Earnings call · Jun 2026 (Q2 FY26)

HANMI FINANCIAL Q2 FY26 earnings call HAFC

Jul 21, 2026 Source

Executive summary

Hanmi Financial Corporation Q2 FY26 — Strong Earnings and Capital Position

Hanmi Financial delivered a strong second quarter, marked by increased earnings, robust deposit growth, and improved asset quality, despite a slight dip in net interest margin and loan production. The company's strategic focus on Corporate Korea clients and C&I loan diversification continues to yield positive results, reinforcing its capital strength and commitment to shareholder returns. Management anticipates stable net interest margin and low to mid-single-digit loan growth for the remainder of the year.

Highlights

Net income increased to $23.5 million or $0.79 per diluted share, up from $22.6 million or $0.75 last quarter.
Deposits grew 2.3% linked quarter, driven by a 5.2% increase in noninterest-bearing accounts.
Noninterest-bearing deposits increased to 31% of total deposits, reflecting funding strength.
Efficiency ratio of 54.1% reflects continued operating discipline.
Nonperforming loans improved to 0.15% of total loans and nonperforming assets to 0.12% of total assets.
Corporate Korea deposits increased 6.2% to $1.2 billion, reaching 17% of total deposits.

Concerns

Net interest margin declined modestly by 2 basis points to 3.36%.
Loan production was slightly lower than the prior quarter at $372 million.
SBA loan production declined $4 million to $37 million, slightly below historical levels.
A $21.2 million CRE credit became delinquent and was downgraded to classified.

Guidance & targets

Category	Target	Timeline	Confidence
Loan growth	low to mid-single-digit high materiality	FY26	Medium
Net interest margin	stable high materiality	H2 FY26	Medium
SBA loan production	pickup in production medium materiality	Q3 · FY26	Medium

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Corporate Korea This strategic initiative continues to generate meaningful results, translating into deeper customer relationships, stronger engagement, and growing business activity. It remains a significant growth opportunity and a meaningful differentiator for Hanmi. Deposits: $1.2 billionDeposits growth: 6.2% (QoQ)Deposits as % of total: 17%Loan balances: $826 millionLoan balances growth: 1% (QoQ)Loan balances as % of total: 12.6%C&I loan production: $22 million (25% of total C&I production)	—	—	—	—

Operational metrics

Return on average assets

1.2% increased from prior quarter

Q2 FY26

Capital returned to shareholders

$13.6 million

Q2 FY26

Through dividends and share repurchases.

Capital returned as % of earnings

58%

Q2 FY26

Loan production

$372 million down 1.6% QoQ

Q2 FY26

Loan production YTD growth

11% vs H1 2025

YTD FY26

Weighted average interest rate on new loans

6.59% vs 6.54% last quarter

Q2 FY26

C&I loan growth

1.6% QoQ

Q2 FY26

C&I loan growth

28% YoY

Q2 FY26

C&I loans as % of total loans

18% up from 14% a year ago

Q2 FY26

CRE production

$171 million up 29.4% QoQ

Q2 FY26

CRE weighted average LTV

47%

Q2 FY26

CRE weighted average DSCR

2.2x

Q2 FY26

SBA loan production

$37 million down $4 million QoQ

Q2 FY26

Slightly below historical levels.

SBA loans sold

$20.6 million

Q2 FY26

SBA loan average premium

7.92%

Q2 FY26

Commercial lines of credit total commitments

$1.4 billion up 2.7% QoQ

Q2 FY26

Commercial lines of credit outstanding balances

decreased 3% QoQ

Q2 FY26

Commercial lines of credit utilization rate

40% down from 43% QoQ

Q2 FY26

Residential mortgage loan production

$50 million up 72% QoQ

Q2 FY26

Residential mortgage loans as % of total loans

15% consistent with prior quarter

Q2 FY26

Residential mortgages sold

$31 million

Q2 FY26

Gain on sale of residential mortgages

$0.4 million

Q2 FY26

Tangible common equity per share

$27.04 up 1.8% QoQ

Q2 FY26

Tangible common equity ratio

10.03%

Q2 FY26

Shares repurchased

160,000

Q2 FY26

Average price of shares repurchased

$30.24

Q2 FY26

Shares remaining under authorization

1.99 million

Q2 FY26

Noninterest income

$8.3 million

Q2 FY26

Primarily affected by lower SBA loan sales volume compared with Q1, partially offset by growth in trade finance and other service fee income.

Noninterest expense as % of average assets

1.99%

Q2 FY26

Annualized.

Credit loss expense

$1.2 million

Q2 FY26

ACL coverage

1.08x

Q2 FY26

Coverage over loan portfolio.

Interest-bearing deposit costs

3.17%

Q2 FY26

Remained stable so far in July.

Loan yields

5.9% held steady

Q2 FY26

Average interest-earning assets growth

1.1% QoQ

Q2 FY26

Average deposits growth

2.7% QoQ

Q2 FY26

FHLB San Francisco dividend impact on NII

-$612,000

Q2 FY26

Reduced second quarter interest income.

FHLB San Francisco dividend impact on NIM

-3 bps

Q2 FY26

Impact on net interest margin.

Industry KPIs

Metric	Value	Period
Loans	$6.56 billion USD	Q2 FY26
Deposits	$7.06 billion USD	Q2 FY26
Rotce ROE	11.1% %	Q2 FY26
Capital returns	$13.2 million USD	Q2 FY26
Fee income lines	$8.3 million USD	Q2 FY26
Allowance reserves	1.08x x	Q2 FY26
Net interest income	$63.9 million USD	Q2 FY26
Net interest margin	3.36% %	Q2 FY26
Net charge offs npls	0.15% %	Q2 FY26
Total operating expenses	$39 million USD	Q2 FY26
Provision for credit losses	$1.2 million USD	Q2 FY26
Efficiency ratio operating leverage	54.1% %	Q2 FY26

Risks & headwinds

Geopolitical uncertainty Ongoing

Unquantified

Mitigation:Broader economy continues to be supported by positive growth, low unemployment, and healthy business activity.

CRE credit delinquency Q2 FY26

$21.2 million CRE credit

Mitigation:Property is well collateralized based on updated appraisal and condition report; bank is well secured on this loan.

SBA loan production decline Q2 FY26

Down $4 million QoQ to $37 million

Mitigation:Pipeline indicates a pickup in production in Q3, expected to return to normal run rate of around $45 million per quarter.

Net interest margin compression Q2 FY26

Declined 2 bps to 3.36%

Mitigation:Underlying margin performance was essentially stable excluding the 3 bps impact from FHLB dividend policy change; expected to remain stable through H2 FY26.

Economic uncertainty impacting Corporate Korea clients Ongoing

Lower line utilization

Mitigation:Clients are accumulating deposits in preparation for future U.S. investments, indicating potential future demand.

What to watch in Q3 FY26

Loan growth

H2 FY26

Current Low to mid-single-digit guidance for FY26. Q2 production $372M, down 1.6% QoQ.

Target Continued growth, with C&I and CRE as primary drivers.

Why it matters

Loan growth is a key driver of Net Interest Income and overall profitability for a bank.

Our priorities for the remainder of 2026 include drive profitable loan growth while continuing portfolio diversification. We expect low to mid-single-digit loan growth for the year and we'll continue expanding relationships across targeted commercial lending segments

Q&A highlights

Which segments are expected to drive loan growth in the second half of the year, given the low to mid-single-digit guidance?

C&I growth will continue to be a primary driver, along with contributions from the Commercial Real Estate segment.

“So looking down to the second half of the year, we do think that C&I growth will continue to be the driver along with the part coming from the Commercial Real Estate segment.”

asked by Adam Kroll · answered by Bonita Lee

2 min read 5 chapters

Detailed narrative

Strong Financial Performance

Hanmi Financial reported a net income of $23.5 million, or $0.79 per diluted share, for Q2 FY26, an increase from $22.6 million, or $0.75 per diluted share, in the prior quarter. The company achieved a return on average assets of 1.2% and an improved return on average equity of 11.1%. Operating efficiency remained a key strength, with an efficiency ratio of 54.1% and noninterest expense representing 1.99% of average assets on an annualized basis.

Deposit Growth and Mix Improvement

Total deposits increased by 2.3% linked quarter, primarily driven by a 5.2% increase in noninterest-bearing accounts, particularly from commercial clients. Noninterest-bearing deposits now constitute a healthy 31% of total deposits. Deposits from Corporate Korea clients grew 6.2% during the quarter to $1.2 billion, representing approximately 17% of total deposits, highlighting the success of this strategic initiative.

Loan Portfolio Diversification

New loan originations totaled $372 million in Q2 FY26, with year-to-date originations up 11% compared to the first half of 2025. The portfolio diversification strategy continues to gain traction, with Commercial and Industrial (C&I) loans increasing 1.6% sequentially and 28% year-over-year, now representing 18% of total loans, up from 14% a year ago. Commercial Real Estate (CRE) production was $171 million, and CRE loans remain 61% of total loans with a weighted average loan-to-value ratio of 47% and a debt service coverage ratio of 2.2x.

Asset Quality and Risk Management

Credit quality remains excellent, with nonperforming loans improving to 0.15% of total loans and nonperforming assets to 0.12% of total assets. Net charge-offs were minimal, and credit loss expense was $1.2 million. While a $21.2 million CRE credit was downgraded to classified due to delinquency, an updated appraisal and property condition report confirmed the collateral is in good condition, and the bank is well secured on this loan.

Capital and Shareholder Returns

The company's capital position remains strong, with tangible common equity per share increasing 1.8% to $27.04 and the tangible common equity ratio at 10.03%. Hanmi returned $13.2 million to shareholders through dividends and share repurchases during the quarter, including repurchasing 160,000 shares at an average price of $30.24. Approximately 1.99 million shares remain available under the current authorization.

AI-generated summary of the company's earnings call. Not investment advice.