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Hanmi Earns $10.1 Million in the First Quarter of 2013 and Pre-Tax Income Doubles; Setting a Solid Platform for Growth

LOS ANGELES, April 25, 2013 (GLOBE NEWSWIRE) -- Hanmi Financial Corporation (Nasdaq:HAFC), the holding company for Hanmi Bank (the "Bank"), today reported a net income of $10.1 million, or $0.32 per diluted share, for the first quarter of 2013, compared to $7.3 million, or $0.23 per diluted share, for the first quarter of 2012. In the fourth quarter of 2012, Hanmi earned $14.0 million, or $0.44 per diluted share, which included the effect of the reversal of a $5.5 million deferred tax asset ("DTA") valuation allowance. Income before tax nearly doubled to $14.8 million in the first quarter of 2013 from $7.4 million in the first quarter of 2012. The increase in Hanmi's earnings is based on solid loan production, increasing core deposits, and improving asset quality and operating efficiencies. Tangible book value increased 32.3% and 2.6% to $12.28 per share at March 31, 2013 from $9.28 per share at March 31, 2012 and $11.97 per share at December 31, 2012, respectively.

"We started 2013 with solid performance in the first quarter, mainly attributable to increased loan production and continuing improvement in asset quality, and are confident that Hanmi will deliver another year of improved operating performance in 2013," said Jay S. Yoo, President and Chief Executive Officer. "As one of our organic growth initiatives to penetrate new markets, we recently hired an experienced SBA lender with a proven track record to lead our expansion efforts in the Texas SBA market. We anticipate that our new Texas loan production office will open in the second quarter of 2013, and will start to contribute to revenues in the second half of the year."

"To reduce excess liquidity and improve profitability, the redemption of $30 million of trust preferred securities ("TPS") was completed on March 15, 2013," said Yoo. "We redeemed an additional $30 million of TPS on April 15, 2013 and expect to reduce the remaining $20 million by the end of April. The full redemption of these securities will improve our net interest margin by saving more than $2.5 million in annual interest expense."

First Quarter Results
(In Thousands, Except Per Share Data)
As of or for the Three Months Ended
March 31, December 31, March 31,
2013 2012 2012
Net Income $ 10,110 $ 13,979 $ 7,341
Net Income Per Diluted Common Share $ 0.32 $ 0.44 $ 0.23
Total Assets $ 2,792,423 $ 2,882,520 $ 2,771,471
Net Loans $ 2,061,156 $ 1,986,051 $ 1,896,827
Total Deposits $ 2,333,012 $ 2,395,963 $ 2,363,726
Return on Average Assets 1.45% 1.94% 1.08%
Return on Average Stockholders' Equity 10.71% 15.02% 10.21%
Net Interest Margin 3.86% 3.86% 3.69%
Efficiency Ratio 56.44% 57.66% 66.56%
Tangible Common Equity to Tangible Assets Ratio 13.89% 13.09% 10.55%
Tangible Common Equity Per Common Share $ 12.28 $ 11.97 $ 9.28
Classified Assets $ 96,047 $ 101,172 $ 230,706
Classified Assets to Bank Tier 1 Capital and ALLL 21.15% 21.57% 54.00%

Financial Highlights (at or for the period ended March 31, 2013)

  • Net income for the first quarter of 2013 increased by 37.7% to $10.1 million, or $0.32 per diluted share, compared to $7.3 million, or $0.23 per diluted share, in the first quarter of 2012.
  • Net interest margin ("NIM") was 3.86% in the first quarter of 2013, compared to 3.69% in the first quarter of 2012. Yields on earning assets fell 13 basis points, while cost of deposits continued to improve by 30 basis points.
  • New loan production in the first quarter of 2013 totaled $178.6 million.
  • Asset quality improved during the first quarter of 2013, with lower levels of non-performing assets, which were 1.21% of total assets, and with continuing improvements in net charge-offs, which totaled $2.3 million, or 0.45% of average gross loans.
  • Operating efficiency improved to 56.44% during the first quarter of 2013, down from 57.66% during the fourth quarter of 2012, and 66.56% during the first quarter of 2012, reflecting higher revenues and lower overall operating costs.
  • The redemption of $30 million TPS was completed on March 15, 2013.
  • Tangible common equity ratio was 13.89%, and tangible book value was $12.28 per share at March 31, 2013, up 32.3% from $9.28 per share at March 31, 2012.

Results of Operations

Net interest income before the provision for credit losses totaled $25.6 million for the first quarter of 2013, down 3.1% from $26.4 million for the fourth quarter of 2012, and up 4.4% from $24.5 million for the first quarter of 2012. Interest and dividend income decreased 2.5% from the fourth quarter of 2012 and 3.0% from the first quarter of 2012, while interest expense increased 2.2% from the fourth quarter of 2012 and decreased 34.2% from the first quarter of 2012.

NIM was 3.86% for the first quarter of 2013, even with the fourth quarter of 2012, and up 17 basis points from the first quarter of 2012. "Continued loan production along with reduced excess liquidity is contributing to a stable NIM," said Mark Yoon, Senior Vice President and Chief Financial Officer. The following table details the asset yields, liability costs, spread and margin.

Three Months Ended
March 31, December 31, March 31,
2013 2012 2012
Total Interest-Earning Assets 4.43% 4.40% 4.56%
Total Interest-Bearing Liability 0.89% 0.83% 1.30%
Net Interest Spread 3.54% 3.57% 3.26%
Net Interest Margin 3.86% 3.86% 3.69%

Asset quality ratios continued to show improvement in the first quarter with the continuing downward trend in non-performing assets to total assets of 1.21% as of March 31, 2013 compared to 1.32% as of December 31, 2012. Allowance for loan losses ("ALLL") to non-performing loans ("NPLs") rose to 186.03% as of March 31, 2013 compared to 169.81% as of December 31, 2012. There was no provision for credit losses for the three months ended March 31, 2013 and December 31, 2012 compared to a $2.0 million provision for the three months ended March 31, 2012.

Non-interest income in the first quarter of 2013 increased to $8.4 million, up from $7.5 million in the fourth quarter of 2012 and $3.6 million in the first quarter of 2012, due mainly to higher gain on sales of SBA loans and lower net losses recognized from selling NPLs.

Non-interest expense in the first quarter of 2013 was $19.2 million, down from $19.5 million in the fourth quarter of 2012, reflecting lower deposit insurance premiums and regulatory assessments, partially offset by higher professional fees. For the first quarter of 2013, deposit insurance premiums and regulatory assessments were down more than $1.0 million from the fourth quarter of 2012 and $1.2 million from the first quarter of 2012, due mainly to a lower premium assessment resulting from our improved overall financial conditions. Professional fees increased in the first quarter of 2013, due mainly to costs associated with the strategic option considered in the beginning of the year as well as legal fees incurred in defending lawsuits in the ordinary course of business.

Balance Sheet

Assets totaled $2.79 billion at March 31, 2013, down 3.1% from $2.88 billion at December 31, 2012, and up 0.8% from $2.77 billion at March 31, 2012. "We remain focused on right-sizing our balance sheet through redeployment of excess liquidity, which will temporarily reduce the size of total assets, but will result in better profitability," said Yoon.

In the first quarter of 2013, Hanmi produced 164 new loans totaling $178.6 million, of which $36.1 million were Small Business Administration ("SBA") loans, $138.0 million were commercial real estate loans, $4.3 million were commercial term loans and lines of credit, and $201,000 were consumer loans. Overall loan production was down 14.4% from the fourth quarter of 2012 and up 11.7% from the first quarter of 2012. The decreased loan production was primarily attributable to a seasonal falloff. "Our goal is to grow loan portfolio 8% this year, while diversifying it. Despite intense competition, we expect that loan production will ramp up in the coming quarters," said Yoon.

Loans receivable, excluding loans held for sale, increased to $2.06 billion at March 31, 2013, up 3.8% from $1.99 billion at December 31, 2012, and 8.7% from $1.90 billion at March 31, 2012. Loans held for sale totaled $6.0 million at March 31, 2013, down from $8.3 million at December 31, 2012, and from $56.0 million at March 31, 2012. Average gross loans, net of deferred loan fees, increased to $2.07 billion for the first quarter of 2013, up from $2.03 billion for the fourth quarter of 2012, and $1.99 billion for the first quarter of 2012.

Average deposits for the first quarter of 2013 were $2.35 billion, down from $2.39 billion for the fourth quarter of 2012, and up from $2.34 billion for the first quarter of 2012. The overall mix of funding continued to improve with time deposits declining and low- and no-cost transaction account balances increasing. "Our deposits were down for the quarter due mainly to a decrease of $59.0 million in Jumbo CDs, which includes $28.5 million of CDs raised from Internet listing services, but our core deposits continued to grow as a percent of deposits," Yoon noted. The deposit mix for the past year is detailed in the table below.

March 31, December 31, March 31,
2013 2012 2012
Demand - Noninterest-Bearing 30.5% 30.1% 29.8%
Savings 4.9% 4.8% 4.6%
Money Market Checking and NOW Accounts 24.8% 24.0% 21.9%
Time Deposits of $100,000 or More 23.9% 25.7% 29.1%
Other Time Deposits 15.9% 15.4% 14.6%
Total Deposits 100.0% 100.0% 100.0%

At March 31, 2013, total stockholders' equity was $389.1 million. Tangible common stockholders' equity was $387.8 million at March 31, 2013, or 13.89% of tangible assets, compared to $377.0 million, or 13.09% of tangible assets, at December 31, 2012, and $292.3 million, or 10.55% of tangible assets, at March 31, 2012. Tangible book value per share was $12.28 at March 31, 2013, up 2.6% from $11.97 at December 31, 2012, and 32.3% from $9.28 at March 31, 2012.

Asset Quality

NPLs, excluding loans held for sale, decreased to $32.9 million at March 31, 2013, down 11.8% from $37.3 million at December 31, 2012, and down 34.5% from $50.2 million at March 31, 2012. Troubled debt restructurings ("TDRs"), totaled $31.7 million at March 31, 2013, down from $35.7 million at December 31, 2012, and $41.5 million at March 31, 2012. Of these TDRs, $17.0 million are NPLs. Two loans of NPLs in the aggregate amount of $2.3 million were recorded at the lower of cost or fair value and classified as loans held for sale at March 31, 2013. The following table shows NPLs in each category:

March 31, 2013 December 31, 2012 March 31, 2012
% to Total % to Total % to Total
Amount NPL Amount NPL Amount NPL
(In Thousands)
Real Estate Loans:
Commercial Property
Retail $ 950 2.9% $ 1,079 2.9% $ 1,327 2.6%
Land 1,687 5.1% 2,097 5.6% 2,187 4.4%
Other -- 0.0% -- 0.0% 1,454 2.9%
Construction -- 0.0% -- 0.0% 8,157 16.2%
Residential Property 1,638 5.0% 1,270 3.4% 1,524 3.0%
Commercial & Industrial Loans:
Commercial Term Loans
Unsecured 7,253 22.1% 8,311 22.3% 6,942 13.8%
Secured by Real Estate 6,353 19.3% 8,679 23.3% 9,837 19.6%
Commercial Lines of Credit 1,505 4.6% 1,521 4.1% 1,610 3.2%
SBA 11,852 36.0% 12,563 33.7% 16,648 33.2%
Consumer Loans 1,655 5.0% 1,759 4.7% 528 1.1%
Total Non-Performing Loans $ 32,893 100.0% $ 37,279 100.0% $ 50,214 100.0%

"As anticipated, continuing improvement in asset quality has resulted in a reduction of problem loan sales in the first quarter of 2013. The first quarter NPL sales totaled $1.6 million," said J.H. Son, Executive Vice President and Chief Credit Officer. "More importantly, the losses associated with our loan sales strategy are significantly lower than they have been in previous years, which indicate that our strategy to sell loans, before they are moved into foreclosure, has been effective." Classified loans were $95.1 million, or 4.5% of gross loans, at March 31, 2013, down from $100.4 million, or 4.9% of gross loans, at December 31, 2012, and $229.5 million, or 11.6% of gross loans, at March 31, 2012.

Delinquent loans that are less than 90 days past due and still accruing interest increased to $6.4 million at March 31, 2013, or 0.30% of gross loans, up from $2.4 million, or 0.12% of gross loans, at December 31, 2012. "The incidental uptick in delinquent loans is a temporary setback due to administrative delays and is expected to decrease again in the second quarter of 2013 with diligent monitoring and collection efforts," said Son. At March 31, 2013, ALLL was $61.2 million, or 2.88% of gross loans and 186.0% of NPLs, compared to 4.10% of gross loans and 161.4% of NPLs at March 31, 2012. For the first quarter of 2013, net charge-offs were $2.3 million, down from $3.2 million for the fourth quarter of 2012, and $11.3 million for the first quarter of 2012.

Conference Call Information

Management will host a conference call today, April 25, 2013, at 1:30 p.m. Pacific Time (4:30 p.m. ET) to discuss these results. This call will also be broadcast live via the internet. Investment professionals and all current and prospective stockholders are invited to access the live call by dialing 1-480-629-9643 at 1:30 p.m. Pacific Time, using access code HANMI. To listen to the call online, either live or archived, visit the Investor Relations page of Hanmi's website at www.hanmi.com.

About Hanmi Financial Corporation

Headquartered in Los Angeles, 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 a loan production office in 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 stockholder value.

Forward-Looking Statements

This press release contains forward-looking statements, which are included in accordance with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "could," "expects," "plans," "intends," "anticipates," "believes," "estimates," "predicts," "potential," or "continue," or the negative of such terms and other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. All statements other than statements of historical fact are "forward–looking statements" for purposes of federal and state securities laws, including, but not limited to, statements about anticipated future operating and financial performance, financial position and liquidity, business strategies, regulatory and competitive outlook, investment and expenditure plans, capital and financing needs and availability, plans and objectives of management for future operations, developments regarding our capital plans, strategic alternatives for a possible business combination, merger or sale transaction and other similar forecasts and statements of expectation and statements of assumption underlying any of the foregoing. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ from those expressed or implied by the forward-looking statement. 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; 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 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; ability to identify a suitable strategic partner or to consummate a strategic transaction; 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 control expenses; and changes in securities markets. In addition, we set forth certain risks in our reports filed with the U.S. Securities and Exchange Commission ("SEC"), including, in Item 1A of our Form 10-K for the year ended December 31, 2012, our quarterly reports on Form 10-Q, and current and periodic reports that we will file with the SEC hereafter, which could cause actual results to differ from those projected. We undertake no obligation to update such forward-looking statements except as required by law.

HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In Thousands)
March 31, December 31, Percentage March 31, Percentage
2013 2012 Change 2012 Change
ASSETS
Cash and Due From Banks $ 69,642 $ 92,350 -24.6% $ 68,093 2.3%
Interest-Bearing Deposits in Other Banks 75,657 175,697 -56.9% 92,149 -17.9%
Cash and Cash Equivalents 145,299 268,047 -45.8% 160,242 -9.3%
Restricted Cash -- 5,350 -100.0% 1,818 -100.0%
Term Federal Funds Sold -- -- 0.0% 120,000 -100.0%
Securities Available for Sale, at Fair Value 419,903 451,060 -6.9% 355,837 18.0%
Securities Held to Maturity, at Amortized Cost -- -- 0.0% 59,472 -100.0%
Loans Held for Sale, at the Lower of Cost or Fair Value 6,043 8,306 -27.2% 55,993 -89.2%
Loans Receivable, Net of Allowance for Loan Losses 2,061,156 1,986,051 3.8% 1,896,827 8.7%
Accrued Interest Receivable 7,526 7,581 -0.7% 7,969 -5.6%
Premises and Equipment, Net 14,792 15,150 -2.4% 16,272 -9.1%
Other Real Estate Owned, Net 900 774 16.3% 1,260 -28.6%
Customers' Liability on Acceptances 2,170 1,336 62.4% 1,539 41.0%
Servicing Assets 6,004 5,542 8.3% 3,515 70.8%
Other Intangible Assets, Net 1,294 1,335 -3.1% 1,462 -11.5%
Investment in Federal Home Loan Bank Stock, at Cost 16,014 17,800 -10.0% 21,761 -26.4%
Investment in Federal Reserve Bank Stock, at Cost 12,222 12,222 0.0% 8,558 42.8%
Income Tax Asset 57,084 60,028 -4.9% 11,501 396.3%
Bank-Owned Life Insurance 29,284 29,054 0.8% 28,344 3.3%
Prepaid Expenses 2,676 2,084 28.4% 3,204 -16.5%
Other Assets 10,056 10,800 -6.9% 15,897 -36.7%
TOTAL ASSETS $ 2,792,423 $ 2,882,520 -3.1% $ 2,771,471 0.8%
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits:
Noninterest-Bearing $ 709,650 $ 720,931 -1.6% $ 704,061 0.8%
Interest-Bearing 1,623,362 1,675,032 -3.1% 1,659,665 -2.2%
Total Deposits 2,333,012 2,395,963 -2.6% 2,363,726 -1.3%
Accrued Interest Payable 3,192 11,775 -72.9% 15,602 -79.5%
Bank's Liability on Acceptances 2,170 1,336 62.4% 1,539 41.0%
Federal Home Loan Bank Advances 2,840 2,935 -3.2% 3,213 -11.6%
Junior Subordinated Debentures 51,478 82,406 -37.5% 82,406 -37.5%
Accrued Expenses and Other Liabilities 10,626 9,741 9.1% 11,267 -5.7%
TOTAL LIABILITIES 2,403,318 2,504,156 -4.0% 2,477,753 -3.0%
STOCKHOLDERS' EQUITY:
Common Stock 257 257 0.0% 257 0.0%
Additional Paid-In Capital 551,064 550,123 0.2% 549,811 0.2%
Unearned Compensation (44) (57) -22.8% (141) -68.8%
Accumulated Other Comprehensive Income 5,095 5,418 -6.0% 4,201 21.3%
Accumulated Deficit (97,409) (107,519) -9.4% (190,552) -48.9%
Less Treasury Stock (69,858) (69,858) 0.0% (69,858) 0.0%
TOTAL STOCKHOLDERS' EQUITY 389,105 378,364 2.8% 293,718 32.5%
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,792,423 $ 2,882,520 -3.1% $ 2,771,471 0.8%
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In Thousands, Except Per Share Data)
Three Months Ended
March 31, December 31, Percentage March 31, Percentage
2013 2012 Change 2012 Change
INTEREST AND DIVIDEND INCOME:
Interest and Fees on Loans $ 26,799 $ 27,418 -2.3% $ 27,542 -2.7%
Taxable Interest on Investment Securities 2,116 2,138 -1.0% 2,098 0.9%
Tax-Exempt Interest on Investment Securities 95 95 0.0% 102 -6.9%
Interest on Term Federal Funds Sold -- 22 -100.0% 325 -100.0%
Interest on Federal Funds Sold 6 7 -14.3% 2 200.0%
Interest on Interest-Bearing Deposits in Other Banks 88 153 -42.5% 68 29.4%
Dividends on Federal Reserve Bank Stock 183 179 2.2% 128 43.0%
Dividends on Federal Home Loan Bank Stock 108 127 -15.0% 29 272.4%
Total Interest and Dividend Income 29,395 30,139 -2.5% 30,294 -3.0%
INTEREST EXPENSE:
Interest on Deposits 3,159 3,366 -6.1% 4,919 -35.8%
Interest on Federal Home Loan Bank Advances 38 39 -2.6% 43 -11.6%
Interest on Junior Subordinated Debentures 594 303 96.0% 799 -25.7%
Total Interest Expense 3,791 3,708 2.2% 5,761 -34.2%
NET INTEREST INCOME BEFORE PROVISION FOR CREDIT LOSSES 25,604 26,431 -3.1% 24,533 4.4%
Provision for Credit Losses -- -- 0.0% 2,000 -100.0%
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 25,604 26,431 -3.1% 22,533 13.6%
NON-INTEREST INCOME:
Service Charges on Deposit Accounts 3,048 3,191 -4.5% 3,168 -3.8%
Insurance Commissions 1,213 1,235 -1.8% 1,236 -1.9%
Trade Finance & Other Other Service Charges and Fees 1,172 1,235 -5.1% 1,110 5.6%
Bank-Owned Life Insurance Income 230 238 -3.4% 399 -42.4%
Gain on Sales of SBA Loans Guaranteed Portion 2,692 2,678 0.5% -- 0.0%
Net Loss on Sales of Other Loans (97) (1,247) -92.2% (2,393) -95.9%
Net Gain on Sales of Investment Securities 9 4 125.0% 1 800.0%
Other Operating Income 90 136 -33.8% 112 -19.6%
Total Non-Interest Income 8,357 7,470 11.9% 3,633 130.0%
NON-INTEREST EXPENSE:
Salaries and Employee Benefits 9,351 9,224 1.4% 9,110 2.6%
Occupancy and Equipment 2,556 2,585 -1.1% 2,595 -1.5%
Deposit Insurance Premiums and Regulatory Assessments 234 1,249 -81.3% 1,401 -83.3%
Data Processing 1,170 1,179 -0.8% 1,253 -6.6%
Other Real Estate Owned Expense 32 (33) -197.0% (44) 172.7%
Professional Fees 2,156 1,744 23.6% 749 187.9%
Directors and Officers Liability Insurance 220 298 -26.2% 297 -25.9%
Supplies and Communications 495 567 -12.7% 558 -11.3%
Advertising and Promotion 672 1,243 -45.9% 601 11.8%
Loan-Related Expense 146 75 94.7% 200 -27.0%
Amortization of Other Intangible Assets 41 41 0.0% 71 -42.3%
Other Operating Expenses 2,094 1,376 52.2% 1,955 7.1%
Total Non-Interest Expense 19,167 19,548 -1.9% 18,746 2.2%
INCOME BEFORE PROVISION FOR INCOME TAXES 14,794 14,353 3.1% 7,420 99.4%
Provision for Income Taxes 4,684 374 1152.4% 79 5829.1%
NET INCOME $ 10,110 $ 13,979 -27.7% $ 7,341 37.7%
EARNINGS PER SHARE:
Basic $ 0.32 $ 0.44 $ 0.23
Diluted $ 0.32 $ 0.44 $ 0.23
WEIGHTED-AVERAGE SHARES OUTSTANDING:
Basic 31,538,980 31,479,921 31,470,520
Diluted 31,626,667 31,549,580 31,489,569
COMMON SHARES OUTSTANDING 31,588,767 31,496,540 31,489,201
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL DATA (UNAUDITED)
(In Thousands)
As of or for the Three Months Ended
March 31, December 31, March 31,
2013 2012 2012
AVERAGE BALANCES:
Average Gross Loans, Net of Deferred Loan Fees (1) $ 2,073,514 $ 2,026,122 $ 1,985,071
Average Investment Securities 443,073 421,520 426,384
Average Interest-Earning Assets 2,693,424 2,731,473 2,676,643
Average Total Assets 2,829,927 2,872,897 2,742,006
Average Deposits 2,348,799 2,388,725 2,337,302
Average Borrowings 79,110 85,390 85,665
Average Interest-Bearing Liabilities 1,727,272 1,767,640 1,777,208
Average Stockholders' Equity 383,003 370,307 289,132
Average Tangible Equity 381,682 368,945 287,631
PERFORMANCE RATIOS:
Return on Average Assets (2) 1.45% 1.94% 1.08%
Return on Average Stockholders' Equity (2) 10.71% 15.02% 10.21%
Return on Average Tangible Equity (2) 10.74% 15.07% 10.38%
Efficiency Ratio 56.44% 57.66% 66.56%
Net Interest Spread (2),(3) 3.54% 3.57% 3.26%
Net Interest Margin (2),(3) 3.86% 3.86% 3.69%
ALLOWANCE FOR LOAN LOSSES:
Balance at Beginning of Period $ 63,305 $ 66,107 $ 89,936
Provision Charged to Operating Expense 196 407 2,400
Charge-Offs, Net of Recoveries (2,310) (3,209) (11,284)
Balance at End of Period $ 61,191 $ 63,305 $ 81,052
ASSET QUALITY RATIOS:
Net Loan Charge-Offs to Average Gross Loans (2) 0.45% 0.63% 2.27%
Allowance for Loan Losses to Gross Loans 2.88% 3.09% 4.10%
Allowance for Loan Losses to Non-Performing Loans 186.03% 169.81% 161.41%
Non-Performing Assets to Total Assets 1.21% 1.32% 1.86%
Non-Performing Loans to Gross Loans 1.55% 1.82% 2.54%
Non-Performing Assets to Allowance for Loan Losses 55.23% 60.11% 63.51%
ALLOWANCE FOR OFF-BALANCE SHEET ITEMS:
Balance at Beginning of Period $ 1,824 $ 2,231 $ 2,981
Provision Charged to Operating Expense (196) (407) (400)
Balance at End of Period $ 1,628 $ 1,824 $ 2,581
NON-PERFORMING ASSETS:
Non-Accrual Loans $ 32,893 $ 37,279 $ 50,214
Loans 90 Days or More Past Due and Still Accruing -- -- --
Non-Performing Loans 32,893 37,279 50,214
Other Real Estate Owned, Net 900 774 1,260
Non-Performing Assets 33,793 38,053 51,474
Non-Performing Loans in Loans Held for Sale 2,306 484 15,472
Non-Performing Assets (including Loans Held for Sale) $ 36,099 $ 38,537 $ 66,946
DELINQUENT LOANS (30 to 89 Days Past Due and Still Accruing) $ 6,440 $ 2,371 $ 10,497
Delinquent Loans to Gross Loans 0.30% 0.12% 0.53%
(1) Loans Held for Sale are included in average gross loans.
(2) Annualized
(3) Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate.
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL DATA, CONTINUED (UNAUDITED)
(In Thousands)
Three Months Ended
March 31, December 31, March 31,
2013 2012 2012
LOAN PORTFOLIO:
Real Estate Loans $ 831,019 $ 787,094 $ 717,491
Residential Loans 94,735 101,778 116,566
Commercial and Industrial Loans 1,160,752 1,123,012 1,102,769
Consumer Loans 35,180 36,676 40,152
Gross Loans 2,121,686 2,048,560 1,976,978
Deferred Loan Fees 661 796 901
Gross Loans, Net of Deferred Loan Fees 2,122,347 2,049,356 1,977,879
Allowance for Loan Losses (61,191) (63,305) (81,052)
Loans Receivable, Net 2,061,156 1,986,051 1,896,827
Loans Held for Sale, at the Lower of Cost or Fair Value 6,043 8,306 55,993
Total Loans Receivable, Net $ 2,067,199 $ 1,994,357 $ 1,952,820
LOAN MIX:
Real Estate Loans 39.1% 38.4% 36.3%
Residential Loans 4.5% 5.0% 5.9%
Commercial and Industrial Loans 54.7% 54.8% 55.8%
Consumer Loans 1.7% 1.8% 2.0%
Total Loans 100.0% 100.0% 100.0%
DEPOSIT PORTFOLIO:
Demand - Noninterest-Bearing $ 709,650 $ 720,931 $ 704,061
Savings 115,186 114,302 108,698
Money Market Checking and NOW Accounts 579,192 575,744 516,628
Time Deposits of $100,000 or More 557,180 616,187 687,573
Other Time Deposits 371,804 368,799 346,766
Total Deposits $ 2,333,012 $ 2,395,963 $ 2,363,726
DEPOSIT MIX:
Demand - Noninterest-Bearing 30.5% 30.1% 29.8%
Savings 4.9% 4.8% 4.6%
Money Market Checking and NOW Accounts 24.8% 24.0% 21.9%
Time Deposits of $100,000 or More 23.9% 25.7% 29.1%
Other Time Deposits 15.9% 15.4% 14.6%
Total Deposits 100.0% 100.0% 100.0%
CAPITAL RATIOS:
Hanmi Financial
Total Risk-Based Capital Ratio 19.45% 20.65% 18.74%
Tier 1 Risk-Based Capital Ratio 18.17% 19.37% 17.46%
Tier 1 Leverage Capital Ratio 14.68% 14.95% 13.44%
Tangible Equity to Tangible Assets Ratio 13.89% 13.09% 10.55%
Hanmi Bank
Total Risk-Based Capital Ratio 18.69% 19.85% 17.74%
Tier 1 Risk-Based Capital Ratio 17.42% 18.58% 16.45%
Tier 1 Leverage Capital Ratio 14.07% 14.33% 12.67%
Tangible Equity to Tangible Assets Ratio 15.10% 15.29% 12.71%
HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
AVERAGE BALANCE, AVERAGE YIELD EARNED AND AVERAGE RATE PAID (UNAUDITED)
(In Thousands)
Three Months Ended
March 31, 2013 December 31, 2012 March 31, 2012
Interest Average Interest Average Interest Average
Average Income / Yield / Average Income / Yield / Average Income / Yield /
Balance Expense Rate Balance Expense Rate Balance Expense Rate
ASSETS
Interest-Earning Assets:
Gross Loans, Net of Deferred Loan Fees $ 2,073,514 $ 26,799 5.24% $ 2,026,122 $ 27,418 5.38% $ 1,985,071 $ 27,542 5.58%
Municipal Securities - Taxable 46,111 454 3.94% 46,203 456 3.95% 44,888 446 3.97%
Municipal Securities - Tax Exempt 12,803 146 4.57% 12,731 146 4.59% 13,283 157 4.73%
Obligations of Other U.S. Government Agencies 88,982 422 1.90% 82,995 387 1.87% 73,446 325 1.77%
Other Debt Securities 295,177 1,240 1.68% 279,591 1,295 1.85% 294,767 1,327 1.80%
Equity Securities 30,336 291 3.84% 30,971 306 3.95% 31,255 157 2.01%
Federal Funds Sold 5,963 6 0.41% 7,127 7 0.39% 1,852 2 0.43%
Term Federal Funds Sold -- -- 0.00% 6,685 22 1.31% 126,484 325 1.03%
Interest-Bearing Deposits in Other Banks 140,538 88 0.25% 239,048 153 0.25% 105,597 68 0.26%
Total Interest-Earning Assets 2,693,424 29,446 4.43% 2,731,473 30,190 4.40% 2,676,643 30,349 4.56%
Noninterest-Earning Assets:
Cash and Cash Equivalents 66,166 73,567 69,152
Allowance for Loan Losses (62,639) (65,228) (88,024)
Other Assets 132,976 133,085 84,235
Total Noninterest-Earning Assets 136,503 141,424 65,363
TOTAL ASSETS $ 2,829,927 $ 2,872,897 $ 2,742,006
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-Bearing Liabilities:
Deposits:
Savings $ 114,182 $ 458 1.63% $ 112,566 $ 477 1.69% $ 105,676 $ 583 2.22%
Money Market Checking and NOW Accounts 567,977 720 0.51% 583,259 772 0.53% 465,664 676 0.58%
Time Deposits of $100,000 or More 595,205 1,175 0.80% 623,780 1,312 0.84% 782,562 2,748 1.41%
Other Time Deposits 370,798 806 0.88% 362,645 805 0.88% 337,641 912 1.09%
FHLB Advances 2,890 38 5.33% 2,984 39 5.20% 3,259 43 5.31%
Junior Subordinated Debentures 76,220 594 3.16% 82,406 303 1.46% 82,406 799 3.90%
Total Interest-Bearing Liabilities 1,727,272 3,791 0.89% 1,767,640 3,708 0.83% 1,777,208 5,761 1.30%
Noninterest-Bearing Liabilities:
Demand Deposits 700,637 706,475 645,759
Other Liabilities 19,015 28,475 29,907
Total Noninterest-Bearing Liabilities 719,652 734,950 675,666
Total Liabilities 2,446,924 2,502,590 2,452,874
Stockholders' Equity 383,003 370,307 289,132
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,829,927 $ 2,872,897 $ 2,742,006
NET INTEREST INCOME $ 25,655 $ 26,482 $ 24,588
COST OF DEPOSITS 0.55% 0.56% 0.85%
NET INTEREST SPREAD 3.54% 3.57% 3.26%
NET INTEREST MARGIN 3.86% 3.86% 3.69%

Non-GAAP Financial Measures

Tangible Common Equity to Tangible Assets Ratio

Tangible common equity to tangible assets ratio is supplemental financial information determined by a method other than in accordance with U.S. generally accepted accounting principles ("GAAP"). This non-GAAP measure is used by management in the analysis of Hanmi Financial and Hanmi Bank's capital strength. Tangible equity is calculated by subtracting goodwill and other intangible assets from total stockholders' equity. Banking and financial institution regulators also exclude goodwill and other intangible assets from total stockholders' equity when assessing the capital adequacy of a financial institution. Management believes the presentation of this financial measure excluding the impact of these items provides useful supplemental information that is essential to a proper understanding of the capital strength of Hanmi Financial and Hanmi Bank. This disclosure should not be viewed as a substitution for results determined in accordance with GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies.

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

TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS RATIO (UNAUDITED)
(In Thousands, Except Per Share Data)
March 31, December 31, March 31,
HANMI FINANCIAL CORPORATION 2013 2012 2012
Total Assets $ 2,792,423 $ 2,882,520 $ 2,771,471
Less Other Intangible Assets (1,294) (1,335) (1,462)
Tangible Assets $ 2,791,129 $ 2,881,185 $ 2,770,009
Total Stockholders' Equity $ 389,105 $ 378,364 $ 293,718
Less Other Intangible Assets (1,294) (1,335) (1,462)
Tangible Stockholders' Equity $ 387,811 $ 377,029 $ 292,256
Total Stockholders' Equity to Total Assets Ratio 13.93% 13.13% 10.60%
Tangible Common Equity to Tangible Assets Ratio 13.89% 13.09% 10.55%
Common Shares Outstanding 31,588,767 31,496,540 31,489,201
Tangible Common Equity Per Common Share $ 12.28 $ 11.97 $ 9.28
HANMI BANK
Total Assets $ 2,786,691 $ 2,877,041 $ 2,766,780
Less Other Intangible Assets -- -- (3)
Tangible Assets $ 2,786,691 $ 2,877,041 $ 2,766,777
Total Stockholders' Equity $ 420,755 $ 439,986 $ 351,677
Less Other Intangible Assets -- -- (3)
Tangible Stockholders' Equity $ 420,755 $ 439,986 $ 351,674
Total Stockholders' Equity to Total Assets Ratio 15.10% 15.29% 12.71%
Tangible Common Equity to Tangible Assets Ratio 15.10% 15.29% 12.71%

CONTACT: Hanmi Financial Corporation Shick (Mark) Yoon SVP & Chief Financial Officer Direct Phone: 213-427-5636 David Yang VP, Investor Relations & Corporate Strategy Direct Phone: 213-637-4798Source:Hanmi Bank