HAFC Hanmi Financial Corporation

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 � 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 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. 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 Ended December 31, 2007 � Year Ended December 31, 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. 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 8.47%, 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 ratios were 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. 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. 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 % 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 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 )% 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 % 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 Average Balance � Interest Income/ Expense � Average Yield/ Rate Average Balance � Interest Income/ Expense � Average Yield/ Rate � Average Balance � Interest Income/ Expense � Average Yield/ Rate Average Balance � Interest Income/ Expense � Average Yield/ Rate � Average Balance � Interest Income/ Expense � Average Yield/ Rate � INTEREST-EARNING ASSETS � LOANS: Real Estate Loans: Commercial Property $ 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 %