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HANMI FINANCIAL CORP (HAFC)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 was a clean beat: diluted EPS $0.73 vs S&P Global consensus $0.65; operating revenue strengthened on higher net interest income and lower deposit costs; NIM expanded 15 bps to 3.22% while efficiency ratio improved to 52.65% (EPS beat: S&P Global data*).
  • Core loan growth accelerated to 3.5% QoQ on $571M production, led by C&I ($211M), with asset quality markedly better: net recoveries of $0.5M, NPLs down to 0.30% of loans, and NPAs to 0.27% of assets .
  • Management raised FY loan growth target to “mid single digits” (from low-to-mid), citing stronger pipelines and USKC momentum; expects further NIM tailwinds as deposit costs step down with likely Fed cuts and CD repricing .
  • Ongoing capital returns: $0.27 dividend and buybacks (200K shares at $23.45) fueled TBVPS to $25.64 and TCE/TA to 9.80% .
  • Near-term stock catalysts: visible margin expansion, C&I-led growth with fee gains from mortgage/SBA sales, and improving credit metrics post office CRE resolution; watch deposit competition and funding mix as loan-to-deposit drifts higher .

What Went Well and What Went Wrong

  • What Went Well

    • Net interest margin expanded 15 bps to 3.22%, with average loan yields +10 bps and interest-bearing deposits −8 bps; NII rose 6.9% QoQ to $61.1M .
    • Strong loan production ($571M, +73% QoQ) anchored by C&I ($211M, +296% QoQ); deposits rose 0.6% with NIBD at ~31% of total .
    • Credit improved: net recoveries $0.5M vs Q2 net charge-offs $11.4M; NPL ratio fell to 0.30%, NPAs to 0.27%; criticized loans declined to 0.69% of loans .
    • Quote: “Net interest margin expanded by 15 basis points to 3.22%… PPNR increased 16.4% quarter-over-quarter” — Bonnie Lee (CEO) .

  • What Went Wrong

    • Funding needs rising with spot L/D ratio ~97%; management acknowledges deposit growth needed to sustain faster NIM expansion and may tap higher-cost borrowings if loan growth outpaces deposits .
    • SBA trade premiums compressed (6.95% vs 7.61% in Q2), and noninterest expense ticked up 2.8% QoQ, partly due to prior-quarter OREO gain not repeating .
    • Competitive pressure in CRE and CDs persists despite Fed cuts; management sees manageable but active pricing competition on both sides of the balance sheet .

Financial Results

  • Core performance by quarter (oldest → newest):
MetricQ3 2024Q1 2025Q2 2025Q3 2025
Net Income ($USD Millions)$14.9 $17.7 $15.1 $22.1
Diluted EPS ($)$0.49 $0.58 $0.50 $0.73
Net Interest Income ($USD Millions)$50.1 $55.1 $57.1 $61.1
Noninterest Income ($USD Millions)$8.4 $7.7 $8.1 $9.9
Net Interest Margin (%)2.74% 3.02% 3.07% 3.22%
Efficiency Ratio (%)59.98% 55.69% 55.74% 52.65%
Loans Receivable ($USD Millions)$6,257.7 $6,282.2 $6,306.0 $6,528.3
Deposits ($USD Millions)$6,403.2 $6,619.5 $6,729.1 $6,766.6
ROAA (%)0.79% 0.94% 0.79% 1.12%
ROAE (%)7.55% 8.92% 7.48% 10.69%
  • Estimates vs actual (S&P Global consensus; old → new):
MetricQ1 2025Q2 2025Q3 2025
EPS Estimate ($)0.574*0.61*0.65*
EPS Actual ($)0.58*0.50*0.73*
Revenue Estimate ($USD Millions)63.4*65.7*68.0*
Revenue Actual ($USD Millions)60.1*57.6*68.8*

Values retrieved from S&P Global*.

  • Segment/portfolio breakdown (Q3 2025):
SegmentBalance ($USD Millions)Mix of Loans (%)Avg Yield (%)
Commercial Real Estate (CRE)$4,015.3 61.4% 5.74%
Residential/Consumer (RRE)$1,043.6 16.0% 5.38%
Commercial & Industrial (C&I)$1,052.5 16.1% 7.72%
Equipment Finance$416.9 6.4% 6.61%
  • KPIs (Q3 2025):
KPIQ3 2025
Loan Production ($USD Millions)Total $570.8; CRE $176.8; RRE $103.2; C&I $211.5; SBA $44.9; Equipment $34.3
Weighted Avg Rate on New Loans6.91%
Payoffs ($USD Millions)$143.0 at avg 7.16%
Deposit Mix (%)NIBD 30.8%; MM&S 31.0%; Time 36.9%
Avg Cost Interest-Bearing Deposits3.56%
Criticized Loans ($USD Millions, %)$45.4; 0.69% of loans
NPLs / Loans (%)0.30%
NPAs / Assets (%)0.27%
Net (Recoveries)/Charge-offs ($USD Millions)+$0.5
ACL / Loans (%)1.07%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Loan GrowthFY 2025Low-to-mid single digits Mid single digits Raised
Net Interest Margin2H 2025Gradual expansion Continued expansion; deposit costs stepping down; CD repricing tailwind Maintained/Enhanced
Noninterest Expense2H 2025Stable with seasonality Stable; seasonal patterns; similar range Maintained
Share RepurchasesOngoingBoard evaluates quarterly; typical 25–75K shares Expect activity each quarter (magnitude variable) Maintained
Effective Tax RateFY 2025~29%–29.3% ~29.5% for the year Slightly higher
DividendQ4 2025$0.27/share [10: link]$0.27/share declared Nov 20 payment Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
Loan growth/C&IQ1: Low-to-mid single digit FY target; C&I pipeline building . Q2: Pipeline up; C&I to drive back-half growth .Strong production; FY target raised to mid single digits .Improving
Deposit costs/betaQ1: CD repricing relief; slowing NIM expansion pace . Q2: CDs ~4.01% spot; continued NIM expansion but diminishing pace .October average rates down; expect 25 bp cuts and further cost declines; beta reasonable .Tailwind
Credit/office CREQ1: $20M office syndicated CRE moved to NPA; $6.2M specific reserve . Q2: $8.6M charge-off; net charge-offs 73 bps ann.; criticized down meaningfully .Net recoveries; NPL/NPAs down; portfolio monitored; NDFI exposure <1% .Improving
USKC initiativeQ1: USKC loans ~15%; deposit growth; Atlanta branch opened . Q2: USKC steady; cautious on tariffs .USKC loans +8.2% to $910M; deposits >$1.0B; mid-teens of total .Strengthening
Fee income (SBA/mortgage)Q1: SBA gains $2.0M; mortgage sales $10M . Q2: SBA gains $2.2M; mortgage sale delayed into early Q3 .Mortgage gains $1.2M; SBA gains $1.9M; premiums slightly lower .Mixed

Management Commentary

  • “Loan growth was healthy, supported by loan production of $571 million… investments in our commercial lending teams, the USKC initiative and expansion into new markets helped drive production.” — Bonnie Lee, CEO .
  • “Net interest income was $61.1 million; NIM improved 15 bps to 3.22 driven by higher loan yields and lower deposit costs.” — Ron Santarosa, CFO .
  • “We raised FY loan growth to mid single digits… we are well positioned to maintain strong momentum.” — Bonnie Lee, CEO .
  • “We anticipate further deposit cost declines with expected Fed cuts; margin can expand, though pace depends on funding mix.” — CFO .

Q&A Highlights

  • Loan growth sustainability: Q3 production benefited from pipeline building during the quarter; target raised to mid-single-digit FY growth given diversified C&I originations (manufacturing, USKC autos) and steady residential/SBA .
  • Funding strategy/NIM path: Average L/D improved QoQ, but spot L/D rich; deposit growth required to keep NIM expansion at a higher pace; higher-cost borrowed funds may dampen NIM if needed but not negate growth .
  • Competitive dynamics: CRE loan pricing competition noted; CD competition remains elevated despite September cut; selective loan competition expected .
  • Capital returns: Expect repurchases each quarter; magnitude variable by Board decision; continued $0.27 dividend cadence .
  • Fee runway: Expect quarterly mortgage loan sale gains, subject to market; SBA gains continue, though trade premiums modestly down .

Estimates Context

  • Q3 2025: EPS $0.73 vs $0.65 consensus — bold beat; Revenue $68.8M vs $68.0M consensus — modest beat (Primary EPS - # of est: 4; Revenue - # of est: 3)*.
  • Q2 2025: EPS $0.50 vs $0.61 consensus — miss; Revenue $57.6M vs $65.7M consensus — miss*.
  • Q1 2025: EPS $0.58 vs $0.574 consensus — slight beat; Revenue $60.1M vs $63.4M consensus — miss*.
    Values retrieved from S&P Global*.

Key Takeaways for Investors

  • Margin trajectory favorable: deposit cost declines and CD repricing provide additional NIM tailwinds into Q4/Q1; monitor funding mix as L/D rises .
  • Growth pivot toward C&I: higher-yielding C&I and USKC relationships are driving production and core deposit growth — supportive of spread and fee income .
  • Credit de-risking largely complete: office syndicated CRE resolution now reflected; net recoveries and lower NPL/NPA reduce earnings volatility and provision risk .
  • Fee diversification intact: recurring SBA gains and resumed mortgage sales add resilience to top line despite premium compression .
  • Capital return supports valuation: ongoing $0.27 dividend and buybacks, TBVPS up to $25.64, TCE/TA 9.80% underpin downside protection .
  • Watch competition/funding: CRE pricing and CD competition could temper NIM benefits; any acceleration in borrowed funds would moderate margin expansion .
  • Near-term setup: Strong beat, raised loan-growth outlook, and cleaner credit are positive for sentiment; focus on sequential NIM and fee momentum into year-end .