Q4 2009 Summary:
-- $82 Million in Capital Raised Through Equity Offering
-- Net Loss of $0.04 per Share
-- Net Loan Growth of $78 Million
-- Net Interest Margin Increased 20 Basis Points From Q3 2009
-- Net Interest Income Increased 9% From Q3 2009
-- Allowance for Loan Losses Increased to 2.69% From 2.49%
-- Efficiency ratio Improved to 47.0% From 50.4% in Q3 2009
-- $55.7 Million Increase in Watchlist Loans
LOS ANGELES--(BUSINESS WIRE)--
Nara Bancorp, Inc. (the "Company") (NASDAQ: NARA), the holding company
of Nara Bank (the "Bank"), reported a net loss available to common
stockholders of $1.5 million, or ($0.04) per diluted share, for fourth
quarter 2009, compared to a net loss available to common stockholders of
($10.3) million, or ($0.39) per diluted share, for fourth quarter 2008,
and net income available to common stockholders of $2.9 million, or
$0.11 per diluted share, for third quarter 2009.
Alvin Kang, newly appointed President and Chief Executive Officer, said,
"During the fourth quarter, we saw a substantial increase in the number
of loans that were downgraded as economic conditions remained
challenging. We continue to be very proactive in managing through this
credit cycle by identifying borrowers that are showing early signs of
distress, modifying loans when appropriate, and further building our
allowance for loan losses. The higher level of provision expense
recorded in the fourth quarter prevented us from being profitable
despite a continuation of positive trends in most other areas of the
Bank, including an expansion in our net interest margin, net loan
growth, and an improvement in our efficiency ratio.
"Most significantly, we were able to substantially strengthen the Bank's
financial position by raising $82 million in capital during the fourth
quarter. As a result of our very strong capital ratios, we are well
positioned to manage through the credit cycle, while also having the
ability to capitalize on attractive opportunities that emerge in our
target markets," said Mr. Kang.
Financial Highlights
2009 Fourth Quarter 2008 Fourth Quarter 2009 Third Quarter
(Dollars in thousands)
Net income (loss) $ (476 ) $ (9,853 ) $ 3,941
Net income (loss)
available to $ (1,546 ) $ (10,327 ) $ 2,872
common
stockholders
Diluted earnings $ (0.04 ) $ (0.39 ) $ 0.11
(loss) per share
Net interest $ 26,414 $ 22,702 $ 24,233
income
Net interest 3.34 % 3.71 % 3.14 %
margin
Non-interest $ 5,424 $ 2,058 $ 4,894
income
Non-interest $ 14,975 $ 13,747 $ 14,668
expense
Net loans $ 2,162,009 $ 2,075,935 $ 2,099,223
receivable
Deposits $ 2,434,190 $ 1,938,603 $ 2,487,070
Non-performing $ 51,674 $ 37,580 $ 35,510
loans *
ALLL to gross 2.69 % 2.07 % 2.49 %
loans *
ALLL to
non-performing 115 % 116 % 149 %
loans *
Provision for loan $ 17,853 $ 28,000 $ 8,500
losses
Efficiency ratio 47.03 % 55.52 % 50.36 %
* Excludes the guaranteed portion of delinquent SBA loans totaling $12.5
million, $20.9 million and $20.9 million at fourth quarter 2009, fourth quarter
2008 and third quarter 2009, respectively.
Operating Results for Fourth Quarter
2009
Net Interest Income and Net Interest Margin. Fourth
quarter 2009 net interest income before provision for loan losses was
$26.4 million, an increase of 16% from fourth quarter 2008. The increase
in net interest income was due to a 29% increase in average interest
earning assets offset by a decline in net interest margin, caused in
part by higher average liquid assets with lower yields.
Fourth quarter 2009 net interest margin (net interest income divided by
average interest-earning assets) decreased 37 basis points to 3.34% from
3.71% for fourth quarter 2008. During 2008, market interest rates
declined as the targeted federal funds rate declined 175 basis points,
and as a result, the Bank's interest-earning assets re-priced downward
faster than its interest-bearing liabilities during 2009.
The weighted average yield on the loan portfolio for fourth quarter 2009
decreased 54 basis points to 6.21% from 6.75% 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. This downward pressure on rates was partially mitigated
by the fixed rate loans in the portfolio. At December 31, 2009, fixed
rate loans were 52% of the loan portfolio. The weighted average yield on
the variable rate and fixed rate loan portfolios (excluding loan
discount accretion) at December 31, 2009 was 4.84% and 7.47%,
respectively, compared to 4.65% and 7.62% at December 31, 2008.
The weighted average yield on securities available-for-sale ("AFS") for
fourth quarter 2009 decreased 73 basis points to 3.92% from 4.65% for
the same period 2008. The decrease was primarily attributable to $768
million in new investment securities purchased during 2009, which had
lower yields than the weighed average yield of the portfolio at December
31, 2008. The weighted average yield on AFS investment securities
purchased during 2009 was 3.80%.
The weighted average cost of deposits for fourth quarter 2009 decreased
81 basis points to 1.93% from 2.74% for the same period last year. The
cost of time deposits decreased 61 basis points to 2.55% from 3.16% for
the same period last year.
The weighted average cost of FHLB advances for fourth quarter 2009 also
decreased 2 basis points to 3.63% for fourth quarter 2009, compared to
3.65% for fourth quarter 2008.
Following are the weighted average rate data on a spot rate basis at
December 31, 2009 and 2008:
December 31,
2009 2008
Weighted average loan portfolio yield (excluding discounts) 6.20 % 6.14 %
Weighted average securities available-for-sale portfolio yield 3.78 % 4.08 %
Weighted average cost of deposits 1.79 % 2.59 %
Weighted average cost of total interest-bearing deposits 2.09 % 3.07 %
Weighted average cost of FHLB advances 3.46 % 3.70 %
Net interest margin 3.52 % 3.18 %
Sequentially, fourth quarter 2009 net interest income before provision
for loan losses increased $2.2 million, or 9%, from third quarter 2009.
The increase was attributable to an increase in average interest-earning
assets and an improved net interest margin. Average interest-earning
assets increased $71.8 million, or 2%, during fourth quarter 2009. The
net interest margin increased 20 basis points to 3.34% for fourth
quarter 2009 from 3.14% for third quarter 2009. The increase in net
interest margin was primarily due to lower deposit costs.
Non-accrual loan interest reversed was $581 thousand, $283 thousand, and
$328 thousand for fourth quarter 2009, fourth quarter 2008, and third
quarter 2009, respectively. Excluding this effect, the net interest
margin for fourth quarter 2009, fourth quarter 2008, and third quarter
2009 was 3.42%, 3.75%, and 3.18%, respectively.
Prepayment penalty income for fourth quarter 2009, fourth quarter 2008
and third quarter 2009 was $166 thousand, $433 thousand and $173
thousand, respectively. Excluding the effects of both non-accrual loan
interest income and prepayment penalty income, the net interest margin
for fourth quarter 2009, fourth quarter 2008 and third quarter 2009 was
3.40%, 3.68% and 3.16%, respectively.
Non-interest Income. Fourth quarter 2009 non-interest
income was $5.4 million, an increase of $3.4 million, or 164% compared
to fourth quarter 2008. The increase is primarily due to net gains on
sales of securities available-for-sale of $1.7 million during fourth
quarter 2009. There were no gains on sales of securities
available-for-sale for the same quarter 2008. A total of $99.8 million
in available-for-sale GSE investment securities were sold as part of the
rebalancing of duration and mix of the investment securities portfolio.
During fourth quarter 2009, the Bank also sold $11.0 million in SBA
loans and recognized $556 thousand in net gains from the sales, compared
to $87 thousand during same period 2008. During fourth quarter 2008,
there were net valuation losses on interest rate swaps of $800 thousand
and net losses on sales of OREO of $1.0 million, which adversely
affected the non-interest income.
Sequentially, non-interest income increased 11% from third quarter 2009.
The increase was primarily due to net gains on sale of SBA loans of $556
thousand during fourth quarter 2009, compared to net losses of $126
thousand on sales of commercial loans during third quarter 2009.
Non-interest Expense. Fourth quarter 2009 non-interest
expense was $15.0 million, an increase of 9% from $13.7 million for the
same period last year. The increase was primarily due to an increase in
FDIC insurance premiums and credit related expenses. FDIC insurance
premiums increased $673 thousand, or 175%, to $1.1 million for fourth
quarter 2009, compared to $384 thousand for the same quarter of 2008.
The increase is due to an increase in the assessment rate imposed by the
FDIC starting with second quarter 2009. Credit related expenses, which
includes loan collection and OREO expenses, increased 61% to $783
thousand for fourth quarter 2009, compared to $487 thousand for the same
quarter of 2008.
Salaries and employee benefits expense decreased $538 thousand, or 8%,
over the same quarter of the prior year, primarily due to decreases in
bonus expense and in the number of full-time equivalent employees, which
decreased to 337 at December 31, 2009 from 367 at December 31, 2008.
Sequentially, non-interest expense for fourth quarter 2009 increased by
2% from $14.7 million in third quarter 2009, primarily due to increases
in professional fees, FDIC assessment and data processing and
communication costs.
Income Taxes. The effective income tax benefit rate was
52% for fourth quarter 2009 compared to 42% for fourth quarter 2008 and
a tax rate of 34% for third quarter 2009. The higher effective tax
benefit rate for fourth quarter 2009 and lower tax rate for the third
quarter of 2009 were due to the effect of higher tax credits recognized
in those periods.
Balance Sheet Summary
Gross loans receivable were $2.21 billion at December 31, 2009, an
increase of $78 million from $2.13 billion at September 30, 2009. New
loan production was $149.2 million during fourth quarter 2009, compared
to $131.9 million during third quarter 2009 (which included $47.1
million in purchased loans), and $81.3 million during fourth quarter
2008. Loan pay-offs, pay-downs, amortization and other changes totaled
$78.3 million during fourth quarter 2009, compared to $59.5 million
during third quarter 2009 and $75.1 million during fourth quarter 2008.
Total deposits were $2.43 billion at December 31, 2009, a decrease of 2%
from $2.49 billion at September 30, 2009. The decrease in total deposits
was primarily due to declines in retail interest bearing demand accounts
and retail non-jumbo CDs, which were partially offset by an increase in
retail jumbo CDs.
Credit Quality
The Company recorded a provision for loan losses of $17.9 million in
fourth quarter 2009, compared to $28.0 million for the same period of
the prior year and $8.5 million in third quarter 2009. The increase in
the provision for loan losses from third quarter 2009 was primarily due
to the impact of higher net charge offs and increases in Special Mention
and Classified loans.
Total Watchlist loans, defined as Special Mention and Classified loans,
were $199.9 million at December 31, 2009, an increase from $144.2
million at September 30, 2009. Special mention loans increased to $42.7
million at December 31, 2009, from $30.8 million at September 30, 2009,
primarily due to two commercial real estate loans aggregating $11.5
million. Substandard loans increased to $153.5 million at December 31,
2009, from $110.7 million at September 30, 2009, mainly due to 43
commercial real estate loans aggregating $52.3 million of which $27.5
million or 19 loans were restructured.
Total delinquent loans, 30 or more days delinquent, was $69.5 million at
December 31, 2009, compared to $68.0 million at September 30, 2009.
Loans past due 30 - 59 days decreased to $14.9 million at December 31,
2009, from $24.5 million at September 30, 2009.
Non-performing loans at December 31, 2009, were $51.7 million, or 2.34%
of total loans, compared to $35.5 million, or 1.67% of total loans, at
September 30, 2009. Inflows to non-performing loans during the fourth
quarter 2009 included five commercial real estate loans aggregating
$11.1 million.
Non-performing assets, comprised of non-accrual loans, accruing
restructured loans and other real estate owned, at December 31, 2009
were $118.1 million, or 5.34% of gross loans plus other real estate
owned, compared to $84.9 million, or 3.98%, at September 30, 2009. Other
real estate owned decreased to $2.0 million at December 31, 2009,
compared to $4.7 million at September 30, 2009 as five properties were
sold during fourth quarter 2009. Accruing troubled debt restructured
loans included in non-performing assets, increased $19.6 million to
$64.3 million at December 31, 2009, from $44.7 million at September 30,
2009. This increase was primarily due to five commercial real estate
loans aggregating $16.2 million.
Net loan charge-offs during fourth quarter 2009 were $11.4 million, or
2.08% of average loans on an annualized basis, compared to $12.4
million, or 2.37% during fourth quarter 2008, and $5.9 million, or 1.11%
of average loans, during third quarter 2009. Fourth quarter 2009 charge
offs included partial charge-offs of four commercial real estate loans
aggregating $5.5 million. Excluding these four relationships, the
average charge-off during the quarter was $88 thousand.
The allowance for loan losses at December 31, 2009, was $59.4 million,
or 2.69% of gross loans receivable (net of the guaranteed portion of
delinquent SBA loans), compared to $53.0 million, or 2.49%, at September
30, 2009. The ratio of the allowance for loan losses to non-performing
loans was 115% at December 31, 2009, compared to 149% at September 30,
2009.
Impaired loans (defined as loans where it is probable that all principal
and interest payments due will not be collectible according to
contractual terms) at December 31, 2009, were $121.0 million, an
increase from $88.4 million at September 30, 2009. New impaired loans
during the quarter included nine commercial real estate loans
aggregating $25.2 million that were restructured. Specific reserves for
impaired loans were $19.8 million, or 16.43% of the aggregate impaired
loan amount at December 31, 2009, compared to $16.0 million, or 18.1%,
at September 30, 2009. Excluding specific reserves for impaired loans,
the allowance coverage on the remaining loan portfolio was 1.90% at
December 31, 2009, compared to 1.81% at September 30, 2009.
Capital
During October 2009, the Company raised $82.0 million (net of expenses)
through the public offering of its common stock which significantly
strengthened its capital ratios. At December 31, 2009, the Company
continued to be well in excess of the regulatory capital requirements to
be classified as a "well-capitalized" institution. The Leverage Ratio
was 12.36% at December 31, 2009, compared to 9.95% at September 30,
2009. The Tier 1 Risk-based Ratio was 16.73% at December 31, 2009,
compared to 13.51% at September 30, 2009. The Total Risk-based Ratio was
17.99% at December 31, 2009, compared to 14.77% at September 30, 2009.
At December 31, 2009, common equity represented 9.37% of total assets,
compared to 8.34% at December 31, 2008. Tangible common equity (TCE)
represented 9.27% of tangible assets at December 31, 2009, compared to
8.20% at December 31, 2008.
Tangible common equity to tangible assets is a non-GAAP financial
measure that represents common equity less goodwill and other intangible
assets, net divided by total assets less goodwill and other intangible
assets, net. Management reviews tangible common equity to tangible
assets in evaluating the Company's capital levels and has included this
ratio in response to market participant interest in tangible common
equity as a measure of capital. See the accompanying financial
information for a reconciliation of the ratio of tangible common equity
to tangible assets with stockholders' equity and total assets.
Outlook
For the full year 2010, Nara Bancorp expects the following:
-- A double-digit increase in net interest income primarily driven by an
expanding net interest margin
-- A reduction in total deposits as the Bank runs off some of its higher
cost jumbo CDs as they mature in the first half of 2010
-- A reduction in total assets as the Bank manages down its concentration
of commercial real estate loans
-- An increase in non-interest expense driven by an increase in headcount
to support the addition of two new branches on the East Coast
-- A continuation of elevated credit costs
Commenting on the outlook for the 2010, Mr. Kang said, "We anticipate
that our quarterly provision for credit losses will continue to be
difficult to predict until a meaningful economic recovery takes place.
However, we believe the earnings power of the Bank will be much stronger
in 2010, which will allow us to better absorb the credit costs that we
incur. With an expanding net interest margin, we expect to generate
higher earnings in 2010 on a pre-tax, pre-provision basis than we did in
2009. We also continue to be active in looking for opportunities to
deploy our capital in ways that will meaningfully strengthen our
franchise and enhance our ability to generate long-term profitable
growth."
Conference Call and Webcast
A conference call with simultaneous webcast to discuss the Company's
fourth quarter 2009 financial results will be held tomorrow, January 26,
2010 at 9:30 a.m. Pacific / 12:30 p.m. Eastern. Interested participants
and investors may access the conference call by dialing 866-225-8754
(domestic) or 480-629-9692 (international), conference ID# 4202673.
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 February 2, 2010, conference ID# 4202673.
About Nara Bancorp, Inc.
Nara Bancorp, Inc. is the parent company of Nara Bank, which was founded
in 1989. Nara Bank is a full-service community bank headquartered in Los
Angeles, with 21 branches and 1 loan production office in the United
States. Nara Bank operates full-service branches in California, New York
and New Jersey, and a loan production office in Texas. Nara Bank was
founded specifically to serve the needs of Korean-Americans. Presently,
Nara Bank serves a diverse group of customers mirroring its communities.
Nara Bank specializes in core business banking products for small and
medium-sized companies, with an emphasis in commercial real estate and
business lending, SBA lending and international trade financing. Nara
Bank is a member of the FDIC and is an Equal Opportunity Lender.
Forward-Looking Statements
This press release contains forward-looking statements, including
statements about future operations and projected full-year financial
results that are subject to risks and uncertainties that could cause
actual results to differ materially from those expressed or implied by
such forward looking statements. These risks and uncertainties include
but are not limited to economic, competitive, governmental and
technological factors affecting the Company's operations, markets,
products, services, and pricing. Readers should carefully review the
risk factors and the information that could materially affect the
Company's financial results and business, described in documents the
Company files from time to time with the Securities and Exchange
Commission, including its quarterly reports on Form 10-Q and Annual
Reports on Form 10-K, and particularly the discussions of business
considerations and certain factors that may affect results of operations
and stock price set forth therein. Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak only as
of the date of this press release. The Company undertakes no obligation
to revise or publicly release the results of any revision to these
forward-looking statements.
Nara Bancorp, Inc.
Consolidated Statements of Financial Condition
Unaudited (Dollars in Thousands)
Nara Bancorp, Inc.
Assets 12/31/2009 9/30/2009 % 12/31/2008 %
change change
Cash and due from $ 105,592 $ 182,150 -42 % $ 30,057 251 %
banks
Federal funds sold 20,000 20,000 0 % 19,000 5 %
Securities available
for sale, at fair 782,690 744,044 5 % 406,586 93 %
value
Federal Home Loan
Bank and Federal 24,334 24,325 0 % 22,255 9 %
Reserve Bank stock
Loans held for sale,
at the lower of cost 4,756 14,137 -66 % 9,821 -52 %
or market
Loans receivable 2,221,433 2,152,190 3 % 2,119,354 5 %
Allowance for loan (59,424 ) (52,967 ) 12 % (43,419 ) 37 %
losses
Net loans receivable 2,162,009 2,099,223 3 % 2,075,935 4 %
Accrued interest 11,261 11,062 2 % 8,168 38 %
receivable
Premises and 10,865 11,222 -3 % 11,987 -9 %
equipment, net
Bank owned life 23,571 23,518 0 % 23,349 1 %
insurance
Goodwill 2,509 2,509 0 % 2,509 0 %
Other intangible 1,042 1,186 -12 % 1,627 -36 %
assets, net
Other assets 79,328 79,314 0 % 60,760 31 %
Total assets $ 3,227,957 $ 3,212,690 0 % $ 2,672,054 21 %
Liabilities
Deposits $ 2,434,190 $ 2,487,070 -2 % $ 1,938,603 26 %
Borrowings from
Federal Home Loan 350,000 350,000 0 % 350,000 0 %
Bank
Subordinated 39,268 39,268 0 % 39,268 0 %
debentures
Accrued interest 12,674 12,550 1 % 8,549 48 %
payable
Other liabilities 23,850 33,787 -29 % 45,681 -48 %
Total liabilities 2,859,982 2,922,675 -2 % 2,382,101 20 %
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 67,000 67,000 0 % 67,000 0 %
Preferred Stock,
Series A with a
liquidation
preference of
$67,000,000 at
December 31, 2009,
September 30, 2009
and December 31, 2008
Preferred stock (3,737 ) (3,970 ) -6 % (4,664 ) -20 %
discount
Common stock, $0.001
par value;
authorized,
40,000,000 shares;
issued and
outstanding, 38 26 46 % 26 46 %
37,824,007,26,316,576
and 26,246,560 shares
at December 31, 2009,
September 30, 2009
and December 31,
2008, respectively
Common stock warrant 2,383 4,766 -50 % 4,766 -50 %
Capital surplus 167,423 83,453 101 % 82,077 104 %
Retained earnings 131,891 133,437 -1 % 141,890 -7 %
Accumulated other
comprehensive income 2,977 5,303 -44 % (1,142 ) 361 %
(loss), net
Total stockholders' 367,975 290,015 27 % 289,953 27 %
equity
Total liabilities and $ 3,227,957 $ 3,212,690 0 % $ 2,672,054 21 %
stockholders' equity
Nara Bancorp, Inc.
Consolidated Statements of Income (Loss)
Unaudited (Dollars in Thousands, Except for Per Share Data)
Three Months Ended Twelve Months Ended
12/31/2009 12/31/2008 % 9/30/2009 % 12/31/2009 12/31/2008 %
change change change
Interest income:
Interest and fees $ 34,041 $ 35,308 -4 % $ 33,242 2 % $ 131,416 $ 151,172 -13 %
on loans
Interest on 7,649 3,819 100 % 8,063 -5 % 25,742 14,416 79 %
securities
Interest on
federal funds sold 180 (36 ) -600 % 401 -55 % 887 1,340 -34 %
and other
investments
Total interest 41,870 39,091 7 % 41,706 0 % 158,045 166,928 -5 %
income
Interest expense:
Interest on 11,808 12,347 -4 % 13,638 -13 % 50,636 54,080 -6 %
deposits
Interest on other 3,648 4,042 -10 % 3,835 -5 % 15,063 16,627 -9 %
borrowings
Total interest 15,456 16,389 -6 % 17,473 -12 % 65,699 70,707 -7 %
expense
Net interest
income before 26,414 22,702 16 % 24,233 9 % 92,346 96,221 -4 %
provision for loan
losses
Provision for loan 17,853 28,000 -36 % 8,500 110 % 61,023 48,825 25 %
losses
Net interest
income after 8,561 (5,298 ) -262 % 15,733 -46 % 31,323 47,396 -34 %
provision for loan
losses
Non-interest
income:
Service fees on 1,616 1,940 -17 % 1,701 -5 % 6,784 7,379 -8 %
deposit accounts
Net gains (losses) 556 87 539 % (126 ) 541 % 1,422 1,781 -20 %
on sales of loans
Net gains on sales
of securities 1,700 - 100 % 1,722 -1 % 4,427 860 415 %
available-for-sale
Net valuation
gains (losses) on (94 ) (800 ) 88 % (85 ) -11 % (446 ) (549 ) 19 %
interest rate
swaps
Net losses on (8 ) (1,003 ) 99 % 2 -500 % (320 ) (1,003 ) 68 %
sales of OREO
Other than
temporary - - 0 % - 0 % - (1,713 ) 100 %
impairment on
securities
Other income and 1,654 1,834 -10 % 1,680 -2 % 6,601 7,238 -9 %
fees
Total non-interest 5,424 2,058 164 % 4,894 11 % 18,468 13,993 32 %
income
Non-interest
expense:
Salaries and 6,302 6,840 -8 % 6,141 3 % 25,437 28,887 -12 %
employee benefits
Occupancy 2,482 2,469 1 % 2,526 -2 % 9,918 9,132 9 %
Furniture and 764 691 11 % 731 5 % 2,926 2,829 3 %
equipment
Advertising and 323 360 -10 % 386 -16 % 1,671 2,029 -18 %
marketing
Data processing 955 794 20 % 896 7 % 3,742 3,275 14 %
and communications
Professional fees 698 380 84 % 520 34 % 2,324 1,961 19 %
FDIC assessment 1,057 384 175 % 984 7 % 5,237 1,415 270 %
Other 2,394 1,829 31 % 2,484 -4 % 10,458 7,481 40 %
Total non-interest 14,975 13,747 9 % 14,668 2 % 61,713 57,009 8 %
expense
Income (loss)
before income (990 ) (16,987 ) -94 % 5,959 -117 % (11,922 ) 4,380 -372 %
taxes
Income tax
provision (514 ) (7,134 ) -93 % 2,018 -125 % (6,199 ) 1,625 -481 %
(benefit)
Net income (loss) $ (476 ) $ (9,853 ) -95 % $ 3,941 -112 % (5,723 ) 2,755 -308 %
Dividends and
discount accretion $ (1,070 ) $ (474 ) 126 % $ (1,069 ) 0 % (4,276 ) (474 ) 802 %
on preferred stock
Net income (loss)
available to $ (1,546 ) $ (10,327 ) -85 % $ 2,872 -154 % $ (9,999 ) $ 2,281 -538 %
common
stockholders
Earnings (Loss)
Per Common Share:
Basic $ (0.04 ) $ (0.39 ) $ 0.11 $ (0.35 ) $ 0.09
Diluted $ (0.04 ) $ (0.39 ) $ 0.11 $ (0.35 ) $ 0.09
Average Shares
Outstanding:
Basic 34,571,292 26,213,085 26,290,656 28,359,496 26,200,344
Diluted 34,571,292 26,213,085 26,360,505 28,359,496 26,419,533
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 Twelve Months
Ended,
Profitability 12/31/2009 12/31/2008 9/30/2009 12/31/2009 12/31/2008
measures:
ROA 1 -0.06 % -1.54 % 0.49 % -0.19 % 0.11 %
ROE 1 -0.54 % -15.06 % 5.54 % -1.88 % 1.15 %
Net interest 3.34 % 3.71 % 3.14 % 3.15 % 3.96 %
margin *
Efficiency 47.03 % 55.52 % 50.36 % 55.69 % 51.73 %
ratio
1 based on net income before effect of dividends and discount accretion on
preferred stock
Three Months Ended Three Months Ended Three Months Ended
12/31/2009 12/31/2008 9/30/2009
Interest Annualized Interest Annualized Interest Annualized
Average Income/ Average Average Income/ Average Average Income/ Average
Balance Expense Yield/Cost Balance Expense Yield/Cost Balance Expense Yield/Cost
(Dollars in thousands) (Dollars in thousands) (Dollars in thousands)
INTEREST EARNING
ASSETS:
Gross loans*,
includes loans $ 2,193,810 $ 34,041 6.21 % $ 2,092,641 $ 35,308 6.75 % $ 2,117,910 $ 33,242 6.28 %
held for sale
Securities
available for 781,422 7,649 3.92 % 328,601 3,819 4.65 % 737,471 8,063 4.37 %
sale
FRB and FHLB
stock and other 165,193 124 0.30 % 22,705 (46 ) -0.81 % 202,131 277 0.55 %
investments
Federal funds 19,783 56 1.13 % 5,528 10 0.72 % 30,870 124 1.61 %
sold
Total interest $ 3,160,208 $ 41,870 5.30 % $ 2,449,475 $ 39,091 6.38 % $ 3,088,382 $ 41,706 5.40 %
earning assets*
INTEREST BEARING
LIABILITIES:
Deposits:
Demand, $ 558,389 $ 1,696 1.21 % $ 319,318 $ 2,413 3.02 % $ 549,991 $ 2,569 1.87 %
interest-bearing
Savings 138,924 892 2.57 % 115,245 1,043 3.62 % 134,998 1,040 3.08 %
Time deposits:
$100,000 or more 903,963 5,378 2.38 % 661,172 4,844 2.93 % 811,007 4,799 2.37 %
Other 541,183 3,842 2.84 % 465,236 4,047 3.48 % 670,465 5,230 3.12 %
Total time 1,445,146 9,220 2.55 % 1,126,408 8,891 3.16 % 1,481,472 10,029 2.71 %
deposits
Total interest 2,142,459 11,808 2.20 % 1,560,971 12,347 3.16 % 2,166,461 13,638 2.52 %
bearing deposits
FHLB advances 350,870 3,187 3.63 % 371,038 3,385 3.65 % 356,848 3,355 3.76 %
Other borrowings 37,774 461 4.88 % 39,268 657 6.69 % 37,769 480 5.08 %
Total interest
bearing 2,531,103 $ 15,456 2.44 % 1,971,277 $ 16,389 3.33 % 2,561,078 $ 17,473 2.73 %
liabilities
Non-interest
bearing demand 305,831 240,142 308,327
deposits
Total funding
liabilities / $ 2,836,934 2.18 % $ 2,211,419 2.96 % $ 2,869,405 2.44 %
cost of funds
Net interest
income / net $ 26,414 2.86 % $ 22,702 3.05 % $ 24,233 2.67 %
interest spread*
Net interest 3.34 % 3.71 % 3.14 %
margin*
Net interest
margin*,
excluding effect 3.42 % 3.75 % 3.18 %
of non-accrual
loan income
(expense)
Net interest
margin*,
excluding effect
of non-accrual 3.40 % 3.68 % 3.16 %
loan income
(expense) and
prepayment fee
income
Non-accrual loan
income $ (581 ) $ (283 ) $ (328 )
(reversed)
recognized
Prepayment fee 166 433 173
income received
Net $ (415 ) $ 150 $ (155 )
Cost of
deposits:
Non-interest
bearing demand $ 305,831 $ - $ 240,142 $ - $ 308,327 $ -
deposits
Interest bearing 2,142,459 11,808 2.20 % 1,560,971 12,347 3.16 % 2,166,461 13,638 2.52 %
deposits
Total deposits $ 2,448,290 $ 11,808 1.93 % $ 1,801,113 $ 12,347 2.74 % $ 2,474,788 $ 13,638 2.20 %
Twelve Months Ended Twelve Months Ended
12/31/2009 12/31/2008
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 $ 2,124,615 $ 131,416 6.19 % $ 2,089,803 $ 151,172 7.23 %
held for sale
Securities
available for 619,594 25,742 4.15 % 298,886 14,416 4.82 %
sale
FRB and FHLB
stock and other 171,270 680 0.40 % 23,498 1,010 4.30 %
investments
Federal funds 14,806 207 1.40 % 16,816 330 1.96 %
sold
Total interest $ 2,930,285 $ 158,045 5.39 % $ 2,429,003 $ 166,928 6.87 %
earning assets*
INTEREST BEARING
LIABILITIES:
Deposits:
Demand, $ 467,764 $ 8,948 1.91 % $ 280,055 $ 8,264 2.95 %
interest-bearing
Savings 125,877 3,948 3.14 % 133,791 4,920 3.68 %
Time deposits:
$100,000 or more 744,416 17,830 2.40 % 742,767 27,033 3.64 %
Other 653,003 19,910 3.05 % 370,900 13,863 3.74 %
Total time 1,397,419 37,740 2.70 % 1,113,667 40,896 3.67 %
deposits
Total interest 1,991,060 50,636 2.54 % 1,527,513 54,080 3.54 %
bearing deposits
FHLB advances 356,528 13,041 3.66 % 372,142 13,932 3.74 %
Other borrowings 37,883 2,022 5.34 % 37,683 2,695 7.15 %
Total interest
bearing 2,385,471 $ 65,699 2.75 % 1,937,338 $ 70,707 3.65 %
liabilities
Non-interest
bearing demand 300,286 328,116
deposits
Total funding
liabilities / $ 2,685,757 2.45 % $ 2,265,454 3.12 %
cost of funds
Net interest
income / net $ 92,346 2.64 % $ 96,221 3.22 %
interest spread*
Net interest 3.15 % 3.96 %
margin*
Net interest
margin*,
excluding effect 3.20 % 3.99 %
of non-accrual
loan income
(expense)
Net interest
margin*,
excluding effect
of non-accrual 3.18 % 3.92 %
loan income
(expense) and
prepayment fee
income
Non-accrual loan
income $ (1,470 ) $ (689 )
(reversed)
recognized
Prepayment fee 632 1,668
income received
Net $ (838 ) $ 979
Cost of
deposits:
Non-interest
bearing demand $ 300,286 $ - $ 328,116 $ -
deposits
Interest bearing 1,991,060 50,636 2.54 % 1,527,513 54,080 3.54 %
deposits
Total deposits $ 2,291,346 $ 50,636 2.21 % $ 1,855,629 $ 54,080 2.91 %
For the Three Months Ended For the Twelve Months Ended
12/31/2009 12/31/2008 % change 9/30/2009 % 12/31/2009 12/31/2008 %
change change
AVERAGE BALANCES
Gross loans*,
includes loans held $ 2,193,810 $ 2,092,641 5 % $ 2,117,910 4 % 2,124,615 2,089,803 2 %
for sale
Investments 966,398 356,834 171 % 970,472 0 % 805,670 339,200 138 %
Interest-earning 3,160,208 2,449,475 29 % 3,088,382 2 % 2,930,285 2,429,003 21 %
assets*
Total assets 3,235,147 2,559,289 26 % 3,208,774 1 % 3,038,969 2,544,667 19 %
Interest-bearing 2,142,459 1,560,971 37 % 2,166,461 -1 % 1,991,060 1,527,513 30 %
deposits
Interest-bearing 2,531,103 1,971,277 28 % 2,561,078 -1 % 2,385,471 1,937,338 23 %
liabilities
Non-interest-bearing 305,831 240,142 27 % 308,327 -1 % 300,286 328,116 -8 %
demand deposits
Stockholders' Equity 351,779 261,635 34 % 284,676 24 % 304,770 238,800 28 %
Net interest earning 629,105 478,198 32 % 527,304 19 % 544,814 491,665 11 %
assets*
LOAN PORTFOLIO 12/31/2009 9/30/2009 % change 12/31/2008 %
COMPOSITION: * change
Commercial loans $ 539,147 $ 546,328 -1 % $ 598,556 -10 %
Real estate loans 1,654,104 1,566,551 6 % 1,472,872 12 %
Consumer and other 18,035 20,142 -10 % 28,520 -37 %
loans
Loans outstanding* 2,211,286 2,133,021 4 % 2,099,948 5 %
Unamortized deferred
loan fees - net of (2,343 ) (1,688 ) 39 % (1,505 ) 56 %
costs
Loans*, net of
deferred loan fees 2,208,943 2,131,333 4 % 2,098,443 5 %
and costs
Allowance for loan (59,424 ) (52,967 ) 12 % (43,419 ) 37 %
losses
Loan receivable*, $ 2,149,519 $ 2,078,366 3 % $ 2,055,024 5 %
net
* The loan portfolio
composition tables
and net interest
margin excludes the
guaranteed portion
of delinquent SBA $ 12,490 $ 20,857 $ 20,911
loans for the
amounts indicated at
each period as these
are 100% guaranteed
by the SBA.
REAL ESTATE LOANS BY 12/31/2009 9/30/2009 % change 12/31/2008 %
PROPERTY TYPE: change
Retail buildings $ 380,958 $ 379,506 0 % $ 380,545 0 %
Hotels/motels 324,058 304,038 7 % 299,596 8 %
Gas stations/ car 266,986 257,406 4 % 257,253 4 %
washes
Mixed-use facilities 157,136 158,078 -1 % 152,676 3 %
Warehouses 111,543 119,797 -7 % 113,487 -2 %
Multifamily 75,587 75,298 0 % 27,988 170 %
Other 337,836 272,428 24 % 241,327 40 %
Total $ 1,654,104 $ 1,566,551 6 % $ 1,472,872 12 %
DEPOSIT COMPOSITION 12/31/2009 9/30/2009 % Change 12/31/2008 %
Change
Non-interest-bearing $ 330,489 $ 328,844 1 % $ 303,656 9 %
demand deposits
Money market and 524,188 577,185 -9 % 306,478 71 %
other
Saving deposits 136,804 143,476 -5 % 113,186 21 %
Time deposits of 932,699 855,261 9 % 626,850 49 %
$100,000 or more
Other time deposits 510,010 582,304 -12 % 588,433 -13 %
Total deposit $ 2,434,190 $ 2,487,070 -2 % $ 1,938,603 26 %
balances
DEPOSIT COMPOSITION 12/31/2009 9/30/2009 12/31/2008
(%)
Non-interest-bearing 13.6 % 13.2 % 15.7 %
demand deposits
Money market and 21.5 % 23.2 % 15.8 %
other
Saving deposits 5.6 % 5.8 % 5.8 %
Time deposits of 38.3 % 34.4 % 32.3 %
$100,000 or more
Other time deposits 21.0 % 23.4 % 30.4 %
Total deposit 100.0 % 100.0 % 100.0 %
balances
CAPITAL RATIOS 12/31/2009 9/30/2009 12/31/2008
Total stockholders' $ 367,975 $ 290,015 $ 289,953
equity
Tier 1 risk-based 16.73 % 13.51 % 14.32 %
capital ratio
Total risk-based 17.99 % 14.77 % 15.58 %
capital ratio
Tier 1 leverage 12.36 % 9.95 % 12.61 %
ratio
Book value per share $ 9.73 $ 11.02 $ 11.05
Tangible common $ 7.90 $ 8.30 $ 8.33
equity per share2
Tangible common
equity to tangible 9.27 % 6.81 % 8.20 %
assets2
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:
12/31/2009 9/30/2009 12/31/2008
Total stockholders' equity $ 367,975 $ 290,015 $ 289,953
Less: Preferred stock, net of (63,263 ) (63,030 ) (62,336 )
discount
Common stock warrant (2,383 ) (4,766 ) (4,766 )
Goodwill and other intangible (3,551 ) (3,695 ) (4,136 )
assets, net
Tangible common equity $ 298,778 $ 218,524 $ 218,715
Total assets $ 3,227,957 $ 3,212,690 $ 2,672,054
Less: Goodwill and other (3,551 ) (3,695 ) (4,136 )
intangible assets, net
Tangible assets $ 3,224,406 $ 3,208,995 $ 2,667,918
Common shares outstanding 37,824,007 26,316,576 26,246,560
Tangible common equity to 9.27 % 6.81 % 8.20 %
tangible assets
Tangible common equity per share $ 7.90 $ 8.30 $ 8.33
For the Three Months Ended For the Twelve Months
Ended
ALLOWANCE FOR LOAN 12/31/2009 9/30/2009 6/30/2009 3/31/2009 12/31/2008 12/31/2009 12/31/2008
LOSSES:
Balance at
beginning of $ 52,967 $ 50,339 $ 50,504 $ 43,419 $ 27,806 $ 43,419 $ 20,035
period
Provision for loan 17,853 8,500 19,000 15,670 28,000 61,023 48,825
losses
Recoveries 155 179 251 83 124 668 252
Charge offs (11,551 ) (6,051 ) (19,416 ) (8,668 ) (12,511 ) (45,686 ) (25,693 )
Balance at end of $ 59,424 $ 52,967 $ 50,339 $ 50,504 $ 43,419 $ 59,424 $ 43,419
period
Net
charge-off/average 2.08 % 1.11 % 3.66 % 1.63 % 2.37 % 2.12 % 1.22 %
gross loans*
(annualized)
For the Three Months Ended For the Twelve Months
Ended
NET CHARGED OFF 12/31/2009 9/30/2009 6/30/2009 3/31/2009 12/31/2008 12/31/2009 12/31/2008
LOANS BY TYPE
Real estate loans $ 7,065 $ 2,572 $ 12,410 $ 2,121 $ 2,613 $ 24,168 $ 7,328
Commercial loans 4,236 3,282 6,608 5,204 9,685 19,330 17,701
Consumer loans 95 18 147 1,260 89 1,520 412
Total net $ 11,396 $ 5,872 $ 19,165 $ 8,585 $ 12,387 $ 45,018 $ 25,441
charge-offs
NON-PERFORMING 12/31/2009 9/30/2009 6/30/2009 3/31/2009 12/31/2008
ASSETS
Delinquent loans
90 days or more on $ 51,674 $ 35,510 $ 30,850 $ 41,330 $ 37,580
non-accrual
status*
Delinquent loans
90 days or more on - - - 7 -
accrual status
Total
non-performing 51,674 35,510 30,850 41,337 37,580
loans*
Other real estate 2,044 4,693 3,805 4,822 2,969
owned
Restructured loans 64,341 44,707 37,026 31,131 3,256
Total
non-performing $ 118,059 $ 84,910 $ 71,681 $ 77,290 $ 43,805
assets*
Non-performing
assets*/ total 3.66 % 2.64 % 2.20 % 2.74 % 1.64 %
assets
Non-performing
assets*/ gross 5.34 % 3.98 % 3.44 % 3.69 % 2.08 %
loans* & OREO
Non-performing
loans*/gross 2.34 % 1.67 % 1.48 % 1.98 % 1.79 %
loans*
Allowance for loan
losses/ gross 2.69 % 2.49 % 2.42 % 2.42 % 2.07 %
loans*
Allowance for loan
losses/ 115 % 149 % 163 % 122 % 116 %
non-performing
loans*
BREAKDOWN OF
RESTRUCTURED LOANS 12/31/2009 9/30/2009 6/30/2009 3/31/2009 12/31/2008
BY TYPE:
Retail buildings $ 9,620 $ 4,811 $ 1,387 $ 847 $ -
Hotels/motels 16,647 4,400 5,325 5,325 -
Gas stations/ car 20,006 19,547 18,931 18,231 -
washes
Mixed-use 2,907 373 374 - -
facilities
Warehouses - 4,455 4,455 - -
Multifamily 1,371 1,371 - - -
Other3 13,790 9,750 6,554 6,728 3,256
Total $ 64,341 $ 44,707 $ 37,026 $ 31,131 $ 3,256
3Includes commercial business and other loans
DELINQUENT LOANS 12/31/2009 9/30/2009 6/30/2009 3/31/2009 12/31/2008
BY DAYS PAST DUE
30 - 59 days $ 14,926 $ 24,507 $ 5,364 $ 8,272 $ 10,967
60 - 89 days 2,877 7,931 6,593 838 2,668
90 days or more - - - 7 -
and accruing
Non-accrual 51,674 35,510 30,850 41,330 37,580
Total delinquent $ 69,477 $ 67,948 $ 42,807 $ 50,447 $ 51,215
loans*
DELINQUENT LOANS 12/31/2009 9/30/2009 6/30/2009 3/31/2009 12/31/2008
BY TYPE4
Real estate loans $ 52,660 $ 54,129 $ 28,242 $ 31,823 $ 28,409
Commercial loans 15,303 13,241 14,041 18,076 21,030
Consumer loans 1,514 578 524 548 1,776
Total delinquent $ 69,477 $ 67,948 $ 42,807 $ 50,447 $ 51,215
loans*
4Delinquent over 30 days, including non-accrual loans
NON-ACCRUAL LOANS 12/31/2009 9/30/2009 6/30/2009 3/31/2009 12/31/2008
BY TYPE
Real estate loans $ 40,354 $ 25,696 $ 20,515 $ 26,153 $ 21,759
Commercial loans 10,275 9,521 10,072 14,876 14,379
Consumer loans 1,045 293 263 301 1,442
Total non-accrual $ 51,674 $ 35,510 $ 30,850 $ 41,330 $ 37,580
loans*
WATCH LIST LOANS 12/31/2009 9/30/2009 6/30/2009 3/31/2009 12/31/2008
Special mention $ 42,671 $ 30,762 $ 53,277 $ 68,388 $ 71,169
Substandard 153,535 110,669 112,641 98,412 55,622
Doubtful 3,655 2,767 4,237 7,288 9,883
Loss - - - 8 -
Total watch list $ 199,861 $ 144,198 $ 170,155 $ 174,096 $ 136,674
loans
* 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.
Source: Nara Bancorp, Inc.
Contact: Investors and Financial Media:
Financial Profiles, Inc.
Tony Rossi, 310-277-4711 x119