hanmi-pe final report esu v8a - federal reserve bank … (sba) loans. a range of consumer credit...

PUBLIC DISCLOSURE

September 13, 2010

COMMUNITY REINVESTMENT ACT PERFORMANCE EVALUATION

Hanmi Bank RSSD #657365

3660 Wilshire Boulevard Los Angeles, California 90010

Federal Reserve Bank of San Francisco

101 Market Street San Francisco, California 94105

NOTE: This document is an evaluation of this institution’s record of meeting the credit needs of its entire community, including low- and moderate-income neighborhoods, consistent with safe and sound operation of the institution. This evaluation is not, nor should it be construed as, an assessment of the financial condition of this institution. The rating assigned to this institution does not represent an analysis, conclusion or opinion of the federal financial supervisory agency concerning the safety and soundness of this financial institution.

HANMI BANK CRA Public Evaluation Los Angeles, California September 13, 2010

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TABLE OF CONTENTS

INSTITUTION RATING ................................................................................................................. 1 Institution’s CRA Rating .......................................................................................................... 1

INSTITUTION ................................................................................................................................. 2 Description of Institution .......................................................................................................... 2 Scope of Examination .............................................................................................................. 3

CONCLUSIONS WITH RESPECT TO PERFORMANCE TESTS .................................................. 5 Lending Test ............................................................................................................................. 5

LENDING ACTIVITY .................................................................................................................. 5 ASSESSMENT AREA CONCENTRATION ..................................................................................... 5 GEOGRAPHIC AND BORROWER DISTRIBUTION ......................................................................... 6 COMMUNITY DEVELOPMENT LENDING .................................................................................... 6

Investment Test ........................................................................................................................ 7 Service Test .............................................................................................................................. 8

RETAIL BANKING SERVICES ..................................................................................................... 8 COMMUNITY DEVELOPMENT SERVICES ................................................................................... 8

Fair Lending or Other Illegal Practices Review ................................................................... 9 FULL-SCOPE ASSESSMENT AREA CONCLUSIONS .............................................................. 10

LOS ANGELES-ORANGE ............................................................................................................ 10 DESCRIPTION OF OPERATIONS IN LOS ANGELES-ORANGE ..................................................... 10 CONCLUSIONS WITH RESPECT TO PERFORMANCE TESTS IN LOS ANGELES-ORANGE ............. 13

LIMITED-SCOPE ASSESSMENT AREA CONCLUSIONS ......................................................... 17

APPENDICES Appendix A: Glossary of Terms

Appendix B: CRA Core Tables Appendix C: Limited-Scope Assessment Area Market Profiles


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INSTITUTION RATING

Institution’s CRA Rating Hanmi Bank is rated "SATISFACTORY"

The following table shows the performance level of Hanmi Bank with respect to the lending, investment, and service tests.

PERFORMANCE LEVELS

PERFORMANCE TESTS

LENDING

TEST* INVESTMENT

TEST SERVICE

TEST

OUTSTANDING X

HIGH SATISFACTORY X

LOW SATISFACTORY X

NEEDS TO IMPROVE

SUBSTANTIAL

NONCOMPLIANCE *The lending test is weighted more heavily than the investment and service tests in determining the overall rating.

The major factors supporting the institution’s rating include:

An excellent geographic distribution of small business loans, particularly in the Los Angeles-Orange assessment area;

An excellent level of lending to businesses with $1.0 million or less in gross annual revenue;

Leadership in making community development loans that addressed the need for affordable housing and promoted economic development but providing small business credit inside enterprise zones;

Retail banking services, including alternative delivery systems, that are reasonably accessible to essentially all portions of the bank’s assessment areas; and

A relatively high level of community development services that benefited low- and moderate-income individuals and small businesses.


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INSTITUTION

Description of Institution Hanmi Bank (Hanmi), headquartered in Los Angeles, California, is a wholly-owned subsidiary of Hanmi Financial Corporation and reported assets of $2.9 billion as of June 30, 2010. The bank began operations in 1982 with a focus on providing services to the Korean-American community in Los Angeles. Hanmi has kept its initial focus, but also promotes its products and services to all of the various ethnic communities within its assessment areas. The bank currently operates nineteen full-service branches in Los Angeles County, four in Orange County and one office each in San Bernardino, San Diego, San Francisco, and Santa Clara Counties. Since its previous Community Reinvestment Act (CRA) examination, Hanmi opened a branch in Walnut, California. The bank currently operates one loan production office outside of its assessment areas in Bellevue, Washington. Hanmi is a full-service bank with a commercial focus, specializing in business banking products for small- and medium-sized businesses and professionals. Commercial products include term loans, lines of credit, real estate construction loans, credit cards, and Small Business Administration (SBA) loans. A range of consumer credit products are offered including, but not limited to, automobile loans and credit cards. While Hanmi has traditionally been a mortgage lender, this product offering was temporarily curtailed during the review period in response to economic conditions. Below is the June 30, 2010, loan portfolio as stated in the Consolidated Reports of Condition and Income, which shows the bank’s commercial focus.

EXHIBIT 1

LOANS AND LEASES AS OF JUNE 30, 2010

Loan Type $ (‘000s) %

Commercial/Industrial & Non-Farm Non-Residential Real Estate 2,171,651 86.7 Construction & Land Development 126,077 5.0 Secured by 1-4 Family Residential Real Estate 109,750 4.4 All Other 80,014 3.2 Consumer Loans & Credit Cards 16,756 0.7

Total (Gross) 2,504,248 100.0 Hanmi has defined the following five separate assessment areas:

Los Angeles – Orange Assessment Area, which consists of Los Angeles and Orange Counties in their entirety and is also the Los Angeles-Long Beach-Glendale Metropolitan Division (MD) and Santa Ana-Anaheim-Irvine MD. Combined, these two MDs also comprise the Los Angeles-Long Beach- Santa Ana Metropolitan Statistical Area (MSA);


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San Bernardino Assessment Area, which consists of San Bernardino County in its entirety and is part of the Riverside-San Bernardino-Ontario MSA;

San Diego Assessment Area, which consists of San Diego County in its entirety and is also the San Diego-Carlsbad-San Marcos MSA;

San Francisco Assessment Area, which consists of San Francisco County in its entirety and is also part of the San Francisco-San Mateo-Redwood City MD; and

Santa Clara Assessment Area, which consists of Santa Clara County in its entirety and is also part of the San Jose-Sunnyvale-Santa Clara MSA.

These areas remain unchanged from the previous CRA examination. Hanmi faced no legal impediments that would prevent it from helping to meet the credit needs of its assessment areas consistent with its business strategy, size, financial capacity, and local economic conditions. The bank received an outstanding rating at its previous CRA examination conducted as of September 2, 2008.

Scope of Examination The examination was conducted using the Interagency Large Institution CRA Examination Procedures. As such, performance was assessed under the lending, investment, and service tests for the period from July 1, 2008, to June 30, 2010. In addition, interviews with members of the bank’s local communities, interviews with bank management, and a review of other relevant information and data were used to help provide context for the bank’s performance under the three test factors. The lending test, which is weighted more heavily than either the investment or service tests, was based upon a review of small business and Home Mortgage Disclosure Act (HMDA) reportable consumer real estate loans originated during the review period. A total of 1,224 small business, 15 home purchase, and 14 home refinance loans were used in the evaluation of Lending in Assessment Area. Of these, 1,156 small business, and all 15 home purchase, and 14 refinance loans made within the assessment areas were used to evaluate the Lending Distribution by Geography and Lending Distribution by Business Revenue and Borrower Income. The assessment was primarily based on small business lending due to the volume of loans originated. Home purchase and refinance loans were considered during the review but did not influence the overall assessment due to their limited volume. The investment test was based upon a review of qualified community development investments originated or held during the review period. Likewise, the service test was based upon a review of qualified community development services conducted during the review period, in addition to retail services offered by the bank that met the needs of the communities in which it operates. The Los Angeles-Orange assessment area received a full-scope review while the San Bernardino, Santa Clara, San Diego, and San Francisco assessment areas were evaluated using limited-scope reviews. The full-scope assessment area was selected because Hanmi maintains its greatest presence and activity in this market. Within this area, the Los Angeles MD received greater


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weight as the bank’s presence in this area is more prominent in terms of branches, loan volume, and percentage of deposits. The scope of the review was consistent throughout the evaluation unless otherwise noted.


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CONCLUSIONS WITH RESPECT TO PERFORMANCE

TESTS

Lending Test Hanmi’s performance under the lending test is outstanding considering the economic conditions that existed during much of the review period. Lending levels were notable with the substantial majority of loans made within the bank’s assessment areas. The distribution of loans reflects excellent geographic distribution among census tracts of all income levels and a high level of lending to small businesses. In addition, Hanmi was a leader in providing high impact community development loans that addressed area needs. LENDING ACTIVITY Overall lending levels reflect good responsiveness to assessment area needs and a willingness to lend in light of the adverse economic conditions that existed during portions of the review period. Exhibit 2 below and Table 1 in Appendix B1

show Hanmi’s lending activity by product.2

Overall, loan volumes in the various assessment areas compare reasonably with the bank’s share of deposits in those markets.

EXHIBIT 2

SUMMARY OF LENDING ACTIVITY JULY 1, 2008 TO JUNE 30, 2010

Loan Type # % $ ('000s) %

Small Business 1,224 97.7 284,130 93.4

Total Business-Related 1,224 97.7 284,130 93.4

HMDA Home Purchase 15 1.2 6,457 2.1

HMDA Refinance 14 1.1 13,689 4.5

Total HMDA-Related 29 2.3 20,146 6.6

Total Loans 1,253 100.0 304,276 100.0 ASSESSMENT AREA CONCENTRATION As shown in Exhibit 3 on the following page, a substantial majority of the bank’s loans, by both by number of transactions and dollar volume, were made within the assessment areas. The tables in Appendix B contain additional information regarding lending within each assessment area.

1 All CRA tables referenced in this section of the evaluation are located in Appendix B. 2 Hanmi did not report any home improvement, multifamily, or small farm loans during this review period.


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EXHIBIT 3

LENDING INSIDE AND OUTSIDE THE ASSESSMENT AREAS JULY 1, 2008 TO JUNE 30, 2010

Loan Type

Inside Outside

# % $

(‘000s) % # %

$ (‘000s)

%

Small Business 1,127 92.1 251,417 88.5 97 7.9 32,713 11.5

Total Business-Related 1,127 92.1 251,417 88.5 97 7.9 32,713 11.5

HMDA Home Purchase 15 100.0 6,457 100.0 0 0.0 0 0.0

HMDA Refinance 14 100.0 13,689 100.0 0 0.0 0 0.0

Total HMDA-Related 29 100.0 20,146 100.0 0 0.0 0 0.0

Total Loans 1,156 92.3 271,563 89.3 97 7.7 32,713 10.8 GEOGRAPHIC AND BORROWER DISTRIBUTION Overall, both the geographic distribution and the distribution of loans among businesses of different size are excellent. This overall conclusion is based on a variety of performance context issues that affect the individual conclusions in the separate assessment areas. Therefore, the facts and data supporting this overall conclusion are presented within the respective assessment area analyses. For both factors, performance was strongest in the Los Angeles-Orange assessment area where lending was distributed throughout geographies of all income levels but was particularly strong in low- and moderate-income tracts. Further, in this area, a significant percentage of loans were made to small businesses and were in small dollar amounts. Though there was a lack of lending in low-income tracts in San Diego, Santa Clara, and San Bernardino areas, lending was otherwise reasonably distributed throughout those areas and within tracts of diverse income-levels in the San Francisco assessment area. With the exception of the San Diego and San Francisco areas, the level of lending to small businesses exceeded the level of aggregate lending. Finally, outside of the Los Angeles-Orange area, there was a good level of lending to small businesses in all but the San Francisco area and a good number of loans in small dollar amounts in all areas. COMMUNITY DEVELOPMENT LENDING The bank is a leader in making community development loans. The level of lending is relatively high, particularly in light of contextual factors. Additionally, many of the loans extended had a significant impact on the bank’s communities. As depicted in Table 1, Hanmi extended a total of 64 community development loans totaling over $104.0 million. A significant number of community development loans were extended to help small businesses open, expand, or continue operations, and/or hire local residents, thus revitalizing and stabilizing low- and moderate-income areas designated as enterprise zones or renewal communities. In addition to benefitting small businesses, loans were originated that helped create affordable housing for low- and


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moderate-income seniors and individuals. Some of these were complex, with the bank acting as the lead institution and obtaining participations for portions of the loans from other institutions. This demonstrated leadership that allowed the bank to serve a community need that it was unable to address on its own. Although there was an absence of community development loans in the San Bernardino and San Francisco assessment areas, this performance did not detract from the bank’s overall performance given Hanmi’s limited presence and resources in these markets. As shown in Table 1, 15 community development loans totaling $3.5 million served a broader statewide or regional area. Several of the larger loans supported affordable housing, but the majority went to organizations that provide community services to low- and moderate-income individuals. Two of the broader statewide or regional loans are highlighted below. The remaining community development loans are described under the respective assessment areas that they benefitted.

A $2.1 million loan to a national real estate fund manager that provides capital and expertise to urban developers and engages in community revitalization projects.

A $1.2 million construction loan for the purpose of building affordable housing units reserved for low- and moderate-income individuals.

Investment Test Overall performance under the investment test is low satisfactory based on an adequate level of qualified community development investments. Investments were generally distributed in a manner consistent with the bank’s presence in each market with the exception of the San Bernardino and San Francisco areas, which had no investment activity. The absence of investments in these areas, however, does not diminish the overall rating given Hanmi’s very limited presence in those markets. As a result of financial challenges arising from the recession, the only new investments made during the review period consisted of $48 thousand in donations to various community groups. However, as indicated in Table 8, the bank maintained almost $19.0 million in prior-period investments. These investments consist primarily of low-income housing tax credits (LIHTCs), targeted mortgage-backed securities, and investments in CRA-dedicated mutual funds and other investment vehicles, such as bonds. The investments supported the creation, rehabilitation, or retention of housing for low- and moderate-income people throughout the bank’s assessment areas. Approximately $7.7 million in investments served a broader statewide or regional area. The following list details some of the highlights these investments. The remaining investments are described under the respective assessment areas that they benefitted.

CRA Mutual Fund – $2.0 million in a CRA fund that supports a variety of projects throughout the state of California, including affordable housing and small business lending.


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Low Income Housing Tax Credits – $1.5 million in LIHTCs that helped construct or rehabilitate affordable housing for low- and moderate-income individuals throughout the state of California.

Mortgage-Backed Securities – $3.1 million in mortgage-backed securities supported by loans to low- and moderate-income individuals.

Service Test The bank’s overall performance under the service test is high satisfactory. Delivery systems are reasonably accessible throughout the bank’s assessment areas. In addition, bank personnel provided a relatively high level of community development services within the bank’s primary market. RETAIL BANKING SERVICES Hanmi’s delivery systems are reasonably accessible to all portions of its assessment areas. The bank uses a network of 27 branches across six counties to deliver its commercial and retail banking services. Hanmi did not close any branches during the review period and opened one new branch in the Los Angeles-Orange assessment area. Branches inside low- and moderate- income geographies remain unchanged and represent approximately 48.0 percent of the bank’s total branches. Services, branch hours, and alternative delivery systems generally meet the convenience and needs of the various communities Hanmi serves. In addition to Saturday hours, a variety of other delivery systems allow access to banking services after normal branch hours. These include internet banking, telephone banking and automated teller machines. As previously indicated, the bank ceased originating mortgage loans, which represents the only material change in services offered. COMMUNITY DEVELOPMENT SERVICES Hanmi provided a relatively high-level of community development services that addressed many needs of the communities served by the bank. During the review period, bank employees provided 856 hours of community development services through involvement with community-based service organizations that provided services to low- and moderate-income individuals and small businesses. Examples include, but are not limited to, participating in tax preparation clinics for low- and moderate-income individuals, participating in sessions that provided low- and moderate-income persons with information on the safety of bank deposits and deposit insurance, and serving on a loan committee for a non-profit small business financial development corporation. All activities benefitted one of the bank’s five assessment areas, with the vast majority benefitting the Los Angeles-Orange assessment area, where the bank has its greatest presence. Generally speaking, activity in the other assessment areas was nominal. Activities specific to the assessment areas are discussed in their respective sections of the evaluation.


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Fair Lending or Other Illegal Practices Review Concurrent with this CRA evaluation, a review of the bank's compliance with consumer protection laws and regulations was conducted and no violations of the substantive provisions of anti-discrimination, fair lending, or other illegal credit practice rules, laws or regulations were identified.


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FULL-SCOPE ASSESSMENT AREA CONCLUSIONS For each assessment area where a full-scope review was performed using the examination procedures.

LOS ANGELES-ORANGE DESCRIPTION OF OPERATIONS IN LOS ANGELES-ORANGE The Los Angeles-Orange assessment area includes Los Angeles and Orange counties in their entirety. Los Angeles County comprises the Los Angeles-Long Beach-Glendale MD and Orange County comprises the Santa Ana-Anaheim-Irvine MD. Together, these counties make up the Los Angeles-Long Beach-Santa Ana MSA. Los Angeles is located along the southern coast of California north of Orange County and south of Ventura County. With a population exceeding ten million people, Los Angeles County is the most populous county in the nation and home to more than 27.0 percent of the state’s 38 million residents.3 Orange County, located just south of Los Angeles County, has an estimated population of three million people making it the third most populous county in California, following Los Angeles and San Diego counties.4

Hanmi operates 23 of its 27 full-service offices in this assessment area. Although Hanmi maintains its most significant branch presence in this market, its overall market share is limited. As of June 30, 2009, Hanmi’s offices within this assessment area held $2.9 billion in deposits, representing 0.9 percent of the market share and ranking the bank 19th out of 174 Federal Deposit Insurance Corporation (FDIC)-insured financial institutions operating 2,508 offices.5 In 2009, there were 200 lenders reporting small business loans pursuant to the reporting requirements of the CRA and 830 lenders reporting HMDA loans. Most of these were large regional and national institutions. These lenders, which represent only a portion of the commercial, and home mortgage lending market, extended 305,293 small business loans totaling and 438,999 HMDA loans.6 Accordingly, competition for small business and home mortgage loans is significant. The following exhibit presents key demographic and business information used to help develop a performance context for the assessment area.

3 State of California Employment Development Department, Labor Market Information Division, Los Angeles County Profile, available at www.labormarketinfo.edd.ca.gov (accessed August 24, 2010). 4 State of California Employment Development Department, Labor Market Information Division, Orange County Profile, available at www.labormarketinfo.edd.ca.gov (accessed August 24, 2010). 5 Federal Deposit Insurance Corporation, Institution Directory, Summary of Deposits, June 30, 2009; available from http://www4.fdic.gov/sod/ (accessed August 24, 2010). 6 Information based on 2009 aggregate data consisting of institutions required to file annual CRA and HMDA data.


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EXHIBIT 4

ASSESSMENT AREA DEMOGRAPHICS7

LOS ANGELES-ORANGE

Income Categories

Tract Distribution

Families by Tract Income

Families < Poverty Level as % of Families by

Tract

Families by Family Income

# % # % # % # % Low-income 200 7.6 177,139 6.3 66,903 37.8 653,549 23.1 Moderate-income 736 28.0 771,693 27.3 166,193 21.5 476,112 16.8 Middle-income 766 29.1 870,585 30.8 86,855 10.0 514,488 18.2 Upper-income 912 34.7 1,008,806 35.7 38,169 3.8 1,184,074 41.9 Tract not reported 17 0.6 0 0.0 0 0.0 0 0.0 Total AA 2,631 100.0 2,828,223 100.0 358,120 12.7 2,828,223 100.0

Income Categories

Housing Units by

Tract

Housing Types by Tract Owner-occupied Rental Vacant

# %-

tract %-units # % # %

Low-income 266,283 35,850 1.7 13.5 213,392 80.1 17,041 6.4 Moderate-income 1,106,668 344,128 16.6 31.1 712,938 64.4 49,602 4.5 Middle-income 1,308,411 662,046 31.9 50.6 599,174 45.8 47,191 3.6 Upper-income 1,559,004 1,031,862 49.8 66.2 469,649 30.1 57,493 3.7 Tract not reported 27 1 0.0 3.7 21 77.8 5 18.5 Total AA 4,240,393 2,073,887 100.0 48.9 1,995,174 47.1 171,332 4.0

Income Categories

Total Businesses by Tract

Businesses by Tract & Revenue Size Less Than or

Equal to $1 Million

Greater than $1 Million

Revenue Not Reported

# % # % # % # % Low-income 42,742 6.6 36,781 6.4 3,482 8.0 2,479 8.0 Moderate-income 148,441 22.8 128,925 22.4 11,663 26.6 7,853 25.3 Middle-income 190,897 29.3 168,385 29.2 13,147 30.0 9,365 30.2 Upper-income 264,468 40.6 238,881 41.4 14,782 33.8 10,805 34.8 Tract not reported 4,659 0.7 3,442 0.6 711 1.6 506 1.6 Total AA 651,207 100.0 576,414 100.0 43,785 100.0 31,008 100.0

Percentage of Total Businesses 88.5 6.7 4.8 2004 Median Family Income

Los Angeles County Orange County

$46,509 $64,321

June 2010 Median Housing Value Los Angeles County

Orange County

$335,000 $442,000

2010 HUD Adjusted Median Family Income Los Angeles County

Orange County

$63,000 $87,200

June 2010 Unemployment Rate Los Angeles County

Orange County

12.3% 9.5%

The assessment area has a large and diverse economy. Major industries include tourism and hospitality, professional and business services, entertainment, wholesale trade, logistics, financial services and manufacturing.8 International trade is also a major industry in this area due to the

7 2000 U.S. Census and 2007 Dun & Bradstreet Data. 8 Los Angeles Economic Development Corporation, Los Angeles County Profile, (accessed August 26, 2010); available from http://www.laedc.org/reports/#laoverview.


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global links supported by the presence of large shipping ports in Long Beach and Los Angeles. Major employers include the Universities of California at Los Angeles and Irvine, Kaiser Permanente, Northrop Grumman Corporation, and Disneyland.9 Small businesses are also central to the assessment area economy and a major source of employment. As shown in Exhibit 4, small businesses make up just over 88.0 percent of the 651,207 businesses operating within the assessment area. According to Moody’s Economy.com, the local economy was in a recession throughout the review period. At 11.7 percent in June 2009,10 the Los Angeles MD unemployment rate was two percentage points above that of the U.S. The rate rose further to 13.3 percent by July 2010.11 The Orange County unemployment rate was also significant at 8.9 percent by the middle of 2009,12 which increased to 9.9 percent by July 2010.13 Unlike Orange County, which saw job losses mainly in the financial services sector with a total loss exceeding 30,000 from the peak employment levels reached in 2006, Los Angeles County experienced broad based job cuts. The manufacturing, entertainment, professional and business service industries, apparel manu-facturing, motion pictures, architecture and accounting were among the largest contributors to job losses in the county during the review period.14

Home prices fell dramatically during the review period and had risen only slightly by the end of it. In June of 2008, home prices in Los Angeles County were 32.0 percent lower than they had been a year prior; they suffered a further 20.0 percent drop by June 2009. Similarly, Orange County saw a 23.0 percent drop by June of 2008 from a year prior and a further 15.0 percent drop by June 2009. By June 2010, however, prices had risen 4.7 percent and 6.0 percent, in Los Angeles and Orange counties, respectively.15 The price drops helped boost Los Angeles County’s housing affordability;16 however, first time homebuyers have not benefitted. For example, from the first quarter of 2009 to the first quarter 2010 both Los Angeles and Orange counties actually saw a nominal decrease in the percentage of first- time homebuyers able to afford a home. Los Angeles County decreased from 57.0 to 56.0 percent during this time frame while Orange County decreased from 56.0 to 54.0 percent.17

Community contacts highlighted the importance of small business loans, especially in smaller dollar amounts. The need for small business loans is also supported by the Federal Reserve Board’s Senior Loan Officer Opinion Survey on Bank Lending Practices. According to this national survey, lending standards tightened considerably during the review period and largely 9 Moody’s Economy.com inc., Precis® METRO: Los Angeles, August 2009, and Moody’s Economy.com inc., Precis® METRO: Santa Ana, August 2009. 10 Ibid. 11 State of California Employment Development Department, Labor Market Information Division (accessed October 7, 2010); available from http://www.calmis.cahwnet.gov. 12 Moody’s Economy.com inc., Precis® METRO: Los Angeles, August 2009, and Moody’s Economy.com inc., Precis® METRO: Santa Ana, August 2009. 13 State of California Employment Development Department, Labor Market Information Division (accessed October 7, 2010); available from http://www.calmis.cahwnet.gov. 14 Moody’s Economy.com inc., Precis® METRO: Los Angeles, August 2009, and Moody’s Economy.com inc., Precis® METRO: Santa Ana, August 2009. 15 California Association of Realtors, Trends in California Real Estate, p. 4, Volume 31, Number 7, July 2010. 16 Ibid, p. 7. 17 Ibid, p. 7.


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remain so. In the October 2008 survey, nearly 80.0 percent of banks reported tightened lending standards for commercial and industrial loans.18 By October 2009, only approximately 15.0 percent of banks reported tightening lending standards19 but none reported loosening standards, suggesting that the more stringent criteria adopted by many banks as a result of the financial crisis remained in place. By the time the July 2010 survey was released, there were signs that the tightening was starting to ease, as a small number of banks surveyed reported easing standards. The majority, however, continued to report that standards were unchanged. In addition to small business loans, community contacts indicated the need for technical assistance with credit repair and personal financial education. Further, many non-profits need continued support through donations and the work of volunteers to continue their programs. Finally, community contacts indicated the continuing need for banks to support affordable housing projects that provide low-income individuals with housing opportunities. CONCLUSIONS WITH RESPECT TO PERFORMANCE TESTS IN LOS ANGELES-ORANGE Lending Test Overall, lending test performance within the Los Angeles-Orange assessment area is excellent. Of particular note is the strong geographic distribution of small business loans, large number of loans made to small businesses and the high impact of community development loans. Lending Activity Lending levels are good. As shown in Table 1, approximately 92.0 percent of the bank’s loans, including the majority of the bank’s community development loans, were extended in the assessment area, which is consistent with the percentage of deposits garnered within the area. Lending Distribution by Geography The geographic distribution of small business loans is excellent. As seen in Table 2, the level of small business lending is reasonably comparable to the percentage of business entities and the level of aggregate lending in middle- and upper-income census tracts. However, of note is that small business lending was very strong in low- and moderate-income census tracts surrounding the bank’s branches, with significantly higher percentages of lending in these census tracts than either the percentage of businesses or the level of aggregate lending. Further, there were no conspicuous lending gaps in the assessment area.

18 Board of Governors of the Federal Reserve System, The October 2009 Senior Loan Officer Opinion Survey on Bank Lending Practices, page 2, October 2009, (accessed June 30, 2010), available from http://www.federalreserve.gov/boarddocs/snloansurvey/200911/fullreport.pdf. 19 Board of Governors of the Federal Reserve System, The April 2010 Senior Loan Officer Opinion Survey on Bank Lending Practices, page 3, April 2010, (accessed October 18, 2010), available from http://www.federalreserve.gov/boarddocs/snloansurvey/201005/fullreport.pdf.


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Lending Distribution by Business Revenue The level of lending to small businesses is excellent. As seen on Table 5, at 42.0 vs. 31.0 percent, the bank’s level of lending to businesses with less that $1 million in gross annual revenues substantially exceeded the performance of the aggregate lenders in the market. In addition, over 44.0 percent of loans were made in amounts under $100,000, thereby addressing an articulated credit need for smaller dollar loans. Community Development Lending The bank’s level and type of community development lending demonstrated leadership in this assessment area. As seen in Table 1, Hanmi funded 44 community development loans totaling almost $99.0 million, of which roughly 50.0 percent were made to support businesses that were located inside enterprise zones and met the purpose of these specially designated improvement areas. Many of these financed sales growth, business expansion, and increased or retained employment within the assessment area. In addition, the bank made seven loans for the construction or rehabilitation of affordable housing for low- and moderate-income individuals. The following are examples of loans made by Hanmi that met critical credit and community development needs within the community:

An $18.4 million loan to refinance a construction loan that funded the development of 40 commercial condominium units inside a low-income census tract in the Los Angeles enterprise zone. This permanent loan provides stability to a property that provides workspace for small businesses.

A $10.0 million line of credit to support the operations of an affordable housing developer. The line supports expenses incurred by the developer during site acquisition and other stages of site development and serves as a standby letter of credit for future affordable housing projects.

A $3.1 million construction loan to finance the development of a 68-unit building in a moderate-income census tract that is 100.0 percent earmarked for low-income families. The bank showed leadership in originating the loan and coordinating its participation with other lenders. The total credit facility needed to construct the projects exceeds $21.0 million.

A $1.1 million loan to develop and provide 40 units of affordable rental housing for low income seniors.

Investment Test Overall investment test performance in the Los Angeles-Orange assessment area is adequate. The bank maintained an adequate level of qualified community development investments and donations that were responsive to affordable housing and economic development needs. As shown in Table 8, total assessment area investment activity consisted of approximately $9.2 million. Almost this entire amount consisted of prior period investments. The only current period investments consist of approximately $48 thousand in donations. Therefore a major factor in the assessment was the ongoing impact provided by the prior period investments still held by the bank. Some of the more noteworthy investments include:


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Low Income Housing Tax Credits – The bank’s LIHTC related investments include

$3.5 million in prior-period disbursements that helped construct or rehabilitate affordable housing for low-and moderate-income individuals within the Los Angeles-Orange assessment area.

CRA Mutual Fund – A $1.0 million investment in a CRA mutual fund that supported affordable housing projects and job creation.

Municipal Bonds – $873,182 in municipal bonds that supported community development projects in the assessment area.

Equity Investment - A $224,235 equity investment in a Community Development Financial Institution.

Donations – Hanmi made 18 donations totaling $48,000, which helped a variety of community development service providers. Organizations supported by these donations include several that provide free income-tax preparation assistance to low- and moderate-income individuals. Other organizations supported by the bank provide education, health services or shelter for low- and moderate-income people.

Service Test Hanmi’s good performance under the service test in the Los Angeles-Orange assessment area is supported by accessible retail banking services, particularly in low- and moderate-income areas, and a high level of responsive community development services. Retail Banking Services Hanmi’s retail banking services are reasonably accessible to essentially all portions of the Los Angeles-Orange assessment area. As seen in Table 9, branches are located in census tracts of all income levels with approximately 48.0 percent of branches located in low- and moderate-income census tracts. A new branch was opened inside the assessment area in the city of Walnut. There were no branch closures during the review period. Services, branch hours, and alternative delivery systems generally meet the convenience and needs of the bank’s customers. In addition to branch offices, alternative delivery systems, including bank-by-phone, automated teller machines, internet banking, courier services, and the mobile banking system via cellular phone, provide additional accessibility. Community Development Services Hanmi provided a relatively high-level of community development services through a variety of organizations. During the review period, employees provided over 800 hours of community development services to the assessment area. Services provided by employees helped a number of organizations that provide services to low-and moderate-income individuals and small businesses. Examples of these services include the following:


16

In partnership with a community-based organization, 15 employees participated in tax preparation clinics for low- and moderate-income individuals. Over 340 hours were spent assisting with tax return preparation.

Six bank employees participated in a public training session sponsored by the FDIC on the safety of bank deposits and how to maximize insurance coverage. Sessions were held at bank branches and community centers located inside low- and moderate-income census tracts.

Two bank officers serve as members of a loan committee at monthly meetings to underwrite small business loans for a non-profit corporation assisting with the development and creation of small businesses, particularly small businesses that are not traditionally bankable.

Two employees participated in a school's career day event and educated students on basic banking principals and career options. The school is located in a low-income census tract.

A member of the bank’s board of directors meets every other month to participate in board meetings for an organization that serves economically disadvantaged youth and their families.


17

LIMITED-SCOPE ASSESSMENT AREA CONCLUSIONS For each assessment area where a limited-scope review was performed using the examination procedures.

Hanmi’s performance in the assessment areas receiving a limited review is generally consistent with the overall performance results for the combined lending, investment and service tests. The bank has a limited presence in all areas outside of the bank’s core market of Los Angeles-Orange County and as a result, lending, investment, and service activity is also limited. Although performance in some tests was below that of the full scope assessment area measures, the limited presence and lesser weighting of performance in these areas resulted in little material impact on the bank’s overall rating. Facts and data reviewed, including performance and demographic information, can be found in the tables accompanying this report.

ASSESSMENT AREA LENDING TEST INVESTMENT TEST SERVICE TEST

San Bernardino Below Below Below

San Diego Above Consistent Below

San Francisco Consistent Below Below

Santa Clara Consistent Consistent Consistent On a combined basis, the limited scope areas contained less than eight percent of the loans made inside the bank’s combined assessment areas and a small number of community development loans. The limited activity also carried through to community development activities as measured under the investment and services tests. Under the lending test, the bank’s geographic distribution of small business loans was generally consistent or above in all areas. While there was no lending in low-income tracts in the San Bernardino, San Diego, and Santa Clara assessment areas, it was noted that these tracts contained less than five percent of the businesses in those areas; further, aggregate lending levels were also very low. Conversely, the level of lending in moderate-income tracts in those areas was generally consistent with and in one case substantially exceeded the representation of businesses and the level of aggregate lending. Only the San Diego and Santa Clara areas benefitted from community development loans. An assessment of community development activity under the investment and services tests found that activity was generally below that in the full scope assessment area. Only San Diego and Santa Clara had prior period investments. Lastly, while all branches offer the same retail services, only Santa Clara received more than a nominal amount of community development service hours.


A - 1

APPENDIX A

GLOSSARY OF TERMS Aggregate lending: The number of loans originated and purchased by all reporting lenders in specified income categories as a percentage of the aggregate number of loans originated and purchased by all reporting lenders in the metropolitan area/assessment area. Census tract: A small subdivision of metropolitan and other densely populated counties. Census tract boundaries do not cross county lines; however, they may cross the boundaries of metropolitan statistical areas. Census tracts usually have between 2,500 and 8,000 persons, and their physical size varies widely depending upon population density. Census tracts are designed to be homogeneous with respect to population characteristics, economic status, and living conditions to allow for statistical comparisons. Community development: All Agencies have adopted the following language. Affordable housing (including multifamily rental housing) for low- or moderate-income individuals; community services targeted to low- or moderate-income individuals; activities that promote economic development by financing businesses or farms that meet the size eligibility standards of the Small Business Administration’s Development Company or Small Business Investment Company programs (13 CFR 121.301) or have gross annual revenues of $1 million or less; or, activities that revitalize or stabilize low- or moderate-income geographies. Effective September 1, 2005, the Board of Governors of the Federal Reserve System, Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation have adopted the following additional language as part of the revitalize or stabilize definition of community development. Activities that revitalize or stabilize: (i) Low-or moderate-income geographies; (ii) Designated disaster areas; or (iii) Distressed or underserved nonmetropolitan middle-income geographies designated by

the Board, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency, based on: a. Rates of poverty, unemployment, and population loss; or b. Population size, density, and dispersion. Activities that revitalize and stabilize

geographies designated based on population size, density, and dispersion if they help to meet essential community needs, including needs of low- and moderate-income individuals.

Consumer loan(s): A loan(s) to one or more individuals for household, family, or other personal expenditures. A consumer loan does not include a home mortgage, small business, or small farm loan. This definition includes the following categories: motor vehicle loans, credit card loans, home equity loans, other secured consumer loans, and other unsecured consumer loans.


A - 2

Family: Includes a householder and one or more other persons living in the same household who are related to the householder by birth, marriage, or adoption. The number of family households always equals the number of families; however, a family household may also include non-relatives living with the family. Families are classified by type as either a married-couple family or other family, which is further classified into ‘male householder’ (a family with a male householder and no wife present) or ‘female householder’ (a family with a female householder and no husband present). Full-scope review: Performance under the lending, investment, and service tests is analyzed considering performance context, quantitative factors (for example, geographic distribution, borrower distribution, and total number and dollar amount of investments), and qualitative factors (for example, responsiveness). Geography: A census tract delineated by the United States Bureau of the Census in the most recent decennial census. Home Mortgage Disclosure Act (HMDA): The statute that requires certain mortgage lenders that do business or have banking offices in a metropolitan statistical area to file annual summary reports of their mortgage lending activity. The reports include such data as the race, gender, and the income of applications, the amount of loan requested, and the disposition of the application (for example, approved, denied, and withdrawn). Home mortgage loans: Includes home purchase and home improvement loans as defined in the HMDA regulation. This definition also includes multifamily (five or more families) dwelling loans, loans for the purchase of manufactured homes and refinancings of home improvement and home purchase loans. Household: Includes all persons occupying a housing unit. Persons not living in households are classified as living in group quarters. In 100 percent tabulations, the count of households always equals the count of occupied housing units. Limited-scope review: Performance under the lending, investment, and service tests is analyzed using only quantitative factors (for example, geographic distribution, borrower distribution, total number and dollar amount of investments, and branch distribution). Low-income: Individual income that is less than 50 percent of the area median income, or a median family income that is less than 50 percent, in the case of a geography. Market share: The number of loans originated and purchased by the institution as a percentage of the aggregate number of loans originated and purchased by all reporting lenders in the metropolitan area/assessment area. Metropolitan area (MA): A metropolitan statistical area (MSA) or a metropolitan division (MD) as defined by the Office of Management and Budget. A MSA is a core area containing at least one urbanized area of 50,000 or more inhabitants, together with adjacent communities having a high degree of economic and social integration with that core. A MD is a division of a MSA based on specific criteria including commuting patterns. Only a MSA that has a population of at least 2.5 million may be divided into MDs.


A - 3

Middle-income: Individual income that is at least 80 percent and less than 120 percent of the area median income, or a median family income that is at least 80 percent and less than 120 percent, in the case of a geography. Moderate-income: Individual income that is at least 50 percent and less than 80 percent of the area median income, or a median family income that is at least 50 percent and less than 80 percent, in the case of a geography. Multifamily: Refers to a residential structure that contains five or more units. Other products: Includes any unreported optional category of loans for which the institution collects and maintains data for consideration during a CRA examination. Examples of such activity include consumer loans and other loan data an institution may provide concerning its lending performance. Owner-occupied units: Includes units occupied by the owner or co-owner, even if the unit has not been fully paid for or is mortgaged. Qualified investment: A qualified investment is defined as any lawful investment, deposit, membership share, or grant that has as its primary purpose community development. Rated area: A rated area is a state or multistate metropolitan area. For an institution with domestic branches in only one state, the institution’s CRA rating would be the state rating. If an institution maintains domestic branches in more than one state, the institution will receive a rating for each state in which those branches are located. If an institution maintains domestic branches in two or more states within a multistate metropolitan area, the institution will receive a rating for the multistate metropolitan area. Small loan(s) to business(es): A loan included in 'loans to small businesses' as defined in the Consolidated Report of Condition and Income (Call Report) and the Thrift Financial Reporting (TFR) instructions. These loans have original amounts of $1 million or less and typically are either secured by nonfarm or nonresidential real estate or are classified as commercial and industrial loans. However, thrift institutions may also exercise the option to report loans secured by nonfarm residential real estate as "small business loans" if the loans are reported on the TFR as nonmortgage, commercial loans. Small loan(s) to farm(s): A loan included in ‘loans to small farms’ as defined in the instructions for preparation of the Consolidated Report of Condition and Income (Call Report). These loans have original amounts of $500,000 or less and are either secured by farmland, or are classified as loans to finance agricultural production and other loans to farmers. Upper-income: Individual income that is more than 120 percent of the area median income, or a median family income that is more than 120 percent, in the case of a geography.


APPENDIX B

CRA CORE TABLES

Table 1 Lending Volume of Reported Loans Table 2 Geographic Distribution of Small Business Loans Table 3 Geographic Distribution of Home Purchase Loans Table 4 Geographic Distribution of Home Mortgage Refinance Loans Table 5 Borrower Distribution of Small Business Loans Table 6 Borrower Distribution of Home Purchase Loans Table 7 Borrower Distribution of Home Mortgage Refinance Loans Table 8 Qualified Investments Table 9 Distribution of Branch Delivery System and Branch Openings/Closings

Table 1 - Lending Volume of Reported Loans Evaluation Period: July 1, 2008 to June 30, 2010

# Loans $ (000's) # Loans $ (000's) # Loans $ (000's) # Loans $ (000's) # Loans $ (000's)

Full-Scope Review

Los Angeles-Orange 92.21 1,037 231,990 0 0 29 20,146 44 98,905 1,066 252,136 90.87

Los Angeles County 78.20 875 201,918 0 0 29 20,146 39 97,565 904 222,064 77.28

Orange County 14.01 162 30,072 0 0 0 0 5 1,341 162 30,072 13.60

Broader Statewide or Regional Area 0.00 0 0 0 0 0 0 15 3,481 15 3,481 0.00

Limited-Scope Review

San Bernardino County 1.99 23 6,583 0 0 0 0 0 0 23 6,583 1.04

San Diego County 4.07 47 11,696 0 0 0 0 4 2,032 47 11,696 2.63

San Francisco County 0.43 5 225 0 0 0 0 0 0 5 225 2.20

Santa Clara County 1.30 15 923 0 0 0 0 1 36 15 923 3.26

HANMI BANK, Los Angeles, California

% of Rated Area

Deposits

% of Rated Area Loans

Small Business Loans Small Farm Loans All HMDA LoansCommunity Development

LoansTotal Reported Loans

Rated Area: State of California

Assessment Areas

B - 1

Table 2 - Geographic Distribution of Small Business Loans Evaluation Period: July 1, 2008 to June 30, 2010

# Loans% Rated

Area Total

BankLoans

(%)

Business Entities

(%)

BankLoans

(%)

Business Entities

(%)

BankLoans

(%)

Business Entities

(%)

BankLoans

(%)

Business Entities

(%)Low Mod Mid Upp Overall Low Mod Mid Upp

Full-Scope Review

Los Angeles-Orange 1,029 91.96 25.17 6.61 36.25 22.96 18.76 29.53 19.83 40.90 4.51 18.66 27.76 49.07 0.20 1.15 0.35 0.11 0.11

Los Angeles County 868 77.57 28.34 7.85 34.45 20.95 17.40 27.61 19.82 43.59 5.39 16.52 25.81 52.28 0.24 1.29 0.43 0.13 0.13

Orange County 161 14.39 8.07 3.20 45.96 28.48 26.09 34.80 19.88 33.52 2.35 23.90 32.53 41.23 0.10 0.34 0.22 0.08 0.05


San Bernardino County 23 2.06 0.00 3.44 17.39 28.13 56.52 43.20 26.09 25.23 2.33 21.70 42.67 33.30 0.04 0.00 0.03 0.05 0.02

San Diego County 47 4.20 0.00 4.79 42.55 21.12 44.68 37.34 12.77 36.75 3.25 16.40 35.92 44.43 0.04 0.00 0.14 0.05 0.01

San Francisco County 5 0.45 40.00 26.18 20.00 26.28 20.00 26.46 20.00 21.08 20.75 26.10 29.10 24.05 0.01 0.02 0.01 0.01 0.00

Santa Clara County 15 1.34 0.00 3.11 26.67 22.04 33.33 45.13 40.00 29.73 2.55 17.53 44.86 35.06 0.02 0.00 0.04 0.02 0.02

Demographic data are based on 2000 U.S. Census and 2004 OMB definitions for MSAs; business data are from 2009 Dun & Bradstreet data; aggregate lending and market share data are from 2009.


Middle-Income Geographies

Upper-Income Geographies

Total Loansfrom Bank

Low-Income Geographies

Moderate-Income Geographies

Aggregate Lending (%)


Assessment Areas

Market Share (%)

B - 2

Table 3 - Geographic Distribution of Home Purchase Loans Evaluation Period: July 1, 2008 to June 30, 2010

# Loans% Rated

Area Total

BankLoans

(%)

OwnerOcc Units

(%)

BankLoans

(%)

OwnerOcc Units

(%)

BankLoans

(%)

OwnerOcc Units

(%)

BankLoans

(%)

OwnerOcc Units


Full-Scope Review

Los Angeles-Orange 15 100.00 33.33 1.73 20.00 16.59 13.33 31.92 33.33 49.76 2.69 20.00 34.24 43.07 0.00 0.05 0.00 0.00 0.00


Orange County 0 0.00 0.00 1.25 0.00 19.56 0.00 33.56 0.00 45.63 1.51 23.68 33.03 41.77 0.00 0.00 0.00 0.00 0.00



San Diego County 0 0.00 0.00 2.30 0.00 14.03 0.00 41.01 0.00 42.66 4.22 14.94 41.37 39.47 0.00 0.00 0.00 0.00 0.00



Demographic data are based on 2000 U.S. Census and 2004 OMB definitions for MSAs; aggregate lending and market share data are from 2009.

Assessment Areas

Market Share (%)









B - 3

Table 4 - Geographic Distribution of Home Mortgage Refinance Loans Evaluation Period: July 1, 2008 to June 30, 2010

# Loans% Rated

Area Total

BankLoans

(%)

OwnerOcc Units

(%)

BankLoans

(%)

OwnerOcc Units

(%)

BankLoans

(%)

OwnerOcc Units

(%)

BankLoans

(%)

OwnerOcc Units


Full-Scope Review



Orange County 0 0.00 0.00 1.25 0.00 19.56 0.00 33.56 0.00 45.63 0.40 11.71 29.37 58.52 0.00 0.00 0.00 0.00 0.00



San Diego County 0 0.00 0.00 2.30 0.00 14.03 0.00 41.01 0.00 42.66 1.41 7.58 31.95 59.07 0.00 0.00 0.00 0.00 0.00




Assessment Areas

Market Share (%)









B - 4

Table 5 - Borrower Distribution of Small Business Loans Evaluation Period: July 1, 2008 to June 30, 2010

# Loans% Rated

Area Total

BankLoans

(%)

All Businesses

(%) < = $100K

> $100K and< = $250K

> $250K and< = $1 Million

All Loans

Loans to Revenue

< = $1 Million(%)

All Loans

Loans to Revenue

< = $1 Million(%)

Full-Scope Review

Los Angeles-Orange 1,037 92.01 42.14 88.51 44.65 25.17 30.18 305,293 31.10 0.20 0.21

Los Angeles County 875 77.64 41.60 88.67 43.54 24.91 31.54 216,867 29.84 0.24 0.26

Orange County 162 14.37 45.06 88.09 50.62 26.54 22.84 88,426 34.19 0.11 0.12


San Bernardino County 23 2.04 47.83 89.51 30.43 30.43 39.13 26,982 28.46 0.04 0.07

San Diego County 47 4.17 25.53 89.51 38.30 23.40 38.30 70,932 33.87 0.04 0.03

San Francisco County 5 0.44 0.00 86.97 80.00 20.00 0.00 28,047 39.45 0.01 0.00

Santa Clara County 15 1.33 46.67 88.00 80.00 13.33 6.67 42,508 37.61 0.02 0.02

Business data are from 2009 Dun & Bradstreet data; aggregate lending and market share data are from 2009.

Assessment Areas

Market Share (%)


Total SmallBusiness Loans

Businesses with Revenue< = $1 Million

Aggregate Lending (%)Originations Regardless of Revenue Size


B - 5

Table 6 - Borrower Distribution of Home Purchase Loans Evaluation Period: July 1, 2008 to June 30, 2010

# Loans% Rated

Area Total

BankLoans

(%)

Families(%)

BankLoans

(%)

Families(%)

BankLoans

(%)

Families(%)

BankLoans

(%)

Families(%)

Low Mod Mid Upp Overall Low Mod Mid Upp

Full-Scope Review



Orange County 0 0.00 0.00 20.56 0.00 17.91 0.00 20.68 0.00 40.86 5.27 18.85 27.11 48.76 0.00 0.00 0.00 0.00 0.00



San Diego County 0 0.00 0.00 21.08 0.00 17.94 0.00 20.10 0.00 40.88 4.34 17.64 27.89 50.14 0.00 0.00 0.00 0.00 0.00





Market Share (%)


Middle-Income Borrowers

Upper-Income Borrowers


Low-Income Borrowers

Moderate-Income Borrowers


Assessment Areas

B - 6

Table 7 - Borrower Distribution of Home Mortgage Refinance Loans Evaluation Period: July 1, 2008 to June 30, 2010

# Loans% Rated

Area Total

BankLoans

(%)

Families(%)

BankLoans

(%)

Families(%)

BankLoans

(%)

Families(%)

BankLoans

(%)

Families(%)

Low Mod Mid Upp Overall Low Mod Mid Upp

Full-Scope Review



Orange County 0 0.00 0.00 20.56 0.00 17.91 0.00 20.68 0.00 40.86 5.32 13.36 25.50 55.83 0.00 0.00 0.00 0.00 0.00



San Diego County 0 0.00 0.00 21.08 0.00 17.94 0.00 20.10 0.00 40.88 3.77 10.59 21.79 63.85 0.00 0.00 0.00 0.00 0.00




Assessment Areas

Market Share (%)


Middle-Income Borrowers

Upper-Income Borrowers


Low-Income Borrowers

Moderate-Income Borrowers



B - 7

Table 8 - Qualified Investments Evaluation Period: July 1, 2008 to June 30, 2010

# $ (000's) # $ (000's) # $ (000's) % of Total # $ (000's)

Full-Scope Review

Los Angeles-Orange 13 9,141 18 48 31 9,189 48.42 0 0

Los Angeles County 10 7,376 16 46 26 7,422 39.11 0 0

Orange County 3 1,765 2 2 5 1,767 9.31 0 0

Broader Statewide or Regional Area 6 7,710 0 0 0 0 40.62 0 0


San Bernardino County 0 0 0 0 0 0 0.00 0 0

San Diego County 2 691 0 0 0 0 3.64 0 0

San Francisco County 0 0 0 0 0 0 0.00 0 0

Santa Clara County 3 1,388 0 0 0 0 7.30 0 0

*Investments made in a previous evaluation period that are outstanding as of the examination date. **Legally binding investment commitments that are tracked and recorded by the institution’s financial reporting system.


Prior Period Investments* Current Period Investments Unfunded Commitments**Total Investments


Assessment Area

B - 8

Table 9 - Distribution of Branch Delivery System and Branch Openings/Closings Evaluation Period: July 1, 2008 to June 30, 2010

Deposits

Low Mod Mid Upp Low Mod Mid Upp Low Mod Mid Upp

Full-Scope Review

Los Angeles-Orange 90.87 23 85.19 8.70 39.13 21.74 30.43 0 0 0 0 0 0 7.30 29.79 31.10 31.74

Los Angeles County 77.28 19 70.37 10.53 31.58 26.32 31.58 1 0 0 0 +1 0 8.00 29.44 30.88 31.58

Orange County 13.60 4 14.81 0.00 75.00 0.00 25.00 0 0 0 0 0 0 4.95 30.96 31.84 32.26


San Bernardino County 1.04 1 3.70 0.00 0.00 0.00 100.00 0 0 0 0 0 0 3.71 30.05 42.02 24.13

San Diego County 2.63 1 3.70 0.00 0.00 100.00 0.00 0 0 0 0 0 0 7.78 24.46 37.46 30.01

San Francisco County 2.20 1 3.70 0.00 100.00 0.00 0.00 0 0 0 0 0 0 12.84 29.23 39.46 18.47

Santa Clara County 3.26 1 3.70 0.00 0.00 100.00 0.00 0 0 0 0 0 0 4.03 22.79 47.69 25.49

# of Bank Branches

% of Rated Area

Branches in AA

Assessment Areas



% of Rate Area

Deposits in AA

Branches Branch Openings / Closings Population

% of Population within each GeographyNet Change in Location of Branches (+ or -)# of Branch Openings

# of Branch Closings

Location of Branches by IncomeLevel of Geography (%)

B - 9


C - 1

APPENDIX C

LIMITED-SCOPE ASSESSMENT AREA MARKET PROFILES

All demographic and economic information in this appendix came from one of the following sources:

2000 U.S. Census. 2009 Dun & Bradstreet data. FDIC, Summary of Deposits, June 30, 2009 (accessed August 24, 2010); available from

http://www.fdic.gov. Monthly Unemployment Rates available from www.labormarketinfo.edd.ca.gov

(accessed on September 17, 2010). Population estimates available from State of California Department of Finance,

Population Estimates, available at: http://www.dof.ca.gov/research/demographic/reports/estimates/ (accessed August 23, 2010).

San Bernardino County information available from Inland Empire USA, San Bernardino County, available at: http://www.inlandempire.us/county_san_bernardino.php (accessed October 29, 2010).

Median housing values available from California Association of Realtors, Trends in California Real Estate, Volume 31, Number 7, July 2010.

San Francisco County information available from 2000 U.S. Census, San Francisco Quickfacts, available at: http://quickfacts.census.gov/qfd/states/06/06075.html (accessed August 24, 2010).

Santa Clara County information available from Santa Clara County, About the County, Available at: http://www.sccgov.org/portal/site/scc/chlevel3?path=/v7/SCC%20Public%20Portal/County%20Connection/About%20the%20County (accessed August 24, 2010).

Data regarding Hanmi’s deposits, loans, investments and branches associated with each of the following assessment areas may be found in the Core Tables located in Appendix B.


C - 2

DESCRIPTION OF OPERATIONS IN SAN BERNARDINO The San Bernardino assessment area consists of San Bernardino County in its entirety and is part of the Riverside-San Bernardino-Ontario MSA. Encompassing over 20,000 square miles, San Bernardino County is the largest county in the nation and comprises the area bordered by Los Angeles County to the west and the state of Nevada to the east. The topography is dominated by sparsely populated desert consisting of about 90.0 percent of the county and the remainder consists of the San Bernardino Mountains and San Bernardino Valley. California’s Department of Finance estimated that its population exceeded two million in 2009. Hanmi has a limited presence in this large market. The bank’s one office held over $34.0 million in deposits with a 0.2 percent market share as of June 30, 2009. The bank ranked 28th

out of 49 FDIC-insured depository institutions operating 263 offices in the assessment area. Deposits are primarily concentrated in three financial institutions that collectively hold 45.6 percent of the market share. Competition is high for small business loans in San Bernardino with 83 lenders originating CRA reportable small business loans. These lenders represent only a small portion of the overall market for small business loans. The bank did not originate any HMDA reportable home mortgage loans in the assessment area during the review period. The following exhibit presents key demographic and business information concerning the assessment area.


C - 3

EXHIBIT 5

ASSESSMENT AREA DEMOGRAPHICS SAN BERNARDINO

Income Categories Tract

Distribution Families by

Tract Income

Families < Poverty Level as % of

Families by Tract


# % # % # % # % Low-income 14 5.7 13,697 3.4 5,582 40.8 91,627 22.5 Moderate-income 74 30.3 114,270 28.1 23,237 20.3 71,045 17.4 Middle-income 100 41.0 173,527 42.6 18,281 10.5 82,412 20.2 Upper-income 53 21.7 105,711 26.0 4,086 3.9 162,121 39.8 Tract not reported 3 1.2 0 0.0 0 0.0 0 0.0 Total AA 244 100.0 407,205 100.0 51,186 12.6 407,205 100.0

Income Categories Housing Units by

Tract


# %-tract %-units # % # % Low-income 22,995 6,125 1.8 26.6 12,556 54.6 4,314 18.8 Moderate-income 177,454 77,589 22.8 43.7 76,825 43.3 23,040 13.0 Middle-income 261,299 153,750 45.1 58.8 72,820 27.9 34,729 13.3 Upper-income 139,621 103,550 30.4 74.2 25,379 18.2 10,692 7.7 Tract not reported 0 0 0.0 0.0 0 0.0 0 0.0 Total AA 601,369 341,014 100.0 56.7 187,580 31.2 72,775 12.1

Income Categories Total Businesses by

Tract

Businesses by Tract & Revenue Size

Less Than or Equal to $1 Million



# % # % # % # % Low-income 2,392 3.4 2,142 3.4 135 3.2 115 3.7 Moderate-income 19,537 28.1 17,321 27.8 1,214 29.0 1,002 32.2 Middle-income 30,004 43.1 26,708 42.9 1,953 46.6 1,343 43.2 Upper-income 17,525 25.2 16,026 25.7 859 20.5 640 20.6 Tract not reported 93 0.1 56 0.1 27 0.6 10 0.3 Total AA 69,551 100.0 62,253 100.0 4,188 100.0 3,110 100.0

Percentage of Total Businesses 89.5 6.0 4.5

2004 Median Family Income $47,448 June 2010 Median Housing Value $159,000

2010 HUD Adjusted Median Family Income $65,000 June 2010 Unemployment Rate 14.3%


C - 4

DESCRIPTION OF OPERATIONS IN SAN DIEGO The San Diego assessment area consists of San Diego County in its entirety and is also the San Diego-Carlsbad-San Marcos MSA. San Diego is the southern-most county in California and shares its southern border with Mexico. With an estimated population of over three million in 2009, San Diego ranks as the second most-populated county in California. Hanmi has a limited presence in this competitive market for financial services. The bank’s one office held $86.0 million in deposits with a 0.2 percent market share as of June 30, 2009. The bank ranked 40th

out of 66 FDIC-insured depository institutions operating 635 offices in the assessment area. Deposits are primarily concentrated in three financial institutions collectively holding 47.9 percent of market deposits. Competition for small business loans is high in San Diego with 112 lenders originating CRA reportable small business loan in 2009, which represents only a small portion of the market. The bank did not originate any HMDA reportable loans during the review period. The following exhibit presents key demographic and business information concerning the assessment area.


C - 5

EXHIBIT 6

ASSESSMENT AREA DEMOGRAPHICS SAN DIEGO



Tract Income


Families by Tract


# % # % # % # % Low-income 48 7.9 44,733 6.7 14,809 33.1 141,031 21.1 Moderate-income 136 22.5 148,992 22.3 22,007 14.8 120,059 17.9 Middle-income 228 37.7 251,776 37.6 16,130 6.4 134,516 20.1 Upper-income 190 31.4 223,601 33.4 6,275 2.8 273,496 40.9 Tract not reported 3 0.5 0 0.0 0 0.0 0 0.0 Total AA 605 100.0 669,102 100.0 59,221 8.9 669,102 100.0


Tract


# %-tract %-units # % # % Low-income 68,232 12,677 2.3 18.6 52,802 77.4 2,753 4.0 Moderate-income 236,266 77,377 14.0 32.7 148,543 62.9 10,346 4.4 Middle-income 407,483 226,170 41.0 55.5 164,786 40.4 16,527 4.1 Upper-income 328,168 235,265 42.7 71.7 77,057 23.5 15,846 4.8 Tract not reported 0 0 0.0 0.0 0 0.0 0 0.0 Total AA 1,040,149 551,489 100.0 53.0 443,188 42.6 45,472 4.4


Tract





# % # % # % # % Low-income 7,184 4.8 6,365 4.7 444 4.9 375 5.7 Moderate-income 31,664 21.1 27,936 20.8 2,149 23.6 1,579 23.9 Middle-income 55,966 37.3 50,092 37.3 3,468 38.0 2,406 36.4 Upper-income 55,085 36.7 49,794 37.1 3,057 33.5 2,234 33.8 Tract not reported 71 0.0 54 0.0 6 0.1 11 0.2 Total AA 149,970 100.0 134,241 100.0 9,124 100.0 6,605 100.0





C - 6

DESCRIPTION OF OPERATIONS IN SAN FRANCISCO The San Francisco assessment area consists of the City and County of San Francisco in its entirety and is also part of the San Francisco-San Mateo-Redwood City, California MD and part of the San Francisco-Oakland-Fremont MSA. San Francisco is a peninsula in northern California, bordered by the San Francisco Bay to the east, the Pacific Ocean to the west, and San Mateo County to the south. Despite its small physical size, occupying only 47 square miles of land, San Francisco ranks as the 11th most populous county in California, with population exceeding 856,000 in 2009. Hanmi has a limited presence in this market for financial services. The bank’s one office held $72.0 million in deposits with a 0.06 percent market share as of June 30, 2009. The bank ranked 36th

out of 56 FDIC-insured depository institutions operating 274 offices in the assessment area. Deposits are primarily concentrated in three financial institutions collectively holding 71.1 percent of market deposits. Competition for small business loans is high in this assessment area with 86 lenders originating CRA reportable small business loans, which represents only a small portion of the market. Hanmi did not originate any HMDA reportable loans within this assessment area during the review period. The following exhibit presents key demographic and business information concerning the assessment area.


C - 7

EXHIBIT 7

ASSESSMENT AREA DEMOGRAPHICS SAN FRANCISCO



Tract Income


Families by Tract


# % # % # % # % Low-income 24 13.6 17,219 11.7 3,794 22.0 41,735 28.4 Moderate-income 55 31.3 40,383 27.4 4,134 10.2 27,814 18.9 Middle-income 61 34.7 61,832 42.0 2,911 4.7 27,552 18.7 Upper-income 36 20.5 27,752 18.9 676 2.4 50,085 34.0 Total AA 176 100.0 147,186 100.0 11,515 7.8 147,186 100.0


Tract


# %-tract %-units # % # % Low-income 50,900 3,610 3.1 7.1 43,933 86.3 3,357 6.6 Moderate-income 89,048 26,173 22.7 29.4 58,979 66.2 3,896 4.4 Middle-income 129,205 53,559 46.4 41.5 69,951 54.1 5,695 4.4 Upper-income 77,374 31,973 27.7 41.3 41,522 53.7 3,879 5.0 Total AA 346,527 115,315 100.0 33.3 214,385 61.9 16,827 4.9


Tract





# % # % # % # % Low-income 13,602 26.2 11,102 24.6 1,387 38.1 1,113 35.5 Moderate-income 13,654 26.3 11,587 25.6 1,164 32.0 903 28.8 Middle-income 13,748 26.5 12,673 28.0 491 13.5 584 18.7 Upper-income 10,952 21.1 9,822 21.7 599 16.5 531 17.0 Total AA 51,956 100.0 45,184 100.0 3,641 100.0 3,131 100.0





C - 8

DESCRIPTION OF OPERATIONS IN SANTA CLARA The Santa Clara assessment area consists of Santa Clara County in its entirety and is also part of the San Jose-Sunnyvale-Santa Clara MSA. Santa Clara, which lies at the southern end of the San Francisco Bay and is bordered by Alameda County to the north and San Mateo and Santa Cruz Counties to the northwest and southwest, is the largest county in the San Francisco Bay Area. The California Department of Finance estimated it to be home to 1.9 million persons in 2009. Hanmi has a limited presence in this large market for financial services. The bank’s one office held $107 million in deposits with a 0.19 percent market share as of June 30, 2009. The bank ranked 27th out of 55 FDIC-insured depository institutions operating 352 offices in the assessment area. Deposits are primarily concentrated in three financial institutions collectively holding 54.5 percent of market deposits. Competition for small business loans is high in the assessment area with 93 lenders originating CRA reportable small business loans in 2009, which represents only a small portion of the market. Hanmi did not originate any HMDA reportable loans in this assessment area during the review period. The following exhibit presents key demographic and business information concerning the assessment area.


C - 9

EXHIBIT 8

ASSESSMENT AREA DEMOGRAPHICS SANTA CLARA



Tract Income


Families by Tract


# % # % # % # % Low-income 14 4.1 12,598 3.2 2,285 18.1 78,717 19.7 Moderate-income 73 21.4 77,751 19.4 7,241 9.3 70,519 17.6 Middle-income 161 47.2 193,734 48.5 7,675 4.0 85,479 21.4 Upper-income 93 27.3 115,682 28.9 2,423 2.1 165,050 41.3 Total AA 341 100.0 399,765 100.0 19,624 4.9 399,765 100.0


Tract


# %-tract %-units # % # % Low-income 19,754 3,953 1.2 20.0 15,397 77.9 404 2.0 Moderate-income 113,083 50,136 14.8 44.3 60,204 53.2 2,743 2.4 Middle-income 288,488 163,886 48.4 56.8 118,290 41.0 6,312 2.2 Upper-income 158,004 120,661 35.6 76.4 33,336 21.1 4,007 2.5 Total AA 579,329 338,636 100.0 58.5 227,227 39.2 13,466 2.3


Tract





# % # % # % # % Low-income 2,614 3.1 2,220 3.0 239 4.0 155 3.7 Moderate-income 18,549 22.0 15,760 21.3 1,676 28.1 1,113 26.9 Middle-income 37,987 45.1 33,759 45.6 2,473 41.5 1,755 42.4 Upper-income 25,025 29.7 22,334 30.2 1,574 26.4 1,117 27.0 Total AA 84,175 100.0 74,073 100.0 5,962 100.0 4,140 100.0




hanmi-pe final report esu v8a - federal reserve bank … (sba) loans. a range of consumer credit...

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