Hanmi Financial (HAFC) which has been a favorite of mine, reported an earnings “miss” last week and the market punished the stock hard.  Hanmi is a small-medium sized bank started in 1982 by Korean Americans for Korean Americans.  It started in Los Angeles, but has branched out to other major cities with Korean populations plus made efforts to attract Hispanic Americans as well.  I like their niche and they’ve been very successful in the past.


Anyway, last Wednesday they reported earning that missed what Wall Street was expecting.  They reported $0.46 versus expectations of $0.54.  That’s a big miss.  Ouch!  This news dropped the stock almost 10%.  That’s a lot for a bank to lose in one day.


Revenue was above expectations by quite a bit, so this suggests they were not controlling cost.  Cost control is a big deal when Wall Street looks at banks.  But, really it’s a one hand or the other issue.  Controlling costs is great unless you have viable places to invest the money and grow the business.  With such a niche business, this is always possible.  They may be trying to outgrow the competition.  We shall see.  I taking a wait and see attitude for now.


The Wall Street concept of banking is a little old fashioned and a little overly conservative.  That doesn’t mean it’s wrong.  It’s probably mostly right.  Most banking is highly competitive.  And here’s the kicker: banking is very dependent on overall economic growth.


Many economist and Wall Street have the idea that growth in the US is now constrained.  I mostly agree.  Economists cite aging baby boomers for lower demand.  Some people, myself included, cite a shrinking middle class and general income disparity.  Remember, the really good days in our nation were when the middle class was growing quickly and the rich were NOT getting richer more quickly.  That is not true today.  Count me as a non-believer in “supply side economics.”  So be it.


There has been other news on bank dividends that I haven’t kept up with.  Sorry.  Nothing earth shattering, but nice all the same.  I expect a little more of this kind of noise as annual meetings progress.  Some banks like to announce dividend raises, stock splits and buy backs just before or at the annual meetings.  It’s promotional for the shareholders.   Works for me!