Hanmi Reports Strong Loan and Deposit Growth for First Quarter 2017

2017 First Quarter Highlights:

First quarter net income of $13.8 million or $0.43 per diluted share.
Loans and leases receivable of $3.94 billion, up 10% in the first quarter on an annualized basis driven by new loan production of $202.7 million; loans receivable up 19% year-over-year.
Net interest income for the first quarter increased to $42.4 million, up approximately 1% from the prior quarter and nearly 10% year-over-year.
Net interest margin, excluding acquisition accounting, was 3.85% compared with 3.86% for the prior quarter and 3.68% a year ago.
Deposits of $4.08 billion, up nearly 29% in the first quarter on an annualized basis due to an increase in money market and savings deposits; deposits are up 17% year-over-year.
Issued $100 million of fixed-to-floating rate subordinated debt with initial annual interest rate of 5.45% with total risk-based capital ratio improving 228 basis points to 16.14%.

LOS ANGELES, April 18, 2017 (GLOBE NEWSWIRE) -- Hanmi Financial Corporation (NASDAQ:HAFC) (or “Hanmi”), the parent company of Hanmi Bank (the “Bank”) today reported net income for the 2017 first quarter of $13.8 million or $0.43 per diluted share, compared with $14.4 million, or $0.45 per diluted share for the 2016 fourth quarter and $14.8 million, or $0.46 per diluted share for the 2016 first quarter.

Mr. C. G. Kum, President and Chief Executive Officer, said, “Hanmi’s first quarter results represent a good start to the year with strong loan and deposit growth, improving asset quality and a successful debt capital raise. Robust origination activity drove loans receivable 10% higher on an annualized basis in the first quarter and up more than 19% from a year ago, while net interest income grew nearly 10% year-over-year. During the quarter we continued to benefit from our C&I lending efforts with solid performance from our Commercial Equipment Leasing division. Importantly, credit quality remained excellent with nonperforming assets declining to 36 basis points of total assets and net recoveries in the quarter of $803,000. In addition, I continue to be very pleased with our deposit franchise, and in particular, the strength of our retail branch network as our money market and savings balances grew more than 15% in the quarter. As a result, total deposits increased nearly 29% on an annualized basis in the quarter and 17% compared to last year.”

Mr. Kum concluded, “During the quarter we successfully completed a public offering and sale of $100 million of subordinated notes that qualify as regulatory capital. The offering was significantly over-subscribed reflecting investors’ confidence in the Hanmi franchise. This further strengthens our total risk-based capital position and will support our continued loan growth in 2017 and beyond.”

Quarterly Highlights
(In thousands, except per share data)

	For the Three Months Ended															Amount Change
	March 31,			December 31,			September 30,			June 30,			March 31,			Q1-17			Q1-17
	2017			2016			2016			2016			2016			vs. Q4-16			vs. Q1-16

Net income	$	13,783		$	14,416		$	13,121		$	14,148		$	14,804		$	(633	)	$	(1,021	)
Net income per diluted common share	$	0.43		$	0.45		$	0.41		$	0.44		$	0.46		$	(0.02	)	$	(0.03	)

Assets	$	4,811,821		$	4,701,346		$	4,402,180		$	4,441,333		$	4,310,748		$	110,475		$	501,073
Loans and leases receivable	$	3,943,951		$	3,844,769		$	3,552,659		$	3,449,310		$	3,306,479		$	99,182		$	637,472
Deposits	$	4,083,165		$	3,809,737		$	3,771,207		$	3,589,289		$	3,499,992		$	273,428		$	583,173

Return on average assets		1.18	%		1.26	%		1.19	%		1.32	%		1.41	%		-0.08	%		-0.23	%
Return on average stockholders' equity		10.46	%		10.84	%		9.88	%		10.98	%		11.92	%		-0.38	%		-1.46	%

Net interest margin ⁽¹⁾		3.89	%		3.96	%		3.86	%		4.02	%		3.98	%		-0.07	%		-0.09	%
Net interest margin excluding acquisition accounting ⁽¹⁾		3.85	%		3.86	%		3.75	%		3.84	%		3.68	%		-0.01	%		0.17	%
Efficiency ratio		54.95	%		51.77	%		58.72	%		56.46	%		57.25	%		3.18	%		-2.30	%
Efficiency ratio excluding merger and integration costs		55.01	%		51.15	%		58.72	%		56.46	%		57.25	%		3.86	%		-2.24	%

Tangible common equity to tangible assets ⁽²⁾		10.98	%		11.05	%		12.04	%		11.79	%		11.82	%		-0.07	%		-0.84	%
Tangible common equity per common share ⁽²⁾	$	16.26		$	16.03		$	16.42		$	16.23		$	15.79		$	0.23		$	0.47

⁽¹⁾Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate.
⁽²⁾Refer to "Non-GAAP Financial Measures" for further details.

Results of Operations
First quarter net interest income increased 0.7% to $42.4 million from $42.1 million in the fourth quarter primarily from the solid expansion of loans and leases receivable, partially offset by an increase in deposit and borrowing interest expense. Average money market and savings deposits increased 7.8% and average borrowings increased 54.9%. During the quarter, Hanmi issued $100 million of 10-year subordinated notes effective March 22, 2017 at a fixed rate of 5.45% for the first five years, and a floating rate of three-month LIBOR plus 3.315% thereafter.

	As of or For the Three Months Ended (in thousands)										Percentage Change
	March 31,		December 31,		September 30,		June 30,		March 31,		Q1-17		Q1-17
Net Interest Income	2017		2016		2016		2016		2016		vs. Q4-16		vs. Q1-16

Interest and fees on loans and leases⁽¹⁾	$	45,378	$	43,780	$	41,150	$	40,645	$	39,067	3.7	%	16.2	%
Interest on securities		2,520		2,550		2,701		2,886		3,017	-1.2	%	-16.5	%
Dividends on FRB and FHLB stock		374		927		419		579		542	-59.7	%	-31.0	%
Interest on deposits in other banks		77		55		55		49		48	40.0	%	60.4	%
Total interest and dividend income	$	48,349	$	47,312	$	44,325	$	44,159	$	42,674	2.2	%	13.3	%

Interest on deposits		5,154		4,799		4,358		3,684		3,727	7.4	%	38.3	%
Interest on borrowings		468		207		179		299		195	126.1	%	140.0	%
Interest on subordinated debentures		373		241		206		196		183	54.8	%	103.8	%
Total interest expense		5,995		5,247		4,743		4,179		4,105	14.3	%	46.0	%
Net interest income	$	42,354	$	42,065	$	39,582	$	39,980	$	38,569	0.7	%	9.8	%

⁽¹⁾Includes loans held for sale.

Net interest margin (on a taxable equivalent basis) for the first quarter of 2017 was 3.89% compared with 3.96% for the fourth quarter of 2016. The decrease in net interest margin for the first quarter compared with the preceding quarter was primarily due to the 2016 fourth quarter special FHLB dividend of $559,000.

	For the Three Months Ended (in thousands)										Percentage Change
	March 31,		December 31,		September 30,		June 30,		March 31,		Q1-17		Q1-17
Average Earning Assets and Interest-bearing Liabilities	2017		2016		2016		2016		2016		vs. Q4-16		vs. Q1-16
Loans ⁽¹⁾	$	3,881,686	$	3,690,955	$	3,477,428	$	3,328,416	$	3,192,832	5.2	%	21.6	%
Securities		526,549		530,241		589,832		657,756		682,370	-0.7	%	-22.8	%
FRB and FHLB stock		16,385		16,385		19,207		30,808		30,497	0.0	%	-46.3	%
Interest-bearing deposits in other banks		38,600		40,548		43,678		38,598		44,089	-4.8	%	-12.4	%
Average interest-earning assets	$	4,463,220	$	4,278,129	$	4,130,145	$	4,055,578	$	3,949,788	4.3	%	13.0	%

Demand: interest-bearing	$	97,602	$	95,399	$	93,852	$	96,397	$	95,560	2.3	%	2.1	%
Money market and savings		1,406,903		1,305,565		1,141,747		944,355		902,037	7.8	%	56.0	%
Time deposits		1,173,184		1,165,828		1,244,127		1,268,127		1,346,567	0.6	%	-12.9	%
Average interest-bearing deposits		2,677,689		2,566,792		2,479,726		2,308,879		2,344,164	4.3	%	14.2	%
Borrowings		270,500		174,674		152,935		278,077		181,868	54.9	%	48.7	%
Subordinated debentures		30,950		18,919		18,844		18,781		18,722	63.6	%	65.3	%
Average interest-bearing liabilities	$	2,979,139	$	2,760,385	$	2,651,505	$	2,605,737	$	2,544,754	7.9	%	17.1	%

⁽¹⁾Includes loans held for sale.

	For the Three Months Ended										Percentage Change
	March 31,		December 31,		September 30,		June 30,		March 31,		Q1-17		Q1-17
Average Yields and Rates	2017		2016		2016		2016		2016		vs. Q4-16		vs. Q1-16
Loans ⁽¹⁾	4.74	%	4.72	%	4.71	%	4.91	%	4.92	%	0.0	%	-0.2	%
Securities ⁽²⁾	2.30	%	2.31	%	2.18	%	2.07	%	2.07	%	0.0	%	0.2	%
FRB and FHLB stock	9.26	%	22.63	%	8.73	%	7.52	%	7.11	%	-13.4	%	2.2	%
Interest-bearing deposits in other banks	0.81	%	0.54	%	0.50	%	0.51	%	0.44	%	0.3	%	0.4	%
Interest-earning assets	4.44	%	4.45	%	4.32	%	4.43	%	4.40	%	0.0	%	0.0	%

Interest-bearing deposits	0.78	%	0.74	%	0.70	%	0.64	%	0.64	%	0.0	%	0.1	%
Borrowings	0.70	%	0.47	%	0.47	%	0.43	%	0.43	%	0.2	%	0.3	%
Subordinated debentures	4.82	%	5.07	%	4.35	%	4.20	%	3.93	%	-0.3	%	0.9	%
Interest-bearing liabilities	0.82	%	0.76	%	0.71	%	0.65	%	0.65	%	0.1	%	0.2	%

Net interest margin (taxable equivalent basis)	3.89	%	3.96	%	3.86	%	4.02	%	3.98	%	-0.1	%	-0.1	%

Cost of deposits	0.54	%	0.50	%	0.47	%	0.43	%	0.43	%	0.0	%	0.1	%

⁽¹⁾Includes loans held for sale.
⁽²⁾Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate.

For the first quarter of 2017, Hanmi recorded a negative provision for loan losses of $0.1 million, which was related to Purchased Credit Impaired (“PCI”) loans from the 2014 acquisition. For the prior quarter, the provision for loan losses was $0.2 million.

First quarter noninterest income decreased $0.9 million or 10.5% to $7.2 million from $8.1 million for the fourth quarter of 2016 primarily due to a $1.4 million decrease in disposition gains on PCI loans offset by a $0.7 million increase in other operating income. The increase in other operating income is primarily related to a $0.3 million increase in servicing fee income resulting from lower amortization of servicing assets and liabilities, and a $0.4 million increase associated with upcharge fees. Disposition gains on PCI loans were $0.2 million for the first quarter of 2017, compared with $1.6 million for the prior quarter. PCI loans from the 2014 acquisition were $9.0 million at the end of the first quarter of 2017, down 9.1% from the prior quarter. Gains on sales of SBA loans were $1.5 million for the first quarter 2017, down from $1.8 million from the fourth quarter of 2016 as the volume of SBA loans sold decreased to $19.6 million from $27.8 million for the preceding quarter.

	For the Three Months Ended (in thousands)										Percentage Change
	March 31,		December 31,		September 30,		June 30,		March 31,		Q1-17		Q1-17
Noninterest Income	2017		2016		2016		2016		2016		vs. Q4-16		vs. Q1-16
Service charges on deposit accounts	$	2,528	$	2,599	$	2,883	$	2,898	$	3,001	-2.7	%	-15.8	%
Trade finance and other service charges and fees		1,047		1,132		992		1,064		1,044	-7.5	%	0.3	%
Other operating income		1,726		991		2,348		1,674		1,399	74.2	%	23.4	%
Service charges, fees & other		5,301		4,722		6,223		5,636		5,444	12.3	%	-2.6	%

Gain on sale of SBA loans		1,464		1,787		1,616		1,774		858	-18.1	%	70.6	%
Disposition gain on PCI loans		183		1,559		789		1,963		659	-88.3	%	-72.2	%
Net gain on sales of securities		269		-		46		-		-	0.0	%	0.0	%
Total noninterest income	$	7,217	$	8,068	$	8,674	$	9,373	$	6,961	-10.5	%	3.7	%

Noninterest expense for the first quarter increased $1.3 million, or 5.0%, to $27.2 million from $26.0 million primarily due to a $0.9 million increase in salaries and employee benefits expenses and a $0.6 million decline in OREO income. Salaries and employee benefits expenses are typically higher in the first quarter due to the seasonal impact of elevated payroll taxes and employee benefits. As a result of the increase in noninterest expense, as well as lower noninterest income, the efficiency ratio increased to 55.0% in the first quarter from 51.8% in the prior quarter.

	For the Three Months Ended (in thousands)												Percentage Change
	March 31,			December 31,			September 30,		June 30,		March 31,		Q1-17		Q1-17
	2017			2016			2016		2016		2016		vs. Q4-16		vs. Q1-16
Noninterest Expense
Salaries and benefits	$	17,104		$	16,246		$	15,950	$	16,061	$	15,698	5.3	%	9.0	%
Occupancy and equipment		3,982			3,641			3,917		3,938		3,496	9.4	%	13.9	%
Data processing		1,631			1,455			1,330		1,454		1,436	12.1	%	13.6	%
Supplies and communication		635			683			821		709		736	-7.0	%	-13.7	%
Advertising and promotion		802			1,140			1,153		1,094		522	-29.6	%	53.6	%
Other operating expenses		3,218			3,136			5,093		4,424		3,715	2.6	%	-13.4	%
subtotal		27,372			26,301			28,264		27,680		25,603	4.1	%	6.9	%

OREO expense (income)		(101	)		(658	)		73		183		465	-84.7	%	-121.7	%
Merger and integration costs		(31	)		312			-		-		-	-109.9	%	0.0	%
Total noninterest expense	$	27,240		$	25,955		$	28,337	$	27,863	$	26,068	5.0	%	4.5	%

Hanmi recorded a provision for income taxes of $8.6 million for the first quarter of 2017, representing an effective tax rate of 38.5%, compared with $9.6 million, representing an effective tax rate of 40.0%, for the preceding quarter and $6.2 million, representing an effective tax rate 29.5% for the first quarter of 2016. The first quarter of 2016 included a $1.8 million benefit arising from the finalization of the 2014 amended tax returns.

Financial Position
Total assets were $4.81 billion at March 31, 2017, a 2.3% increase from $4.70 billion at December 31, 2016. The increase in total assets was primarily due to an increase in loans and leases receivable.

Loans and leases receivable, before the allowance for loan and lease losses, were $3.95 billion at March 31, 2017, up 2.6% from $3.85 billion at December 31, 2016. The increase in loans and leases from the prior quarter reflects Hanmi’s strong loan production and the acquisition and commencement of the Commercial Equipment Leasing division in the 2016 fourth quarter. Loans held for sale, representing the guaranteed portion of SBA loans, were $8.8 million at March 31, 2017 compared with $9.3 million at the end of the 2016 fourth quarter.

Loans and leases receivable, before the allowance for loan and lease losses, increased 19.5% from $3.31 billion the first quarter last year, primarily due to strong loan production over the last twelve months, as well as last year’s acquisition and commencement of the Commercial Equipment Leasing division.


	As of (in thousands)										Percentage Change
	March 31,		December 31,		September 30,		June 30,		March 31,		Q1-17		Q1-17
	2017		2016		2016		2016		2016		vs. Q4-16		vs. Q1-16
Loan and Lease Portfolio
Commercial real estate loans	$	2,991,123	$	2,939,608	$	2,880,012	$	2,835,076	$	2,729,527	1.8	%	9.6	%
Residential real estate loans		359,152		338,767		330,675		296,496		256,488	6.0	%	40.0	%
Commercial and industrial loans		316,284		300,220		319,656		293,073		295,632	5.4	%	7.0	%
Lease receivable		259,591		243,294		-		-		-	6.7	%	0.0	%
Consumer loans		17,801		22,880		22,316		24,665		24,832	-22.2	%	-28.3	%
Loans and leases receivable		3,943,951		3,844,769		3,552,659		3,449,310		3,306,479	2.6	%	19.3	%
Loans held for sale		8,849		9,316		6,425		12,833		2,583	-5.0	%	242.6	%
Total loans	$	3,952,800	$	3,854,085	$	3,559,084	$	3,462,143	$	3,309,062	2.6	%	19.5	%

Acquired Loans⁽¹⁾
PCI loans, net of discounts	$	8,960	$	9,863	$	15,540	$	15,020	$	19,834	-9.2	%	-54.8	%
Non-PCI loans, net of discounts		101,062		104,733		108,434		117,750		139,869	-3.5	%	-27.7	%
Total acquired loans	$	110,022	$	114,596	$	123,974	$	132,770	$	159,703	-4.0	%	-31.1	%

⁽¹⁾Includes UCB acquired only.

New loan production for the 2017 first quarter was $202.7 million while payoffs were $67.6 million compared with $227.1 million and $82.1 million for the fourth quarter last year. First quarter 2017 new loan production was comprised of $116.2 million of commercial real estate loans, $16.9 million of commercial and industrial loans, $29.7 million of SBA loans, and $0.4 million of consumer loans and $39.5 million of commercial leases. Loan purchases for the 2017 first quarter were $33.6 million, compared with $26.9 million in the fourth quarter of 2016. For the first quarter of 2017, commercial real estate loans as a percentage of total loans and leases decreased to 75.7% compared with 82.5% for the same period last year.

Deposits increased to $4.08 billion at the end of the 2017 first quarter from $3.81 billion at the end of the preceding quarter. Money market and savings deposits led this growth increasing 15.4%. Total demand deposits increased 3.1% with non-interest bearing increasing 3.2% and interest-bearing increasing 2.7%. The loans to deposits ratio at March 31, 2017 declined to 96.6% from 100.9% at December 31, 2016.

Deposits increased 16.7% from $3.50 billion in the first quarter last year, primarily due to the strength of our retail branch network as our money market and savings balance increased 64.7% compared a year ago.

	As of (in thousands)										Percentage Change
	March 31,		December 31,		September 30,		June 30,		March 31,		Q1-17		Q1-17
	2017		2016		2016		2016		2016		vs. Q4-16		vs. Q1-16
Deposit Portfolio
Demand: noninterest-bearing	$	1,241,272	$	1,203,240	$	1,231,967	$	1,189,528	$	1,172,444	3.2	%	5.9	%
Demand: interest-bearing		99,433		96,856		94,272		92,776		99,141	2.7	%	0.3	%
Money market and savings		1,534,578		1,329,324		1,242,502		1,023,421		931,915	15.4	%	64.7	%
Time deposits of $250,000 or less		731,445		734,383		819,471		891,197		948,346	-0.4	%	-22.9	%
Time deposits of more than $250,000		476,437		445,934		382,995		392,367		348,146	6.8	%	36.8	%
Total deposits	$	4,083,165	$	3,809,737	$	3,771,207	$	3,589,289	$	3,499,992	7.2	%	16.7	%

At March 31, 2017, stockholders’ equity was $539.5 million, compared with $531.0 million at December 31, 2016. Tangible common stockholders’ equity was $526.7 million, or 10.98% of tangible assets, compared with $518.1 million, or 11.05% of tangible assets at December 31, 2016. Tangible book value per share was $16.26, up from $16.03 from the preceding quarter.

Hanmi continues to remain well capitalized, with a Tier 1 risk-based capital ratio of 12.91% and a Total risk-based capital ratio of 16.14% at March 31, 2017, versus 13.02% and 13.86%, respectively, at December 31, 2016.

	As of										Amount Change
	March 31,		December 31,		September 30,		June 30,		March 31,		Q1-17		Q1-17
	2017		2016		2016		2016		2016		vs. Q4-16		vs. Q1-16
Regulatory Capital ratios⁽¹⁾
Hanmi Financial
Total risk-based capital	16.14	%	13.86	%	14.99	%	15.16	%	15.37	%	2.3	%	0.8	%
Tier 1 risk-based capital	12.91	%	13.02	%	13.89	%	14.00	%	14.15	%	-0.1	%	-1.2	%
Common equity tier 1 capital	12.53	%	12.73	%	13.73	%	13.85	%	13.99	%	-0.2	%	-1.5	%
Tier 1 leverage capital ratio	11.22	%	11.53	%	11.68	%	11.69	%	11.70	%	-0.3	%	-0.5	%
Hanmi Bank
Total risk-based capital	15.88	%	13.64	%	14.61	%	14.58	%	14.78	%	2.2	%	1.1	%
Tier 1 risk-based capital	15.04	%	12.80	%	13.50	%	13.43	%	13.56	%	2.2	%	1.5	%
Common equity tier 1 capital	15.04	%	12.80	%	13.50	%	13.43	%	13.56	%	2.2	%	1.5	%
Tier 1 leverage capital ratio	13.08	%	11.33	%	11.36	%	11.21	%	11.22	%	1.8	%	1.9	%

⁽¹⁾Preliminary ratios for March 31, 2017

Hanmi declared a cash dividend of $0.19 per common share on its common stock in the 2017 first quarter, with the same as the prior quarter. The dividend was paid on February 23, 2017, to stockholders of record as of the close of business on February 7, 2017.

Asset Quality
Nonperforming loans, excluding PCI loans, were $12.8 million at the end of the first quarter of 2017, or 0.32% of loans, compared with $11.4 million at the end of the fourth quarter of 2016, or 0.30% of loans.

OREO was $4.6 million at the end of the first quarter of 2017, down from $7.5 million at the end of the prior quarter. Nonperforming assets were $17.4 million at the end of the first quarter of 2017, or 0.36% of assets, compared with 0.40% of assets at the end of the prior quarter.

Gross charge-offs for the first quarter of 2017 were $186,000, compared with $7.3 million for the preceding quarter. The fourth quarter included a charge-off of a $5.0 million PCI loan from the 2014 acquisition that had been substantially reserved for in prior periods. Recoveries of previously charged-off loans for the first quarter of 2017 were $989,000 compared with $625,000 for the preceding quarter. As a result, there were net recoveries of $803,000 for the first quarter of 2017, compared to net charge-offs of $6.7 million for the preceding quarter.

The allowance for loan and lease losses was $33.2 million as of March 31, 2017, generating an allowance of loan losses to loans receivable ratio of 0.84% the same as at December 31, 2016.

	As of or for the Three Months Ended (in thousands)															Amount Change
	March 31,			December 31,			September 30,			June 30,			March 31,			Q1-17			Q1-17
	2017			2016			2016			2016			2016			vs. Q4-16			vs. Q1-16
Asset Quality
Nonperforming assets ⁽¹⁾:
Nonaccrual Non-PCI loans	$	12,774		$	11,406		$	10,948		$	12,341		$	16,276		$	1,368		$	(3,502	)
Loans 90 days or more past due and still accruing		-			-			-			-			-			-			-
Nonperforming Non-PCI loans		12,774			11,406			10,948			12,341			16,276			1,368			(3,502	)
OREO, net		4,636			7,484			10,971			11,846			9,411			(2,848	)		(4,775	)
Nonperforming assets	$	17,410		$	18,890		$	21,919		$	24,187		$	25,687		$	(1,480	)	$	(8,277	)

Delinquent loans:
Loans, 30 to 89 days past due and still accruing	$	6,273		$	5,718		$	1,066		$	1,517		$	5,974		$	555		$	299
Delinquent loans to loans		0.16	%		0.15	%		0.03	%		0.04	%		0.18	%		0.01	%		-0.02	%

Allowance for loan and lease losses:
Balance at beginning of period	$	32,429		$	38,972		$	39,707		$	41,026		$	42,935
Loan and lease loss provision (income)		(80	)		151			(1,450	)		(1,515	)		(1,525	)
Net loan charge-offs (recoveries)		(803	)		6,694			(715	)		(196	)		384
Balance at end of period	$	33,152		$	32,429		$	38,972		$	39,707		$	41,026

Asset quality ratios:
Nonperforming Non-PCI loans to loans ⁽¹⁾		0.32	%		0.30	%		0.31	%		0.36	%		0.50	%
Nonperforming assets to assets ⁽¹⁾		0.36	%		0.40	%		0.50	%		0.54	%		0.60	%
Net loan charge-offs (recoveries) to average loans ⁽³⁾		-0.08	%		0.73	%		-0.08	%		-0.02	%		0.05	%
Allowance for loan losses to loans		0.84	%		0.84	%		1.10	%		1.15	%		1.24	%
Allowance for loan losses to nonperforming Non-PCI loans ^{(1) (2)}		252.54	%		275.80	%		305.43	%		277.60	%		217.38	%

Allowance for off-balance sheet items:
Balance at beginning of period	$	1,184		$	1,491		$	1,475		$	1,220		$	986
Provision (income) for off-balance sheet items		-			(307	)		16			255			234
Balance at end of period	$	1,184		$	1,184		$	1,491		$	1,475		$	1,220

⁽¹⁾Excludes PCI loans
⁽²⁾Excludes allowance for loan losses allocated to PCI loans
⁽³⁾Annualized

Conference Call
Management will host a conference call today, April 18, 2017 at 1:00 p.m. PT (4:00 p.m. ET) to discuss these results. This call will also be broadcast live via the internet. Investment professionals and all current and prospective stockholders are invited to access the live call by dialing 1-877-407-9039 before 1:00 p.m. PT, using access code HANMI. To listen to the call online, either live or archived, visit the Investor Relations page of Hanmi’s website at www.hanmi.com.

About Hanmi Financial Corporation
Headquartered in Los Angeles, California, Hanmi Financial Corporation owns Hanmi Bank, which serves multi-ethnic communities through its network of 41 full-service branches and 6 loan production offices in California, Texas, Illinois, Virginia, New Jersey, New York, Colorado, Washington and Georgia. Hanmi Bank specializes in real estate, commercial, SBA and trade finance lending to small and middle market businesses. Additional information is available at www.hanmi.com.

Forward-Looking Statements
This press release contains forward-looking statements, which are included in accordance with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” or “continue,” or the negative of such terms and other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. All statements other than statements of historical fact are “forward–looking statements” for purposes of federal and state securities laws, including, but not limited to, statements about anticipated future operating and financial performance, financial position and liquidity, business strategies, regulatory and competitive outlook, investment and expenditure plans, capital and financing needs and availability, plans and objectives of management for future operations, developments regarding our capital plans, strategic alternatives for a possible business combination, merger or sale transaction, and other similar forecasts and statements of expectation and statements of assumption underlying any of the foregoing. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ from those expressed or implied by the forward-looking statement. These factors include the following: failure to maintain adequate levels of capital and liquidity to support our operations; the effect of potential future supervisory action against us or Hanmi Bank; general economic and business conditions internationally, nationally and in those areas in which we operate; volatility and deterioration in the credit and equity markets; changes in consumer spending, borrowing and savings habits; availability of capital from private and government sources; demographic changes; competition for loans and deposits and failure to attract or retain loans and deposits; fluctuations in interest rates and a decline in the level of our interest rate spread; risks of natural disasters related to our real estate portfolio; risks associated with Small Business Administration loans; failure to attract or retain key employees; changes in governmental regulation, including, but not limited to, any increase in FDIC insurance premiums; ability of Hanmi Bank to make distributions to Hanmi Financial Corporation, which is restricted by certain factors, including Hanmi Bank’s retained earnings, net income, prior distributions made, and certain other financial tests; ability to identify a suitable strategic partner or to consummate a strategic transaction; adequacy of our allowance for loan and lease losses; credit quality and the effect of credit quality on our provision for loan and lease losses and allowance for loan and lease losses; changes in the financial performance and/or condition of our borrowers and the ability of our borrowers to perform under the terms of their loans and other terms of credit agreements; our ability to control expenses; and changes in securities markets. In addition, we set forth certain risks in our reports filed with the U.S. Securities and Exchange Commission, including, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2016, our Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K that we will file hereafter, which could cause actual results to differ from those projected. We undertake no obligation to update such forward-looking statements except as required by law.

Hanmi Financial Corporation and Subsidiaries
Consolidated Balance Sheets (Unaudited)
(In thousands)

	March 31,			December 31,			Percentage		March 31,			Percentage
	2017			2016			Change		2016			Change
Assets
Cash and due from banks	$	138,592		$	147,235		-5.9	%	$	137,464		0.8	%
Securities available for sale, at fair value		548,010			516,964		6.0	%		675,032		-18.8	%
Loans held for sale, at the lower of cost or fair value		8,849			9,316		-5.0	%		2,583		242.6	%
Loans and leases receivable, net of allowance for loan and lease losses		3,910,799			3,812,340		2.6	%		3,265,453		19.8	%
Accrued interest receivable		10,774			10,987		-1.9	%		10,626		1.4	%
Customers' liability on acceptances		932			978		-4.7	%		2,809		-66.8	%
Servicing assets		10,609			10,564		0.4	%		11,452		-7.4	%
Premises and equipment, net		28,350			28,698		-1.2	%		30,112		-5.9	%
Goodwill and other intangible assets, net		12,797			12,889		-0.7	%		1,619		690.4	%
Federal Home Loan Bank ("FHLB") stock, at cost		16,385			16,385		0.0	%		16,385		0.0	%
Federal Reserve Bank ("FRB") stock, at cost		-			-		-			14,423		-100.0	%
Other real estate owned ("OREO"), net		4,636			7,484		-38.1	%		9,411		-50.7	%
Income tax asset		40,049			48,047		-16.6	%		56,456		-29.1	%
Bank-owned life insurance		49,722			49,440		0.6	%		48,612		2.3	%
Prepaid expenses and other assets		31,317			30,019		4.3	%		28,311		10.6	%
Total assets	$	4,811,821		$	4,701,346		2.3	%	$	4,310,748		11.6	%

Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Noninterest-bearing	$	1,241,272		$	1,203,240		3.2	%	$	1,172,444		5.9	%
Interest-bearing		2,841,893			2,606,497		9.0	%		2,327,548		22.1	%
Total deposits		4,083,165			3,809,737		7.2	%		3,499,992		16.7	%
Accrued interest payable		2,619			2,567		2.0	%		3,249		-19.4	%
Bank's liability on acceptances		932			978		-4.7	%		2,809		-66.8	%
FHLB advances		50,000			315,000		-84.1	%		250,000		-80.0	%
Subordinated debentures		116,795			18,978		515.4	%		18,759		522.6	%
Accrued expenses and other liabilities		18,768			23,061		-18.6	%		25,079		-25.2	%
Total liabilities		4,272,279			4,170,321		2.4	%		3,799,888		12.4	%

Stockholders' equity:
Common stock		33			33		0.0	%		33		0.0	%
Additional paid-in capital		563,151			562,446		0.1	%		558,945		0.8	%
Accumulated other comprehensive income (loss)		(1,603	)		(2,394	)	-33.0	%		5,364		-129.9	%
Retained earnings		49,395			41,726		18.4	%		16,742		195.0	%
Less treasury stock		(71,434	)		(70,786	)	0.9	%		(70,224	)	1.7	%
Total stockholders' equity		539,542			531,025		1.6	%		510,860		5.6	%
Total liabilities and stockholders' equity	$	4,811,821		$	4,701,346		2.3	%	$	4,310,748		11.6	%

Hanmi Financial Corporation and Subsidiaries
Consolidated Statements of Income (Unaudited)
(In thousands, except share and per share data)

	Three Months Ended
	March 31,			December 31,			Percentage		March 31,			Percentage
	2017			2016			Change		2016			Change
Interest and dividend income:
Interest and fees on loans	$	45,378		$	43,780		3.7	%	$	39,067		16.2	%
Interest on securities		2,520			2,550		-1.2	%		3,017		-16.5	%
Dividends on FRB and FHLB stock		374			927		-59.7	%		542		-31.0	%
Interest on deposits in other banks		77			55		40.0	%		48		60.4	%
Total interest and dividend income		48,349			47,312		2.2	%		42,674		13.3	%
Interest expense:
Interest on deposits		5,154			4,799		7.4	%		3,727		38.3	%
Interest on FHLB advances		468			207		126.1	%		195		140.0	%
Interest on subordinated debentures		373			241		54.8	%		183		103.8	%
Total interest expense		5,995			5,247		14.3	%		4,105		46.0	%
Net interest income before provision for loan and lease losses		42,354			42,065		0.7	%		38,569		9.8	%
Loan and lease loss provision (income)		(80	)		151		-153.0	%		(1,525	)	-94.8	%
Net interest income after provision for loan and lease losses		42,434			41,914		1.2	%		40,094		5.8	%
Noninterest income:
Service charges on deposit accounts		2,528			2,599		-2.7	%		3,001		-15.8	%
Trade finance and other service charges and fees		1,047			1,132		-7.5	%		1,044		0.3	%
Gain on sale of Small Business Administration ("SBA") loans		1,464			1,787		-18.1	%		858		70.6	%
Disposition gains on Purchased Credit Impaired ("PCI") loans		183			1,559		-88.3	%		659		-72.2	%
Net gain on sales of securities		269			-		-			-		-
Other operating income		1,726			991		74.2	%		1,399		23.4	%
Total noninterest income		7,217			8,068		-10.5	%		6,961		3.7	%
Noninterest expense:
Salaries and employee benefits		17,104			16,246		5.3	%		15,698		9.0	%
Occupancy and equipment		3,982			3,641		9.4	%		3,496		13.9	%
Data processing		1,631			1,455		12.1	%		1,436		13.6	%
Professional fees		1,148			1,311		-12.4	%		1,464		-21.6	%
Supplies and communications		635			683		-7.0	%		736		-13.7	%
Advertising and promotion		802			1,140		-29.6	%		522		53.6	%
OREO expense (income)		(101	)		(658	)	-84.7	%		465		-121.7	%
Merger and integration costs		(31	)		312		-109.9	%		-		-
Other operating expenses		2,070			1,825		13.4	%		2,251		-8.0	%
Total noninterest expense		27,240			25,955		5.0	%		26,068		4.5	%
Income before provision for income taxes		22,411			24,027		-6.7	%		20,987		6.8	%
Income tax expense		8,628			9,611		-10.2	%		6,183		39.5	%
Net income	$	13,783		$	14,416		-4.4	%	$	14,804		-6.9	%

Basic earnings per share:	$	0.43		$	0.45				$	0.46
Diluted earnings per share:	$	0.43		$	0.45				$	0.46

Weighted-average shares outstanding:
Basic		32,001,766			31,956,822					31,846,371
Diluted		32,191,458			32,149,625					31,928,103
Common shares outstanding		32,392,580			32,330,747					32,249,512

Hanmi Financial Corporation and Subsidiaries
Average Balance, Average Yield Earned, and Average Rate Paid (Unaudited)
(In thousands, except ratios)

	Three Months Ended
	March 31, 2017							December 31, 2016							March 31, 2016
				Interest		Average					Interest		Average					Interest		Average
	Average			Income /		Yield /		Average			Income /		Yield /		Average			Income /		Yield /
	Balance			Expense		Rate		Balance			Expense		Rate		Balance			Expense		Rate
Average Assets
Interest-earning assets:
Loans ⁽¹⁾	$	3,881,686		$	45,378	4.74	%	$	3,690,955		$	43,780	4.72	%	$	3,192,832		$	39,067	4.92	%
Securities ⁽²⁾		526,549			3,026	2.30	%		530,241			3,057	2.31	%		682,370			3,529	2.07	%
FRB and FHLB stock		16,385			374	9.26	%		16,385			927	22.63	%		30,497			542	7.11	%
Interest-bearing deposits in other banks		38,600			77	0.81	%		40,548			55	0.54	%		44,089			48	0.44	%
Total interest-earning assets		4,463,220			48,855	4.44	%		4,278,129			47,819	4.45	%		3,949,788			43,186	4.40	%

Noninterest-earning assets:
Cash and due from banks		117,802							115,211							114,664
Allowance for loan and lease losses		(32,842	)						(39,235	)						(42,519	)
Other assets		190,041							192,001							199,143
Total noninterest-earning assets		275,001							267,977							271,288

Average total assets	$	4,738,221						$	4,546,106						$	4,221,076

Average Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Deposits:
Demand: interest-bearing	$	97,602		$	19	0.08	%	$	95,399		$	19	0.08	%	$	95,560		$	19	0.08	%
Money market and savings		1,406,903			2,666	0.77	%		1,305,565			2,340	0.71	%		902,037			1,084	0.48	%
Time deposits		1,173,184			2,469	0.85	%		1,165,828			2,440	0.83	%		1,346,567			2,624	0.78	%
Total interest-bearing deposits		2,677,689			5,154	0.78	%		2,566,792			4,799	0.74	%		2,344,164			3,727	0.64	%
FHLB advances		270,500			468	0.70	%		174,674			207	0.47	%		181,868			195	0.43	%
Subordinated debentures		30,950			373	4.82	%		18,919			241	5.07	%		18,722			183	3.93	%
Total interest-bearing liabilities		2,979,139			5,995	0.82	%		2,760,385			5,247	0.76	%		2,544,754			4,105	0.65	%

Noninterest-bearing liabilities:
Demand deposits: noninterest-bearing		1,196,151							1,229,042							1,138,822
Other liabilities		28,658							27,497							38,031
Total noninterest-bearing liabilities		1,224,809							1,256,539							1,176,853

Total liabilities		4,203,948							4,016,924							3,721,607
Stockholders' equity		534,273							529,182							499,469

Average Total liabilities and stockholders' equity	$	4,738,221						$	4,546,106						$	4,221,076

Net interest income (taxable equivalent basis) ⁽²⁾				$	42,860						$	42,572						$	39,081

Cost of deposits						0.54	%						0.50	%						0.43	%
Net interest spread						3.62	%						3.69	%						3.75	%
Net interest margin						3.89	%						3.96	%						3.98	%


⁽¹⁾ Includes loans held for sale
⁽²⁾ Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate.

Non-GAAP Financial Measures

Acquisition Accounting

Core loan yield, core deposit costs, net interest income and net interest margin excluding acquisition accounting are supplemental financial information determined by a method other than in accordance with U.S. generally accepted accounting principles (“GAAP”). This non-GAAP measure is used by management in the analysis of Hanmi’s results of operations. The calculation of these measures is illustrated below. Management believes the presentation of this financial measure excluding the impact of these items provides useful supplemental information that is essential to a proper understanding of the results of Hanmi. This disclosure should not be viewed as a substitution for results determined in accordance with GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies.

The following table reconciles this non-GAAP performance measure to the GAAP performance measure for the periods indicated:

Impact of the Acquisition Accounting Adjustment
	Fore the Three Months Ended
	March 31,			December 31,		September 30,			June 30,		March 31,
	2017			2016		2016			2016		2016
Core loan yield		4.68	%	4.63	%		4.63	%	4.78	%		4.67	%
Accretion of discount on purchased loans		0.06	%	0.09	%		0.08	%	0.13	%		0.25	%
As reported		4.74	%	4.72	%		4.71	%	4.91	%		4.92	%

Core deposit cost		0.55	%	0.54	%		0.54	%	0.52	%		0.54	%
Accretion of time deposits premium		0.01	%	0.04	%		0.07	%	0.09	%		0.11	%
As reported		0.54	%	0.50	%		0.47	%	0.43	%		0.43	%

	Fore the Three Months Ended
	March 31, 2017					December 31, 2016					September 30, 2016					June 30, 2016					March 31, 2016
	Amount			Rate		Amount			Rate		Amount			Rate		Amount			Rate		Amount			Rate
						(in thousands)
Net interest income and net interest margin excluding acquisition accounting ⁽¹⁾	$	42,230		3.85	%	$	41,489		3.86	%	$	38,874		3.75	%	$	38,671		3.84	%	$	36,164		3.68	%
Accretion of discount on Non-PCI loans		527		0.04	%		781		0.07	%		648		0.06	%		994		0.10	%		1,754		0.18	%
Accretion of discount on PCI loans		54		0.00	%		78		0.01	%		26		0.00	%		97		0.01	%		277		0.03	%
Accretion of time deposits premium		126		0.01	%		314		0.03	%		610		0.06	%		791		0.08	%		942		0.10	%
Amortization of subordinated debentures discount		(77	)	-0.01	%		(90	)	-0.01	%		(67	)	-0.01	%		(62	)	-0.01	%		(56	)	-0.01	%
Net impact		630		0.04	%		1,083		0.10	%		1,217		0.11	%		1,820		0.18	%		2,917		0.30	%
As reported, on a fully taxable equivalent basis ⁽¹⁾	$	42,860		3.89	%	$	42,572		3.96	%	$	40,091		3.86	%	$	40,491		4.02	%	$	39,081		3.98	%

⁽¹⁾Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate.

Tangible Common Equity to Tangible Assets Ratio

Tangible common equity to tangible assets ratio is supplemental financial information determined by a method other than in accordance with U.S. generally accepted accounting principles (“GAAP”). This non-GAAP measure is used by management in the analysis of Hanmi’s capital strength. Tangible equity is calculated by subtracting goodwill and other intangible assets from stockholders’ equity. Banking and financial institution regulators also exclude goodwill and other intangible assets from stockholders’ equity when assessing the capital adequacy of a financial institution. Management believes the presentation of this financial measure excluding the impact of these items provides useful supplemental information that is essential to a proper understanding of the capital strength of Hanmi. This disclosure should not be viewed as a substitution for results determined in accordance with GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies.

The following table reconciles this non-GAAP performance measure to the GAAP performance measure for the periods indicated:

Tangible Common Equity to Tangible Assets Ratio (Unaudited)
(In thousands, except share, per share data and ratios)

	March 31,			December 31,			September 30,			June 30,			March 31,
Hanmi Financial Corporation	2017			2016			2016			2016			2016
Assets	$	4,811,821		$	4,701,346		$	4,402,180		$	4,441,333		$	4,310,748
Less goodwill		(11,031	)		(11,031	)		-			-			-
Less other intangible assets		(1,766	)		(1,858	)		(1,456	)		(1,537	)		(1,619	)
Tangible assets	$	4,799,024		$	4,688,457		$	4,400,724		$	4,439,796		$	4,309,129

Common Stockholders' equity	$	539,542		$	531,025		$	531,198		$	525,185		$	510,860
Less goodwill		(11,031	)		(11,031	)		-			-			-
Less other intangible assets		(1,766	)		(1,858	)		(1,456	)		(1,537	)		(1,619	)
Tangible Common stockholders' equity	$	526,745		$	518,136		$	529,742		$	523,648		$	509,241

Common Stockholders' equity to assets		11.21	%		11.30	%		12.07	%		11.82	%		11.85	%
Tangible common equity to tangible assets		10.98	%		11.05	%		12.04	%		11.79	%		11.82	%

Common shares outstanding		32,392,580			32,330,747			32,252,774			32,260,320			32,249,512
Tangible common equity per common share	$	16.26		$	16.03		$	16.42		$	16.23		$	15.79

Investor Contacts:
Romolo (Ron) Santarosa
Senior Executive Vice President & Chief Financial Officer
213-427-5636

Richard Pimentel
Senior Vice President & Corporate Finance Officer
213-427-3191

Lasse Glassen
Investor Relations
Addo Investor Relations
310-829-5400

Source: Hanmi Bank

Released April 18, 2017

Press Releases

Hanmi Reports Strong Loan and Deposit Growth for First Quarter 2017

Related Documents