Hanmi suspends dividend payouts
In a sign of more stress in Southern California’s banking industry, Hanmi Financial Corp. said Friday that it would quit paying dividends to shareholders to conserve cash at its operating unit, Hanmi Bank.
The Koreatown-based company lost $105.5 million in the second quarter, largely the result of a noncash accounting charge but also a reflection of growing weakness in the bank’s loan portfolio.
Because of the red ink, the company said, state and federal regulators have imposed restrictions that require suspending the quarterly dividend of 3 cents a share, last paid in July.
Hanmi had cut the dividend in half just a month earlier.
“The board’s decision points to a challenging economic environment that is affecting the entire financial sector,” Hanmi Chairman Won R. Yoon said in a statement. “Although the bank remains well capitalized, it is important that we maintain liquidity and conserve capital.”
Analysts already had figured the dividend was a goner, so market reaction to Friday’s announcement was modest. Hanmi’s shares slipped 13 cents, or 2.5%, to $5.11. The stock hit a seven-year low of $4.75 on July 7. The price has plunged from a peak of $22.88 in January 2007.
In suspending its dividend, Hanmi joins a host of banks nationwide that have made similar cuts to preserve capital as loan troubles mount.
With assets of $3.8 billion, Hanmi is the largest of more than a dozen banks that focus on the ethnic Korean community in Southern California. Many of them have been struggling with a rising volume of loan defaults, partly because of the region’s real estate woes.