Nara Bancorp Inc. in Los Angeles said Friday that it swung to a $9.9 million loss in the fourth quarter as it aggressively recognized loan losses.
It had earned $8.3 million a year earlier.
The $2.7 billion-asset company said it hiked its provision for loan losses 656% from a year earlier, to $28 million, because of higher chargeoffs and nonperforming loans.
Chargeoffs increased 300%, to $12.4 million, or an annualized 3.27% of average loans. Nonperformers increased 126%, to $37.6 million, or 1.79% of total loans.
Loan rates repriced downward faster than deposit rates, trimming the net interest margin by 72 basis points, to 3.71%.
Its origination of loans with Small Business Administration guarantees plummeted 262%, to $8 million. The company did not sell any such loans during the fourth quarter, causing its noninterest income to contract. It reported $24.9 million of SBA loan sales a year earlier.
Nara said a $67 million cash infusion through the Treasury Department's Troubled Asset Relief Program fattened its total risk-based capital ratio to 15.58% at Dec. 31.
"We believe our balance sheet remains strong, and we are well positioned to manage through a prolonged economic slowdown," Min Kim, the company's president and chief executive, said in a press release.