• Hanmi Reports 2023 Second Quarter Results

    Source: Nasdaq GlobeNewswire / 25 Jul 2023 15:05:02   America/Chicago

    LOS ANGELES, July 25, 2023 (GLOBE NEWSWIRE) -- Hanmi Financial Corporation (NASDAQ: HAFC, or “Hanmi”), the parent company of Hanmi Bank (the “Bank”), today reported financial results for the second quarter of 2023.

    Net income for the second quarter of 2023 was $20.6 million, or $0.67 per diluted share, compared with $22.0 million, or $0.72 per diluted share, for the first quarter of 2023. Return on average assets and return on average equity for the second quarter of 2023 were 1.12% and 11.14%, respectively.

    Net income for the first half of 2023 was $42.6 million, or $1.39 per diluted share, compared with $45.7 million, or $1.50 per diluted share, for the first half of 2022. For the first six months of 2023, return on average assets and return on average equity were 1.17% and 11.66%, respectively.

    CEO Commentary

    “Hanmi delivered solid results for the second quarter, reflecting our team’s steady execution of our relationship banking strategy during this period of rising interest rates and uncertain economic conditions,” said Bonnie Lee, President and Chief Executive Officer of Hanmi Financial Corporation. “These results were supported by healthy deposit growth, disciplined expense management and strong credit administration. 

    “We grew deposits by 1.9% with solid contributions from both new and existing customers, a testament to the success of our relationship banking model. Importantly, our Corporate Korea initiative contributed significantly to new deposit growth in the quarter. Hanmi is uniquely positioned to capture greater market penetration as Korean corporations continue to expand their U.S. operations.

    “As expected, our loan production year-to-date has been impacted by lower demand due to escalating interest rates. That said, we are encouraged that our loan pipeline began to grow as we entered the third quarter. Even so, we will continue to take a selective and disciplined approach to lending in the current environment with a focus on attractively priced loans and high-quality borrowers who also have a deposit relationship with Hanmi.

    “We are well-positioned to navigate the remainder of the year with a strong base of loyal customers, a growing pipeline of new opportunities, a healthy balance sheet and liquidity position, excellent credit quality and an outstanding and dedicated team.”

    Second Quarter 2023 Highlights:        

    • Second quarter net income was $20.6 million, or $0.67 per diluted share, down 6.2% from $22.0 million, or $0.72 per diluted share, for the first quarter of 2023 and reflects lower revenues, higher noninterest expenses and no significant credit loss expenses.
    • Loans receivable were $5.97 billion at June 30, 2023, down 0.3% from the end of the first quarter and essentially unchanged from year-end; loan production for the second quarter was $259.3 million with a weighted average interest rate of 7.39%.
    • Deposits increased 1.9% sequentially to $6.32 billion at June 30, 2023 and were up 2.4% from year-end; noninterest-bearing deposits were 34.9% of the deposit portfolio at June 30, 2023.
    • Net interest income was $55.4 million for the second quarter, down 4.2% from the first quarter primarily due to higher deposit interest expense.
    • Net interest margin (taxable equivalent) was 3.11% for the second quarter, down 17 basis points from the prior quarter; sequentially, the average yield on loans increased 13 basis points while the cost of interest-bearing deposits increased 52 basis points.
    • Noninterest income for the second quarter was $7.9 million, down 4.8% from the first quarter, primarily on lower SBA gains; second quarter noninterest income included a $1.9 million gain from a litigation settlement offset by a $1.9 million loss on the sale of securities.
    • Noninterest expense was $34.3 million, up $1.5 million, or 4.5%, from the first quarter; second quarter expenses included a $0.7 million increase in FDIC insurance expense while first quarter included $0.6 million of recoveries of other real estate owned expense and an SBA servicing asset valuation allowance; the efficiency ratio for the second quarter was 54.11%.
    • Credit loss expense for the second quarter included a $0.5 million provision for loan losses and a $0.6 million recovery for off-balance sheet items; the ratio of the allowance for credit losses to loans was 1.19% at the end of the second quarter.
    • Criticized loans declined 25.2% from the first quarter and stood at 1.4% of loans at quarter-end; nonperforming assets were $22.3 million or 0.30% of total assets at June 30, 2023.
    • Hanmi’s ratio of tangible common equity to tangible assets was 8.96% at June 30, 2023 and it had a preliminary Common equity Tier 1 capital ratio of 11.91% and a Total capital ratio of 15.12%.

    For more information about Hanmi, please see the Q2 2023 Investor Update (and Supplemental Financial Information), which is available on the Bank’s website at www.hanmi.com and via a current report on Form 8-K on the website of the Securities and Exchange Commission at www.sec.gov. Also, please refer to “Non-GAAP Financial Measures” herein for further details of the presentation of certain non-GAAP financial measures.

                   
    Quarterly Results              
    (Dollars in thousands, except per share data)              
                   
     As of or for the Three Months Ended Amount Change 
     June 30, March 31, December 31, September 30, June 30, Q2-23 Q2-23 
      2023   2023   2022   2022   2022  vs. Q1-23 vs. Q2-22 
                   
    Net income$20,620  $21,991  $28,479  $27,169  $25,050  $(1,371) $(4,430) 
    Net income per diluted common share$0.67  $0.72  $0.93  $0.89  $0.82  $(0.05) $(0.15) 
                   
    Assets$7,344,924  $7,434,130  $7,378,262  $7,128,511  $6,955,968  $(89,206) $388,956  
    Loans receivable$5,965,171  $5,980,458  $5,967,133  $5,800,991  $5,655,403  $(15,287) $309,768  
    Deposits$6,315,768  $6,201,038  $6,168,072  $6,201,376  $5,979,390  $114,730  $336,378  
                   
    Return on average assets 1.12%   1.21%   1.56%   1.52%   1.45%   -0.09   -0.33  
    Return on average stockholders' equity 11.14%   12.19%   15.90%   15.58%   14.92%   -1.05   -3.78  
                   
    Net interest margin 3.11%   3.28%   3.67%   3.66%   3.55%   -0.17   -0.44  
    Efficiency ratio (1) 54.11%   49.54%   46.99%   46.22%   46.05%   4.57   8.06  
                   
    Tangible common equity to tangible assets (2) 8.96%   8.77%   8.50%   8.40%   8.74%   0.19   0.22  
    Tangible common equity per common share (2)$21.56  $21.30  $20.54  $19.60  $19.91   0.26   1.65  
                   
    (1)       Noninterest expense divided by net interest income plus noninterest income.
     
    (2)       Refer to "Non-GAAP Financial Measures" for further details.
     
                 

    Results of Operations
    Net interest income for the second quarter decreased $2.5 million to $55.4 million from $57.9 million for the first quarter of 2023, down 4.2%. The decrease was primarily due to an increase in the cost of interest-bearing deposits, partially offset by an increase in interest-earning asset yields. The cost of interest-bearing deposits increased 52 basis points to 3.25% for the second quarter of 2023 from 2.73% for the first quarter of 2023. The increase was due to higher market interest rates and a shift in the composition of the portfolio to higher rate deposits. Average interest-bearing deposits were $3.97 billion for the second quarter compared with $3.79 billion for the first quarter. Average loans were $5.94 billion for the second quarter, consistent with the first quarter of 2023. The yield on average loans for the second quarter increased 13 basis points to 5.64% from 5.51% for the first quarter. Second quarter loan prepayment fees were $0.2 million compared with $0.4 million for the first quarter. Net interest margin (taxable-equivalent) for the second quarter was 3.11% compared with 3.28% for the first quarter.

                  
     As of or For the Three Months Ended (in thousands) Percentage Change
     Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Q2-23 Q2-23
    Net Interest Income 2023   2023   2022   2022   2022  vs. Q1-23 vs. Q2-22
                  
    Interest and fees on loans receivable(1)$83,567  $80,923  $77,123  $66,976  $59,855  3.3% 39.6%
    Interest on securities 4,126   4,025   3,633   3,271   2,930  2.5% 40.8%
    Dividends on FHLB stock 283   289   289   245   242  -2.1% 16.9%
    Interest on deposits in other banks 2,794   2,066   1,194   958   193  35.2% 1347.7%
    Total interest and dividend income$90,770  $87,303  $82,239  $71,450  $63,220  4.0% 43.6%
                  
    Interest on deposits 32,115   25,498   14,900   6,567   2,457  26.0% 1207.1%
    Interest on borrowings 1,633   2,369   1,192   349   370  -31.1% 341.4%
    Interest on subordinated debentures 1,600   1,583   1,586   1,448   1,349  1.1% 18.6%
    Total interest expense 35,348   29,450   17,678   8,364   4,176  20.0% 746.5%
    Net interest income$55,422  $57,853  $64,561  $63,086  $59,044  -4.2% -6.1%
                  
    (1)       Includes loans held for sale.             
                  
     For the Three Months Ended (in thousands) Percentage Change
     Average Earning Assets and Interest-bearing LiabilitiesJun 30, Mar 31, Dec 31, Sep 30, Jun 30, Q2-23 Q2-23
     2023   2023   2022   2022   2022  vs. Q1-23 vs. Q2-22
    Loans receivable (1)$5,941,071  $5,944,399  $5,877,298  $5,696,587  $5,572,504  -0.1% 6.6%
    Securities (2) 971,531   980,712   966,299   956,989   945,291  -0.9% 2.8%
    FHLB stock 16,385   16,385   16,385   16,385   16,385  0.0% 0.0%
    Interest-bearing deposits in other banks 230,974   192,902   138,476   181,401   136,473  19.7% 69.2%
    Average interest-earning assets$7,159,961  $7,134,398  $6,998,458  $6,851,362  $6,670,653  0.4% 7.3%
                  
    Demand: interest-bearing$99,057  $109,391  $119,106  $121,269  $122,771  -9.4% -19.3%
    Money market and savings 1,463,304   1,453,569   1,781,834   2,079,490   2,139,488  0.7% -31.6%
    Time deposits 2,403,685   2,223,615   1,585,798   1,120,149   894,345  8.1% 168.8%
    Average interest-bearing deposits 3,966,046   3,786,575   3,486,738   3,320,908   3,156,604  4.7% 25.6%
    Borrowings 196,776   268,056   197,554   123,370   140,245  -26.6% 40.3%
    Subordinated debentures 129,631   129,483   129,335   129,176   129,029  0.1% 0.5%
    Average interest-bearing liabilities$4,292,453  $4,184,114  $3,813,627  $3,573,454  $3,425,878  2.6% 25.3%
                  
    Average Noninterest Bearing Deposits             
    Demand deposits - noninterest bearing$2,213,171  $2,324,413  $2,593,948  $2,717,810  $2,716,297  -4.8% -18.5%
                  
    (1)       Includes loans held for sale.             
    (2)       Amounts calculated on a fully taxable equivalent basis using the federal tax rate in effect for the periods presented.         
                  
     For the Three Months Ended Yield/Rate Change
     Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Q2-23 Q2-23
    Average Yields and Rates 2023   2023   2022   2022   2022  vs. Q1-23 vs. Q2-22
    Loans receivable(1) 5.64%  5.51%  5.21%  4.67%  4.31% 0.13  1.33 
    Securities (2) 1.73%  1.67%  1.47%  1.40%  1.27% 0.06  0.46 
    FHLB stock 6.92%  7.16%  7.00%  5.93%  5.93% -0.23  0.99 
    Interest-bearing deposits in other banks 4.85%  4.34%  3.42%  2.09%  0.57% 0.51  4.29 
    Interest-earning assets 5.09%  4.96%  4.67%  4.15%  3.80% 0.13  1.29 
                  
    Interest-bearing deposits 3.25%  2.73%  1.70%  0.78%  0.31% 0.52  2.94 
    Borrowings 3.33%  3.58%  2.55%  1.24%  1.10% -0.26  2.23 
    Subordinated debentures 4.94%  4.89%  4.67%  4.37%  4.14% 0.05  0.80 
    Interest-bearing liabilities 3.30%  2.85%  1.84%  0.93%  0.49% 0.45  2.81 
                  
    Net interest margin (taxable equivalent basis) 3.11%  3.28%  3.67%  3.66%  3.55% -0.17  -0.44 
                  
    Cost of deposits 2.08%  1.69%  0.97%  0.43%  0.17% 0.39  1.91 
                  
    (1)       Includes loans held for sale.
    (2)       Amounts calculated on a fully taxable equivalent basis using the federal tax rate in effect for the periods presented.
              

    Credit loss expense for the second quarter was negative $0.1 million and included a $0.5 million provision for loan losses and a $0.6 million recovery for off-balance sheet items. For the first quarter, credit loss expense was $2.1 million and included a $2.2 million provision for loan losses and a $0.1 million recovery for off-balance sheet items.

    Noninterest income for the second quarter decreased $0.4 million to $7.9 million from $8.3 million for the first quarter. The decrease reflected $0.7 million lower gain on sale income of SBA loans, partially offset by a $0.2 million net increase in service charges and fee income. The volume of SBA loans sold in the second quarter declined to $19.9 million from $29.7 million for the first quarter due to the higher interest rate environment while trade premiums decreased to 7.75% for the second quarter from 7.85% for the first quarter.

        
     For the Three Months Ended (in thousands) Percentage Change
     Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Q2-23 Q2-23
    Noninterest Income 2023   2023  2022   2022  2022 vs. Q1-23 vs. Q2-22
    Service charges on deposit accounts$2,571  $2,579 $2,742  $2,996 $2,875 -0.3% -10.6%
    Trade finance and other service charges and fees 1,173   1,258  1,115   1,132  1,416 -6.8% -17.2%
    Servicing income 825   742  725   635  663 11.2% 24.4%
    Bank-owned life insurance income (expense) 271   270  (97)  245  246 0.4% 10.2%
    All other operating income 1,811   1,618  1,039   1,656  1,336 11.9% 35.6%
    Service charges, fees & other 6,651   6,467  5,524   6,664  6,536 2.8% 1.8%
                  
    Gain on sale of SBA loans 1,212   1,869  1,933   2,250  2,774 -35.2% -56.3%
    Net gain (loss) on sales of securities (1,871)  -  -   -  - 0.0% 0.0%
    Legal settlement 1,943   -  -   -  - 0.0% 0.0%
    Total noninterest income$7,935  $8,336 $7,457  $8,914 $9,310 -4.8% -14.8%
                  

    Noninterest expense for the second quarter increased $1.5 million to $34.3 million from $32.8 million for the first quarter. The increase was primarily due to a $1.5 million increase in other operating expenses that included a $0.7 million increase in FDIC insurance assessment rates and reflected the absence of a $0.4 million first quarter recovery of a servicing asset valuation allowance and a $0.2 million recovery of other real estate owned and repossessed personal property expenses. All other expense categories were relatively consistent with the first quarter. The efficiency ratio for the second quarter increased to 54.11%, from 49.54% for the prior quarter due to the lower revenue and higher expenses.

        
     For the Three Months Ended (in thousands) Percentage Change
     Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Q2-23 Q2-23
      2023   2023   2022   2022   2022 vs. Q1-23 vs. Q2-22
    Noninterest Expense             
    Salaries and employee benefits$20,365  $20,610  $20,279  $19,365  $18,779 -1.2% 8.4%
    Occupancy and equipment 4,500   4,412   3,668   4,736   4,597 2.0% -2.1%
    Data processing 3,465   3,253   3,431   3,352   3,114 6.5% 11.3%
    Professional fees 1,376   1,335   1,783   1,249   1,231 3.1% 11.8%
    Supplies and communication 638   676   683   710   581 -5.6% 9.8%
    Advertising and promotion 748   833   974   1,186   660 -10.2% 13.3%
    All other operating expenses 3,243   1,957   3,041   2,698   2,463 65.7% 31.7%
    Subtotal 34,335   33,076 - 33,859 - 33,296 - 31,425 3.8% 9.3%
                  
    Other real estate owned expense (income) 4   (201)  (70)  2   50 -102.0% -92.0%
    Repossessed personal property expense (income) (59)  (84)  55   (23)  - -42.4% 0.0%
    Total noninterest expense$34,280  $32,791  $33,844  $33,275  $31,475 4.5% 8.9%
                  

    Hanmi recorded a provision for income taxes of $8.5 million for the second quarter, compared with $9.3 million in the first quarter representing an effective tax rate of 29.3% compared with 29.7% for the first quarter. For the first six months of 2023, the effective tax rate was 29.5% compared with 29.0% for the same period a year ago.

    Financial Position
    Total assets at June 30, 2023 declined 1.2%, or $89.2 million, to $7.35 billion from $7.43 billion at March 31, 2023. The decline reflected a $14.1 million decrease in loans receivable, a $41.3 million decrease in cash and due from banks, and a $42.0 million decrease in securities available for sale.

    Loans receivable, before the allowance for credit losses, were $5.97 billion at quarter-end, down slightly from March 31, 2023. Loans held for sale, representing the guaranteed portion of SBA 7(a) loans, were $7.3 million at the end of the second quarter, compared with $3.7 million at the end of the prior quarter.

        
     As of (in thousands) Percentage Change
     Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Q2-23 Q2-23
      2023   2023   2022   2022   2022  vs. Q1-23 vs. Q2-22
    Loan Portfolio             
    Commercial real estate loans$3,738,325  $3,784,176  $3,833,397  $3,853,947  $3,829,656  -1.2% -2.4%
    Residential/consumer loans 886,984   817,917   734,473   649,591   521,576  8.4% 70.1%
    Commercial and industrial loans 753,456   778,149   804,475   732,030   766,813  -3.2% -1.7%
    Equipment Finance 586,406   600,216   594,788   565,423   537,358  -2.3% 9.1%
    Loans receivable 5,965,171   5,980,458   5,967,133   5,800,991   5,655,403  -0.3% 5.5%
    Loans held for sale 7,293   3,652   8,043   10,044   18,528  99.7% -60.6%
    Total$5,972,464  $5,984,110  $5,975,176  $5,811,035  $5,673,931  -0.2% 5.3%
                  
                  
     As of  
     Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,    
      2023   2023   2022   2022   2022     
    Composition of Loan Portfolio             
    Commercial real estate loans 62.6%  63.2%  64.2%  66.3%  67.5%    
    Residential/consumer loans 14.9%  13.7%  12.3%  11.2%  9.2%    
    Commercial and industrial loans 12.6%  13.0%  13.5%  12.6%  13.5%    
    Equipment Finance 9.8%  10.0%  9.9%  9.7%  9.5%    
    Loans receivable 99.9%  99.9%  99.9%  99.8%  99.7%    
    Loans held for sale 0.1%  0.1%  0.1%  0.2%  0.3%    
    Total 100.0%  100.0%  100.0%  100.0%  100.0%    
                  

    New loan production was $259.3 million for the second quarter, at a weighted average rate of 7.39% while $120.6 million of loans paid off during the quarter at an average rate of 7.21%. Lower loan production reflects lower demand in the higher market interest rate environment.

    Commercial real estate loan production for the second quarter was $41.0 million. Commercial and industrial loan production was $36.3 million, SBA loan production was $30.9 million, equipment finance production was $50.9 million and residential mortgage loan production was $100.2 million.

              
     For the Three Months Ended (in thousands)
     Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,
      2023   2023   2022   2022   2022 
    New Loan Production         
    Commercial real estate loans$40,989  $75,528  $86,500  $132,870  $271,006 
    Commercial and industrial loans 36,322   27,055   137,902   88,015   96,187 
    SBA loans 30,926   34,472   53,209   44,898   67,900 
    Equipment Finance 50,905   69,307   89,193   86,092   95,371 
    Residential/consumer loans 100,161   97,201   106,955   140,432   111,766 
    subtotal 259,303   303,563   473,759   492,307   642,230 
              
              
    Payoffs (120,609)  (124,923)  (121,409)  (139,883)  (230,536)
    Amortization (102,248)  (102,675)  (91,333)  (80,294)  (94,543)
    Loan sales (20,933)  (30,002)  (50,550)  (45,418)  (41,937)
    Net line utilization (28,092)  (30,401)  (43,124)  (78,927)  43,295 
    Charge-offs & OREO (2,708)  (2,237)  (1,201)  (2,197)  (606)
              
    Loans receivable-beginning balance 5,980,458   5,967,133   5,800,991   5,655,403   5,337,500 
    Loans receivable-ending balance$5,965,171  $5,980,458  $5,967,133  $5,800,991  $5,655,403 
              

    Deposits were $6.32 billion at the end of the second quarter, up $114.7 million, or 1.9%, from $6.20 billion at the end of the prior quarter. Driving this change was a $198.2 million increase in money market and savings deposits and a $51.7 million increase in time deposits, partially offset by a $128.0 million decline in noninterest-bearing demand deposits. Noninterest-bearing demand deposits represented 34.9% of total deposits at quarter-end and the loan-to-deposit ratio was 94.4%.

        
     As of (in thousands) Percentage Change
     Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Q2-23 Q2-23
      2023   2023   2022   2022   2022  vs. Q1-23 vs. Q2-22
    Deposit Portfolio             
    Demand: noninterest-bearing$2,206,078  $2,334,083  $2,539,602  $2,771,498  $2,782,737  -5.5% -20.7%
    Demand: interest-bearing 97,076   104,245   115,573   125,408   123,614  -6.9% -21.5%
    Money market and savings 1,580,691   1,382,472   1,556,690   2,056,793   2,102,161  14.3% -24.8%
    Time deposits 2,431,923   2,380,238   1,956,207   1,247,677   970,878  2.2% 150.5%
    Total deposits$6,315,768  $6,201,038  $6,168,072  $6,201,376  $5,979,390  1.9% 5.6%
                  
              -   
     As of  
     Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,    
      2023   2023   2022   2022   2022     
    Composition of Deposit Portfolio             
    Demand: noninterest-bearing 34.9%  37.6%  41.2%  44.7%  46.5%    
    Demand: interest-bearing 1.5%  1.7%  1.9%  2.0%  2.1%    
    Money market and savings 25.0%  22.3%  25.2%  33.2%  35.2%    
    Time deposits 38.6%  38.4%  31.7%  20.1%  16.2%    
    Total deposits 100.0%  100.0%  100.0%  100.0%  100.0%    
                  

    Stockholders’ equity at June 30, 2023 was $668.6 million, compared with $662.2 million at March 31, 2023. The increase was primarily due to $20.6 million of second quarter net income net of $7.6 million of dividends paid. Offsetting this increase was a $5.6 million increase in unrealized after-tax losses on securities available for sale due to changes resulting from increases in intermediate-term interest rates during the second quarter. Also, Hanmi repurchased 100,000 shares during the second quarter at an average share price of $14.44, or $1.4 million. At June 30, 2023, 559,972 shares remain under the Company’s share repurchase program. Tangible common stockholders’ equity was $657.4 million, or 8.96% of tangible assets, at June 30, 2023, compared with $651.0 million, or 8.77% of tangible assets at the end of the first quarter. Tangible book value per share increased to $21.56 at June 30, 2023, up from $21.30 at March 31, 2023. Refer to “Non-GAAP Financial measures” for details.

    Hanmi and the Bank exceeded the minimum regulatory capital requirements and the Bank continues to exceed the minimum for the “well capitalized” category. At June 30, 2023, Hanmi’s preliminary Common equity Tier 1 capital ratio was 11.91% and its Total risk-based capital ratio was 15.12%, compared with 11.59% and 14.80%, respectively, at the end of the first quarter.  

         
     As of Ratio Change 
     Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Q2-23 Q2-23 
     2023  2023  2022  2022  2022  vs. Q1-23 vs. Q2-22 
    Regulatory Capital ratios (1)              
    Hanmi Financial              
    Total risk-based capital15.12% 14.80% 14.49% 14.38% 14.31% 0.32 0.81 
    Tier 1 risk-based capital12.26% 11.94% 11.71% 11.55% 11.42% 0.32 0.84 
    Common equity tier 1 capital11.91% 11.59% 11.37% 11.21% 11.07% 0.32 0.84 
    Tier 1 leverage capital ratio10.22% 10.09% 10.07% 9.99% 9.94% 0.13 0.28 
    Hanmi Bank              
    Total risk-based capital14.46% 14.15% 13.86% 13.76% 13.70% 0.31 0.76 
    Tier 1 risk-based capital13.39% 13.06% 12.85% 12.73% 12.64% 0.33 0.75 
    Common equity tier 1 capital13.39% 13.06% 12.85% 12.73% 12.64% 0.33 0.75 
    Tier 1 leverage capital ratio11.21% 11.06% 11.07% 11.02% 11.00% 0.15 0.21 
                   
    (1)       Preliminary ratios for June 30, 2023              
                   

    Asset Quality
    Loans 30 to 89 days past due and still accruing were 0.23% of loans at the end of the second quarter, compared with 0.26% at the end of the prior quarter.

    Special mention loans were $44.6 million at the end of the second quarter, down from $64.3 million at March 31, 2023. The $19.7 million decrease in special mention loans included upgrades to pass of $43.9 million, new downgrades to special mention of $26.0 million, and payoffs of $1.6 million.  

    Classified loans were $38.8 million at June 30, 2023, down from $47.3 million at the end of the prior quarter. The $8.5 million decrease was primarily driven by upgrades of $9.1 million and charge-offs and payoffs of $4.6 million, offset by new downgrades to classified of $5.2 million.

    Nonperforming loans were $22.2 million at June 30, 2023, up from $20.1 million at the end of the prior quarter. As a percentage of the loan portfolio, nonperforming loans were 0.37% at quarter-end, compared with 0.34% at the end of the first quarter. At June 30, 2023, nonperforming loans continue to include a $10.0 million commercial and industrial loan in the health-care industry secured by real estate and business assets for which the specific allowance increased to $3.3 million from $2.5 million at the end of the first quarter.

    Nonperforming assets were $22.3 million at the end of the second quarter, up from $20.2 million at the end of the first quarter. As a percentage of total assets, nonperforming assets were 0.30% at quarter-end, compared with 0.27% at March 31, 2023.

    Gross charge-offs for the second quarter were $2.7 million, compared with $2.2 million for the first quarter. Second quarter gross charge-offs consisted of $2.6 million of equipment financing agreements and $0.1 million of commercial and industrial and SBA loans. Recoveries of previously charged-off loans for the second quarter were $1.0 million, compared with $0.8 million for the prior quarter. Recoveries during the second quarter consisted of $0.3 million of equipment financing agreements and $0.7 million in commercial and industrial and SBA loans.

    As a result, there were net charge-offs of $1.7 million for the second quarter, compared with net charge-offs of $1.5 million for the prior quarter. For the second quarter, net charge-offs represented 0.12% of average loans on an annualized basis, compared with net charge-offs of 0.10% of average loans for the first quarter on an annualized basis.

    The allowance for credit losses was $71.0 million at June 30, 2023, down from $72.2 million at March 31, 2023. The ratio of the allowance for credit losses to loans was relatively unchanged at 1.19% at the end of the second quarter, from 1.21% at the end of the first quarter. Specific allowances for loans increased $1.2 million, while the allowance for qualitative considerations decreased $2.4 million.

                   
     As of or for the Three Months Ended (in thousands) Amount Change 
     Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Q2-23 Q2-23 
      2023   2023   2022   2022   2022  vs. Q1-23 vs. Q2-22 
    Asset Quality Data and Ratios              
                   
    Delinquent loans:              
    Loans, 30 to 89 days past due and still accruing$13,749  $15,377  $7,492  $4,936  $4,174  $(1,628) $9,575  
    Delinquent loans to total loans 0.23%   0.26%   0.13%   0.09%   0.07%   -0.03   0.16  
                   
    Criticized loans:              
    Special mention$44,632  $64,340  $79,013  $122,952  $80,453  $(19,708) $(35,821) 
    Classified 38,840   47,288   46,192   47,740   53,007   (8,448)  (14,167) 
    Total criticized loans$83,472  $111,628  $125,205  $170,692  $133,460  $(28,156) $(49,988) 
                   
    Nonperforming assets:              
    Nonaccrual loans$22,178  $20,050  $9,846  $11,592  $11,044  $2,128  $11,134  
    Loans 90 days or more past due and still accruing -   -   -   -   -   -   -  
    Nonperforming loans 22,178   20,050   9,846   11,592   11,044   2,128   11,134  
    Other real estate owned, net 117   117   117   792   675   -   (558) 
    Nonperforming assets$22,295  $20,167  $9,963  $12,384  $11,719  $2,128  $10,576  
                   
    Nonperforming loans to total loans 0.37%   0.34%   0.17%   0.20%   0.20%      
    Nonperforming assets to assets 0.30%   0.27%   0.14%   0.17%   0.17%      
                   
    Allowance for credit losses:              
    Balance at beginning of period$72,249  $71,523  $71,584  $73,067  $71,512      
    Credit loss expense (recovery) on loans 514   2,181   221   (374)  1,640      
    Net loan (charge-offs) recoveries (1,739)  (1,455)  (282)  (1,109)  (85)     
    Balance at end of period$71,024  $72,249 $-$71,523 $-$71,584 $-$73,067      
                   
    Net loan charge-offs (recoveries) to average loans (1) 0.12%   0.10%   0.02%   0.08%   0.01%      
    Allowance for credit losses to loans 1.19%   1.21%   1.20%   1.23%   1.29%      
                   
    Allowance for credit losses related to off-balance sheet items:              
    Balance at beginning of period$3,067  $3,115  $3,250  $2,313  $2,358      
    Credit loss expense (recovery) on off-balance sheet items (591)  (48)  (135)  937   (45)     
    Balance at end of period$2,476  $3,067  $3,115  $3,250  $2,313      
                   
    Unused commitments to extend credit$791,818  $924,371  $780,543  $746,354  $613,804      
                   
    (1)       Annualized     
                   

    Corporate Developments
    On April 27, 2023, Hanmi’s Board of Directors declared a cash dividend on its common stock for the second quarter of 2023 of $0.25 per share. Hanmi paid the dividend on May 24, 2023, to stockholders of record as of the close of business on May 8, 2023.

    Earnings Conference Call        
    Hanmi Bank will host its second quarter 2023 earnings conference call today, July 25, 2023 at 2:00 p.m. PST (5:00 p.m. EST) to discuss these results. This call will also be webcast. To access the call, please dial 1-877-407-9039 before 2:00 p.m. PST, using access code Hanmi Bank. To listen to the call online, either live or archived, please visit Hanmi’s Investor Relations website at www.hanmi.com.

    About Hanmi Financial Corporation
    Headquartered in Los Angeles, California, Hanmi Financial Corporation owns Hanmi Bank, which serves multi-ethnic communities through its network of 35 full-service branches and eight loan production offices in California, Texas, Illinois, Virginia, New Jersey, New York, Colorado, Washington and Georgia. Hanmi Bank specializes in real estate, commercial, SBA and trade finance lending to small and middle market businesses. Additional information is available at www.hanmi.com.

    Forward-Looking Statements
    This press release contains forward-looking statements, which are included in accordance with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are “forward–looking statements” for purposes of federal and state securities laws, including, but not limited to, statements about our anticipated future operating and financial performance, financial position and liquidity, business strategies, regulatory and competitive outlook, investment and expenditure plans, capital and financing needs and availability, plans and objectives of management for future operations, developments regarding our capital and strategic plans, and other similar forecasts and statements of expectation and statements of assumption underlying any of the foregoing. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” or “continue,” or the negative of such terms and other comparable terminology. Although we believe that our forward-looking statements to be reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

    Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ from those expressed or implied by the forward-looking statements. These factors include the following:

    • a failure to maintain adequate levels of capital and liquidity to support our operations;
    • the effect of potential future supervisory action against us or Hanmi Bank;
    • the effect of our rating under the Community Reinvestment Act and our ability to address any issues raised in our regulatory exams;
    • general economic and business conditions internationally, nationally and in those areas in which we operate, including any potential recessionary conditions;
    • volatility and deterioration in the credit and equity markets;
    • changes in consumer spending, borrowing and savings habits;
    • availability of capital from private and government sources;
    • demographic changes;
    • competition for loans and deposits and failure to attract or retain loans and deposits;
    • inflation and fluctuations in interest rates that reduce our margins and yields, the fair value of financial instruments, the level of loan originations or prepayments on loans we have made and make, and the cost we pay to retain and attract deposits and secure other types of funding;
    • the current or anticipated impact of military conflict, terrorism or other geopolitical events;
    • risks of natural disasters;
    • legal proceedings and litigation brought against us;
    • a failure in or breach of our operational or security systems or infrastructure, including cyberattacks;
    • the failure to maintain current technologies;
    • risks associated with Small Business Administration loans;
    • failure to attract or retain key employees;
    • our ability to access cost-effective funding;
    • changes in liquidity, including the size and composition of our deposit portfolio, including the percentage of uninsured deposits in the portfolio;
    • fluctuations in real estate values;
    • changes in accounting policies and practices;
    • changes in governmental regulation, including, but not limited to, any increase in FDIC insurance premiums and changes in the monetary policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System;
    • the continuing impact of the COVID-19 pandemic on our business and results of operation;
    • the ability of Hanmi Bank to make distributions to Hanmi Financial Corporation, which is restricted by certain factors, including Hanmi Bank’s retained earnings, net income, prior distributions made, and certain other financial tests;
    • strategic transactions we may enter into;
    • the adequacy of our allowance for credit losses;
    • our credit quality and the effect of credit quality on our credit losses expense and allowance for credit losses;
    • changes in the financial performance and/or condition of our borrowers and the ability of our borrowers to perform under the terms of their loans and other terms of credit agreements;
    • our ability to control expenses; and
    • cyber security and fraud risks against our information technology and those of our third-party providers and vendors.

    In addition, we set forth certain risks in our reports filed with the U.S. Securities and Exchange Commission, including, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022, our Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K that we will file hereafter, which could cause actual results to differ from those projected. We undertake no obligation to update such forward-looking statements except as required by law.

    Investor Contacts:
    Romolo (Ron) Santarosa
    Senior Executive Vice President & Chief Financial Officer
    213-427-5636

    Larry Clark, CFA
    Investor Relations
    Financial Profiles, Inc.
    lclark@finprofiles.com
    310-622-8223

     
    Hanmi Financial Corporation and Subsidiaries
    Consolidated Balance Sheets (Unaudited)
    (Dollars in thousands)
                
     June 30, March 31,  Percentage June 30,  Percentage
      2023   2023  ChangeChange  2022  ChangeChange
    Assets           
    Cash and due from banks$344,907  $386,201  $(41,294)-10.7% $217,237  $127,670 58.8%
    Securities available for sale, at fair value 836,650   878,701   (42,051)-4.8%  860,221   (23,571)-2.7%
    Loans held for sale, at the lower of cost or fair value 7,293   3,652   3,641 99.7%  18,528   (11,235)-60.6%
    Loans receivable, net of allowance for credit losses 5,894,147   5,908,209   (14,062)-0.2%  5,582,335   311,812 5.6%
    Accrued interest receivable 18,163   19,004   (841)-4.4%  14,044   4,119 29.3%
    Premises and equipment, net 22,849   22,625   224 1.0%  24,207   (1,358)-5.6%
    Customers' liability on acceptances 1,688   41   1,647 4017.1%  616   1,072 174.0%
    Servicing assets 7,352   7,541   (189)-2.5%  7,353   (1)-0.0%
    Goodwill and other intangible assets, net 11,162   11,193   (31)-0.3%  11,310   (148)-1.3%
    Federal Home Loan Bank ("FHLB") stock, at cost 16,385   16,385   - 0.0%  16,385   - 0.0%
    Bank-owned life insurance 56,085   55,814   271 0.5%  55,395   690 1.2%
    Prepaid expenses and other assets 128,243   124,764   3,479 2.8%  148,337   (20,094)-13.5%
    Total assets$ 7,344,924  $ 7,434,130  $ (89,206)-1.2% $ 6,955,968  $ 388,956 5.6%
                
    Liabilities and Stockholders' Equity           
    Liabilities:           
    Deposits:           
    Noninterest-bearing$2,206,078  $2,334,083  $(128,005)-5.5% $2,782,737  $(576,659)-20.7%
    Interest-bearing 4,109,690   3,866,955   242,735 6.3%  3,196,653   913,037 28.6%
    Total deposits 6,315,768   6,201,038   114,730 1.9%  5,979,390   336,378 5.6%
    Accrued interest payable 34,621   20,512   14,109 68.8%  986   33,635 3411.3%
    Bank's liability on acceptances 1,688   41   1,647 4017.1%  616   1,072 174.0%
    Borrowings 125,000   350,000   (225,000)-64.3%  145,000   (20,000)-13.8%
    Subordinated debentures 129,708   129,558   150 0.1%  129,113   595 0.5%
    Accrued expenses and other liabilities 69,579   70,816   (1,237)-1.7%  82,567   (12,988)-15.7%
    Total liabilities 6,676,364   6,771,965   (95,601)-1.4%  6,337,672   338,692 5.3%
                
    Stockholders' equity:           
    Common stock 33   33   - 0.0%  33   - 0.0%
    Additional paid-in capital 585,391   584,884   507 0.1%  582,018   3,373 0.6%
    Accumulated other comprehensive income (84,639)  (79,059)  (5,580)-7.1%  (66,568)  (18,071)-27.1%
    Retained earnings 296,901   283,910   12,991 4.6%  229,135   67,766 29.6%
    Less treasury stock (129,126)  (127,603)  (1,523)-1.2%  (126,322)  (2,804)-2.2%
    Total stockholders' equity 668,560   662,165   6,395 1.0%  618,296   50,264 8.1%
    Total liabilities and stockholders' equity$ 7,344,924  $ 7,434,130  $ (89,206)-1.2% $ 6,955,968  $ 388,956 5.6%
                

     

     
    Hanmi Financial Corporation and Subsidiaries
    Consolidated Statements of Income (Unaudited)
    (Dollars in thousands, except share and per share data)
              
     Three Months Ended
     June 30, March 31, Percentage June 30, Percentage
      2023   2023 Change  2022 Change
    Interest and dividend income:         
    Interest and fees on loans receivable$83,567  $80,923 3.3% $59,855 39.6%
    Interest on securities 4,126   4,026 2.5%  2,930 40.8%
    Dividends on FHLB stock 283   289 -2.1%  242 16.9%
    Interest on deposits in other banks 2,794   2,065 35.3%  193 1347.7%
    Total interest and dividend income 90,770   87,303 4.0%  63,220 43.6%
    Interest expense:         
    Interest on deposits 32,115   25,498 26.0%  2,457 1207.1%
    Interest on borrowings 1,633   2,369 -31.1%  370 341.4%
    Interest on subordinated debentures 1,600   1,583 1.1%  1,349 18.6%
    Total interest expense 35,348   29,450 20.0%  4,176 746.5%
    Net interest income before credit loss expense 55,422   57,853 -4.2%  59,044 -6.1%
    Credit loss expense (recovery) (77)  2,133 -103.6%  1,596 -104.8%
    Net interest income after credit loss expense 55,499   55,720 -0.4%  57,448 -3.4%
    Noninterest income:         
    Service charges on deposit accounts 2,571   2,579 -0.3%  2,875 -10.6%
    Trade finance and other service charges and fees 1,173   1,258 -6.8%  1,416 -17.2%
    Gain on sale of Small Business Administration ("SBA") loans 1,212   1,869 -35.2%  2,774 -56.3%
    Other operating income 2,979   2,630 13.3%  2,245 32.7%
    Total noninterest income 7,935   8,336 -4.8%  9,310 -14.8%
    Noninterest expense:         
    Salaries and employee benefits 20,365   20,610 -1.2%   18,779 8.4%
    Occupancy and equipment 4,500   4,412 2.0%  4,597 -2.1%
    Data processing 3,465   3,253 6.5%  3,114 11.3%
    Professional fees 1,376   1,335 3.1%  1,231 11.8%
    Supplies and communications 638   676 -5.6%  581 9.8%
    Advertising and promotion 748   833 -10.2%  660 13.3%
    Other operating expenses 3,188   1,672 90.7%  2,513 26.9%
    Total noninterest expense 34,280   32,791 4.5%  31,475 8.9%
    Income before tax 29,154   31,265 -6.8%  35,283 -17.4%
    Income tax expense 8,534   9,274 -8.0%   10,233 -16.6%
    Net income$ 20,620  $ 21,991 -6.2%  $ 25,050 -17.7%
             - 
    Basic earnings per share:$0.68  $0.72   $0.82  
    Diluted earnings per share:$0.67  $0.72   $0.82  
              
    Weighted-average shares outstanding:         
    Basic 30,324,264   30,347,325    30,296,897  
    Diluted 30,387,041   30,430,745    30,412,348  
    Common shares outstanding 30,485,788   30,555,287    30,482,990  
              

     

     
    Hanmi Financial Corporation and Subsidiaries
    Consolidated Statements of Income (Unaudited)
    (Dollars in thousands, except share and per share data)
     
     Six Months Ended
     June 30, June 30, Percentage
      2023  2022 Change
    Interest and dividend income:     
    Interest and fees on loans receivable$164,490 $113,779 44.6%
    Interest on securities 8,152  5,447 49.7%
    Dividends on FHLB stock 572  490 16.7%
    Interest on deposits in other banks 4,859  408 1090.9%
    Total interest and dividend income 178,073  120,124 48.2%
    Interest expense:     
    Interest on deposits 57,613  4,470 1188.9%
    Interest on borrowings 4,002  707 466.1%
    Interest on subordinated debentures 3,182  4,947 -35.7%
    Total interest expense 64,797  10,124 540.0%
    Net interest income before credit loss expense 113,276  110,000 3.0%
    Credit loss expense (recovery) 2,056  220 -834.5%
    Net interest income after credit loss expense 111,220  109,780 1.3%
    Noninterest income:     
    Service charges on deposit accounts 5,151  5,750 -10.4%
    Trade finance and other service charges and fees 2,431  2,558 -5.0%
    Gain on sale of Small Business Administration ("SBA") loans 3,081  5,295 -41.8%
    Other operating income 5,608  4,226 32.7%
    Total noninterest income 16,271  17,829 -8.7%
    Noninterest expense:     
    Salaries and employee benefits 40,975  36,496 12.3%
    Occupancy and equipment 8,912  9,243 -3.6%
    Data processing 6,718  6,351 5.8%
    Professional fees 2,710  2,661 1.8%
    Supplies and communications 1,314  1,245 5.5%
    Advertising and promotion 1,581  1,477 7.0%
    Other operating expenses 4,862  5,694 -14.6%
    Total noninterest expense 67,072  63,167 6.2%
    Income before tax 60,419  64,442 -6.2%
    Income tax expense 17,807  18,697 -4.8%
    Net income$ 42,612 $ 45,745 -6.8%
         - 
    Basic earnings per share:$1.40 $1.50  
    Diluted earnings per share:$1.39 $1.50  
          
    Weighted-average shares outstanding:     
    Basic 30,320,281  30,271,761  
    Diluted 30,383,226  30,391,273  
    Common shares outstanding 30,485,788  30,482,990  
          


                   
    Hanmi Financial Corporation and Subsidiaries
    Average Balance, Average Yield Earned, and Average Rate Paid (Unaudited)
    (Dollars in thousands)
                   
     Three Months Ended
     June 30, 2023 March 31, 2023 June 30, 2022
       InterestAverage   InterestAverage   InterestAverage
     Average Income /Yield / Average Income /Yield / Average Income /Yield /
     Balance ExpenseRate Balance ExpenseRate Balance ExpenseRate
    Assets              
    Interest-earning assets:              
    Loans receivable (1)$5,941,071  $83,5675.64% $5,944,399  $80,9235.51% $5,572,504  $59,8554.31%
    Securities (2) 971,531   4,1261.73%  980,712   4,0261.67%  945,291   2,9301.27%
    FHLB stock 16,385   2836.92%  16,385   2897.16%  16,385   2425.93%
    Interest-bearing deposits in other banks 230,974   2,7944.85%  192,902   2,0654.34%  136,473   1930.57%
    Total interest-earning assets 7,159,961   90,7705.09%  7,134,398   87,3034.96%  6,670,653   63,2203.80%
                   
    Noninterest-earning assets:              
    Cash and due from banks 62,036      65,088      67,859    
    Allowance for credit losses (72,098)     (71,452)     (73,896)   
    Other assets 232,058      239,121      255,095    
                   
    Total assets$ 7,381,957     $ 7,367,155     $ 6,919,711    
                   
    Liabilities and Stockholders' Equity              
    Interest-bearing liabilities:              
    Deposits:              
    Demand: interest-bearing$99,057  $270.11% $109,391  $290.11% $122,771  $180.06%
    Money market and savings 1,463,304   9,8872.71%  1,453,569   7,3152.04%  2,139,488   1,5700.29%
    Time deposits 2,403,685   22,2013.70%  2,223,615   18,1543.31%  894,345   8690.39%
    Total interest-bearing deposits 3,966,046   32,1153.25%  3,786,575   25,4982.73%  3,156,604   2,4570.31%
    Borrowings 196,776   1,6333.33%  268,056   2,3693.58%  140,245   3841.10%
    Subordinated debentures 129,631   1,6004.94%  129,483   1,5834.89%  129,029   1,3354.14%
    Total interest-bearing liabilities 4,292,453   35,3483.30%  4,184,114   29,4502.85%  3,425,878   4,1760.49%
                   
    Noninterest-bearing liabilities and equity:              
    Demand deposits: noninterest-bearing 2,213,171      2,324,413      2,716,297    
    Other liabilities 133,623      127,112      104,084    
    Stockholders' equity 742,710      731,516      673,452    
                   
    Total liabilities and stockholders' equity$ 7,381,957     $ 7,367,155     $ 6,919,711    
                   
    Net interest income (tax equivalent basis)  $ 55,422    $ 57,853    $ 59,044 
                   
    Cost of deposits   2.08%    1.69%    0.17%
    Net interest spread (taxable equivalent basis)   1.79%    2.10%    3.31%
    Net interest margin (taxable equivalent basis)   3.11%    3.28%    3.55%
                   
    (1)       Includes average loans held for sale              
    (2)       Income calculated on a fully taxable equivalent basis using the federal tax rate in effect for the periods presented.
                   


     
    Hanmi Financial Corporation and Subsidiaries
    Average Balance, Average Yield Earned, and Average Rate Paid (Unaudited)
    (Dollars in thousands)
     
     Six Months Ended
     June 30, 2023 June 30, 2022
       InterestAverage   InterestAverage
     Average Income /Yield / Average Income /Yield /
     Balance ExpenseRate Balance ExpenseRate
    Assets         
    Interest-earning assets:         
    Loans receivable (1)$5,942,726  $164,4905.58% $5,403,029  $113,7794.25%
    Securities (2) 976,096   8,1521.70%  937,939   5,4471.19%
    FHLB stock 16,385   5727.04%  16,385   4906.03%
    Interest-bearing deposits in other banks 212,043   4,8584.62%  314,690   4080.26%
    Total interest-earning assets 7,147,250   178,0725.02%  6,672,043   120,1243.63%
              
    Noninterest-earning assets:         
    Cash and due from banks 63,553      65,427    
    Allowance for credit losses (71,777)     (73,538)   
    Other assets 235,571      242,593    
              
    Total assets$ 7,374,597     $ 6,906,525    
              
    Liabilities and Stockholders' Equity         
    Interest-bearing liabilities:         
    Deposits:         
    Demand: interest-bearing$104,196  $560.11% $123,826  $350.06%
    Money market and savings 1,458,463   17,2012.38%  2,122,840   2,7580.26%
    Time deposits 2,314,148   40,3563.52%  915,577   1,6770.37%
    Total interest-bearing deposits 3,876,807   57,6133.00%  3,162,243   4,4700.29%
    Borrowings 232,219   4,0023.48%  135,427   7261.08%
    Subordinated debentures 129,557   3,1824.91%  170,868   4,9285.77%
    Total interest-bearing liabilities 4,238,583   64,7973.08%  3,468,538   10,1240.59%
              
    Noninterest-bearing liabilities and equity:         
    Demand deposits: noninterest-bearing 2,268,485      2,675,574    
    Other liabilities 130,385      96,269    
    Stockholders' equity 737,144      666,144    
              
    Total liabilities and stockholders' equity$ 7,374,597     $ 6,906,525    
              
    Net interest income (tax equivalent basis)  $ 113,275    $ 110,000 
              
    Cost of deposits   1.89%    0.15%
    Net interest spread (taxable equivalent basis)   1.94%    3.04%
    Net interest margin (taxable equivalent basis)   3.20%    3.32%
              
              
    (1)       Includes average loans held for sale         
    (2)       Amounts calculated on a fully taxable equivalent basis using the federal tax rate in effect for the periods presented.
              

    Non-GAAP Financial Measures

    Tangible Common Equity to Tangible Assets Ratio

    Tangible common equity to tangible assets ratio is supplemental financial information determined by a method other than in accordance with U.S. generally accepted accounting principles (“GAAP”). Management uses this non-GAAP financial measure in the analysis of Hanmi’s capital strength. Tangible common equity represents stockholders’ equity less goodwill and other intangible assets. Banking and financial institution regulators also exclude goodwill and other intangible assets from stockholders’ equity when assessing the capital adequacy of a financial institution. Management believes the presentation of this financial measure excluding the impact of these items provides useful supplemental information that is essential to a proper understanding of the capital strength of Hanmi. This financial measure is not a substitute for results determined in accordance with GAAP, nor is it necessarily comparable to other companies’ non-GAAP financial measures.

    The following table reconciles this non-GAAP financial measure to the GAAP financial measure for the periods indicated:

     
    Tangible Common Equity to Tangible Assets Ratio (Unaudited)
    (In thousands, except share, per share data and ratios)
              
     June 30, March 31, December 31, September 30, June 30,
    Hanmi Financial Corporation 2023   2023   2022   2022   2022 
    Assets$7,344,924  $7,434,130  $7,378,262  $7,128,511  $6,955,968 
    Less goodwill and other intangible assets (11,162)  (11,193)  (11,225)  (11,267)  (11,310)
    Tangible assets$7,333,762  $7,422,937  $7,367,037  $7,117,244  $6,944,658 
              
    Stockholders' equity (1)$668,560  $662,165  $637,515  $608,893  $618,296 
    Less goodwill and other intangible assets (11,162)  (11,193)  (11,225)  (11,267)  (11,310)
    Tangible stockholders' equity (1)$657,398  $650,972  $626,290  $597,626  $606,986 
              
    Stockholders' equity to assets 9.10%  8.91%  8.64%  8.54%  8.89%
    Tangible common equity to tangible assets (1) 8.96%  8.77%  8.50%  8.40%  8.74%
              
    Common shares outstanding 30,485,788   30,555,287   30,485,621   30,484,004   30,482,990 
    Tangible common equity per common share$21.56  $21.30  $20.54  $19.60  $19.91 
              
              
    (1)       There were no preferred shares outstanding at the periods indicated.        

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