Ex 99.1
Hanmi Financial Corporation Reports
2007 Financial Results
— Net Loss Includes a Non-Cash Goodwill Impairment Charge of $102.9 Million —
LOS ANGELES — February 12, 2008 — Hanmi Financial Corporation (NASDAQ:HAFC) (“we,” “our” or “Hanmi”), the holding company for Hanmi Bank (the “Bank”), today reported a fourth-quarter 2007 net loss of $100.0 million, or ($2.15) per share, which includes a non-cash goodwill impairment charge of $102.9 million, compared to net income of $17.3 million, or $0.35 per diluted share, for the comparable period in 2006.
In addition, fourth-quarter 2007 results include a $1.1 million other-than-temporary impairment charge on a Community Reinvestment Act (“CRA”) preferred security, $1.7 million separation expenses associated with the former Chief Executive Officer’s retirement, and a $20.7 million provision for credit losses.
For the year, we reported a net loss of $60.5 million, or ($1.27) per share, compared to net income of $65.6 million, or $1.33 per diluted share, in 2006. Excluding three unusual charges — goodwill impairment charge, other-than-temporary impairment charge and separation expenses, 2007 net income was $44.1 million, or $0.92 per diluted share.
“The goodwill impairment charge was occasioned by the decline in the market value of our common stock, which we believe reflects, in part, recent turmoil in the financial markets that has adversely affected the market value of the common stock of many banks,” stated Chung Hoon Youk, Chief Credit Officer and Interim Chief Executive Officer. “It is important to note that the fourth-quarter loss, attributable primarily to the goodwill impairment charge, does not affect our tangible equity or our liquidity position. Further, our regulatory capital ratios are unaffected by this goodwill write-off, and we believe that we continue to have a level of capital that is sufficient to support current operations and foreseeable future growth.”
For the fourth quarter and full year ended December 31, 2007, we believe the following components to be of significance with regard to the net loss:
                                                 
    Three Months Ended December 31, 2007     Year Ended December 31, 2007  
            Weighted-                     Weighted-        
    Income     Average     Per     Income     Average     Per  
    (Loss)     Shares     Share     (Loss)     Shares     Share  
    (Numerator)     (Denominator)     Amount     (Numerator)     (Denominator)     Amount  
    (Dollars in Thousands, Except Per Share Amounts)  
 
                                                
GAAP Net Loss
   $ (99,986 )     46,465,973     $ (2.15 )   $ (60,520 )     47,787,213     $ (1.27 )
Impairment Loss on Goodwill
     102,891                       102,891                  
Other-Than-Temporary Impairment Loss on Securities
     1,074                       1,074                  
Separation Expenses for Former CEO’s Retirement
     1,683                       1,683                  
Tax Effect
     (1,009 )                     (1,009 )                
 
                                                
Dilutive Securities — Options and Warrants
             180,751     $ 2.25               306,504     $ 2.19  
 
                                    
 
                                                
Non-GAAP Net Income, Excluding Impairment Loss on Goodwill, Other-Than-Temporary Impairment Loss on Securities, Net of Taxes, and Separation Expenses for Former CEO’s Retirement, Net of Taxes
   $ 4,653       46,646,724     $ 0.10     $ 44,119       48,093,717     $ 0.92  
 
                                    

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Mr. Youk noted, “In the fourth quarter, the economic conditions in the markets in which our borrowers operate continued to deteriorate and the levels of loan delinquency and default experienced by the Bank continued at higher than historical levels. In response, the Bank has increased its allowance for loan losses and significantly expanded its portfolio monitoring activities well beyond the normal level of portfolio monitoring to attempt to identify potential weaknesses in performing loans. For loans with identified weaknesses, we have created individual action plans to mitigate, to the extent possible, such weaknesses. This intensive effort resulted, in part, in additional downgrades in the classification of loans, primarily to ‘special mention.’ We will continue our intensive monitoring of the loan portfolio until the Bank’s credit risk profile returns to a normalized level. The fourth-quarter provision for credit losses reflects the increased migration of loans into more adverse risk rating categories and increases in net charge-offs and non-performing loans during the quarter.”
“Although the direction of the economy is beyond our control,” said Mr. Youk, “we are committed to increasing profitability and reducing the volatility of our own financial performance. In addition to taking a very prudent stance towards the assessment of credit quality we recently inaugurated a campaign to increase core deposits with the objective of providing stronger margins.”
NET INTEREST INCOME AND MARGIN
For the fourth quarter of 2007, average loans increased $148.7 million, or 4.7%, compared to the prior quarter, and increased $402.7 million, or 14.0%, compared to the same quarter in the previous year. Average deposits increased $13.7 million, or 0.5%, compared to the prior quarter, and increased $76.6 million, or 2.6%, compared to the same quarter in the previous year. In order to fill the funding gap, the Bank utilized FHLB advances and other borrowings, which increased to $487 million from $169 million a year ago.
Despite the growth in loans, net interest income in the fourth quarter of 2007 was essentially flat at $37.7 million compared to $37.9 million last quarter and $38.8 million in the fourth quarter of 2006 due to compression in the net interest margin. As a result of the Federal Reserve Bank lowering short-term interest rates and intense competition for loans and deposits, the Bank’s net interest margin has decreased relative to prior periods. The Bank’s net interest margin was 4.08% for the fourth quarter of 2007, compared to 4.26% in the prior quarter and 4.59% a year ago.
NON-INTEREST INCOME
Non-interest income increased in the fourth quarter to $10.9 million from $9.5 million in the prior quarter, excluding the fourth-quarter pre-tax non-cash impairment charge of $1.1 million on the CRA preferred security, but lower than the $11.1 million reported in the fourth quarter of 2006, due largely to fluctuations in gain on sales of loans. For the year, non-interest income increased to $40.0 million from $37.0 million in 2006, due mainly to an increase in insurance commissions from the acquisition of two insurance companies in January 2007.

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NON-INTEREST EXPENSE
Non-interest expense for the fourth-quarter and year ended 2007 were $126.2 million and $189.9 million, respectively, which includes the goodwill impairment charge and separation expenses. Excluding the goodwill impairment charge and separation expenses, fourth-quarter non-GAAP non-interest expenses were $21.6 million, and full-year non-GAAP non-interest expenses were $85.4 million, compared to $19.9 million and $77.3 million, respectively for the prior year periods. These increases were mainly derived from an increase in operating expenses from the acquisition of two insurance companies.
                 
    Three Months     Year  
    Ended     Ended  
    December 31,     December 31,  
    2007     2007  
    (In Thousands)  
GAAP Non-Interest Expenses
   $ 126,221     $ 189,929  
Impairment Loss on Goodwill
     (102,891 )     (102,891 )
Separation Expenses for Former CEO’s Retirement
     (1,683 )     (1,683 )
 
            
Non-GAAP Non-Interest Expenses, Excluding Impairment Loss on Goodwill and Separation Expenses for Former CEO’s Retirement
   $ 21,647     $ 85,355  
 
            
GOODWILL IMPAIRMENT
As previously noted, in the fourth quarter we recorded a charge of $102.9 million for impairment of goodwill. Generally accepted accounting principles in the United States (“GAAP”) require that when a company’s fair value becomes less than the carrying amount of stockholders’ equity, an assessment of impairment of goodwill must be performed. The Bank’s goodwill was primarily associated with the acquisition of Pacific Union Bank in April 2004. The twelve branches acquired continue to be significant contributors to our operations and have been integrated into our core operations. GAAP requires that we use the most readily available indicator of market value, which is the market price of our stock, as part of our assessment of goodwill impairment. While we believe that our current market trading value is in part indicative of concerns in the economy and financial markets generally, we decided that the current fair value of our stock was not sufficient to support the carrying value of goodwill. This charge is not expected to affect our ongoing operations.
ASSET QUALITY
The total provision for credit losses for the three months ended December 31, 2007 was $20.7 million. By comparison, the provision for credit losses was $8.5 million for the three months ended September 30, 2007 and $1.6 million for the three months ended December 31, 2006. The increase in the provision for credit losses is attributable to increases in net charge-offs, non-performing loans and criticized and classified loans.
The provision for credit losses, net of the charge-offs, increased the allowance for loan losses to $43.6 million, or 1.33%, of the gross loan portfolio, at December 31, 2007. We also have an allowance for off-balance sheet exposure, primarily unfunded loan commitments, of $1.8 million (recorded in other liabilities). Based on management’s evaluation and analysis of portfolio credit quality and prevailing economic conditions, we believe these reserves are adequate for losses inherent in the loan portfolio and off-balance sheet exposure at December 31, 2007.

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CAPITAL
Our capital exceeds the levels defined as “well capitalized” by our regulators. Hanmi Bank’s Tier 1 leverage ratio, Tier 1 risk-based capital ratio and total risk-based capital ratios were 8.49%, 9.31% and 10.58%, respectively, at December 31, 2007. Hanmi Financial’s Tier 1 leverage ratio, Tier 1 risk-based capital ratio and total risk-based capital ratio wee 8.52%, 9.38% and 10.63%, respectively, at December 31, 2007
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 24 full-service offices in Los Angeles, Orange, San Bernardino, Santa Clara, San Francisco and San Diego counties, and eight loan production offices in California, Colorado, Georgia, Illinois, Texas, Virginia and Washington. 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.hanmifinancial.com.
This release includes non-GAAP net income, non-GAAP earnings per share data, shares used in non-GAAP earnings per share calculation and non-GAAP non-interest expenses.
These non-GAAP measures are not in accordance with, or an alternative for measures prepared in accordance with, GAAP and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. We believe that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate our results of operations in conjunction with the corresponding GAAP measures.
We believe that the presentation of non-GAAP net income, non-GAAP earnings per share data, shares used in non-GAAP earnings per share calculation and non-GAAP non-interest expenses, when shown in conjunction with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to its financial condition and results of operations. In addition, we believe that the presentation of non-GAAP income provides useful information to investors and management regarding operating activities for the periods presented.
For the internal budgeting process, our management uses financial statements that do not include impairment losses on goodwill, other-than-temporary impairment losses on securities and separation expenses. Our management also uses the foregoing non-GAAP measures, in addition to the corresponding GAAP measures, in reviewing our financial results.

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FORWARD-LOOKING STATEMENTS
This 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. 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: general economic and business conditions in those areas in which we operate; demographic changes; competition for loans and deposits; fluctuations in interest rates; risks of natural disasters related to our real estate portfolio; risks associated with SBA loans; changes in governmental regulation; credit quality; the ability of borrowers to perform under the terms of their loans and other terms of credit agreements; our ability to successfully integrate acquisitions we may make; the availability of capital to fund the expansion of our business; and changes in securities markets. In addition, we set forth certain risks in our reports filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2006, 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.
CONTACT
HANMI FINANCIAL CORPORATION
         
 
  BRIAN E. CHO   STEPHANIE YOON
 
  Chief Financial Officer   Investor Relations
 
  (213) 368-3200   (213) 427-5631

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HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in Thousands)
                                         
    December 31,     September 30,     %     December 31,     %  
    2007     2007     Change     2006     Change  
ASSETS
                                        
Cash and Due from Banks
   $ 105,898     $ 103,789       2.0 %   $ 97,501       8.6 %
Federal Funds Sold
     16,500       —       —       41,000       (59.8 )%
 
                              
Cash and Cash Equivalents
     122,398       103,789       17.9 %     138,501       (11.6 )%
 
                              
Term Federal Funds Sold
     —       —       —       5,000       (100.0 )%
Investment Securities
     350,457       357,616       (2.0 )%     391,579       (10.5 )%
Loans:
                                        
Gross Loans, Net of Deferred Loan Fees
     3,284,708       3,219,871       2.0 %     2,864,947       14.7 %
Allowance for Loan Losses
     (43,611 )     (34,503 )     26.4 %     (27,557 )     58.3 %
 
                              
Loans Receivable, Net
     3,241,097       3,185,368       1.7 %     2,837,390       14.2 %
 
                              
Customers’ Liability on Acceptances
     5,387       5,357       0.6 %     8,403       (35.9 )%
Premises and Equipment, Net
     20,800       20,597       1.0 %     20,075       3.6 %
Accrued Interest Receivable
     17,500       17,619       (0.7 )%     16,919       3.4 %
Other Real Estate Owned
     287       287       —       —       —  
Deferred Income Taxes
     34,573       13,480       156.5 %     13,064       164.6 %
Servicing Assets
     4,336       4,328       0.2 %     4,579       (5.3 )%
Goodwill
     107,100       209,991       (49.0 )%     207,646       (48.4 )%
Other Intangible Assets
     6,909       7,457       (7.3 )%     6,312       9.5 %
Federal Reserve Bank and Federal Home Loan Bank Stock
     33,479       25,525       31.2 %     24,922       34.3 %
Bank-Owned Life Insurance
     24,524       24,285       1.0 %     23,592       4.0 %
Other Assets
     25,371       35,916       (29.4 )%     27,261       (6.9 )%
 
                              
TOTAL ASSETS
   $ 3,994,218     $ 4,011,615       (0.4 )%   $ 3,725,243       7.2 %
 
                              
 
                                        
LIABILITIES AND SHAREHOLDERS’ EQUITY
                                        
Liabilities:
                                        
Deposits:
                                        
Noninterest-Bearing
   $ 680,282     $ 690,513       (1.5 )%   $ 728,347       (6.6 )%
Interest-Bearing
     2,321,417       2,357,044       (1.5 )%     2,216,368       4.7 %
 
                              
Total Deposits
     3,001,699       3,047,557       (1.5 )%     2,944,715       1.9 %
Accrued Interest Payable
     21,828       20,449       6.7 %     22,582       (3.3 )%
Acceptances Outstanding
     5,387       5,357       0.6 %     8,403       (35.9 )%
FHLB Advances and Other Borrowings
     487,164       361,344       34.8 %     169,037       188.2 %
Junior Subordinated Debentures
     82,406       82,406       —       82,406       —  
Other Liabilities
     24,189       11,593       108.7 %     10,983       120.2 %
 
                              
Total Liabilities
     3,622,673       3,528,706       2.7 %     3,238,126       11.9 %
Shareholders’ Equity
     371,545       482,909       (23.1 )%     487,117       (23.7 )%
 
                              
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
   $ 3,994,218     $ 4,011,615       (0.4 )%   $ 3,725,243       7.2 %
 
                              

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HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in Thousands, Except Per Share Data)
                                                                 
    Three Months Ended     Year Ended  
    Dec. 31,     Sept. 30,     %     Dec. 31,     %     Dec. 31,     Dec. 31,     %  
    2007     2007     Change     2006     Change     2007     2006     Change  
INTEREST INCOME:
                                                                
Interest and Fees on Loans
   $ 67,505     $ 66,714       1.2 %   $ 63,666       6.0 %   $ 261,992     $ 239,075       9.6 %
Interest on Investments
     4,309       4,422       (2.6 )%     4,762       (9.5 )%     17,867       19,710       (9.4 )%
Interest on Federal Funds Sold
     69       61       13.1 %     654       (89.4 )%     1,032       1,402       (26.4 )%
Interest on Term Federal Funds Sold
     —       —       —       2       (100.0 )%     5       2       150.0 %
 
                                                
Total Interest Income
     71,883       71,197       1.0 %     69,084       4.1 %     280,896       260,189       8.0 %
 
                                                
INTEREST EXPENSE:
                                                                
Interest on Deposits
     27,446       27,882       (1.6 )%     26,346       4.2 %     108,100       93,036       16.2 %
Interest on FHLB Advances and Other Borrowings
     5,074       3,785       34.1 %     2,278       122.7 %     13,949       6,977       99.9 %
Interest on Junior Subordinated Debentures
     1,670       1,675       (0.3 )%     1,682       (0.7 )%     6,644       6,416       3.6 %
 
                                                
Total Interest Expense
     34,190       33,342       2.5 %     30,306       12.8 %     128,693       106,429       20.9 %
 
                                                
NET INTEREST INCOME BEFORE PROVISION FOR CREDIT LOSSES
     37,693       37,855       (0.4 )%     38,778       (2.8 )%     152,203       153,760       (1.0 )%
 
                                                          
Provision for Credit Losses
     20,704       8,464       144.6 %     1,631       1,169.4 %     38,323       7,173       434.3 %
 
                                                
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES
     16,989       29,391       (42.2 )%     37,147       (54.3 )%     113,880       146,587       (22.3 )%
 
                                                
NON-INTEREST INCOME:
                                                                
Service Charges on Deposit Accounts
     4,672       4,463       4.7 %     4,471       4.5 %     18,061       17,134       5.4 %
Insurance Commissions
     1,419       1,131       25.5 %     124       1,044.4 %     4,954       770       543.4 %
Trade Finance Fees
     944       1,082       (12.8 )%     1,153       (18.1 )%     4,493       4,567       (1.6 )%
Remittance Fees
     546       512       6.6 %     519       5.2 %     2,049       2,056       (0.3 )%
Other Service Charges and Fees
     646       691       (6.5 )%     620       4.2 %     2,527       2,359       7.1 %
Bank-Owned Life Insurance Income
     240       234       2.6 %     225       6.7 %     933       879       6.1 %
Increase in Fair Value of Derivatives
     162       207       (21.7 )%     351       (53.8 )%     683       1,074       (36.4 )%
Other Income
     479       457       4.8 %     248       93.1 %     1,702       1,157       47.1 %
Gain on Sales of Loans
     1,767       523       237.9 %     3,367       (47.5 )%     5,452       6,917       (21.2 )%
Gain on Sales of Other Real Estate Owned
     —       226       (100.0 )%     —       —       226       48       370.8 %
Gain on Sales of Securities Available for Sale
     —       —       —       —       —       —       2       (100.0 )%
Other-Than-Temporary Impairment Loss on Securities
     (1,074 )     —       —       —       —       (1,074 )     —       —  
 
                                                
Total Non-Interest Income
     9,801       9,526       2.9 %     11,078       (11.5 )%     40,006       36,963       8.2 %
 
                                                
NON-INTEREST EXPENSES:
                                                                
Salaries and Employee Benefits
     13,075       11,418       14.5 %     10,303       26.9 %     47,036       40,512       16.1 %
Occupancy and Equipment
     2,754       2,657       3.7 %     2,521       9.2 %     10,494       9,643       8.8 %
Data Processing
     1,622       1,540       5.3 %     1,543       5.1 %     6,390       5,857       9.1 %
Advertising and Promotion
     1,137       943       20.6 %     875       29.9 %     3,630       2,997       21.1 %
Supplies and Communications
     596       704       (15.3 )%     543       9.8 %     2,592       2,391       8.4 %
Professional Fees
     782       565       38.4 %     360       117.2 %     2,468       1,910       29.2 %
Amortization of Other Intangible Assets
     548       570       (3.9 )%     564       (2.8 )%     2,324       2,379       (2.3 )%
Decrease in Fair Value of Embedded Option
     —       37       (100.0 )%     290       (100.0 )%     233       582       (60.0 )%
Other Operating Expenses
     2,816       2,815       —       2,916       (3.4 )%     11,871       11,042       7.5 %
Impairment Loss on Goodwill
     102,891       —       —       —       —       102,891       —       —  
 
                                                
Total Non-Interest Expenses
     126,221       21,249       494.0 %     19,915       533.8 %     189,929       77,313       145.7 %
 
                                                
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES
     (99,431 )     17,668       (662.8 )%     28,310       (451.2 )%     (36,043 )     106,237       (133.9 )%
Provision for Income Taxes
     555       6,580       (91.6 )%     11,000       (95.0 )%     24,477       40,588       (39.7 )%
 
                                                
NET INCOME (LOSS)
   $ (99,986 )   $ 11,088       (1,001.7 )%   $ 17,310       (677.6 )%   $ (60,520 )   $ 65,649       (192.2 )%
 
                                                
 
                                                                
EARNINGS (LOSS) PER SHARE:
                                                                
Basic
   $ (2.15 )   $ 0.23       (1,034.8 )%   $ 0.35       (714.3 )%   $ (1.27 )   $ 1.34       (194.8 )%
Diluted
   $ (2.15 )   $ 0.23       (1,034.8 )%   $ 0.35       (714.3 )%   $ (1.27 )   $ 1.33       (195.5 )%
 
                                                                
WEIGHTED-AVERAGE SHARES OUTSTANDING:
                                                                
Basic
     46,465,973       47,355,143               48,969,795               47,787,213       48,850,221          
Diluted
     46,465,973       47,536,078               49,567,778               47,787,213       49,435,128          
 
                                                                
SHARES OUTSTANDING AT PERIOD-END
     45,860,941       46,986,341               49,076,613               45,860,941       49,076,613          

-7-

 

HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL DATA (UNAUDITED)
(Dollars in Thousands)
                                                                 
    Three Months Ended     Year Ended  
    Dec. 31,     Sept. 30,     %     Dec. 31,     %     Dec. 31,     Dec. 31,     %  
    2007     2007     Change     2006     Change     2007     2006     Change  
AVERAGE BALANCES:
                                                                
Average Gross Loans, Net of Deferred Loan Fees
   $ 3,284,222     $ 3,135,531       4.7 %   $ 2,881,515       14.0 %   $ 3,080,544     $ 2,747,922       12.1 %
Average Investment Securities
     350,147       360,626       (2.9 )%     395,313       (11.4 )%     368,144       414,672       (11.2 )%
Average Interest-Earning Assets
     3,669,436       3,526,493       4.1 %     3,349,911       9.5 %     3,494,758       3,214,761       8.7 %
Average Total Assets
     4,053,474       3,915,517       3.5 %     3,735,578       8.5 %     3,882,891       3,602,181       7.8 %
Average Deposits
     3,029,804       3,016,118       0.5 %     2,953,226       2.6 %     2,989,806       2,881,448       3.8 %
Average Borrowings
     496,513       367,605       35.1 %     255,700       94.2 %     355,819       221,347       60.8 %
Average Interest-Bearing Liabilities
     2,845,775       2,683,930       6.0 %     2,480,902       14.7 %     2,643,296       2,367,389       11.7 %
Average Shareholders’ Equity
     485,607       487,006       (0.3 )%     482,486       0.6 %     492,637       458,227       7.5 %
Average Tangible Equity
     269,496       269,255       0.1 %     268,201       0.5 %     275,036       242,362       13.5 %
 
                                                                
PERFORMANCE RATIOS:
                                                                
Return on Average Assets
     (9.79 )%     1.12 %             1.84 %             (1.56 )%     1.82 %        
Return on Average Shareholders’ Equity
     (81.69 )%     9.03 %             14.23 %             (12.28 )%     14.33 %        
Return on Average Tangible Equity
     (147.19 )%     16.34 %             25.61 %             (22.00 )%     27.09 %        
Efficiency Ratio
     265.76 %     44.85 %             39.95 %             98.81 %     40.54 %        
Net Interest Margin
     4.08 %     4.26 %             4.59 %             4.36 %     4.78 %        
 
                                                                
ALLOWANCE FOR LOAN LOSSES:
                                                                
Balance at the Beginning of Period
   $ 34,503     $ 32,190       7.2 %   $ 28,276       22.0 %   $ 27,557     $ 24,963       10.4 %
Provision Charged to Operating Expense
     20,736       8,397       146.9 %     1,631       1,171.4 %     38,688       7,173       439.4 %
Charge-Offs, Net of Recoveries
     (11,628 )     (6,084 )     91.1 %     (2,350 )     394.8 %     (22,634 )     (4,579 )     394.3 %
 
                                                
Balance at the End of Period
   $ 43,611     $ 34,503       26.4 %   $ 27,557       58.3 %   $ 43,611     $ 27,557       58.3 %
 
                                                
 
                                                                
Allowance for Loan Losses to Total Gross Loans
     1.33 %     1.07 %             0.96 %             1.33 %     0.96 %        
Allowance for Loan Losses to Total Non-Performing Loans
     80.05 %     77.19 %             193.86 %             80.05 %     193.86 %        
 
                                                                
ALLOWANCE FOR OFF-BALANCE SHEET ITEMS:
                                                                
Balance at the Beginning of Period
   $ 1,797     $ 1,730       3.9 %   $ 2,130       (15.6 )%   $ 2,130     $ 2,130       —  
Provision Charged to Operating Expense
     (32 )     67       (147.8 )%     —       —       (365 )     —       —  
 
                                                
Balance at the End of Period
   $ 1,765     $ 1,797       (1.8 )%   $ 2,130       (17.1 )%   $ 1,765     $ 2,130       (17.1 )%
 
                                                

-8-

 

HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL DATA (UNAUDITED) (Continued)
(Dollars in Thousands)
                                         
    Dec. 31,     Sept. 30,     %     Dec. 31,     %  
    2007     2007     Change     2006     Change  
 
                                        
NON-PERFORMING ASSETS:
                                        
Non-Accrual Loans
   $ 54,252     $ 44,497       21.9 %   $ 14,213       281.7 %
Loans 90 Days or More Past Due and Still Accruing
     227       199       14.1 %     2       11,250.0 %
 
                              
Total Non-Performing Loans
     54,479       44,696       21.9 %     14,215       283.3 %
Other Real Estate Owned
     287       287       —       —       --  
 
                              
Total Non-Performing Assets
   $ 54,766     $ 44,983       21.7 %   $ 14,215       285.3 %
 
                              
Total Non-Performing Loans/Total Gross Loans
     1.66 %     1.39 %             0.50 %        
Total Non-Performing Assets/Total Assets
     1.37 %     1.12 %             0.38 %        
Total Non-Performing Assets/Allowance for Loan Losses
     125.6 %     130.4 %             51.6 %        
 
                                        
DELINQUENT LOANS
   $ 45,086     $ 54,954       (18.0 )%   $ 19,616       129.8 %
 
                              
Delinquent Loans/Total Gross Loans
     1.37 %     1.71 %             0.68 %        
 
                                        
LOAN PORTFOLIO:
                                        
Real Estate Loans
   $ 1,101,907     $ 1,099,100       0.3 %   $ 1,041,393       5.8 %
Commercial and Industrial Loans
     2,094,719       2,033,009       3.0 %     1,726,434       21.3 %
Consumer Loans
     90,449       90,416       —       100,121       (9.7 )%
 
                              
Total Gross Loans
     3,287,075       3,222,525       2.0 %     2,867,948       14.6 %
Deferred Loan Fees
     (2,367 )     (2,654 )     (10.8 )%     (3,001 )     (21.1 )%
 
                              
Gross Loans, Net of Deferred Loan Fees
     3,284,708       3,219,871       2.0 %     2,864,947       14.7 %
Allowance for Loan Losses
     (43,611 )     (34,503 )     26.4 %     (27,557 )     58.3 %
 
                              
Loans Receivable, Net
   $ 3,241,097     $ 3,185,368       1.7 %   $ 2,837,390       14.2 %
 
                              
 
                                        
LOAN MIX:
                                        
Real Estate Loans
     33.5 %     34.1 %             36.3 %        
Commercial and Industrial Loans
     63.7 %     63.1 %             60.2 %        
Consumer Loans
     2.8 %     2.8 %             3.5 %        
 
                                  
Total Gross Loans
     100.0 %     100.0 %             100.0 %        
 
                                  
 
                                        
DEPOSIT PORTFOLIO:
                                        
Noninterest-Bearing
   $ 680,282     $ 690,513       (1.5 )%   $ 728,347       (6.6 )%
Savings
     93,099       94,150       (1.1 )%     99,255       (6.2 )%
Money Market Checking and NOW Accounts
     445,806       476,257       (6.4 )%     438,267       1.7 %
Time Deposits of $100,000 or More
     1,441,683       1,474,764       (2.2 )%     1,383,358       4.2 %
Other Time Deposits
     340,829       311,873       9.3 %     295,488       15.3 %
 
                              
Total Deposits
   $ 3,001,699     $ 3,047,557       (1.5 )%   $ 2,944,715       1.9 %
 
                              
 
                                        
DEPOSIT MIX:
                                        
Noninterest-Bearing
     22.7 %     22.7 %             24.7 %        
Savings
     3.1 %     3.1 %             3.4 %        
Money Market Checking and NOW Accounts
     14.9 %     15.6 %             14.9 %        
Time Deposits of $100,000 or More
     48.0 %     48.4 %             47.0 %        
Other Time Deposits
     11.3 %     10.2 %             10.0 %        
 
                                  
Total Deposits
     100.0 %     100.0 %             100.0 %        
 
                                  

-9-

 

HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
AVERAGE BALANCES, AVERAGE YIELDS EARNED AND AVERAGE RATES PAID (UNAUDITED)
(Dollars in Thousands)
                                                                                                                         
    Three Months Ended     Year Ended  
    December 31, 2007     September 30, 2007     December 31, 2006     December 31, 2007     December 31, 2006  
            Interest     Average             Interest     Average             Interest     Average             Interest     Average             Interest     Average  
    Average     Income/     Yield/     Average     Income/     Yield/     Average     Income/     Yield/     Average     Income/     Yield/     Average     Income/     Yield/  
    Balance     Expense     Rate     Balance     Expense     Rate     Balance     Expense     Rate     Balance     Expense     Rate     Balance     Expense     Rate  
INTEREST-EARNING ASSETS
                                                                                                                        
LOANS:
                                                                                                                        
Real Estate Loans:
                                                                                                                        
Commercial Property
   $ 787,721     $ 15,483       7.80 %   $ 775,605     $ 15,678       8.02 %   $ 756,961     $ 15,724       8.24 %   $ 771,386     $ 61,863       8.02 %   $ 756,771     $ 61,773       8.16 %
Construction
     235,851       5,471       9.20 %     227,779       4,814       8.38 %     189,948       4,662       9.74 %     223,017       20,359       9.13 %     176,265       17,047       9.67 %
Residential Property
     89,184       1,160       5.16 %     87,864       1,124       5.08 %     80,762       1,066       5.24 %     87,180       4,537       5.20 %     84,381       4,369       5.18 %
 
                                                                                          
Total Real Estate Loans
     1,112,756       22,114       7.88 %     1,091,248       21,616       7.86 %     1,027,671       21,452       8.28 %     1,081,583       86,759       8.02 %     1,017,417       83,189       8.18 %
Commercial and Industrial Loans
     2,081,945       43,658       8.32 %     1,951,478       43,169       8.78 %     1,758,498       39,986       9.02 %     1,905,625       166,802       8.75 %     1,637,133       146,803       8.97 %
Consumer Loans
     91,378       1,624       7.05 %     94,751       1,798       7.53 %     98,570       2,222       8.94 %     95,463       7,611       7.97 %     97,015       8,441       8.70 %
 
                                                                                          
Total Gross Loans
     3,286,079       67,396       8.14 %     3,137,477       66,583       8.42 %     2,884,739       63,660       8.76 %     3,082,671       261,172       8.47 %     2,751,565       238,433       8.67 %
Prepayment Penalty Income
     —       109       —       —       131       —               6       —       —       820       —       —       642       —  
Unearned Income on Loans, Net of Costs
     (1,857 )     —       —       (1,946 )     —       —       (3,224 )     —       —       (2,127 )     —       —       (3,643 )     —       —  
 
                                                                                          
Gross Loans, Net
   $ 3,284,222     $ 67,505       8.15 %   $ 3,135,531     $ 66,714       8.44 %   $ 2,881,515     $ 63,666       8.77 %   $ 3,080,544     $ 261,992       8.51 %   $ 2,747,922     $ 239,075       8.70 %
 
                                                                                          
 
                                                                                                                        
INVESTMENT SECURITIES:
                                                                                                                        
Municipal Bonds
   $ 72,097     $ 765       4.24 %   $ 70,984     $ 764       4.31 %   $ 72,670     $ 766       4.22 %   $ 71,937     $ 3,055       4.25 %   $ 72,694     $ 3,087       4.25 %
U.S. Government Agency Securities
     110,194       1,188       4.31 %     119,704       1,286       4.30 %     118,103       1,261       4.27 %     116,701       4,963       4.25 %     122,503       5,148       4.20 %
Mortgage-Backed Securities
     97,566       1,190       4.88 %     101,688       1,237       4.87 %     123,283       1,461       4.74 %     107,356       5,148       4.80 %     132,845       6,248       4.70 %
Collateralized Mortgage Obligations
     52,883       570       4.31 %     55,619       612       4.40 %     68,368       744       4.35 %     58,189       2,530       4.35 %     73,765       3,178       4.31 %
Corporate Bonds
     12,709       154       4.85 %     7,811       89       4.56 %     7,914       89       4.50 %     9,084       422       4.65 %     7,908       357       4.51 %
Other Securities
     4,698       84       7.15 %     4,820       84       6.97 %     4,975       84       6.75 %     4,877       336       6.89 %     4,957       337       6.80 %
 
                                                                                          
Total Investment Securities
   $ 350,147     $ 3,951       4.51 %   $ 360,626     $ 4,072       4.52 %   $ 395,313     $ 4,405       4.46 %   $ 368,144     $ 16,454       4.47 %   $ 414,672     $ 18,355       4.43 %
 
                                                                                          
 
                                                                                                                        
OTHER INTEREST-EARNING ASSETS:
                                                                                                                        
Equity Securities (FHLB and FRB Stock)
   $ 29,149     $ 358       4.91 %   $ 25,431     $ 350       5.51 %   $ 24,877     $ 357       5.74 %   $ 26,228     $ 1,413       5.39 %   $ 24,684     $ 1,354       5.49 %
Federal Funds Sold
     5,918       69       4.66 %     4,905       61       4.97 %     48,043       654       5.45 %     19,746       1,032       5.23 %     27,410       1,402       5.11 %
Term Federal Funds Sold
     —       —       —       —       —       —       163       2       4.91 %     96       5       5.21 %     41       2       4.88 %
Interest-Earning Deposits
     —       —       —       —       —       —       —       —       —       —       —       —       32       1       4.01 %
 
                                                                                          
Total Other Interest-Earning Assets
   $ 35,067     $ 427       4.87 %   $ 30,336     $ 411       5.42 %   $ 73,083     $ 1,013       5.54 %   $ 46,070     $ 2,450       5.32 %   $ 52,167     $ 2,759       5.29 %
 
                                                                                          
 
                                                                                                                        
TOTAL INTEREST-EARNING ASSETS
   $ 3,669,436     $ 71,883       7.77 %   $ 3,526,493     $ 71,197       8.01 %   $ 3,349,911     $ 69,084       8.18 %   $ 3,494,758     $ 280,896       6.31 %   $ 3,214,761     $ 260,189       6.35 %
 
                                                                                          
 
                                                                                                                        
INTEREST-BEARING LIABILITIES
                                                                                                                        
 
                                                                                                                        
INTEREST-BEARING DEPOSITS:
                                                                                                                        
Savings
   $ 93,413     $ 622       2.64 %   $ 95,147     $ 567       2.36 %   $ 98,892     $ 451       1.81 %   $ 97,173     $ 2,152       2.21 %   $ 107,811     $ 1,853       1.72 %
Money Market Checking and NOW Accounts
     478,501       3,996       3.31 %     471,756       4,164       3.50 %     442,747       3,675       3.29 %     452,825       15,298       3.38 %     471,780       14,539       3.08 %
Time Deposits of $100,000 or More
     1,465,551       18,977       5.14 %     1,438,711       19,263       5.31 %     1,392,240       18,650       5.31 %     1,430,603       75,516       5.28 %     1,286,202       64,184       4.99 %
Other Time Deposits
     311,797       3,851       4.90 %     310,711       3,888       4.96 %     291,323       3,570       4.86 %     306,876       15,134       4.93 %     280,249       12,460       4.45 %
 
                                                                                          
Total Interest-Bearing Deposits
   $ 2,349,262     $ 27,446       4.64 %   $ 2,316,325     $ 27,882       4.78 %   $ 2,225,202     $ 26,346       4.70 %   $ 2,287,477     $ 108,100       4.73 %   $ 2,146,042     $ 93,036       4.34 %
 
                                                                                          
 
                                                                                                                        
BORROWINGS:
                                                                                                                        
FHLB Advances and Other Borrowings
   $ 414,107     $ 5,074       4.86 %   $ 285,199     $ 3,785       5.27 %   $ 173,294     $ 2,278       5.22 %   $ 273,413     $ 13,949       5.10 %   $ 138,941     $ 6,977       5.02 %
Junior Subordinated Debentures
     82,406       1,670       8.04 %     82,406       1,675       8.06 %     82,406       1,682       8.10 %     82,406       6,644       8.06 %     82,406       6,416       7.79 %
 
                                                                                          
Total Borrowings
   $ 496,513     $ 6,744       5.39 %   $ 367,605     $ 5,460       5.89 %   $ 255,700     $ 3,960       6.14 %   $ 355,819     $ 20,593       5.79 %   $ 221,347     $ 13,393       6.05 %
 
                                                                                          
 
                                                                                                                        
TOTAL INTEREST-BEARING LIABILITIES
   $ 2,845,775     $ 34,190       4.77 %   $ 2,683,930     $ 33,342       4.93 %   $ 2,480,902     $ 30,306       4.85 %   $ 2,643,296     $ 128,693       4.87 %   $ 2,367,389     $ 106,429       4.50 %
 
                                                                                          
 
                                                                                                                        
NET INTEREST INCOME
           $ 37,693                     $ 37,855                     $ 38,778                     $ 152,203                     $ 153,760          
 
                                                                                                              
 
                                                                                                                        
NET INTEREST SPREAD
                     3.00 %                     3.08 %                     3.33 %                     1.44 %                     1.86 %
 
                                                                                                              
 
                                                                                                                        
NET INTEREST MARGIN
                     4.08 %                     4.26 %                     4.59 %                     4.36 %                     4.78 %
 
                                                                                                              

-10-