Why Hanmi Financial (HAFC) Is Up Today

NEW YORK (TheStreet) -- Hanmi Financial  (HAFC), the holding company for Hanmi Bank, 6.2% to $22.46 on Monday after the West Coast-focused bank announced its fourth-quarter and fiscal-year earnings results.

Hanmi reported 9.6% loan growth and 4.9% deposit growth in the fiscal year 2013. Its fourth-quarter net income was $10 million, or 31 cents per diluted share, compared to $10.3 million, or 32 cents per diluted share, in the third quarter and $14 million, or 44 cents per diluted share, in the fourth quarter one year ago, though that figure included a $5.5 million gross benefit from the reversal of a deferred tax asset valuation allowance.

The company's full-year net income was $39.9 million, or $1.26 per diluted share, compared to $90.4 million or $2.87 per diluted share, one year earlier. Those latter figures include a $47.4 million net tax benefit from the deferred tax asset valuation allowance reversal.

Pretax income also grew 44.1% to $62 million in 2013 from $43 million in 2012.

"The fourth quarter of 2013 was solidly profitable, highlighted by continued loan growth, with excellent results from our business lending team," said president and CEO C.G. Kum in a company statement. "Expanding our capabilities, particularly for commercial and industrial lending and treasury management services, is allowing us to broaden and deepen our relationship with business customers throughout our market, while diversifying our loan portfolio and expanding our ability to generate fee income.

"We are also expanding our franchise into new markets with the pending acquisition of Central Bancorp, Inc. When approved, Hanmi will become the second largest Korean American Bank in the nation. With strong earnings accretion and significant strategic benefits, this deal is garnering solid support from our stockholders and other stakeholders. This transaction will add significant momentum for us and position us for future growth."

TheStreet Ratings team rates HANMI FINANCIAL CORP as a "buy" with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate HANMI FINANCIAL CORP (HAFC) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • HAFC's revenue growth has slightly outpaced the industry average of 0.8%. Since the same quarter one year prior, revenues slightly increased by 8.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to its closing price of one year ago, HAFC's share price has jumped by 34.91%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, HAFC should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Net operating cash flow has increased to $18.04 million or 19.61% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -5.21%.
  • The gross profit margin for HANMI FINANCIAL CORP is currently very high, coming in at 91.91%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 26.31% trails the industry average.
  • HANMI FINANCIAL CORP's earnings per share declined by 23.8% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, HANMI FINANCIAL CORP increased its bottom line by earning $2.86 versus $1.42 in the prior year. For the next year, the market is expecting a contraction of 55.8% in earnings ($1.27 versus $2.86).
  • You can view the full analysis from the report here: HAFC Ratings Report

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