Hanmi Financial NASDAQ: HAFC reported higher second-quarter 2026 earnings as management pointed to loan production, deposit growth, expense discipline and improved credit metrics as key drivers of performance.
President and Chief Executive Officer Bonnie Lee said the company generated net income of $23.5 million, or $0.79 per diluted share, compared with $22.6 million, or $0.75 per diluted share, in the prior quarter. Lee said return on average assets rose to 1.2%, while return on average equity improved to 11.1%.
“Hanmi delivered another quarter of a strong financial performance driven by solid earnings growth, expanding customer relationships, disciplined execution, and excellent credit quality,” Lee said on the call.
The company returned $13.6 million to shareholders through dividends and share repurchases during the quarter, according to Lee. Chief Financial Officer Romolo Santarosa later said Hanmi repurchased 160,000 shares at an average price of $30.24, with 1.99 million shares remaining under its current authorization.
Net Interest Income Rises, Margin Holds Near Stable
Santarosa said net interest income increased 1% from the first quarter to $63.9 million. Net interest margin declined two basis points to 3.36%, a move he attributed largely to a change in dividend practices at the Federal Home Loan Bank of San Francisco. He said that change reduced second-quarter interest income by approximately $612,000, or about three basis points.
Excluding that impact, Santarosa said underlying margin performance was “essentially stable.” Average interest-earning assets rose 1.1%, average deposits increased 2.7%, loan yields held steady at 5.9%, and the cost of interest-bearing deposits fell to 3.17%.
Assuming no changes in Federal Reserve policy, Santarosa said management expects net interest margin to remain stable through the rest of the year. In response to a question from KBW analyst Kelly Motta, he said competitive pressures could move savings and money market costs slightly higher, while certificate of deposit repricing may provide only modest relief. He described the margin outlook as having potential to move “one to three basis points” in either direction but generally remaining within a narrow range.
Loan Production Led by CRE, With C&I Still a Strategic Focus
Chief Banking Officer Anthony Kim said second-quarter loan production totaled $372 million, down $6 million, or 1.6%, from the prior quarter. The weighted average interest rate on production was 6.59%, compared with 6.54% in the first quarter.
Kim said the decline was primarily due to lower production in commercial and industrial, Small Business Administration and equipment finance loans, partially offset by increases in commercial real estate and residential mortgage lending.
- C&I production was $89 million, with Corporate Korea representing $22 million, or 25% of total C&I production.
- CRE production was $171 million, up $39 million, or 29.4%, from the prior quarter.
- SBA production declined $4 million to $37 million.
- Residential mortgage production rose 72%, or $21 million, to $50 million.
Kim said C&I loan balances increased 1.6% from the prior quarter and 27.6% from the same period a year earlier. C&I loans represented 18% of the total loan portfolio, up from 14% one year ago. CRE loans remained 61% of total loans, and Kim said the CRE portfolio had a weighted average loan-to-value ratio of approximately 47% and a weighted average debt service coverage ratio of 2.2 times.
During the question-and-answer portion of the call, Lee said Hanmi expects C&I growth to continue to be a primary driver in the second half of the year, along with contributions from commercial real estate. She reiterated that the company expects low- to mid-single-digit loan growth for 2026.
Deposits Increase, Corporate Korea Initiative Gains Traction
Lee said deposits grew 2.3% from the prior quarter, driven by a 5.2% increase in non-interest-bearing accounts, led by commercial accounts. Non-interest-bearing deposits represented 31% of total deposits.
Hanmi’s Corporate Korea initiative continued to expand during the quarter. Lee said deposits from Corporate Korea clients increased 6.2% to $1.2 billion, reaching an all-time high and representing approximately 17% of total deposits. Loan balances tied to the initiative grew to $826 million, representing 13% of the total loan portfolio, according to Lee.
Kim said Corporate Korea deposit balances rose by $70 million, or 6%, surpassing $1.2 billion. At quarter-end, Corporate Korea deposits represented 17% of both total deposits and demand deposits.
Asked by Piper Sandler analyst Adam Crowell about loan demand among Corporate Korea clients, Lee said borrowers remain cautious because of economic uncertainty, rising energy costs and geopolitical concerns. However, she said Hanmi is seeing deposit inflows from clients preparing for additional investment in the United States.
Credit Quality Remains Strong Despite One Delinquent CRE Loan
Management emphasized credit quality throughout the call. Lee said non-performing loans improved to 0.15% of total loans, while non-performing assets improved to 0.12% of total assets.
Kim said delinquencies increased during the quarter because of a $21.2 million CRE credit that had been previously identified and downgraded in the prior quarter. The loan became delinquent and was moved from special mention to classified. Kim said Hanmi commissioned an appraisal and a property condition report and found the collateral to be in good condition, adding that the bank is “well-secured” on the loan and views it as an isolated situation.
Santarosa said credit loss expense was $1.2 million, while net charge-offs were minimal. Lee said Hanmi was comfortable with its allowance for credit losses coverage of 1.08% of the loan portfolio.
Expenses Expected to Stay Near Current Run Rate
Non-interest income was $8.3 million, with results affected by lower SBA loan sales volume compared with the first quarter, partially offset by growth in trade finance and other service fee income, Santarosa said. Hanmi sold $20.6 million of SBA loans at an average premium of 7.92% during the quarter.
Non-interest expense increased 1.7% to $39 million, primarily due to higher salaries and benefits and the absence of a gain on the sale of other real estate owned that was recognized in the first quarter. The efficiency ratio was 54.1%, while non-interest expense represented 1.99% of average assets on an annualized basis.
In response to Motta, Santarosa said expenses should remain “in and around that same run rate” in the second half, with no major upward trend currently expected.
Lee closed the call by saying Hanmi enters the second half of 2026 “from a position of strength,” citing loan and deposit pipelines, portfolio diversification, expense discipline and conservative risk management as priorities for the remainder of the year.
About Hanmi Financial (NASDAQ:HAFC)
Hanmi Financial Corporation is a bank holding company based in California, primarily operating through its wholly owned subsidiary, Hanmi Bank. Established in 1982 to serve the Korean‐American community in Los Angeles, the company has expanded its footprint to include branch locations throughout California as well as markets in Illinois, Texas and Washington State. Hanmi Bank offers a comprehensive suite of commercial and consumer banking products designed to meet the needs of small and medium‐sized businesses, professionals and individual clients.
On the commercial banking side, Hanmi Bank provides business checking and savings accounts, lines of credit, commercial real estate lending and SBA‐guaranteed loans.
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