Hanmi Financial Reports Strong Q1 Growth Amid Rising Credit Losses and Nonaccrual Loans

Hanmi Financial Corporation (NASDAQ: HAFC) has recently reported its financial performance for the first quarter ended March 31, 2025. The results indicate a mixture of positive growth metrics as well as areas of concern. Here are the key highlights and statistics:

• Net Income: Increased to $17.7 million, or $0.58 per diluted share, from $15.2 million, or $0.50 per diluted share year-over-year.
• Net Interest Income: Rose to $55.1 million, improving from $50.7 million in the previous year, largely due to a reduction in interest expense.
• Deposits: Increased by $183.7 million, or 2.9%, reaching $6.62 billion, attributed to gains in money market, savings, and time deposits.
• Loans Receivable: Slightly increased by $30.4 million to $6.21 billion, driven by loan production of $345.9 million, offset by payoffs and reductions of $315.1 million.
• Return on Average Assets: Improved to 0.94%, compared to 0.81% a year earlier.
• Credit Loss Expense: Increased dramatically to $2.7 million from $0.2 million year-over-year, reflecting credit quality concerns.
• Nonaccrual Loans: Increased to $35.5 million from $14.3 million as of December 31, 2024, marking a 149.1% increase, largely due to a $20.0 million commercial real estate loan designated as nonaccrual.
• Allowance for Credit Losses: Holds strong at $70.6 million, or 1.12% of total loans, remaining stable from the previous quarter.

### Positive Aspects:

• Strong increase in net income and reduction in expenses, particularly in noninterest expense which fell to $35.0 million from $36.4 million.
• Improved margins, with net interest spread increasing to 1.70% from 1.28% year-over-year.
• Capital ratios remain robust, with total risk-based capital ratio reported at 15.28% and Tier 1 risk-based capital at 12.46%, indicating solid financial health.

### Negative Aspects:

• Significant rise in credit loss expense raises concerns about the quality of the loan portfolio.
• Substantial increase in nonaccrual loans and classified loans indicates potential future financial risk.
• Overall increase in loans past due (including nonaccruals) presents challenges for the company’s liquidity and credit management.

Overall, while Hanmi Financial Corporation (NASDAQ: HAFC) has experienced growth in key areas during the first quarter of 2025, the increase in credit losses and nonaccrual loans suggests a need for vigilant management of its loan portfolio moving forward. The company’s ability to maintain its capital ratios and manage expenses effectively will be crucial for ensuring sustainable growth.http://www.sec.gov/Archives/edgar/data/1109242/000095017025067856/hafc-20250331.htm