UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

(Mark One)

Hanmi Financial Corporation

(213) 382-2200

Not Applicable

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes (x) No (   )

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b.2 of the Exchange Act.).

Yes (x) No (   )

As of November 1, 2004, there were 24,538,317 outstanding shares of the issuer’s Common Stock.

FORM 10-Q

INDEX

HANMI FINANCIAL CORPORATION

HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

See accompanying notes to consolidated financial statements.

3

HANMI FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
FOR THE QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003

4

See accompanying notes to consolidated financial statements.

5

HANMI FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003

6

See accompanying notes to consolidated financial statements.

7

Notes to Consolidated Financial Statements

Note 1. Hanmi Financial Corporation

     Hanmi Financial Corporation (“Hanmi Financial” or the “Company”) is a Delaware corporation that is the holding company for Hanmi Bank (the “Bank”) and is subject to the Bank Holding Company Act of 1956, as amended.

     Hanmi Bank, the primary subsidiary of the Company, is a commercial bank licensed by the California Department of Financial Institutions. Hanmi Bank’s deposit accounts are insured under the Federal Deposit Insurance Act up to applicable limits thereof, and the Bank is a member of the Federal Reserve System.

     Hanmi Bank is a community bank conducting general business banking with its primary market encompassing the multi-ethnic population of Los Angeles, Orange, San Diego, San Francisco, and Santa Clara counties. Hanmi Bank’s full-service offices are located in business areas where many of the businesses are run by immigrants and other minority groups. Hanmi Bank’s client base reflects the multi-ethnic composition of these communities. On April 30, 2004, the Company completed its acquisition of Pacific Union Bank (“PUB”), a $1.2 billion (assets) commercial bank headquartered in Los Angeles that, like Hanmi, serves primarily the Korean-American community. At September 30, 2004, Hanmi Bank had twenty-seven full-service branch offices located in Los Angeles, Orange, Santa Clara, San Francisco, and San Diego counties. On October 4, 2004, it closed four branches as planned.

Note 2. Basis of Presentation

     In the opinion of management, the consolidated financial statements of Hanmi Financial Corporation and its subsidiaries reflect all adjustments necessary to a fair presentation of the results for the interim period ended September 30, 2004, but are not necessarily indicative of the results which will be reported for the entire year. In the opinion of management, the aforementioned consolidated financial statements are in conformity with accounting principles generally accepted in the United States of America. The interim information should be read in conjunction with the Company’s 2003 Annual Report on Form 10-K.

     Descriptions of the Company’s significant accounting policies are included in Note 1, Summary of Significant Accounting Policies, in the Company’s 2003 Form 10-K. Certain reclassifications were made to the prior period presentation to conform to the current period’s presentation.

Note 3. Investment Securities

     Gross unrealized losses on investment securities and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at September 30, 2004, were as follows:

8

     The temporary impairment is the result of a change in market interest rates and is not a result of the underlying issuer’s ability to repay. Accordingly, we have not recognized the temporary impairment in our results of operations.

Note 4. Employee Stock-Based Compensation

     The Company measures its employee stock-based compensation arrangements under the provisions of Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”). Accordingly, no compensation expense has been recognized for the stock option plan, as stock options were granted at fair value at the date of grant. Had compensation expense for the Company’s stock option plan been determined based on the fair values estimated using the Black-Scholes model at the grant dates for previous awards, the Company’s net income and income per share would have been reduced to the pro forma amounts indicated for the quarters as follows:

Note 5. Earnings per Share

     Earnings per share (“EPS”) is calculated on both a basic and a diluted basis. Basic earnings per share excludes dilution and is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted from the issuance of common stock that then shared in earnings, excluding common shares in treasury.

     The following table presents a reconciliation of the components used to derive basic and diluted earnings per share for the periods indicated.

9

Note 6. Derivative Financial Instruments

     The Company has entered into interest-rate swaps to hedge the interest-rate risk associated with the cash flows of specifically identified variable-rate loans. As of September 30, 2004, the Company had five interest-rate swap agreements with a total notional amount of $70 million, wherein the Company receives a fixed rate of 5.77% and 6.37% at quarterly intervals for each $20 million notional amount and a fixed rate of 6.51%, 6.76%, and 7.29% for each $10 million notional amount, respectively. The swaps expire over the period March 14, 2008 through May 17, 2009. The Company pays a floating rate at quarterly intervals based on The Wall Street Journal published prime rate.

     At September 30, 2004, the fair value of the interest rate swaps was in a favorable position of $370,000. A total of $191,000, net of tax, is included in other comprehensive income. The fair value of the interest rate swaps is included in other assets in the accompanying consolidated statements of financial condition. Expenses of $4,000 related to swap ineffectiveness were recorded in the Company’s income statement for the quarter ended September 30, 2004.

10

Note 7. Current Accounting Matters

     In March 2004, the Financial Accounting Standards Board ("FASB") issued Emerging Issues Task Force ("EITF") Issue No. 03-1, “ The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments”. This EITF describes a model involving three steps: (1) determine whether an investment is impaired, (2) determine whether the impairment is other-than-temporary, and (3) recognize any impairment loss in earnings. The EITF also requires several additional disclosures for cost-method investments. In September, the FASB approved the deferral of the effective date for EITF No. 03-1 pending reconsideration of implementation guidance relating to debt securities that are impaired solely due to market interest rate fluctuation.

     The Company uses interest rate swaps to enter into cash flow hedges of variable prime-rate-based interest payments on portions of its loan portfolio using the first-payments-received technique. Effective October 1, 2004, the Company intends to apply the guidance contained in Emerging Issues Task Force Issue No. G25 to such hedges. As such, the Company will recognize the fixed rate received on such loans in income, unless it determines the level of defaults in its portfolio or the margins in excess of its prime rate received increase to such a level as to warrant recognition of hedge ineffectiveness.

Note 8. Business Combinations

     On April 30, 2004, the Company completed its acquisition of Pacific Union Bank (“PUB”) and merged PUB with Hanmi Bank. The Company paid $164.5 million in cash to acquire 5,537,431 of the PUB shares owned by Korea Exchange Bank. All of the remaining PUB shares were converted in the acquisition into shares of the Company’s common stock based on an exchange ratio of 1.156 Hanmi shares for each PUB share.

     Immediately prior to the completion of the acquisition, the Company issued a total of 3,947,369 shares of its common stock pursuant to a private placement for total proceeds of $75,000,000 before expenses and placement fees. As a result of the issuance of shares in the merger and the private placement, as well as normal stock option activity, the number of outstanding Company shares has increased to 24,438,017.

     In addition, all outstanding PUB employee stock options were converted into 68,707 options to purchase Hanmi stock valued at $1.1 million in total. Based on Hanmi’s average price of $25.06 for the five-day trading period from April 28 through May 4, 2004, the total consideration paid for PUB was $325.2 million and resulted in the recognition of goodwill aggregating approximately $207.8 million. This amount, as well as the fair values of assets and liabilities recorded, may change as certain estimates are finalized.

     The fair value of PUB net assets acquired was as follows:

11

     The core deposit intangible is being amortized over its estimated useful life of five years. None of the goodwill balance is expected to be deductible for income tax purposes.

     The Company’s post-merger integration of PUB’s operations is proceeding substantially as planned. During the third quarter, the Company successfully completed the conversion of PUB’s core loan, deposits and general ledger data processing systems onto Hanmi Bank’s platform. On October 4, 2004, the Bank closed four redundant branches, bringing the total number of branches to 23.

     Following the acquisition of PUB, management initiated and approved plans to restructure the operations of the existing Hanmi and PUB branch networks and corporate headquarters to eliminate duplicative facilities, streamline operations, and reduce costs. Through September 30, 2004, 41 employees had been terminated. On a pro forma basis, the combined employee headcount of Hanmi and PUB decreased from 671 as of December 31, 2003 to 538 as of September 30, 2004, primarily as a result of attrition and the hiring freeze instituted January 2, 2004.

     Merger-related costs recognized as expenses during the second and third quarters of 2004 consist of employee retention bonuses, the costs of vacating duplicative branches within Hanmi’s existing network, and the impairment of fixed assets (primarily leasehold improvements) associated with such branches. Of the $2,053,000 provided, $735,000 was utilized and charged against the related liability in the second and third quarters of 2004.

     Certain costs (primarily PUB employee severance, data processing contract termination costs, and the costs of vacating duplicative branches within PUB’s network) were recognized as liabilities assumed in the business combination or impairments of fixed assets associated with such branches. Accordingly, they have been considered part of the purchase price of PUB and recorded as an increase in the balance of goodwill. Of the $4,515,000 provided, $2,311,000 was utilized and charged against the related liability in the second and third quarters of 2004.

     The Company incurred the following merger-related costs through September 30, 2004.

12

Unaudited Pro Forma Combined Financial Data Reflecting the PUB Acquisition

     The unaudited pro forma combined income statements presented below give effect to the acquisition of PUB as if it had been consummated as of January 1, 2003. The unaudited pro forma information is not necessarily indicative of the results of operations that would have resulted had the acquisition been completed as of January 1, 2003, nor is it necessarily indicative of future results of operations.

(1) $7.4 million of legal expense incurred related to the merger was not considered in adjustment entries.

Note 9. Off-balance Sheet Commitments

     As part of its service to its small-to medium-sized business customers, Hanmi Bank from time to time issues formal loan commitments and lines of credit. These commitments can be either secured or unsecured. They may be in the form of revolving lines of credit for seasonal working capital needs or may take the form of commercial letters of credit and standby letters of credit. Commercial letters of credit facilitate import trade. Standby letters of credit are conditional commitments issued by Hanmi Bank to guarantee the performance of a customer to a third party.

     The following table shows the distribution of the Hanmi Bank’s undisbursed loan commitments as of the dates indicated.

13

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

     The following is management’s discussion and analysis of the major factors that influenced the Company’s results of operations and financial condition for the three months and nine months ended September 30, 2004. This analysis should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2003 and with the unaudited financial statements and notes thereto set forth in this report.

Critical Accounting Policies

     We have established various accounting policies which govern the application of accounting principles generally accepted in the United States of America in the preparation of our financial statements. Our significant accounting policies are described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2003. Certain accounting policies require us to make significant estimates and assumptions which have a material impact on the carrying value of certain assets and liabilities, and we consider these to be critical accounting policies. The estimates and assumptions we use are based on historical experience and other factors, which we believe to be reasonable under the circumstances. Actual results could differ significantly from these estimates and assumptions which could have a material impact on the carrying value of assets and liabilities at the balance sheet dates and our results of operations for the reporting periods. Management has discussed the development and selection of these critical accounting policies with the Audit Committee of our Board of Directors.

     During the nine months ended September 30, 2004, the application of Statement of Financial Accounting Standards No. 141 “Business Combinations,” to the purchase of Pacific Union Bank required significant estimates and assumptions. We engaged outside experts including appraisers to assist in estimating the fair values of certain assets acquired, particularly the loan portfolio, core deposit intangible asset, and fixed assets. The fair values of financial assets, including the investments portfolio, deposits, and borrowings, were estimated by the Bank, using market data regarding securities market prices and interest rates. We also evaluated long-lived assets for impairment and recorded any necessary adjustments. In accordance with Emerging Issues Task Force Issue No. 95-3, “Recognition of Liabilities in Connection With a Purchase Business Combination,” we recognized liabilities assumed for costs to involuntarily terminate employees of PUB and costs to exit activities of PUB under an exit plan approved by Hanmi Bank’s board of directors.

     We believe the allowance for loan losses is the critical accounting policy that requires the most significant estimates and assumptions, which are particularly susceptible to significant change in the preparation of our financial statements. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Allowance and Provision for Loan Losses” for a description of the methodology used to determine the allowance for loan losses.

14

Selected Financial Data

     The following table sets forth certain selected financial data for the periods indicated.

15

(1)

Calculations are based upon annualized net income.

(2)

Tangible equity is calculated by subtracting goodwill and the core deposit intangible from shareholders’ equity.

(3)

Net interest margin is calculated by dividing annualized net interest income by total average interest-earning assets.

(4)

The efficiency ratio is calculated as the ratio of total non-interest expenses to the sum of net interest income before provision for loan losses and total non-interest income including securities gains and losses.

(5)

The required ratios for a “well-capitalized” institution as defined by regulations of the Board of Governors of the Federal Reserve System, are 5% leverage capital, 6% Tier 1 risk-based capital and 10% total risk-based capital.

(6)

Net charge-offs was annualized to calculate the ratio.

(7)

Non-performing assets consist of non-performing loans, which include non-accrual loans, loans past due 90 days or more and still accruing interest, and restructured loans.

Forward-Looking Information

     Certain matters discussed under this caption may constitute forward-looking statements under Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated due to a number of factors. Words such as “expect,” “feel,” “will,” “may,” “anticipate,” “plan,” “estimate,” “intend,” “should,” and similar expressions are intended to identify forward-looking statements. These statements include, but are not limited to, financial projections and estimates and their underlying assumptions; statements regarding plans, objectives and expectations with respect to future operations, products and services; and statements regarding future performance. Such statements are subject to certain risks and uncertainties, many of which are difficult to predict and generally beyond our control, that could cause actual results to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: (1) our business and the business of Pacific Union Bank may not be combined successfully, and the growth opportunities and cost savings from the merger may not be fully realized or may take longer to realize than expected; (2) operating costs and business disruptions following the merger, including adverse effects on relationships with employees, may be greater than expected; (3) competitive factors which could affect net interest income and non-interest income, general economic conditions which could affect the volume of loan originations, deposit flows and real estate values; and (4) the levels of non-interest income and the amount of loan losses as well as other factors discussed in our filings with the Securities and Exchange Commission or FDIC, as the case may be, from time to time. For additional information concerning these factors, see our Form 10-K filed with the Securities and Exchange Commission on March 15, 2004 under the headings “Factors That May Affect Future Results of Operations,” “Interest Rate Risk Management,” and “Liquidity and Capital Resources.” We undertakes no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made.

16

Results of Operations

Overview

     The Company’s net income for the three months ended September 30, 2004 was $11.1 million, or $0.44 per diluted share, compared to $4.9 million, or $0.34 per diluted share, for the three months ended September 30, 2003. The 123.8% increase in net income for 2004 as compared to 2003 was primarily due to the acquisition of interest-earning assets totaling $1.1 billion as part of the merger with Pacific Union Bank ("PUB"). Net interest income before provision for loan losses increased $15.5 million, or 107.6%, due to ongoing growth in the loan portfolio as well as the newly acquired interest-earning assets. Non-interest income increased by $2.7 million, or 61.8%, mainly due to an increase in service charges on deposit accounts. Non-interest expenses increased by $9.3 million, or 96.6%, including $325,000 of non-recurring restructuring expenses. This increase was primarily attributable to the additional salaries and employee benefits, occupancy, professional fees, and data processing expenses incurred during the post-merger integration period. The annualized return on average assets was 1.42% for the three months ended September 30, 2004, compared to a return on average assets of 1.19% for the same period of 2003, an increase of 23 basis points. The annualized return on average equity was 11.68% for the three months ended September 30, 2004, and return on tangible equity was 28.17%, compared to 14.70% and 14.93%, respectively, for the same period in 2003.

     The Company’s net income for the nine months ended September 30, 2004 was $25.0 million or $1.23 per diluted share, compared to $14.1 million, or $0.99 per diluted share, for the nine months ended September 30, 2003. This increase in net income was primarily attributable to the acquisition of interest-earning assets totaling $1.1 billion as part of the merger with PUB. Net interest income before provision for loan losses increased $30.7 million, or 75.8%, to $71.1 million and non-interest income increased by $4.2 million, or 29.0%, to $18.8 million. Non-interest expenses increased by $18.3 million, or 63.3%, including $2.1 million of non-recurring restructuring expenses. The annualized return on average assets was 1.32% for the nine months ended September 30, 2004, compared to a return on average assets of 1.19% for the same period of 2003, an increase of thirteen basis points. The annualized return on average equity was 12.85%, and return on tangible equity was 25.01%, compared to 14.50% and 14.74%, respectively, for the same period in 2003.

Net Interest Income before Provision for Loan Losses

     The principal component of the Company’s earnings is net interest income, which is the difference between the interest and fees earned on loans and investments and the interest paid on deposits and other borrowed funds. When net interest income is expressed as a percentage of average interest-earning assets, the result is the net interest margin. The net interest spread is the yield on average interest-earning assets less the average cost of interest-bearing deposits and borrowed funds.

     For the three months ended September 30, 2004, the Company’s net interest income before provision for loan losses was nearly $30.0 million. This represented an increase of $15.5 million, or 107.6%, over net interest income before provision for loan losses of $14.4 million for the three months ended September 30, 2003. The interest rate spread increased to 3.90% for the three months ended September 30, 2004, from 3.09% for the same period in 2003. The change was mainly due to an increase in rates received on loans and investments as the Company increased its prime rate by a total of 75 basis points. Approximately 90% of the Company’s loan portfolio is tied to its prime rate. The Company also emphasized spread income and disposed of certain low yielding assets in the first and second quarters of 2004 and reinvested the proceeds from the amortization of its investment portfolio into loan production. Average loans outstanding increased from 71.9% of average interest-earning assets in the third quarter of 2003 to 82.7% of average interest-earning assts in the third quarter of 2004. The net interest margin also increased by 73 basis points to 4.42% for the three months ended September 30, 2004, from 3.69% for the same period in 2003, due to an increase in the volume of interest-earning assets with higher interest rates.

17

     For the nine months ended September 30, 2004, the Company’s net interest income before provision for loan losses was $71.1 million. This represented an increase of $30.7 million, or 75.8%, over net interest income before provision for loan losses of $40.5 million for the nine months ended September 30, 2003. The interest rate spread increased to 3.68% for the nine months ended September 30, 2004, from 3.01% for the same period in 2003. The change was mainly due to an increase in rates received on loans and investments. The net interest margin also increased 57 basis points to 4.21% for the nine months ended September 30, 2004, from 3.64% for the same period in 2003, due to an increase in the volume of interest earning assets with higher interest rates.

     Total interest income increased $19.7 million, or 100.8%, to $39.3 million for the three months ended September 30, 2004, from $19.6 million for the three months ended September 30, 2003. Total interest income increased $36.9 million, or 65.8%, to $93.1 million for the nine months ended September 30, 2004 from $56.1 million for the nine months ended September 30, 2003. The increase was mainly the result of an increase in the volume of interest-earning assets obtained through the acquisition of PUB. For the third quarter of 2004, average interest-earning assets increased by $1.15 billion, or 73.2%, to $2.71 billion, compared to $1.57 billion a year ago. For the nine months ended September 30, 2004, average interest-earning assets increased by $770 million, or 51.9%, to $2.25 billion, compared to $1.48 billion a year ago.

     The Company’s interest expense on deposits and other borrowed funds for the three months ended September 30, 2004 increased by $4.2 million, or 81.5%, to $9.3 million, from $5.1 million for the three months ended September 30, 2003. The Company’s interest expense on deposits and other borrowed funds for the nine months ended September 30, 2004 increased by $6.3 million, or 39.9%, to $21.9 million, from $15.7 million for the nine months ended September 30, 2003. The increases reflect an increase in interest-bearing liabilities related to the acquisition of PUB, partially offset by a decrease in interest rates paid to depositors.

     Average interest-bearing liabilities were $1.96 billion and $1.60 billion for the three months and nine months ended September 30, 2004, which represented increases of $887 million, or 82.3%, and $573 million, or 55.9%, respectively, from average interest-bearing liabilities of $1.08 billion and $1.03 billion for the same periods a year ago. The cost of average interest-bearing liabilities decreased to 1.89% and 1.83% for the three months and nine months ended September 30, 2004, compared to costs of 1.90% and 2.04% for the same periods in 2003. Overall interest on deposits decreased mainly due to the repricing of interest rates on long-term certificates of deposit to lower interest rates as the deposits matured and the acquisition of PUB’s deposits, which had a lower average interest rate compared to Hanmi’s deposits portfolio.

18

     The table below presents the average yield on each category of interest-earning assets, average rate paid on each category of interest-bearing liabilities, and the resulting interest rate spread and net yield on interest-earning assets for the periods indicated. All average balances are daily average balances.

19