UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
HANMI FINANCIAL CORPORATION
(Registrant’s Telephone Number, Including Area Code)
(Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report)
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each class
Trading
Symbol(s)
Name of each exchange on which registered
Common Stock, $0.001 par value
HAFC
Nasdaq Global Select Market
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
As of July 30, 2025, there were 30,126,029 outstanding shares of the Registrant’s Common Stock.
Hanmi Financial Corporation and Subsidiaries Quarterly Report on Form 10-Q
Three Months Ended June 30, 2025
Table of Contents
Part I – Financial Information
Item 1.
Financial Statements
3
Consolidated Balance Sheets at June 30, 2025 (unaudited) and December 31, 2024
Consolidated Statements of Income for the three and six months ended June 30, 2025 and 2024 (unaudited)
4
Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2025 and 2024 (unaudited)
5
Consolidated Statements of Changes in Stockholders’ Equity for the three and six months ended June 30, 2025 and 2024 (unaudited)
6
Consolidated Statements of Cash Flows for the six months ended June 30, 2025 and 2024 (unaudited)
8
Notes to Consolidated Financial Statements (unaudited)
9
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
45
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
65
Item 4.
Controls and Procedures
Part II – Other Information
Legal Proceedings
66
Item 1A.
Risk Factors
Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities
Defaults Upon Senior Securities
Mine Safety Disclosures
Item 5.
Other Information
67
Item 6.
Exhibits
68
Signatures
69
2
Item 1. Financial Statements
Hanmi Financial Corporation and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share data)
June 30,
December 31,
2025
2024
(Unaudited)
Assets
Cash and due from banks
$
380,050
304,800
Securities available for sale, at fair value (amortized cost of $994,611 and $1,004,563 as of June 30, 2025 and December 31, 2024, respectively)
918,094
905,798
Loans held for sale, at the lower of cost or fair value
49,611
8,579
Loans receivable, net of allowance for credit losses of $66,756 and $70,147 as of June 30, 2025 and December 31, 2024, respectively
6,239,201
6,181,230
Accrued interest receivable
23,749
22,937
Premises and equipment, net
20,607
21,404
Customers' liability on acceptances
214
1,226
Servicing assets
6,420
6,457
Goodwill and other intangible assets, net
11,031
Federal Home Loan Bank ("FHLB") stock, at cost
16,385
Income tax assets
39,550
44,901
Bank-owned life insurance
56,985
57,168
Prepaid expenses and other assets
100,466
96,009
Total assets
7,862,363
7,677,925
Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Noninterest-bearing
2,105,369
2,096,634
Interest-bearing
4,623,753
4,339,142
Total deposits
6,729,122
6,435,776
Accrued interest payable
30,567
34,824
Bank's liability on acceptances
Borrowings
127,500
262,500
Subordinated debentures
130,960
130,638
Accrued expenses and other liabilities
81,166
80,787
Total liabilities
7,099,529
6,945,751
Stockholders’ equity:
Preferred stock, $0.001 par value; authorized 10,000,000 shares; no shares issued as of June 30, 2025 and December 31, 2024
—
Common stock, $0.001 par value; authorized 62,500,000 shares; issued 34,294,037 shares (30,176,568 shares outstanding) and 34,151,464 shares (30,195,999 shares outstanding) as of June 30, 2025 and December 31, 2024, respectively
34
Additional paid-in capital
592,825
591,069
Accumulated other comprehensive loss, net of tax benefit of $22,092 and $28,576 as of June 30, 2025 and December 31, 2024, respectively
(54,511
)
(70,723
Retained earnings
367,251
350,869
Less treasury stock; 4,117,469 shares and 3,955,465 shares as of June 30, 2025 and December 31, 2024, respectively
(142,765
(139,075
Total stockholders’ equity
762,834
732,174
Total liabilities and stockholders’ equity
See Accompanying Notes to Consolidated Financial Statements (Unaudited)
Consolidated Statements of Income (Unaudited)
(in thousands, except share and per share data)
Three Months Ended
Six Months Ended
Interest and dividend income:
Interest and fees on loans receivable
92,589
90,752
183,476
182,427
Interest on securities
6,261
5,238
12,430
10,193
Dividends on FHLB stock
354
357
714
719
Interest on deposits in other banks
2,129
2,313
3,969
4,914
Total interest and dividend income
101,333
98,660
200,589
198,253
Interest expense:
Interest on deposits
41,924
46,495
82,483
92,133
Interest on borrowings
684
1,896
2,708
3,551
Interest on subordinated debentures
1,586
1,649
3,167
3,295
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
Net interest income after credit loss expense
49,508
47,659
101,879
98,086
Noninterest income:
Service charges on deposit accounts
2,169
2,429
4,387
4,878
Trade finance and other service charges and fees
1,461
1,277
2,858
2,691
Gain on sale of Small Business Administration ("SBA") loans
2,160
1,644
4,161
3,126
Gain on sale of residential mortgage loans
365
175
808
Other operating income
2,281
2,342
4,215
4,287
Total noninterest income
8,071
8,057
15,796
15,790
Noninterest expense:
Salaries and employee benefits
22,069
20,434
43,041
42,019
Occupancy and equipment
4,344
4,607
8,794
9,144
Data processing
3,727
3,686
7,514
7,237
Professional fees
1,725
1,749
3,194
3,642
Supplies and communications
515
570
1,031
1,172
Advertising and promotion
798
669
1,382
1,576
Other operating expenses
3,169
3,561
6,374
6,930
Total noninterest expense
36,347
35,276
71,330
71,720
Income before tax
21,232
20,440
46,345
42,156
Income tax expense
6,115
5,989
13,556
12,541
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
1.08
0.97
Weighted-average shares outstanding:
Basic
29,948,836
30,055,913
29,943,279
30,089,341
Diluted
30,054,456
30,133,646
30,048,704
30,166,181
(in thousands)
Other comprehensive income (loss), net of tax:
Unrealized gain (loss):
Unrealized holding gain (loss) on available for sale securities
7,706
(1,277
22,248
(6,375
Unrealized loss on cash flow hedges
(235
(746
(45
(2,953
Unrealized gain (loss)
7,471
(2,023
22,203
(9,328
Income tax benefit (expense) related to other comprehensive income items
(2,155
588
(6,339
2,933
Other comprehensive income (loss)
5,316
(1,435
15,864
(6,395
Reclassification adjustment for losses included in net income
248
460
493
Income tax benefit related to reclassification adjustment
(73
(135
(145
(137
Reclassification adjustment for losses included in net income, net of tax
325
348
323
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
Common Stock - Number of Shares
Stockholders' Equity
Accumulated
Additional
Other
Treasury
Total
Shares
Common
Paid-in
Comprehensive
Retained
Stock,
Stockholders'
Issued
Outstanding
Stock
Capital
Loss
Earnings
at Cost
Equity
Balance at April 1, 2024
33,957,284
(3,680,926
30,276,358
587,687
(76,890
326,526
(134,257
703,100
Issuance of awards pursuant to equity incentive plans, net of forfeitures
167,626
Share-based compensation expense
960
Shares surrendered to satisfy tax liability upon vesting of equity awards
(1,874
(28
Repurchase of common stock
(170,000
(2,729
Cash dividends paid (common stock, $0.25/share)
(7,585
Change in unrealized gain (loss) on securities available for sale, net of income taxes
(906
Change in unrealized gain (loss) on cash flow hedge, net of income taxes
(204
Balance at June 30, 2024
34,124,910
(3,852,800
30,272,110
588,647
(78,000
333,392
(137,014
707,059
Balance at April 1, 2025
34,265,030
(4,031,516
30,233,514
591,942
(60,002
360,289
(140,778
751,485
29,007
883
(15,953
(359
(70,000
(1,628
Cash dividends paid (common stock, $0.27/share)
(8,155
5,482
Balance at June 30, 2025
34,294,037
(4,117,469
30,176,568
Balance at January 1, 2024
33,918,035
(3,549,380
30,368,655
586,912
(71,928
319,048
(132,175
701,891
206,875
1,735
(33,420
(518
(270,000
(4,321
Cash dividends paid (common stock, $0.50/share)
(15,271
(4,298
(1,774
Balance at January 1, 2025
34,151,464
(3,955,465
30,195,999
142,573
1,756
(42,004
(938
(120,000
(2,752
Cash dividends paid (common stock, $0.54/share)
(16,407
15,892
320
7
Six Months Ended June 30,
Cash flows from operating activities:
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
3,244
3,214
Amortization of servicing assets - net
1,372
1,366
(Gain) loss on sales of SBA loans
(4,161
(3,126
Origination of loans held for sale
(108,610
(47,595
Proceeds from sales of loans
80,730
51,070
(Gain) loss on sales of residential loans
(175
(808
Change in bank-owned life insurance
183
131
Change in prepaid expenses and other assets
(4,681
4,730
Change in income tax assets
(988
(4,087
Change in accrued interest payable and other liabilities
(4,958
(5,399
Net cash provided by operating activities
6,853
32,034
Cash flows from investing activities:
Purchases of securities available for sale
(101,004
(78,454
Proceeds from matured, called and repayment of securities
109,626
58,848
Purchases of loans receivable
(44,631
(24,656
Proceeds from sales of residential mortgage loans
50,352
Purchases of premises and equipment
(832
(1,563
Proceeds from disposition of premises and equipment
14
Proceeds from sales of other real estate owned ("OREO")
713
Change in loans receivable, excluding purchases and sales
(33,736
(21,956
Net cash used in investing activities
(69,850
(17,429
Cash flows from financing activities:
Change in deposits
293,346
48,765
Change in open FHLB advances
(135,000
(32,500
Cash paid for employee vested shares surrendered due to employee tax liability
(2,754
(4,326
Cash dividends paid
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 beginning of year
302,324
Cash and due from banks at end of period
313,079
Supplemental disclosures of cash flow information:
Interest paid
92,615
90,586
Income taxes paid
13,590
22,365
Non-cash activities:
Transfer of fixed assets to other real estate owned
-
655
Income tax (expense) benefit related to other comprehensive income items
(6,484
2,796
Change in right-of-use asset obtained in exchange for lease liability
(3,814
(1,932
Note 1 — Organization and Basis of Presentation
Hanmi Financial Corporation (“Hanmi Financial,” the “Company,” “we,” “us” or “our”) is a bank holding company whose primary subsidiary is Hanmi Bank (the “Bank”). Our primary operations are related to traditional banking activities, including the acceptance of deposits and the lending and investing of money by the Bank.
In management’s opinion, the accompanying unaudited consolidated financial statements of Hanmi Financial and its subsidiaries reflect all adjustments of a normal and recurring nature that are necessary for a fair presentation of the results for the interim period ended June 30, 2025. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted. The unaudited consolidated financial statements are prepared in conformity with GAAP and in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission. Operating results for the three or six-month periods ended June 30, 2025 are not necessarily indicative of the results that may be expected for the year ended December 31, 2025 or for any other period. The interim information should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Annual Report on Form 10-K”).
The preparation of interim unaudited consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. These estimates and assumptions affect the amounts reported in the unaudited financial statements and disclosures provided, and actual results could differ.
Descriptions of our significant accounting policies are included in Note 1 - Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements in the 2024 Annual Report on Form 10-K.
Effective January 1, 2025, the Company changed its methodology for estimating expected credit losses on its loan portfolio in accordance with Accounting Standards Update ("ASU") 2016-23, Financial Instruments – Credit Losses. Prior to January 1, 2025, the Company primarily used a Probability of Default / Loss Given Default (PD/LGD) model to determine the allowance for credit losses. Following a periodic review of its credit loss estimation process, the Company concluded that a historical loss rate approach, adjusted for current conditions and reasonable and supportable forecasts, more appropriately reflected the expected credit losses for its loan portfolio. This change is considered a change in accounting estimate resulting from a change in methodology and assumptions and was accounted for prospectively in accordance with ASC 250-10-45-17 through 45-18.
The change in methodology had an immaterial impact to the Company’s operating results and financial condition. The provision for credit losses for the six months ended June 30, 2025 reflects this change in estimate. Management believes the revised approach enhances the accuracy and relevance of its allowance for credit losses by aligning the methodology more closely with the Company’s historical experience, the nature of its loan portfolio, and expectations for future economic conditions.
Accounting Standards Update ("ASU") 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures: In December 2023, the FASB issued ASU 2023-09 to enhance the transparency and usefulness of income tax disclosures primarily related to income tax rate reconciliation and income tax information. The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024. The adoption of ASU 2023-09 did not have a material effect on the Company’s operating results or financial condition.
ASU 2024-03, Income Statement Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40), as amended by ASU 2025-01, Clarifying the Effective Date: In November 2024, the Financial Accounting Standards Board (“FASB”) issued ASU 2024-03 to require additional information about specific expense categories in the financial statement notes at interim and annual reporting periods. The amendments in this ASU do not change or remove current expense disclosure requirements. The amendments affect where the information appears in the financial statement notes. ASU 2025-01 amends the changes in ASU 2024-03 to be effective for fiscal years beginning after December 15, 2026. The adoption of ASU 2024-03 is not expected to have a material effect on the Company’s operating results or financial condition.
The following is a summary of securities available for sale as of the dates indicated:
Gross
Estimated
Amortized
Unrealized
Fair
Cost
Gain
Value
June 30, 2025
U.S. Treasury securities
119,908
236
(323
119,821
U.S. government agency and sponsored agency obligations:
Mortgage-backed securities - residential
434,588
549
(47,105
388,032
Mortgage-backed securities - commercial
73,295
85
(12,030
61,350
Collateralized mortgage obligations
203,969
1,861
(7,176
198,654
Debt securities
87,287
(2,133
85,160
Total U.S. government agency and sponsored agency obligations
799,139
2,501
(68,444
733,196
Municipal bonds-tax exempt
75,564
(10,487
65,077
Total securities available for sale
994,611
2,737
(79,254
December 31, 2024
89,208
242
(521
88,929
453,993
222
(61,643
392,572
75,947
24
(13,055
62,916
182,553
404
(9,401
173,556
126,776
(3,969
122,816
839,269
659
(88,068
751,860
76,086
(11,077
65,009
1,004,563
901
(99,666
The amortized cost and estimated fair value of securities as of June 30, 2025 and December 31, 2024, by contractual or expected maturity, are shown below. Collateralized mortgage obligations are included in the table shown below based on their expected maturities. All other securities are included based on their contractual maturities.
Available for Sale
Fair Value
Within one year
121,820
121,099
93,251
92,646
Over one year through five years
106,462
104,431
133,408
129,556
Over five years through ten years
134,725
121,037
90,772
81,833
Over ten years
631,604
571,527
687,132
601,763
10
The following table summarizes debt securities available for sale in an unrealized loss position for which an allowance for credit losses has not been recorded at June 30, 2025 or December 31, 2024, aggregated by major security type and length of time in a continuous unrealized loss position:
Holding Period
Less than 12 Months
12 Months or More
Number
of
Securities
(in thousands, except number of securities)
27,020
(295
8,193
35,213
(179
19,577
(46,926
338,997
113
358,574
120
(309
14,631
(11,721
40,470
12
55,101
16
(31
5,541
(7,145
50,234
23
55,775
25
69,919
(519
39,749
13
(67,925
499,620
162
539,369
19
(547
66,769
20
(78,707
572,890
639,659
203
(61
13,603
(460
9,771
23,374
(271
23,276
(61,372
351,793
114
375,069
124
(447
19,092
(12,608
41,817
60,909
(645
76,963
18
(8,756
54,020
130,983
42
(23
11,712
(3,946
107,595
21
119,307
(1,386
131,043
36
(86,682
555,225
173
686,268
209
(1,447
144,646
(98,219
630,005
195
774,651
237
The Company evaluates its available for sale securities portfolio for impairment on a quarterly basis. The Company did not recognize unrealized losses in income because it has the ability and the intent to hold and does not expect to be required to sell these securities until the recovery of their cost basis. The quarterly impairment assessment considers the changes in the credit quality of these debt securities since acquisition and the likelihood of a credit loss occurring over the life of the securities. If a credit loss is expected to occur, an allowance is established and a corresponding credit loss is recognized. Based on its analysis, as of June 30, 2025, the Company determined that no credit losses were expected to be realized on the tax-exempt municipal bond portfolio. The remainder of the portfolio consists of U.S. Treasury obligations, U.S. government agency securities, and U.S. government sponsored agency securities, all of which have the backing of the U.S. government, and are therefore not expected to incur credit losses.
There were no sales of securities during the six months ended June 30, 2025 or June 30, 2024.
Securities available for sale with market values of $27.9 million and $29.4 million as of June 30, 2025 and December 31, 2024, respectively, were pledged to secure borrowings from the Federal Reserve Bank (“FRB”) Discount Window.
At June 30, 2025, there were no holdings of securities of any one issuer, other than the U.S. government and its agencies, in an amount greater than 10% of stockholders’ equity.
11
Loans consisted of the following as of the dates indicated:
Real estate loans:
Commercial property
Retail
1,116,540
1,068,978
Hospitality
822,021
848,134
Office
556,453
568,861
Other (1)
1,373,836
1,385,051
Total commercial property loans
3,868,850
3,871,024
Construction
80,072
78,598
Residential (2)
993,869
951,302
Total real estate loans
4,942,791
4,900,924
Commercial and industrial loans
917,995
863,431
Equipment financing agreements
445,171
487,022
Loans receivable
6,305,957
6,251,377
Allowance for credit losses
(66,756
(70,147
Loans receivable, net
Accrued interest on loans was $19.8 million and $19.1 million at June 30, 2025 and December 31, 2024, respectively.
At June 30, 2025 and December 31, 2024, loans with carrying values of $2.40 billion and $2.46 billion, respectively, were pledged to secure advances from the FHLB.
The following is the activity for loans held for sale for the following periods:
Real Estate
Commercial and Industrial
Three months ended June 30, 2025
Balance at beginning of period
5,015
6,816
11,831
Originations and transfers
56,000
17,190
73,190
Sales
(15,601
(19,787
(35,388
Principal paydowns and amortization
(2
(20
(22
Balance at end of period
45,412
4,199
Three months ended June 30, 2024
1,454
2,545
3,999
20,572
9,391
29,963
(14,877
(8,613
(23,490
(5
7,149
3,318
10,467
Six months ended June 30, 2025
3,994
4,585
74,615
33,995
108,610
(33,195
(34,358
(67,553
Principal payoffs and amortization
(25
Six months ended June 30, 2024
8,792
3,221
12,013
30,186
17,409
47,595
(31,775
(17,301
(49,076
(54
(11
(65
The following table presents loans purchased by portfolio segment for the following periods:
Commercial real estate
6,060
15,113
6,334
Commercial and industrial
8,398
9,203
18,322
Residential real estate
10,330
5,178
20,315
19,636
44,631
29,834
Allowance for Credit Losses
Effective January 1, 2025, we transitioned to a new allowance for credit losses (“ACL”) model to perform our ACL analysis. Part of the transition to the new model, in addition to the factors previously mentioned, includes a change in our methodology on commercial and industrial, commercial real estate, and residential loans. The change in models did not result in a material change in our ACL as of January 1, 2025. The table below includes in credit loss expense for the six months ended June 30, 2025 the effect of the ACL model change of $1.4 million.
The following table details the information on the allowance for credit losses by portfolio segment for the following periods:
Equipment Financing Agreements
51,302
6,242
13,053
70,597
Charge-offs
(8,615
(811
(2,951
(12,377
Recoveries
194
198
621
1,013
5,140
1,306
1,077
7,523
Ending balance
48,021
6,935
11,800
66,756
42,584
11,836
13,850
68,270
(93
(2,152
(2,338
64
166
318
548
Credit loss expense (recovery)
(403
(1,346
2,998
1,249
42,152
10,563
15,014
67,729
45,099
10,006
15,042
70,147
(8,785
(1,033
(5,749
(15,567
618
234
1,404
2,256
11,089
(2,272
1,103
9,920
45,499
10,257
13,706
69,462
(248
(4,120
(4,461
111
224
741
1,076
(3,365
330
4,687
1,652
The table below presents the allowance for credit losses by portfolio segment as a percentage of the total allowance for credit losses and loans by portfolio segment as a percentage of the aggregate investment of loans receivable as of:
Allowance Amount
Percentage of Total Allowance
Total Loans
Percentage of Total Loans
(dollars in thousands)
9,886
14.8
%
17.7
10,171
14.5
17.1
7,579
11.3
13.1
15,302
21.8
13.6
5,603
8.4
8.8
3,935
5.6
9.1
13,268
19.9
8,243
11.8
22.2
36,336
54.4
61.4
37,651
53.7
62.0
1,107
1.7
1.3
1,664
2.4
Residential
10,578
15.8
5,784
8.2
15.2
71.9
78.5
64.3
10.4
14.3
13.8
7.0
21.4
7.7
100.0
The following table represents the amortized cost basis of collateral-dependent loans by class of loans, for which repayment is expected to be obtained through the sale of the underlying collateral, as of:
874
1,377
2,514
215
10,990
14,378
1,592
3,997
1,875
18,375
3,467
3,499
Loan Quality Indicators
As part of the on-going monitoring of the quality of our loans portfolio, we utilize an internal loan grading system to identify credit risk and assign an appropriate grade (from 1 to 8) for each loan in our portfolio. Third-party loan reviews are conducted annually on a sample basis. Additional adjustments are made when determined to be necessary. The loan grade definitions are as follows:
Pass and Pass-Watch: Pass and Pass-Watch loans, grades (1-4), are in compliance with the Bank’s credit policy and regulatory requirements, and do not exhibit any potential or defined weaknesses as defined under “Special Mention”, “Substandard” or “Doubtful.” This category is the strongest level of the Bank’s loan grading system. It consists of all performing loans with no identified credit weaknesses. It includes cash and stock/security secured loans or other investment grade loans.
Special Mention: A Special Mention loan, grade (5), has potential weaknesses that deserve management’s close attention. If not corrected, these potential weaknesses may result in deterioration of the repayment of the debt and result in a Substandard classification. Loans that have significant actual, not potential, weaknesses are considered more severely classified.
Substandard: A Substandard loan, grade (6), has a well-defined weakness that jeopardizes the liquidation of the debt. A loan graded Substandard is not protected by the sound worth and paying capacity of the borrower, or of the value and type of collateral pledged. With a Substandard loan, there is a distinct possibility that the Bank will sustain some loss if the weaknesses or deficiencies are not corrected.
Doubtful: A Doubtful loan, grade (7), is one that has critical weaknesses that would make the collection or liquidation of the full amount due improbable. However, there may be pending events which may work to strengthen the loan, and therefore the amount or timing of a possible loss cannot be determined at the current time.
Loss: A loan classified as Loss, grade (8), is considered uncollectible and of such little value that their continuance as active bank assets is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this asset even though partial recovery may be possible in the future. Loans classified as Loss will be charged off in a timely manner.
Under regulatory guidance, loans graded special mention or worse are considered criticized loans, and loans graded substandard or worse are considered classified loans.
15
Loans by Vintage Year and Risk Rating
Term Loans
Amortized Cost Basis by Origination Year (1)
2023
2022
2021
Prior
RevolvingLoansAmortizedCost Basis
Risk Rating
`
Pass / Pass-Watch
572,829
425,598
519,482
883,296
762,889
592,258
87,965
3,844,317
Special Mention
148
301
449
Classified
834
678
12,534
3,089
6,949
24,084
Total commercial property
573,663
426,276
895,978
765,978
599,508
YTD gross charge-offs
8,585
200
8,785
YTD net charge-offs (recoveries)
(3
8,311
(139
8,169
19,071
53,002
7,999
Total construction
128,556
97,446
167,830
343,344
137,640
109,026
7,562
991,404
250
946
1,269
2,215
Total residential
344,290
110,295
7,812
720,456
576,046
695,311
1,226,640
900,529
701,284
95,527
4,915,793
699
13,480
8,218
26,299
721,290
576,724
1,240,268
903,618
709,803
95,777
(141
8,167
Commercial and industrial loans:
216,947
194,113
45,908
68,389
27,439
20,422
332,135
905,353
12,001
110
82
47
641
Total commercial and industrial loans
194,111
80,500
27,521
20,469
332,539
373
362
298
1,033
346
799
Equipment financing agreements:
77,045
113,036
114,946
94,254
34,222
4,751
438,254
1,442
3,693
1,089
6,917
Total equipment financing agreements
113,529
116,388
97,947
35,311
4,951
258
1,826
2,453
1,081
5,749
229
1,634
1,924
600
(40
4,345
Total loans receivable:
1,014,448
883,195
856,165
1,389,283
962,190
726,457
427,662
6,259,400
12,149
12,700
1,169
17,283
4,260
8,465
33,857
Total loans receivable
1,015,282
884,364
857,607
1,418,715
966,450
735,223
428,316
631
11,400
629
15,567
602
1,629
10,581
(96
13,311
2020
533,989
558,271
930,190
800,938
553,490
271,209
101,277
3,749,364
29,935
1,009
76,524
107,468
541
5,658
3,151
72
4,770
14,192
564,465
936,857
804,089
553,562
352,503
274
136
410
(21
(704
(451
70,601
7,997
1,133
1,132
(1,358
(226
127,986
200,316
355,134
145,310
11,164
105,406
4,436
949,752
251
983
316
1,299
356,117
11,480
732,576
766,584
1,285,324
946,248
564,654
376,615
105,713
4,777,714
107,719
6,641
388
15,491
763,052
1,292,974
949,399
565,042
457,909
105,964
1,543
1,111
(2,065
(680
271,655
59,453
94,385
32,226
12,761
13,360
346,001
829,841
19,473
12,401
31,894
196
102
1,696
291,128
59,448
106,982
32,328
13,595
347,189
169
168
207
576
160
(13
123
(3,375
(2,906
140,143
144,617
129,764
52,354
8,085
3,563
478,526
431
1,945
3,851
1,934
129
206
8,496
140,574
146,562
133,615
54,288
8,214
3,769
30
1,456
5,128
2,206
9,499
4,488
287
(211
7,719
1,144,374
970,654
1,509,473
1,030,828
585,500
393,538
451,714
6,086,081
49,408
13,410
76,544
139,613
972
1,940
10,688
5,187
517
5,191
25,683
1,194,754
972,594
1,533,571
1,036,015
586,017
475,273
453,153
49
1,625
5,570
1,498
668
11,618
1,468
4,922
1,813
1,409
(2,153
4,133
17
Loans by Vintage Year and Payment Performance
Payment performance
Performing
425,956
884,371
596,574
3,853,989
Nonperforming
11,607
2,934
14,861
341,566
989,876
2,724
3,993
576,404
1,225,937
705,600
4,923,937
14,331
4,203
18,854
80,390
20,447
917,865
22
130
94,188
438,188
3,759
6,983
883,553
1,400,515
965,361
730,798
6,279,990
811
18,200
4,425
25,967
936,140
351,042
3,868,846
717
2,178
354,562
949,431
1,555
1,871
1,290,702
564,726
456,448
4,896,875
2,272
4,049
106,863
13,498
862,032
119
97
1,399
129,442
8,079
478,198
4,173
135
8,824
1,194,323
1,527,007
1,034,081
585,566
473,509
451,965
6,237,105
6,564
451
1,764
14,272
The following is an aging analysis of loans, including loans on nonaccrual status, disaggregated by loan class, as of:
30-59DaysPast Due
60-89DaysPast Due
90 Daysor MorePast Due
TotalPast Due
Current
1,599
401
2,000
1,114,540
1,021
2,003
3,024
818,997
545,463
662
1,373,174
3,282
13,394
16,676
3,852,174
1,928
2,005
487
4,421
989,448
5,210
13,881
21,097
4,921,694
575
784
917,211
5,895
2,145
12,327
432,844
11,680
4,359
18,168
34,208
6,271,749
975
855
254
2,084
1,066,894
516
(50
216
682
847,452
212
568,649
1,288
1,383,763
2,779
1,017
470
4,266
3,866,758
5,129
2,975
980
9,084
942,218
7,908
3,992
1,450
13,350
4,887,574
132
1,278
1,646
861,785
6,154
2,866
5,760
14,780
472,242
14,298
6,990
8,488
29,776
6,221,601
Nonaccrual Loans and Nonperforming Assets
The following tables represent the amortized cost basis of loans on nonaccrual status and loans past due 90 days and still accruing as of:
Nonaccrual LoansWithNo Allowance forCredit Losses
Nonaccrual LoansWithAllowance forCredit Losses
LoansPast Due90 Days StillAccruing
TotalNonperformingLoans
918
255
1,173
1,747
944
13,655
1,206
17,648
6,869
17,762
8,205
1,480
277
1,757
165
249
414
1,645
533
1,866
3,511
4,044
513
4,024
10,248
Prior to designating loans nonaccrual, the Company collected and recognized interest income of $15,000 and $361,000 for the three and six months ended June 30, 2025, respectively.
The following table details nonperforming assets as of the dates indicated:
Nonaccrual loans
Loans past due 90 days and still accruing
Total nonperforming loans receivable
Other real estate owned (“OREO”)
117
Total nonperforming assets*
14,389
* Excludes repossessed personal property of $0.6 million and $0.6 million as of June 30, 2025 and December 31, 2024, respectively.
OREO of $0.1 million is included in prepaid expenses and other assets in the accompanying Consolidated Balance Sheets as of December 31, 2024. The Company did not have any OREO at June 30, 2025.
Loan Modifications
The following table presents loan modifications made to borrowers experiencing financial difficulty, by type of modification, with related amortized cost balances, respective percentage shares of the total class of loans, and the related financial effect, as of the periods indicated:
Principal and Interest Deferment
Amortized Cost Basis
% of Total Class of Loans
Financial Effect
Commercial property loans: Retail
13,533
1.2
Two loans with three-month principal and interest deferment
The table above includes two retail commercial loans with an amortized cost of $13.5 million that were modified during the six months ended June 30, 2025.
Term Extension
20,620
2.6
One loan with term extension of six years
The modified loans above were current at June 30, 2025. No loans were modified during the three months ended June 30, 2025.
During the three and six months ended June 30, 2025 and 2024, there were no payment defaults on loans modified within the preceding 12 months.
The activity in servicing assets was as follows for the periods indicated:
Three Months Ended June 30,
6,422
6,890
Addition related to sale of loans
Amortization
(672
6,836
7,070
1,335
(1,372
(1,366
At June 30, 2025 and December 31, 2024, we serviced loans sold to unaffiliated parties of $565.7 million and $560.1 million, respectively. These represented loans that were sold for which the Bank continues to provide servicing. These loans are maintained off-balance sheet and are not included in the loans receivable balance. At June 30, 2025, all the loans serviced, except for $33.4 million of residential mortgage loans, were SBA loans.
The Company recorded servicing fee income of $1.3 million and $1.4 million for the three months ended June 30, 2025 and 2024, respectively and $2.6 million and $2.7 million for the six months ended June 30, 2025 and 2024, respectively. Servicing fee income, net of the amortization of servicing assets, is included in other operating income in the consolidated statements of income. Amortization expense was $0.7 million for both the three months ended June 30, 2025 and 2024 and $1.4 million for both the six months ended June 30, 2025 and 2024.
The fair value of servicing rights was $8.1 million at June 30, 2025 and was determined using discount rates ranging from 11.2% to 18.7% and prepayment speeds ranging from 9.9% to 27.7%, depending on the stratification of the specific right. The fair value of servicing rights was $7.9 million at December 31, 2024 and was determined using discount rates ranging from 10.8% to 27.3% and prepayment speeds ranging from 15.4% to 21.2%, depending on the stratification of the specific right.
The Company’s income tax expense was $6.1 million and $6.0 million, representing an effective income tax rate of 28.8% and 29.3% for the three months ended June 30, 2025 and 2024, respectively. The Company's income tax expense was $13.6 million and $12.5 million, representing an effective income tax rate of 29.3% and 29.7%, for the six months ended June 30, 2025 and 2024, respectively.
Management concluded that as of June 30, 2025 and December 31, 2024, a valuation allowance of $1.5 million was appropriate against certain state net operating loss carry forwards. For all other deferred tax assets, management believes it was more likely than not these deferred tax assets will be realized principally through future taxable income and reversal of existing taxable temporary differences. Net deferred tax assets were $36.8 million and $38.2 million as of June 30, 2025 and December 31, 2024, respectively.
As of June 30, 2025, the Company was subject to examination for its federal tax returns for years ending after December 31, 2020 and for state tax returns for the periods ended after December 31, 2019. As of June 30, 2025, the Company is under audit with the State of New York for tax years 2021 and 2022. During the quarter ended June 30, 2025, there was no material change to the Company’s uncertain tax positions. The Company does not expect its unrecognized tax positions to change significantly over the next twelve months.
Note 6 — Goodwill
Goodwill of $11.0 million was recorded as a result of the acquisition of an equipment financing agreements portfolio in 2016. At June 30, 2025 and December 31, 2024, the carrying amount of goodwill was $11.0 million.
The Company performed an impairment analysis in the second quarter of 2025 and determined there was no impairment as of June 30, 2025. No triggering event occurred as of, or subsequent to June 30, 2025, that would require a reassessment of goodwill.
Note 7 — Deposits
The scheduled maturities of time deposits are as follows for the periods indicated:
TimeDeposits MoreThan $250,000
Other TimeDeposits
At June 30, 2025
734,065
718,615
1,452,680
2026
422,685
492,255
914,940
2027
58,522
2028
14,119
2029 and thereafter
473
1,156,750
1,283,984
2,440,734
At December 31, 2024
1,002,785
1,254,185
2,256,970
264
19,112
19,376
48,630
177
1,003,049
1,322,234
2,325,283
At June 30, 2025, the Bank had $90.0 million of open advances and $37.5 million of term advances at the FHLB with a weighted average interest rate of 4.64% and 4.58%, respectively. At December 31, 2024, the Bank had $225.0 million of open advances and $37.5 million of term advances at the FHLB with a weighted average rate of 4.78% and 4.58%, respectively. Interest expense on borrowings for the six months ended June 30, 2025 and 2024 was $2.7 million and $3.6 million, respectively.
OutstandingBalance
WeightedAverage Rate
Open advances
90,000
4.64
225,000
4.78
Advances due within 12 months
25,000
4.44
Advances due over 12 months through 24 months
12,500
4.85
37,500
4.58
Outstanding advances
4.62
4.75
The following is financial data pertaining to FHLB advances:
Weighted-average interest rate at end of period
Weighted-average interest rate during the period
4.57
4.37
Average balance of FHLB advances
119,213
154,112
Maximum amount outstanding at any month-end
152,500
350,000
The Bank maintains a secured credit facility with the FHLB, allowing the Bank to borrow on an overnight, open (no maturity) and a term basis. The Bank had pledged $2.40 billion and $2.46 billion of loans at carrying values as collateral with the FHLB as of June 30, 2025 and December 31, 2024, respectively. The remaining available borrowing capacity was $1.52 billion and $1.69 billion at June 30, 2025 and December 31, 2024, respectively.
The Bank also had securities pledged with the FRB with market values of $27.9 million and $29.4 million at June 30, 2025 and December 31, 2024, respectively. The pledged securities provided $26.1 million; and $27.6 million in available borrowing capacity through the Fed Discount Window as of June 30, 2025 and December 31, 2024, respectively.
On August 20, 2021, the Company issued $110.0 million of Fixed-to-Floating Subordinated Notes (“2031 Notes”) with a maturity date of September 1, 2031. The 2031 Notes have an initial fixed interest rate of 3.75% per annum, payable semiannually in arrears on March 1 and September 1 of each year, up to but excluding September 1, 2026. From and including September 1, 2026 and thereafter, the 2031 Notes will bear interest at a floating rate per annum equal to the Three-Month Term SOFR plus 310 basis points, payable quarterly in arrears on March 1, June 1, September 1 and December 1 of each year. If the then current three-month term SOFR rate is less than zero, the three-month SOFR will be deemed to be zero. Debt issuance cost was $2.1 million, which is being amortized through the 2031 Notes’ maturity date. At June 30, 2025 and December 31, 2024, the balance of the 2031 Notes included in the Company’s Consolidated Balance Sheet, net of issuance cost, was $108.6 million and $108.5 million, respectively.
The Company assumed Junior Subordinated Deferrable Interest Debentures (“Subordinated Debentures”) as a result of an acquisition in 2014 with an unpaid principal balance of $26.8 million and an estimated fair value of $18.5 million. The $8.3 million discount is being amortized to interest expense through the debentures’ maturity date of March 15, 2036. A trust was formed in 2005, which issued $26.0 million of Trust Preferred Securities (“TPS”) at a 6.26% fixed rate for the first five years and a variable rate of three-month LIBOR plus 140 basis points thereafter and invested the proceeds in the Subordinated Debentures. Beginning September 15, 2023, the variable rate on the TPS changed to three-month SOFR plus 166 basis points, representing the credit spread of 140 basis points and a 26 basis point adjustment to convert three-month LIBOR to three-month SOFR. The rate on the TPS at June 30, 2025 was 5.98%. The TPS will be subject to mandatory redemption if the Subordinated Debentures are repaid by the Company. Interest is payable quarterly, and the Company has the option to defer interest payments on the Subordinated Debentures from time to time for a period not to exceed five consecutive years. At June 30, 2025 and December 31, 2024, the balance of Subordinated Debentures included in the Company’s Consolidated Balance Sheets, net of discount of $4.5 million and $4.7 million, was $22.3 million and $22.1 million, respectively. The amortization of discount was $112,000 and $104,000 for the three months ended June 30, 2025 and 2024, respectively.
Earnings per share (“EPS”) is calculated on both a basic and a diluted basis. Basic EPS excludes dilution and is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted from the issuance of common stock that then shared in earnings, excluding common shares in treasury. For diluted EPS, the weighted-average number of common shares includes the impact of unvested performance stock units (“PSUs”) under the treasury method.
Unvested restricted stock containing rights to non-forfeitable dividends are considered participating securities prior to vesting and have been included in the earnings allocation in computing basic and diluted EPS under the two-class method.
The following table is a reconciliation of the components used to derive basic and diluted EPS for the periods indicated:
(dollars in thousands, except per share and unit amounts)
Basic EPS
Less: income allocated to unvested restricted stock
122
272
Income allocated to common shares
14,995
14,322
32,517
29,393
Weighted-average shares for basic EPS
Basic EPS (1)
Effect of dilutive PSUs
105,620
77,733
105,425
76,840
Diluted EPS
Weighted-average shares for diluted EPS
Diluted EPS (1)
On a weighted-average basis, options to purchase 3,000 and 31,000 shares of common stock were excluded from the calculation of diluted earnings per share for the six months ended June 30, 2025 and 2024, respectively, because their effect would have been anti-dilutive. There were no anti-dilutive unvested PSUs outstanding for the six months ended June 30, 2025 and 91,732 anti-dilutive unvested PSUs outstanding for the six months ended June 30, 2024.
During the six months ended June 30, 2025, 53,509 PSUs were awarded to executive officers from the 2021 Equity Compensation Plan, with a fair value of $1.2 million on the grant date. 88,598 PSUs were awarded to executive officers during the six months ended June 30, 2024 with a fair value of $1.3 million on the grant date. These units have a three-year cliff vesting period and include dividend equivalent rights. Total PSUs outstanding as of June 30, 2025 were 191,804 with an aggregate grant fair value of $3.5 million. Total PSUs outstanding as of June 30, 2024 were 180,330 with an aggregate grant fair value of $3.4 million.
26
Federal bank regulatory agencies require bank holding companies and banks to maintain a minimum ratio of qualifying total capital to risk-weighted assets of 8.0% and a minimum ratio of Tier 1 capital to risk-weighted assets of 6.0%. In addition to the risk-based guidelines, federal bank regulatory agencies require bank holding companies and banks to maintain a minimum ratio of Tier 1 capital to average assets, referred to as the leverage ratio, of 4.0%.
In order for banks to be considered “well capitalized,” federal bank regulatory agencies require a minimum ratio of qualifying total capital to risk-weighted assets of 10.0% and a minimum ratio of Tier 1 capital to risk-weighted assets of 8.0%. In addition to the risk-based guidelines, federal bank regulatory agencies require depository institutions to maintain a minimum ratio of Tier 1 capital to average assets, referred to as the leverage ratio, of 5.0%.
At June 30, 2025, the Bank’s capital ratios exceeded the minimum requirements for the Bank to be considered “well capitalized” and the Company exceeded all of its applicable minimum regulatory capital ratio requirements.
A capital conservation buffer of 2.5% must be met to avoid limitations on the ability of the Bank and the Company to pay dividends, repurchase shares or pay discretionary bonuses. The Bank's capital conservation buffer was 6.39% and 6.43% and the Company's capital conservation buffer was 6.46% and 6.46% as of June 30, 2025 and December 31, 2024, respectively.
In March 2020, federal banking agencies announced an interim final rule to delay the impact on regulatory capital arising from the implementation of the Current Expected Credit Loss ("CECL") methodology contained in ASU 2016-13. The interim final rule maintains the three-year transition option in the previous rule and provides banks the option to delay for two years an estimate of CECL’s effect on regulatory capital, relative to the incurred loss methodology’s effect on regulatory capital, followed by a three-year transition period (five-year transition option). The Company and the Bank adopted the capital transition relief over the permissible five-year period. Effective January 1, 2025, the capital transition relief period terminated.
The capital ratios of Hanmi Financial and the Bank as of June 30, 2025 and December 31, 2024 were as follows:
Minimum
Minimum to Be
Regulatory
Categorized as
Actual
Requirement
“Well Capitalized”
Amount
Ratio
Total capital (to risk-weighted assets):
Hanmi Financial
996,444
15.20
524,002
8.00
N/A
Hanmi Bank
942,875
14.39
523,995
654,993
10.00
Tier 1 capital (to risk-weighted assets):
816,687
12.46
393,002
6.00
873,118
13.32
392,996
Common equity Tier 1 capital (to risk-weighted assets)
794,364
12.12
294,751
4.50
294,747
425,746
6.50
Tier 1 capital (to average assets):
10.63
307,282
4.00
11.43
305,481
381,851
5.00
979,843
15.24
514,455
927,882
14.43
514,406
643,007
801,040
385,841
859,079
13.36
385,804
778,941
12.11
289,381
289,353
417,955
301,346
11.47
299,771
374,714
27
ASC 820, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value including a three-level valuation hierarchy, and expands disclosures about fair value measurements. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The three-level fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair value are defined as follows:
Fair value is used on a recurring basis for certain assets and liabilities in which fair value is the primary basis of accounting. Additionally, fair value is used on a non-recurring basis to evaluate assets or liabilities for impairment or for disclosure purposes.
We record securities available for sale at fair value on a recurring basis. Certain other assets, such as loans held for sale, impaired loans, OREO, and core deposit intangible, are recorded at fair value on a non-recurring basis. Non-recurring fair value measurements typically involve assets that are periodically evaluated for impairment and for which any impairment is recorded in the period in which the re-measurement is performed.
The following methods and assumptions were used to estimate the fair value of each class of financial instrument below:
Securities available for sale - The fair values of securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges. If quoted prices are not available, fair values are measured using matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities, or other model-based valuation techniques requiring observable inputs other than quoted prices such as yield curve, prepayment speeds, and default rates. Level 1 securities include U.S. Treasury securities that are traded on an active exchange or by dealers or brokers in active over-the-counter markets. The fair value of these securities is determined by quoted prices on an active exchange or over-the-counter market. Level 2 securities primarily include U.S. government agency and sponsored agency mortgage-backed securities, collateralized mortgage obligations and debt securities as well as municipal bonds in markets that are active. In determining the fair value of the securities categorized as Level 2, we obtain reports from nationally recognized broker-dealers detailing the fair value of each investment security held as of each reporting date. The broker-dealers use prices obtained from nationally recognized pricing services to value our fixed income securities. The fair value of the municipal securities is determined based on pricing data provided by nationally recognized pricing services. We review the prices obtained for reasonableness based on our understanding of the marketplace, and also consider any credit issues related to the bonds. As we have not made any adjustments to the market quotes provided to us and as they are based on observable market data, they have been categorized as Level 2 within the fair value hierarchy. Level 3 securities are instruments that are not traded in the market. As such, no observable market data for the instrument is available, which necessitates the use of significant unobservable inputs.
Derivatives – The fair values of derivatives are based on valuation models using observable market data as of the measurement date (Level 2). Our derivatives are traded in an over-the-counter market where quoted market prices are not always available. Therefore, the fair values of derivatives are determined using quantitative models that utilize multiple market inputs. The inputs will vary based on the type of derivative, but could include interest rates, prices and indices to generate continuous yield or pricing curves, prepayment rates, and volatility factors to value the position. The majority of market inputs are actively quoted and can be validated through external sources, including brokers, market transactions and third-party pricing services.
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Loans held for sale - Loans held for sale includes the guaranteed portion of SBA 7(a) loans carried at the lower of cost or fair value. Management obtains quotes, bids or pricing indication sheets on all or part of the loans directly from the purchasing financial institutions. Premiums received or to be received on the quotes, bids or pricing indication sheets are indicative of the fact that cost is lower than fair value. At June 30, 2025 and December 31, 2024, the SBA 7(a) loans held for sale were recorded at its cost. We record SBA 7(a) loans held for sale on a nonrecurring basis with Level 2 inputs.
Nonperforming loans – Nonaccrual loans receivable and loans 90-days past due and still accruing interest are considered nonperforming for reporting purposes. All nonperforming loans with a carrying balance over $250,000 are individually evaluated for the amount of impairment, if any. Nonperforming loans with a carrying balance of $250,000 or less are evaluated collectively. However, from time to time, nonrecurring fair value adjustments to collateral dependent nonperforming loans, for which repayment is expected to be obtained through the sale of the underlying collateral, are recorded based on either the current appraised value of the collateral, or management’s judgment, that are then adjusted based on recent market trends. When the fair value of the collateral is less than the book value, a valuation allowance is established to carry the loan at the fair value of the collateral, and results in a Level 3 measurement.
OREO - Fair value of OREO is based primarily on third party appraisals, less costs to sell and result in a Level 3 classification of the inputs for determining fair value. Appraisals are required annually and may be updated more frequently as circumstances require and the fair value adjustments are made to OREO based on the updated appraised value of the property.
Servicing assets - On a quarterly basis, the Company utilizes a third party service to evaluate servicing assets related to loans sold to unaffiliated parties with servicing retained, and result in a Level 3 classification. Servicing assets are assessed for impairment or increased obligation based on fair value at each reporting date.
Other repossessed assets – Fair value of equipment from equipment financing agreements is based primarily on a third party valuation service, less costs to sell and result in a Level 3 classification of the inputs for determining fair value. Valuations are required at the time the asset is repossessed and may be subsequently updated periodically due to the Company’s short-term possession of the asset prior to sale or as circumstances require and the fair value adjustments are made to the asset based on its value prior to sale.
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As of June 30, 2025 and December 31, 2024, assets and liabilities measured at fair value on a recurring basis are as follows:
Level 1
Level 2
Level 3
Significant
Observable
Quoted Prices in
Inputs with No
Active Markets
Active Market
for Identical
with Identical
Unobservable
Characteristics
Inputs
Total Fair Value
Assets:
Securities available for sale:
798,273
Derivative financial instruments
3,283
3,439
816,869
4,690
5,292
As of June 30, 2025 and December 31, 2024, assets and liabilities measured at fair value on a non-recurring basis are as follows:
Inputs With No
With Identical
Collateral dependent loans (1)
18,269
Repossessed personal property
605
Collateral dependent loans (2)
Other real estate owned
568
31
The following table represents quantitative information about Level 3 fair value assumptions for assets measured at fair value on a non-recurring basis at June 30, 2025 and December 31, 2024:
ValuationTechniques
UnobservableInput(s)
Range (WeightedAverage)
Collateral dependent loans:
Market approach
Adjustments to market data
(45%) to 6% / (17)%
(1)
2,408
(11)% to 17% / 1%
(26)% to (4)% / (14)%
(11) to 17% / (1)%
(2)
(45)% to 30% / (10)%
(11)% to 17% / 5%
(11)% to 8% / (2)%
0% to 5% / 4%
ASC 825, Financial Instruments, requires disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis. The methodologies for estimating the fair value of financial assets and financial liabilities that are measured on a recurring basis or non-recurring basis are discussed above.
The estimated fair value of financial instruments has been determined by using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret market data to develop estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that we could realize in a current market
32
exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.
Recognition and Measurement of Financial Assets and Financial Liabilities (Topic 825), among other provisions, requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. Other than certain financial instruments for which we had concluded that the carrying amounts approximate fair value, the fair value estimates shown below were based on an exit price notion as of June 30, 2025, as required by ASU 2016-01. The financial instruments for which we had concluded that the carrying amounts approximate fair value include cash and due from banks, accrued interest receivable and payable, and noninterest-bearing deposits.
The estimated fair values of financial instruments were as follows:
Carrying
Financial assets:
Securities available for sale
Loans held for sale
51,126
Loans receivable, net of allowance for credit losses
6,195,404
Financial liabilities:
Noninterest-bearing deposits
Interest-bearing deposits
4,620,420
Borrowings and subordinated debentures
258,460
127,460
134,212
9,229
6,078,567
4,336,429
393,138
262,183
129,226
The methods and assumptions used to estimate the fair value of each class of financial instruments for which it was practicable to estimate that value are explained below:
Cash and due from banks – The carrying amounts of cash and due from banks approximate fair value due to the short-term nature of these instruments (Level 1).
Securities – The fair value of securities, consisting of securities available for sale, is generally obtained from market bids for similar or identical securities, from independent securities brokers or dealers, or from other model-based valuation techniques
33
described above (Level 1 and 2).
Loans held for sale – Loans held for sale are carried at the lower of aggregate cost or fair market value, as determined based upon quotes, bids or sales contract prices (Levels 1 and 2).
Loans receivable, net of allowance for credit losses – The fair value of loans receivable is estimated based on the discounted cash flow approach. To estimate the fair value of the loans, certain loan characteristics such as account types, remaining terms, annual interest rates or coupons, interest types, past delinquencies, timing of principal and interest payments, current market rates, loan-to-value ratios, loss exposures, and remaining balances are considered. Additionally, the Company’s prior charge-off rates and loss ratios as well as various other assumptions relating to credit, interest, and prepayment risks are used as part of valuing the loan portfolio. Subsequently, the loans were individually evaluated by sorting and pooling them based on loan types, credit risk grades, and payment types. Consistent with the requirements of ASU 2016-01, the fair value of the Company's loans receivable is considered to be an exit price notion as of June 30, 2025 (Level 3).
The fair value of collateral dependent loans is estimated based on the net realizable fair value of the collateral or the observable market price of the most recent sale or quoted price from loans held for sale. The Company does not record loans at fair value on a recurring basis. Nonrecurring fair value adjustments to collateral dependent loans are recorded based on the current appraised value of the collateral (Level 3).
Accrued interest receivable – The carrying amount of accrued interest receivable approximates its fair value (Level 1).
Noninterest-bearing deposits – The fair value of noninterest-bearing deposits is the amount payable on demand at the reporting date (Level 2).
Interest-bearing deposits – The fair value of interest-bearing deposits, such as savings accounts, money market checking, and certificates of deposit, is estimated based on discounted cash flows. The cash flows for non-maturity deposits, including savings accounts and money market checking, are estimated based on their historical decaying experiences. The discount rate used for fair valuation is based on interest rates currently being offered by the Bank on comparable deposits as to amount and term (Level 3).
Borrowings and subordinated debentures – Borrowings consist of FHLB advances, subordinated debentures and other borrowings. Discounted cash flows based on current market rates for borrowings with similar remaining maturities are used to estimate the fair value of borrowings (Level 2 and 3).
Accrued interest payable – The carrying amount of accrued interest payable approximates its fair value (Level 1).
Note 12 — Off-Balance Sheet Commitments
The Bank is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. These instruments involve, to varying degrees, elements of credit and interest rate risk similar to the risk involved with on-balance sheet items.
The Bank’s exposure to losses in the event of non-performance by the other party to commitments to extend credit and standby letters of credit is represented by the contractual notional amount of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for extending loan facilities to customers. The Bank evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Bank upon an extension of credit, was based on management’s credit evaluation of the counterparty. Collateral held varies but may include accounts receivable, inventory, premises and equipment, and income-producing or borrower-occupied properties.
Some of the commitments to fund existing loans, lines of credit and letters of credit are expected to expire without being drawn upon. Therefore, the total commitments do not necessarily represent future cash requirements. As of June 30, 2025, the Bank was obligated on $150.0 million of letters of credit to the FHLB of San Francisco, which were being used as collateral for $150.0 million in public fund deposits from the State of California.
The following table shows the distribution of total loan commitments as of the dates indicated:
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 was maintained at a level believed to be sufficient to absorb current expected lifetime losses related to these unfunded credit facilities. The determination of the allowance adequacy was based on periodic evaluations of the unfunded credit facilities including an assessment of the probability of commitment usage, credit risk factors for loans outstanding to these same customers, and the terms and expiration dates of the unfunded credit facilities.
Activity in the allowance for credit losses related to off-balance sheet items was as follows for the periods indicated:
2,399
2,297
2,074
2,474
107
(287
432
(464
2,506
2,010
The Company enters into leases in the normal course of business primarily for bank branch offices, back-office operations locations, business development offices, information technology data centers and information technology equipment. The Company’s leases have remaining terms ranging from one month to nine years, some of which include renewal or termination options to extend the lease for up to ten years.
The Company includes lease extension and termination options in the lease term if, after considering relevant economic factors, it is reasonably certain the Company will exercise the option. In addition, the Company has elected to account for any non-lease components in its real estate leases as part of the associated lease component. The Company has also elected not to recognize leases with original lease terms of 12 months or less (short-term leases) on the Company’s balance sheet.
Leases are classified as operating or finance leases at the lease commencement date. Lease expense for operating leases and short-term leases is recognized on a straight-line basis over the term of the lease. Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.
35
Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of the lease payments over the lease term.
As of June 30, 2025, the outstanding balances for our right-of-use asset and lease liability were $34.6 million and $38.7 million, respectively. The outstanding balances of the right-of-use asset and lease liability were $35.6 million and $39.8 million, respectively, as of December 31, 2024. The right-of-use asset is reported in prepaid expenses and other assets line item and lease liability is reported in accrued expenses and other liabilities line item on the Consolidated Balance Sheets.
In determining the discount rates, since most of our leases do not provide an implicit rate, we used our incremental borrowing rate provided by the FHLB of San Francisco based on the information available at the commencement date to calculate the present value of lease payments.
At June 30, 2025, future minimum rental commitments under these non-cancelable operating leases, with initial or remaining terms of one year or more, were as follows:
4,337
7,659
7,447
6,985
2029
6,295
Thereafter
10,129
Remaining lease commitments
42,852
Interest
(4,165
Present value of lease liability
38,687
Net lease expense recognized for the three months ended June 30, 2025 and 2024 were $2.1 million and $2.5 million, respectively. This included operating lease costs of $2.1 million and $2.4 million for the three months ended June 30, 2025 and 2024, respectively. Net lease expense recognized for the six months ended June 30, 2025 and 2024 was $4.2 million and $4.7 million, respectively. Operating lease costs were $4.3 million and $4.6 million for the six months ended June 30, 2025 and 2024, respectively. Sublease income for operating leases was immaterial for both the three and six months ended June 30, 2025 and 2024.
Weighted average remaining lease terms for the Company's operating leases were 5.93 years and 6.35 years as of June 30, 2025 and December 31, 2024, respectively. Weighted average discount rates used for the Company's operating leases were 3.37% and 3.30% as of June 30, 2025 and December 31, 2024, respectively.
Cash paid and included in cash flows from operating activities for amounts used in the measurement of the lease liability of the Company's operating leases was $2.2 million and $2.0 million for the three months ended June 30, 2025 and 2024, respectively, and $4.4 million and $4.2 million for the six months ended June 30, 2025 and 2024, respectively.
Note 14 — Liquidity
As of June 30, 2025, Hanmi Financial had $8.9 million in cash on deposit with its bank subsidiary and $43.2 million of U.S. Treasury securities at fair value. As of December 31, 2024, the Company had $11.4 million in cash on deposit with its bank subsidiary and $38.8 million of U.S. Treasury securities at fair value. Management believes that Hanmi Financial, on a stand-alone basis, had adequate liquid assets to meet its current debt obligations.
The principal objective of our liquidity management program is to maintain the Bank’s ability to meet the day-to-day cash flow requirements of its customers who wish either to withdraw funds or to draw upon credit facilities to meet their cash needs. Management believes that the Bank, on a stand-alone basis, has adequate liquid assets to meet its current obligations. The Bank’s primary funding source will continue to be deposits originating from its branch platform. The Bank’s wholesale funds historically consisted of FHLB advances, brokered deposits, as well as State of California time deposits. As of June 30, 2025 and December 31, 2024, the Bank had $127.5 million and $262.5 million of FHLB advances, and $85.5 million and $60.7 million of brokered deposits,
respectively. As of June 30, 2025 and December 31, 2024, the Bank had $150.0 million and $120.0 million of State of California time deposits, respectively.
We monitor the sources and uses of funds on a regular basis to maintain an acceptable liquidity position. The Bank’s primary source of borrowings is the FHLB, from which the Bank is eligible to borrow up to 30% of its assets. As of June 30, 2025 and December 31, 2024, the total borrowing capacity available, based on pledged collateral was $1.80 billion and $1.69 billion, respectively. The remaining available borrowing capacity was $1.52 billion and $1.30 billion as of June 30, 2025 and December 31, 2024, respectively.
The amount that the FHLB is willing to advance differs based on the quality and character of qualifying collateral pledged by the Bank, and the FHLB may adjust the advance rates for qualifying collateral upwards or downwards from time to time. To the extent deposit renewals and deposit growth are not sufficient to fund maturing and withdrawable deposits, repay maturing borrowings, fund existing and future loans, equipment financing agreements and securities, and otherwise fund working capital needs and capital expenditures, the Bank may utilize the remaining borrowing capacity from its FHLB borrowing arrangement.
As a means of augmenting its liquidity, the Bank also had an available borrowing source of $26.1 million from the Federal Reserve Discount Window, to which the Bank pledged securities with a carrying value of $33.4 million, with no borrowings outstanding as of June 30, 2025. At December 31, 2024, the available borrowing capacity through the Federal Reserve Bank of San Francisco Discount Window was $27.6 million on pledged securities with market values of $29.4 million, with no borrowings outstanding. The Bank also maintains a line of credit for repurchase agreements up to $100.0 million. The Bank also had three unsecured federal funds lines of credit totaling $140.0 million with no outstanding balances as of June 30, 2025 or December 31, 2024.
Note 15 — Derivatives and Hedging Activities
Risk Management Objective of Using Derivative
The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its assets and liabilities and through the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates.
Derivatives Designated as Hedging Instruments - Cash Flow Hedges of Interest Rate Risk
The Company’s objectives in using interest rate derivatives are to add stability to interest income and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of fixed-rate amounts from a counterparty in exchange for the Company making variable-rate payments over the life of the agreements without exchange of the underlying notional amount. Such derivatives were used to hedge the variable cash flows associated with existing variable-rate assets. During the fourth quarter of 2023, the Company entered into a $100.0 million notional interest rate swap designated as a cash flow hedge, with an effective date of May 1, 2024 and a maturity date of May 1, 2026, to hedge a pool of Prime Rate-indexed loans against falling rates. The principal balance of the loan pool designated for the Prime Rate-indexed loans was $131.4 million as of June 30, 2025. During the first quarter of 2024, the Company entered into a $75.0 million notional interest rate swap designated as a cash flow hedge, with an effective date of May 1, 2024 and a maturity date of May 1, 2026, to hedge a pool of one-month SOFR-indexed loans against falling rates. The principal balance of the loan pool designated for the SOFR-indexed loans was $101.5 million as of June 30, 2025.
For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in accumulated other comprehensive income and subsequently reclassified into interest income in the same period(s) during which the hedged transaction affects earnings. Management evaluated the effectiveness of the Company’s derivatives designated as cash flow hedges at inception and at the balance sheet date and determined they are effective. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest income as interest payments are received on the Company’s variable-rate asset. During the next 12 months, the Company estimates that an additional $0.1 million will be reclassified as a decrease to interest income.
37
Derivatives Not Designated as Hedging Instruments
The Company also enters into interest rate swap agreements between the Company and its customers and other third-party counterparties. The Company enters into “back to back swap” arrangements whereby the Company executes interest rate swap agreements with its customers and acquires an offsetting swap position from a third-party counterparty. These derivative financial statements are accounted for at fair value, with changes in fair value recognized in the Company’s Consolidated Statements of Income.
The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Balance Sheet as of June 30, 2025 and December 31, 2024.
As of June 30, 2025
Derivative Assets
Derivative Liabilities
Notional Amount
Balance Sheet Location
Derivatives not designated as hedging instruments
Interest rate products
100,485
Other Assets
Other Liabilities
3,274
Total derivatives not designated as hedging instruments
Derivatives designated as hedging instruments
175,000
Total derivatives designated as hedging instruments
As of December 31, 2024
101,892
4,650
642
38
The table below presents the effect of cash flow hedge accounting on Accumulated Other Comprehensive Income for the three and six months ended June 30, 2025 and 2024.
Derivatives in Subtopic 815-20 Hedging Relationships
Amount of Gain or (Loss) Recognized in OCI on Derivative
Amount of Gain or (Loss)Recognized in OCI IncludedComponent
Amount of Gain or (Loss)Recognized in OCI ExcludedComponent
Location of Gain or (Loss) Recognized from Accumulated Other Comprehensive Income into Income
Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income
Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income Included Component
Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income Excluded Component
Derivatives in Cash Flow Hedging Relationships
Interest Rate Products
(234
Interest Income
Three Months Ended June 30, 2024
39
Six Months Ended June 30, 2025
44
(493
Six Months Ended June 30, 2024
The table below presents the effect of cash flow hedge accounting on the Income Statement for the three and six months ended June 30, 2025 and 2024.
Location and Amount of Gain or (Loss) Recognized in Income on Cash Flow Hedging Relationship
Interest Expense
Gain or (loss) on cash flow hedging relationships in Subtopic 815-20
Interest contracts
Amount of gain or (loss) reclassified from accumulated other comprehensive loss into income
Amount of gain or (loss) reclassified from accumulated other comprehensive loss into income - included component
40
The table below presents the effect of the Company’s derivative financial instruments that are not designated as hedging instruments on the Income Statement for the three and six months ended June 30, 2025 and 2024.
Derivatives Not Designated as HedgingInstruments under Subtopic 815-20
Location of Gain or (Loss) Recognized in Income on Derivative
Amount of Gain or (Loss)Recognized in Income on Derivative
Other income
(16
No fee income was recognized from its derivative financial instruments for the six months ended June 30, 2025 or 2024.
41
The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of June 30, 2025 and December 31, 2024. The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The derivative assets are located within the prepaid and other assets line item on the Consolidated Balance Sheets and the derivative liabilities are located within the accrued expenses and other liabilities line item on the Consolidated Balance Sheets.
Offsetting of Derivative Assets
Gross Amounts Not Offset in the Consolidated Balance Sheets
Gross Amounts of Recognized Assets
Gross Amounts Offset in the Consolidated Balance Sheets
Net Amounts of Assets presented in the Consolidated Balance Sheets
Financial Instruments
Cash Collateral Received
Net Amount
Derivatives
2,380
355
Offsetting of Derivative Liabilities
Gross Amounts of Recognized Liabilities
Net Amounts of Liabilities presented in the Consolidated Balance Sheets
Cash Collateral Provided
2,891
4,048
The Company has agreements with each of its derivative counterparties that contain a provision stating if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations. In addition, these agreements may also require the Company to post additional collateral should it fail to maintain its status as a well- or adequately- capitalized institution.
As of June 30, 2025 and December 31, 2024, the fair value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $0. As of June 30, 2025 and December 31, 2024, no collateral was provided related to these agreements.
Note 16 — Segment Reporting
The Company has one reportable segment, Banking, as determined by the Chief Financial Officer, who is designated the chief operating decision maker, based upon information provided about the Company's products and services offered, which are primarily banking operations. The Banking segment is also distinguished by the level of information provided to the chief operating decision maker, who uses such information to review performance of various components of the business. The chief operating decision maker uses net interest income, net interest margin, non-interest income, non-interest expense, credit loss expense, and net income to assess performance and in the determination of allocating resources. These metrics, coupled with monitoring of budget to actual results, are used in assessment performance and in establishing compensation. Loans, investments, and deposits provide the revenues in our banking operations. Interest expense, provisions for credit losses, and salaries and benefits provide the significant expenses in our banking operations.
The following table presents information reported internally for performance assessment by the chief operating decision maker for the following periods:
Banking Segment
Quarter Ended June 30,
Net interest income
Noninterest income
Segment revenues
65,210
56,677
Other revenues
Total consolidated revenues
Less:
Noninterest expenses
Segment net income
Reconciliation of profit:
Adjustments and reconciling items
Consolidated net income
43
128,027
115,064
Segment assets
Other assets
Consolidated assets
Note 17 — Subsequent Events
On July 24, 2025, the Company announced that the Board of Directors of the Company declared a quarterly cash dividend of $0.27 per share to be paid on August 20, 2025 to stockholders of record as of the close of business on August 4, 2025.
On July 4, 2025, President Trump signed into law the legislation formally titled "An Act to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14" and commonly referred to as the One Big Beautiful Bill (the "Act"). The Company is currently evaluating income tax implications of the Act. The Company does not currently expect the Act to have a material impact on the Company's financial statements.
The following is management’s discussion and analysis of our results of operations and financial condition as of and for the three and six months ended June 30, 2025. This analysis should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Annual Report on Form 10-K”) and with the unaudited consolidated financial statements and notes thereto set forth in this Quarterly Report on Form 10-Q for the period ended June 30, 2025 (this “Report”).
Some of the statements contained in this Report are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements in this Report other than statements of historical fact are “forward–looking statements” for purposes of federal and state securities laws, including, but not limited to, statements about anticipated future operating and financial performance, financial condition and liquidity, business strategies, regulatory and competitive outlook, investment and expenditure plans, capital and financing needs and availability, plans and objectives of management for future operations, developments regarding our capital and strategic plans and other similar forecasts and statements of expectation and statements of assumptions underlying any of the foregoing. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” or “continue,” or the negative of such terms and other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.
Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, financial condition, levels of activity, performance or achievements to differ from those expressed or implied by the forward-looking statements. These factors include:
For additional information concerning risks we face, see “Part II, Item 1A. Risk Factors” in this Report and “Item 1A. Risk Factors” in Part I of the 2024 Annual Report on Form 10-K. We undertake no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made, except as required by law.
We have established various accounting policies that govern the application of GAAP in the preparation of our financial statements. Our significant accounting policies are described in the Notes to the consolidated financial statements in our 2024 Annual Report on Form 10-K. We had no significant changes in what constituted our accounting policies since the filing of our 2024 Annual Report on Form 10-K.
Certain accounting policies require us to make significant estimates and assumptions that have a material impact on the carrying value of certain assets and liabilities, and we consider these to be critical accounting policies. For a description of these critical accounting policies, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies” in our 2024 Annual Report on Form 10-K. Actual results could differ significantly from these estimates and assumptions, which could have a material impact on the carrying value of assets and liabilities at the balance sheet dates and our results of operations for the reporting periods. Management has discussed the development and selection of these critical accounting policies with the Audit Committee of the Company’s Board of Directors.
Net income was $15.1 million, or $0.50 per diluted share, for the three months ended June 30, 2025 compared with $14.5 million, or $0.48 per diluted share, for the same period a year ago. The increase in net income was driven by a $8.5 million increase in net interest income, offset by a $6.6 million increase in credit loss expense, a $1.1 million increase in noninterest expense, and a $0.1 million higher income tax expense. Credit loss expense for the second quarter of 2025 was $7.6 million compared with a $1.0 million expense for the second quarter of 2024.
Net income was $32.8 million, or $1.08 per diluted share, for the six months ended June 30, 2025 compared with $29.6 million, or $0.97 per diluted share, for the same period a year ago. The $3.2 million increase in net income was driven by a $13.0 million increase in net interest income and a $0.4 million decrease in noninterest expense, offset by increases in credit loss expense of $9.2 million and income tax expense of $1.0 million. Credit loss expense for the six months ended June 30, 2025 was $10.4 million compared with credit loss expense of $1.2 million for the six months ended June 30, 2024.
Additional significant financial highlights include:
Our primary source of revenue is net interest income, which is the difference between interest derived from earning assets, and interest paid on liabilities obtained to fund those assets. Our net interest income is affected by changes in the level and mix of
46
interest-earning assets and interest-bearing liabilities, referred to as volume changes. Net interest income is also affected by changes in the yields earned on assets and rates paid on liabilities, referred to as rate changes. Interest rates charged on loans are affected principally by changes to market interest rates, the demand for loans receivable, the supply of money available for lending purposes, and other competitive factors. Those factors are, in turn, affected by general economic conditions and other factors beyond our control, such as federal economic policies, the general supply of money in the economy, legislative tax policies, governmental budgetary matters, and the actions of the Federal Reserve.
The following table shows the average balance of assets, liabilities and stockholders’ equity, the amount of interest income, and interest expense, the average yield or rate for each category of interest-earning assets and interest-bearing liabilities, and the net interest spread and the net interest margin on a taxable-equivalent basis for the periods indicated. All average balances are daily average balances.
June 30, 2024
Average
Income /
Yield /
Balance
Expense
Rate
Interest-earning assets:
Loans receivable (1)
6,257,741
5.93
6,089,440
5.99
Securities (2)
993,975
2.55
979,671
2.17
FHLB stock
8.65
8.77
Interest-bearing deposits in other banks
200,266
4.26
180,177
5.16
Total interest-earning assets
7,468,367
5.44
7,265,673
5.46
Noninterest-earning assets:
53,977
55,442
(70,222
(67,908
250,241
252,410
7,702,363
7,505,617
Interest-bearing liabilities:
Demand: interest-bearing
81,308
0.15
85,443
Money market and savings
2,109,221
17,342
3.30
1,845,870
17,324
3.77
Time deposits
2,434,659
24,553
4.05
2,453,154
29,139
Total interest-bearing deposits
4,625,188
3.64
4,384,467
4.27
60,134
169,525
130,880
4.84
130,239
5.07
Total interest-bearing liabilities
4,816,202
3.68
4,684,231
4.30
Noninterest-bearing liabilities and equity:
Demand deposits: noninterest-bearing
1,934,985
1,883,765
Other liabilities
140,053
162,543
Stockholders’ equity
811,123
775,078
Cost of deposits (3)
2.56
2.98
Net interest spread (taxable equivalent basis) (4)
1.76
1.16
Net interest margin (taxable equivalent basis) (5)
3.07
2.69
48
The table below shows changes in interest income and interest expense and the amounts attributable to variations in interest rates and volumes for the periods indicated. The variances attributable to simultaneous volume and rate changes have been allocated to the change due to volume and the change due to rate categories in proportion to the relationship of the absolute dollar amount attributable solely to the change in volume and to the change in rate.
June 30, 2025 vs June 30, 2024
Increases (Decreases) Due to Change In
Volume
2,762
(925
1,837
76
947
1,023
(448
(184
3,104
(431
2,673
(1
2,526
(2,508
(140
(4,446
(4,586
(1,219
(1,212
(71
(63
1,174
(7,020
(5,846
Change in net interest income
1,930
6,589
8,519
For the three months ended June 30, 2025 and 2024, net interest income was $57.1 million and $48.6 million, respectively. The increase of $8.5 million was due to a decrease in interest expense and an increase in interest and dividend income. The net interest spread and net interest margin, on a taxable equivalent basis, for the quarter ended June 30, 2025, were 1.76% and 3.07%, respectively, compared with 1.16% and 2.69%, respectively, for the same period in 2024. Interest and dividend income increased $2.7 million, or 2.7%, to $101.3 million for the three months ended June 30, 2025 from $98.7 million for the same period in 2024 primarily due to an increase in the average balance of loans. Interest expense decreased $5.8 million, or 11.7%, to $44.2 million for the three months ended June 30, 2025 from $50.0 million for the same period in 2024 primarily due to decreases in deposit rates.
The average balance of interest earning assets increased $202.7 million, or 2.8%, to $7.47 billion for the three months ended June 30, 2025, from $7.27 billion for the three months ended June 30, 2024. The average balance of loans increased $168.3 million, or 2.8%, to $6.26 billion for the three months ended June 30, 2025, from $6.09 billion for the three months ended June 30, 2024. The average balance of securities was $1.0 billion for the three months ended June 30, 2025 and 2024. The average balance of interest-bearing deposits at other banks increased $20.1 million, or 11.1%, to $200.3 million for the three months ended June 30, 2025, from $180.2 million for the three months ended June 30, 2024.
The average yield on interest-earning assets, on a taxable equivalent basis, decreased two basis points to 5.44% for the three months ended June 30, 2025, from 5.46% for the three months ended June 30, 2024. The average yield on loans decreased to 5.93% for the three months ended June 30, 2025, from 5.99% for the three months ended June 30, 2024. The average yield on securities, on a taxable equivalent basis, increased to 2.55% for the three months ended June 30, 2025, from 2.17% for the three months ended June 30, 2024. The increase in the average yield on securities was primarily due to the Company using the proceeds from lower-coupon maturing securities to reinvest into higher-coupon securities.
The average balance of interest-bearing liabilities increased $132.0 million, or 2.8%, to $4.82 billion for the three months ended June 30, 2025 compared with $4.68 billion for the three months ended June 30, 2024. The average balances of money market and savings accounts and increased $263.4 million, offset partially by decreases in borrowings of $109.4 million and in interest-bearing demand deposits and time deposits of $4.1 million and $18.5 million, respectively. The increase in average balances of money market and savings accounts was due to an increase in new commercial accounts. The decrease in the average balance of time deposits was due to the shift to money market and savings accounts as market rates decreased. The decrease in the average balance of borrowings during the three months ended June 30, 2025 was due to the increase in the average balance on interest-bearing deposits.
The average cost of interest-bearing liabilities was 3.68% and 4.30% for the three months ended June 30, 2025 and 2024, respectively. The average cost of interest-bearing deposits decreased 63 basis points to 3.64% for the three months ended June 30, 2025, compared with 4.27% for the three months ended June 30, 2024. The average cost of time deposits decreased 73 basis points to 4.05% for the three months ended June 30, 2025 compared with 4.78% for the three months ended June 30, 2024. The average cost of money market and savings accounts decreased 47 basis points to 3.30% for the three months ended June 30, 2024 compared with 3.77% for the three months ended June 30, 2024. The decrease in the cost of deposits was due to a decrease in deposit market rates. The average cost of borrowings increased to 4.58% for the three months ended June 30, 2025 compared with 4.50% for the three months ended June 30, 2024, as the lower-rate borrowings matured or were paid off.
The following table shows the average balance of assets, liabilities and stockholders’ equity; the amount of interest income, and interest expense; the average yield or rate for each category of interest-earning assets and interest-bearing liabilities; and the net interest spread and the net interest margin on a taxable-equivalent basis for the periods indicated. All average balances are daily average balances.
6,223,825
5.94
6,113,664
997,716
2.52
974,596
2.12
715
8.79
8.82
188,214
3,968
4.25
190,950
5.18
7,426,140
7,295,595
53,824
56,912
(69,936
(68,507
249,697
248,555
7,659,725
7,532,555
80,344
56
0.14
85,922
61
2,073,421
33,779
3.29
1,830,478
33,877
3.72
2,390,249
48,648
4.10
2,480,492
58,195
4.72
4,544,014
3.66
4,396,892
4.21
119,460
165,972
130,799
130,163
5.06
4,794,273
4,693,027
4.24
1,915,577
1,902,477
142,341
163,533
807,534
773,518
2.58
2.94
1.73
1.22
3.05
2.74
50
2,770
(1,721
1,049
1,995
2,237
(4
(84
(862
(946
2,926
(590
2,336
4,390
(4,488
(98
(2,273
(7,274
(9,547
(1,000
157
(843
(144
(128
1,129
(11,750
(10,621
1,797
11,160
12,957
For the six months ended June 30, 2025 and 2024, net interest income was $112.2 million and $99.3 million, respectively. The increase of $12.9 million was primarily due to a decrease in interest expense due to decreases in deposit rates. The net interest spread and net interest margin, on a taxable equivalent basis, for the six months ended June 30, 2025, were 1.73% and 3.05%, respectively, compared with 1.22% and 2.74%, respectively, for the same period in 2024. Interest and dividend income increased $2.3 million, or 1.2%, to $200.6 million for the six months ended June 30, 2025 from $198.3 million for the same period in 2024. Interest expense decreased $10.6 million, or 10.7%, to $88.4 million for the six months ended June 30, 2025 from $99.0 million for the same period in 2024 primarily due to decreases in deposit rates.
The average balance of interest earning assets increased $130.5 million, or 1.8%, to $7.43 billion for the six months ended June 30, 2025, from $7.30 billion for the six months ended June 30, 2024. The average balance of loans increased $110.2 million, or 1.8%, to $6.22 billion for the six months ended June 30, 2025, from $6.11 billion for the six months ended June 30, 2024. The average balance of securities was $1.00 billion for the six months ended June 30, 2025 and 2024. The average balance of interest-bearing deposits at other banks decreased $2.7 million, or 1.4%, to $188.2 million for the six months ended June 30, 2025, from $191.0 million for the six months ended June 30, 2024.
The average yield on interest-earning assets, on a taxable equivalent basis, decreased two basis points to 5.44% for the six months ended June 30, 2025, from 5.46% for the six months ended June 30, 2024. The average yield on loans decreased to 5.94% for the six months ended June 30, 2025, from 6.00% for the six months ended June 30, 2024. The average yield on securities, on a taxable equivalent basis, increased to 2.52% for the six months ended June 30, 2025, from 2.12% for the six months ended June 30, 2024. The increase in the average yield on securities was primarily due to the Company using the proceeds from lower-coupon maturing securities to reinvest into higher-coupon securities.
51
The average balance of interest-bearing liabilities increased $101.2 million, or 2.2%, to $4.8 billion for the six months ended June 30, 2025 compared with $4.6 billion for the six months ended June 30, 2024 due to a $147.1 million increase in the average balance of interest-bearing deposits offset by a $46.5 million decrease in the average balance of borrowings. The average balances of money market and savings accounts increased by $242.9 million while the average balance of time deposits decreased $90.2 million. The increase in average balances of money market and savings accounts was due to an increase in new commercial accounts. The decrease in the average balance of time deposits was due to the shift to money market and savings accounts as market rates decreased. The decrease in the average balance of borrowings was due to an increase in the average balance of interest-bearing deposits.
For the second quarter of 2025, the Company recorded $7.6 million of credit loss expense, comprised of a $7.5 million provision for loan losses and a $0.1 million provision recorded for off-balance sheet items. For the same period in 2024, the Company recorded $1.0 million of credit loss expense, comprised of a $1.2 million provision for loan losses, partially offset by a $0.2 million recovery for off-balance sheet items. The $6.6 million increase in credit loss expense reflected an increase in net charge-offs as well as an increase in quantitative and qualitative estimated loss rates. Net charge-offs included an $8.6 million loan charge-off on a syndicated commercial real estate office loan designated as nonaccrual, which had an associated specific allowance of $6.2 million assigned in the first quarter of 2025.
For the six months ended June 30, 2025, the Company recorded $10.4 million of credit loss expense, comprised of a $9.9 million provision for loan losses and a $0.5 million provision recorded for off-balance sheet items. For the same period in 2024, the Company recorded $1.2 million of credit loss expense, comprised of a $1.7 million provision for loan losses, partially offset by a $0.5 million recovery for off-balance sheet items. The $8.2 million increase in provision for loan losses was the result of a $9.9 million increase in net charge-offs, partially offset by a $2.7 million decrease in specific allowances.
See also “Allowance for Credit Losses and Allowance for Credit Losses Related to Off-Balance Sheet Items” for further details.
The following table sets forth the various components of noninterest income for the periods indicated:
Increase(Decrease)
Percent
(260
(10.70
)%
184
14.41
Servicing income
754
796
(42
(5.28
Bank-owned life insurance income
708
638
70
10.97
All other operating income
819
908
(89
(9.80
Service charges, fees & other
5,911
6,048
(2.27
Gain on sale of SBA loans
31.39
(365
(100.00
0.17
For the three months ended June 30, 2025 and 2024, noninterest income was $8.1 million. A $0.5 million increase in gain on sale of SBA loans and a $0.2 million increase in trade finance and other service charges was offset by a $0.4 million decrease in gain on sale of residential mortgage loans and $0.3 million decrease in service charges on deposit accounts due to reductions in the number of transactions eligible for service charges.
52
During the second quarter of 2025, the Company sold $35.4 million of SBA loans, recognizing a net gain of $2.2 million. There were no residential mortgage loans sold during the second quarter of 2025. During the second quarter of 2024, the Company sold $19.5 million of residential loans, recognizing a net gain of $0.4 million, and sold $23.5 million of SBA loans, recognizing a net gain of $1.6 million. Trade premiums on SBA loan sales were 7.61% and 8.54% for the three months ended June 30, 2025 and 2024, respectively.
(491
(10.07
167
6.21
1,486
1,508
(1.46
942
75
7.96
1,712
(125
(6.80
11,460
11,856
(396
(3.34
1,035
33.11
(633
(78.34
0.04
For the six months ended June 30, 2025 and 2024, noninterest income was $15.8 million. The $1.0 million increase in gain on sale of SBA loans and $0.2 million increase in trade finance and other service charges was offset by a $0.6 million decrease in gain on sale of residential mortgage loans and $0.5 million decrease in service charges on deposit accounts due to reductions in the number of transactions eligible for service charges.
During the six months ended June 30, 2025, the Company sold $10.0 million of residential mortgage loans, recognizing a gain of $0.2 million, and sold $67.6 million of SBA loans, recognizing a net gain of $4.2 million. During the six months ended June 30, 2024, the Company sold $49.2 million of residential loans, recognizing a net gain of $0.8 million, and sold $49.1 million of SBA loans, recognizing a net gain of $3.1 million. Trade premiums on SBA loans sales were 7.71% and 7.85% for the six months ended June 30, 2025 and 2024, respectively.
The following table sets forth the components of noninterest expense for the periods indicated:
1,635
(263
(5.71
1.11
(24
(1.37
(55
(9.65
19.28
All other operating expenses
3,567
2,992
19.22
Subtotal
36,745
34,707
2,038
5.87
Branch consolidation expense
(301
Other real estate owned (income) expense
(461
(467
N/M
Repossessed personal property expense
63
262
(199
(75.95
1,071
3.04
53
For the three months ended June 30, 2025, noninterest expense was $36.3 million, an increase of $1.1 million, or 3.0%, compared with $35.3 million for the same period in 2024. The increase was mainly attributed to a $1.6 million increase in salaries and employee benefits, a $0.6 million increase in all other operating expenses, and a $0.1 million increase in advertising and promotion, partially offset by a $0.3 million decrease in occupancy and equipment due to branch consolidations and a $0.5 million increase in other real estate owned income due to the gain on sale of other real estate owned. The increase in salaries and employee benefits was mainly attributed to annual merit increases and a decrease in capitalized salaries related to loan originations for the three months ended June 30, 2025 compared with the same period in 2024. Advertising and promotion increased $0.1 million due to new branch promotional expenses. The increase in other operating expenses was due to loan and deposit operations.
1,022
2.43
8,843
(49
(0.55
3.83
(12.30
(12.03
(194
(12.31
6,742
6,451
291
4.51
71,698
70,940
758
1.07
(420
(399
(88.47
(390
(0.54
For the six months ended June 30, 2025, noninterest expense was $71.3 million, a decrease of $0.4 million, or 0.5%, compared with $71.7 million for the same period in 2024. The decrease was mainly attributed to a $0.4 million decrease in professional fees, a $0.2 million decrease in advertising and promotion, a $0.3 million branch consolidation expense during the six months ended June 30, 2024, a $0.4 million increase in other real estate owned income due to the sale of other real estate owned and $0.4 million decrease in repossessed personal property expense, offset by a $1.0 million increase in salaries and benefits. The increase in salaries and employee benefits was primarily due to an increase in annual merit raises and promotions. Professional fees decreased $0.4 million for the six months ended June 30, 2025 due to the completion of a loan system implementation in 2024. Advertising and promotion decreased $0.2 million due to a decrease in deposit marketing campaign expenses.
Income tax expense was $6.1 million and $6.0 million, representing an effective income tax rate of 28.8% and 29.3% for the three months ended June 30, 2025 and 2024, respectively. Income tax expense was $13.6 million and $12.5 million, representing an effective income tax rate of 29.3% and 29.7% for the six months ended June 30, 2025 and 2024, respectively.
As of June 30, 2025, our securities portfolio consisted of U.S. government agency and sponsored agency mortgage-backed securities, collateralized mortgage obligations and debt securities, tax-exempt municipal bonds and U.S. Treasury securities. Most of these securities carry fixed interest rates. Other than holdings of U.S. government agency and sponsored agency obligations, there were no securities of any one issuer exceeding 10% of stockholders’ equity as of June 30, 2025 or December 31, 2024.
Securities increased $12.3 million to $918.1 million at June 30, 2025 from $905.8 million at December 31, 2024, mainly attributed to $101.0 million in securities purchases and a decrease in unrealized losses on securities, net of tax, of $15.9 million during the six months ended June 30, 2025, partially offset by $109.6 million in payments and maturities.
54
The following table summarizes the contractual maturity schedule for securities, at amortized cost, and their cost weighted average yield, which is calculated using amortized cost as the weight, as of June 30, 2025:
After OneYear But
After FiveYears But
Within OneYear
Within FiveYears
Within TenYears
After TenYears
Yield
80,844
4.46
39,064
3.51
0.00
4.15
67,608
1.98
366,980
1.91
1.92
0.76
3,203
3.46
68,612
2.48
2.49
81
1.31
1.03
202,489
4.31
4.29
39,496
1.52
47,791
2.25
40,976
1.49
51,075
2.32
69,007
1.96
638,081
2.73
53,062
1.33
22,502
1.34
3.47
90,139
2.84
122,069
1.69
660,583
2.67
As of June 30, 2025 and December 31, 2024, loans receivable (excluding loans held for sale), net of deferred loan fees and costs, discounts and allowance for credit losses, were $6.24 billion and $6.18 billion, respectively. For the six months ended June 30, 2025, there was $675.5 million in new loan production, offset partially by $321.8 million in loan sales and payoffs, and amortization and other reductions of $258.1 million. Loan production consisted of commercial real estate loans of $258.6 million, residential mortgages of $138.8 million, commercial and industrial loans of $95.8 million, equipment financing agreements of $80.3 million and SBA loans of $102.1 million.
The table below shows the maturity distribution of outstanding loans, before the allowance for credit losses as of June 30, 2025. In addition, the table shows the distribution of such loans between those with floating or variable interest rates and those with fixed or predetermined interest rates.
After OneYear butWithinThreeYears
After ThreeYears butWithinFiveYears
After FiveYears butWithinFifteenYears
AfterFifteenYears
169,350
306,509
425,818
136,850
78,013
145,223
267,240
348,296
44,739
16,523
241,831
248,758
46,353
9,957
9,554
338,734
464,636
424,740
107,913
37,813
895,138
1,287,143
1,245,207
299,459
141,903
76,076
3,996
7,103
230
4,250
982,286
978,317
1,291,139
1,245,437
303,709
1,124,189
416,708
152,778
152,214
196,295
32,819
222,640
175,740
13,972
1,427,844
1,666,557
1,573,391
513,976
Loans with predetermined interest rates
782,718
1,091,615
640,878
32,641
259,709
2,807,561
Loans with variable interest rates
645,126
574,942
932,513
481,335
864,480
3,498,396
55
The table below shows the maturity distribution of outstanding loans, before the allowance for credit losses, with fixed or predetermined interest rates, as of June 30, 2025.
After OneYear butWithin ThreeYears
After ThreeYears butWithin FiveYears
137,363
242,039
199,583
104
472
579,561
75,370
132,053
94,285
301,923
122,030
198,116
17,446
337,592
276,476
291,673
142,975
10,985
3,237
725,346
611,239
863,881
454,289
3,924
1,944,422
1,467
2,201
255,785
259,474
612,706
454,310
13,290
2,203,896
137,193
5,094
10,828
5,379
158,494
The table below shows the maturity distribution of outstanding loans, before the allowance for credit losses, with floating or variable interest rates (including floating, adjustable and hybrids), as of June 30, 2025.
31,987
64,470
226,235
136,746
77,542
536,980
69,853
135,187
254,011
16,307
520,097
119,801
50,642
28,907
218,861
62,258
172,964
281,765
96,929
34,574
648,490
283,899
423,263
790,918
288,371
137,977
1,924,428
3,995
80,071
5,637
2,049
726,503
734,398
365,612
427,258
791,127
290,420
2,738,897
279,514
147,684
141,386
190,915
759,499
As of June 30, 2025, the loan portfolio included the following concentrations of loan types to borrowers in industries that represented greater than 10.0% of loans receivable outstanding:
Percentage of
Balance as of
Loans Receivable
Lessor of nonresidential buildings
1,635,211
25.9
820,660
13.0
Loans 30 to 89 days past due and still accruing were $11.0 million at June 30, 2025, compared with $18.5 million at December 31, 2024.
Activity in criticized loans was as follows for the periods indicated:
118,380
46,519
Additions
300
4,769
Reductions
(105,980
(17,431
62,316
23,669
1,969
13,993
(27,363
(3,716
36,922
33,946
448
20,045
(127,361
(11,871
65,315
31,367
2,522
16,571
(30,915
(13,992
Special mention loans were $12.7 million and $139.6 million at June 30, 2025 and December 31, 2024, respectively. The $126.9 million decrease in the first six months of 2025 reflected loan upgrades of $105.8 million on a commercial and industrial loan during the first quarter and two commercial real estate loans during the second quarter, paydowns of $20.0 million and amortization of $1.5 million, offset by downgrades of $0.4 million. The $28.4 million decrease in special mention loans during the six months ended June 30, 2024 reflected upgrades to pass loans of $19.4 million, downgrades to classified loans of $8.0 million, and paydowns and payoffs of $3.7 million, offset by downgrades from pass loans of $2.7 million. The upgrades to pass loans were primarily attributable to upgrades of two commercial and industrial loans totaling $13.6 million and one commercial real estate loan of $4.3 million during the second quarter of 2024.
Classified loans were $33.9 million and $25.7 million at June 30, 2025 and December 31, 2024, respectively. The $8.2 million increase in classified loans for the six months ended June 30, 2025 resulted from $25.2 million of loan downgrades and $5.8 million of additions to classified loans. The increase in loan downgrades was primarily the result of a $20.0 million commercial real estate office loan designated as nonaccrual during the first quarter of 2025. Additions were offset by $14.6 million of charge-offs, including an $8.6 million charge-off during the second quarter of 2025 on the previously mentioned office loan and $5.6 million of equipment financing charge-offs, $4.3 million of upgrades, $2.6 million of amortization and paydowns and $1.3 million of payoffs. The $2.5 million increase in classified loans during the six months ended June 30, 2024 was primarily driven by new downgrades to classified of $17.6 million, offset by payoffs of $8.3 million, charge-offs of $3.7 million, and paydowns and amortization of $3.1 million.
Nonperforming Assets
Nonperforming loans consist of nonaccrual loans and loans 90 days or more past due and still accruing interest. Nonperforming assets consist of nonperforming loans and OREO. Loans are placed on nonaccrual status when, in the opinion of management, the full timely collection of principal or interest is in doubt. Generally, the accrual of interest is discontinued when principal or interest payments become more than 90 days past due, unless we believe the loan is adequately collateralized and in the process of collection. However, in certain instances, we may place a particular loan on nonaccrual status earlier, depending upon the individual circumstances surrounding the loan’s delinquency. When a loan is placed on nonaccrual status, previously accrued but
57
unpaid interest is reversed against current income. Subsequent collections of cash are applied as principal reductions when received, except when the ultimate collectability of principal is probable, in which case interest payments are credited to income. Nonaccrual loans may be restored to accrual status when principal and interest become current and full repayment is expected, which generally occurs after sustained payment of six months. Interest income is recognized on the accrual basis for loans not meeting the criteria for nonaccrual. OREO consists of properties acquired by foreclosure or similar means.
Except for nonaccrual loans, management is not aware of any other loans as of June 30, 2025 for which known credit problems of the borrower would cause serious doubts as to the ability of such borrowers to comply with their present loan repayment terms, or any known events that would result in a loan being designated as nonperforming at some future date.
Nonaccrual loans were $26.0 million and $14.3 million as of June 30, 2025 and December 31, 2024, respectively, representing an increase of $11.7 million, or 82.6%. The increase was due to the previously mentioned commercial real estate office loan designated as nonaccrual during the first quarter of 2025. As of June 30, 2025 and December 31, 2024, 1.57% and 1.81% of equipment financing agreements were on nonaccrual status, respectively. At June 30, 2025, there were no loans 90 days or more past due and still accruing interest. At December 31, 2024, all loans 90 days or more past due were classified as nonaccrual.
The $26.0 million of nonperforming loans as of June 30, 2025 had individually evaluated allowances of $4.1 million, compared with $14.3 million of nonperforming loans with individually evaluated allowances of $6.2 million as of December 31, 2024.
Nonperforming assets were $26.0 million at June 30, 2025, or 0.33% of total assets, compared with $14.4 million, or 0.19%, at December 31, 2024. Additionally, not included in nonperforming assets were repossessed personal property assets associated with equipment finance agreements of $0.6 million and $0.6 million at June 30, 2025 and December 31, 2024, respectively.
Individually Evaluated Loans
The Company reviews loans on an individual basis when the loan does not share similar risk characteristics with loan pools. Individually evaluated loans are measured for expected credit losses based on the present value of expected cash flows discounted at the effective interest rate, the observable market price, or the fair value of collateral.
Individually evaluated loans were $23.0 million and $14.3 million as of June 30, 2025 and December 31, 2024, respectively, representing a increase of $8.7 million, or 60.8%. Specific allowances associated with individually evaluated loans decreased $2.1 million to $4.1 million as of June 30, 2025 compared with $6.2 million as of December 31, 2024. due to increased charge-offs, offset by new specific allowances on individually evaluated loans.
A borrower is experiencing financial difficulties when there is a probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. The Company may modify loans to borrowers experiencing financial difficulties by providing principal forgiveness, a term extension, an other-than-insignificant payment delay, or an interest rate reduction.
The following table presents loan modifications made to borrowers experiencing financial difficulty by type of modification, with related amortized cost balances, respective percentage shares of the total class of loans, and the related financial effect, as of the periods indicated:
$13,533
1.2%
The modified loans above were current at June 30, 2025.
No loans were modified during the three months ended June 30, 2025. The table above includes two retail commercial loans with an amortized cost of $13.5 million that were modified during the six months ended June 30, 2025.
58
Allowance for Credit Losses and Allowance for Credit Losses Related to Off-Balance Sheet Items
As previously mentioned, effective January 1, 2025, the Company changed its methodology for estimating expected credit losses on its loan portfolio. The Company’s estimate of the allowance for credit losses at June 30, 2025 and December 31, 2024 reflected losses expected over the remaining contractual life of assets based on historical, current, and forward-looking information. The contractual term does not consider extensions, renewals or modifications.
Our allowance for credit losses methodology incorporates a variety of risk considerations, both quantitative and qualitative, that management believes is appropriate to absorb lifetime credit losses at each reporting date. Quantitative factors include the general economic forecast in our markets, risk ratings, delinquency trends, collateral values, changes in nonperforming loans, and other factors.
We use qualitative factors to adjust the allowance calculation for risks not considered by the quantitative calculations. Qualitative factors considered in our methodologies include concentrations of credit, changes in lending management and staff, and quality of the loan review system.
The Company reviews baseline and alternative economic scenarios from Moody’s (previously known as Moody’s Analytics, a subsidiary of Moody’s Corporation) for consideration in the quantitative portion of our analysis of the allowance for credit losses. Moody’s publishes a baseline forecast that represents the estimate of the most likely path for the United States economy through the current business cycle (50% probability that economic conditions will be worse and 50% probability that economic conditions will be better) as well as alternative scenarios to examine how different types of shocks will affect the future performance of the United States economy.
The Company utilizes a midpoint approach of multiple forward-looking scenarios to incorporate losses from a baseline, upside (stronger near-term growth) and downside (slower near-term growth) economy. As a result, the upside and downside scenarios each receive a weight of 30%, and the baseline receives a weight of 40%.
Certain quantitative and qualitative factors used to estimate credit losses and establish an allowance for credit losses are subject to uncertainty. The adequacy of our allowance for credit losses is sensitive to changes in current and forecasted economic conditions that may affect the ability of borrowers to make contractual payments as well as the value of the collateral securing such payments.
Although management believes it uses the best information available to establish the allowance for credit losses, future adjustments to the allowance for credit losses may be necessary and the Company’s results of operations could be adversely affected if circumstances differ substantially from the assumptions used in making the determinations.
In addition, because future events affecting borrowers and collateral cannot be predicted without uncertainty, the existing allowance for credit losses may not be adequate or increases may be necessary should the quality of any loans deteriorate as a result of the factors discussed. Any material increase in the allowance for credit losses would adversely impact the Company's financial condition and results of operations.
59
The following table reflects our allocation of the allowance for credit losses by loan category as well as the amount of loans in each loan category, including related percentages:
The following table sets forth certain ratios related to our allowance for credit losses at the dates presented:
As of
Ratios:
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
Balance:
Nonaccrual loans at end of period
Nonperforming loans at end of period
The allowance for credit losses was $66.8 million and $70.1 million at June 30, 2025 and December 31, 2024, respectively. The allowance attributed to individually evaluated loans was $4.1 million and $6.2 million as of June 30, 2025 and December 31, 2024, respectively. The decrease in the allowance on individually evaluated loans during the six months ended June 30, 2025 was due to increased charge-offs, offset by new specific allowances on individually evaluated loans. The allowance attributed to collectively evaluated loans was $62.7 million and $64.0 million as of June 30, 2025 and December 31, 2024, respectively. The decrease in the allowance attributed to collectively evaluated loans was primarily due to the change in ACL methodology.
As of June 30, 2025 and December 31, 2024, the allowance for credit losses related to off-balance sheet items, primarily unfunded loan commitments, was $2.5 million and $2.1 million, respectively. The Bank closely monitors the borrower’s repayment capabilities, while funding existing commitments to ensure losses are minimized. Based on management’s evaluation and analysis of portfolio credit quality, prevailing economic conditions and economic forecasts, we believe these allowances were adequate for current expected lifetime losses in the loan portfolio and off-balance sheet exposure as of June 30, 2025.
The following table presents a summary of gross charge-offs and recoveries for the loan portfolio:
Gross charge-offs
Gross recoveries
Net (charge-offs) recoveries
(11,364
(1,790
(13,311
(3,385
For the three months ended June 30, 2025, gross charge-offs increased $10.0 million from the same period in 2024. Gross recoveries for the three months ended June 30, 2025 increased $0.5 million from the same period in 2024. Gross charge-offs for the three months ended June 30, 2025 primarily consisted of an $8.6 million charge-off on the previously mentioned commercial real estate loan designated as nonaccrual in the first quarter of 2025 and $2.9 million of equipment financing agreements charge-offs.
60
Gross charge-offs for the three months ended June 30, 2024 primarily consisted of $2.2 million of equipment financing charge-offs. Gross recoveries for the three months ended June 30, 2025 primarily consisted of $0.6 million of recoveries on equipment financing agreements.
For the six months ended June 30, 2025, gross charge-offs increased $11.1 million from the same period in 2024. Gross recoveries for the six months ended June 30, 2025 increased $1.2 million from the same period in 2024. Gross charge-offs for the six months ended June 30, 2025 primarily consisted of an $8.6 million charge-off on the previously mentioned commercial real estate loan designated as nonaccrual in the first quarter of 2025 and $5.7 million of equipment financing agreements charge-offs. Gross charge-offs for the six months ended June 30, 2024 primarily consisted of $4.1 million of equipment financing agreements charge-offs. Gross recoveries for the six months ended June 30, 2025 primarily consisted of $1.4 million of recoveries on equipment financing agreements.
The following table presents a summary of net (charge-offs) recoveries for the loan portfolio:
Average Loans
Net (Charge-Offs) Recoveries
Net (Charge-Offs) Recoveries to Average Loans (1)
Commercial real estate loans
3,978,350
(8,422
(0.85
3,958,335
(8,169
(0.41
Residential loans
997,921
1
982,922
818,498
(613
(0.30
808,069
(799
(0.20
462,972
(2,330
(2.01
474,499
(4,345
(1.83
(0.73
(0.43
3,853,792
3,864,615
959,072
(29
(0.01
965,708
730,929
73
723,967
545,647
(1,834
(1.34
559,374
(3,379
(1.21
(0.12
(0.11
Deposits
The following table shows the composition of deposits by type as of the dates indicated:
Demand – noninterest-bearing
31.3
32.6
Interest-bearing:
Demand
90,172
80,323
2,092,847
31.2
1,933,535
30.0
Uninsured amount of time deposits more than $250,000:
Three months or less
264,868
3.9
225,015
3.5
Over three months through six months
218,328
3.2
219,304
3.4
Over six months through twelve months
262,060
202,966
Over twelve months
494
0.0
All other insured time deposits
1,694,984
25.2
1,677,985
26.1
Total deposits were $6.73 billion and $6.44 billion as of June 30, 2025 and December 31, 2024, respectively, representing an increase of $293.3 million, or 4.6%. The increase in deposits was primarily driven by a $159.3 million increase in money market and savings deposits and a $115.5 million increase in time deposits as a result of new commercial accounts and branch openings during the first six months of 2025. At June 30, 2025, the loan-to-deposit ratio was 93.7% compared with 97.1% at December 31, 2024.
As of June 30, 2025, the aggregate amount of uninsured deposit accounts (deposits in amounts greater than $250,000, which is the maximum amount for federal deposit insurance) was $2.94 billion. For time deposits, the aggregate amount exceeding the insurance limit was $745.8 million. For demand money market and savings accounts, the aggregate amount exceeding the insurance limit was $2.19 billion. At June 30, 2025, $1.31 billion of total uninsured deposits were in accounts with balances of $5.0 million or more. As of December 31, 2024, the aggregate amount of uninsured deposits was $2.72 billion. The aggregate amount of uninsured time deposits was $647.3 million. For demand, money market and savings accounts, the aggregate amount of uninsured deposits was $2.07 billion. At December 31, 2024, $1.21 billion of total uninsured deposits were in accounts with balances of $5.0 million or more.
The Bank’s wholesale funds have historically consisted of FHLB advances, brokered deposits as well as State of California time deposits. As of June 30, 2025 and December 31, 2024, the Bank had $127.5 million and $262.5 million of FHLB advances, and $85.5 million and $60.7 million of brokered deposits, respectively. The Bank had $150.0 million and $120.0 million of State of California time deposits, as of June 30, 2025 and December 31, 2024, respectively.
Borrowings mostly take the form of FHLB advances. At June 30, 2025 and December 31, 2024, FHLB advances were $127.5 million and $262.5 million, respectively. FHLB open advances were $90.0 million and $225.0 million at June 30, 2025 and December 31, 2024, respectively. For the same periods, term advances were $37.5 million and $37.5 million, respectively. Funds from deposit growth not used to fund loan production were used to pay off borrowings.
The weighted-average interest rate of all FHLB advances at June 30, 2025 and December 31, 2024 was 4.62% and 4.75%, respectively.
The FHLB maximum amount outstanding at any month end during each of the year-to-date periods ended June 30, 2025 and December 31, 2024 was $152.5 million and $350.0 million, respectively.
The following is a summary of contractual maturities of FHLB advances greater than twelve months:
FHLB of San Francisco
WeightedAverageRate
Outstanding advances over 12 months
62
Subordinated debentures were $131.0 million and $130.6 million as of June 30, 2025 and December 31, 2024, respectively. Subordinated debentures are comprised of fixed-to-floating subordinated notes of $108.6 million and $108.5 million as of June 30, 2025 and December 31, 2024, respectively, and junior subordinated deferrable interest debentures of $22.3 million and $22.1 million as of June 30, 2025 and December 31, 2024, respectively. See “Note 8 – Borrowings and Subordinated Debentures” to the consolidated financial statements for more details.
Stockholders’ equity was $762.8 million and $732.2 million as of June 30, 2025 and December 31, 2024, respectively. Net income, net of $16.4 million of dividends paid, added $16.4 million to stockholders' equity for the period, as did $0.9 million of share-based compensation, a $15.9 million decrease in unrealized after-tax losses on securities available for sale and a $0.3 million decrease in unrealized after-tax losses on cash flow hedges due to changes in interest rates. In addition, the Company repurchased 120,000 shares of common stock during the period at an average share price of $22.94 for a total cost of $2.8 million. At June 30, 2025, 1,110,500 shares remain under the Company's share repurchase program.
Interest Rate Risk Management
The spread between interest income on interest-earning assets and interest expense on interest-bearing liabilities is the principal component of net interest income, and interest rate changes substantially affect our financial performance. We emphasize capital protection through stable earnings. In order to achieve stable earnings, we prudently manage our assets and liabilities and closely monitor the percentage changes in net interest income and equity value in relation to limits established within our guidelines.
The Company performs simulation modeling to estimate the potential effects of interest rate changes. The following table summarizes one of the stress simulations performed to forecast the impact of changing interest rates on net interest income and the value of interest-earning assets and interest-bearing liabilities reflected on our balance sheet (i.e., an instantaneous parallel shift in the yield curve of the magnitude indicated below) as of June 30, 2025. The Company compares this stress simulation to policy limits, which specify the maximum tolerance level for net interest income exposure over a 1- to 12-month and a 13- to 24- month horizon, given the basis point adjustment in interest rates reflected below.
Net Interest Income Simulation
1- to 12-Month Horizon
13- to 24-Month Horizon
Change in Interest
Dollar
Percentage
Rates (Basis Points)
Change
22,761
8.48
46,198
15.44
15,500
5.77
31,253
10.45
100
9,455
3.52
18,340
6.13
(100)
(9,298
(3.46
%)
(19,331
(6.46
(200)
(18,377
(6.84
(40,210
(13.44
(300)
(24,592
(9.16
(59,708
(19.96
Economic Value of Equity (EVE)
70,160
8.31
55,651
6.59
41,513
4.91
(53,182
(6.30
(124,160
(14.70
(205,910
(24.38
The estimated sensitivity does not necessarily represent our forecast, and the results may not be indicative of actual changes to our net interest income. These estimates are based upon a number of assumptions, including the timing and magnitude of interest rate changes, prepayments on loans receivable and securities, pricing strategies on loans receivable and deposits, and replacement of asset and liability cash flows.
The key assumptions, based upon loans receivable, securities and deposits, are as follows:
Conditional prepayment rates*:
Deposit rate betas*:
NOW, savings, money market demand
Time deposits, retail and wholesale
* Balance-weighted average
While the assumptions used are based on current economic and local market conditions, there is no assurance as to the predictive nature of these conditions, including how customer preferences or competitor influences might change.
Historically, our primary source of capital has been the retention of operating earnings. In order to ensure adequate capital levels, the Board regularly assesses projected sources and uses of capital, expected loan growth, anticipated capital management tools (such as stock repurchases and dividends), and projected capital thresholds under adverse and severely adverse economic conditions. In addition, the Board considers the Company’s access to capital from financial markets through the issuance of additional debt and securities, including common stock or notes, to meet its capital needs.
The Company’s ability to pay dividends to stockholders depends in part upon dividends it receives from the Bank. California law restricts the amount available for cash dividends to the lesser of a bank’s retained earnings or net income for its last three fiscal years (less any distributions to stockholders made during such period). Where the above test is not met, cash dividends may still be paid, with the prior approval of the California Department of Financial Protection and Innovation (“DFPI”), in an amount not exceeding the greater of: (1) retained earnings of the Bank; (2) net income of the Bank for its last fiscal year; or (3) the net income of the Bank for its current fiscal year. The Company paid dividends of $16.4 million ($0.54 per share) for the six months ended June 30, 2025 and $30.4 million ($1.00 per share) for the year 2024. As of July 1, 2025, the Bank has the ability to pay dividends of approximately $83.1 million, after giving effect to the $0.27 dividend declared on July 24, 2025, for the third quarter of 2025, without the prior approval of the Commissioner of the DFPI.
At June 30, 2025, the Bank’s total risk-based capital ratio of 14.39%, Tier 1 risk-based capital ratio of 13.32%, common equity Tier 1 capital ratio of 13.32% and Tier 1 leverage capital ratio of 11.43% placed the Bank in the “well capitalized” category pursuant to capital rules, which is defined as institutions with total risk-based capital ratio equal to or greater than 10.00%, Tier 1 risk-based capital ratio equal to or greater than 8.00%, common equity Tier 1 capital ratios equal to or greater than 6.50%, and Tier 1 leverage capital ratio equal to or greater than 5.00%.
At June 30, 2025, the Company's total risk-based capital ratio was 15.20%, Tier 1 risk-based capital ratio was 12.46%, common equity Tier 1 capital ratio was 12.12% and Tier 1 leverage capital ratio was 10.63%.
For a discussion of the applicable capital adequacy framework, see "Regulation and Supervision - Capital Adequacy Requirements" in our 2024 Annual Report on Form 10-K.
For a discussion of off-balance sheet arrangements, see Note 12 - Off-Balance Sheet Commitments included in the notes to unaudited consolidated financial statements in this Report and “Item 1. Business - Off-Balance Sheet Commitments” in our 2024 Annual Report on Form 10-K.
For quantitative and qualitative disclosures regarding market risks, see “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Interest Rate Risk Management” in this Report.
Evaluation of Disclosure Controls and Procedures
Management is responsible for the disclosure controls and procedures of the Corporation. Disclosure controls and procedures are controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods required by the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of the Corporation’s management, including the Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), of the effectiveness of the design and operation of the Corporation’s disclosure controls and procedures. Based on that evaluation, the Corporation’s Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of June 30, 2025.
Changes in Internal Control over Financial Reporting
There were no changes in the Corporation's internal control over financial reporting (as defined in Rule 13a-15(f)) during the quarter ended June 30, 2025 that materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.
Item 1. Legal Proceedings
From time to time, Hanmi Financial and its subsidiaries are parties to litigation that arises in the ordinary course of business, such as claims to enforce liens, claims involving the origination and servicing of loans, and other issues related to the business of Hanmi Financial and its subsidiaries. In the opinion of management, the resolution of any such issues would not have a material adverse impact on the financial condition, results of operations, or liquidity of Hanmi Financial or its subsidiaries.
There have been no material changes in risk factors applicable to the Corporation from those described in “Risk Factors” in Part I, Item 1A of the Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
In addition to the other information contained in this Quarterly Report on Form 10-Q, the following risk factor represents a material update and addition to the risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
Tariffs imposed on South Korea could have an impact on our business. On July 31, 2025, President Trump announced that an agreement has been reached with South Korea whereby a 15% tariff will be imposed on goods imported by South Korea into the U.S. and South Korea will make investments in certain U.S. industries. The final details of this trade agreement, including the timing of its implementation, remain unclear and may be subject to further negotiation. Any tariffs or required investments in U.S. industries imposed on South Korea may have an impact on South Korean businesses and the South Korean economy, which may negatively impact our customers with ties to South Korea, including U.S. subsidiaries of South Korean companies. While the impact of any final trade agreement with South Korea is uncertain, it may have an impact on the demand and performance of loans related to our customers with South Korean ties which, in turn, could have an effect on our financial condition and results of operations.
On April 25, 2024, the Company announced that the Board of Directors has adopted a stock repurchase program under which the Company may repurchase up to 5% of its outstanding shares, or approximately 1.5 million shares of its common stock. As of June 30, 2025, 1,110,500 shares remained available for future purchases under that stock repurchase program. The program has no scheduled expiration date and the Board of Directors has the right to suspend or discontinue the program at any time.
The following table represents information with respect to repurchases of common stock made by the Company during the 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
1,110,500
23.26
70,000
The Company acquired 15,953 shares from employees in connection with the satisfaction of employee tax withholding obligations incurred through the vesting of Company stock awards during the three months ended June 30, 2025. Shares withheld to pay income taxes upon the vesting of stock awards are repurchased pursuant to the terms of the applicable plan and not under the Company's repurchase program.
None.
Not applicable.
Securities Trading Plans of Directors and Executive Officers
During the three months ended June 30, 2025, none of our directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Hanmi securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”
Exhibit
Document
3.1
Amendment to Amended and Restated Certificate of Incorporation of Hanmi Financial Corporation, dated May 28, 2025.
31.1
Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS
Inline XBRL Instance Document *
101.SCH
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents *
The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2025, formatted in Inline XBRL
* Attached as Exhibit 101 to this report are documents formatted in Inline XBRL (Extensible Business Reporting Language).
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.
Hanmi Financial Corporation
Date:
August 8, 2025
By:
/s/ Bonita I. Lee
Bonita I. Lee
President and Chief Executive Officer (Principal Executive Officer)
/s/ Romolo C. Santarosa
Romolo C. Santarosa
Senior Executive Vice President and Chief Financial Officer (Principal Financial Officer)