Executive Summary

Q1 2025 delivered steady profitability with diluted EPS of $0.58 (flat QoQ, +16% YoY) on stronger net interest income and lower funding costs; net interest margin expanded 11 bps to 3.02% and efficiency ratio improved to 55.69% .
Deposits rose 2.9% QoQ to $6.62B with noninterest-bearing demand deposits at 31.2%; loans grew 0.5% QoQ to $6.28B, supported by residential mortgage and SBA production .
Asset quality mixed: criticized loans fell slightly, but nonperforming loans increased to $35.6M (0.57% of loans) due to a $20M syndicated office CRE loan moving to nonaccrual; ACL/loans held at 1.12% .
Versus S&P Global consensus, EPS modestly beat (0.58 vs 0.574*) while revenue missed (company operating revenue $62.8M vs S&P revenue actual 60.1M* on a different definition); narrative catalysts: continued NIM expansion and deposit mix improvement, offset by office CRE nonaccrual .
Management reiterated a balanced growth strategy (low-to-mid single-digit loan growth, prioritize C&I, expand USKC deposits) and expects margin expansion to slow as CD repricing benefits diminish; Q2 salaries/benefits to rise ~3–4% with annual merits .

What Went Well and What Went Wrong

What Went Well

“We achieved our third consecutive quarter of net interest margin expansion, up 11 basis points to 3.02%, primarily driven by lower funding costs.” — Bonnie Lee, CEO .
Deposits grew 2.9% QoQ, with healthy noninterest-bearing demand mix (31.2%); branch openings supported new commercial accounts .
Noninterest income rose 5% QoQ to $7.7M, led by higher SBA gain-on-sale ($2.0M), as SBA loan sale volume increased to $32.2M .

What Went Wrong

Nonperforming loans increased to $35.6M (0.57% of loans) largely due to a $20.0M syndicated office CRE loan moved to nonaccrual; a $6.2M specific allowance was established .
Credit loss expense rose to $2.7M from $0.9M QoQ, reflecting the loan downgrade; net charge-offs were $1.9M (0.13% annualized) .
C&I production declined 30% QoQ to $42M, and equipment finance balances continued to drift lower; management cited macro uncertainty and seasonality .

Financial Results

Metric	Q1 2024	Q3 2024	Q4 2024	Q1 2025
Net Interest Income ($USD Millions)	$50.7	$50.1	$53.4	$55.1
Noninterest Income ($USD Millions)	$7.7	$8.4	$7.4	$7.7
Diluted EPS ($)	$0.50	$0.49	$0.58	$0.58
Net Interest Margin (%)	2.78%	2.74%	2.91%	3.02%
Efficiency Ratio (%)	62.42%	59.98%	56.79%	55.69%
ROAA (%)	0.81%	0.79%	0.93%	0.94%
ROAE (%)	7.90%	7.55%	8.89%	8.92%

Consensus vs actual (S&P Global definitions; revenue differs from company’s “operating revenue”):

Metric	Q3 2024	Q4 2024	Q1 2025
Primary EPS Consensus Mean	0.483*	0.526*	0.574*
Primary EPS Actual	0.49*	0.58*	0.58*
Revenue Consensus Mean ($USD)	59.1M*	61.6M*	63.4M*
Revenue Actual ($USD)	56.2M*	59.9M*	60.1M*

Values retrieved from S&P Global.*

Segment and portfolio KPIs:

KPI	Q1 2025
Loans Receivable ($USD Billions)	$6.282
Deposits ($USD Billions)	$6.619
Loan-to-Deposit Ratio (%)	94.9%
Noninterest-Bearing Demand Deposits (% of total)	31.2%
Nonperforming Loans ($USD Millions)	$35.6
NPLs / Total Loans (%)	0.57%
Criticized Loans ($USD Millions)	$164.9
Net Charge-offs ($USD Millions, annualized %)	$1.9; 0.13%
ACL / Loans (%)	1.12%
TCE / TA (%)	9.59%
Tangible Book Value per Share ($)	$24.49
CET1 (%) (Company)	12.13%

Loan portfolio composition and yields (Q1 2025):

Segment	Balance ($USD Millions)	Mix (%)	Avg Yield (%)
CRE	$3,975.7	63.1%	5.65%
Residential/Consumer	$979.5	15.6%	5.39%
C&I	$854.4	13.6%	7.76%
Equipment Finance	$472.6	7.5%	6.50%
Total Loans	$6,282.2	100%	—

Deposit composition (Q1 2025):

Deposit Type	Balance ($USD Millions)	Mix (%)
Demand: Noninterest-Bearing	$2,066.7	31.2%
Demand: Interest-Bearing	$80.8	1.2%
Money Market & Savings	$2,073.9	31.3%
Time Deposits	$2,398.1	36.3%
Total	$6,619.5	100%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Loan Growth	FY 2025	Not quantified	Low-to-mid single-digit growth; increase C&I, reduce CRE mix	New directional guidance
Margin (NIM)	Near-term	Expansion ongoing	Expansion to continue but pace will slow as CD repricing benefit diminishes	Qualitative moderated
Deposit Pricing	Q2–Q3 2025	Not quantified	March spot: CDs 4.10%, interest-bearing deposits 3.67%; maturing Q2 CDs avg 4.41%, expected repricing down	Operational detail
Salaries & Benefits	Q2 2025	—	+3–4% from annual merits/promotions; payroll tax seasonality offsets partly	New quantitative
SBA Production	Quarterly	~$40–45M per quarter target	Maintain $42–45M per quarter, ±$5M; strong pipeline	Maintained
Dividend	Q2 2025	$0.25 (Q4 2024)	$0.27 declared for Q2 2025; dividend increased 8% in Jan	Raised

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024 and Q4 2024)	Current Period (Q1 2025)	Trend
Net Interest Margin	Expanded to 2.74% in Q3; to 2.91% in Q4 on lower deposit costs	3.02%; deposit costs down 27 bps QoQ; expansion to slow ahead	Improving, moderating pace
Deposit Mix/Core Growth	Q3/Q4 noted higher noninterest-bearing balances and deposit growth	Deposits +2.9% QoQ; NIBD 31.2%; USKC deposits now ~15% of total	Strengthening
Corporate Korea (USKC)	Q3/Q4 strategic contributor to C&I; momentum building	Deposits up; loans ~15% of portfolio; Korea rep office increasing engagement	Expanding relationships
Credit Quality	Q3: criticized loans up on special mention; NPLs down; Q4: NPLs down, criticized up	NPLs up on $20M syndicated office; ACL stable at 1.12%	Mixed/Watch CRE office
SBA & Fee Income	Q3: SBA gains $1.5M; Q4 $1.4M	SBA gains $2.0M; sales volume $32.2M (premiums 7.82%)	Improving volumes, lower premiums
Branch/Geography	—	New branch in Duluth (Atlanta market); early strong production	Network expansion

Management Commentary

“Deposits increased 3% driven by new commercial accounts and contributions from our newly opened branches… Loan production was solid… we maintained our strong credit quality… resulting in our best quarterly efficiency ratio since the fourth quarter of 2023.” — Bonnie Lee, CEO .
“Net interest margin… improved nicely to 3.02%… principally due to a decrease in deposit interest expense… tangible book value per share increased 2.6% to $24.49; CET1 12.13%.” — Ron Santarosa, CFO .
“US KC loan portfolio remained stable at ~15% of total loans… deposits increased significantly and now represents 15% of total deposits… we see growing opportunities… among midsized companies.” — Bonnie Lee, CEO .

Q&A Highlights

Pipeline & Tariffs: Pipeline “pretty healthy” for Q2; USKC clients less exposed to tariff risks (domestic production, prepared since prior administrations); optimism contingent on policy outcomes .
Expenses: Expect Q2 salaries/benefits up ~3–4% from annual merits/promotions; other expenses to track inflation .
Capital Deployment: Ongoing buybacks considered quarterly; recent repurchases of 50k shares at ~$22.49; board calibrates dividends and repurchases .
Margin & Deposit Costs: March spot CDs at 4.10% and interest-bearing deposits at 3.67%; maturing CDs (~4.41%) allow some repricing relief but pace slowing .
Loan Yields & Beta: Average loan yields hugging ~6%; incremental new loan yields above book, but impact modest given book size; loan beta likely low with small Fed moves, higher with larger moves .
Credit Detail: $20M syndicated office CRE loan (10% HAFC share) in CBD moved to nonaccrual; $6.2M specific allowance established; office maturities ~$200M in 2025 appear manageable based on borrower discussions .

Estimates Context

EPS: Q1 2025 EPS modest beat — $0.58 actual vs $0.574 consensus (≈ +1%); sequentially ahead of Q4’s $0.526 estimate and actual $0.58 .
Revenue: Q1 2025 S&P revenue actual $60.1M* vs $63.4M* consensus (≈ -5% miss); company operating revenue was $62.8M (net interest income before credit loss + noninterest income), highlighting definitional differences* .
Target Price: Consensus target price ~$30.63* (unchanged across periods).
Values retrieved from S&P Global.*

Where estimates may adjust: modest upward pressure on EPS forecasts from sustained NIM expansion and fee income resilience; revenue models should align definitions (operating revenue vs S&P “revenue actual”) and incorporate slower margin expansion trajectory .

Key Takeaways for Investors

NIM expansion remains the core earnings driver, but management guides the pace to slow as CD repricing tailwinds moderate; monitor deposit cost trajectory and non-maturity pricing discipline .
Deposit growth and mix (31% NIBD) underpin funding stability; USKC deposits now ~15% of total and represent a strategic lever for future spread support .
Credit watch: office CRE exposure and syndicated participation require vigilance; the $20M nonaccrual with $6.2M specific allowance is contained but raises portfolio monitoring priority .
Fee income: SBA gain-on-sale volumes recovered with lower premiums; continued execution can support noninterest income amid rate volatility .
Capital and TBV: TCE/TA 9.59% and CET1 12.13% provide cushion; ongoing buybacks and dividend increase to $0.27 enhance shareholder returns .
Near-term trading lens: potential positives from further (albeit smaller) NIM gains and deposit growth; potential overhang from CRE credit headlines and revenue miss vs S&P consensus; positioning around management updates on office maturities and deposit pricing could be catalytic .
Medium-term thesis: diversified growth (C&I emphasis, residential mortgage sales), disciplined expenses, and relationship banking model in targeted geographies (Atlanta entry) support sustainable ROAE improvement if credit remains contained .

HANMI FINANCIAL CORP (HAFC)·Q1 2025 Earnings Summary