EXHIBIT 99.1

Hanmi Reports Fourth Quarter 2019 Results

2019 Fourth Quarter and Full Year Highlights:   

LOS ANGELES, Jan. 28, 2020 (GLOBE NEWSWIRE) -- Hanmi Financial Corporation (NASDAQ: HAFC, or “Hanmi”), the parent company of Hanmi Bank (the “Bank”), today reported net income for the 2019 fourth quarter of $3.1 million, or $0.10 per diluted share, compared with $12.4 million, or $0.40 per diluted share for the 2019 third quarter and $11.4 million, or $0.37 per diluted share for the 2018 fourth quarter. 2019 fourth quarter net income included a $6.9 million specific provision for loan and lease losses related to the previously identified $39.7 million troubled loan relationship.

For the 2019 year, net income was $32.8 million, or $1.06 per diluted share, compared with $57.9 million, or $1.79 per diluted share, for 2018.

Bonnie Lee, President and Chief Executive Officer, said, “Hanmi’s performance in the fourth quarter was highlighted by excellent growth in loan and lease production along with an improving mix of deposits. Total loan and lease production volume of $381.4 million increased more than 75% from the prior quarter and nearly 55% from the fourth quarter last year. Despite the strong loan and lease production, payoffs more than doubled from the prior quarter, which resulted in loan and lease growth in the fourth quarter of 3.6% on an annualized basis. In addition, we benefitted during the year from an 8.3% increase in noninterest-bearing demand deposits along with a 13.6% reduction in time deposits that helped mitigate competitive pressure on loan yields.”

Ms. Lee continued, “Net income for the quarter included a $6.9 million specific provision related to the previously identified $39.7 million troubled loan relationship. We continue to work with the borrower on an orderly resolution to the relationship and the borrower has continued payments, reducing the relationship to $39.7 million from $40.7 million at midyear. With the loans comprising this relationship maturing on December 31, 2019, we received current appraisals on the personal property securing the relationship and have provided for a specific allowance at the lower range of the appraised values. Notwithstanding this particular relationship, Hanmi’s overall credit quality metrics remain strong.”

Ms. Lee concluded, “As we look ahead to 2020, given our strong deposit franchise and loan and lease pipeline I believe Hanmi is well-positioned to deliver profitable growth throughout the year.”

Quarterly Highlights
(Dollars in thousands, except per share data)

 
  As of  or for the Three Months Ended 
 Amount Change
 December 31,  September 30,  June 30,  March 31,  December 31,  Q4-19  Q4-19 
 2019  2019  2019  2019  2018  vs. Q3-19  vs. Q4-18 
                     
Net income$3,084  $12,376  $2,656  $14,672  $11,385  $(9,292) $(8,301)
Net income per diluted common share$0.10  $0.40  $0.09  $0.48  $0.37  $(0.30) $(0.27)
                     
Assets$5,538,184  $5,527,982  $5,511,752  $5,571,068  $5,502,219  $10,202  $35,965 
Loans and leases receivable$4,610,148  $4,569,837  $4,555,802  $4,575,620  $4,600,540  $40,311  $9,608 
Deposits$4,698,962  $4,690,141  $4,762,068  $4,820,175  $4,747,235  $8,821  $(48,273)
                     
Return on average assets0.22% 0.90% 0.19% 1.09% 0.83% -0.68  -0.61 
Return on average stockholders' equity2.15% 8.67% 1.87% 10.62% 7.92% -6.52  -5.77 
                     
Net interest margin (1)3.32% 3.36% 3.30% 3.52% 3.51% -0.04  -0.19 
Efficiency ratio (2)67.31% 64.04% 59.44% 56.83% 56.40% 3.27  10.91 
                     
Tangible common equity to tangible assets (3)9.98% 10.20% 10.04% 9.93% 9.84% -0.22  0.14 
Tangible common equity per common share (3)$17.90  $18.05  $17.83  $17.89  $17.47  $(0.15) $0.43 
                     
(1)  Amounts calculated on a fully taxable equivalent basis using the federal tax rate in effect for the periods presented.
(2)  Noninterest expense divided by net interest income plus noninterest income.
(3)  Refer to "Non-GAAP Financial Measures" for further details.


Results of Operations

Net interest income was $43.9 million for the fourth quarter of 2019 compared with $44.1 million for the third quarter of 2019. Fourth quarter interest and fees on loans and leases decreased 2.9%, or $1.7 million, from the preceding quarter primarily due to an 11 basis point reduction in average yields, which was a function of the decline in the overnight rate by 25 basis points. This was partially offset by a decrease in total interest expense of 7.5%, or $1.4 million, from the preceding quarter due primarily to lower rates paid on interest-bearing deposits. Fourth quarter loan prepayment penalties were $0.7 million compared with $0.3 million for the third quarter.

Net interest income of $175.9 million for the full year in 2019 decreased 2.8% compared with $181.0 million for the full year in 2018. The year-over-year decline in net interest income reflects an 11 basis point increase in average yield on higher average interest-earnings assets that was more than offset by a 48 basis point increase in average rate paid on average interest-bearing deposits.

                
  As of or For the Three Months Ended (in thousands)  Percentage Change
 Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Q4-19  Q4-19 
Net Interest Income2019 2019 2019 2019 2018 vs. Q3-19  vs. Q4-18 
                
Interest and fees on loans and leases(1)$  56,267 $  57,929 $  56,872 $  58,334 $  57,947 -2.9% -2.9%
Interest on securities3,665 3,769 3,770 3,456 3,278 -2.8% 11.8%
Dividends on FHLB stock289 286 283 289 555 1.0% -47.9%
Interest on deposits in other banks478 193 557 335 179 147.7% 167.0%
Total interest and dividend income$  60,699 $  62,177 $  61,482 $  62,414 $  61,959 -2.4% -2.0%
                
Interest on deposits14,699 15,995 16,728 15,683 14,139 -8.1% 4.0%
Interest on borrowings325 367 - 71 420 -11.4% -22.6%
Interest on subordinated debentures1,739 1,757 1,764 1,772 1,754 -1.0% -0.9%
Total interest expense16,763 18,119 18,492 17,526 16,313 -7.5% 2.8%
Net interest income$  43,936 $  44,058 $  42,990 $  44,888 $  45,646 -0.3% -3.7%
                
(1)  Includes loans held for sale.
   


Net interest margin was 3.32% for the fourth quarter of 2019 compared with 3.36% for the third quarter of 2019, principally reflecting a 15 basis point decline in the yield on earning assets offset by a 16 basis point decline in the cost of interest-bearing deposits. For the full year, net interest margin was 3.37% for 2019 compared with 3.57% for 2018.

The average earning asset yield was 4.59% for the fourth quarter of 2019 compared with 4.74% for the third quarter of 2019. The 15 basis point decline reflects in part the 25 basis point decline in the overnight rate. Full year yields increased 11 basis points year-over-year to 4.73%.

The cost of interest-bearing liabilities was 1.89% for the fourth quarter of 2019 compared with 2.04% for the third quarter of 2019. The lower cost of interest-bearing liabilities was driven by a reduction in the general level of interest rates. For 2019, the cost of interest-bearing liabilities was 1.99% compared with 1.55% for the full year 2018, reflecting a decreasing interest rate environment in the second half of 2019. 

   
  For the Three Months Ended (in thousands)  Percentage Change
 Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Q4-19  Q4-19 
Average Earning Assets and Interest-bearing Liabilities2019 2019 2019 2019 2018 vs. Q3-19  vs. Q4-18 
Loans and leases receivable (1)$  4,487,998 $  4,519,770 $  4,491,377 $  4,533,120 $  4,544,722 -0.7% -1.2%
Securities624,861 630,450 629,062 589,547 581,550 -0.9% 7.4%
FHLB stock16,385 16,385 16,385 16,385 16,385 0.0% 0.0%
Interest-bearing deposits in other banks114,462 35,140 92,753 53,022 34,301 225.7% 233.7%
Average interest-earning assets$  5,243,706 $  5,201,745 $  5,229,577 $  5,192,074 $  5,176,958 0.8% 1.3%
                
Demand: interest-bearing$  82,604 $  82,665 $  83,932 $  85,291 $  89,971 -0.1% -8.2%
Money market and savings1,640,162 1,555,639 1,541,976 1,526,710 1,510,428 5.4% 8.6%
Time deposits1,605,276 1,692,419 1,863,685 1,852,562 1,751,429 -5.1% -8.3%
Average interest-bearing deposits3,328,042 3,330,723 3,489,593 3,464,563 3,351,828 -0.1% -0.7%
Borrowings75,500 74,239 59 10,611 65,217 1.7% 15.8%
Subordinated debentures118,297 118,145 118,007 117,863 117,728 0.1% 0.5%
Average interest-bearing liabilities$  3,521,839 $  3,523,107 $  3,607,659 $  3,593,037 $  3,534,773 0.0% -0.4%
                
(1)  Includes loans held for sale.  


 For the Three Months Ended 
 Amount Change
 Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Q4-19 Q4-19
Average Yields and Rates2019 2019 2019 2019 2018 vs. Q3-19 vs. Q4-18
Loans and leases receivable(1)4.97% 5.08% 5.08% 5.22% 5.06% -0.11 -0.09
Securities (2)2.35% 2.39% 2.40% 2.44% 2.37% -0.04 -0.02
FHLB stock7.00% 6.93% 6.93% 7.15% 13.44% 0.07 -6.44
Interest-bearing deposits in other banks1.66% 2.18% 2.41% 2.56% 2.07% -0.52 -0.41
Interest-earning assets4.59% 4.74% 4.72% 4.89% 4.76% -0.15 -0.17
                   
Interest-bearing deposits1.75% 1.91% 1.92% 1.84% 1.67% -0.16 0.08
Borrowings1.71% 1.96% 0.00% 2.71% 2.56% -0.25 -0.85
Subordinated debentures5.88% 5.92% 5.96% 6.01% 5.94% -0.04 -0.06
Interest-bearing liabilities1.89% 2.04% 2.06% 1.98% 1.83% -0.15 0.06
                   
Net interest margin (taxable equivalent basis)3.32% 3.36% 3.30% 3.52% 3.51% -0.04 -0.19
                   
Cost of deposits1.25% 1.37% 1.41% 1.35% 1.20% -0.12 0.05
                   
 
(1)  Includes loans held for sale.
(2)  Amounts calculated on a fully taxable equivalent basis using the federal tax rate in effect for the periods presented.
 

For the fourth quarter of 2019, the loan and lease loss provision was $10.8 million compared with $1.6 million for the preceding quarter, and $3.0 million for the fourth quarter of 2018. The 2019 fourth quarter provision included a $6.9 million specific provision for a previously identified troubled loan relationship. The loan and lease loss provision for the full year 2019 was $30.2 million compared with $4.0 million for 2018. 2019 included a $22.6 million specific provision for the previously identified troubled loan relationship.

Fourth quarter noninterest income decreased 2.2% to $6.7 million from $6.9 million for the third quarter, primarily due to a $0.3 million decrease in gain on sale of SBA loans. Gains on sales of SBA loans were $1.5 million for the fourth quarter 2019, down from $1.8 million for the preceding quarter reflecting lower trade premiums of 7.60% compared with 9.15%. The volume of SBA loans sold for the 2019 fourth quarter and third quarter were $24.9 million and $24.3 million, respectively. Servicing income reflected a higher level of amortization arising from elevated pay-offs, and other income included $0.5 million from the accretion of purchase discount related to matured leases.

Noninterest income was $27.6 million for the full year 2019 compared with $24.5 million for 2018 primarily due to higher gain on sale of SBA loans and securities and a $1.2 million gain on sale of bank premises. 

   
  For the Three Months Ended (in thousands)  Percentage Change
 Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Q4-19  Q4-19 
Noninterest Income2019 2019 2019 2019 2018 vs. Q3-19  vs. Q4-18 
Service charges on deposit accounts$2,589 $2,518 $2,486 $2,358 $2,648 2.8% -2.2%
Trade finance and other service charges and fees1,267 1,191 1,204 1,124 1,167 6.4% 8.6%
Servicing income227 614 600 357 630 -63.0% -64.0%
Bank-owned life insurance income281 279 281 280 288 0.7% -2.4%
All other operating income846 491 293 484 584 72.3% 44.9%
Service charges, fees & other5,210 5,093 4,864 4,603 5,317 2.3% -2.0%
                
Gain on sale of SBA loans1,499 1,767 1,060 926 983 -15.2% 52.5%
Net gain (loss) on sales of securities- - 570 725 - 0.0% 0.0%
Gain on sale of bank premises- - 1,235 - - 0.0% 0.0%
Total noninterest income$6,709 $6,860 $7,729 $6,254 $6,300 -2.2% 6.5%
                

During the fourth quarter, noninterest expense increased 4.5% to $34.1 million from $32.6 million in the third quarter principally due to a $1.7 million impairment loss on former bank premises to be sold and a $0.6 million increase in the provision for off balance sheet items arising from an increase in commitments to extend credit and an increase in related estimated loss factors.

Noninterest expense for the year ended December 31, 2019 were $125.9 million, reflecting an increase of $8.3 million from the year ended December 31, 2018 stemming mostly from the $1.7 million impairment loss, higher professional fees principally related to the reporting delay and CECL implementation, and increased investments in technology. The efficiency ratio for full year 2019 was 61.89% compared to 57.20% for the prior year. 

  For the Three Months Ended (in thousands)   Percentage Change 
 Dec 31, Sep 30, Jun 30, Mar 31,  Dec 31,  Q4-19  Q4-19 
 2019 2019 2019 2019  2018  vs. Q3-19  vs. Q4-18 
Noninterest Expense                 
Salaries and employee benefits$  17,752 $  17,530 $  16,881 $  15,738  $  15,845  1.3% 12.0%
Occupancy and equipment4,547 4,528 3,468 4,521  4,105  0.4% 10.8%
Data processing2,122 2,410 2,140 2,083  1,894  -12.0% 12.0%
Professional fees2,601 2,826 1,983 1,649  1,969  -8.0% 32.1%
Supplies and communication717 726 649 844  797  -1.2%% -10.0%
Advertising and promotion1,165 927 945 760  1,316  25.7% -11.5%
All other operating expenses2,556 3,291 3,687 3,728  3,669  -22.3% -30.3%
subtotal31,460 32,238 29,753 29,323  29,595  -2.4% 6.3%
                  
Provision (income) for off-balance sheet items855 209 233 (339) 82  309.1% 942.7%
Other real estate owned expense (income)40 160 158 81  (378) -75.0% 110.6%
Impairment loss on bank premises1,734 - - -  -  0.0% 0.0%
Total noninterest expense$  34,089 $  32,607 $  30,144 $  29,065  $  29,299  4.5% 16.3%
                  

For the full years ended December 31, 2019 and 2018, the provision for income taxes was $14.6 million and $26.1 million, respectively, representing effective tax rates of 30.8% and 31.1%, respectively.

Financial Position
Total assets were $5.54 billion at December 31, 2019, a 0.2% increase from $5.53 billion at September 30, 2019.

Loans and leases receivable, before the allowance for loan and lease losses, were $4.61 billion at December 31, 2019, up 0.9% from $4.57 billion at the end of the prior quarter. Loans held for sale, representing the guaranteed portion of SBA loans, were $6.0 million at December 31, 2019 compared with $6.6 million at the end of the third quarter.

Loans and leases receivable, before the allowance for loan and lease losses at year-end 2019, were up 0.1% from $4.60 billion at December 31, 2018.

   
  As of (in thousands)  Percentage Change 
 Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Q4-19  Q4-19 
 2019 2019 2019 2019 2018 vs. Q3-19  vs. Q4-18 
Loan and Lease Portfolio               
Commercial real estate loans$  3,226,478 $  3,209,752 $  3,213,135 $  3,230,526 $  3,257,792 0.5% -1.0%
Residential real estate loans402,028 436,576 458,327 483,830 500,563 -7.9% -19.7%
Commercial and industrial loans484,093 441,209 409,502 422,502 429,903 9.7% 12.6%
Lease receivables483,879 467,777 460,519 425,530 398,858 3.4% 21.3%
Consumer loans13,670 14,523 14,319 13,232 13,424 -5.9% 1.8%
Loans and leases receivable4,610,148 4,569,837 4,555,802 4,575,620 4,600,540 0.9% 0.2%
Loans held for sale6,020 6,598 6,029 7,140 9,390 -8.8% -35.9%
Total loans and leases$  4,616,168 $  4,576,435 $  4,561,831 $  4,582,760 $  4,609,930 0.9% 0.1%
                

For the fourth quarter of 2019, commercial real estate loans as a percentage of loans and leases receivable decreased to 70.0% compared with 70.8% for the same period last year. Commercial and industrial loans and leases receivable each reached 10.5% of the portfolio; a year ago, they were 9.3% and 8.7% respectively.

New loan and lease production for the 2019 fourth quarter was $381.4 million at an average rate of 5.08%, while the average rate of loans paid off during the same period was 5.01%.

 For the Three Months Ended (in thousands)
 Dec 31,  Sep 30,  Jun 30,  Mar 31,  Dec 31, 
 2019  2019  2019  2019  2018 
New Loan & Lease Production              
Commercial real estate loans$  185,070  $  78,039  $  105,527  $  46,531  $  87,523 
Commercial and industrial loans95,349  51,093  48,451  33,643  68,113 
SBA loans33,649  34,114  19,970  29,976  30,758 
Lease receivable65,525  52,333  77,983  69,577  59,023 
Consumer loans1,768  1,882  450  122  831 
subtotal381,361  217,461  252,381  179,849  246,248 
               
               
Payoffs(205,012) (103,638) (124,200) (133,246) (94,288)
Amortization(77,580) (70,407) (77,417) (74,538) (90,603)
Loan sales(26,087) (24,286) (16,650) (15,459) (18,210)
Net line utilization(31,333) (4,012) (52,404) 19,581  (21,715)
Charge-offs & OREO(1,038) (1,084) (1,527) (1,107) (3,775)
               
Loans and leases-beginning balance$  4,569,837  $  4,555,803  $  4,575,620  $  4,600,540  $  4,582,883 
Loans and leases-ending balance$  4,610,148  $  4,569,837  $  4,555,803  $  4,575,620  $  4,600,540 
               

Deposits increased by 0.2% to $4.70 billion at the end of the fourth quarter from $4.69 billion at the end of the preceding quarter. The average loan-to-deposit ratio at December 31, 2019 was 96.1% compared with 97.6% in the third quarter.

Deposits decreased by 1.0% from $4.75 billion at the end of the fourth quarter last year, driven primarily by a decrease of 13.6% in time deposits, partially offset by an increase of 8.3% in noninterest-bearing demand deposits. Time deposits accounted for 33.1% of the deposit portfolio.

   
  As of (in thousands)  Percentage Change 
 Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Q4-19  Q4-19 
 2019 2019 2019 2019 2018 vs. Q3-19  vs. Q4-18 
Deposit Portfolio               
Demand: noninterest-bearing$  1,391,624 $  1,388,121 $  1,312,577 $  1,316,114 $  1,284,530 0.3% 8.3%
Demand: interest-bearing84,323 84,155 80,248 85,946 87,582 0.2% -3.7%
Money market and savings1,667,096 1,590,037 1,528,000 1,543,299 1,573,622 4.8% 5.9%
Time deposits1,555,919 1,627,828 1,841,243 1,874,816 1,801,501 -4.4% -13.6%
Total deposits$  4,698,962 $  4,690,141 $  4,762,068 $  4,820,175 $  4,747,235 0.2% -1.0%
                

At December 31, 2019, stockholders’ equity was $563.3 million, compared with $574.5 million at September 30, 2019. Tangible common stockholders’ equity was $551.4 million, or 9.98% of tangible assets, compared with $562.6 million, or 10.20% of tangible assets at the end of the third quarter. Tangible book value per share decreased to $17.90 from $18.05 in the prior quarter. During the 2019 fourth quarter, Hanmi repurchased 375,000 shares at a weighted average price of $19.63.

Hanmi continues to be well capitalized for regulatory purposes, with a preliminary Tier 1 risk-based capital ratio of 11.77% and a Total risk-based capital ratio of 14.99% at December 31, 2019, versus 11.91% and 15.07%, respectively, for the third quarter.

  As of  Amount Change
 Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Q4-19 Q4-19
 2019 2019 2019 2019 2018 vs. Q3-19 vs. Q4-18
Regulatory Capital ratios (1)             
Hanmi Financial             
Total risk-based capital14.99% 15.07% 14.99% 14.17% 14.54% -0.08 0.45
Tier 1 risk-based capital11.77% 11.91% 11.83% 11.94% 11.74% -0.14 0.03
Common equity tier 1 capital11.35% 11.49% 11.41% 11.52% 11.32% -0.14 0.03
Tier 1 leverage capital ratio10.13% 10.43% 10.20% 10.39% 10.18% -0.30 -0.05
Hanmi Bank             
Total risk-based capital14.56% 14.65% 14.62% 14.37% 14.19% -0.09 0.37
Tier 1 risk-based capital13.43% 13.55% 13.54% 13.64% 13.47% -0.12 -0.04
Common equity tier 1 capital13.43% 13.55% 13.54% 13.64% 13.47% -0.12 -0.04
Tier 1 leverage capital ratio11.69% 11.86% 11.67% 11.88% 11.67% -0.17 0.02
              
(1)  Preliminary ratios for December 31, 2019             
              


Asset Quality

Loans and leases 30 to 89 days past due and still accruing were 0.22% of loans and leases at the end of the fourth quarter of 2019, compared with 0.18% at the end of the third quarter.

Classified loans were $94.0 million at December 31, 2019 compared with $80.7 million at the end of the third quarter, while special mention loans were $26.6 million at the end of the fourth quarter compared with $27.4 million at September 30, 2019. The increase in classified loans reflects the addition of a $10.7 million branded hotel construction loan due to project delays; project completion is estimated to be late summer or early fall of 2020.

Nonperforming loans and leases were $63.8 million at the end of the fourth quarter of 2019, or 1.38% of loans and leases compared with $64.7 million for the third quarter, or 1.42% of the portfolio.

Nonperforming assets were $63.8 million at the end of the fourth quarter of 2019, or 1.15% of assets, compared with $65.1 million, or 1.18% of assets, at the end of the prior quarter.

The troubled loan relationship identified in the 2019 second quarter, included in both the classified and nonaccrual categories above, was $39.7 million at December 31, 2019, compared with $40.0 million at September 30, 2019, and $40.7 million at June 30, 2019. The decline reflects payments applied to the loans outstanding; there have been no charge-offs. The specific allowance for this troubled loan relationship increased to $22.6 million at year-end from $15.7 million at September 30, 2019.

Gross charge-offs for the fourth quarter of 2019 were $1.0 million compared with $0.9 million for the preceding quarter. Recoveries of previously charged-off loans for the fourth quarter of 2019 were $1.0 million compared with $0.6 million for the preceding quarter. As a result, there were net charge offs of $55,000 for the fourth quarter of 2019, compared with net charge offs of $276,000 for the preceding quarter. For the fourth quarter of 2019, net charge offs represented 0.00% of average loans and leases compared to net charge offs of 0.02% for the preceding quarter.

The allowance for loan and lease losses was $61.4 million as of December 31, 2019, generating an allowance for loan and lease losses to loans and leases of 1.33% compared with 1.11% in the prior quarter.

  As of or for the Three Months Ended (in thousands) 
 Amount Change
 
 Dec 31,  Sep 30,  Jun 30,  Mar 31,  Dec 31,  Q4-19  Q4-19 
 2019  2019  2019  2019  2018  vs. Q3-19  vs. Q4-18 
Asset Quality Data and Ratios                    
                     
Delinquent loans and leases:                    
Loans and leases, 30 to 89 days past due and still accruing$  10,251  $  8,085  $  11,210  $  9,242  $  10,674  $  2,166  $  (423)
Delinquent loans and leases to loans and leases0.22% 0.18% 0.25% 0.20% 0.23% 0.04  -0.01 
                     
Criticized loans and leases:                    
Special mention$  26,632  $  27,400  $  23,820  $  9,257  $  29,183  $  (768) $(2,551)
Classified94,025  80,734  75,686  53,087  29,542  13,291  64,483 
Total criticized loans & leases$  120,657  $  108,134  $  99,506  $  62,344  $  58,725  $12,523  $61,932 
                     
Nonperforming assets:                    
Nonaccrual loans and leases$  63,761  $  64,194  $  63,031  $  40,041  $  15,525  $  (433) $48,236 
Loans and leases 90 days or more past due and still accruing-  544  -  -  4  (544) (4)
Nonperforming loans and leases63,761  64,738  63,031  40,041  15,529  (977) 48,232 
Other real estate owned, net63  330  507  622  663  (267) (600)
Nonperforming assets$  63,824  $  65,068  $  63,538  $  40,663  $  16,192  $(1,244) $47,632 
                     
Nonperforming loans and leases to loans and leases1.38% 1.43% 1.38% 0.88% 0.34%      
Nonperforming assets to assets1.15% 1.18% 1.15% 0.73% 0.29%      
                     
Allowance for loan and lease losses:                    
Balance at beginning of period$  50,712  $  49,386  $  32,896  $  31,974  $  31,676       
Loan and lease loss provision10,752  1,602  16,699  1,117  3,041       
Less: Net loan and lease charge-offs55  276  209  195  2,743       
Balance at end of period$  61,409  $  50,712  $  49,386  $  32,896  $  31,974       
                     
Net loan and lease charge-offs to average loans and leases (1)0.00% 0.02% 0.02% 0.02% 0.24%      
Allowance for loan and lease losses to loans and leases1.33% 1.11% 1.08% 0.72% 0.70%      
                     
Allowance for off-balance sheet items:                    
Balance at beginning of period$  1,542  $  1,333  $  1,100  $  1,439  $  1,357       
Provision (income) for off-balance sheet items855  209  233  (339) 82       
Balance at end of period$  2,397  $  1,542  $  1,333  $  1,100  $  1,439       
                     
Commitments to extend credit$  371,287  $  346,182  $  311,128  $  270,051  $  325,100       
                     
(1)  Annualized                    


Corporate Developments

On October 24, 2019 Hanmi’s Board of Directors declared a cash dividend on its common stock for the 2019 fourth quarter of $0.24 per share. The dividend was paid on November 27, 2019, to stockholders of record as of the close of business on November 4, 2019.

On January 23, 2020 Hanmi’s Board of Directors declared a cash dividend on its common stock for the 2020 first quarter of $0.24 per share. The dividend will be paid on February 27, 2020, to stockholders of record as of the close of business on February 3, 2020.

In January 2019, Hanmi announced that its Board of Directors authorized a stock repurchase program of up to 5%, or 1.5 million shares, of its outstanding common stock. During the fourth quarter, Hanmi made initial purchases under this authorization for 375,000 shares at an average price of $19.63 for an aggregate investment of approximately $7.4 million. As of December 31, 2019, approximately 1.1 million shares remained available for future purchases under the current stock repurchase program.

Conference Call                            
Management will host a conference call today, January 28, 2020 at 2:00 p.m. PT (5:00 p.m. ET) to discuss these results. This call will also be broadcast live via the internet. Investment professionals and all current and prospective stockholders are invited to access the live call by dialing 1-877-407-9039 before 2:00 p.m. PT, using access code HANMI. To listen to the call online, either live or archived, visit the Investor Relations page of Hanmi’s website at www.hanmi.com.

About Hanmi Financial Corporation
Headquartered in Los Angeles, California, Hanmi Financial Corporation owns Hanmi Bank, which serves multi-ethnic communities through its network of 35 full-service branches and 9 loan production offices in California, Texas, Illinois, Virginia, New Jersey, New York, Colorado, Washington and Georgia. Hanmi Bank specializes in real estate, commercial, SBA and trade finance lending to small and middle market businesses. Additional information is available at www.hanmi.com.

Forward-Looking Statements
This press release contains forward-looking statements, which are included in accordance with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” or “continue,” or the negative of such terms and other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. All statements other than statements of historical fact are “forward–looking statements” for purposes of federal and state securities laws, including, but not limited to, statements about anticipated future operating and financial performance, financial position and liquidity, business strategies, regulatory and competitive outlook, investment and expenditure plans, capital and financing needs and availability, plans and objectives of management for future operations, developments regarding our capital plans, strategic alternatives for a possible business combination, merger or sale transaction, and other similar forecasts and statements of expectation and statements of assumption underlying any of the foregoing. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ from those expressed or implied by the forward-looking statements. These factors include the following: failure to maintain adequate levels of capital and liquidity to support our operations; the effect of potential future supervisory action against us or Hanmi Bank; our ability to remediate any material weakness in our internal controls over financial reporting; 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; a failure in or breach of our operational or security systems or infrastructure, including cyberattacks; the failure to maintain current technologies; inability to successfully implement future information technology enhancements; difficult business and economic conditions that can adversely affect our industry and business, including competition and lack of soundness of other financial institutions, fraudulent activity and negative publicity; risks associated with Small Business Administration loans; failure to attract or retain key employees; our ability to access cost-effective funding; fluctuations in real estate values; changes in accounting policies and practices; the imposition of tariffs or other domestic or international governmental policies impacting the value of the products of our borrowers; changes in governmental regulation, including, but not limited to, any increase in FDIC insurance premiums; ability of Hanmi Bank to make distributions to Hanmi Financial Corporation, which is restricted by certain factors, including Hanmi Bank’s retained earnings, net income, prior distributions made, and certain other financial tests; ability to identify a suitable strategic partner or to consummate a strategic transaction; adequacy of our allowance for loan and lease losses; credit quality and the effect of credit quality on our provision for loan and lease losses and allowance for loan and lease losses; changes in the financial performance and/or condition of our borrowers and the ability of our borrowers to perform under the terms of their loans and other terms of credit agreements; our ability to control expenses; changes in securities markets; and risks as it relates to cyber security against our information technology and those of our third party providers and vendors. In addition, we set forth certain risks in our reports filed with the U.S. Securities and Exchange Commission, including, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2018, our Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K that we will file hereafter, which could cause actual results to differ from those projected. We undertake no obligation to update such forward-looking statements except as required by law.

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

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

 
Hanmi Financial Corporation and Subsidiaries
Consolidated Balance Sheets (Unaudited)
(In thousands)
 
 December 31,  September 30,  Percentage  December 31,  Percentage 
 2019  2019  Change  2018  Change 
Assets              
Cash and due from banks$  121,678  $  150,678  -19.2% $  155,376  -21.7%
Securities available for sale, at fair value634,477  621,815  2.0% 574,908  10.4%
Loans held for sale, at the lower of cost or fair value6,020  6,598  -8.8% 9,390  -35.9%
Loans and leases receivable, net of allowance for loan and lease losses4,548,739  4,519,125  0.7% 4,568,566  -0.4%
Accrued interest receivable11,742  11,723  0.2% 13,331  -11.9%
Premises and equipment, net26,070  27,271  -4.4% 27,752  -6.1%
Customers' liability on acceptances66  33  100.0% 173  -61.8%
Servicing assets6,956  7,436  -6.5% 8,520  -18.4%
Goodwill and other intangible assets, net11,873  11,950  -0.6% 12,182  -2.5%
Federal Home Loan Bank ("FHLB") stock, at cost16,385  16,385  0.0% 16,385  0.0%
Bank-owned life insurance52,782  52,500  0.5% 51,661  2.2%
Prepaid expenses and other assets101,396  102,468  -1.0% 63,975  58.5%
Total assets$  5,538,184  $  5,527,982  0.2% $  5,502,219  0.7%
               
Liabilities and Stockholders' Equity              
Liabilities:              
Deposits:              
Noninterest-bearing$  1,391,624  $  1,388,121  0.3% $  1,284,530  8.3%
Interest-bearing3,307,338  3,302,020  0.2% 3,462,705  -4.5%
Total deposits4,698,962  4,690,141  0.2% 4,747,235  -1.0%
Accrued interest payable11,215  10,076  11.3% 11,379  -1.4%
Bank's liability on acceptances66  33  100.0% 173  -61.8%
Borrowings90,000  75,000  20.0% 55,000  63.6%
Subordinated debentures118,377  118,232  0.1% 117,808  0.5%
Accrued expenses and other liabilities56,297  59,973  -6.1% 18,056  211.8%
Total liabilities  4,974,917    4,953,455  0.4%   4,949,651  0.5%
               
Stockholders' equity:              
Common stock33  33  0.0% 33  0.0%
Additional paid-in capital575,816  574,957  0.1% 569,712  1.1%
Accumulated other comprehensive income (loss)3,382  3,708  -8.8% (6,079) -155.6%
Retained earnings100,551  104,927  -4.2% 97,539  3.1%
Less treasury stock(116,515) (109,098) 6.8% (108,637) 7.3%
Total stockholders' equity  563,267    574,527  -2.0%   552,568  1.9%
Total liabilities and stockholders' equity$  5,538,184  $  5,527,982  0.2% $  5,502,219  0.7%
               


 
Hanmi Financial Corporation and Subsidiaries
Consolidated Statements of Income (Unaudited)
(In thousands, except share and per share data)
 
  Three Months Ended
 December 31, September 30, Percentage  December 31, Percentage 
 2019 2019 Change  2018 Change 
Interest and dividend income:           
Interest and fees on loans and leases$  56,267 $  57,929 -2.9% $  57,947 -2.9%
Interest on securities3,665 3,769 -2.8% 3,278 11.8%
Dividends on FHLB stock289 286 1.0% 555 -47.9%
Interest on deposits in other banks478 193 147.7% 179 167.0%
Total interest and dividend income60,699 62,177 -2.4% 61,959 -2.0%
Interest expense:           
Interest on deposits14,699 15,995 -8.1% 14,139 4.0%
Interest on borrowings325 367 -11.4% 420 -22.6%
Interest on subordinated debentures1,739 1,757 -1.0% 1,754 -0.9%
Total interest expense16,763 18,119 -7.5% 16,313 2.8%
Net interest income before provision for loan and lease losses43,936 44,058 -0.3% 45,646 -3.7%
Loan and lease loss provision10,752 1,602 571.2% 3,041 253.6%
Net interest income after provision for loan and lease losses33,184 42,456 -21.8% 42,605 -22.1%
Noninterest income:           
Service charges on deposit accounts2,589 2,518 2.8% 2,648 -2.2%
Trade finance and other service charges and fees1,267 1,191 6.4% 1,167 8.6%
Gain on sale of Small Business Administration ("SBA") loans1,499 1,767 -15.2% 983 52.5%
Net gain on sales of securities- - -  - - 
Other operating income1,354 1,384 -2.2% 1,502 -9.9%
Total noninterest income6,709 6,860 -2.2% 6,300 6.5%
Noninterest expense:           
Salaries and employee benefits17,752 17,530 1.3% 15,845 12.0%
Occupancy and equipment4,547 4,528 0.4% 4,105 10.8%
Data processing2,122 2,410 -12.0% 1,894 12.0%
Professional fees2,601 2,826 -8.0% 1,969 32.1%
Supplies and communications717 726 -1.2% 797 -10.0%
Advertising and promotion1,165 927 25.7% 1,316 -11.5%
Other operating expenses5,185 3,660 41.7% 3,373 53.7%
Total noninterest expense34,089 32,607 4.5% 29,299 16.3%
Income before provision for income taxes5,804 16,709 -65.3% 19,607 -70.4%
Provision for income taxes2,720 4,333 -37.2% 8,222 -66.9%
Net income$  3,084 $  12,376 -75.1% $  11,385 -72.9%
            
Basic earnings per share:$  0.10 $  0.40    $  0.37   
Diluted earnings per share:$  0.10 $  0.40    $  0.37   
            
Weighted-average shares outstanding:           
Basic30,692,487 30,830,445    30,681,980   
Diluted30,723,958 30,859,119    30,757,398   
Common shares outstanding30,799,624 31,173,881    30,928,437   
            


 
Hanmi Financial Corporation and Subsidiaries
Consolidated Statements of Income (Unaudited)
(In thousands, except share and per share data)
 
  Twelve Months Ended 
 December 31, December 31,  Percentage 
 2019 2018  Change 
Interest and dividend income:       
Interest and fees on loans$  229,402 $  219,590  4.5%
Interest on securities14,661 12,817  14.4%
Dividends on FHLB stock1,147 1,413  -18.8%
Interest on deposits in other banks1,562 577  170.7%
Total interest and dividend income246,772 234,397  5.3%
Interest expense:       
Interest on deposits63,105 43,080  46.5%
Interest on borrowings763 3,379  -77.4%
Interest on subordinated debentures7,032 6,925  1.5%
Total interest expense70,900 53,384  32.8%
Net interest income before provision for loan and lease losses175,872 181,013  -2.8%
Loan and lease loss provision30,170 3,990  656.1%
Net interest income after provision for loan and lease losses145,702 177,023  -17.7%
Noninterest income:       
Service charges on deposit accounts9,951 10,000  -0.5%
Trade finance and other service charges and fees4,786 4,616  3.7%
Gain on sale of Small Business Administration ("SBA") loans5,251 4,954  6.0%
Net gain (loss) on sales of securities1,295 (341) -479.8%
Other operating income6,269 5,291  18.5%
Total noninterest income27,552 24,520  12.4%
Noninterest expense:       
Salaries and employee benefits67,900 69,435  -2.2%
Occupancy and equipment17,064 15,944  7.0%
Data processing8,755 6,870  27.4%
Professional fees9,060 6,178  46.6%
Supplies and communications2,936 3,003  -2.2%
Advertising and promotion3,797 4,041  -6.0%v
Other operating expenses16,394 12,102  35.5%
Total noninterest expense125,906 117,573  7.1%
Income before provision for income taxes47,348 83,970  -43.6%
Income tax expense14,560 26,102  -44.2%
Net income$  32,788 $  57,868  -43.3%
        
Basic earnings per share:$  1.06 $  1.80    
Diluted earnings per share:$  1.06 $  1.79    
        
Weighted-average shares outstanding:       
Basic30,725,376 31,924,863    
Diluted30,760,422 32,051,333    
Common shares outstanding30,799,624 30,928,437    
        


 
Hanmi Financial Corporation and Subsidiaries
Average Balance, Average Yield Earned, and Average Rate Paid (Unaudited)
(In thousands, except ratios)
 Three Months Ended
 December 31, 2019 September 30, 2019 December 31, 2018
    Interest Average     InterestAverage     InterestAverage 
 Average  Income / Yield /  Average  Income /Yield /  Average  Income /Yield / 
 Balance  Expense Rate  Balance  ExpenseRate  Balance  ExpenseRate 
Assets                     
Interest-earning assets:                     
Loans and leases receivable (1)$  4,487,998  $  56,267 4.97% $4,519,770  $  57,9295.08% $4,544,722  $  57,9465.06%
Securities (2)624,861  3,665 2.35% 630,450  3,7692.39% 581,550  3,4422.37%
FHLB stock16,385  289 7.00% 16,385  2866.93% 16,385  55513.44%
Interest-bearing deposits in other banks114,462  478 1.66% 35,140  1932.18% 34,301  1792.07%
Total interest-earning assets5,243,706  60,699 4.59% 5,201,745  62,1774.74% 5,176,958  62,1224.76%
                      
Noninterest-earning assets:                     
Cash and due from banks104,591       99,492      120,684     
Allowance for loan and lease losses(50,978)      (49,762)     (31,005)    
Other assets210,004       210,142      173,896     
                      
Total assets$  5,507,323       $  5,461,617      $  5,440,533     
                      
Liabilities and Stockholders' Equity                     
Interest-bearing liabilities:                     
Deposits:                     
Demand: interest-bearing$  82,604  $  24 0.11% $  82,665  $  310.15% $  89,971  $  340.15%
Money market and savings1,640,162  5,616 1.36% 1,555,639  6,1801.58% 1,510,428  5,3001.39%
Time deposits1,605,276  9,059 2.24% 1,692,419  9,7842.29% 1,751,429  8,8051.99%
Total interest-bearing deposits3,328,042  14,699 1.75% 3,330,723  15,9951.91% 3,351,828  14,1391.67%
Borrowings75,500  325 1.71% 74,239  3671.96% 65,217  4202.56%
Subordinated debentures118,297  1,739 5.88% 118,145  1,7575.92% 117,728  1,7545.94%
Total interest-bearing liabilities3,521,839  16,763 1.89% 3,523,107  18,1192.04% 3,534,773  16,3131.83%
                      
Noninterest-bearing liabilities and equity:                     
Demand deposits: noninterest-bearing1,342,524       1,300,704      1,305,860     
Other liabilities74,862       71,631      29,462     
Stockholders' equity568,098       566,175      570,438     
                      
Total liabilities and stockholders' equity$  5,507,323       $  5,461,617      $  5,440,533     
                      
Net interest income (tax equivalent basis)   $  43,936       $  44,058      $  45,809  
                      
Cost of deposits     1.25%     1.37%     1.20%
Net interest spread (taxable equivalent basis)     2.70%     2.70%     2.93%
Net interest margin (taxable equivalent basis)     3.32%     3.36%     3.51%
                      
(1)  Includes average loans held for sale   
(2)  Amounts calculated on a fully taxable equivalent basis using the federal tax rate in effect for the periods presented.
 


 
Hanmi Financial Corporation and Subsidiaries
Average Balance, Average Yield Earned, and Average Rate Paid (Unaudited)
(In thousands, except ratios)
 
 Twelve Months Ended
 December 31, 2019
  December 31, 2018  
    InterestAverage     InterestAverage 
 Average  Income /Yield /  Average  Income /Yield / 
 Balance  ExpenseRate  Balance  ExpenseRate 
Assets             
Interest-earning assets:             
Loans and leases receivable (1)$  4,507,975  $  229,4025.09% $4,456,202  $  219,5904.93%
Securities (2)618,610  14,8062.39% 587,916  13,5282.30%
FHLB stock16,385  1,1477.00% 16,385  1,4138.62%
Interest-bearing deposits in other banks73,906  1,5622.11% 31,478  5771.83%
Total interest-earning assets5,216,876  246,9174.73% 5,091,981  235,1084.62%
              
Noninterest-earning assets:             
Cash and due from banks103,475      122,925     
Allowance for loan and lease losses(41,933)     (31,880)    
Other assets197,517      174,939     
              
Total assets$  5,475,935      $  5,357,965     
              
Liabilities and Stockholders' Equity             
Interest-bearing liabilities:             
Deposits:             
Demand: interest-bearing$  83,613  $  1160.14% $  91,495  $  1060.12%
Money market and savings1,566,403  23,5561.50% 1,444,674  16,1821.12%
Time deposits1,752,642  39,4332.25% 1,609,403  26,7921.66%
Total interest-bearing deposits3,402,658  63,1051.85% 3,145,572  43,0801.37%
Borrowings40,374  7631.89% 174,452  3,3791.94%
Subordinated debentures118,079  7,0325.96% 117,524  6,9255.88%
Total interest-bearing liabilities3,561,111  70,9001.99% 3,437,548  53,3841.55%
              
Noninterest-bearing liabilities and equity:             
Demand deposits: noninterest-bearing1,288,301      1,315,473     
Other liabilities61,209      30,180     
Stockholders' equity565,314      574,764     
              
Total liabilities and stockholders' equity$  5,475,935      $  5,357,965     
              
Net interest income (tax equivalent basis)   $  176,017      $  181,724  
              
Cost of deposits    1.35%     0.97%
Net interest spread (taxable equivalent basis)   2.74%     3.07%
Net interest margin (taxable equivalent basis)   3.37%     3.57%
              
(1)  Includes average loans held for sale
(2)  Amounts calculated on a fully taxable equivalent basis using the federal tax rate in effect for the periods presented.
 

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

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

 
Tangible Common Equity to Tangible Assets Ratio (Unaudited)
(In thousands, except share, per share data and ratios)
 
 December 31,  September 30,  June 30,  March 31,  December 31, 
Hanmi Financial Corporation2019  2019  2019  2019  2018 
Assets$  5,538,184  $  5,527,982  $  5,511,752  $  5,571,068  $  5,502,219 
Less goodwill and other intangible assets(11,873) (11,950) (12,028) (12,105) (12,182)
Tangible assets$  5,526,311  $  5,516,032  $  5,499,724  $  5,558,963  $  5,490,037 
               
Stockholders' equity  (1)$  563,267  $  574,527  $  564,458  $  564,292  $  552,568 
Less goodwill and other intangible assets(11,873) (11,950) (12,028) (12,105) (12,182)
Tangible stockholders' equity  (1)$  551,394  $  562,577  $  552,430  $  552,187  $  540,386 
               
Stockholders' equity to assets10.17% 10.39% 10.24% 10.13% 10.04%
Tangible common equity to tangible assets (1)9.98% 10.20% 10.04% 9.93% 9.84%
               
Common shares outstanding30,799,624  31,173,881  30,975,163  30,860,533  30,928,437 
Tangible common equity per common share$  17.90  $  18.05  $  17.83  $  17.89  $  17.47 
               
(1)  There were no preferred shares outstanding at the periods indicated.