##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 x
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the Quarterly Period Ended March 31, 2008
  o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
  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 A 
Los Angeles, California
    
    90010(Address of Principal Executive Offices)
    
    (Zip Code)
 (213) 382-2200
 (Registrants Telephone Number, Including Area Code)
 Not Applicable
 (Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report)
 Indicate by check mark whether the Registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the Registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
    
    Yes x      No  ̈
  Large Accelerated Filer
    
    x
    
    Accelerated Filer
    
    oNon-Accelerated Filer
    
    o (Do Not Check if a Smaller Reporting Company)
    
    Smaller Reporting Company
    
    o
 Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act).
    
    Yes o      No x




---



##### 



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  QUARTERLY REPORT ON FORM 10-Q  THREE MONTHS ENDED MARCH 31, 2008 AND 2007
 TABLE OF CONTENTS
 PagePART I  FINANCIAL INFORMATIONITEM 1.
    
    FINANCIAL STATEMENTSConsolidated Balance Sheets (Unaudited)
    
    
    1Consolidated Statements of Income (Unaudited)
    
    
    2Consolidated Statements of Changes in Stockholders Equity and Comprehensive Income (Unaudited)
    
    
    3Consolidated Statements of Cash Flows (Unaudited)
    
    
    4Notes to Consolidated Financial Statements (Unaudited)
    
    
    5ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    13ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    32ITEM 4.
    
    CONTROLS AND PROCEDURES
    
    
    33PART II  OTHER INFORMATIONITEM 1.
    
    LEGAL PROCEEDINGS
    
    
    33ITEM 1A.
    
    RISK FACTORS
    
    
    33ITEM 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    33ITEM 3.
    
    DEFAULTS UPON SENIOR SECURITIES
    
    
    33ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    33ITEM 5.
    
    OTHER INFORMATION
    
    
    33ITEM 6.
    
    EXHIBITS
    
    
    34SIGNATURES
    
    
    35EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2




---



##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 
 HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)  (Dollars in Thousands)
 March 31,
    
    
    December 31,2008
    
    
    2007ASSETSCash and Due From Banks
    
    $
    101,306
    
    
    $
    105,898Federal Funds Sold
    
    
    2,000
    
    
    
    16,500Cash and Cash Equivalents
    
    
    103,306
    
    
    
    122,398Securities Held to Maturity, at Amortized Cost (Fair Value: 2008  $932; 2007  $941)
    
    
    934
    
    
    
    940Securities Available for Sale, at Fair Value
    
    
    322,702
    
    
    
    349,517Loans Receivable, Net of Allowance for Loan Losses of $52,986 and $43,611 at March 31,
2008 and December 31, 2007, Respectively
    
    
    3,242,500
    
    
    
    3,234,762Loans Held for Sale, at the Lower of Cost or Fair Value
    
    
    8,553
    
    
    
    6,335Customers Liability on Acceptances
    
    
    7,119
    
    
    
    5,387Premises and Equipment, Net
    
    
    20,679
    
    
    
    20,800Accrued Interest Receivable
    
    
    15,417
    
    
    
    17,411Other Real Estate Owned
    
    
    
    
    
    
    287Servicing Assets
    
    
    4,220
    
    
    
    4,336Goodwill
    
    
    107,393
    
    
    
    107,100Other Intangible Assets
    
    
    6,384
    
    
    
    6,908Federal Reserve Bank Stock, at Cost
    
    
    11,733
    
    
    
    11,733Federal Home Loan Bank Stock, at Cost
    
    
    21,985
    
    
    
    21,746Bank-Owned Life Insurance
    
    
    24,760
    
    
    
    24,525Other Assets
    
    
    42,710
    
    
    
    49,472TOTAL ASSETS
    
    $
    3,940,395
    
    
    $
    3,983,657LIABILITIES AND STOCKHOLDERS EQUITYLIABILITIES:Deposits:Noninterest-Bearing
    
    $
    676,471
    
    
    $
    680,282Interest-Bearing:Savings
    
    
    92,189
    
    
    
    93,099Money Market Checking and NOW Accounts
    
    
    696,552
    
    
    
    445,806Time Deposits of $100,000 or More
    
    
    1,248,853
    
    
    
    1,441,683Other Time Deposits
    
    
    313,703
    
    
    
    340,829Total Deposits
    
    
    3,027,768
    
    
    
    3,001,699Accrued Interest Payable
    
    
    17,857
    
    
    
    21,828Acceptances Outstanding
    
    
    7,119
    
    
    
    5,387FHLB Advances and Other Borrowings
    
    
    415,553
    
    
    
    487,164Junior Subordinated Debentures
    
    
    82,406
    
    
    
    82,406Other Liabilities
    
    
    19,328
    
    
    
    14,617Total Liabilities
    
    
    3,570,031
    
    
    
    3,613,101COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS EQUITY:Common Stock, $.001 Par Value; Authorized 200,000,000 Shares; Issued 50,538,049
Shares (45,905,549 Shares Outstanding) and 50,493,441 Shares (45,860,941 Shares
Outstanding) at March 31, 2008 and December 31, 2007, Respectively
    
    
    51
    
    
    
    50Additional Paid-In Capital
    
    
    348,607
    
    
    
    348,073Unearned Compensation
    
    
    (270
    )
    
    
    (245
    )Accumulated Other Comprehensive Income  Unrealized Gain on Securities
Available for Sale, Interest-Only Strips and Interest Rate Swaps, Net of Income Taxes of
$1,469 and $527 at March 31, 2008 and December 31, 2007, Respectively
    
    
    1,628
    
    
    
    275Retained Earnings
    
    
    90,360
    
    
    
    92,415440,376
    
    
    
    440,568Less Treasury Stock, at Cost; 4,632,500 Shares at March 31, 2008 and
December 31, 2007
    
    
    (70,012
    )
    
    
    (70,012
    )Total Stockholders Equity
    
    
    370,364
    
    
    
    370,556TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    3,940,395
    
    
    $
    3,983,657
  1




---



##### Table of Contents



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)  (Dollars in Thousands, Except Per Share Data)
 Three Months EndedMarch 31,2008
    
    
    2007INTEREST AND DIVIDEND INCOME:Interest and Fees on Loans
    
    $
    60,598
    
    
    $
    62,561Taxable Interest on Investments
    
    
    3,116
    
    
    
    3,531Tax-Exempt Interest on Investments
    
    
    759
    
    
    
    764Dividends on FHLB and FRB Stock
    
    
    414
    
    
    
    369Interest on Federal Funds Sold
    
    
    83
    
    
    
    726Interest on Term Federal Funds Sold
    
    
    
    
    
    
    5Total Interest and Dividend Income
    
    
    64,970
    
    
    
    67,956INTEREST EXPENSE:Interest on Deposits
    
    
    24,847
    
    
    
    26,189Interest on FHLB Advances and Other Borrowings
    
    
    4,477
    
    
    
    2,171Interest on Junior Subordinated Debentures
    
    
    1,449
    
    
    
    1,639Total Interest Expense
    
    
    30,773
    
    
    
    29,999NET INTEREST INCOME BEFORE PROVISION FOR CREDIT LOSSES
    
    
    34,197
    
    
    
    37,957Provision for Credit Losses
    
    
    17,821
    
    
    
    6,132NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES
    
    
    16,376
    
    
    
    31,825NON-INTEREST INCOME:Service Charges on Deposit Accounts
    
    
    4,717
    
    
    
    4,488Insurance Commissions
    
    
    1,315
    
    
    
    1,125Trade Finance Fees
    
    
    865
    
    
    
    1,290Remittance Fees
    
    
    505
    
    
    
    471Other Service Charges and Fees
    
    
    716
    
    
    
    616Bank-Owned Life Insurance Income
    
    
    240
    
    
    
    230Increase in Fair Value of Derivatives
    
    
    239
    
    
    
    92Other Income
    
    
    337
    
    
    
    275Gain on Sales of Loans
    
    
    213
    
    
    
    1,400Gain on Sales of Securities Available for Sale
    
    
    618
    
    
    
    Total Non-Interest Income
    
    
    9,765
    
    
    
    9,987NON-INTEREST EXPENSES:Salaries and Employee Benefits
    
    
    11,280
    
    
    
    11,761Occupancy and Equipment
    
    
    2,782
    
    
    
    2,512Data Processing
    
    
    1,534
    
    
    
    1,563Professional Fees
    
    
    985
    
    
    
    474Advertising and Promotion
    
    
    812
    
    
    
    661Supplies and Communication
    
    
    704
    
    
    
    588Amortization of Other Intangible Assets
    
    
    524
    
    
    
    614Other Operating Expenses
    
    
    2,967
    
    
    
    2,796Total Non-Interest Expenses
    
    
    21,588
    
    
    
    20,969INCOME BEFORE PROVISION FOR INCOME TAXES
    
    
    4,553
    
    
    
    20,843Provision for Income Taxes
    
    
    1,632
    
    
    
    7,851NET INCOME
    
    $
    2,921
    
    
    $
    12,992EARNINGS PER SHARE:Basic
    
    $
    0.06
    
    
    $
    0.27Diluted
    
    $
    0.06
    
    
    $
    0.26WEIGHTED-AVERAGE SHARES OUTSTANDING:Basic
    
    
    45,842,376
    
    
    
    48,962,089Diluted
    
    
    45,918,143
    
    
    
    49,500,312DIVIDENDS DECLARED PER SHARE
    
    $
    0.06
    
    
    $
    0.06
  2




---



##### Table of Contents



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY AND COMPREHENSIVE INCOME (UNAUDITED)  (Dollars in Thousands)
 Common Stock - Number of Shares
    
    
    Stockholders EquityAccumulatedAdditional
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    Treasury
    
    
    TotalTreasury
    
    
    
    
    
    
    Common
    
    
    Paid-in
    
    
    Unearned
    
    
    Comprehensive
    
    
    Retained
    
    
    Stock,
    
    
    StockholdersIssued
    
    
    Stock
    
    
    Outstanding
    
    
    Stock
    
    
    Capital
    
    
    Compensation
    
    
    Income (Loss)
    
    
    Earnings
    
    
    at Cost
    
    
    EquityBALANCE  DECEMBER 31, 2006
    
    
    50,239,613
    
    
    
    (1,163,000
    )
    
    
    49,076,613
    
    
    $
    50
    
    
    $
    344,810
    
    
    $
    
    
    
    $
    (3,200
    )
    
    $
    164,751
    
    
    $
    (20,041
    )
    
    $
    486,370Shares Issued for Business Acquisitions
    
    
    102,181
    
    
    
    
    
    
    
    102,181
    
    
    
    
    
    
    
    2,198
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,198Exercises of Stock Options
    
    
    43,943
    
    
    
    
    
    
    
    43,943
    
    
    
    
    
    
    
    389
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    389Share-Based Compensation Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    480
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    480Cash Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,950
    )
    
    
    
    
    
    
    (2,950
    )Shares Repurchased
    
    
    
    
    
    
    (397,200
    )
    
    
    (397,200
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,057
    )
    
    
    (8,057
    )Comprehensive Income:Net Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,992
    
    
    
    
    
    
    
    12,992Change in Unrealized Loss on Securities
Available for Sale, Interest-Only Strips
and Interest Rate Swaps, Net of Tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    822
    
    
    
    
    
    
    
    
    
    
    
    822Total Comprehensive Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,814BALANCE  MARCH 31, 2007
    
    
    50,385,737
    
    
    
    (1,560,200
    )
    
    
    48,825,537
    
    
    $
    50
    
    
    $
    347,877
    
    
    $
    
    
    
    $
    (2,378
    )
    
    $
    174,793
    
    
    $
    (28,098
    )
    
    $
    492,244BALANCE  DECEMBER 31, 2007
    
    
    50,493,441
    
    
    
    (4,632,500
    )
    
    
    45,860,941
    
    
    $
    50
    
    
    $
    348,073
    
    
    $
    (245
    )
    
    $
    275
    
    
    $
    92,415
    
    
    $
    (70,012
    )
    
    $
    370,556Cumulative-Effect Adjustment from the
Adoption of EITF Issue No. 06-4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,223
    )
    
    
    
    
    
    
    (2,223
    )Shares Issued for Business Acquisitions
    
    
    39,608
    
    
    
    
    
    
    
    39,608
    
    
    
    1
    
    
    
    292
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    293Repurchase of Stock Options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (70
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (70
    )Share-Based Compensation Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    271
    
    
    
    16
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    287Restricted Stock Awards
    
    
    5,000
    
    
    
    
    
    
    
    5,000
    
    
    
    
    
    
    
    41
    
    
    
    (41
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cash Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,753
    )
    
    
    
    
    
    
    (2,753
    )Comprehensive Income:Net Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,921
    
    
    
    
    
    
    
    2,921Change in Unrealized Loss on Securities
Available for Sale, Interest-Only Strips
and Interest Rate Swaps, Net of Tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,353
    
    
    
    
    
    
    
    
    
    
    
    1,353Total Comprehensive Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,274BALANCE  MARCH 31, 2008
    
    
    50,538,049
    
    
    
    (4,632,500
    )
    
    
    45,905,549
    
    
    $
    51
    
    
    $
    348,607
    
    
    $
    (270
    )
    
    $
    1,628
    
    
    $
    90,360
    
    
    $
    (70,012
    )
    
    $
    370,364
  3




---



##### Table of Contents



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)  (In Thousands)
 Three Months EndedMarch 31,2008
    
    
    2007CASH FLOWS FROM OPERATING ACTIVITIES:Net Income
    
    $
    2,921
    
    
    $
    12,992Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities:Depreciation and Amortization of Premises and Equipment
    
    
    749
    
    
    
    703Amortization of Premiums and Accretion of Discounts on Investments, Net
    
    
    (353
    )
    
    
    48Amortization of Other Intangible Assets
    
    
    524
    
    
    
    614Amortization of Servicing Assets
    
    
    (413
    )
    
    
    (529
    )Share-Based Compensation Expense
    
    
    287
    
    
    
    480Provision for Credit Losses
    
    
    17,821
    
    
    
    6,132Federal Home Loan Bank Stock Dividends
    
    
    (239
    )
    
    
    (193
    )Gain on Sales of Securities Available for Sale
    
    
    (618
    )
    
    
    Increase in Fair Value of Derivatives
    
    
    (239
    )
    
    
    (92
    )Gain on Sales of Loans
    
    
    (213
    )
    
    
    (1,400
    )Loss on Sales of Premises and Equipment
    
    
    1
    
    
    
    10Origination of Loans Held for Sale
    
    
    (8,356
    )
    
    
    (24,698
    )Proceeds from Sales of Loans Held for Sale
    
    
    6,351
    
    
    
    35,771Decrease in Accrued Interest Receivable
    
    
    1,994
    
    
    
    180Decrease in Servicing Asset
    
    
    529
    
    
    
    580Increase in Cash Surrender Value of Bank-Owned Life Insurance
    
    
    (235
    )
    
    
    (230
    )Decrease (Increase) in Other Assets
    
    
    6,470
    
    
    
    (3,471
    )Decrease in Accrued Interest Payable
    
    
    (3,971
    )
    
    
    (203
    )Increase in Other Liabilities
    
    
    1,339
    
    
    
    5,295Other, Net
    
    
    132
    
    
    
    783Net Cash Provided By Operating Activities
    
    
    24,481
    
    
    
    32,772CASH FLOWS FROM INVESTING ACTIVITIES:Proceeds from Matured Term Federal Funds Sold
    
    
    
    
    
    
    5,000Proceeds from Matured or Called Securities Available for Sale
    
    
    30,256
    
    
    
    11,334Proceeds from Sales of Securities Available for Sale
    
    
    24,001
    
    
    
    Proceeds from Sales of Other Real Estate Owned
    
    
    155
    
    
    
    Net Increase in Loans Receivable
    
    
    (24,410
    )
    
    
    (64,317
    )Purchases of Securities Available for Sale
    
    
    (24,581
    )
    
    
    Purchases of Premises and Equipment
    
    
    (629
    )
    
    
    (944
    )Business Acquisitions, Net of Cash Acquired
    
    
    
    
    
    
    (4,121
    )Net Cash Provided By (Used In) Investing Activities
    
    
    4,792
    
    
    
    (53,048
    )CASH FLOWS FROM FINANCING ACTIVITIES:Increase in Deposits
    
    
    26,069
    
    
    
    39,292Proceeds from Exercises of Stock Options
    
    
    
    
    
    
    389Stock Issued for Business Acquisitions
    
    
    
    
    
    
    2,198Cash Paid to Acquire Treasury Stock
    
    
    
    
    
    
    (8,057
    )Cash Paid to Repurchase Stock Options
    
    
    (70
    )
    
    
    Cash Dividends Paid
    
    
    (2,753
    )
    
    
    (2,950
    )Repayment of Long-Term FHLB Advances and Other Borrowings
    
    
    (115
    )
    
    
    (109
    )Net Change in Short-Term FHLB Advances and Other Borrowings
    
    
    (71,496
    )
    
    
    (814
    )Net Cash (Used In) Provided By Financing Activities
    
    
    (48,365
    )
    
    
    29,949NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    (19,092
    )
    
    
    9,673Cash and Cash Equivalents at Beginning of Period
    
    
    122,398
    
    
    
    138,501CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    103,306
    
    
    $
    148,174SUPPLEMENTAL CASH FLOW INFORMATION:Cash Paid
During the Period for:Interest
    
    $
    38,459
    
    
    $
    29,688Income Tax
Payments, Net of Refunds
    
    $
    163
    
    
    $
    711Non-Cash
Activities:Stock Issued
for Business Acquisition Contingent Consideration
    
    $
    293
    
    
    $
    
  4




---



##### Table of Contents



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE MONTHS ENDED MARCH 31, 2008 AND 2007
 NOTE 1  BASIS OF PRESENTATION
   Note 1  Summary of
Significant Accounting Policies
 Note 7  Correction of Immaterial Errors in Prior
Periods.
 NOTE 2  FAIR VALUE MEASUREMENTS
 Fair Value Option and Fair Value Measurements
 Fair Value Measurements. Effective Date of
FASB Statement No. 157.
 The Fair Value Option for Financial Assets
and Financial Liabilities.
 5




---



##### Table of Contents



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE MONTHS ENDED MARCH 31, 2008 AND 2007 (Continued)
 NOTE 2  FAIR VALUE MEASUREMENTS (Continued)
 Fair Value Measurement
       Level 1
    
    Quoted prices (unadjusted) for identical assets or liabilities in active
markets that the entity has the ability to access as of the measurement date.     Level 2
    
    Significant other observable inputs other than Level 1 prices, such as quoted
prices for similar assets or liabilities, quoted prices in markets that are not active, and
other inputs that are observable or can be corroborated by observable market data.     Level 3
    
    Significant unobservable inputs that reflect a companys own assumptions about
the assumptions that market participants would use in pricing an asset or liability.
  Securities Available for Sale
 Loans Held for Sale
 Impaired Loans Accounting by Creditors for Impairment of a Loan,
 Derivatives
 Servicing
Assets and Servicing Liabilities
 6




---



##### Table of Contents



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE MONTHS ENDED MARCH 31, 2008 AND 2007 (Continued)
 NOTE 2  FAIR VALUE MEASUREMENTS (Continued)
 Assets and Liabilities Measured at Fair Value on a Recurring Basis
  Level 1
    
    
    Level 2
    
    
    Level 3SignificantObservableInputs WithQuoted Prices in
    
    
    No ActiveActive Markets
    
    
    Market With
    
    
    Significantfor Identical
    
    
    Identical
    
    
    Unobservable
    
    
    Balance as ofAssets
    
    
    Characteristics
    
    
    Inputs
    
    
    March 31, 2008(In Thousands)ASSETS:Securities Available for Sale:U.S. Government Agency Securities
    
    $
    105,295
    
    
    $
    
    
    
    $
    
    
    
    $
    105,295Mortgage-Backed Securities
    
    
    
    
    
    
    94,600
    
    
    
    
    
    
    
    94,600Municipal Bonds
    
    
    
    
    
    
    62,615
    
    
    
    
    
    
    
    62,615Collateralized Mortgage Obligations
    
    
    
    
    
    
    48,549
    
    
    
    
    
    
    
    48,549Corporate Bonds
    
    
    
    
    
    
    7,796
    
    
    
    
    
    
    
    7,796Other Securities
    
    
    
    
    
    
    2,922
    
    
    
    925
    
    
    
    3,847Total Securities Available for Sale
    
    $
    105,295
    
    
    $
    216,482
    
    
    $
    925
    
    
    $
    322,702Derivatives (Equity Swap)
    
    $
    
    
    
    $
    1,192
    
    
    $
    
    
    
    $
    1,192Servicing Assets
    
    $
    
    
    
    $
    
    
    
    $
    4,220
    
    
    $
    4,220LIABILITIES:Servicing Liabilities
    
    $
    
    
    
    $
    
    
    
    $
    266
    
    
    $
    266
  Fair Value Measurements Using Significant Unobservable Inputs (Level 3)Realized andRealized and
    
    
    UnrealizedUnrealized
    
    
    Gains or LossesBeginning
    
    
    Purchases,
    
    
    Gains or Losses
    
    
    in Other
    
    
    EndingBalance as of
    
    
    Issuances and
    
    
    in Earnings
    
    
    Comprehensive
    
    
    Balance as ofJanuary 1, 2008
    
    
    Settlements
    
    
    (Other Expense)
    
    
    Income
    
    
    March 31, 2008(In Thousands)ASSETS:Securities Available for
Sale (Other Securities)
    
    $
    925
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    925Servicing Assets
    
    $
    4,336
    
    
    $
    91
    
    
    $
    (207
    )
    
    $
    
    
    
    $
    4,220LIABILITIES:Servicing Liabilities
    
    $
    266
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    266
 7




---



##### Table of Contents



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE MONTHS ENDED MARCH 31, 2008 AND 2007 (Continued)
 NOTE 2  FAIR VALUE MEASUREMENTS (Continued)
 Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis
  Level 1
    
    
    Level 2
    
    
    Level 3SignificantObservableInputs WithQuoted Prices in
    
    
    No ActiveActive Markets
    
    
    Market With
    
    
    Significantfor Identical
    
    
    Identical
    
    
    Unobservable
    
    
    Balance as ofAssets
    
    
    Characteristics
    
    
    Inputs
    
    
    March 31, 2008(In Thousands)ASSETS:Loans Held for Sale
    
    $
    
    
    
    $
    8,553
    
    
    $
    
    
    
    $
    8,553Impaired Loans
    
    $
    
    
    
    $
    3,306
    
    
    $
    85,223
    
    
    $
    88,529
 NOTE 3  SHARE-BASED COMPENSATION
  Unrecognized Compensation Expense
  Unrecognized
    
    
    Average ExpectedExpense
    
    
    Recognition Period(Dollars in Thousands)Stock Option Awards
    
    $
    3,615
    
    
    2.7 yearsRestricted Stock Awards
    
    
    270
    
    
    4.3 yearsTotal Unrecognized Share-Based Compensation Expense
    
    $
    3,885
    
    
    2.8 years
 8




---



##### Table of Contents



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE MONTHS ENDED MARCH 31, 2008 AND 2007 (Continued)
 NOTE 3  SHARE-BASED COMPENSATION (Continued)
 Share-Based Payment Award Activity
  Weighted-
    
    
    Weighted-
    
    
    AggregateAverage
    
    
    Average
    
    
    IntrinsicNumber
    
    
    Exercise
    
    
    Remaining
    
    
    Value ofof
    
    
    Price Per
    
    
    Contractual
    
    
    In-the-MoneyShares
    
    
    Share
    
    
    Life
    
    
    Options(Dollars in Thousands, Except Per Share Data)Options Outstanding at Beginning of Period
    
    
    1,472,766
    
    
    $
    15.33
    
    
    7.2 years
    
    $
    735
    (1)Options Granted
    
    
    40,000
    
    
    $
    9.52
    
    
    9.8 yearsOptions Expired
    
    
    (15,800
    )
    
    $
    14.94
    
    
    6.6 yearsOptions Forfeited
    
    
    (10,600
    )
    
    $
    18.44
    
    
    8.1 yearsOptions Outstanding at End of Period
    
    
    1,486,366
    
    
    $
    15.16
    
    
    7.0 years
    
    $
    475
    (2)Options Exercisable at End of Period
    
    
    684,744
    
    
    $
    12.63
    
    
    5.5 years
    
    $
    475
    (2)
 
 (1)
    
    Intrinsic value represents the excess of the closing stock price on the last
trading day of the period, which was $8.62 as of December 31, 2007, over the exercise
price, multiplied by the number of options.(2)
    
    Intrinsic value represents the excess of the closing stock price on the last
trading day of the period, which was $7.39 as of March 31, 2008, over the exercise
price, multiplied by the number of options.   Weighted-AverageNumber
    
    
    Grant Dateof
    
    
    Fair ValueShares
    
    
    Per ShareNon-Vested Restricted Stock at Beginning of Period
    
    
    19,000
    
    
    $
    13.48Restricted Stock Awards
    
    
    5,000
    
    
    $
    8.21Non-Vested Restricted Stock at End of Period
    
    
    24,000
    
    
    $
    12.38
 NOTE 4  EARNINGS PER SHARE
  9




---



##### Table of Contents



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE MONTHS ENDED MARCH 31, 2008 AND 2007 (Continued)
 NOTE 4  EARNINGS PER SHARE (Continued)
  Weighted-Average
    
    
    PerIncome
    
    
    Shares
    
    
    Share(Numerator)
    
    
    (Denominator)
    
    
    Amount(Dollars in Thousands, Except Per Share Data)Three Months Ended March 31, 2008:Basic EPS  Income Available to Common Stockholders
    
    $
    2,921
    
    
    
    45,842,376
    
    
    $
    0.06Effect of Dilutive Securities  Options and Unvested Restricted Stock
    
    
    
    
    
    
    75,767
    
    
    
    Diluted EPS  Income Available to Common Stockholders
    
    $
    2,921
    
    
    
    45,918,143
    
    
    $
    0.06Three Months Ended March 31, 2007:Basic EPS  Income Available to Common Stockholders
    
    $
    12,992
    
    
    
    48,962,089
    
    
    $
    0.27Effect of Dilutive Securities  Options, Warrants and Unvested Restricted Stock
    
    
    
    
    
    
    538,223
    
    
    
    (0.01
    )Diluted EPS  Income Available to Common Stockholders
    
    $
    12,992
    
    
    
    49,500,312
    
    
    $
    0.26
  NOTE 5  OFF-BALANCE SHEET COMMITMENTS
   March 31,
    
    
    December 31,2008
    
    
    2007(In Thousands)Commitments to Extend Credit
    
    $
    492,671
    
    
    $
    524,349Commercial Letters of Credit
    
    
    50,579
    
    
    
    52,544Standby Letters of Credit
    
    
    48,483
    
    
    
    48,071Unused Credit Card Lines
    
    
    19,093
    
    
    
    18,622Total Undisbursed Loan Commitments
    
    $
    610,826
    
    
    $
    643,586
 10




---



##### Table of Contents



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE MONTHS ENDED MARCH 31, 2008 AND 2007 (Continued)
 NOTE 6  SEGMENT REPORTING
  NOTE 7  CORRECTION OF IMMATERIAL ERRORS IN PRIOR PERIODS
   December 31, 2007AsPreviously
    
    
    
    
    
    
    AsReported
    
    
    Adjustments
    
    
    Restated(In Thousands)CONSOLIDATED BALANCE SHEETAccrued Interest Receivable
    
    $
    17,500
    
    
    $
    (89
    )
    
    $
    17,411Total Assets
    
    $
    3,983,746
    
    
    $
    (89
    )
    
    $
    3,983,657Other Liabilities
    
    $
    13,717
    
    
    $
    900
    
    
    $
    14,617Total Liabilities
    
    $
    3,612,201
    
    
    $
    900
    
    
    $
    3,613,101Retained Earnings
    
    $
    93,404
    
    
    $
    (989
    )
    
    $
    92,415Total Stockholders Equity
    
    $
    371,545
    
    
    $
    (989
    )
    
    $
    370,556Total Liabilities and Stockholders Equity
    
    $
    3,983,746
    
    
    $
    (89
    )
    
    $
    3,983,657Three Months Ended March 31, 2007AsPreviously
    
    
    
    
    
    
    AsReported
    
    
    Adjustments
    
    
    Restated(In Thousands)CONSOLIDATED STATEMENT OF INCOMEInterest on Deposits
    
    $
    26,081
    
    
    $
    108
    
    
    $
    26,189Total Interest Expense
    
    $
    29,891
    
    
    $
    108
    
    
    $
    29,999Net Interest Income Before Provision for Credit Losses
    
    $
    38,065
    
    
    $
    (108
    )
    
    $
    37,957Net Interest Income After Provision for Credit Losses
    
    $
    31,933
    
    
    $
    (108
    )
    
    $
    31,825Income Before Provision for Income Taxes
    
    $
    20,951
    
    
    $
    (108
    )
    
    $
    20,843Provision for Income Taxes
    
    $
    7,896
    
    
    $
    (45
    )
    
    $
    7,851Net Income
    
    $
    13,055
    
    
    $
    (63
    )
    
    $
    12,992Earnings Per
Share:Basic
    
    $
    0.27
    
    
    $
    
    
    
    $
    0.27Diluted
    
    $
    0.26
    
    
    $
    
    
    
    $
    0.26
 11




---



##### Table of Contents



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE MONTHS ENDED MARCH 31, 2008 AND 2007 (Continued)
 NOTE 8  CUMULATIVE-EFFECT ADJUSTMENT FROM THE ADOPTION OF EITF ISSUE NO. 06-4
 Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split
Dollar Life Insurance Arrangements, Employers Accounting for
Postretirement Benefits Other Than Pensions,
 12




---



##### Table of Contents



ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 FORWARD-LOOKING STATEMENTS
 Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
 
    
    general economic and business conditions in those areas in which we operate;
    
    demographic changes;
    
    competition for loans and deposits;
    
    fluctuations in interest rates;
    
    risks of natural disasters related to our real estate portfolio;
    
    risks associated with Small Business Administration (SBA) loans;
    
    changes in governmental regulation;
    
    ability to receive regulatory approval for Hanmi Bank to declare dividends to Hanmi
Financial;
    
    credit quality and the effect of credit quality on our provision for credit losses and
allowance for loan losses;
    
    the ability of borrowers to perform under the terms of their loans and other terms of
credit agreements;
    
    our ability to successfully integrate acquisitions we may make;
    
    the availability of capital to fund the expansion of our business; and
    
    changes in securities markets.
 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
  CRITICAL ACCOUNTING POLICIES
 Notes to Consolidated
Financial Statements Item 7.
Managements Discussion and Analysis of Financial Condition and Results of Operations  Critical
Accounting Policies
 13




---



##### Table of Contents



SELECTED FINANCIAL DATA
  As of and for theThree Months EndedMarch 31,2008
    
    
    2007(Dollars in Thousands, Except Per Share Data)AVERAGE BALANCES:Average Gross Loans, Net (1)
    
    $
    3,303,141
    
    
    $
    2,882,632Average Investment Securities
    
    $
    342,123
    
    
    $
    386,688Average Interest-Earning Assets
    
    $
    3,689,650
    
    
    $
    3,350,245Average Total Assets
    
    $
    3,965,425
    
    
    $
    3,740,936Average Deposits
    
    $
    2,995,315
    
    
    $
    2,945,386Average Borrowings
    
    $
    553,138
    
    
    $
    251,594Average Interest-Bearing Liabilities
    
    $
    2,897,209
    
    
    $
    2,487,429Average Stockholders Equity
    
    $
    377,411
    
    
    $
    495,832Average
Tangible Equity (2)
    
    $
    263,624
    
    
    $
    276,918PER SHARE DATA:Earnings Per Share  Basic
    
    $
    0.06
    
    
    $
    0.27Earnings Per Share  Diluted
    
    $
    0.06
    
    
    $
    0.26Common Shares Outstanding
    
    
    45,905,549
    
    
    
    48,825,537Book Value
Per Share (3)
    
    $
    8.07
    
    
    $
    10.08Tangible
Book Value Per Share (4)
    
    $
    5.59
    
    
    $
    5.61Cash Dividends Per Share
    
    $
    0.06
    
    
    $
    0.06SELECTED PERFORMANCE RATIOS:Return on
Average Assets (5) (6)
    
    
    0.30
    %
    
    
    1.41
    %Return on
Average Stockholders Equity (5) (7)
    
    
    3.11
    %
    
    
    10.63
    %Return on
Average Tangible Equity (5) (8)
    
    
    4.46
    %
    
    
    19.03
    %Net Interest
Spread (9)
    
    
    2.81
    %
    
    
    3.34
    %Net Interest
Margin (10)
    
    
    3.73
    %
    
    
    4.59
    %Efficiency
Ratio (11)
    
    
    49.11
    %
    
    
    43.74
    %Dividend
Payout Ratio (12)
    
    
    94.28
    %
    
    
    22.55
    %Average Stockholders Equity to Average Total Assets
    
    
    9.52
    %
    
    
    13.25
    %SELECTED
CAPITAL RATIOS:(13)Total Risk-Based Capital Ratio:Hanmi Financial
    
    
    10.74
    %
    
    
    12.19
    %Hanmi Bank
    
    
    10.79
    %
    
    
    12.30
    %Tier 1 Risk-Based Capital Ratio:Hanmi Financial
    
    
    9.48
    %
    
    
    11.15
    %Hanmi Bank
    
    
    9.54
    %
    
    
    11.25
    %Tier 1 Leverage Ratio:Hanmi Financial
    
    
    8.69
    %
    
    
    10.09
    %Hanmi Bank
    
    
    8.74
    %
    
    
    10.18
    %SELECTED ASSET QUALITY RATIOS:Non-Performing Loans to Total Gross Loans (14)
    
    
    2.68
    %
    
    
    0.67
    %Non-Performing Assets to Total Assets (15)
    
    
    2.25
    %
    
    
    0.52
    %Net Loan
Charge-Offs to Average Total Gross Loans (16)
    
    
    0.89
    %
    
    
    0.34
    %Allowance for Loan Losses to Total Gross Loans
    
    
    1.60
    %
    
    
    1.08
    %Allowance for Loan Losses to Non-Performing Loans
    
    
    59.72
    %
    
    
    161.55
    %
 
 (1)
    
    Loans are net of deferred fees and related direct costs.(2)
    
    Average tangible equity is calculated by subtracting average goodwill and average
core deposit intangible assets from average stockholders equity. See Non-GAAP Financial
Measures.(3)
    
    Total stockholders equity divided by common shares outstanding.(4)
    
    Tangible equity divided by common shares outstanding. See Non-GAAP Financial Measures.(5)
    
    Calculation based upon annualized net income.(6)
    
    Net income divided by average total assets.(7)
    
    Net income divided by average stockholders equity.(8)
    
    Net income divided by average tangible equity. See Non-GAAP Financial Measures.(9)
    
    Average yield earned on interest-earning assets less average rate paid on interest-bearing liabilities.(10)
    
    Net interest income before provision for credit losses divided by average interest-earning assets.(11)
    
    Total non-interest expenses divided by the sum of net interest income before provision for credit losses and total non-interest income.(12)
    
    Cash dividends per share times common shares outstanding divided by net income.(13)
    
    The required ratios for a well-capitalized institution, as defined by regulations
of the Board of Governors of the Federal Reserve System (the FRB), are 10 percent for Total
Risk-Based Capital Ratio (total capital divided by total risk-weighted assets); 6 percent for
Tier 1 Risk-Based Capital Ratio (Tier 1 capital divided by total risk-weighted assets); and 5
percent for Tier 1 Leverage Ratio (Tier 1 capital divided by average total assets).(14)
    
    Non-performing loans consist of non-accrual loans, loans past due 90 days or more and restructured loans.(15)
    
    Non-performing assets consist of non-performing loans (see footnote (14) above) and other real estate owned.(16)
    
    Calculation based upon annualized net loan charge-offs. 14




---



##### Table of Contents



Non-GAAP Financial Measures
 Return on Average Tangible Equity
   Three Months EndedMarch 31,2008
    
    
    2007(Dollars in Thousands)Average Stockholders Equity
    
    $
    377,411
    
    
    $
    495,832Less Average Goodwill and Average Other Intangible Assets
    
    
    (113,787
    )
    
    
    (218,914
    )Average Tangible Equity
    
    $
    263,624
    
    
    $
    276,918Return on Average Stockholders Equity
    
    
    3.11
    %
    
    
    10.63
    %Effect of Average Goodwill and Average Other Intangible Assets
    
    
    1.35
    %
    
    
    8.40
    %Return on Average Tangible Equity
    
    
    4.46
    %
    
    
    19.03
    %
 Tangible Book Value Per Share
   March 31,2008
    
    
    2007(Dollars in Thousands;Except Per Share Data)Total Stockholders Equity
    
    $
    370,364
    
    
    $
    492,244Less Goodwill and Other Intangible Assets
    
    
    (113,777
    )
    
    
    (218,560
    )Tangible Equity
    
    $
    256,587
    
    
    $
    273,684Book Value Per Share
    
    $
    8.07
    
    
    $
    10.08Effect of Goodwill and Other Intangible Assets
    
    
    (2.48
    )
    
    
    (4.47
    )Tangible Book Value Per Share
    
    $
    5.59
    
    
    $
    5.61
 15




---



##### Table of Contents



EXECUTIVE OVERVIEW
     Key Performance Indicators
  
    
    Return on average assets was 0.30 percent for the three months ended March 31, 2008,
compared to 1.41 percent for the same period in 2007.
    
    Return on average stockholders equity was 3.11 percent for the three months ended
March 31, 2008, and the annualized return on average tangible equity was 4.46 percent,
compared to 10.63 percent and 19.03 percent, respectively, for the same period in 2007.
    
    The efficiency ratio (non-interest expenses divided by the sum of net interest income
before provision for credit losses and non-interest income) was 49.11 percent for the three
months ended March 31, 2008, compared to 43.74 percent for the same quarter in 2007
    
    The net interest spread and net interest margin for the three months ended March 31,
2008 were 2.81 percent and 3.73 percent, respectively, compared to 3.34 percent and 4.59
percent, respectively, for the same period in 2007.
  
    
    Investment securities decreased $26.8 million, or 7.7 percent, from $350.5 million as
of December 31, 2007 to $323.6 million as of March 31, 2008.
    
    Loans receivable (including loans held for sale), net of deferred loan fees and
allowance for loan losses, increased $10.0 million, or 0.3 percent, from $3.24 billion as
of December 31, 2007 to $3.25 billion as of March 31, 2008.
    
    Total deposits increased $26.1 million, or 0.9 percent, from $3.00 billion as of
December 31, 2007 to $3.03 billion as of March 31, 2008.
 16




---



##### Table of Contents



2008 Outlook
  Item 2.
Managements Discussion and Analysis of Financial Condition and Results of Operations  Interest
Rate Risk Management  Liquidity and Capital Resources
 RESULTS OF OPERATIONS
 Net Interest Income Before Provision for Credit Losses
   17




---



##### Table of Contents



Three Months EndedMarch 31, 2008
    
    
    March 31, 2007Interest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    AverageAverage
    
    
    Income/
    
    
    Yield/
    
    
    Average
    
    
    Income/
    
    
    Yield/Balance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    Rate(Dollars in Thousands)ASSETSInterest-Earning Assets:Gross Loans,
Net (1)
    
    $
    3,303,141
    
    
    $
    60,598
    
    
    
    7.38
    %
    
    $
    2,882,632
    
    
    $
    62,561
    
    
    
    8.80
    %Municipal
Securities (2)
    
    
    71,879
    
    
    
    759
    
    
    
    4.22
    %
    
    
    72,396
    
    
    
    764
    
    
    
    4.22
    %Obligations of Other U.S. Government Agencies
    
    
    109,860
    
    
    
    1,245
    
    
    
    4.53
    %
    
    
    118,267
    
    
    
    1,256
    
    
    
    4.25
    %Other Debt Securities
    
    
    160,384
    
    
    
    1,871
    
    
    
    4.67
    %
    
    
    196,025
    
    
    
    2,275
    
    
    
    4.64
    %Equity Securities
    
    
    33,490
    
    
    
    414
    
    
    
    4.94
    %
    
    
    25,008
    
    
    
    369
    
    
    
    5.90
    %Federal Funds Sold
    
    
    10,896
    
    
    
    83
    
    
    
    3.05
    %
    
    
    55,528
    
    
    
    726
    
    
    
    5.23
    %Term Federal Funds Sold
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    389
    
    
    
    5
    
    
    
    5.14
    %Total Interest-Earning Assets
    
    
    3,689,650
    
    
    
    64,970
    
    
    
    7.08
    %
    
    
    3,350,245
    
    
    
    67,956
    
    
    
    8.23
    %Noninterest-Earning Assets:Cash and Cash Equivalents
    
    
    93,793
    
    
    
    
    
    
    
    
    
    
    
    90,766Allowance for Loan Losses
    
    
    (42,545
    )
    
    
    
    
    
    
    
    
    
    
    (27,085
    )Other Assets
    
    
    224,527
    
    
    
    
    
    
    
    
    
    
    
    327,010Total Noninterest-Earning Assets
    
    
    275,775
    
    
    
    
    
    
    
    
    
    
    
    390,691Total Assets
    
    $
    3,965,425
    
    
    
    
    
    
    
    
    
    
    $
    3,740,936LIABILITIES AND STOCKHOLDERS EQUITYInterest-Bearing Liabilities:Deposits:Savings
    
    $
    92,467
    
    
    
    527
    
    
    
    2.29
    %
    
    $
    100,777
    
    
    
    461
    
    
    
    1.86
    %Money Market Checking and NOW Accounts
    
    
    557,493
    
    
    
    4,660
    
    
    
    3.36
    %
    
    
    427,871
    
    
    
    3,472
    
    
    
    3.29
    %Time Deposits of $100,000 or More
    
    
    1,354,466
    
    
    
    15,687
    
    
    
    4.66
    %
    
    
    1,406,311
    
    
    
    18,498
    
    
    
    5.33
    %Other Time Deposits
    
    
    339,645
    
    
    
    3,973
    
    
    
    4.70
    %
    
    
    300,876
    
    
    
    3,758
    
    
    
    5.07
    %FHLB Advances and Other Borrowings
    
    
    470,732
    
    
    
    4,477
    
    
    
    3.83
    %
    
    
    169,188
    
    
    
    2,171
    
    
    
    5.20
    %Junior Subordinated Debentures
    
    
    82,406
    
    
    
    1,449
    
    
    
    7.07
    %
    
    
    82,406
    
    
    
    1,639
    
    
    
    8.07
    %Total Interest-Bearing Liabilities
    
    
    2,897,209
    
    
    
    30,773
    
    
    
    4.27
    %
    
    
    2,487,429
    
    
    
    29,999
    
    
    
    4.89
    %Noninterest-Bearing Liabilities:Demand Deposits
    
    
    651,244
    
    
    
    
    
    
    
    
    
    
    
    709,551Other Liabilities
    
    
    39,561
    
    
    
    
    
    
    
    
    
    
    
    48,124Total Noninterest-Bearing Liabilities
    
    
    690,805
    
    
    
    
    
    
    
    
    
    
    
    757,675Total Liabilities
    
    
    3,588,014
    
    
    
    
    
    
    
    
    
    
    
    3,245,104Stockholders Equity
    
    
    377,411
    
    
    
    
    
    
    
    
    
    
    
    495,832Total Liabilities and Stockholders Equity
    
    $
    3,965,425
    
    
    
    
    
    
    
    
    
    
    $
    3,740,936Net Interest Income
    
    
    
    
    
    $
    34,197
    
    
    
    
    
    
    
    
    
    
    $
    37,957Net
Interest Spread(3)
    
    
    
    
    
    
    
    
    
    
    2.81
    %
    
    
    
    
    
    
    
    
    
    
    3.34
    %Net
Interest Margin(4)
    
    
    
    
    
    
    
    
    
    
    3.73
    %
    
    
    
    
    
    
    
    
    
    
    4.59
    %
 
 (1)
    
    Loans are net of deferred fees and related direct costs, but excluding the allowance
for loan losses. Non-accrual loans are included in the average loan balance. Loan fees have
been included in the calculation of interest income. Loan fees were $588,000 and $902,000 for
the three months ended March 31, 2008 and 2007, respectively.(2)
    
    If computed on a tax-equivalent basis using an effective marginal rate of 35
percent, tax-exempt income would be $1.2 million and $1.2 million, and the yields would be
6.50 percent and 6.49 percent, for the three months ended March 31, 2008 and 2007,
respectively.(3)
    
    Represents the average rate earned on interest-earning assets less the average rate
paid on interest-bearing liabilities.(4)
    
    Represents annualized net interest income as a percentage of average
interest-earning assets. 18




---



##### Table of Contents



Three Months EndedMarch 31, 2008 vs. 2007Increases (Decreases)Due to Change inVolume
    
    
    Rate
    
    
    Total(In Thousands)Interest and Dividend Income:Gross Loans, Net
    
    $
    8,744
    
    
    $
    (10,707
    )
    
    $
    (1,963
    )Municipal Securities
    
    
    (5
    )
    
    
    
    
    
    
    (5
    )Obligations of Other U.S. Government Agencies
    
    
    (92
    )
    
    
    81
    
    
    
    (11
    )Other Debt Securities
    
    
    (416
    )
    
    
    12
    
    
    
    (404
    )Equity Securities
    
    
    111
    
    
    
    (66
    )
    
    
    45Federal Funds Sold
    
    
    (423
    )
    
    
    (220
    )
    
    
    (643
    )Term Federal Funds Sold
    
    
    (5
    )
    
    
    
    
    
    
    (5
    )Total Interest and Dividend Income
    
    
    7,914
    
    
    
    (10,900
    )
    
    
    (2,986
    )Interest Expense:Savings
    
    
    (40
    )
    
    
    106
    
    
    
    66Money Market Checking and NOW Accounts
    
    
    1,109
    
    
    
    79
    
    
    
    1,188Time Deposits of $100,000 or More
    
    
    (633
    )
    
    
    (2,178
    )
    
    
    (2,811
    )Other Time Deposits
    
    
    486
    
    
    
    (271
    )
    
    
    215FHLB Advances and Other Borrowings
    
    
    3,017
    
    
    
    (711
    )
    
    
    2,306Junior Subordinated Debentures
    
    
    
    
    
    
    (190
    )
    
    
    (190
    )Total Interest Expense
    
    
    3,939
    
    
    
    (3,165
    )
    
    
    774Change in Net Interest Income
    
    $
    3,975
    
    
    $
    (7,735
    )
    
    $
    (3,760
    )
    19




---



##### Table of Contents



Provision for Credit Losses
  Non-Interest Income
  Three Months EndedMarch 31,
    
    
    Increase (Decrease)2008
    
    
    2007
    
    
    Amount
    
    
    Percentage(Dollars in Thousands)Service Charges on Deposit Accounts
    
    $
    4,717
    
    
    $
    4,488
    
    
    $
    229
    
    
    
    5.1
    %Insurance Commissions
    
    
    1,315
    
    
    
    1,125
    
    
    
    190
    
    
    
    16.9
    %Trade Finance Fees
    
    
    865
    
    
    
    1,290
    
    
    
    (425
    )
    
    
    (32.9
    )%Remittance Fees
    
    
    505
    
    
    
    471
    
    
    
    34
    
    
    
    7.2
    %Other Service Charges and Fees
    
    
    716
    
    
    
    616
    
    
    
    100
    
    
    
    16.2
    %Bank-Owned Life Insurance Income
    
    
    240
    
    
    
    230
    
    
    
    10
    
    
    
    4.3
    %Increase in Fair Value of Derivatives
    
    
    239
    
    
    
    92
    
    
    
    147
    
    
    
    159.8
    %Other Income
    
    
    337
    
    
    
    275
    
    
    
    62
    
    
    
    22.5
    %Gain on Sales of Loans
    
    
    213
    
    
    
    1,400
    
    
    
    (1,187
    )
    
    
    (84.8
    )%Gain on Sales of Securities Available for Sale
    
    
    618
    
    
    
    
    
    
    
    618
    
    
    
    Total Non-Interest Income
    
    $
    9,765
    
    
    $
    9,987
    
    
    $
    (222
    )
    
    
    (2.2
    )%
    20




---



##### Table of Contents



Non-Interest Expenses
  Three Months EndedMarch 31,
    
    
    Increase (Decrease)2008
    
    
    2007
    
    
    Amount
    
    
    Percentage(Dollars in Thousands)Salaries and Employee Benefits
    
    $
    11,280
    
    
    $
    11,761
    
    
    $
    (481
    )
    
    
    (4.1
    )%Occupancy and Equipment
    
    
    2,782
    
    
    
    2,512
    
    
    
    270
    
    
    
    10.7
    %Data Processing
    
    
    1,534
    
    
    
    1,563
    
    
    
    (29
    )
    
    
    (1.9
    )%Professional Fees
    
    
    985
    
    
    
    474
    
    
    
    511
    
    
    
    107.8
    %Advertising and Promotion
    
    
    812
    
    
    
    661
    
    
    
    151
    
    
    
    22.8
    %Supplies and Communications
    
    
    704
    
    
    
    588
    
    
    
    116
    
    
    
    19.7
    %Amortization of Other Intangible Assets
    
    
    524
    
    
    
    614
    
    
    
    (90
    )
    
    
    (14.7
    )%Other Operating Expenses
    
    
    2,967
    
    
    
    2,796
    
    
    
    171
    
    
    
    6.1
    %Total Non-Interest Expenses
    
    $
    21,588
    
    
    $
    20,969
    
    
    $
    619
    
    
    
    3.0
    %
     Provision for Income Taxes
  21




---



##### Table of Contents



FINANCIAL CONDITION
 Investment Portfolio
 Accounting for Certain Investments in Debt and Equity Securities.
  March 31, 2008
    
    
    December 31, 2007Estimated
    
    
    Unrealized
    
    
    
    
    
    
    Estimated
    
    
    UnrealizedAmortized
    
    
    Fair
    
    
    Gain
    
    
    Amortized
    
    
    Fair
    
    
    GainCost
    
    
    Value
    
    
    (Loss)
    
    
    Cost
    
    
    Value
    
    
    (Loss)(In Thousands)Held to Maturity:Municipal Bonds
    
    $
    694
    
    
    $
    694
    
    
    $
    
    
    
    $
    694
    
    
    $
    694
    
    
    $
    Mortgage-Backed Securities
    
    
    240
    
    
    
    238
    
    
    
    (2
    )
    
    
    246
    
    
    
    247
    
    
    
    1Total Held to Maturity
    
    $
    934
    
    
    $
    932
    
    
    $
    (2
    )
    
    $
    940
    
    
    $
    941
    
    
    $
    1Available for Sale:U.S. Government Agency Securities
    
    $
    104,553
    
    
    $
    105,295
    
    
    $
    742
    
    
    $
    104,893
    
    
    $
    105,089
    
    
    $
    196Mortgage-Backed Securities
    
    
    93,638
    
    
    
    94,600
    
    
    
    962
    
    
    
    99,332
    
    
    
    99,198
    
    
    
    (134
    )Municipal Bonds
    
    
    61,032
    
    
    
    62,615
    
    
    
    1,583
    
    
    
    69,907
    
    
    
    71,751
    
    
    
    1,844Collateralized Mortgage Obligations
    
    
    48,143
    
    
    
    48,549
    
    
    
    406
    
    
    
    51,881
    
    
    
    51,418
    
    
    
    (463
    )Corporate Bonds
    
    
    7,910
    
    
    
    7,796
    
    
    
    (114
    )
    
    
    18,295
    
    
    
    18,226
    
    
    
    (69
    )Other Securities
    
    
    3,925
    
    
    
    3,847
    
    
    
    (78
    )
    
    
    3,925
    
    
    
    3,835
    
    
    
    (90
    )Total Available for Sale
    
    $
    319,201
    
    
    $
    322,702
    
    
    $
    3,501
    
    
    $
    348,233
    
    
    $
    349,517
    
    
    $
    1,284
  Available for Sale
    
    
    Held to MaturityEstimated
    
    
    
    
    
    
    EstimatedAmortized
    
    
    Fair
    
    
    Amortized
    
    
    FairCost
    
    
    Value
    
    
    Cost
    
    
    ValueWithin One Year
    
    $
    50,912
    
    
    $
    51,155
    
    
    $
    
    
    
    $
    Over One Year Through Five Years
    
    
    68,588
    
    
    
    68,964
    
    
    
    
    
    
    
    Over Five Years Through Ten Years
    
    
    7,293
    
    
    
    7,509
    
    
    
    694
    
    
    
    694Over Ten Years
    
    
    50,627
    
    
    
    51,925
    
    
    
    
    
    
    
    Mortgage-Backed Securities
    
    
    93,638
    
    
    
    94,600
    
    
    
    240
    
    
    
    238Collateralized Mortgage Obligations
    
    
    48,143
    
    
    
    48,549
    
    
    
    
    
    
    
    $
    319,201
    
    
    $
    322,702
    
    
    $
    934
    
    
    $
    932
  22




---



##### Table of Contents



Loan Portfolio
   March 31,
    
    
    December 31,
    
    
    Increase (Decrease)2008
    
    
    2007
    
    
    Amount
    
    
    Percentage(Dollars in Thousands)Real Estate Loans:Commercial Property
    
    $
    784,746
    
    
    $
    795,675
    
    
    $
    (10,929
    )
    
    
    (1.4
    )%Construction
    
    
    217,274
    
    
    
    215,857
    
    
    
    1,417
    
    
    
    0.7
    %Residential Property (1)
    
    
    90,101
    
    
    
    90,375
    
    
    
    (274
    )
    
    
    (0.3
    )%Total Real Estate Loans
    
    
    1,092,121
    
    
    
    1,101,907
    
    
    
    (9,786
    )
    
    
    (0.9
    )%Commercial and Industrial Loans:Commercial Term Loans
    
    
    1,630,516
    
    
    
    1,599,853
    
    
    
    30,663
    
    
    
    1.9
    %Commercial Lines of Credit
    
    
    249,400
    
    
    
    256,978
    
    
    
    (7,578
    )
    
    
    (2.9
    )%SBA Loans (2)
    
    
    140,988
    
    
    
    118,528
    
    
    
    22,460
    
    
    
    18.9
    %International Loans
    
    
    102,837
    
    
    
    119,360
    
    
    
    (16,523
    )
    
    
    (13.8
    )%Total Commercial and Industrial Loans
    
    
    2,123,741
    
    
    
    2,094,719
    
    
    
    29,022
    
    
    
    1.4
    %Consumer Loans
    
    
    90,087
    
    
    
    90,449
    
    
    
    (362
    )
    
    
    (0.4
    )%Total Loans Gross
    
    
    3,305,949
    
    
    
    3,287,075
    
    
    
    18,874
    
    
    
    0.6
    %Deferred Loan Fees
    
    
    (1,910
    )
    
    
    (2,367
    )
    
    
    457
    
    
    
    (19.3
    )%Allowance for Loan Losses
    
    
    (52,986
    )
    
    
    (43,611
    )
    
    
    (9,375
    )
    
    
    21.5
    %Net Loans Receivable
    
    $
    3,251,053
    
    
    $
    3,241,097
    
    
    $
    9,956
    
    
    
    0.3
    %
 
 (1)
    
    Includes loans held for sale, at the lower of cost or market, of $700,000 and
$310,000 at March 31, 2008 and December 31, 2007, respectively.(2)
    
    Includes loans held for sale, at the lower of cost or market, of $7.9 million and
$6.0 million at March 31, 2008 and December 31, 2007, respectively.   Percentageof TotalBalance at
    
    Gross LoansIndustry
    
    March 31, 2008
    
    Outstanding(Dollars in Thousands)Accommodation/Hospitality
    
    $
    423,986
    
    
    
    12.82
    %Gasoline Stations
    
    $
    363,613
    
    
    
    11.00
    %Lessors of Non-Residential Buildings
    
    $
    333,020
    
    
    
    10.07
    %
  23




---



##### Table of Contents



Non-Performing Assets
    March 31,
    
    
    December 31,
    
    
    Increase (Decrease)2008
    
    
    2007
    
    
    Amount
    
    
    Percentage(Dollars in Thousands)Non-Accrual Loans
    
    $
    88,529
    
    
    $
    54,252
    
    
    $
    34,277
    
    
    
    63.2
    %Loans 90 Days or More Past Due and Still Accruing
    
    
    191
    
    
    
    227
    
    
    
    (36
    )
    
    
    (15.9
    )%Total Non-Performing Loans
    
    
    88,720
    
    
    
    54,479
    
    
    
    34,241
    
    
    
    62.9
    %Other Real Estate Owned
    
    
    
    
    
    
    287
    
    
    
    (287
    )
    
    
    (100.0
    )%Total Non-Performing Assets
    
    $
    88,720
    
    
    $
    54,766
    
    
    $
    33,954
    
    
    
    62.0
    %
  Allowance for Loan Losses and Allowance for Off-Balance Sheet Items
   24




---



##### Table of Contents



Provision for Credit Losses.
 25




---



##### Table of Contents



As of and for the Three Months EndedMarch 31,
    
    
    December 31,
    
    
    March 31,2008
    
    
    2007
    
    
    2007(Dollars in Thousands)Allowance for Loan Losses:Balance at Beginning of Period
    
    $
    43,611
    
    
    $
    34,503
    
    
    $
    27,557Actual Charge-Offs
    
    
    (7,852
    )
    
    
    (11,834
    )
    
    
    (2,619
    )Recoveries on Loans Previously Charged Off
    
    
    555
    
    
    
    206
    
    
    
    215Net Loan Charge-Offs
    
    
    (7,297
    )
    
    
    (11,628
    )
    
    
    (2,404
    )Provision Charged to Operating Expenses
    
    
    16,672
    
    
    
    20,736
    
    
    
    6,374Balance at End of Period
    
    $
    52,986
    
    
    $
    43,611
    
    
    $
    31,527Allowance for Off-Balance Sheet Items:Balance at Beginning of Period
    
    $
    1,765
    
    
    $
    1,797
    
    
    $
    2,130Provision Charged to Operating Expenses
    
    
    1,149
    
    
    
    (32
    )
    
    
    (242
    )Balance at End of Period
    
    $
    2,914
    
    
    $
    1,765
    
    
    $
    1,888Ratios:Net Loan Charge-Offs to Average Total Gross Loans (1)
    
    
    0.89
    %
    
    
    1.40
    %
    
    
    0.34
    %Net Loan Charge-Offs to Total Gross Loans (1)
    
    
    0.89
    %
    
    
    1.40
    %
    
    
    0.33
    %Allowance for Loan Losses to Average Total Gross Loans
    
    
    1.60
    %
    
    
    1.33
    %
    
    
    1.09
    %Allowance for Loan Losses to Total Gross Loans
    
    
    1.60
    %
    
    
    1.33
    %
    
    
    1.08
    %Net Loan Charge-Offs to Allowance for Loan Losses (1)
    
    
    55.39
    %
    
    
    105.78
    %
    
    
    30.92
    %Net Loan Charge-Offs to Provision Charged to Operating Expenses
    
    
    43.77
    %
    
    
    56.08
    %
    
    
    37.72
    %Allowance for Loan Losses to Non-Performing Loans
    
    
    59.72
    %
    
    
    80.05
    %
    
    
    161.55
    %Balances:Average Total Gross Loans
    
    $
    3,305,252
    
    
    $
    3,286,079
    
    
    $
    2,885,229Total Gross Loans
    
    $
    3,305,949
    
    
    $
    3,287,075
    
    
    $
    2,919,600Non-Performing Loans
    
    $
    88,720
    
    
    $
    54,766
    
    
    $
    19,515
 
 (1)
    
    Net loan charge-offs are annualized to calculate the ratios. Deposits
  March 31,
    
    
    December 31,
    
    
    Increase (Decrease)2008
    
    
    2007
    
    
    Amount
    
    
    Percentage(Dollars in Thousands)Demand  Noninterest-Bearing
    
    $
    676,471
    
    
    $
    680,282
    
    
    $
    (3,811
    )
    
    
    (0.6
    )%Interest-Bearing:Savings
    
    
    92,189
    
    
    
    93,099
    
    
    
    (910
    )
    
    
    (1.0
    )%Money Market Checking and NOW Accounts
    
    
    696,552
    
    
    
    445,806
    
    
    
    250,746
    
    
    
    56.2
    %Time Deposits of $100,000 or More
    
    
    1,248,853
    
    
    
    1,441,683
    
    
    
    (192,830
    )
    
    
    (13.4
    )%Other Time Deposits
    
    
    313,703
    
    
    
    340,829
    
    
    
    (27,126
    )
    
    
    (8.0
    )%Total Deposits
    
    $
    3,027,768
    
    
    $
    3,001,699
    
    
    $
    26,069
    
    
    
    0.9
    %
  26




---



##### Table of Contents



FHLB Advances and Other Borrowings
  Junior Subordinated Debentures
  INTEREST RATE RISK MANAGEMENT
  27




---



##### Table of Contents



After Three
    
    
    After OneWithin
    
    
    Months
    
    
    Year But
    
    
    
    
    
    
    Non-Three
    
    
    But Within
    
    
    Within Five
    
    
    After Five
    
    
    Interest-Months
    
    
    One Year
    
    
    Years
    
    
    Years
    
    
    Sensitive
    
    
    Total(Dollars in Thousands)ASSETSCash and Due From Banks
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    101,306
    
    
    $
    101,306Federal Funds Sold
    
    
    2,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,000Securities:Fixed Rate
    
    
    13,106
    
    
    
    63,431
    
    
    
    129,671
    
    
    
    93,472
    
    
    
    
    
    
    
    299,680Floating Rate
    
    
    4,458
    
    
    
    
    
    
    
    15,651
    
    
    
    3,847
    
    
    
    
    
    
    
    23,956Loans:Fixed Rate
    
    
    50,587
    
    
    
    89,740
    
    
    
    602,048
    
    
    
    598,326
    
    
    
    
    
    
    
    1,340,701Floating Rate
    
    
    1,703,853
    
    
    
    27,637
    
    
    
    145,184
    
    
    
    45
    
    
    
    
    
    
    
    1,876,719Non-Accrual
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    88,529
    
    
    
    88,529Deferred Loan Fees and Allowance for Loan
Losses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (54,896
    )
    
    
    (54,896
    )FRB and FHLB Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33,718
    
    
    
    
    
    
    
    33,718Other Assets
    
    
    
    
    
    
    24,760
    
    
    
    
    
    
    
    7,336
    
    
    
    196,586
    
    
    
    228,682Total Assets
    
    $
    1,774,004
    
    
    $
    205,568
    
    
    $
    892,554
    
    
    $
    736,744
    
    
    $
    331,525
    
    
    $
    3,940,395LIABILITIES ANDSTOCKHOLDERS EQUITYLiabilities:Deposits:Demand Deposits
    
    $
    45,770
    
    
    $
    135,635
    
    
    $
    325,523
    
    
    $
    169,543
    
    
    $
    
    
    
    $
    676,471Savings
    
    
    16,369
    
    
    
    31,698
    
    
    
    35,833
    
    
    
    8,289
    
    
    
    
    
    
    
    92,189Money Market Checking and NOW Accounts
    
    
    104,641
    
    
    
    200,118
    
    
    
    225,619
    
    
    
    166,174
    
    
    
    
    
    
    
    696,552Time Deposits:Fixed Rate
    
    
    851,825
    
    
    
    701,642
    
    
    
    8,920
    
    
    
    115
    
    
    
    
    
    
    
    1,562,502Floating Rate
    
    
    54
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    54FHLB Advances and Other Borrowings
    
    
    308,004
    
    
    
    96,000
    
    
    
    7,041
    
    
    
    4,508
    
    
    
    
    
    
    
    415,553Junior Subordinated Debentures
    
    
    82,406
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    82,406Other Liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44,304
    
    
    
    44,304Stockholders Equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    370,364
    
    
    
    370,364Total Liabilities and Stockholders Equity
    
    $
    1,409,069
    
    
    $
    1,165,093
    
    
    $
    602,936
    
    
    $
    348,629
    
    
    $
    414,668
    
    
    $
    3,940,395Repricing Gap
    
    $
    364,935
    
    
    $
    (959,525
    )
    
    $
    289,618
    
    
    $
    388,115
    
    
    $
    (83,143
    )Cumulative Repricing Gap
    
    $
    364,935
    
    
    $
    (594,590
    )
    
    $
    (304,972
    )
    
    $
    83,143
    
    
    $
    Cumulative Repricing Gap as a Percentage of
Total Assets
    
    
    9.26
    %
    
    
    (15.09
    )%
    
    
    (7.74
    )%
    
    
    2.11
    %Cumulative Repricing Gap as a Percentage of
Interest-Earning Assets
    
    
    10.20
    %
    
    
    (16.62
    )%
    
    
    (8.53
    )%
    
    
    2.32
    %
   28




---



##### Table of Contents



Less than Three Months
    
    
    Less Than Twelve MonthsMarch 31,
    
    
    December 31,
    
    
    March 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2008
    
    
    2007(Dollars in Thousands)Cumulative Repricing Gap
    
    $
    364,935
    
    
    $
    57,250
    
    
    $
    (594,590
    )
    
    $
    (740,764
    )Percentage of Total Assets
    
    
    9.26
    %
    
    
    1.44
    %
    
    
    (15.09
    )%
    
    
    (18.59
    )%Percentage of Interest-Earning Assets
    
    
    10.20
    %
    
    
    1.58
    %
    
    
    (16.62
    )%
    
    
    (20.39
    )%
   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
    %
    
    
    6.76
    %
    
    
    (20.88
    )%
    
    $
    8,515
    
    
    $
    (95,470
    )100
    %
    
    
    3.38
    %
    
    
    (10.81
    )%
    
    $
    4,265
    
    
    $
    (49,416
    )(100
    )%
    
    
    (3.52
    )%
    
    
    11.34
    %
    
    $
    (4,433
    )
    
    $
    51,837(200
    )%
    
    
    (6.99
    )%
    
    
    30.96
    %
    
    $
    (8,814
    )
    
    $
    141,561
  LIQUIDITY AND CAPITAL RESOURCES
  29




---



##### Table of Contents



Capital Ratios
   Minimum
    
    
    Minimum to BeRegulatory
    
    
    Categorized asActual
    
    
    Requirement
    
    
    Well CapitalizedAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio(Dollars in Thousands)Total Capital (to Risk-Weighted Assets):Hanmi Financial
    
    $
    378,694
    
    
    
    10.74
    %
    
    $
    282,169
    
    
    
    8.00
    %
    
    
    N/A
    
    
    
    N/AHanmi Bank
    
    $
    380,234
    
    
    
    10.79
    %
    
    $
    281,889
    
    
    
    8.00
    %
    
    $
    352,362
    
    
    
    10.00
    %Tier 1 Capital (to Risk-Weighted Assets):Hanmi Financial
    
    $
    334,459
    
    
    
    9.48
    %
    
    $
    141,085
    
    
    
    4.00
    %
    
    
    N/A
    
    
    
    N/AHanmi Bank
    
    $
    336,042
    
    
    
    9.54
    %
    
    $
    140,945
    
    
    
    4.00
    %
    
    $
    211,417
    
    
    
    6.00
    %Tier 1 Capital (to Average Total Assets):Hanmi Financial
    
    $
    334,459
    
    
    
    8.69
    %
    
    $
    153,942
    
    
    
    4.00
    %
    
    
    N/A
    
    
    
    N/AHanmi Bank
    
    $
    336,042
    
    
    
    8.74
    %
    
    $
    153,803
    
    
    
    4.00
    %
    
    $
    192,253
    
    
    
    5.00
    %
 30




---



##### Table of Contents



Dividends
     OFF-BALANCE SHEET ARRANGEMENTS
 Note 5  Off-Balance Sheet
Commitments Item 1.
Business  Off-Balance Sheet Commitments
 CONTRACTUAL OBLIGATIONS
  RECENTLY ISSUED ACCOUNTING STANDARDS
 SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment
of FASB Statement No. 133
 31




---



##### Table of Contents



SFAS No. 160, Non-Controlling Interest in Consolidated Financial Statements  an Amendment
of ARB No. 51
 SFAS No. 141(R), Business Combinations
 SAB No. 109, Written Loan Commitments Recorded at Fair Value through Earnings Application of Accounting Principles to Loan
Commitments,
 
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Interest Rate Risk Management  Liquidity and Capital Resources.
 32




---



##### Table of Contents



ITEM 4. CONTROLS AND PROCEDURES
    
 PART II  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5. OTHER INFORMATION
  33




---



##### Table of Contents



ITEM 6. EXHIBITS
 ExhibitNumber
    
    Document31.1
    
    Certification of Chief Executive Officer pursuant to Rule
13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as
amended31.2
    
    Certification of Chief Financial Officer pursuant to Rule
13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as
amended32.1
    
    Certification of Chief Executive Officer Pursuant to 18 U.S.C.
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 200232.2
    
    Certification of Chief Financial Officer Pursuant to 18 U.S.C.
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
 34




---



##### Table of Contents



SIGNATURES
  HANMI FINANCIAL CORPORATIONDate:
    May 9, 2008
    
    By:
    /s/ Chung Hoon YoukChung Hoon YoukInterim President and Chief Executive OfficerBy:
    /s/ Brian E. ChoBrian E. ChoExecutive Vice President and Chief Financial Officer 35