0001193125-26-082425
SEC filingHanmi Financial Corporation reported net income of $76.1 million for FY 2025, a 22.3% increase from $62.2 million in FY 2024. This growth was driven by a $33.4 million increase in net interest income (to $236.2 million) and a $2.4 million increase in noninterest income (to $34.0 million), partially offset by a $6.5 million increase in noninterest expense (to $147.8 million) and a $5.4 million increase in income tax expense. Key drivers included loan growth of $312.0 million (5.0%) to $6.56 billion, a decline in interest expense due to lower deposit rates, and increased gains from SBA loan sales. The company maintained strong capital ratios, with the Bank's total risk-based capital at 14.25%, and paid dividends of $1.08 per share. Credit loss expense increased to $14.4 million from $4.4 million, primarily due to an $8.6 million charge-off on a commercial real estate loan.
Hanmi Financial Corporation reported strong financial results for FY 2025, with net income increasing 22.3% to $76.1 million from $62.2 million in FY 2024. This improvement was primarily driven by a $33.4 million (16.5%) increase in net interest income to $236.2 million, resulting from higher average loan balances and lower interest expense on deposits. Noninterest income grew 7.6% to $34.0 million, led by increased gains on SBA loan sales. These positive factors were partially offset by a $6.5 million (4.6%) increase in noninterest expense to $147.8 million and higher income tax expense. The company's return on average assets improved to 0.98% from 0.83%, while return on average equity increased to 9.32% from 7.97%.
Total interest and dividend income was $410.9 million, with interest and fees on loans comprising $375.8 million (91.5% of total interest income). The average yield on interest-earning assets increased slightly to 5.48% from 5.46% in the prior year. Noninterest income of $34.0 million included $7.8 million from gain on sale of SBA loans (up from $6.1 million in 2024) and $1.9 million from gain on sale of residential mortgage loans (up from $1.5 million). Service charges on deposit accounts contributed $8.7 million, while trade finance and other service charges added $6.1 million. The company's revenue mix reflects its focus on commercial lending, with commercial real estate and commercial/industrial loans representing 77.6% of the total loan portfolio.
Net interest margin (taxable equivalent basis) improved significantly to 3.15% from 2.78% in the prior year, while the net interest spread increased to 1.87% from 1.27%. This margin expansion resulted from a 59 basis point decrease in the average rate paid on interest-bearing liabilities to 3.61%, partially offset by a modest 2 basis point increase in the average yield on interest-earning assets. The cost of deposits decreased to 2.51% from 2.90%. Operating margin was 24.2%, up from 17.4% in the prior year, reflecting the company's ability to grow revenue faster than expenses. Credit loss expense increased to $14.4 million from $4.4 million, primarily due to an $8.6 million charge-off on a syndicated commercial real estate office loan.
Net cash provided by operating activities was $206.0 million, driven by net income of $76.1 million and adjustments including credit loss expense of $14.4 million and depreciation/amortization of $3.3 million. Investing activities used $384.3 million, primarily for loan growth ($392.0 million) and securities purchases ($173.1 million), partially offset by proceeds from security maturities and sales. Financing activities provided $86.4 million, mainly from deposit growth of $241.9 million, partially offset by dividend payments of $32.6 million and stock repurchases of $9.4 million. Total assets were $7.87 billion, with loans (net of allowance) of $6.49 billion and securities of $880.6 million. Total deposits were $6.68 billion, with a loan-to-deposit ratio of 98.3%. Stockholders' equity increased to $796.4 million from $732.2 million.
The company's strategic initiatives focus on expanding commercial and industrial and residential real estate portfolios while reducing commercial real estate exposure. Management noted continued refinement of risk management practices for commercial real estate loans, including stress testing under adverse economic conditions. The Board authorized an expansion of the share repurchase program in January 2026, adding 1.5 million shares to existing capacity. Key risk factors include concentrations in commercial real estate lending (particularly lessor of nonresidential buildings at 23.8% and hospitality at 12.9% of loans), exposure to economic conditions in Southern California, and potential impacts from tariffs on South Korea. The company maintains adequate liquidity with borrowing capacity of $424.5 million through the Federal Reserve Discount Window and additional lines of credit.