Hanmi Doubles Its Profits on Better Credit Quality

Hanmi Financial (HAFC) in Los Angeles reported strong quarterly results Thursday as it continues to explore a possible sale or merger.

Its fourth-quarter profit more than doubled thanks to its recovering loan portfolio.

The holding company for the $2.8 billion-asset Hanmi Bank reported net income of $14 million for the fourth quarter, a 155% increase over the fourth quarter of 2011. Per-share earnings of 44 cents met the expectations of analysts polled by Bloomberg.

The jump in Hanmi's quarterly profit stemmed from lower expenses for bad loans. Chargeoffs declined to $3.2 million from $15 million. Hanmi made no provision for credit losses, after making a $4 million provision in the year-prior quarter. Nonperforming assets declined 28%, to $38 million.

Hanmi's net interest income rose 8%, to $26.4 million, as a 36% reduction in interest on deposits lowered interest expense. Its net interest margin widened by 20 basis points, to 3.86%.

Noninterest income rose 17%, to $7.5 million. A 51% decrease in losses on loan sales and a 12% increase in insurance commissions contributed to the improvement in noninterest income.