Financial Data and Key Metrics Changes - The company reported net income of $4,100,000 or $0.29 per diluted common share for Q2 2025, driven by strong loan originations and a pickup in net interest income [15][16] - Tangible book value per share increased to 13.51 from 13.42 in the prior quarter [4] - Average loan balances totaled $634,000,000 for the quarter, up from $565,000,000 in the prior quarter [15] - Net interest income rose to $14,700,000 from $14,300,000 in the previous quarter, while net interest margin decreased to 7.81% from 8.27% [16][17] - Fee income increased to $10,300,000 from $7,800,000 in the prior quarter [18] Business Line Data and Key Metrics Changes - Loan originations totaled $1,500,000,000 in Q2, a 17% increase quarter over quarter and a 27% increase year over year [9] - SBA loan originations increased by 24% quarter over quarter and over 140% year over year [10] - The company continued to sell guaranteed portions of SBA loans, which made up 43% of the total portfolio at the end of Q2 [11] Market Data and Key Metrics Changes - The company is experiencing strong demand for credit enhanced products, with expected balances reaching $50,000,000 to $100,000,000 by the end of Q4 2025 [10][46] - The overall portfolio growth is supported by a stable environment for SBA lending and healthy demand from qualified applicants [5] Company Strategy and Development Direction - The company aims for gradual growth through 2025 and 2026, focusing on credit enhanced products and new programs signed late in 2024 and early in 2025 [5][6] - Strategic investments made over the past two years are expected to yield results, with potential benefits from BIN and payment products anticipated to enhance profitability [6][14] - The company is exploring the integration of artificial intelligence to improve operational efficiency [8] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the stability of the overall lending environment and the potential for continued growth in loan originations [5][10] - The company expects a rebound in return on average equity into the low to mid-teens range and return on average assets exceeding 2% in the long term [7][62] - Management acknowledged that while growth may not be linear, they are excited about the long-term potential of the bank [14] Other Important Information - The efficiency ratio improved to 59.5% from 64.8% in the prior quarter, indicating better cost management [19] - The effective tax rate decreased to 24.5% from 28.1% in the prior quarter, with expectations around 27% for 2025 [20] Q&A Session Summary Question: Can you discuss the relationship between credit enhanced income and expected balances? - The credit enhanced income reflects the provision for credit losses related to the credit enhanced portfolio, which will increase as balances grow [22][23] Question: What are the plans for funding growth given the strong loan production? - Short-term funding relies on wholesale funding, while long-term strategies include integrating payments business to attract lower-cost deposits [25][26] Question: What is the trend in net charge-offs this quarter? - The increase in net charge-offs was primarily due to SBA charge-offs, but overall levels are in line with historical expectations [28] Question: How does the company view the impact of AI and stablecoins on the banking industry? - The company sees potential in AI for fraud detection and operational efficiency, while stablecoins are being monitored for future opportunities [40][41][37] Question: What is the current health of the company's partners and pipeline? - The health of partners is strong, with solid growth in origination levels and a good pipeline for new lending partners [47][50]

Company Overview - Hanmi Financial Corporation is headquartered in Los Angeles, California, and owns Hanmi Bank, which serves multi-ethnic communities through a network of 32 full-service branches, five loan production offices, and three loan centers across several states including California, Colorado, Georgia, Illinois, New Jersey, New York, Texas, Virginia, and Washington [3] - Hanmi Bank specializes in real estate, commercial, SBA, and trade finance lending to small and middle market businesses [3] Upcoming Financial Results - Hanmi Financial Corporation will report its second quarter 2025 financial results after the market close on Tuesday, July 22, 2025 [1] - Management will host a conference call on the same day at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) to discuss the results [1] Accessing the Conference Call - Investment professionals and current and prospective shareholders can access the live call on July 22 by dialing 1-877-407-9039 before 2:00 p.m. Pacific Time, using access code "Hanmi Bank" [2] - The call can also be listened to online via the investor relations page of Hanmi's website, with a replay available approximately one hour following the call [2]