Solid Financial Performance Despite Slight Q4 Dip
Hanmi Financial Corporation (NASDAQ: HAFC) reported a slight dip in fourth-quarter earnings, even as it wrapped up a strong fiscal year in 2025. The company posted Q4 net income of $21.2 million, or $0.70 per diluted share, marking a 3.7% decline compared to the previous quarter. The decrease was attributed primarily to a drop in non-interest income. However, net interest income rose 2.9% sequentially to $62.9 million, and the net interest margin expanded by six basis points to 3.28%.
President and CEO Bonnie Lee described the quarter as a “solid performance” concluding a “strong year of growth.” CFO Ron Santarosa noted that the average rate on interest-bearing deposits fell to 3.36%, while average loans increased to $6.46 billion with a yield of 5.94%. The return on average assets stood at 1.07%, and return on average equity was 10.14%.
2025 Full-Year Growth and Efficiency Gains
For the full year, Hanmi reported net income of $76.1 million, or $2.51 per diluted share, reflecting a 22% increase over 2024. The return on average equity for the year was 9.32%. Loan growth reached $312 million, or 5%, with net interest margin widening by 37 basis points. Pre-provision net revenue surged 31.5%, showing strong core business performance.
Operating expenses rose 4.6% year-over-year, largely due to merit-based salary increases and investments in banking talent. Nevertheless, the bank improved its efficiency ratio to 54.7%, down from 60.3% in 2024. The fourth-quarter efficiency ratio came in at 54.95%.
Loan Production Shows Mixed Results
Chief Banking Officer Anthony Kim reported $375 million in Q4 loan production, a 34% decline from Q3. Despite the quarterly drop, full-year originations were steady across segments, with notable strength in commercial and industrial (C&I), residential, and SBA lending. CRE loan production was $126 million, down 29%, while C&I dropped 61% to $82 million. Residential mortgage production was $70 million, down 32%.
Kim highlighted that the bank maintained a disciplined underwriting approach. The CRE portfolio had a weighted average loan-to-value of 47.4% and a debt service coverage ratio of 2.2x. SBA loan sales amounted to $29.9 million, generating a $1.8 million gain. Residential mortgages sold totaled $33.5 million, with a gain of $0.6 million.
Lee emphasized a 36% increase in full-year loan production, driven by investments in talent. Residential and C&I production jumped 90% and 42% respectively, and C&I portfolio expansion helped reduce commercial real estate exposure from 63.1% to 61.3% of total loans.
Deposit Trends and CD Competition
Deposits decreased 1.3% in Q4, primarily due to declines in demand, savings, and money market accounts. This was partially offset by growth in time deposits. For the full year, deposits rose 3.8%, with non-interest-bearing deposits maintaining a healthy 30% of the total base.
Kim reported a 1.5% sequential decline in USKC deposit balances, which remained around $1 billion—up 24% year-over-year. The company credited its Seoul representative office, opened the previous year, with helping to strengthen customer relationships and support deposit growth.
Competition for CDs remains intense, with some banks offering rates in the “high threes to low fours.” Hanmi’s CD retention rate fell to 80% from a historical 90% as the bank opted not to match “irrational” promotional rates. Approximately $1.8 billion in CDs are set to mature in H1 2026, with management aiming to reprice them in the 3.5%–3.7% range to lower funding costs.
Strong Credit Metrics and 2026 Priorities
Hanmi’s credit quality remains robust. Non-performing assets were 0.26% of total assets, and the allowance for credit losses stood at 1.07% of total loans. Net charge-offs were 10 basis points, delinquent loans were 0.27%, and criticized loans were 1.48%.
One hospitality credit was downgraded to Special Mention due to proactive portfolio monitoring. Management described the loan as senior with a strong sponsor and high liquidity, and noted that the property was undergoing improvements in anticipation of upcoming global events. No losses are expected.
Looking ahead, Hanmi’s 2026 strategy includes low- to mid-single-digit loan growth, deposit expansion with a focus on non-interest-bearing sources, disciplined expense control, and conservative credit management. The bank also plans selective investments in talent and technology.
Capital Actions and Shareholder Returns
Hanmi returned $42 million to shareholders in 2025 through $9 million in share repurchases and $33 million in dividends. In Q4, the company repurchased 73,600 shares at an average price of $26.75. Tangible common equity per share rose 2.5% to $26.27, with tangible common equity at 9.99% of tangible assets.
About Hanmi Financial
Founded in 1982, Hanmi Financial serves primarily Korean-American communities and operates through Hanmi Bank across California, Illinois, Texas, and Washington. The bank offers a full suite of commercial and consumer banking services, including business checking, real estate lending, and SBA-guaranteed loans.
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