Hanmi Financial (HAFC) - 2025 Q2 - Quarterly Results

Executive Summary & Highlights This section provides an overview of Hanmi Financial Corporation's Q2 2025 performance, highlighting key financial metrics and strategic achievements CEO Commentary 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] - Preprovision net revenue grew by 3.7%, driven by lower funding costs[4] - Loans grew 1.6% on an annualized basis, with healthy C&I and residential mortgage loan production[4] - Deposits increased by 1.7% for the quarter, with noninterest-bearing demand deposits accounting for over 30% of total deposits[4] - Asset quality remained excellent with significant improvement; criticized loans, nonaccrual loans, and delinquent loans all declined notably[4] Second Quarter 2025 Highlights 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] - 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] - 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] - Deposits were $6.73 billion, up 1.7% from Q1 2025, with noninterest-bearing demand deposits at 31.3% of total deposits[9] Results of Operations 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 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] - 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] Credit Loss Expense 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] - Q2 credit loss expense included $7.5 million for loan losses and $0.1 million for off-balance sheet items[19] Noninterest Income 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] Noninterest Expense 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] Income Tax Expense 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 This section outlines Hanmi Financial Corporation's financial position, detailing changes in assets, loan portfolio, deposits, and stockholders' equity and capital 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] Loan Portfolio 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] 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] - The loan-to-deposit ratio was 93.7% at June 30, 2025[29] Stockholders' Equity and Capital 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] - 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] Regulatory Capital Ratios 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 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 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] Nonperforming Assets 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] Charge-offs and Recoveries 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] - Recoveries of previously charged-off loans were $1.0 million in Q2 2025[38] Allowance for Credit Losses 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] - Collectively evaluated allowances increased by $3.8 million[39] Corporate Information This section provides details on Hanmi Financial Corporation's corporate developments, earnings conference call, and an overview of the company Corporate Developments 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] Earnings Conference Call 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] - Webcast and replay available on Hanmi's Investor Relations website[45] About Hanmi Financial Corporation 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] - Operates 32 full-service branches and eight loan production offices in California, Texas, Illinois, Virginia, New Jersey, New York, Colorado, Washington, and Georgia[46] - Specializes in real estate, commercial, SBA, and trade finance lending to small and middle market businesses[46] Forward-Looking Statements & Risk Factors 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] - 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] Consolidated Financial Statements (Unaudited) 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 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 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 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 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 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] 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 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] 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% |