Hanmi Financial Corporation (HAFC)

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Hanmi Financial Corporation (HAFC)

Q4 2009 Earnings Call Transcript

January 28, 2010 1:30 pm ET


David Yang – IR and Corporate Planning Officer

Jay Yoo – President and CEO

Brian Cho – EVP and CFO

J. H. Sohn [ph] – SVP and Chief Credit Officer


Julianna Balicka – KBW



Welcome to the Hanmi Financial Corporation’s 2009 fourth quarter earnings conference call. My name is Regina, and I will be your operator for today. At this time, all participants are in listen-only mode. We will conduct a question-and-answer session toward the end of this conference. (Operator instructions) As a reminder, this call is being recorded for replay purposes.

I would like to introduce Mr. David Yang, Investor Relations and Corporate Planning Officer.

David Yang

Welcome to Hanmi Financial Corporation’s 2009 fourth quarter earnings conference call. Thank you for joining us today.

With me today to discuss Hanmi Financials’ fourth-quarter highlights are Jay Yoo, our President and Chief Executive Officer; Brian Cho, our Executive Vice President and Chief Financial Officer; and J. H. Sohn [ph], our Senior Vice President and Chief Credit Officer.

Jay will start out the call with an overview of the quarter, Brian will then discuss financial performance, and J. H. will conclude with a review of credit quality. At the conclusion of the formal remarks, we will open the session for questions.

In today’s call, we will include comments and forward-looking statements based on current plans, expectations, events, and financial industry trends that may affect the company’s future operating results and financial position. Our actual results could be quite different from those expressed or implied by our forward-looking statements, which involve risks and uncertainties. The speakers on this call claim the protection of the Safe Harbor provisions contained in the Securities Litigation Reform Act of 1995 for some factors that may cause our results to differ from our expectations. Please refer to our SEC filings, including our most recent Form 10-K and 10-Q. In particular, we direct you to the discussion in our 10-K of certain risk factors affecting our business.

This morning, Hanmi Financial issued a news release outlining its financial results for the fourth quarter of 2009. Please visit our website at www.hanmi.com to obtain a copy.

After comments by management this morning, we will open up this call to your questions.

I will now turn the call over to Jay.

Jay Yoo

Thank you, David. Hello everyone, and thank you for joining us today.

I would first like to inform you that we have appointed J. H. Sohn as our permanent Chief Credit Officer, pending regulatory approval.

As has been the case for several quarters now, and despite making progress on several fronts, our fourth-quarter financial performance was affected by a challenging economic environment and the decline in commercial real estate market.

We reported a fourth-quarter loss of $35.9 million or $0.70 per share, largely as a result of a $77 million provision for credit losses; and a loss of $122.2 million for year 2009 or $2.57 per share.

Although challenging, 2009 was a year of (inaudible) change for Hanmi. Looking beyond our bottom line fourth quarter and full-year loss, we made progress in executing our strategic plan to reposition Hanmi for consistent, significant, and long-term profitability. We have successfully deleveraged our balance sheet to improve our capital portfolio [ph], to withstand the impact of the current economic environment. Further, we have substantially improved the liquidity. Our core deposits significantly grew last year, enabling us to reduce reliance on corporate funding.

We continued to diligently deal with credit issues, especially in the fourth quarter, we proactively identified program loans and provided adequate reserve for them or charged them off. With many economists predicting on economy recovery in 2010, we are hopeful that Hanmi will report major improvements in financial performance as the current year progresses. However, with approximately 78% of our low end portfolio collateralized by commercial real estate, much will depend on the extent to which the (inaudible) anticipate improvement in the economy as a whole.

In the meantime, we continue to work on our loan portfolio, so we can begin to see decline in non-performers and net charges in the near future. Most recently, to enhance credit risk management, we have reorganized our credit department by segregating the duties. Most notably, we have stripped off the duties of loan monitoring and loan review. The key function of our loan monitoring department will be to identify potential program loans, while our (inaudible) department will (inaudible) problem loans. Further, on the direction of our new CCO, J. H., one million will be devoted to providing training in various areas of credit for junior run officers, to improve and prepare the bank for future or any growth.

Our main purpose during the first half of 2010 will be to fully comply with regulatory actions by maintaining capital efficacy, improving asset quality, and sustaining liquidity. To date, we have submitted on schedule all of the plans and policies stipulated in the regulatory actions, and we believe we have substantially complied with all provisions. Our highest priority during the next few months is to successfully raise capital to maintain satisfactory capital ratios.

Let me briefly discuss our capital raising project. The minimum capital injection mandated by the regulators is $100 million, likely to rise in 2010 and others are putting off the tangible equity to cash flow ratio to above 9%. We are working to raise sufficient capital in the coming months. Very strong capital will not only satisfy the regulatory ratio requirements, but will also allow us for salary fee momentum for growth.

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