Hanmi Reports 2024 Second Quarter Results

Rhea-AI Summary

Hanmi Financial (NASDAQ: HAFC) announced its Q2 2024 financial results. Net income was $14.5M ($0.48/share), down from $15.2M ($0.50/share) in Q1 2024. ROA was 0.77% and ROE was 7.50%, compared to 0.81% and 7.90% in Q1. Though net income declined, business activity improved with a 17% growth in loan production and a rise in demand deposit accounts. Net interest income fell 4.0% to $48.6M, while the net interest margin decreased to 2.69%. Total loans receivable were stable at $6.18B. Deposits declined 0.7% to $6.33B. Noninterest income grew 4.2% to $8.1M, while noninterest expenses fell 3.2% to $35.3M. Asset quality improved, with criticized loans dropping 17.6%. However, nonperforming assets increased to 0.26% of total assets. The allowance for credit losses slightly decreased to $67.7M. As of June 30, 2024, Hanmi maintained a strong balance sheet and capital ratios, positioning it well for future growth.

Positive

• 17% growth in loan production.
• Noninterest income increased by 4.2%.
• Noninterest expenses decreased by 3.2%.
• Criticized loans decreased by 17.6%.
• Strong capital ratios with a total risk-based capital ratio of 15.24%.

Negative

• Net income decreased by 4.6% from Q1 2024.
• Net interest income decreased by 4.0%.
• Deposits decreased by 0.7%.
• Allowance for credit losses decreased to $67.7M.
• Nonperforming assets increased to 0.26% of total assets.

Insights

Financial Analyst

Financial Performance Analysis:

Hanmi Financial Corporation's Q2 2024 results indicate a slight dip in performance compared to the previous quarter. Net income declined from $15.2 million in Q1 2024 to $14.5 million in Q2 2024. This reduction is mainly due to lower net interest income and higher credit loss expenses. However, it's noteworthy that Hanmi managed to decrease noninterest expenses by 3.2%, which shows effective cost management.

From an investor's perspective, the decreased net interest margin (from 2.78% in Q1 2024 to 2.69% in Q2 2024) may raise concerns, especially given the competitive banking environment. On a positive note, the bank's asset quality remained strong with a significant reduction in criticized loans by 17.6%, indicating prudent risk management.

Overall, while the decline in some financial metrics might be concerning, Hanmi's strong asset quality and effective cost control strategies could help the institution navigate the current economic challenges effectively.

Market Research Analyst

Market Position and Growth Prospects:

Hanmi's Q2 2024 report highlights a strategic focus on relationship banking, resulting in a 17% increase in loan production and growth in demand deposit accounts. This aligns with the bank's efforts to expand its market share. Additionally, the bank's investment in technology to enhance the customer experience and achieve operational efficiencies reflects a forward-thinking approach to capturing growth opportunities.

However, a slight decrease in deposits (0.7%) and the increase in the cost of interest-bearing deposits suggest that Hanmi might face challenges in maintaining its funding base amid rising interest rates. The bank's ability to attract and retain noninterest-bearing deposits, which constitute 31.0% of total deposits, will be important in this scenario.

For retail investors, Hanmi's emphasis on technology and operational efficiency presents a long-term growth opportunity, though short-term challenges related to deposit costs and margin pressures should be monitored closely.

Credit Risk Analyst

Credit Quality and Risk Management:

Hanmi Financial Corporation's credit quality metrics for Q2 2024 indicate a balanced approach to risk management. The decrease in criticized loans by 17.6% and a stable allowance for credit losses (1.10% of loans) suggest that the bank is effectively managing credit risks. However, the increase in nonperforming assets to $20.0 million (up from $14.1 million in Q1 2024) and the rise in nonperforming loans to 0.31% from 0.23% require careful monitoring.

The higher credit loss expense of $1.0 million in Q2, compared with $0.2 million in the previous quarter, highlights the ongoing need to provision for potential loan losses amidst economic uncertainties. Despite these challenges, Hanmi’s strong capital ratios, with a total risk-based capital ratio of 15.24%, provide a solid buffer to absorb potential losses.

For investors, Hanmi's commitment to maintaining high asset quality and strong capital positions is reassuring. However, the uptick in nonperforming assets warrants a cautious approach, especially in the context of economic volatility.

LOS ANGELES, July 23, 2024 (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 2024.

Net income for the second quarter of 2024 was $14.5 million, or $0.48 per diluted share, compared with $15.2 million, or $0.50 per diluted share, for the first quarter of 2024. The return on average assets for the second quarter of 2024 was 0.77% and the return on average equity was 7.50%, compared with a return on average assets of 0.81% and the return on average equity of 7.90% for the first quarter of 2024.

CEO Commentary
“Our second quarter results demonstrate that while the economic environment has been challenging, we are observing improved business activity and stabilizing margin pressure,” said Bonnie Lee, President and Chief Executive Officer of Hanmi. Our relationship banking model has enabled us to attract new customers, resulting in 17% quarterly growth in loan production as well as growth in demand deposit accounts, further expanding our market share. Importantly, our rigorous underwriting practices continue to generate excellent asset quality."

“As we look to the second half of 2024, we are progressing with a robust balance sheet, ample liquidity and strong capital ratios. We continue to prioritize our customers by enhancing their Hanmi experience through strategic technology investments, which are also enabling us to achieve operational efficiencies. Finally, our prudent expense and credit management has positioned Hanmi to capitalize on the growth opportunities ahead. I am thankful to our team of bankers and support staff who continue to foster meaningful relationships with our customers and enhance our franchise value.”

Second Quarter 2024 Highlights:        

• Second quarter net income was $14.5 million, or $0.48 per diluted share, compared with $15.2 million, or $0.50 per diluted share for the first quarter of 2024. The decline in net income reflects lower net interest income, and a higher credit loss expense, partially offset by lower noninterest expenses.
• Loans receivable were $6.18 billion at June 30, 2024, essentially unchanged from the end of the first quarter of 2024; loan production for the second quarter was $273.9 million with a weighted average interest rate of 8.31%.
• Deposits were $6.33 billion at June 30, 2024, down 0.7% from the end of the first quarter of 2024; noninterest-bearing demand deposits were 31.0% of total deposits at the end of the second quarter.
• Net interest income for the second quarter was $48.6 million, down 4.0% from the first quarter of 2024, and net interest margin (taxable equivalent) was 2.69% for the second quarter, down 9 basis points; the average yield on loans decreased 1 basis point, while the cost of interest-bearing deposits increased 11 basis points. 
• Noninterest income for the second quarter was $8.1 million, up $0.4 million, or 4.2%, from the first quarter of 2024.
  
• Noninterest expenses were $35.3 million for the second quarter, down 3.2% from the first quarter of 2024, primarily reflecting a decrease in salaries and benefits.
• Asset quality remained favorable with criticized loans declining 17.6% from the first quarter of 2024, to $70.9 million, or 1.1% of loans. Nonperforming assets rose 7 basis points, to 0.26% of total assets, and net charge offs continued to be low at $1.8 million, or 0.12% of average loans (annualized).

For more information about Hanmi, please see the Q2 2024 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 Highlights
(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,				Q2-24				Q2-24
	2024				2024				2023				2023				2023				vs. Q1-24				vs. Q2-23
Net income	$	14,451			$	15,164			$	18,633			$	18,796			$	20,620			$	(713	)		$	(6,169	)
Net income per diluted common share	$	0.48			$	0.50			$	0.61			$	0.62			$	0.67			$	(0.02	)		$	(0.19	)
Assets	$	7,586,347			$	7,512,046			$	7,570,341			$	7,350,140			$	7,344,924			$	74,301			$	241,423
Loans receivable	$	6,176,359			$	6,177,840			$	6,182,434			$	6,020,785			$	5,965,171			$	(1,481	)		$	211,188
Deposits	$	6,329,340			$	6,376,060			$	6,280,574			$	6,260,072			$	6,315,768			$	(46,720	)		$	13,572
Return on average assets		0.77	%			0.81	%			0.99	%			1.00	%			1.12	%			-0.04				-0.35
Return on average stockholders' equity		7.50	%			7.90	%			9.70	%			9.88	%			11.14	%			-0.40				-3.64
Net interest margin		2.69	%			2.78	%			2.92	%			3.03	%			3.11	%			-0.09				-0.42
Efficiency ratio (1)		62.24	%			62.42	%			58.86	%			51.82	%			54.11	%			-0.18				8.13
Tangible common equity to tangible assets (2)		9.19	%			9.23	%			9.14	%			8.89	%			8.96	%			-0.04				0.23
Tangible common equity per common share (2)	$	22.99			$	22.86			$	22.75			$	21.45			$	21.56				0.13				1.43
(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 to $48.6 million from $50.7 million for the second quarter of 2024, down 4.0%. The decrease was primarily due to an increase in the cost of interest-bearing deposits. The cost of interest-bearing deposits increased 11 basis points to 4.27% for the second quarter of 2024, from 4.16% for the first quarter of 2024. The increase in the cost of interest-bearing deposits was due to higher market interest rates. Average interest-bearing deposits were $4.38 billion for the second quarter, down 0.6% from $4.41 billion for the first quarter of 2024. The yield on average loans for the second quarter decreased to 5.99% from 6.00% for the first quarter of 2024. Average loans were $6.09 billion for the second quarter, down 0.8% from $6.14 billion for the first quarter of 2024. Second quarter loan prepayment fees were $0.1 million, compared with $0.2 million for the first quarter of 2024. Net interest margin (taxable-equivalent) for the second quarter was 2.69%, compared with 2.78% for the first quarter of 2024.

	As of or For the Three Months Ended (in thousands)																				Percentage Change
	Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,				Q2-24				Q2-24
Net Interest Income	2024				2024				2023				2023				2023				vs. Q1-24				vs. Q2-23
Interest and fees on loans receivable(1)	$	90,752			$	91,674			$	89,922			$	85,398			$	83,567				-1.0	%			8.6	%
Interest on securities		5,238				4,955				4,583				4,204				4,126				5.7	%			27.0	%
Dividends on FHLB stock		357				361				341				317				283				-1.1	%			26.1	%
Interest on deposits in other banks		2,313				2,604				2,337				4,153				2,794				-11.2	%			-17.2	%
Total interest and dividend income	$	98,660			$	99,594			$	97,183			$	94,072			$	90,770				-0.9	%			8.7	%
Interest on deposits		46,495				45,638				40,277				36,818				32,115				1.9	%			44.8	%
Interest on borrowings		1,896				1,655				2,112				753				1,633				14.6	%			16.1	%
Interest on subordinated debentures		1,649				1,646				1,654				1,646				1,600				0.2	%			3.1	%
Total interest expense		50,040				48,939				44,043				39,217				35,348				2.2	%			41.6	%
Net interest income	$	48,620			$	50,655			$	53,140			$	54,855			$	55,422				-4.0	%			-12.3	%
(1)       Includes loans held for sale.

	For the Three Months Ended (in thousands)																				Percentage Change
Average Earning Assets and	Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,				Q2-24				Q2-24
Interest-bearing Liabilities	2024				2024				2023				2023				2023				vs. Q1-24				vs. Q2-23
Loans receivable (1)	$	6,089,440			$	6,137,888			$	6,071,644			$	5,915,423			$	5,941,071				-0.8	%			2.5	%
Securities		979,671				969,520				961,551				955,473				971,531				1.0	%			0.8	%
FHLB stock		16,385				16,385				16,385				16,385				16,385				0.0	%			0.0	%
Interest-bearing deposits in other banks		180,177				201,724				181,140				317,498				230,974				-10.7	%			-22.0	%
Average interest-earning assets	$	7,265,673			$	7,325,517			$	7,230,720			$	7,204,779			$	7,159,961				-0.8	%			1.5	%
Demand: interest-bearing	$	85,443			$	86,401			$	86,679			$	94,703			$	99,057				-1.1	%			-13.7	%
Money market and savings		1,845,870				1,815,085				1,669,973				1,601,826				1,463,304				1.7	%			26.1	%
Time deposits		2,453,154				2,507,830				2,417,803				2,438,112				2,403,685				-2.2	%			2.1	%
Average interest-bearing deposits		4,384,467				4,409,316				4,174,455				4,134,641				3,966,046				-0.6	%			10.6	%
Borrowings		169,525				162,418				205,951				120,381				196,776				4.4	%			-13.8	%
Subordinated debentures		130,239				130,088				129,933				129,780				129,631				0.1	%			0.5	%
Average interest-bearing liabilities	$	4,684,231			$	4,701,822			$	4,510,339			$	4,384,802			$	4,292,453				-0.4	%			9.1	%
Average Noninterest Bearing Deposits
Demand deposits - noninterest bearing	$	1,883,765			$	1,921,189			$	2,025,212			$	2,136,156			$	2,213,171				-1.9	%			-14.9	%
(1)       Includes loans held for sale.

	For the Three Months Ended																				Yield/Rate Change
	Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,				Q2-24				Q2-24
Average Yields and Rates	2024				2024				2023				2023				2023				vs. Q1-24				vs. Q2-23
Loans receivable(1)		5.99	%			6.00	%			5.88	%			5.73	%			5.64	%			-0.01				0.35
Securities (2)		2.17	%			2.07	%			1.93	%			1.79	%			1.73	%			0.10				0.44
FHLB stock		8.77	%			8.87	%			8.25	%			7.67	%			6.92	%			-0.10				1.85
Interest-bearing deposits in other banks		5.16	%			5.19	%			5.12	%			5.19	%			4.85	%			-0.03				0.31
Interest-earning assets		5.46	%			5.47	%			5.34	%			5.19	%			5.09	%			-0.01				0.37
Interest-bearing deposits		4.27	%			4.16	%			3.83	%			3.53	%			3.25	%			0.11				1.02
Borrowings		4.50	%			4.10	%			4.07	%			2.48	%			3.33	%			0.40				1.17
Subordinated debentures		5.07	%			5.06	%			5.09	%			5.07	%			4.94	%			0.01				0.13
Interest-bearing liabilities		4.30	%			4.19	%			3.88	%			3.55	%			3.30	%			0.11				1.00
Net interest margin (taxable equivalent basis)		2.69	%			2.78	%			2.92	%			3.03	%			3.11	%			-0.09				-0.42
Cost of deposits		2.98	%			2.90	%			2.58	%			2.33	%			2.08	%			0.08				0.90
(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 $1.0 million, compared with $0.2 million for the first quarter of 2024. Second quarter credit loss expense included a $1.3 million credit loss expense for loan losses, offset by a $0.3 million recovery for off-balance sheet items. Second quarter net loan charge-offs were $1.8 million, compared with first quarter of 2024 net loan charge-offs of $1.6 million.

Noninterest income for the second quarter increased $0.4 million to $8.1 million, or 4.2%, from $7.7 million for the first quarter of 2024. The increase primarily reflected $0.3 million in bank-owned life insurance benefit income in the second quarter of 2024. Additionally, gains on sales of SBA loans were $1.6 million for the second quarter of 2024, compared with $1.5 million for the first quarter of 2024. The volume of SBA loans sold in the second quarter decreased to $23.5 million, from $25.6 million for the first quarter of 2024, while trade premiums increased to 8.54% for the second quarter, from 7.23% for the first quarter of 2024. Moreover, gains on the sale of mortgage loans continued in the second quarter, whereby loans sold were $19.5 million, at a premium of 2.00%, compared with $29.7 million and 2.27% for the first quarter, resulting in income of $0.4 million for each period.

	For the Three Months Ended (in thousands)																				Percentage Change
	Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,				Q2-24				Q2-24
Noninterest Income	2024				2024				2023				2023				2023				vs. Q1-24				vs. Q2-23
Service charges on deposit accounts	$	2,429			$	2,450			$	2,391			$	2,605			$	2,571				-0.9	%			-5.5	%
Trade finance and other service charges and fees		1,277				1,414				1,245				1,155				1,173				-9.7	%			8.9	%
Servicing income		796				712				772				838				825				11.8	%			-3.5	%
Bank-owned life insurance income (expense)		638				304				(29	)			280				271				109.9	%			135.4	%
All other operating income		908				928				853				1,178				1,811				-2.2	%			-49.9	%
Service charges, fees & other		6,048				5,808				5,232				6,056				6,651				4.1	%			-9.1	%
Gain on sale of SBA loans		1,644				1,482				1,448				1,172				1,212				10.9	%			35.6	%
Gain on sale of mortgage loans		365				443				-				-				-				-17.6	%			100.0	%
Net gain (loss) on sales of securities		-				-				-				-				(1,871	)			0.0	%			-100.0	%
Gain (loss) on sale of bank premises		-				-				-				4,000				-				0.0	%			0.0	%
Legal settlement		-				-				-				-				1,943				0.0	%			-100.0	%
Total noninterest income	$	8,057			$	7,733			$	6,680			$	11,228			$	7,935				4.2	%			1.5	%

Noninterest expense for the second quarter decreased to $35.3 million from $36.4 million for the first quarter of 2024. The decline was primarily due to a $1.2 million decrease in salaries and benefits arising from $0.6 million in seasonally lower employer taxes and benefits and a $0.6 million decrease in capitalized labor costs associated with the Company's investment in a new loan origination system. All other categories of recurring noninterest expense combined, except for data processing, which increased by $0.1 million, decreased $0.5 million for the second quarter from the first quarter of 2024. Additionally, Hanmi recorded $0.3 million in nonrecurring branch consolidation expenses in the second quarter due to the consolidation of three branches; two branches in Texas and one branch in California. The efficiency ratio for the second quarter was 62.2%, compared with 62.4% for the first quarter of 2024.

	For the Three Months Ended (in thousands)																				Percentage Change
	Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,				Q2-24				Q2-24
	2024				2024				2023				2023				2023				vs. Q1-24				vs. Q2-23
Noninterest Expense
Salaries and employee benefits	$	20,434			$	21,585			$	20,062			$	20,361			$	20,365				-5.3	%			0.3	%
Occupancy and equipment		4,348				4,537				4,604				4,825				4,500				-4.2	%			-3.4	%
Data processing		3,686				3,551				3,487				3,490				3,465				3.8	%			6.4	%
Professional fees		1,749				1,893				1,977				1,568				1,376				-7.6	%			27.1	%
Supplies and communication		570				601				613				552				638				-5.2	%			-10.7	%
Advertising and promotion		669				907				990				534				748				-26.2	%			-10.6	%
All other operating expenses		3,251				3,160				3,252				2,852				3,243				2.9	%			0.2	%
Subtotal		34,707				36,234				34,985				34,182				34,335				-4.2	%			1.1	%
Branch consolidation expense		301				-				-				-				-				100.0	%			100.0	%
Other real estate owned expense		6				22				15				16				4				-72.7	%			50.0	%
Repossessed personal property expense (income)		262				189				211				47				(59	)			38.6	%			-544.1	%
Total noninterest expense	$	35,276			$	36,445			$	35,211			$	34,245			$	34,280				-3.2	%			2.9	%

Hanmi recorded a provision for income taxes of $6.0 million for the second quarter of 2024, compared with $6.6 million for the first quarter of 2024, representing an effective tax rate of 29.3% and 30.2%, respectively. The first quarter of 2024 income tax expense included a $0.2 million charge for share-based compensation vesting and $0.2 million of additional expense associated with amended state tax returns.

Financial Position
Total assets at June 30, 2024 increased 1.0%, or $74.3 million, to $7.59 billion from $7.51 billion at March 31, 2024. The sequential quarter increase mainly reflected a 22.3%, or $57.0 million, increase in cash and due from banks, a $6.5 million increase in loans held for sale, and a $5.4 million increase in securities.

Loans receivable, before allowance for credit losses, were $6.18 billion at June 30, 2024, and was consistent with the balance at March 31, 2024. Loans held for sale, representing the guaranteed portion of SBA 7(a) loans, were $10.5 million as of June 30, 2024, up from $4.0 million as of March 31, 2024.

	As of (in thousands)																				Percentage Change
	Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,				Q2-24				Q2-24
	2024				2024				2023				2023				2023				vs. Q1-24				vs. Q2-23
Loan Portfolio
Commercial real estate loans	$	3,888,505			$	3,878,677			$	3,889,739			$	3,773,015			$	3,738,325				0.3	%			4.0	%
Residential/consumer loans		954,209				970,362				962,661				926,326				886,984				-1.7	%			7.6	%
Commercial and industrial loans		802,372				774,851				747,819				728,792				753,456				3.6	%			6.5	%
Equipment finance		531,273				553,950				582,215				592,652				586,406				-4.1	%			-9.4	%
Loans receivable		6,176,359				6,177,840				6,182,434				6,020,785				5,965,171				0.0	%			3.5	%
Loans held for sale		10,467				3,999				12,013				11,767				7,293				161.7	%			43.5	%
Total	$	6,186,826			$	6,181,839			$	6,194,447			$	6,032,552			$	5,972,464				0.1	%			3.6	%

	As of
	Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,
	2024				2024				2023				2023				2023
Composition of Loan Portfolio
Commercial real estate loans		62.9	%			62.7	%			62.8	%			62.5	%			62.6	%
Residential/consumer loans		15.4	%			15.7	%			15.5	%			15.4	%			14.9	%
Commercial and industrial loans		13.0	%			12.5	%			12.1	%			12.1	%			12.6	%
Equipment finance		8.5	%			9.0	%			9.4	%			9.8	%			9.8	%
Loans receivable		99.8	%			99.9	%			99.8	%			99.8	%			99.9	%
Loans held for sale		0.2	%			0.1	%			0.2	%			0.2	%			0.1	%
Total		100.0	%			100.0	%			100.0	%			100.0	%			100.0	%

New loan production was $273.9 million for the second quarter of 2024 at an average rate of 8.31%, while payoffs were $148.4 million during the quarter at an average rate of 8.10%.

Commercial real estate loan production for the second quarter of 2024 was $87.6 million. Commercial and industrial loan production was $59.0 million, SBA loan production was $54.5 million, equipment finance production was $42.6 million, and residential mortgage loan production was $30.2 million.

	For the Three Months Ended (in thousands)
	Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,
	2024				2024				2023				2023				2023
New Loan Production
Commercial real estate loans	$	87,632			$	60,085			$	178,157			$	106,151			$	40,989
Commercial and industrial loans		59,007				50,789				52,079				67,907				36,322
SBA loans		54,486				30,817				48,432				36,109				30,926
Equipment finance		42,594				39,155				57,334				71,075				50,905
Residential/consumer loans		30,194				53,115				53,465				55,026				100,161
subtotal		273,913				233,961				389,467				336,268				259,303
Payoffs		(148,400	)			(86,250	)			(77,961	)			(62,140	)			(120,609	)
Amortization		(83,640	)			(90,711	)			(106,610	)			(116,411	)			(102,248	)
Loan sales		(42,945	)			(55,321	)			(29,861	)			(22,496	)			(20,933	)
Net line utilization		1,929				(4,150	)			(11,609	)			(70,238	)			(28,092	)
Charge-offs & OREO		(2,338	)			(2,123	)			(1,777	)			(9,369	)			(2,708	)
Loans receivable-beginning balance		6,177,840				6,182,434				6,020,785				5,965,171				5,980,458
Loans receivable-ending balance	$	6,176,359			$	6,177,840			$	6,182,434			$	6,020,785			$	5,965,171

Deposits were $6.33 billion at the end of the second quarter of 2024, down $46.7 million, or 0.7%, from $6.38 billion at the end of the preceding quarter. Driving the change was a $44.2 million decrease in time deposits and a $25.1 million decrease in money market and savings deposits, partially offset by a $26.9 million increase in noninterest-bearing demand deposits. Noninterest-bearing demand deposits represented 31.0% of total deposits at June 30, 2024 and the loan-to-deposit ratio was 97.6%.

	As of (in thousands)																				Percentage Change
	Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,				Q2-24				Q2-24
	2024				2024				2023				2023				2023				vs. Q1-24				vs. Q2-23
Deposit Portfolio
Demand: noninterest-bearing	$	1,959,963			$	1,933,060			$	2,003,596			$	2,161,238			$	2,206,078				1.4	%			-11.2	%
Demand: interest-bearing		82,981				87,374				87,452				88,133				97,076				-5.0	%			-14.5	%
Money market and savings		1,834,797				1,859,865				1,734,658				1,576,006				1,580,691				-1.3	%			16.1	%
Time deposits		2,451,599				2,495,761				2,454,868				2,434,695				2,431,923				-1.8	%			0.8	%
Total deposits	$	6,329,340			$	6,376,060			$	6,280,574			$	6,260,072			$	6,315,768				-0.7	%			0.2	%

	As of
	Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,
	2024				2024				2023				2023				2023
Composition of Deposit Portfolio
Demand: noninterest-bearing		31.0	%			30.3	%			31.9	%			34.5	%			34.9	%
Demand: interest-bearing		1.3	%			1.4	%			1.4	%			1.4	%			1.5	%
Money market and savings		29.0	%			29.2	%			27.6	%			25.2	%			25.0	%
Time deposits		38.7	%			39.1	%			39.1	%			38.9	%			38.6	%
Total deposits		100.0	%			100.0	%			100.0	%			100.0	%			100.0	%

Stockholders’ equity at June 30, 2024 was $707.1 million, up $4.0 million from $703.1 million at March 31, 2024. Second quarter net income, net of dividends paid, added $6.9 million to stockholders’ equity for the period. Offsetting this addition was a $0.9 million increase in unrealized after-tax losses on securities available for sale due to changes in interest rates during the second quarter and a $0.2 million increase in unrealized after-tax losses on cash flow hedges. In addition, Hanmi repurchased 170,000 shares of common stock during the quarter at an average share price of $16.05. At June 30, 2024, 1,330,000 shares remain under Hanmi’s share repurchase program. Tangible common stockholders’ equity was $696.0 million, or 9.19% of tangible assets, at June 30, 2024, compared with $692.0 million, or 9.23% of tangible assets at the end of the first quarter of 2024.

Hanmi and the Bank exceeded minimum regulatory capital requirements, and the Bank continues to exceed the minimum for the “well capitalized” category. At June 30, 2024, Hanmi’s preliminary common equity tier 1 capital ratio was 12.11% and its total risk-based capital ratio was 15.24%, compared with 12.05% and 15.20%, respectively, at the end of the first quarter of 2024.

	As of																				Ratio Change
	Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,				Q2-24				Q2-24
	2024				2024				2023				2023				2023				vs. Q1-24				vs. Q2-23
Regulatory Capital ratios (1)
Hanmi Financial
Total risk-based capital		15.24	%			15.20	%			14.95	%			15.07	%			15.11	%			0.04				0.13
Tier 1 risk-based capital		12.46	%			12.40	%			12.20	%			12.30	%			12.25	%			0.06				0.21
Common equity tier 1 capital		12.11	%			12.05	%			11.86	%			11.95	%			11.90	%			0.06				0.21
Tier 1 leverage capital ratio		10.51	%			10.36	%			10.37	%			10.27	%			10.22	%			0.15				0.29
Hanmi Bank
Total risk-based capital		14.51	%			14.50	%			14.27	%			14.42	%			14.45	%			0.01				0.06
Tier 1 risk-based capital		13.47	%			13.44	%			13.26	%			13.42	%			13.39	%			0.03				0.08
Common equity tier 1 capital		13.47	%			13.44	%			13.26	%			13.42	%			13.39	%			0.03				0.08
Tier 1 leverage capital ratio		11.41	%			11.29	%			11.32	%			11.25	%			11.21	%			0.12				0.20
(1)       Preliminary ratios for June 30, 2024

Asset Quality
Loans 30 to 89 days past due and still accruing were 0.22% of loans at the end of the second quarter of 2024, compared with 0.26% at the end of the prior quarter.

Criticized loans totaled $70.9 million at the end of the second quarter, down from $86.0 million at the end of the first quarter of 2024. Special mention loans were $36.9 million at the end of the second quarter, down from $62.3 million at March 31, 2024. Reductions in special mention loans included upgrades to pass of $17.9 million, paydowns and payoffs of $2.3 million and a downgrade of one loan relationship with total loans of $7.2 million. The upgrades to pass in the second quarter were mainly attributable to upgrades of $13.6 million on two commercial and industrial loans, and a $4.3 million upgrade on a commercial real estate loan. The quarter-over-quarter change also included increases from downgrades of $2.0 million of pass loans.

Classified loans were $33.9 million at June 30, 2024, up from $23.7 million at the end of the prior quarter. The $10.2 million increase was primarily driven by new loan downgrades to classified of $14.0 million, offset by charge-offs of $1.8 million, payoffs of $1.0 million, and paydowns and amortization of $1.0 million. The loan downgrades in the second quarter were primarily attributable to the previously mentioned $7.2 million in criticized loan downgrades.

Nonperforming loans were $19.2 million at June 30, 2024, up from $14.0 million at the end of the prior quarter. As a percentage of the loan portfolio, nonperforming loans were 0.31% at June 30, 2024, and 0.23% at the end of the first quarter.

Nonperforming assets were $20.0 million at the end of the second quarter of 2024, up from $14.1 million at the end of the prior quarter. The increase included a $0.7 million addition of a closed branch property. As a percentage of total assets, nonperforming assets were 0.26% at June 30, 2024, and 0.19% at the end of the first quarter.

Gross charge-offs for the second quarter of 2024 were $2.3 million, compared with $2.1 million for the preceding quarter. Recoveries of previously charged-off loans were $0.5 million in the second and first quarters of 2024. As a result, net charge-offs were $1.8 million for the second quarter of 2024, compared with net charge-offs of $1.6 million for the prior quarter.

The allowance for credit losses was $67.7 million at June 30, 2024, compared with $68.3 million at March 31, 2024. Specific allowances for loans increased $1.6 million, while the allowance for quantitative and qualitative considerations decreased $2.2 million. The ratio of the allowance for credit losses to loans was 1.10% at June 30, 2024, compared with 1.11% at March 31, 2024.

	As of or for the Three Months Ended (in thousands)																				Amount Change
	Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,				Q2-24				Q2-24
	2024				2024				2023				2023				2023				vs. Q1-24				vs. Q2-23
Asset Quality Data and Ratios
Delinquent loans:
Loans, 30 to 89 days past due and still accruing	$	13,844			$	15,839			$	10,263			$	9,545			$	13,749			$	(1,995	)		$	95
Delinquent loans to total loans		0.22	%			0.26	%			0.17	%			0.16	%			0.23	%			-0.04				-0.01
Criticized loans:
Special mention	$	36,921			$	62,317			$	65,314			$	76,473			$	44,632			$	(25,396	)		$	(7,711	)
Classified		33,945				23,670				31,367				33,134				38,840				10,275				(4,895	)
Total criticized loans	$	70,866			$	85,987			$	96,681			$	109,607			$	83,472			$	(15,121	)		$	(12,606	)
Nonperforming assets:
Nonaccrual loans	$	19,245			$	14,025			$	15,474			$	15,783			$	22,178			$	5,220			$	(2,933	)
Loans 90 days or more past due and still accruing		-				-				-				-				-				-				-
Nonperforming loans		19,245				14,025				15,474				15,783				22,178				5,220				(2,933	)
Other real estate owned, net		772				117				117				117				117				655				655
Nonperforming assets*	$	20,017			$	14,142			$	15,591			$	15,900			$	22,295			$	5,875			$	(2,278	)
Nonperforming assets to assets*		0.26	%			0.19	%			0.21	%			0.22	%			0.30	%			0.07				-0.04
Nonperforming loans to total loans		0.31	%			0.23	%			0.25	%			0.26	%			0.37	%			0.08				-0.06
* Excludes repossessed personal property of $1.2 million, $1.3 million, $1.3 million, $1.3 million, and $0.8 million as of Q2-24, Q1-24, Q4-23, Q3-23, and Q2-23, respectively

	As of or for the Three Months Ended (in thousands)
	Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,
	2024				2024				2023				2023				2023
Allowance for credit losses:
Balance at beginning of period	$	68,270			$	69,462			$	67,313			$	71,024			$	72,249
Credit loss expense (recovery) on loans		1,248				404				(2,880	)			5,167				514
Net loan (charge-offs) recoveries		(1,789	)			(1,596	)			5,029				(8,878	)			(1,739	)
Balance at end of period	$	67,729			$	68,270			$	69,462			$	67,313			$	71,024
Net loan charge-offs (recoveries) to average loans (1)		0.12	%			0.10	%			-0.33	%			0.60	%			0.12	%
Allowance for credit losses to loans		1.10	%			1.11	%			1.12	%			1.12	%			1.19	%
Allowance for credit losses related to off-balance sheet items:
Balance at beginning of period	$	2,297			$	2,474			$	2,463			$	2,476			$	3,067
Credit loss expense (recovery) on off-balance sheet items		(287	)			(177	)			11				(13	)			(591	)
Balance at end of period	$	2,010			$	2,297			$	2,474			$	2,463			$	2,476
Unused commitments to extend credit	$	795,391			$	792,769			$	813,960			$	848,886			$	791,818
(1)       Annualized

Corporate Developments
On April 25, 2024, Hanmi’s Board of Directors declared a cash dividend on its common stock for the 2024 second quarter of $0.25 per share. Hanmi paid the dividend on May 22, 2024, to stockholders of record as of the close of business on May 6, 2024.

Earnings Conference Call 
Hanmi Bank will host its second quarter 2024 earnings conference call today, July 23, 2024, 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 https://investors.hanmi.com/ where it will also be available for replay approximately one hour following the call.

About Hanmi Financial Corporation
Headquartered in Los Angeles, California, Hanmi Financial Corporation owns Hanmi Bank, which serves multi-ethnic communities through its network of 32 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;
• 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, the level of loan sales and the cost we pay to retain and attract deposits and secure other types of funding;
• our ability to enter new markets successfully and capitalize on growth opportunities;
• the current or anticipated impact of military conflict, terrorism or other geopolitical events;
• the effect of potential future supervisory action against us or Hanmi Bank and our ability to address any issues raised in our regulatory exams;
• 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 and 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 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 and changes in the methodology for computing 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, 2023, 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

Lisa Fortuna
Investor Relations
Financial Profiles, Inc.
lfortuna@finprofiles.com
310-622-8251

Hanmi Financial Corporation and Subsidiaries
Consolidated Balance Sheets (Unaudited)
(Dollars in thousands)

	June 30,				March 31,				Percentage			June 30,				Percentage
	2024				2024				Change			2023				Change
Assets
Cash and due from banks	$	313,079			$	256,038			22.3	%		$	344,907			-9.2	%
Securities available for sale, at fair value		877,638				872,190			0.6	%			836,650			4.9	%
Loans held for sale, at the lower of cost or fair value		10,467				3,999			161.7	%			7,293			43.5	%
Loans receivable, net of allowance for credit losses		6,108,630				6,109,570			0.0	%			5,894,147			3.6	%
Accrued interest receivable		23,958				23,032			4.0	%			18,163			31.9	%
Premises and equipment, net		21,955				21,952			0.0	%			22,849			-3.9	%
Customers' liability on acceptances		551				161			242.2	%			1,688			-67.4	%
Servicing assets		6,836				6,890			-0.8	%			7,352			-7.0	%
Goodwill and other intangible assets, net		11,048				11,074			-0.2	%			11,162			-1.0	%
Federal Home Loan Bank ("FHLB") stock, at cost		16,385				16,385			0.0	%			16,385			0.0	%
Bank-owned life insurance		56,534				56,639			-0.2	%			56,085			0.8	%
Prepaid expenses and other assets		139,266				134,116			3.8	%			128,243			8.6	%
Total assets	$	7,586,347			$	7,512,046			1.0	%		$	7,344,924			3.3	%
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Noninterest-bearing	$	1,959,963			$	1,933,060			1.4	%		$	2,206,078			-11.2	%
Interest-bearing		4,369,377				4,443,000			-1.7	%			4,109,690			6.3	%
Total deposits		6,329,340				6,376,060			-0.7	%			6,315,768			0.2	%
Accrued interest payable		47,699				38,007			25.5	%			34,621			37.8	%
Bank's liability on acceptances		551				161			242.2	%			1,688			-67.4	%
Borrowings		292,500				172,500			69.6	%			125,000			134.0	%
Subordinated debentures		130,318				130,165			0.1	%			129,708			0.5	%
Accrued expenses and other liabilities		78,880				92,053			-14.3	%			69,579			13.4	%
Total liabilities		6,879,288				6,808,946			1.0	%			6,676,364			3.0	%
Stockholders' equity:
Common stock		34				34			0.0	%			33			3.0	%
Additional paid-in capital		588,647				587,687			0.2	%			585,391			0.6	%
Accumulated other comprehensive income		(78,000	)			(76,890	)		-1.4	%			(84,639	)		7.8	%
Retained earnings		333,392				326,526			2.1	%			296,901			12.3	%
Less treasury stock		(137,014	)			(134,257	)		-2.1	%			(129,126	)		-6.1	%
Total stockholders' equity		707,059				703,100			0.6	%			668,560			5.8	%
Total liabilities and stockholders' equity	$	7,586,347			$	7,512,046			1.0	%		$	7,344,924			3.3	%

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
	2024				2024				Change			2023				Change
Interest and dividend income:
Interest and fees on loans receivable	$	90,752			$	91,674			-1.0	%		$	83,567			8.6	%
Interest on securities		5,238				4,955			5.7	%			4,126			27.0	%
Dividends on FHLB stock		357				361			-1.1	%			283			26.1	%
Interest on deposits in other banks		2,313				2,604			-11.2	%			2,794			-17.2	%
Total interest and dividend income		98,660				99,594			-0.9	%			90,770			8.7	%
Interest expense:
Interest on deposits		46,495				45,638			1.9	%			32,115			44.8	%
Interest on borrowings		1,896				1,655			14.6	%			1,633			16.1	%
Interest on subordinated debentures		1,649				1,646			0.2	%			1,600			3.1	%
Total interest expense		50,040				48,939			2.2	%			35,348			41.6	%
Net interest income before credit loss expense		48,620				50,655			-4.0	%			55,422			-12.3	%
Credit loss expense (recovery)		961				227			323.3	%			(77	)		-1348.1	%
Net interest income after credit loss expense		47,659				50,428			-5.5	%			55,499			-14.1	%
Noninterest income:
Service charges on deposit accounts		2,429				2,450			-0.9	%			2,571			-5.5	%
Trade finance and other service charges and fees		1,277				1,414			-9.7	%			1,173			8.9	%
Gain on sale of Small Business Administration ("SBA") loans		1,644				1,482			10.9	%			1,212			35.6	%
Other operating income		2,707				2,387			13.4	%			2,979			-9.1	%
Total noninterest income		8,057				7,733			4.2	%			7,935			1.5	%
Noninterest expense:
Salaries and employee benefits		20,434				21,585			-5.3	%			20,365			0.3	%
Occupancy and equipment		4,607				4,537			1.5	%			4,500			2.4	%
Data processing		3,686				3,551			3.8	%			3,465			6.4	%
Professional fees		1,749				1,893			-7.6	%			1,376			27.1	%
Supplies and communications		570				601			-5.2	%			638			-10.7	%
Advertising and promotion		669				907			-26.2	%			748			-10.6	%
Other operating expenses		3,561				3,371			5.6	%			3,188			11.7	%
Total noninterest expense		35,276				36,445			-3.2	%			34,280			2.9	%
Income before tax		20,440				21,716			-5.9	%			29,154			-29.9	%
Income tax expense		5,989				6,552			-8.6	%			8,534			-29.8	%
Net income	$	14,451			$	15,164			-4.7	%		$	20,620			-29.9	%
Basic earnings per share:	$	0.48			$	0.50						$	0.68
Diluted earnings per share:	$	0.48			$	0.50						$	0.67
Weighted-average shares outstanding:
Basic		30,055,913				30,119,646							30,324,264
Diluted		30,133,646				30,119,646							30,387,041
Common shares outstanding		30,272,110				30,276,358							30,485,788

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
	2024				2023				Change
Interest and dividend income:
Interest and fees on loans receivable	$	182,427			$	164,490				10.9	%
Interest on securities		10,193				8,152				25.0	%
Dividends on FHLB stock		719				572				25.7	%
Interest on deposits in other banks		4,914				4,859				1.1	%
Total interest and dividend income		198,253				178,073				11.3	%
Interest expense:
Interest on deposits		92,133				57,613				59.9	%
Interest on borrowings		3,551				4,002				-11.3	%
Interest on subordinated debentures		3,295				3,182				3.6	%
Total interest expense		98,979				64,797				52.8	%
Net interest income before credit loss expense		99,274				113,276				-12.4	%
Credit loss expense (recovery)		1,188				2,056				42.2	%
Net interest income after credit loss expense		98,086				111,220				-11.8	%
Noninterest income:
Service charges on deposit accounts		4,878				5,151				-5.3	%
Trade finance and other service charges and fees		2,691				2,431				10.7	%
Gain on sale of Small Business Administration ("SBA") loans		3,126				3,081				1.5	%
Other operating income		5,095				5,608				-9.1	%
Total noninterest income		15,790				16,271				-3.0	%
Noninterest expense:
Salaries and employee benefits		42,019				40,975				2.5	%
Occupancy and equipment		9,144				8,912				2.6	%
Data processing		7,237				6,718				7.7	%
Professional fees		3,642				2,710				34.4	%
Supplies and communications		1,172				1,314				-10.8	%
Advertising and promotion		1,576				1,581				-0.3	%
Other operating expenses		6,930				4,862				42.5	%
Total noninterest expense		71,720				67,072				6.9	%
Income before tax		42,156				60,419				-30.2	%
Income tax expense		12,541				17,807				-29.6	%
Net income	$	29,615			$	42,612				-30.5	%
Basic earnings per share:	$	0.98			$	1.40
Diluted earnings per share:	$	0.97			$	1.39
Weighted-average shares outstanding:
Basic		30,089,341				30,320,281
Diluted		30,166,181				30,383,226
Common shares outstanding		30,272,110				30,485,788

Hanmi Financial Corporation and Subsidiaries
Average Balance, Average Yield Earned, and Average Rate Paid (Unaudited)
(Dollars in thousands)

	Three Months Ended
	June 30, 2024											March 31, 2024											June 30, 2023
					Interest			Average								Interest			Average								Interest			Average
	Average				Income /			Yield /				Average				Income /			Yield /				Average				Income /			Yield /
	Balance				Expense			Rate				Balance				Expense			Rate				Balance				Expense			Rate
Assets
Interest-earning assets:
Loans receivable (1)	$	6,089,440			$	90,752			5.99	%		$	6,137,888			$	91,674			6.00	%		$	5,941,071			$	83,567			5.64	%
Securities (2)		979,671				5,238			2.17	%			969,520				4,955			2.07	%			971,531				4,126			1.73	%
FHLB stock		16,385				357			8.77	%			16,385				361			8.87	%			16,385				283			6.92	%
Interest-bearing deposits in other banks		180,177				2,313			5.16	%			201,724				2,604			5.19	%			230,974				2,794			4.85	%
Total interest-earning assets		7,265,673				98,660			5.46	%			7,325,517				99,594			5.47	%			7,159,961				90,770			5.09	%
Noninterest-earning assets:
Cash and due from banks		55,442											58,382											62,036
Allowance for credit losses		(67,908	)										(69,106	)										(72,098	)
Other assets		252,410											244,700											232,058
Total assets	$	7,505,617										$	7,559,493										$	7,381,957
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Deposits:
Demand: interest-bearing	$	85,443			$	32			0.15	%		$	86,401			$	30			0.14	%		$	99,057			$	27			0.11	%
Money market and savings		1,845,870				17,324			3.77	%			1,815,085				16,553			3.67	%			1,463,304				9,887			2.71	%
Time deposits		2,453,154				29,139			4.78	%			2,507,830				29,055			4.66	%			2,403,685				22,201			3.70	%
Total interest-bearing deposits		4,384,467				46,495			4.27	%			4,409,316				45,638			4.16	%			3,966,046				32,115			3.25	%
Borrowings		169,525				1,896			4.50	%			162,418				1,655			4.10	%			196,776				1,633			3.33	%
Subordinated debentures		130,239				1,649			5.07	%			130,088				1,646			5.06	%			129,631				1,600			4.94	%
Total interest-bearing liabilities		4,684,231				50,040			4.30	%			4,701,822				48,939			4.19	%			4,292,453				35,348			3.30	%
Noninterest-bearing liabilities and equity:
Demand deposits: noninterest-bearing		1,883,765											1,921,189											2,213,171
Other liabilities		162,543											164,524											133,623
Stockholders' equity		775,078											771,958											742,710
Total liabilities and stockholders' equity	$	7,505,617										$	7,559,493										$	7,381,957
Net interest income					$	48,620										$	50,655										$	55,422
Cost of deposits									2.98	%										2.90	%										2.08	%
Net interest spread (taxable equivalent basis)									1.16	%										1.28	%										1.79	%
Net interest margin (taxable equivalent basis)									2.69	%										2.78	%										3.11	%
(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, 2024											June 30, 2023
					Interest			Average								Interest			Average
	Average				Income /			Yield /				Average				Income /			Yield /
	Balance				Expense			Rate				Balance				Expense			Rate
Assets
Interest-earning assets:
Loans receivable (1)	$	6,113,664			$	182,427			6.00	%		$	5,942,726			$	164,490			5.58	%
Securities (2)		974,596				10,193			2.12	%			976,096				8,152			1.70	%
FHLB stock		16,385				719			8.82	%			16,385				572			7.04	%
Interest-bearing deposits in other banks		190,950				4,914			5.18	%			212,043				4,859			4.62	%
Total interest-earning assets		7,295,595				198,253			5.46	%			7,147,250				178,073			5.02	%
Noninterest-earning assets:
Cash and due from banks		56,912											63,553
Allowance for credit losses		(68,507	)										(71,777	)
Other assets		248,555											235,571
Total assets	$	7,532,555										$	7,374,597
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Deposits:
Demand: interest-bearing	$	85,922			$	61			0.14	%		$	104,196			$	56			0.11	%
Money market and savings		1,830,478				33,877			3.72	%			1,458,463				17,201			2.38	%
Time deposits		2,480,492				58,195			4.72	%			2,314,148				40,356			3.52	%
Total interest-bearing deposits		4,396,892				92,133			4.21	%			3,876,807				57,613			3.00	%
Borrowings		165,972				3,551			4.30	%			232,219				4,002			3.48	%
Subordinated debentures		130,163				3,295			5.06	%			129,557				3,182			4.91	%
Total interest-bearing liabilities		4,693,027				98,979			4.24	%			4,238,583				64,797			3.08	%
Noninterest-bearing liabilities and equity:
Demand deposits: noninterest-bearing		1,902,477											2,268,485
Other liabilities		163,533											130,385
Stockholders' equity		773,518											737,144
Total liabilities and stockholders' equity	$	7,532,555										$	7,374,597
Net interest income					$	99,274										$	113,276
Cost of deposits									2.94	%										1.89	%
Net interest spread (taxable equivalent basis)									1.22	%										1.94	%
Net interest margin (taxable equivalent basis)									2.74	%										3.20	%
(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”). This non-GAAP measure is used by management in the analysis of Hanmi’s capital strength. Tangible common equity is calculated by subtracting goodwill and other intangible assets from stockholders’ equity. 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 disclosure should not be viewed as a substitute for results determined in accordance with GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies.

The following table reconciles this non-GAAP performance measure to the GAAP performance 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	2024				2024				2023				2023				2023
Assets	$	7,586,347			$	7,512,046			$	7,570,341			$	7,350,140			$	7,344,924
Less goodwill and other intangible assets		(11,048	)			(11,074	)			(11,099	)			(11,131	)			(11,162	)
Tangible assets	$	7,575,299			$	7,500,972			$	7,559,242			$	7,339,009			$	7,333,762
Stockholders' equity (1)	$	707,059			$	703,100			$	701,891			$	663,359			$	668,560
Less goodwill and other intangible assets		(11,048	)			(11,074	)			(11,099	)			(11,131	)			(11,162	)
Tangible stockholders' equity (1)	$	696,011			$	692,026			$	690,792			$	652,228			$	657,398
Stockholders' equity to assets		9.32	%			9.36	%			9.27	%			9.03	%			9.10	%
Tangible common equity to tangible assets (1)		9.19	%			9.23	%			9.14	%			8.89	%			8.96	%
Common shares outstanding		30,272,110				30,276,358				30,368,655				30,410,582				30,485,788
Tangible common equity per common share	$	22.99			$	22.86			$	22.75			$	21.45			$	21.56
(1)       There were no preferred shares outstanding at the periods indicated.

FAQ

What were Hanmi Financial's Q2 2024 net income and earnings per share?

Hanmi Financial's Q2 2024 net income was $14.5 million, or $0.48 per diluted share.

How did Hanmi Financial's loan production perform in Q2 2024?

Hanmi Financial saw a 17% growth in loan production for Q2 2024.

What was Hanmi Financial's net interest margin in Q2 2024?

Hanmi Financial's net interest margin for Q2 2024 was 2.69%.

What was the total amount of Hanmi Financial's deposits at the end of Q2 2024?

Hanmi Financial's total deposits were $6.33 billion at the end of Q2 2024.

How did Hanmi Financial's noninterest income change in Q2 2024?

Hanmi Financial's noninterest income increased by 4.2% to $8.1 million in Q2 2024.

What were Hanmi Financial's criticized loans in Q2 2024?

Hanmi Financial's criticized loans decreased by 17.6% to $70.9 million in Q2 2024.

What was Hanmi Financial's allowance for credit losses at the end of Q2 2024?

Hanmi Financial's allowance for credit losses was $67.7 million at the end of Q2 2024.

What is Hanmi Financial's total risk-based capital ratio as of Q2 2024?

Hanmi Financial's total risk-based capital ratio was 15.24% as of Q2 2024.