HAFC Hanmi Financial Corporation

Hanmi Financial Corporation (NASDAQ: HAFC) (“we,” “our” or “Hanmi”), the holding company for Hanmi Bank (the “Bank”), reported a third-quarter net loss of $59.7 million, or ($1.26) per share, compared to net income of $4.3 million, or $0.09 per diluted share, in the third quarter of 2008. During the third quarter, we incurred tax charges of $38.2 million related to a valuation allowance of deferred tax assets. Excluding this charge, the net loss would have been $21.5 million for the third quarter of 2009, primarily driven by $49.5 million in credit loss provisions.

Hanmi also announced today that Hanmi and the Bank have entered into a Written Agreement (the “Written Agreement”) with the Federal Reserve Bank of San Francisco (the “FRB”), effective as of November 2, 2009. In addition, the board of directors of the Bank has consented to the issuance of a Final Order (the “Final Order”) by the California Department of Financial Institutions (the “DFI”), effective as of November 2, 2009. The Written Agreement and the Final Order provide for certain actions to be taken in cooperation with the regulatory authorities and are intended to address various matters including issues related to capital, liquidity and asset quality.

Jay S. Yoo, President and Chief Executive Officer, commented, “In the continuing weakness of the credit markets, the third-quarter provision for loan losses was again a record high, leading to disappointing operating results. However, we have continued our business strategies in the third quarter and achieved meaningful improvements in our core banking foundation. The balance sheet deleveraging strategy changed our liability profile to core-deposit based and substantially expanded our net interest margin. Various asset quality management programs, as well as higher loan charge-offs and transfers to other real estate owned, at last reduced delinquent loans and we also took a step forward in our capital raising efforts by receiving a $6.95 million capital infusion from Leading Investment & Securities Co. as previously announced. We are currently in active negotiations with certain Korean institutional investors relating to a larger capital infusion sufficient for Hanmi to weather this credit environment.”

Regulatory Agreements

The Final Order and Written Agreement require the Bank to prepare and submit written plans to the DFI and the FRB that address the following items: (i) strengthening board oversight of the management and operation of the Bank; (ii) strengthening credit risk management practices; (iii) improving credit administration policies and procedures; (iv) improving the Bank’s position with respect to problem assets; (v) improving the capital position of the Bank and, with respect to the Written Agreement, of Hanmi; (vi) maintaining adequate reserves for loan and lease losses; (vii) improving the Bank’s earnings through a strategic plan and a budget for 2010; (viii) improving the Bank’s liquidity position and funds management practices; and (ix) contingency funding. In addition, the Order and the Agreement place restrictions on the Bank’s lending to borrowers who have adversely classified loans with the Bank and require the Bank to charge off or collect certain problem loans. The Final Order and Written Agreement also require the Bank to review and revise its allowance for loan and lease losses consistent with relevant supervisory guidance. The Bank is also prohibited from paying dividends, incurring, increasing or guaranteeing any debt, or making certain changes to its business without prior approval from the DFI, and the Bank and Hanmi must obtain prior approval from the FRB prior to declaring and paying dividends.

Under the Final Order, the Bank is also required to increase its capital and maintain certain regulatory capital ratios prior to certain dates specified therein. By July 31, 2010, the Bank will be required to increase its contributed equity capital by not less than an additional $100 million. The Bank will be required to maintain a ratio of tangible shareholders’ equity to total tangible assets as follows:

                   

Date

Ratio of Tangible Shareholders’Equity to Total Tangible Assets

  By December 31, 2009 Not Less Than 7.0 Percent   By July 31, 2010 Not Less Than 9.0 Percent  

From December 31, 2010 andUntil the Order is Terminated

Not Less Than 9.5 Percent  

If the Bank is not able to maintain the capital ratios identified in the Final Order, it must notify the DFI, and Hanmi and the Bank are required to notify the FRB if their respective capital ratios fall below those set forth in the capital plan to be submitted to the FRB.

Results of Operations

The net interest income before provision for credit losses increased by $3.4 million, or 14.6 percent, to $26.5 million in the third quarter of 2009 compared to $23.1 million in the prior quarter. Such increase in net interest income reflects the effects of our core deposit campaign that was launched in the prior quarter. Most of our high-cost six-month time deposits that were offered from December 2008 through March 2009 and matured in the third quarter of 2009 have been rolled over into lower-cost deposits and the average cost of interest-bearing deposits decreased by 67 basis points to 2.70 percent from 3.37 percent in the second quarter of 2009. On the other hand, our stringent lending policy allowed us to increase our loan pricing and to improve the average yield on the loan portfolio to 5.50 percent in the third quarter of 2009 compared to 5.46 percent in the prior quarter. The combined result was the increase of net interest margin by 52 basis points to 3.00 percent in the third quarter compared to 2.48 percent in the second quarter.

The provision for credit losses in the third quarter of 2009 increased by $25.6 million to $49.5 million compared to $23.9 million in the prior quarter, due mainly to the $16.4 million additional provision provided to the impaired loans that was part of our continuing efforts to address the further deteriorating commercial real estate market. For the first nine months of 2009, the provision for credit losses more than doubled to $119.4 million compared to $50.2 million for the prior year’s same period, reflecting our effort to prepare for the uncertain credit risk in this weak credit market.

Total non-interest income in the third quarter of 2009 was $8.2 million compared to $6.7 million in the prior quarter and $5.3 million in the third quarter of 2008. The sequential increase in non-interest income reflects an $864,000 net gain on sales of SBA loans. The second quarter income was also reduced by an impairment loss of $909,000 on a low income housing investment

Total non-interest expense in the third quarter of 2009 was $23.7 million compared to $24.7 million in the second quarter, a decrease of $1.0 million, or 4.1 percent, and an increase of $1.5 million, or 6.5 percent, compared to $22.2 million in the third quarter of 2008. The decrease from the second quarter of 2009 was mainly caused by the reduction of deposit insurance premiums and regulatory assessments. Increased expenses in the second quarter reflect the one-time FDIC special assessment fees of $1.8 million. Reflecting a second-quarter out-of-court settlement fee of $850,000, third-quarter loan-related expenses declined by 84.2 percent to $192,000 from $1.2 million in the second quarter. Salaries and employee benefits, the biggest single contributor to total non-interest expense, was essentially unchanged at $8.6 million compared to $8.5 million in the prior quarter. We will continue to hold down all operating costs for the remainder of 2009; however, further cost control may be offset by regulatory-related expenses such as professional fees and potential FDIC assessments. We also expect that expenses to manage our asset quality in this stressed credit environment continue to be significant. In the third quarter, expenses in relation with other real estate owned ("OREO"), such as valuation expenses and maintenance costs, more than doubled to $3.4 million from the prior quarter’s $1.5 million.

Due to increased net interest income before provision for credit losses and increased non-interest income, along with decreased non-interest expense, the efficiency ratio (non-interest expense divided by the sum of net interest income before provision for credit losses and non-interest income) sequentially improved to 68.2 percent compared to 82.9 percent in the second quarter of 2009.

Balance Sheet and Asset Quality

Total assets at September 30, 2009 decreased by $418.3 million, or 10.8 percent, to $3.46 billion from $3.88 billion at December 31, 2008, and decreased by $308.5 million, or 8.2 percent, from $3.77 billion at September 30, 2008, reflecting the Bank’s ongoing strategy to deleverage the balance sheet.

With our ongoing stringent lending policy to carefully evaluate all maturing loans and selectively renew our loans based on quality, gross loans, net of deferred loan fees, decreased by $384.6 million, or 11.4 percent, to $2.98 billion as of September 30, 2009, compared to $3.36 billion at December 31, 2008, and decreased by $367.5 million, or 11.0 percent, compared to $3.35 billion at September 30, 2008.

The success of our core deposit campaign together with our deleveraging strategy substantially changed our liability profile in the third quarter by increasing our core deposits and decreasing the brokered deposits and borrowings.

Our total deposits decreased by $78.2 million, or 2.5 percent, to $2.99 billion at September 30, 2009, compared to $3.07 billion at December 31, 2008, and increased by $192.5 million, or 6.9 percent, compared to $2.80 billion at September 30, 2008. Such decrease was carefully designed under our deleveraging strategy which allows some run off of volatile and expensive time deposits. For the nine months ended September 30, 2009, time deposits decreased by $472.1 million and our non-time deposits increased by $393.9 million. For the same nine month period, FHLB advances also decreased by $261.4 million, or 61.9 percent, to $160.8 million at September 30, 2009, compared to $422.2 million at December 31, 2008, At September 30, 2009, brokered deposits, excluding CDARS, were $365.7 million, a decrease of $508.4 million, or 58.2 percent, compared to $874.1 million at December 31, 2008.

Third quarter charge-offs, net of recoveries, were $29.9 million compared to $23.6 million in the prior quarter and $11.8 million in the third quarter of 2008. Out of the third quarter charge-offs, $22.8 million was made from unsecured commercial and industrial (“C&I”) loans, including one large loan in the amount of $7.0 million to an international trading company. Also included were some commercial real estate and business property loans due to decreases in hard collateral values, resulted in partial charge-offs of $4.0 million, with the remaining balance of $3.5 million consisting of consumer and SBA loans.

Delinquent loans were $151.0 million (5.07 percent of total gross loans) at September 30, 2009, compared to $178.7 million (5.66 percent of total gross loans) at June 30, 2009, $164.4 million (4.95 percent of total gross loans) at March 31, 2009, $128.5 million (3.82 percent of total gross loans) at December 31, 2008, and $102.9 million (3.08 percent of total gross loans) at September 30, 2008. The decrease in delinquencies from the prior quarter is attributable to diligent collection efforts, which involve proactive negotiations with borrowers in financial difficulty, often leading to loan modifications or charge-offs.

Non-performing loans (“NPL”) at September 30, 2009 were $174.4 million (5.85 percent of total gross loans), compared to $167.3 million (5.3 percent of total gross loans) at June 30, 2009, $156.3 million (4.71 percent of total gross loans) at March 31, 2009, $121.9 million (3.62 percent of total gross loans) at December 31, 2008, and $111.9 million (3.34 percent of total gross loans) at September 30, 2008. The breakdown in third quarter 2009 NPLs was as follows: 10.4 percent were construction loans, 47.6 percent were C&I loans including owner/user business property loans, 30.3 percent were commercial real estate (“CRE”) loans, 9.5 percent were SBA loans, and 2.2 percent were consumer loans.

As of September 30, 2009, total non-performing assets of $201.6 million included OREO of $27.1 million compared to total non-performing assets of $201.3 million with OREO of $34.0 million at June 30, 2009, $157.5 million with OREO of $1.2 million at March 31, 2009, and $122.7 million with OREO of $823,000 at December 31, 2008. At September 30, 2008, total non-performing assets were $114.9 million, which included OREO of $3.0 million. At September 30, 2009, OREO was $6.9 million lower, when compared to the prior quarter, mainly due to the sale of a golf course north of San Diego.

At September 30, 2009, the allowance for loan losses was $124.8 million, or 4.19 percent of total gross loans (71.53 percent of total non-performing loans), compared to $71.0 million, or 2.11 percent of total gross loans (58.23 percent of total non-performing loans), at December 31, 2008, and $63.9 million, or 1.91 percent of total gross loans (57.16 percent of total non-performing loans), at September 30, 2008.

Capital Adequacy

On September 4, 2009, Hanmi received an investment of $6.95 million from Leading Investment & Securities Co. Ltd. IWL Partners LLC, an affiliate of Leading, is additionally preparing a separate definitive agreement that would result in a larger equity capital infusion. If completed as expected, the Korean investment will augment Hanmi’s capital reserves and, in conjunction with our program to deleverage the balance sheet, will enhance our ability to weather the current recession and emerge well-positioned to take advantage of opportunities as the economy recovers.

At September 30, 2009, the Bank’s Tier 1 Leverage, Tier 1 Risk-Based Capital, and Total Risk-Based Capital ratios were 7.05 percent, 8.40 percent and 9.69 percent, respectively, compared to 8.85 percent, 9.44 percent, and 10.71 percent, respectively, at December 31, 2008. The Bank’s ratio of tangible shareholders’ equity to total tangible assets was 7.57 percent at September 30, 2009.

Deferred Tax Assets

During the third quarter of 2009, Hanmi established a valuation allowance of $44.9 million against its existing net deferred tax assets. The Company’s primary deferred tax assets relate to its allowance for loan losses and impairment charges. Under generally accepted accounting principles, a valuation allowance must be recognized if it is “more likely than not” that such deferred tax assets will not be realized. Appropriate consideration is given to all available evidence (both positive and negative) related to the realization of the deferred tax assets on a quarterly basis.

In conducting its regular quarterly evaluation, Hanmi made a determination to establish a valuation allowance at September 30, 2009 based primarily upon the existence of a three-year cumulative loss derived by combining the pre-tax income (loss) reported during the two most recent annual periods with management’s current projected results for the year ending 2009. This three-year cumulative loss position is primarily attributable to significant provisions for credit losses incurred during 2009. Although the Company’s current financial forecasts indicate that sufficient taxable income will be generated in the future to ultimately realize the existing deferred tax benefits, those forecasts were not considered to constitute sufficient positive evidence to overcome the observable negative evidence associated with the three-year cumulative loss position determined at September 30, 2009. Although the creation of the valuation allowance will increase tax expense for the quarter ended September 30, 2009 and similarly reduce tangible book value, it will not have an effect on Hanmi’s cash flows. The remaining net deferred tax assets of $2.5 million will be reversed by NOL carryover during the 4th quarter of 2009.

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 statements. These factors include the following: failure to maintain adequate levels of capital and liquidity to support our operations; the effect of regulatory orders we have entered into and potential future supervisory action against us or Hanmi Bank; general economic and business conditions internationally, nationally and in those areas in which we operate; volatility and deterioration in the credit and equity markets; changes in consumer spending, borrowing and savings habits; availability of capital from private and government sources; the ability of Leading to complete the transactions contemplated by the Securities Purchase Agreement; demographic changes; competition for loans and deposits and failure to attract or retain loans and deposits; fluctuations in interest rates and a decline in the level of our interest rate spread; risks of natural disasters related to our real estate portfolio; risks associated with Small Business Administration (“SBA”) loans; failure to attract or retain key employees; changes in governmental regulation, including, but not limited to, any increase in FDIC insurance premiums; ability to receive regulatory approval for Hanmi Bank to declare dividends to Hanmi Financial; adequacy of our allowance for loan losses, credit quality and the effect of credit quality on our provision for credit losses and allowance for loan losses; changes in the financial performance and/or condition of our borrowers and the ability of our borrowers to perform under the terms of their loans and other terms of credit agreements; our ability to successfully integrate acquisitions we may make; our ability to control expenses; and changes in securities markets. In addition, we set forth certain risks in our reports filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2008 and current and periodic reports filed with the Securities and Exchange Commission thereafter, which could cause actual results to differ from those projected. You should understand that it is not possible to predict or identify all such risks. Consequently, you should not consider such disclosures to be a complete discussion of all potential risks or uncertainties. We undertake no obligation to update such forward-looking statements except as required by law.

About Hanmi Financial Corporation

Headquartered in Los Angeles, Hanmi Bank, a wholly owned subsidiary of Hanmi Financial Corporation, provides services to the multi-ethnic communities of California, with 27 full-service offices in Los Angeles, Orange, San Bernardino, San Francisco, Santa Clara and San Diego counties, and two loan production offices in Virginia and Washington State. Hanmi Bank specializes in commercial, SBA and trade finance lending, and is a recognized community leader. Hanmi Bank’s mission is to provide a full range of quality products and premier services to its customers and to maximize shareholder value. Additional information is available at www.hanmi.com.

  HANMI FINANCIAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Dollars in Thousands)                       September 30, December 31, % September 30, % 2009 2008 Change 2008 Change

ASSETS

  Cash and Due from Banks $ 57,727 $ 83,933 (31.2 )% $ 81,640 (29.3 )% Interest-Bearing Deposits in Other Banks 155,607 2,014 7,626.3 % 755 20,510.2 % Federal Funds Sold and Securities Purchased Under Resale Agreements   —     130,000   (100.0 )%   5,000   (100.0 )%   Cash and Cash Equivalents   213,334     215,947   (1.2 )%   87,395   144.1 %   Investment Securities 205,901 197,117 4.5 % 221,714 (7.1 )%   Loans: Gross Loans, Net of Deferred Loan Fees 2,977,504 3,362,111 (11.4 )% 3,345,049 (11.0 )% Allowance for Loan Losses   (124,768 )   (70,986 ) 75.8 %   (63,948 ) 95.1 %   Loans Receivable, Net   2,852,736     3,291,125   (13.3 )%   3,281,101   (13.1 )%   Due from Customers on Acceptances 1,859 4,295 (56.7 )% 7,382 (74.8 )% Premises and Equipment, Net 19,302 20,279 (4.8 )% 20,703 (6.8 )% Accrued Interest Receivable 11,389 12,347 (7.8 )% 13,801 (17.5 )% Other Real Estate Owned, Net 27,140 823 3,197.7 % 2,988 808.3 % Deferred Income Taxes, Net 2,464 29,456 (91.6 )% 18,682 (86.8 )% Servicing Assets 3,957 3,791 4.4 % 4,018 (1.5 )% Other Intangible Assets, Net 3,736 4,950 (24.5 )% 5,404 (30.9 )% Investment in Federal Home Loan Bank Stock, at Cost 30,697 30,697 — 30,424 0.9 % Investment in Federal Reserve Bank Stock, at Cost 10,053 10,228 (1.7 )% 11,733 (14.3 )% Bank-Owned Life Insurance 26,171 25,476 2.7 % 25,239 3.7 % Income Taxes Receivable 34,908 11,712 198.1 % 17,785 96.3 % Other Assets   13,843     17,573   (21.2 )%   17,622   (21.4 )%   TOTAL ASSETS $ 3,457,490   $ 3,875,816   (10.8 )% $ 3,765,991   (8.2 )%  

LIABILITIES AND STOCKHOLDERS’ EQUITY

  Liabilities: Deposits: Noninterest-Bearing $ 561,548 $ 536,944 4.6 % $ 634,593 (11.5 )% Interest-Bearing   2,430,312     2,533,136   (4.1 )%   2,164,784   12.3 %   Total Deposits 2,991,860 3,070,080 (2.5 )% 2,799,377 6.9 %   Accrued Interest Payable 19,730 18,539 6.4 % 11,344 73.9 % Bank Acceptances Outstanding 1,859 4,295 (56.7 )% 7,382 (74.8 )% Federal Home Loan Bank Advances 160,828 422,196 (61.9 )% 583,315 (72.4 )% Other Borrowings 1,496 787 90.1 % 1,657 (9.7 )% Junior Subordinated Debentures 82,406 82,406 — 82,406 — Accrued Expenses and Other Liabilities   12,191     13,598   (10.3 )%   13,314   (8.4 )%   Total Liabilities 3,270,370 3,611,901 (9.5 )% 3,498,795 (6.5 )%   Stockholders’ Equity   187,120     263,915   (29.1 )%   267,196   (30.0 )%   TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 3,457,490   $ 3,875,816   (10.8 )% $ 3,765,991   (8.2 )%       HANMI FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(Dollars in Thousands, Except Per Share Data)                 Three Months Ended Nine Months Ended Sept. 30, June 30, % Sept. 30, % Sept. 30, Sept. 30, % 2009 2009 Change 2008 Change 2009 2008 Change INTEREST AND DIVIDEND INCOME: Interest and Fees on Loans $ 42,705 $ 44,718 (4.5 )% $ 56,134 (23.9 )% $ 132,508 $ 172,637 (23.2 )% Taxable Interest on Investment Securities 1,541 1,370 12.5 % 2,049 (24.8 )% 4,261 7,743 (45.0 )% Tax-Exempt Interest on Investment Securities 607 621 (2.3 )% 650 (6.6 )% 1,871 2,071 (9.7 )% Interest on Term Federal Funds Sold 293 695 (57.8 )% — — 1,688 — — Dividends on Federal Reserve Bank Stock 150 153 (2.0 )% 176 (14.8 )% 456 528 (13.6 )% Interest on Federal Funds Sold and Securities Purchased Under Resale Agreements 67 112 (40.2 )% 23 191.3 % 261 137 90.5 % Interest on Interest-Bearing Deposits in Other Banks 68 11 518.2 % 4 1,600.0 % 81 5 1,520.0 % Dividends on Federal Home Loan Bank Stock   64     —   —     405   (84.2 )%   64     953   (93.3 )% Total Interest and Dividend Income   45,495     47,680   (4.6 )%   59,441   (23.5 )%   141,190     184,074   (23.3 )%   INTEREST EXPENSE: Interest on Deposits 17,365 22,686 (23.5 )% 19,365 (10.3 )% 62,836 64,699 (2.9 )% Interest on Federal Home Loan Bank Advances 865 1,010 (14.4 )% 3,324 (74.0 )% 2,987 11,406 (73.8 )% Interest on Junior Subordinated Debentures 747 846 (11.7 )% 1,150 (35.0 )% 2,581 3,763 (31.4 )% Interest on Other Borrowings   —     2   (100.0 )%   5   (100.0 )%   2     344   (99.4 )% Total Interest Expense   18,977     24,544   (22.7 )%   23,844   (20.4 )%   68,406     80,212   (14.7 )%   NET INTEREST INCOME BEFORE PROVISION FOR CREDIT LOSSES 26,518 23,136 14.6 % 35,597 (25.5 )% 72,784 103,862 (29.9 )% — — — Provision for Credit Losses   49,500     23,934   106.8 %   13,176   275.7 %   119,387     50,226   137.7 %   NET INTEREST INCOME (LOSS) AFTER PROVISION FOR CREDIT LOSSES   (22,982 )   (798 ) 2,779.9 %   22,421   (202.5 )%   (46,603 )   53,636   (186.9 )%   NON-INTEREST INCOME: Service Charges on Deposit Accounts 4,275 4,442 (3.8 )% 4,648 (8.0 )% 13,032 13,904 (6.3 )% Insurance Commissions 1,063 1,185 (10.3 )% 1,194 (11.0 )% 3,430 3,893 (11.9 )% Remittance Fees 511 545 (6.2 )% 499 2.4 % 1,579 1,543 2.3 % Trade Finance Fees 512 499 2.6 % 784 (34.7 )% 1,517 2,474 (38.7 )% Other Service Charges and Fees 489 467 4.7 % 433 12.9 % 1,439 1,852 (22.3 )% Net Gain on Sales of Loans 864 — — — — 866 765 13.2 % Bank-Owned Life Insurance Income 234 227 3.1 % 241 (2.9 )% 695 715 (2.8 )% Gain on Sales of Investment Securities — 1 (100.0 )% — — 1,277 618 106.6 % Loss on Sales of Investment Securities — — — (483 ) (100.0 )% (109 ) (483 ) (77.4 )% Other-Than-Temporary Impairment Loss on Investment Securities — — — (2,410 ) (100.0 )% — (2,410 ) (100.0 )% Other Operating Income (Loss)   265     (695 ) (138.1 )%   422   (37.2 )%   (462 )   1,874   (124.7 )% Total Non-Interest Income   8,213     6,671   23.1 %   5,328   54.1 %   23,264     24,745   (6.0 )%   NON-INTEREST EXPENSE: Salaries and Employee Benefits 8,648 8,508 1.6 % 10,782 (19.8 )% 24,659 33,363 (26.1 )% Occupancy and Equipment 2,834 2,788 1.6 % 2,786 1.7 % 8,506 8,360 1.7 % Deposit Insurance Premiums and Regulatory Assessments 2,001 3,929 (49.1 )% 780 156.5 % 7,420 2,098 253.7 % Other Real Estate Owned Expense 3,372 1,502 124.5 % 2 N/M 5,017 141 3,458.2 % Data Processing 1,608 1,547 3.9 % 1,498 7.3 % 4,691 4,730 (0.8 )% Professional Fees 1,239 890 39.2 % 647 91.5 % 2,745 2,627 4.5 % Supplies and Communications 603 599 0.7 % 681 (11.5 )% 1,772 2,008 (11.8 )% Advertising and Promotion 447 624 (28.4 )% 914 (51.1 )% 1,640 2,614 (37.3 )% Loan-Related Expense 192 1,217 (84.2 )% 170 12.9 % 1,590 569 179.4 % Amortization of Other Intangible Assets 379 406 (6.7 )% 478 (20.7 )% 1,214 1,504 (19.3 )% Other Operating Expenses 2,366 2,686 (11.9 )% 3,497 (32.3 )% 7,383 7,859 (6.1 )% Impairment Loss on Goodwill   —     —   —     —   —     —     107,393   (100.0 )% Total Non-Interest Expense   23,689     24,696   (4.1 )%   22,235   6.5 %   66,637     173,266   (61.5 )%   INCOME (LOSS) BEFORE PROVISION (BENEFIT) FOR INCOME TAXES (38,458 ) (18,823 ) 104.3 % 5,514 (797.5 )% (89,976 ) (94,885 ) (5.2 )% Provision (Benefit) for Income Taxes   21,207     (9,288 ) (328.3 )%   1,166   1,718.8 %   (3,580 )   3,393   (205.5 )%   NET INCOME (LOSS) $ (59,665 ) $ (9,535 ) 525.7 % $ 4,348   (1,472.2 )% $ (86,396 ) $ (98,278 ) (12.1 )%   EARNINGS (LOSS) PER SHARE: Basic $ (1.26 ) $ (0.21 ) 500.0 % $ 0.09 (1,500.0 )% $ (1.86 ) $ (2.14 ) (13.1 )% Diluted $ (1.26 ) $ (0.21 ) 500.0 % $ 0.09 (1,500.0 )% $ (1.86 ) $ (2.14 ) (13.1 )%   WEIGHTED-AVERAGE SHARES OUTSTANDING: Basic 47,413,141 45,924,767 45,881,549 46,415,225 45,869,069 Diluted 47,413,141 45,924,767 45,933,043 46,415,225 45,869,069   SHARES OUTSTANDING AT PERIOD-END 51,201,390 46,130,967 45,905,549 51,201,390 45,905,549       HANMI FINANCIAL CORPORATION AND SUBSIDIARIES SELECTED FINANCIAL DATA (UNAUDITED) (Dollars in Thousands)             Three Months Ended   Nine Months Ended Sept. 30,   June 30,   %   Sept. 30,   % Sept. 30,   Sept. 30,   % 2009 2009 Change 2008 Change 2009 2008 Change   AVERAGE BALANCES: Average Gross Loans, Net of Deferred Loan Fees $ 3,078,104 $ 3,282,152 (6.2 )% $ 3,341,250 (7.9 )% $ 3,235,455 $ 3,320,559 (2.6 )% Average Investment Securities 209,021 179,129 16.7 % 244,027 (14.3 )% 190,243 294,130 (35.3 )% Average Interest-Earning Assets 3,552,698 3,796,039 (6.4 )% 3,630,755 (2.1 )% 3,718,837 3,659,255 1.6 % Average Total Assets 3,672,253 3,897,158 (5.8 )% 3,789,614 (3.1 )% 3,842,266 3,892,197 (1.3 )% Average Deposits 3,100,419 3,223,309 (3.8 )% 2,895,746 7.1 % 3,174,880 2,924,416 8.6 % Average Borrowings 297,455 386,477 (23.0 )% 590,401 (49.6 )% 374,139 588,267 (36.4 )% Average Interest-Bearing Liabilities 2,844,821 3,083,774 (7.7 )% 2,835,917 0.3 % 3,013,651 2,861,288 5.3 % Average Stockholders’ Equity 232,136 240,207 (3.4 )% 267,433 (13.2 )% 249,742 340,894 (26.7 )% Average Tangible Equity 228,169 235,850 (3.3 )% 261,751 (12.8 )% 245,377 263,870 (7.0 )%     PERFORMANCE RATIOS (Annualized): Return on Average Assets (6.45 )% (0.98 )% 0.46 % (3.01 )% (3.37 )% Return on Average Stockholders’ Equity (101.97 )% (15.92 )% 6.47 % (46.25 )% (38.51 )% Return on Average Tangible Equity (103.75 )% (16.22 )% 6.61 % (47.08 )% (49.75 )% Efficiency Ratio 68.21 % 82.85 % 54.33 % 69.38 % 134.73 % Net Interest Spread (1) 2.47 % 1.88 % 3.21 % 2.08 % 3.02 % Net Interest Margin (1) 3.00 % 2.48 % 3.94 % 2.65 % 3.83 %     ALLOWANCE FOR LOAN LOSSES: Balance at Beginning of Period $ 105,268 $ 104,943 0.3 % $ 62,977 67.2 % $ 70,986 $ 43,611 62.8 % Provision Charged to Operating Expense 49,375 23,922 106.4 % 12,802 285.7 % 119,067 47,685 149.7 % Charge-Offs, Net of Recoveries   (29,875 )   (23,597 ) 26.6 %   (11,831 ) 152.5 %   (65,285 )   (27,348 ) 138.7 % Balance at End of Period $ 124,768   $ 105,268   18.5 % $ 63,948   95.1 % $ 124,768   $ 63,948   95.1 %   Allowance for Loan Losses to Total Gross Loans 4.19 % 3.33 % 1.91 % 4.19 % 1.91 % Allowance for Loan Losses to Total Non-Performing Loans 71.53 % 62.92 % 57.16 % 71.53 % 57.16 %     ALLOWANCE FOR OFF-BALANCE SHEET ITEMS: Balance at Beginning of Period $ 4,291 $ 4,279 0.3 % $ 3,932 9.1 % $ 4,096 $ 1,765 132.1 % Provision Charged to Operating Expense   125     12   941.7 %   374   151.8 %   320     2,541   (87.4 )% Balance at End of Period $ 4,416   $ 4,291   2.9 % $ 4,306   2.6 % $ 4,416   $ 4,306   2.6 %   (1) Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate.               HANMI FINANCIAL CORPORATION AND SUBSIDIARIES SELECTED FINANCIAL DATA (UNAUDITED) (Continued) (Dollars in Thousands)         Sept. 30, Dec. 31, % Sept. 30, % 2009 2008 Change 2008 Change NON-PERFORMING ASSETS: Non-Accrual Loans $ 174,363 $ 120,823 44.3 % $ 111,335 56.6 % Loans 90 Days or More Past Due and Still Accruing   64     1,075   (94.0 )%   535   (88.0 )% Total Non-Performing Loans 174,427 121,898 43.1 % 111,870 55.9 % Other Real Estate Owned, Net   27,140     823   3,197.7 %   2,988   808.3 % Total Non-Performing Assets $ 201,567   $ 122,721   64.2 % $ 114,858   75.5 %   Total Non-Performing Loans/Total Gross Loans 5.85 % 3.62 % 3.34 % Total Non-Performing Assets/Total Assets 5.83 % 3.17 % 3.05 % Total Non-Performing Assets/Allowance for Loan Losses 161.6 % 172.9 % 179.6 %   DELINQUENT LOANS $ 151,047   $ 128,469   17.6 % $ 102,917   46.8 %   Delinquent Loans/Total Gross Loans 5.07 % 3.82 % 3.08 %   LOAN PORTFOLIO: Real Estate Loans $ 1,086,735 $ 1,180,114 (7.9 )% $ 1,166,436 (6.8 )% Commercial and Industrial Loans 1,824,042 2,099,732 (13.1 )% 2,096,222 (13.0 )% Consumer Loans   68,537     83,525   (17.9 )%   84,031   (18.4 )% Total Gross Loans 2,979,314 3,363,371 (11.4 )% 3,346,689 (11.0 )% Deferred Loan Fees   (1,810 )   (1,260 ) 43.7 %   (1,640 ) 10.4 % Gross Loans, Net of Deferred Loan Fees 2,977,504 3,362,111 (11.4 )% 3,345,049 (11.0 )% Allowance for Loan Losses   (124,768 )   (70,986 ) 75.8 %   (63,948 ) 95.1 % Loans Receivable, Net $ 2,852,736   $ 3,291,125   (13.3 )% $ 3,281,101   (13.1 )%   LOAN MIX: Real Estate Loans 36.5 % 35.1 % 34.9 % Commercial and Industrial Loans 61.2 % 62.4 % 62.6 % Consumer Loans   2.3 %   2.5 %   2.5 % Total Gross Loans   100.0 %   100.0 %   100.0 %   DEPOSIT PORTFOLIO: Demand - Noninterest-Bearing $ 561,548 $ 536,944 4.6 % $ 634,593 (11.5 )% Savings 98,019 81,869 19.7 % 86,157 13.8 % Money Market Checking and NOW Accounts 723,585 370,401 95.4 % 597,065 21.2 % Time Deposits of $100,000 or More 845,318 849,800 (0.5 )% 863,034 (2.1 )% Other Time Deposits   763,390     1,231,066   (38.0 )%   618,528   23.4 % Total Deposits $ 2,991,860   $ 3,070,080   (2.5 )% $ 2,799,377   6.9 %   DEPOSIT MIX: Demand - Noninterest-Bearing 18.8 % 17.5 % 22.7 % Savings 3.3 % 2.7 % 3.1 % Money Market Checking and NOW Accounts 24.2 % 12.1 % 21.3 % Time Deposits of $100,000 or More 28.3 % 27.7 % 30.8 % Other Time Deposits   25.4 %   40.0 %   22.1 % Total Deposits   100.0 %   100.0 %   100.0 %   CAPITAL RATIOS (Bank Only): Total Risk-Based 9.69 % 10.71 % 10.84 % Tier 1 Risk-Based 8.40 % 9.44 % 9.57 % Tier 1 Leverage 7.05 % 8.85 % 8.94 %                               HANMI FINANCIAL CORPORATION AND SUBSIDIARIES AVERAGE BALANCES, AVERAGE YIELDS EARNED AND AVERAGE RATES PAID (UNAUDITED) (Dollars in Thousands)     Three Months Ended Nine Months Ended September 30, 2009 June 30, 2009 September 30, 2008 September 30, 2009 September 30, 2008

AverageBalance

 

InterestIncome/Expense

 

AverageYield/Rate

AverageBalance

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AverageYield/Rate

AverageBalance

InterestIncome/Expense

AverageYield/Rate

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INTEREST-EARNING ASSETS   Loans: Real Estate Loans: Commercial Property $ 887,028 $ 12,051 5.39 % $ 914,802 $ 13,041 5.72 % $ 867,684 $ 14,604 6.70 % $ 905,386 $ 38,029 5.62 % $ 821,097 $ 42,894 6.98 % Construction 138,340 1,464 4.20 % 178,456 1,594 3.58 % 199,969 2,539 5.05 % 165,455 4,605 3.72 % 208,519 8,081 5.18 % Residential Property   83,387     1,050 5.00 %   86,913     1,119 5.16 %   90,739     1,209 5.30 %   86,904     3,332 5.13 %   90,069     3,584 5.32 % Total Real Estate Loans 1,108,755 14,565 5.21 % 1,180,171 15,754 5.35 % 1,158,392 18,352 6.30 % 1,157,745 45,966 5.31 % 1,119,685 54,559 6.51 % Commercial and Industrial Loans 1,897,321 26,863 5.62 % 2,025,414 27,774 5.50 % 2,099,708 36,128 6.85 % 2,001,546 82,874 5.54 % 2,114,974 112,416 7.10 % Consumer Loans   73,670     1,084 5.84 %   77,989     1,108 5.70 %   85,021     1,495 7.00 %   77,606     3,345 5.76 %   87,920     4,789 7.28 % Total Gross Loans 3,079,746 42,512 5.48 % 3,283,574 44,636 5.45 % 3,343,121 55,975 6.66 % 3,236,897 132,185 5.46 % 3,322,579 171,764 6.91 % Prepayment Penalty Income — 193 — — 82 — — 159 — — 323 — — 873 — Unearned Income on Loans, Net of Costs   (1,642 )   — —     (1,422 )   — —     (1,871 )   — —     (1,442 )   — —     (2,020 )   — —   Gross Loans, Net   3,078,104     42,705 5.50 %   3,282,152     44,718 5.46 %   3,341,250     56,134 6.68 %   3,235,455     132,508 5.48 %   3,320,559     172,637 6.94 %   Investment Securities: Municipal Bonds (1) 58,179 933 6.41 % 59,222 956 6.46 % 60,979 1,000 6.56 % 58,760 2,878 6.53 % 65,329 3,186 6.50 % U.S. Government Agency Securities 37,969 431 4.54 % 13,177 144 4.37 % 46,777 483 4.13 % 20,345 671 4.40 % 80,120 2,612 4.35 % Mortgage-Backed Securities 82,429 807 3.92 % 74,939 880 4.70 % 83,460 994 4.76 % 77,720 2,582 4.43 % 90,652 3,246 4.77 % Collateralized Mortgage Obligations 17,066 173 4.05 % 20,713 215 4.15 % 41,266 441 4.27 % 23,742 736 4.13 % 45,853 1,462 4.25 % Corporate Bonds 401 — 0.00 % 233 22 37.77 % 7,751 89 4.59 % 265 — 0.00 % 8,344 287 4.59 % Other Securities   12,977     130 4.01 %   10,845     109 4.02 %   3,794     42 4.43 %   9,411     272 3.85 %   3,832     136 4.73 % Total Investment Securities (1)   209,021     2,474 4.73 %   179,129     2,326 5.19 %   244,027     3,049 5.00 %   190,243     7,139 5.00 %   294,130     10,929 4.95 %   Other Interest-Earning Assets: Equity Securities 41,741 214 2.05 % 41,532 153 1.47 % 39,929 581 5.82 % 41,667 520 1.66 % 37,160 1,481 5.31 %

Federal Funds Sold and Securities Purchased Under Resale Agreements

56,568 67 0.47 % 135,362 112 0.33 % 4,797 23 1.92 % 95,365 261 0.36 % 7,096 137 2.57 % Term Federal Funds Sold 90,239 293 1.30 % 147,692 695 1.88 % — — — 125,249 1,688 1.80 % — — — Interest-Earning Deposits   77,025     68 0.35 %   10,172     11 0.43 %   752     4 2.13 %   30,858     81 0.35 %   310     5 2.15 % Total Other Interest-Earning Assets   265,573     642 0.97 %   334,758     971 1.16 %   45,478     608 5.35 %   293,139     2,550 1.16 %   44,566     1,623 4.86 %   TOTAL INTEREST-EARNING ASSETS (1) $ 3,552,698   $ 45,821 5.12 % $ 3,796,039   $ 48,015 5.07 % $ 3,630,755   $ 59,791 6.55 % $ 3,718,837   $ 142,197 5.11 % $ 3,659,255   $ 185,189 6.76 %   INTEREST-BEARING LIABILITIES   Interest-Bearing Deposits: Savings $ 93,404 $ 585 2.48 % $ 84,588 $ 527 2.50 % $ 91,465 $ 533 2.32 % $ 86,715 $ 1,617 2.49 % $ 91,910 $ 1,587 2.31 % Money Market Checking and NOW Accounts 629,124 2,998 1.89 % 319,319 1,426 1.79 % 693,718 5,579 3.20 % 431,646 6,278 1.94 % 656,625 15,946 3.24 % Time Deposits of $100,000 or More 983,341 7,447 3.00 % 1,313,683 12,108 3.70 % 973,752 8,709 3.56 % 1,124,876 29,877 3.55 % 1,143,975 35,436 4.14 % Other Time Deposits   841,497     6,335 2.99 %   979,707     8,625 3.53 %   486,581     4,544 3.72 %   996,275     25,064 3.36 %   380,511     11,730 4.12 % Total Interest-Bearing Deposits   2,547,366     17,365 2.70 %   2,697,297     22,686 3.37 %   2,245,516     19,365 3.43 %   2,639,512     62,836 3.18 %   2,273,021     64,699 3.80 %   Borrowings: FHLB Advances 213,583 865 1.61 % 302,220 1,010 1.34 % 506,981 3,324 2.61 % 290,142 2,987 1.38 % 492,434 11,406 3.09 % Other Borrowings 1,466 — 0.00 % 1,851 2 0.43 % 1,014 5 1.96 % 1,591 2 0.17 % 13,427 344 3.42 % Junior Subordinated Debentures   82,406     747 3.60 %   82,406     846 4.12 %   82,406     1,150 5.55 %   82,406     2,581 4.19 %   82,406     3,763 6.10 % Total Borrowings   297,455     1,612 2.15 %   386,477     1,858 1.93 %   590,401     4,479 3.02 %   374,139     5,570 1.99 %   588,267     15,513 3.52 %   TOTAL INTEREST-BEARING LIABILITIES $ 2,844,821   $ 18,977 2.65 % $ 3,083,774   $ 24,544 3.19 % $ 2,835,917   $ 23,844 3.34 % $ 3,013,651   $ 68,406 3.03 % $ 2,861,288   $ 80,212 3.74 %   NET INTEREST INCOME (1) $ 26,844 $ 23,471 $ 35,947 $ 73,791 $ 104,977   NET INTEREST SPREAD (1) 2.47 % 1.88 % 3.21 % 2.08 % 3.02 %   NET INTEREST MARGIN (1) 3.00 % 2.48 % 3.94 % 2.65 % 3.79 %  

(1) Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate.