About Hanmi Financial

Hanmi Financial Corporation operates as the holding company for Hanmi Bank that provides business banking products and services in the United States. The bank’s deposit accounts are insured under the Federal Deposit Insurance Act up to applicable limits thereof. The California Department of Financial Protection and Innovation (the DFPI) is the bank’s primary state bank regulator and the Federal Deposit Insurance Corporation (the FDIC) is its primary federal regulator. The bank is a community bank conducting general business banking, with its primary market encompassing the Korean-American community and other multi-ethnic communities across California, Colorado, Georgia, Illinois, New Jersey, New York, Texas, Virginia and Washington. The bank’s full-service offices are located in markets where many of the businesses are owned by immigrants and other minority groups. The bank’s client base reflects the multi-ethnic composition of these communities. The bank is a California state-chartered financial institution insured by the FDIC. The bank is a state nonmember bank, and the FDIC is its primary federal bank regulator. The California Department of Financial Protection and Innovation is the bank's primary state bank regulator. Lending Activities The bank originates loans for its own portfolio and for sale in the secondary market. Lending activities include real estate loans (commercial property, construction and residential property), commercial and industrial loans (commercial term, commercial lines of credit and international), equipment lease financing and Small Business Administration (SBA) loans. Real Estate Loans Real estate lending involves risks associated with the potential decline in the value of the underlying real estate collateral and the cash flows from income-producing properties. When real estate values decline, the bank’s real estate dependence increases the risk of loss both in the bank’s loan portfolio and the bank’s holdings of other real estate owned (OREO), which are the result of foreclosures on real property due to default by borrowers who use the property as collateral for loans. OREO properties are categorized as real property that is owned by the bank, but which is not directly related to the bank’s business. Commercial Property The bank offers commercial real estate loans, which are usually collateralized by first deeds of trust. The bank obtains formal appraisals in accordance with applicable regulations to support the value of the real estate collateral. The bank’s commercial real estate loans are principally secured by investor-owned or owner-occupied commercial and industrial buildings. Generally, these types of loans are made with a maturity date of up to seven years, with longer amortization periods. The bank offers fixed-rate commercial real estate loans, including hybrid-fixed rate loans that are fixed for one to five years and then convert to adjustable rate loans for the remaining term. Construction The bank maintains a small construction portfolio for multifamily and commercial and industrial properties within its market areas. On a case-by-case basis, the bank originates permanent loans on the commercial property under loan conditions that require strong project stability and debt service coverage. Residential Property The bank purchases and originates fixed-rate and variable-rate mortgage loans secured by one- to four-family properties with amortization schedules of 15 to 30 years and maturity schedules of up to 30 years. Commercial and Industrial Loans The bank offers commercial loans for intermediate and short-term credit. Commercial loans may be unsecured, partially secured or fully secured with maturity schedules that range from 12 to 60 months. The bank finances primarily small- and middle-market businesses in a wide spectrum of industries. Commercial and industrial loans consist of credit lines for operating needs, loans for equipment purchases and working capital, and various other business purposes. Commercial Term The bank offers term loans for a variety of needs, including loans for purchases of equipment, machinery or inventory, business acquisitions, tenant improvements, and refinancing of existing business-related debts. These loans have repayment terms of up to seven years. Commercial Lines of Credit The bank offers lines of credit for a variety of short-term needs, including lines of credit for working capital, accounts receivable and inventory financing, and other purposes related to business operations. Commercial lines of credit usually have a term of 12 months. International The bank offers a variety of international finance and trade services and products, including letters of credit, import financing (trust receipt financing and bankers’ acceptances) and export financing. Although most of the company’s trade finance activities are related to trade with Asian countries, all of its loans are made to companies domiciled in the United States, and a substantial portion of those borrowers are California-based businesses engaged in import and export activities. Equipment Financing Agreements Equipment financing agreements have terms ranging from one to seven years. Commercial equipment financing agreements are secured by the business assets being financed. The bank generally obtains a personal guaranty of the owner(s) of the business. Equipment financing agreements are similar to commercial business loans in that the financing agreements are typically made on the basis of the borrower’s ability to make repayment from the cash flows of the borrower’s business. SBA Loans The bank originates loans that are guaranteed by the SBA, an independent agency of the federal government. SBA loans are offered for business purposes, such as owner-occupied commercial real estate, business acquisitions, start-ups, franchise financing, working capital, improvements and renovations, inventory and equipment, and debt-refinancing. SBA loans offer lower down payments and longer-term financing, which helps small business that are starting out, or about to expand. The guarantees on SBA loans and SBA express loans are generally 75% and 50% of the principal amount of the loan, respectively. The bank typically requires that SBA loans be secured by business assets and by a first or second deed of trust on any available real property. When the SBA loan is secured by a first deed of trust on real property, the bank obtains appraisals in accordance with applicable regulations. SBA loans have terms ranging from five to 25 years depending on the use of the proceeds. To qualify for a SBA loan, a borrower must demonstrate the capacity to service and repay the loan, without liquidating the collateral, based on historical earnings or reliable projections. Deposits The bank offers a traditional array of deposit products, including noninterest-bearing checking accounts, interest-bearing checking and savings accounts, negotiable order of withdrawal (NOW) accounts, money market accounts, and certificates of deposit. Investment Portfolio As of December 31, 2022, the company’s securities portfolio included mortgage-backed securities, collateralized mortgage obligations, debt securities issued by the U.S. government agencies and sponsored agencies and tax-exempt municipal bonds. Regulation and Supervision The company is subject to the Bank Holding Company Act of 1956, as amended (the BHCA). The company, which is a bank holding company, and the bank, which is a California-chartered state nonmember bank, are subject to significant regulation and restrictions by federal and state laws and regulatory agencies. The company is a bank holding company that is subject to comprehensive supervision, regulation, examination and enforcement by the Federal Reserve. The company’s business is also influenced by the monetary and fiscal policies of the Board of Governors of the Federal Reserve System (the Federal Reserve), the federal government, and the policies of regulatory agencies, particularly the FDIC and the DFPI. The company is a bank holding company within the meaning of Section 3700 of the California Financial Code. Therefore, the company and any of its subsidiaries are subject to examination by, and may be required to file reports with, the DFPI. The bank is a California state-chartered commercial bank whose deposits are insured by the FDIC. The FDIC is its primary federal bank regulator and the DFPI is the bank’s primary state bank regulator. The bank is subject to comprehensive supervision, regulation, examination and enforcement by the FDIC and the DFPI. The bank must comply with numerous federal and state anti-money laundering and consumer protection statutes and implementing regulations, including the USA PATRIOT Act of 2001, the Bank Secrecy Act, the Foreign Account Tax Compliance Act, the Community Reinvestment Act (CRA), the Fair Credit Reporting Act, as amended by the Fair and Accurate Credit Transactions Act, the Equal Credit Opportunity Act, the Truth in Lending Act, the Fair Housing Act, the Home Mortgage Disclosure Act, the Real Estate Settlement Procedures Act, the National Flood Insurance Act, the California Homeowner Bill of Rights, and various federal and state privacy protection laws. The bank was rated Needs to Improve in meeting community credit needs under the CRA at its most recent examination for CRA performance. The bank is a member and holder of the capital stock of the Federal Home Loan Bank of San Francisco (FHLBSF). As of December 31, 2022, the bank was in compliance with the FHLBSF’s stock ownership requirement. The company’s common stock is registered with the Securities and Exchange Commission (SEC) under the Securities Exchange Act of 1934, as amended (the Exchange Act). The company is subject to the information and proxy solicitation requirements, insider trading restrictions and other requirements under the Exchange Act. History Hanmi Financial Corporation was founded in 1982. The company, a Delaware corporation, was incorporated in 2000.