Hanmi Financial Q3 Profit Rises as Margin Expands

Hanmi Financial Corporation (NASDAQ: HAFC) reported a modest sequential increase in third-quarter 2026 profit as higher net interest income and a wider margin offset a rise in credit costs tied to a single commercial real estate loan. Net income reached $23.7 million, or $0.80 per diluted share, up 0.8% from the second quarter and 7.4% from a year earlier.

Operating revenue increased 6.1% quarter over quarter to $76.6 million. Non-GAAP preprovision net revenue rose 10.8% to $36.8 million, but the benefit was largely absorbed by credit loss expense, which climbed to $4.5 million from $1.2 million in the prior quarter.

Margin Expansion Supports Revenue

Net interest income increased 5.8% from the second quarter and 10.6% year over year to $67.6 million. The taxable-equivalent net interest margin widened by 8 basis points sequentially and 22 basis points from a year earlier to 3.44%.

Hanmi attributed the sequential improvement to a 13-basis-point increase in the average loan yield, while the average rate paid on interest-bearing deposits rose by only 1 basis point. Several quarter-specific items, including loan interest reversals, prepayment fees, accelerated deferred fee income, a special Federal Home Loan Bank dividend and additional subordinated-debt interest expense, contributed about 4 basis points to the reported margin.

Noninterest income was $9.0 million, up 8.2% from the second quarter but down 8.6% year over year. The sequential increase primarily reflected a $1.0 million rise in gains from Small Business Administration loan sales. Noninterest expense increased 2.1% sequentially to $39.8 million, partly because of $1.1 million in accelerated amortization costs associated with the early redemption of subordinated debt.

The efficiency ratio improved to 52.02% from 54.07% in the second quarter. Return on average assets was 1.17%, compared with 1.20% in the prior quarter, while return on average equity declined to 10.90% from 11.09%.

Loan Production Accelerates, Deposits Grow

Total loans increased 0.5% during the quarter to $6.57 billion. New loan production rose 46.2%, or $171.7 million, to $543.6 million, although the balance-sheet impact was partly offset by a $127.0 million increase in loan payoffs.

Commercial real estate production totaled $226.9 million. Commercial and industrial production increased 91% sequentially to $170.3 million, while residential mortgage, SBA and equipment-finance production amounted to $77.1 million, $41.0 million and $28.2 million, respectively. The weighted average interest rate on new production was 6.61%.

Commercial real estate remained the largest portfolio category at $4.06 billion, or 62% of total loans. Within that portfolio, retail properties accounted for $1.15 billion, hospitality for $883.6 million and offices for $483.8 million. California represented 63% of total CRE exposure.

Deposits increased 1.4% from the prior quarter to $7.06 billion, with core deposits rising 1.9%. Noninterest-bearing deposits remained 30.4% of the total, while estimated uninsured deposits represented 46.3%. Brokered deposits remained limited at 1.2% of deposits.

Single CRE Loan Raises Credit Costs

Hanmi recorded a $3.2 million partial charge-off on a $21.2 million retail commercial real estate loan when the asset was moved to held-for-sale. Net charge-offs totaled $4.3 million, equivalent to an annualized 0.27% of average loans. Excluding that CRE charge-off, the annualized net charge-off ratio would have been 0.07%, according to the presentation.

Nonperforming assets were $10.0 million, or 0.12% of total assets, unchanged as a percentage from the second quarter. Nonperforming loans totaled 0.14% of loans. Delinquent loans fell by $19.8 million to $13.0 million, primarily because the $21.2 million CRE loan was designated held-for-sale.

Criticized loans, however, increased to $134.4 million, or 2.05% of total loans, from $113.9 million, or 1.74%, in the prior quarter. The third-quarter total included two multifamily CRE loans totaling $51.4 million. Within the hospitality portfolio, $56.4 million, or 6.4%, was criticized, including a $54.2 million special-mention loan.

The allowance for credit losses was $70.8 million at September 30, equivalent to 1.08% of total loans and effectively unchanged from the previous quarter.

Capital and Liquidity Remain Above Requirements

Hanmi returned 55.6% of third-quarter earnings to shareholders through $8.3 million of dividends and $4.9 million of share repurchases. Non-GAAP tangible common equity to tangible assets was 9.93%, down from 10.03% in the second quarter, while tangible book value per share was essentially unchanged at $27.03. The company’s common equity Tier 1 capital ratio was 12.30%, and Hanmi Bank remained above the regulatory threshold for well-capitalized institutions.

The bank reported $1.25 billion of liquid assets and $2.49 billion of secondary liquidity sources at quarter-end, providing total bank liquidity of $3.73 billion, or 46.5% of assets. Its $957.9 million available-for-sale securities portfolio carried $88.2 million of unrealized losses.

The presentation identified commercial real estate concentration, deposit competition, interest-rate fluctuations, credit deterioration and changes in real estate values among the factors that could affect future results. It also cited cybersecurity, regulatory, geopolitical, funding and broader economic risks.