 2,367,088 2.64 %
of funds
Net interest income
/ net interest $ 21,260 2.41 % $ 24,156 3.24 % $ 20,439 2.57 %
spread
Net interest margin 2.94 % 3.97 % 3.16 %
Net interest margin,
excluding effect of
non-accrual loan 2.96 % 4.02 % 3.23 %
income(expense)
Net interest margin,
excluding effect of
non-accrual loan
income(expense) and 2.94 % 3.92 % 3.20 %
prepayment fee
income
Non-accrual loan
income (reversed) $ (169 ) $ (292 ) $ (394 )
recognized
Prepayment fee 145 580 147
income received
Net $ (24 ) $ 288 $ (247 )
Cost of deposits:
Non-interest bearing $ 297,089 $ - $ 337,229 $ - $ 289,637 $ -
demand deposits
Interest bearing 1,977,572 13,365 2.70 % 1,537,750 13,578 3.53 % 1,670,635 11,825 2.83 %
deposits
Total deposits $ 2,274,661 $ 13,365 2.35 % $ 1,874,979 $ 13,578 2.90 % $ 1,960,272 $ 11,825 2.41 %
Six Months Ended Six Months Ended
6/30/2009 6/30/2008
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 $ 2,100,206 $ 64,133 6.11 % $ 2,076,180 $ 78,063 7.52 %
for sale
Securities available 477,424 10,030 4.20 % 288,033 7,239 5.03 %
for sale
FRB and FHLB stock
and other 158,692 278 0.35 % 24,126 686 5.69 %
investments
Federal funds sold 4,110 28 1.36 % 14,529 159 2.19 %
Total interest $ 2,740,432 $ 74,469 5.43 % $ 2,402,868 $ 86,147 7.17 %
earning assets
INTEREST BEARING
LIABILITIES:
Deposits:
Demand, $ 379,905 $ 4,681 2.46 % $ 254,607 $ 3,730 2.93 %
interest-bearing
Savings 114,609 2,016 3.52 % 139,878 2,648 3.79 %
Time deposits:
$100,000 or more 629,474 7,654 2.43 % 776,227 15,948 4.11 %
Other 700,963 10,839 3.09 % 314,677 6,459 4.11 %
Total time deposits 1,330,437 18,493 2.78 % 1,090,904 22,407 4.11 %
Total interest 1,824,951 25,190 2.76 % 1,485,389 28,785 3.88 %
bearing deposits
FHLB advances 359,252 6,499 3.62 % 383,264 7,195 3.75 %
Other borrowings 37,985 1,081 5.69 % 37,917 1,401 7.39 %
Total interest 2,222,188 $ 32,770 2.95 % 1,906,570 $ 37,381 3.92 %
bearing liabilities
Non-interest bearing 293,384 337,636
demand deposits
Total funding
liabilities / cost $ 2,515,572 2.61 % $ 2,244,206 3.33 %
of funds
Net interest income
/ net interest $ 41,699 2.49 % $ 48,766 3.25 %
spread
Net interest margin 3.04 % 4.06 %
Net interest margin,
excluding effect of
non-accrual loan 3.08 % 4.07 %
income(expense)
Net interest margin,
excluding effect of
non-accrual loan
income(expense) and 3.06 % 4.00 %
prepayment fee
income
Non-accrual loan
income (reversed) $ (560 ) $ (133 )
recognized
Prepayment fee 292 801
income received
Net $ (268 ) $ 668
Cost of deposits:
Non-interest bearing $ 293,384 $ - $ 337,636 $ -
demand deposits
Interest bearing 1,824,951 25,190 2.76 % 1,485,389 28,785 3.88 %
deposits
Total deposits $ 2,118,335 $ 25,190 2.38 % $ 1,823,025 $ 28,785 3.16 %
For the Three Months Ended For the Six Months Ended
6/30/2009 6/30/2008 % change 3/31/2009 % change 6/30/2009 6/30/2008 % change
AVERAGE BALANCES
Gross loans,
includes loans held $ 2,092,809 $ 2,096,825 0 % $ 2,107,685 -1 % 2,100,206 2,076,180 1 %
for sale
Investments 802,435 336,645 138 % 476,186 69 % 640,226 326,688 96 %
Interest-earning 2,895,244 2,433,470 19 % 2,583,871 12 % 2,740,432 2,402,868 14 %
assets
Total assets 3,007,256 2,545,239 18 % 2,697,622 11 % 2,852,961 2,512,140 14 %
Interest-bearing 1,977,572 1,537,750 29 % 1,670,635 18 % 1,824,951 1,485,389 23 %
deposits
Interest-bearing 2,365,336 1,941,343 22 % 2,077,451 14 % 2,222,188 1,906,570 17 %
liabilities
Non-interest-bearing 297,089 337,229 -12 % 289,637 3 % 293,384 337,636 -13 %
demand deposits
Stockholders' Equity 290,959 232,865 25 % 291,908 0 % 291,094 230,232 26 %
Net interest earning 529,908 492,127 8 % 506,420 5 % 518,244 496,298 4 %
assets
LOAN PORTFOLIO 6/30/2009 3/31/2009 % change 12/31/2008 % change 6/30/2008 % change
COMPOSITION:
Commercial loans $ 556,793 $ 573,615 -3 % $ 598,556 -7 % $ 615,977 -10 %
Real estate loans 1,502,048 1,491,480 1 % 1,472,872 2 % 1,474,204 2 %
Consumer and other 23,069 24,633 -6 % 28,520 -19 % 32,140 -28 %
loans
Loans outstanding 2,081,910 2,089,728 0 % 2,099,948 -1 % 2,122,321 -2 %
Unamortized deferred
loan fees - net of (1,598 ) (1,500 ) 7 % (1,505 ) 6 % (1,615 ) -1 %
costs
Loans, net of
deferred loan fees 2,080,312 2,088,228 0 % 2,098,443 -1 % 2,120,706 -2 %
and costs
Allowance for loan (50,339 ) (50,504 ) 0 % (43,419 ) 16 % (27,899 ) 80 %
losses
Loan receivable, net $ 2,029,973 $ 2,037,724 0 % $ 2,055,024 -1 % $ 2,092,807 -3 %
DEPOSIT COMPOSITION 6/30/2009 3/31/2009 % Change 12/31/2008 % Change 6/30/2008 % Change
Non-interest-bearing $ 318,874 $ 297,540 7 % $ 303,656 5 % $ 351,188 -9 %
demand deposits
Money market and 517,020 364,297 42 % 306,478 69 % 266,988 94 %
other
Saving deposits 129,120 113,614 14 % 113,186 14 % 146,362 -12 %
Time deposits of 763,088 590,342 29 % 626,850 22 % 800,255 -5 %
$100,000 or more
Other time deposits 711,693 732,519 -3 % 588,433 21 % 363,787 96 %
Total deposit $ 2,439,795 $ 2,098,312 16 % $ 1,938,603 26 % $ 1,928,580 27 %
balances
DEPOSIT COMPOSITION 6/30/2009 3/31/2009 12/31/2008 6/30/2008
(%)
Non-interest-bearing 13.1 % 14.2 % 15.7 % 18.2 %
demand deposits
Money market and 21.2 % 17.4 % 15.8 % 13.8 %
other
Saving deposits 5.3 % 5.4 % 5.8 % 7.6 %
Time deposits of 31.3 % 28.1 % 32.3 % 41.5 %
$100,000 or more
Other time deposits 29.1 % 34.9 % 30.4 % 18.9 %
Total deposit 100.0 % 100.0 % 100.0 % 100.0 %
balances
CAPITAL RATIOS 6/30/2009 3/31/2009 12/31/2008 6/30/2008
Total stockholders' $ 281,419 $ 289,685 $ 289,953 $ 227,679
equity
Tier 1 risk-based 13.37 % 14.03 % 14.32 % 11.53 %
capital ratio
Total risk-based 14.63 % 15.30 % 15.58 % 12.76 %
capital ratio
Tier 1 leverage 10.50 % 11.95 % 12.61 % 10.35 %
ratio
Book value per share $ 8.14 $ 8.47 $ 8.49 $ 8.69
*
Tangible common $ 8.00 $ 8.32 $ 8.33 $ 8.51
equity per share *
Tangible common
equity to tangible 6.45 % 7.74 % 8.20 % 8.68 %
assets *
* excludes TARP
preferred stock and
stock warrants of
$67.0 million
For the Three Months Ended For the Six Months Ended
ALLOWANCE FOR LOAN 6/30/2009 3/31/2009 % Change 6/30/2008 % Change 6/30/2009 6/30/2008 % Change
LOSSES:
Balance at Beginning $ 50,504 $ 43,419 16 % $ 23,116 118 % $ 43,419 $ 20,035 117 %
of Period
Provision for Loan 19,000 15,670 21 % 9,652 97 % 34,670 14,645 137 %
Losses
Recoveries 251 83 202 % 58 333 % 334 105 218 %
Charge Offs (19,416 ) (8,668 ) 124 % (4,927 ) 294 % (28,084 ) (6,886 ) 308 %
Balance at End of $ 50,339 $ 50,504 0 % $ 27,899 80 % $ 50,339 $ 27,899 80 %
Period
Net
charge-off/Average 3.66 % 1.63 % 0.93 % 2.64 % 0.65 %
gross loans
(annualized)
NON-PERFORMING 6/30/2009 3/31/2009 12/31/2008 6/30/2008
ASSETS
Delinquent Loans 90
days or more on $ 30,850 $ 41,330 $ 37,580 $ 25,222
Non-Accrual Status
Delinquent Loans 90
days or more on - 7 - -
Accrual Status
Total Non-Performing 30,850 41,337 37,580 25,222
Loans
Other real estate 3,805 4,822 2,969 -
owned
Restructured Loans 37,026 31,131 3,256 1,414
Total Non-Performing $ 71,681 $ 77,290 $ 43,805 $ 26,636
Assets
Non-Performing 2.20 % 2.74 % 1.64 % 1.03 %
Assets/ Total Assets
Non-Performing 1.48 % 1.98 % 1.79 % 1.19 %
Loans/ Gross Loans
Allowance for loan 2.42 % 2.42 % 2.07 % 1.32 %
losses/ Gross Loans
Allowance for loan
losses/ 163 % 122 % 116 % 111 %
Non-Performing Loans
For the Three Months Ended, For the Six Months Ended,
PTPP COVERAGE 6/30/2009 3/31/2009 12/31/2008 9/30/2008 6/30/2008 6/30/2009 6/30/2008
Pre Tax - Pre $ 8,223 $ 9,556 $ 11,013 $ 14,773 $ 12,641 $ 17,779 $ 27,419
Provision income
Provision for loan (19,000 ) (15,670 ) (28,000 ) (6,180 ) (9,652 ) (34,670 ) (14,645 )
losses
Income (loss) before $ (10,777 ) $ (6,114 ) $ (16,987 ) $ 8,593 $ 2,989 $ (16,891 ) $ 12,774
income taxes
For the Three Months Ended, For the Six Months Ended,
NET CHARGED OFF 6/30/2009 3/31/2009 12/31/2008 9/30/2008 6/30/2008 6/30/2009 6/30/2008
LOANS BY TYPE
Real Estate Loans $ 12,410 $ 2,121 $ 2,613 $ 2,128 $ 2,441 $ 14,531 $ 2,688
Commercial Loans 6,608 5,204 9,685 4,053 2,331 11,812 3,862
Consumer Loans 147 1,260 89 92 97 1,407 231
Total Net $ 19,165 $ 8,585 $ 12,387 $ 6,273 $ 4,869 $ 27,750 $ 6,781
Charge-offs
DELINQUENT LOANS BY 6/30/2009 3/31/2009 12/31/2008 9/30/2008 6/30/2008
DAYS PAST DUE
30 - 59 Days $ 5,364 $ 8,272 $ 10,967 $ 10,486 $ 4,494
60 - 89 Days 6,593 838 2,668 2,792 3,264
90 days or more and - 7 - - -
accruing
Non-accrual 30,850 41,330 37,580 30,501 25,222
Total Delinquent $ 42,807 $ 50,447 $ 51,215 $ 43,779 $ 32,980
Loans
DELINQUENT LOANS BY 6/30/2009 3/31/2009 12/31/2008 9/30/2008 6/30/2008
TYPE*
Real Estate Loans $ 28,242 $ 31,823 $ 28,409 $ 18,681 $ 19,247
Commercial Loans 14,041 18,076 21,030 24,151 13,085
Consumer Loans 524 548 1,776 947 648
Total Delinquent $ 42,807 $ 50,447 $ 51,215 $ 43,779 $ 32,980
Loans
* Delinquent over 30
days, including
non-accrual loans
NON-ACCRUAL LOANS BY 6/30/2009 3/31/2009 12/31/2008 9/30/2008 6/30/2008
TYPE
Real Estate Loans $ 20,515 $ 26,153 $ 21,759 $ 11,410 $ 15,451
Commercial Loans 10,072 14,876 14,379 18,885 9,467
Consumer Loans 263 301 1,442 206 304
Total Non-accrual $ 30,850 $ 41,330 $ 37,580 $ 30,501 $ 25,222
Loans
WATCH LIST LOANS 6/30/2009 3/31/2009 12/31/2008 9/30/2008 6/30/2008
Special Mention $ 53,277 $ 68,388 $ 71,169 $ 38,461 $ 12,835
Substandard 112,641 98,412 55,622 44,580 41,991
Doubtful 4,237 7,288 9,883 7,306 3,246
Loss - 8 - - 11
Total Watch List $ 170,155 $ 174,096 $ 136,674 $ 90,347 $ 58,083
Loans
Source: Nara Bancorp, Inc.
Contact: Investors and Financial Media:
Nara Bancorp, Inc.
Tony Rossi, Financial Relations Board
213-486-6545