Hanmi Financial Corporation Q1 FY2026 earnings call

• HMME delivered strong financial results across key metrics in the first quarter, supported by strong CNI originations and ongoing expansion of new full-service commercial banking relationships.
• Maintained disciplined underwriting and pricing standard, executed effectively on deposit gathering initiatives, resulting in net interest margin expansion for the seventh consecutive quarter.
• Net income grew robustly compared to the year-ago period, return on average assets and return on average equity were 1.18% and 10.86% respectively.
• Non-performing assets decreased by 38%, asset quality remained excellent. Discipline focus on risk management produced positive outcomes.
• Efficiency ratio further improved by 150 basis points to 53.5% from 55%. Strong financial performance drove improvement in all capital ratios, and significant capital was returned to shareholders.

Net income for the first quarter was $22.6 million, or 75 cents per diluted share. Net interest income increased from the prior quarter, and net interest margin expanded by 10 basis points to 3.38%. Deposits grew 7% on an annualized basis, and non-interest-bearing deposits remained healthy at approximately 30% of the total deposits. New loan originations were solid, with the CNI loan production increasing by 64%, but total loans had a slight decline due to higher than normal payoffs. Non-performing assets decreased by 38%, representing just 0.16% of total assets.

• Expect loan growth in the low to mid single-digit range while continuing to prioritize further diversification across the portfolio.
• Focus on growing deposits to support loan growth while preserving a stable, well-balanced funding profile, with a particular emphasis on growing non-interest-bearing deposits.
• Remain committed to discipline expense management, making selective investment in talent and technology to support long-term growth strategy while operating efficiently.
• Continue to take a prudent approach to credit management to preserve strong asset quality, with conservative underwriting practices, active portfolio oversight, and rigorous risk analysis guiding decision-making.

• Geopolitical conflicts may have economic implications for the global economy, although at this point no impact on the business nor clients' businesses has been seen.
• Ongoing uncertainty about the impact of tariffs led to muted loan activity.

Q: On loan growth, any specific industry or geography driving CNI production and if CNI will be the main driver of low to mid single digit growth for the year?

A: Expect CNI to be a focus for growth, with CNI production in the first quarter fairly broad-based in terms of different business types and industry, and expect growth to come from other portfolios as well.

Q: Additional color on retail loan migrated to special mention or hospitality loan migrated to classified during the quarter?

A: $21.2 million retail commercial real estate loan downgraded to special mention due to loss of major tenant but property generates sufficient income to service debt and has personal guarantees. $5 million hospitality industry loan downgraded due to construction impact but modification granted and loan is paying as agreed.

Q: Expect to remain active on share repurchases?

A: Given strong balance sheet, excellent asset quality, and earnings trends, anticipate board will continue share repurchases in amounts not too dissimilar from the first quarter.

Q: Planned investments for the year and impact on expense level?

A: No significant notions of major expenditures, characterized as ordinary, and first quarter trend is fairly indicative for the rest of the year.

Q: Impact of SBA loan guideline changes on pipeline?

A: Will continue with $45 to $50 million range of SBA production.

Q: Client sentiment on Corporate Korea Initiative given macro noise?

A: Customers no longer see tariff as an obstacle, but ongoing economic uncertainty makes companies cautious about taking in additional lines and loans, opting to use excess cash instead, leading to subdued loan demand but influx of deposits.

Q: Planned new hires for the year?

A: Talent investment is a focus, but timing is balanced to manage impact on the bank, and it's a continuation of the continuing process.