GlobeNewswire Inc | Jan 26, 2021 04:05PM EST

January 26, 2021

2020 Fourth Quarter and Full Year Highlights:

-- Fourth quarter net income of $14.3 million, or $0.47 per diluted share, down 12.3% from $16.3 million, or $0.53 per diluted share from the prior quarter; full year 2020 net income of $42.2 million, or $1.38 per diluted share, up 28.7% from $32.8 million, or $1.06 per diluted share in 2019. -- Loans receivable of $4.88 billion, up 4.0% in the fourth quarter on an annualized basis reflecting $327.8 million of new loan and lease production; loans receivable were up 5.9% year-over-year. -- Deposits of $5.28 billion, up 6.4% in the fourth quarter on an annualized basis and up 12.3% year-over-year driven by an increase of $507.1 million in noninterest-bearing demand deposits; cost of interest-bearing deposits fell 23 basis points from the prior quarter. -- Credit loss expense was $5.1 million, compared with $0.04 million for the prior quarter and the allowance for credit losses was 1.85% of loans at December 31, 2020, or 1.97% excluding Paycheck Protection Program (PPP) loans. -- Nonperforming assets were 1.38% of total assets at December 31, 2020 compared with 1.07% at September 30, 2020; modified loans declined 73.1% in the fourth quarter to $155.6 million or 3.2% of loans. -- Fourth quarter net interest income was $46.9 million, up 2.8% from the prior quarter; fourth quarter prepayment penalties were $0.8 million compared with $1.3 million for the prior quarter. For the full year, net interest income was $180.9 million, up 2.9% from $175.9 million last year. -- Fourth quarter net interest margin was 3.13% (3.18% excluding PPP loans), unchanged from the prior quarter; net interest margin for the full year was 3.19% (3.23% excluding PPP loans) compared with 3.37% last year. -- The efficiency ratio for the fourth quarter was 55.53% compared with 56.73% for the prior quarter. The efficiency ratio for full year 2020 was 53.15% (58.63% excluding securities gains and deferred PPP loan origination costs) compared to 61.89% for the prior year. -- Hanmi remained well capitalized with a Total risk-based capital ratio of 15.29% and a Common equity Tier 1 capital ratio of 11.60% at December 31, 2020; tangible common equity to tangible assets ratio was 9.13% (9.59% excluding PPP loans) at year-end.For more information about Hanmis response to the COVID-19 pandemic, including detail regarding participation in the PPP, loan deferrals, including a breakdown by loan type and industry, as well as detail concerning Hanmis loan exposure to higher impacted industries, please see the Q4 2020 Investor Update (and Supplemental Financial Information), which is available on the Banks website at www.hanmi.com and via a current report on Form 8-K on the website of the Securities and Exchange Commission at www.sec.gov.

LOS ANGELES, Jan. 26, 2021 (GLOBE NEWSWIRE) -- Hanmi Financial Corporation (NASDAQ: HAFC, or Hanmi), the parent company of Hanmi Bank (the Bank), today reported net income for the 2020 fourth quarter of $14.3 million, or $0.47 per diluted share, compared with $16.3 million, or $0.53 per diluted share for the 2020 third quarter and $3.1 million, or $0.10 per diluted share for the 2019 fourth quarter.

For the 2020 year, net income was $42.2 million, or $1.38 per diluted share, compared with $32.8 million, or $1.06 per diluted share, for 2019.

Bonnie Lee, President and Chief Executive Officer, said, In a year of unprecedented operating challenges and economic uncertainty, Hanmi completed 2020 with a strong performance in the fourth quarter highlighted by excellent loan production, stable net interest margin and careful expense management. Total loan and lease production of $327.8 million increased more than 27% from the prior quarter and contributed to the 5.9% growth in loans and leases for the full year. Fourth quarter net interest marginor NIMremained stable at 3.13% as we were able to offset declining loan yields through lower deposit costs. Overall, we were successful in protecting NIM throughout the year. I was also pleased by our cost reduction measures that led to a year-over-year decline in noninterest expense of 9.3% for the fourth quarter and 5.4% for the full year. In combination, these efforts generated full-year net income of $42.2 million, an increase of 28.7% over the prior year.

Ms. Lee continued, Throughout the pandemic, we have focused on helping our borrowers affected by the crisis through loan modifications and these efforts have been very successful in protecting the value of our portfolio. I continue to be very pleased with the trends of the modified portfolio, which has declined significantly from the prior quarter and now represents just 3.2% of our loans. I am also very proud of our efforts earlier in the year originating loans under the federal governments Paycheck Protection Program that included almost 3,100 loans totaling nearly $309 million to assist affected customers. Overall, we remain very committed to proactive asset management and helping our borrowers weather the crisis while minimizing future charge-offs.

Ms. Lee concluded, Much was accomplished in 2020 and I thank our entire team for their dedication and commitment. Looking ahead, our solid balance sheet and capital position coupled with our strong loan and deposit franchise, gives me confidence that we will deliver profitable growth as we remain cautiously optimistic that the economy will continue to improve.

Quarterly Highlights(Dollars in thousands, except per share data) As of or for the Three Months Ended Amount Change December 31, September 30, June 30, March 31, December 31, Q4-20 Q4-20 2020 2020 2020 2020 2019 vs. Q3-20 vs. Q4-19 Net income $ 14,326 $ 16,344 $ 9,175 $ 2,350 $ 3,084 $ (2,019 ) $ 11,242Net income perdiluted common $ 0.47 $ 0.53 $ 0.30 $ 0.08 $ 0.10 $ (0.06 ) $ 0.37share Assets $ 6,201,888 $ 6,106,782 $ 6,218,163 $ 5,617,690 $ 5,538,184 $ 95,106 $ 663,704Loans $ 4,880,168 $ 4,834,137 $ 4,825,642 $ 4,543,636 $ 4,610,148 $ 46,031 $ 270,020receivableDeposits $ 5,275,008 $ 5,194,292 $ 5,209,781 $ 4,582,068 $ 4,698,962 $ 80,715 $ 576,046 Return on 0.92 % 1.08 % 0.63 % 0.17 % 0.22 % -0.16 0.70average assetsReturn onaverage 10.01 % 11.74 % 6.73 % 1.69 % 2.15 % -1.73 7.86stockholders'equity Net interest 3.13 % 3.13 % 3.15 % 3.36 % 3.32 % 0.00 -0.19marginEfficiency 55.53 % 56.73 % 41.51 % 61.89 % 67.31 % -1.20 -11.78ratio ^(1) Tangible commonequity to 9.13 % 9.05 % 8.63 % 9.65 % 9.98 % 0.09 -0.85tangible assets^(2)Tangible commonequity per $ 18.41 $ 17.95 $ 17.47 $ 17.67 $ 17.90 $ 0.45 $ 0.51common share ^(2) ^(1) Noninterest expense divided by net interest income plusnoninterest income.^(2) Refer to "Non-GAAP Financial Measures" for further details.

Results of OperationsNet interest income was $46.9 million for the fourth quarter of 2020 compared with $45.6 million for the third quarter of 2020, an increase of 2.8%, or $1.3 million, primarily due to lower interest expense on deposits. Fourth quarter deposit interest expense decreased 24.2%, or $1.7 million, from the preceding quarter driven by a 23 basis point reduction in the average rate paid on interest-bearing deposits. Interest and fees on loans decreased 0.4%, or $0.2 million, from the preceding quarter reflecting an 8 basis point reduction in average yields. Fourth quarter loan prepayment penalties were $0.8 million compared with $1.3 million for the third quarter.

Net interest income of $180.9 million for the full year of 2020 increased 2.9%, or $5.0 million from $175.9 million for the full year of 2019. The year-over-year increase in net interest income reflects an 81 basis point decrease in the average rate paid on interest-bearing deposits offset by a 78 basis point decrease in the average yield on interest-earning assets.

As of or For the Three Months Ended (in thousands) Percentage Change Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Q4-20 Q4-20Net Interest 2020 2020 2020 2020 2019 vs. Q3-20 vs. Q4-19Income Interest andfees on loans $ 52,372 $ 52,586 $ 52,230 $ 54,648 $ 56,267 -0.4 % -6.9 %receivable^(1)Interest on 1,684 1,972 3,225 3,655 3,665 -14.6 % -54.0 %securitiesDividends on 206 204 203 289 289 1.1 % -28.7 %FHLB stockInterest ondeposits in 97 84 78 333 478 16.4 % -79.6 %other banksTotal interestand dividend $ 54,359 $ 54,846 $ 55,736 $ 58,925 $ 60,699 -0.9 % -10.4 %income Interest on 5,331 7,032 8,889 12,742 14,699 -24.2 % -63.7 %depositsInterest on 528 582 760 496 325 -9.4 % 62.3 %borrowingsInterest onsubordinated 1,623 1,627 1,645 1,712 1,739 -0.2 % -6.7 %debenturesTotal interest 7,482 9,240 11,295 14,950 16,763 -19.0 % -55.4 %expenseNet interest $ 46,877 $ 45,606 $ 44,441 $ 43,975 $ 43,936 2.8 % 6.7 %income ^(1) Includes loansheld for sale.

Net interest margin was 3.13% for the fourth quarter of 2020, unchanged from the prior quarter, as a 14 basis point decline in the yield on earning assets was offset by a 23 basis point decline in the cost of interest-bearing deposits. For the full year, net interest margin was 3.19% for 2020 compared with 3.37% for 2019.

The yield on average earning assets was 3.63% for the fourth quarter of 2020 compared with 3.77% for the third quarter of 2020. The 14 basis point decline was primarily due to a reduction in yields on securities and loans receivable. Full year yields decreased 78 basis points to 3.95% for 2020 from 4.73% for 2019.

The cost of interest-bearing liabilities was 0.83% for the fourth quarter of 2020 compared with 1.05% for the third quarter of 2020. The 23 basis point decline in the cost of interest-bearing deposits drove the lower cost of interest-bearing liabilities. For 2020, the cost of interest-bearing liabilities was 1.20% compared with 1.99% for the full year 2019, reflecting the current lower interest rate environment.

For the Three Months Ended (in thousands) Percentage Change Dec 31, Sep 30, Jun 30 Mar 31, Dec 31, Q4-20 Q4-20Average EarningAssets and 2020 2020 2020 2020 2019 vs. vs.Interest-bearing Q3-20 Q4-19LiabilitiesLoans receivable ^ $ 4,803,238 $ 4,734,511 $ 4,680,048 $ 4,518,395 $ 4,487,998 1.5 % 7.0 %(1)Securities 743,636 696,285 589,932 623,711 624,861 6.8 % 19.0 %FHLB stock 16,385 16,385 16,385 16,385 16,385 0.0 % 0.0 %Interest-bearingdeposits in other 392,949 340,486 386,956 104,513 114,462 15.4 % 243.3 %banksAverageinterest-earning $ 5,956,208 $ 5,787,667 $ 5,673,321 $ 5,263,004 $ 5,243,706 2.9 % 13.6 %assets Demand: $ 101,758 $ 99,161 $ 92,676 $ 82,934 $ 82,604 2.6 % 23.2 %interest-bearingMoney market and 1,895,830 1,771,615 1,677,081 1,687,013 1,640,162 7.0 % 15.6 %savingsTime deposits 1,315,227 1,357,167 1,458,351 1,522,745 1,605,276 -3.1 % -18.1 %Averageinterest-bearing 3,312,815 3,227,943 3,228,108 3,292,692 3,328,042 2.6 % -0.5 %depositsBorrowings 150,000 163,364 342,437 130,659 75,500 -8.2 % 98.7 %Subordinated 118,888 118,733 118,583 118,444 118,297 0.1 % 0.5 %debenturesAverageinterest-bearing $ 3,581,703 $ 3,510,040 $ 3,689,128 $ 3,541,795 $ 3,521,839 2.0 % 1.7 %liabilities Average Noninterest Bearing DepositsDemand deposits - $ 1,935,564 $ 1,859,832 $ 1,589,668 $ 1,333,697 $ 1,342,524 4.1 % 44.2 %noninterest bearing ^(1) Includes loans held for sale. For the Three Months Ended Amount Change Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Q4-20 Q4-20Average Yields and 2020 2020 2020 2020 2019 vs. vs.Rates Q3-20 Q4-19Loans receivable^ 4.34 % 4.42 % 4.49 % 4.86 % 4.97 % -0.08 -0.63 (1)Securities ^(2) 0.91 % 1.13 % 2.19 % 2.34 % 2.35 % -0.22 -1.44 FHLB stock 5.00 % 4.95 % 5.00 % 7.10 % 7.00 % 0.05 -2.00 Interest-bearingdeposits in other 0.10 % 0.10 % 0.08 % 1.28 % 1.66 % 0.00 -1.56 banksInterest-earning 3.63 % 3.77 % 3.95 % 4.50 % 4.59 % -0.14 -0.96 assets Interest-bearing 0.64 % 0.87 % 1.11 % 1.56 % 1.75 % -0.23 -1.11 depositsBorrowings 1.40 % 1.42 % 0.89 % 1.53 % 1.71 % -0.02 -0.31 Subordinated 5.46 % 5.48 % 5.55 % 5.78 % 5.88 % -0.02 -0.42 debenturesInterest-bearing 0.83 % 1.05 % 1.23 % 1.70 % 1.89 % -0.22 -1.06 liabilities Net interest margin(taxable equivalent 3.13 % 3.13 % 3.15 % 3.36 % 3.32 % 0.00 -0.19 basis) Cost of deposits 0.40 % 0.55 % 0.74 % 1.11 % 1.25 % -0.15 -0.85 ^(1) Includes loans held for sale.^(2) Amounts calculated on a fully taxable equivalent basis usingthe federal tax rate in effect for the periods presented.

For the fourth quarter of 2020, credit loss expense was $5.1 million, comprised of a $5.7 million provision for loan losses, a $2.9 million negative provision for off-balance sheet items and a $2.3 million provision for losses on accrued interest receivable for modified loans. Credit loss expense for the third quarter of 2020 was $0.04 million, comprised of a provision for loan losses of $0.70 million and a negative provision for off-balance sheet items of $0.66 million. At December 31, 2020, accrued interest receivable on current and former modified loans was $9.2 million and the related allowance for possible losses was $1.7 million.

Credit loss expense for the full year 2020 was $45.5 million compared with $30.2 million for 2019. Credit loss expense for 2020 reflected the new accounting standard for determining the allowance for credit losses and included a $42.5 million provision for loan losses which primarily reflected the change to life of loan current expected credit losses and the impact of the pandemic, a $0.7 million provision for off-balance sheet items and a $2.3 million provision for losses on accrued interest receivable for loans currently or previously modified under the CARES Act. A year ago, under the former accounting standard for determining the allowance for loan losses, the provision for loan losses was $30.2 million, which primarily reflected specific allowance allocations related to a troubled loan relationship. The 2019 provision for off-balance sheet items, included in other operating expenses, was $1.0 million.

Fourth quarter noninterest income increased to $8.8 million from $7.1 million for the third quarter, primarily due to a $1.0 million litigation settlement from a failed acquisition and $1.0 million from the disposition of a previously acquired loan. This increase was partially offset by a $0.6 million decrease in gain on sale of SBA loans. Gains on sales of SBA loans were $1.8 million for the fourth quarter of 2020, down from $2.3 million for the preceding quarter reflecting lower sale volumes. The volume of SBA loans sold for the 2020 fourth quarter and third quarter were $21.6 million and $29.3 million, respectively while trade premiums were 10.09% and 9.53%, respectively.

Noninterest income was $43.1 million for the full year 2020 compared with $27.6 million for 2019 primarily due to $15.7 million in gains on sales of securities realized in the second quarter of 2020 as a result of repositioningthe securities portfolio to capture the high-level of unrealized gains arising from the very low rate environment.

For the Three Months Ended (in thousands) Percentage Change Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Q4-20 Q4-20Noninterest 2020 2020 2020 2020 2019 vs. Q3-20 vs. Q4-19IncomeServicecharges on $ 2,051 $ 2,002 $ 2,032 $ 2,400 $ 2,589 2.4 % -20.8 %depositaccountsTrade financeand otherservice 1,113 972 961 986 1,267 14.5 % -12.1 %charges andfeesServicing 361 704 855 561 227 -48.7 % 59.0 %incomeBank-ownedlife 271 289 276 277 281 -6.1 % -3.6 %insuranceincomeAll otheroperating 1,879 806 1,095 845 846 133.2 % 122.1 %incomeServicecharges, fees 5,675 4,773 5,219 5,069 5,210 18.9 % 8.9 %& other Gain on sale 1,769 2,324 - 1,154 1,499 -23.9 % 18.0 %of SBA loansNet gain onsales of - - 15,712 - - 0.0 % 0.0 %securitiesGain on saleof bank 365 43 - - - 748.8 % 0.0 %premisesLegal 1,000 - - - - 0.0 % 0.0 %settlementTotalnoninterest $ 8,809 $ 7,140 $ 20,931 $ 6,223 $ 6,709 23.4 % 31.3 %income

During the fourth quarter of 2020, noninterest expense increased 3.3% to $30.9 million from $29.9 million for the third quarter primarily due to the $0.5 million change in other real estate owned and repossessed personal property due to a $0.2 million net charge in the quarter compared with a $0.3 million net credit in the previous quarter. Primarily as a result of the increase in revenues (noninterest income and net interest income), partially offset by higher noninterest expense, the efficiency ratio improved to 55.53% in the fourth quarter from 56.73% in the prior quarter.

Noninterest expense for the year ended December 31, 2020 was $119.1 million, reflecting a decrease of $6.9 million from the year ended December 31, 2019 stemming primarily from the capitalization of $3.1 million in costs for PPP originations, a $1.6 million decrease in repossessed personal property expense and a $1.5 million decrease in impairments on bank premises. The efficiency ratio for full year 2020 was 53.15% (58.63% excluding securities gains and deferred PPP loan origination costs) compared to 61.89% for the prior year.

For the Three Months Ended (in thousands) Percentage Change Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Q4-20 Q4-20 2020 2020 2020 2020 2019 vs. Q3-20 vs. Q4-19Noninterest ExpenseSalaries andemployee $ 17,344 $ 17,194 $ 14,701 $ 17,749 $ 17,752 0.9 % -2.3 %benefitsOccupancy and 4,651 4,650 4,508 4,475 4,547 0.0 % 2.3 %equipmentData processing 2,989 2,761 2,804 2,669 2,122 8.2 % 40.8 %Professional 1,846 1,794 1,545 1,915 2,601 2.9 % -29.0 %feesSupplies and 759 698 858 781 717 8.8 % 5.9 %communicationAdvertising and 888 594 456 734 1,165 49.5 % -23.8 %promotionAll otheroperating 2,006 2,553 2,655 2,722 3,379 -21.4 % -40.6 %expensessubtotal 30,483 30,244 27,527 31,045 32,283 0.8 % -5.6 % Other realestate owned 310 (116 ) (191 ) 2 40 -367.2 % 675.0 %expense(income)Repossessedpersonalproperty (71 ) (204 ) (198 ) 21 32 -65.2 % -321.9 %expense(income)Impairment losson bank 201 - - - 1,734 0.0 % -88.4 %premisesTotalnoninterest $ 30,923 $ 29,924 $ 27,138 $ 31,068 $ 34,089 3.3 % -9.3 %expense

For the full years ended December 31, 2020 and 2019, the provision for income taxes was $17.3 million and $14.6 million, respectively, representing effective tax rates of 29.1% and 30.8%, respectively.

Financial PositionTotal assets were $6.20 billion at December 31, 2020, a 1.6% increase from $6.11 billion at September 30, 2020.

Loans receivable, before the allowance for credit losses, were $4.88 billion at December 31, 2020, up 1.0% from $4.83 billion at September 30, 2020. Loans held for sale, representing the guaranteed portion of SBA 7(a) loans were $8.6 million at the end of the fourth quarter, compared with $12.8 million at the end of the third quarter.

As of (in thousands) Percentage Change Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Q4-20 Q4-20 2020 2020 2020 2020 2019 vs. Q3-20 vs. Q4-19Loan PortfolioCommercialreal estate $ 3,353,818 $ 3,264,447 $ 3,266,242 $ 3,187,189 $ 3,226,478 2.7 % 3.9 %loansResidential/consumer 345,831 370,883 366,190 391,206 415,698 -6.8 % -16.8 %loansCommercialand 757,255 765,484 730,399 472,714 484,093 -1.1 % 56.4 %industrialloansLeases 423,264 433,323 462,811 492,527 483,879 -2.3 % -12.5 %Loans 4,880,168 4,834,137 4,825,642 4,543,636 4,610,148 1.0 % 5.9 %receivableLoans held 8,568 12,834 17,942 - 6,020 -33.2 % 42.3 %for saleTotal $ 4,888,736 $ 4,846,971 $ 4,843,584 $ 4,543,636 $ 4,616,168 0.9 % 5.9 %

For the fourth quarter of 2020, commercial real estate loans as a percentage of loans receivable decreased to 68.7% compared with 70.0% for the same period last year. Commercial and industrial loans, which included $295.7 million of SBA guaranteed PPP loans, reached 15.5% of the portfolio at year-end, up from 10.5% a year ago.

Hanmi generated solid loan production volume during the fourth quarter. New loan production totaled $327.8 million at an average rate of 4.11%, while the average rate of loans paid off during the same period was 4.44%.

For the Three Months Ended (in thousands) Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, 2020 2020 2020 2020 2019 New Loan Production Commercial real estate loans $ 187,050 $ 99,618 $ 129,432 $ 109,433 $ 185,070 Commercial and industrial 71,412 78,594 61,114 18,237 95,349 loansSBA loans 27,516 31,335 328,274 23,422 33,649 Leases receivable 39,830 21,271 15,279 56,849 65,525 Residential/consumer loans 2,011 25,766 10 714 1,768 subtotal 327,819 256,584 534,109 208,655 381,361 Payoffs (160,006 ) (139,797 ) (67,537 ) (122,686 ) (205,012 )Amortization (78,632 ) (66,907 ) (90,678 ) (95,414 ) (77,580 )Loan sales (21,580 ) (36,068 ) - (18,352 ) (26,087 )Net line utilization (18,815 ) (2,199 ) (92,230 ) (11,242 ) (31,333 )Charge-offs & OREO (2,755 ) (3,118 ) (1,658 ) (27,473 ) (1,038 ) Loans receivable-beginning 4,834,137 4,825,642 4,543,636 4,610,148 4,569,837 balanceLoans receivable-ending $ 4,880,168 $ 4,834,137 $ 4,825,642 $ 4,543,636 $ 4,610,148 balance

Deposits totaled $5.28 billion at the end of the fourth quarter, compared with $5.19 billion at the end of the preceding quarter. Growth in money market and savings deposits was partially offset by reductions in time deposits and noninterest-bearing demand deposits. At December 31, 2020, the loan-to-deposit ratio was 92.5% compared with 93.1% at the end of the previous quarter.

As of (in thousands) Percentage Change Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Q4-20 Q4-20 2020 2020 2020 2020 2019 vs. Q3-20 vs. Q4-19Deposit Portfolio Demand: $ 1,898,766 $ 1,961,006 $ 1,865,213 $ 1,366,270 $ 1,391,624 -3.2 % 36.4 %noninterest-bearingDemand: interest-bearing 100,617 100,155 96,941 87,313 84,323 0.5 % 19.3 %Money market and savings 1,991,926 1,794,627 1,812,612 1,648,022 1,667,096 11.0 % 19.5 %Time deposits 1,283,699 1,338,504 1,435,015 1,480,463 1,555,919 -4.1 % -17.5 %Total deposits $ 5,275,008 $ 5,194,292 $ 5,209,781 $ 4,582,068 $ 4,698,962 1.6 % 12.3 %

At December 31, 2020, stockholders equity was $577.0 million, compared with $563.2 million at September 30, 2020. Tangible common stockholders equity was $565.4 million, or 9.13% of tangible assets, at December 31, 2020 compared with $551.5 million, or 9.05% of tangible assets at the end of the third quarter. The ratio of tangible common equity to tangible assets excluding the $295.7 million of PPP loans was 9.59% at year-end. Tangible book value per share increased 2.6% to $18.41 at December 31, 2020 from $17.95 at the end of the prior quarter.

Hanmi continues to be well capitalized for regulatory purposes, with a preliminary Tier 1 risk-based capital ratio of 12.02% and a Total risk-based capital ratio of 15.29% at December 31, 2020, versus 11.85% and 15.16%, respectively, at the end of the third quarter.

As of Amount Change Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Q4-20 Q4-20 2020 2020 2020 2020 2019 vs. Q3-20 vs. Q4-19RegulatoryCapital ratios ^ (1)Hanmi FinancialTotalrisk-based 15.29 % 15.16 % 14.85 % 14.77 % 15.11 % 0.13 0.18 capitalTier 1risk-based 12.02 % 11.85 % 11.55 % 11.52 % 11.78 % 0.17 0.24 capitalCommon equity 11.60 % 11.43 % 11.12 % 11.09 % 11.36 % 0.17 0.24 tier 1 capitalTier 1leverage 9.53 % 9.53 % 9.69 % 9.91 % 10.15 % 0.00 -0.62 capital ratioHanmi Bank Totalrisk-based 14.94 % 14.77 % 14.41 % 14.29 % 14.64 % 0.17 0.30 capitalTier 1risk-based 13.69 % 13.51 % 13.15 % 13.12 % 13.39 % 0.18 0.30 capitalCommon equity 13.69 % 13.51 % 13.15 % 13.12 % 13.39 % 0.18 0.30 tier 1 capitalTier 1leverage 10.87 % 10.88 % 11.04 % 11.35 % 11.56 % -0.01 -0.69 capital ratio ^(1) Preliminary ratios forDecember 31,2020

Asset QualityLoans and leases 30 to 89 days past due and still accruing were 0.19% of loans and leases at the end of the fourth quarter of 2020, compared with 0.20% at the end of the third quarter.

Special mention loans were $77.0 million at the end of the fourth quarter compared with $57.1 million at September 30, 2020. The quarter over quarter change reflects additions of $37.5 million and reductions or downgrades of $17.6 million. The December 31, 2020 balance of special mention loans included $49.1 million of loans adversely affected by the pandemic.

Classified loans were $140.2 million at December 31, 2020 compared with $106.2 million at the end of the third quarter. The quarter-over-quarter change reflects additions or downgrades of $45.4 million and reductions of $11.4 million. At December 31, 2020 classified loans included $54.0 million of loans adversely affected by the COVID-19 pandemic.

Nonperforming loans and leases were $83.0 million at the end of the fourth quarter of 2020, or 1.70% of loans and leases, compared with $64.3 million at the end of the third quarter, or 1.33% of the portfolio. The quarter-over-quarter change reflects additions or downgrades of $22.3 million and payoffs of $3.6 million. At December 31, 2020 nonperforming loans and leases included $33.0 million of loans and leases adversely affected by the COVID-19 pandemic.

Nonperforming assets were $85.4 million at the end of the fourth quarter of 2020, or 1.38% of total assets, compared with $65.4 million, or 1.07% of assets, at the end of the prior quarter.

Loans and leases modified under the CARES Act declined 73% to $155.6 million at December 31, 2020 from $578.6 million at September 30, 2020. Approximately 13.6%, or $21.1 million, of modified loans and leases are currently under deferred payment arrangements, with the remainder making payments that are less than the contractually required amount. Of the modified loan and lease portfolio, 20.1% were special mention and 15.7% were classified. In addition, 4.6% were on nonaccrual status at December 31, 2020.

Gross charge-offs for the fourth quarter of 2020 were $2.8 million compared with $2.2 million for the preceding quarter. Recoveries of previously charged-off loans for the fourth quarter of 2020 were $0.8 million compared with $1.7 million for the preceding quarter. As a result, there were net charge-offs of $1.9 million for the fourth quarter of 2020, compared with net charge-offs of $0.4 million for the preceding quarter. For the fourth quarter of 2020, net charge-offs represented an annualized 0.16% of average loans compared with 0.03% of average loans for the third quarter.

The allowance for credit losses was $90.4 million as of December 31, 2020 generating an allowance for credit losses to loans of 1.85% (1.97% excluding the PPP loans) compared with 1.79% (1.91% excluding the PPP loans) at the end of the prior quarter. The increase primarily reflected an increase in specific allowances for individually impaired loans resulting from the COVID-19 pandemic. Although macroeconomic assumptions continue to improve, the risk factors associated with the impact of the COVID-19 pandemic on the Banks loan portfolio continue to be considered in establishing the allowance for credit losses.

As of or for the Three Months Ended (in thousands) Amount Change Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Q4-20 Q4-20 2020 2020 2020 2020 2019 vs. Q3-20 vs. Q4-19Asset Quality Data and Ratios Delinquent loans:Loans, 30 to 89days past due $ 9,473 $ 9,428 $ 9,984 $ 10,001 $ 10,251 $ 45 $ (778 )and stillaccruingDelinquent loans 0.19 % 0.20 % 0.21 % 0.22 % 0.22 % -0.01 -0.03 to total loans Criticized loans:Special mention $ 76,978 $ 57,105 $ 21,134 $ 20,945 $ 26,632 $ 19,873 $ 50,346 Classified 140,168 106,211 93,922 88,225 94,025 33,957 46,143 Total criticized $ 217,146 $ 163,316 $ 115,056 $ 109,170 $ 120,657 $ 53,830 $ 96,489 loans Nonperforming assets:Nonaccrual loans $ 83,032 $ 64,333 $ 58,264 $ 46,383 $ 63,761 $ 18,699 $ 19,271 Loans 90 days ormore past due - - - 5,843 - - - and stillaccruingNonperforming 83,032 64,333 58,264 52,226 63,761 18,699 19,271 loansOther realestate owned, 2,360 1,052 148 63 63 1,308 2,297 netNonperforming $ 85,392 $ 65,385 $ 58,412 $ 52,289 $ 63,824 $ 20,007 $ 21,568 assets Nonperformingloans to total 1.70 % 1.33 % 1.21 % 1.15 % 1.38 % loansNonperforming 1.38 % 1.07 % 0.94 % 0.93 % 1.15 % assets to assets Allowance for credit losses:Balance atbeginning of $ 86,620 $ 86,330 $ 66,500 $ 61,408 $ 50,712 periodImpact of CECL - - - 17,433 - adoptionCredit loss 5,731 696 21,131 14,916 10,751 expense on loansNet loan(charge-offs) (1,925 ) (406 ) (1,301 ) (27,257 ) (55 ) recoveriesBalance at end $ 90,426 $ 86,620 $ 86,330 $ 66,500 $ 61,408 of period Net loancharge-offs to 0.16 % 0.03 % 0.11 % 2.41 % 0.00 % average loans ^(1)Allowance forcredit losses to 1.85 % 1.79 % 1.79 % 1.46 % 1.33 % loans Allowance forcredit lossesrelated to off-balancesheet items:Balance atbeginning of $ 5,689 $ 6,347 $ 2,885 $ 2,397 $ 1,542 periodImpact of CECL - - - (335 ) - adoptionCredit lossexpense on (2,898 ) (658 ) 3,462 823 855 off-balancesheet itemsBalance at end $ 2,791 $ 5,689 $ 6,347 $ 2,885 $ 2,397 of period Allowance forLosses on Accrued InterestReceivable:Balance atbeginning of $ - $ - $ - $ - $ - periodInterestreversal for (584 ) - - - - loans placed onnonaccrualCredit lossexpense oninterest accrued 2,250 - - - - on CARES ActmodificationsBalance at end $ 1,666 $ - $ - $ - $ - of period Commitments to $ 453,899 $ 444,782 $ 486,852 $ 375,233 $ 371,287 extend credit ^(1) Annualized

Corporate DevelopmentsOn November 5, 2020 Hanmis Board of Directors declared a cash dividend on its common stock for the 2020 fourth quarter of $0.08 per share. The dividend was paid on November 30, 2020 to stockholders of record as of the close of business on November 16, 2020.

Conference CallManagement will host a conference call today, January 26, 2021 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 Hanmis 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 35 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. All statements other than statements of historical fact are forwardlooking 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 and strategic plans, and other similar forecasts and statements of expectation and statements of assumption underlying any of the foregoing. 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 our forward-looking statements to be reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

Forward-looking 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 statements. These factors include the following:

-- a 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; -- our ability to remediate any material weakness in our internal controls over financial reporting; -- 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; -- a failure in or breach of our operational or security systems or infrastructure, including cyberattacks; -- the failure to maintain current technologies; -- our inability to successfully implement future information technology enhancements; -- difficult business and economic conditions that can adversely affect our industry and business, including competition and lack of soundness of other financial institutions, fraudulent activity and negative publicity; -- risks associated with Small Business Administration loans; -- failure to attract or retain key employees; -- our ability to access cost-effective funding; -- fluctuations in real estate values; -- changes in accounting policies and practices; -- the imposition of tariffs or other domestic or international governmental policies impacting the value of the products of our borrowers; -- changes in governmental regulation, including, but not limited to, any increase in FDIC insurance premiums; -- the ability of Hanmi Bank to make distributions to Hanmi Financial Corporation, which is restricted by certain factors, including Hanmi Banks retained earnings, net income, prior distributions made, and certain other financial tests; -- the adequacy of our allowance for credit losses; -- our credit quality and the effect of credit quality on our provision for loan losses and allowance for credit 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; -- changes in securities markets; and -- risks as it relates to cyber security against our information technology and those of our third-party providers and vendors.

Further, given its ongoing and dynamic nature, it is difficult to predict the full impact of theCOVID-19 outbreak on our business. The extent of such impact will depend on future developments, which are highly uncertain, including when the coronavirus can be controlled and abated and whether the gradual reopening of businesses will result in a meaningful increase in economic activity. As the result of the COVID-19 pandemic and the related adverse local and national economic consequences, we could be subject to any of the following risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, and results of operations:

-- demand for our products and services may decline; -- if the economy is unable to substantially reopen, and high levels of unemployment continue for an extended period of time, loan delinquencies, problem assets, and foreclosures may increase; -- collateral for loans,especially real estate, may decline in value, which could cause loan losses to increase; -- our allowance for credit losses may have to be increased if borrowers experience financial difficulties; -- a worsening of business and economic conditions or in the financial markets could result in an impairment of certain intangible assets, such as goodwill or our servicing assets; -- the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us; -- as the result of the decline in the Federal Reserve Boards target federal funds rate to near 0%, the yield on our assets may continue to decline to a greater extent than the decline in our cost of interest-bearing liabilities; -- a material decrease in net income or a net loss over several quarters could result in a decrease in the rate of our quarterly cash dividend; -- litigation, regulatory enforcement risk and reputation risk regarding our participation in the Paycheck Protection Program and the risk that the Small Business Administration may not fund some or all PPP loan guaranties; -- our cyber security risks are increased as the result of an increase in the number of employees working remotely; -- FDIC premiums may increase if the agency experiences additional resolution costs; and -- the unanticipated loss or unavailability of key employees due to the outbreak, which could harm our ability to operate our business or execute our business strategy, especially as we may not be successful in finding and integrating suitable replacements.

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, 2019, 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) SantarosaSenior Executive Vice President & Chief Financial Officer213-427-5636

Lasse GlassenInvestor Relations / Addo Investor Relations310-829-5400

Hanmi FinancialCorporation andSubsidiariesConsolidated Balance Sheets (Unaudited)(In thousands) December 31, September 30, Percentage December 31, Percentage 2020 2020 Change 2019 ChangeAssets Cash and due from $ 391,849 $ 359,755 8.9 % $ 121,678 222.0 %banksSecuritiesavailable for sale, 753,781 723,601 4.2 % 634,477 18.8 %at fair valueLoans held forsale, at the lower 8,568 12,834 -33.2 % 6,020 42.3 %of cost or fairvalueLoans receivable,net of allowance 4,789,742 4,747,517 0.9 % 4,548,739 5.3 %for credit lossesAccrued interest 16,363 21,417 -23.6 % 11,742 39.4 %receivablePremises and 26,431 27,956 -5.5 % 26,070 1.4 %equipment, netCustomers'liability on 1,319 208 535.2 % 66 1899.2 %acceptancesServicing assets 6,212 6,348 -2.1 % 6,956 -10.7 %Goodwill and otherintangible assets, 11,612 11,677 -0.6 % 11,873 -2.2 %netFederal Home LoanBank ("FHLB") 16,385 16,385 0.0 % 16,385 0.0 %stock, at costBank-owned life 53,894 53,623 0.5 % 52,782 2.1 %insurancePrepaid expenses 125,732 125,461 0.2 % 101,396 24.0 %and other assetsTotal assets $ 6,201,888 $ 6,106,782 1.6 % $ 5,538,184 12.0 % Liabilities andStockholders' EquityLiabilities: Deposits: Noninterest-bearing $ 1,898,766 $ 1,961,006 -3.2 % $ 1,391,624 36.4 %Interest-bearing 3,376,242 3,233,286 4.4 % 3,307,338 2.1 %Total deposits 5,275,008 5,194,292 1.6 % 4,698,962 12.3 %Accrued interest 4,564 5,427 -15.9 % 11,215 -59.3 %payableBank's liability on 1,319 208 535.2 % 66 1899.2 %acceptancesBorrowings 150,000 150,000 0.0 % 90,000 66.7 %Subordinated 118,972 118,821 0.1 % 118,377 0.5 %debenturesAccrued expensesand other 74,981 74,831 0.2 % 56,297 33.2 %liabilitiesTotal liabilities 5,624,844 5,543,579 1.5 % 4,974,917 13.1 % Stockholders' equity:Common stock 33 33 0.0 % 33 0.0 %Additional paid-in 578,360 577,727 0.1 % 575,816 0.4 %capitalAccumulated othercomprehensive 3,076 1,721 78.7 % 3,382 -9.0 %incomeRetained earnings 114,621 102,751 11.6 % 100,551 14.0 %Less treasury stock (119,046 ) (119,029 ) 0.0 % (116,515 ) -2.2 %Total stockholders' 577,044 563,203 2.5 % 563,267 2.4 %equityTotal liabilitiesand stockholders' $ 6,201,888 $ 6,106,782 1.6 % $ 5,538,184 12.0 %equity



Hanmi FinancialCorporation andSubsidiariesConsolidatedStatements of Income (Unaudited)(In thousands,except share andper share data) Three Months Ended December 31, September 30, Percentage December 31, Percentage 2020 2020 Change 2019 ChangeInterest and dividend income:Interest andfees on loans $ 52,372 $ 52,586 -0.4 % $ 56,267 -6.9 %receivableInterest on 1,684 1,972 -14.6 % 3,665 -54.0 %securitiesDividends on 206 204 1.1 % 289 -28.7 %FHLB stockInterest ondeposits in 97 84 16.4 % 478 -79.6 %other banksTotal interestand dividend 54,359 54,846 -0.9 % 60,699 -10.4 %incomeInterest expense:Interest on 5,331 7,032 -24.2 % 14,699 -63.7 %depositsInterest on 528 582 -9.4 % 325 62.3 %borrowingsInterest onsubordinated 1,623 1,627 -0.2 % 1,739 -6.7 %debenturesTotal interest 7,482 9,241 -19.0 % 16,763 -55.4 %expenseNet interestincome before 46,877 45,605 2.8 % 43,936 6.7 %credit lossexpenseCredit loss 5,083 38 0.0 % 10,752 -52.7 %expenseNet interestincome after 41,794 45,567 -8.3 % 33,184 25.9 %credit lossexpenseNoninterest income:Service chargeson deposit 2,051 2,002 2.4 % 2,589 -20.8 %accountsTrade financeand other 1,113 972 14.5 % 1,267 -12.1 %service chargesand feesGain on sale ofSmall Business 1,769 2,324 -23.9 % 1,499 18.0 %Administration("SBA") loansNet gain onsales of - - - - - securitiesOther operating 3,876 1,842 110.4 % 1,354 186.3 %incomeTotalnoninterest 8,809 7,140 23.4 % 6,709 31.3 %incomeNoninterest expense:Salaries andemployee 17,344 17,194 0.9 % 17,752 -2.3 %benefitsOccupancy and 4,651 4,650 0.0 % 4,547 2.3 %equipmentData processing 2,989 2,761 8.2 % 2,122 40.8 %Professional 1,846 1,794 2.9 % 2,601 -29.0 %feesSupplies and 759 698 8.8 % 717 5.9 %communicationsAdvertising and 888 594 49.4 % 1,165 -23.8 %promotionOther operating 2,446 2,233 9.5 % 5,185 -52.8 %expensesTotalnoninterest 30,923 29,924 3.3 % 34,089 -9.3 %expenseIncome before 19,680 22,783 -13.6 % 5,804 239.1 %taxIncome tax 5,354 6,439 -16.9 % 2,720 96.8 %expenseNet income $ 14,326 $ 16,344 -12.3 % $ 3,084 364.5 % Basic earnings $ 0.47 $ 0.53 $ 0.10 per share:Diluted earnings $ 0.47 $ 0.53 $ 0.10 per share: Weighted-averageshares outstanding:Basic 30,466,723 30,464,263 30,692,487 Diluted 30,466,723 30,464,263 30,723,958 Common shares 30,717,835 30,719,591 30,799,624 outstanding Hanmi FinancialCorporation andSubsidiariesConsolidatedStatements of Income (Unaudited)(In thousands,except share andper share data) Twelve Months Ended December 31, December 31, Percentage 2020 2019 Change Interest and dividend income:Interest andfees on loans $ 211,836 $ 229,402 -7.7 % receivableInterest on 10,536 14,661 -28.1 % securitiesDividends on 902 1,147 -21.3 % FHLB stockInterest ondeposits in 592 1,562 -62.1 % other banksTotal interestand dividend 223,866 246,772 -9.3 % incomeInterest expense:Interest on 33,994 63,105 -46.1 % depositsInterest on 2,367 763 210.2 % borrowingsInterest onsubordinated 6,607 7,032 -6.0 % debenturesTotal interest 42,968 70,900 -39.4 % expenseNet interestincome before 180,898 175,872 2.9 % credit lossexpenseCredit loss 45,454 30,170 50.7 % expenseNet interestincome after 135,444 145,702 -7.0 % credit lossexpenseNoninterest income:Service chargeson deposit 8,485 9,951 -14.7 % accountsTrade financeand other 4,033 4,786 -15.7 % service chargesand feesGain on sale ofSmall Business 5,247 5,251 -0.1 % Administration("SBA") loansNet gain onsales of 15,712 1,295 1113.3 % securitiesOther operating 9,627 6,269 53.6 % incomeTotalnoninterest 43,104 27,552 56.4 % incomeNoninterest expense:Salaries andemployee 66,988 67,900 -1.3 % benefitsOccupancy and 18,283 17,064 7.1 % equipmentData processing 11,222 8,755 28.2 % Professional 6,771 9,060 -25.3 % feesSupplies and 3,096 2,936 5.4 % communicationsAdvertising and 2,671 3,797 -29.7 % promotionOther operating 10,022 16,394 -38.9 % expensesTotalnoninterest 119,053 125,906 -5.4 % expenseIncome before 59,495 47,348 25.7 % taxIncome tax 17,299 14,560 18.8 % expenseNet income $ 42,196 $ 32,788 28.7 % Basic earnings $ 1.38 $ 1.06 per share:Diluted earnings $ 1.38 $ 1.06 per share: Weighted-averageshares outstanding:Basic 30,280,415 30,725,376 Diluted 30,280,415 30,760,422 Common shares 30,717,835 30,799,624 outstanding

Hanmi Financial Corporation and SubsidiariesAverage Balance, Average Yield Earned, and Average Rate Paid (Unaudited)(In thousands, except ratios) Three Months Ended December 31, 2020 September 30, 2020 December 31, 2019 Interest Average Interest Average Interest Average Average Income / Yield / Average Income / Yield / Average Income / Yield / Balance Expense Rate Balance Expense Rate Balance Expense RateAssets Interest-earning assets:Loans receivable ^(1) $ 4,803,238 $ 52,372 4.34 % $ 4,734,511 $ 52,586 4.42 % $ 4,487,998 $ 56,267 4.97 %Securities 743,636 1,684 0.91 % 696,285 1,972 1.13 % 624,861 3,665 2.35 %FHLB stock 16,385 206 5.00 % 16,385 204 4.95 % 16,385 289 7.00 %Interest-bearingdeposits in other 392,949 97 0.10 % 340,486 84 0.10 % 114,462 478 1.66 %banksTotal interest-earning 5,956,208 54,359 3.63 % 5,787,667 54,846 3.77 % 5,243,706 60,699 4.59 %assets Noninterest-earning assets:Cash and due from 58,541 64,814 104,591 banksAllowance for credit (86,160 ) (86,615 ) (50,978 ) lossesOther assets 241,405 245,589 210,004 Total assets $ 6,169,994 $ 6,011,455 $ 5,507,323 Liabilities and Stockholders' EquityInterest-bearing liabilities:Deposits: Demand: $ 101,758 $ 14 0.05 % $ 99,161 $ 17 0.07 % $ 82,604 $ 24 0.11 %interest-bearingMoney market and 1,895,830 1,737 0.36 % 1,771,615 2,192 0.49 % 1,640,162 5,616 1.36 %savingsTime deposits 1,315,227 3,581 1.08 % 1,357,167 4,823 1.41 % 1,605,276 9,059 2.24 %Total interest-bearing 3,312,815 5,332 0.64 % 3,227,943 7,032 0.87 % 3,328,042 14,699 1.75 %depositsBorrowings 150,000 529 1.40 % 163,364 582 1.42 % 75,500 325 1.71 %Subordinated 118,888 1,623 5.46 % 118,733 1,627 5.48 % 118,297 1,739 5.88 %debenturesTotal interest-bearing 3,581,703 7,484 0.83 % 3,510,040 9,241 1.05 % 3,521,839 16,763 1.89 %liabilities Noninterest-bearingliabilities and equity:Demand deposits: 1,935,564 1,859,832 1,342,524 noninterest-bearingOther liabilities 83,414 87,811 74,862 Stockholders' equity 569,313 553,772 568,098 Total liabilities and $ 6,169,994 $ 6,011,455 $ 5,507,323 stockholders' equity Net interest income $ 46,875 $ 45,605 $ 43,936 (tax equivalent basis) Cost of deposits 0.40 % 0.55 % 1.25 %Net interest spread(taxable equivalent 2.80 % 2.72 % 2.70 %basis)Net interest margin(taxable equivalent 3.13 % 3.13 % 3.32 %basis) ^(1) Includes average loans held for sale Hanmi Financial Corporation and SubsidiariesAverage Balance, Average Yield Earned, and Average Rate Paid (Unaudited)(In thousands, except ratios) Twelve Months Ended December 31, 2020 December 31, 2019 Interest Average Interest Average Average Income / Yield / Average Income / Yield / Balance Expense Rate Balance Expense Rate Assets Interest-earning assets:Loans receivable ^(1) $ 4,684,512 $ 211,836 4.52 % $ 4,507,975 $ 229,402 5.09 % Securities ^(2) 663,700 10,537 1.59 % 618,610 14,806 2.39 % FHLB stock 16,385 902 5.51 % 16,385 1,147 7.00 % Interest-bearingdeposits in other 306,668 592 0.19 % 73,906 1,562 2.11 % banksTotal interest-earning 5,671,265 223,867 3.95 % 5,216,876 246,917 4.73 % assets Noninterest-earning assets:Cash and due from 72,557 103,475 banksAllowance for credit (75,250 ) (41,933 ) lossesOther assets 228,131 197,517 Total assets $ 5,896,703 $ 5,475,935 Liabilities and Stockholders' EquityInterest-bearing liabilities:Deposits: Demand: $ 94,167 $ 70 0.07 % $ 83,613 $ 116 0.14 % interest-bearingMoney market and 1,758,300 11,016 0.63 % 1,566,403 23,556 1.50 % savingsTime deposits 1,412,951 22,908 1.62 % 1,752,642 39,433 2.25 % Total interest-bearing 3,265,418 33,994 1.04 % 3,402,658 63,105 1.85 % depositsBorrowings 196,397 2,367 1.21 % 40,374 763 1.89 % Subordinated 118,663 6,607 5.57 % 118,079 7,032 5.96 % debenturesTotal interest-bearing 3,580,478 42,968 1.20 % 3,561,111 70,900 1.99 % liabilities Noninterest-bearingliabilities and equity:Demand deposits: 1,680,882 1,288,301 noninterest-bearingOther liabilities 77,478 61,209 Stockholders' equity 557,865 565,314 Total liabilities and $ 5,896,703 $ 5,475,935 stockholders' equity Net interest income $ 180,899 $ 176,017 (tax equivalent basis) Cost of deposits 0.69 % 1.35 % Net interest spread(taxable equivalent 2.75 % 2.74 % basis)Net interest margin(taxable equivalent 3.19 % 3.37 % basis) ^(1) Includes average loans held for sale^(2) Amounts calculated on a fully taxable equivalent basis usingthe 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 Hanmis capital strength. Tangible common 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) HanmiFinancial December 31, September 30, June 30, March 31, December 31,Corporation 2020 2020 2020 2020 2019 Assets $ 6,201,888 $ 6,106,782 $ 6,218,163 $ 5,617,690 $ 5,538,184 Less goodwilland other (11,612 ) (11,677 ) (11,742 ) (11,808 ) (11,873 )intangibleassetsTangible $ 6,190,276 $ 6,095,105 $ 6,206,421 $ 5,605,882 $ 5,526,311 assets Stockholders' $ 577,044 $ 563,203 $ 547,436 $ 552,958 $ 563,267 equity (1)Less goodwilland other (11,612 ) (11,677 ) (11,742 ) (11,808 ) (11,873 )intangibleassetsTangiblestockholders' $ 565,432 $ 551,526 $ 535,694 $ 541,150 $ 551,394 equity (1) Stockholders'equity to 9.30 % 9.22 % 8.80 % 9.84 % 10.17 %assetsTangiblecommon equity 9.13 % 9.05 % 8.63 % 9.65 % 9.98 %to tangibleassets (1) Common shares 30,717,835 30,719,591 30,657,629 30,622,741 30,799,624 outstandingTangiblecommon equity $ 18.41 $ 17.95 $ 17.47 $ 17.67 $ 17.90 per commonshare ^(1) There were nopreferred shares outstanding at the periods indicated.

Paycheck Protection Program

In response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act (the CARES Act) was adopted, which included authorization for the U.S. Small Business Administration (the SBA) to introduce a new program, entitled the Paycheck Protection Program, which provides loans for eligible businesses through the SBAs 7(a) loan guaranty program. These loans are fully guaranteed and available for loan forgiveness of up to the full principal amount so long as certain employee and compensation levels of the business are maintained and the proceeds of the loan are used as required under the program. The Paycheck Protection Program (PPP) and loan forgiveness are intended to provide economic relief to small businesses nationwide adversely impacted under the COVID-19 pandemic.

Hanmi participated in this program and the financial information for the 2020 fourth quarter reflects this participation. This table below shows financial information excluding the effect of the origination of the PPP loans, including the corresponding interest income earned on such loans, which constitutes a non-GAAP measure. Management believes the presentation of certain financial measures excluding the effect of PPP loans provides useful supplemental information that is essential to a proper understanding of the financial condition and results of operations 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 financial measures that may be used by other companies.

PPP Non-GAAP Financial Data (Unaudited)(In thousands, except ratios) As of December As of September 31, 2020 30, 2020 Tangible assets 6,190,276 6,095,105 Less PPP loans (295,702 ) (302,929 )Tangible assets adjusted for PPP loans $ 5,894,574 $ 5,792,176 Tangible stockholders' equity 565,432 551,526 Tangible common equity to tangible assets 9.13 % 9.05 %(1)Tangible common equity to tangible assets 9.59 % 9.52 %adjusted for PPP loans (1) (1) There were no preferred sharesoutstanding at December 31, or September 30, 2020 Allowance for credit losses 90,426 86,620 Loans receivable 4,880,168 4,834,137 Less PPP loans (295,702 ) (302,929 )Loans receivable adjusted for PPP loans $ 4,584,466 $ 4,531,208 Allowance for credit losses to loans 1.85 % 1.79 %receivableAllowance for credit losses to loans 1.97 % 1.91 %receivable adjusted for PPP loans For the Twelve For the Three Months Ended Months Ended December 31, December 31, 2020 2020Net interest income $ 180,898 $ 46,877 Less PPP loan interest income (4,593 ) (1,751 )Net interest income adjusted for PPP loans $ 176,305 $ 45,126 Average interest-earning assets 5,671,265 5,956,208 Less average PPP loans (217,999 ) (304,017 )Average interest-earning assets adjusted for $ 5,453,266 $ 5,652,191 PPP loans Net interest margin (1) 3.19 % 3.13 %Net interest margin adjusted for PPP loans 3.23 % 3.18 %(1) (1) net interest income (as applicable) divided by average interest-earning assets (as applicable), annualized Noninterest expense 119,053 30,923 Less PPP deferred origination costs 3,064 - Noninterest expense adjusted for PPP loans $ 122,117 $ 30,923 Net interest income plus noninterest income $ 224,002 $ 55,686 Less net gain on sales of securities (15,712 ) - Net interest income plus noninterest income $ 208,290 $ 55,686 adjusted for net securities gains Efficiency ratio (1) 53.15 % 55.53 %Efficiency ratio adjusted for PPP loans and 58.63 % 55.53 %securities gains (1) (1) noninterest expense (as applicable) divided by the sumof net interest income and noninterest income (as applicable)