Ladies and gentlemen, welcome to the Hanmi Financial Corporation Third Quarter 2014 Conference Call. As a reminder today’s call is been recorded for replay purposes. At this time, all participants are in a listen-only mode. Following the presentation the conference will be open for questions. I would now like to introduce Ms. Christina Lee, First Vice President of Investor Relations and Corporate Strategy. Please go ahead Ma’am.

Thank you, [Tania]. And thank you all for joining us today. With me to discuss Hanmi Financial's third quarter 2014 earnings are, C.G. Kum, our President and Chief Executive Officer; Bonnie Lee, Chief Operating Officer; and Mark Yoon, Chief Financial Officer. Mr. Kum will begin with an overview of the quarter, and Mr. Yoon will then provide more details on our operating performance and credit quality. At the conclusion of the prepared remarks, we'll open the session for questions. In today's call, we may include comments and forward-looking statements based on current plans, expectations, events and financial industry trends that may affect the company's future operating results and financial position. Our actual results could be different from those expressed or implied by our forward-looking statements, which involve risks and uncertainties. The speakers on this call claim the protection of the Safe Harbor provisions contained in Securities Litigation Reform Act of 1995. For some factors that may cause our results to differ from our expectations, please refer to our SEC filings, including our most recent Form 10-K and 10-Qs. In particular, we direct you to the discussion in our 10-K of certain risk factors affecting our business. This morning, Hanmi Financial issued a news release outlining our financial results for the third quarter of 2014, which can be found on our website at hanmi.com. I will now turn the call over to Mr. Kum.

Thank you, Christina. Good morning, everyone. I want to thank all of you for joining our third quarter earnings call today. This was a very exciting quarter for Hanmi, in addition to our strong financial performance, the third quarter marks the closing of our acquisition of Central Bancorp, a transaction that we announced back in December last year. From the time of announcement to closing of the acquisition we have had nearly nine months to plan the integration of the combined bank. I’m pleased to say that we hit the ground running when the transaction closed on August 31. With the acquisition complete, Hanmi became the second largest Korean American Bank. We now have 49 banking offices and four loan production offices serving different communities across California, Colorado, Illinois, New Jersey, New York, Texas, Virginia and Washington. The combined entity has approximately $4.2 billion in assets, $2.7 billion in gross loans and $3.6 billion in deposits providing Hanmi with a leading deposit market share among Korean American banks in Illinois, Texas and Virginia along with the substantial market share in California. We believe the combined entity will be a significant competitive force in our markets and will help drive meaningful growth and earnings expansion. And importantly, we are positioned to further expand our market share from our core Korean American customer base for the wider Asian American and mainstream communities by providing our customers with the benefit of a larger product offering, improved lending capacity and enhanced customer service. Looking at our third quarter results, which reflect two months of standalone operations of Hanmi and one month of combined operations following the completion of the acquisition, we’ve reported net income of $13.3 million or $0.41 per diluted share. Net income increased by 20.1% on a quarter-over-quarter basis and grew 27.7%…

Thank you, Mr. Kum. Good morning everyone. I’ll discuss our financial result for the third quarter of 2014 in more detail. We’ve generated $30.7 million net interest income before the credit loss provision in the third quarter which was up from $28 million or 9.6% from the second quarter and up from $28.5 million or 7.7% from the third quarter year ago. While our NIM decline in this quarter, it continues to be well above the 2.81% average posted by the 296 banks, making up the SNL U.S. Bank Index for the third quarter of 2014, and in line with the 3.73% average of the 120 banks in the SNL Index for banks with assets over $1.25 billion. Non-interest income in the third quarter was $14.3 million compared to $5.1 million in the preceding quarter and $6.1 million in the third quarter a year ago. In the third quarter of 2014 in conjunction with the CBI acquisition the company recorded $6.6 million bargain purchase gain. In addition, the third quarter of 2014, gain on sales of SBA loans increased to $1.2 million from $498,000 in the preceding quarter and $1 million in the third quarter year ago, reflecting higher SBA loan production and premium. In the third quarter, SBA loan sales totaled $14.3 million, compared to $6.8 million in the preceding quarter and $15.5 million in the third quarter a year ago. Other operating income increased to $2.2 million in the third quarter of 2014, compared to $253,000 in the preceding quarter and $416,000 in the third quarter of 2013. The increase was due mainly to an $819,000 recovery from an OREO property and an $807,000 gain recognized from the early termination of CBI's retirement plan in September. On the expense side, non-interest expense was $26.8 million in the third…

Thank you, Mark. In conclusion, I’m pleased with our third quarter results, which reflects strong organic loan growth at Hanmi, legacy Hanmi and the initial benefits of our acquisition of CBI. We are well positioned to have a strong finish to 2014 and to carry significant momentum into 2015. These are extraordinarily exciting times for Hanmi. We look forward to completing the integration of the two organizations as quickly as possible and realize the strategic value of the combination to enhance shareholders value. Thank you. Christina?

Tania, let’s open the call for questions.

Thank you. (Operator Instructions) Our first question comes from Julianna Balicka with KBW. Please proceed with your questions.

Good morning.

Good morning. How are you?

Good, how are you?

Good.

I have several questions, please. One, I think, tax housekeeping question. It appears that there was some non-operating tax benefit in the tax rate. You said that effective tax rate ex merger charges on BPO gain will be 40%, so is that the case?

The two major factors that reduced effective tax rates were bargain purchase gain, which is permanent difference. And also transaction cost like fees paid to our investment bankers and lawyers related to the acquisition should be capitalized. So those are the two major ones that play in the effective tax rate.

So, does that look like that there is a tax benefit?

No, that’s not. Those are the not tax benefits. Basically it include, you need to take it out from when you calculate a taxable income, so you increase your taxable income rate.

Right.

You need to add it back, because it is expense item on -- from a [book] purposes. For tax purposes you need take them out. So your taxable incomes increase, so your effective tax rate goes up.

Okay. All right. And then in terms of the full quarter run rate of operating expenses for next year, one, in this quarter, what was the one main contribution from United Central. And kind of thinking about next year's run rate for expenses, one, what would be some elevated expenses that should and migrate downwards because now, [indiscernible] before that as merger charges, and two, could you quantify the cost savings dollars that you are expecting once [indiscernible]?

So, we’re not going to provide you with – we’re not able to provide you with the forecast for 2015 as we speak in the detail that you probably want. But let me just going to [partial] that out a little bit to give you a sense of the trajectory -- the upward trajectory of our income. Based on the marks that we have taken, we’re projecting that the net interest income for the fourth quarter and for the full year of 2015 to be up by somewhere between 14% to 16%. On the expense side, the one month run rate of UCB’s personnel annualizing that. We believe that there’s about a – roughly about 35% to 38% reduction that will manifest as of the end of the first quarter of 2015. That’s roughly about on an annualized basis 5.6 million number as it relates to the UCB former UCB side as far as the salary and benefit, salary line item is concerned. However the offsetting expenses that we will incur to ramp-up the lending platform in both Texas and Illinois, but there should also be offsetting revenue coming from the loans that will be generated from those two offices.

Are there any legacy costs that could migrate downward as professional fees as such on Hanmi side?

There shouldn’t be. You are talking about for 2015.

In your third quarter number it looks like your professional fee are elevator?

Yes. Associated with the merger basically, go ahead.

Well, that’s professional fee that you see in here $1.4 million for the third quarter it just related to a normal professional fees, consulting fee we pay for risks and compliance and also cost of 2013 as well.

Okay. All right. And then in terms of SBA income, it’s a fee income that you gain this quarter kind of run rate that you should be thinking about or there is some pent-up demand from previous quarters about deals that close little later, any kind of you sees there?

Well, I think for 2015, $120 million [7A] production is a reasonable expectation. And then you can do the analysis as far as what their premium income might be, but we believe that we can comfortably with the new team and the new leadership generate about $120 million and if they can accelerate some of the infrastructure enhancement on the SBA side that number could go up.

Okay. Excellent. And then in terms of the new hires that put in Texas and Midwest that you’re hiring, what kind of contribution to loan growth are you expecting from the new market once there’re up and running?

Well, in the overall, we’re expecting to generate double-digit loan growth for Hanmi for 2015. Depending on the opportunities both Texas and Illinois may end up exceeding that, but overall for the organization we believe that we should be able to obtain low double-digit loan growth in 2015.

And are you planning to transform any of the CBI deposit base, any larger deposit run up -- or run up that you’re planning or anything like that in terms of leveraging of the loans deposit ratio again?

Yes. I mean some of the higher yielding or higher rate that [CDs] we’ll probably let it run-off, I think that’s logical. For us the better way to leverage is to generate more loans and we believe that the people we have in place with the infrastructure that’s being built in Texas and Illinois that will be able better leverage. Now having said that though as you have heard me say before, our goal is not be a 100% loan to deposit, that’s just not our business model. With our focus on generating deposits just as much as generating good quality loans, the comfortable zone for us is in the high 80s and perhaps even as much as low 90s. But I’d say with the additional deposits that we’ve picked up we’ll probably be hovering in the high 80s or that would be the target I should say for the near future.

Okay. Very good. And then final housekeeping question. Was there any accelerated yield from UCB loans this quarter and what is the accretion income expectation from that portfolio for the month?

You’re talking about for the one month of third quarter or going forward?

Yes, for the one month as well as for both.

One month for the fourth -- third quarter wasn’t all that significant. Now there was no acceleration of yield accretion here for the September. For the fourth quarter we’re expecting somewhere in the range of about $4.5 million, and both the credit interest.

Accretion interest.

Yes, credit interest incretion.

Yes. What it meant was positive $3 million for the first quarter for credit and then $1.7 million for CD premium amortization.

Right.

Great. And what you final fair value remarks on the UCB loans?

15%.

15%, okay. Very good. Thank you very much. I’ll get back now.

You bet.

(Operator Instructions) Our next question comes from Gary Tenner with D.A. Davidson. Please proceed with your question.

Good morning.

Good morning, Gary.

Couple of questions, I wonder if on the personnel line, it was up more than I would have expected just from the one month of CBI, so, was anything else on that line item attribute the $2.6 million sequential quarter increase?

The $2.6 consists of $1.6 from UCB and then also we accrue additional bonus provision in third quarter.

It’s more of a one-item obviously. With the expectation that with successful year that we’re having in 2014 the board and management’s plan is to reward the hard working employees here at Hanmi. So, that’s on ongoing run rate as far as the bonus item is concern.

Okay. And then, your comments on the net interest income, kind of growth expectations for the fourth quarter in 2015, 14% to 16%, is that coming off this abbreviated third quarter of CBI benefit or is the after more not -- I guess I'm just not clear how that translates as 15 growth rate also very kind of normalized fourth quarter and then grown up that is that what you're suggesting?

Now this is strictly as it relates to the accretion item for coming from the CBI fair market valuation process. So as it relates to the growth in the net interest income from the organic activity, we have – that’s not part of that. So that could be incremental increase above and beyond the items that I just mentioned.

Okay. So the 14%, 16% was purely from the decreasing asset.

Correct.

Okay. Thank you for that. And one last question, because I’m not clear on exactly the number that were transferred over from CBI over the period and loan balances of the $2.68 billion, how much of that is actually represented by CBI balances?

At September the former UCB loan balance was $283 million.

And that’s net of the month.

Yes, the fair value.

Okay. All right. Thanks very much.

Okay.

(Operator Instructions) We have no further questions in queue at this time. Please continue.

Thank you for listening to Hanmi Financial's third quarter conference call. We look forward to speaking to you next quarter.

Thank you. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. And thank you for your participation.