GlobeNewswire Inc | Jul 27, 2021 04:05PM EDT

July 27, 2021

2021 Second Quarter Highlights:

-- Second quarter net income of $22.1 million, or $0.72 per diluted share, up from $16.7 million, or $0.54 per diluted share from the prior quarter and up from $9.2 million or $0.30 per diluted share for the same quarter a year ago. -- Loans receivable of $4.82 billion, were unchanged from the prior quarter; up 2.5% when excluding Paycheck Protection Program (PPP) loans. Strong production of $465.6 million was offset by payoffs/paydowns and forgiveness on first draw PPP loans. -- Deposits of $5.63 billion, up 2.2% from the first quarter driven by an 8.3% increase in noninterest-bearing demand deposits; cost of interest-bearing deposits fell 12 basis points from the prior quarter. -- A $3.3 million recovery of credit loss expense for the second quarter resulted in an allowance for credit losses of 1.73% of loans at June 30, 2021, or 1.78% excluding PPP loans. -- Nonaccrual loans declined 28.1% from the end of the first quarter principally from the return-to-accrual status of two film tax-credit loans aggregating $12.4 million; classified loans were down 25.3% from the prior quarter due to upgrades to special mention, payoffs and paydowns. -- Second quarter net interest income was $49.6 million, up 7.8% from the first quarter and included $2.7 million from PPP loans and $0.9 million of interest income from the return-to-accrual status of the two film tax-credit loans. -- Net interest margin was 3.19% for the second quarter, or 3.12% excluding interest from PPP loans. -- Second quarter noninterest income was $8.9 million, down 9.4% from the prior quarter as lower gains on sale of second-draw PPP loans was offset partially by higher gains on sale of non-PPP SBA 7(a) loans. -- Noninterest expense was $30.8 million, up 4.2% from the previous quarter, which included $1.4 million of cost capitalization on second-draw PPP loans; Efficiency ratio for the second quarter was 52.66% (52.86% excluding securities gains and second draw PPP loan gains and origination costs) compared with 52.92% for the prior quarter. -- Hanmi remained well capitalized with a Total risk-based capital ratio of 15.41% and a Common equity Tier 1 capital ratio of 11.76% at June 30, 2021; tangible common equity to tangible assets ratio was 9.01% (9.23% excluding PPP loans) at the end of the second quarter.For more information about Hanmi, please see the Q2 2021 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. Also, please refer to Non-GAAP Financial Measures herein for further details of the presentation of certain non-GAAP financial measures.

LOS ANGELES, July 27, 2021 (GLOBE NEWSWIRE) -- Hanmi Financial Corporation (NASDAQ: HAFC, or Hanmi), the parent company of Hanmi Bank (the Bank), today reported net income for the 2021 second quarter of $22.1 million, or $0.72 per diluted share, compared with $16.7 million, or $0.54 per diluted share for the first quarter and $9.2 million, or $0.30 per diluted share for the 2020 second quarter.

Bonnie Lee, President and Chief Executive Officer, said, Hanmis record earnings in the second quarter were driven by excellent loan and lease production, solid growth in deposits and improving asset quality. New loan and lease production in the quarter increased to $465.6 million, up nearly 34% from the prior quarter. During the quarter we benefitted from significant lending activity from our new residential mortgage platform, along with growth in equipment leases, which returned to pre-pandemic levels. SBA loan production, excluding PPP loans, also expanded nicely quarter-over-quarter. The strong loan and lease production was partially offset by loan payoffs. Excluding PPP loans, loans receivable of $4.82 billion were up 2.5% from the prior quarter. Deposit gathering activities were also quite successful and were led by ongoing growth in low-cost noninterest-bearing demand deposits.

Ms. Lee continued, Overall, I remain pleased with our efforts to manage-down nonaccrual loans, which declined nearly 30% from the prior quarter. We also benefitted from a $3.3 million recovery of credit loss expense in the quarter. At the bottom line, net income grew significantly to $22.1 million, or $0.72 per diluted share, and was an all-time record.

Ms. Lee concluded, I would like to extend my sincere gratitude to the entire Hanmi team for their hard work and dedication in helping our customers and communities through the health crisis over the past fifteen months. As the businesses in our key markets continue to re-open, activity has significantly increased resulting in a robust loan pipeline for Hanmi as we look ahead to the second half of 2021.

Quarterly Highlights (Dollars in thousands, except per share data)

As of or for the Three Months Ended Amount Change June 30, March 31, December 31, September 30, June 30, Q2-21 Q2-21 2021 2021 2020 2020 2020 vs. Q1-21 vs. Q2-20 Net income $ 22,122 $ 16,659 $ 14,326 $ 16,344 $ 9,175 $ 5,463 $ 12,947 Net income perdiluted common $ 0.72 $ 0.54 $ 0.47 $ 0.53 $ 0.30 $ 0.18 $ 0.42 share Assets $ 6,578,856 $ 6,438,401 $ 6,201,888 $ 6,106,782 $ 6,218,163 $ 140,455 $ 360,693 Loans $ 4,820,092 $ 4,817,151 $ 4,880,168 $ 4,834,137 $ 4,825,642 $ 2,941 $ (5,550 )receivableDeposits $ 5,629,830 $ 5,509,823 $ 5,275,008 $ 5,194,292 $ 5,209,781 $ 120,007 $ 420,049 Return on 1.38 % 1.08 % 0.92 % 1.08 % 0.63 % 0.29 0.75 average assetsReturn onaverage 14.91 % 11.63 % 10.01 % 11.74 % 6.73 % 3.28 8.18 stockholders'equity Net interest 3.19 % 3.09 % 3.13 % 3.13 % 3.15 % 0.10 0.04 marginEfficiency 52.66 % 52.92 % 55.53 % 56.73 % 41.51 % -0.26 11.15 ratio ^(1) Tangible commonequity to 9.01 % 8.87 % 9.13 % 9.05 % 8.63 % 0.13 0.38 tangible assets^(2)Tangible commonequity per $ 19.27 $ 18.59 $ 18.41 $ 17.95 $ 17.47 $ 0.68 $ 1.80 common share ^(2) ^(1) Noninterest expense divided by net interest income plus noninterest income.^(2) Refer to "Non-GAAP Financial Measures" for further details.

Results of Operations Net interest income was $49.6 million for the second quarter of 2021 compared with $46.0 million for the first quarter of 2021, an increase of 7.8%, or $3.6 million. Second quarter interest and fees on loans receivable increased 4.3%, or $2.2 million, from the preceding quarter primarily due to a $1.7 million increase in interest income for PPP loans and interest income from the return-to-accrual status of the two film tax-credit loans. Total interest expense for the second quarter decreased $1.0 million from the preceding quarter driven by a 12 basis point reduction in the average rate paid on interest-bearing deposits. Second quarter loan prepayment penalties were $0.2 million compared with $0.3 million for the first quarter.

As of or For the Three Months Ended (in thousands) Percentage Change Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Q2-21 Q2-21Net Interest 2021 2021 2020 2020 2020 vs. Q1-21 vs. Q2-20Income Interest andfees on loans $ 52,785 $ 50,614 $ 52,372 $ 52,586 $ 52,230 4.3 % 1.1 %receivable^(1)Interest on 1,404 1,140 1,684 1,972 3,225 23.2 % -56.5 %securitiesDividends on 242 206 206 204 203 17.7 % 19.4 %FHLB stockInterest ondeposits in 176 96 97 84 78 83.9 % 125.9 %other banksTotal interestand dividend $ 54,607 $ 52,056 $ 54,359 $ 54,846 $ 55,736 4.9 % -2.0 %income Interest on 3,003 3,958 5,331 7,032 8,889 -24.1 % -66.2 %depositsInterest on 447 478 528 582 760 -6.5 % -41.2 %borrowingsInterest onsubordinated 1,585 1,619 1,623 1,627 1,645 -2.1 % -3.7 %debenturesTotal interest 5,035 6,055 7,482 9,241 11,294 -16.8 % -55.4 %expenseNet interest $ 49,572 $ 46,001 $ 46,878 $ 45,604 $ 44,442 7.8 % 11.5 %income ^(1) Includesloans held for sale.

The net interest margin was 3.19% for the second quarter of 2021, up 10 basis points from the prior quarter.

The yield on average earning assets was 3.51% for the second quarter of 2021 compared with 3.50% for the first quarter of 2021, as the benefit from higher interest income from PPP loans and the return-to-accrual of two film tax-credit loans was offset by higher balances of low-yield deposits in other banks.

The cost of interest-bearing liabilities was 0.57% for the second quarter of 2021 compared with 0.69% for the first quarter of 2021. The 12 basis point decline in the cost of interest-bearing deposits drove the lower cost of interest-bearing liabilities. The decline in the cost of interest-bearing deposits reflected the low interest rate environment and the changes in the composition of the deposit portfolio, as a $101.6 million, or 8.2%, decrease in time deposits was offset by increases in lower cost deposit accounts.

For the Three Months Ended (in thousands) Percentage Change Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Q2-21 Q2-21Average EarningAssets and 2021 2021 2020 2020 2020 vs. vs.Interest-bearing Q1-21 Q2-20LiabilitiesLoans receivable $ 4,753,297 $ 4,843,825 $ 4,803,238 $ 4,734,511 $ 4,680,048 -1.9 % 1.6 %^(1)Securities ^(2) 812,805 774,022 743,636 696,285 589,932 5.0 % 37.8 %FHLB stock 16,385 16,385 16,385 16,385 16,385 0.0 % 0.0 %Interest-bearingdeposits in 659,934 395,602 392,949 340,486 386,956 66.8 % 70.5 %other banksAverageinterest-earning $ 6,242,421 $ 6,029,834 $ 5,956,208 $ 5,787,667 $ 5,673,321 3.5 % 10.0 %assets Demand: $ 112,252 $ 102,980 $ 101,758 $ 99,161 $ 92,676 9.0 % 21.1 %interest-bearingMoney market and 2,032,102 1,967,012 1,895,830 1,771,615 1,677,081 3.3 % 21.2 %savingsTime deposits 1,136,903 1,238,513 1,315,227 1,357,167 1,458,351 -8.2 % -22.0 %Averageinterest-bearing 3,281,257 3,308,505 3,312,815 3,227,943 3,228,108 -0.8 % 1.6 %depositsBorrowings 150,091 150,000 150,000 163,364 342,437 0.1 % -56.2 %Subordinated 119,170 119,040 118,888 118,733 118,583 0.1 % 0.5 %debenturesAverageinterest-bearing $ 3,550,518 $ 3,577,545 $ 3,581,703 $ 3,510,040 $ 3,689,128 -0.8 % -3.8 %liabilities AverageNoninterest Bearing DepositsDemand deposits- noninterest $ 2,223,171 $ 1,991,204 $ 1,935,564 $ 1,859,832 $ 1,589,668 11.6 % 39.9 %bearing ^(1) Includesloans 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 Three Months Ended Amount Change Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Q2-21 Q2-21Average Yields 2021 2021 2020 2020 2020 vs. vs.and Rates Q1-21 Q2-20Loans receivable 4.45 % 4.24 % 4.34 % 4.42 % 4.49 % 0.21 -0.04 ^(1)Securities ^(2) 0.69 % 0.59 % 0.91 % 1.13 % 2.19 % 0.10 -1.50 FHLB stock 5.93 % 5.10 % 5.00 % 4.95 % 5.00 % 0.83 0.93 Interest-bearingdeposits in 0.11 % 0.10 % 0.10 % 0.10 % 0.08 % 0.01 0.03 other banksInterest-earning 3.51 % 3.50 % 3.63 % 3.77 % 3.95 % 0.01 -0.44 assets Interest-bearing 0.37 % 0.49 % 0.64 % 0.87 % 1.11 % -0.12 -0.74 depositsBorrowings 1.19 % 1.29 % 1.40 % 1.42 % 0.89 % -0.10 0.30 Subordinated 5.32 % 5.44 % 5.46 % 5.48 % 5.55 % -0.12 -0.23 debenturesInterest-bearing 0.57 % 0.69 % 0.83 % 1.05 % 1.23 % -0.12 -0.66 liabilities Net interestmargin (taxable 3.19 % 3.09 % 3.13 % 3.13 % 3.15 % 0.10 0.04 equivalentbasis) Cost of deposits 0.22 % 0.30 % 0.40 % 0.55 % 0.74 % -0.08 -0.52 ^(1) Includesloans 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 second quarter of 2021, Hanmi recorded a $3.3 million recovery of credit loss expense, comprised of a $4.1 million recovery for loan losses and a $0.5 million reduction in the allowance for accrued interest receivable for current or previously modified loans, offset partially by a $1.3 million provision for off-balance sheet items. Credit loss expense for the first quarter of 2021 was $2.1 million, comprised of a $1.0 million provision for loan losses, a $2.1 million provision for an SBA guarantee repair loss, and a $1.0 million negative provision for losses on off-balance sheet items and accrued interest receivable for modified loans. At June 30, 2021, accrued interest receivable on current and former modified loans was $4.8 million compared with $6.4 million at March 31, 2021 and the related allowance for estimated losses was $0.7 million and $1.2 million at June 30, 2021 and March 31, 2021, respectively.

Second quarter 2021 noninterest income decreased to $8.9 million from $9.8 million for the first quarter of 2021, primarily due to a $2.3 million decrease in gains on the sale of second draw PPP loans, offset partially by an increase in gains on the sale of non-PPP 7(a) SBA loans. Gains on sales of non-PPP 7(a) SBA loans were $3.3 million for the second quarter of 2021, up from $1.7 million for the preceding quarter. The volume of non-PPP 7(a) SBA loans sold for the second quarter and previous quarter was $26.6 million and $18.1 million, respectively, while trade premiums were 12.55% and 10.66%, respectively.

For the Three Months Ended (in thousands) Percentage Change Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Q2-21 Q2-21Noninterest 2021 2021 2020 2020 2020 vs. Q1-21 vs. Q2-20IncomeServicecharges on $ 2,344 $ 2,357 $ 2,051 $ 2,002 $ 2,032 -0.6 % 15.3 %depositaccountsTrade financeand otherservice 1,259 1,034 1,113 972 961 21.8 % 31.0 %charges andfeesServicing 540 846 361 704 855 -36.2 % -36.9 %incomeBank-ownedlife 252 256 271 289 276 -1.6 % -8.7 %insuranceincomeAll otheroperating 908 841 1,879 806 1,095 8.0 % -17.0 %incomeServicecharges, fees 5,303 5,334 5,675 4,773 5,219 -0.6 % 1.6 %& other Gain on sale 3,508 4,125 1,769 2,324 - -15.0 % 0.0 %of SBA loansNet gain onsales of - 99 - - 15,712 -100.0 % -100.0 %securitiesGain on saleof bank - - 365 43 - 0.0 % 0.0 %premisesLegal 75 250 1,000 - - -70.0 % 0.0 %settlementTotalnoninterest $ 8,886 $ 9,808 $ 8,809 $ 7,140 $ 20,931 -9.4 % -57.5 %income

During the second quarter of 2021, noninterest expense increased 4.2% to $30.8 million from $29.5 million for the first quarter primarily due to a $1.5 million increase in salaries and employee benefits. The increase in salaries and benefits from the prior quarter reflects $1.4 million in capitalized costs from second draw PPP originations recorded in the first quarter, as well as higher incentive compensation expense. The efficiency ratio improved to 52.66% in the second quarter from 52.92% in the prior quarter.

For the Three Months Ended (in thousands) Percentage Change Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Q2-21 Q2-21 2021 2021 2020 2020 2020 vs. Q1-21 vs. Q2-20Noninterest ExpenseSalaries andemployee $ 18,302 $ 16,820 $ 17,344 $ 17,194 $ 14,701 8.8 % 24.5 %benefitsOccupancy and 4,602 4,595 4,651 4,650 4,508 0.2 % 2.1 %equipmentData processing 2,915 2,926 2,989 2,761 2,804 -0.4 % 3.9 %Professional 1,413 1,447 1,846 1,794 1,545 -2.4 % -8.6 %feesSupplies and 733 757 759 698 858 -3.2 % -14.6 %communicationAdvertising and 374 359 888 594 456 4.3 % -18.0 %promotionAll otheroperating 2,607 2,378 2,006 2,553 2,655 9.6 % -1.8 %expensessubtotal 30,946 29,282 30,483 30,244 27,527 5.7 % 12.4 % Other realestate owned (47 ) 221 310 (116 ) (191 ) -121.3 % 75.4 %expense(income)Repossessedpersonalproperty (116 ) 32 (71 ) (204 ) (198 ) -462.5 % -41.4 %expense(income)Impairment losson bank - - 201 - - 0.0 % 0.0 %premisesTotalnoninterest $ 30,783 $ 29,535 $ 30,923 $ 29,924 $ 27,138 4.2 % 13.4 %expense

Hanmi recorded a provision for income taxes of $8.9 million for the second quarter of 2021, representing an effective tax rate of 28.6% compared with $7.5 million, representing an effective tax rate of 31.1% for the first quarter of 2021. The effective tax rate for the first six months of 2021 was 29.7% compared with 32.3% for the first six months of 2020.

Financial PositionTotal assets were $6.58 billion at June 30, 2021, a 2.2% increase from $6.44 billion at March 31, 2021 driven by higher cash balances associated with the continued influx of additional customer noninterest-bearing deposits.

Loans receivable, before the allowance for credit losses, were $4.82 billion at June 30, 2021, unchanged from the prior quarter, or up 2.5% when excluding Paycheck Protection Program (PPP) loans. Loans held for sale representing the guaranteed portion of SBA 7(a) loans were $22.0 million at the end of the second quarter of 2021, compared with $10.9 million at the end of the first quarter of 2021. Loans held for sale also included $14.1 million in second draw PPP loans.

As of (in thousands) Percentage Change Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Q2-21 Q2-21 2021 2021 2020 2020 2020 vs. Q1-21 vs. Q2-20Loan PortfolioCommercialreal estate $ 3,452,014 $ 3,372,288 $ 3,353,818 $ 3,264,447 $ 3,266,242 2.4 % 5.7 %loansResidential/consumer 348,730 328,228 345,831 370,883 366,190 6.2 % -4.8 %loansCommercialand 587,729 707,073 757,255 765,484 730,399 -16.9 % -19.5 %industrialloansLeases 431,619 409,562 423,264 433,323 462,811 5.4 % -6.7 %Loans 4,820,092 4,817,151 4,880,168 4,834,137 4,825,642 0.1 % -0.1 %receivableLoans held 36,030 32,674 8,568 12,834 17,942 10.3 % 100.8 %for saleTotal $ 4,856,122 $ 4,849,825 $ 4,888,736 $ 4,846,971 $ 4,843,584 0.1 % 0.3 %

Hanmi generated solid loan production during the second quarter. New loan production totaled $465.6 million at an average rate of 3.74% partially offset by $264.8 million of loans paid-off during the quarter at an average rate of 2.90%. Payoffs for the 2021 second and first quarters included $114.0 and $39.0 million of first-draw PPP loan forgiveness, respectively.

For the Three Months Ended (in thousands) Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, 2021 2021 2020 2020 2020New Loan Production Commercial real estate loans $ 186,136 $ 103,051 $ 187,050 $ 99,618 $ 129,432 Commercial and industrial 99,429 42,255 71,412 78,594 61,114 loansSBA loans 42,560 155,908 27,516 31,335 328,274 Leases receivable 70,923 34,055 39,830 21,271 15,279 Residential/consumer loans 66,581 12,722 2,011 25,766 10 subtotal 465,629 347,991 327,819 256,584 534,109 Payoffs (264,822 ) (166,730 ) (160,006 ) (139,797 ) (67,537 )Amortization (90,348 ) (94,852 ) (78,632 ) (66,907 ) (90,678 )Loan sales (35,760 ) (136,590 ) (21,580 ) (36,068 ) - Net line utilization (70,287 ) (9,331 ) (18,815 ) (2,199 ) (92,230 )Charge-offs & OREO (1,471 ) (3,505 ) (2,755 ) (3,118 ) (1,658 ) Loans receivable-beginning 4,817,151 4,880,168 4,834,137 4,825,642 4,543,636 balanceLoans receivable-ending $ 4,820,092 $ 4,817,151 $ 4,880,168 $ 4,834,137 $ 4,825,642 balance

Deposits totaled $5.63 billion at the end of the second quarter of 2021, compared with $5.51 billion at the end of the preceding quarter. Growth was primarily driven by an increase in noninterest-bearing demand deposits and to a lesser extent increases in interest-bearing demand deposits and money market and savings deposits, partially offset by a reduction in time deposits. Noninterest-bearing demand deposits now represent 41.8% of total deposits up from 35.8% in the year-ago period. At June 30, 2021, the loan-to-deposit ratio was 85.6% compared with 87.4% at the end of the previous quarter.

As of (in thousands) Percentage Change Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Q2-21 Q2-21 2021 2021 2020 2020 2020 vs. Q1-21 vs. Q2-20Deposit Portfolio Demand: $ 2,354,671 $ 2,174,624 $ 1,898,766 $ 1,961,006 $ 1,865,213 8.3 % 26.2 %noninterest-bearingDemand: interest-bearing 113,893 111,362 100,617 100,155 96,941 2.3 % 17.5 %Money market and savings 2,045,143 2,029,824 1,991,926 1,794,627 1,812,612 0.8 % 12.8 %Time deposits 1,116,124 1,194,013 1,283,699 1,338,504 1,435,015 -6.5 % -22.2 %Total deposits $ 5,629,831 $ 5,509,823 $ 5,275,008 $ 5,194,292 $ 5,209,781 2.2 % 8.1 %

At June 30, 2021, stockholders equity was $603.0 million, compared with $581.8 million at March 31, 2021. Tangible common stockholders equity was $591.5 million, or 9.01% of tangible assets, at June 30, 2021 compared with $570.3 million, or 8.87% of tangible assets at the end of the first quarter. The ratio of tangible common equity to tangible assets excluding the $158.1 million of first and second draw PPP loans was 9.23% at June 30, 2021. Tangible book value per share increased to $19.27 at June 30, 2021 from $18.59 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 12.17% and a Total risk-based capital ratio of 15.41 % at June 30, 2021, versus 12.26% and 15.54%, respectively, at the end of the first quarter of 2021.

As of Amount Change Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Q2-21 Q2-21 2021 2021 2020 2020 2020 vs. Q1-21 vs. Q2-20RegulatoryCapital ratios^ (1)Hanmi FinancialTotalrisk-based 15.41 % 15.54 % 15.21 % 15.16 % 14.85 % -0.13 0.56 capitalTier 1risk-based 12.17 % 12.26 % 11.93 % 11.85 % 11.55 % -0.09 0.62 capitalCommonequity tier 11.76 % 11.84 % 11.52 % 11.43 % 11.12 % -0.08 0.64 1 capitalTier 1leverage 9.44 % 9.61 % 9.49 % 9.53 % 9.69 % -0.17 -0.25 capitalratioHanmi Bank Totalrisk-based 15.18 % 15.26 % 14.86 % 14.77 % 14.41 % -0.08 0.77 capitalTier 1risk-based 13.93 % 14.01 % 13.60 % 13.51 % 13.15 % -0.08 0.78 capitalCommonequity tier 13.93 % 14.01 % 13.60 % 13.51 % 13.15 % -0.08 0.78 1 capitalTier 1leverage 10.80 % 10.99 % 10.83 % 10.88 % 11.04 % -0.19 -0.24 capitalratio ^(1) Preliminaryratios for June 30,2021

Asset QualityLoans and leases 30 to 89 days past due and still accruing were 0.09% of loans and leases at the end of the second quarter of 2021, compared with 0.14% at the end of the first quarter.

Loans 90 days or more past due and still accruing were $12.4 million and represent two film tax-credit loans previously included in nonaccrual loans. These loans are well secured and in the process of collection. Subsequent to the end of the second quarter, the Company collected payments of $4.6 million, including accrued interest, representing the full payoff of one of these loans, and $5.4 million, representing the partial paydown of the other. The Company expects to collect the remaining amounts due on the second loan prior to the end of the third quarter.

Special mention loans were $121.8 million at the end of the second quarter compared with $96.1 million at March 31, 2021. The quarter-over-quarter change reflected upgrades from classified loans of $34.0 million and downgrades from pass loans of $15.5 million. Reductions of special mention loans during the quarter include $12.3 million of upgrades to pass and $9.0 million of downgrades to classified, as well as $2.5 million in payoffs/paydowns. The June 30, 2021 balance of special mention loans included $70.8 million of loans adversely affected by the COVID-19 pandemic.

Classified loans were $110.1 million at June 30, 2021 compared with $147.4 million at the end of the first quarter. The quarter-over-quarter change reflected reductions due to upgrades to special mention of $34.0 million and payoffs/paydowns and net charge-offs of $14.1 million. Additions to classified loans, representing downgrades from pass and special mention, totaled $10.8 million. At June 30, 2021, classified loans included $63.3 million of loans adversely affected by the COVID-19 pandemic.

Nonperforming loans were $52.0 million at the end of the second quarter of 2021, or 1.08% of loans, compared with $55.1 million at the end of the first quarter, or 1.14% of the portfolio. The quarter-over-quarter change reflected additions of $1.8 million and reductions (comprising upgrades, payments, sales, and charge-offs) of $4.9 million. At June 30, 2021, nonperforming loans included $20.3 million of loans and leases adversely affected by the COVID-19 pandemic.

Nonperforming assets were $52.7 million at the end of the second quarter of 2021, or 0.80% of total assets, compared with $56.6 million, or 0.88% of assets, at the end of the prior quarter.

Loans modified under the CARES Act declined 38% to $72.3 million at June 30, 2021 from $116.4 million at March 31, 2021. Substantially all of these modified loans are making interest only or other reduced payments that are less than the contractually required amount. Of the modified loan portfolio, 50.7% were special mention and 17.6% were classified. In addition, 7.0% were on nonaccrual status at June 30, 2021.

Gross charge-offs for the second quarter of 2021 were $1.5 million compared with $3.5 million for the preceding quarter. Recoveries of previously charged-off loans for the second quarter of 2021 were $0.6 million compared with $0.5 million for the preceding quarter. As a result, there were net charge-offs of $0.9 million for the second quarter of 2021, compared with net charge-offs of $3.0 million for the preceding quarter. For the second quarter of 2021, net charge-offs represented 0.08% of average loans on an annualized basis compared with 0.25% of average loans for the first quarter on an annualized basis.

The allowance for credit losses was $83.4 million as of June 30, 2021 generating an allowance for credit losses to loans of 1.73 % (1.78% excluding the PPP loans) compared with 1.83% (1.94% excluding the PPP loans) at the end of the prior quarter. 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 Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Q2-21 Q2-21 2021 2021 2020 2020 2020 vs. Q1-21 vs. Q2-20Asset Quality Data and Ratios Delinquent loans:Loans, 30 to 89days past due $ 4,332 $ 6,926 $ 9,473 $ 9,428 $ 9,984 $ (2,594 ) $ (5,652 )and stillaccruingDelinquent loans 0.09 % 0.14 % 0.19 % 0.20 % 0.21 % -0.05 -0.12 to total loans Criticized loans:Special mention $ 121,826 $ 96,057 $ 76,978 $ 57,105 $ 21,134 $ 25,769 $ 100,692 Classified 110,120 147,426 140,168 106,211 93,922 (37,306 ) 16,198 Total criticized $ 231,946 $ 243,483 $ 217,146 $ 163,316 $ 115,056 $ (11,537 ) $ 116,890 loans Nonperforming assets:Nonaccrual loans $ 39,572 $ 55,058 $ 83,032 $ 64,333 $ 58,264 $ (15,486 ) $ (18,692 )Loans 90 days ormore past due 12,446 - - - - 12,446 12,446 and stillaccruingNonperforming 52,018 55,058 83,032 64,333 58,264 (3,040 ) (6,246 )loansOther realestate owned, 712 1,545 2,360 1,052 148 (833 ) 564 netNonperforming $ 52,730 $ 56,603 $ 85,392 $ 65,385 $ 58,412 $ (3,873 ) $ (5,682 )assets Nonperformingloans to total 1.08 % 1.14 % 1.70 % 1.33 % 1.21 % loansNonperforming 0.80 % 0.88 % 1.38 % 1.07 % 0.94 % assets to assets Allowance for credit losses:Balance atbeginning of $ 88,392 $ 90,426 $ 86,620 $ 86,330 $ 66,500 periodCredit lossexpense (4,112 ) 964 5,731 696 21,131 (recovery) onloansNet loan(charge-offs) (908 ) (2,998 ) (1,925 ) (406 ) (1,301 ) recoveriesBalance at end $ 83,372 $ 88,392 $ 90,426 $ 86,620 $ 86,330 of period Net loancharge-offs to 0.08 % 0.25 % 0.16 % 0.03 % 0.11 % average loans ^(1)Allowance forcredit losses to 1.73 % 1.83 % 1.85 % 1.79 % 1.79 % loans Allowance for credit lossesrelated to off-balance sheet items:Balance atbeginning of $ 2,342 $ 2,791 $ 5,689 $ 6,347 $ 2,885 periodCredit lossexpense on 1,301 (450 ) (2,898 ) (658 ) 3,462 off-balancesheet itemsBalance at end $ 3,643 $ 2,342 $ 2,791 $ 5,689 $ 6,347 of period Allowance for Losses on Accrued Interest Receivable:Balance atbeginning of $ 1,196 $ 1,666 $ - $ - $ - periodInterestreversal for - - (584 ) - - loans placed onnonaccrualCredit lossexpense oninterest accrued (516 ) (470 ) 2,250 - - on CARES ActmodificationsBalance at end $ 680 $ 1,196 $ 1,666 $ - $ - of period Commitments to $ 552,773 $ 463,841 $ 453,899 $ 444,782 $ 486,852 extend credit ^(1) Annualized

Corporate DevelopmentsOn April 29, 2021 Hanmis Board of Directors declared a cash dividend on its common stock for the 2021 second quarter of $0.12 per share. The dividend was paid on May 27, 2021 to stockholders of record as of the close of business on May 10, 2021.

Conference CallManagement will host a conference call today, July 27, 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 our 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 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; -- 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; -- the effect of our rating under the Community Reinvestment Act and our ability to address any issues raised in our regulatory exams; -- 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 continuing 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 continued 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 higher 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; -- a material decrease in net income or a net loss over several quarters could result in the elimination or 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, 2020, 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 Financial Corporation and SubsidiariesConsolidated Balance Sheets (Unaudited)(In thousands)

June 30, March 31, Percentage June 30, Percentage 2021 2021 Change 2020 ChangeAssets Cash and due from $ 697,789 $ 646,445 7.9 % $ 546,048 27.8 %banksSecuritiesavailable for sale, 862,119 780,114 10.5 % 655,971 31.4 %at fair valueLoans held forsale, at the lower 36,030 32,674 10.3 % 17,942 100.8 %of cost or fairvalueLoans receivable,net of allowance 4,736,720 4,728,759 0.2 % 4,739,312 -0.1 %for credit lossesAccrued interest 14,397 14,806 -2.8 % 21,372 -32.6 %receivablePremises and 26,225 26,398 -0.7 % 26,412 -0.7 %equipment, netCustomers'liability on 1,907 735 159.6 % - - acceptancesServicing assets 6,199 6,150 0.8 % 6,187 0.2 %Goodwill and otherintangible assets, 11,504 11,558 -0.5 % 11,742 -2.0 %netFederal Home LoanBank ("FHLB") 16,385 16,385 0.0 % 16,385 0.0 %stock, at costBank-owned life 54,402 54,150 0.5 % 53,334 2.0 %insurancePrepaid expenses 115,178 120,227 -4.2 % 123,458 -6.7 %and other assetsTotal assets $ 6,578,856 $ 6,438,401 2.2 % $ 6,218,163 5.8 % Liabilities andStockholders' EquityLiabilities: Deposits: Noninterest-bearing $ 2,354,671 $ 2,174,624 8.3 % $ 1,865,213 26.2 %Interest-bearing 3,275,159 3,335,199 -1.8 % 3,344,568 -2.1 %Total deposits 5,629,830 5,509,823 2.2 % 5,209,781 8.1 %Accrued interest 1,855 2,352 -21.1 % 8,655 -78.6 %payableBank's liability on 1,907 735 159.6 % - - acceptancesBorrowings 150,000 150,000 0.0 % 251,808 -40.4 %Subordinated 119,243 119,124 0.1 % 118,670 0.5 %debenturesAccrued expensesand other 73,044 74,545 -2.0 % 81,813 -10.7 %liabilitiesTotal liabilities 5,975,879 5,856,579 2.0 % 5,670,727 5.4 % Stockholders' equity:Common stock 33 33 0.0 % 33 0.0 %Additional paid-in 579,595 578,958 0.1 % 577,211 0.4 %capitalAccumulated othercomprehensive (2,859 ) (5,293 ) 46.0 % 335 953.5 %incomeRetained earnings 146,651 128,211 14.4 % 88,859 65.0 %Less treasury stock (120,443 ) (120,087 ) -0.3 % (119,002 ) -1.2 %Total stockholders' 602,977 581,822 3.6 % 547,436 10.1 %equityTotal liabilitiesand stockholders' $ 6,578,856 $ 6,438,401 2.2 % $ 6,218,163 5.8 %equity

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

Three Months Ended June 30, March 31, Percentage June 30, Percentage 2021 2021 Change 2020 ChangeInterest and dividend income:Interest andfees on loans $ 52,785 $ 50,614 4.3 % $ 52,230 1.1 %receivableInterest on 1,404 1,140 23.2 % 3,225 -56.5 %securitiesDividends on 242 206 17.7 % 203 19.4 %FHLB stockInterest ondeposits in 176 96 83.9 % 78 125.9 %other banksTotal interestand dividend 54,607 52,056 4.9 % 55,736 -2.0 %incomeInterest expense:Interest on 3,003 3,958 -24.1 % 8,889 -66.2 %depositsInterest on 447 478 -6.5 % 760 -41.2 %borrowingsInterest onsubordinated 1,585 1,619 -2.1 % 1,645 -3.7 %debenturesTotal interest 5,035 6,055 -16.8 % 11,294 -55.4 %expenseNet interestincome before 49,572 46,001 7.8 % 44,442 11.5 %credit lossexpenseCredit lossexpense (3,327 ) 2,109 -257.7 % 24,594 -113.5 %(recovery)Net interestincome after 52,899 43,892 20.5 % 19,848 166.5 %credit lossexpenseNoninterest income:Service chargeson deposit 2,344 2,357 -0.6 % 2,032 15.3 %accountsTrade financeand other 1,259 1,034 21.8 % 961 31.0 %service chargesand feesGain on sale ofSmall Business 3,508 4,125 -15.0 % - - Administration("SBA") loansNet gain onsales of - 99 -100.0 % 15,712 -100.0 %securitiesOther operating 1,775 2,193 -19.1 % 2,226 -20.3 %incomeTotalnoninterest 8,886 9,808 -9.4 % 20,931 -57.5 %incomeNoninterest expense:Salaries andemployee 18,302 16,820 8.8 % 14,701 24.5 %benefitsOccupancy and 4,602 4,595 0.2 % 4,508 2.1 %equipmentData processing 2,915 2,926 -0.4 % 2,804 3.9 %Professional 1,413 1,447 -2.4 % 1,545 -8.6 %feesSupplies and 733 757 -3.2 % 858 -14.6 %communicationsAdvertising and 374 359 4.3 % 456 -18.0 %promotionOther operating 2,444 2,631 -7.1 % 2,266 7.9 %expensesTotalnoninterest 30,783 29,535 4.2 % 27,138 13.4 %expenseIncome before 31,002 24,165 28.3 % 13,641 127.3 %taxIncome tax 8,880 7,506 18.3 % 4,466 98.9 %expenseNet income $ 22,122 $ 16,659 32.8 % $ 9,175 141.1 % Basic earnings $ 0.72 $ 0.54 $ 0.30 per share:Diluted earnings $ 0.72 $ 0.54 $ 0.30 per share: Weighted-averageshares outstanding:Basic 30,442,993 30,461,681 30,426,967 Diluted 30,520,456 30,473,970 30,426,967 Common shares 30,697,652 30,682,533 30,657,629 outstanding

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

Six Months Ended June 30, June 30, Percentage 2021 2020 ChangeInterest and dividend income: Interest and fees on loans $ 103,400 $ 106,878 -3.3 %receivableInterest on securities 2,544 6,880 -63.0 %Dividends on FHLB stock 448 492 -8.9 %Interest on deposits in other 272 411 -33.8 %banksTotal interest and dividend 106,664 114,661 -7.0 %incomeInterest expense: Interest on deposits 6,953 21,631 -67.9 %Interest on borrowings 933 1,256 -25.7 %Interest on subordinated 3,204 3,357 -4.5 %debenturesTotal interest expense 11,090 26,244 -57.7 %Net interest income before 95,574 88,417 8.1 %credit loss expenseCredit loss expense (recovery) (1,217 ) 40,333 -103.0 %Net interest income after 96,791 48,084 101.3 %credit loss expenseNoninterest income: Service charges on deposit 4,599 4,432 3.8 %accountsTrade finance and other service 2,280 1,948 17.0 %charges and feesGain on sale of Small Business 7,633 1,154 561.4 %Administration ("SBA") loansNet gain on sales of securities 99 15,712 -99.4 %Other operating income 4,081 3,908 4.4 %Total noninterest income 18,692 27,154 -31.2 %Noninterest expense: Salaries and employee benefits 35,122 32,451 8.2 %Occupancy and equipment 9,198 8,983 2.4 %Data processing 5,841 5,473 6.7 %Professional fees 2,860 3,460 -17.3 %Supplies and communications 1,489 1,639 -9.1 %Advertising and promotion 732 1,190 -38.4 %Other operating expenses 5,074 5,011 1.3 %Total noninterest expense 60,316 58,206 3.6 %Income before tax 55,166 17,032 223.9 %Income tax expense 16,386 5,506 197.6 %Net income $ 38,780 $ 11,526 236.4 % Basic earnings per share: $ 1.26 $ 0.38 Diluted earnings per share: $ 1.26 $ 0.38 Weighted-average shares outstanding:Basic 30,452,320 30,447,984 Diluted 30,526,120 30,450,231 Common shares outstanding 30,697,652 30,657,629

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

Three Months Ended June 30, 2021 March 31, 2021 June 30, 2020 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) $ 4,753,297 $ 52,787 4.45 % $ 4,843,825 $ 50,614 4.24 % $ 4,680,048 $ 52,230 4.49 %Securities ^(2) 812,805 1,404 0.69 % 774,022 1,140 0.59 % 589,932 3,225 2.19 %FHLB stock 16,385 242 5.93 % 16,385 206 5.10 % 16,385 203 5.00 %Interest-bearingdeposits in other 659,934 176 0.11 % 395,602 96 0.10 % 386,956 78 0.08 %banksTotal interest-earning 6,242,421 54,609 3.51 % 6,029,834 52,056 3.50 % 5,673,321 55,736 3.95 %assets Noninterest-earning assets:Cash and due from 61,560 56,666 69,667 banksAllowance for credit (88,049 ) (89,681 ) (66,926 ) lossesOther assets 220,779 233,146 219,383 Total assets $ 6,436,711 $ 6,229,965 $ 5,895,445 Liabilities and Stockholders' EquityInterest-bearing liabilities:Deposits: Demand: $ 112,252 $ 23 0.05 % $ 102,980 $ 14 0.05 % $ 92,676 $ 18 0.08 %interest-bearingMoney market and 2,032,102 1,298 0.26 % 1,967,012 1,479 0.30 % 1,677,081 2,309 0.55 %savingsTime deposits 1,136,903 1,682 0.59 % 1,238,513 2,465 0.81 % 1,458,351 6,562 1.81 %Total interest-bearing 3,281,257 3,003 0.37 % 3,308,505 3,958 0.49 % 3,228,108 8,889 1.11 %depositsBorrowings 150,091 447 1.19 % 150,000 478 1.29 % 342,437 760 0.89 %Subordinated 119,170 1,585 5.32 % 119,040 1,619 5.44 % 118,583 1,645 5.55 %debenturesTotal interest-bearing 3,550,518 5,035 0.57 % 3,577,545 6,055 0.69 % 3,689,128 11,294 1.23 %liabilities Noninterest-bearingliabilities and equity:Demand deposits: 2,223,171 1,991,204 1,589,668 noninterest-bearingOther liabilities 67,771 80,060 68,311 Stockholders' equity 595,250 581,156 548,338 Total liabilities and $ 6,436,711 $ 6,229,965 $ 5,895,445 stockholders' equity Net interest income $ 49,574 $ 46,001 $ 44,442 (tax equivalent basis) Cost of deposits 0.22 % 0.30 % 0.74 %Net interest spread(taxable equivalent 2.94 % 2.81 % 2.72 %basis)Net interest margin(taxable equivalent 3.19 % 3.09 % 3.15 %basis) ^(1) Includes average loans held for sale^(2) Amounts calculated on a fully taxable equivalent basis using the federal tax rate in effect for the periods presented.

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

Six Months Ended June 30, 2021 June 30, 2020 Interest Average Interest Average Average Income / Yield / Average Income / Yield / Balance Expense Rate Balance Expense RateAssets Interest-earning assets:Loans receivable ^ $ 4,798,311 $ 103,399 4.35 % $ 4,599,222 $ 106,878 4.67 %(1)Securities ^(2) 793,521 2,544 0.64 % 606,821 6,880 2.27 %FHLB stock 16,385 448 5.52 % 16,385 492 6.05 %Interest-bearingdeposits in other 528,498 272 0.10 % 245,734 411 0.34 %banksTotalinterest-earning 6,136,715 106,663 3.51 % 5,468,162 114,661 4.22 %assets Noninterest-earning assets:Cash and due from 59,127 83,782 banksAllowance for (88,860 ) (63,990 ) credit lossesOther assets 227,436 212,595 Total assets $ 6,334,418 $ 5,700,549 Liabilities andStockholders' EquityInterest-bearing liabilities:Deposits: Demand: $ 107,642 $ 37 0.07 % $ 87,805 $ 39 0.09 %interest-bearingMoney market and 1,999,737 2,776 0.28 % 1,682,047 7,088 0.85 %savingsTime deposits 1,187,427 4,148 0.70 % 1,490,548 14,504 1.96 %Totalinterest-bearing 3,294,806 6,961 0.43 % 3,260,400 21,631 1.33 %depositsBorrowings 150,046 923 1.24 % 236,548 1,256 1.07 %Subordinated 119,105 3,204 5.38 % 118,513 3,357 5.67 %debenturesTotalinterest-bearing 3,563,957 11,088 0.63 % 3,615,461 26,244 1.46 %liabilities Noninterest-bearingliabilities and equity:Demand deposits: 2,107,828 1,461,682 noninterest-bearingOther liabilities 74,391 69,259 Stockholders' 588,242 554,147 equity Total liabilitiesand stockholders' $ 6,334,418 $ 5,700,549 equity Net interest income(tax equivalent $ 95,575 $ 88,417 basis) Cost of deposits 0.26 % 0.92 %Net interest spread(taxable equivalent 2.88 % 2.76 %basis)Net interest margin(taxable equivalent 3.14 % 3.25 %basis) ^(1) Includes average loans held for sale^(2) Amounts calculated on a fully taxable equivalent basis using the federaltax 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)

June 30, March 31, December 31, September 30, June 30,HanmiFinancial 2021 2021 2020 2020 2020CorporationAssets $ 6,578,856 $ 6,438,401 $ 6,201,888 $ 6,106,782 $ 6,218,163 Less goodwilland other (11,504 ) (11,558 ) (11,612 ) (11,677 ) (11,742 )intangibleassetsTangible $ 6,567,352 $ 6,426,843 $ 6,190,276 $ 6,095,105 $ 6,206,421 assets Stockholders' $ 602,977 $ 581,822 $ 577,044 $ 563,203 $ 547,436 equity (1)Less goodwilland other (11,504 ) (11,558 ) (11,612 ) (11,677 ) (11,742 )intangibleassetsTangiblestockholders' $ 591,473 $ 570,264 $ 565,432 $ 551,526 $ 535,694 equity (1) Stockholders'equity to 9.17 % 9.04 % 9.30 % 9.22 % 8.80 %assetsTangiblecommon equity 9.01 % 8.87 % 9.13 % 9.05 % 8.63 %to tangibleassets (1) Common shares 30,697,652 30,682,533 30,717,835 30,719,591 30,657,629 outstandingTangiblecommon equity $ 19.27 $ 18.59 $ 18.41 $ 17.95 $ 17.47 per commonshare ^(1) There were no preferredshares 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 2021 second 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 June 30, As of March 31, 2021 2021 Tangible assets 6,567,352 6,426,843 Less first and second draw PPP loans (158,134 ) (278,200 ) Tangible assets adjusted for PPP loans $ 6,409,218 $ 6,148,643 Tangible stockholders' equity 591,473 570,264 Tangible common equity to tangible 9.01 % 8.87 % assets^ (1)Tangible common equity to tangible 9.23 % 9.27 % assets adjusted for PPP loans ^(1) (1) There were no preferred sharesoutstanding at June 30, or March 31, 2021 Allowance for credit losses 83,372 88,392 Loans receivable 4,820,092 4,817,151 Less first draw PPP loans (144,077 ) (256,457 ) Loans receivable adjusted for PPP loans $ 4,676,015 $ 4,560,694 Allowance for credit losses to loans 1.73 % 1.83 % receivableAllowance for credit losses to loans 1.78 % 1.94 % receivable adjusted for PPP loans For the Six For the Three Months Ended Months Ended June 30, 2021 June 30, 2021 $ 95,574 $ 49,572 Net interest income (4,545 ) (2,680 ) Less PPP loan interest income $ 91,029 $ 46,892 Net interest income adjusted for PPP loans 6,136,715 6,242,421 Average interest-earning assets (254,435 ) (220,965 ) Less average PPP loans $ 5,882,280 $ 6,021,456 Average interest-earning assets adjusted for PPP loans 3.14 % 3.19 % Net interest margin ^(1) 3.12 % 3.12 % Net interest margin adjusted for PPP loans ^(1) (1) Net interest income (as applicable) divided byaverage interest-earning assets (as applicable), annualized 60,316 30,783 Noninterest expense 1,403 13 Less PPP deferred origination costs $ 61,719 $ 30,796 Noninterest expense adjusted for PPP loans $ 114,266 $ 58,458 Net interest income plus noninterest (2,756 ) (203 ) incomeLess securities and PPP gains $ 111,510 $ 58,255 Net interest income plus noninterestincome adjusted for securities and PPP gains 52.79 % 52.66 % Efficiency ratio^ (1) 55.35 % 52.86 % Efficiency ratio adjusted for PPP loans and securities gains^ (1) (1) Noninterest expense (as applicable) divided by thesum of net interest income and noninterest income (as applicable)