e8vk

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Rhp7uoPrhrzgQN9BaVwGfa0fUCwwg+VDVu9EVMzTLLY+GwkDG2LwjmIP5u0cmkb7 9MZiFQHS9Ho1P6s02LIJRw== 0000950123-09-058023.txt : 20091105 0000950123-09-058023.hdr.sgml : 20091105 20091105090043 ACCESSION NUMBER: 0000950123-09-058023 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20091102 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20091105 DATE AS OF CHANGE: 20091105 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HANMI FINANCIAL CORP CENTRAL INDEX KEY: 0001109242 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 954788120 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-30421 FILM NUMBER: 091159643 BUSINESS ADDRESS: STREET 1: 3660 WILSHIRE BLVD SUITE PH-A CITY: LOS ANGELES STATE: CA ZIP: 90010 BUSINESS PHONE: 2133822200 8-K 1 v54239e8vk.htm FORM 8-K e8vk

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): November 2, 2009

HANMI FINANCIAL CORPORATION

(Exact Name of Registrant as Specified in its Charter)


Delaware	000-30421	95-4788120

(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)


3660 Wilshire Boulevard, Penthouse Suite A
Los Angeles, California		90010

(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: (213) 382-2200

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions (see General Instruction A.2. below):

o		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS


Item 1.01 Entry into a Material Definitive Agreement
Item 2.02 Results of Operations and Financial Condition
Item 9.01 Financial Statements and Exhibits
SIGNATURES
EXHIBIT INDEX
EX-10.1
EX-10.2
EX-99.1

Item 1.01 Entry into a Material Definitive Agreement.

On November 2, 2009, the members of the Board of Directors of Hanmi Bank (the “Bank”), the wholly-owned subsidiary of Hanmi Financial Corporation (“Hanmi”), consented to the issuance of a Final Order (the “Order”) from the California Department of Financial Institutions (the “DFI”). On the same date, Hanmi and the Bank entered into a Written Agreement (the “Agreement”) with the Federal Reserve Bank of San Francisco (the “FRB”). The Order and the Agreement contain substantially similar provisions.

The Order and the Agreement require the Board of Directors of 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) maintaining adequate reserves for loan and lease losses; (vi) improving the capital position of the Bank and, with respect to the Agreement, of Hanmi; (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 requires the Bank to charge off or collect certain problem loans. The Order and the 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 Order, the Bank is also required to increase its capital and maintain certain regulatory capital ratios prior to certain dates specified in the Order. 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:


		Ratio of Tangible Shareholders’
Date		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 and Until the Order is Terminated		Not Less Than 9.5 Percent

If the Bank is not able to maintain the capital ratios identified in the 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.

The Board of Directors and Management are committed to addressing and resolving the matters raised in the Order and the Agreement on a timely basis and actions have already been undertaken to comply with each requirement.

A copy of the Order is attached to this Form 8-K as Exhibit 10.1 and a copy of the Agreement is attached as Exhibit 10.2. The provisions of the Order and the Agreement are incorporated herein by reference, and the description of the Order and the Agreement above is qualified in its entirety by reference to those documents.

On November 5, 2009, Hanmi issued a press release related to the Order and the Agreement, among other things. A copy of the press release is attached as Exhibit 99.1 to this Form 8-K.

Item 2.02 Results of Operations and Financial Condition.

This information set forth under “Item 2.02. Results of Operations and Financial Condition,” including Exhibit 99.1 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.

On November 5, 2009, Hanmi issued a press release announcing its financial results for the three months ended September 30, 2009, among other things. A copy of the press release is attached as Exhibit 99.1 to this Form 8-K.

Item 9.01 Financial Statements and Exhibits.


10.1		Final Order, dated November 2, 2009, issued to Hanmi Bank by the California Department of Financial Institutions.

10.2		Written Agreement, dated November 2, 2009, by and between Hanmi Financial Corporation and Hanmi Bank, on one hand, and the Federal Reserve Bank of San Francisco, on the other hand.

99.1		Press Release, dated November 5, 2009.

Forward-Looking Statements

This form 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 Hanmi believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievements. These statements involve known and unknown risks, uncertainties and other factors that may cause Hanmi’s 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 Hanmi’s operations; the effect of regulatory orders Hanmi or the Bank has entered into and potential future supervisory action against Hanmi or the Bank; general economic and business conditions internationally, nationally and in those areas in which the Bank operates; 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 the Bank’s interest rate spread; risks of natural disasters related to the Bank’s 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 the Bank to declare dividends to Hanmi; adequacy of the Bank’s allowance for loan losses, credit quality and the effect of credit quality on the Bank’s provision for credit losses and allowance for loan losses; changes in the financial performance and/or condition of the Bank’s borrowers and the ability of the Bank’s borrowers to perform under the terms of their loans and other terms of credit agreements; Hanmi’s ability to successfully integrate acquisitions it may make; Hanmi’s ability to control expenses; and changes in securities markets. In addition, Hanmi sets forth certain risks in its reports filed with the Securities and Exchange Commission, including Hanmi’s 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. Hanmi undertakes no obligation to update such forward-looking statements except as required by law.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


Date: November 5, 2009	HANMI FINANCIAL CORPORATION
	By:	/s/ Jay S. Yoo
		Jay S. Yoo
		President and Chief Executive Officer

EXHIBIT INDEX


Exhibit
No.		Description
10.1		Final Order, dated November 2, 2009, issued to Hanmi Bank by the California Department of Financial Institutions.

10.2		Written Agreement, dated November 2, 2009, by and between Hanmi Financial Corporation and Hanmi Bank, on one hand, and the Federal Reserve Bank of San Francisco, on the other hand.

99.1		Press Release, dated November 5, 2009.*


*		Deemed “furnished” and not “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.

EX-10.1 2 v54239exv10w1.htm EX-10.1 exv10w1

Exhibit 10.1


STATE OF CALIFORNIA BUSINESS, TRANSPORTATION AND HOUSING AGENCY		ARNOLD SCHWARZENEGGER, Governor DALE E. BONNER, Secretary
WILLIAM S. HARAF, Commissioner of Financial Institutions www.dfi.ca.gov

October 27, 2009

Board of Directors
Hanmi Bank
3660 Wilshire Boulevard
Penthouse A
Los Angeles, CA 90010


Re:		Hanmi Bank — Order Under Financial Code Section 1913

Members of the Board of Directors:

Pursuant to our telephone conference on October 26, 2009 with Gary Steven Findley and Brian Cho, enclosed is a revised order that the Department of Financial Institutions (DFI) proposes to Hanmi Bank under Financial Code Section 1913. The revised order is attached, marked as “Exhibit A,” to the Waiver and Consent enclosed with this letter. A copy of the revised order marked to show changes from the proposed order enclosed with DFI’s letter dated October 22, 2209 is also enclosed.

If you have any questions or if you wish to discuss the provisions of the revised order, please contact me at 213.897.2172 or David Spainhour at 213-897-5349.

Very truly yours,

WALLACE M. WONG
Senior Counsel

WMW:lca
Enclosures


cc:		Gary Steven Findley, Esq. Mary Luvisi, Federal Reserve Board John Ross, Department of Financial Institutions, Los Angeles David Spainhour, Department of Financial Institutions, Los Angeles


45 Fremont Street, Suite 1700	1810 13^th Street	300 S. Spring Street, Suite 15513	7575 Metropolitan Drive, Suite 108
San Francisco, CA 94105	Sacramento, CA 95811	Los Angeles, CA 90013	San Diego, CA 92108
(415) 263-8500	(916) 322-5966	(213) 897-2085	(619) 682-7227

STATE OF CALIFORNIA

DEPARTMENT OF FINANCIAL INSTITUTIONS


In the Matter of	)
	)
HANMI BANK	)	WAIVER AND CONSENT
	)
	)

Hanmi Bank (Bank) consents to the issuance of an order under Financial Code Section 1913 substantially in the form attached, marked as “Exhibit A,” (Order).

In addition, in connection with the issuance of the Order, Bank waives (i) the issuance of an order under Financial Code Section 1912, (ii) notice and a hearing, and (iii) findings of fact and ultimate findings.

Dated: , 2009.


				HANNI BANK

		By:

				(Signature)

				(Print Name and Title)

STATE OF CALIFORNIA

DEPARTMENT OF FINANCIAL INSTITUTIONS


In the Matter of	)
	)
	)
HANMI BANK	)	FINAL ORDER
	)	(Financial Code Section 1913)
	)
	)

FINAL ORDER

Pursuant to Section 1913 of the Financial Code, the Commissioner of Financial Institutions (Commissioner) hereby orders:

Hanmi Bank (Bank) shall discontinue its unsafe and injurious practices, as follows:

Within 60 days of the effective date of this Order, the board of directors of the Bank shall submit to the Department of Financial Institutions (Department) a written plan to strengthen board oversight of the management and operations of the Bank. The plan shall, at a minimum, address, consider, and include:

(a)

The actions that the board of directors will take to improve the Bank’s condition and maintain effective control over, and supervision of, the Bank’s major operations and activities, including but not limited to, credit risk management, credit administration,

EXHIBIT A

processes to mitigate risks associated with credit concentrations, earnings, and liquidity;

	(b)		The responsibility of the board of directors to monitor management’s adherence to approved policies and procedures, and applicable laws and regulations; and

	(c)		A description of the information and reports that will be regularly reviewed by the board of directors in its oversight of the operations and management of the Bank, including information on the Bank’s adversely classified assets, allowance for loan and lease losses, capital, earnings, and liquidity.

Within 60 days of the effective date of this Order, the Bank shall submit to the Department an acceptable written plan to strengthen credit risk management practices. The plan shall, at a minimum, address, consider, and include:

	(a)		Procedures to periodically review and revise risk exposure limits to address changes in market conditions;

	(b)		Strategies to minimize credit losses and reduce the level of problem assets;

	(c)		Enhanced stress testing of loan and portfolio segments; and

	(d)		Procedures to identify, limit, and manage concentrations of credit that are consistent with the Interagency Guidance on Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices, dated December 12, 2006 (SR 07-1).

Within 60 days of the effective date of this Order, the Bank shall submit to the Department acceptable revised written credit administration policies and procedures that shall, at a minimum, address, consider, and include:

	(a)		For loans that are modified, analyses of borrowers’ current financial condition and guarantors’ cash flow and repayment sources;

	(b)		The appropriate use of interest reserves; and

	(c)		Enhancements to the internal loan grading system to timely and accurately identify individual problem credits.

(a) The Bank shall not, directly or indirectly, extend or renew any credit to or for the benefit of any borrower, including any related interest of the borrower, who is obligated to the Bank in any manner on any extension of credit or portion thereof that has been charged off by the Bank or classified, in whole or in part, “loss” in the Report of Examination of the Bank conducted by the Federal Reserve Bank of San Francisco and the Department that commenced on April 13, 2009 (the “Report of Examination”) or in any subsequent report of examination, as long as such credit remains uncollected.

(b)

The Bank shall not, directly or indirectly, extend or renew any credit to or for the benefit of any borrower, including any related interest of the borrower, whose extension of credit has been classified “doubtful” or “substandard” in the Report of Examination or in any subsequent report of examination, without the prior approval of the Bank’s board of directors or the Bank’s loan committee. The board

of directors or loan committee shall document in writing the reasons for the extension of credit or renewal, specifically certifying that: (i) the extension of credit is necessary to protect the Bank’s interest in the ultimate collection of the credit already granted or (ii) the extension of credit is in full compliance with the Bank’s written loan policy, is adequately secured, and a thorough credit analysis has been performed indicating that the extension or renewal is reasonable and justified, all necessary loan documentation has been properly and accurately prepared and filed, the extension of credit will not impair the Bank’s interest in obtaining repayment of the already outstanding credit, and the board of directors or loan committee reasonably believes that the extension of credit or renewal will be repaid according to its terms. The written certification shall be made a part of the minutes of the board of directors meetings, and a copy of the signed certification, together with the credit analysis and related information that was used in the determination, shall be retained by the Bank in the borrower’s credit file for subsequent supervisory review. For purposes of this Order, the term “related interest” is defined as set forth in Section 215.2(n) of Regulation O of the Board of Governors of the Federal Reserve System (Board of Governors) (12 C.F.R. § 215.2(n)).

(a) Within 60 days of the effective date of this Order, the Bank shall submit to the Department an acceptable written plan designed to

improve the Bank’s position through repayment, amortization, liquidation, additional collateral, or other means on each loan or other asset in excess of $3 million, including other real estate owned (OREO), that (i) is past due as to principal or interest more than 90 days as of the date of this Order; (ii) is on the Bank’s problem loan list; or (iii) was adversely classified in the Report of Examination. In developing the plan for each loan, the Bank shall, at a minimum, review, analyze, and document the financial position of the borrower, including source of repayment, repayment ability, and alternative repayment sources, as well as the value and accessibility of any pledged or assigned collateral, and any possible actions to improve the Bank’s collateral position.

	(b)		Within 30 days of the date that any additional loan or other asset in excess of $3 million, including OREO, becomes past due as to principal or interest for more than 90 days, is on the Bank’s problem loan list, or is adversely classified in any subsequent report of examination of the Bank, the Bank shall submit to the Department an acceptable written plan to improve the Bank’s position on such loan or asset.

	(c)		Within 30 days after the end of each calendar quarter thereafter, the Bank shall submit a written progress report to the Department to update each asset improvement plan, which shall include, at a minimum, the carrying value of the loan or other asset and changes

in the nature and value of supporting collateral, along with a copy of the Bank’s current problem loan list, a list of all loan renewals and extensions without full collection of interest in the last quarter, and past due/non-accrual report. The board of directors shall review the progress reports before submission to the Department and shall document the review in the minutes of the board of directors’ meetings.

(a)

Within 10 days after the effective date of this Order, the Bank shall eliminate from its books, by charge-off or collection, all assets or portions of assets classified “loss” in the Report of Examination that have not been previously collected in full or charged off. Thereafter the Bank shall, within 30 days from the receipt of any federal or state report of examination, charge off all assets classified “loss” unless otherwise approved in writing by the Department.

(b)

Within 60 days after the effective date of this Order, the Bank shall review and revise its allowance for loan and lease losses (ALLL) methodology consistent with relevant supervisory guidance, including the Interagency Policy Statements on the Allowance for Loan and Lease Losses, dated July 2, 2001 (SR 01-17 (Sup)) and December 13, 2006 (SR 06-17), and the findings and recommendations regarding the ALLL set forth in the Report of Examination, and submit a description of the revised methodology to the Department. The revised ALLL methodology shall be designed

			to maintain an adequate ALLL and shall address, consider, and include, at a minimum, the reliability of the Bank’s loan grading system, the volume of criticized loans, concentrations of credit, the current level of past due and nonperforming loans, past loan loss experience, evaluation of probable losses in the Bank’s loan portfolio, including adversely classified loans, and the impact of market conditions on loan and collateral valuations and collectibility.

	(c)		Within 60 days of the effective date of this Order, the Bank shall submit to the Department an acceptable written program for the maintenance of an adequate ALLL. The program shall include policies and procedures to ensure adherence to the revised ALLL methodology and provide for periodic reviews and updates to the ALLL methodology, as appropriate. The program shall also provide for a review of the ALLL by the board of directors on at least a quarterly calendar basis. Any deficiency found in the ALLL shall be remedied in the quarter it is discovered, prior to the filing of the Consolidated Reports of Condition and Income, by additional provisions. The board of directors shall maintain written documentation of its review, including the factors considered and conclusions reached by the Bank in determining the adequacy of the ALLL. During the term of this Order, the Bank shall submit to the Department, within 30 days after the end of each calendar quarter, a written report regarding the board of directors’ quarterly review of the

ALLL and a description of any changes to the methodology used in determining the amount of ALLL for that quarter.

(a)

By December 31, 2009, the Bank shall have and thereafter continue to maintain a ratio of tangible shareholder’s equity to total tangible assets of not less than 7.0%. Such requirement shall be in addition to a fully funded ALLL, the adequacy of which shall be satisfactory to the Commissioner as determined at subsequent examinations and/or visitations.

	(b)		By July 31, 2010, the Bank shall increase its contributed equity capital by not less than an additional $100 million, and shall thereafter maintain a ratio of tangible shareholder’s equity to total tangible assets of not less than 9.0%. Such requirement shall be in addition to a fully funded ALLL, the adequacy of which shall be satisfactory to the Commissioner as determined at subsequent examinations and/or visitations.

	(c)		By December 31, 2010, and thereafter during the life of this Order, the Bank shall maintain a ratio of tangible shareholder’s equity to total tangible assets of not less than 9.5%. Such requirement shall be in addition to a fully funded ALLL, the adequacy of which shall be satisfactory to the Commissioner as determined at subsequent examinations and/or visitations.

By November 30, 2009, the Bank shall develop, adopt, and implement a comprehensive capital augmentation and maintenance plan (“Capital

		Plan”) acceptable to the Commissioner. Such Capital Plan shall identify the sources and timing of additional capital and shall, at a minimum, provide a plan for compliance with Subparagraphs 7(a) through 7(d) of this Order. Such Capital Plan shall include provisions for monitoring, controlling, and addressing risks to the Bank’s capital, and shall also discuss contingency plans for identifying and raising additional capital in the future if and when it should become necessary. Such Capital Plan shall be in a form and shall be implemented in a manner acceptable to the Commissioner.

9.		The Bank shall notify the Department, in writing, no more than 30 days after the end of any quarter in which any of the Bank’s capital ratios (total risk-based, Tier 1, or leverage) fall below the approved Capital Plan’s minimum ratios. Together with the notification, the Bank shall submit an acceptable written plan that details the steps the Bank will take to increase the Bank’s capital ratios to or above the approved Capital Plan’s minimums.

10.

(a)

Within 60 days of the effective date of this Order, the Bank shall submit to the Department a strategic plan to improve the Bank’s earnings, and a budget for 2010. The written plan and budget shall include, but not be limited to:

(i)

Identification of the major areas where, and means by which, the board of directors will seek to improve the Bank’s operating performance;

	(ii)		A realistic and comprehensive budget for calendar year 2010, including income statement and balance sheet projections; and

	(iii)		A description of the operating assumptions that form the basis for, and adequately support, major projected income, expense, and balance sheet components.

(b)

A strategic plan and budget for each calendar year subsequent to 2010 shall be submitted to the Department at least 30 days prior to the beginning of that calendar year.

11.		Within 60 days of the effective date of this Order, the Bank shall submit to the Department an acceptable written plan designed to improve management of the Bank’s liquidity position and funds management practices that includes, but is not limited to, measures to reduce reliance on short-term wholesale funding, including brokered deposits.

12.		Within 60 days of the effective date of this Order, the Bank shall submit to the Department an acceptable revised written contingency funding plan that, at a minimum, identifies available sources of liquidity and includes adverse scenario planning.

13.

(a)

The Bank shall not declare or pay any dividends, or make any other distribution to its shareholder, without the prior written approval of the Department.

(b)

All requests for prior approval shall be received at least 30 days prior to the proposed dividend declaration date. All requests shall

contain, at a minimum, current and projected information on the Bank’s capital, asset quality, earnings and ALLL needs.

14.

(a)

Within 60 days from the date of this Order, and during the life of this Order, the Bank’s board of directors shall have and retain management acceptable to the Commissioner. Such management shall include a Chief Executive Officer, a Chief Financial Officer, and a Chief Credit Officer (collectively referred to as “Senior Executive Officers”) qualified to restore the Bank to satisfactory condition.

(b)

During the life of this Order, the Bank shall have and retain members of the Bank’s board of directors acceptable to the Commissioner. Such members of the Bank’s board of directors shall possess the skills and abilities to satisfactorily perform the duties of a director of the Bank, to properly oversee and provide appropriate guidance to the management of the Bank, and shall be qualified to restore the Bank to satisfactory condition. Without limiting the generality of the foregoing, the Commissioner reserves the right to determine whether Bank’s current senior officers and the current members of Bank’s board of directors will be considered to be qualified for purposes of this Order.

(c)

During the life of this Order, the Bank’s board of directors shall notify the Commissioner in writing when it proposes to add any
individual to the Bank’s board of directors or employ any individual

as a Senior Executive Officer. The notification must be received at least 30 days before such addition or employment is intended to become effective and should include a detailed description of the background and experience of the individual or individuals to be added or employed. The Bank may not add any individual to its board of directors or employ any individual as a Senior Executive Officer unless and until the Commissioner has issued a notice of non-disapproval in writing.

15.

The Bank shall not open, relocate or discontinue any branch office or place of business/loan production office without the prior written consent of the Commissioner.

16.

(a)

Within 10 days of the effective date of this Order, the board of directors of the Bank shall appoint a committee (the “Compliance Committee”) to monitor and coordinate the Bank’s compliance with the provisions of this Order. The Compliance Committee shall include a majority of outside directors who are not executive officers or principal shareholders of the Bank or Hanmi Financial Corporation, as defined in Sections 215.2(e)(1) and 215.2(m)(1) of Regulation O of the Board of Governors (12 C.F.R. §§ 215.2(e)(1) and 215.2(m)(1)). At a minimum, the Compliance Committee shall meet at least monthly, keep detailed minutes of each meeting, and report its findings to the board of directors of the Bank.

(b)

Within 30 days after the end of each calendar quarter following the effective date of this Order, the Bank shall submit to the Department written progress reports detailing the form and manner of all actions taken to secure compliance with this Order and the results thereof.

17.

(a)

The Bank shall submit written plans, policies, procedures, and a program that are acceptable to the Department within the applicable time periods set forth in Paragraphs 2, 3, 5, 6(c), 7, 8, 10, and 11 of this Order.

	(b)		Within 10 days of approval by the Department, the Bank shall adopt the approved plans, policies, procedures, and program. Upon adoption, the Bank shall promptly implement the approved plans, policies, procedures, and program, and thereafter fully comply with them.

	(c)		During the term of this Order, the approved plans, policies, procedures, and program shall not be amended or rescinded without the prior written approval of the Department.

18.

If the Department determines that the Bank has violated any substantive provision of this Order, the Bank shall, for the purposes of the California Financial Code, be deemed to be conducting its business in an unsafe or unauthorized manner and may subject the Bank to further regulatory enforcement action by the Department.

II.

This Order is effective immediately and shall remain effective and enforceable except to the extent, and until such time as, the Commissioner shall amend, supplement, suspend or terminate this Order.

Dated: ,2009.




		William S. Haraf
		Commissioner California Department of Financial Institutions

Marked copy 10-27-09

STATE OF CALIFORNIA

DEPARTMENT OF FINANCIAL INSTITUTIONS


In the Matter of	)
	)
	)
HANMI BANK	)	FINAL ORDER
	)	(Financial Code Section 1913)
	)
	)

FINAL ORDER

Pursuant to Section 1913 of the Financial Code, the Commissioner of Financial Institutions (Commissioner) hereby orders:

Hanmi Bank (Bank) shall discontinue its unsafe and injurious practices, as follows:

(a)

Exhibit A

			processes to mitigate risks associated with credit concentrations, earnings, and liquidity;

	(b)		The responsibility of the board of directors to monitor management’s adherence to approved policies and procedures, and applicable laws and regulations; and

	(c)		A description of the information and reports that will be regularly reviewed by the board of directors in its oversight of the operations and management of the Bank, including information on the Bank’s adversely classified assets, allowance for loan and lease losses, capital, earnings, and liquidity.

	(a)		Procedures to periodically review and revise risk exposure limits to address changes in market conditions;

	(b)		Strategies to minimize credit losses and reduce the level of problem assets;

	(c)		Enhanced stress testing of loan and portfolio segments; and

	(d)		Procedures to identify, limit, and manage concentrations of credit that are consistent with the Interagency Guidance on Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices, dated December 12, 2006 (SR 07-1).

	(a)		For loans that are modified, analyses of borrowers’ current financial condition and guarantors’ cash flow and repayment sources;

	(b)		The appropriate use of interest reserves; and

	(c)		Enhancements to the internal loan grading system to timely and accurately identify individual problem credits.

4.	(a)	The Bank shall not, directly or indirectly, extend or renew any credit to or for the benefit of any borrower, including any related interest of the borrower, who is obligated to the Bank in any manner on any extension of credit or portion thereof that has been charged off by the Bank or classified, in whole or in part, “loss” in the Report of Examination of the Bank conducted by the Federal Reserve Bank of San Francisco and the Department that commenced on April 13, 2009 (the “Report of Examination”) or in any subsequent report of examination, as long as such credit remains uncollected.

	(b)	The Bank shall not, directly or indirectly, extend or renew any credit to or for the benefit of any borrower, including any related interest of the borrower, whose extension of credit has been classified “doubtful” or “substandard” in the Report of Examination or in any subsequent report of examination, without the prior approval of the Bank’s board of directors or the Bank’s loan committee. The board


	5.	(a)		Within 60 days of the effective date of this Order, the Bank shall submit to the Department an acceptable written plan designed to

			improve the Bank’s position through repayment, amortization, liquidation, additional collateral, or other means on each loan or other asset in excess of $3 million, including other real estate owned (OREO), that (i) is past due as to principal or interest more than 90 days as of the date of this Order; (ii) is on the Bank’s problem loan list; or (iii) was adversely classified in the Report of Examination. In developing the plan for each loan, the Bank shall, at a minimum, review, analyze, and document the financial position of the borrower, including source of repayment, repayment ability, and alternative repayment sources, as well as the value and accessibility of any pledged or assigned collateral, and any possible actions to improve the Bank’s collateral position.

	(b)		Within 30 days of the date that any additional loan or other asset in excess of $3 million, including OREO, becomes past due as to principal or interest for more than 90 days, is on the Bank’s problem loan list, or is adversely classified in any subsequent report of examination of the Bank, the Bank shall submit to the Department an acceptable written plan to improve the Bank’s position on such loan or asset.

	(c)		Within 30 days after the end of each calendar quarter thereafter, the Bank shall submit a written progress report to the Department to update each asset improvement plan, which shall include, at a minimum, the carrying value of the loan or other asset and changes


	6.	(a)		Within 10 days after the effective date of this Order, the Bank shall eliminate from its books, by charge-off or collection, all assets or portions of assets classified “loss” in the Report of Examination that have not been previously collected in full or charged off. Thereafter the Bank shall, within 30 days from the receipt of any federal or state report of examination, charge off all assets classified “loss” unless otherwise approved in writing by the Department.


	(b)		Within 60 days after the effective date of this Order, the Bank shall review and revise its allowance for loan and lease losses (ALLL) methodology consistent with relevant supervisory guidance, including the Interagency Policy Statements on the Allowance for Loan and Lease Losses, dated July 2, 2001 (SR 01-17 (Sup)) and December 13, 2006 (SR 06-17), and the findings and recommendations regarding the ALLL set forth in the Report of Examination, and submit a description of the revised methodology to the Department. The revised ALLL methodology shall be designed

			to maintain an adequate ALLL and shall address, consider, and include, at a minimum, the reliability of the Bank’s loan grading system, the volume of criticized loans, concentrations of credit, the current level of past due and nonperforming loans, past loan loss experience, evaluation of probable losses in the Bank’s loan portfolio, including adversely classified loans, and the impact of market conditions on loan and collateral valuations and collectibility.

	(c)		Within 60 days of the effective date of this Order, the Bank shall submit to the Department an acceptable written program for the maintenance of an adequate ALLL. The program shall include policies and procedures to ensure adherence to the revised ALLL methodology and provide for periodic reviews and updates to the ALLL methodology, as appropriate. The program shall also provide for a review of the ALLL by the board of directors on at least a quarterly calendar basis. Any deficiency found in the ALLL shall be remedied in the quarter it is discovered, prior to the filing of the Consolidated Reports of Condition and Income, by additional provisions. The board of directors shall maintain written documentation of its review, including the factors considered and conclusions reached by the Bank in determining the adequacy of the ALLL. During the term of this Order, the Bank shall submit to the Department, within 30 days after the end of each calendar quarter, a written report regarding the board of directors’ quarterly review of the

ALLL and a description of any changes to the methodology used in determining the amount of ALLL for that quarter.


	7.	(a)		By December 31, 2009, the Bank shall have and thereafter continue to maintain a ratio of tangible shareholder’s equity to total tangible assets of not less than 7.0%. Such requirement shall be in addition to a fully funded ALLL, the adequacy of which shall be satisfactory to the Commissioner as determined at subsequent examinations and/or visitations.


	(b) By March 31, 2010, the Bank shall increase its contributed equity capital by not less than $30 million, and shall thereafter maintain a ratio of tangible shareholder’s equity to total tangible assets of not less than 8.0%. Such requirement shall be in addition to a fully funded ALLL, the adequacy of which shall be satisfactory to the Commissioner as determined at subsequent examinations and/or visitations.

	(cb)		By July 31, 2010, the Bank shall increase its contributed equity capital by not less than an additional $100 million, and shall thereafter maintain a ratio of tangible shareholder’s equity to total tangible assets of not less than 9.0%. Such requirement shall be in addition to a fully funded ALLL, the adequacy of which shall be satisfactory to the Commissioner as determined at subsequent examinations and/or visitations.

(dc)

By December 31, 2010, and thereafter during the life of this Order, the Bank shall maintain a ratio of tangible shareholder’s equity to total tangible assets of not less than 9.5%. Such requirement shall be in addition to a fully funded ALLL, the adequacy of which shall be satisfactory to the Commissioner as determined at subsequent examinations and/or visitations.

	8.		By November 30, 2009, the Bank shall develop, adopt, and implement a comprehensive capital augmentation and maintenance plan (“Capital Plan”) acceptable to the Commissioner. Such Capital Plan shall identify the sources and timing of additional capital and shall, at a minimum, provide a plan for compliance with Subparagraphs 7(a) through 7(d) of this Order. Such Capital Plan shall include provisions for monitoring, controlling, and addressing risks to the Bank’s capital, and shall also discuss contingency plans for identifying and raising additional capital in the future if and when it should become necessary. Such Capital Plan shall be in a form and shall be implemented in a manner acceptable to the Commissioner.

	9.		The Bank shall notify the Department, in writing, no more than 30 days after the end of any quarter in which any of the Bank’s capital ratios (total risk-based, Tier 1, or leverage) fall below the approved Capital Plan’s minimum ratios. Together with the notification, the Bank shall submit an acceptable written plan that details the steps the Bank will take to increase

the Bank’s capital ratios to or above the approved Capital Plan’s minimums.

10.

(a)

	(i)		Identification of the major areas where, and means by which, the board of directors will seek to improve the Bank’s operating performance;

	(ii)		A realistic and comprehensive budget for calendar year 2010, including income statement and balance sheet projections; and

	(iii)		A description of the operating assumptions that form the basis for, and adequately support, major projected income, expense, and balance sheet components.

(b)

A strategic plan and budget for each calendar year subsequent to 2010 shall be submitted to the Department at least 30 days prior to the beginning of that calendar year.

11.

Within 60 days of the effective date of this Order, the Bank shall submit to the Department an acceptable written plan designed to improve management of the Bank’s liquidity position and funds management practices that includes, but is not limited to, measures to reduce reliance on short-term wholesale funding, including brokered deposits.

12.

Within 60 days of the effective date of this Order, the Bank shall submit to the Department an acceptable revised written contingency funding plan that, at a minimum, identifies available sources of liquidity and includes adverse scenario planning.

13.	(a)	The Bank shall not declare or pay any dividends, or make any other distribution to its shareholder, without the prior written approval of the Department.

	(b)	All requests for prior approval shall be received at least 30 days prior to the proposed dividend declaration date. All requests shall contain, at a minimum, current and projected information on the Bank’s capital, asset quality, earnings and ALLL needs.

14.

(a)

(b)

			appropriate guidance to the management of the Bank, and shall be qualified to restore the Bank to satisfactory condition. Without limiting the generality of the foregoing, the Commissioner reserves the right to determine whether Bank’s current senior officers and the current members of Bank’s board of directors will be considered to be qualified for purposes of this Order.

	(c)		During the life of this Order, the Bank’s board of directors shall notify the Commissioner in writing when it proposes to add any individual to the Bank’s board of directors or employ any individual as a Senior Executive Officer. The notification must be received at least 30 days before such addition or employment is intended to become effective and should include a detailed description of the background and experience of the individual or individuals to be added or employed. The Bank may not add any individual to its board of directors or employ any individual as a Senior Executive Officer unless and until the Commissioner has issued a notice of non-disapproval in writing.

15.

The Bank shall not open, relocate or discontinue any branch office or place of business/loan production office without the prior written consent of the Commissioner.

16.

(a)

the provisions of this Order. The Compliance Committee shall include a majority of outside directors who are not executive officers or principal shareholders of the Bank or Hanmi Financial Corporation, as defined in Sections 215.2(e)(1) and 215.2(m)(1) of Regulation O of the Board of Governors (12 C.F.R. §§ 215.2(e)(1) and 215.2(m)(1)). At a minimum, the Compliance Committee shall meet at least monthly, keep detailed minutes of each meeting, and report its findings to the board of directors of the Bank.

(b)

17.

(a)

(b)

Within 10 days of approval by the Department, the Bank shall adopt the approved plans, policies, procedures, and program. Upon adoption, the Bank shall promptly implement the approved plans, policies, procedures, and program, and thereafter fully comply with them.

(c)

During the term of this Order, the approved plans, policies, procedures, and program shall not be amended or rescinded without the prior written approval of the Department.

18.

II.

This Order is effective immediately and shall remain effective and enforceable except to the extent, and until such time as, the Commissioner shall amend, supplement, suspend or terminate this Order.

Dated: , 2009.




		William S. Haraf
		Commissioner California Department of Financial Institutions

EX-10.2 3 v54239exv10w2.htm EX-10.2 exv10w2

Exhibit 10.2

UNITED STATES OF AMERICA
BEFORE THE
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D.C.



Written Agreement by and among

HANMI FINANCIAL CORPORATION		Docket Nos. 09-141-WA/RB-HC
Los Angeles, California		09-141 -WA/RB-SM

HANMI BANK
Los Angeles, California

and

FEDERAL RESERVE BANK OF
SAN FRANCISCO
San Francisco, California

WHEREAS, in recognition of their common goal to maintain the financial soundness of Hanmi Financial Corporation, Los Angeles, California (“Hanmi”), a registered bank holding company, and its subsidiary bank, Hanmi Bank, Los Angeles, California (the “Bank”), a state chartered bank that is a member of the Federal Reserve System, Hanmi, the Bank, and the Federal Reserve Bank of San Francisco (the “Reserve Bank”) have mutually agreed to enter into this Written Agreement (the “Agreement”); and

WHEREAS, on , 2009, Hanmi’s and the Bank’s boards of directors, at duly constituted meetings, adopted resolutions authorizing and directing and to consent to this Agreement on behalf of Hanmi and the Bank, respectively, and consenting to compliance with each and every applicable provision of this Agreement by Hanmi, the Bank, and their institution-affiliated parties, as defined in

sections 3(u) and 8(b)(3) of the Federal Deposit Insurance Act, as amended (the “FDI Act”) (12 U.S.C. §§ 1813(u) and 1818(b)(3)).

NOW, THEREFORE, Hanmi, the Bank, and the Reserve Bank agree as follows:

Board Oversight

1. Within 60 days of this Agreement, the board of directors of the Bank shall submit to the Reserve Bank a written plan to strengthen board oversight of the management and operations of the Bank. The plan shall, at a minimum, address, consider, and include:

(a) The actions that the board of directors will take to improve the Bank’s condition and maintain effective control over, and supervision of, the Bank’s major operations and activities, including but not limited to, credit risk management, credit administration, processes to mitigate risks associated with credit concentrations, earnings, and liquidity;

(b) the responsibility of the board of directors to monitor management’s adherence to approved policies and procedures, and applicable laws and regulations; and

(c) a description of the information and reports that will be regularly reviewed by the board of directors in its oversight of the operations and management of the Bank, including information on the Bank’s adversely classified assets, allowance for loan and lease losses, capital, earnings, and liquidity.

Credit Risk Management

2. Within 60 days of this Agreement, the Bank shall submit to the Reserve Bank an acceptable written plan to strengthen credit risk management practices. The plan shall, at a minimum, address, consider, and include:

(a) Procedures to periodically review and revise risk exposure limits to address changes in market conditions;

(b) strategies to minimize credit losses and reduce the level of problem assets;

(d) procedures to identify, limit, and manage concentrations of credit that are consistent with the Interagency Guidance on Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices, dated December 12, 2006 (SR 07-1).

Credit Administration

3. Within 60 days of this Agreement, the Bank shall submit to the Reserve Bank acceptable revised written credit administration policies and procedures that shall, at a minimum, address, consider, and include:

(a) For loans that are modified, analyses of borrowers’ current financial condition and guarantors’ cash flow and repayment sources;

(b) the appropriate use of interest reserves; and

Asset Improvement

4. (a) The Bank shall not, directly or indirectly, extend or renew any credit to or for the benefit of any borrower, including any related interest of the borrower, who is obligated to the Bank in any manner on any extension of credit or portion thereof that has been charged off by the Bank or classified, in whole or in part, “loss” in the report of examination of the Bank conducted by the Reserve Bank and the State of California Department of Financial Institutions (the “Department”) that commenced on April 13, 2009 (the “Report of Examination”) or in any subsequent report of examination, as long as such credit remains uncollected.

(b) The Bank shall not, directly or indirectly, extend or renew any credit to or for the benefit of any borrower, including any related interest of the borrower, whose extension of credit has been classified “doubtful” or “substandard” in the Report of Examination or in any subsequent report of examination, without the prior approval of the Bank’s board of directors or the Bank’s loan committee. The board of directors or loan committee shall document in writing the reasons for the extension of credit or renewal, specifically certifying that: (i) the extension of credit is necessary to protect the Bank’s interest in the ultimate collection of the credit already granted or (ii) the extension of credit is in full compliance with the Bank’s written loan policy, is adequately secured, and a thorough credit analysis has been performed indicating that the extension or renewal is reasonable and justified, all necessary loan documentation has been properly and accurately prepared and filed, the extension of credit will not impair the Bank’s interest in obtaining repayment of the already outstanding credit, and the board of directors or loan committee reasonably believes that the extension of credit or renewal will be repaid according to its terms. The written certification shall be made a part of the minutes of the board of directors meetings, and a copy of the signed certification, together with the credit analysis and related information that was used in the determination, shall be retained by the Bank in the borrower’s credit file for subsequent supervisory review. For purposes of this Agreement, the term “related interest” is defined as set forth in section 215.2(n) of Regulation O of the Board of Governors of the Federal Reserve System (the “Board of Governors”) (12 C.F.R. § 215.2(n)).

5. (a) Within 60 days of this Agreement, the Bank shall submit to the Reserve Bank an acceptable written plan designed to improve the Bank’s position through repayment, amortization, liquidation, additional collateral, or other means on each loan or other asset in excess of $3 million, including OREO, that (i) is past due as to principal or interest more than

ALLL. During the term of this Agreement, the Bank shall submit to the Reserve Bank, within 30 days after the end of each calendar quarter, a written report regarding the board of directors’ quarterly review of the ALLL and a description of any changes to the methodology used in determining the amount of ALLL for that quarter.

Capital Plan

7. Within 60 days of this Agreement, Hanmi and the Bank shall submit to the Reserve Bank an acceptable joint written plan to maintain sufficient capital at Hanmi on a consolidated basis, and the Bank as a separate legal entity on a stand-alone basis. The plan shall, at a minimum, address, consider, and include:

(a) Hanmi’s current and future capital requirements, including compliance with the Capital Adequacy Guidelines for Bank Holding Companies: Risk-Based Measure and Tier 1 Leverage Measure, Appendices A and D of Regulation Y of the Board of Governors (12 C.F.R. Part 225, App. A and D);

(b) the Bank’s current and future capital requirements, including compliance with the Capital Adequacy Guidelines for State Member Banks: Risk-Based Measure and Tier 1 Leverage Measure, Appendices A and B of Regulation H of the Board of Governors (12 C.F.R. Part 208, App. A and B);

(c) the adequacy of the Bank’s capital, taking into account the volume of classified credits, concentrations of credit, ALLL, current and projected asset growth, and projected retained earnings;

(d) the source and timing of additional funds to fulfill Hanmi’s and the Bank’s future capital requirements; and

(e) the requirements of section 225.4(a) of Regulation Y of the Board of Governors (12 C.F.R. § 225.4(a)) that Hanmi serve as a source of strength to the Bank.

8. Hanmi and the Bank shall notify the Reserve Bank, in writing, no more than 30 days after the end of any quarter in which any of Hanmi’s consolidated capital ratios or the Bank’s capital ratios (total risk-based, Tier 1, or leverage) fall below the approved capital plan’s minimum ratios. Together with the notification, Hanmi and the Bank, as appropriate, shall submit an acceptable written plan that details the steps Hanmi or the Bank, as appropriate, will take to increase Hanmi’s or the Bank’s capital ratios to or above the approved capital plan’s minimums.

Strategic Plan and Budget

9. (a) Within 60 days of this Agreement, the Bank shall submit to the Reserve Bank a strategic plan to improve the Bank’s earnings, and a budget for 2010. The written plan and budget shall include, but not be limited to:

(i) Identification of the major areas where, and means by which, the board of directors will seek to improve the Bank’s operating performance;

(ii) a realistic and comprehensive budget for calendar year 2010, including income statement and balance sheet projections; and

(iii) a description of the operating assumptions that form the basis for, and adequately support, major projected income, expense, and balance sheet components.

(b) A strategic plan and budget for each calendar year subsequent to 2010 shall be submitted to the Reserve Bank at least 30 days prior to the beginning of that calendar year.

Liquidity/Funds Management

10. Within 60 days of this Agreement, the Bank shall submit to the Reserve Bank an acceptable written plan designed to improve management of the Bank’s liquidity position and funds management practices that includes, but is not limited to, measures to reduce reliance on short-term wholesale funding, including brokered deposits.

11. Within 60 days of this Agreement, the Bank shall submit to the Reserve Bank an acceptable revised written contingency funding plan that, at a minimum, identifies available sources of liquidity and includes adverse scenario planning.

Dividends

12. (a) Hanmi and the Bank shall not declare or pay any dividends without the prior written approval of the Reserve Bank and the Director of the Division of Banking Supervision and Regulation of the Board of Governors (the “Director”).

(b) Hanmi shall not take any other form of payment representing a reduction in capital from the Bank without the prior written approval of the Reserve Bank.

(c) Hanmi and its nonbank subsidiaries shall not make any distributions of interest, principal, or other sums on subordinated debentures or trust preferred securities without the prior written approval of the Reserve Bank and the Director.

(d) All requests for prior approval shall be received at least 30 days prior to the proposed dividend declaration date, proposed distribution on subordinated debentures, and required notice of deferral on trust preferred securities. All requests shall contain, at a minimum, current and projected information, as appropriate, on Hanmi’s capital, earnings, and cash flow; the Bank’s capital, asset quality, earnings and ALLL needs; and identification of the sources of funds for the proposed payment or distribution. Hanmi and the Bank, as appropriate, must also

demonstrate that the requested declaration or payment of dividends is consistent with the Board of Governors’ Policy Statement on the Payment of Cash Dividends by State Member Banks and Bank Holding Companies, dated November 14, 1985 (Federal Reserve Regulatory Service, 4-877 at page 4-323).

Debt and Stock Redemption

13. (a) Hanmi shall not, directly or indirectly, incur, increase, or guarantee any debt without the prior written approval of the Reserve Bank. All requests for prior written approval shall contain, but not be limited to, a statement regarding the purpose of the debt, the terms of the debt, and the planned source(s) for debt repayment, and an analysis of the cash flow resources available to meet such debt repayment.

(b) Hanmi shall not, directly or indirectly, purchase or redeem any shares of its stock without the prior written approval of the Reserve Bank.

Compliance with Laws and Regulations

14. (a) In appointing any new director or senior executive officer, or changing the responsibilities of any senior executive officer so that the officer would assume a different senior executive officer position, Hanmi and the Bank shall comply with the notice provisions of section 32 of the FDI Act (12 U.S.C. § 1831i) and Subpart H of Regulation Y of the Board of Governors (12 C.F.R. §§ 225.71 et seq.).

(b) Hanmi and the Bank shall comply with the restrictions on indemnification and severance payments of section 18(k) of the FDI Act (12 U.S.C. § 1828(k)) and Part 359 of the Federal Deposit Insurance Corporation’s regulations (12 C.F.R. Part 359).

Compliance with the Agreement

15. (a) Within 10 days of this Agreement, the boards of directors of Hanmi and the Bank shall appoint a joint committee (the “Compliance Committee”) to monitor and coordinate Hanmi’s and the Bank’s compliance with the provisions of this Agreement. The Compliance Committee shall include a majority of outside directors who are not executive officers or principal shareholders of Hanmi and the Bank, as defined in sections 215.2(e)(l) and 215.2(m)(l) of Regulation O of the Board of Governors (12 C.F.R. §§ 215.2(e)(l) and 215.2(m)(l)). At a minimum, the Compliance Committee shall meet at least monthly, keep detailed minutes of each meeting, and report its findings to the boards of directors of Hanmi and the Bank.

(b) Within 30 days after the end of each calendar quarter following the date of this Agreement, the Bank shall submit to the Reserve Bank written progress reports detailing the form and manner of all actions taken to secure compliance with this Agreement and the results thereof.

Approval and Implementation of Plans, Policies, Procedures, and Program

16. (a) The Bank and, as applicable, Hanmi shall submit written plans, policies, procedures, and a program that are acceptable to the Reserve Bank within the applicable time periods set forth in paragraphs 2, 3, 5, 6(c), 7, 8, 10, and 11 of this Agreement.

(b) Within 10 days of approval by the Reserve Bank, the Bank and, as applicable, Hanmi shall adopt the approved plans, policies, procedures, and program. Upon adoption, the Bank and, as applicable, Hanmi shall promptly implement the approved plans, policies, procedures, and program, and thereafter fully comply with them.

(c) During the term of this Agreement, the approved plans, policies, procedures, and program shall not be amended or rescinded without the prior written approval of the Reserve Bank.

Communications

17. All communications regarding this Agreement shall be sent to:

	(a)		Mr. Stanley Crisp Vice President Regional Financial Institutions Group Banking Supervision & Regulation Federal Reserve Bank of San Francisco 101 Market Street San Francisco, California 94105

	(b)		Mr. Jay S. Yoo President and Chief Executive Officer Hanmi Financial Corporation Hanmi Bank 3660 Wilshire Boulevard Penthouse A Los Angeles, California 90010

Miscellaneous

18. Notwithstanding any provision of this Agreement, the Reserve Bank may, in its sole discretion, grant written extensions of time to Hanmi and the Bank to comply with any provision of this Agreement.

19. The provisions of this Agreement shall be binding upon Hanmi, the Bank, and their institution-affiliated parties, in their capacities as such, and their successors and assigns.

20. Each provision of this Agreement shall remain effective and enforceable until stayed, modified, terminated, or suspended in writing by the Reserve Bank.

21. The provisions of this Agreement shall not bar, estop, or otherwise prevent the Board of Governors, the Reserve Bank, the Department, or any other federal or state agency

from taking any other action affecting Hanmi, the Bank, or any of their current or former institution-affiliated parties and their successors and assigns.

22. Pursuant to Section 50 of the FDI Act (12 U.S.C. § 1831aa), this Agreement is enforceable by the Board of Governors under Section 8 of the FDI Act (12 U.S.C. § 1818).

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the ___ th day of , 2009.


HANMI FINANCIAL CORPORATION	FEDERAL RESERVE BANK OF SAN FRANCISCO

By:	By:
		Stanley Crisp
		Vice President

HANMI BANK

By:

EX-99.1 4 v54239exv99w1.htm EX-99.1 exv99w1

Exhibit 99.1

Hanmi Financial Corporation
Reports Third-quarter 2009 Financial Results and
Formalizes Agreement with Regulators

LOS ANGELES — November 5, 2009 — 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.

- 1 -

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:


		Ratio of Tangible Shareholders’
Date		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 and Until 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

- 2 -

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.

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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 Sept 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 loans (“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

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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 4^th 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 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; 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

- 5 -

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.

Contact

Hanmi Financial Corporation


BRIAN E. CHO		DAVID YANG
Chief Financial Officer		Investor Relations and Corporate Planning
(213) 368-3200		(213) 637-4798

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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	)%

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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

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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.

- 9 -

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	%

- 10 -

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
				Interest		Average						Interest		Average						Interest		Average						Interest		Average						Interest		Average
	Average			Income/		Yield/			Average			Income/		Yield/			Average			Income/		Yield/			Average			Income/		Yield/			Average			Income/		Yield/
	Balance			Expense		Rate			Balance			Expense		Rate			Balance			Expense		Rate			Balance			Expense		Rate			Balance			Expense		Rate
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.

- 11 -

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