LOS ANGELES, Oct. 07, 2025 (GLOBE NEWSWIRE) -- Hanmi Financial Corporation (Nasdaq: HAFC) (“Hanmi”), the holding company for Hanmi Bank, today announced that it will report third quarter 2025 financial results after the market close on Tuesday, October 21, 2025. Management will host a conference call that same day, at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) to discuss the results. Investment professionals and all current and prospective shareholders are invited to access the live call on October 21 ...

Dan Medici Appointed to the Boards of Hanmi Financial Corporation and Hanmi Bank Mr. Medici has more than three decades of experience in the information technology (IT) field. Based in San Diego, he served as a federal bank examiner for the Office of the Comptroller of Currency for over 36 years. LOS ANGELES, Sept. 30, 2025 (GLOBE NEWSWIRE) -- Hanmi Financial Corporation (NASDAQ: HAFC, or “Hanmi”), and its wholly-owned subsidiary, Hanmi Bank (the “Bank”), today announced that Daniel J. Medici has been a ...

Part I – Financial Information [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements of Hanmi Financial Corporation and its subsidiaries for the periods ended June 30, 2025, and December 31, 2024, including balance sheets, income statements, comprehensive income statements, statements of changes in stockholders' equity, and cash flow statements, along with detailed notes explaining accounting policies, financial instrument specifics, and other relevant disclosures [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights (in thousands) | Item | June 30, 2025 | December 31, 2024 | Change (2025 vs 2024) | Percentage Change | | :-------------------------------- | :------------ | :------------------ | :-------------------- | :------------------ | | Total assets | $7,862,363 | $7,677,925 | $184,438 | 2.40% | | Loans receivable, net | $6,239,201 | $6,181,230 | $57,971 | 0.94% | | Total deposits | $6,729,122 | $6,435,776 | $293,346 | 4.56% | | Borrowings | $127,500 | $262,500 | $(135,000) | -51.43% | | Total liabilities | $7,099,529 | $6,945,751 | $153,778 | 2.21% | | Total stockholders' equity | $762,834 | $732,174 | $30,660 | 4.19% | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) Consolidated Statements of Income Highlights (in thousands, except per share data) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total interest and dividend income | $101,333 | $98,660 | $200,589 | $198,253 | | Total interest expense | $44,194 | $50,040 | $88,358 | $98,979 | | Net interest income before credit loss expense | $57,139 | $48,620 | $112,231 | $99,274 | | Credit loss expense | $7,631 | $961 | $10,352 | $1,188 | | Total noninterest income | $8,071 | $8,057 | $15,796 | $15,790 | | Total noninterest expense | $36,347 | $35,276 | $71,330 | $71,720 | | Net income | $15,117 | $14,451 | $32,789 | $29,615 | | Basic earnings per share | $0.50 | $0.48 | $1.09 | $0.98 | | Diluted earnings per share | $0.50 | $0.48 | $1.08 | $0.97 | [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Consolidated Statements of Comprehensive Income Highlights (in thousands) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $15,117 | $14,451 | $32,789 | $29,615 | | Other comprehensive income (loss), net of tax | $5,491 | $(1,110) | $16,212 | $(6,072) | | Total comprehensive income | $20,608 | $13,341 | $49,001 | $23,543 | [Consolidated Statements of Changes in Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Changes in Stockholders' Equity (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :---------------- | | Total stockholders' equity (beginning of period) | $732,174 | $701,891 | | Net income | $32,789 | $29,615 | | Cash dividends paid | $(16,407) | $(15,271) | | Change in unrealized gain (loss) on securities available for sale, net of income taxes | $15,892 | $(4,298) | | Change in unrealized gain (loss) on cash flow hedge, net of income taxes | $320 | $(1,774) | | Total stockholders' equity (end of period) | $762,834 | $707,059 | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30, in thousands) | Cash Flow Activity | 2025 | 2024 | | :--------------------------------- | :----- | :----- | | Net cash provided by operating activities | $6,853 | $32,034 | | Net cash used in investing activities | $(69,850) | $(17,429) | | Net cash provided by (used in) financing activities | $138,247 | $(3,850) | | Net increase in cash and due from banks | $75,250 | $10,755 | | Cash and due from banks at end of period | $380,050 | $313,079 | [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) [Note 1 — Organization and Basis of Presentation](index=9&type=section&id=Note%201%20%E2%80%94%20Organization%20and%20Basis%20of%20Presentation) - Hanmi Financial Corporation is a bank holding company with Hanmi Bank as its primary subsidiary, focusing on traditional banking activities like deposits and lending[22](index=22&type=chunk) - Effective January 1, 2025, the Company changed its methodology for estimating expected credit losses on its loan portfolio to a historical loss rate approach, adjusted for current conditions and forecasts, from a PD/LGD model, with an immaterial impact on operating results and financial condition[26](index=26&type=chunk)[27](index=27&type=chunk) [Note 2 — Securities](index=11&type=section&id=Note%202%20%E2%80%94%20Securities) Securities Available for Sale (in thousands) | Category | June 30, 2025 (Fair Value) | December 31, 2024 (Fair Value) | Change | | :--------------------------------------- | :--------------------------- | :----------------------------- | :----- | | U.S. Treasury securities | $119,821 | $88,929 | $30,892 | | U.S. government agency and sponsored agency obligations | $733,196 | $751,860 | $(18,664) | | Municipal bonds-tax exempt | $65,077 | $65,009 | $68 | | Total securities available for sale | $918,094 | $905,798 | $12,296 | - The Company evaluates its available-for-sale securities portfolio for impairment quarterly and determined no credit losses were expected as of June 30, 2025, due to the backing of the U.S. government for most of the portfolio[32](index=32&type=chunk) - Securities with market values of **$27.9 million** (June 30, 2025) and **$29.4 million** (December 31, 2024) were pledged to secure borrowings from the Federal Reserve Bank Discount Window[33](index=33&type=chunk) [Note 3 — Loans](index=13&type=section&id=Note%203%20%E2%80%94%20Loans) Loans Receivable Composition (in thousands) | Loan Type | June 30, 2025 | December 31, 2024 | Change | | :------------------------------ | :------------ | :---------------- | :----- | | Real estate loans | $4,942,791 | $4,900,924 | $41,867 | | Commercial and industrial loans | $917,995 | $863,431 | $54,564 | | Equipment financing agreements | $445,171 | $487,022 | $(41,851) | | Loans receivable, net | $6,239,201 | $6,181,230 | $57,971 | - Loans with carrying values of **$2.40 billion** (June 30, 2025) and **$2.46 billion** (December 31, 2024) were pledged to secure advances from the FHLB[36](index=36&type=chunk) Allowance for Credit Losses by Portfolio Segment (in thousands) | Portfolio Segment | June 30, 2025 | December 31, 2024 | Change | | :------------------------------ | :------------ | :---------------- | :----- | | Real estate loans | $48,021 | $45,099 | $2,922 | | Commercial and industrial loans | $6,935 | $10,006 | $(3,071) | | Equipment financing agreements | $11,800 | $15,042 | $(3,242) | | Total allowance for credit losses | $66,756 | $70,147 | $(3,391) | Nonperforming Loans and Assets (in thousands) | Item | June 30, 2025 | December 31, 2024 | Change | | :--------------------------------- | :------------ | :---------------- | :----- | | Nonaccrual loans | $25,967 | $14,272 | $11,695 | | Total nonperforming loans receivable | $25,967 | $14,272 | $11,695 | | Total nonperforming assets | $25,967 | $14,389 | $11,578 | - Two retail commercial loans totaling **$13.5 million** were modified with a three-month principal and interest deferment during the six months ended June 30, 2025[57](index=57&type=chunk) - One commercial and industrial loan was modified with a six-year term extension[58](index=58&type=chunk) [Note 4 — Servicing Assets](index=25&type=section&id=Note%204%20%E2%80%94%20Servicing%20Assets) Servicing Assets Activity (Six Months Ended June 30, in thousands) | Item | 2025 | 2024 | | :------------------------------ | :----- | :----- | | Balance at beginning of period | $6,457 | $7,070 | | Addition related to sale of loans | $1,335 | $1,132 | | Amortization | $(1,372) | $(1,366) | | Balance at end of period | $6,420 | $6,836 | - The Company serviced **$565.7 million** in loans sold to unaffiliated parties as of June 30, 2025, primarily SBA loans, which are maintained off-balance sheet[61](index=61&type=chunk) - Servicing fee income was **$2.6 million** for the six months ended June 30, 2025, compared to **$2.7 million** for the same period in 2024[62](index=62&type=chunk) [Note 5 — Income Taxes](index=25&type=section&id=Note%205%20%E2%80%94%20Income%20Taxes) Income Tax Expense and Effective Rate | Period | Income Tax Expense (in thousands) | Effective Income Tax Rate | | :------------------------------- | :------------------------------ | :------------------------ | | Three months ended June 30, 2025 | $6,115 | 28.8% | | Three months ended June 30, 2024 | $5,989 | 29.3% | | Six months ended June 30, 2025 | $13,556 | 29.3% | | Six months ended June 30, 2024 | $12,541 | 29.7% | - A valuation allowance of **$1.5 million** was maintained against certain state net operating loss carryforwards as of June 30, 2025, and December 31, 2024[65](index=65&type=chunk) [Note 6 — Goodwill](index=26&type=section&id=Note%206%20%E2%80%94%20Goodwill) - Goodwill remained at **$11.0 million** as of June 30, 2025, and December 31, 2024, with no impairment identified during the second quarter of 2025[67](index=67&type=chunk) [Note 7 — Deposits](index=26&type=section&id=Note%207%20%E2%80%94%20Deposits) Scheduled Maturities of Time Deposits (in thousands) | Maturity Year | June 30, 2025 | December 31, 2024 | | :-------------- | :------------ | :---------------- | | 2025 | $1,452,680 | $2,256,970 | | 2026 | $914,940 | $19,376 | | 2027 | $58,522 | $48,630 | | 2028 | $14,119 | $130 | | 2029 and thereafter | $473 | $177 | | Total | $2,440,734 | $2,325,283 | - Accrued interest payable on deposits decreased to **$30.6 million** at June 30, 2025, from **$34.8 million** at December 31, 2024[68](index=68&type=chunk) [Note 8 — Borrowings and Subordinated Debentures](index=26&type=section&id=Note%208%20%E2%80%94%20Borrowings%20and%20Subordinated%20Debentures) FHLB Advances (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Outstanding advances | $127,500 | $262,500 | | Weighted average rate | 4.62% | 4.75% | | Remaining available borrowing capacity | $1,520,000 | $1,690,000 | - The Bank had **$110.0 million** of Fixed-to-Floating Subordinated Notes (2031 Notes) with an initial fixed interest rate of **3.75%** per annum, maturing September 1, 2031[73](index=73&type=chunk) - Junior Subordinated Deferrable Interest Debentures had a balance of **$22.3 million** at June 30, 2025, with a variable rate tied to three-month SOFR plus 166 basis points (**5.98%** at June 30, 2025)[74](index=74&type=chunk) [Note 9 — Earnings Per Share](index=27&type=section&id=Note%209%20%E2%80%94%20Earnings%20Per%20Share) Basic and Diluted EPS (Six Months Ended June 30) | Item | 2025 | 2024 | | :--------------------------------- | :----- | :----- | | Income allocated to common shares (in thousands) | $32,517 | $29,393 | | Weighted-average shares for basic EPS | 29,943,279 | 30,089,341 | | Basic EPS | $1.09 | $0.98 | | Weighted-average shares for diluted EPS | 30,048,704 | 30,166,181 | | Diluted EPS | $1.08 | $0.97 | - Unvested restricted stock with non-forfeitable dividends are considered participating securities and included in EPS calculation under the two-class method[76](index=76&type=chunk) [Note 10 — Regulatory Matters](index=29&type=section&id=Note%2010%20%E2%80%94%20Regulatory%20Matters) - As of June 30, 2025, Hanmi Bank's capital ratios exceeded the minimum requirements to be considered 'well capitalized'[82](index=82&type=chunk) Capital Ratios (June 30, 2025) | Capital Ratio | Hanmi Financial | Hanmi Bank | Minimum Regulatory Requirement | Minimum to Be 'Well Capitalized' | | :------------------------------------ | :-------------- | :--------- | :----------------------------- | :----------------------------- | | Total capital (to risk-weighted assets) | 15.20% | 14.39% | 8.00% | 10.00% | | Tier 1 capital (to risk-weighted assets) | 12.46% | 13.32% | 6.00% | 8.00% | | Common equity Tier 1 capital (to risk-weighted assets) | 12.12% | 13.32% | 4.50% | 6.50% | | Tier 1 capital (to average assets) | 10.63% | 11.43% | 4.00% | 5.00% | - The capital conservation buffer for Hanmi Bank was **6.39%** and for Hanmi Financial was **6.46%** as of June 30, 2025, exceeding the **2.5%** requirement[83](index=83&type=chunk) [Note 11 — Fair Value Measurements](index=30&type=section&id=Note%2011%20%E2%80%94%20Fair%20Value%20Measurements) - The Company categorizes fair value measurements into a three-level hierarchy: Level 1 (quoted prices in active markets), Level 2 (significant other observable inputs), and Level 3 (significant unobservable inputs)[86](index=86&type=chunk)[91](index=91&type=chunk) Assets Measured at Fair Value on a Recurring Basis (June 30, 2025, in thousands) | Asset Type | Level 1 | Level 2 | Level 3 | Total Fair Value | | :--------------------------------------- | :-------- | :-------- | :-------- | :--------------- | | U.S. Treasury securities | $119,821 | $— | $— | $119,821 | | U.S. government agency and sponsored agency obligations | $— | $733,196 | $— | $733,196 | | Municipal bonds-tax exempt | $— | $65,077 | $— | $65,077 | | Total securities available for sale | $119,821 | $798,273 | $— | $918,094 | | Derivative financial instruments | $— | $3,283 | $— | $3,283 | Assets Measured at Fair Value on a Non-Recurring Basis (June 30, 2025, in thousands) | Asset Type | Total | Level 1 | Level 2 | Level 3 | | :-------------------------- | :------ | :------ | :------ | :------ | | Collateral dependent loans | $18,269 | $— | $— | $18,269 | | Repossessed personal property | $605 | $— | $— | $605 | [Note 12 — Off-Balance Sheet Commitments](index=37&type=section&id=Note%2012%20%E2%80%94%20Off-Balance%20Sheet%20Commitments) Total Loan Commitments (in thousands) | Commitment Type | June 30, 2025 | December 31, 2024 | | :------------------------------ | :------------ | :---------------- | | Unused commitments to extend credit | $915,847 | $782,291 | | Standby letters of credit | $118,290 | $97,463 | | Commercial letters of credit | $14,629 | $18,324 | | Total commitments | $1,048,766 | $898,078 | - The allowance for credit losses related to off-balance sheet items increased to **$2.5 million** at June 30, 2025, from **$2.1 million** at December 31, 2024[118](index=118&type=chunk) [Note 13 — Leases](index=37&type=section&id=Note%2013%20%E2%80%94%20Leases) - The Company's leases, primarily for offices and equipment, have remaining terms from one month to nine years, with some renewal options up to ten years[119](index=119&type=chunk) Lease Balances (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Right-of-use asset | $34,600 | $35,600 | | Lease liability | $38,700 | $39,800 | - Net lease expense for the six months ended June 30, 2025, was **$4.2 million**, down from **$4.7 million** in the prior year[124](index=124&type=chunk) [Note 14 — Liquidity](index=39&type=section&id=Note%2014%20%E2%80%94%20Liquidity) - Hanmi Financial had **$8.9 million** in cash and **$43.2 million** in U.S. Treasury securities as of June 30, 2025, indicating adequate liquid assets[127](index=127&type=chunk) - Hanmi Bank's primary funding sources are deposits, FHLB advances (**$127.5 million** at June 30, 2025), brokered deposits (**$85.5 million**), and State of California time deposits (**$150.0 million**)[128](index=128&type=chunk)[129](index=129&type=chunk) - The Bank had **$1.52 billion** in remaining available borrowing capacity from the FHLB and **$26.1 million** from the Federal Reserve Discount Window as of June 30, 2025[130](index=130&type=chunk)[132](index=132&type=chunk) [Note 15 — Derivatives and Hedging Activities](index=41&type=section&id=Note%2015%20%E2%80%94%20Derivatives%20and%20Hedging%20Activities) - The Company uses interest rate swaps as cash flow hedges to manage interest rate risk, specifically hedging variable cash flows from Prime Rate-indexed and one-month SOFR-indexed loan pools against falling rates[134](index=134&type=chunk) Fair Value of Derivative Financial Instruments (June 30, 2025, in thousands) | Derivative Type | Notional Amount | Fair Value (Assets) | Notional Amount | Fair Value (Liabilities) | | :------------------------------------ | :-------------- | :------------------ | :-------------- | :----------------------- | | Derivatives not designated as hedging instruments (Interest rate products) | $100,485 | $3,283 | $100,485 | $3,274 | | Derivatives designated as hedging instruments (Interest rate products) | $— | $— | $175,000 | $165 | - The Company estimates an additional **$0.1 million** will be reclassified as a decrease to interest income from cash flow hedges over the next 12 months[135](index=135&type=chunk) [Note 16 — Segment Reporting](index=48&type=section&id=Note%2016%20%E2%80%94%20Segment%20Reporting) - Hanmi Financial operates as a single reportable segment, 'Banking,' with performance assessed using metrics like net interest income, non-interest income/expense, credit loss expense, and net income[152](index=152&type=chunk) Banking Segment Revenues and Net Income (in thousands) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Segment revenues | $65,210 | $56,677 | $128,027 | $115,064 | | Segment net income | $15,117 | $14,451 | $32,789 | $29,615 | [Note 17 — Subsequent Events](index=49&type=section&id=Note%2017%20%E2%80%94%20Subsequent%20Events) - On July 24, 2025, the Company declared a quarterly cash dividend of **$0.27** per share, payable on August 20, 2025[155](index=155&type=chunk) - President Trump signed the 'One Big Beautiful Bill' on July 4, 2025, and the Company is evaluating its income tax implications, not expecting a material impact[156](index=156&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=50&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition and results of operations for the three and six months ended June 30, 2025, compared to the prior year, covering key financial highlights, detailed analysis of net interest income, credit loss expense, noninterest income and expense, income taxes, and an in-depth review of the financial condition including securities, loans, deposits, borrowings, equity, and risk management [Executive Overview](index=52&type=section&id=Executive%20Overview) Net Income and EPS Performance | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $15.1 million | $14.5 million | $32.8 million | $29.6 million | | Diluted EPS | $0.50 | $0.48 | $1.08 | $0.97 | - Loans receivable increased by **$58.0 million** (**0.94%**) to **$6.24 billion** as of June 30, 2025, driven by **$0.7 billion** in new loan production[166](index=166&type=chunk) - Deposits increased by **$293.3 million** to **$6.73 billion** at June 30, 2025, with growth in money market, savings, and time deposits[166](index=166&type=chunk) [Results of Operations](index=54&type=section&id=Results%20of%20Operations) [Net Interest Income](index=54&type=section&id=Net%20Interest%20Income) Net Interest Income and Margin (Taxable Equivalent Basis) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net interest income | $57.1 million | $48.6 million | $112.2 million | $99.3 million | | Net interest spread | 1.76% | 1.16% | 1.73% | 1.22% | | Net interest margin | 3.07% | 2.69% | 3.05% | 2.74% | - The increase in net interest income was primarily due to a decrease in interest expense, driven by lower deposit rates, and an increase in interest and dividend income from higher average loan balances[175](index=175&type=chunk)[185](index=185&type=chunk) - The average cost of interest-bearing liabilities decreased to **3.68%** for the three months ended June 30, 2025 (from **4.30%** in 2024) and to **3.72%** for the six months ended June 30, 2025 (from **4.24%** in 2024)[179](index=179&type=chunk)[190](index=190&type=chunk) [Credit Loss Expense](index=61&type=section&id=Credit%20Loss%20Expense) Credit Loss Expense (in thousands) | Period | Credit Loss Expense | | :------------------------------- | :------------------ | | Three months ended June 30, 2025 | $7,631 | | Three months ended June 30, 2024 | $961 | | Six months ended June 30, 2025 | $10,352 | | Six months ended June 30, 2024 | $1,188 | - The **$6.6 million** increase in credit loss expense for the three months ended June 30, 2025, was due to increased net charge-offs and higher estimated loss rates, including an **$8.6 million** charge-off on a syndicated commercial real estate office loan[191](index=191&type=chunk) [Noninterest Income](index=61&type=section&id=Noninterest%20Income) Noninterest Income Components (in thousands) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Service charges, fees & other | $5,911 | $6,048 | $11,460 | $11,856 | | Gain on sale of SBA loans | $2,160 | $1,644 | $4,161 | $3,126 | | Gain on sale of residential mortgage loans | $— | $365 | $175 | $808 | | Total noninterest income | $8,071 | $8,057 | $15,796 | $15,790 | - Gain on sale of SBA loans increased by **$0.5 million** for the three months and **$1.0 million** for the six months ended June 30, 2025, while gain on sale of residential mortgage loans decreased significantly[194](index=194&type=chunk)[196](index=196&type=chunk) [Noninterest Expense](index=63&type=section&id=Noninterest%20Expense) Noninterest Expense Components (in thousands) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Salaries and employee benefits | $22,069 | $20,434 | $43,041 | $42,019 | | Occupancy and equipment | $4,344 | $4,607 | $8,794 | $8,843 | | Data processing | $3,727 | $3,686 | $7,514 | $7,237 | | Total noninterest expense | $36,347 | $35,276 | $71,330 | $71,720 | - Noninterest expense increased by **$1.1 million** (**3.0%**) for the three months ended June 30, 2025, primarily due to a **$1.6 million** increase in salaries and employee benefits[199](index=199&type=chunk) - For the six months ended June 30, 2025, noninterest expense decreased by **$0.4 million** (**0.5%**), mainly due to decreases in professional fees and advertising, partially offset by increased salaries and benefits[200](index=200&type=chunk) [Income Tax Expense](index=64&type=section&id=Income%20Tax%20Expense) Income Tax Expense and Effective Rate | Period | Income Tax Expense (in thousands) | Effective Income Tax Rate | | :------------------------------- | :------------------------------ | :------------------------ | | Three months ended June 30, 2025 | $6,115 | 28.8% | | Three months ended June 30, 2024 | $5,989 | 29.3% | | Six months ended June 30, 2025 | $13,556 | 29.3% | | Six months ended June 30, 2024 | $12,541 | 29.7% | [Financial Condition](index=64&type=section&id=Financial%20Condition) [Securities](index=64&type=section&id=Securities) - The securities portfolio increased by **$12.3 million** to **$918.1 million** at June 30, 2025, primarily due to **$101.0 million** in purchases and a **$15.9 million** decrease in unrealized losses, partially offset by **$109.6 million** in payments and maturities[203](index=203&type=chunk) - The portfolio consists mainly of U.S. government agency and sponsored agency mortgage-backed securities, collateralized mortgage obligations, debt securities, tax-exempt municipal bonds, and U.S. Treasury securities[202](index=202&type=chunk) [Loans Receivable](index=65&type=section&id=Loans%20Receivable) - Loans receivable, net of allowance for credit losses, increased to **$6.24 billion** at June 30, 2025, from **$6.18 billion** at December 31, 2024[205](index=205&type=chunk) - New loan production for the six months ended June 30, 2025, was **$675.5 million**, including commercial real estate (**$258.6 million**), residential mortgages (**$138.8 million**), and SBA loans (**$102.1 million**)[205](index=205&type=chunk) Loan Portfolio by Interest Rate Type (June 30, 2025, in thousands) | Interest Rate Type | Total Loans Receivable | | :------------------------- | :--------------------- | | Loans with predetermined interest rates | $2,807,561 | | Loans with variable interest rates | $3,498,396 | [Loan Quality Indicators](index=66&type=section&id=Loan%20Quality%20Indicators) - Loans 30 to 89 days past due decreased to **$11.0 million** at June 30, 2025, from **$18.5 million** at December 31, 2024[212](index=212&type=chunk) Criticized and Classified Loans (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :--------------- | :------------ | :---------------- | | Special Mention | $12,700 | $139,613 | | Classified | $33,857 | $25,683 | - Nonaccrual loans increased by **$11.7 million** (**82.6%**) to **$26.0 million** at June 30, 2025, primarily due to a commercial real estate office loan[218](index=218&type=chunk) [Allowance for Credit Losses and Allowance for Credit Losses Related to Off-Balance Sheet Items](index=71&type=section&id=Allowance%20for%20Credit%20Losses%20and%20Allowance%20for%20Credit%20Losses%20Related%20to%20Off-Balance%20Sheet%20Items) - The allowance for credit losses was **$66.8 million** at June 30, 2025, down from **$70.1 million** at December 31, 2024, primarily due to a change in ACL methodology[236](index=236&type=chunk) Allowance for Credit Losses Ratios | Ratio | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :------------ | :---------------- | | Allowance for credit losses to loans receivable | 1.06% | 1.12% | | Nonaccrual loans to loans | 0.41% | 0.23% | | Allowance for credit losses to nonaccrual loans | 257.08% | 491.50% | Net Charge-offs (Recoveries) (Six Months Ended June 30, in thousands) | Loan Portfolio | 2025 | 2024 | | :------------------------------ | :----- | :----- | | Commercial real estate loans | $(8,169) | $— | | Commercial and industrial loans | $(799) | $(24) | | Equipment financing agreements | $(4,345) | $(3,379) | | Total | $(13,311) | $(3,385) | [Deposits](index=73&type=section&id=Deposits) Composition of Deposits (in thousands) | Deposit Type | June 30, 2025 (Balance) | June 30, 2025 (Percent) | December 31, 2024 (Balance) | December 31, 2024 (Percent) | | :--------------------------------------- | :---------------------- | :---------------------- | :-------------------------- | :-------------------------- | | Demand – noninterest-bearing | $2,105,369 | 31.3% | $2,096,634 | 32.6% | | Interest-bearing (Demand, Money market and savings, Time) | $4,623,753 | 68.7% | $4,339,142 | 67.4% | | Total deposits | $6,729,122 | 100.0% | $6,435,776 | 100.0% | - Total deposits increased by **$293.3 million** (**4.6%**) to **$6.73 billion** at June 30, 2025, driven by increases in money market, savings, and time deposits[243](index=243&type=chunk) - The loan-to-deposit ratio improved to **93.7%** at June 30, 2025, from **97.1%** at December 31, 2024[243](index=243&type=chunk) [Borrowings and Subordinated Debentures](index=74&type=section&id=Borrowings%20and%20Subordinated%20Debentures) - FHLB advances decreased to **$127.5 million** at June 30, 2025, from **$262.5 million** at December 31, 2024, with the weighted-average interest rate decreasing to **4.62%** from **4.75%**[246](index=246&type=chunk)[247](index=247&type=chunk) - Subordinated debentures totaled **$131.0 million** at June 30, 2025, comprising fixed-to-floating notes and junior subordinated deferrable interest debentures[249](index=249&type=chunk) [Stockholders' Equity](index=75&type=section&id=Stockholders'%20Equity) - Stockholders' equity increased to **$762.8 million** at June 30, 2025, from **$732.2 million** at December 31, 2024[250](index=250&type=chunk) - The increase was driven by net income, share-based compensation, and a decrease in unrealized after-tax losses on securities and cash flow hedges, partially offset by **$16.4 million** in dividends paid and **$2.8 million** in common stock repurchases[250](index=250&type=chunk) [Interest Rate Risk Management](index=75&type=section&id=Interest%20Rate%20Risk%20Management) - The Company uses simulation modeling to estimate the potential effects of interest rate changes on net interest income (NII) and Economic Value of Equity (EVE)[252](index=252&type=chunk) Estimated Sensitivity to Interest Rate Changes (June 30, 2025, in thousands) | Change in Interest Rates (Basis Points) | NII 1- to 12-Month Horizon (Dollar Change) | NII 13- to 24-Month Horizon (Dollar Change) | EVE (Dollar Change) | | :-------------------------------------- | :----------------------------------------- | :------------------------------------------ | :------------------ | | 300 | $22,761 | $46,198 | $70,160 | | 200 | $15,500 | $31,253 | $55,651 | | 100 | $9,455 | $18,340 | $41,513 | | (100) | $(9,298) | $(19,331) | $(53,182) | | (200) | $(18,377) | $(40,210) | $(124,160) | | (300) | $(24,592) | $(59,708) | $(205,910) | [Capital Resources and Liquidity](index=77&type=section&id=Capital%20Resources%20and%20Liquidity) - The Bank's capital ratios at June 30, 2025, placed it in the 'well capitalized' category, with a total risk-based capital ratio of **14.39%** and a Tier 1 leverage capital ratio of **11.43%**[259](index=259&type=chunk) - As of July 1, 2025, Hanmi Bank had the ability to pay approximately **$83.1 million** in dividends without prior DFPI approval, after accounting for the declared **$0.27** dividend[258](index=258&type=chunk) [Off-Balance Sheet Arrangements](index=77&type=section&id=Off-Balance%20Sheet%20Arrangements) - The Company refers to Note 12 for a discussion of off-balance sheet arrangements, which include commitments to extend credit and standby letters of credit[262](index=262&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=78&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section refers to the market risk disclosures provided within the Management's Discussion and Analysis of Financial Condition and Results of Operations, specifically the 'Interest Rate Risk Management' subsection - Quantitative and qualitative disclosures about market risks are discussed in 'Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - Interest Rate Risk Management' within this report[263](index=263&type=chunk) [Item 4. Controls and Procedures](index=78&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025, and there were no material changes in internal control over financial reporting during the quarter - The Corporation's Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of June 30, 2025[264](index=264&type=chunk) - No material changes occurred in the Corporation's internal control over financial reporting during the quarter ended June 30, 2025[265](index=265&type=chunk) Part II – Other Information [Item 1. Legal Proceedings](index=79&type=section&id=Item%201.%20Legal%20Proceedings) The Company and its subsidiaries are involved in routine litigation, but management believes the resolution of these matters will not have a material adverse impact on their financial condition, results of operations, or liquidity - Management believes that the resolution of current legal proceedings will not have a material adverse impact on the financial condition, results of operations, or liquidity of Hanmi Financial or its subsidiaries[268](index=268&type=chunk) [Item 1A. Risk Factors](index=79&type=page&id=Item%201A.%20Risk%20Factors) There have been no material changes to previously disclosed risk factors, except for a new risk related to potential tariffs imposed on South Korea, which could negatively impact customers with ties to South Korea and, consequently, the Company's financial performance - A new material risk factor is the potential impact of tariffs imposed on South Korea, which could negatively affect South Korean businesses and the South Korean economy, potentially impacting the Company's customers with ties to South Korea[271](index=271&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=79&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities,%20Use%20of%20Proceeds,%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The Company repurchased 70,000 shares of common stock during the three months ended June 30, 2025, under its stock repurchase program, with 1,110,500 shares remaining available, and acquired 15,953 shares from employees to satisfy tax withholding obligations Common Stock Repurchases (Three Months Ended June 30, 2025) | Purchase Date | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Program | Maximum Shares That May Yet Be Purchased Under the Program | | :-------------------------- | :--------------------------- | :----------------------------------------------------------- | :------------------------------------------------------- | | April 1, 2025 - April 30, 2025 | $22.77 | 5,000 | 1,175,500 | | May 1, 2025 - May 31, 2025 | $23.40 | 52,500 | 1,123,000 | | June 1, 2025 - June 30, 2025 | $22.88 | 12,500 | 1,110,500 | | Total | $23.26 | 70,000 | 1,110,500 | - As of June 30, 2025, **1,110,500** shares remained available for future purchases under the Company's stock repurchase program[272](index=272&type=chunk) - The Company acquired **15,953** shares from employees to satisfy tax withholding obligations upon the vesting of stock awards during the three months ended June 30, 2025[273](index=273&type=chunk) [Item 3. Defaults Upon Senior Securities](index=79&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The Company reported no defaults upon senior securities during the period - There were no defaults upon senior securities[274](index=274&type=chunk) [Item 4. Mine Safety Disclosures](index=79&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company - This item is not applicable[275](index=275&type=chunk) [Item 5. Other Information](index=80&type=section&id=Item%205.%20Other%20Information) No directors or executive officers adopted or terminated any Rule 10b5-1 trading plans or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025 - None of the Company's directors or executive officers adopted or terminated any Rule 10b5-1 trading plans or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025[276](index=276&type=chunk) [Item 6. Exhibits](index=81&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including amendments to the certificate of incorporation, certifications of principal executive and financial officers, and Inline XBRL documents - The exhibits include an amendment to the Certificate of Incorporation, certifications from the Principal Executive Officer and Principal Financial Officer (pursuant to Sections 302 and 906 of Sarbanes-Oxley Act), and Inline XBRL documents[277](index=277&type=chunk) [Signatures](index=82&type=section&id=Signatures) The report is duly signed on behalf of Hanmi Financial Corporation by its President and Chief Executive Officer, Bonita I. Lee, and its Senior Executive Vice President and Chief Financial Officer, Romolo C. Santarosa, on August 8, 2025 - The report was signed by Bonita I. Lee, President and Chief Executive Officer, and Romolo C. Santarosa, Senior Executive Vice President and Chief Financial Officer, on August 8, 2025[282](index=282&type=chunk)

Company Overview - Hanmi Financial Corporation is headquartered in Los Angeles, California, and owns Hanmi Bank, which operates 32 full-service branches, five loan production offices, and three loan centers across multiple states including California, Colorado, Georgia, Illinois, New Jersey, New York, Texas, Virginia, and Washington [3] - Hanmi Bank specializes in lending for real estate, commercial, SBA, and trade finance, targeting small and middle market businesses [3] Conference Participation - Hanmi Financial Corporation will participate in the 26th Annual KBW Community Bank Investor Conference on July 29 and 30, 2025, in New York City [1] - Bonnie Lee, President and CEO, along with Ron Santarosa, CFO, will conduct one-on-one and small group meetings during the conference [1] Investor Relations - A copy of the presentation for institutional investors will be available in the Investor Relations section of the company's website [2]

Core Viewpoint - Hanmi Financial reported quarterly earnings of $0.5 per share, missing the Zacks Consensus Estimate of $0.62 per share, representing an earnings surprise of -19.35% [1][2] Financial Performance - The company posted revenues of $65.21 million for the quarter ended June 2025, missing the Zacks Consensus Estimate by 0.29%, compared to year-ago revenues of $56.68 million [2] - Over the last four quarters, Hanmi Financial has surpassed consensus EPS estimates two times and topped consensus revenue estimates just once [2] Stock Performance - Hanmi Financial shares have increased approximately 9.7% since the beginning of the year, outperforming the S&P 500's gain of 7.2% [3] Future Outlook - The current consensus EPS estimate for the coming quarter is $0.66 on revenues of $66.8 million, and for the current fiscal year, it is $2.54 on revenues of $263 million [7] - The estimate revisions trend for Hanmi Financial was favorable ahead of the earnings release, resulting in a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The Zacks Industry Rank for Banks - West is currently in the top 28% of over 250 Zacks industries, suggesting that the industry outlook can significantly impact stock performance [8]

Financial Data and Key Metrics Changes - Net income for Q2 2025 was $15.1 million or $0.50 per diluted share, down from $17.7 million and $0.58 in Q1 2025, primarily due to increased credit loss expense [6][7] - Return on average assets was 0.79% and return on average equity was 7.8% [7] - Pre-provision net revenues grew 3.7% or $1 million, indicating strength in core business [7] - Net interest margin increased by five basis points to 3.07%, driven by lower funding costs [7][22] Business Line Data and Key Metrics Changes - Total loans increased by $6.31 billion, or 0.4% on a linked quarter basis, with higher contributions from commercial and industrial (C&I) and residential mortgage loans [8] - C&I production increased by $11 million or 26% to $503 million, while residential mortgage loan production rose by 52% to $84 million [18] - SBA loan production decreased to $47 million but still exceeded the high end of the target range, with year-to-date production up 20% [16][18] Market Data and Key Metrics Changes - Non-interest bearing demand deposits increased by over 7% from 2024, representing 31.3% of total deposits [9] - USKC loan and deposit portfolios remained steady, with USKC loans at $842 million, approximately 13% of total loans [19] Company Strategy and Development Direction - The company aims to drive loan growth in the low to mid single-digit range, focusing on expanding SBA activities and C&I portfolios while reducing exposure to commercial real estate (CRE) [11][28] - The strategy includes strengthening relationships in select deposit-rich markets and driving growth in key regions [28] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about long-term growth potential despite current economic conditions, emphasizing proactive portfolio management and strong asset quality [10][11][28] - The company is well-positioned for growth, leveraging strong liquidity and maintaining robust credit metrics [11] Other Important Information - Asset quality improved significantly, with criticized loans decreasing by 72% and non-accruals down 27% [21] - The allowance for credit losses stood at 1.06% of loans at the end of Q2 2025 [26] Q&A Session Summary Question: Loan growth expectations for the second half of the year - Management indicated a strong pipeline for new loans, suggesting potential to reach mid-single-digit growth [31][32] Question: Insights on deposit costs and time deposit repricing - Average interest-bearing deposit costs were 3.64%, with expectations for net interest margin to continue increasing, albeit at a slowing rate [35][37] Question: Credit quality and criticized asset levels - Management noted significant reductions in criticized assets due to proactive management, with confidence in the overall credit quality [39][41] Question: Future C&I production and loan growth - C&I production is expected to drive loan growth in the latter half of the year, supported by a strong pipeline [47][49] Question: Plans for share buybacks and expenses - Management indicated that buyback decisions are made quarterly, with expectations for expenses to remain stable [50][51]

Financial Data and Key Metrics Changes - Net income for Q2 2025 was $15.1 million or $0.50 per diluted share, down from $17.7 million and $0.58 in Q1 2025, primarily due to an increase in credit loss expense [5][6] - Return on average assets was 0.79% and return on average equity was 7.8% [6] - Pre-provision net revenues grew 3.7% or $1 million, indicating strength in core business [6] - Net interest margin increased by five basis points to 3.07%, driven by lower funding costs [6][22] - Total loans increased by $6.31 billion, or 0.4% on a linked quarter basis, with a 1.6% annualized growth [7] Business Line Data and Key Metrics Changes - Loan production for Q2 was $330 million, down 4.7% from the prior quarter, with a weighted average interest rate of 7.1% [14] - Commercial real estate (CRE) production was $112 million, down 24% from the prior quarter [15] - SBA loan production decreased to $47 million but exceeded the high end of the quarterly target range [15] - C&I production increased by 26% to $53 million, attributed to new talent and growth efforts [17] - Residential mortgage loan production was $84 million, up 52% from the previous quarter [18] Market Data and Key Metrics Changes - Non-interest bearing demand deposits increased by over 7% from 2024, representing 31.3% of total deposits [9] - USKC loan and deposit portfolios remained steady, with USKC loans at $842 million, approximately 13% of the total loan portfolio [19] - Deposits increased by 1.7% in Q2, driven by new commercial accounts and contributions from new branches [20] Company Strategy and Development Direction - The company aims to drive loan growth in the low to mid single-digit range, focusing on expanding SBA activities and C&I portfolios while reducing exposure to CRE [11] - The strategy includes strengthening relationships in select deposit-rich markets and driving growth in key regions [28] - The company is optimistic about long-term growth potential despite current economic conditions [10][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to execute effectively and deliver sustained profitable growth [28] - The economic outlook remains dynamic, with many USKC customers taking a wait-and-see approach regarding tariffs and their impact on the economy [10] - The company is well-positioned for growth, leveraging strong liquidity and maintaining robust credit metrics [11] Other Important Information - Asset quality improved significantly, with criticized loans decreasing by 72% and non-accruals decreasing by 27% [21] - The allowance for credit losses stood at 1.06% of loans at the end of Q2 [26] - The company repurchased 70,000 shares of common stock at an average price of $23.26, totaling $1.6 million [27] Q&A Session Summary Question: Loan growth expectations for the second half of the year - Management indicated that the second half typically sees higher production, with a strong pipeline of new loans already established [32] Question: Insights on margin and deposit costs - Average interest-bearing deposit costs were 3.64% for the quarter, with expectations for net interest margin to continue increasing, albeit at a slowing rate [35][37] Question: Credit quality and criticized assets - Management noted significant success in resolving loans in the special mention category, contributing to improved asset quality metrics [41] Question: C&I production driving loan growth - C&I production is expected to drive loan growth in the second half, supported by a higher pipeline and ongoing efforts to target more C&I opportunities [49] Question: Plans for additional hires in C&I and SBA - Major hires were completed in the first half, and the number of new relationship managers is expected to remain steady [60]

Financial Performance - Net income for the second quarter was $15.1 million, a decrease of 14.5% compared to the previous quarter, primarily due to credit loss expense[8, 33] - Preprovision net revenues increased by 3.7%, or $1 million, driven by a 3.7% increase in net interest income and a 4.5% increase in noninterest income[9] - Net interest margin was 3.07%, up from 3.02% in the first quarter[8, 24] - Noninterest expense increased by 4% to $36.3 million, mainly due to a $1.1 million increase in salaries and benefits[43] Loan and Deposit Portfolio - Loan receivables reached $6.31 billion, a slight increase of 0.4% from the end of the first quarter[9] - Deposits totaled $6.73 billion, up 1.7% from the previous quarter, with noninterest-bearing deposits accounting for 31.3% of total deposits[9, 19] - Loan production for the second quarter was $329.6 million, with a weighted average interest rate of 7.10%[9] - The securities portfolio was $994.6 million, representing 13% of assets, with an unrealized loss position of $76.5 million[71] Asset Quality and Capital - Criticized loans decreased significantly by 71.8% to 0.74% of total loans, reflecting $85.3 million in loan upgrades, a $20 million loan payment, and an $8.6 million loan charge-off[9] - Nonaccrual loans fell by 26.8% to 0.41% of total loans, and loan delinquencies declined to 0.17% of total loans[9] - The ratio of tangible common equity to tangible assets was 9.58%, and the common equity tier 1 capital ratio was 12.12%, remaining essentially unchanged from the first quarter[9]

[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) This section provides an overview of Hanmi Financial Corporation's Q2 2025 performance, highlighting key financial metrics and strategic achievements [CEO Commentary](index=1&type=section&id=CEO%20Commentary) Hanmi Financial Corporation reported solid Q2 2025 performance, marked by an expanded net interest margin and growth in preprovision net revenue, primarily due to lower funding costs - Net interest margin expanded to **3.07%**[4](index=4&type=chunk) - Preprovision net revenue grew by **3.7%**, driven by lower funding costs[4](index=4&type=chunk) - Loans grew **1.6%** on an annualized basis, with healthy C&I and residential mortgage loan production[4](index=4&type=chunk) - Deposits increased by **1.7%** for the quarter, with noninterest-bearing demand deposits accounting for over **30%** of total deposits[4](index=4&type=chunk) - Asset quality remained excellent with significant improvement; criticized loans, nonaccrual loans, and delinquent loans all declined notably[4](index=4&type=chunk) [Second Quarter 2025 Highlights](index=1&type=section&id=Second%20Quarter%202025%20Highlights) Hanmi's second quarter 2025 saw a decrease in net income to $15.1 million, or $0.50 per diluted share, primarily due to increased credit loss expense, despite growth in preprovision net revenue, expanded net interest margin, and improved asset quality | Metric | Q2 2025 | Q1 2025 | Q2 2024 | Q2-25 vs. Q1-25 Change | Q2-25 vs. Q2-24 Change | | :-------------------------------- | :------ | :------ | :------ | :--------------------- | :--------------------- | | Net income (in thousands) | $15,117 | $17,672 | $14,451 | $(2,555) | $666 | | Net income per diluted common share | $0.50 | $0.58 | $0.48 | $(0.08) | $0.02 | | Return on average assets | 0.79% | 0.94% | 0.77% | -0.15 | 0.02 | | Return on average stockholders' equity | 7.48% | 8.92% | 7.50% | -1.44 | -0.02 | | Net interest margin | 3.07% | 3.02% | 2.69% | 0.05 | 0.38 | | Efficiency ratio | 55.74% | 55.69% | 62.24% | 0.05 | -6.50 | | Tangible common equity to tangible assets | 9.58% | 9.59% | 9.19% | -0.01 | 0.39 | | Tangible common equity per common share | $24.91 | $24.49 | $22.99 | 0.42 | 1.92 | - Preprovision net revenue grew **3.7%**, or **$1.0 million**, driven by a **3.7%** increase in net interest income, a five basis point increase in net interest margin, and a **4.5%** increase in noninterest income[9](index=9&type=chunk) - Asset quality improved significantly: criticized loans dropped **71.8%** to **0.74%** of total loans, nonaccrual loans fell **26.8%** to **0.41%** of total loans, and loan delinquencies declined to **0.17%** of total loans[9](index=9&type=chunk) - Loans receivables were **$6.31 billion**, up **0.4%** from Q1 2025, with Q2 loan production at **$329.6 million** (weighted average interest rate of **7.10%**)[9](index=9&type=chunk) - Deposits were **$6.73 billion**, up **1.7%** from Q1 2025, with noninterest-bearing demand deposits at **31.3%** of total deposits[9](index=9&type=chunk) [Results of Operations](index=2&type=section&id=Results%20of%20Operations) This section details Hanmi Financial Corporation's operational performance, including net interest income, credit loss expense, noninterest income, noninterest expense, and income tax expense [Net Interest Income and Margin](index=2&type=section&id=Net%20Interest%20Income%20and%20Margin) Net interest income for Q2 2025 increased by 3.7% to $57.1 million, driven by lower rates on interest-bearing liabilities, higher interest-earning assets, and an additional day in the quarter, expanding the net interest margin to 3.07% | Metric | Q2 2025 (in thousands) | Q1 2025 (in thousands) | Q2 2024 (in thousands) | Q2-25 vs. Q1-25 Change | Q2-25 vs. Q2-24 Change | | :-------------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Total interest and dividend income | $101,333 | $99,257 | $98,660 | 2.1% | 2.7% | | Total interest expense | $44,194 | $44,165 | $50,040 | 0.1% | -11.7% | | Net interest income | $57,139 | $55,092 | $48,620 | 3.7% | 17.5% | | Net interest margin (taxable equivalent) | 3.07% | 3.02% | 2.69% | 0.05 | 0.38 | - Average interest-earning assets increased **1.2%**, while the average yield decreased by one basis point[12](index=12&type=chunk) - Average interest-bearing liabilities increased **0.9%**, with the average rate paid declining seven basis points, primarily due to lower rates on time deposits[12](index=12&type=chunk) [Credit Loss Expense](index=3&type=section&id=Credit%20Loss%20Expense) Credit loss expense significantly increased to $7.6 million in Q2 2025 from $2.7 million in Q1 2025, primarily due to higher net charge-offs, including an $8.6 million charge-off on a syndicated commercial real estate office loan, and an increase in estimated loss rates | Metric | Q2 2025 (in thousands) | Q1 2025 (in thousands) | Q2 2024 (in thousands) | Q2-25 vs. Q1-25 Change | Q2-25 vs. Q2-24 Change | | :-------------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Credit loss expense | $7,631 | $2,721 | $961 | 180.4% | 694.1% | - The increase in credit loss expense reflected an **$8.6 million** loan charge-off on a syndicated commercial real estate office loan designated as nonaccrual[19](index=19&type=chunk) - Q2 credit loss expense included **$7.5 million** for loan losses and **$0.1 million** for off-balance sheet items[19](index=19&type=chunk) [Noninterest Income](index=4&type=section&id=Noninterest%20Income) Noninterest income increased by 4.5% to $8.1 million in Q2 2025, primarily driven by higher gains from SBA loan sales and a significant increase in bank-owned life insurance income due to a death benefit claim, partially offset by the absence of gains from mortgage loan sales | Metric | Q2 2025 (in thousands) | Q1 2025 (in thousands) | Q2 2024 (in thousands) | Q2-25 vs. Q1-25 Change | Q2-25 vs. Q2-24 Change | | :-------------------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Total noninterest income | $8,071 | $7,726 | $8,057 | 4.5% | 0.2% | | Gain on sale of SBA loans | $2,160 | $2,000 | $1,644 | 8.0% | 31.4% | | Bank-owned life insurance income | $708 | $309 | $638 | 129.1% | 11.0% | | Gain on sale of mortgage loans | $- | $175 | $365 | -100.0% | -100.0% | - SBA loan sales volume increased to **$35.4 million** from **$32.2 million** in Q1 2025[20](index=20&type=chunk) [Noninterest Expense](index=4&type=section&id=Noninterest%20Expense) Noninterest expense rose by 3.9% to $36.3 million in Q2 2025, primarily due to increases in salaries and benefits, professional fees, advertising and promotion, and other operating expenses, partially offset by a $0.6 million gain on sale of other real estate owned, with the efficiency ratio remaining stable at 55.7% | Metric | Q2 2025 (in thousands) | Q1 2025 (in thousands) | Q2 2024 (in thousands) | Q2-25 vs. Q1-25 Change | Q2-25 vs. Q2-24 Change | | :-------------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Total noninterest expense | $36,347 | $34,984 | $35,276 | 3.9% | 3.0% | | Salaries and employee benefits | $22,069 | $20,972 | $20,434 | 5.2% | 8.0% | | Professional fees | $1,725 | $1,468 | $1,749 | 17.5% | -1.4% | | Advertising and promotion | $798 | $585 | $669 | 36.4% | 19.3% | - The efficiency ratio for the second quarter was **55.7%**, unchanged from the first quarter of 2025[21](index=21&type=chunk) [Income Tax Expense](index=5&type=section&id=Income%20Tax%20Expense) Income tax expense for Q2 2025 was $6.1 million, a decrease from $7.4 million in Q1 2025, resulting in an effective tax rate of 28.8% for the quarter | Metric | Q2 2025 (in thousands) | Q1 2025 (in thousands) | Q2 2024 (in thousands) | Q2-25 vs. Q1-25 Change | Q2-25 vs. Q2-24 Change | | :---------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Income tax expense | $6,115 | $7,441 | $5,989 | -17.8% | 2.1% | | Effective tax rate | 28.8% | 29.6% | - | - | - | [Financial Position](index=5&type=section&id=Financial%20Position) This section outlines Hanmi Financial Corporation's financial position, detailing changes in assets, loan portfolio, deposits, and stockholders' equity and capital [Assets](index=5&type=section&id=Assets) Total assets at June 30, 2025, increased by 1.7% to $7.86 billion, primarily driven by increases in cash, loans held for sale, loans receivable, and securities available for sale | Asset Category | Jun 30, 2025 (in thousands) | Mar 31, 2025 (in thousands) | Jun 30, 2024 (in thousands) | Q2-25 vs. Q1-25 Change | Q2-25 vs. Q2-24 Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :--------------------- | :--------------------- | | Total assets | $7,862,363 | $7,729,035 | $7,586,347 | 1.7% | 3.6% | | Cash and due from banks | $380,050 | $329,003 | $313,079 | 15.5% | 21.4% | | Loans held for sale | $49,611 | $11,831 | $10,467 | 319.3% | 374.0% | | Loans receivable, net of allowance for credit losses | $6,239,201 | $6,211,592 | $6,108,630 | 0.4% | 2.1% | - Loans held-for-sale significantly increased to **$49.6 million**, consisting of **$41.9 million** of residential mortgage loans and **$7.7 million** of guaranteed SBA 7(a) loans[25](index=25&type=chunk) [Loan Portfolio](index=5&type=section&id=Loan%20Portfolio) Loans receivable, before allowance for credit losses, increased to $6.31 billion, with strong growth in commercial and industrial loans, a decline in equipment finance loans, and new loan production of $329.6 million at a weighted average interest rate of 7.10% | Loan Category | Jun 30, 2025 (in thousands) | Mar 31, 2025 (in thousands) | Jun 30, 2024 (in thousands) | Q2-25 vs. Q1-25 Change | Q2-25 vs. Q2-24 Change | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :--------------------- | :--------------------- | | Loans receivable | $6,305,957 | $6,282,189 | $6,176,359 | 0.4% | 2.1% | | Commercial real estate loans | $3,948,922 | $3,975,651 | $3,888,505 | -0.7% | 1.6% | | Residential/consumer loans | $993,869 | $979,536 | $954,209 | 1.5% | 4.2% | | Commercial and industrial loans | $917,995 | $854,406 | $802,372 | 7.4% | 14.4% | | Equipment finance | $445,171 | $472,596 | $531,273 | -5.8% | -16.2% | New Loan Production (in thousands) | New Loan Production (in thousands) | Q2 2025 | Q1 2025 | Q2 2024 | | :--------------------------------- | :------ | :------ | :------ | | Commercial real estate loans | $111,993 | $146,606 | $87,632 | | Residential/consumer loans | $83,761 | $55,000 | $30,194 | | Commercial and industrial loans | $53,444 | $42,344 | $59,007 | | SBA loans | $46,829 | $55,242 | $54,486 | | Equipment finance | $33,567 | $46,749 | $42,594 | | **Subtotal** | **$329,594** | **$345,941** | **$273,913** | - New loan production for Q2 2025 was **$329.6 million** with an average rate of **7.10%**[26](index=26&type=chunk) [Deposits](index=6&type=section&id=Deposits) Total deposits increased by 1.7% to $6.73 billion at the end of Q2 2025, driven by increases in time deposits, noninterest-bearing demand deposits, and money market/savings deposits, with noninterest-bearing demand deposits representing 31.3% of total deposits | Deposit Category | Jun 30, 2025 (in thousands) | Mar 31, 2025 (in thousands) | Jun 30, 2024 (in thousands) | Q2-25 vs. Q1-25 Change | Q2-25 vs. Q2-24 Change | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :--------------------- | :--------------------- | | Total deposits | $6,729,122 | $6,619,475 | $6,329,340 | 1.7% | 6.3% | | Noninterest-bearing demand | $2,105,369 | $2,066,659 | $1,959,963 | 1.9% | 7.4% | | Interest-bearing demand | $90,172 | $80,790 | $82,981 | 11.6% | 8.7% | | Money market and savings | $2,092,847 | $2,073,943 | $1,834,797 | 0.9% | 14.1% | | Time deposits | $2,440,734 | $2,398,083 | $2,451,599 | 1.8% | -0.4% | - Noninterest-bearing demand deposits represented **31.3%** of total deposits at June 30, 2025[29](index=29&type=chunk) - The loan-to-deposit ratio was **93.7%** at June 30, 2025[29](index=29&type=chunk) [Stockholders' Equity and Capital](index=6&type=section&id=Stockholders%27%20Equity%20and%20Capital) Stockholders' equity increased to $762.8 million, driven by net income (net of dividends) and a decrease in unrealized after-tax losses on securities, while Hanmi maintained strong capital ratios, exceeding minimum regulatory requirements and remaining 'well capitalized', also repurchasing 70,000 shares of common stock | Metric | Jun 30, 2025 (in thousands) | Mar 31, 2025 (in thousands) | Jun 30, 2024 (in thousands) | Q2-25 vs. Q1-25 Change | Q2-25 vs. Q2-24 Change | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :--------------------- | :--------------------- | | Total stockholders' equity | $762,834 | $751,485 | $707,059 | 1.5% | 7.9% | | Tangible common stockholders' equity | $751,803 | $740,454 | $696,011 | - | - | | Tangible common equity to tangible assets | 9.58% | 9.59% | 9.19% | -0.01 | 0.39 | - Stockholders' equity increased by **$11.3 million**, including **$7.0 million** in net income (net of dividends paid) and a **$5.5 million** decrease in unrealized after-tax losses on securities available for sale[30](index=30&type=chunk) - Hanmi repurchased **70,000 shares** of common stock at a cost of **$1.6 million**, with **1,110,500 shares** remaining under the repurchase program[30](index=30&type=chunk) [Regulatory Capital Ratios](index=6&type=section&id=Regulatory%20Capital%20Ratios) Hanmi and Hanmi Bank continued to exceed minimum regulatory capital requirements, with the Bank remaining in the 'well capitalized' category, and Hanmi's common equity tier 1 capital ratio remaining stable at 12.12% | Regulatory Capital Ratios (Hanmi Financial) | Jun 30, 2025 | Mar 31, 2025 | Jun 30, 2024 | Q2-25 vs. Q1-25 Change | Q2-25 vs. Q2-24 Change | | :------------------------------------------ | :----------- | :----------- | :----------- | :--------------------- | :--------------------- | | Total risk-based capital | 15.20% | 15.28% | 15.24% | -0.08 | -0.04 | | Tier 1 risk-based capital | 12.46% | 12.46% | 12.46% | 0.00 | 0.00 | | Common equity tier 1 capital | 12.12% | 12.12% | 12.11% | 0.00 | 0.01 | | Tier 1 leverage capital ratio | 10.63% | 10.67% | 10.51% | -0.04 | 0.12 | | Regulatory Capital Ratios (Hanmi Bank) | Jun 30, 2025 | Mar 31, 2025 | Jun 30, 2024 | Q2-25 vs. Q1-25 Change | Q2-25 vs. Q2-24 Change | | Total risk-based capital | 14.39% | 14.47% | 14.51% | -0.08 | -0.12 | | Tier 1 risk-based capital | 13.32% | 13.34% | 13.47% | -0.02 | -0.15 | | Common equity tier 1 capital | 13.32% | 13.34% | 13.47% | -0.02 | -0.15 | | Tier 1 leverage capital ratio | 11.43% | 11.49% | 11.41% | -0.06 | 0.02 | [Asset Quality](index=7&type=section&id=Asset%20Quality) This section reviews Hanmi Financial Corporation's asset quality, including delinquent and criticized loans, nonperforming assets, charge-offs and recoveries, and the allowance for credit losses [Delinquent and Criticized Loans](index=7&type=section&id=Delinquent%20and%20Criticized%20Loans) Asset quality showed significant improvement in Q2 2025, with delinquent loans decreasing to 0.17% of total loans and criticized loans dropping substantially by $118.3 million to $46.6 million, primarily due to loan upgrades and paydowns of commercial real estate loans | Metric | Jun 30, 2025 (in thousands) | Mar 31, 2025 (in thousands) | Jun 30, 2024 (in thousands) | Q2-25 vs. Q1-25 Change | Q2-25 vs. Q2-24 Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :--------------------- | :--------------------- | | Loans, 30 to 89 days past due and still accruing | $10,953 | $17,312 | $13,844 | $(6,359) | $(2,891) | | Delinquent loans to total loans | 0.17% | 0.28% | 0.22% | (0.11) | (0.05) | | Total criticized loans | $46,558 | $164,899 | $70,866 | $(118,341) | $(24,308) | | Criticized loans to total loans | 0.74% | 2.62% | 1.15% | (1.88) | (0.41) | - The **$118.3 million** decrease in criticized loans resulted from a **$105.7 million** decrease in special mention loans (including **$85.3 million** in loan upgrades of two CRE loans) and a **$12.6 million** decrease in classified loans[35](index=35&type=chunk) [Nonperforming Assets](index=7&type=section&id=Nonperforming%20Assets) Nonperforming loans and assets both decreased significantly in Q2 2025, with nonperforming loans falling by $9.6 million to $26.0 million, primarily due to charge-offs and paydowns, improving nonperforming assets as a percentage of total assets to 0.33% | Metric | Jun 30, 2025 (in thousands) | Mar 31, 2025 (in thousands) | Jun 30, 2024 (in thousands) | Q2-25 vs. Q1-25 Change | Q2-25 vs. Q2-24 Change | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :--------------------- | :--------------------- | | Nonaccrual loans | $25,968 | $35,459 | $19,245 | $(9,491) | $6,723 | | Nonperforming loans | $25,968 | $35,571 | $19,245 | $(9,603) | $6,723 | | Nonperforming assets | $25,968 | $35,688 | $20,017 | $(9,720) | $5,951 | | Nonperforming assets to assets | 0.33% | 0.46% | 0.26% | -0.13 | 0.07 | | Nonperforming loans to total loans | 0.41% | 0.57% | 0.31% | -0.16 | 0.10 | - The **$9.6 million** decrease in nonperforming loans primarily reflected charge-offs of **$11.6 million** and **$1.3 million** in paydowns[36](index=36&type=chunk) [Charge-offs and Recoveries](index=7&type=section&id=Charge-offs%20and%20Recoveries) Gross charge-offs increased to $12.4 million in Q2 2025, primarily due to an $8.6 million charge-off on a commercial real estate loan and $2.9 million on equipment financing agreements, resulting in net charge-offs of $11.4 million for the quarter | Metric | Q2 2025 (in thousands) | Q1 2025 (in thousands) | Q2 2024 (in thousands) | | :-------------------------- | :--------------------- | :--------------------- | | Net loan (charge-offs) recoveries | $(11,365) | $(1,946) | $(1,789) | | Net loan charge-offs (recoveries) to average loans | 0.73% | 0.13% | 0.12% | - Gross charge-offs for Q2 2025 were **$12.4 million**, compared with **$3.2 million** for the preceding quarter[38](index=38&type=chunk) - Recoveries of previously charged-off loans were **$1.0 million** in Q2 2025[38](index=38&type=chunk) [Allowance for Credit Losses](index=7&type=section&id=Allowance%20for%20Credit%20Losses) The allowance for credit losses decreased to $66.8 million at June 30, 2025, from $70.6 million at March 31, 2025, mainly due to a decrease in specific allowances reflecting an $8.6 million charge-off, partially offset by an increase in collectively evaluated allowances, resulting in a ratio of allowance for credit losses to loans of 1.06% | Metric | Jun 30, 2025 (in thousands) | Mar 31, 2025 (in thousands) | Jun 30, 2024 (in thousands) | | :-------------------------- | :-------------------------- | :-------------------------- | | Balance at end of period (loans) | $66,756 | $70,597 | $67,729 | | Allowance for credit losses to loans | 1.06% | 1.12% | 1.10% | | Balance at end of period (off-balance sheet items) | $2,506 | $2,399 | $2,010 | - Specific allowances for loans decreased by **$7.6 million**, a result of the **$8.6 million** charge-off[39](index=39&type=chunk) - Collectively evaluated allowances increased by **$3.8 million**[39](index=39&type=chunk) [Corporate Information](index=8&type=section&id=Corporate%20Information) This section provides details on Hanmi Financial Corporation's corporate developments, earnings conference call, and an overview of the company [Corporate Developments](index=8&type=section&id=Corporate%20Developments) Hanmi's Board of Directors declared a cash dividend of $0.27 per share for Q2 2025, which was paid on May 21, 2025 - A cash dividend of **$0.27 per share** was declared for the second quarter of 2025[44](index=44&type=chunk) [Earnings Conference Call](index=8&type=section&id=Earnings%20Conference%20Call) Hanmi Bank hosted its Q2 2025 earnings conference call on July 22, 2025, at 2:00 p.m. PST, with webcast access available on its Investor Relations website - Earnings conference call held on July 22, 2025, at **2:00 p.m. PST**[45](index=45&type=chunk) - Webcast and replay available on Hanmi's Investor Relations website[45](index=45&type=chunk) [About Hanmi Financial Corporation](index=9&type=section&id=About%20Hanmi%20Financial%20Corporation) Hanmi Financial Corporation, headquartered in Los Angeles, California, is the parent company of Hanmi Bank, which serves multi-ethnic communities through 32 full-service branches and eight loan production offices across several states, specializing in real estate, commercial, SBA, and trade finance lending to small and middle market businesses - Headquartered in Los Angeles, California[46](index=46&type=chunk) - Operates **32 full-service branches** and **eight loan production offices** in California, Texas, Illinois, Virginia, New Jersey, New York, Colorado, Washington, and Georgia[46](index=46&type=chunk) - Specializes in real estate, commercial, SBA, and trade finance lending to small and middle market businesses[46](index=46&type=chunk) [Forward-Looking Statements & Risk Factors](index=9&type=section&id=Forward-Looking%20Statements%20%26%20Risk%20Factors) This section contains forward-looking statements subject to various known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially from projections, including maintaining adequate capital and liquidity, general economic conditions, market volatility, changes in investor sentiment, competition, interest rate fluctuations, regulatory actions, and cybersecurity threats - Forward-looking statements are subject to known and unknown risks, uncertainties, and other factors[48](index=48&type=chunk) - Key risk factors include: failure to maintain adequate capital and liquidity, general economic and business conditions, volatility in credit and equity markets, changes in investor sentiment, competition for loans and deposits, inflation and interest rate fluctuations, ability to enter new markets, impact of geopolitical events, potential supervisory actions, natural disasters, legal proceedings, operational/security system failures, risks with SBA loans, failure to attract key employees, access to cost-effective funding, governmental policies, changes in liquidity, fluctuations in real estate values, accounting policy changes, regulatory changes, restrictions on Hanmi Bank distributions, strategic transactions, adequacy of credit loss allowance, credit quality, ability to control expenses, and cybersecurity/fraud risks[49](index=49&type=chunk) [Consolidated Financial Statements (Unaudited)](index=10&type=section&id=Consolidated%20Financial%20Statements%20%28Unaudited%29) This section presents Hanmi Financial Corporation's unaudited consolidated financial statements, including balance sheets, statements of income, and average balance, yield, and rate data [Consolidated Balance Sheets](index=10&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheet shows a 1.7% increase in total assets to $7.86 billion at June 30, 2025, driven by growth in cash, loans held for sale, and loans receivable, with total liabilities also increasing by 1.7% to $7.10 billion, primarily due to higher deposits, while stockholders' equity grew by 1.5% to $762.8 million | (Dollars in thousands) | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :-------------------------------- | :------------ | :------------- | :------------ | | **Assets:** | | | | | Cash and due from banks | $380,050 | $329,003 | $313,079 | | Securities available for sale | $918,094 | $907,011 | $877,638 | | Loans held for sale | $49,611 | $11,831 | $10,467 | | Loans receivable, net | $6,239,201 | $6,211,592 | $6,108,630 | | Total assets | $7,862,363 | $7,729,035 | $7,586,347 | | **Liabilities:** | | | | | Total deposits | $6,729,122 | $6,619,475 | $6,329,340 | | Borrowings | $127,500 | $117,500 | $292,500 | | Total liabilities | $7,099,529 | $6,977,550 | $6,879,288 | | **Stockholders' Equity:** | | | | | Total stockholders' equity | $762,834 | $751,485 | $707,059 | [Consolidated Statements of Income](index=11&type=section&id=Consolidated%20Statements%20of%20Income) For Q2 2025, net income was $15.1 million, a 14.5% decrease from Q1 2025, primarily due to a significant increase in credit loss expense, despite growth in net interest income and noninterest income; for the six months ended June 30, 2025, net income increased by 10.7% to $32.8 million compared to the same period in 2024, driven by higher net interest income Three Months Ended | (Dollars in thousands, except per share data) | Three Months Ended Jun 30, 2025 | Three Months Ended Mar 31, 2025 | Three Months Ended Jun 30, 2024 | | :-------------------------------------------- | :------------------------------ | :------------------------------ | :------------------------------ | | Total interest and dividend income | $101,333 | $99,257 | $98,660 | | Total interest expense | $44,194 | $44,165 | $50,040 | | Net interest income before credit loss expense | $57,139 | $55,092 | $48,620 | | Credit loss expense | $7,631 | $2,721 | $961 | | Total noninterest income | $8,071 | $7,726 | $8,057 | | Total noninterest expense | $36,347 | $34,984 | $35,276 | | Income before tax | $21,232 | $25,113 | $20,440 | | Income tax expense | $6,115 | $7,441 | $5,989 | | Net income | $15,117 | $17,672 | $14,451 | | Diluted earnings per share | $0.50 | $0.58 | $0.48 | Six Months Ended | (Dollars in thousands, except per share data) | Six Months Ended Jun 30, 2025 | Six Months Ended Jun 30, 2024 | | :-------------------------------------------- | :---------------------------- | :---------------------------- | | Total interest and dividend income | $200,589 | $198,253 | | Total interest expense | $88,358 | $98,979 | | Net interest income before credit loss expense | $112,231 | $99,274 | | Credit loss expense | $10,352 | $1,188 | | Total noninterest income | $15,796 | $15,790 | | Total noninterest expense | $71,330 | $71,720 | | Income before tax | $46,345 | $42,156 | | Income tax expense | $13,556 | $12,541 | | Net income | $32,789 | $29,615 | | Diluted earnings per share | $1.08 | $0.97 | [Average Balance, Average Yield Earned, and Average Rate Paid](index=12&type=section&id=Average%20Balance%2C%20Average%20Yield%20Earned%2C%20and%20Average%20Rate%20Paid) For Q2 2025, the average yield on interest-earning assets slightly decreased to 5.44%, while the average rate paid on interest-bearing liabilities decreased to 3.68%, resulting in an improved net interest spread of 1.76% and a net interest margin of 3.07%; for the six months ended June 30, 2025, the net interest margin was 3.05%, up from 2.74% in the prior year period Average Balance, Average Yield Earned, and Average Rate Paid | (Dollars in thousands) | Jun 30, 2025 Average Balance | Jun 30, 2025 Average Yield/Rate | Mar 31, 2025 Average Balance | Mar 31, 2025 Average Yield/Rate | Jun 30, 2024 Average Balance | Jun 30, 2024 Average Yield/Rate | | :-------------------------------- | :--------------------------- | :------------------------------ | :--------------------------- | :------------------------------ | :--------------------------- | :------------------------------ | | **Interest-earning assets:** | | | | | | | | Loans receivable | $6,257,741 | 5.93% | $6,189,531 | 5.95% | $6,089,440 | 5.99% | | Total interest-earning assets | $7,468,367 | 5.44% | $7,383,443 | 5.45% | $7,265,673 | 5.46% | | **Interest-bearing liabilities:** | | | | | | | | Total interest-bearing deposits | $4,625,188 | 3.64% | $4,461,939 | 3.69% | $4,384,467 | 4.27% | | Total interest-bearing liabilities | $4,816,202 | 3.68% | $4,772,101 | 3.75% | $4,684,231 | 4.30% | | Net interest spread | | 1.76% | | 1.70% | | 1.16% | | Net interest margin | | 3.07% | | 3.02% | | 2.69% | Six Months Ended Average Balance, Average Yield Earned, and Average Rate Paid | (Dollars in thousands) | Six Months Ended Jun 30, 2025 Average Balance | Six Months Ended Jun 30, 2025 Average Yield/Rate | Six Months Ended Jun 30, 2024 Average Balance | Six Months Ended Jun 30, 2024 Average Yield/Rate | | :-------------------------------- | :-------------------------------------------- | :----------------------------------------------- | :-------------------------------------------- | :----------------------------------------------- | | **Interest-earning assets:** | | | | | | Loans receivable | $6,223,825 | 5.94% | $6,113,664 | 6.00% | | Total interest-earning assets | $7,426,140 | 5.44% | $7,295,595 | 5.46% | | **Interest-bearing liabilities:** | | | | | | Total interest-bearing deposits | $4,544,014 | 3.66% | $4,396,892 | 4.21% | | Total interest-bearing liabilities | $4,794,273 | 3.72% | $4,693,027 | 4.24% | | Net interest spread | | 1.73% | | 1.22% | | Net interest margin | | 3.05% | | 2.74% | [Non-GAAP Financial Measures](index=15&type=section&id=Non-GAAP%20Financial%20Measures) This section provides reconciliations and explanations for non-GAAP financial measures used by Hanmi Financial Corporation to assess performance [Tangible Common Equity to Tangible Assets Ratio](index=15&type=section&id=Tangible%20Common%20Equity%20to%20Tangible%20Assets%20Ratio) The tangible common equity to tangible assets ratio, a non-GAAP measure, is used by management to assess capital strength by excluding goodwill and other intangible assets, and at June 30, 2025, this ratio was 9.58%, remaining stable compared to the prior quarter - Tangible common equity to tangible assets ratio is a non-GAAP measure used to analyze capital strength by excluding goodwill and other intangible assets[59](index=59&type=chunk) Tangible Common Equity to Tangible Assets Ratio Reconciliation | (In thousands, except ratios) | Jun 30, 2025 | Mar 31, 2025 | Jun 30, 2024 | | :-------------------------------- | :----------- | :----------- | :----------- | | Assets | $7,862,363 | $7,729,035 | $7,586,347 | | Less goodwill and other intangible assets | $(11,031) | $(11,031) | $(11,048) | | Tangible assets | $7,851,332 | $7,718,004 | $7,575,299 | | Stockholders' equity | $762,834 | $751,485 | $707,059 | | Less goodwill and other intangible assets | $(11,031) | $(11,031) | $(11,048) | | Tangible stockholders' equity | $751,803 | $740,454 | $696,011 | | Tangible common equity to tangible assets | 9.58% | 9.59% | 9.19% | | Tangible common equity per common share | $24.91 | $24.49 | $22.99 | [Preprovision Net Revenue](index=16&type=section&id=Preprovision%20Net%20Revenue) Preprovision net revenue, a non-GAAP measure, increased by 3.7% to $28.9 million in Q2 2025, helping evaluate core operational performance by excluding credit loss expense and highlighting the company's net revenue activities and operational efficiency - Preprovision net revenue is a non-GAAP measure used to assess core operational performance by excluding credit loss expense[62](index=62&type=chunk) Preprovision Net Revenue Reconciliation | (In thousands, except percentages) | Jun 30, 2025 | Mar 31, 2025 | Jun 30, 2024 | Q2-25 vs. Q1-25 Change | Q2-25 vs. Q2-24 Change | | :--------------------------------- | :----------- | :----------- | :----------- | :--------------------- | :--------------------- | | Net income | $15,117 | $17,672 | $14,451 | - | - | | Add back: Credit loss expense | $7,631 | $2,721 | $961 | - | - | | Add back: Income tax expense | $6,115 | $7,441 | $5,989 | - | - | | Preprovision net revenue | $28,863 | $27,834 | $21,401 | 3.7% | 34.9% |

Core Viewpoint - Hanmi Financial Corporation reported a decline in net income for Q2 2025, primarily due to increased credit loss expenses, despite improvements in asset quality and operational metrics [2][3][7]. Financial Performance - Net income for Q2 2025 was $15.1 million, or $0.50 per diluted share, down from $17.7 million, or $0.58 per diluted share in Q1 2025 [2][7]. - Return on average assets decreased to 0.79% from 0.94%, and return on average equity fell to 7.48% from 8.92% [2][8]. - Preprovision net revenue grew by 3.7%, driven by lower funding costs and a 3.7% increase in net interest income [3][7]. Asset Quality - Significant improvement in asset quality was noted, with criticized loans dropping 71.8% to 0.74% of total loans, and nonaccrual loans falling 26.8% to 0.41% of total loans [7][18]. - Loan delinquencies decreased to 0.17% of total loans [7]. Loan and Deposit Growth - Loans receivable increased to $6.31 billion, up 0.4% from Q1 2025, with loan production for Q2 at $329.6 million [7][29]. - Deposits rose to $6.73 billion, a 1.7% increase from the previous quarter, with noninterest-bearing demand deposits accounting for 31.3% of total deposits [7][29]. Noninterest Income and Expenses - Noninterest income increased by 4.5% to $8.1 million, primarily due to gains from the sale of SBA loans [20][21]. - Noninterest expenses rose to $36.3 million, up 3.9% sequentially, driven by increases in salaries, professional fees, and advertising [21][22]. Capital Position - The capital position remained strong, with a tangible common equity to tangible assets ratio of 9.58% and a common equity tier 1 capital ratio of 12.12% [7][24].