##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the Quarterly Period Ended March 31, 2009
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For 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 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)
 þ o
 o o
  Large accelerated filer o
Accelerated filer þ
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company o o þ




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##### 



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  QUARTERLY REPORT ON FORM 10-Q  THREE MONTHS ENDED MARCH 31, 2009
 TABLE OF CONTENTS
 PagePART I  FINANCIAL INFORMATIONITEM 1.
    
    FINANCIAL STATEMENTSConsolidated Balance Sheets (Unaudited)
    
    
    1Consolidated Statements of Operations (Unaudited)
    
    
    2Consolidated Statements of Changes in Stockholders Equity and Comprehensive Income (Loss) (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
    
    
    19ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    42ITEM 4.
    
    CONTROLS AND PROCEDURES
    
    
    43PART II  OTHER INFORMATIONITEM 1.
    
    LEGAL PROCEEDINGS
    
    
    43ITEM 1A.
    
    RISK FACTORS
    
    
    43ITEM 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    43ITEM 3.
    
    DEFAULTS UPON SENIOR SECURITIES
    
    
    43ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    43ITEM 5.
    
    OTHER INFORMATION
    
    
    43ITEM 6.
    
    EXHIBITS
    
    
    44SIGNATURES
    
    
    
    
    46EX-31.1EX-31.2EX-32.1EX-32.2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 
 HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)  (Dollars in Thousands, Except Share Data)
 March 31,
    
    
    December 31,2009
    
    
    2008ASSETSCash and Due From Banks
    
    $
    230,950
    
    
    $
    85,188Federal Funds Sold and Securities Purchased Under Agreements to Resell
    
    
    90,000
    
    
    
    130,000Cash and Cash Equivalents
    
    
    320,950
    
    
    
    215,188Securities Held to Maturity, at Amortized Cost (Fair Value of $895 and $910 as of March 31,
2009 and December 31, 2008, Respectively)
    
    
    894
    
    
    
    910Securities Available for Sale, at Fair Value
    
    
    163,518
    
    
    
    196,966Loans Receivable, Net of Allowance for Loan Losses of $83,943 and $70,986 as of March 31,
2009 and December 31, 2008, Respectively
    
    
    3,200,187
    
    
    
    3,253,715Loans Held for Sale, at the Lower of Cost or Fair Value
    
    
    34,252
    
    
    
    37,410Customers Liability on Acceptances
    
    
    2,176
    
    
    
    4,295Premises and Equipment, Net
    
    
    20,269
    
    
    
    20,279Accrued Interest Receivable
    
    
    11,702
    
    
    
    12,347Other Real Estate Owned
    
    
    1,206
    
    
    
    823Servicing Assets
    
    
    3,630
    
    
    
    3,791Other Intangible Assets
    
    
    4,521
    
    
    
    4,950Federal Home Loan Bank Stock, at Cost
    
    
    30,697
    
    
    
    30,697Federal Reserve Bank Stock, at Cost
    
    
    10,228
    
    
    
    10,228Bank-Owned Life Insurance
    
    
    25,710
    
    
    
    25,476Other Assets
    
    
    62,955
    
    
    
    58,741TOTAL ASSETS
    
    $
    3,892,895
    
    
    $
    3,875,816LIABILITIES AND STOCKHOLDERS EQUITYLIABILITIES:Deposits:Noninterest-Bearing
    
    $
    542,521
    
    
    $
    536,944Interest-Bearing:Savings
    
    
    82,824
    
    
    
    81,869Money Market Checking and NOW Accounts
    
    
    308,383
    
    
    
    370,401Time Deposits of $100,000 or More
    
    
    1,218,826
    
    
    
    849,800Other Time Deposits
    
    
    1,043,555
    
    
    
    1,231,066Total Deposits
    
    
    3,196,109
    
    
    
    3,070,080Accrued Interest Payable
    
    
    27,234
    
    
    
    18,539Acceptances Outstanding
    
    
    2,176
    
    
    
    4,295Federal Home Loan Bank Advances and Other Borrowings
    
    
    312,836
    
    
    
    422,983Junior Subordinated Debentures
    
    
    82,406
    
    
    
    82,406Other Liabilities
    
    
    11,891
    
    
    
    13,598Total Liabilities
    
    
    3,632,652
    
    
    
    3,611,901COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS EQUITY:Common Stock, $0.001 Par Value; Authorized 200,000,000 Shares; Issued 50,573,467 Shares
(45,940,967 Shares Outstanding) and 50,538,049 Shares (45,905,549 Shares Outstanding) as
of March 31, 2009 and December 31, 2008, Respectively
    
    
    51
    
    
    
    51Additional Paid-In Capital
    
    
    349,522
    
    
    
    349,304Unearned Compensation
    
    
    (148
    )
    
    
    (218
    )Accumulated Other Comprehensive Income  Unrealized Gain on Securities Available for
Sale, Interest-Only Strips and Interest Rate Swaps, Net of Income Taxes of $1,332 and
$473 as of March 31, 2009 and December 31, 2008, Respectively
    
    
    1,780
    
    
    
    544Retained Deficit
    
    
    (20,950
    )
    
    
    (15,754
    )Less Treasury Stock, at Cost; 4,632,500 Shares as of March 31, 2009 and December 31, 2008
    
    
    (70,012
    )
    
    
    (70,012
    )Total Stockholders Equity
    
    
    260,243
    
    
    
    263,915TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    3,892,895
    
    
    $
    3,875,816
  1




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##### Table of Contents



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)  (Dollars in Thousands, Except Per Share Data)
 Three Months EndedMarch 31,2009
    
    
    2008INTEREST AND DIVIDEND INCOME:Interest and Fees on Loans
    
    $
    45,085
    
    
    $
    60,598Taxable Interest on Investments
    
    
    1,352
    
    
    
    3,116Tax-Exempt Interest on Investments
    
    
    643
    
    
    
    759Dividends on Federal Home Loan Bank and Federal Reserve Bank Stock
    
    
    153
    
    
    
    414Interest on Federal Funds Sold and Securities Purchased Under Agreements to Resell
    
    
    82
    
    
    
    83Interest on Term Federal Funds Sold
    
    
    700
    
    
    
    Total Interest and Dividend Income
    
    
    48,015
    
    
    
    64,970INTEREST EXPENSE:Interest on Deposits
    
    
    22,785
    
    
    
    24,847Interest on Federal Home Loan Bank Advances and Other Borrowings
    
    
    1,112
    
    
    
    4,477Interest on Junior Subordinated Debentures
    
    
    988
    
    
    
    1,449Total Interest Expense
    
    
    24,885
    
    
    
    30,773NET INTEREST INCOME BEFORE PROVISION FOR CREDIT LOSSES
    
    
    23,130
    
    
    
    34,197Provision for Credit Losses
    
    
    24,953
    
    
    
    17,821NET INTEREST INCOME (LOSS) AFTER PROVISION FOR CREDIT LOSSES
    
    
    (1,823
    )
    
    
    16,376NON-INTEREST INCOME:Service Charges on Deposit Accounts
    
    
    4,315
    
    
    
    4,717Insurance Commissions
    
    
    1,182
    
    
    
    1,315Remittance Fees
    
    
    523
    
    
    
    505Trade Finance Fees
    
    
    506
    
    
    
    865Other Service Charges and Fees
    
    
    483
    
    
    
    716Bank-Owned Life Insurance Income
    
    
    234
    
    
    
    240Gain on Sales of Securities Available for Sale
    
    
    1,167
    
    
    
    618Gain on Sales of Loans
    
    
    2
    
    
    
    213Other-Than-Temporary Impairment Loss on Securities
    
    
    (98
    )
    
    
    Other Income
    
    
    66
    
    
    
    576Total Non-Interest Income
    
    
    8,380
    
    
    
    9,765NON-INTEREST EXPENSE:Salaries and Employee Benefits
    
    
    7,503
    
    
    
    11,280Occupancy and Equipment
    
    
    2,884
    
    
    
    2,782Data Processing
    
    
    1,536
    
    
    
    1,534Deposit Insurance Premiums and Regulatory Assessments
    
    
    1,490
    
    
    
    560Professional Fees
    
    
    616
    
    
    
    985Supplies and Communication
    
    
    570
    
    
    
    704Advertising and Promotion
    
    
    569
    
    
    
    812Amortization of Other Intangible Assets
    
    
    429
    
    
    
    524Other Operating Expenses
    
    
    2,655
    
    
    
    2,407Total Non-Interest Expense
    
    
    18,252
    
    
    
    21,588INCOME (LOSS) BEFORE PROVISION (BENEFIT) FOR INCOME TAXES
    
    
    (11,695
    )
    
    
    4,553Provision (Benefit) for Income Taxes
    
    
    (6,499
    )
    
    
    1,632NET INCOME (LOSS)
    
    $
    (5,196
    )
    
    $
    2,921EARNINGS (LOSS) PER SHARE:Basic
    
    $
    (0.11
    )
    
    $
    0.06Diluted
    
    $
    (0.11
    )
    
    $
    0.06WEIGHTED-AVERAGE SHARES OUTSTANDING:Basic
    
    
    45,891,043
    
    
    
    45,842,376Diluted
    
    
    45,891,043
    
    
    
    45,918,143DIVIDENDS DECLARED PER SHARE
    
    $
    
    
    
    $
    0.06
  2




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##### Table of Contents



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED)  (Dollars in Thousands)
 Stockholders EquityAccumulatedCommon
Stock  Number of Shares
    
    
    
    
    
    
    Additional
    
    
    
    
    
    
    Other
    
    
    Retained
    
    
    Treasury
    
    
    TotalTreasury
    
    
    
    
    
    
    Common
    
    
    Paid-in
    
    
    Unearned
    
    
    Comprehensive
    
    
    Earnings
    
    
    Stock,
    
    
    StockholdersIssued
    
    
    Stock
    
    
    Outstanding
    
    
    Stock
    
    
    Capital
    
    
    Compensation
    
    
    Income
    
    
    (Deficit)
    
    
    at Cost
    
    
    EquityBALANCE AS OF JANUARY 1, 2008
    
    
    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 Income Taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,353
    
    
    
    
    
    
    
    
    
    
    
    1,353Total Comprehensive Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,274BALANCE AS OF MARCH 31, 2008
    
    
    50,538,049
    
    
    
    (4,632,500
    )
    
    
    45,905,549
    
    
    $
    51
    
    
    $
    348,607
    
    
    $
    (270
    )
    
    $
    1,628
    
    
    $
    90,360
    
    
    $
    (70,012
    )
    
    $
    370,364BALANCE AS OF JANUARY 1, 2009
    
    
    50,538,049
    
    
    
    (4,632,500
    )
    
    
    45,905,549
    
    
    $
    51
    
    
    $
    349,304
    
    
    $
    (218
    )
    
    $
    544
    
    
    $
    (15,754
    )
    
    $
    (70,012
    )
    
    $
    263,915Shares Issued for Business Acquisitions
    
    
    39,418
    
    
    
    
    
    
    
    39,418
    
    
    
    
    
    
    
    46
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46Share-Based Compensation Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    236
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    242Forfeiture of Restricted Stock Award
    
    
    (4,000
    )
    
    
    
    
    
    
    (4,000
    )
    
    
    
    
    
    
    (64
    )
    
    
    64
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Comprehensive Loss:Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,196
    )
    
    
    
    
    
    
    (5,196
    )Change in Unrealized Loss on Securities
Available for Sale, Interest-Only Strips and
Interest Rate Swaps, Net of Income Taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,236
    
    
    
    
    
    
    
    
    
    
    
    1,236Total Comprehensive Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,960
    )BALANCE AS OF MARCH 31, 2009
    
    
    50,573,467
    
    
    
    (4,632,500
    )
    
    
    45,940,967
    
    
    $
    51
    
    
    $
    349,522
    
    
    $
    (148
    )
    
    $
    1,780
    
    
    $
    (20,950
    )
    
    $
    (70,012
    )
    
    $
    260,243
  3




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##### Table of Contents



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)  (In Thousands)
 Three Months EndedMarch 31,2009
    
    
    2008CASH FLOWS FROM OPERATING ACTIVITIES:Net Income (Loss)
    
    $
    (5,196
    )
    
    $
    2,921Adjustments to Reconcile Net Income (Loss) to Net Cash Provided By Operating Activities:Depreciation and Amortization of Premises and Equipment
    
    
    669
    
    
    
    749Amortization of Premiums and Accretion of Discounts on Investments, Net
    
    
    (1,101
    )
    
    
    (353
    )Amortization of Other Intangible Assets
    
    
    429
    
    
    
    524Amortization of Servicing Assets
    
    
    235
    
    
    
    413Share-Based Compensation Expense
    
    
    242
    
    
    
    287Provision for Credit Losses
    
    
    24,953
    
    
    
    17,821Federal Home Loan Bank Stock Dividends
    
    
    
    
    
    
    (239
    )Gain on Sales of Securities Available for Sale
    
    
    (1,167
    )
    
    
    (618
    )Other-Than-Temporary Impairment Loss on Securities
    
    
    98
    
    
    
    Gain on Sales of Loans
    
    
    (2
    )
    
    
    (213
    )Loss on Sales of Other Real Estate Owned
    
    
    
    
    
    
    132Provision for Valuation Allowance on Other Real Estate Owned
    
    
    126
    
    
    
    Origination of Loans Held for Sale
    
    
    (201
    )
    
    
    (8,356
    )Proceeds from Sales of Loans Held for Sale
    
    
    3,361
    
    
    
    6,351Decrease in Accrued Interest Receivable
    
    
    645
    
    
    
    1,994Decrease in Servicing Asset
    
    
    (74
    )
    
    
    (297
    )Increase in Cash Surrender Value of Bank-Owned Life Insurance
    
    
    (234
    )
    
    
    (235
    )(Increase) Decrease in Other Assets
    
    
    (5,102
    )
    
    
    6,232Increase (Decrease) in Accrued Interest Payable
    
    
    8,695
    
    
    
    (3,971
    )(Decrease) Increase in Other Liabilities
    
    
    (1,844
    )
    
    
    1,339Net Cash Provided By Operating Activities
    
    
    24,532
    
    
    
    24,481CASH FLOWS FROM INVESTING ACTIVITIES:Proceeds from Matured or Called Securities Available for Sale
    
    
    27,069
    
    
    
    30,256Proceeds from Sales of Securities Available for Sale
    
    
    38,447
    
    
    
    24,001Proceeds from Sales of Other Real Estate Owned
    
    
    
    
    
    
    155Net Decrease (Increase) in Loans Receivable
    
    
    28,249
    
    
    
    (24,410
    )Purchases of Securities Available for Sale
    
    
    (27,758
    )
    
    
    (24,581
    )Purchases of Premises and Equipment
    
    
    (659
    )
    
    
    (629
    )Net Cash Provided By Investing Activities
    
    
    65,348
    
    
    
    4,792CASH FLOWS FROM FINANCING ACTIVITIES:Increase in Deposits
    
    
    126,029
    
    
    
    26,069Cash Paid to Repurchase Stock Options
    
    
    
    
    
    
    (70
    )Cash Dividends Paid
    
    
    
    
    
    
    (2,753
    )Repayment of Long-Term Federal Home Loan Bank Advances and Other Borrowings
    
    
    (121
    )
    
    
    (115
    )Net Change in Short-Term Federal Home Loan Bank Advances and Other Borrowings
    
    
    (110,026
    )
    
    
    (71,496
    )Net Cash Provided By (Used In) Financing Activities
    
    
    15,882
    
    
    
    (48,365
    )NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    105,762
    
    
    
    (19,092
    )Cash and Cash Equivalents at Beginning of Period
    
    
    215,188
    
    
    
    122,398CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    320,950
    
    
    $
    103,306SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:Cash Paid During the Period for:Interest Paid
    
    $
    16,190
    
    
    $
    38,459Income Taxes Paid
    
    $
    
    
    
    $
    163Non-Cash Activities:Stock Issued for Business Acquisition
    
    $
    46
    
    
    $
    293Transfer of Loans to Other Real Estate Owned
    
    $
    509
    
    
    $
    
  4




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##### Table of Contents



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE MONTHS ENDED MARCH 31, 2009 AND 2008
 NOTE 1  BASIS OF PRESENTATION
    Note 1  Summary of
Significant Accounting Policies
  NOTE 2  OTHER-THAN-TEMPORARY IMPAIRMENT LOSS ON SECURITIES
 Accounting for Certain Investments in Debt and Equity
Securities, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain
Investments,
  5




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HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE MONTHS ENDED MARCH 31, 2009 AND 2008 (Continued)
 NOTE 3  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.
 , Determining Fair Value of a Financial Asset
in a Market That Is Not Active.
 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.
 6




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HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE MONTHS ENDED MARCH 31, 2009 AND 2008 (Continued)
 NOTE 3  FAIR VALUE MEASUREMENTS (Continued)
  Securities Available for Sale
 Loans Held for Sale
 Impaired Loans Accounting by Creditors for Impairment of a Loan,
 Other Real Estate Owned (OREO)
 Servicing Assets and Servicing Liabilities
 Other Intangible Assets
 7




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HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE MONTHS ENDED MARCH 31, 2009 AND 2008 (Continued)
 NOTE 3  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
    
    
    Significant
    
    
    Balance as offor Identical
    
    
    Identical
    
    
    Unobservable
    
    
    March 31,Assets
    
    
    Characteristics
    
    
    Inputs
    
    
    2009(In Thousands)ASSETS:Securities Available for Sale:Mortgage-Backed Securities
    
    $
    
    
    
    $
    69,528
    
    
    $
    
    
    
    $
    69,528Municipal Bonds
    
    
    
    
    
    
    59,834
    
    
    
    
    
    
    
    59,834Collateralized Mortgage Obligations
    
    
    
    
    
    
    23,190
    
    
    
    
    
    
    
    23,190Asset-Backed Securities
    
    
    
    
    
    
    5,635
    
    
    
    
    
    
    
    5,635Other Securities
    
    
    50
    
    
    
    2,928
    
    
    
    1,416
    
    
    
    4,394Equity Securities
    
    
    695
    
    
    
    
    
    
    
    
    
    
    
    695Corporate Bonds
    
    
    
    
    
    
    242
    
    
    
    
    
    
    
    242Total Securities Available for Sale
    
    $
    745
    
    
    $
    161,357
    
    
    $
    1,416
    
    
    $
    163,518Servicing Assets
    
    $
    
    
    
    $
    
    
    
    $
    3,630
    
    
    $
    3,630LIABILITIES:Servicing Liabilities
    
    $
    
    
    
    $
    
    
    
    $
    232
    
    
    $
    232
  Fair Value Measurements Using Significant Unobservable Inputs (Level 3)Realized andUnrealizedBeginning
    
    
    
    
    
    Realized and
    
    Gains or Losses
    
    
    
    
    
    EndingBalance as of
    
    Purchases,
    
    Unrealized
    
    in Other
    
    Transfers
    
    Balance as ofJanuary 1,
    
    Issuances and
    
    Gains or Losses
    
    Comprehensive
    
    In and/or Out
    
    March 31,2009
    
    Settlements
    
    in Earnings
    
    Income
    
    of Level 3
    
    2009(In Thousands)ASSETS:Securities Available for Sale:Other Securities
    
    $
    1,311
    
    
    $
    
    
    
    $
    
    
    
    $
    105
    
    
    $
    
    
    
    $
    1,416Servicing Assets
    
    $
    3,791
    
    
    $
    74
    
    
    $
    (235
    )
    
    $
    
    
    
    $
    
    
    
    $
    3,630LIABILITIES:Servicing Liabilities
    
    $
    238
    
    
    $
    
    
    
    $
    (6
    )
    
    $
    
    
    
    $
    
    
    
    $
    232
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HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE MONTHS ENDED MARCH 31, 2009 AND 2008 (Continued)
 NOTE 3  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
    
    Significant
    
    Balance as offor Identical
    
    Identical
    
    Unobservable
    
    March 31,Assets
    
    Characteristics
    
    Inputs
    
    2009(In Thousands)ASSETS:Loans Held for Sale
    
    $
    
    
    
    $
    34,252
    
    
    $
    
    
    
    $
    34,252Impaired Loans
    
    $
    
    
    
    $
    3,083
    
    
    $
    
    
    
    $
    3,083Other Real Estate Owned
    
    $
    
    
    
    $
    1,206
    
    
    $
    
    
    
    $
    1,206Other Intangible Assets
    
    $
    
    
    
    $
    
    
    
    $
    4,521
    
    
    $
    4,521
 NOTE 4  LOANS
 Allowance for Loan Losses and Allowance for Off-Balance Sheet Items
  As of and for the Three Months EndedMarch 31,
    
    
    December 31,
    
    
    March 31,2009
    
    
    2008
    
    
    2008(In Thousands)Allowance for Loan Losses:Balance at Beginning of Period
    
    $
    70,986
    
    
    $
    63,948
    
    
    $
    43,611Actual Charge-Offs
    
    
    (12,516
    )
    
    
    (19,473
    )
    
    
    (7,852
    )Recoveries on Loans Previously Charged Off
    
    
    703
    
    
    
    851
    
    
    
    555Net Loan Charge-Offs
    
    
    (11,813
    )
    
    
    (18,622
    )
    
    
    (7,297
    )Provision Charged to Operating Expense
    
    
    24,770
    
    
    
    25,660
    
    
    
    16,672Balance at End of Period
    
    $
    83,943
    
    
    $
    70,986
    
    
    $
    52,986Allowance for Off-Balance Sheet Items:Balance at Beginning of Period
    
    $
    4,096
    
    
    $
    4,306
    
    
    $
    1,765Provision Charged to Operating Expense
    
    
    183
    
    
    
    (210
    )
    
    
    1,149Balance at End of Period
    
    $
    4,279
    
    
    $
    4,096
    
    
    $
    2,914
 Impaired Loans
  March 31,
    
    
    December 31,2009
    
    
    2008(In Thousands)Recorded Investment With Related Allowance
    
    $
    174,036
    
    
    $
    71,448Recorded Investment With No Related Allowance
    
    
    37,315
    
    
    
    49,945Allowance on Impaired Loans
    
    
    (24,724
    )
    
    
    (18,157
    )Net Recorded Investment in Impaired Loans
    
    $
    186,627
    
    
    $
    103,236
 9




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HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE MONTHS ENDED MARCH 31, 2009 AND 2008 (Continued)
 NOTE 4  LOANS (Continued)
   Three Months EndedMarch 31,
    
    
    March 31,2009
    
    
    2008(In Thousands)Interest Income That Would Have Been Recognized Had Impaired
Loans Performed in Accordance With Their Original Terms
    
    $
    5,177
    
    
    $
    2,331Less: Interest Income Recognized on Impaired Loans
    
    
    (1,655
    )
    
    
    (1,354
    )Interest Foregone on Impaired Loans
    
    $
    3,522
    
    
    $
    977
  Non-Performing Assets
  March 31,
    
    
    December 31,2009
    
    
    2008(In Thousands)Non-Accrual Loans
    
    $
    155,508
    
    
    $
    120,823Loans 90 Days or More Past Due and Still Accruing
    
    
    823
    
    
    
    1,075Total Non-Performing Loans
    
    
    156,331
    
    
    
    121,898Other Real Estate Owned
    
    
    1,206
    
    
    
    823Total Non-Performing Assets
    
    $
    157,537
    
    
    $
    122,721Troubled Debt Restructurings on Accrual Status
    
    $
    61,865
    
    
    $
    
   10




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HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE MONTHS ENDED MARCH 31, 2009 AND 2008 (Continued)
 NOTE 4  LOANS (Continued)
  NOTE 5  SHARE-BASED COMPENSATION
 Share-Based Compensation Expense
  Unrecognized Share-Based Compensation Expense
  Unrecognized
    
    
    Average ExpectedExpense
    
    
    Recognition Period(Dollars in Thousands)Stock Option Awards
    
    $
    1,321
    
    
    2.1 yearsRestricted Stock Awards
    
    
    148
    
    
    3.7 yearsTotal Unrecognized Share-Based Compensation Expense
    
    $
    1,469
    
    
    2.2 years
 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
    
    
    1,323,467
    
    
    $
    14.05
    
    
    6.3 years
    
    $
    
    (1)Options Expired
    
    
    (71,045
    )
    
    $
    15.10
    
    
    5.6 yearsOptions Forfeited
    
    
    (65,600
    )
    
    $
    16.72
    
    
    7.2 yearsOptions Outstanding at End of Period
    
    
    1,186,822
    
    
    $
    13.84
    
    
    6.0 years
    
    $
    
    (2)Options Exercisable at End of Period
    
    
    782,311
    
    
    $
    13.44
    
    
    5.0 years
    
    $
    
    (2)
 
 (1)
    
    Intrinsic value represents the excess of the closing stock price on the last
trading day of the period, which was $2.06 as of December 31, 2008, 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 $1.30 as of March 31, 2009, over the exercise
price, multiplied by the number of options.  11




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HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE MONTHS ENDED MARCH 31, 2009 AND 2008 (Continued)
 NOTE 5  SHARE-BASED COMPENSATION (Continued)
 Restricted Stock Awards
  Weighted-AverageNumber
    
    
    Grant Dateof
    
    
    Fair ValueShares
    
    
    Per ShareRestricted Stock at Beginning of Period
    
    
    20,200
    
    
    $
    11.42Restricted Stock Forfeited
    
    
    (4,000
    )
    
    $
    16.15Restricted Stock at End of Period
    
    
    16,200
    
    
    $
    10.25
 NOTE 6  EARNINGS (LOSS) PER SHARE
   Three Months Ended March 31,2009
    
    
    2008(Numerator)
    
    
    (Denominator)
    
    
    
    
    
    
    (Numerator)
    
    
    (Denominator)Weighted-
    
    
    Per
    
    
    
    
    
    
    Weighted-
    
    
    PerNet
    
    
    Average
    
    
    Share
    
    
    Net
    
    
    Average
    
    
    ShareLoss
    
    
    Shares
    
    
    Amount
    
    
    Income
    
    
    Shares
    
    
    Amount(Dollars in Thousands, Except Per Share Data)Basic EPS
    
    $
    (5,196
    )
    
    
    45,891,043
    
    
    $
    (0.11
    )
    
    $
    2,921
    
    
    
    45,842,376
    
    
    $
    0.06Effect of Dilutive Securities  Options, Warrants and
Unvested Restricted Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    75,767
    
    
    
    Diluted EPS
    
    $
    (5,196
    )
    
    
    45,891,043
    
    
    $
    (0.11
    )
    
    $
    2,921
    
    
    
    45,918,143
    
    
    $
    0.06
  12




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HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE MONTHS ENDED MARCH 31, 2009 AND 2008 (Continued)
 NOTE 7  OFF-BALANCE SHEET COMMITMENTS
   March 31,
    
    
    December 31,2009
    
    
    2008(In Thousands)Commitments to Extend Credit
    
    $
    344,640
    
    
    $
    386,785Standby Letters of Credit
    
    
    42,286
    
    
    
    47,289Commercial Letters of Credit
    
    
    24,942
    
    
    
    29,177Unused Credit Card Lines
    
    
    22,139
    
    
    
    16,912Total Undisbursed Loan Commitments
    
    $
    434,007
    
    
    $
    480,163
 NOTE 8  SEGMENT REPORTING
  NOTE 9  LIQUIDITY
 Disclosure of Certain Significant Risks and Uncertainties,
 13




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HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE MONTHS ENDED MARCH 31, 2009 AND 2008 (Continued)
 NOTE 9  LIQUIDITY (Continued)
 Hanmi Bank
       14




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HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE MONTHS ENDED MARCH 31, 2009 AND 2008 (Continued)
 NOTE 9  LIQUIDITY (Continued)
  Hanmi Financial
  NOTE 10  REGULATORY MATTERS
 Memorandum of Understanding
   15




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##### Table of Contents



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE MONTHS ENDED MARCH 31, 2009 AND 2008 (Continued)
 Capital Plan
  Government Programs
   16




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##### Table of Contents



HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE MONTHS ENDED MARCH 31, 2009 AND 2008 (Continued)
 NOTE 11  SUBSEQUENT EVENTS
 Appointment of Director
  Retirement of Director
  17




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HANMI FINANCIAL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)  THREE MONTHS ENDED MARCH 31, 2009 AND 2008 (Continued)
 NOTE 11  SUBSEQUENT EVENTS (Continued)
 Stock Option Grants and Restricted Stock Awards
  Stock
    
    
    RestrictedOption
    
    
    StockGrants
    
    
    Awards
    
    
    TotalDirectors
    
    
    120,000
    
    
    
    90,000
    
    
    
    210,000Executive Management
    
    
    80,000
    
    
    
    50,000
    
    
    
    130,000Senior Management
    
    
    50,000
    
    
    
    50,000
    
    
    
    100,000250,000
    
    
    
    190,000
    
    
    
    440,000
 18




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##### 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
 
    
    failure to maintain adequate levels of capital and liquidity to support our operations;
    
    a significant number of our customers failing to perform under their loans and other
terms of credit agreements;
    
    the effect of regulatory orders we have entered into and potential future supervisory
action against us or the Bank;
    
    fluctuations in interest rates and a decline in the level of our interest rate spread;
    
    failure to attract or retain deposits;
    
    sources of liquidity available to us and to the Bank becoming limited or our potential
inability to access sufficient sources of liquidity when needed or the requirement that we
obtain government waivers to do so;
    
    adverse changes in domestic or global financial markets, economic conditions or
business conditions or the effects of pandemic flu;
    
    regulatory restrictions on the Banks ability to pay dividends to us and on our ability
to make payments on Hanmi Financial obligations;
    
    significant reliance on loans secured by real estate and the associated vulnerability
to downturns in the local real estate market, natural disasters and other variables
impacting the value of real estate;
    
    failure to retain our key employees;
    
    failure to maintain our status as a financial holding company;
    
    adequacy of our allowance for loan losses;
    
    credit quality and the effect of credit quality on our provision for credit losses and
allowance for loan losses;
    
    failure to manage our future growth or successfully integrate acquisitions;
    
    volatility and disruption in financial, credit and securities markets, and the price of
our common stock;
    
    deterioration in the financial markets that may result in other-than-temporary
impairment charges relating to our securities portfolio;
    
    competition in our primary market areas;
    
    demographic changes in our primary market areas; and
    
    significant government regulations, legislation and potential changes thereto.
 19




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##### Table of Contents



Item 2. Managements Discussion and
Analysis of Financial Condition and Results of Operations Item 1A. Risk Factors. Item 1A. Risk Factors Item 7. Managements Discussion and Analysis of Financial Condition
and Results of Operations
 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
 20




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SELECTED FINANCIAL DATA
  As of and for theThree Months EndedMarch 31,2009
    
    2008(Dollars in Thousands, Except Per Share Data)AVERAGE BALANCES:Average Gross Loans, Net (1)
    
    $
    3,349,085
    
    
    $
    3,303,141Average Investment Securities
    
    $
    182,284
    
    
    $
    342,123Average Interest-Earning Assets
    
    $
    3,806,186
    
    
    $
    3,689,650Average Total Assets
    
    $
    3,946,860
    
    
    $
    3,965,425Average Deposits
    
    $
    3,202,032
    
    
    $
    2,995,315Average Borrowings
    
    $
    440,053
    
    
    $
    553,138Average Interest-Bearing Liabilities
    
    $
    3,115,332
    
    
    $
    2,897,209Average Stockholders Equity
    
    $
    263,686
    
    
    $
    377,411Average Tangible Equity (2)
    
    $
    258,908
    
    
    $
    263,624PER SHARE DATA:Earnings (Loss) Per Share  Basic
    
    $
    (0.11
    )
    
    $
    0.06Earnings (Loss) Per Share  Diluted
    
    $
    (0.11
    )
    
    $
    0.06Common Shares Outstanding
    
    
    45,940,967
    
    
    
    45,905,549Book Value Per Share (3)
    
    $
    5.66
    
    
    $
    8.07Tangible Book Value Per Share (4)
    
    $
    5.57
    
    
    $
    5.59Cash Dividends Per Share
    
    $
    
    
    
    $
    0.06SELECTED PERFORMANCE RATIOS:Return on Average Assets (5) (6)
    
    
    (0.53
    %)
    
    
    0.30
    %Return on Average Stockholders Equity (5) (7)
    
    
    (7.99
    %)
    
    
    3.11
    %Return on Average Tangible Equity (5) (8)
    
    
    (8.14
    %)
    
    
    4.46
    %Efficiency Ratio (9)
    
    
    57.92
    %
    
    
    49.11
    %Net Interest Spread (10)
    
    
    1.88
    %
    
    
    2.81
    %Net Interest Margin (11)
    
    
    2.46
    %
    
    
    3.73
    %Dividend Payout Ratio (12)
    
    
    
    
    
    
    94.28
    %Average Stockholders Equity to Average Total Assets
    
    
    6.68
    %
    
    
    9.52
    %SELECTED CAPITAL RATIOS:(13)Total Risk-Based Capital Ratio:Hanmi Financial
    
    
    10.88
    %
    
    
    10.74
    %Hanmi Bank
    
    
    10.81
    %
    
    
    10.79
    %Tier 1 Risk-Based Capital Ratio:Hanmi Financial
    
    
    9.61
    %
    
    
    9.48
    %Hanmi Bank
    
    
    9.54
    %
    
    
    9.54
    %Tier 1 Leverage Ratio:Hanmi Financial
    
    
    8.46
    %
    
    
    8.69
    %Hanmi Bank
    
    
    8.40
    %
    
    
    8.74
    %SELECTED ASSET QUALITY RATIOS:Non-Performing Loans to Total Gross Loans (14)
    
    
    4.71
    %
    
    
    2.68
    %Non-Performing Assets to Total Assets (15)
    
    
    4.05
    %
    
    
    2.25
    %Net Loan Charge-Offs to Average Total Gross Loans (16)
    
    
    1.43
    %
    
    
    0.89
    %Allowance for Loan Losses to Total Gross Loans
    
    
    2.53
    %
    
    
    1.60
    %Allowance for Loan Losses to Non-Performing Loans
    
    
    53.70
    %
    
    
    59.72
    %
 
 (1)
    
    Loans are net of deferred fees and related direct costs.(2)
    
    Average tangible equity is calculated by subtracting average goodwill and average
other 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)
    
    Total non-interest expenses divided by the sum of net interest income before
provision for credit losses and total non-interest income.(10)
    
    Average yield earned on interest-earning assets less average rate paid on interest-bearing liabilities.(11)
    
    Net interest income before provision for credit losses divided by average interest-earning assets.(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, are 10 percent for the Total
Risk-Based Capital Ratio (total capital divided by total risk-weighted assets); 6 percent for
the Tier 1 Risk-Based Capital Ratio (Tier 1 capital divided by total risk-weighted assets);
and 5 percent for the Tier 1 Leverage Ratio (Tier 1 capital divided by average total assets).(14)
    
    Non-performing loans consist of non-accrual loans and loans past due 90 days or more and still accruing interest.(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. 21




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##### Table of Contents



Non-GAAP Financial Measures
 Return on Average Tangible Equity
   Three Months EndedMarch 31,2009
    
    
    2008(Dollars in Thousands)Average Stockholders Equity
    
    $
    263,686
    
    
    $
    377,411Less Average Goodwill and Average Other Intangible Assets
    
    
    (4,778
    )
    
    
    (113,787
    )Average Tangible Equity
    
    $
    258,908
    
    
    $
    263,624Return on Average Stockholders Equity
    
    
    (7.99
    %)
    
    
    3.11
    %Effect of Average Goodwill and Average Other Intangible Assets
    
    
    (0.15
    %)
    
    
    1.35
    %Return on Average Tangible Equity
    
    
    (8.14
    %)
    
    
    4.46
    %
 Tangible Book Value Per Share
   March 31,2009
    
    
    2008(Dollars in Thousands,Except Per Share Data)Total Stockholders Equity
    
    $
    260,243
    
    
    $
    370,364Less Goodwill and Other Intangible Assets
    
    
    (4,521
    )
    
    
    (113,777
    )Tangible Equity
    
    $
    255,722
    
    
    $
    256,587Book Value Per Share
    
    $
    5.66
    
    
    $
    8.07Effect of Goodwill and Other Intangible Assets
    
    
    (0.09
    )
    
    
    (2.48
    )Tangible Book Value Per Share
    
    $
    5.57
    
    
    $
    5.59
 22




---



##### Table of Contents



EXECUTIVE OVERVIEW
      
    
    The use of third-parties to assist the Bank in quarterly stress testing the entire loan
portfolio, reviewing loans within the portfolio, and re-appraising properties where
appropriate.
    
    A further streamlining of the Banks operations. In February, we reduced headcount by
16, including some senior officers. We also suspended operations at four of our
out-of-state loan production offices and combined three branch districts into two.
    
    The recent enhancement of the Board of Directors with the addition of three new
members. Together, they bring extensive experience in the banking industry, notably their
experience in meeting the expectations and requirements of bank regulators.
 RESULTS OF OPERATIONS
 Net Interest Income Before Provision for Credit Losses
   23




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##### Table of Contents



Three Months EndedMarch 31, 2009
    
    
    March 31, 2008Interest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    AverageAverage
    
    
    Income/
    
    
    Yield/
    
    
    Average
    
    
    Income/
    
    
    Yield/Balance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    Rate(Dollars in Thousands)ASSETSInterest-Earning Assets:Gross Loans, Net (1)
    
    $
    3,349,085
    
    
    $
    45,085
    
    
    
    5.46
    %
    
    $
    3,303,141
    
    
    $
    60,598
    
    
    
    7.38
    %Municipal Securities (2)
    
    
    58,886
    
    
    
    643
    
    
    
    4.37
    %
    
    
    71,879
    
    
    
    759
    
    
    
    4.22
    %Obligations of Other U.S. Government Agencies
    
    
    9,578
    
    
    
    96
    
    
    
    4.01
    %
    
    
    109,860
    
    
    
    1,245
    
    
    
    4.53
    %Other Debt Securities
    
    
    113,820
    
    
    
    1,254
    
    
    
    4.41
    %
    
    
    160,384
    
    
    
    1,871
    
    
    
    4.67
    %Equity Securities
    
    
    41,727
    
    
    
    153
    
    
    
    1.47
    %
    
    
    33,490
    
    
    
    414
    
    
    
    4.94
    %Federal Funds Sold and Securities Purchased Under
Agreements to Resell
    
    
    94,585
    
    
    
    82
    
    
    
    0.35
    %
    
    
    10,896
    
    
    
    83
    
    
    
    3.05
    %Term Federal Funds Sold
    
    
    138,344
    
    
    
    700
    
    
    
    2.02
    %
    
    
    
    
    
    
    
    
    
    
    Interest-Earning Deposits
    
    
    161
    
    
    
    2
    
    
    
    4.97
    %
    
    
    
    
    
    
    
    
    
    
    Total Interest-Earning Assets
    
    
    3,806,186
    
    
    
    48,015
    
    
    
    5.12
    %
    
    
    3,689,650
    
    
    
    64,970
    
    
    
    7.08
    %Noninterest-Earning Assets:Cash and Cash Equivalents
    
    
    84,054
    
    
    
    
    
    
    
    
    
    
    
    93,793Allowance for Loan Losses
    
    
    (72,350
    )
    
    
    
    
    
    
    
    
    
    
    (42,545
    )Other Assets
    
    
    128,970
    
    
    
    
    
    
    
    
    
    
    
    224,527Total Noninterest-Earning Assets
    
    
    140,674
    
    
    
    
    
    
    
    
    
    
    
    275,775TOTAL ASSETS
    
    $
    3,946,860
    
    
    
    
    
    
    
    
    
    
    $
    3,965,425LIABILITIES AND STOCKHOLDERS EQUITYInterest-Bearing Liabilities:Deposits:Savings
    
    $
    82,029
    
    
    
    505
    
    
    
    2.50
    %
    
    $
    92,467
    
    
    
    527
    
    
    
    2.29
    %Money Market Checking and NOW Accounts
    
    
    343,354
    
    
    
    1,854
    
    
    
    2.19
    %
    
    
    557,493
    
    
    
    4,660
    
    
    
    3.36
    %Time Deposits of $100,000 or More
    
    
    1,078,650
    
    
    
    10,322
    
    
    
    3.88
    %
    
    
    1,354,466
    
    
    
    15,687
    
    
    
    4.66
    %Other Time Deposits
    
    
    1,171,246
    
    
    
    10,104
    
    
    
    3.50
    %
    
    
    339,645
    
    
    
    3,973
    
    
    
    4.70
    %FHLB Advances and Other Borrowings
    
    
    357,647
    
    
    
    1,112
    
    
    
    1.26
    %
    
    
    470,732
    
    
    
    4,477
    
    
    
    3.83
    %Junior Subordinated Debentures
    
    
    82,406
    
    
    
    988
    
    
    
    4.86
    %
    
    
    82,406
    
    
    
    1,449
    
    
    
    7.07
    %Total Interest-Bearing Liabilities
    
    
    3,115,332
    
    
    
    24,885
    
    
    
    3.24
    %
    
    
    2,897,209
    
    
    
    30,773
    
    
    
    4.27
    %Noninterest-Bearing Liabilities:Demand Deposits
    
    
    526,753
    
    
    
    
    
    
    
    
    
    
    
    651,244Other Liabilities
    
    
    41,089
    
    
    
    
    
    
    
    
    
    
    
    39,561Total Noninterest-Bearing Liabilities
    
    
    567,842
    
    
    
    
    
    
    
    
    
    
    
    690,805Total Liabilities
    
    
    3,683,174
    
    
    
    
    
    
    
    
    
    
    
    3,588,014Stockholders Equity
    
    
    263,686
    
    
    
    
    
    
    
    
    
    
    
    377,411TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    3,946,860
    
    
    
    
    
    
    
    
    
    
    $
    3,965,425NET INTEREST INCOME
    
    
    
    
    
    $
    23,130
    
    
    
    
    
    
    
    
    
    
    $
    34,197NET INTEREST SPREAD(3)
    
    
    
    
    
    
    
    
    
    
    1.88
    %
    
    
    
    
    
    
    
    
    
    
    2.81
    %NET INTEREST MARGIN(4)
    
    
    
    
    
    
    
    
    
    
    2.46
    %
    
    
    
    
    
    
    
    
    
    
    3.73
    %
 
 (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 $391,000 and $588,000 for
the three months ended March 31, 2009 and 2008, respectively.(2)
    
    If computed on a tax-equivalent basis using an effective marginal rate of 35
percent, tax-exempt income would be $989,000 and $1.2 million, and the yields would be 6.72
percent and 6.50 percent, for the three months ended March 31, 2009 and 2008, 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. 24




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##### Table of Contents



Three Months Ended March 31, 2009 vs.Three Months Ended March 31, 2008Increases (Decreases) Due to Change inVolume
    
    
    Rate
    
    
    Total(In Thousands)Interest and Dividend Income:Gross Loans, Net
    
    $
    799
    
    
    $
    (16,312
    )
    
    $
    (15,513
    )Municipal Securities
    
    
    (141
    )
    
    
    25
    
    
    
    (116
    )Obligations of Other U.S. Government Agencies
    
    
    (1,020
    )
    
    
    (129
    )
    
    
    (1,149
    )Other Debt Securities
    
    
    (518
    )
    
    
    (99
    )
    
    
    (617
    )Equity Securities
    
    
    83
    
    
    
    (344
    )
    
    
    (261
    )Federal Funds Sold and Securities Purchased Under
Agreements to Resell
    
    
    132
    
    
    
    (133
    )
    
    
    (1
    )Term Federal Funds Sold
    
    
    700
    
    
    
    
    
    
    
    700Interest-Earning Deposits
    
    
    2
    
    
    
    
    
    
    
    2Total Interest and Dividend Income
    
    
    37
    
    
    
    (16,992
    )
    
    
    (16,955
    )Interest Expense:Savings
    
    
    (65
    )
    
    
    43
    
    
    
    (22
    )Money Market Checking and NOW Accounts
    
    
    (1,471
    )
    
    
    (1,335
    )
    
    
    (2,806
    )Time Deposits of $100,000 or More
    
    
    (2,949
    )
    
    
    (2,416
    )
    
    
    (5,365
    )Other Time Deposits
    
    
    7,379
    
    
    
    (1,248
    )
    
    
    6,131FHLB Advances and Other Borrowings
    
    
    (888
    )
    
    
    (2,477
    )
    
    
    (3,365
    )Junior Subordinated Debentures
    
    
    
    
    
    
    (461
    )
    
    
    (461
    )Total Interest Expense
    
    
    2,006
    
    
    
    (7,894
    )
    
    
    (5,888
    )Change in Net Interest Income
    
    $
    (1,969
    )
    
    $
    (9,098
    )
    
    $
    (11,067
    )
    25




---



##### Table of Contents



Provision for Credit Losses
 Non-Performing Assets Allowance for Loan Losses and Allowance for Off-Balance Sheet Items
 Non-Interest Income
  Three Months EndedMarch 31,
    
    
    Increase (Decrease)2009
    
    
    2008
    
    
    Amount
    
    
    Percentage(Dollars in Thousands)Service Charges on Deposit Accounts
    
    $
    4,315
    
    
    $
    4,717
    
    
    $
    (402
    )
    
    
    (8.5
    %)Insurance Commissions
    
    
    1,182
    
    
    
    1,315
    
    
    
    (133
    )
    
    
    (10.1
    %)Remittance Fees
    
    
    523
    
    
    
    505
    
    
    
    18
    
    
    
    3.6
    %Trade Finance Fees
    
    
    506
    
    
    
    865
    
    
    
    (359
    )
    
    
    (41.5
    %)Other Service Charges and Fees
    
    
    483
    
    
    
    716
    
    
    
    (233
    )
    
    
    (32.5
    %)Bank-Owned Life Insurance Income
    
    
    234
    
    
    
    240
    
    
    
    (6
    )
    
    
    (2.5
    %)Gain on Sales of Securities Available for Sales
    
    
    1,167
    
    
    
    618
    
    
    
    549
    
    
    
    88.8
    %Gain on Sales of Loans
    
    
    2
    
    
    
    213
    
    
    
    (211
    )
    
    
    (99.1
    %)Other-Than-Temporary Impairment Loss on Securities
    
    
    (98
    )
    
    
    
    
    
    
    (98
    )
    
    
    Other Income
    
    
    66
    
    
    
    576
    
    
    
    (510
    )
    
    
    (88.5
    %)Total Non-Interest Income
    
    $
    8,380
    
    
    $
    9,765
    
    
    $
    (1,385
    )
    
    
    (14.2
    %)
     26




---



##### Table of Contents



Non-Interest Expense
  Three Months EndedMarch 31,
    
    
    Increase (Decrease)2009
    
    
    2008
    
    
    Amount
    
    
    Percentage(Dollars in Thousands)Salaries and Employee Benefits
    
    $
    7,503
    
    
    $
    11,280
    
    
    $
    (3,777
    )
    
    
    (33.5
    %)Occupancy and Equipment
    
    
    2,884
    
    
    
    2,782
    
    
    
    102
    
    
    
    3.7
    %Data Processing
    
    
    1,536
    
    
    
    1,534
    
    
    
    2
    
    
    
    0.1
    %Deposit Insurance Premiums and Regulatory Assessments
    
    
    1,490
    
    
    
    560
    
    
    
    930
    
    
    
    166.1
    %Professional Fees
    
    
    616
    
    
    
    985
    
    
    
    (369
    )
    
    
    (37.5
    %)Supplies and Communications
    
    
    570
    
    
    
    704
    
    
    
    (134
    )
    
    
    (19.0
    %)Advertising and Promotion
    
    
    569
    
    
    
    812
    
    
    
    (243
    )
    
    
    (29.9
    %)Amortization of Other Intangible Assets
    
    
    429
    
    
    
    524
    
    
    
    (95
    )
    
    
    (18.1
    %)Other Operating Expenses
    
    
    2,655
    
    
    
    2,407
    
    
    
    248
    
    
    
    10.3
    %Total Non-Interest Expense
    
    $
    18,252
    
    
    $
    21,588
    
    
    $
    (3,336
    )
    
    
    (15.5
    %)
    Provision for Income Taxes
  27




---



##### Table of Contents



FINANCIAL CONDITION
 Investment Portfolio
 Accounting for Certain Investments in Debt and Equity Securities.
  March 31, 2009
    
    
    December 31, 2008Estimated
    
    
    Unrealized
    
    
    
    
    
    
    Estimated
    
    
    UnrealizedAmortized
    
    
    Fair
    
    
    Gain
    
    
    Amortized
    
    
    Fair
    
    
    GainCost
    
    
    Value
    
    
    (Loss)
    
    
    Cost
    
    
    Value
    
    
    (Loss)(In Thousands)Held to Maturity:Municipal Bonds
    
    $
    694
    
    
    $
    695
    
    
    $
    1
    
    
    $
    695
    
    
    $
    695
    
    
    $
    Mortgage-Backed Securities
    
    
    200
    
    
    
    200
    
    
    
    
    
    
    
    215
    
    
    
    215
    
    
    
    Total Held to Maturity
    
    $
    894
    
    
    $
    895
    
    
    $
    1
    
    
    $
    910
    
    
    $
    910
    
    
    $
    Available for Sale:Mortgage-Backed Securities
    
    $
    68,591
    
    
    $
    69,528
    
    
    $
    937
    
    
    $
    77,515
    
    
    $
    78,860
    
    
    $
    1,345Municipal Bonds
    
    
    58,404
    
    
    
    59,834
    
    
    
    1,430
    
    
    
    58,987
    
    
    
    58,313
    
    
    
    (674
    )Collateralized Mortgage Obligations
    
    
    22,903
    
    
    
    23,190
    
    
    
    287
    
    
    
    36,204
    
    
    
    36,162
    
    
    
    (42
    )Asset-Backed Securities
    
    
    5,643
    
    
    
    5,635
    
    
    
    (8
    )
    
    
    
    
    
    
    
    
    
    
    Other Securities
    
    
    3,976
    
    
    
    4,394
    
    
    
    418
    
    
    
    4,684
    
    
    
    4,958
    
    
    
    274Equity Securities
    
    
    511
    
    
    
    695
    
    
    
    184
    
    
    
    511
    
    
    
    804
    
    
    
    293Corporate Bonds
    
    
    333
    
    
    
    242
    
    
    
    (91
    )
    
    
    355
    
    
    
    169
    
    
    
    (186
    )U.S. Government Agency Securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,580
    
    
    
    17,700
    
    
    
    120Total Available for Sale
    
    $
    160,361
    
    
    $
    163,518
    
    
    $
    3,157
    
    
    $
    195,836
    
    
    $
    196,966
    
    
    $
    1,130
   Available for Sale
    
    
    Held to MaturityEstimated
    
    
    
    
    
    
    EstimatedAmortized
    
    
    Fair
    
    
    Amortized
    
    
    FairCost
    
    
    Value
    
    
    Cost
    
    
    Value(In Thousands)Within One Year
    
    $
    5,028
    
    
    $
    5,366
    
    
    $
    
    
    
    $
    Over One Year Through Five Years
    
    
    2,788
    
    
    
    2,897
    
    
    
    
    
    
    
    Over Five Years Through Ten Years
    
    
    12,282
    
    
    
    12,516
    
    
    
    694
    
    
    
    695Over Ten Years
    
    
    48,258
    
    
    
    49,326
    
    
    
    
    
    
    
    Mortgage-Backed Securities
    
    
    68,591
    
    
    
    69,528
    
    
    
    200
    
    
    
    200Collateralized Mortgage Obligations
    
    
    22,903
    
    
    
    23,190
    
    
    
    
    
    
    
    Equity Securities
    
    
    511
    
    
    
    695
    
    
    
    
    
    
    
    $
    160,361
    
    
    $
    163,518
    
    
    $
    894
    
    
    $
    895
 28




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##### Table of Contents



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  March 31, 2009:Mortgage-Backed Securities
    
    $
    6
    
    
    $
    655
    
    
    $
    1
    
    
    $
    810
    
    
    $
    7
    
    
    $
    1,465Municipal Bonds
    
    
    28
    
    
    
    2,662
    
    
    
    44
    
    
    
    2,123
    
    
    
    72
    
    
    
    4,785Collateralized Mortgage Obligations
    
    
    1
    
    
    
    959
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    959Asset-Backed Securities
    
    
    8
    
    
    
    5,635
    
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    5,635Other Securities
    
    
    
    
    
    
    
    
    
    
    72
    
    
    
    2,928
    
    
    
    72
    
    
    
    2,928Corporate Bonds
    
    
    91
    
    
    
    242
    
    
    
    
    
    
    
    
    
    
    
    91
    
    
    
    242$
    134
    
    
    $
    10,153
    
    
    $
    117
    
    
    $
    5,861
    
    
    $
    251
    
    
    $
    16,014Available for Sale  December 31, 2008:Mortgage-Backed Securities
    
    $
    158
    
    
    $
    10,631
    
    
    $
    33
    
    
    $
    5,277
    
    
    $
    191
    
    
    $
    15,908Municipal Bonds
    
    
    968
    
    
    
    35,614
    
    
    
    119
    
    
    
    1,749
    
    
    
    1,087
    
    
    
    37,363Collateralized Mortgage Obligations
    
    
    36
    
    
    
    4,569
    
    
    
    143
    
    
    
    5,903
    
    
    
    179
    
    
    
    10,472Other Securities
    
    
    72
    
    
    
    929
    
    
    
    40
    
    
    
    1,960
    
    
    
    112
    
    
    
    2,889Corporate Bonds
    
    
    186
    
    
    
    169
    
    
    
    
    
    
    
    
    
    
    
    186
    
    
    
    169$
    1,420
    
    
    $
    51,912
    
    
    $
    335
    
    
    $
    14,889
    
    
    $
    1,755
    
    
    $
    66,801
  29




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##### Table of Contents



Loan Portfolio
  March 31,
    
    
    December 31,
    
    
    Increase (Decrease)2009
    
    
    2008
    
    
    Amount
    
    
    Percentage(Dollars in Thousands)Real Estate Loans:Commercial Property
    
    $
    920,431
    
    
    $
    908,970
    
    
    $
    11,461
    
    
    
    1.3
    %Construction
    
    
    177,268
    
    
    
    178,783
    
    
    
    (1,515
    )
    
    
    (0.8
    %)Residential Property
    
    
    87,355
    
    
    
    92,361
    
    
    
    (5,006
    )
    
    
    (5.4
    %)Total Real Estate Loans
    
    
    1,185,054
    
    
    
    1,180,114
    
    
    
    4,940
    
    
    
    0.4
    %Commercial and Industrial Loans:Commercial Term Loans
    
    
    1,589,459
    
    
    
    1,611,449
    
    
    
    (21,990
    )
    
    
    (1.4
    %)Commercial Lines of Credit
    
    
    201,076
    
    
    
    214,699
    
    
    
    (13,623
    )
    
    
    (6.3
    %)SBA Loans (1)
    
    
    177,505
    
    
    
    178,399
    
    
    
    (894
    )
    
    
    (0.5
    %)International Loans
    
    
    87,169
    
    
    
    95,185
    
    
    
    (8,016
    )
    
    
    (8.4
    %)Total Commercial and Industrial Loans
    
    
    2,055,209
    
    
    
    2,099,732
    
    
    
    (44,523
    )
    
    
    (2.1
    %)Consumer Loans
    
    
    79,459
    
    
    
    83,525
    
    
    
    (4,066
    )
    
    
    (4.9
    %)Total Loans  Gross
    
    
    3,319,722
    
    
    
    3,363,371
    
    
    
    (43,649
    )
    
    
    (1.3
    %)Deferred Loan Fees
    
    
    (1,340
    )
    
    
    (1,260
    )
    
    
    (80
    )
    
    
    6.3
    %Allowance for Loan Losses
    
    
    (83,943
    )
    
    
    (70,986
    )
    
    
    (12,957
    )
    
    
    18.3
    %Net Loans Receivable
    
    $
    3,234,439
    
    
    $
    3,291,125
    
    
    $
    (56,686
    )
    
    
    (1.7
    %)
 
 (1)
    
    Includes loans held for sale, at the lower of cost or market, of $34.3
million and $37.4 million as of March 31, 2009 and December 31, 2008, respectively.   Balance as of
    
    Percentage of TotalIndustry
    
    March 31, 2009
    
    Gross Loans Outstanding(In Thousands)Lessors of Non-Residential Buildings
    
    $
    458,680
    
    
    
    13.8
    %Accommodation/Hospitality
    
    $
    439,914
    
    
    
    13.3
    %Gasoline Stations
    
    $
    379,515
    
    
    
    11.4
    %
  30




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##### Table of Contents



Non-Performing Assets
   March 31,
    
    
    December 31,
    
    
    Increase (Decrease)2009
    
    
    2008
    
    
    Amount
    
    
    Percentage(Dollars in Thousands)Non-Accrual Loans
    
    $
    155,508
    
    
    $
    120,823
    
    
    $
    34,685
    
    
    
    28.7
    %Loans 90 Days or More Past Due and Still Accruing
    
    
    823
    
    
    
    1,075
    
    
    
    (252
    )
    
    
    (23.4
    %)Total Non-Performing Loans
    
    
    156,331
    
    
    
    121,898
    
    
    
    34,433
    
    
    
    28.2
    %Other Real Estate Owned
    
    
    1,206
    
    
    
    823
    
    
    
    383
    
    
    
    46.5
    %Total Non-Performing Assets
    
    $
    157,537
    
    
    $
    122,721
    
    
    $
    34,816
    
    
    
    28.4
    %Delinquent Loans
    
    $
    164,402
    
    
    $
    128,469
    
    
    $
    35,933
    
    
    
    28.0
    %Troubled Debt Restructurings on Accrual Status
    
    $
    61,865
    
    
    $
    
    
    
    $
    61,865
    
    
    
    
    31




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##### Table of Contents



Allowance for Loan Losses and Allowance for Off-Balance Sheet Items
      32




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##### Table of Contents



As of and for the Three Months EndedMarch 31,
    
    
    December 31,
    
    
    March 31,2009
    
    
    2008
    
    
    2008(Dollars in Thousands)Allowance for Loan Losses:Balance at Beginning of Period
    
    $
    70,986
    
    
    $
    63,948
    
    
    $
    43,611Actual Charge-Offs
    
    
    (12,516
    )
    
    
    (19,473
    )
    
    
    (7,852
    )Recoveries on Loans Previously Charged Off
    
    
    703
    
    
    
    851
    
    
    
    555Net Loan Charge-Offs
    
    
    (11,813
    )
    
    
    (18,622
    )
    
    
    (7,297
    )Provision Charged to Operating Expenses
    
    
    24,770
    
    
    
    25,660
    
    
    
    16,672Balance at End of Period
    
    $
    83,943
    
    
    $
    70,986
    
    
    $
    52,986Allowance for Off-Balance Sheet Items:Balance at Beginning of Period
    
    $
    4,096
    
    
    $
    4,306
    
    
    $
    1,765Provision Charged to Operating Expenses
    
    
    183
    
    
    
    (210
    )
    
    
    1,149Balance at End of Period
    
    $
    4,279
    
    
    $
    4,096
    
    
    $
    2,914Ratios:Net Loan Charge-Offs to Average Total Gross Loans (1)
    
    
    1.43
    %
    
    
    2.20
    %
    
    
    0.89
    %Net Loan Charge-Offs to Total Gross Loans (1)
    
    
    1.44
    %
    
    
    2.20
    %
    
    
    0.89
    %Allowance for Loan Losses to Average Total Gross Loans
    
    
    2.51
    %
    
    
    2.11
    %
    
    
    1.60
    %Allowance for Loan Losses to Total Gross Loans
    
    
    2.53
    %
    
    
    2.11
    %
    
    
    1.60
    %Net Loan Charge-Offs to Allowance for Loan Losses (1)
    
    
    57.07
    %
    
    
    104.36
    %
    
    
    55.39
    %Net Loan Charge-Offs to Provision Charged to Operating Expenses
    
    
    47.69
    %
    
    
    72.57
    %
    
    
    43.77
    %Allowance for Loan Losses to Non-Performing Loans
    
    
    53.70
    %
    
    
    58.23
    %
    
    
    59.72
    %Balances:Average Total Gross Loans Outstanding During Period
    
    $
    3,350,343
    
    
    $
    3,368,044
    
    
    $
    3,305,252Total Gross Loans Outstanding at End of Period
    
    $
    3,319,722
    
    
    $
    3,363,371
    
    
    $
    3,305,949Non-Performing Loans at End of Period
    
    $
    156,331
    
    
    $
    121,898
    
    
    $
    88,720
 
 (1)
    
    Net loan charge-offs are annualized to calculate the ratios. Provision for Credit Losses.
  33




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##### Table of Contents



Deposits
  March 31,
    
    
    December 31,
    
    
    Increase (Decrease)2009
    
    
    2008
    
    
    Amount
    
    
    Percentage(Dollars in Thousands)Demand  Noninterest-Bearing
    
    $
    542,521
    
    
    $
    536,944
    
    
    $
    5,577
    
    
    
    1.0
    %Interest-Bearing:Savings
    
    
    82,824
    
    
    
    81,869
    
    
    
    955
    
    
    
    1.2
    %Money Market Checking and NOW Accounts
    
    
    308,383
    
    
    
    370,401
    
    
    
    (62,018
    )
    
    
    (16.7
    %)Time Deposits of $100,000 or More
    
    
    1,218,826
    
    
    
    849,800
    
    
    
    369,026
    
    
    
    43.4
    %Other Time Deposits
    
    
    1,043,555
    
    
    
    1,231,066
    
    
    
    (187,511
    )
    
    
    (15.2
    %)Total Deposits
    
    $
    3,196,109
    
    
    $
    3,070,080
    
    
    $
    126,029
    
    
    
    4.1
    %
    Federal Home Loan Bank Advances and Other Borrowings
  Junior Subordinated Debentures
  34




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##### Table of Contents



INTEREST RATE RISK MANAGEMENT
   AfterThree
    
    
    After OneMonths
    
    
    Year ButWithin
    
    
    But
    
    
    Within
    
    
    After
    
    
    Non-Three
    
    
    Within
    
    
    Five
    
    
    Five
    
    
    Interest-Months
    
    
    One Year
    
    
    Years
    
    
    Years
    
    
    Sensitive
    
    
    Total(Dollars in Thousands)ASSETSCash and Due From Banks
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    230,950
    
    
    $
    230,950Securities Purchased Under Agreements to Resell
    
    
    90,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    90,000Securities:Fixed Rate
    
    
    38,817
    
    
    
    19,144
    
    
    
    38,943
    
    
    
    48,405
    
    
    
    
    
    
    
    145,309Floating Rate
    
    
    3,303
    
    
    
    
    
    
    
    11,456
    
    
    
    4,344
    
    
    
    
    
    
    
    19,103Loans:Fixed Rate
    
    
    265,513
    
    
    
    216,768
    
    
    
    530,933
    
    
    
    334,641
    
    
    
    
    
    
    
    1,347,855Floating Rate
    
    
    1,677,271
    
    
    
    33,320
    
    
    
    104,755
    
    
    
    1,013
    
    
    
    
    
    
    
    1,816,359Non-Accrual
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    155,508
    
    
    
    155,508Deferred Loan Fees and Allowance for Loan Losses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (85,283
    )
    
    
    (85,283
    )Federal Home Loan Bank and FederalReserve Bank Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,925
    
    
    
    
    
    
    
    40,925Other Assets
    
    
    
    
    
    
    25,710
    
    
    
    
    
    
    
    7,847
    
    
    
    98,612
    
    
    
    132,169Total Assets
    
    $
    2,074,904
    
    
    $
    294,942
    
    
    $
    686,087
    
    
    $
    437,175
    
    
    $
    399,787
    
    
    $
    3,892,895LIABILITIES AND STOCKHOLDERS EQUITYLiabilities:Deposits:Demand Deposits
    
    $
    33,976
    
    
    $
    109,364
    
    
    $
    262,475
    
    
    $
    136,706
    
    
    $
    
    
    
    $
    542,521Savings
    
    
    15,868
    
    
    
    27,383
    
    
    
    33,069
    
    
    
    6,504
    
    
    
    
    
    
    
    82,824Money Market Checking and NOW Accounts
    
    
    44,979
    
    
    
    86,845
    
    
    
    100,427
    
    
    
    76,132
    
    
    
    
    
    
    
    308,383Time Deposits:Fixed Rate
    
    
    627,242
    
    
    
    1,600,825
    
    
    
    34,224
    
    
    
    34
    
    
    
    
    
    
    
    2,262,325Floating Rate
    
    
    56
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    56Federal Home Loan Bank Advances and Other
Borrowings
    
    
    253,278
    
    
    
    54,657
    
    
    
    4,673
    
    
    
    228
    
    
    
    
    
    
    
    312,836Junior Subordinated Debentures
    
    
    82,406
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    82,406Other Liabilities
    
    
    143
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41,158
    
    
    
    41,301Stockholders Equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    260,243
    
    
    
    260,243Total Liabilities and Stockholders Equity
    
    $
    1,057,948
    
    
    $
    1,879,074
    
    
    $
    434,868
    
    
    $
    219,604
    
    
    $
    301,401
    
    
    $
    3,892,895Repricing Gap
    
    $
    1,016,956
    
    
    $
    (1,584,132
    )
    
    $
    251,219
    
    
    $
    217,571
    
    
    $
    98,386
    
    
    $
    Cumulative Repricing Gap
    
    $
    1,016,956
    
    
    $
    (567,176
    )
    
    $
    (315,957
    )
    
    $
    (98,386
    )
    
    $
    
    
    
    $
    Cumulative Repricing Gap as a Percentage of
Total Assets
    
    
    26.12
    %
    
    
    (14.57
    %)
    
    
    (8.12
    %)
    
    
    (2.53
    %)
    
    
    Cumulative Repricing Gap as a Percentage of
Interest-Earning Assets
    
    
    29.40
    %
    
    
    (16.39
    %)
    
    
    (9.13
    %)
    
    
    (2.84
    %)
    
    
    
  35




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##### Table of Contents



Less Than Three Months
    
    Less Than Twelve MonthsMarch 31,
    
    December 31,
    
    March 31,
    
    December 31,2009
    
    2008
    
    2009
    
    2008(Dollars in Thousands)Cumulative Repricing Gap
    
    $
    1,016,956
    
    
    $
    1,126,633
    
    
    $
    (567,176
    )
    
    $
    (147,200
    )Cumulative Repricing Gap as a Percentage of Total Assets
    
    
    26.12
    %
    
    
    29.07
    %
    
    
    (14.57
    %)
    
    
    (3.80
    %)Cumulative Repricing Gap as a Percentage of Interest-Earning Assets
    
    
    29.40
    %
    
    
    31.20
    %
    
    
    (16.39
    %)
    
    
    (4.08
    %)
   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
    %
    
    
    12.75
    %
    
    
    (11.23
    %)
    
    $
    14,198
    
    
    $
    (51,248
    )100
    %
    
    
    6.72
    %
    
    
    (5.65
    %)
    
    $
    7,487
    
    
    $
    (25,790
    )(100
    %)
    
    
    (11.71
    %)
    
    
    9.62
    %
    
    $
    (5,972
    )
    
    $
    78,534(200
    %)
    
    
    (23.67
    %)
    
    
    18.88
    %
    
    $
    (20,249
    )
    
    $
    123,682
  36




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##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
 Capital Resources
   Liquidity  Hanmi Financial
 Notes to Consolidated Financial Statements (Unaudited), Note 10
 Regulatory Matters
  Liquidity  Hanmi Bank
  37




---



##### Table of Contents



38




---



##### 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
    
    $
    377,813
    
    
    
    10.88
    %
    
    $
    277,822
    
    
    
    8.00
    %
    
    
    N/A
    
    
    
    N/AHanmi Bank
    
    $
    374,948
    
    
    
    10.81
    %
    
    $
    277,571
    
    
    
    8.00
    %
    
    $
    346,964
    
    
    
    10.00
    %Tier 1 Capital (to Risk-Weighted Assets):Hanmi Financial
    
    $
    333,579
    
    
    
    9.61
    %
    
    $
    138,911
    
    
    
    4.00
    %
    
    
    N/A
    
    
    
    N/AHanmi Bank
    
    $
    330,835
    
    
    
    9.54
    %
    
    $
    138,786
    
    
    
    4.00
    %
    
    $
    208,178
    
    
    
    6.00
    %Tier 1 Capital (to Average Total Assets):Hanmi Financial
    
    $
    333,579
    
    
    
    8.46
    %
    
    $
    157,707
    
    
    
    4.00
    %
    
    
    N/A
    
    
    
    N/AHanmi Bank
    
    $
    330,835
    
    
    
    8.40
    %
    
    $
    157,492
    
    
    
    4.00
    %
    
    $
    196,866
    
    
    
    5.00
    %
 Regulatory Matters
  Government Programs
        Regulatory Matters
   39




---



##### Table of Contents



Dividends
    40




---



##### Table of Contents



OFF-BALANCE SHEET ARRANGEMENTS
 Note 7  Off-Balance Sheet
Commitments Item 1.
Business  Off-Balance Sheet Commitments
 CONTRACTUAL OBLIGATIONS
  RECENTLY ISSUED ACCOUNTING STANDARDS
 FSP No. FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial
Instruments
 FSP Nos. FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary
Impairments
 FSP No. FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset
or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly
 FSP EITF 99-20-1, Amendments to the Impairment Guidance of Emerging Issues Task Force
(EITF) Issue No. 99-20 Accounting for Certain Investments in Debt and Equity
Securities,
 41




---



##### Table of Contents



EITF Issue No. 08-5, Issuers Accounting for Liabilities Measured at Fair Value With a
Third-Party Credit Enhancement
 FSP EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions
Are Participating Securities
 FSP No. FAS 142-3, Determination of the Useful Life of Intangible Assets Goodwill and Other Intangible Assets.
 SFAS No. 160, Non-Controlling Interest in Consolidated Financial Statements  an Amendment
of ARB No. 51
 SFAS No. 141(R), Business Combinations Business Combinations.
 
 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.
 42




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##### 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
  43




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##### Table of Contents



ITEM 6. EXHIBITS
 ExhibitNumber
    
    Document3.1
    
    Amended and Restated Certificate of Incorporation of Hanmi Financial Corporation  (9)3.2
    
    Certificate of Second Amendment of Certificate of Incorporation of Hanmi Financial Corporation  (9)3.3
    
    Amended and Restated Bylaws of Hanmi Financial Corporation  (9)3.4
    
    Certificate of Amendment to Bylaws of Hanmi Financial Corporation  (9)10.1
    
    Amended and Restated Trust Agreement of Hanmi Capital Trust I dated as of January 8, 2004 among Hanmi FinancialCorporation, Deutsche Bank Trust Company Americas, as Property Trustee, Deutsche Bank Trust Company Delaware, asDelaware Trustee, and the Administrative Trustees Named Therein  (3)10.2
    
    Hanmi Capital Trust I Junior Subordinated Indenture dated as of January 8, 2004 entered into between Hanmi FinancialCorporation and Deutsche Bank Trust Company Americas, as Trustee (included as exhibit D to Exhibit 10.1)  (3)10.3
    
    Hanmi Capital Trust I Guarantee Agreement dated as of January 8, 2004 entered into between Hanmi Financial Corporation,as Guarantor, and Deutsche Bank Trust Company Americas, as Guarantee Trustee  (3)10.4
    
    Hanmi Capital Trust I Form of Common Securities Certificate (included as exhibit B to Exhibit 10.1)  (3)10.5
    
    Hanmi Capital Trust I Form of Preferred Securities Certificate (included as exhibit C to Exhibit 10.1)  (3)10.6
    
    Amended and Restated Trust Agreement of Hanmi Capital Trust II dated as of March 15, 2004 among Hanmi FinancialCorporation, Deutsche Bank Trust Company Americas, as Property Trustee, Deutsche Bank Trust Company Delaware, asDelaware Trustee, and the Administrative Trustees Named Therein  (3)10.7
    
    Hanmi Capital Trust II Junior Subordinated Indenture dated as of March 15, 2004 entered into between Hanmi FinancialCorporation and Deutsche Bank Trust Company Americas, as Trustee (included as exhibit D to Exhibit 10.6)  (3)10.8
    
    Hanmi Capital Trust II Guarantee Agreement dated as of March 15, 2004 entered into between Hanmi Financial Corporation,as Guarantor, and Deutsche Bank Trust Company Americas, as Guarantee Trustee  (3)10.9
    
    Hanmi Capital Trust II Form of Common Securities Certificate (included as exhibit B to Exhibit 10.6)  (3)10.10
    
    Hanmi Capital Trust II Form of Preferred Securities Certificate (included as exhibit C to Exhibit 10.6)  (3)10.11
    
    Amended and Restated Trust Agreement of Hanmi Capital Trust III dated as of April 28, 2004 among Hanmi FinancialCorporation, Deutsche Bank Trust Company Americas, as Property Trustee, Deutsche Bank Trust Company Delaware, asDelaware Trustee, and the Administrative Trustees Named Therein  (3)10.12
    
    Hanmi Capital Trust III Junior Subordinated Indenture dated as of April 28, 2004 entered into between Hanmi FinancialCorporation and Deutsche Bank Trust Company Americas, as Trustee (included as exhibit D to Exhibit 10.11)(3)10.13
    
    Hanmi Capital Trust III Guarantee Agreement dated as of April 28, 2004 entered into between Hanmi Financial Corporation,as Guarantor, and Deutsche Bank Trust Company Americas, as Guarantee Trustee  (3)10.14
    
    Hanmi Capital Trust III Form of Common Securities Certificate (included as exhibit B to Exhibit 10.11)  (3)10.15
    
    Hanmi Capital Trust III Form of Preferred Securities Certificate (included as exhibit C to Exhibit 10.11)  (3)10.16
    
    Employment Agreement Between Hanmi Financial Corporation and Hanmi Bank, on the One Hand, and Jay S. Yoo, on the OtherHand, dated as of June 19, 2008  (4)10.17
    
    Hanmi Financial Corporation 2007 Equity Compensation Plan (1)10.18
    
    Employment Offer Letter to John Park from Hanmi Bank dated August 13, 2008  (5)10.19
    
    Hanmi Financial Corporation Year 2000 Stock Option Plan  (8)10.20
    
    Form of Notice of Stock Option Grant and Agreement Pursuant to 2007 Equity Compensation Plan  (9)10.21
    
    Form of Notice of Grant and Restricted Stock Agreement Pursuant to 2007 Equity Compensation Plan  (9)10.22
    
    Employment Offer Letter with Brian E. Cho, executed November 1, 2007  (7)14
    
    Code of Ethics (6)21
    
    Subsidiaries of the Registrant (7)
 44




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ITEM 6. EXHIBITS (Continued)
 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
 
 (1)
    
    Previously filed and incorporated by reference herein from Hanmi Financials Current
Report on Form 8-K filed with the SEC on June 26, 2007.(2)
    
    Previously filed and incorporated by reference herein from Hanmi Financials Current
Report on Form 8-K filed with the SEC on December 27, 2007.(3)
    
    Previously filed and incorporated by reference herein from Hanmi Financials
Quarterly Report on Form 10-Q for the quarter ended June 30, 2004 filed with the SEC on August
9, 2004.(4)
    
    Previously filed and incorporated by reference herein from Hanmi Financials
Quarterly Report on Form 10-Q for the quarter ended June 30, 2008 filed with the SEC on August
11, 2008.(5)
    
    Previously filed and incorporated by reference herein from Hanmi Financials
Quarterly Report on Form 10-Q for the quarter ended September 30, 2008 filed with the SEC on
November 7, 2008.(6)
    
    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.(7)
    
    Previously filed and incorporated by reference herein from Hanmi Financials Annual
Report on Form 10-K for the year ended December 31, 2007 filed with the SEC on February 29,
2008.(8)
    
    Previously filed and incorporated by reference herein from Hanmi Financials
Registration Statement on Form S-8 filed with the SEC on August 18, 2000.(9)
    
    Previously filed and incorporated by reference herein from Hanmi Financials Annual
Report on Form 10-K for the year ended December 31, 2008 filed with the SEC on March 13, 2009. 45




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##### Table of Contents



SIGNATURES
  HANMI FINANCIAL CORPORATIONDate:                May 11, 2009
    By:
    /s/ Jay S. YooJay S. YooPresident and Chief Executive OfficerBy:
    /s/ Brian E. ChoBrian E. ChoExecutive Vice President and Chief Financial Officer 46