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Hanmi Financial holding its own in a flat yield curve environment, say executives

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Hanmi Financial holding its own in a flat yield curve environment, say executives

Los Angeles-based Hanmi Financial Corp. executives highlighted thecompany's loan growth during its second-quarter earnings call.

The company reported new loan production of $265.2 millionfor the second quarter, up 27.5% year over year, compared to $208.1 million forthe second quarter of 2015. New loan production during the second quartercomprised of $197.2 million of commercial real estate loans, $19.2 million ofcommercial and industrial loans, $46.6 million of Small Business Administrationloans, and $2.2 million of consumer loans. The increase in loan productiondrove loans receivable up 4.3%, compared to the previous quarter and 19.9% yearover year.

The executives noted that the company experienced strongloan growth in its legacy market of California, as well as Texas and Illinois.They added that lending operations in Texas and Illinois contributed 21% toHanmi's organic new loan production during the second quarter.

"The strong growth we are experiencing in Texas andIllinois is very encouraging and we expect momentum in these markets tocontinue in the second half of the year, as we leverage our strong branchnetwork in these states," said Chong Guk Kum, president and CEO of thecompany, during the call.

"In a flat yield curve environment like ours, there isa risk that all banks have that there could be more prepayments depending onthe efforts of some of the big banks like [Wells Fargo & Co.] and [], who have hadhistorically a tendency to drift down to our space, the community banks andregional banks, with rates in terms that we typically do not want to competeagainst," Kum said, while discussing the flat yield curve environment.

"However, having said that, we have been in this kindof environment for a bit notwithstanding some of those potential threats. Ourproduction has been very good, very strong and also the rate that we are ableto obtain on our new loans is slightly north of 4.4%. So, risk does exist. Itseems that we are more than holding our own at this point," he added.