Hanmi Financial Corporation Reports Record Net Income of $15.0 Million for Second Quarter of 2005; Earnings Per Share Increase 67 Percent to $0.30

Business Wire, July 21, 2005

LOS ANGELES -- Hanmi Financial Corporation (NASDAQ:HAFC), the holding company for Hanmi Bank, reported that for the three months ended June 30, 2005, it earned record net income of $15.0 million, an increase of 99.3 percent over net income of $7.5 million in the comparable period a year ago. Earnings per share were $0.30 (diluted), an increase of 66.7 percent compared to $0.18 (diluted) for the same period in 2004. Earnings per share for 2004 have been restated to reflect a 100 percent stock dividend in January 2005.

For the six months ended June 30, 2005, net income was $28.4 million, an increase of 103.6 percent over net income of $13.9 million in the comparable period a year ago. Earnings per share were $0.56 (diluted), an increase of 43.6 percent compared to $0.39 (diluted) for the same period in 2004.

"We continue to be very pleased with our financial performance," said Sung Won Sohn, Ph.D., Hanmi's President and Chief Executive Officer. "The quarter ended June 30, 2005 was the best in Hanmi's 23-year history, with record assets of $3.25 billion and record net income that was double that of the prior year period. Other metrics, notably second-quarter net interest margin of 4.89 percent and an efficiency ratio of 40.30 percent, point to the success of our program to focus on credit quality while seeking further operating efficiencies."

"Although sequential growth in deposits was modest because we entered the quarter with a high level of liquidity, the loan portfolio grew by $174 million, or almost 8 percent, over the first quarter," continued Dr. Sohn. "Especially gratifying is the progress we are making in shifting the mix of the loan portfolio from commercial real estate loans to straightforward commercial and industrial loans."

"The increase in loan originations was particularly strong in the second quarter and came despite a marketplace that continues to be characterized by aggressive pricing of both fixed-rate term loans and deposits. That said, our outlook for the current quarter is cautiously optimistic. Because the environment has become extremely competitive, our challenge -- as was the case in the quarter just ended -- is to continue attracting deposits and expanding the loan portfolio while maintaining a superior net interest margin and an excellent credit quality."

SECOND QUARTER HIGHLIGHTS

--Pre-tax income for the second quarter of 2005 increased 100.7 percent to $24.8 million, compared to $12.4 million for the same quarter in 2004.

--Net interest income before provision for credit losses for the second quarter of 2005 increased 42.0 percent to $34.0 million from $24.0 million for the same quarter in 2004.

--Return on average assets for the second quarter of 2005 was 1.90 percent, compared to 1.74 percent for the first quarter of 2005 and 1.14 percent for the same quarter in 2004.

--Return on average shareholders' equity for the second quarter of 2005 was 14.48 percent, compared to 13.32 percent for the first quarter of 2005 and 10.02 percent for the same quarter in 2004.

--Return on average tangible shareholders' equity for the second quarter of 2005 was 30.61 percent, compared to 29.19 percent for the first quarter of 2005 and 19.83 percent for the same quarter in 2004.

--Net interest margin for the second quarter of 2005 increased to 4.89 percent from 4.70 percent for the first quarter of 2005 and 4.04 percent for the same quarter in 2004.

--Total assets increased to $3.25 billion at June 30, 2005 from $3.10 billion at December 31, 2004 and $3.10 billion at June 30, 2004.

--The loan portfolio increased by $174.0 million, or 7.8 percent, during the second quarter of 2005 to $2.40 billion from $2.23 billion at March 31, 2005. The loan portfolio totaled $2.23 billion at December 31, 2004 and $2.20 billion at June 30, 2004.

--Deposits grew by $15.1 million, or 0.6 percent, during the second quarter of 2005 to $2.56 billion from $2.54 billion at March 31, 2005. Deposits totaled $2.53 billion at December 31, 2004 and $2.35 billion at June 30, 2004. Federal funds sold decreased from $77.0 million at March 31, 2005 to $7.0 million at June 30, 2005, while other borrowings increased from $67.1 million at March 31, 2005 to $147.6 million at June 30, 2005.

--The efficiency ratio for the second quarter of 2005 improved to 40.30 percent compared to 44.38 percent for the first quarter of 2005 and 57.33 percent for the same quarter in 2004.

NET INTEREST INCOME BEFORE PROVISION FOR CREDIT LOSSES

Net interest income before provision for credit losses was $34.0 million for the second quarter of 2005, an increase of $2.3 million, or 7.4 percent, compared to $31.7 million in the first quarter of 2005, and an increase of $10.0 million, or 42.0 percent, compared to $24.0 million for the same quarter in 2004.

The sequential increase in net interest income was primarily due to an increase in the net interest margin, which was 4.89 percent for the second quarter of 2005, compared to 4.70 percent for the first quarter of 2005 and 4.04 percent for the same quarter in 2004. Of the $2.3 million increase in net interest income for the second quarter of 2005, an increase in interest rates caused net interest income to increase $1.5 million compared with the first quarter of 2005.