HANMI FINANCIAL CORP Q3 FY2026 earnings call

• Strong Financial Performance: The company delivered solid results with pre-provision net revenue growth of 10.8% and an improved efficiency ratio of 52%, demonstrating positive operating leverage.
• Deposit Growth & Stability: Core deposits increased 1.9%, and total deposits grew 1.4%. Deposits from Corporate Korea clients reached an all-time high of $1.3 billion, representing 19% of total deposits, serving as a key differentiator.
• Robust Loan Production: Total loan originations were $544 million, up 46.2% sequentially. CNI loans grew 11.3% year-over-year to 18% of the portfolio. CRA production surged 33.4% to $227 million, and residential mortgage production increased 54% to $77 million.
• Asset Quality Management: Delinquent and non-performing loans remain low at 0.2% and 0.14% respectively. The bank proactively sold a previously identified CRE loan to avoid prolonged resolution and downgraded two NYC multifamily loans due to rent control regulation changes, despite them being current.
• Capital Strength: Tangible common equity to tangible assets stood at 9.93%. The bank returned 55.6% of net income to shareholders via dividends and buybacks. Regulatory capital ratios remained well above well-capitalized thresholds.

The provided transcript does not break down financial performance by distinct product segments with specific revenue contribution percentages. However, it highlights the following key financial metrics for the quarter: Net income was $23.7 million ($0.80 per daily share). Pre-provision net revenues grew 10.8% sequentially. Net interest income increased 5.8% sequentially, with a net interest margin expansion of 8 basis points to 3.44%. Non-interest income rose 8.2% sequentially, driven primarily by gains from SBA loan sales. Total non-interest expense increased 2.1%, largely due to a one-time $1.1 million charge for accelerated deferred debt issuance costs; excluding this, expenses declined 0.8%. Credit loss expense was $4.5 million, including a $3.2 million charge-off on a CRE loan.

• Loan Growth Outlook: Management projects low single-digit loan growth for the full year 2026, potentially reaching mid-single digits in 2027 if higher interest rates reduce refinancing payoffs.
• Net Interest Margin: Expectations are constructive, supported by disciplined expense management and favorable rate swaps/caps implemented to mitigate floating rate exposure.
• Shareholder Returns: The company intends to maintain its current quarterly share repurchase run rate through Q4 2026.
• SBA Loan Sales: Anticipate a consistent quarterly production run rate of approximately $45–50 million for SBA loans, with all SBA 7(a) productions sold.

• Interest Rate Sensitivity: While hedging actions were taken, future Fed decisions and competitive deposit pressures could impact deposit costs and net interest margins.
• Refinancing Payoffs: Significant loan runoff occurred due to borrowers refinancing with other lenders offering better terms that did not meet Hanmi's underwriting criteria, impacting net loan growth.
• Regulatory Changes: Evolving local rent control regulations in New York City have introduced risk factors for multifamily portfolios, requiring proactive reassessment and potential downgrades.
• Credit Concentration: A specific Commercial Real Estate (CRE) loan resulted in a significant $3.2 million charge-off, highlighting ongoing credit risk management challenges in certain sectors.

Q: Analyst asked about the trajectory of deposit beta and CD repricing given recent Fed moves. / A: CFO noted September deposit costs rose slightly to 3.19%, with October trends around 3.22%, reflecting a 25bps Fed move. He described the beta as 'well-behaved' but cautioned that aggressive Fed cuts could increase pressure. COB added that over $1 billion in CDs maturing in Q4 are repricing at similar rates (~3.69%), meaning no immediate benefit or damage from repricing yet.

Q: Analyst questioned why loan balances remained flat despite strong production, asking for 2027 growth outlook. / A: CEO explained that while production is up, year-to-date payoffs surged 65% (over $250M), offsetting growth. She projected low single-digit growth for 2026 but expects mid-single-digit growth in 2027, assuming higher rates reduce refinancing activity and sustain production levels.

Q: Analyst requested details on the yield cadence of maturing loans and SBA margin outlook under higher rates. / A: CFO stated loan runoff follows scheduled maturities, with a mix of fixed/variable rates averaging ~6% yield, while new production yields ~6.5%, suggesting gradual book yield improvement. CEO noted SBA production will stabilize at $45-50M quarterly, with all 7(a) loans sold, though margins face pressure from higher rates.

Q: Analyst asked about the composition of NY multifamily exposure and rent-stabilized properties. / A: CEO clarified that excluding two specifically downgraded loans, the remaining NY multifamily portfolio consists of smaller loans, most of which are not subject to rent control, indicating limited direct exposure to the regulatory risks mentioned in prepared remarks.