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Section 1: 8-K (FORM 8-K)

 

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): October 17, 2017  

HANMI FINANCIAL CORPORATION
(Exact Name of Registrant as Specified in Charter)

Delaware000-3042195-4788120
(State or Other Jurisdiction of Incorporation)(Commission File Number)(I.R.S. Employer Identification Number)

 

3660 Wilshire Boulevard, Penthouse Suite A, Los Angeles, California 90010
(Address of Principal Executive Offices) (Zip Code)

(213) 382-2200
(Registrant's telephone number, including area code)

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:

 [   ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 [   ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 [   ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 [   ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company [    ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [    ]

 
 

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 October 17, 2017, Hanmi Financial Corporation (“Hanmi Financial”) issued a press release announcing its financial results for the quarter ended September 30, 2017. A copy of the press release is attached as Exhibit 99.1 to this Form 8-K.

Item 9.01. Financial Statements and Exhibits.

(d)           Exhibits

99.1        Press release issued by Hanmi Financial dated October 17, 2017. 

Forward-Looking Statements

This press release contains forward-looking statements, which are included in accordance with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” or “continue,” or the negative of such terms and other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. All statements other than statements of historical fact are “forward–looking statements” for purposes of federal and state securities laws, including, but not limited to, statements about anticipated future operating and financial performance, financial position and liquidity, business strategies, regulatory and competitive outlook, investment and expenditure plans, capital and financing needs and availability, plans and objectives of management for future operations, developments regarding our capital plans, strategic alternatives for a possible business combination, merger or sale transaction, and other similar forecasts and statements of expectation and statements of assumption underlying any of the foregoing. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ from those expressed or implied by the forward-looking statement. These factors include the following: failure to maintain adequate levels of capital and liquidity to support our operations; the effect of potential future supervisory action against us or Hanmi Bank; general economic and business conditions internationally, nationally and in those areas in which we operate; volatility and deterioration in the credit and equity markets; changes in consumer spending, borrowing and savings habits; availability of capital from private and government sources; demographic changes; competition for loans and deposits and failure to attract or retain loans and deposits; fluctuations in interest rates and a decline in the level of our interest rate spread; risks of natural disasters related to our real estate portfolio; risks associated with Small Business Administration loans; failure to attract or retain key employees; changes in governmental regulation, including, but not limited to, any increase in FDIC insurance premiums; ability of Hanmi Bank to make distributions to Hanmi Financial Corporation, which is restricted by certain factors, including Hanmi Bank’s retained earnings, net income, prior distributions made, and certain other financial tests; ability to identify a suitable strategic partner or to consummate a strategic transaction; adequacy of our allowance for loan and lease losses; credit quality and the effect of credit quality on our provision for loan and lease losses and allowance for loan and lease losses; changes in the financial performance and/or condition of our borrowers and the ability of our borrowers to perform under the terms of their loans and other terms of credit agreements; our ability to control expenses; and changes in securities markets. In addition, we set forth certain risks in our reports filed with the U.S. Securities and Exchange Commission, including, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2016, our Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K that we will file hereafter, which could cause actual results to differ from those projected. We undertake no obligation to update such forward-looking statements except as required by law.


SIGNATURE

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.

 HANMI FINANCIAL CORPORATION
   
  
Date: October 17, 2017By: /s/ C. G. Kum        
  C. G. Kum
  President and Chief Executive Officer
  


EXHIBIT INDEX

 

Exhibit No. Description
  
99.1 Press release, dated October 17, 2017.*


*

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.

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Section 2: EX-99.1 (PRESS RELEASE)

EdgarFiling

EXHIBIT 99.1

Hanmi’s Third Quarter Results Driven by Strong Growth in Loans and Net Income

2017 Third Quarter Highlights:      

LOS ANGELES, Oct. 17, 2017 (GLOBE NEWSWIRE) -- Hanmi Financial Corporation (NASDAQ:HAFC) or (“Hanmi”), the parent company of Hanmi Bank (the “Bank”) today reported net income for the 2017 third quarter of $14.9 million or $0.46 per diluted share, compared with $14.5 million, or $0.45 per diluted share for the 2017 second quarter and $13.1 million, or $0.41 per diluted share for the 2016 third quarter.

For the first nine months of 2017, net income increased 2.6% to $43.2 million, or $1.33 per diluted share, compared with $42.1 million, or $1.31 per diluted share, for the first nine months of 2016.

Mr. C. G. Kum, President and Chief Executive Officer, said, “Hanmi’s third quarter performance was highlighted by continued growth in earning assets and top line revenue. Loans and leases receivable increased by 3% during the third quarter, which resulted in a 9% increase on a year-to-date basis. Higher production in loans and leases drove a 4% increase in net interest income for the quarter. This growth, along with careful expense management, helped generate a quarterly net income of $14.9 million, or $0.46 per share, reflecting an attractive return on average assets of 1.18% and return on average equity of 10.73%. I am also pleased to note that the Company surpassed $5 billion in total assets.”

Mr. Kum concluded, “During the fourth quarter, we will be capitalizing on this momentum by expanding into New York City with the opening of our first retail branch in midtown Manhattan. As we look to strategically expand the Bank, the favorable demographics of New York City, which has the second largest Asian population among U.S. metropolitan areas, provides significant opportunities to grow our franchise.” 

 

Quarterly Highlights              
 (in thousands, except per share data)               
               
  For the Three Months Ended  Amount Change 
 Sep 30, Jun 30, Mar 31, Dec 31, Sep 30, Q3-17 Q3-17 
 2017 2017 2017 2016 2016 vs. Q2-17 vs. Q3-16 
               
Net income$  14,923  $  14,457  $  13,783  $  14,416  $  13,121  $  466 $  1,802 
Net income per diluted common share$  0.46  $  0.45  $  0.43  $  0.45  $  0.41  $  0.01 $  0.05 
               
Assets$  5,111,396  $  4,973,346  $  4,811,821  $  4,701,346  $  4,402,180  $  138,050 $  709,216 
Loans and leases receivable$  4,195,355  $  4,073,062  $  3,943,951  $  3,844,769  $  3,552,659  $  122,293 $  642,696 
Deposits$  4,299,010  $  4,259,173  $  4,083,165  $  3,809,737  $  3,771,207  $  39,837 $  527,803 
               
Return on average assets 1.18%  1.19%  1.18%  1.26%  1.19%  -0.01  -0.01 
Return on average stockholders' equity 10.73%  10.65%  10.46%  10.84%  9.88%  0.08  0.85 
               
Net interest margin (1) 3.79%  3.81%  3.89%  3.96%  3.86%  -0.02  -0.07 
Net interest margin excluding acquisition accounting (2) 3.76%  3.76%  3.84%  3.86%  3.75%  0.00  0.01 
Efficiency ratio (3) 53.33%  54.74%  54.95%  51.77%  58.72%  -1.41  -5.39 
Efficiency ratio excluding merger and integration costs 53.33%  54.75%  55.01%  51.15%  58.72%  -1.42  -5.39 
               
Tangible common equity to tangible assets (2) 10.72%  10.83%  10.98%  11.05%  12.04%  -0.11  -1.32 
Tangible common equity per common share (2)$  16.86  $  16.59  $  16.26  $  16.03  $  16.42  $  0.27 $  0.44 
               
(1)   Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate.           
(2)   Refer to "Non-GAAP Financial Measures" for further details.             
(3)   Noninterest expense divided by net interest income plus noninterest income             
               

Results of Operations
Third quarter 2017 net interest income increased 4.0% to $44.9 million from $43.2 million in the second quarter primarily from the solid expansion of loans and leases receivables, partially offset by an increase in interest expense on deposits.  Interest and fees on loans and leases for the third quarter increased 4.8%, or $2.3 million, from the preceding quarter while interest expense on deposits increased 9.4%, or $0.6 million.

               
  As of or For the Three Months Ended (in thousands)  Percentage Change 
 Sep 30, Jun 30, Mar 31, Dec 31, Sep 30, Q3-17 Q3-17 
Net Interest Income2017 2017 2017 2016 2016 vs. Q2-17 vs. Q3-16 
               
Interest and fees on loans and leases(1)$  50,265 $  47,971 $  45,378 $  43,780 $  41,150 4.8% 22.2% 
Interest on securities   3,188    2,949    2,520    2,550    2,701 8.1% 18.0% 
Dividends on FRB and FHLB stock   286    283    374    927    419 1.1% -31.7% 
Interest on deposits in other banks   123    123    77    55    55 0.0% 123.6% 
Total interest and dividend income                     $  53,862 $  51,326 $  48,349 $  47,312 $  44,325 4.9% 21.5% 
               
Interest on deposits   7,071    6,463    5,154    4,799    4,358 9.4% 62.3% 
Interest on borrowings   198    49    468    207    179 304.1% 10.6% 
Interest on subordinated debentures   1,667    1,636    373    241    206 1.9% 709.2% 
Total interest expense   8,936    8,148    5,995    5,247    4,743 9.7% 88.4% 
Net interest income$  44,926 $  43,178 $  42,354 $  42,065 $  39,582 4.0% 13.5% 
               
(1)  Includes loans held for sale.              
               

Net interest margin (on a taxable equivalent basis) for the third quarter of 2017 was 3.79%, down 2 basis points from 3.81% for the second quarter of 2017.  However, net interest margin, excluding acquisition accounting, for the third quarter of 2017 was 3.76%, same as the second quarter of 2017.  Loan interest income, as a percentage of average interest earning assets, increased the net interest margin by one basis point while deposit interest expense decreased the net interest margin by three basis points.  The average rate paid on interest-bearing deposits for the third quarter increased to 0.93% from 0.88% for the preceding quarter while the average cost of deposits increased similarly to 0.66% from 0.62%.  The average yield on loans and leases receivable was 4.87%, unchanged from the prior quarter.

               
               
  For the Three Months Ended (in thousands)  Percentage Change 
 Sep 30, Jun 30, Mar 31, Dec 31, Sep 30, Q3-17 Q3-17 
Average Earning Assets and Interest-bearing Liabilities2017 2017 2017 2016 2016 vs. Q2-17 vs. Q3-16 
Loans and lease receivables (1)$  4,092,131  $  3,951,934  $  3,881,686  $  3,690,955  $  3,477,428  3.5% 17.7% 
Securities   611,538     585,384     526,549     530,241     589,832  4.5% 3.7% 
FRB and FHLB stock   16,385     16,385     16,385     16,385     19,207  0.0% -14.7% 
Interest-bearing deposits in other banks   38,981     47,402     38,600     40,548     43,678  -17.8% -10.8% 
Average interest-earning assets$  4,759,035  $  4,601,105  $  4,463,220  $  4,278,129  $  4,130,145  3.4% 15.2% 
               
Demand: interest-bearing$  90,720  $  93,873  $  97,602  $  95,399  $  93,852  -3.4% -3.3% 
Money market and savings   1,526,951     1,532,733     1,406,903     1,305,565     1,141,747  -0.4% 33.7% 
Time deposits   1,384,724     1,320,005     1,173,184     1,165,828     1,244,127  4.9% 11.3% 
Average interest-bearing deposits   3,002,395     2,946,611     2,677,689     2,566,792     2,479,726  1.9% 21.1% 
Borrowings   67,935     20,000     270,500     174,674     152,935  239.7% -55.6% 
Subordinated debentures   117,065     116,850     30,950     18,919     18,844  0.2% 521.2% 
Average interest-bearing liabilities$  3,187,395  $  3,083,461  $  2,979,139  $  2,760,385  $  2,651,505  3.4% 20.2% 
               
(1)  Includes loans held for sale.              
               
  For the Three Months Ended  Amount Change 
 Sep 30, Jun 31, Mar 31, Dec 31, Sep 30, Q3-17 Q3-17 
Average Yields and Rates2017 2017 2016 2016 2016 vs. Q2-17 vs. Q3-16 
Loans and lease receivables (1) 4.87%  4.87%  4.74%  4.72%  4.71% 0.00  0.16  
Securities (2) 2.41%  2.35%  2.30%  2.31%  2.18% 0.06  0.23  
FRB and FHLB stock 6.93%  6.93%  9.26%  22.63%  8.73% 0.00  -1.80  
Interest-bearing deposits in other banks 1.25%  1.04%  0.81%  0.54%  0.50% 0.21  0.75  
Interest-earning assets 4.53%  4.52%  4.44%  4.45%  4.32% 0.01  0.21  
               
Interest-bearing deposits 0.93%  0.88%  0.78%  0.74%  0.70% 0.05  0.23  
Borrowings 1.16%  0.98%  0.70%  0.47%  0.47% 0.18  0.69  
Subordinated debentures 5.68%  5.59%  4.82%  5.07%  4.35% 0.09  1.33  
Interest-bearing liabilities 1.11%  1.06%  0.82%  0.76%  0.71% 0.05  0.40  
               
Net interest margin (taxable equivalent basis) 3.79%  3.81%  3.89%  3.96%  3.86% -0.02  -0.07  
               
Cost of deposits 0.66%  0.62%  0.54%  0.50%  0.47% 0.04  0.19  
               
(1)  Includes loans held for sale.              
(2)  Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate.          
               

For the third quarter of 2017, Hanmi recorded a provision for loan losses of $0.3 million compared with $0.4 million for the preceding quarter.

Third quarter noninterest income decreased 9.1% to $8.8 million from $9.7 million for the second quarter of 2017 primarily due to a $0.7 million decrease in gain on sales of securities and a $0.6 million decrease in other operating income offset by a $0.4 million increase in disposition gains on PCI loans. Included in other income is income from the early pay-off of leases which was $0.6 million lower in the third quarter. Gains on sales of SBA loans were $2.5 million for the third quarter 2017, down from $2.7 million from the second quarter of 2017 as the volume of SBA loans sold increased to $32.5 million from $32.4 million for the preceding quarter. Gains on the sales of securities were $0.3 million for the third quarter of 2017, down from $0.9 million in the second quarter. Disposition gains on PCI loans were $1.0 million for the third quarter of 2017, compared with $0.5 million for the prior quarter. PCI loans from the 2014 acquisition were $8.7 million at the end of the third quarter of 2017, down 0.9% from the prior quarter.

               
  For the Three Months Ended (in thousands)  Percentage Change 
 Sep 30, Jun 30, Mar 31, Dec 31, Sep 30, Q3-17 Q3-17 
Noninterest Income2017 2017 2017 2016 2016 vs. Q2-17 vs. Q3-16 
Service charges on deposit accounts$  2,678 $  2,461 $  2,528 $  2,599 $  2,883 8.8% -7.1% 
Trade finance and other service charges and fees      1,133    1,269    1,047    1,132    992 -10.7% 14.2% 
Other operating income   1,213    1,826    1,726    991    2,348 -33.6% -48.3% 
Service charges, fees & other   5,024    5,556    5,301    4,722    6,223 -9.6% -19.3% 
               
Gain on sale of SBA loans   2,546    2,668    1,464    1,787    1,616 -4.6% 57.5% 
Disposition gain on PCI loans   979    540    183    1,559    789 81.3% 24.1% 
Net gain on sales of securities   267    938    269    -     46 -71.5% 480.4% 
Total noninterest income$  8,816 $  9,702 $  7,217 $  8,068 $  8,674 -9.1% 1.6% 
               

Noninterest expense for the third quarter decreased 1.0% to $0.3 million to $28.7 million from $28.9 million for the second quarter primarily due to a $0.5 million decrease in OREO expense. As a result of the increase in revenue from the growth in earning assets and the decrease in noninterest expense, the efficiency ratio improved to 53.3% in the third quarter from 54.7% in the prior quarter.

To further enhance operational efficiencies, Hanmi consolidated two branch offices at the end of the third quarter in Beverly Hills and Torrance, California. 

Hanmi will also open a new branch office in New York City in the fourth quarter.

               
  For the Three Months Ended (in thousands)  Percentage Change 
 Sep 30, Jun 30, Mar 31, Dec 31, Sep 30, Q3-17 Q3-17 
 2017 2017 2017 2016 2016 vs. Q2-17 vs. Q3-16 
Noninterest Expense              
Salaries and benefits$  16,947  $  16,623  $  17,104  $  16,246  $  15,950 1.9% 6.3% 
Occupancy and equipment   3,883     3,878     3,982     3,641     3,917 0.1% -0.9% 
Data processing   1,779     1,738     1,631     1,455     1,330 2.4% 33.8% 
Professional fees   1,210     1,554     1,148     1,311     1,090 -22.1% 11.0% 
Supplies and communication   755     745     635     683     821 1.3% -8.0% 
Advertising and promotion   1,147     1,015     802     1,140     1,153 13.0% -0.5% 
Other operating expenses   2,955     2,881     2,070     1,825     4,003 2.6% -26.2% 
subtotal   28,676     28,434     27,372     26,301     28,264 0.9% 1.5% 
               
OREO expense (income)   (16)    519     (101)    (658)    73 -103.1% -121.9% 
Merger and integration costs   -      (9)    (31)    312     -  -100.0% 0.0% 
Total noninterest expense   $  28,660  $  28,944  $  27,240  $  25,955  $  28,337 -1.0% 1.1% 
               

Hanmi recorded a provision for income taxes of $9.9 million for the third quarter of 2017, representing an effective tax rate of 39.9%, compared with $9.1 million, representing an effective tax rate of 38.5%, for the preceding quarter.

Financial Position
Total assets were $5.11 billion at September 30, 2017, a 2.8% increase from $4.97 billion at June 30, 2017. The increase in total assets was primarily due to an increase in loans and leases receivable.

Loans and leases receivable, before the allowance for loan and lease losses, were $4.20 billion at September 30, 2017, up 3.0% from $4.07 billion at June 30, 2017. The increase in loans and leases from the prior quarter reflects Hanmi’s continued strong loan production. Loans held for sale, representing the guaranteed portion of SBA loans, were $6.5 million at September 30, 2017 compared with $10.9 million at the end of the 2017 second quarter.

Loans and leases receivable, before the allowance for loan and lease losses, increased 18.1% from $3.55 billion for the third quarter last year, primarily due to strong loan production over the last twelve months, as well as last year’s fourth quarter acquisition and commencement of the Commercial Equipment Leasing division.

               
  As of (in thousands)  Percentage Change 
 Sep 30, Jun 30, Mar 31, Dec 31, Sep 30, Q3-17 Q3-17 
 2017 2017 2017 2016 2016 vs. Q2-17 vs. Q3-16 
Loan and Lease Portfolio              
Commercial real estate loans$  3,108,931 $  3,068,069 $  2,991,123 $  2,939,608 $  2,880,012 1.3% 7.9% 
Residential real estate loans   430,627    384,044    359,152    338,767    330,675 12.1% 30.2% 
Commercial and industrial loans   364,456    346,150    316,284    300,220    319,656 5.3% 14.0% 
Lease receivable   272,271    257,525    259,591    243,294    -  5.7% NM  
Consumer loans   19,070    17,274    17,801    22,880    22,316 10.4% -14.5% 
Loans and leases receivable    4,195,355  4,073,062  3,943,951  3,844,769  3,552,659 3.0% 18.1% 
Loans held for sale   6,469    10,949    8,849    9,316    6,425 -40.9% 0.7% 
Total loans$  4,201,824 $  4,084,011 $  3,952,800 $  3,854,085 $  3,559,084 2.9% 18.1% 
               
Acquired Loans(1)              
PCI loans, net of discounts$  8,704 $  8,784 $  8,960 $  9,863 $  15,540 -0.9% -44.0% 
Non-PCI loans, net of discounts   91,013    96,600    101,062    104,733    108,434 -5.8% -16.1% 
Total acquired loans$  99,717 $  105,384 $  110,022 $  114,596 $  123,974 -5.4% -19.6% 
               
(1)  Includes UCB acquired only.              
               

New loan production for the 2017 third quarter was $220.4 million while payoffs and amortization was $145.4 million compared with $279.0 million and $131.4 million for the second quarter of 2017. Third quarter 2017 new loan production was comprised of $91.2 million of commercial real estate loans, $43.8 million of commercial and industrial loans, $43.0 million of SBA loans, $39.5 million of commercial leases and $2.8 million of consumer loans. Loan purchases for the 2017 third quarter were $88.2 million, compared with $39.4 million in the second quarter of 2017. For the third quarter of 2017, commercial real estate loans as a percentage of total loans and leases decreased to 74.1% compared with 81.1% for the same period last year.

Deposits increased to $4.30 billion at the end of the 2017 third quarter from $4.26 billion at the end of the preceding quarter. Demand non-interest bearing deposits led this growth increasing 2.6%. The loans to deposits ratio at September 30, 2017 increased to 97.6% from 95.6% at June 30, 2017.

Deposits increased 14.0% from $3.77 billion in the third quarter last year, primarily due to the strength of Hanmi’s retail branch network as money market and savings deposits and time deposits increased 23.5% and 14.8%, respectively from a year ago.

               
  As of (in thousands)  Percentage Change 
 Sep 30, Jun 30, Mar 31, Dec 31, Sep 30, Q3-17 Q3-17 
 2017 2017 2017 2016 2016 vs. Q2-17 vs. Q3-16 
Deposit Portfolio              
Demand: noninterest-bearing$  1,293,538 $  1,260,929 $  1,241,272 $  1,203,240 $  1,231,967 2.6% 5.0% 
Demand: interest-bearing   90,734    93,390    99,433    96,856    94,272 -2.8% -3.8% 
Money market and savings   1,534,457    1,528,127    1,534,578    1,329,324    1,242,502 0.4% 23.5% 
Time deposits of $250,000 or less   949,826    916,197    731,445    734,383    819,471 3.7% 15.9% 
Time deposits of more than $250,000    430,455    460,530    476,437    445,934    382,995 -6.5% 12.4% 
Total deposits$  4,299,010 $  4,259,173 $  4,083,165 $  3,809,737 $  3,771,207 0.9% 14.0% 
               

At September 30, 2017, stockholders’ equity was $559.2 million, compared with $550.1 million at June 30, 2017. Tangible common stockholders’ equity was $546.6 million, or 10.72% of tangible assets, compared with $537.4 million, or 10.83% of tangible assets at June 30, 2017. Tangible book value per share was $16.86, compared to $16.59 in the second quarter.

Hanmi continues to be well capitalized, with a preliminary Tier 1 risk-based capital ratio of 12.46% and a Total risk-based capital ratio of 15.46% at September 30, 2017, versus 12.58% and 15.69%, respectively, at June 30, 2017.

               
  As of  Amount Change 
 Sep 30, Jun 30, Mar 31, Dec 31, Sep 30, Q3-17 Q3-17 
 2017 2017 2017 2016 2016 vs. Q2-17 vs. Q3-16 
Regulatory Capital ratios (1)              
Hanmi Financial              
Total risk-based capital15.46% 15.69% 16.16% 13.86% 14.99% -0.23 0.47 
Tier 1 risk-based capital12.46% 12.58% 12.93% 13.02% 13.89% -0.12 -1.43 
Common equity tier 1 capital12.11% 12.22% 12.56% 12.73% 13.73% -0.11 -1.62 
Tier 1 leverage capital ratio10.92% 11.08% 11.21% 11.53% 11.68% -0.16 -0.76 
Hanmi Bank              
Total risk-based capital15.30% 15.44% 15.91% 13.64% 14.61% -0.14 0.69 
Tier 1 risk-based capital14.54% 14.62% 15.07% 12.80% 13.50% -0.08 1.04 
Common equity tier 1 capital14.54% 14.62% 15.07% 12.80% 13.50% -0.08 1.04 
Tier 1 leverage capital ratio12.73% 12.89% 13.08% 11.33% 11.36% -0.16 1.37 
               
(1)  Preliminary ratios for September 30, 2017              
               

Hanmi declared a cash dividend of $0.21 per common share on its common stock in the 2017 third quarter, up 11% from the prior quarter. The dividend was paid on August 16, 2017, to stockholders of record as of the close of business on July 28, 2017.

Asset Quality
Nonperforming loans, excluding PCI loans, were $14.6 million at the end of the third quarter of 2017, or 0.35% of loans, compared with $16.5 million at the end of the second quarter of 2017, or 0.41% of loans. Loans past due 30 to 89 days and still accruing declined significantly to 0.12% of loans at the end of the third quarter of 2017, compared with 0.23% of loans at the end of the second quarter.

OREO was $1.9 million at the end of the third quarter of 2017, down from $4.3 million at the end of the prior quarter reflecting the sale of a $2.4 million property. Nonperforming assets were $16.5 million at the end of the third quarter of 2017, or 0.32% of assets, compared with 0.42% of assets at the end of the prior quarter.

Gross charge-offs for the third quarter of 2017 were $2.4 million compared with $665,000 for the preceding quarter. Gross-charge-offs included a $1.3 million charge-off of a commercial and industrial loan. Recoveries of previously charged-off loans for the third quarter of 2017 were $871,000 compared with $849,000 for the preceding quarter. As a result, there were net charge-offs of $1.5 million for the third quarter of 2017, compared to net recoveries of $184,000 for the preceding quarter.

The allowance for loan and lease losses was $32.5 million as of September 30, 2017, generating an allowance of loan losses to loans receivable ratio of 0.77% compared with 0.83% as of June 30, 2017.

               
  As of or for the Three Months Ended (in thousands)  Amount Change 
 Sep 30, Jun 30, Mar 31, Dec 31, Sep 30, Q3-17 Q3-17 
 2017 2017 2017 2016 2016 vs. Q2-17 vs. Q3-16 
Asset Quality              
Nonperforming assets (1):              
Nonaccrual loans$  14,558  $  16,464  $  12,774  $  11,406  $  10,948  $  (1,906) $  3,610  
Loans 90 days or more past due and still accruing   -     -     -     -     -     -      -   
Nonperforming loans   14,558     16,464     12,774     11,406     10,948     (1,906)    3,610  
OREO, net   1,946     4,321     4,636     7,484     10,971     (2,375)    (9,025) 
Nonperforming assets$  16,504  $  20,785  $  17,410  $  18,890  $  21,919  $  (4,281) $  (5,415) 
               
Delinquent loans:              
Loans, 30 to 89 days past due and still accruing$  4,993  $  9,431  $  6,273  $  5,718  $  1,066  $  (4,438) $  3,927  
Delinquent loans to loans 0.12%  0.23%  0.16%  0.15%  0.03%    (0.11)    0.09  
               
Allowance for loan and lease losses:              
Balance at beginning of period$  33,758  $  33,152  $  32,429  $  38,972  $  39,707      
Loan and lease loss provision (income)   269     422     (80)    151     (1,450)     
Net loan charge-offs (recoveries)   1,535     (184)    (803)    6,694     (715)     
Balance at end of period$  32,492  $  33,758  $  33,152  $  32,429  $  38,972      
               
Asset quality ratios:              
Nonperforming loans to loans (1) 0.35%  0.41%  0.32%  0.30%  0.31%     
Nonperforming assets to assets (1) 0.32%  0.42%  0.36%  0.40%  0.50%     
Net loan charge-offs (recoveries) to average loans (3) 0.15%  -0.02%  -0.08%  0.73%  -0.08%     
Allowance for loan losses to loans 0.77%  0.83%  0.84%  0.84%  1.10%     
Allowance for loan losses to nonperforming loans (1) (2) 217.74%  200.67%  252.54%  275.80%  305.43%     
               
Allowance for off-balance sheet items:              
Balance at beginning of period$  1,135  $  1,184  $  1,184  $  1,491  $  1,475      
Provision (income) for off-balance sheet items   (220)    (49)    -      (307)    16      
Balance at end of period$  915  $  1,135  $  1,184  $  1,184  $  1,491      
               
(1)  Excludes PCI loans              
(2)  Excludes allowance for loan losses allocated to PCI loans             
(3)  Annualized              

Conference Call
Management will host a conference call today, October 17, 2017 at 2:00 p.m. PT (5:00 p.m. ET) to discuss these results. This call will also be broadcast live via the internet. Investment professionals and all current and prospective stockholders are invited to access the live call by dialing 1-877-407-9039 before 2:00 p.m. PT, using access code HANMI. To listen to the call online, either live or archived, visit the Investor Relations page of Hanmi’s website at www.hanmi.com.

About Hanmi Financial Corporation
Headquartered in Los Angeles, California, Hanmi Financial Corporation owns Hanmi Bank, which serves multi-ethnic communities through its network of 39 full-service branches and 6 loan production offices in California, Texas, Illinois, Virginia, New Jersey, New York, Colorado, Washington and Georgia. Hanmi Bank specializes in real estate, commercial, SBA and trade finance lending to small and middle market businesses. Additional information is available at www.hanmi.com.

Forward-Looking Statements
This press release contains forward-looking statements, which are included in accordance with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” or “continue,” or the negative of such terms and other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. All statements other than statements of historical fact are “forward–looking statements” for purposes of federal and state securities laws, including, but not limited to, statements about anticipated future operating and financial performance, financial position and liquidity, business strategies, regulatory and competitive outlook, investment and expenditure plans, capital and financing needs and availability, plans and objectives of management for future operations, developments regarding our capital plans, strategic alternatives for a possible business combination, merger or sale transaction, and other similar forecasts and statements of expectation and statements of assumption underlying any of the foregoing. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ from those expressed or implied by the forward-looking statement. These factors include the following: failure to maintain adequate levels of capital and liquidity to support our operations; the effect of potential future supervisory action against us or Hanmi Bank; general economic and business conditions internationally, nationally and in those areas in which we operate; volatility and deterioration in the credit and equity markets; changes in consumer spending, borrowing and savings habits; availability of capital from private and government sources; demographic changes; competition for loans and deposits and failure to attract or retain loans and deposits; fluctuations in interest rates and a decline in the level of our interest rate spread; risks of natural disasters related to our real estate portfolio; risks associated with Small Business Administration loans; failure to attract or retain key employees; changes in governmental regulation, including, but not limited to, any increase in FDIC insurance premiums; ability of Hanmi Bank to make distributions to Hanmi Financial Corporation, which is restricted by certain factors, including Hanmi Bank’s retained earnings, net income, prior distributions made, and certain other financial tests; ability to identify a suitable strategic partner or to consummate a strategic transaction; adequacy of our allowance for loan and lease losses; credit quality and the effect of credit quality on our provision for loan and lease losses and allowance for loan and lease losses; changes in the financial performance and/or condition of our borrowers and the ability of our borrowers to perform under the terms of their loans and other terms of credit agreements; our ability to control expenses; and changes in securities markets. In addition, we set forth certain risks in our reports filed with the U.S. Securities and Exchange Commission, including, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2016, our Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K that we will file hereafter, which could cause actual results to differ from those projected. We undertake no obligation to update such forward-looking statements except as required by law.

Investor Contacts:
Romolo (Ron) Santarosa
Senior Executive Vice President & Chief Financial Officer
213-427-5636

Richard Pimentel
Senior Vice President & Corporate Finance Officer
213-427-3191

Lasse Glassen
Investor Relations
Addo Investor Relations
310-829-5400


Hanmi Financial Corporation and Subsidiaries
Consolidated Balance Sheets (Unaudited)
(In thousands)

           
 Sep 30, Jun 30, Percentage Sep 30, Percentage 
 2017 2017 Change 2016 Change 
Assets          
Cash and due from banks$  138,139  $  138,507  -0.3% $  130,197  6.1% 
Securities available for sale, at fair value   598,440     571,846  4.7%    548,961  9.0% 
Loans held for sale, at the lower of cost or fair value   6,469     10,949  -40.9%    6,425  0.7% 
Loans and leases receivable, net of allowance for loan and lease losses      4,162,863     4,039,304  3.1%    3,513,687  18.5% 
Accrued interest receivable   12,098     11,167  8.3%    10,160  19.1% 
Customers' liability on acceptances   647     1,481  -56.3%    1,041  -37.8% 
Servicing assets   10,428     10,480  -0.5%    10,833  -3.7% 
Premises and equipment, net   26,648     26,869  -0.8%    27,682  -3.7% 
Goodwill and other intangible assets, net   12,628     12,712  -0.7%    1,456  767.3% 
Federal Home Loan Bank ("FHLB") stock, at cost   16,385     16,385  0.0%    16,385  0.0% 
Other real estate owned ("OREO"), net   1,946     4,321  -55.0%    10,971  -82.3% 
Income tax asset   46,210     50,286  -8.1%    50,145  -7.8% 
Bank-owned life insurance   50,268     49,982  0.6%    49,149  2.3% 
Prepaid expenses and other assets   28,227     29,057  -2.9%    25,088  12.5% 
Total assets$   5,111,396   $   4,973,346   2.8% $   4,402,180   16.1% 
           
Liabilities and Stockholders' Equity          
Liabilities:          
Deposits:          
Noninterest-bearing$  1,293,538  $  1,260,929  2.6% $  1,231,967  5.0% 
Interest-bearing   3,005,472     2,998,244  0.2%    2,539,240  18.4% 
Total deposits   4,299,010     4,259,173  0.9%    3,771,207  14.0% 
Accrued interest payable   4,071     3,432  18.6%    2,444  66.6% 
Bank's liability on acceptances   657     1,481  -55.6%    1,041  -36.9% 
FHLB advances   110,000     20,000  450.0%    55,000  100.0% 
Subordinated debentures   117,140     117,011  0.1%    18,888  520.2% 
Accrued expenses and other liabilities   21,271     22,109  -3.8%    22,402  -5.0% 
Total liabilities   4,552,149      4,423,206   2.9%    3,870,982   17.6% 
           
Stockholders' equity:          
Common stock   33     33  0.0%    33  0.0% 
Additional paid-in capital   564,787     563,948  0.1%    560,906  0.7% 
Accumulated other comprehensive income   290     137  111.7%    7,555  -96.2% 
Retained earnings   65,858     57,717  14.1%    33,413  97.1% 
Less treasury stock   (71,721)    (71,695) 0.0%    (70,709) 1.4% 
Total stockholders' equity   559,247      550,140   1.7%    531,198   5.3% 
Total liabilities and stockholders' equity$   5,111,396   $   4,973,346   2.8% $   4,402,180   16.1% 
           


Hanmi Financial Corporation and Subsidiaries
Consolidated Statements of Income (Unaudited)
(In thousands, except share and per share data)

           
  Three Months Ended  
 Sep 30, Jun 30,  Percentage  Sep 30,  Percentage  
 2017 2017 Change 2016 Change 
Interest and dividend income:          
Interest and fees on loans and leases$  50,265  $  47,971  4.8% $  41,150  22.2% 
Interest on securities   3,188     2,949  8.1%    2,701  18.0% 
Dividends on FRB and FHLB stock   286     283  1.1%    419  -31.7% 
Interest on deposits in other banks   123     123  0.0%    55  123.6% 
Total interest and dividend income   53,862     51,326  4.9%    44,325  21.5% 
Interest expense:          
Interest on deposits   7,071     6,463  9.4%    4,358  62.3% 
Interest on FHLB advances   198     49  304.1%    179  10.6% 
Interest on subordinated debentures   1,667     1,636  1.9%    206  709.2% 
Total interest expense   8,936     8,148  9.7%    4,743  88.4% 
Net interest income before provision for loan and lease losses   44,926     43,178  4.0%    39,582  13.5% 
Loan and lease loss provision (income)   269     422  -36.3%    (1,450) -118.6% 
Net interest income after provision for loan and lease losses   44,657     42,756  4.4%    41,032  8.8% 
Noninterest income:          
Service charges on deposit accounts   2,678     2,461  8.8%    2,883  -7.1% 
Trade finance and other service charges and fees   1,133     1,269  -10.7%    992  14.2% 
Gain on sale of Small Business Administration ("SBA") loans   2,546     2,668  -4.6%    1,616  57.5% 
Disposition gains on Purchased Credit Impaired ("PCI") loans   979     540  81.3%    789  24.1% 
Net gain on sales of securities   267     938  -71.5%    46  480.4% 
Other operating income   1,213     1,826  -33.6%    2,348  -48.3% 
Total noninterest income   8,816     9,702  -9.1%    8,674  1.6% 
Noninterest expense:          
Salaries and employee benefits   16,947     16,623  1.9%    15,950  6.3% 
Occupancy and equipment   3,883     3,878  0.1%    3,917  -0.9% 
Data processing   1,779     1,738  2.4%    1,330  33.8% 
Professional fees   1,210     1,554  -22.1%    1,090  11.0% 
Supplies and communications   755     745  1.3%    821  -8.0% 
Advertising and promotion   1,147     1,015  13.0%    1,153  -0.5% 
OREO expense (income)   (16)    519  -103.1%    73  -121.9% 
Merger and integration costs   -     (9) -100.0%    -  -  
Other operating expenses   2,955     2,881  2.6%    4,003  -26.2% 
Total noninterest expense   28,660     28,944  -1.0%    28,337  1.1% 
Income before provision for income taxes   24,813     23,514  5.5%    21,369  16.1% 
Income tax expense   9,890     9,057  9.2%    8,248  19.9%`
Net income$   14,923   $   14,457   3.2% $   13,121   13.7% 
            
Basic earnings per share:$  0.46  $  0.45    $  0.41    
Diluted earnings per share:$  0.46  $  0.45    $  0.41    
           
Weighted-average shares outstanding:          
Basic   32,095,286     32,078,038       31,912,470    
Diluted   32,260,282     32,243,034       32,088,233    
Common shares outstanding   32,413,082     32,393,856       32,252,774    
           


Hanmi Financial Corporation and Subsidiaries
Consolidated Statements of Income (Unaudited)
(In thousands, except share and per share data)

   
  Nine Months Ended  
 Sep 30, Sep 30,  Percentage  
 2017 2016 Change 
Interest and dividend income:      
Interest and fees on loans and leases$  143,614  $  120,862  18.8% 
Interest on securities   8,657     8,604  0.6% 
Dividends on FRB and FHLB stock   943     1,540  -38.8% 
Interest on deposits in other banks   323     152  112.5% 
Total interest and dividend income   153,537     131,158  17.1% 
Interest expense:      
Interest on deposits   18,687     11,769  58.8% 
Interest on FHLB advances   714     673  6.1% 
Interest on subordinated debentures   3,677     584  529.6% 
Total interest expense   23,078     13,026  77.2% 
Net interest income before provision for loan and leas losses   130,459     118,132  10.4% 
Loan and lease loss provision (income)   611     (4,490) -113.6% 
Net interest income after provision for loan and lease losses   129,848     122,622  5.9% 
Noninterest income:      
Service charges on deposit accounts   7,667     8,782  -12.7% 
Trade finance and other service charges and fees   3,449     3,099  11.3% 
Gain on sale of Small Business Administration ("SBA") loans   6,678     4,247  57.2% 
Net gain on sales of securities   1,473     46  3102.2% 
Disposition gains on Purchased Credit Impaired ("PCI") loans      1,702     3,411  -50.1% 
Other operating income   4,764     5,423  -12.2% 
Total noninterest income   25,733     25,008  2.9% 
Noninterest expense:      
Salaries and employee benefits   50,674     47,710  6.2% 
Occupancy and equipment   11,743     11,351  3.5% 
Data processing   5,148     4,219  22.0% 
Professional fees   3,912     4,063  -3.7% 
Supplies and communications   2,135     2,266  -5.8% 
Advertising and promotion   2,964     2,769  7.0% 
OREO expense (income)   402     721  -44.2% 
Merger and integration costs   (40)    -  -  
Other operating expenses   7,905     9,170  -13.8% 
Total noninterest expense   84,843     82,269  3.1% 
Income before provision for income taxes   70,738     65,361  8.2% 
Income tax expense   27,576     23,288  18.4% 
Net income$   43,162   $   42,073   2.6% 
        
Basic earnings per share:$  1.34  $  1.31    
Diluted earnings per share$  1.33  $  1.31    
       
Weighted-average shares outstanding:      
Basic   32,058,705     31,880,466    
Diluted   32,235,263     32,031,295    
Common shares outstanding   32,413,082     32,252,774    
       


Hanmi Financial Corporation and Subsidiaries
Average Balance, Average Yield Earned, and Average Rate Paid (Unaudited)
(In thousands, except ratios)

             
 Three Months Ended 
 September 30, 2017 June 30, 2017 September 30, 2016 
  Interest  Average   Interest  Average   Interest  Average  
 AverageIncome /Yield / AverageIncome /Yield / AverageIncome /Yield / 
 BalanceExpenseRate BalanceExpenseRate BalanceExpenseRate 
Assets            
Interest-earning assets:            
Loans and leases receivable (1)$  4,092,131 $  50,2654.87% $  3,951,934 $  47,9714.87% $  3,477,428 $  41,1504.71% 
Securities (2)   611,538    3,6832.41%    585,384    3,4442.35%    589,832    3,2102.18% 
FRB and FHLB stock   16,385    2866.93%    16,385    2836.93%    19,207    4198.73% 
Interest-bearing deposits in other banks   38,981    1231.25%    47,402    1231.04%    43,678    550.50% 

Total interest-earning assets
   4,759,035    54,3574.53%    4,601,105    51,8214.52%    4,130,145    44,8344.32% 
             
Noninterest-earning assets:            
Cash and due from banks   114,108       116,750       116,779    
Allowance for loan losses   (34,252)      (33,540)      (40,214)   
Other assets   188,813       191,158       190,993    

Total assets
$  5,027,704     $  4,875,473     $  4,397,703     
             
Liabilities and Stockholders' Equity            
Interest-bearing liabilities:            
Deposits:            
Demand: interest-bearing$  90,720 $  180.08% $  93,873 $  180.08% $  93,852 $  190.08% 
Money market and savings   1,526,951    3,3110.86%    1,532,733    3,2240.84%    1,141,747    1,8340.64% 
Time deposits   1,384,724    3,7421.07%    1,320,005    3,2210.98%    1,244,127    2,5050.80% 
Total interest-bearing deposits   3,002,395    7,0710.93%    2,946,611    6,4630.88%    2,479,726    4,3580.70% 
FHLB advances   67,935    1981.16%    20,000    490.98%    152,935    1790.47% 
Subordinated debentures   117,065    1,6675.68%    116,850    1,6365.59%    18,844    2064.35% 

Total interest-bearing liabilities
   3,187,395    8,9361.11%    3,083,461    8,1481.06%    2,651,505    4,7430.71% 
             
Noninterest-bearing liabilities:            
Demand deposits: noninterest-bearing   1,257,954       1,219,876       1,189,693    
Other liabilities   30,592       27,853       27,924    
Stockholders' equity   551,763       544,283       528,581    

Total liabilities and stockholders' equity   
$  5,027,704     $  4,875,473     $  4,397,703     
             
Net interest income (2) $   45,421    $   43,673    $  40,091   
             
Cost of deposits  0.66%   0.62%   0.47% 
Net interest spread (2)  3.42%   3.46%   3.61% 
Net interest margin (2)  3.79%   3.81%   3.86% 
             
             
             
(1)   Includes loans held for sale            
(2)   Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate.      
             

 

Hanmi Financial Corporation and Subsidiaries
Average Balance, Average Yield Earned, and Average Rate Paid (Unaudited)
(In thousands, except ratios)

         
 Nine Months Ended 
 September 30, 2017 September 30, 2016 
  Interest  Average   Interest  Average  
 AverageIncome /Yield / AverageIncome /Yield / 
 BalanceExpenseRate BalanceExpenseRate 
Assets        
Interest-earning assets:        
Loans and leases receivable (1)$  3,976,021 $  143,6144.83% $  3,333,420 $  120,8624.84% 
Securities (2)   574,801    10,1532.36%    643,125    10,1362.10% 
FRB and FHLB stock   16,385    9437.69%    26,809    1,5407.67% 
Interest-bearing deposits in other banks   41,663    3231.04%    42,127    1520.48% 
Total interest-earning assets   4,608,870    155,0334.50%    4,045,481    132,6904.38% 
         
Noninterest-earning assets:        
Cash and due from banks   116,206       115,235    
Allowance for loan losses   (33,550)      (41,401)   
Other assets   190,001       195,747    
Total assets$  4,881,527     $  4,315,062     
         
Liabilities and Stockholders' Equity        
Interest-bearing liabilities:        
Deposits:        
Demand: interest-bearing$  94,040 $  560.08% $  95,264 $  560.08% 
Money market and savings   1,489,302    9,2000.83%    996,578    4,1300.55% 
Time deposits   1,293,412    9,4310.97%    1,286,120    7,5830.79% 
Total interest-bearing deposits   2,876,754    18,6870.87%    2,377,962    11,7690.66% 
FHLB advances   118,736    7140.80%    204,106    6730.44% 
Subordinated debentures   88,604    3,6775.52%    18,783    5844.09% 
Total interest-bearing liabilities   3,084,094    23,0781.00%    2,600,851    13,0260.67% 
         
Noninterest-bearing liabilities:        
Demand deposits: noninterest-bearing   1,224,886       1,166,427    
Other liabilities   29,044       32,381    
         
Stockholders' equity   543,503       515,403    
Total liabilities and stockholders' equity   $  4,881,527     $  4,315,062     
         
Net interest income (2) $   131,955    $   119,664   
         
Cost of deposits  0.61%   0.44% 
Net interest spread (2)  3.50%   3.71% 
Net interest margin (2)  3.83%   3.95% 
         
         
(1)   Includes loans held for sale        
(2)   Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate.  
   

Non-GAAP Financial Measures

Acquisition Accounting

Core loan yield, core deposit costs, net interest income and net interest margin excluding acquisition accounting are supplemental financial information determined by a method other than in accordance with U.S. generally accepted accounting principles (“GAAP”). This non-GAAP measure is used by management in the analysis of Hanmi’s results of operations. The calculation of these measures is illustrated below. Management believes the presentation of this financial measure excluding the impact of these items provides useful supplemental information that is essential to a proper understanding of the results of Hanmi. This disclosure should not be viewed as a substitution for results determined in accordance with GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies.

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

                    
  For the Three Months Ended           
  September 30,     June 30,  March 31, December 31, September 30,          
 2017 2017 2017 2016 2016          
Core loan yield 4.84% 4.82%  4.68% 4.63%  4.63%          
Accretion of discount on purchased loans 0.03% 0.05%  0.06% 0.09%  0.08%          
As reported 4.87% 4.87%  4.74% 4.72%  4.71%          
                    
Core deposit cost 0.67% 0.63%  0.55% 0.54%  0.54%          
Accretion of time deposits premium 0.01% 0.01%  0.01% 0.04%  0.07%          
As reported 0.66% 0.62%  0.54% 0.50%  0.47%          
                    
 
 
 For the Three Months Ended
 September 30, 2017 June 30, 2017 March 31, 2017   December 31, 2016     September 30, 2016   
  Amount   Rate   Amount   Rate   Amount   Rate   Amount   Rate   Amount   Rate 
Net interest income and net interest margin
excluding acquisition accounting
(1)
$   45,049   3.76% $   43,129   3.76% $   42,230   3.84% $   41,489   3.86% $   38,874   3.75%
Accretion of discount on Non-PCI loans   303  0.03%    457  0.04%    527  0.05%    781  0.07%    648  0.06%
Accretion of discount on PCI loans   38  0.00%    52  0.00%    54  0.00%    78  0.01%    26  0.00%
Accretion of time deposits premium   116  0.01%    116  0.01%    126  0.01%    314  0.03%    610  0.06%
Amortization of subordinated debentures discount   (85) -0.01%    (81) -0.01%    (77) -0.01%    (90) -0.01%    (67) -0.01%
Net impact   372  0.03%    544  0.05%    630  0.05%    1,083  0.10%    1,217  0.11%
As reported, on a fully taxable equivalent basis (1)$   45,421   3.79% $   43,673   3.81% $   42,860   3.89% $   42,572   3.96% $   40,091   3.86%
                    
(1)   Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate:  rates may not sum due to rounding.          
                    

Tangible Common Equity to Tangible Assets Ratio

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

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

Tangible Common Equity to Tangible Assets Ratio (Unaudited)
(In thousands, except share, per share data and ratios)

           
 September 30, June 30, March 31, December 31, September 30, 
Hanmi Financial Corporation2017 2017 2017 2016 2016 

Assets
$  5,111,396  $  4,973,346  $  4,811,821  $  4,701,346  $  4,402,180  

Less goodwill
   (11,031)    (11,031)    (11,031)    (11,031)    -   
Less other intangible assets,net   (1,597)    (1,681)    (1,766)    (1,858)    (1,456) 
Tangible assets$  5,098,768  $  4,960,634  $  4,799,024  $  4,688,457  $  4,400,724  
           
Common Stockholders' equity$  559,247  $  550,140  $  539,542  $  531,025  $  531,198  
Less goodwill   (11,031)    (11,031)    (11,031)    (11,031)    -  
Less other intangible assets   (1,597)    (1,681)    (1,766)    (1,858)    (1,456) 
Tangible Common stockholders' equity$  546,619  $  537,428  $  526,745  $  518,136  $  529,742  
           
Common Stockholders' equity to assets 10.94%  11.06%  11.21%  11.30%  12.07% 
Tangible common equity to tangible assets 10.72%  10.83%  10.98%  11.05%  12.04% 
           
Common shares outstanding   32,413,082     32,393,856     32,392,580     32,330,747     32,252,774  
Tangible common equity per common share                         $  16.86  $  16.59  $  16.26  $  16.03  $  16.42  
           

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