##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
      FORM 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the Fiscal Year Ended
    December 31, 2006oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the Transition Period
    From          To   Commission file number:
    000-30421
     HANMI FINANCIAL
    CORPORATION
 (Exact Name of Registrant as
    Specified in its Charter)
  Delaware

95-4788120(State or Other Jurisdiction of
    Incorporation or Organization)

(I.R.S. Employer Identification
    No.)3660 Wilshire Boulevard,
    Penthouse Suite ALos Angeles, California

90010(Address of Principal Executive
    Offices)

(Zip Code)  (213) 382-2200
 (Registrants Telephone
    Number, Including Area Code)
    Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, $.001 Par
    Value

The NASDAQ Global Market    None
  (Title of Class)
  o þ
  o þ
  þ o
  Regulation S-K 10-K Form 10-K. o
  Rule 12b-2.
  Large
    Accelerated Filer þ
    Accelerated
    Filer o
    Non-Accelerated
    Filer o  Rule 12b-2 o þ
      Documents Incorporated By Reference
    Herein:




---



##### 



HANMI
    FINANCIAL CORPORATION
  ANNUAL
    REPORT ON
    FORM 10-K
    FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006
  TABLE OF
    CONTENTS
  PagePART IItem 1.

Business


1Item 1A.

Risk
    Factors


16Item 1B.

Unresolved Staff
    Comments


17Item 2.

Properties


17Item 3.

Legal
    Proceedings


18Item 4.

Submission of
    Matters to a Vote of Security Holders


18PART IIItem 5.

Market for
    Registrants Common Equity, Related Stockholder Matters and
    Issuer Purchases of Equity Securities


19Item 6.

Selected Financial
    Data


20Item 7.

Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


24Item 7A.

Quantitative and
    Qualitative Disclosures About Market Risk


47Item 8.

Financial
    Statements and Supplementary Data


47Item 9.

Changes In and
    Disagreements With Accountants on Accounting and Financial
    Disclosure


47Item 9A.

Controls and
    Procedures


47Item 9B.

Other
    Information


50PART IIIItem 10.

Directors,
    Executive Officers and Corporate Governance


50Item 11.

Executive
    Compensation


50Item 12.

Security Ownership
    of Certain Beneficial Owners and Management and Related
    Stockholder Matters


50Item 13.

Certain
    Relationships and Related Transactions, and Director
    Independence


50Item 14.

Principal
    Accounting Fees and Services


50PART IVItem 15.

Exhibits, Financial
    Statement Schedules


51Index to
    Consolidated Financial Statements


52Report of
    Independent Registered Public Accounting Firm


53Consolidated
    Statements of Financial Condition as of December 31, 2006
    and 2005


54Consolidated
    Statements of Income for the Years Ended December 31, 2006,
    2005 and 2004


55Consolidated
    Statements of Changes in Shareholders Equity and
    Comprehensive Income for the Years Ended December 31, 2006,
    2005 and 2004


56Consolidated
    Statements of Cash Flows for the Years Ended December 31,
    2006, 2005 and 2004


57Notes to
    Consolidated Financial Statements


58Signatures


92Exhibit Index


93EXHIBIT 10.4EXHIBIT 23EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2




---



##### Table of Contents



FORWARD-LOOKING
    STATEMENTS
  Item 1.  Business,
    Item 7. Managements Discussion and Analysis of
    Financial Condition and Results of Operations Form 10-K Item 1A. Risk Factors,
    Item 7. Managements Discussion and Analysis of
    Financial Condition and Results of Operations 
    Interest Rate Risk Management  Liquidity and Capital Resources.
  PART I  ITEM 1.
    BUSINESS  General
  (213) 382-2200.
    Korean-American
    Year Ended December 31,2006


2005


2004(Dollars in thousands)Interest and Fees on Loans

$
239,075



80.8
%

$
180,845



78.2
%

$
117,999



72.9
%Interest on Investments


19,710



6.7
%


18,507



8.0
%


17,372



10.7
%Other Interest Income


1,404



0.5
%


1,589



0.7
%


183



0.1
%Service Charges on Deposit Accounts


17,134



5.8
%


15,782



6.8
%


14,441



8.9
%Other Non-Interest Income


18,470



6.2
%


14,600



6.3
%


11,770



7.4
%Total Revenues

$
295,793



100.0
%

$
231,323



100.0
%

$
161,765



100.0
%  1




---



##### Table of Contents



Business
    Acquisitions
      Market
    Area
  Korean-American
    Lending
    Activities
    Commercial
    Loans
     2




---



##### Table of Contents



SBA
    Guaranteed Loans
      Loans
    Secured by Real Estate
    Commercial
    Mortgage Loans
    loan-to-value The Wall Street Journal
 3




---



##### Table of Contents



Real Estate
    Construction Loans
    
    maturities of two years or less;
    a floating rate of interest based on the Bank Prime Rate or a
    nationally recognized index such as the WSJ Prime Rate;
    minimum cash equity of 35 percent of project cost;
    reserve of anticipated interest costs during construction or
    advance of fees;
    first lien position on the underlying real estate;
    loan-to-value
    ratios generally not exceeding 65 percent; and
    recourse against the borrower or a guarantor in the event of
    default.  case-by-case
  
    the uncertain value of the project prior to completion;
    the inherent uncertainty in estimating construction costs, which
    are often beyond the borrowers control;
    construction delays and cost overruns;
    possible difficulties encountered in connection with municipal
    or other governmental regulations during construction; and
    the difficulty in accurately evaluating the market value of the
    completed project.   4




---



##### Table of Contents



Residential
    Mortgage Loans
    Consumer
    Loans
  debt-to-income
    Off-Balance
    Sheet Commitments
    Lending
    Procedures and Loan Limits
     5




---



##### Table of Contents



and/or
  Allowance
    for Loan Losses, Allowance for Off-Balance Sheet Items and
    Provision for Credit Losses
    Interagency Policy Statement on
    the Allowance for Loan and Lease Losses and/or
  Deposits
    Website
  www.hanmi.com. Form 10-K, Form 10-Q, Form 8-K Form 10-K.
  Employees
    Insurance
    Competition
   6




---



##### Table of Contents



and/or
      Korean-American
    Economic
    Conditions, Government Policies, Legislation and
    Regulation
       7




---



##### Table of Contents



Supervision
    and Regulation
  General
    Hanmi
    Financial
    Capital
    Standards.
          Financial
    Holding Status
     8




---



##### Table of Contents




    lending, exchanging, transferring, investing for others, or
    safeguarding financial assets other than money or securities;
    providing any device or other instrumentality for transferring
    money or other financial assets;
    arranging, effecting or facilitating financial transactions for
    the account of third parties;
    securities underwriting;
    dealing and market making;
    sponsoring mutual funds and investment companies;
    insurance underwriting and agency sales;
    merchant banking investments; and
    activities that the FRB, in consultation with the Secretary of
    the Treasury, determines from time to time to be so closely
    related to banking or managing or controlling banks as to be a
    proper incident thereto.  The
    Bank
        
    In December 2006, the Federal banking agencies issued final
    guidance to reinforce sound risk management practices for bank
    holding companies and banks in commercial real estate
    (CRE) loans which establishes CRE concentration
    thresholds as criteria for examiners to identify CRE
    concentration that may warrant further analysis. The
    implementation of these guidelines could result in increased
    reserves and capital costs for banks with CRE
    concentration. As of December 31, 2006, the
    Banks CRE portfolio would not meet the definition of CRE
    concentration as set forth in the guidelines.
    In September 2006, the Federal banking agencies issued final
    guidance on alternative residential mortgage products that allow
    borrowers to defer repayment of principal and sometimes
    interest, including interest-only mortgage loans,
    and payment option adjustable rate mortgages where a
    borrower has flexible payment options, including payments that
    have the potential for negative amortization. While
    acknowledging that innovations in mortgage lending can benefit
    some consumers, the final guidance states that management should
    (1) assess a borrowers ability to repay the loan,
    including any principal balances added through negative
    amortization, at the fully indexed rate that would apply after
    the introductory period, (2) recognize that certain
    nontraditional mortgages are untested in a stressed environment
    and warrant strong risk management standards as well as
    appropriate capital and loan loss reserves, and (3) ensure
    that 9




---



##### Table of Contents



borrowers have sufficient information to clearly understand loan
    terms and associated risks prior to making a product or payment
    choice. The Bank believes its products and disclosures are in
    conformance with the requirements of the guidance.  
    Pursuant to the Financial Services Regulatory Relief Act of
    2006, the SEC and the FRB have released, as Regulation R,
    joint proposed rules expected to be finalized by midyear to
    implement exceptions provided for in the Gramm-Leach-Bliley Act
    for bank securities activities which banks may conduct without
    registering with the SEC as securities brokers or moving such
    activities to a broker-dealer affiliate. The proposed
    Regulation R push out rules exceptions would
    allow a bank, subject to certain conditions, to continue to
    conduct securities transactions for customers as part of the
    banks trust and fiduciary, custodial and deposit
    sweep functions, and to refer customers to a
    securities broker-dealer pursuant to a networking arrangement
    with the broker-dealer. The proposed rules, if adopted, are not
    expected to have a material effect on the current securities
    activities which the Bank now conducts for customers.    Federal
    Home Loan Bank (FHLB) System
    Interstate
    Banking and Branching
    The
    Sarbanes-Oxley Act of 2002
    
    required executive certification of financial presentations;
    increased requirements for board audit committees and their
    members; 10




---



##### Table of Contents




    enhanced disclosure of controls and procedures and internal
    control over financial reporting;
    enhanced controls on, and reporting of, insider trading; and
    increased penalties for financial crimes and forfeiture of
    executive bonuses in certain circumstances.    Dividends
    and Other Transfers of Funds
  Capital Standards
    Capital
    Standards
       11




---



##### Table of Contents



Actual as ofRequirement


December 31, 2006Adequately


Well


Hanmi


HanmiCapitalized


Capitalized


Bank


FinancialTotal Risk-Based Capital Ratio


8.0
%


10.0
%


12.28
%


12.55
%Tier 1 Risk-Based Capital
    Ratio


4.0
%


6.0
%


11.31
%


11.58
%Tier 1 Leverage Capital Ratio


4.0
%


5.0
%


9.85
%


10.08
%       Premiums
    for Deposit Insurance
     12




---



##### Table of Contents



Extensions
    of Credit to Insiders and Transactions with
    Affiliates
    
    a banks or bank holding companys executive officers,
    directors and principal shareholders (i.e., in most cases, those
    persons who own, control or have power to vote more than
    10 percent of any class of voting securities);
    any company controlled by any such executive officer, director
    or shareholder; or
    any political or campaign committee controlled by such executive
    officer, director or principal shareholder.  loan-to-one-borrower
   13




---



##### Table of Contents



USA
    PATRIOT Act
    
    the establishment of a customer identification program;
    the development of internal policies, procedures, and controls;
    the designation of a compliance officer;
    an ongoing employee training program; and
    an independent audit function to test the programs.    Consumer
    Laws
      
    making unaffordable loans based on the assets of the borrower
    rather than on the borrowers ability to repay an
    obligation (asset-based lending);
    inducing a borrower to refinance a loan repeatedly in order to
    charge high points and fees each time the loan is refinanced
    (loan flipping); and/or
    engaging in fraud or deception to conceal the true nature of the
    loan obligation from an unsuspecting or unsophisticated borrower.      
    initial notices to customers about their privacy policies,
    describing the conditions under which they may disclose
    non-public personal information to non-affiliated third parties
    and affiliates;
    annual notices of their privacy policies to current customers;
    and
    a reasonable method for customers to opt out of
    disclosures to non-affiliated third parties. 14




---



##### Table of Contents



15




---



##### Table of Contents



Regulation
    of Subsidiaries
    ITEM 1A.
    RISK
    FACTORS    Our Southern California business focus and economic
    conditions in Southern California could adversely affect our
    operations.
  Our concentrations in commercial real estate loans located
    primarily in Southern California could have adverse effects on
    credit quality.
  Our earnings are affected by changing interest
    rates.
  We are subject to government regulations that could limit
    or restrict our activities, which in turn could adversely affect
    our operations.
  Competition may adversely affect our
    performance.
 16




---



##### Table of Contents



If a significant number of borrowers, guarantors or
    related parties fail to perform as required by the terms of
    their loans, we could sustain losses.
  ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS    ITEM 2.
    PROPERTIES      Owned/Office

Type of Office

Address

City/State

LeasedCorporate Headquarters

Headquarters(1)

3660 Wilshire Boulevard, Penthouse
    Suite A

Los Angeles, CA

LeasedCerritos Branch

Branch

11754 East Artesia Boulevard

Artesia, CA

LeasedDowntown Branch

Branch

950 South Los Angeles Street

Los Angeles, CA

LeasedFashion District Branch

Branch

726 East 12th Street,
    Suite 211

Los Angeles, CA

LeasedGarden Grove Branch

Branch

9820 Garden Grove Boulevard

Garden Grove, CA

OwnedGardena Branch

Branch

2001 West Redondo Beach
    Boulevard

Gardena, CA

LeasedIrvine Branch

Branch

14474 Culver Drive, Suite D

Irvine, CA

LeasedKoreatown Galleria Branch

Branch

3250 West Olympic Boulevard,
    Suite 200

Los Angeles, CA

LeasedKoreatown Plaza Branch

Branch(2)

928 South Western Avenue,
    Suite 260

Los Angeles, CA

LeasedMid-Olympic Branch

Branch(3)

3099 West Olympic Boulevard

Los Angeles, CA

OwnedOlympic Branch

Branch(4)

3737 West Olympic Boulevard

Los Angeles, CA

OwnedRowland Heights Branch

Branch

18720 East Colima Road

Rowland Heights, CA

LeasedSan Diego Branch

Branch

4637 Convoy Street, Suite 101

San Diego, CA

LeasedSan Francisco Branch

Branch

1491 Webster Street

San Francisco, CA

LeasedSilicon Valley Branch

Branch

2765 El Camino Real

Santa Clara, CA

LeasedSouth Cerritos Branch

Branch

11900 South Street, Suite 109

Cerritos, CA

LeasedTorrance Branch

Branch

2370 Crenshaw Boulevard, Suite H

Torrance, CA

LeasedVan Nuys Branch

Branch

14427 Sherman Way

Van Nuys, CA

LeasedVermont Branch

Branch(5)

933 South Vermont Avenue

Los Angeles, CA

OwnedWest Garden Grove Branch

Branch

9122 Garden Grove Boulevard

Garden Grove, CA

OwnedWest Torrance Branch

Branch

21838 Hawthorne Boulevard

Torrance, CA

LeasedWestern Branch

Branch

120 South Western Avenue

Los Angeles, CA

LeasedWilshire Branch

Main
    Branch(6)

3660 Wilshire Boulevard,
    Suite 103

Los Angeles, CA

LeasedCommercial Loan Department

Loan
    Office(1)

3660 Wilshire Boulevard,
    Suite 1050

Los Angeles, CA

LeasedSBA Loan Department

Loan
    Office(1)

3327 Wilshire Boulevard

Los Angeles, CA

LeasedAtlanta LPO

Loan
    Office(1)

3585 Peachtree Industrial
    Boulevard, Suite 144

Duluth, GA

LeasedChicago LPO

Loan
    Office(1)

6200 North Hiawatha, Suite 235

Chicago, IL

LeasedDallas LPO

Loan
    Office(1)

2711 LBJ Freeway, Suite 114

Farmers Branch, TX

Leased 17




---



##### Table of Contents



Owned/Office

Type of Office

Address

City/State

LeasedDenver LPO

Loan
    Office(1)

3033 South Parker Road,
    Suite 340

Aurora, CO

LeasedNorthern California LPO

Loan
    Office(1)

39899 Balentine Drive,
    Suite 200

Newark, CA

LeasedNorthwest Region LPO No. 1

Loan
    Office(1)

33110 Pacific Highway South,
    Suite 4

Federal Way, WA

LeasedNorthwest Region LPO No. 2

Loan
    Office(1)

3500 108th Avenue Northeast,
    Suite 280

Bellevue, WA

LeasedVirginia LPO

Loan
    Office(1)

7535 Little River Turnpike,
    Suite 200B

Annandale, VA

Leased     (1)
    
    Deposits are not accepted at this facility.(2)
    
    Residential Mortgage Center is also located at this
    facility.(3)
    
    Auto Loan Center and Consumer Loan Center are also
    located at this facility.(4)
    
    Training Facility is also located at this facility.(5)
    
    Administrative offices are also located at this facility.(6)
    
    International Finance Department is also located at this
    facility.    ITEM 3.
    LEGAL
    PROCEEDINGS    ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS   18




---



##### Table of Contents



PART II  ITEM 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES  Market
    Information
    High


Low


Cash Dividend2006:Fourth Quarter

$
22.88


$
18.89


$
0.06 per shareThird Quarter

$
20.00


$
18.13


$
0.06 per shareSecond Quarter

$
20.46


$
17.09


$
0.06 per shareFirst Quarter

$
19.95


$
17.04


$
0.06 per share2005:Fourth Quarter

$
20.42


$
16.51


$
0.05 per shareThird Quarter

$
19.72


$
16.27


$
0.05 per shareSecond Quarter

$
17.90


$
14.05


$
0.05 per shareFirst Quarter

$
19.19


$
15.62


$
0.05 per share     Dividends
    Item 1.
    Business  Dividends and Other Transfers of
    Funds.
  Securities
    Authorized for Issuance Under Equity Compensation
    Plans
    Number of SecuritiesRemaining Available forNumber of Securities to be


Weighted-Average


Future Issuance UnderIssued Upon Exercise of


Exercise Price of


Equity CompensationOutstanding Options,


Outstanding Options,


Plans (Excluding SecuritiesWarrants and Rights


Warrants and Rights


Reflected in Column (a))(a)


(b)Equity Compensation Plans Approved
    By Security Holders


1,755,813


$
15.31



2,206,092Equity Compensation Plans Not
    Approved By Security Holders


678,502(1
)

$
13.45



Total Equity Compensation
    Plans


2,434,315


$
14.79



2,206,092     (1)
    
    Composed of: a) stock options granted to Chief Executive
    Officer to purchase 350,000 shares of common stock at an
    exercise price of $17.165 per share with vesting in equal annual
    installments of 16.66%, subject to accelerated vesting upon
    certain corporate transactions, and expiring no later than
    November 3, 2014; and b) remaining stock warrants
    issued to affiliates of Castle Creek Financial LLC (for services
    rendered in connection with the placement of Hanmi
    Financials equity securities) to purchase a total of
    328,502 shares of common stock at an exercise price of
    $9.50 per share. 19




---



##### Table of Contents



Performance
    Graph
  ®
  COMPARISON
    OF CUMULATIVE TOTAL RETURN ON $100 INVESTMENT
    AMONG HANMI FINANCIAL, NASDAQ COMPOSITE
    ®
    (U.S.) INDEX AND S&P 500 FINANCIALS INDEX COMPARATIVE
    RETURN
  
  December 31,Index



Symbol




2001




2002




2003




2004




2005




2006Hanmi Financial



HAFC




100.00




125.24




148.62




270.18




268.53




338.74NASDAQ Composite



^IXIC




100.00




68.47




102.71




111.53




113.06




123.82S&P 500 Financials



S5FINL




100.00




83.58




106.92




115.72




120.03




139.43   ITEM 6.
    SELECTED
    FINANCIAL DATA  Item 7. Managements Discussion and
    Analysis of Financial Condition and Results of Operations.
 20




---



##### Table of Contents



As of and for the Year Ended December 31,2006


2005


2004


2003


2002(Dollars in thousands, except for per share data)SUMMARY STATEMENT OF
    INCOME:Interest Income

$
260,189


$
200,941


$
135,554


$
77,417


$
69,316Interest Expense


106,429



62,111



32,617



20,796



21,345Net Interest Income Before
    Provision for Credit Losses


153,760



138,830



102,937



56,621



47,971Provision for Credit Losses


7,173



5,395



2,907



5,680



4,800Non-Interest Income


35,604



30,382



26,211



20,022



21,204Non-Interest Expenses


75,954



69,133



66,566



39,325



38,333Income Before Provision for Income
    Taxes


106,237



94,684



59,675



31,638



26,042Provision for Income Taxes


40,588



36,455



22,975



12,425



9,012NET INCOME

$
65,649


$
58,229


$
36,700


$
19,213


$
17,030SUMMARY STATEMENT OF FINANCIAL
    CONDITION:Cash and Cash Equivalents

$
138,501


$
163,477


$
127,164


$
62,595


$
122,772Total Investment Securities


391,579



443,912



418,973



414,616



279,548Loans Receivable,
    Net(1)


2,837,390



2,469,080



2,234,842



1,248,399



975,154Total Assets


3,725,243



3,414,252



3,104,188



1,787,139



1,457,313Total Deposits


2,944,715



2,826,114



2,528,807



1,445,835



1,283,979Total Liabilities


3,238,126



2,987,475



2,704,278



1,647,672



1,332,845Total Shareholders Equity


487,117



426,777



399,910



139,467



124,468Tangible Equity


273,159



209,028



178,791



137,424



122,304Average Net Loans


2,721,229



2,359,439



1,912,534



1,103,765



882,625Average Investment Securities


414,672



418,750



425,537



379,635



244,675Average Interest-Earning Assets


3,214,761



2,871,564



2,387,412



1,538,820



1,222,050Average Total Assets


3,602,181



3,249,190



2,670,701



1,623,214



1,308,885Average Deposits


2,881,448



2,632,254



2,129,724



1,416,564



1,164,562Average Borrowings


221,347



165,482



223,780



63,138



21,847Average Interest-Bearing
    Liabilities


2,367,389



2,046,227



1,687,688



1,057,249



854,858Average Shareholders Equity


458,227



417,813



293,313



132,369



112,927Average Tangible Equity


242,362



198,527



143,262



130,252



110,762PER SHARE DATA:Earnings Per Share 
    Basic

$
1.34


$
1.18


$
0.87


$
0.68


$
0.62Earnings Per Share 
    Diluted

$
1.33


$
1.17


$
0.84


$
0.67


$
0.60Book Value Per
    Share(2)

$
9.93


$
8.77


$
8.11


$
4.92


$
4.47Tangible Book Value Per
    Share(3)

$
5.57


$
4.30


$
3.62


$
4.85


$
4.39Cash Dividends Per Share

$
0.24


$
0.20


$
0.20


$
0.20


$
Common Shares Outstanding


49,076,613



48,658,798



49,330,704



28,326,820



27,830,866     (1)
    
    Loans are net of deferred fees and related direct costs.(2)
    
    Total shareholders equity divided by common shares
    outstanding.(3)
    
    Tangible equity divided by common shares outstanding. 21




---



##### Table of Contents



As of and for the Year Ended December 31,2006


2005


2004


2003


2002SELECTED PERFORMANCE
    RATIOS:Return on Average
    Assets(4)


1.82
%


1.79
%


1.37
%


1.18
%


1.30
%Return on Average
    Shareholders
    Equity(5)


14.33
%


13.94
%


12.51
%


14.51
%


15.08
%Return on Average Tangible
    Equity(6)


27.09
%


29.33
%


25.62
%


14.75
%


15.38
%Net Interest
    Spread(7)


3.59
%


3.96
%


3.75
%


3.06
%


3.17
%Net Interest
    Margin(8)


4.78
%


4.83
%


4.31
%


3.68
%


3.93
%Efficiency
    Ratio(9)


40.11
%


40.86
%


51.54
%


51.31
%


55.41
%Dividend Payout
    Ratio(10)


17.91
%


16.95
%


22.99
%


29.41
%


Average Shareholders Equity
    to Average Total Assets


12.72
%


12.86
%


10.98
%


8.15
%


8.63
%SELECTED CAPITAL
    RATIOS:Total Capital to Total
    Risk-Weighted Assets:Hanmi Financial


12.55
%


12.04
%


11.98
%


11.13
%


12.14
%Hanmi Bank


12.28
%


11.98
%


11.80
%


11.09
%


11.94
%Tier 1 Capital to Total
    Risk-Weighted Assets:Hanmi Financial


11.58
%


11.03
%


10.93
%


10.05
%


11.01
%Hanmi Bank


11.31
%


10.96
%


10.75
%


10.00
%


10.81
%Tier 1 Capital to Average
    Total Assets:Hanmi Financial


10.08
%


9.11
%


8.93
%


7.80
%


8.50
%Hanmi Bank


9.85
%


9.06
%


8.78
%


7.75
%


8.34
%SELECTED ASSET QUALITY
    RATIOS:Non-Performing Loans to Total
    Gross
    Loans(11)


0.50
%


0.41
%


0.27
%


0.68
%


0.65
%Non-Performing Assets to Total
    Assets(12)


0.38
%


0.30
%


0.19
%


0.48
%


0.44
%Net Loan Charge-Offs to
    Average Total Gross Loans


0.17
%


0.12
%


0.19
%


0.29
%


0.28
%Allowance for Loan Losses to Total
    Gross Loans


0.96
%


1.00
%


1.00
%


1.06
%


1.14
%Allowance for Loan Losses to
    Non-Performing Loans


193.86
%


246.40
%


377.49
%


154.13
%


173.81
%     (4)
    
    Net income divided by average total assets.(5)
    
    Net income divided by average shareholders equity.(6)
    
    Net income divided by average tangible equity.(7)
    
    Average yield earned on interest-earning assets less average
    rate paid on interest-bearing liabilities.(8)
    
    Net interest income before provision for credit losses
    divided by average interest-earning assets.(9)
    
    Total non-interest expenses divided by the sum of net
    interest income before provision for credit losses and total
    non-interest income.(10)
    
    Dividends declared per share divided by basic earnings per
    share.(11)
    
    Non-performing loans consist of non-accrual loans, loans past
    due 90 days or more and restructured loans.(12)
    
    Non-performing assets consist of non-performing loans and
    other real estate owned. 22




---



##### Table of Contents



Non-GAAP Financial
    Measures
  Return
    on Average Tangible Equity
      Year Ended December 31,2006


2005


2004


2003


2002(Dollars in thousands)Average Shareholders Equity

$
458,227


$
417,813


$
293,313


$
132,369


$
112,927Less Average Goodwill and Core
    Deposit Intangible Assets


(215,865
)


(219,286
)


(150,051
)


(2,117
)


(2,165
)Average Tangible
    Equity

$
242,362


$
198,527


$
143,262


$
130,252


$
110,762Return on Average
    Shareholders Equity


14.33
%


13.94
%


12.51
%


14.51
%


15.08
%Effect of Average Goodwill and
    Core Deposit Intangible Assets


12.76
%


15.39
%


13.11
%


0.24
%


0.30
%Return on Average Tangible
    Equity


27.09
%


29.33
%


25.62
%


14.75
%


15.38
%   Tangible
    Book Value Per Share
   23




---



##### Table of Contents



December 31,2006


2005


2004


2003


2002(Dollars in thousands, except per share amounts)Total Shareholders Equity

$
487,117


$
426,777


$
399,910


$
139,467


$
124,468Less Goodwill and Core Deposit
    Intangible Assets


(213,958
)


(217,749
)


(221,119
)


(2,043
)


(2,164
)Tangible Equity

$
273,159


$
209,028


$
178,791


$
137,424


$
122,304Book Value Per Share

$
9.93


$
8.77


$
8.11


$
4.92


$
4.47Effect of Goodwill and Core
    Deposit Intangible Assets


(4.36
)


(4.47
)


(4.49
)


(0.07
)


(0.08
)Tangible Book Value Per
    Share

$
5.57


$
4.30


$
3.62


$
4.85


$
4.39   ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS    Item 1A. Risk Factors.
  CRITICAL
    ACCOUNTING POLICIES
  Notes to Consolidated Financial Statements.
  Allowance for Loan Losses Financial Condition 
    Allowance for Loan Losses and Allowance for Off-Balance Sheet
    Items, Results of Operations  Provision
    for Credit Losses Notes to Consolidated
    Financial Statements, Note 1  Summary of
    Significant Accounting Policies
 24




---



##### Table of Contents



Loan Sales
  Notes to Consolidated Financial Statements,
    Note 1  Summary of Significant Accounting
    Policies Note 6  Loan Servicing Asset
  OVERVIEW
         25




---



##### Table of Contents



RESULTS
    OF OPERATIONS
  Net
    Interest Income, Net Interest Spread and Net Interest
    Margin     26




---



##### Table of Contents



Year Ended December 31,2006


2005


2004Interest


Average





Interest


Average





Interest


AverageAverage


Income/


Yield/


Average


Income/


Yield/


Average


Income/


Yield/Balance


Expense


Rate


Balance


Expense


Rate


Balance


Expense


Rate(Dollars in thousands)ASSETSInterest-Earning Assets:Gross Loans,
    Net(1)

$
2,747,922


$
239,075



8.70
%

$
2,382,230


$
180,845



7.59
%

$
1,933,761


$
117,999



6.10
%Municipal
    Securities(2)


72,694



3,087



4.25
%


74,166



3,122



4.21
%


70,372



3,015



4.28
%Obligations of Other
    U.S. Government Agencies


122,503



5,148



4.20
%


102,703



4,002



3.90
%


90,336



3,374



3.73
%Other Debt Securities


219,475



10,120



4.61
%


241,881



10,271



4.25
%


264,829



10,261



3.87
%Equity Securities


24,684



1,354



5.49
%


23,571



1,107



4.70
%


15,041



716



4.76
%Federal Funds Sold


27,410



1,402



5.11
%


46,799



1,589



3.40
%


12,772



183



1.43
%Term Federal Funds Sold


41



2



4.88
%






















Interest-Earning Deposits


32



1



4.04
%


214



5



2.34
%


301



6



1.99
%Total Interest-Earning Assets


3,214,761



260,189



8.09
%


2,871,564



200,941



7.00
%


2,387,412



135,554



5.68
%Noninterest-Earning Assets:Cash and Cash Equivalents


93,535











92,245











76,064Allowance for Loan Losses


(26,693
)










(22,791
)










(21,227
)Other Assets


320,578











308,172











228,452Total Noninterest-Earning Assets


387,420











377,626











283,289Total Assets

$
3,602,181










$
3,249,190










$
2,670,701LIABILITIES AND
    SHAREHOLDERS EQUITYInterest-Bearing Liabilities:Deposits:Savings

$
107,811



1,853



1.72
%

$
138,167



2,130



1.54
%

$
131,589



1,790



1.36
%Money Market Checking and NOW
    Accounts


471,780



14,539



3.08
%


539,678



12,964



2.40
%


466,880



8,098



1.73
%Time Deposits of $100,000 or More


1,286,202



64,184



4.99
%


959,904



31,984



3.33
%


611,555



10,966



1.79
%Other Time Deposits


280,249



12,460



4.45
%


242,996



7,114



2.93
%


253,884



5,414



2.13
%FHLB Advances and Other Borrowings


138,941



6,977



5.02
%


83,076



3,017



3.63
%


141,374



3,305



2.34
%Junior Subordinated Debentures


82,406



6,416



7.79
%


82,406



4,902



5.95
%


82,406



3,044



3.69
%Total Interest-Bearing Liabilities


2,367,389



106,429



4.50
%


2,046,227



62,111



3.04
%


1,687,688



32,617



1.93
%Noninterest-Bearing Liabilities:Demand Deposits


735,406











751,509











665,816Other Liabilities


41,159











33,641











23,884Total Noninterest-Bearing
    Liabilities


776,565











785,150











689,700Total Liabilities


3,143,954











2,831,377











2,377,388Shareholders Equity


458,227











417,813











293,313Total Liabilities and
    Shareholders Equity

$
3,602,181










$
3,249,190










$
2,670,701Net Interest Income





$
153,760










$
138,830










$
102,937Net Interest
    Spread(3)










3.59
%










3.96
%










3.75
%Net Interest
    Margin(4)










4.78
%










4.83
%










4.31
%     (1)
    
    Loans are net of deferred fees
    and related direct costs. Loan fees have been included in the
    calculation of interest income. Loan fees were
    $4.8 million, $6.3 million and $6.2 million for
    the years ended December 31, 2006, 2005 and 2004,
    respectively.(2)
    
    Tax-exempt income, computed on a
    tax-equivalent basis using an effective marginal rate of
    35 percent, was $4.7 million, $4.8 million and
    $4.6 million for the years ended December 31, 2006,
    2005 and 2004, respectively. Yields on tax-exempt income were
    6.53 percent, 6.48 percent and 6.59 percent for
    the years ended December 31, 2006, 2005 and 2004,
    respectively.(3)
    
    Represents the average yield
    earned on interest-earning assets less the average rate paid on
    interest-bearing liabilities.(4)
    
    Represents net interest income
    as a percentage of average interest-earning assets. 27




---



##### Table of Contents



Year Ended December 31,2006 vs. 2005


2005 vs. 2004Increase (Decrease)


Increase (Decrease)Due to Change in


Due to Change inVolume


Rate


Total


Volume


Rate


Total(In thousands)Interest Income:Gross Loans, Net

$
29,839


$
28,391


$
58,230


$
30,620


$
32,226


$
62,846Municipal Securities


(63
)


28



(35
)


161



(54
)


107Obligations of Other
    U.S. Government Agencies


816



330



1,146



477



151



628Other Debt Securities


(994
)


843



(151
)


(929
)


939



10Equity Securities


54



193



247



401



(10
)


391Federal Funds Sold


(807
)


620



(187
)


930



476



1,406Term Federal Funds Sold


2







2











Interest-Earning Deposits


(10
)


6



(4
)


(2
)


1



(1
)Total Interest Income


28,837



30,411



59,248



31,658



33,729



65,387Interest Expense:Savings


(503
)


226



(277
)


92



248



340Money Market Checking and NOW
    Accounts


(1,773
)


3,348



1,575



1,403



3,463



4,866Time Deposits of $100,000 or More


13,068



19,132



32,200



8,385



12,633



21,018Other Time Deposits


1,220



4,126



5,346



(241
)


1,941



1,700FHLB Advances and Other Borrowings


2,524



1,436



3,960



(1,685
)


1,397



(288
)Junior Subordinated Debentures






1,514



1,514







1,858



1,858Total Interest Expense


14,536



29,782



44,318



7,954



21,540



29,494Change in Net Interest
    Income

$
14,301


$
629


$
14,930


$
23,704


$
12,189


$
35,893        28




---



##### Table of Contents



29




---



##### Table of Contents



Provision
    for Credit Losses
      Non-Interest
    Income
    Year Ended December 31,2006


2005


2004(In thousands)Service Charges on Deposit Accounts

$
17,134


$
15,782


$
14,441Trade Finance Fees


4,567



4,269



4,044Remittance Fees


2,056



2,122



1,653Other Service Charges and Fees


2,359



2,496



1,486Bank-Owned Life Insurance Income


879



845



731Increase in Fair Value of
    Derivatives


1,074



1,105



232Other Income


616



625



493Gain on Sales of Loans


6,917



3,021



2,997Gain on Sales of Securities
    Available for Sale


2



117



134Total Non-Interest
    Income

$
35,604


$
30,382


$
26,211    30




---



##### Table of Contents



Notes to Consolidated
    Financial Statements, Note 16 
    Derivatives, Non-Interest
    Expenses.
    Non-Interest
    Expenses
    Year Ended December 31,2006


2005


2004(In thousands)Salaries and Employee Benefits

$
40,512


$
36,839


$
33,540Occupancy and Equipment


10,130



8,978



8,098Data Processing


4,939



4,844



4,540Advertising and Promotion


2,997



2,913



3,001Supplies and Communications


2,391



2,556



2,433Professional Fees


1,910



2,201



2,068Amortization of Core Deposit
    Intangible


2,379



2,785



1,872Decrease in Fair Value of Embedded
    Option


582



748



Other Operating Expenses


10,114



7,778



8,961Merger-Related Expenses






(509
)


2,053Total Non-Interest
    Expenses

$
75,954


$
69,133


$
66,566  31




---



##### Table of Contents



Income
    Taxes
   32




---



##### Table of Contents



Notes to Consolidated Financial
    Statements, Note 11  Income Taxes,
    FINANCIAL
    CONDITION
  Loan
    Portfolio
    and/or
  loan-to-value
     33




---



##### Table of Contents



Amount of Loans Outstanding as of December 31,2006


2005


2004


2003


2002(In thousands)Real Estate Loans:Commercial Property

$
757,428


$
733,650


$
783,539


$
397,853


$
284,465Construction


202,207



152,080



92,521



43,047



39,237Residential
    Property(1)


81,758



88,442



80,786



58,477



47,891Total Real Estate Loans


1,041,393



974,172



956,846



499,377



371,593Commercial and Industrial Loans:Commercial Term Loans


1,202,612



945,210



754,108



433,398



346,522Commercial Lines of Credit


225,630



224,271



201,940



120,856



117,304SBA
    Loans(2)


171,631



155,491



166,285



91,717



66,443International Loans


126,561



106,520



95,936



65,040



42,641Total Commercial and Industrial
    Loans


1,726,434



1,431,492



1,218,269



711,011



572,910Consumer
    Loans(3)


100,121



92,154



87,526



54,878



44,416Total Gross Loans

$
2,867,948


$
2,497,818


$
2,262,641


$
1,265,266


$
988,919     (1)
    
    As of December 31, 2006 and 2005, loans held for sale
    totaling $630,000 and $1.1 million, respectively, were
    included at the lower of cost or fair value.(2)
    
    As of December 31, 2006, 2005, 2004, 2003 and 2002,
    loans held for sale totaling $23.2 million, $0,
    $3.9 million, $25.5 million and $12.5 million,
    respectively, were included at the lower of cost or market.(3)
    
    Consumer loans includes HELOCs.    Percentage Distribution of Loansas of December 31,2006


2005


2004


2003


2002Real Estate Loans:Commercial Property


26.4
%


29.4
%


34.6
%


31.4
%


28.8
%Construction


7.1
%


6.1
%


4.1
%


3.4
%


4.0
%Residential Property


2.8
%


3.5
%


3.6
%


4.7
%


4.8
%Total Real Estate Loans


36.3
%


39.0
%


42.3
%


39.5
%


37.6
%Commercial and Industrial Loans:Commercial Term Loans


41.9
%


37.8
%


33.3
%


34.3
%


35.0
%Commercial Lines of Credit


7.9
%


9.0
%


8.9
%


9.6
%


11.9
%SBA Loans


6.0
%


6.2
%


7.3
%


7.2
%


6.7
%International Loans


4.4
%


4.3
%


4.3
%


5.1
%


4.3
%Total Commercial and Industrial
    Loans


60.2
%


57.3
%


53.8
%


56.2
%


57.9
%Consumer Loans


3.5
%


3.7
%


3.9
%


4.3
%


4.5
%Total Gross Loans


100.0
%


100.0
%


100.0
%


100.0
%


100.0
%  34




---



##### Table of Contents



December 31,2006


2005(In thousands)Commitments to Extend Credit

$
578,347


$
555,736Commercial Letters of Credit


65,158



58,036Standby Letters of Credit


48,289



42,768Unused Credit Card Lines


17,031



14,892Total Undisbursed
    Loan Commitments

$
708,825


$
671,432     After OneWithin


But Within


AfterOne Year


Five Years


Five Years


Total(In thousands)Real Estate Loans:Commercial Property

$
503,372


$
143,462


$
110,594


$
757,428Construction


202,207











202,207Residential Property


24,816



33,546



23,396



81,758Total Real Estate Loans


730,395



177,008



133,990



1,041,393Commercial and Industrial Loans:Commercial Term Loans


894,040



185,956



122,616



1,202,612Commercial Lines of Credit


225,630











225,630SBA Loans


159,395



872



11,364



171,631International Loans


126,561











126,561Total Commercial and Industrial
    Loans


1,405,626



186,828



133,980



1,726,434Consumer Loans


60,725



39,396







100,121Total Gross Loans

$
2,196,746


$
403,232


$
267,970


$
2,867,948Loans With Predetermined Interest
    Rates

$
69,784


$
385,870


$
267,970


$
723,624Loans With Variable Interest Rates

$
2,126,962


$
17,362


$



$
2,144,324     Non-Performing
    Assets
     35




---



##### Table of Contents



December 31,2006


2005


2004


2003


2002(Dollars in thousands)Non-Performing Loans:Non-Accrual Loans:Real Estate Loans:Commercial Property

$
246


$



$



$
527


$
Residential Property






474



112



1,126



287Commercial and Industrial Loans


13,862



9,574



5,510



6,398



5,522Consumer Loans


105



74



184



53



49Total Non-Accrual Loans


14,213



10,122



5,806



8,104



5,858Loans 90 Days or More Past Due and
    Still Accruing (as to Principal or Interest):Real Estate Loans:Commercial Property














557



356Residential Property


















261Commercial and Industrial Loans










169







Consumer Loans


2



9



39







Total Loans 90 Days or More Past
    Due and Still Accruing (as to Principal or Interest)


2



9



208



557



617Total Non-Performing Loans


14,215



10,131



6,014



8,661



6,475Other Real Estate Owned


















Total Non-Performing
    Assets

$
14,215


$
10,131


$
6,014


$
8,661


$
6,475Troubled Debt
    Restructurings

$
3,310


$
642


$
1,227


$
491


$
Non-Performing Loans as a
    Percentage of Total Gross Loans


0.50
%


0.41
%


0.27
%


0.68
%


0.65
%Non-Performing Assets as a
    Percentage of Total Assets


0.38
%


0.30
%


0.19
%


0.48
%


0.44
%  36




---



##### Table of Contents



Allowance
    for Loan Losses and Allowance for Off-Balance Sheet
    Items
    December 31,2006


2005


2004


2003


2002Allowance for Loan

Allowance


Loans


Allowance


Loans


Allowance


Loans


Allowance


Loans


Allowance


LoansLosses Applicable To

Amount


Receivable


Amount


Receivable


Amount


Receivable


Amount


Receivable


Amount


Receivable(Dollars in thousands)Real Estate Loans:Commercial Property

$
2,101


$
757,428


$
2,043


$
733,650


$
1,854


$
783,539


$
374


$
397,853


$
337


$
284,465Construction


586



202,207



475



152,080



349



92,521



427



43,047



267



39,237Residential
    Property(1)


19



81,128



19



87,377



155



80,786



191



58,477



149



47,891Total Real Estate Loans


2,706



1,040,763



2,537



973,107



2,358



956,846



992



499,377



753



371,593Commercial and Industrial
    Loans(1)


23,099



1,703,194



21,035



1,431,492



19,051



1,214,419



11,376



685,557



9,773



560,370Consumer Loans


1,752



100,121



1,391



92,154



1,293



87,526



846



54,878



652



44,416Unallocated


























135







76



Total

$
27,557


$
2,844,078


$
24,963


$
2,496,753


$
22,702


$
2,258,791


$
13,349


$
1,239,812


$
11,254


$
976,379     (1)
    
    Loans held for sale excluded.         37




---



##### Table of Contents



As of and for the Year Ended December 31,2006


2005


2004


2003


2002(Dollars in thousands)Allowance for Loan
    Losses:Balance  Beginning of
    Year

$
24,963


$
22,702


$
13,349


$
11,254


$
9,408Allowance for Loan
    Losses  PUB Acquisition










10,566







Charge-Offs:Real Estate Loans:Commercial Property














198



Commercial and Industrial Loans


5,333



4,371



5,004



3,687



3,213Consumer Loans


796



827



481



538



358Total Charge-Offs


6,129



5,198



5,485



4,423



3,571Recoveries on Loans Previously
    Charged Off:Real Estate Loans:Commercial Property


406











21



Residential Property














6



Commercial and Industrial Loans


957



2,193



1,702



859



871Consumer Loans


187



201



78



322



105Total Recoveries on Loans
    Previously Charged Off


1,550



2,394



1,780



1,208



976Net Loan Charge-Offs


4,579



2,804



3,705



3,215



2,595Provision Charged to Operating
    Expenses


7,173



5,065



2,492



5,310



4,441Balance  End of
    Year

$
27,557


$
24,963


$
22,702


$
13,349


$
11,254Allowance for Off-Balance Sheet
    Items:Balance  Beginning of
    Year

$
2,130


$
1,800


$
1,385


$
1,015


$
656Provision Charged to Operating
    Expenses






330



415



370



359Balance  End of
    Year

$
2,130


$
2,130


$
1,800


$
1,385


$
1,015Ratios:Net Loan Charge-Offs to
    Average Total Gross Loans


0.17
%


0.12
%


0.19
%


0.29
%


0.29
%Net Loan Charge-Offs to Total
    Gross Loans at End of Period


0.16
%


0.11
%


0.16
%


0.25
%


0.26
%Allowance for Loan Losses to
    Average Total Gross Loans


1.00
%


1.05
%


1.17
%


1.20
%


1.26
%Allowance for Loan Losses to Total
    Gross Loans at End of Period


0.96
%


1.00
%


1.00
%


1.06
%


1.14
%Net Loan Charge-Offs to
    Allowance for Loan Losses


16.62
%


11.23
%


16.32
%


24.08
%


23.06
%Net Loan Charge-Offs to
    Provision Charged to Operating Expenses


63.84
%


55.36
%


148.68
%


60.55
%


58.43
%Allowance for Loan Losses to
    Non-Performing Loans


193.86
%


246.40
%


377.55
%


154.13
%


173.81
%Balances:Average Total Gross Loans
    Outstanding During Period

$
2,751,565


$
2,386,575


$
1,938,422


$
1,119,860


$
895,394Total Gross Loans Outstanding at
    End of Period

$
2,867,948


$
2,497,818


$
2,262,641


$
1,265,266


$
988,919Non-Performing Loans at End of
    Period

$
14,215


$
10,131


$
6,014


$
8,661


$
6,475    38




---



##### Table of Contents




    reviewing the adversely graded, delinquent or otherwise
    questionable loans;
    generating an estimate of the loss potential in each such loan;
    adjusting a qualitative factor for industry, economic or other
    external factors; and
    evaluating the present status of each loan.    Investment
    Portfolio
       39




---



##### Table of Contents



Investment Portfolio as of December 31,2006


2005


2004Amortized


Fair


Amortized


Fair


Amortized


FairCost


Value


Cost


Value


Cost


Value(In thousands)Securities Held to
    Maturity:Municipal Bonds

$
693


$
693


$
692


$
692


$
691


$
691Mortgage-Backed Securities


274



276



357



359



399



402Total Securities Held to
    Maturity

$
967


$
969


$
1,049


$
1,051


$
1,090


$
1,093Securities Available for
    Sale:Mortgage-Backed Securities

$
123,614


$
121,608


$
149,311


$
147,268


$
148,706


$
149,174U.S. Government Agency
    Securities


119,768



118,244



129,589



127,813



89,345



89,677Municipal Bonds


69,966



71,710



71,536



73,220



71,771



73,616Collateralized Mortgage Obligations


67,605



66,113



83,068



81,456



93,172



92,539Corporate Bonds


8,090



7,887



8,235



8,053



8,380



8,444Other Securities


4,999



5,050



4,999



5,053



4,437



4,433Total Securities Available for
    Sale

$
394,042


$
390,612


$
446,738


$
442,863


$
415,811


$
417,883   and/or
  After One


After FiveWithin


But Within


But Within


AfterOne Year


Five Years


Ten Years


Ten YearsAmount


Yield


Amount


Yield


Amount


Yield


Amount


Yield(Dollars in thousands)Mortgage-Backed
    Securities(1)

$
43,043



4.43
%

$
40,845



4.80
%

$
32,117



4.87
%

$
5,877



5.24
%U.S. Government Agency
    Securities


39,599



4.17
%


78,644



4.36
%














Municipal
    Bonds(2)










2,124



4.91
%


8,669



6.22
%


61,610



6.34
%Collateralized Mortgage
    Obligations(1)


18,926



4.22
%


41,936



4.44
%


5,252



4.33
%






Corporate Bonds










7,887



4.53
%














Other Securities


5,050



6.75
%






















$
106,618



4.40
%

$
171,436



4.50
%

$
46,038



5.06
%

$
67,487



6.24
%     (1)
    
    Mortgage-backed securities and collateralized mortgage
    obligations have contractual maturities through 2036. The above
    table is based on the expected prepayment schedule.(2)
    
    The yield on municipal bonds has been computed on a
    tax-equivalent basis, using an effective marginal rate of
    35 percent. 40




---



##### Table of Contents



Deposits
            Year Ended December 31,2006


2005


2004Average


Average


Average


Average


Average


AverageBalance


Rate


Balance


Rate


Balance


Rate(Dollars in thousands)Demand, Noninterest-Bearing

$
735,406






$
751,509






$
665,816



Savings


107,811



1.72
%


138,167



1.54
%


131,589



1.36
%Money Market Checking and NOW
    Accounts


471,780



3.08
%


539,678



2.40
%


466,880



1.73
%Time Deposits of $100,000 or More


1,286,202



4.99
%


959,904



3.33
%


611,555



1.79
%Other Time Deposits


280,249



4.45
%


242,996



2.93
%


253,884



2.13
%Total Deposits

$
2,881,448






$
2,632,254






$
2,129,724     December 31,2006


2005


2004(Dollars in thousands)Three Months or Less

$
689,309


$
587,251


$
378,205Over Three Months Through Six
    Months


414,687



248,338



232,231Over Six Months Through Twelve
    Months


274,402



321,714



131,775Over Twelve Months


4,960



4,647



14,369$
1,383,358


$
1,161,950


$
756,580  41




---



##### Table of Contents



FHLB
    Advances and Other Borrowings
      Junior
    Subordinated Debentures
    INTEREST
    RATE RISK MANAGEMENT
      After


After OneLess


Three


Year ButThan


Months


Within


After


Non-Three


But Within


Five


Five


Interest-Months


One Year


Years


Years


Sensitive


Total(Dollars in thousands)ASSETSCash

$



$



$



$



$
97,501


$
97,501Federal Funds Sold


41,000



















41,000Term Federal Funds Sold


5,000



















5,000Federal Reserve Bank and Federal
    HomeLoan Bank Stock














24,922







24,922Securities:Fixed Rate


6,906



55,309



171,437



113,524







347,176Floating Rate


9,850



3,325



26,178



5,050







44,403Loans:Fixed Rate


41,199



45,894



385,868



267,969







740,930Floating Rate


1,884,321



20,798



204,027



3,659







2,112,805Non-Accrual


















14,213



14,213Deferred Loan Fees and
    Allowance for Loan Losses


















(30,558
)


(30,558
)Other Assets






23,592







6,515



297,744



327,851Total Assets

$
1,988,276


$
148,918


$
787,510


$
421,639


$
378,900


$
3,725,243 42




---



##### Table of Contents



After


After OneLess


Three


Year ButThan


Months


Within


After


Non-Three


But Within


Five


Five


Interest-Months


One Year


Years


Years


Sensitive


Total(Dollars in thousands)LIABILITIES AND
    SHAREHOLDERS EQUITYLiabilitiesDeposits:Demand Deposits

$
43,944


$
147,184


$
353,240


$
183,979


$



$
728,347Savings


13,027



31,258



44,375



10,595







99,255Money Market Checking and NOW
    Accounts


65,322



125,238



142,165



105,542







438,267Time Deposits:Fixed Rate


812,061



855,730



10,768



141







1,678,700Floating Rate


146



















146FHLB Advances and Other Borrowings


929



45,000



118,252



4,856







169,037Junior Subordinated Debentures


82,406



















82,406Other Liabilities


















41,968



41,968Shareholders Equity


















487,117



487,117Total Liabilities and
    Shareholders Equity

$
1,017,835


$
1,204,410


$
668,800


$
305,113


$
529,085


$
3,725,243Repricing Gap

$
970,441


$
(1,055,492
)

$
118,710


$
116,526


$
(150,185
)Cumulative Repricing Gap

$
970,441


$
(85,051
)

$
33,659


$
150,185


$
Cumulative Repricing Gap as a
    Percentage of Total Assets


26.05
%


(2.28
)%


0.90
%


4.03
%


Cumulative Repricing Gap as a
    Percentage of Interest-Earning Assets


29.26
%


(2.56
)%


1.01
%


4.53
%


   point-in-time
  less-than-three
 43




---



##### Table of Contents



Less Than Three Months


Less Than Twelve MonthsDecember 31,


December 31,2006


2005


2006


2005(Dollars in thousands)Cumulative Repricing Gap

$
970,441


$
972,608


$
(85,051
)

$
94,299Percentage of Total Assets


26.05
%


28.49
%


(2.28
)%


2.76
%Percentage of Interest-Earning
    Assets


29.26
%


32.25
%


(2.56
)%


3.13
%       Rate Shock TablePercentage Changes


Change in AmountChange in

Net


Economic


Net


EconomicInterest

Interest


Value of


Interest


Value ofRate

Income


Equity


Income


Equity(Dollars in thousands)200%


13.07
%


(9.80
)%

$
20,632


$
(47,657
)100%


6.52
%


(5.14
)%

$
10,287


$
(24,886
)(100%)


(6.55
)%


5.55
%

$
(10,337
)

$
26,845(200%)


(13.15
)%


11.39
%

$
(20,759
)

$
55,089
     LIQUIDITY
    AND CAPITAL RESOURCES
    and/or and/or
 44




---



##### Table of Contents



loans-to-assets
  December 31,Liquidity Ratios

2006


2005


2004Core Deposits/Total Assets


30.1
%


35.3
%


41.1
%Short-Term Non-Core Funding/Total
    Assets


46.0
%


41.8
%


33.2
%Net Loans/Total Assets


76.6
%


72.4
%


71.9
%Investments/Deposits


15.9
%


18.9
%


20.4
%Loans and Investments/Deposits


112.2
%


106.3
%


108.5
%Off-Balance Sheet Items/Total
    Assets


19.0
%


18.5
%


15.0
%     U.S.-based
      OFF-BALANCE
    SHEET ARRANGEMENTS
  Item 1. Business  Small Business
    Administration Guaranteed Loans Item 1. Business  Off-Balance Sheet
    Commitments.
 45




---



##### Table of Contents



CONTRACTUAL
    OBLIGATIONS
    More Than


More ThanOne Year


Three Yearsand Less


and Less


MoreLess Than


Than Three


Than Five


Than FiveContractual Obligations

One Year


Years


Years


Years


Total(In thousands)Time Deposits

$
1,667,937


$
4,972


$
5,796


$
141


$
1,678,846Commitments to Extend Credit


578,347















578,347Long-Term Debt Obligations


45,000



111,000



7,252



87,262



250,514Standby Letters of Credit


47,709



312







268



48,289Operating Lease Obligations


4,093



5,917



3,443



6,068



19,521Total Contractual
    Obligations

$
2,343,086


$
122,201


$
16,491


$
93,739


$
2,575,517   RECENTLY
    ISSUED ACCOUNTING STANDARDS
  Considering the Effects
    of Prior Year Misstatements when Quantifying Misstatements in
    Current Year Financial Statements.
        Fair
    Value Measurements.
  Accounting for Uncertainty in Income Taxes 
    an Interpretation of FASB Statement No. 109 Accounting for
    Income Taxes
 46




---



##### Table of Contents



Accounting for Servicing of Financial Assets,
  Accounting for Certain Hybrid Financial Instruments, an
    amendment of FASB Statements No. 133 and
    SFAS No. 140.
  
    permits fair value remeasurement for any hybrid financial
    instrument that contains an embedded derivative that otherwise
    would require bifurcation;
    clarifies which interest-only strips and principal-only strips
    are not subject to SFAS No. 133;
    establishes a requirement to evaluate interests in securitized
    financial assets to identify interests that are freestanding
    derivatives or hybrid financial instruments that contain an
    embedded derivative requiring bifurcation;
    clarifies that concentrations of credit risk in the form of
    subordinations are not embedded derivatives; and
    amends SFAS No. 140 to eliminate the prohibition on a
    qualified special purpose entity from holding a derivative
    financial instrument that pertains to a beneficial interest
    other than another derivative financial instrument.    ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  Item 7.
    Managements Discussion and Analysis of Financial Condition
    and Results of Operations  Interest Rate Risk
    Management  Liquidity and
    Capital Resources.
  ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA    ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE None.  ITEM 9A.
    CONTROLS
    AND PROCEDURES  Disclosure
    Controls and Procedures
    
    Hanmi Financials disclosure controls and procedures were
    effective as of the end of the period covered by this report in
    timely alerting them to material information relating to Hanmi
    Financial that is required to be included in Hanmi
    Financials periodic SEC filings; and 47




---



##### Table of Contents




    Hanmi Financials internal controls over financial
    reporting provide reasonable assurance regarding the reliability
    of financial reporting and the preparation of financial
    statements for external purposes in accordance with generally
    accepted accounting principles.      Managements
    Report on Internal Control Over Financial Reporting
    
    pertain to the maintenance of records that in reasonable detail
    accurately and fairly reflect the transactions and dispositions
    of the assets of the company;
    provide reasonable assurance that transactions are recorded as
    necessary to permit preparation of financial statements in
    accordance with generally accepted accounting principles;
    provide reasonable assurance that receipts and expenditures of
    the company are being made only in accordance with
    authorizations of management and directors of the
    company; and
    provide reasonable assurance regarding prevention or timely
    detection of unauthorized acquisition, use or disposition of the
    companys assets that could have a material effect on the
    consolidated financial statements.    Internal Control-Integrated Framework
     48




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  
  Internal Control-Integrated Framework
        Internal
    Control-Integrated Framework Internal Control-Integrated Framework
        49




---



##### Table of Contents



ITEM 9B.
    OTHER
    INFORMATION   PART III  ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE  The Board of
    Directors and Executive Officers Section 16(a) Beneficial Ownership Reporting
    Compliance
  Audit
    Committee Financial Expert
    Code of
    Ethics
  www.hanmi.com.
  ITEM 11.
    EXECUTIVE
    COMPENSATION  Executive
    Compensation
  ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS  Beneficial Ownership of
    Principal Stockholders and Management
  ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE  Certain Relationships and Related
    Transactions
  ITEM 14.
    PRINCIPAL
    ACCOUNTING FEES AND SERVICES  Independent Accountants
 50




---



##### Table of Contents



PART IV  ITEM 15.
    EXHIBITS,
    FINANCIAL STATEMENT SCHEDULES         51




---



##### Table of Contents



HANMI
    FINANCIAL CORPORATION AND SUBSIDIARY
  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
  PageReport of
    Independent Registered Public Accounting Firm


53Consolidated
    Statements of Financial Condition as of December 31, 2006
    and 2005


54Consolidated
    Statements of Income for the Years Ended December 31, 2006,
    2005 and 2004


55Consolidated
    Statements of Changes in Shareholders Equity and
    Comprehensive Income for the Years Ended December 31, 2006,
    2005 and 2004


56Consolidated
    Statements of Cash Flows for the Years Ended December 31,
    2006, 2005 and 2004


57Notes to
    Consolidated Financial Statements


58  52




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  
        Internal Control-Integrated
    Framework
  Share-Based Payment.
      53




---



##### Table of Contents



HANMI
    FINANCIAL CORPORATION AND SUBSIDIARY
  CONSOLIDATED
    STATEMENTS OF FINANCIAL CONDITION
  December 31,2006


2005(Dollars in thousands)ASSETSCash and Due From Banks

$
97,501


$
103,477Federal Funds Sold and Securities
    Purchased Under Agreements to Resell


41,000



60,000Cash and Cash Equivalents


138,501



163,477Term Federal Funds Sold


5,000



Securities Held to Maturity, at
    Amortized Cost (Fair Value: 2006  $969;
    2005  $1,051)


967



1,049Securities Available for Sale, at
    Fair Value


390,612



442,863Loans Receivable, Net of Allowance
    for Loan Losses of $27,557 and $24,963 at December 31, 2006
    and 2005, Respectively


2,813,520



2,468,015Loans Held for Sale, at the Lower
    of Cost or Fair Value


23,870



1,065Customers Liability on
    Acceptances


8,403



8,432Premises and Equipment, Net


20,075



20,784Accrued Interest Receivable


16,919



14,120Deferred Income Taxes


13,064



9,651Servicing Asset


4,579



3,910Goodwill


207,646



209,058Core Deposit Intangible


6,312



8,691Federal Reserve Bank Stock


11,733



12,350Federal Home Loan Bank Stock


13,189



12,237Bank-Owned Life Insurance


23,592



22,713Other Assets


27,261



15,837TOTAL ASSETS

$
3,725,243


$
3,414,252LIABILITIES AND
    SHAREHOLDERS EQUITYLIABILITIES:Deposits:Noninterest-Bearing

$
728,347


$
738,618Interest-Bearing:Savings


99,255



121,574Money Market Checking and NOW
    Accounts


438,267



526,171Time Deposits of $100,000 or More


1,383,358



1,161,950Other Time Deposits


295,488



277,801Total Deposits


2,944,715



2,826,114Accrued Interest Payable


22,582



11,911Acceptances Outstanding


8,403



8,432FHLB Advances and Other Borrowings


169,037



46,331Junior Subordinated Debentures


82,406



82,406Other Liabilities


10,983



12,281Total Liabilities


3,238,126



2,987,475COMMITMENTS AND CONTINGENCIES
    (Notes 18 and 19)SHAREHOLDERS EQUITY:Common Stock, $.001 Par Value;
    Authorized 200,000,000 Shares; Issued
    50,239,613 Shares (49,076,613 Shares Outstanding)
    and 49,821,798 Shares
    (48,658,798 Shares Outstanding) at December 31,
    2006 and 2005, Respectively


50



50Additional Paid-In Capital


344,810



339,991Unearned Compensation






(1,150
)Accumulated Other Comprehensive
    Loss  Unrealized Loss on Securities Available for
    Sale, Interest-Only Strips and Interest Rate Swaps, Net of
    Income Taxes of ($1,450) and ($1,671) at December 31, 2006
    and 2005, Respectively


(3,200
)


(4,383
)Retained Earnings


165,498



112,310507,158



446,818Less Treasury Stock, at Cost;
    1,163,000 Shares at December 31, 2006 and 2005


(20,041
)


(20,041
)Total Shareholders
    Equity


487,117



426,777TOTAL LIABILITIES AND
    SHAREHOLDERS EQUITY

$
3,725,243


$
3,414,252    54




---



##### Table of Contents



HANMI
    FINANCIAL CORPORATION AND SUBSIDIARY
   CONSOLIDATED STATEMENTS OF INCOME
  Year Ended December 31,2006


2005


2004(Dollars in thousands, Except Per Share Data)INTEREST INCOME:Interest and Fees on Loans

$
239,075


$
180,845


$
117,999Interest on Investments


19,710



18,507



17,372Interest on Federal Funds Sold


1,402



1,589



183Interest on Term Federal Funds Sold


2







Total Interest Income


260,189



200,941



135,554INTEREST EXPENSE:Interest on Deposits


93,036



54,192



26,268Interest on FHLB Advances and
    Other Borrowings


6,977



3,017



3,305Interest on Junior Subordinated
    Debentures


6,416



4,902



3,044Total Interest Expense


106,429



62,111



32,617NET INTEREST INCOME BEFORE
    PROVISION FOR CREDIT LOSSES


153,760



138,830



102,937Provision for Credit Losses


7,173



5,395



2,907NET INTEREST INCOME AFTER
    PROVISION FOR CREDIT LOSSES


146,587



133,435



100,030NON-INTEREST INCOME:Service Charges on Deposit Accounts


17,134



15,782



14,441Trade Finance Fees


4,567



4,269



4,044Remittance Fees


2,056



2,122



1,653Other Service Charges and Fees


2,359



2,496



1,486Bank-Owned Life Insurance Income


879



845



731Increase in Fair Value of
    Derivatives


1,074



1,105



232Other Income


616



625



493Gain on Sales of Loans


6,917



3,021



2,997Gain on Sales of Securities
    Available for Sale


2



117



134Total Non-Interest Income


35,604



30,382



26,211NON-INTEREST EXPENSES:Salaries and Employee Benefits


40,512



36,839



33,540Occupancy and Equipment


10,130



8,978



8,098Data Processing


4,939



4,844



4,540Advertising and Promotion


2,997



2,913



3,001Supplies and Communications


2,391



2,556



2,433Professional Fees


1,910



2,201



2,068Amortization of Core Deposit
    Intangible


2,379



2,785



1,872Decrease in Fair Value of Embedded
    Options


582



748



Other Operating Expenses


10,114



7,778



8,961Merger-Related Expenses






(509
)


2,053Total Non-Interest Expenses


75,954



69,133



66,566INCOME BEFORE PROVISION FOR INCOME
    TAXES


106,237



94,684



59,675Provision for Income Taxes


40,588



36,455



22,975NET INCOME

$
65,649


$
58,229


$
36,700EARNINGS PER SHARE:Basic

$
1.34


$
1.18


$
0.87Diluted

$
1.33


$
1.17


$
0.84WEIGHTED-AVERAGE
    SHARES OUTSTANDING:Basic


48,850,221



49,174,885



42,268,964Diluted


49,435,128



49,942,356



43,517,257DIVIDENDS DECLARED PER SHARE

$
0.24


$
0.20


$
0.20    55




---



##### Table of Contents



HANMI
    FINANCIAL CORPORATION AND SUBSIDIARY
  CONSOLIDATED
    STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY AND
    COMPREHENSIVE INCOME
  Shareholders EquityCommon Stock  Number of Shares











AccumulatedGross





Net











OtherShares





Shares





Additional





Comprehensive





Treasury


TotalIssued and


Treasury


Issued and


Common


Paid-in


Unearned


Income


Retained


Stock,


ShareholdersOutstanding


Shares


Outstanding


Stock


Capital


Compensation


(Loss)


Earnings


at Cost


Equity(Dollars in thousands)BALANCE 
    JANUARY 1, 2004


28,326,820







28,326,820


$
28


$
103,068


$



$
386


$
35,985


$



$
139,467Exercises of Stock Options and
    Stock Warrants


690,576







690,576



1



3,424



















3,425Stock Issued Through Private
    Placement


7,894,654







7,894,654



8



71,702



















71,710Stock Issued in PUB Acquisition


12,418,654







12,418,654



12



156,738



















156,750Cash Dividends






























(8,791
)






(8,791
)Comprehensive Income:Net Income






























36,700







36,700Change in Unrealized Gain on
    Securities Available for Sale, Interest-Only Strips and Interest
    Rate Swaps, Net of Tax


























649











649Total Comprehensive Income






































37,349BALANCE 
    DECEMBER 31, 2004


49,330,704







49,330,704



49



334,932







1,035



63,894







399,910Exercises of Stock Options


391,094







391,094



1



2,515



















2,516Restricted Stock Award


100,000







100,000







1,815



(1,815
)














Amortization of Unearned
    Compensation






















665















665Tax Benefit from Exercise of Stock
    Options


















729



















729Stock Repurchase






(1,163,000
)


(1,163,000
)






















(20,041
)


(20,041
)Cash Dividends






























(9,813
)






(9,813
)Comprehensive Income:Net Income






























58,229







58,229Change in Unrealized Gain on
    Securities Available for Sale, Interest-Only Strips and Interest
    Rate Swaps, Net of Tax


























(5,418
)










(5,418
)Total Comprehensive Income






































52,811BALANCE 
    DECEMBER 31, 2005


49,821,798



(1,163,000
)


48,658,798



50



339,991



(1,150
)


(4,383
)


112,310



(20,041
)


426,777Cumulative Adjustment 
    Tax Credit Funds






























(656
)






(656
)Cumulative Adjustment 
    Share-Based Compensation


















(916
)


1,150















234Exercises of Stock Options and
    Stock Warrants


417,815







417,815







3,553



















3,553Share-Based Compensation Expense


















1,521



















1,521Tax Benefit from Exercise of Stock
    Options


















661



















661Cash Dividends






























(11,805
)






(11,805
)Comprehensive Income:Net Income






























65,649







65,649Change in Unrealized Gain on
    Securities Available for Sale, Interest-Only Strips and Interest
    Rate Swaps, Net of Tax


























1,183











1,183Total Comprehensive Income






































66,832BALANCE 
    DECEMBER 31, 2006


50,239,613



(1,163,000
)


49,076,613


$
50


$
344,810


$



$
(3,200
)

$
165,498


$
(20,041
)

$
487,117    56




---



##### Table of Contents



HANMI
    FINANCIAL CORPORATION AND SUBSIDIARY
  CONSOLIDATED STATEMENTS OF CASH FLOWS
  Year Ended December 31,2006


2005


2004(In thousands)CASH FLOWS FROM OPERATING
    ACTIVITIES:Net Income

$
65,649


$
58,229


$
36,700Adjustments to Reconcile Net Income
    to Net Cash Provided By Operating Activities:Depreciation and Amortization of
    Premises and Equipment


2,924



2,704



2,447Amortization of Premiums and
    Accretion of Discounts on Investments, Net


264



565



3,246Amortization of Core Deposit
    Intangible


2,379



2,785



1,872Share-Based Compensation Expense


1,521



665



Provision for Credit Losses


7,173



5,395



2,907Federal Reserve Bank and Federal
    Home Loan Bank Stock Dividends


(641
)


(362
)


(497
)Gain on Sales of Securities
    Available for Sale


(2
)


(117
)


(134
)Increase in Fair Value of
    Derivatives


(1,074
)


(1,105
)


(232
)Decrease in Fair Value of Embedded
    Options


582



748



Gain on Sales of Loans


(6,917
)


(3,021
)


(2,997
)Loss on Sales of Premises and
    Equipment


22



34



15Excess Tax Benefit from Exercises
    of Stock Options


(598
)


729



Deferred Tax (Benefit) Expense


(2,942
)


(2,707
)


694Origination of Loans Held for Sale


(154,608
)


(61,709
)


(53,855
)Proceeds from Sales of Loans Held
    for Sale


138,720



67,515



54,311(Increase) Decrease in Accrued
    Interest Receivable


(2,799
)


(4,091
)


155Increase in Servicing Asset


(669
)


(64
)


(1,482
)Increase in Cash Surrender Value of
    Bank-Owned Life Insurance


(879
)


(845
)


(731
)(Increase) Decrease in Other Assets


(11,424
)


(2,015
)


2,399Increase (Decrease) in Accrued
    Interest Payable


10,671



4,811



(444
)Increase (Decrease) in Other
    Liabilities


(1,298
)


188



(11,285
)Other, Net


2,855



612



4,645Net Cash Provided By Operating
    Activities


48,909



68,944



37,734CASH FLOWS FROM INVESTING
    ACTIVITIES:Proceeds from Redemption of Federal
    Reserve Bank Stock


617







Proceeds from Sales of Federal Home
    Loan Bank Stock










5,031Proceeds from Matured or Called
    Securities Available for Sale


56,729



89,885



120,389Proceeds from Matured or Called
    Securities Held to Maturity










239Proceeds from Sales of Securities
    Available for Sale


5,005



11,360



53,063Net Increase in Loans Receivable


(352,678
)


(242,088
)


(120,651
)Purchase of Term Federal Funds Sold


(5,000
)






Purchases of Federal Reserve Bank
    and Federal Home Loan Bank Stock


(311
)


(2,264
)


(9,884
)Purchases of Securities Available
    for Sale


(9,663
)


(132,700
)


(22,384
)Purchases of Bank-Owned Life
    Insurance










(10,000
)Purchases of Premises and Equipment


(2,237
)


(3,831
)


(2,049
)Acquisition of Pacific Union Bank,
    Net of Cash Acquired










(63,498
)Net Cash Used In Investing
    Activities


(307,538
)


(279,638
)


(49,744
)CASH FLOWS FROM FINANCING
    ACTIVITIES:Increase in Deposits


118,601



297,307



146,273Issuance of Junior Subordinated
    Debentures










82,406Proceeds from Exercises of Stock
    Options and Stock Warrants


3,553



2,516



3,425Excess Tax Benefit from Exercises
    of Stock Options


598







Stock Issued Through Private
    Placement










71,710Cash Dividends Paid


(11,805
)


(9,813
)


(7,740
)Cash Paid to Acquire Treasury Stock






(20,041
)


Proceeds from Long-Term FHLB
    Advances and Other Borrowings


130,000



7,411



66,363Repayment of Long-Term FHLB
    Advances and Other Borrowings


(5,420
)


(30,246
)


(148,400
)Net Change in Short-Term FHLB
    Advances and Other Borrowings


(1,874
)


(127
)


(137,458
)Net Cash Provided By Financing
    Activities


233,653



247,007



76,579NET INCREASE (DECREASE) IN CASH
    AND CASH EQUIVALENTS


(24,976
)


36,313



64,569Cash and Cash
    Equivalents  Beginning of Year


163,477



127,164



62,595CASH AND CASH
    EQUIVALENTS
    END OF YEAR

$
138,501


$
163,477


$
127,164Supplemental Disclosures of Cash
    Flow Information:Interest Paid

$
117,100


$
41,266


$
29,920Income Taxes Paid

$
45,869


$
37,650


$
25,400Supplemental Schedule of
    Non-Cash Investing and Financing Activities:Transfer of Loans to Other Real
    Estate Owned

$
541


$



$
Accrued Dividend

$
2,941


$
2,433


$
2,467Reconciliation of Acquisition of
    Pacific Union Bank, Net of Cash Acquired:Fair Value of Assets Acquired









$
1,383,782Cash and Cash Equivalents Acquired










(104,383
)Non-Cash Financing of Purchase
    Price and Liabilities Assumed:Issuance of Common Stock










(156,750
)Liabilities Assumed










(1,059,151
)Acquisition of Pacific Union
    Bank, Net of Cash Acquired









$
63,498    57




---



##### Table of Contents



HANMI
    FINANCIAL CORPORATION AND SUBSIDIARY
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS
   NOTE 1 
    SUMMARY
    OF SIGNIFICANT ACCOUNTING POLICIES    Principles
    of Consolidation
        Korean-American
  Cash
    and Cash Equivalents
    Federal
    Reserve Bank Stock
    Federal
    Home Loan Bank Stock
   58




---



##### Table of Contents



HANMI
    FINANCIAL CORPORATION AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31,
    2006, 2005 AND 2004  (Continued)
    Securities
    held-to-maturity
    held-to-maturity
    other-than-temporary other-than-temporary
    Derivative
    Instruments
  Accounting for Derivative Instruments and
    Hedging Activities, as amended.
   59




---



##### Table of Contents



HANMI
    FINANCIAL CORPORATION AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31,
    2006, 2005 AND 2004  (Continued)
         mark-to-market
  Loans
        Servicing
    Assets
  Accounting for Transfers and
    Servicing of Financial Assets and Extinguishments of
    Liabilities
 60




---



##### Table of Contents



HANMI
    FINANCIAL CORPORATION AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31,
    2006, 2005 AND 2004  (Continued)
     Loans
    Held for Sale
    Loan
    Interest Income and Fees
      Allowance
    for Loan Losses
     61




---



##### Table of Contents



HANMI
    FINANCIAL CORPORATION AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31,
    2006, 2005 AND 2004  (Continued)
                Interagency Policy Statement on
    the Allowance for Loan and Lease Losses and/or
  Premises
    and Equipment
    Buildings and Improvements

10 to 30 YearsFurniture and Equipment

Two to Seven YearsLeasehold Improvements

Term of Lease or Useful Life,
    Whichever is ShorterSoftware

Three Years   Impairment
    of Long-Lived Assets
  Accounting for
    the Impairment or Disposal of Long-Lived Assets.
 62




---



##### Table of Contents



HANMI
    FINANCIAL CORPORATION AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31,
    2006, 2005 AND 2004  (Continued)
    Goodwill
  Goodwill and Other Intangible
    Assets,
  Core
    Deposit Intangible
      Junior
    Subordinated Debentures
    Consolidation of
    Variable Interest Entities (Revised December 2003) 
    an Interpretation of ARB No. 51,
 63




---



##### Table of Contents



HANMI
    FINANCIAL CORPORATION AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31,
    2006, 2005 AND 2004  (Continued)
    Income
    Taxes
    Share-Based
    Compensation
  Share-Based
    Payment, Accounting
    for Stock-Based Compensation. Accounting for
    Stock Issued to Employees,
    Year Ended December 31,2005


2004(Dollars in thousands, Except Per Share Data)Net Income  As Reported

$
58,229


$
36,700Add  Share-Based
    Employee Compensation Expense Included in Reported Net Income,
    Net of Related Tax Effects (Restricted Stock Award)


409



Deduct  Total
    Share-Based Employee Compensation Expense Determined Under Fair
    Value-Based Method for All Awards Subject to
    SFAS No. 123, Net of Related Tax Effects


(1,214
)


(408
)Net
    Income
    Pro Forma

$
57,424


$
36,292Earnings Per Share  As
    Reported:Basic

$
1.18


$
0.87Diluted

$
1.17


$
0.84Earnings Per Share  Pro
    Forma:Basic

$
1.17


$
0.86Diluted

$
1.15


$
0.83   No. FAS 123R-3, Transition Election Related to Accounting for the Tax
    Effects of the Share-Based Payment Awards (FAS 123R-3). FAS 123R-3
 64




---



##### Table of Contents



HANMI
    FINANCIAL CORPORATION AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31,
    2006, 2005 AND 2004  (Continued)
        Earnings
    Per Share
    Treasury
    Stock
    Use of
    Estimates in the Preparation of Financial
    Statements
    Reclassifications
    NOTE 2 
    BUSINESS COMBINATION
    five-day
 65




---



##### Table of Contents



HANMI
    FINANCIAL CORPORATION AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31,
    2006, 2005 AND 2004  (Continued)
    Purchase Price and Acquisition Costs 
  (Dollars in Thousands;Except Share Prices)Common Stock:Number of Shares of PUB Stock
    Outstanding as of April 30, 2004


10,908,821Less Shares Acquired for Cash


(5,537,431
)Number of Shares of PUB Stock to
    be Exchange for Hanmi Stock


5,371,390Exchange Ratio


2.312Stock Issued in PUB Acquisition


12,418,654Multiplied by Hanmi
    Financials Average Stock Price for the Period Two Days
    Before Through Two Days After the April 29, 2004 Pricing of
    the Merger Agreement

$
12.53$
155,606Stock Options:Estimated Fair Value of 137,414
    Hanmi Financial Stock Options to be Issued in Exchange for
    59,443 PUB Outstanding Stock Options, Calculated Using the
    Black-Scholes Option Pricing Model, Modified for Dividends, With
    Model Assumptions Estimated as of April 30, 2004 and a
    Hanmi Financial Stock Price of $12.53, the Average Stock Price
    for the Period Two Days Before Through Two Days After the
    April 29, 2004 Pricing of the Merger Agreement


1,063Cash


164,562Transaction Costs:Cash


3,320Stock Warrants


145Total Purchase Price

$
324,696  66




---



##### Table of Contents



HANMI
    FINANCIAL CORPORATION AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31,
    2006, 2005 AND 2004  (Continued)
     (In thousands)Book Value of Net Assets Acquired

$
110,683Adjustments:Adjustment to Record Acquired
    Securities at Estimated Fair Value


(1,489
)Adjustment to Record Acquired
    Loans at Estimated Fair Value


376Adjustment to Record Acquired
    Fixed Assets at Estimated Fair Value


5,459Adjustment to Record Core Deposit
    Intangible Asset


13,137Adjustment to Record Various Other
    Assets at Estimated Fair Value


15Adjustment to Record
    Interest-Bearing Deposits at Fair Value


(264
)Adjustment to Record Other
    Borrowings at Fair Value


(789
)Adjustment to Record Severance
    Benefits Associated with the Elimination of Positions,
    Termination of Certain Contractual Obligations of PUB and Other
    Miscellaneous Adjustments


(1,711
)Adjustment to Record Deferred Tax
    Liability


(7,948
)Adjustment to Record Goodwill
    Associated with the Acquisition of PUB


207,227Total Purchase Price

$
324,696    67




---



##### Table of Contents



HANMI
    FINANCIAL CORPORATION AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31,
    2006, 2005 AND 2004  (Continued)
      (In thousands)Assets:Cash and Due From Banks

$
27,483Federal Fund Sold


76,900Federal Home Loan Bank Stock


6,256Securities Available for Sale


157,905Loans Receivable, Net of Allowance
    for Loan Losses


865,743Premises and Equipment


11,668Accrued Interest Receivable


3,498Goodwill


205,815Core Deposit Intangible


13,137Other Assets


12,888Total Assets

$
1,381,293Liabilities:Deposits

$
936,699Borrowings


105,789Other Liabilities


14,109Total Liabilities

$
1,056,597Net Assets Acquired

$
324,696        68




---



##### Table of Contents



HANMI
    FINANCIAL CORPORATION AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31,
    2006, 2005 AND 2004  (Continued)
      Included inExpensed


Cost of(Credited)


Acquisition(In thousands)Merger-Related Costs 
    2005:Reversal of Merger-Related Costs

$
(509
)

$
(1,142
)Total Merger-Related
    Costs
    2005

$
(509
)

$
(1,142
)Merger-Related Costs 
    2004:Employee Termination Costs

$
1,364


$
1,425Contract Termination Costs






1,828Leasehold Termination Costs


348



1,262Asset Impairments


341



Total Merger-Related
    Costs
    2004

$
2,053


$
4,515   NOTE 3 
    SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL
  and/or
    December 31,2006


2005(Dollars in thousands)Balance at Year-End

$



$
20,000Average Balance Outstanding During
    the Year

$
6,164


$
13,137Maximum Amount Outstanding at Any
    Month-End During the Year

$
30,000


$
25,000Weighted-Average Interest Rate
    During the Year


5.09
%


3.38
%  69




---



##### Table of Contents



HANMI
    FINANCIAL CORPORATION AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31,
    2006, 2005 AND 2004  (Continued)
   NOTE 4 
    SECURITIES
    Gross


Gross


EstimatedAmortized


Unrealized


Unrealized


FairCost


Gain


Loss


Value(In thousands)December 31,
    2006:Municipal Bonds

$
693


$



$



$
693Mortgage-Backed Securities


274



2







276$
967


$
2


$



$
969December 31,
    2005:Municipal Bonds

$
692


$



$



$
692Mortgage-Backed Securities


357



2







359$
1,049


$
2


$



$
1,051     Gross


Gross


EstimatedAmortized


Unrealized


Unrealized


FairCost


Gain


Loss


Value(In thousands)December 31,
    2006:Mortgage-Backed Securities

$
123,614


$
179


$
2,185


$
121,608U.S. Government Agency
    Securities


119,768







1,524



118,244Municipal Bonds


69,966



1,795



51



71,710Collateralized Mortgage Obligations


67,605







1,492



66,113Corporate Bonds


8,090







203



7,887Other


4,999



172



121



5,050$
394,042


$
2,146


$
5,576


$
390,612December 31,
    2005:Mortgage-Backed Securities

$
149,311


$
144


$
2,187


$
147,268U.S. Government Agency
    Securities


129,589







1,776



127,813Municipal Bonds


71,536



1,758



74



73,220Collateralized Mortgage Obligations


83,068



3



1,615



81,456Corporate Bonds


8,235







182



8,053Other


4,999



156



102



5,053$
446,738


$
2,061


$
5,936


$
442,863  70




---



##### Table of Contents



HANMI
    FINANCIAL CORPORATION AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31,
    2006, 2005 AND 2004  (Continued)
     Available for Sale


Held to MaturityAmortized


Estimated


Amortized


EstimatedCost


Fair Value


Cost


Fair Value(In thousands)Within One Year

$
44,942


$
44,649


$



$
Over One Year Through Five Years


90,049



88,656







Over Five Years Through Ten Years


7,834



7,976



693



693Over Ten Years


59,998



61,610







202,823



202,891



693



693Mortgage-Backed Securities


123,614



121,608



274



276Collateralized Mortgage Obligations


67,605



66,113







191,219



187,721



274



276$
394,042


$
390,612


$
967


$
969     Holding PeriodLess than 12 Months


12 Months or More


TotalUnrealized


Estimated


Unrealized


Estimated


Unrealized


EstimatedLosses


Fair Value


Losses


Fair Value


Losses


Fair Value(In thousands)Available for Sale 
    December 31, 2006:Mortgage-Backed Securities

$
121


$
19,442


$
2,064


$
87,966


$
2,185


$
107,408U.S. Government Agency
    Securities


21



9,979



1,503



108,265



1,524



118,244Municipal Bonds


3



961



48



4,290



51



5,251Collateralized Mortgage Obligations


98



7,196



1,394



58,917



1,492



66,113Corporate Bonds










203



7,887



203



7,887Other










121



2,879



121



2,879$
243


$
37,578


$
5,333


$
270,204


$
5,576


$
307,782Available for Sale 
    December 31, 2005:Mortgage-Backed Securities

$
922


$
78,891


$
1,265


$
40,364


$
2,187


$
119,255U.S. Government Agency
    Securities


1,682



112,931



94



9,882



1,776



122,813Municipal Bonds


31



4,126



43



2,353



74



6,479Collateralized Mortgage Obligations


383



29,281



1,232



42,988



1,615



72,269Corporate Bonds


106



5,102



76



2,951



182



8,053Other


21



979



81



1,919



102



2,898$
3,145


$
231,310


$
2,791


$
100,457


$
5,936


$
331,767  71




---



##### Table of Contents



HANMI
    FINANCIAL CORPORATION AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31,
    2006, 2005 AND 2004  (Continued)
   other-than-temporarily
      NOTE 5 
    LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES
    2006


2005(In thousands)Real Estate Loans:Commercial Property

$
757,428


$
733,650Construction


202,207



152,080Residential Property


81,128



87,377Total Real Estate Loans


1,040,763



973,107Commercial and Industrial Loans:Commercial Term Loans


1,202,612



945,210Commercial Lines of Credit


225,630



224,271SBA Loans


148,391



155,491International Loans


126,561



106,520Total Commercial and Industrial
    Loans


1,703,194



1,431,492Consumer Loans


100,121



92,154Total Gross Loans


2,844,078



2,496,753Allowance for Loans Losses


(27,557
)


(24,963
)Deferred Loan Fees


(3,001
)


(3,775
)Loans Receivable, Net

$
2,813,520


$
2,468,015  72




---



##### Table of Contents



HANMI
    FINANCIAL CORPORATION AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31,
    2006, 2005 AND 2004  (Continued)
     As of and for the Year Ended December 31,2006


2005


2004Allowance








Allowance








Allowancefor Off-








for Off-








for Off-Allowance


Balance





Allowance


Balance





Allowance


Balancefor Loan


Sheet





for Loan


Sheet





for Loan


SheetLosses


Items


Total


Losses


Items


Total


Losses


Items


Total(In thousands)Balance  Beginning of
    Year

$
24,963


$
2,130


$
27,093


$
22,702


$
1,800


$
24,502


$
13,349


$
1,385


$
14,734Allowance for Loan Losses Acquired
    in PUB Acquisition


























10,566







10,566Provision Charged to Operating
    Expense


7,173







7,173



5,065



330



5,395



2,492



415



2,907Loans Charged Off


(6,129
)






(6,130
)


(5,198
)






(5,198
)


(5,485
)






(5,485
)Recoveries


1,550







1,551



2,394







2,394



1,780







1,780Balance
    End of Year

$
27,557


$
2,130


$
29,687


$
24,963


$
2,130


$
27,093


$
22,702


$
1,800


$
24,502     Year Ended December 31,2006


2005


2004(In thousands)Interest Income That Would Have
    Been Recognized Had Impaired Loans Performed in Accordance With
    Their Original Terms

$
1,726


$
957


$
678Less: Interest Income Recognized
    on Impaired Loans


(1,146
)


(603
)


(350
)Interest Foregone on Impaired
    Loans

$
580


$
354


$
328     As of and for theYear Ended December 31,2006


2005


2004(In thousands)Recorded Investment With Related
    Allowance

$
10,616


$
7,548


$
4,391Recorded Investment With No
    Related Allowance


3,868



3,235



3,262Allowance on Impaired Loans


(6,731
)


(4,991
)


(3,039
)Net Recorded Investment in
    Impaired Loans

$
7,753


$
5,792


$
4,614Average Total Recorded Investment
    in Impaired Loans

$
19,287


$
14,340


$
9,850      73




---



##### Table of Contents



HANMI
    FINANCIAL CORPORATION AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31,
    2006, 2005 AND 2004  (Continued)
      December 31,2006


2005(In thousands)Outstanding Balance 
    Beginning of Year

$
850


$
1,552Credit Granted, Including Renewals






Repayments


(811
)


(702
)Outstanding Balance 
    End of Year

$
39


$
850     NOTE 6 
    SERVICING ASSET
    December 31,2006


2005(In thousands)Balance  Beginning of
    Year

$
3,910


$
3,846Additions


2,331



1,150Valuation Write-Down


(355
)


Amortization


(1,307
)


(1,086
)Balance  End of
    Year

$
4,579


$
3,910     NOTE 7 
    PREMISES AND EQUIPMENT
    December 31,2006


2005(In thousands)Land

$
6,120


$
6,120Buildings and Improvements


8,210



7,804Furniture and Equipment


12,202



12,095Leasehold Improvements


8,403



7,924Software


862



38735,797



34,330Accumulated Depreciation and
    Amortization


(15,722
)


(13,546
)Total Premises and Equipment,
    Net

$
20,075


$
20,784    74




---



##### Table of Contents



HANMI
    FINANCIAL CORPORATION AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31,
    2006, 2005 AND 2004  (Continued)
    NOTE 8 
    DEPOSITS
    December 31,2006


2005(In thousands)Less Than Three Months

$
811,211


$
701,140After Three Months to Six Months


516,473



314,151After Six Months to Twelve Months


340,856



407,689After Twelve Months


10,306



16,771Total Time Deposits

$
1,678,846


$
1,439,751       Year Ended December 31,2006


2005


2004(In thousands)Savings

$
1,853


$
2,130


$
1,790Money Market Checking and NOW
    Accounts


14,539



12,964



8,098Time Deposits of $100,000 or More


64,184



31,984



10,966Other Time Deposits


12,460



7,114



5,414Total Interest Expense on
    Deposits

$
93,036


$
54,192


$
26,268     NOTE 9 
    FHLB
    ADVANCES AND OTHER BORROWINGS    December 31,2006


2005(In thousands)FHLB Advances

$
168,107


$
43,527Note Issued to
    U.S. Treasury


930



2,804Total FHLB Advances and Other
    Borrowings

$
169,037


$
46,331  75




---



##### Table of Contents



HANMI
    FINANCIAL CORPORATION AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31,
    2006, 2005 AND 2004  (Continued)
     Weighted-AverageYear

Amount


Interest Rate(In thousands)2007

$
45,000



4.75
%2008


105,000



5.42
%2009


6,000



5.63
%2010


7,252



4.44
%2011






Thereafter


4,855



5.27
%$
168,107     Year Ended December 31,2006


2005


2004(Dollars in thousands)Weighted-Average Interest Rate at
    End of Year


5.20
%


4.33
%


4.12
%Weighted-Average Interest Rate
    During the Year


5.02
%


3.70
%


2.23
%Average Balance of FHLB Advances

$
123,295


$
74,437


$
137,827Maximum Amount Outstanding at Any
    Month-End

$
168,250


$
100,700


$
261,000           NOTE 10 
    JUNIOR SUBORDINATED DEBENTURES
   76




---



##### Table of Contents



HANMI
    FINANCIAL CORPORATION AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31,
    2006, 2005 AND 2004  (Continued)
      NOTE 11 
    INCOME TAXES
    2006


2005


2004(In thousands)Current:Federal

$
34,471


$
29,779


$
16,010State


9,059



9,383



6,27143,530



39,162



22,281Deferred:Federal


(2,222
)


(2,350
)


1,032State


(720
)


(357
)


(338
)(2,942
)


(2,707
)


694Income Taxes

$
40,588


$
36,455


$
22,975     2006


2005(In thousands)Deferred Tax Assets:Credit Loss Provision

$
13,608


$
12,419Depreciation


1,288



591State Taxes


2,672



2,928Unrealized Loss on Securities
    Available for Sale, Interest-Only Strips and Interest Rate Swaps


1,450



1,671Other


637



59Total Deferred Tax Assets


19,655



17,668Deferred Tax Liabilities:Purchase Accounting


(5,329
)


(6,497
)Other


(1,262
)


(1,520
)Total Deferred Tax Liabilities


(6,591
)


(8,017
)Net Deferred Tax
    Assets

$
13,064


$
9,651    77




---



##### Table of Contents



HANMI
    FINANCIAL CORPORATION AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31,
    2006, 2005 AND 2004  (Continued)
      2006


2005


2004Statutory Tax Rate


35.0
%


35.0
%


35.0
%State Taxes, Net of Federal Tax
    Benefits


5.8
%


6.2
%


6.5
%Tax-Exempt Municipal Securities


(1.0
)%


(1.2
)%


(1.8
)%Reversal of Valuation Allowance










(0.7
)%Other


(1.6
)%


(1.5
)%


(0.5
)%Effective Tax Rate


38.2
%


38.5
%


38.5
%     NOTE 12 
    EMPLOYEE SHARE-BASED COMPENSATION
    Year
    2000 Stock Option Plan
        Year Ended December 31,2006


2005


2004Estimated Weighted-Average Fair
    Value Per Share of Options Granted

$
6.23


$
4.96


$
3.55     Year Ended December 31,2006


2005


2004Weighted-Average Assumptions:Dividend Yield


1.26%



1.18%



1.48%Expected Volatility


34.79%



32.62%



33.04%Expected Term


4.6 years



4.1 years



4.0 yearsRisk-Free Interest Rate


4.85%



4.13%



2.75%  78




---



##### Table of Contents



HANMI
    FINANCIAL CORPORATION AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31,
    2006, 2005 AND 2004  (Continued)
       Year Ended December 31,2006


2005


2004(In thousands)Grant Date Fair Value of Options
    Granted

$
5,940


$
672


$
1,582Fair Value of Options Vested

$
695


$
905


$
691Total Intrinsic Value of Options
    Exercised(1)

$
2,874


$
4,487


$
9,758Cash Received from Options
    Exercised

$
2,032


$
2,093


$
1,703Actual Tax Benefit Realized from
    Tax Deductions on Options Exercised

$
661


$
729


$
     (1)
    
    Intrinsic value represents the difference between the closing
    stock price on the exercise date and the exercise price,
    multiplied by the number of options.    2006


2005


2004Number


Weighted-Average


Number


Weighted-Average


Number


Weighted-Averageof


Exercise Price


of


Exercise Price


of


Exercise PriceShares


Per Share


Shares


Per Share


Shares


Per ShareOptions Outstanding 
    Beginning of Year


1,173,712


$
10.55



1,618,836


$
9.33



1,500,064


$
5.52Options Granted


953,000


$
19.17



135,554


$
17.10



791,000


$
13.51Options Assumed in PUB Acquisition





$







$




137,414


$
5.11Options Exercised


(257,759
)

$
7.88



(391,094
)

$
6.44



(670,576
)

$
4.82Options Forfeited


(111,540
)

$
15.39



(189,584
)

$
13.26



(139,066
)

$
9.61Options Expired


(1,600
)

$
14.03






$







$
Options
    Outstanding
    End of Year


1,755,813


$
15.31



1,173,712


$
10.55



1,618,836


$
9.33Options Exercisable  End
    of Year


471,903


$
8.55



520,602


$
7.00



487,242


$
6.10  79




---



##### Table of Contents



HANMI
    FINANCIAL CORPORATION AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31,
    2006, 2005 AND 2004  (Continued)
     2006


2005


2004Weighted-Average





Weighted-Average





Weighted-AverageNumber


Grant Date


Number


Grant Date


Number


Grant Dateof


Fair Value


of


Fair Value


of


Fair ValueShares


Per Share


Shares


Per Share


Shares


Per ShareNon-Vested Options
    Outstanding  Beginning of Year


653,110


$
3.68



1,131,594


$
2.93



844,910


$
1.89Options Granted


953,000


$
6.23



135,554


$
4.96



791,000


$
3.55Options Vested


(210,660
)

$
3.30



(424,454
)

$
2.13



(365,250
)

$
1.89Options Forfeited


(111,540
)

$
4.90



(189,584
)

$
3.62



(139,066
)

$
2.83Non-Vested Options OutstandingEnd of Year


1,283,910


$
5.53



653,110


$
3.68



1,131,594


$
2.93       Options Outstanding


Options ExercisableWeighted-


Weighted-








Weighted-


Weighted-Average


Average








Average


AverageExercise


Remaining








Exercise


RemainingExercise

Number


Intrinsic


Price Per


Contractual


Number


Intrinsic


Price Per


ContractualPrice Range

of Shares


Value(1)


Share


Life


of Shares


Value(1)


Share


Life(Dollars in thousands, Except Per Share Data)$3.27 to $4.99


156,666


$
2,938


$
3.78



3.8 years



156,666


$
2,938


$
3.78



3.8 years$5.00 to $9.99


141,593



2,177


$
7.15



4.3 years



141,593



2,177


$
7.15



4.3 years$10.00 to $14.99


434,000



3,918


$
13.50



7.3 years



149,533



1,351


$
13.50



7.3 years$15.00 to $19.99


735,554



3,386


$
17.93



9.2 years



24,111



133


$
17.03



8.3 years$20.00 to $21.63


288,000



259


$
21.63



9.9 years










$




1,755,813


$
12,678


$
15.31



8.0 years



471,903


$
6,599


$
8.55



6.8 years     (1)
    
    Intrinsic value represents the difference between the closing
    stock price on the last trading day of the period, which was
    $22.53 as of December 29, 2006, and the exercise price,
    multiplied by the number of options.  2004
    CEO Stock Option Plan
     80




---



##### Table of Contents



HANMI
    FINANCIAL CORPORATION AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31,
    2006, 2005 AND 2004  (Continued)
        2006


2005


2004Number


Exercise


Number


Exercise


Number


Exerciseof


Price Per


of


Price Per


of


Price PerShares


Share


Shares


Share


Shares


ShareOptions Outstanding 
    Beginning of Year


350,000


$
17.17



350,000


$
17.17






$
Options Granted





$







$




350,000


$
17.17Options
    Outstanding
    End of Year


350,000


$
17.17



350,000


$
17.17



350,000


$
17.17Options Exercisable 
    End of Year


58,333


$
17.17






$







$
     2006


2005


2004Number


Grant Date


Number


Grant Date


Number


Grant Dateof


Fair Value


of


Fair Value


of


Fair ValueShares


Per Share


Shares


Per Share


Shares


Per ShareNon-Vested Options
    Outstanding  Beginning of Year


350,000


$
4.82



350,000


$
4.82






$
Options Granted





$







$




350,000


$
4.82Options Vested


(58,333
)

$
4.82






$







$
Non-Vested Options
    Outstanding  End of Year


291,667


$
4.82



350,000


$
4.82



350,000


$
4.82       Options Outstanding

Options ExercisableExercise


Remaining







Exercise


RemainingNumber


Intrinsic


Price Per


Contractual

Number


Intrinsic


Price Per


Contractualof Shares


Value(1)


Share


Life

of Shares


Value(1)


Share


Life(Dollars in thousands, Except Per Share Data)350,000


$
1,878


$
17.17


7.9 years


58,333


$
313


$
17.17



7.9 years     (1)
    
    Intrinsic value represents the difference between the closing
    stock price on the last trading day of the period, which was
    $22.53 as of December 29, 2006, and the exercise price,
    multiplied by the number of options. 81




---



##### Table of Contents



HANMI
    FINANCIAL CORPORATION AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31,
    2006, 2005 AND 2004  (Continued)
    Restricted
    Stock Award
    NOTE 13 
    SHAREHOLDERS EQUITY
  Stock
    Warrants
    Repurchase
    of Common Stock
    NOTE 14 
    REGULATORY MATTERS
       82




---



##### Table of Contents



HANMI
    FINANCIAL CORPORATION AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31,
    2006, 2005 AND 2004  (Continued)
      Minimum


Minimum to BeRegulatory


Categorized asActual


Requirement


Well CapitalizedAmount


Ratio


Amount


Ratio


Amount


Ratio(Dollars in thousands)December 31,
    2006Total Capital (to Risk-Weighted
    Assets):Hanmi Financial

$
384,895



12.55
%

$
245,408



8.00
%


N/A



N/AHanmi Bank

$
376,422



12.28
%

$
245,158



8.00
%

$
306,447



10.00
%Tier 1 Capital (to
    Risk-Weighted Assets):Hanmi Financial

$
355,186



11.58
%

$
122,704



4.00
%


N/A



N/AHanmi Bank

$
346,713



11.31
%

$
122,579



4.00
%

$
183,868



6.00
%Tier 1 Capital (to Average
    Assets):Hanmi Financial

$
355,186



10.08
%

$
140,947



4.00
%


N/A



N/AHanmi Bank

$
346,713



9.85
%

$
140,827



4.00
%

$
176,034



5.00
%December 31,
    2005Total Capital (to Risk-Weighted
    Assets):Hanmi Financial

$
319,866



12.04
%

$
212,617



8.00
%


N/A



N/AHanmi Bank

$
318,099



11.98
%

$
212,383



8.00
%

$
265,478



10.00
%Tier 1 Capital (to
    Risk-Weighted Assets):Hanmi Financial

$
292,750



11.03
%

$
106,191



4.00
%


N/A



N/AHanmi Bank

$
290,983



10.96
%

$
106,191



4.00
%

$
159,287



6.00
%Tier 1 Capital (to Average
    Assets):Hanmi Financial

$
295,750



9.11
%

$
128,566



4.00
%


N/A



N/AHanmi Bank

$
290,983



9.06
%

$
128,447



4.00
%

$
160,558



5.00
%     Memorandum
    of Understanding
   83




---



##### Table of Contents



HANMI
    FINANCIAL CORPORATION AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31,
    2006, 2005 AND 2004  (Continued)
    NOTE 15 
    EARNINGS PER SHARE
    Weighted-Average


PerIncome


Shares


Share(Numerator)


(Denominator)


Amount(Dollars in thousands, Except Per Share Amounts)2006:Basic EPS  Income
    Available to Common Shareholders

$
65,649



48,850,221


$
1.34Effect of Dilutive
    Securities  Options and Warrants






584,907



(0.01
)Diluted EPS  Income
    Available to Common Shareholders

$
65,649



49,435,128


$
1.332005:Basic EPS  Income
    Available to Common Shareholders

$
58,229



49,174,885


$
1.18Effect of Dilutive
    Securities  Options and Warrants






767,471



(0.01
)Diluted EPS  Income
    Available to Common Shareholders

$
58,229



49,942,356


$
1.172004:Basic EPS  Income
    Available to Common Shareholders

$
36,700



42,268,964


$
0.87Effect of Dilutive
    Securities  Options and Warrants






1,248,293



(0.03
)Diluted EPS  Income
    Available to Common Shareholders

$
36,700



43,517,257


$
0.84     NOTE 16 
    EMPLOYEE BENEFITS
  401(k)
    Plan
    Bank-Owned
    Life Insurance
   84




---



##### Table of Contents



HANMI
    FINANCIAL CORPORATION AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31,
    2006, 2005 AND 2004  (Continued)
    Deferred
    Compensation Plan
    NOTE 17 
    DERIVATIVE FINANCIAL INSTRUMENTS
  Interest
    Rate Swap
      Equity
    Swap
      Currency
    Swap
   85




---



##### Table of Contents



HANMI
    FINANCIAL CORPORATION AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31,
    2006, 2005 AND 2004  (Continued)
      NOTE 18 
    COMMITMENTS AND CONTINGENCIES
    Year EndingDecember 31,

Amount(In thousands)2007

$
4,0932008


3,4552009


2,4622010


2,1282011


1,315Thereafter


6,068$
19,521       NOTE 19 
    OFF-BALANCE SHEET COMMITMENTS
  case-by-case
 86




---



##### Table of Contents



HANMI
    FINANCIAL CORPORATION AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31,
    2006, 2005 AND 2004  (Continued)
      December 31,2006


2005(In thousands)Commitments to Extend Credit

$
578,347


$
555,736Commercial Letters of Credit


65,158



58,036Standby Letters of Credit


48,289



42,768Unused Credit Card Lines


17,031



14,892Total Undisbursed
    Loan Commitments

$
708,825


$
671,432   NOTE 20 
    FAIR VALUE OF FINANCIAL INSTRUMENTS
  and/or
  December 31, 2006


December 31, 2005Carrying





Carryingor Contract


Estimated


or Contract


EstimatedAmount


Fair Value


Amount


Fair Value(In thousands)ASSETSCash and Cash Equivalents

$
138,501


$
138,501


$
163,477


$
163,477Term Federal Funds Sold


5,000



5,000







Securities Held to Maturity


967



969



1,049



1,051Securities Available for Sale


390,612



390,612



442,863



442,863Loans Receivable, Net


2,813,520



2,834,864



2,468,015



2,460,092Loans Held for Sale


23,870



23,870



1,065



1,074Accrued Interest Receivable


16,919



16,919



14,120



14,120Federal Reserve Bank Stock


11,733



11,733



12,350



12,350Federal Home Loan Bank Stock


13,189



13,189



12,237



12,237Equity Swap


872



872



88



88 87




---



##### Table of Contents



HANMI
    FINANCIAL CORPORATION AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31,
    2006, 2005 AND 2004  (Continued)
   December 31, 2006


December 31, 2005Carrying





Carryingor Contract


Estimated


or Contract


EstimatedAmount


Fair Value


Amount


Fair Value(In thousands)LIABILITIESNoninterest-Bearing Deposits


728,347



728,347



738,618



738,618Interest-Bearing Deposits


2,216,368



2,216,757



2,087,496



2,087,496FHLB Advances, Other Borrowings
    and Junior Subordinated Debentures


251,443



254,058



128,737



129,441Accrued Interest Payable


22,582



22,582



11,911



11,911Currency Swap










(105
)


(105
)Embedded Derivative


1,641



1,641



1,280



1,280OFF-BALANCE SHEET
    ITEMSCommitments to Extend Credit


578,347



1,786



555,736



774Standby Letters of Credit


48,289



245



42,768



217     Cash and Cash Equivalents
  Term Federal Funds Sold
  Securities
  Loans
  Accrued Interest Receivable
  Federal Reserve Bank Stock and Federal Home Loan Bank
    Stock
  Equity Swap
  Deposits
 88




---



##### Table of Contents



HANMI
    FINANCIAL CORPORATION AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31,
    2006, 2005 AND 2004  (Continued)
    Accrued Interest Payable
  FHLB Advances, Other Borrowings and Junior Subordinated
    Debentures
  Currency Swap and Embedded Derivative
  Commitments to Extend Credit and Standby Letters of
    Credit
  Note 21 
    Condensed Financial Information of Parent Company
  December 31,STATEMENTS OF FINANCIAL CONDITION

2006


2005(In thousands)ASSETSCash

$
7,578


$
1,470Investment in Hanmi Bank


558,645



505,009Investment in Unconsolidated
    Subsidiaries


2,986



2,986Other Assets


4,346



3,091Total Assets

$
573,555


$
512,556LIABILITIES AND
    SHAREHOLDERS EQUITYLiabilities:Junior Subordinated Debentures

$
82,406


$
82,406Other Liabilities


4,032



3,373Shareholders Equity


487,117



426,777Total Liabilities and
    Shareholders Equity

$
573,555


$
512,556   Year Ended December 31,STATEMENTS OF INCOME

2006


2005


2004(In thousands)Equity in Earnings of Hanmi Bank

$
71,375


$
62,001


$
39,574Other Expenses, Net


(9,266
)


(6,133
)


(4,673
)Income Tax Benefit


3,540



2,361



1,799Net Income

$
65,649


$
58,229


$
36,700   89




---



##### Table of Contents



HANMI
    FINANCIAL CORPORATION AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31,
    2006, 2005 AND 2004  (Continued)
   Year Ended December 31,STATEMENTS OF CASH FLOWS

2006


2005


2004(In thousands)CASH FLOWS FROM OPERATING
    ACTIVITIES:Net Income

$
65,649


$
58,229


$
36,700Adjustments to Reconcile Net
    Income to Net Cash Used In Operating Activities:Earnings of Hanmi Bank


(71,375
)


(62,001
)


(39,574
)Decrease (Increase) in Receivable
    from Hanmi Bank






455



(224
)Share-Based Compensation Expense


1,521







Increase in Other Assets


(1,255
)


(1,292
)


(718
)Increase (Decrease) in Other
    Liabilities


659



(229
)


132Excess Tax Benefit from Exercises
    of Stock Options


661



729



Net Cash Used In Operating
    Activities


(4,140
)


(4,109
)


(3,684
)CASH FLOWS FROM INVESTING
    ACTIVITIES:Dividends Received from Hanmi Bank


18,500



27,541



11,990Capital Contribution to Hanmi Bank










(80,000
)Acquisition of Pacific Union Bank










(71,710
)Purchase of Investment in
    Unconsolidated Subsidiaries










(2,475
)Net Cash Provided By (Used In)
    Investing Activities


18,500



27,541



(142,195
)CASH FLOWS FROM FINANCING
    ACTIVITIES:Issuance of Junior Subordinated
    Debentures










82,406Proceeds from Exercise of Stock
    Options and Stock Warrants


3,553



2,516



3,425Stock Issued Through Private
    Placement










71,710Repurchase of Common Stock






(20,041
)


Cash Dividends Paid


(11,805
)


(9,813
)


(7,740
)Net Cash (Used In) Provided By
    Financing Activities


(8,252
)


(27,338
)


149,801NET INCREASE (DECREASE) IN
    CASH


6,108



(3,906
)


3,922Cash  Beginning of Year


1,470



5,376



1,454CASH  END OF
    YEAR

$
7,578


$
1,470


$
5,376  90




---



##### Table of Contents



HANMI
    FINANCIAL CORPORATION AND SUBSIDIARY
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31,
    2006, 2005 AND 2004  (Continued)
   NOTE 22 
    QUARTERLY FINANCIAL DATA (UNAUDITED)
    Quarter EndedMarch 31


June 30


September 30


December 31(Dollars in thousands; Except Per Share Amounts)2006:Interest Income

$
58,535


$
63,906


$
68,664


$
69,084Interest Expense


21,680



25,509



28,934



30,306Net Interest Income Before
    Provision for Credit Losses


36,855



38,397



39,730



38,778Provision for Credit Losses


2,960



900



1,682



1,631Non-Interest Income


7,744



8,287



8,784



10,789Non-Interest Expenses


17,439



19,416



19,473



19,626Income Before Provision for Income
    Taxes


24,200



26,368



27,359



28,310Provision for Income Taxes


9,398



10,428



9,762



11,000NET INCOME

$
14,802


$
15,940


$
17,597


$
17,310EARNINGS PER SHARE:Basic

$
0.30


$
0.33


$
0.36


$
0.35Diluted

$
0.30


$
0.32


$
0.36


$
0.352005:Interest Income

$
43,602


$
48,063


$
52,401


$
56,875Interest Expense


11,347



13,462



16,831



20,471Net Interest Income Before
    Provision for Credit Losses


32,255



34,601



35,570



36,404Provision for Credit Losses


136



450



3,157



1,652Non-Interest Income


6,964



6,891



8,751



7,776Non-Interest Expenses


17,405



16,212



16,991



18,525Income Before Provision for Income
    Taxes


21,678



24,830



24,173



24,003Provision for Income Taxes


8,346



9,792



9,204



9,113NET INCOME

$
13,332


$
15,038


$
14,969


$
14,890EARNINGS PER SHARE:Basic

$
0.27


$
0.30


$
0.30


$
0.31Diluted

$
0.27


$
0.30


$
0.30


$
0.30     NOTE 23 
    SUBSEQUENT EVENT
   91




---



##### Table of Contents



SIGNATURES      By:
    /s/  Sung
    Won Sohn, Ph.D.          /s/  Sung
    Won
    Sohn, Ph.D.Sung
    Won Sohn, Ph.D.President and Chief Executive Officer
    (Principal Executive Officer)

/s/  Michael
    J. WiniarskiMichael
    J. WiniarskiSenior Vice President and Chief Financial Officer (Principal
    Financial and Accounting Officer)/s/  Richard
    B. C. LeeRichard
    B. C. LeeChairman of the Board/s/  I Joon
    AhnI Joon
    AhnDirector

/s/  Kraig
    A. KupiecKraig
    A. KupiecDirector/s/  Joon
    Hyung LeeJoon
    Hyung LeeDirector

/s/  M. Christian
    MitchellM. Christian
    MitchellDirector/s/  Chang
    Kyu ParkChang
    Kyu ParkDirector

/s/  Joseph
    K. RhoJoseph
    K. RhoDirector/s/  William
    J. RuhWilliam
    J. RuhDirector

/s/  Won
    R. YoonWon
    R. YoonDirector  92




---



##### Table of Contents



HANMI
    FINANCIAL CORPORATION AND SUBSIDIARY
   EXHIBIT INDEX  ExhibitNumber

Document3
.1

Certificate of Incorporation, As
    Amended *3
.2

Bylaws, As Amended *4
.1

Specimen Certificate of Registrant
    *10
.1

Employment Agreement with Sung Won
    Sohn ***10
.2

Hanmi Financial Corporation Year
    2000 Stock Option Plan **10
.3

Hanmi Financial Corporation 2004
    CEO Stock Option Plan ****10
.4

Hanmi Financial Corporation
    Deferred Compensation Plan14


Code of Ethics ***21


Subsidiaries of the Registrant ****23


Consent of KPMG LLP31
.1

Rule 13a-14(a)/15d-14(a)
    Certification of Chief Executive Officer31
.2

Rule 13a-14(a)/15d-14(a)
    Certification of Chief Financial Officer32
.1

Certification of Chief Executive
    Officer Under Section 906 of the Sarbanes-Oxley Act32
.2

Certification of Chief Financial
    Officer Under Section 906 of the Sarbanes-Oxley Act     *
    
    Previously filed and incorporated by reference herein from
    Hanmi Financials Registration Statement on
    Form S-4
    (No. 333-32770)
    filed with the SEC on March 20, 2000.**
    
    Previously filed and incorporated by reference herein from
    Hanmi Financials Registration Statement on
    Form S-8
    (No. 333-44320
    and 44090) filed with the SEC on August 18, 2000.***
    
    Previously filed and incorporated by reference herein from
    Hanmi Financials Annual Report on
    Form 10-K
    for the year ended December 31, 2004 filed with the SEC on
    March 16, 2005.****
    
    Previously filed and incorporated by reference herein from
    Hanmi Financials Joint Proxy Statement/Prospectus on
    Form S-4
    filed with the SEC on February 9, 2004. 93