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TheStreet Open House

10 Bank Stocks Trading Below Book With Up To 85% Upside (Update 2)

9. Hanmi Financial

Shares of Hanmi Financial (HAFC) of Los Angeles closed at $8.60 Wednesday, returning 16% year-to-date, after last year's 20% decline.

The shares trade just below their Dec. 30 tangible book value of $9.02, having undergone a 1-for-8 reverse split on Dec. 19.

The company in November raised $77.1 million in common equity, net of expenses, and reported a strong regulatory Tier 1 leverage ratio of 13.34%, and a total risk-based capital ratio of 18.66%, as of Dec. 30.

Hanmi had $2.7 billion in total assets as of Dec. 30.

The company reported its fifth consecutive quarter profit, with fourth-quarter net income of $5.5 million, or 22 cents a share, compared to $5.3 million, or 28 cents a share, in the fourth quarter of 2010.

For Hanmi's investors, quite a bit is riding on the company's deferred tax assets, or DTA, which can only be recaptured in the event of sustained, and significant, profitability. During the company's fourth-quarter conference call on Jan. 19, CFO Lonny Robinson said that "as we see profitability continuing, we believe that we may be able to recover some although not all of the approximately $80 million deferred tax asset valuation allowance,: but that "DTA recoveries are typically not a one-time event but rather a series of credits over several quarters."

The shares trade for eight times the consensus 2012 EPS estimate of $1.14.

KBW analyst Julianna Balicka has a "Market Perform" rating on Hanmi Financial, with an $8.50 price target, saying on Jan. 26 that "things are aligning well for Hanmi," as the company's tangible common equity ratio HAD "improved to 10.4%," the DTA recapture was "anticipated in 2012," and because of "lending momentum, especially in SBA."

Balicka increased her 2012 EPS estimate for Hanmi to $1.50 from 53 cents, and her 2013 estimate to $1.30 from 76 cents, "modeling $30mm of the DTA valuation allowance reversal in our 2012 numbers, followed by $20mm in 2013," improving tangible book value per share by an estimated $1.59.

Interested in more on Hanmi Financial? See TheStreet Ratings' report card for this stock.

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