HANMI FINANCIAL CORP Q1 FY2025 earnings call

• Strong start to 2025 with solid deposit growth, margin expansion, and disciplined expenses. - Key highlights: net income increase, margin expansion, loan growth, noninterest income growth, deposit growth, USKC initiative progress, new branch in Duluth, GA. - Future priorities: loan growth in low to mid-single digits, focus on C&I, reduce CRE portfolio, pursue residential mortgage sales, hire banking talent, core deposit growth, maintain asset quality.

Net income was $17.7 million or $0.58 per diluted share, up 17% and 16% respectively compared to Q1 2024. Net interest margin was 3.02%, up 11 basis points. Total loans grew to $6.28 billion, up 0.5% QoQ. Noninterest income grew 5% primarily from SBA loan sales. Deposits grew 3% QoQ, driven by new commercial accounts and new branches. Operating expenses were well managed with an efficiency ratio of 55.69%. USKC loan portfolio was ~15% of total loans, and USKC deposits now represent 15% of total deposits (up from 13% end 2024).

• Target low to mid-single-digit loan growth, focusing on C&I and monitoring macroeconomic environment. - Pursue residential mortgage sales to supplement fee revenues. - Hire additional banking talent to expand C&I business in target verticals. - Continue to increase core deposit growth. - Maintain strong asset quality via disciplined credit administration.

• Macroeconomic uncertainty may impact loan demand and portfolio. - Potential tariff impacts on USKC customers, though some are better positioned. - Elevated interest rates affecting CRE refinancing and activity.

Q: How is the loan pipeline looking and potential tariff impacts?

A: Second quarter pipeline is healthy; tariff impacts on USKC customers are manageable as many are prepared and some not impacted by tariffs.

Q: How to model expenses for the rest of the year?

A: Second quarter likely has 3%-4% increase in salaries and benefits due to annual merits, else expenses in line with inflation.

Q: Capital deployment and share repurchases?

A: Board reviews dividend and repurchases quarterly; recent share repurchases, with plans dependent on Board decision.

Q: Margin details, including deposit rates and CD repricing?

A: March CDs at 4.1%, average interest-bearing deposit cost 3.67% in March; maturing CDs in Q2 average 4.41%, margin expansion may slow.

Q: Credit details on syndicated CRE loan?

A: Syndicated commercial real estate office property in CBD; $6.2 million reserved, loan size $200 million, Hanmi has 10% stake.

Q: Office CRE portfolio and maturities?

A: Over $200 million maturing in 2025; no immediate issues seen based on current operating statements.

Q: Loan yields and Fed rate cuts?

A: Loan beta depends on speed, pace, and volume of Fed rate changes; recent rate declines have had limited impact on loan yields.

Q: SBA production expectations?

A: Quarterly SBA production guidance $42M-$45M, plus/minus $5M, with solid pipeline and premium market holding.