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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): April 24, 2018  

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 April 24, 2018, Hanmi Financial Corporation (“Hanmi Financial”) issued a press release announcing its financial results for the quarter ended March 31, 2018. 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 April 24, 2018. 

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, 2017, 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: April 24, 2018By: /s/ C. G. Kum        
  C. G. Kum
  President and Chief Executive Officer
  


EXHIBIT INDEX

 

Exhibit No.   Description
   
99.1 Press release, dated April 24, 2018.*

 

*   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 First Quarter Results Reflect Solid Loan Production and 7.8% Increase in Net Income

2018 First Quarter Highlights:        

LOS ANGELES, April 24, 2018 (GLOBE NEWSWIRE) -- Hanmi Financial Corporation (NASDAQ:HAFC) (or “Hanmi”), the parent company of Hanmi Bank (the “Bank”), today reported net income for the 2018 first quarter of $14.9 million, or $0.46 per diluted share, compared with $11.5 million, or $0.36 per diluted share for the 2017 fourth quarter and $13.8 million, or $0.43 per diluted share for the 2017 first quarter.

Mr. C. G. Kum, President and Chief Executive Officer, said, “Hanmi’s first quarter results represent a good start to the year with strong loan production, expanding net income and continued excellent asset quality. During the first quarter, which is typically our seasonally weakest quarter, new loan and lease production of $245.3 million increased 21% from last year’s first quarter. This robust origination activity, which benefitted from our focus on C&I lending, helped loans and leases receivable increase in the first quarter 10% on an annualized basis and grow 12% compared to a year ago, while net income expanded nearly 8% year-over-year. I am also pleased that our net interest margin held relatively steady after adjusting for benefits in the prior quarter from prepayment fees. Importantly, credit quality remained excellent with nonperforming assets declining to 32 basis points of total assets in the quarter.”

Mr. Kum concluded, “During the first quarter, our Board increased the quarterly dividend 14%, to $0.24 per share. Hanmi remains committed to rewarding its shareholders and this dividend increase reflects confidence in our ability to continue generating profitable growth in 2018 and beyond.”

Quarterly Highlights
(In thousands, except per share data)

  As of  or for the Three Months Ended  Amount Change
 March 31, December 31, September 30, June 30, March 31, Q1-18 Q1-18
  2018   2017   2017   2017   2017  vs. Q4-17 vs. Q1-17
              
Net income$14,855  $11,500  $14,923  $14,457  $13,783  $3,355 $1,072
Net income per diluted common share$0.46  $0.36  $0.46  $0.45  $0.43  $0.10 $0.03
              
Assets$5,305,641  $5,210,485  $5,111,396  $4,973,346  $4,811,821  $95,156 $493,820
Loans receivable$4,413,557  $4,304,458  $4,195,355  $4,073,062  $3,943,951  $109,099 $469,606
Deposits$4,378,101  $4,348,654  $4,299,010  $4,259,173  $4,083,165  $29,447 $294,936
              
Return on average assets 1.16%  0.88%  1.18%  1.19%  1.18%  0.28  -0.02
Return on average stockholders' equity 10.65%  8.12%  10.73%  10.65%  10.46%  2.53  0.19
              
Net interest margin (1) 3.70%  3.79%  3.79%  3.81%  3.89%  -0.09  -0.19
Efficiency ratio (3) 58.36%  54.16%  53.33%  54.74%  54.95%  4.20  3.41
              
Tangible common equity to tangible assets (2) 10.43%  10.58%  10.72%  10.83%  10.98%  -0.15  -0.55
Tangible common equity per common share (2)$16.98  $16.96  $16.86  $16.59  $16.26  $0.02 $0.72
              
              
(1)  Amounts calculated on a fully taxable equivalent basis using the federal tax rate in effect for the periods presented.        
(2)  Refer to "Non-GAAP Financial Measures" for further details.            
(3)  Noninterest expense divided by net interest income plus noninterest income.            

Results of Operations 
First quarter 2018 net interest income decreased 3.1% to $44.9 million from $46.3 million in the 2017 fourth quarter as the expansion of loans and leases receivable were more than offset by a five basis point decrease in overall loan and lease yields along with a five basis point increase in cost of deposits.  Interest and fees on loans and leases for the first quarter decreased 1.2%, or $0.6 million, from the preceding quarter while interest expense on deposits increased 5.2%, or $0.4 million.  Loan prepayment fees were $0.1 million for the first quarter compared with $1.0 million for the fourth quarter.

              
  As of or For the Three Months Ended (in thousands)  Percentage Change
 Mar 31, Dec 31, Sep 30, Jun 30, Mar 31, Q1-18 Q1-18
Net Interest Income2018 2017 2017 2017 2017 vs. Q4-17 vs. Q1-17
              
Interest and fees on loans and leases(1)$  51,574 $  52,176 $  50,265 $  47,971 $  45,378 -1.2% 13.7%
Interest on securities   3,105    3,194    3,188    2,949    2,520 -2.8% 23.2%
Dividends on FHLB stock   289    289    286    283    374 0.0% -22.7%
Interest on deposits in other banks   114    125    123    123    77 -8.8% 48.1%
Total interest and dividend income$  55,082 $  55,784 $  53,862 $  51,326 $  48,349 -1.3% 13.9%
              
Interest on deposits   7,785    7,402    7,071    6,463    5,154 5.2% 51.0%
Interest on borrowings   679    363    198    49    468 87.1% 45.1%
Interest on subordinated debentures   1,694    1,676    1,667    1,636    373 1.1% 354.2%
Total interest expense   10,158    9,441    8,936    8,148    5,995 7.6% 69.4%
Net interest income$  44,924 $  46,343 $  44,926 $  43,178 $  42,354 -3.1% 6.1%
              
(1)  Includes loans held for sale.             
              

Net interest margin for the first quarter of 2018 was 3.70%, down 9 basis points from 3.79% for the fourth quarter of 2017, mainly due to higher interest income in the fourth quarter from end of year prepayment fees. Adjusting for this, net interest margin for the first quarter was relatively flat on a sequential quarter basis.

              
  For the Three Months Ended (in thousands)  Percentage Change
 Mar 31, Dec 31, Sep 30, Jun 30, Mar 31, Q1-18 Q1-18
Average Earning Assets and Interest-bearing Liabilities 2018   2017   2017   2017   2017  vs. Q4-17 vs. Q1-17
Loans and lease receivables (1)$4,310,964  $4,227,259  $4,092,131  $3,951,934  $3,881,686  2.0% 11.1%
Securities 588,738   611,181   611,538   585,384   526,549  -3.7% 11.8%
FHLB stock 16,385   16,385   16,385   16,385   16,385  0.0% 0.0%
Interest-bearing deposits in other banks 32,401   36,386   38,981   47,402   38,600  -11.0% -16.1%
Average interest-earning assets$4,948,488  $4,891,211  $4,759,035  $4,601,105  $4,463,220  1.2% 10.9%
              
Demand: interest-bearing$91,378  $90,646  $90,720  $93,873  $97,602  0.8% -6.4%
Money market and savings 1,478,795   1,513,408   1,526,951   1,532,733   1,406,903  -2.3% 5.1%
Time deposits 1,440,382   1,408,227   1,384,724   1,320,005   1,173,184  2.3% 22.8%
Average interest-bearing deposits 3,010,555   3,012,281   3,002,395   2,946,611   2,677,689  -0.1% 12.4%
Borrowings 179,000   119,946   67,935   20,000   270,500  49.2% -33.8%
Subordinated debentures 117,323   117,198   117,065   116,850   30,950  0.1% 279.1%
Average interest-bearing liabilities$3,306,878  $3,249,425  $3,187,395  $3,083,461  $2,979,139  1.8% 11.0%
              
(1)  Includes loans held for sale.             
              
  For the Three Months Ended  Amount Change
 Mar 31, Dec 31, Sep 30, Jun 30, Mar 31, Q1-18 Q1-18
Average Yields and Rates 2018   2017   2017   2017   2017  vs. Q4-17 vs. Q1-17
Loans and lease receivables (1) 4.85%  4.90%  4.87%  4.87%  4.74% -0.05  0.11 
Securities (2) 2.24%  2.37%  2.41%  2.35%  2.30% -0.13  -0.06 
FHLB stock 7.15%  7.00%  6.93%  6.93%  9.26% 0.15  -2.11 
Interest-bearing deposits in other banks 1.43%  1.36%  1.25%  1.04%  0.81% 0.07  0.62 
Interest-earning assets 4.53%  4.56%  4.53%  4.52%  4.44% -0.03  0.09 
              
Interest-bearing deposits 1.05%  0.97%  0.93%  0.88%  0.78% 0.08  0.27 
Borrowings 1.54%  1.20%  1.16%  0.98%  0.70% 0.34  0.84 
Subordinated debentures 5.77%  5.70%  5.68%  5.59%  4.82% 0.07  0.95 
Interest-bearing liabilities 1.25%  1.15%  1.11%  1.06%  0.82% 0.10  0.43 
              
Net interest margin (taxable equivalent basis) 3.70%  3.79%  3.79%  3.81%  3.89% -0.09  -0.19 
              
Cost of deposits 0.73%  0.68%  0.66%  0.62%  0.54% 0.05  0.19 
              
(1)  Includes loans held for sale.             
(2)  Amounts calculated on a fully taxable equivalent basis using the federal tax rate in effect for the periods presented.      

For the first quarter of 2018, the loan and lease loss provision expense was $0.6 million compared with $0.2 million for the preceding quarter.

First quarter noninterest income decreased 21.1% to $6.1 million from $7.7 million for the fourth quarter of 2017 primarily due to the $0.4 million loss on the sales of securities related to the sale of $22.0 million of CRA mutual funds and a $0.6 million decrease in gains on sales of SBA loans. Gains on sales of SBA loans were $1.4 million for the first quarter 2018, down from $2.1 million from the fourth quarter of 2017 as the volume of SBA loans sold decreased to $19.2 million from $27.5 million for the preceding quarter.

  For the Three Months Ended (in thousands)  Percentage Change
 Mar 31, Dec 31, Sep 30, Jun 30, Mar 31, Q1-18 Q1-18
Noninterest Income 2018   2017  2017  2017  2017 vs. Q4-17 vs. Q1-17
Service charges on deposit accounts$2,511  $2,729 $2,678 $2,461 $2,528 -8.0% -0.7%
Trade finance and other service charges and fees 1,173   1,047  1,133  1,269  1,047 12.0% 12.0%
Servicing income 662   799  625  644  564 -17.1% 17.5%
Bank-owned life insurance income 277   282  260  286  285 -1.7% -2.8%
Other operating income 285   404  328  896  877 -29.5% -67.5%
Service charges, fees & other 4,908   5,261  5,024  5,556  5,301 -6.7% -7.4%
              
Gain on sale of SBA loans 1,448   2,056  2,546  2,668  1,464 -29.6% -1.1%
Disposition gain on PCI loans 133   91  979  540  183 46.2% -27.3%
Net gain (loss) on sales of securities (428)  275  267  938  269 -255.6% -259.1%
Total noninterest income$6,061  $7,683 $8,816 $9,702 $7,217 -21.1% -16.0%
              

Noninterest expense for the first quarter increased 1.7% to $29.8 million from $29.3 million for the prior quarter primarily due to a $1.4 million increase in salaries and employee benefits expenses, partially offset by a $0.7 million decrease in other operating expense. Salaries and employee benefits expenses are typically higher in the first quarter due to the seasonal impact of elevated payroll taxes and employee benefits. As a result of the increase in noninterest expense, as well as lower noninterest income due to losses on CRA mutual fund sales and lower SBA gain on sale income, the efficiency ratio increased to 58.4% in the first quarter from 54.2% in the prior quarter.

              
  For the Three Months Ended (in thousands)  Percentage Change
 Mar 31, Dec 31, Sep 30, Jun 30, Mar 31, Q1-18 Q1-18
 2018  2017   2017   2017  2017  vs. Q4-17 vs. Q1-17
Noninterest Expense             
Salaries and employee benefits$18,702 $17,270  $16,947  $16,623 $17,104  8.3% 9.3%
Occupancy and equipment 4,072  3,997   3,883   3,878  3,982  1.9% 2.3%
Data processing 1,678  1,812   1,779   1,738  1,631  -7.4% 2.9%
Professional fees 1,369  1,552   1,210   1,554  1,148  -11.8% 19.3%
Supplies and communication 708  778   755   745  635  -9.0% 11.5%
Advertising and promotion 876  988   1,147   1,015  802  -11.3% 9.2%
Other operating expenses 2,273  2,961   2,955   2,881  2,070  -23.2% 9.8%
subtotal 29,678  29,358   28,676   28,434  27,372  1.1% 8.4%
              
Other real estate owned expense (income) 79  (100)  (16)  510  (132) -179.0% -159.8%
Total noninterest expense$29,757 $29,258  $28,660  $28,944 $27,240  1.7% 9.2%
              

Hanmi recorded a provision for income taxes of $5.7 million for the first quarter of 2018, representing an effective tax rate of 27.8%, compared with $13.0 million, representing an effective tax rate of 53.2%, for the fourth quarter of 2017. As a result of the lower Federal corporate tax rate beginning in 2018, the provision for income taxes for the prior quarter included additional income tax expense of $3.9 million resulting from a one-time revaluation adjustment to reduce Hanmi’s deferred tax assets. The effective tax rate, before the additional income tax expense, was 37.5% for the 2017 fourth quarter.

Financial Position
Total assets were $5.31 billion at March 31, 2018, a 1.8% increase from $5.21 billion at December 31, 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 $4.41 billion at March 31, 2018, up 2.5% from $4.30 billion at December 31, 2017. The increase in loans and leases from the prior quarter reflects Hanmi’s continued strong loan and lease production. Loans held for sale, representing the guaranteed portion of SBA loans, were $6.0 million at March 31, 2018 compared with $6.4 million at the end of 2017.

Loans and leases receivable, before the allowance for loan and lease losses, increased 11.9% from $3.94 billion for the first quarter last year, primarily due to strong loan and lease production over the last twelve months.

              
  As of (in thousands)  Percentage Change
 Mar 31, Dec 31, Sep 30, Jun 30, Mar 31, Q1-18 Q1-18
 2018 2017 2017 2017 2017 vs. Q4-17 vs. Q1-17
Loan and Lease Portfolio             
Commercial real estate loans$3,122,745 $3,069,063 $3,108,931 $3,068,069 $2,991,123 1.7% 4.4%
Residential real estate loans 545,053  521,852  430,627  384,044  359,152 4.4% 51.8%
Commercial and industrial loans 409,380  399,197  364,456  346,150  316,284 2.6% 29.4%
Lease receivable 321,480  297,286  272,271  257,525  259,591 8.1% 23.8%
Consumer loans 14,899  17,060  19,070  17,274  17,801 -12.7% -16.3%
Loans and leases receivable 4,413,557  4,304,458  4,195,355  4,073,062  3,943,951 2.5% 11.9%
Loans held for sale 6,008  6,394  6,469  10,949  8,849 -6.0% -32.1%
Total loans$4,419,565 $4,310,852 $4,201,824 $4,084,011 $3,952,800 2.5% 11.8%
              

New loan and lease production for the 2018 first quarter was $245.3 million while payoffs, amortization and net line utilization was $154.3 million compared with $262.4 million and $228.3 million, respectively, for the fourth quarter of 2017.  First quarter 2018 new loan and lease production was comprised of $136.6 million of commercial real estate loans, $27.4 million of commercial and industrial loans, $25.1 million of SBA loans, $55.0 million of commercial leases and $1.2 million of consumer loans. Loan purchases for the 2018 first quarter were $38.9 million, compared with $105.0 million in the fourth quarter of 2017. For the first quarter of 2018, commercial real estate loans as a percentage of loans and leases receivable decreased to 70.8% compared with 75.8% for the same period last year.

Deposits increased to $4.38 billion at the end of the 2018 first quarter from $4.35 billion at the end of the preceding quarter. Time deposits and non-interest bearing demand deposits led this growth with increases of 3.3% and 3.0%, respectively. The loans to deposits ratio at March 31, 2018 increased to 100.8% from 99.0% in the fourth quarter.

Deposits increased 7.2% from $4.08 billion in the first quarter last year, as time deposits and non-interest bearing demand deposits increased 21.1% and 8.9%, respectively, from a year ago.

  As of (in thousands)  Percentage Change
 Mar 31, Dec 31, Sep 30, Jun 30, Mar 31, Q1-18 Q1-18
 2018 2017 2017 2017 2017 vs. Q4-17 vs. Q1-17
Deposit Portfolio             
Demand: noninterest-bearing$1,352,162 $1,312,274 $1,293,538 $1,260,929 $1,241,272 3.0% 8.9%
Demand: interest-bearing 93,591  92,948  90,734  93,390  99,433 0.7% -5.9%
Money market and savings 1,469,010  1,527,100  1,534,457  1,528,127  1,534,578 -3.8% -4.3%
Time deposits of $100,000 or more 1,197,026  954,104  949,826  916,197  731,445 25.5% 63.7%
Other time deposits 266,312  462,228  430,455  460,530  476,437 -42.4% -44.1%
Total deposits$4,378,101 $4,348,654 $4,299,010 $4,259,173 $4,083,165 0.7% 7.2%
              

At March 31, 2018, stockholders’ equity was $564.3 million, compared with $562.5 million at December 31, 2017. Tangible common stockholders’ equity was $551.8 million, or 10.43% of tangible assets, compared with $549.9 million, or 10.58% of tangible assets at December 31, 2017. Tangible book value per share was $16.98, compared to $16.96 in the fourth quarter.

Hanmi continues to be well capitalized, with a preliminary Tier 1 risk-based capital ratio of 12.55% and a Total risk-based capital ratio of 15.47% at March 31, 2018, versus 12.55% and 15.50%, respectively, at year end 2017.

  As of  Amount Change
 Mar 31, Dec 31, Sep 30, Jun 30, Mar 31, Q1-18 Q1-18
 2018
 2017
 2017
 2017
 2017
 vs. Q4-17 vs. Q1-17
Regulatory Capital ratios (1)             
Hanmi Financial             
Total risk-based capital15.47% 15.50% 15.58% 15.69% 16.16% -0.03 -0.69
Tier 1 risk-based capital12.55% 12.55% 12.56% 12.58% 12.93% 0.00 -0.38
Common equity tier 1 capital12.12% 12.19% 12.20% 12.22% 12.56% -0.07 -0.44
Tier 1 leverage capital ratio10.88% 10.79% 10.92% 11.08% 11.21% 0.09 -0.33
Hanmi Bank             
Total risk-based capital15.16% 15.20% 15.32% 15.44% 15.91% -0.04 -0.75
Tier 1 risk-based capital14.43% 14.47% 14.55% 14.62% 15.07% -0.04 -0.64
Common equity tier 1 capital14.43% 14.47% 14.55% 14.62% 15.07% -0.04 -0.64
Tier 1 leverage capital ratio12.50% 12.44% 12.66% 12.89% 13.08% 0.06 -0.58
              
(1)  Preliminary ratios for March 31, 2018            
              

Hanmi declared a cash dividend of $0.24 per common share on its common stock in the 2018 first quarter, up 14% from the prior quarter. The dividend was paid on February 23, 2018, to stockholders of record as of the close of business on February 5, 2018.

Asset Quality
Nonperforming loans were $15.4 million at the end of the first quarter of 2018, or 0.35% of loans, compared with $15.8 million at the end of 2017, or 0.37% of loans. Loans 30 to 89 days past due and still accruing were 0.16% of loans at the end of the first quarter of 2018, compared with 0.20% of loans at the end of the fourth quarter.

Nonperforming assets were $17.0 million at the end of the first quarter of 2018, or 0.32% of assets, compared with 0.34% of assets at the end of the prior quarter.

Gross charge-offs for the first quarter of 2018 were $1.6 million compared with $2.6 million for the preceding quarter. Recoveries of previously charged-off loans for the first quarter of 2018 were $1.7 million compared with $973,000 for the preceding quarter. As a result, there were net recoveries of $85,000 for the first quarter of 2018, compared to net charge-offs of $1.7 million, or 4 basis points, for the preceding quarter.  For the first quarter of 2018, net recoveries were 0.01% of average loans and leases compared with net charge-offs of 0.16% for the preceding quarter.   

The allowance for loan and lease losses (ALLL) was $31.8 million as of March 31, 2018, generating an allowance of loan and lease losses to gross loans and leases of 0.72%, unchanged from the prior quarter. ALLL to nonperforming loans for the first quarter of 2018 was 206.9%, up from 196.4% a quarter ago. 

  As of or for the Three Months Ended (in thousands)  Amount Change
 Mar 31, Dec 31, Sep 30, Jun 30, Mar 31, Q1-18 Q1-18
  2018   2017   2017   2017   2017  vs. Q4-17 vs. Q1-17
Asset Quality             
Non-performing assets (1):             
Nonaccrual loans$15,345  $15,805  $14,558  $16,464  $12,774  $(460) $2,571 
Loans 90 days or more past due and still accruing 17   -   -   -   -   17   17 
Non-performing loans and leases 15,362   15,805   14,558   16,464   12,774   (443)  2,588 
Other real estate, net 1,660   1,946   1,946   4,321   4,636   (286)  (2,976)
Nonperforming assets$17,022  $17,751  $16,504  $20,785  $17,410  $(729) $(388)
              
Delinquent loans:             
Loans, 30 to 89 days past due and still accruing$7,270  $8,666  $5,682  $9,602  $8,356  $(1,396) $(1,086)
Delinquent loans to loans 0.16%  0.20%  0.14%  0.24%  0.21%  (0.04)  (0.05)
              
Allowance for loan and lease losses:             
Balance at beginning of period$31,043  $32,492  $33,758  $33,152  $32,429     
Loan and lease loss provision (income) 649   220   269   422   (80)    
Net loan charge-offs (recoveries) (85)  1,669   1,535   (184)  (803)    
Balance at end of period$31,777  $31,043  $32,492  $33,758  $33,152     
              
Asset quality ratios:             
Non-performing loans and leases to loans and leases 0.35%  0.37%  0.35%  0.41%  0.32%    
Non-performing assets to assets 0.32%  0.34%  0.32%  0.42%  0.36%    
Net loan and lease charge-offs (recoveries) to average loans and leases (1) -0.01%  0.16%  0.15%  -0.02%  -0.08%    
Allowance for loan and lease losses to loans and leases 0.72%  0.72%  0.77%  0.83%  0.84%    
Allowance for loan and lease losses to non-performing loans and leases 206.85%  196.41%  223.19%  205.04%  259.53%    
              
Allowance for off-balance sheet items:             
Balance at beginning of period$1,296  $915  $1,135  $1,184  $1,184     
Provision (income) for off-balance sheet items 27   381   (220)  (49)  -     
Balance at end of period$1,323  $1,296  $915  $1,135  $1,184     
              
(1)  Annualized             

Conference Call                             
Management will host a conference call today, April 24, 2018 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 40 full-service branches and 9 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, 2017, 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)          
           
 March 31, December 31, Percentage March 31, Percentage 
  2018   2017  Change  2017  Change 
Assets          
Cash and due from banks$151,611  $153,826  -1.4% $138,592  9.4% 
Securities available for sale, at fair value 570,351   578,804  -1.5%  548,010  4.1% 
Loans held for sale, at the lower of cost or fair value 6,008   6,394  -6.0%  8,849  -32.1% 
Loans receivable, net of allowance for loan losses 4,381,780   4,273,415  2.5%  3,910,799  12.0% 
Accrued interest receivable 12,751   12,770  -0.1%  10,774  18.3% 
Premises and equipment, net 26,465   26,655  -0.7%  28,350  -6.6% 
Customers' liability on acceptances 870   803  8.3%  932  -6.7% 
Servicing assets 9,867   10,218  -3.4%  10,609  -7.0% 
Goodwill and other intangible assets, net 12,454   12,544  -0.7%  12,797  -2.7% 
Federal Home Loan Bank ("FHLB") stock, at cost 16,385   16,385  0.0%  16,385  0.0% 
Bank-owned life insurance 50,831   50,554  0.5%  49,722  2.2% 
Prepaid expenses and other assets 66,268   68,117  -2.7%  76,002  -12.8% 
Total assets$   5,305,641   $   5,210,485   1.8% $   4,811,821   10.3% 
           
Liabilities and Stockholders' Equity          
Liabilities:          
Deposits:          
Noninterest-bearing$1,352,162  $1,312,274  3.0% $1,241,272  8.9% 
Interest-bearing 3,025,939   3,036,380  -0.3%  2,841,893  6.5% 
Total deposits 4,378,101   4,348,654  0.7%  4,083,165  7.2% 
Accrued interest payable 5,931   5,309  11.7%  2,619  126.5% 
Bank's liability on acceptances 870   803  8.3%  932  -6.7% 
Borrowings 220,000   150,000  46.7%  50,000  340.0% 
Subordinated debentures 117,400   117,270  0.1%  116,795  0.5% 
Accrued expenses and other liabilities 19,061   25,972  -26.6%  18,768  1.6% 
Total liabilities   4,741,363      4,648,008   2.0%    4,272,279   11.0% 
           
Stockholders' equity:          
Common stock 33   33  0.0%  33  0.0% 
Additional paid-in capital 567,081   565,627  0.3%  563,151  0.7% 
Accumulated other comprehensive income (8,207)  (1,869) 339.1%  (1,603) 412.0% 
Retained earnings 77,691   70,575  10.1%  49,395  57.3% 
Less treasury stock (72,320)  (71,889) 0.6%  (71,434) 1.2% 
Total stockholders' equity   564,278      562,477   0.3%    539,542   4.6% 
Total liabilities and stockholders' equity$   5,305,641   $   5,210,485   1.8% $   4,811,821   10.3% 
           


Hanmi Financial Corporation and Subsidiaries          
Consolidated Statements of Income (Unaudited)          
(In thousands, except share and per share data)          
           
  Three Months Ended  
 March 31, December 31, Percentage March 31, Percentage 
  2018   2017  Change  2017  Change 
Interest and dividend income:          
Interest and fees on loans and leases$51,574  $52,176  -1.2% $45,378  13.7% 
Interest on securities 3,105   3,194  -2.8%  2,520  23.2% 
Dividends on FHLB stock 289   289  0.0%  374  -22.7% 
Interest on deposits in other banks 114   125  -8.8%  77  48.1% 
Total interest and dividend income 55,082   55,784  -1.3%  48,349  13.9% 
Interest expense:          
Interest on deposits 7,785   7,402  5.2%  5,154  51.0% 
Interest on borrowings 679   363  87.1%  468  45.1% 
Interest on subordinated debentures 1,694   1,676  1.1%  373  354.2% 
Total interest expense 10,158   9,441  7.6%  5,995  69.4% 
Net interest income before provision for loan and lease losses 44,924   46,343  -3.1%  42,354  6.1% 
Loan and lease loan provision (income) 649   220  195.0%  (80) -911.3% 
Net interest income after provision for loan and lease losses 44,275   46,123  -4.0%  42,434  4.3% 
Noninterest income:          
Service charges on deposit accounts 2,511   2,729  -8.0%  2,528  -0.7% 
Trade finance and other service charges and fees 1,173   1,047  12.0%  1,047  12.0% 
Gain on sale of Small Business Administration ("SBA") loans 1,448   2,056  -29.6%  1,464  -1.1% 
Servicing income 662   564  0.0%  799  0.0% 
Bank-owned life insurance income 277   285  0.0%  282  0.0% 
Disposition gains on Purchased Credit Impaired ("PCI") loans 133   91  46.2%  183  -27.3% 
Net gain (loss) on sales of securities (428)  275  -255.6%  269  -259.1% 
Other operating income 285   637  -55.2%  646  -55.9% 
Total noninterest income 6,061   7,683  -21.1%  7,217  -16.0% 
Noninterest expense:          
Salaries and employee benefits 18,702   17,270  8.3%  17,104  9.3% 
Occupancy and equipment 4,072   3,997  1.9%  3,982  2.3% 
Data processing 1,678   1,812  -7.4%  1,631  2.9% 
Professional fees 1,369   1,552  -11.8%  1,148  19.3% 
Supplies and communications 708   778  -9.0%  635  11.5% 
Advertising and promotion 876   988  -11.3%  802  9.2% 
Other real estate owned expense (income) 79   (100) -179.0%  (101) -178.2% 
Other operating expenses 2,273   2,961  -23.2%  2,039  11.5% 
Total noninterest expense 29,757   29,258  1.7%  27,240  9.2% 
Income from continuing operations before provision for income taxes 20,579   24,548  -16.2%  22,411  -8.2% 
Provision for income taxes 5,724   13,048  -56.1%  8,628  -33.7% 
Net income$   14,855   $   11,500   29.2% $   13,783   7.8% 
            
Basic earnings per share:$0.46  $0.36    $0.43    
Diluted earnings per share:$0.46  $0.36    $0.43    
           
Weighted-average shares outstanding:          
Basic 32,145,214   32,109,792     32,001,766    
Diluted 32,301,095   32,299,838     32,191,458    
Common shares outstanding 32,502,658   32,431,630     32,392,580    
           


Hanmi Financial Corporation and Subsidiaries            
Average Balance, Average Yield Earned, and Average Rate Paid (Unaudited)            
 (In thousands, except ratios)            
             
 Three Months Ended 
 March 31, 2018 December 31, 2017 March 31, 2017 
  InterestAverage  InterestAverage  InterestAverage 
 AverageIncome /Yield / AverageIncome /Yield / AverageIncome /Yield / 
 BalanceExpenseRate BalanceExpenseRate BalanceExpenseRate 
Assets            
Interest-earning assets:            
Loans and leases (1)$4,310,964 $51,5744.85% $4,227,259 $52,1764.90% $3,881,686 $45,3784.74% 
Securities (2) 588,738  3,2962.24%  611,181  3,6192.37%  526,549  3,0262.30% 
FHLB stock 16,385  2897.15%  16,385  2897.00%  16,385  3749.26% 
Interest-bearing deposits in other banks 32,401  1141.43%  36,386  1251.36%  38,600  770.81% 
Total interest-earning assets 4,948,488  55,2734.53%  4,891,211  56,2094.56%  4,463,220  48,8554.44% 
             
Noninterest-earning assets:            
Cash and due from banks 122,580     118,230     117,802    
Allowance for loan and lease losses (32,487)    (32,469)    (32,842)   
Other assets 175,209     185,994     190,041    
             
Total assets$  5,213,790     $  5,162,966     $  4,738,221     
             
Liabilities and Stockholders' Equity            
Interest-bearing liabilities:            
Deposits:            
Demand: interest-bearing$91,378 $180.08% $90,646 $180.08% $97,602 $190.08% 
Money market and savings 1,478,795  3,3260.91%  1,513,408  3,3150.87%  1,406,903  2,6660.77% 
Time deposits 1,440,382  4,4411.25%  1,408,227  4,0691.15%  1,173,184  2,4690.85% 
Total interest-bearing liabilities 3,010,555  7,7851.05%  3,012,281  7,4020.97%  2,677,689  5,1540.78% 
Borrowings 179,000  6791.54%  119,946  3631.20%  270,500  4680.70% 
Subordinated debentures 117,323  1,6945.77%  117,198  1,6765.70%  30,950  3734.82% 
Total interest-bearing liabilities 3,306,878  10,1581.25%  3,249,425  9,4411.15%  2,979,139  5,9950.82% 
             
Noninterest-bearing liabilities and equity:            
Demand deposits: noninterest-bearing 1,307,072     1,321,182     1,196,151    
Other liabilities 33,973     30,482     28,658    
Stockholders' equity 565,867     561,877     534,273    
             
Total liabilities and stockholders' equity$  5,213,790     $  5,162,966     $  4,738,221     
             
Net interest income (tax equivalent basis) $   45,115    $   46,768    $  42,860   
             
Cost of deposits  0.73%   0.68%   0.54% 
Net interest spread (taxable equivalent basis) 3.28%   3.41%   3.62% 
Net interest margin (taxable equivalent basis) 3.70%   3.79%   3.89% 
             
(1)  Includes loans held for sale            
(2)  Amounts calculated on a fully taxable equivalent basis using the federal tax rate in effect for the periods presented.     

Non-GAAP Financial Measures

Tangible Common Equity to Tangible Assets Ratio

Tangible common equity to tangible assets ratio is supplemental financial information determined by a method other than in accordance with U.S. generally accepted accounting principles (“GAAP”). This non-GAAP measure is used by management in the analysis of Hanmi’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)
           
 March 31, December 31, September 30, June 30, March 31, 
Hanmi Financial Corporation 2018   2017   2017   2017   2017  
Assets$5,305,641  $5,210,485  $5,111,396  $4,973,346  $4,811,821  
Less goodwill and other intangible assets (12,454)  (12,544)  (12,628)  (12,712)  (12,797) 
Tangible assets$5,293,187  $5,197,941  $5,098,768  $4,960,634  $4,799,024  
           
Stockholders' equity$564,278  $562,477  $559,247  $550,140  $539,542  
Less goodwill and other intangible assets (12,454)  (12,544)  (12,628)  (12,712)  (12,797) 
Tangible stockholders' equity$551,824  $549,933  $546,619  $537,428  $526,745  
           
Stockholders' equity to assets 10.64%  10.80%  10.94%  11.06%  11.21% 
Tangible common equity to tangible assets 10.43%  10.58%  10.72%  10.83%  10.98% 
           
Common shares outstanding 32,502,658   32,431,630   32,413,082   32,393,856   32,392,580  
Tangible common equity per common share$16.98  $16.96  $16.86  $16.59  $16.26  

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