HAFC Hanmi Financial Corporation

Hanmi Financial Corporation (NASDAQ:HAFC), the holding company for Hanmi Bank, reported that for the three months ended June 30, 2007, it earned net income of $15.3 million, an increase of 17.4 percent compared to net income of $13.1 million in the first quarter of 2007. Earnings per share were $0.31 (diluted), an increase of 19.2 percent compared to $0.26 per share (diluted) for the first quarter of 2007. �The sequential increase of $2.2 million in net income � to $15.3 million from $13.1 million in the prior quarter � points to continuing solid performance in our core operations, including a loan portfolio that grew by $191.0 million, or 6.7 percent, since the beginning of the year,� said Sung Won Sohn, Ph.D., President and Chief Executive Officer. �It points as well to the quality of the loan portfolio and the fact that the second-quarter provision for credit losses was only $3.0 million compared to $6.1 million in the first quarter.� �We grew our net interest income before provision for credit losses by $525,000, or 1.4 percent, compared to the first quarter, despite a modest decline in the net interest margin to 4.51 percent from 4.61 percent,� added Dr. Sohn. �This illustrates the state of the markets we serve, particularly the Southern California commercial real estate market: they present numerous business opportunities, but at the same time remain fiercely competitive.� �We anticipate that this competition � which is coming from mainstream banks as well as other Korean-American banks � will in the near term continue to put pressure on margins. With that understood,� concluded Dr. Sohn, �the message I would leave with investors is that while we will continue to focus on growth in assets and net interest income, our foremost concern will continue to be credit quality.� SECOND-QUARTER HIGHLIGHTS � Net interest income before provision for credit losses was $38.6 million for the second quarter of 2007, compared to $38.1 million for the first quarter of 2007 and $38.4 million for the second quarter of 2006, reflecting a 2.4 percent and 7.8 percent, respectively, sequential increase in average interest-earning assets. Net interest margin for the second quarter of 2007 was 4.51 percent, compared to 4.61 percent for the first quarter of 2007 and 4.84 percent for the second quarter of 2006. � The loan portfolio increased by $191.0 million, or 6.7 percent, to $3.06 billion at June 30, 2007, compared to $2.86 billion at December 31, 2006, reflecting continued growth in commercial and industrial loans. � Non-performing loans increased by $3.1 million to $22.6 million, or 0.74 percent of the portfolio, at June 30, 2007, compared to $19.5 million, or 0.67 percent of the portfolio, at March 31, 2007. Loans over 30 days delinquent decreased from $37.3 million at March 31, 2007 to $32.0 million at June 30, 2007. � The provision for credit losses was $3.0 million for the second quarter of 2007, compared to $6.1 million for the first quarter of 2007 and $900,000 for the second quarter of 2006. � The allowance for loan losses was 1.05 percent, 1.08 percent and 0.98 percent of the gross loan portfolio at June 30, 2007, March 31, 2007 and June 30, 2006, respectively. � During the second quarter, the Company repurchased 923,800 of its shares at a cost of $15.9 million, or $17.19 per share. NET INTEREST INCOME BEFORE PROVISION FOR CREDIT LOSSES Net interest income before provision for credit losses was $38.6 million for the second quarter of 2007, an increase of $525,000, or 1.4 percent, compared to $38.1 million for the first quarter of 2007, and an increase of $193,000, or 0.5 percent, compared to $38.4 million for the second quarter of 2006. The yield on the loan portfolio was 8.68 percent for the second quarter of 2007, a decrease of 12 basis points compared to 8.80 percent for the first quarter of 2007, and an increase of 3 basis points compared to 8.65 percent for the second quarter of 2006. The yield on investment securities was 4.40 percent for the second quarter of 2007, a decrease of 4 basis points compared to 4.44 percent for the first quarter of 2007, and the same as the second quarter of 2006. The yield on average interest-earning assets was 8.17 percent for the second quarter of 2007, a decrease of 6 basis points compared to 8.23 percent for the first quarter of 2007, and an increase of 11 basis points compared to 8.06 percent for the second quarter of 2006. The cost of interest-bearing liabilities was 4.92 percent for the second quarter of 2007, an increase of 5 basis points compared to 4.87 percent for the first quarter of 2007, and an increase of 55 basis points compared to 4.37 percent for the second quarter of 2006, as the competitive deposit rate environment continued to stabilize. PROVISION FOR CREDIT LOSSES The provision for credit losses was $3.0 million for the second quarter of 2007, compared to $6.1 million for the first quarter of 2007 and $900,000 for the same quarter last year. In the second quarter of 2007, net charge-offs were $2.5 million, compared to $2.4 million for the first quarter of 2007 and $353,000 for the same quarter last year. The sequential decrease in the provision for credit losses is attributable primarily to decreased migration of loans into the Company�s more adverse risk rating categories and the resolution of certain non-performing loans in the second quarter. The sequential decrease in the provision for credit losses also reflects a reduced rate of increase in non-performing assets, which increased $4.2 million in the second quarter to a balance of $23.7 million at June 30, 2007, compared to an increase of $5.3 million to a balance of $19.5 million at March 31, 2007. Delinquent loans decreased to $32.0 million, or 1.05 percent of gross loans, at June 30, 2007 from $37.3 million, or 1.28 percent of gross loans, at March 31, 2007. While the level of non-performing assets and delinquent loans are indicators of the credit quality of the portfolio, the provision for credit losses is determined primarily on the basis of loan classifications and the Company�s historical loss experience with similarly situated credits. NON-INTEREST INCOME Non-interest income increased by $705,000, or 7.1 percent, to $10.7 million for the second quarter of 2007, compared to $10.0 million for the first quarter of 2007, and increased by $2.0 million, or 23.4 percent, compared to $8.7 million for the second quarter of 2006. The increases in non-interest income are primarily attributable to increases in the amount of gain on sales of loans and increased insurance commissions as a result of the acquisition of two insurance agencies in the first quarter of 2007. NON-INTEREST EXPENSES Non-interest expenses increased by $521,000, or 2.5 percent, to $21.5 million for the second quarter of 2007, compared to $21.0 million for the first quarter of 2007, and increased by $1.7 million, or 8.6 percent, compared to $19.8 million for the second quarter of 2006. Salaries and employee benefits decreased $979,000, or 8.3 percent, sequentially from $11.8 million for the quarter ended March 31, 2007 to $10.8 million for the quarter ended June 30, 2007 because of decreased accruals for incentive compensation. In addition, a larger percentage of payroll costs were capitalized as direct loan origination costs, as a result of higher loan volume, and the employer�s portion of payroll taxes decreased. Other operating expenses increased $648,000, or 23.2 percent, sequentially from $2.8 million for the quarter ended March 31, 2007 to $3.4 million for the quarter ended June 30, 2007 as the Company incurred increased deposit operations losses and increased the amortization and write-downs of loan servicing assets. The efficiency ratio (non-interest expenses divided by the sum of net interest income before provision for credit losses and non-interest income) for the second quarter of 2007 was 43.61 percent, compared to 43.64 percent for the first quarter of 2007 and 42.06 percent for the second quarter of 2006, reflecting the acquisitions of two insurance agencies in the first quarter of 2007. PROVISION FOR INCOME TAXES The provision for income taxes reflects a 38.1 percent effective tax rate for the second quarter of 2007, compared to a 37.7 percent effective tax rate for the first quarter of 2007 and a 39.5 percent effective tax rate for the second quarter of 2006. The periodic effective tax rates reflect a stable level of Enterprise Zone and low-income housing tax credits in periods in which there were fluctuations in taxable income. FINANCIAL POSITION Total assets were $3.87 billion at June 30, 2007, an increase of $145.7 million, or 3.9 percent, compared to $3.73 billion at December 31, 2006, and an increase of $247.2 million, or 6.8 percent, from the June 30, 2006 balance of $3.62 billion. At June 30, 2007, net loans totaled $3.02 billion, an increase of $186.3 million, or 6.6 percent, from $2.84 billion at December 31, 2006. Real estate loans increased by $21.1 million, or 2.0 percent, to $1.06 billion at June 30, 2007, compared to $1.04 billion at December 31, 2006, and commercial and industrial loans grew by $171.7 million, or 9.9 percent, to $1.90 billion at June 30, 2007, compared to $1.73 billion at December 31, 2006. The growth in total assets was funded primarily by an increase in FHLB advances and other borrowings of $109.7 million, up 64.9 percent to $278.8 million at June 30, 2007, compared to $169.0 million at December 31, 2006. In addition, deposits increased $28.4 million, up 1.0 percent to $2.97 billion at June 30, 2007 from $2.94 billion at December 31, 2006. The increase in deposits included increases in time deposits of $100,000 or more of $24.9 million, up 1.8 percent to $1.41 billion, in other time deposits of $13.2 million, up 4.5 percent to $308.7 million, and in money market checking accounts of $706,000, up 0.2 percent to $439.0 million, partially offset by decreases in noninterest-bearing demand deposits of $8.1 million, down 1.1 percent to $720.2 million, and in savings accounts of $2.2 million, down 2.3 percent to $97.0 million. ASSET QUALITY Total non-performing assets, including loans 90 days or more past due and still accruing, non-accrual loans and other real estate owned (�OREO�) assets, increased by $9.5 million to $23.7 million at June 30, 2007 from $14.2 million at December 31, 2006, and increased by $11.6 million from $12.1 million at June 30, 2006. Non-performing loans as a percentage of gross loans increased to 0.74 percent at June 30, 2007 from 0.50 percent at December 31, 2006 and 0.43 percent at June 30, 2006. At June 30, 2007, delinquent loans were $32.0 million, or 1.05 percent of gross loans, compared to $19.6 million, or 0.68 percent of gross loans, at December 31, 2006, and $23.1 million, or 0.83 percent of gross loans, at June 30, 2006. At June 30, 2007, the Company maintained an allowance for loan losses of $32.2 million and a liability for off-balance sheet exposure, primarily unfunded loan commitments, of $1.7 million. The allowance for loan losses represented 1.05 percent of gross loans at June 30, 2007, compared to 0.96 percent and 0.98 percent at December 31, 2006 and June 30, 2006, respectively. As of June 30, 2007, the allowance for loan losses was 142.3 percent of non-performing loans, compared to 193.9 percent at December 31, 2006 and 224.5 percent at June 30, 2006. 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 23 full-service offices in Los Angeles, Orange, San Francisco, Santa Clara and San Diego counties, and nine loan production offices in California, Colorado, Georgia, Illinois, Texas, Virginia and Washington. Hanmi Bank specializes in commercial, SBA, trade finance and consumer 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. 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; 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. HANMI FINANCIAL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Dollars in Thousands) � June 30, December 31, % June 30, % 2007 2006 Change 2006 Change ASSETS Cash and Due from Banks $ 98,020 $ 97,501 0.5 % $ 110,271 (11.1)% Federal Funds Sold 23,800 41,000 (42.0)% 1,100 2,063.6 % Cash and Cash Equivalents 121,820 138,501 (12.0)% 111,371 9.4 % Term Federal Funds Sold � 5,000 (100.0)% � � Investment Securities 364,732 391,579 (6.9)% 410,050 (11.1)% Loans: Loans, Net of Deferred Loan Fees 3,055,921 2,864,947 6.7 % 2,787,970 9.6 % Allowance for Loan Losses (32,190) (27,557) 16.8 % (27,250) 18.1 % Net Loans 3,023,731 2,837,390 6.6 % 2,760,720 9.5 % Customers� Liability on Acceptances 12,753 8,403 51.8 % 11,057 15.3 % Premises and Equipment, Net 20,361 20,075 1.4 % 20,312 0.2 % Accrued Interest Receivable 17,313 16,919 2.3 % 14,899 16.2 % Other Real Estate Owned 1,080 � � � � Deferred Income Taxes 13,742 13,064 5.2 % 11,681 17.6 % Servicing Asset 4,417 4,579 (3.5)% 4,302 2.7 % Goodwill 209,941 207,646 1.1 % 207,646 1.1 % Other Intangible Assets 8,027 6,312 27.2 % 7,461 7.6 % Federal Reserve Bank and Federal Home Loan Bank Stock 25,352 24,922 1.7 % 24,603 3.0 % Bank-Owned Life Insurance 24,051 23,592 1.9 % 23,146 3.9 % Other Assets 23,577 27,261 (13.5)% 16,401 43.8 % Total Assets $ 3,870,897 $ 3,725,243 3.9 % $ 3,623,649 6.8 % � LIABILITIES AND SHAREHOLDERS� EQUITY Liabilities: Deposits: Noninterest-Bearing $ 720,214 $ 728,348 (1.1)% $ 778,445 (7.5)% Interest-Bearing 2,252,932 2,216,367 1.6 % 2,116,567 6.4 % Total Deposits 2,973,146 2,944,715 1.0 % 2,895,012 2.7 % Accrued Interest Payable 23,343 22,582 3.4 % 15,319 52.4 % Acceptances Outstanding 12,753 8,403 51.8 % 11,057 15.3 % FHLB Advances and Other Borrowings 278,784 169,037 64.9 % 156,872 77.7 % Junior Subordinated Debentures 82,406 82,406 � 82,406 � Other Liabilities 14,431 10,983 31.4 % 12,253 17.8 % Total Liabili-ties 3,384,863 3,238,126 4.5 % 3,172,919 6.7 % Shareholders� Equity 486,034 487,117 (0.2)% 450,730 7.8 % Total Liabilities and Shareholders� Equity $ 3,870,897 $ 3,725,243 3.9 % $ 3,623,649 6.8 % HANMI FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (Dollars in Thousands, Except Per Share Data) � For the Three Months Ended For the Six Months Ended June 30, March 31, % June 30, % June 30, June 30, % � � 2007 � 2007 Change � 2006 Change � 2007 � 2006 Change INTEREST INCOME: Interest and Fees on Loans $ 65,212 $ 62,561 4.2 % $ 58,870 10.8 % $ 127,773 $ 112,017 14.1 % Intereston Invest-ments 4,472 4,664 (4.1 )% 5,013 (10.8 )% 9,136 10,112 (9.7 )% Interest on Federal Funds Sold 176 726 (75.8 )% 23 665.2 % 902 312 189.1 % Interest on Term Federal Funds Sold � � � 5 (100.0 )% � � � � � 5 � � � � Total Interest Income � 69,860 � 67,956 2.8 % � 63,906 9.3 % � 137,816 � 122,441 12.6 % � INTEREST EXPENSE: Interest on Deposits 26,691 26,081 2.3 % 21,921 21.8 % 52,772 41,512 27.1 % Interest on FHLB Advances and Other Borrowings 2,919 2,171 34.5 % 2,001 45.9 % 5,090 2,615 94.6 % Interest on Junior Subordi-nated Debentures � 1,660 � 1,639 1.3 % � 1,587 4.6 % � 3,299 � 3,062 7.7 % Total Interest Expense � 31,270 � 29,891 4.6 % � 25,509 22.6 % � 61,161 � 47,189 29.6 % � NET INTEREST INCOME BEFORE PROVISION FOR CREDIT LOSSES 38,590 38,065 1.4 % 38,397 0.5 % 76,655 75,252 1.9 % � � � Provision for Credit Losses � 3,023 � 6,132 (50.7 )% � 900 235.9 % � 9,155 � 3,860 137.2 % � NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES � 35,567 � 31,933 11.4 % � 37,497 (5.1 )% � 67,500 � 71,392 (5.5 )% � NON-INTEREST INCOME: Service Charges on Deposit Accounts 4,438 4,488 (1.1 )% 4,183 6.1 % 8,926 8,414 6.1 % Insurance Commissions 1,279 1,125 13.7 % 243 426.3 % 2,404 396 507.1 % Trade Finance Fees 1,177 1,290 (8.8 )% 1,116 5.5 % 2,467 2,187 12.8 % Remittance Fees 520 471 10.4 % 532 (2.3 )% 991 1,020 (2.8 )% Other Service Charges and Fees 574 616 (6.8 )% 614 (6.5 )% 1,190 1,148 3.7 % Bank-Owned Life Insurance Income 229 230 (0.4 )% 215 6.5 % 459 433 6.0 % Increase in Fair Value of Derivatives 222 92 141.3 % 109 103.7 % 314 334 (6.0 )% Other Income 491 275 78.5 % 345 42.3 % 766 626 22.4 % Gain on Sales of Loans 1,762 1,400 25.9 % 1,311 34.4 % 3,162 2,150 47.1 % Gain on Sales of Securities Available for Sale � � � � � � � � � � � � � 5 (100.0 )% Total Non-Interest Income � 10,692 � 9,987 7.1 % � 8,668 23.4 % � 20,679 � 16,713 23.7 % � NON-INTEREST EXPENSES: Salaries and Employee Benefits 10,782 11,761 (8.3 )% 10,691 0.9 % 22,543 19,852 13.6 % Occupancy and Equipment 2,571 2,512 2.3 % 2,670 (3.7 )% 5,083 4,876 4.2 % Data Processing 1,665 1,563 6.5 % 1,218 36.7 % 3,228 2,647 21.9 % Advertising and Promotion 889 661 34.5 % 811 9.6 % 1,550 1,457 6.4 % Suppliesand Communi-cations 704 588 19.7 % 576 22.2 % 1,292 1,212 6.6 % Professional Fees 647 474 36.5 % 492 31.5 % 1,121 1,160 (3.4 )% Amortization of Other Intangible Assets 592 614 (3.6 )% 605 (2.1 )% 1,206 1,230 (2.0 )% Decrease in Fair Value of Embedded Option 196 � � 112 75.0 % 196 214 (8.4 )% Other Operating Expenses � 3,444 � 2,796 23.2 % � 2,622 31.4 % � 6,240 � 4,889 27.6 % Total Non-Interest Expenses � 21,490 � 20,969 2.5 % � 19,797 8.6 % � 42,459 � 37,537 13.1 % � INCOME BEFORE PROVISION FOR INCOME TAXES 24,769 20,951 18.2 % 26,368 (6.1 )% 45,720 50,568 (9.6 )% Provision for Income Taxes � 9,446 � 7,896 19.6 % � 10,428 (9.4 )% � 17,342 � 19,826 (12.5 )% � NET INCOME $ 15,323 $ 13,055 17.4 % $ 15,940 (3.9 )% $ 28,378 $ 30,742 (7.7 )% � EARNINGS PER SHARE: Basic $ 0.32 $ 0.27 18.5 % $ 0.33 (3.0 )% $ 0.58 $ 0.63 (7.9 )% Diluted $ 0.31 $ 0.26 19.2 % $ 0.32 (3.1 )% $ 0.58 $ 0.62 (6.5 )% � WEIGHTED-AVERAGE SHARES OUTSTANDING: Basic 48,397,824 48,962,089 48,822,729 48,678,399 48,768,881 Diluted 48,737,574 49,500,312 49,404,204 49,110,835 49,366,709 � SHARES OUTSTANDING AT PERIOD-END 47,950,929 48,825,537 48,908,580 47,950,929 48,908,580 HANMI FINANCIAL CORPORATION AND SUBSIDIARIES SELECTED FINANCIAL DATA (UNAUDITED) (Dollars in Thousands) For the Three Months Ended For the Six Months Ended June 30, March 31, % June 30, % June 30, June 30, % � 2007 � � 2007 � Change � 2006 � Change � 2007 � � 2006 � Change � AVERAGE BALANCES: Average Gross Loans, Net of Deferred Loan Fees $ 3,014,895 $ 2,882,632 4.6 % $ 2,729,218 10.5 % $ 2,949,129 $ 2,638,822 11.8 % Average Investment Securities 375,598 386,688 (2.9 )% 425,371 (11.7 )% 381,113 431,440 (11.7 )% Average Interest-Earning Assets 3,429,123 3,350,245 2.4 % 3,180,999 7.8 % 3,414,585 3,109,051 9.8 % Average Total Assets 3,818,170 3,740,936 2.1 % 3,570,389 6.9 % 3,780,147 3,497,310 8.1 % Average Deposits 2,967,748 2,945,386 0.8 % 2,832,218 4.8 % 2,956,629 2,821,648 4.8 % Average Borrow-ings 304,744 251,594 21.1 % 248,480 22.6 % 278,316 193,691 43.7 % Average Interest-Bearing Liabilities 2,551,665 2,487,429 2.6 % 2,341,481 9.0 % 2,519,725 2,278,944 10.6 % Average Share-holders� Equity 495,719 495,832 � 449,664 10.2 % 497,444 443,507 12.2 % Average Tangible Equity 277,414 276,918 0.2 % 232,802 19.2 % 277,778 226,645 22.6 % � � PERFORMANCE RATIOS: Return on Average Assets 1.61 % 1.42 % 1.79 % 1.51 % 1.77 % Return on Average Shareholders� Equity 12.40 % 10.68 % 14.22 % 11.50 % 13.98 % Return on Average Tangible Equity 22.15 % 19.12 % 27.46 % 20.60 % 27.35 % Effi-ciency Ratio 43.61 % 43.64 % 42.06 % 43.62 % 40.82 % Net Interest Margin 4.51 % 4.61 % 4.84 % 4.53 % 4.88 % � � ALLOWANCE FOR LOAN LOSSES: Balance at the Beginning of Period $ 31,527 $ 27,557 14.4 % $ 26,703 18.1 % $ 27,557 $ 24,963 10.4 % Provision Charged to Operating Expense 3,181 6,374 (50.1 )% 900 253.4 % 9,555 3,860 147.5 % Charge-Offs, Net of Recoveries � (2,518 ) � (2,404 ) 4.7 % � (353 ) 613.3 % � (4,922 ) � (1,573 ) 212.9 % Balance at the End of Period $ 32,190 � $ 31,527 � 2.1 % $ 27,250 � 18.1 % $ 32,190 � $ 27,250 � 18.1 % � Allowance for Loan Losses to Total Gross Loans 1.05 % 1.08 % 0.98 % 1.05 % 0.98 % Allowance for Loan Losses to Total Non-Performing Loans 142.30 % 161.55 % 224.54 % 142.30 % 224.54 % � � ALLOWANCE FOR OFF-BALANCE SHEET ITEMS: Balance at the Beginning of Period $ 1,888 $ 2,130 (11.4 )% $ 2,130 (11.4 )% $ 2,130 $ 2,130 � Provision Charged to Operating Expense � (158 ) � (242 ) (34.7 )% � � � � � � (400 ) � � � � � Balance at the End of Period $ 1,730 � $ 1,888 � (8.4 )% $ 2,130 � (18.8 )% $ 1,730 � $ 2,130 � (18.8 )% HANMI FINANCIAL CORPORATION AND SUBSIDIARIES SELECTED FINANCIAL DATA (UNAUDITED) (Continued) (Dollars in Thousands) � June 30, December 31, % June 30, % � 2007 � � 2006 � Change � 2006 � Change NON-PERFORMING ASSETS: Non-Accrual Loans $ 22,442 $ 14,213 57.9 % $ 12,001 87.0 % Loans 90 Days or More Past Due and Still Accruing � 179 � � 2 � 8,850.0 % � 135 � 32.6 % Total Non-Performing Loans 22,621 14,215 59.1 % 12,136 86.4 % Other Real Estate Owned � 1,080 � � � � � � � � � � � Total Non-Performing Assets $ 23,701 � $ 14,215 � 66.7 % $ 12,136 � 95.3 % � Total Non-Performing Loans/Total Gross Loans 0.74 % 0.50 % 0.43 % Total Non-Performing Assets/Total Assets 0.61 % 0.38 % 0.33 % Total Non-Performing Assets/Allowance for Loan Losses 73.6 % 51.6 % 44.5 % � DELINQUENT LOANS $ 31,979 � $ 19,616 � 63.0 % $ 23,084 � 38.5 % � Delinquent Loans/Total Gross Loans 1.05 % 0.68 % 0.83 % � LOAN PORTFOLIO: Real Estate Loans $ 1,062,460 $ 1,041,393 2.0 % $ 1,029,462 3.2 % Commercial and Industrial Loans 1,898,097 1,726,434 9.9 % 1,663,449 14.1 % Consumer Loans � 97,496 � � 100,121 � (2.6 )% � 98,974 � (1.5 )% Total Gross Loans 3,058,053 2,867,948 6.6 % 2,791,885 9.5 % Deferred Loan Fees (2,132 ) (3,001 ) (29.0 )% (3,915 ) (45.5 )% Allowance for Loan Losses � (32,190 ) � (27,557 ) 16.8 % � (27,250 ) 18.1 % Loans Receivable, Net $ 3,023,731 � $ 2,837,390 � 6.6 % $ 2,760,720 � 9.5 % � LOAN MIX: Real Estate Loans 34.7 % 36.3 % 36.9 % Commercial and Industrial Loans 62.1 % 60.2 % 59.6 % Consumer Loans � 3.2 % � 3.5 % � 3.5 % Total Gross Loans � 100.0 % � 100.0 % � 100.0 % � DEPOSIT PORTFOLIO: Demand - Noninterest-Bearing $ 720,214 $ 728,348 (1.1 )% $ 778,445 (7.5 )% Savings 97,019 99,254 (2.3 )% 110,492 (12.2 )% Money Market Checking and NOW Accounts 438,973 438,267 0.2 % 440,970 (0.5 )% Time Deposits of $100,000 or More 1,408,237 1,383,358 1.8 % 1,287,257 9.4 % Other Time Deposits � 308,703 � � 295,488 � 4.5 % � 277,848 � 11.1 % Total Deposits $ 2,973,146 � $ 2,944,715 � 1.0 % $ 2,895,012 � 2.7 % � DEPOSIT MIX: Demand - Noninterest-Bearing 24.2 % 24.7 % 26.9 % Savings 3.3 % 3.4 % 3.8 % Money Market Checking and NOW Accounts 14.8 % 14.9 % 15.2 % Time Deposits of $100,000 or More 47.4 % 47.0 % 44.5 % Other Time Deposits � 10.3 % � 10.0 % � 9.6 % Total Deposits � 100.0 % � 100.0 % � 100.0 % HANMI FINANCIAL CORPORATION AND SUBSIDIARIES AVERAGE BALANCES, AVERAGE YIELDS EARNED AND AVERAGE RATES PAID (UNAUDITED) (Dollars in Thousands) For the Three Months Ended For the Three Months Ended For the Six Months Ended June 30, 2007 March 31, 2007 June 30, 2006 June 30, 2007 June 30, 2006 Average Balance Inter-est Income/ Expense Aver-age Yield/ Rate Average Balance Inter-est Income/ Expense Aver-age Yield/ Rate � Average Balance Interest Income/ Expense Average Yield/ Rate Average Balance Interest Income/ Expense Aver-age Yield/ Rate Average Balance Interest Income/ Expense Aver-age Yield/ Rate � INTEREST-EARNING ASSETS � LOANS: Real Estate Loans: Commercial Property $ 769,112 $ 15,534 8.10 % $ 752,673 $ 15,168 8.17 % $ 761,626 $ 15,425 8.12 % $ 760,938 $ 30,702 8.14 % $ 747,442 $ 29,931 8.08 % Construc-tion 215,760 5,137 9.55 % 212,370 4,937 9.43 % 179,588 4,286 9.57 % 214,074 10,075 9.49 % 170,293 8,052 9.54 % Residen-tial Property � 86,596 � � 1,157 5.36 % � 85,022 � � 1,097 5.23 % � 86,091 � � 1,107 5.16 % � 85,813 � � 2,254 5.30 % � 86,352 � � 2,189 5.11 % Total Real Estate Loans 1,071,468 21,828 8.17 % 1,050,065 21,202 8.19 % 1,027,305 20,818 8.13 % 1,060,825 43,031 8.18 % 1,004,087 40,172 8.07 % Commercial and Industrial Loans 1,848,369 41,206 8.94 % 1,736,530 38,769 9.05 % 1,608,638 35,905 8.95 % 1,792,760 79,973 9.00 % 1,543,507 67,737 8.85 % Consumer Loans � 97,175 � � 2,016 8.32 % � 98,634 � � 2,173 8.93 % � 97,169 � � 2,081 8.59 % � 97,900 � � 4,189 8.63 % � 95,079 � � 3,964 8.41 % Total Loans - Gross 3,017,012 65,050 8.65 % 2,885,229 62,144 8.74 % 2,733,112 58,804 8.63 % 2,951,485 127,193 8.69 % 2,642,673 111,873 8.54 % Prepayment Penalty Income � 162 � 417 66 � 580 � 144 Unearned Income on Loans, Net of Costs � (2,117 ) � � � (2,597 ) � � � (3,894 ) � � � (2,356 ) � � � (3,851 ) � � Gross Loans, Net $ 3,014,895 � $ 65,212 8.68 % $ 2,882,632 � $ 62,561 8.80 % $ 2,729,218 � $ 58,870 8.65 % $ 2,949,129 � $ 127,773 8.74 % $ 2,638,822 � $ 112,017 8.56 % � INVESTMENT SECURI-TIES: Municipal Bonds $ 72,284 $ 762 4.22 % $ 72,396 $ 764 4.22 % $ 73,061 $ 773 4.23 % $ 72,340 $ 1,526 4.22 % $ 73,414 $ 1,551 4.23 % U.S. Government Agency Securities 118,696 1,233 4.16 % 118,267 1,256 4.25 % 127,184 1,316 4.14 % 118,483 2,489 4.20 % 126,843 2,619 4.13 % Mortgage-Backed Securities 111,568 1,317 4.72 % 118,899 1,404 4.72 % 136,514 1,612 4.72 % 115,213 2,721 4.72 % 140,511 3,282 4.67 % Collatera-lized Mortgage Obligations 60,199 651 4.33 % 64,208 697 4.34 % 75,728 810 4.28 % 62,193 1,348 4.33 % 77,703 1,657 4.26 % Corporate Bonds 7,907 89 4.50 % 7,869 90 4.57 % 7,903 89 4.50 % 7,888 179 4.54 % 7,968 179 4.49 % Other Securi-ties � 4,944 � � 84 6.80 % � 5,049 � � 84 6.65 % � 4,981 � � 83 6.67 % � 4,996 � � 168 6.73 % � 5,001 � � 168 6.72 % Total Invest-ment Securi-ties $ 375,598 � $ 4,136 4.40 % $ 386,688 � $ 4,295 4.44 % $ 425,371 � $ 4,683 4.40 % $ 381,113 � $ 8,431 4.42 % $ 431,440 � $ 9,456 4.38 % � OTHER INTEREST-EARNING ASSETS: Equity Securities (FHLB and FRB Stock) $ 25,290 $ 336 5.31 % $ 25,008 $ 369 5.90 % $ 24,524 $ 330 5.38 % $ 49,833 $ 705 2.83 % $ 24,567 $ 655 5.33 % Federal Funds Sold 13,340 176 5.28 % 55,528 726 5.23 % 1,859 23 4.95 % 34,317 902 5.26 % 14,158 312 4.41 % Term Federal Funds Sold � � � 389 5 5.14 % � � � 193 5 5.18 % � � � Interest-Earning Deposits � � � � � � � � � � � � � � � 27 � � � 3.64 % � � � � � � � � 64 � � 1 4.01 % Total Other Interest-Earning Assets $ 38,630 � $ 512 5.30 % $ 80,925 � $ 1,100 5.44 % $ 26,410 � $ 353 5.35 % $ 84,343 � $ 1,612 3.82 % $ 38,789 � $ 968 4.99 % � TOTAL INTEREST-EARNING ASSETS $ 3,429,123 � $ 69,860 8.17 % $ 3,350,245 � $ 67,956 8.23 % $ 3,180,999 � $ 63,906 8.06 % $ 3,414,585 � $ 137,816 8.14 % $ 3,109,051 � $ 122,441 7.94 % � INTEREST-BEARING LIABILITIES � INTEREST-BEARING DEPOSITS: Savings $ 99,457 $ 502 2.02 % $ 100,777 $ 461 1.86 % $ 112,341 $ 480 1.71 % $ 100,114 $ 963 1.94 % $ 115,036 $ 962 1.69 % Money Market Checking and NOW Accounts 432,408 3,666 3.40 % 427,871 3,472 3.29 % 484,039 3,638 3.01 % 430,152 7,138 3.35 % 501,735 7,352 2.95 % Time Deposits of $100,000 or More 1,411,099 18,778 5.34 % 1,406,311 18,498 5.33 % 1,223,118 14,869 4.88 % 1,408,718 37,276 5.34 % 1,195,348 27,653 4.67 % Other Time Deposits � 303,957 � � 3,745 4.94 % � 300,876 � � 3,650 4.92 % � 273,503 � � 2,934 4.30 % � 302,425 � � 7,395 4.93 % � 273,134 � � 5,545 4.09 % Total Interest-Bearing Deposits $ 2,246,921 � $ 26,691 4.76 % $ 2,235,835 � $ 26,081 4.73 % $ 2,093,001 � $ 21,921 4.20 % $ 2,241,409 � $ 52,772 4.75 % $ 2,085,253 � $ 41,512 4.01 % � BORROWINGS: FHLB Advances and Other Borrowings $ 222,338 $ 2,919 5.27 % $ 169,188 $ 2,171 5.20 % $ 166,074 $ 2,001 4.83 % $ 195,910 $ 5,090 5.24 % $ 111,285 $ 2,615 4.74 % Junior Subordinated Debentures � 82,406 � � 1,660 8.08 % � 82,406 � � 1,639 8.07 % � 82,406 � � 1,587 7.72 % � 82,406 � � 3,299 8.07 % � 82,406 � � 3,062 7.49 % Total Borrow-ings $ 304,744 � $ 4,579 6.03 % $ 251,594 � $ 3,810 6.14 % $ 248,480 � $ 3,588 5.79 % $ 278,316 � $ 8,389 6.08 % $ 193,691 � $ 5,677 5.91 % � TOTAL INTEREST-BEARING LIABILITIES $ 2,551,665 � $ 31,270 4.92 % $ 2,487,429 � $ 29,891 4.87 % $ 2,341,481 � $ 25,509 4.37 % $ 2,519,725 � $ 61,161 4.89 % $ 2,278,944 � $ 47,189 4.18 % � NET INTEREST SPREAD 3.25 % 3.36 % 3.69 % 3.25 % 3.76 % � NET INTEREST MARGIN 4.51 % 4.61 % 4.84 % 4.53 % 4.88 %