Hanmi Financial Corporation (HAFC)

[BEIJING BILL]

Hanmi Bank (HAFC) Largest In Terms Of Assets; Rumors Abound On Investments From Another South Korean Bank
Thursday March 11, 10:29 am ET

67 WALL STREET, New York - March 11, 2010 - The Wall Street Transcript has just published its Pacific & Southwest Regional Banks Report offering a timely review of the sector to serious investors and industry executives. This 37 page feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling [phone] or via The Wall Street Transcript Online.

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Topics covered: FDIC-Assisted Acquisitions - Short-Term Volatility - Ethnic-Oriented Western Banks - A Return To Normalized Earnings - Finding Value Post Run-Up - Search For Sustained Profitability - Question of Commercial Real Estate Assets - Increased Consolidation - Strengthened Balance Sheets - Late-Stage Ramifications of TARP - Consequences Of Volcker-Obama Proposal

Companies include: Bank of Marin (BMRC); American Business Bank (AMBZ); BB&T (BBT); Bank of America (BAC); Bank of Hawaii (BOH); BofI Holding (BOFI); CVBF (CVBF); Cathay (CATY); Center Financial (CLFC); Center and Wilshire (WIBC); Central Pacific (CPF); Citi ©; City National (CYN); CoBiz (COBZ); Comerica (CMA); Cullen/Frost (CFR); East West (EWBC); and many more.

In the following brief excerpt from the 37 page report, Joseph Gladue discusses the outlook for the Banking sector and for investors.

Joseph Gladue joined B. Riley & Co. in 2007 as a Senior Equity Research Analyst; his coverage includes banks and thrifts. Mr. Gladue holds the Chartered Financial Analyst designation and was formerly Vice President of Equity Research at Cohen & Company, where he provided equity research on micro-, small-, and mid-cap bank and thrift stocks.

He has been named a Wall Street Journal All-Star Analyst and was twice a Forbes Best Brokerage Analyst. Earlier in his career, Mr. Gladue was Vice President of Equity Research and Director of Research at the Chapman Company. He earned his B.A. in economics at the University of Notre Dame and his M.S. in finance at Loyola College in Baltimore.

TWST: You mentioned the ethnic-oriented banks. How have they performed in comparison to conventional banks?

Mr. Gladue: Chinese banks were some of the banks that were harder hit by the troubles in residential construction. East West Bank (EWBC) had a lot of problems in that area, as did their biggest rival, UCBH (UCBH.PK). Of course, UCBH was taken over by the regulators, and ultimately most of their operations were sold to East West Bank. East West has been pretty aggressive on writing off their problem loans, and they benefited from the FDIC-assisted transaction of UCBH. That transaction is probably the poster child for the benefits of doing an FDIC-assisted deal. East West had some big gains from accounting for that transaction, and it looks like it is going to be pretty accretive to East West's operations going forward. Cathay Bancorp (CATY), the other big Chinese-oriented bank, didn't have quite as big a problem with construction lending as East West or UCBH did, but they still ran into some problems with asset quality as well.

Both East West and Cathay have done some capital raises; they seem to be relatively healthy on the capital front now. There are really four large Korean banks. The largest in terms of assets is Hanmi (HAFC). Hanmi is a little bit different than the other three. They're less focused on commercial real estate lending and had a bigger exposure to C And I lending, but they have had some big asset-quality issues, and they do need to raise capital. There have been some rumors in the papers, some emanating out of South Korea, that one of the big South Korean banks was interested in investing in Hanmi. That has not come to pass yet, but that rumor is still out there. The other three large Korean-American banks - Wilshire (WIBC), Nara (NARA) and Center Bank (CLFC) - all are more focused on commercial real estate.

TWST: More generally, how would you characterize the industry over the last six months or so? How have the Pacific and Western banks performed in comparison to other areas of the country?

Mr. Gladue: In the fourth quarter, on an industry-wide basis, there do seem to be some signs that asset quality is bottoming out. The nonperformers and early-stage delinquencies at a number of banks declined. That wasn't universal; there are still a number of banks that are seeing increases. In addition to that, a lot of banks have been building up their reserve levels pretty substantially over the last year or so. It looks like it is getting to the point where some of those banks are going to stop building their reserves in the next quarter or two. It may be a while before they start reducing the reserves, but as long as they are not building them, that could provide some additional boost to their earnings. They will just start provisioning at that net charge-off level and not adding to the reserve. We have seen a little bit of improvement in net interest margins for a number of the banks.

That is largely because a number of banks have seen their CDs repriced to lower rates. However, some banks have been shifting their securities portfolio to shorter durations to prepare for an ultimate increase in interest rates somewhere down the road. This shift will likely be a drag on net interest margins at these banks for the next few quarters. I think that this trend holds true for a lot of the banks in the West Coast and Pacific. Local markets still have the big impact on how each bank is performing. I follow two banks in Hawaii, Bank of Hawaii (BOH) and Central Pacific (CPF). Bank of Hawaii is still a very healthy bank. I guess Central Pacific is a little more challenged, mostly from the lending that they did in California. Though they are seeing growing asset-quality issues in Hawaii as well. In regards to the Hawaii economy, unemployment is still much lower than the national average, but it is up substantially from where it was a year ago. So it has grown there.

The Wall Street Transcript is a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs and research analysts. This Special Issue is available by calling [phone] or via The Wall Street Transcript Online .

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