Earnings call transcript: Hanmi Financial miss in Q2 2025 impacts stock

Hanmi Financial Corporation (HAFC) reported its second-quarter 2025 earnings, revealing a shortfall in both earnings per share (EPS) and revenue compared to forecasts. The company’s EPS came in at $0.50, missing the forecast of $0.61 by 18.03%. Revenue also fell short, registering $65.21 million against the expected $65.7 million, a 0.75% miss. Despite these misses, the stock showed resilience, closing at $25.92, up 0.77% from the previous day. According to InvestingPro analysis, HAFC is currently trading above its Fair Value, with a market capitalization of $783 million.

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Key Takeaways

• Hanmi Financial’s EPS and revenue both missed analyst expectations.
• The stock price increased by 0.77% in after-hours trading.
• The company reported a 3.7% growth in net interest income.
• Loan production decreased by 4.7% from the previous quarter.
• Hanmi Financial maintains a strong liquidity position.

Company Performance

Hanmi Financial’s performance in Q2 2025 was marked by a decline in net income to $15.1 million, down from $17.7 million in Q1. The company reported a slight increase in net interest margin, up by 5 basis points to 3.07%. Despite the earnings miss, Hanmi Financial continues to expand its commercial banking capabilities and has increased its SBA production target to $45-50 million. The company maintains a strong financial position with a P/E ratio of 12.3 and has demonstrated its commitment to shareholder returns by maintaining dividend payments for 13 consecutive years, currently offering a 4.13% dividend yield.

Financial Highlights

• Revenue: $65.21 million, down from the forecast of $65.7 million
• Earnings per share: $0.50, below the forecast of $0.61
• Net interest income: $57.1 million, up 3.7%
• Non-interest income: $8.1 million, up 4.5%

Earnings vs. Forecast

Hanmi Financial’s EPS of $0.50 was below the forecasted $0.61, marking an 18.03% negative surprise. Revenue also fell short by 0.75%, coming in at $65.21 million against the expected $65.7 million. This marks a significant miss compared to the company’s historical trend of meeting or exceeding forecasts.

Market Reaction

Despite the earnings miss, Hanmi Financial’s stock price increased by 0.77% to $25.92 in after-hours trading. This movement places the stock closer to its 52-week high of $27.59, indicating investor confidence in the company’s long-term strategy.

Outlook & Guidance

Looking forward, Hanmi Financial targets low to mid-single-digit loan growth and expects continued improvement in net interest margins. The company plans to expand its SBA activities and commercial and industrial (C&I) portfolios while reducing commercial real estate exposure.

Executive Commentary

"We delivered a solid operating performance in the first half of the year, fueling our momentum," said Bonnie Lee, CEO. "Our strategy is clear, to broaden our loan and deposit base, strengthen and establish new relationships within select deposit-rich markets."

Risks and Challenges

• Increased credit loss expense impacting net income.
• Subdued refinance activity in the mortgage market.
• Economic environment described as "dynamic" with potential volatility.
• Selective approach to commercial real estate lending may limit growth.
• Potential tax rate increase, with an expected rate of approximately 29.5% for the full year.

Q&A

During the earnings call, analysts focused on loan growth prospects, with the company expecting mid-single-digit growth in Q3. Questions also covered credit quality improvements and the anticipated stability of expenses. Executives highlighted a strong pipeline for Q3 and continued modest margin improvements.

Full transcript - Hanmi Financial Corporation (HAFC) Q2 2025:

Conference Operator: Ladies and gentlemen, welcome to Omni Financial Corporation’s Second Quarter twenty twenty five Conference Call. As a reminder, today’s call is being recorded for replay purposes. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. I would now like to turn the conference call over to Ben Brokowitz, Investor Relations for the company.

Please go ahead,

Ben Brokowitz, Investor Relations, Omni Financial Corporation: Thank you, operator, and thank you all for joining us today to discuss Omni’s second quarter twenty twenty five results. This afternoon, Omni issued its earnings release and quarterly supplemental slide presentation to accompany today’s call. Both documents are available in the IR section of the company’s website at hominy.com. I’m here today with Bonnie Lee, President and Chief Executive Officer of Hominy Financial Corporation, Anthony Kim, Chief Banking Officer, and Ron Santarosa, Chief Financial Officer. Bonnie will begin today’s call with an overview.

Anthony will discuss loan and deposit activities. Ron will provide details on our financial performance, and then Bonnie will provide closing comments before we open the call up for your questions. Before we begin, I would like to remind you that today’s comments may include forward looking statements under the federal securities laws. Forward looking statements are based on current plans, expectations, events and financial industry trends that may affect the company’s future operating results and financial position. Our actual results may differ materially from those contemplated by our forward looking statements, which involve risks and uncertainties.

Discussions of the factors that could cause our actual results to differ materially from these forward looking statements can be found in our SEC filings, including our reports on Forms 10 ks and 10 Q. In particular, we direct you to the discussion of certain risk factors affecting our business contained in our earnings release, our investor presentation, and in our Form 10 Q. With that, I would now like to turn the call over to Bonnie Lee. Bonnie, please go ahead.

Bonnie Lee, President and Chief Executive Officer, Hanmi Financial Corporation: Thank you, Ben. Good afternoon, everyone. Thank you for joining us today to discuss our second quarter twenty twenty five results. I am pleased with Hammeetin’s consistent execution this quarter, building on our progress in the previous quarter for a solid first half of the year. We delivered further margin expansion and drove growth in our loan portfolio with healthy contributions from C and I and residential mortgage loans.

Deposit growth was also solid for the quarter with a continued contribution from commercial accounts and new branches. Importantly, asset quality improved significantly from an already strong base with a notable reductions in criticized and non accrual loans. This progress is a testament to our focus and proactive portfolio management through vigilant and prompt actions. Now, let me review some key highlights of the quarter. Net income for the first quarter was $15,100,000 or $0.50 per diluted share compared to $17,700,000 and $0.58 respectively in the first quarter.

The decline in net income was primarily due to an increase in credit loss expense. Our return on average assets was 0.79% and return on average equity was 7.8%. Pre provision net revenues grew 3.7% or $1,000,000 showing the strength of our core business. Once again, we’ve spent in net interest margin increasing by five basis points to 3.07%, primarily driven by lower funding costs. As I just mentioned, asset quality is excellent, improved significantly from the first quarter due to our proactive portfolio management actions.

Net charge offs for the second quarter were considerably higher than the first quarter, reflecting the $8,600,000 charge off and the $20,000,000 non accrual syndicated commercial real estate office loan we identified last quarter. While disappointing, we believe this action brings the matter closer to resolution and is not reflective of any systematic issues. Total loans increased $6,310,000,000 0.4% on a linked quarter basis or 1.6% annualized with a higher C and I and residential mortgage loan production during the quarter. Deposits increased by 1.7% in the second quarter, driven by new commercial accounts and meaningful contribution from our new branches. This growth underscores our ability to continually forge new customer relationships while strengthening our long standing ones.

Non interest bearing demand deposits have increased by over 7% from the 2024 and continue to represent a noteworthy percentage of total deposits at 31.3%. Non interest income increased to 4.5% primarily reflecting the success of our SBA efforts. We continue to maintain disciplined control over our operating expenses, holding our efficiency ratio constant at 55.7% compared to the prior quarter. During the second quarter, we also expanded our commercial banking capabilities by successfully recruiting talented new bankers in both C and I and SBA lending to support growth in these key asset classes. Given the strength of our loan pipeline, we are increasing our quarterly SBA production target to 45,000,000 to $50,000,000 from 40,000,000 to 45,000,000 for the second half of twenty twenty five.

Turning now to our corporate Korea initiative. Although the economic outlook remains dynamic, we continue with the Korean manufacturers through our new branch in the Metro Atlanta area where many Korean companies have US manufacturing presence. We anticipate new loan production from them in the second half of twenty twenty five. Our USKC loan and deposit portfolios remain steady in the quarter with both portfolios in the low to mid teens as a percentage of total loans and deposits. While the current economic environment is evolving, we remain optimistic about the long term growth potential of our USKC initiative.

That said, many of our USKC customers are taking a wait and see approach as they look for greater clarity around tariffs and their potential impact on the broader economy. Looking ahead, we believe Hanmi is well positioned for growth as we execute on our key strategic initiatives and priorities, which include driving loan growth in the low to mid single digit range with a focus on expanding our SBA activities and our C and I portfolios, while reducing our exposure to CRE as a percentage of the overall portfolio. Building on the meaningful improvement in our C and I and SBA loan pipelines as our customers continue to adapt to the current economic environment. Leveraging our strong liquidity position and maintaining robust credit metrics, which support our standing as a well capitalized bank. Preserving our significantly improved asset quality through proactive management of our portfolio and disciplined credit administration.

In summary, we delivered a solid operating performance in the first half of the year, fueling our momentum. We remain deeply engaged with our customers responding to their needs as they navigate the evolving market environment and its effect on their businesses. When I look at our performance through the first half of twenty twenty five, I see the strength and execution of our growth strategy. New loan production has increased 33% over the previous year. Pre provision net revenues have increased 31% and net interest margin is 31 basis points higher.

Our customer centric approach enables our team to deliver exceptional service and innovative market leading solutions. Coupled with our continued focus and disciplined expense management and strong asset quality, we are well positioned to drive sustainable growth and deliver long term value to our shareholders. I’ll now turn the call over to Anthony Kim, our Chief Banking Officer to discuss second quarter loan production and deposit gathering in more detail.

Anthony Kim, Chief Banking Officer, Hanmi Financial Corporation: Thank you, Bonnie, and thank you for joining us today. I’ll begin by providing additional details on our loan production. Second quarter loan production was $330,000,000 down $16,000,000 or 4.7% from the prior quarter with a weighted average interest rate of 7.1% compared to 7.355% last quarter. The decrease in loan production was primarily due to a decrease in CRE, SBA and equipment finance, partially offset by higher residential and C and I production. We continue to be disciplined and selective with our underwriting to ensure we only pursue opportunities that meet our high quality standards.

CRE production was $112,000,000 down 24% from the prior quarter given our selective approach. The elevated interest rate environment continues to impact traditional and refinancing activity. We remain pleased with the quality of our CRE portfolio. It has a weighted average loan to value ratio of approximately 47% and a weighted average debt service coverage ratio of 2.2 times. SBA loan production decreased 8,000,000 from the prior quarter to 47,000,000, but still exceeded the high end of our quarterly target range.

This steady production highlights the impact of our recent team hires and the growth we’re driving among small businesses in our markets. On a year to date basis, SBA production increased 20%. During the quarter, we sold approximately 35,400,000.0 of SBA loans from our portfolio and recognized a gain of 2,200,000.0 during the quarter. C and I production during the second quarter was 50 3,000,000, an increase of 11,000,000 or 26%. The increase was due primarily to adding new C and I talent and our efforts to further grow this portfolio.

Total commitments for our commercial lines of credit remain healthy and over $1,000,000,000 in the second quarter of 3% or 12% on an annualized basis. Outstanding balances increased by 2% resulting in a utilization rate of 38% consistent with the prior quarter. Residential mortgage loan production was $84,000,000 for the second quarter, up 52% from previous quarter due primarily to increased activities of our correspondent lenders. Of note, most of our current lending opportunities continue to be in the purchase market as refinance activity remains subdued. Residential mortgage loan represent approximately 16% of our total loan portfolio consistent with the previous quarter.

During the second quarter, we did not finalize the sale of residential mortgages. However, this was completed at the beginning of the third quarter. We’ll continue to explore additional sales contingent on market conditions. Although we are making good progress expanding our USKC relationships, many of these customers are temporarily on the sidelines as they await greater clarity given the current economic conditions. USKC loan balances were $842,000,000, representing approximately 13% of total loan portfolio.

Turning to deposits. In the second quarter, deposits were up 1.7% from the prior quarter driven by new commercial accounts and contributions from our new branches. Deposit production for USKC customers were down slightly from the previous quarter, but remained solid at 61,000,000 Our team is making good progress adding new relationships that we believe can grow over time. At quarter end, corporate Korea deposit represented 14% of our total deposits and 16% of our demand deposits. The composition of our deposit base remains stable, which reflects the success of our relationship banking model.

During the second quarter, our mix of non interest bearing deposit remained healthy at 31% of total bank deposits. Asset quality improved significantly from the first quarter due to proactive portfolio management as criticized loans decreased 72% reflecting $85,000,000 in loan upgrades and $20,000,000 in loan payments. Non accruals also decreased 27% and loan delinquencies declined to 0.17% of total loans. Our credit quality remains strong, which we expect to continue given our vigilant credit administration practices. And now I’ll hand the call over to Ron Saldorosa, our Chief Financial Officer for more details on our second quarter financial results.

Ron Santarosa, Chief Financial Officer, Hanmi Financial Corporation: Thank you, Anthony, and good afternoon to all. As Bonnie noted, our pre provision net revenues increased 3.7 quarter over quarter, reflecting higher levels of net interest income and non interest income, and expanding net interest margin, and well controlled non interest expenses. Looking to the components of pre provision net revenues, we generated a 3.7% increase in net interest income, posting $57,100,000 for the second quarter. Net interest margin also improved by five basis points to 3.07%. The growth in net interest income was principally due to lower rates on interest bearing deposits, a higher volume of average loans and one extra day in the quarter.

The growth in net interest margin primarily reflected a nine basis point benefit from lower levels of borrowed funds, offset by a six basis point reduction in the contribution from loans and interest bearing deposits. Notably, the average loan to deposit ratio for the second quarter was 95.4, down from 97.4% for the first quarter. Non interest income was $8,100,000 up 4.5% from the first quarter due to a higher level of SBA gains and income from a bank owned life insurance policy. Gains on SBA loan sales were $2,200,000 up 8% from the first quarter, with a 10% higher volume of loans sold totaling $35,400,000 while trade premiums declined 21 basis points to 7.61%. As Anthony noted, we did not conclude the sale of a residential mortgage loans during the second quarter.

And as a result, we had $41,900,000 of residential mortgage loans classified as held for sale at quarter end. The sale of these loans closed early in the third quarter for a gain of $699,000 For the second quarter, non interest expense was $36,300,000 up 3.9% from the first quarter. However, the efficiency ratio remained the same at 55.7%. Salaries increased 5.2%, reflecting annual merit increases and promotions, along with however, lower amounts of capitalized salaries. Since quarterly loan production was lower, capitalized salaries were also lower, comprising $400,000 of the quarter over quarter increase.

Advertising and promotion expenses were higher in the second quarter due to the opening of our Atlanta branch and other promotions. During the quarter, we also sold our sole OREO property for a gain of $596,000 Credit loss expense for the second quarter was $7,600,000 and included a loan loss provision of $7,500,000 and a provision for off balance sheet items of $100,000 Notwithstanding the higher level of net charge offs, the provision also reflects an increase in estimated loss rates for quantitative and qualitative considerations in the allowance and an increase in loans outstanding. Net loan charge offs were $11,400,000 This included the $8,600,000 loan charge off on the non accrual commercial real estate loan identified last quarter, for which there was a specific allowance of $6,200,000 As a percentage of average loans, net loan charge offs annualized were 73 basis points for the second quarter compared with 13 basis points for the first quarter. Excluding the large loan charge off, net loan charge offs would have been 18 basis points for the second quarter. At the end of the second quarter, the allowance for credit losses stood at 1.06% of loans.

As Bonnie and Anthony mentioned earlier, our asset quality metrics are strong with delinquent loans, criticized loans and non accrual loans, all less than 1% of total loans. Our capital ratios also remained strong. During the second quarter, in addition to the $0.27 per share common dividend declared and paid, Homney repurchased 70,000 shares of common stock at an average price of $23.26 for a total of $1,600,000 Tangible common book value per share increased to $24.91 and the ratio of tangible common equity to tangible assets was 9.58%. Omni’s preliminary common Tier one capital ratio was 10.63%, and the bank’s preliminary total capital ratio was 14.39%. With that, I will turn it back to Bonnie.

Bonnie Lee, President and Chief Executive Officer, Hanmi Financial Corporation: Thank you, Ron. We are pleased with the progress we have achieved thus far in 2025 and remain encouraged by the long term growth opportunities ahead. Although we are mindful of the current economic conditions, our unwavering focus is on delivering bespoke relationship driven banking services that facilitate our customers’ objectives and create value for our shareholders. Our strategy is clear, to broaden our loan and deposit base, strengthen and establish new relationships within select deposit rich markets and drive growth in key regions. This steady and disciplined methodology has served us well through challenging economic conditions and we are confident in our ability to execute effectively and deliver sustained profitable growth.

Thank you. We’ll now open the call to answer your questions. Operator, please open up the line.

Conference Operator: Certainly. We’ll now be conducting a question and answer session. Our first question today is coming from Kelly Mota from KBW. Your line is now live.

Kelly Mota, Analyst, KBW: Hi, good afternoon. Thanks for the question. Maybe starting off on loan growth, I think in your prepared remarks, you reiterated the low to mid single digit range. Mid single digits would imply a step up from the second half of the year. Just wondering if you could provide some color as to how the pipelines are holding up, the composition of growth ahead, and what would get you towards the upper end of that range?

Thanks.

Bonnie Lee, President and Chief Executive Officer, Hanmi Financial Corporation: Sure, Kelly. So, in general, our second half in terms of production is usually higher than the first half of the year. And going into the third quarter, we already have a very strong pipeline of new loans, much higher than the second quarter initial pipeline. So with that, as long as the payoffs remain within the range, as well as for the line credit customers line utilization and fluctuations remain, we could probably reach the mid single digit as we speak.

Kelly Mota, Analyst, KBW: Got it. Okay. That’s that’s helpful. Then on on the margin, you know, the you had some continued improvement in deposit costs, although the rate at which is slowing. I believe in the past you provided a spot deposit rate.

Ron, I’m wondering if you could provide the color on that as well as the cadence of time deposit repricing and if there’s still an additional pickup from that if we get a rate cut here later this quarter.

Ron Santarosa, Chief Financial Officer, Hanmi Financial Corporation: Sure, Kelly. So first, looking at interest bearing deposit costs. So for the quarter, average interest bearing deposit costs were 3.64%. For the month of June, interest bearing deposit costs were 3.6%. So you can see they’re about four basis points down.

With respect to time deposits or CDs, they were 4.05% for the quarter. They were 4.01% for the month of June. So again, down about four basis points. When you look at our maturities that are coming in the third quarter, the average rate of those maturing CDs is 4.12%. So roughly ten, eleven basis point differential from where we are for the month of June.

So all of that said, I would continue to expect net interest margin to increase. However, the rate of increase I think will continue to slow, given the proportion of time deposits to the total portfolio, and again expecting no other rate increases or decreases, I’m sorry, for the remainder of the year. I just think you’ll continue to see kind of a diminishing benefit of net interest margin growth.

Kelly Mota, Analyst, KBW: Got it. That’s helpful. And then maybe last one for me on credit. You guys obviously had the one larger net charge off that impacted the provision this quarter. But stepping back from that, it seems like criticized assets are down meaningfully.

And if I’m hearing you right, the commentary on credit is actually quite constructive as we look ahead. Can you provide some additional color as to what gives you the confidence and kind of the drivers that brought criticized levels down? As well as, was this larger loan an office credit? And I think you have some a substantial portion of that matures over the next year. So I realize there’s a lot in that question, but I’m just hoping to get more color all around on that.

Thank you. Sure.

Bonnie Lee, President and Chief Executive Officer, Hanmi Financial Corporation: Within the quarter, we had a very good success in resolving the launch in the particular in the special mentioned category, you know, totaling over $100,000,000 close to $106,000,000 So mainly it’s in two loans. The first loan, know, borrower really stepped up and increased the commitment, expressing the commitment by paying down the loan by 20,000,000. And the second loan, with the improved operating performance, and then partial pay down in the prior period, we were able to upgrade on these two loans, but not only on the special mention loan, but in the non performing category, even in the past between 3089, all metrics have improved tremendously. Already very solid, very strong asset quality numbers. And one of the reasons we repeatedly commented is our very proactive portfolio management and then also slicing dicing over the portfolio.

And that has come to the result. And the loan that took a charge off of 8,600,000.0. This is a syndicated office property and the only syndicated office CRE loan that we have. And it has been paid as agreed with the satisfactory debt service coverage. However, when it matured in early January, the lead lender and the sponsor have not come to the terms for resolution.

So during the second quarter, with an updated appraisal, we recorded the 8,600,000.0 charge off with a collateral shortfall. While disappointing, we believe this is the best course of action on a collateral dependent loan. So, and that’s why we provided the charge off.

Anthony Kim, Chief Banking Officer, Hanmi Financial Corporation: Kelly, if I may add on the office portfolio, other than the one large credit that just Bonnie mentioned, we closely monitor all other loans Of $550,000,000, approximately 200,000,000 are maturing within this year. We looked at all the credits, there’s no major credit issues or repricing risk that we’re seeing right now. So other than those one large one off loans, we don’t see any other major credit issues at this time.

Kelly Mota, Analyst, KBW: Thank you so much for all the color there. I’ll step back.

Conference Operator: Thank you. Our next question is coming from Gary Tenner from D. A. Davidson. Your line is now live.

Gary Tenner, Analyst, D.A. Davidson: Hey, I’m Matasan on for Gary. So I got a quick one on loan growth. So given the strong C and I production this quarter, should we expect C and I to drive loan growth in the back half of the year? Sorry if I missed this earlier.

Anthony Kim, Chief Banking Officer, Hanmi Financial Corporation: Yes. Looking at the pipeline coming into third quarter, C and I pipeline, level of the C and I pipeline is much higher than that of second quarter. And it is our intention to target more CNI with a higher deposit opportunities. That’s been our effort for the past year. So yes, and I along with our mortgage and SBA will drive the growth.

Bonnie Lee, President and Chief Executive Officer, Hanmi Financial Corporation: Yeah, in addition to that, I think that in terms of just as I mentioned earlier, and the production and the second quarter is generally high for us for the last couple of years. So we will see we expect to see more increased activity. So including the C and I, it could possibly come from the CRE as well. But one noticeable area is that residents and mortgage and SBA loans for the last couple of quarters have really contributed to the production and the net balance growth.

Gary Tenner, Analyst, D.A. Davidson: Right, that makes sense. And I can follow-up on a buyback question. I see that CET1 is north of 12% and buybacks ticked up a tiny bit this quarter. Should we expect similar level of buybacks from you guys?

Ron Santarosa, Chief Financial Officer, Hanmi Financial Corporation: As I mentioned before, the decisions with respect to repurchases are framed each quarter by the Board of Directors. So what I offer to you is a backward look at the ranges in which we made purchases. I think over the past year plus from a low of 25,000 to a high of 75,000. So I would just point you to the past and to look at those ranges and that might help you with your question.

Gary Tenner, Analyst, D.A. Davidson: Sounds good. And maybe last one for me on the expenses. Seems like you guys are holding the line there with the slight pickup in salaries. Should we expect expenses to remain relatively stable for the rest of the year?

Ron Santarosa, Chief Financial Officer, Hanmi Financial Corporation: I believe so. When you look at our quarterly spend, you’ll see some seasonal patterns. Fourth quarter typically has a higher spend in advertising and promotions. First quarter, you see the payroll tax effects. So if you just think about the different seasonalities that occur, that said, I think we will be within the relatively the same range as we are currently.

Gary Tenner, Analyst, D.A. Davidson: Thank you for taking my questions.

Bonnie Lee, President and Chief Executive Officer, Hanmi Financial Corporation: Thank you.

Conference Operator: Thank you. Next question is coming from Adam Kroll from Piper Sandler. Your line is now live.

Adam Kroll, Analyst, Piper Sandler: Hi, good afternoon. This is Adam Kroll on for Matthew Clark, and thanks for taking my questions. So, guess to start on credit, I was just curious how much remaining exposure there is on the syndicated office loan. And could you just remind us how large the syndicated book is as a percent of the portfolio?

Bonnie Lee, President and Chief Executive Officer, Hanmi Financial Corporation: Yeah, so on this particular subject, we have about $11,000,000 outstanding.

Anthony Kim, Chief Banking Officer, Hanmi Financial Corporation: The syndicate portfolio represents approximately 4%, about $250,000,000 ish.

Adam Kroll, Analyst, Piper Sandler: Got it. That’s helpful. And then obviously the reserve dropped a bit this quarter. I was just curious, do you feel comfortable where it is today? Or do you plan to build that up kind of towards the 1.1% range?

Ron Santarosa, Chief Financial Officer, Hanmi Financial Corporation: We are very comfortable with the reserve at its current level. As we pointed out, there was growth attributed to not only an increase in loss factors, but also an increase in the outstanding portfolio. So looking out, we do anticipate the loan book to grow with that then would follow an increase in the provision and potentially the coverage ratio, depending on kind of the mix of the loan book. And then again, the outlook this past quarter, you know, there’s still shades of declining economic performance, which could portend recessionary ideas. We need to see how the economic outlooks unfold as we go through the third and fourth quarter and where the sentiment might be lying with respect to those ideas.

Adam Kroll, Analyst, Piper Sandler: Got it. That’s super helpful. Last one for me is maybe just on the expense side. Do you have plans to add additional C and I and SBA bankers in the back half of the year? And is that kind of built into that stable expense guide?

Bonnie Lee, President and Chief Executive Officer, Hanmi Financial Corporation: So, all the major hires we have completed during the first half. So, in terms of a number of new relationship managers or marketing managers, I think it would be holding pretty steady.

Adam Kroll, Analyst, Piper Sandler: Got it. Thanks for taking my questions.

Gary Tenner, Analyst, D.A. Davidson: Thank

Conference Operator: you. Next question is a follow-up from Kelly Mota from KBW. Your line is now live.

Kelly Mota, Analyst, KBW: Hey. Thanks for letting me jump back in. Just a minor cleanup cost question for Ron. A lot of the California banks have announced revisions in their tax rate expectations with the change in the California law. Just wondering anything notable to note on a go forward basis, or is this, call it 29%, a good approximation of the run rate ahead?

Ron Santarosa, Chief Financial Officer, Hanmi Financial Corporation: Yes, Kelly. So we fortunately or unfortunately are largely based in California. And so the change in the apportionment is just not as large for us as it might be for other institutions. That said, the effective tax rate for the six months was 29.25%. So an effective tax rate of probably about 29.5 ish is probably indicative of how the year might turn out.

We have a bit more discrete items in the first half of the year than we do in the second half of the year, and so the effective tax rate tends to drift up as we complete the year.

Kelly Mota, Analyst, KBW: Got it. That’s helpful. Last question for me on the occupancy line. I kind of expected that to tick up related to expansionary efforts. Is this 4,300,000.0 a good go forward run rate?

Or is there anything to build in as you kind of like add have added there?

Ron Santarosa, Chief Financial Officer, Hanmi Financial Corporation: So in terms of expansion, I would imagine you’re speaking to people. And for people, we have existing infrastructure that will accommodate any additional seats. So there’s no expense push because of that idea. With respect to the branch footprint, as we’ve mentioned in the past, we annually take a look at how we are situated and we will make decisions on consolidation, on relocation, on new markets. And so that will continue.

But if you look backwards, I don’t think that event or that idea manifested in any large increment or decrement to our spend. We kind of try to create headroom, fill in headroom, you know, trying to keep things about the same, but for inflation as best we can.

Kelly Mota, Analyst, KBW: Got it. Thanks for the clarification. I must have thought you had expanded more recently than you have. Appreciate it.

Conference Operator: Thank you. We’ve reached the end of our question and answer session. I’d like to turn the floor back over for any further or closing comments.

Bonnie Lee, President and Chief Executive Officer, Hanmi Financial Corporation: Thank you for participating in today’s call. We value your interest in Harmony and look forward to keeping you informed about our progress throughout the year. Thank

Conference Operator: Thank you. That does conclude today’s teleconference. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.

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