The allowance for credit losses stood at 1.06% of loans, with net loan charge-offs annualized at 73 basis points for the second quarter.

The elevated interest rate environment continues to impact traditional and refinancing activity, particularly in the CRE sector.

Loan production decreased by 4.7% from the prior quarter, mainly due to a decrease in CRE, SBA, and equipment finance.

Net income for the quarter declined to $15.1 million from $17.7 million in the previous quarter, primarily due to an increase in credit loss expense.

The company expanded its commercial banking capabilities by recruiting new talent in C&I and SBA lending, supporting growth in these key asset classes.

Deposit growth was solid, driven by new commercial accounts and contributions from new branches.

Hanmi Financial Corp ( NASDAQ:HAFC ) achieved further margin expansion and growth in its loan portfolio, particularly in C&I and residential mortgage loans.

For the complete transcript of the earnings call, please refer to the full earnings call transcript .

Non-Interest Bearing Demand Deposits: Increased by over 7% from the second quarter of 2024, representing 31.3% of total deposits.

Net Income: $15.1 million or $0.50 per diluted share, down from $17.7 million or $0.58 in the previous quarter.

Story Continues

Q & A Highlights

Q: Can you provide some color on loan growth expectations for the second half of the year? A: Bonita Lee, President and CEO, stated that the second half of the year typically sees higher production than the first half. The pipeline for new loans is strong, and if payoffs and line utilization remain stable, they could achieve mid-single-digit growth.

Q: What is the outlook for net interest margin given the current deposit cost trends? A: Romolo Santarosa, CFO, noted that interest-bearing deposit costs decreased slightly, and time deposits are expected to reprice at slightly lower rates. Net interest margin is expected to continue increasing, but at a slower rate, assuming no further rate cuts this year.

Q: Can you provide more details on the credit quality and the large net charge-off this quarter? A: Bonita Lee explained that asset quality improved significantly, with criticized loans decreasing. The large charge-off was related to a syndicated office property loan, which was the only syndicated office CRE loan they had. Despite the charge-off, overall credit quality remains strong.

Q: Should we expect C&I to drive loan growth in the back half of the year? A: Anthony Kim, Chief Banking Officer, confirmed that the C&I pipeline is strong and will be a focus for growth, along with residential mortgage and SBA loans.

Q: What are the expectations for expenses for the rest of the year? A: Romolo Santarosa indicated that expenses should remain relatively stable, with some seasonal variations. Major hires have been completed in the first half, so staffing levels should remain steady.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.