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Hanmi Reports First Quarter 2019 Results

2019 First Quarter Highlights:

  • Net income of $14.7 million, or $0.48 per diluted share, up 28.9% from the prior quarter and down 1.2% year-over-year.
  • Loans and leases receivable stood at $4.58 billion at the end of the first quarter, compared with $4.60 billion at the end of the prior quarter, and up 3.7% from $4.41 billion at the end of the first quarter of 2018.
  • Deposits reached $4.82 billion, up 6.0% in the first quarter on an annualized basis and up 10.1% year-over-year driven by growth in time deposits; Loan-to-deposit ratio declined to 94.9% from 96.9% in the prior quarter.
  • Net charge-offs declined to $0.2 million, or two basis points for the first quarter; allowance to loans and leases at 0.72%.
  • Net interest income was $44.9 million, compared with $45.6 million for the previous quarter; first quarter loan prepayment penalties were $0.7 million compared with $0.4 million for the fourth quarter; fourth quarter also included a special FHLB dividend of $0.2 million.
  • Net interest margin of 3.52% compared with 3.51% in the prior quarter; Net interest margin after adjusting for loan prepayment penalties and the special FHLB dividend was 3.46% for the first quarter and prior quarter.
  • Noninterest income was $6.3 million, consistent with the previous quarter; the first quarter included gains on sales of SBA loans of $0.9 million and gains on sales of securities of $0.7 million.
  • Noninterest expense was $29.1 million compared with $29.3 million for the fourth quarter; the first quarter included branch consolidation and staff reduction expenses of $0.3 million.
  • Return on average assets was 1.09% and return on average equity was 10.62% compared with 0.83% and 7.92%, respectively, for the prior quarter.
  • On April 3rd, the Board of Directors appointed Bonnie I. Lee as a director of Hanmi and the Bank and as President and Chief Executive Officer effective May 3, 2019.

LOS ANGELES, April 23, 2019 (GLOBE NEWSWIRE) -- Hanmi Financial Corporation (NASDAQ: HAFC, or “Hanmi”), the parent company of Hanmi Bank (the “Bank”), today reported net income for the 2019 first quarter of $14.7 million, or $0.48 per diluted share, compared with $11.4 million, or $0.37 per diluted share for the 2018 fourth quarter and $14.9 million, or $0.46 per diluted share for the 2018 first quarter.

C. G. Kum, Chief Executive Officer, said, “Hanmi’s first quarter financial performance highlights the continued execution of our strategy to grow loans in a prudent manner, protect net interest margin and to improve the Bank’s cost structure. During the first quarter, which is typically the seasonally slowest quarter for loan production, new origination volume nearly offset normal loan run-off while net interest margin remained stable. Based on our current loan and lease pipeline, we remain confident in our ability to grow loans in the range of 5% to 7% for the full year. Deposit gathering activities in the quarter were also successful as total deposits expanded 6% on an annualized basis due to growth in time and noninterest-bearing demand deposits. In addition, we made progress in executing our previously announced branch consolidation initiative with the closure of four branches in the first quarter.”

Mr. Kum concluded, “I am very pleased with the Board’s decision to appoint Bonnie Lee as CEO upon my retirement next month. While serving as our Chief Operating Officer for the past six years, she has developed deep relationships with Hanmi’s customers and employees, while establishing herself as a respected leader in our industry. Given her institutional knowledge of the Bank, excellent track record of success and strong leadership abilities, I am confident this will be a smooth transition as Bonnie assumes her new role as CEO.”

Quarterly Highlights
(In thousands, except per share data)

   As of  or for the Three Months Ended   Amount Change
  March 31,   December 31,   September 30,   June 30,   March 31,   Q1-19   Q1-19
  2019   2018   2018   2018   2018   vs. Q4-18   vs. Q1-18
                           
Net income $ 14,672     $ 11,385     $ 16,081     $ 15,548     $ 14,855     $ 3,287     $ (183 )
Net income per diluted common share $ 0.48     $ 0.37     $ 0.50     $ 0.48     $ 0.46     $ 0.11     $ 0.02  
                           
Assets $ 5,571,068     $ 5,502,219     $ 5,487,042     $ 5,415,202     $ 5,305,641     $ 68,849     $ 265,427  
Loans and leases receivable $ 4,575,620     $ 4,600,540     $ 4,582,883     $ 4,542,126     $ 4,413,557     $ (24,920 )   $ 162,063  
Deposits $ 4,820,175     $ 4,747,235     $ 4,614,422     $ 4,426,535     $ 4,378,101     $ 72,940     $ 442,074  
                           
Return on average assets   1.09 %     0.83 %     1.17 %     1.17 %     1.16 %     0.26       -0.07  
Return on average stockholders' equity   10.62 %     7.92 %     10.91 %     10.81 %     10.65 %     2.70       -0.03  
                           
Net interest margin (1)   3.52 %     3.51 %     3.48 %     3.60 %     3.70 %     0.01       -0.18  
Efficiency ratio (2)   56.83 %     56.40 %     56.28 %     57.80 %     58.36 %     0.43       -1.53  
                           
Tangible common equity to tangible assets (3)   9.93 %     9.84 %     10.15 %     10.35 %     10.43 %     0.09       -0.50  
Tangible common equity per common share (3) $ 17.89     $ 17.47     $ 17.31     $ 17.20     $ 16.98     $ 0.42     $ 0.91  
                                                       

(1)       Amounts calculated on a fully taxable equivalent basis using the federal tax rate in effect for the periods presented.
(2)       Noninterest expense divided by net interest income plus noninterest income.
(3)       Refer to "Non-GAAP Financial Measures" for further details.

Results of Operations
First quarter 2019 net interest income decreased 1.7% to $44.9 million from $45.6 million in the 2018 fourth quarter principally due to two fewer days quarter-over-quarter. Interest and fees on loans and leases for the first quarter increased 0.7%, or $0.4 million, from the preceding quarter due to an increase in the average yield and an increase in loan prepayment fees. In addition, borrowing costs decreased $0.3 million in the first quarter as deposits increased and borrowings declined. However, this was partially offset by an increase in interest expense on deposits of 10.9%, or $1.5 million, from the preceding quarter due to a 3.4% increase in average interest-bearing deposits.

   As of or For the Three Months Ended (in thousands)   Percentage Change
  Mar 31,   Dec 31,   Sep 30,   Jun 30,   Mar 31,   Q1-19   Q1-19
Net Interest Income 2019   2018   2018   2018   2018   vs. Q4-18   vs. Q1-18
                           
Interest and fees on loans and leases(1) $ 58,334   $ 57,947   $ 56,361   $ 53,708   $ 51,574   0.7 %   13.1 %
Interest on securities   3,456     3,278     3,238     3,198     3,105   5.4 %   11.3 %
Dividends on FHLB stock   289     555     286     283     289   -47.9 %   0.0 %
Interest on deposits in other banks   335     179     151     133     114   87.2 %   193.9 %
Total interest and dividend income $ 62,414   $ 61,959   $ 60,036   $ 57,322   $ 55,082   0.7 %   13.3 %
                           
Interest on deposits   15,683     14,139     11,694     9,465     7,785   10.9 %   101.5 %
Interest on borrowings   71     420     1,264     1,015     679   -83.1 %   -89.5 %
Interest on subordinated debentures   1,772     1,754     1,749     1,728     1,694   1.0 %   4.6 %
Total interest expense   17,526     16,313     14,707     12,208     10,158   7.4 %   72.5 %
Net interest income $ 44,888   $ 45,646   $ 45,329   $ 45,114   $ 44,924   -1.7 %   -0.1 %
                                         

(1)       Includes loans held for sale.

Net interest margin on a tax equivalent basis was 3.52% for the first quarter of 2019 compared with 3.51% for the fourth quarter of 2018, as higher average yields on loans and leases receivable primarily due to market interest rates and competition were offset by higher costs of deposits. Net interest margin adjusted for loan prepayment penalties and the special FHLB dividend was 3.46% for the first quarter and prior quarter.

The average earning asset yield (tax equivalent) was 4.89% for the first quarter of 2019 compared with 4.76% for the fourth quarter of 2018. The 13 basis point increase was due to the increase in average yields for loans and leases receivable.

The cost of interest-bearing liabilities was 1.98% for the first quarter of 2019 compared with 1.83% for the fourth quarter of 2018. The 15 basis point increase was primarily due to a 17 basis point increase in the average rate paid on interest-bearing deposits and a 3.4% increase in interest-bearing deposits.

   For the Three Months Ended (in thousands)   Percentage Change
  Mar 31,   Dec 31,   Sep 30,   Jun 30,   Mar 31,   Q1-19   Q1-19
Average Earning Assets and Interest-bearing Liabilities 2019   2018   2018   2018   2018   vs. Q4-18   vs. Q1-18
Loans and leases receivable (1) $   4,533,120   $   4,544,722   $   4,551,284   $   4,414,217   $   4,310,964   -0.3 %   5.2 %
Securities     589,547       581,550       589,939       591,493       588,738   1.4 %   0.1 %
FHLB stock     16,385       16,385       16,385       16,385       16,385   0.0 %   0.0 %
Interest-bearing deposits in other banks     53,022       34,301       30,368       28,831       32,401   54.6 %   63.6 %
Average interest-earning assets $   5,192,074   $   5,176,958   $   5,187,976   $   5,050,926   $   4,948,488   0.3 %   4.9 %
                           
Demand: interest-bearing $   85,291   $   89,971   $   92,090   $   92,552   $   91,378   -5.2 %   -6.7 %
Money market and savings     1,526,710       1,510,428       1,377,739       1,412,118       1,478,795   1.1 %   3.2 %
Time deposits     1,852,562       1,751,429       1,687,827       1,553,692       1,440,382   5.8 %   28.6 %
Average interest-bearing deposits     3,464,563       3,351,828       3,157,656       3,058,362       3,010,555   3.4 %   15.1 %
Borrowings     10,611       65,217       240,054       214,066       179,000   -83.7 %   -94.1 %
Subordinated debentures     117,863       117,728       117,584       117,456       117,323   0.1 %   0.5 %
Average interest-bearing liabilities $   3,593,037   $   3,534,773   $   3,515,294   $   3,389,884   $   3,306,878   1.6 %   8.7 %
                                         

(1)       Includes loans held for sale.

   For the Three Months Ended   Amount Change
  Mar 31,   Dec 31,   Sep 30,   Jun 30,   Mar 31,   Q1-19   Q1-19
Average Yields and Rates 2019   2018   2018   2018   2018   vs. Q4-18   vs. Q1-18
Loans and leases receivable(1) 5.22 %   5.06 %   4.91 %   4.88 %   4.85 %   0.16   0.37
Securities (2) 2.44 %   2.37 %   2.31 %   2.29 %   2.24 %   0.07   0.20
FHLB stock 7.15 %   13.44 %   6.93 %   6.93 %   7.15 %   -6.29   0.00
Interest-bearing deposits in other banks 2.56 %   2.07 %   1.97 %   1.85 %   1.43 %   0.49   1.13
Interest-earning assets 4.89 %   4.76 %   4.60 %   4.57 %   4.53 %   0.13   0.36
                           
Interest-bearing deposits 1.84 %   1.67 %   1.47 %   1.24 %   1.05 %   0.17   0.79
Borrowings 2.71 %   2.56 %   2.09 %   1.90 %   1.54 %   0.15   1.17
Subordinated debentures 6.01 %   5.94 %   5.92 %   5.87 %   5.77 %   0.07   0.24
Interest-bearing liabilities 1.98 %   1.83 %   1.66 %   1.44 %   1.25 %   0.15   0.73
                           
Net interest margin (taxable equivalent basis) 3.52 %   3.51 %   3.48 %   3.60 %   3.70 %   0.01   -0.18
                           
Cost of deposits 1.35 %   1.20 %   1.04 %   0.87 %   0.73 %   0.15   0.62
                           

(1)       Includes loans held for sale.
(2)       Amounts calculated on a fully taxable equivalent basis using the federal tax rate in effect for the periods presented.

For the first quarter of 2019, the loan and lease loss provision was $1.1 million compared with $3.0 million for the preceding quarter. Net charge-offs declined to $0.2 million for the first quarter of 2019 from $2.7 million from the fourth quarter of 2018. The allowance to loans and leases rose to 0.72% at the end of the first quarter from 0.70% at year-end.

First quarter noninterest income decreased 0.7% to $6.3 million from the fourth quarter, primarily due to a $0.3 million decrease in service charges on deposit accounts and a $0.3 million decrease in servicing income. The decline in servicing income reflects a higher level of prepayments in the serviced assets. This was partially offset by a $0.7 million increase in gain on sales of securities. This increase was due to the sale of $69.2 million of tax-exempt municipal bonds in the first quarter, with the resulting proceeds invested in U.S. Treasury bills and U.S. Government agency mortgage-backed securities. Gains on sales of SBA loans were $0.9 million for the first quarter, down from $1.0 million for the preceding quarter reflecting higher trade premiums offset by lower volume. The volume of SBA loans sold for the first quarter 2019 and fourth quarter 2018 were $15.5 million and $17.9 million, respectively.

   For the Three Months Ended (in thousands)   Percentage Change
  Mar 31,   Dec 31,   Sep 30,   Jun 30,   Mar 31,   Q1-19   Q1-19
Noninterest Income 2019   2018   2018   2018   2018   vs. Q4-18   vs. Q1-18
Service charges on deposit accounts $   2,358   $   2,648   $   2,513   $   2,328   $   2,511     -11.0 %   -6.1 %
Trade finance and other service charges and fees     1,124       1,167       1,128       1,149       1,173     -3.7 %   -4.2 %
Servicing income     357       630       673       421       662     -43.3 %   -46.1 %
Bank-owned life insurance income     280       288       285       256       277     -2.8 %   1.1 %
Other operating income     484       584       483       316       418     -17.1 %   15.8 %
Service charges, fees & other     4,603       5,317       5,082       4,470       5,041     -13.4 %   -8.7 %
                           
Gain on sale of SBA loans     926       983       1,114       1,408       1,448     -5.8 %   -36.0 %
Net gain (loss) on sales of securities     725       -        19       67       (428 )   0.0 %   -269.4 %
Total noninterest income $   6,254   $   6,300   $   6,215   $   5,945   $   6,061     -0.7 %   3.2 %
                                           

Noninterest expense for the first quarter decreased 0.8% to $29.1 million from $29.3 million for the prior quarter primarily due to a $0.4 million decrease in other operating expenses and a $0.6 million decrease in advertising and promotion, partially offset by a $0.5 million increase in other real estate owned expense and a $0.4 million increase in occupancy and equipment of which approximately $0.3 million was related to one-time expenses associated with the consolidation of four branches during the quarter. Despite the decrease in noninterest expense, as a result of the decrease in revenues (noninterest income and net interest income), the efficiency ratio increased slightly to 56.8% in the first quarter from 56.4% in the prior quarter.

   For the Three Months Ended (in thousands)   Percentage Change
  Mar 31,   Dec 31,   Sep 30,   Jun 30,   Mar 31,   Q1-19   Q1-19
  2019   2018   2018   2018   2018   vs. Q4-18   vs. Q1-18
Noninterest Expense                          
Salaries and employee benefits $   15,738   $   15,845     $   17,436     $   17,453   $   18,702   -0.7 %   -15.8 %
Occupancy and equipment     4,521       4,105         3,685         4,082       4,072   10.1 %   11.0 %
Data processing     2,083       1,894         1,745         1,554       1,678   10.0 %   24.1 %
Professional fees     1,649       1,969         1,626         1,214       1,369   -16.3 %   20.5 %
Supplies and communication     844       797         805         693       708   5.9 %   19.2 %
Advertising and promotion     760       1,316         814         1,034       876   -42.2 %   -13.2 %
Merger and integration costs     -        -          466         380       -    0.0 %   0.0 %
Other operating expenses     3,389       3,751         2,872         2,854       2,273   -9.7 %   49.1 %
subtotal     28,984       29,677         29,449         29,264       29,678   -2.3 %   -2.3 %
                           
Other real estate owned expense (income)     81       (378 )       (441 )       246       79   -121.4 %   2.5 %
Total noninterest expense $   29,065   $   29,299     $   29,008     $   29,510   $   29,757   -0.8 %   -2.3 %
                                             

Hanmi recorded a provision for income taxes of $6.3 million for the first quarter of 2019, representing an effective tax rate of 30.0% compared with $8.2 million, representing an effective tax rate of 41.9% for the fourth quarter of 2018.  First quarter income tax expense included a $0.4 million charge related to the settlement of the California 2008 and 2009 tax year audits with the Franchise Tax Board. Fourth quarter income tax expense included a net charge of $2.7 million, reflecting charges for a state deferred tax valuation allowance and the finalization of the re-measurement of deferred tax assets due to the change in the Federal corporate tax rate, offset by a benefit due to a lapse of the statute of limitations for certain unrecognized tax benefits.

Financial Position
Total assets were $5.57 billion at March 31, 2019, a 1.3% increase from $5.50 billion at December 31, 2018 from an increase in securities available for sale at fair value and the adoption of ASC 842, the new accounting standard for leases. On January 1, 2019, Hanmi adopted ASC 842 – Lease Accounting (ASU 2016-02) and recorded a Right-of-Use Asset (ROUA) on Leases and a Lease Liability of $40.9 million, respectively.  As of March 31, 2019, the ROUA on Leases was $39.3 million and the Lease Liability was $39.5 million. These amounts were included in ‘Prepaid expenses and other assets’ and ‘Accrual expenses and other liabilities,’ respectively.

Loans and leases receivable, before the allowance for loan and lease losses, were $4.58 billion at March 31, 2019, down 0.5% from $4.60 billion at December 31, 2018. The decrease in loans and leases from the prior quarter reflects the seasonality of loan production as well as Hanmi’s strategic decision to moderate loan growth, protect net interest margin and reduce expenses given the increasingly challenging banking environment. Loans held for sale, representing the guaranteed portion of SBA loans, were $7.1 million at March 31, 2019 compared with $9.4 million at the end of 2018.

Loans and leases receivable, before the allowance for loan and lease losses, increased 3.7% from $4.41 billion at March 31, 2018, primarily due to production.

   As of (in thousands)   Percentage Change
  Mar 31,   Dec 31,   Sep 30,   Jun 30,   Mar 31,   Q1-19   Q1-19
  2019   2018   2018   2018   2018   vs. Q4-18   vs. Q1-18
Loan and Lease Portfolio                          
Commercial real estate loans $   3,230,526   $   3,257,792   $   3,275,382   $   3,241,348   $   3,122,745   -0.8 %   3.5 %
Residential real estate loans     483,830       500,563       516,968       539,861       545,053   -3.3 %   -11.2 %
Commercial and industrial loans     422,502       429,903       396,383       396,522       409,380   -1.7 %   3.2 %
Lease receivable     425,530       398,858       379,455       350,578       321,480   6.7 %   32.4 %
Consumer loans     13,232       13,424       14,695       13,817       14,899   -1.4 %   -11.2 %
Loans and leases receivable   4,575,620     4,600,540     4,582,883     4,542,126     4,413,557   -0.5 %   3.7 %
Loans held for sale     7,140       9,390       4,455       5,349       6,008   -24.0 %   18.8 %
Total loans and leases $   4,582,760   $   4,609,930   $   4,587,338   $   4,547,475   $   4,419,565   -0.6 %   3.7 %
                                         

For the first quarter of 2019, commercial real estate loans as a percentage of loans and leases receivable decreased to 70.6% compared with 70.8% for the same period last year.

Bonnie Lee, President and Chief Operating Officer, said, “While loan production is seasonally slowest in the first quarter, our performance is also indicative of being extremely selective in originating new credits with respect to pricing and underwriting.  Given the highly competitive environment, I am quite pleased with our stable net interest margin and continued strong credit quality. Overall, our production outlook remains positive and we continue to expect to generate 5% to 7% growth in attractively priced, high quality loans and leases for the full year.”

Commenting on her recent promotion, Ms. Lee concluded, “I am honored to serve on Hanmi’s Board of Directors and very grateful to the Board’s confidence in my abilities. C. G. Kum has been an excellent colleague, friend and mentor since I joined Hanmi in 2013. I look forward to serving as the Bank’s next CEO upon his retirement next month, and I wish him all the best in his well-deserved retirement.”

  For the Three Months Ended (in thousands)
  Mar 31,   Dec 31,   Sep 30,   Jun 30,   Mar 31,
  2019   2018   2018   2018   2018
New Loan & Lease Production                  
Commercial real estate loans $   46,531     $   87,523     $   112,748     $   198,314     $   136,633  
Commercial and industrial loans     33,643         68,113         32,714         19,226         27,426  
SBA loans     29,976         30,758         25,388         29,649         25,081  
Lease receivable     69,577         59,023         64,284         60,308         54,952  
Consumer loans     122         831         2,873         1,327         1,189  
subtotal     179,849         246,248         238,007         308,824         245,281  
                   
Loan purchases     -         -         2,160         25,901         38,905  
Payoffs, amortization & net line utilization     (188,203 )       (206,606 )       (177,799 )       (186,234 )       (154,268 )
Loan sales     (15,459 )       (18,210 )       (19,751 )       (19,185 )       (19,187 )
Charge-offs     (1,107 )       (3,775 )       (1,245 )       (657 )       (1,632 )
Other real estate owned     -         -         (615 )       (80 )       -  
                   
Loans and leases-beginning balance $   4,600,540     $   4,582,883     $   4,542,126     $   4,413,557     $   4,304,458  
Loans and leases-ending balance $   4,575,620     $   4,600,540     $   4,582,883     $   4,542,126     $   4,413,557  
                                       

Deposits increased to $4.82 billion at the end of the 2019 first quarter from $4.75 billion at the end of the preceding quarter. Time deposits and noninterest-bearing demand deposits led this growth with increases of 4.1% and 2.5%, respectively. The loan-to-deposit ratio at March 31, 2019 decreased to 94.9% from 96.9% in the fourth quarter.

Deposits increased 10.1% from $4.38 billion in the first quarter last year, as time deposits and money market and savings deposits increased 28.1% and 5.1%, respectively, from a year ago.

   As of (in thousands)   Percentage Change
  Mar 31,   Dec 31,   Sep 30,   Jun 30,   Mar 31,   Q1-19   Q1-19
  2019   2018   2018   2018   2018   vs. Q4-18   vs. Q1-18
Deposit Portfolio                          
Demand: noninterest-bearing $   1,316,114   $   1,284,530   $   1,313,777   $   1,350,383   $   1,352,162   2.5 %   -2.7 %
Demand: interest-bearing     85,946       87,582       90,586       105,825       93,591   -1.9 %   -8.2 %
Money market and savings     1,543,299       1,573,622       1,478,631       1,381,038       1,469,010   -1.9 %   5.1 %
Time deposits     1,874,816       1,801,501       1,731,428       1,589,289       1,463,338   4.1 %   28.1 %
Total deposits $   4,820,175   $   4,747,235   $   4,614,422   $   4,426,535   $   4,378,101   1.5 %   10.1 %
                                         

At March 31, 2019, stockholders’ equity was $564.3 million, compared with $552.6 million at December 31, 2018. Tangible common stockholders’ equity was $552.2 million, or 9.93% of tangible assets, compared with $540.4 million, or 9.84% of tangible assets at December 31, 2018. Tangible book value per share was $17.89, compared to $17.47 in the fourth quarter.

Hanmi continues to be well capitalized, with a preliminary Tier 1 risk-based capital ratio of 11.84% and a total risk-based capital ratio of 14.63% at March 31, 2019, versus 11.74% and 14.54%, respectively, at year-end 2018.

   As of   Amount Change
  Mar 31,   Dec 31,   Sep 30,   Jun 30,   Mar 31,   Q1-19   Q1-19
  2019   2018   2018   2018   2018   vs. Q4-18   vs. Q1-18
Regulatory Capital ratios (1)                          
Hanmi Financial                          
Total risk-based capital 14.63 %   14.54 %   15.01 %   15.17 %   15.43 %   0.09   -0.80
Tier 1 risk-based capital 11.84 %   11.74 %   12.21 %   12.35 %   12.52 %   0.10   -0.68
Common equity tier 1 capital 11.43 %   11.32 %   11.79 %   11.93 %   12.09 %   0.11   -0.66
Tier 1 leverage capital ratio 10.39 %   10.18 %   10.53 %   10.83 %   10.88 %   0.21   -0.49
Hanmi Bank                          
Total risk-based capital 14.25 %   14.19 %   14.76 %   14.86 %   15.13 %   0.06   -0.88
Tier 1 risk-based capital 13.53 %   13.47 %   14.05 %   14.15 %   14.39 %   0.06   -0.86
Common equity tier 1 capital 13.53 %   13.47 %   14.05 %   14.15 %   14.39 %   0.06   -0.86
Tier 1 leverage capital ratio 11.88 %   11.67 %   12.11 %   12.42 %   12.51 %   0.21   -0.63
                                     

(1)       Preliminary ratios for March 31, 2019

Hanmi declared a cash dividend of $0.24 per common share on its common stock in the 2019 first quarter. The dividend was paid on February 28, 2019, to stockholders of record as of the close of business on January 30, 2019.

Asset Quality
Loans and leases 30 to 89 days past due and still accruing were 0.20% of loans and leases at the end of the first quarter of 2019, compared with 0.23% at the end of the fourth quarter.

Nonperforming loans and leases were $40.0 million at the end of the first quarter of 2019, or 0.88% of loans and leases compared with $15.5 million at the end of 2018, or 0.34% of the portfolio. The increase in nonaccrual loans and leases reflects the addition of a $25.0 million commercial loan relationship, primarily secured by business assets and to a lesser extent commercial real estate, which recently experienced an interruption to their business.  Hanmi has established a specific allowance of $3.0 million at March 31, 2019 for this relationship, is working closely with the borrower and expects to achieve a resolution as soon as possible. 

Nonperforming assets were $40.7 million at the end of the first quarter of 2019, or 0.73% of assets, compared to $16.2 million, or 0.29% of assets, at the end of the prior quarter.

Gross charge-offs for the first quarter of 2019 were $1.1 million compared with $3.8 million for the preceding quarter. Recoveries of previously charged-off loans and leases for the first quarter of 2019 were $0.9 million compared with $1.0 million for the preceding quarter. As a result, there were net charge-offs of $0.2 million for the first quarter of 2019, compared to net charge-offs of $2.7 million for the preceding quarter. For the first quarter of 2019, net charge-offs were 0.02% of average loans and leases compared with net charge-offs of 0.24% for the preceding quarter.  

The allowance for loan and lease losses was $32.9 million as of March 31, 2019, generating an allowance for loan and lease losses to loans and leases of 0.72% compared with 0.70% in the prior quarter.

...
   As of or for the Three Months Ended (in thousands)   Amount Change
  Mar 31,   Dec 31,   Sep 30,   Jun 30,   Mar 31,   Q1-19   Q1-19
  2019   2018   2018   2018   2018   vs. Q4-18   vs. Q1-18
Asset Quality                          
Nonperforming assets:                          
Nonaccrual loans and leases $   40,041     $   15,525     $   18,283     $   15,804     $   15,345     $   24,516