Hanmi Earns $4.2 Million and Reports Earnings per Share of $0.03 in 3Q11

Improving Credit Metrics, Higher Net Interest Margin, and Better Efficiency Contribute to Profits

LOS ANGELES, Oct. 20, 2011 (GLOBE NEWSWIRE) -- Hanmi Financial Corporation (Nasdaq:HAFC), the holding company for Hanmi Bank (the "Bank"), today reported net income of $4.2 million, or $0.03 per diluted common share, for the third quarter of 2011. Hanmi's performance marks the fourth consecutive profitable quarter following the $8.0 million, or $0.05 per diluted common share, earned in the second quarter of 2011. In the first nine months of 2011, Hanmi earned $22.6 million, or $0.15 per diluted common share, compared to a loss of $93.3 million, or $1.24 per common share, in the first nine months of 2010.

"Hanmi's continuing profitability in the third quarter further demonstrates the strength of our core franchise and sustainable improvements in the overall condition of the Bank," said Jay S. Yoo, President and Chief Executive Officer. "Improvements in key asset quality measures, liquidation of problem assets, and contributions from SBA loans and investment sales highlight the third quarter profitable results."

Hanmi Financial 2011 Quarterly Financial Highlights For the Three Months Ended
(Dollars in Thousands) 9/30/2011 6/30/2011 9/30/2010
Net income $ 4,203 $ 8,001 $ (14,577)
Net income per diluted common share $ 0.03 $ 0.05 $ (0.12)
       
Total assets  $ 2,686,570  $ 2,710,835  $ 2,968,505
Total net loans  $ 1,928,735  $ 2,003,669  $ 2,218,228
Total deposits  $ 2,353,169  $ 2,398,375  $ 2,527,386
       
Net interest margin 3.75% 3.65% 3.49%
Efficiency ratio 60.55% 72.67% 75.38%
       
Tangible common equity per common share  $ 1.33  $ 1.30  $ 1.13
       
Non-performing assets  $ 95,792  $ 168,442  $ 215,306
Non-performing Assets/Total assets 3.57% 6.21% 7.25%
Allowance for loan losses/Total gross loans 4.97% 5.16% 7.35%
Allowance for loan losses/Total non-performing loans 105.54% 65.25% 90.41%
       
Hanmi Bank      
Tier 1 risk-based capital 13.42% 12.72% 10.28%
Total risk-based capital 14.71% 14.02% 11.61%
Tangible equity/Tangible assets 10.63% 10.33% 8.37%
       

Third Quarter of 2011 Highlights (at or for the period ended September 30, 2011)

  • Substantial improvements in asset quality including a reduction in non-performing assets (NPAs), delinquent loans, and charge-offs
  • NPAs declined 55.5% year-over-year to $95.8 million, or 3.57% of total assets, from $215.3 million, or 7.25% of total assets in the third quarter of 2010. NPAs decreased by $72.7 million, or 43.1%, from the immediately preceding quarter, reflecting success in selling non-performing loans and slowing migration of new nonaccrual loans.
  • Delinquent loans, which are 30 to 89 days past due and still accruing, were $16.5 million, up from $15.6 million, or 5.3%, in the immediately preceding quarter, and down from $23.9 million a year ago, or 31.1%, a year ago.
  • Total net charge-offs declined to $15.5 million from $16.5 million, or 6.0%, in the second quarter of 2011, and down from $21.3 million, or 27.2%, in the third quarter of 2010.
  • All capital ratios improved from prior quarter and continues to be considered "well-capitalized" for regulatory purposes
  • The Bank's tangible common equity to tangible assets ratio at September 30, 2011 was 10.63%, which well exceeds the 9.5% requirement set forth in the Final Order issued to the Bank by the California Department of Financial Institutions (CDFI)
  • Sustainable profitability with a positive trend on efficiency and net interest margin
  • Net income for the third quarter of 2011 totaled $4.2 million, or $0.03 per diluted common share, and earnings for the first nine months of 2011 was $22.6 million, or $0.15 per diluted common share.
  • Net interest margin (NIM) was 3.75% in the third quarter of 2011, up 10 basis points from 3.65% in the immediately preceding quarter and up 26 basis points from 3.49% in the third quarter of 2010.
  • Efficiency ratio improved to 60.6% this quarter as compared to 72.7% in the immediately preceding quarter and 75.4% in the third quarter of 2010.

Capital Management

"We are continuing to reevaluate the adequacy of our capital given the level and nature of the risks to which we are exposed. Despite volatile financial markets and economic headwinds, improving asset quality and stronger capital levels allow us time to properly evaluate options that maximize shareholder value," said Yoo. The following table shows the Bank's capital ratios:

Capital ratio 3Q2011 2Q2011 3Q2010
Total risk-based 14.71% 14.02% 11.61%
Tier 1 risk-based 13.42% 12.72% 10.28%
Tier 1 leverage 10.41% 9.70% 8.26%
Tangible common equity 10.63% 10.33% 8.37%
       

All of the Bank's capital ratios were above the minimum regulatory standards for being considered to be "well-capitalized" for regulatory purposes. The Bank's tangible common equity to tangible assets ratio of 10.63% at September 30, 2011, well exceeds the 9.5% requirement set forth in the Final Order issued to the Bank by the CDFI.

Asset Quality

NPLs declined 42.8% to $95.5 million at September 30, 2011, down from $167.1 million at June 30, 2011, and $194.7 million at September 30, 2010. Of the NPLs, non-performers current on payments were $50.4 million, or 52.8%, compared to $85.6 million or 51.2% at June 30, 2011 and $33.4 million or 17.2% at September 30, 2010. In addition, $17.5 million, or 18.3% of the NPLs, were recorded at the lower of cost or fair value as they were classified as held for sale. Out of the NPLs, $12.5 million is guaranteed by the Small Business Administration (SBA) and the State of California.

The following table shows NPLs by loan category:

Total Non-Performing Loans             
(Dollars in Thousands) 9/30/2011 % of
Total NPL
6/30/2011 % of
Total NPL
12/31/2010 % of
Total NPL
9/30/2010 % of
Total NPL
Real Estate Loans:                 
Commercial Property                 
Retail   13,273 13.9%  14,335 8.6%  10,998 6.5%  17,308 8.9%
Land   2,723 2.9%  25,184 15.1%  26,808 15.9%  29,701 15.3%
Other   6,844 7.2%  4,613 2.8%  10,131 6.0%  13,794 7.1%
Construction   6,142 6.4%  12,298 7.4%  19,097 11.3%  9,338 4.8%
Residential Property   1,464 1.5%  1,726 1.0%  1,926 1.1%  1,957 1.0%
                 
Commercial & Industrial Loans:               
Commercial Term                 
Unsecured   10,395 10.9%  10,758 6.4%  17,065 10.1%  18,565 9.5%
Secured by Real Estate   29,667 31.1%  60,053 35.9%  45,946 27.2%  70,564 36.2%
Commercial Lines of Credit   2,222 2.3%  2,905 1.7%  2,798 1.7%  3,692 1.9%
SBA   21,673 22.7%  31,163 18.6%  33,085 19.6%  28,632 14.7%
International Loans       3,243 1.9%  127 0.1%  540 0.3%
                 
Consumer Loans   1,100 1.2%  824 0.5%  1,047 0.6%  638 0.3%
TOTAL NPL (1)  95,503 100.0%  167,102 100.0%  169,028 100.0%  194,729 100.0%
                 
(1) Includes loans held for sale of $17.5 million, $22.6 million, $26.6 million and $10.7 million as of September 30, 2011, June 30, 2011, December 31, 2010 and September 30, 2010, respectively.
 

"NPLs declined significantly in the third quarter, as we continued to proactively sell loans and move delinquent loans through the collection process," said J.H. Son, Executive Vice President and Chief Credit Officer. "We completed $30.6 million in non-performing loan sales and a $19.2 million short sale, despite what has been a pretty soft market. We were able to accomplish this goal with small tranche sales which helped to improve overall returns."

The sale of other real estate owned (OREO) continued during the third quarter, with five properties valued at $2.2 million resulting in an $82,000 net gain. In the first nine months of 2011, Hanmi sold thirteen properties valued at $6.7 million resulting in a net loss of $599,000. OREO totaled $289,000 at September 30, 2011, down from $1.3 million at June 30, 2011, and down from $20.6 million at September 30, 2010.

"Loans that are less than 90 days delinquent increased minimally in the third quarter of 2011, reflecting more stable levels for the past two quarters," Son said. Delinquent loans, 30-89 past due and still accruing interest, which are not included in NPLs, totaled $16.5 million, or 0.81% of gross loans at September 30, 2011, a marginal increase from $15.6 million, or 0.74% of gross loans at June 30, 2011.

The following table shows delinquent loans, 30-89 past due and still accruing interest, by loan category:

Delinquent Loans (30 to 89 days past due and still accruing interest) 
(Dollars in Thousands) 9/30/2011 % of
Total
6/30/2011 % of
Total
12/31/2010 % of
Total
9/30/2010 % of
Total
Real Estate Loans:                 
Commercial Property                 
Retail   3,975 24.1%          381 1.6%
Land                 
Other   766 4.7%  4,082 26.1%        
Construction           4,894 22.8%  8,713  
Residential Property   1,763 10.7%  2,778 17.8%  522 2.4%  261 1.1%
                 
Commercial & Industrial Loans:                 
Commercial Term                 
Unsecured   764 4.6%  2,079 13.3%  3,620 16.9%  2,494 10.4%
Secured by Real Estate   4,523 27.5%  4,625 29.6%  7,251 33.8%  6,087 25.5%
Commercial Lines of Credit   300 1.8%      160 0.7%  294 1.2%
SBA   4,045 24.6%  1,412 9.0%  4,381 20.4%  4,929 20.6%
International Loans       99 0.6%        
                 
Consumer Loans  337 2.0%  569 3.6%  629 2.9%  737 3.1%
TOTAL (1)  16,473 100.0%  15,644 100.0%  21,457 100.0%  23,896 100.0%
                 
(1) Includes loans held for sale of $369,000 as of September 30, 2010.
 

The following table shows Hanmi's credit quality trends since the third quarter of 2007:

Credit Quality Trends (Dollars in Thousands)
  Provision for
Credit Losses
Net Charge-offs  Allowance for
Loan Losses to
Gross Loans (%)
30-89 Days Past
Due to Gross
Loans (%)
Non-performing
Assets to Total
Assets (%)
9/30/2011  8,100  15,506 4.97 0.81 3.57
6/30/2011   —  16,501 5.16 0.74 6.21
3/31/2011   —  21,555 5.79 0.95 5.36
12/31/2010  5,000  35,249 6.44 0.95 5.95
9/30/2010  22,000  21,304 7.35 1.00 7.25
6/30/2010  37,500  38,946 7.06 0.87 9.13
3/31/2010  57,996  26,393 6.63 2.56 9.43
12/31/2009  77,000  57,312 5.14 1.46 7.76
9/30/2009  49,500  29,875 4.19 0.96 5.83
6/30/2009  23,934  23,597 3.33 1.51 5.20
3/31/2009  45,953  11,813 3.16 1.45 4.04
12/31/2008  25,450  18,622 2.11 1.23 3.14
9/30/2008  13,176  11,831 1.91 0.68 3.04
6/30/2008  19,229  8,220 1.88 0.94 2.91
3/31/2008  17,821  7,297 1.60 0.73 2.25
12/31/2007  20,704  11,628 1.33 0.61 1.37
9/30/2007  8,464  6,084 1.07 0.52 1.12
           

One of the factors that have contributed to the improvement of asset quality is the on-going program for NPLs. During the third quarter of 2011, Hanmi sold 26 NPLs valued at $30.6 million for net proceeds of $27.5 million. In the first nine months of 2011, it sold 66 loans with net proceeds of $73.1 million. At September 30, 2011, loans held for sale (LHFS) totaled $37.2 million, a reduction of $6.9 million, or 15.7%, from $44.1 million at June 30, 2011, and an increase of 1.60%, from $36.6 million at December 31, 2010. As illustrated in the above table, Hanmi's NPAs to total assets peaked at March 31, 2010 at 9.43% and has improved to 3.57% at September 30, 2011.

The following table presents the details of loans held for sale:

Loans Held for Sale 
(Dollars in Thousands) 9/30/2011 6/30/2011 $ Change % Change 12/31/2010 $ Change % Change 9/30/2010 $ Change
Real Estate Loans:                   
Commercial Property                   
Retail   6,152              1,939  4,213
Land           1,082  (1,082)      
Other   3,545  708  2,837    1,177  2,368    227  3,318
Construction           1,406  (1,406)      
Residential Property     266              
                   
Commercial & Industrial Loans:                   
Commercial Term                   
Unsecured                 144  (144)
Secured by Real Estate   7,382  12,857  (5,475) -42.6%  14,893  (7,511) -50.4%  1,697  5,685
SBA   20,123  30,274  (10,151) -33.5%  18,062  2,061 11.4%  6,653  13,470
TOTAL  37,202  44,105  (12,789) -15.7%  36,620  (5,570) 1.6%  10,660  26,542
                   

At September 30, 2011, the allowance for loan losses was $100.8 million or 4.97% of gross loans. The allowance for loan losses to loans peaked in September of 2010 at 7.35%, and has steadily declined over the past few quarters as credit metrics improved. The ratio of allowance for loan losses to non-performing loans at September 30, 2011, improved to 105.5% compared to 65.3% at June 30, 2011. Third quarter charge-offs, net of recoveries, were $15.5 million in the third quarter of 2011, compared to $16.5 million in the second quarter of 2011 and $21.3 million in the third quarter of 2010.

Hanmi established a provision for credit losses of $8.1 million for the third quarter of 2011. The provision related predominantly to additional provisions for impaired loans and an increase in the historical loss factor in the commercial line of credit pool. Of the total $8.1 million of provision for credit losses, $831,000 was allocated to cover off-balance sheet items, bringing the allowance for off-balance sheet items total to $3.2 million. Hanmi recorded a provision for credit losses of $22.0 million and $117.5 million in the third quarter and first nine months of 2010, respectively. With the improvement in overall credit metrics, provision expense was $8.1 million in the first nine months of 2011. This assessment also takes into account many factors, including net loan charge-offs, non-accrual loans, specific allowance for loan losses, risk-rating migration and changes in the portfolio composition and size.

Balance Sheet

Total assets decreased to $2.69 billion at September 30, 2011, down 0.9% from $2.71 billion at June 30, 2011, and down 9.5% from $2.97 billion at September 30, 2010.

Gross loans, net of deferred loan fees, totaled $2.03 billion at September 30, 2011, down 3.9% from $2.11 billion at June 30, 2011, and down 15.2% from $2.39 billion at September 30, 2010.  Average gross loans, net of deferred loan fees, decreased to $2.08 billion for the third quarter of 2011, down 2.8% from $2.14 billion for the second quarter of 2011, and down 15.4% from $2.46 billion for the third quarter of 2010. The slight decline in loan balance in the third quarter this year reflects continued progress in reducing the number of problem loans, partially offset by new loans originated and a lower level of charge-offs made in the quarter. 

In the third quarter of 2011, the Hanmi's total investment portfolio increased $24.7 million with $118.6 million of new purchases yielding on average 2.81% and averaging 4.9 years in duration. In addition there was $583,000 of positive fair value adjustment, partially offset by the calling of $49.8 million of bonds, the sale of $25.2 million of securities, the payment of $15.6 million in principal, and the maturation of $3.0 million of securities. The $25.2 million of securities sold had a weighted yield to maturity of 2.41% and a weighted modified duration of 4.20 years.

The average investment securities portfolio increased substantially to $394.4 million for the third quarter of 2011, up 76%, from $223.7 million for the third quarter a year ago. At September 30, 2011, the investment portfolio totaled $415.7 million, which is an increase of 6.3%, or $24.7 million, from the second quarter of 2011. "In September, the Federal Reserve announced plans to reduce long-term interest rates through the purchase of long-term bonds through its Operation Twist initiative," said Lonny Robinson, Executive Vice President and Chief Financial Officer. "In anticipation of a flattening yield curve, we are implementing a barbell investment strategy by purchasing a mix of high quality notes and bonds, thereby increasing returns on our investment portfolio."

Including secured off-balance sheet lines of credit, total available liquidity to Hanmi was $912 million at September 30, 2011, representing 33.9% of total assets and 38.7% of total deposits.

Average deposits declined 1.8% to $2.38 billion for the third quarter of 2011 compared to $2.43 billion for the immediately preceding quarter, and declined 6.9% from $2.56 billion for the third quarter a year ago. This year-over-year reduction in average deposits was almost entirely due to the successful strategy of reducing time deposits, particularly high-cost promotional CDs and funds raised from rate listing services. 

The improved deposit mix resulting from our new marketing campaign and renewed loan production efforts, contributed to lower interest costs. "With our new ongoing marketing campaign and proactive loan production efforts, we are continuing to rebuild our core deposit base. Core deposits, which are total deposits less time deposits equal to or greater than $100,000, now account for 64.6% of total deposits, up from, 55.4% a year ago," said Robinson. 

Total deposits decreased by 1.9% from the immediately preceding quarter and decreased 6.9% from a year ago. Both the quarterly and annual decline in total deposits was primarily due to reductions in time deposits equal to or greater than $100,000, including a $45.7 million, or 5.2% decrease for the third quarter of 2011, and $293.6 million, or 25.5% decrease year-over-year. Total deposits were $2.35 billion at September 30, 2011, compared to $2.40 billion at June 30, 2011, and $2.53 billion at September 30, 2010. There are no brokered deposits in the deposit mix at quarter-end.

Results of Operations

Net interest income, before the provision for credit losses, totaled $25.2 million for the third quarter of 2011, and $76.7 million for the first nine months of 2011, down 1.2% in the quarter and 4.0% year-over-year. Interest and dividend income was down 2.9% in the third quarter of 2011 while interest expense fell 8.8%. Year to date, interest and dividend income was down 10.7% and interest expense fell 28.6%.

The average yield on the loan portfolio improved 11 basis points to 5.60% in the third quarter of 2011 compared to 5.49% in the second quarter of 2011, and was up 16 basis points from 5.44% in the third quarter of 2010. Because interest recovery on loans that have been returned to accrual status exceeded interest reversal on loans in non-accrual status, the yield increased in the third quarter of 2011 compared to the immediately preceding quarter. The average yield on loans for the first nine months of 2011 increased 20 basis points to 5.57% from 5.37% for the first nine months of 2010.

The cost of average interest-bearing deposits in the third quarter of 2011 was down 7 basis points to 1.28% from 1.35% in the immediately preceding quarter and down 37 basis points from 1.65% in the third quarter of 2010. Year-to-date, the cost of deposits was down 39 basis points to 1.36% from 1.75% for the first nine months of 2010. As a result, NIM increased 10 basis points to 3.75% for the third quarter of 2011 compared to 3.65% for the second quarter of 2011, and was up 26 basis points from 3.49% for the third quarter of 2010. For the first nine months of 2011, NIM increased 11 basis points to 3.69% from 3.58% for the first nine months of 2010. "We have approximately $337 million in promotional CDs with a weighted average rate of 1.8% maturing over the next six months, of which $250 million will mature in March 2012. As we replace these promotional deposits with lower-cost deposits, we anticipate further margin improvement," said Robinson.

Non-interest income in the third quarter of 2011 was $5.98 million, down 0.6% from $6.02 million in the second quarter of 2011, and up 5.4% from $5.7 million in the third quarter of 2010. For the first nine months of 2011, non-interest income dropped 9.6% to $17.5 million from $19.4 million for the first nine months of 2010. The year-over-year decline in non-interest income is due to decreased service charges on deposit accounts and net loss on sales of loans, partially offset by an increase in gain on sales of investment securities. Service charges on deposit accounts decreased to $9.6 million for the first nine months of 2011 compared to $10.8 million for the first nine months of 2010, reflecting a decrease in non-sufficient funds service charges, due to better balance management by customers and regulatory reforms on these fees. For the first nine months of 2011, Hanmi recognized a $1.9 million loss from the sale of loans which consisted of $2.9 million of impairment adjustments and $569,000 of direct losses from NPL sales, partially offset by $1.6 million of gains from sales of SBA loans. For the first nine months of 2011, Hanmi posted a net gain on sales of investment securities of $1.6 million compared to a gain of $117,000 in the first nine months of 2010.

Non-interest expense in the third quarter of 2011 decreased 17.6% to $18.9 million from $22.9 million in the immediately preceding quarter and was down 21.7% from $24.1 million in the third quarter a year ago. For the first nine months of 2011, non-interest expense decreased 16.3% to $62.8 million from $75.1 million in the first nine months of 2010. The notable year-over-year improvements were primarily attributable to lower OREO expenses, FDIC deposit insurance assessments and other regulatory costs, partially offset by $2.2 million in expenses associated with the unconsummated capital raising efforts.

Consequently, efficiency ratio improved to 60.6% this quarter as compared to 72.7% in the immediately preceding quarter and 75.4% in the third quarter of 2010. The efficiency ratio for the first nine months of 2011 showed substantial improvement to 66.6% as compared to 75.6% in the first nine months of 2010.

Conference Call Information

Management will host a conference call today at 1:30 p.m. Pacific Time (4:30 p.m. ET) to discuss these results. This call will also be broadcast live via the internet. Investment professionals and all current and prospective shareholders are invited to access the live call by dialing (617) 213-8857 at 1:30 p.m. Pacific Time, 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. Shortly after the call concludes, the replay will also be available at (617) 801-6888, using access code #63388247 where it will be archived until November 11, 2011.

About Hanmi Financial Corporation

Headquartered in Los Angeles, Hanmi Bank, a wholly-owned subsidiary of Hanmi Financial Corporation, provides services to the multi-ethnic communities of California, with 27 full-service offices in Los Angeles, Orange, San Bernardino, San Francisco, Santa Clara and San Diego counties, and a loan production office in Washington State. Hanmi Bank specializes in commercial, SBA and trade finance lending, and is a recognized community leader. Hanmi Bank's mission is to provide a full range of quality products and premier services to its customers and to maximize shareholder value. 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 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: inability to continue as a going concern; inability to raise additional capital on acceptable terms or at all; failure to maintain adequate levels of capital and liquidity to support our operations; the effect of regulatory orders we have entered into and 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 to receive regulatory approval for Hanmi Bank to declare dividends to Hanmi Financial; adequacy of our allowance for loan losses, credit quality and the effect of credit quality on our provision for credit losses and allowance for loan 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 successfully integrate acquisitions we may make; 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 ("SEC"), including, in particular Item 1A of our Form 10K for the year ended June 30, 2011, as well as current and periodic reports filed with the U.S. Securities and Exchange Commission 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
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in Thousands)
               
   September 30,   June 30,   %   December 31,   %   September 30,   % 
   2011   2011   Change   2010   Change   2010   Change 
ASSETS              
               
Cash and Due from Banks  $ 72,591  $ 67,166  8.1 %  $ 60,983  19.0 %  $ 63,455  14.4 %
Interest-Bearing Deposits in Other Banks  156,271  131,757  18.6 %  158,737  (1.6)%  218,843  (28.6)%
Federal Funds Sold   —  —  —   30,000  —   —  — 
               
 Cash and Cash Equivalents  228,862  198,923  15.1 %  249,720  (8.4)%  282,298  (18.9)%
               
Investment Securities  415,698  391,045  6.3 %  413,963  0.4 %  325,428  27.7 %
               
Loans:              
 Gross Loans, Net of Deferred Loan Fees  2,029,527  2,112,698  (3.9)%  2,267,126  (10.5)%  2,394,291  (15.2)%
 Allowance for Loan Losses  (100,792)  (109,029)  (7.6)%  (146,059)  (31.0)%  (176,063)  (42.8)%
               
 Loans Receivable, Net  1,928,735  2,003,669  (3.7)%  2,121,067  (9.1)%  2,218,228  (13.1)%
               
Accrued Interest Receivable  7,225  7,512  (3.8)%  8,048  (10.2)%  8,442  (14.4)%
Due from Customers on Acceptances  599  1,629  (63.2)%  711  (15.8)%  1,375  (56.4)%
Premises and Equipment, Net  16,627  16,869  (1.4)%  17,599  (5.5)%  17,639  (5.7)%
Other Real Estate Owned, Net  289  1,340  (78.4)%  4,089  (92.9)%  20,577  (98.6)%
Servicing Assets  2,884  2,545  13.3 %  2,890  (0.2)%  3,197  (9.8)%
Other Intangible Assets, Net  1,664  1,825  (8.8)%  2,233  (25.5)%  2,480  (32.9)%
Investment in FHLB and FRB Stock, at Cost  31,451  32,565  (3.4)%  34,731  (9.4)%  35,201  (10.7)%
Bank-Owned Life Insurance  28,051  27,813  0.9 %  27,350  2.6 %  27,111  3.5 %
Income Taxes Receivable  9,188  9,188  —   9,188  —   9,188  — 
Other Assets  15,297  15,912  (3.9)%  15,559  (1.7)%  17,341  (11.8)%
               
TOTAL ASSETS  $ 2,686,570  $ 2,710,835  (0.9)%  $ 2,907,148  (7.6)%  $ 2,968,505  (9.5)%
               
LIABILITIES AND STOCKHOLDERS' EQUITY              
               
Liabilities:              
 Deposits:              
 Noninterest-Bearing  $ 621,195  $ 600,812  3.4 %  $ 546,815  13.6 %  $ 559,764  11.0 %
 Interest-Bearing  1,731,974  1,797,563  (3.6)%  1,919,906  (9.8)%  1,967,622  (12.0)%
               
 Total Deposits  2,353,169  2,398,375  (1.9)%  2,466,721  (4.6)%  2,527,386  (6.9)%
               
 Accrued Interest Payable  13,490  14,226  (5.2)%  15,966  (15.5)%  13,727  (1.7)%
 Bank Acceptances Outstanding  599  1,629  (63.2)%  711  (15.8)%  1,375  (56.4)%
 Federal Home Loan Bank Advances  3,392  3,479  (2.5)%  153,650  (97.8)%  153,734  (97.8)%
 Other Borrowings  18,708  1,034  —   1,570  —   2,558  — 
 Junior Subordinated Debentures  82,406  82,406  —   82,406  —   82,406  — 
 Deferred Tax Liabilities  —  —  —   —  —   807  — 
 Accrued Expenses and Other Liabilities  11,603  11,321  2.5 %  12,868  (9.8)%  13,880  (16.4)%
               
 Total Liabilities  2,483,367  2,512,470  (1.2)%  2,733,892  (9.2)%  2,795,873  (11.2)%
               
Stockholders' Equity  203,203  198,365  2.4 %  173,256  17.3 %  172,632  17.7 %
               
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $ 2,686,570  $ 2,710,835  (0.9)%  $ 2,907,148  (7.6)%  $ 2,968,505  (9.5)%
 
 
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in Thousands, Except Per Share Data)
                 
   Three Months Ended   Nine Months Ended 
   Sept. 30,   June 30,   %   Sept. 30,   %   Sept. 30,   Sept. 30,   % 
   2011   2011   Change   2010   Change   2011   2010   Change 
INTEREST AND DIVIDEND INCOME:                
Interest and Fees on Loans  $ 29,355  $ 29,249  0.4 %  $ 33,681  (12.8)%  $ 89,509  $ 104,862  (14.6)%
Taxable Interest on Investment Securities  2,022  3,094  (34.6)%  1,592  27.0 %  7,789  4,035  93.0 %
Tax-Exempt Interest on Investment Securities  39  37  5.4 %  62  (37.1)%  116  216  (46.3)%
Interest on Federal Funds Sold  54  27  —   40  35.0 %  116  70  65.7 %
Dividends on FRB and FHLB Stock  129  132  (2.3)%  135  (4.4)%  394  397  (0.8)%
Interest on Interest-Bearing Deposits in Other Banks  75  79  (5.1)%  165  (54.5)%  243  319  (23.8)%
Total Interest and Dividend Income  31,674  32,618  (2.9)%  35,675  (11.2)%  98,167  109,899  (10.7)%
                 
INTEREST EXPENSE:                
Interest on Deposits  5,730  6,192  (7.5)%  8,299  (31.0)%  18,657  26,816  (30.4)%
Interest on Federal Home Loan Bank Advances and Other Borrowings  46  240  (80.8)%  364  (87.4)%  619  1,080  (42.7)%
Interest on Junior Subordinated Debentures  739  711  3.9 %  739  —   2,148  2,100  2.3 %
Total Interest Expense  6,515  7,143  (8.8)%  9,402  (30.7)%  21,424  29,996  (28.6)%
                 
NET INTEREST INCOME BEFORE PROVISION FOR CREDIT LOSSES  25,159  25,475  (1.2)%  26,273  (4.2)%  76,743  79,903  (4.0)%
Provision for Credit Losses  8,100  —   —   22,000  (63.2)%  8,100  117,496  (93.1)%
NET INTEREST INCOME (LOSS) AFTER PROVISION FOR CREDIT LOSSES  17,059  25,475  (33.0)%  4,273  299.2 %  68,643  (37,593)  — 
                 
NON-INTEREST INCOME:                
Service Charges on Deposit Accounts  3,225  3,278  (1.6)%  3,442  (6.3)%  9,644  10,770  (10.5)%
Insurance Commissions  940  1,203  (21.9)%  1,089  (13.7)%  3,403  3,573  (4.8)%
Remittance Fees  469  499  (6.0)%  484  (3.1)%  1,430  1,469  (2.7)%
Trade Finance Fees  341  328  4.0 %  381  (10.5)%  966  1,144  (15.6)%
Other Service Charges and Fees  389  368  5.7 %  409  (4.9)%  1,090  1,193  (8.6)%
Net Gain (Loss) on Sales of Loans  (1,445)  (77)  —   229  —   (1,860)  443  — 
Bank-Owned Life Insurance Income  237  233  1.7 %  237  —   700  703  (0.4)%
Net Gain (Loss) on Sales of Investment Securities  1,704  (70)  —   4  —   1,634  117  — 
Impairment Loss on Investment Securities  —   —   —   (790)  —   —   (790)  — 
Other Operating Income  118  255  (53.7)%  186  (36.6)%  496  731  (32.1)%
Total Non-Interest Income  5,978  6,017  (0.6)%  5,671  5.4 %  17,503  19,353  (9.6)%
                 
NON-INTEREST EXPENSE:                
Salaries and Employee Benefits  8,146  8,762  (7.0)%  9,552  (14.7)%  26,032  27,349  (4.8)%
Occupancy and Equipment  2,605  2,650  (1.7)%  2,702  (3.6)%  7,820  8,101  (3.5)%
Deposit Insurance Premiums and Regulatory Assessments  1,552  1,377  12.7 %  2,253  (31.1)%  4,999  8,552  (41.5)%
Data Processing  1,383  1,487  (7.0)%  1,446  (4.4)%  4,269  4,432  (3.7)%
Other Real Estate Owned Expense  (86)  806  —   2,580  —   1,549  9,998  (84.5)%
Professional Fees  1,147  1,138  0.8 %  753  52.3 %  3,074  2,841  8.2 %
Directors and Officers Liability Insurance  737  733  0.5 %  716  2.9 %  2,204  2,149  2.6 %
Expenses Related to Unconsummated Capital Raises  —   2,220  —   —   —   2,220  —   — 
Other Operating Expenses  3,368  3,713  (9.3)%  4,077  (17.4)%  10,632  11,648  (8.7)%
Total Non-Interest Expense  18,852  22,886  (17.6)%  24,079  (21.7)%  62,799  75,070  (16.3)%
                 
INCOME (LOSS) BEFORE PROVISION (BENEFIT) FOR INCOME TAXES  4,185  8,606  (51.4)%  (14,135)  —   23,347  (93,310)  — 
Provision (Benefit) for Income Taxes  (18)  605  —   442  —   706  11  — 
                 
NET INCOME (LOSS)  $ 4,203  $ 8,001  (47.5)%  $ (14,577)  —   $ 22,641  $ (93,321)  — 
                 
EARNINGS (LOSS) PER SHARE:                
Basic  $ 0.03  $ 0.05  (40.0)%  $ (0.12)  —   $ 0.15  $ (1.24)  — 
Diluted  $ 0.03  $ 0.05  (40.0)%  $ (0.12)  —   $ 0.15  $ (1.24)  — 
                 
WEIGHTED-AVERAGE SHARES OUTSTANDING:                
Basic  151,107,790  151,104,636    122,789,120    151,091,317  75,204,528  
Diluted  151,258,390  151,258,390    122,789,120    151,246,741  75,204,528  
                 
SHARES OUTSTANDING AT PERIOD-END  151,258,390  151,258,390    151,198,390    151,258,390  151,198,390  
             
             
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES            
SELECTED FINANCIAL DATA (UNAUDITED)                
(Dollars in Thousands)                
   Three Months Ended   Nine Months Ended 
   Sept 30,   June 30,   %   Sept 30,   %   Sept 30,   Sept 30,   % 
   2011   2011   Change   2010   Change   2011   2010   Change 
                 
AVERAGE BALANCES:                
Average Gross Loans, Net of Deferred Loan Fees  $ 2,077,934  $ 2,136,976  (2.8)%  $ 2,456,883  (15.40)%  $ 2,149,101  $ 2,610,122  (17.7)%
Average Investment Securities  394,379  497,052  (20.7)%  223,709  76.3 %  454,560  169,558  168.1 %
Average Interest-Earning Assets  2,660,776  2,804,709  (5.1)%  2,989,762  (11.00)%  2,785,115  2,988,813  (6.8)%
Average Total Assets  2,700,629  2,836,967  (4.8)%  2,983,632  (9.5)%  2,813,865  3,015,243  (6.7)%
Average Deposits  2,383,639  2,427,934  (1.8)%  2,559,116  (6.9)%  2,423,194  2,612,891  (7.3)%
Average Borrowings  87,386  190,447  (54.1)%  239,992  (63.6)%  171,212  245,708  (30.3)%
Average Interest-Bearing Liabilities  1,859,847  2,025,392  (8.2)%  2,238,036  (16.90)%  2,005,110  2,296,599  (12.7)%
Average Stockholders' Equity  200,971  189,528  6.0 %  155,056  29.6 %  189,658  128,268  47.9 %
Average Tangible Equity  199,219  187,595  6.2 %  152,417  30.7 %  187,719  125,327  49.8 %
                 
                 
PER SHARE DATA:                
Earnings (Loss) Per Share - Basic  $ 0.03  $ 0.05    $ (0.12)    $ 0.15  $ (1.24)  
Earnings (Loss) Per Share - Diluted  $ 0.03  $ 0.05    $ (0.12)    $ 0.15  $ (1.24)  
Book Value Per Share (1)  $ 1.34  $ 1.31    $ 1.14    $ 1.34  $ 1.14  
Tangible Book Value Per Share (2)  $ 1.33  $ 1.30    $ 1.13    $ 1.33  $ 1.13  
                 
PERFORMANCE RATIOS (Annualized):                
Return on Average Assets  0.62%  1.13%    (1.94)%    1.08%  (4.14)%  
Return on Average Stockholders' Equity  8.30%  16.93%    (37.30)%    15.96%  (97.27)%  
Return on Average Tangible Equity  8.37%  17.11%    (37.94)%    16.13%  (99.56)%  
Efficiency Ratio  60.55%  72.67%    75.38%    66.63%  75.63%  
Net Interest Spread (3)  3.34%  3.26%    3.07%    3.29%  3.17%  
Net Interest Margin (3)  3.75%  3.65%    3.49%    3.69%  3.58%  
                 
                 
ALLOWANCE FOR LOAN LOSSES:                
Balance at Beginning of Period  $ 109,029  $ 125,780  (13.3)%  $ 176,667  (38.3)%  $ 146,059  $ 144,996  0.7 %
Provision Charged to Operating Expense  7,269  (250)  —   20,700  (64.9)%  8,295  117,710  (93.0)%
Charge-Offs, Net of Recoveries  (15,506)  (16,501)  (6.0)%  (21,304)  (27.2)%  (53,562)  (86,643)  (38.2)%
Balance at End of Period  $ 100,792  $ 109,029  (7.6)%  $ 176,063  (42.8)%  $ 100,792  $ 176,063  (42.8)%
                 
Allowance for Loan Losses to Total Gross Loans 4.97% 5.16%   7.35%   4.97% 7.35%  
Allowance for Loan Losses to Total Non-Performing Loans 105.54% 65.25%   90.41%   105.54% 90.41%  
                 
                 
ALLOWANCE FOR OFF-BALANCE SHEET ITEMS:                
Balance at Beginning of Period  $ 2,391  $ 2,141  11.7 %  $ 2,362  1.2 %  $ 3,417  $ 3,876  (11.8)%
Provision Charged to Operating Expense  831  250  —   1,300  —   (195)  (214)  (8.9)%
Balance at End of Period  $ 3,222  $ 2,391  34.8 %  $ 3,662  (12.0)%  $ 3,222  $ 3,662  (12.0)%
                 
                 
(1) Total stockholders' equity divided by common shares outstanding.
(2) Tangible equity divided by common shares outstanding. See "Non-GAAP Financial Measures."
(3) Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate.
                 
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES            
SELECTED FINANCIAL DATA (UNAUDITED) (Continued)              
(Dollars in Thousands)                
                 
   Sept. 30   June 30,   %   December 31,   %   Sept. 30,   %   
   2011   2011   Change   2010   Change   2010   Change   
NON-PERFORMING ASSETS:                
Non-Accrual Loans  $ 95,503  $ 167,102  (42.8)%  $ 169,028  (43.5)%  $ 194,729  (51.0)%  
Loans 90 Days or More Past Due and Still Accruing  —  —  —   —  —   —  —   
Total Non-Performing Loans  95,503  167,102  (42.8)%  169,028  (43.5)%  194,729  (51.0)%  
Other Real Estate Owned, Net  289  1,340  (78.4)%  4,089  (92.9)%  20,577  (98.6)%  
Total Non-Performing Assets  $ 95,792  $ 168,442  (43.1)%  $ 173,117  (44.7)%  $ 215,306  (55.5)%  
                 
Total Non-Performing Loans/Total Gross Loans 4.71% 7.91%   7.45%   8.13%    
Total Non-Performing Assets/Total Assets 3.57% 6.21%   5.95%   7.25%    
Total Non-Performing Assets/Allowance for Loan Losses 95.0% 154.5%   118.5%   122.3%    
                 
DELINQUENT LOANS (4)  $ 16,473  $ 15,644  5.3 %  $ 21,457  (23.2)%  $ 23,896  (31.1)%  
                 
Delinquent Loans/Total Gross Loans 0.81% 0.74%   0.95%   1.00%    
                 
LOAN PORTFOLIO:                
Real Estate Loans  $ 764,169  $ 788,559  (3.1)%  $ 856,527  (10.8)%  $ 885,734  (13.7)%  
Commercial and Industrial Loans (5)  1,220,245  1,277,650  (4.5)%  1,360,865  (10.3)%  1,456,163  (16.2)%  
Consumer Loans  44,819  46,500  (3.6)%  50,300  (10.9)%  53,237  (15.8)%  
Total Gross Loans  2,029,233  2,112,709  (4.0)%  2,267,692  (10.5)%  2,395,134  (15.3)%  
Deferred Loan Fees  294  (11)  —   (566)  —   (843)  0.0 %  
Gross Loans, Net of Deferred Loan Fees  2,029,527  2,112,698  (3.9)%  2,267,126  (10.5)%  2,394,291  (15.2)%  
Allowance for Loan Losses  (100,792)  (109,029)  (7.6)%  (146,059)  (31.0)%  (176,063)  (42.8)%  
Loans Receivable, Net  $ 1,928,735  $ 2,003,669  (3.7)%  $ 2,121,067  (9.1)%  $ 2,218,228  (13.1)%  
                 
LOAN MIX:                
Real Estate Loans  37.7%  37.3%    37.8%    37.0%    
Commercial and Industrial Loans  60.1%  60.5%    60.0%    60.8%    
Consumer Loans  2.2%  2.2%    2.2%    2.2%    
Total Gross Loans  100.0%  100.0%    100.0%    100.0%    
                 
DEPOSIT PORTFOLIO:                
Demand - Noninterest-Bearing  $ 621,195  $ 600,812  3.4 %  $ 546,815  13.6 %  $ 559,764  11.0 %  
Savings  106,633  110,935  (3.9)%  113,968  (6.4)%  119,824  (11.0)%  
Money Market Checking and NOW Accounts  455,438  484,132  (5.9)%  402,481  13.2 %  422,564  7.8 %  
Time Deposits of $100,000 or More  833,180  878,871  (5.2)%  1,118,621  (25.5)%  1,126,760  (26.1)%  
Other Time Deposits  336,723  323,625  4.0 %  284,836  18.2 %  298,474  12.8 %  
Total Deposits  $ 2,353,169  $ 2,398,375  (1.9)%  $ 2,466,721  (4.6)%  $ 2,527,386  (6.9)%  
                 
DEPOSIT MIX:                
Demand - Noninterest-Bearing  26.4%  25.1%    22.2%    22.1%    
Savings  4.5%  4.6%    4.6%    4.7%    
Money Market Checking and NOW Accounts  19.4%  20.2%    16.3%    16.7%    
Time Deposits of $100,000 or More  35.4%  36.6%    45.3%    44.6%    
Other Time Deposits  14.3%  13.5%    11.6%    11.9%    
Total Deposits  100.0%  100.0%    100.0%    100.0%    
                 
CAPITAL RATIOS (Bank Only):                
Total Risk-Based 14.71% 14.02%   12.22%   11.61%    
Tier 1 Risk-Based 13.42% 12.72%   10.91%   10.28%    
Tier 1 Leverage 10.41% 9.70%   8.55%   8.26%    
Tangible equity ratio 10.63% 10.33%   8.59%   8.37%    
                 
(4) 30 to 89 days past due and still accruing interest   
(5) Commercial and industrial loans include owner-occupied property loans of $811.0 million, $848.8 million, $894.8 million and $967.9 million as of September 30, 2011, June 30, 2011, December 31, 2010 and September 30, 2010, respectively.   
 
 
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
AVERAGE BALANCES, AVERAGE YIELDS EARNED AND AVERAGE RATES PAID (UNAUDITED)
(Dollars in Thousands)
   Three Months Ended 
  September 30, 2011 June 30, 2011 September 30, 2010
   Average Balance   Interest Income/ Expense   Average Yield/
Rate 
 Average Balance   Interest Income/ Expense   Average Yield/
Rate 
 Average Balance   Interest Income/ Expense   Average Yield/
Rate 
                   
INTEREST-EARNING ASSETS                  
                   
Loans:                  
Real Estate Loans:                  
Commercial Property  $ 686,766  $ 8,974 5.18%  $ 688,142  $ 9,386 5.47%  $ 773,589  $ 10,638 5.46%
Construction  40,486  663 6.50%  50,192  621 4.96%  71,545  862 4.78%
Residential Property  57,164  677 4.70%  59,323  679 4.59%  67,291  805 4.75%
Total Real Estate Loans  784,416  10,314 5.22%  797,657  10,686 5.37%  912,425  12,305 5.35%
Commercial and Industrial Loans (1)  1,247,713  18,435 5.86%  1,291,470  17,914 5.56%  1,490,811  20,611 5.49%
Consumer Loans  45,663  524 4.55%  48,017  562 4.69%  54,469  690 5.03%
Total Gross Loans  2,077,792  29,273 5.59%  2,137,144  29,162 5.47%  2,457,705  33,606 5.42%
Prepayment Penalty Income  —   81  —   —   87  —   —   75  — 
Unearned Income on Loans, Net of Costs  142  —   —   (168)  —   —   (823)  —   — 
Gross Loans, Net  2,077,934  29,354 5.60%  2,136,976  29,249 5.49%  2,456,882  33,681 5.44%
                   
Investment Securities:                  
Municipal Bonds - Taxable   10,732  115 4.29%  13,603  140 4.12%  —   —   — 
Municipal Bonds -Nontaxable (2)  4,526  60 5.30%  4,125  57 5.53%  6,301  95 6.03%
U.S. Government Agency Securities  106,029  387 1.46%  152,438  629 1.65%  92,690  620 2.68%
Mortgage-Backed Securities  108,398  552 2.04%  127,413  946 2.97%  63,439  537 3.39%
Collateralized Mortgage Obligations  132,931  713 2.15%  169,110  1,113 2.63%  45,747  300 2.62%
Corporate Bonds  20,381  168 3.30%  20,121  165 3.28%  3,130  30 3.83%
Other Securities  11,382  87 3.06%  10,242  101 3.94%  12,402  103 3.32%
Total Investment Securities (2)  394,379  2,082 2.11%  497,052  3,151 2.54%  223,709  1,685 3.01%
                   
Other Interest-Earning Assets:                  
Equity Securities  32,491  129 1.59%  34,078  133 1.56%  36,568  135 1.48%
Federal Funds Sold and Securities Purchased                  
Under Resale Agreements  4,734  5 0.42%  7,067  9 0.51%  6,932  8 0.46%
Term Federal Funds Sold  42,913  49 0.46%  13,681  18 0.53%  22,880  32 0.56%
Interest-Bearing Deposits in Other Banks  108,325  75 0.28%  115,855  79 0.27%  242,790  165 0.27%
Total Other Interest-Earning Assets  188,463  258 0.55%  170,681  239 0.56%  309,170  340 0.44%
                   
TOTAL INTEREST-EARNING ASSETS (2)  $ 2,660,776  $ 31,694 4.73%  $ 2,804,709  $ 32,639 4.67%  $ 2,989,761  $ 35,706 4.74%
                   
INTEREST-BEARING LIABILITIES                  
                   
Interest-Bearing Deposits:                  
Savings  $ 107,643  $ 675 2.49%  $ 111,723  $ 734 2.64%  $ 122,122  $ 889 2.89%
Money Market Checking and NOW Accounts  475,712  806 0.67%  488,723  1,010 0.83%  429,601  1,094 1.01%
Time Deposits of $100,000 or More   854,894  3,237 1.50%  926,024  3,477 1.51%  1,133,970  5,059 1.77%
Other Time Deposits  334,212  1,014 1.20%  308,475  971 1.26%  312,351  1,257 1.60%
Total Interest-Bearing Deposits  1,772,461  5,732 1.28%  1,834,945  6,192 1.35%  1,998,044  8,299 1.65%
                   
Borrowings:                  
FHLB Advances  3,437  46 5.31%  106,710  239 0.90%  153,777  342 0.88%
Other Borrowings  1,543  —   —   1,331  1 0.30%  3,809  22 2.29%
Junior Subordinated Debentures  82,406  739 3.56%  82,406  711 3.46%  82,406  739 3.56%
Total Borrowings  87,386  785 3.56%  190,447  951 2.00%  239,992  1,103 1.82%
                   
TOTAL INTEREST-BEARING LIABILITIES  $ 1,859,847  $ 6,517 1.39%  $ 2,025,392  $ 7,143 1.41%  $ 2,238,036  $ 9,402 1.67%
                   
NET INTEREST INCOME (2)    $ 25,177      $ 25,496      $ 26,304  
                   
NET INTEREST SPREAD (2)     3.34%     3.26%     3.07%
                   
NET INTEREST MARGIN (2)     3.75%     3.65%     3.49%
                   
                   
 (1) Commercial and industrial loans include owner-occupied commercial real etate loans 
 (2) Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate. 
 
 
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
AVERAGE BALANCES, AVERAGE YIELDS EARNED AND AVERAGE RATES PAID (UNAUDITED)
(Dollars in Thousands)
   Nine Months Ended 
  September 30, 2011 September 30, 2010
   Average Balance   Interest Income/ Expense   Average Yield/ Rate   Average Balance   Interest Income/ Expense   Average Yield/ Rate 
             
INTEREST-EARNING ASSETS            
             
Loans:            
Real Estate Loans:            
Commercial Property  $ 698,818  $ 27,971 5.35%  $ 806,704  $ 32,363 5.36%
Construction  50,227  1,792 4.77%  88,424  3,202 4.84%
Residential Property  59,141  2,039 4.61%  70,410  2,520 4.79%
Total Real Estate Loans  808,186  31,802 5.26%  965,538  38,085 5.27%
Commercial and Industrial Loans (1)  1,293,472  55,741 5.76%  1,588,154  64,330 5.42%
Consumer Loans  47,603  1,668 4.68%  57,425  2,277 5.30%
Total Gross Loans  2,149,261  89,211 5.55%  2,611,117  104,692 5.36%
Prepayment Penalty Income  —   297  —   —   170  — 
Unearned Income on Loans, Net of Costs  (160)  —   —   (994)  —   — 
Gross Loans, Net  2,149,101  89,508 5.57%  2,610,123  104,862 5.37%
             
Investment Securities:            
Municipal Bonds - Taxable   13,930  433 4.14%  —   —  0.00%
Municipal Bonds -Nontaxable (2)  4,373  179 5.46%  7,107  332 6.23%
U.S. Government Agency Securities  134,779  1,639 1.62%  63,790  1,563 3.27%
Mortgage-Backed Securities  116,857  2,137 2.44%  61,265  1,604 3.49%
Collateralized Mortgage Obligations  152,788  2,803 2.45%  23,931  542 3.02%
Corporate Bonds  20,236  500 3.29%  1,055  30 3.79%
Other Securities  11,597  277 3.18%  12,410  295 3.17%
Total Investment Securities (2)  454,560  7,968 2.34%  169,558  4,366 3.43%
             
Other Interest-Earning Assets:            
Equity Securities  34,030  394 1.54%  37,961  397 1.39%
Federal Funds Sold and Securities Purchased            
Under Resale Agreements  6,160  22 0.48%  11,056  41 0.49%
Term Federal Funds Sold  25,542  94 0.49%  10,128  29 0.38%
Interest-Bearing Deposits in Other Banks  115,722  243 0.28%  149,988  319 0.28%
Total Other Interest-Earning Assets  181,454  753 0.55%  209,133  786 0.50%
             
TOTAL INTEREST-EARNING ASSETS (2)  $ 2,785,115  $ 98,229 4.72%  $ 2,988,814  $ 110,014 4.92%
             
INTEREST-BEARING LIABILITIES            
             
Interest-Bearing Deposits:            
Savings  $ 110,795  $ 2,158 2.60%  $ 120,945  $ 2,635 2.91%
Money Market Checking and NOW Accounts  471,179  2,818 0.80%  481,744  3,933 1.09%
Time Deposits of $100,000 or More   943,366  10,773 1.53%  1,050,248  14,793 1.88%
Other Time Deposits  308,558  2,910 1.26%  397,954  5,455 1.83%
Total Interest-Bearing Deposits  1,833,898  18,659 1.36%  2,050,891  26,816 1.75%
             
Borrowings:            
FHLB Advances  87,369  618 0.95%  160,162  1,027 0.86%
Other Borrowings  1,437  1 0.09%  3,140  53 2.26%
Junior Subordinated Debentures  82,406  2,148 3.49%  82,406  2,100 3.41%
 Total Borrowings  171,212  2,767 2.16%  245,708  3,180 1.73%
             
TOTAL INTEREST-BEARING LIABILITIES  $ 2,005,110  $ 21,426 1.43%  $ 2,296,599  $ 29,996 1.75%
             
NET INTEREST INCOME (2)    $ 76,803      $ 80,018  
             
NET INTEREST SPREAD (2)     3.29%     3.17%
             
NET INTEREST MARGIN (2)     3.69%     3.58%
             
             
 (1) Commercial and industrial loans include owner-occupied commercial real etate loans 
 (2) Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate. 
 

Non-GAAP Financial Measures

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 Bank and Hanmi Financial's capital strength. Tangible equity is calculated by subtracting goodwill and other intangible assets from total stockholders' equity. Banking and financial institution regulators also exclude goodwill and other intangible assets from total 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 Bank and Hanmi Financial. 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:

         
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES        
NON-GAAP FINANCIAL MEASURES (UNAUDITED)        
(Dollars in Thousands)        
         
   September 30,   June 30,   December 31,   September 30, 
   2011   2011   2010   2010 
         
TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS RATIO        
         
Total Assets  $ 2,686,570  $ 2,710,835  $ 2,907,148  $ 2,968,505
Less Other Intangible Assets  (1,664)  (1,825)  (2,233)  (2,480)
Tangible Assets  $ 2,684,906  $ 2,709,010  $ 2,904,915  $ 2,966,025
         
Total Stockholders' Equity  $ 203,203  $ 198,365  $ 173,256  $ 172,632
Less Other Intangible Assets  (1,664)  (1,825)  (2,233)  (2,480)
Tangible Stockholders' Equity  $ 201,539  $ 196,540  $ 171,023  $ 170,152
         
Total Stockholders' Equity to Total Assets Ratio 7.56% 7.32% 5.96% 5.82%
Tangible Common Equity to Tangible Assets Ratio 7.51% 7.26% 5.89% 5.74%
         
Common Shares Outstanding  151,258,390  151,258,390  151,198,390  151,198,390
Tangible Common Equity Per Common Share  $ 1.33  $ 1.30  $ 1.13  $ 1.13
         
         
HANMI BANK        
NON-GAAP FINANCIAL MEASURES (UNAUDITED)      
(Dollars in Thousands)        
         
   September 30,   June 30,   December 31,   September 30, 
   2011   2011   2010   2010 
         
TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS RATIO        
         
Total Assets  $ 2,681,517  $ 2,705,997  $ 2,900,415  $ 2,961,039
Less Other Intangible Assets  (94)  (184)  (450)  (625)
Tangible Assets  $ 2,681,423  $ 2,705,813  $ 2,899,965  $ 2,960,414
         
Total Stockholders' Equity  $ 285,250  $ 279,712  $ 249,637  $ 248,310
Less Other Intangible Assets  (94)  (184)  (450)  (625)
Tangible Stockholders' Equity  $ 285,156  $ 279,528  $ 249,187  $ 247,685
         
Total Stockholders' Equity to Total Assets Ratio 10.64% 10.34% 8.61% 8.39%
Tangible Common Equity to Tangible Assets Ratio 10.63% 10.33% 8.59% 8.37%
CONTACT: Hanmi Financial Corporation
         Lonny Robinson
         Chief Financial Officer
         (213)-368-3200

         David Yang
         Investor Relations Officer
         (213) 637-4798
Source: Hanmi Bank