Hanmi Financial's Strategic Resilience: Navigating Rising Rates with Disciplined Growth and NIM Expansion

In an era of persistent inflation and aggressive Federal Reserve rate hikes, regional banks face a dual challenge: maintaining net interest margin (NIM) stability while managing credit risk in a tightening lending environment. Hanmi Financial Corporation (NASDAQ:HAFC) has emerged as a standout performer, leveraging disciplined loan growth and balance sheet optimization to outpace peers. Its Q3 2025 results and forward guidance underscore a strategic pivot toward diversified lending and cost discipline, positioning the bank to thrive in a high-rate regime.

Disciplined Loan Growth: Diversifying Beyond CRE

Hanmi's Q3 2025 loan production surged 73% sequentially to $571 million, driven by a strategic shift toward Commercial and Industrial (C&I) loans, according to Panabee's Q3 report. Originations in this segment skyrocketed fourfold to $212 million, reflecting a deliberate effort to reduce reliance on Commercial Real Estate (CRE), which still accounts for 61.4% of total loans but has been steadily declining, as noted in the Q2 earnings transcript. This diversification mitigates sector-specific risks, particularly in a market where CRE valuations face downward pressure from higher borrowing costs.

The bank's focus on C&I lending aligns with broader industry trends. As stated by Anthony Kim, Hanmi's CEO, the addition of new banking talent and targeted growth strategies has fueled a 26% sequential increase in C&I production, Panabee reported. Meanwhile, the Small Business Administration (SBA) portfolio received a boost, with the company raising its 2025 second-half production target to $45 million–$50 million, according to the same Panabee coverage. This dual emphasis on C&I and SBA loans not only broadens revenue streams but also enhances fee income through government-guaranteed programs.

NIM Resilience: Cost Management and Balance Sheet Optimization

Hanmi's NIM expanded by 15 basis points to 3.22% in Q3 2025, a testament to its ability to navigate rising rates, Panabee noted. This improvement was driven by an 8-basis-point decline in the average cost of interest-bearing deposits to 3.56%, coupled with a 6.9% increase in net interest income to $61.1 million, as reported by Panabee. The bank's efficiency ratio also improved to 52.65%, reflecting tighter cost controls, per the Panabee coverage.

The resilience in NIM is further supported by balance sheet optimization. Hanmi reduced cash holdings by $164 million and cut borrowings by 51%, signaling confidence in deploying capital into higher-yielding assets, as highlighted in TradingView's Q3 results. This strategic reallocation has allowed the bank to maintain a stable NIM despite a flattening yield curve. Management expects this trend to continue, with Ron Santarosa, CFO, noting that disciplined cost management and asset-liability strategies will keep the margin "stable in the near term," according to the Q2 earnings transcript.

Credit Quality and Capital Strength: A Foundation for Long-Term Growth

Strong credit metrics further reinforce Hanmi's strategic positioning. Nonperforming assets fell 17.7% to $21.4 million, while net loan recoveries totaled $0.5 million, including a $2.0 million recovery on a previously charged-off healthcare loan, as reported by Panabee. These improvements reflect prudent underwriting and proactive risk management.

Capital strength remains a cornerstone of Hanmi's strategy. The bank repurchased 199,698 shares for $4.7 million in Q3 and maintained a tangible common equity to tangible assets ratio of 9.80%, according to the Investing.com transcript. This financial flexibility allows Hanmi to fund growth without overleveraging, a critical advantage in a rising-rate environment where liquidity constraints plague weaker peers.

Forward Guidance: Balancing Growth and Prudence

Looking ahead, Hanmi's management has signaled a measured approach to loan growth. While projecting low to mid-single-digit expansion for the remainder of 2025, the bank remains cautious about potential risks. Santarosa noted that accelerated loan growth could necessitate adjustments to reserve levels, potentially impacting provisions, per the Q2 earnings transcript. This balanced outlook underscores Hanmi's commitment to sustainable growth over short-term gains.

Conclusion: A Model for Regional Banking in a High-Rate World

Hanmi Financial's Q3 2025 performance and forward guidance paint a compelling picture of a regional bank adeptly navigating macroeconomic headwinds. By diversifying its loan portfolio, optimizing its balance sheet, and maintaining strict credit discipline, Hanmi has positioned itself to outperform in a rising-rate environment. For investors, the bank's strategic agility and financial resilience make it a compelling case study in how regional institutions can thrive amid systemic challenges.