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10-Q

Hanmi Financial Corp (HAFC)

10-Q 2026-05-08 For: 2026-03-31
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Added on May 08, 2026
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2026

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From To

Commission File Number: 000-30421

HANMI FINANCIAL CORPORATION

(Exact Name of Registrant as Specified in its Charter)

Delaware 95-4788120
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
900 Wilshire Boulevard, Suite 1250
--- ---
Los Angeles, California 90017
(Address of Principal Executive Offices) (Zip Code)

(213) 382-2200

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report)

Securities Registered Pursuant to Section 12(b) of the Act:

Title of each class Trading<br><br>Symbol(s) Name of each exchange on which registered
Common Stock, $0.001 par value HAFC Nasdaq Global Select Market

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☒
Non-accelerated filer ☐ Smaller reporting company ☐
Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

As of April 30, 2026, there were 29,766,435 outstanding shares of the Registrant’s Common Stock.

Hanmi Financial Corporation and Subsidiaries Quarterly Report on Form 10-Q

Three Months Ended March 31, 2026

Table of Contents

Part I – Financial Information
Item 1. Financial Statements 3
Consolidated Balance Sheets at March 31, 2026 (unaudited) and December 31, 2025 3
Consolidated Statements of Income for the three months ended March 31, 2026 and 2025 (unaudited) 4
Consolidated Statements of Comprehensive Income for the three months ended March 31, 2026 and 2025 (unaudited) 5
Consolidated Statements of Changes in Stockholders’ Equity for the threemonths ended March 31, 2026 and 2025 (unaudited) 6
Consolidated Statements of Cash Flows for thethree months ended March 31, 2026 and 2025 (unaudited) 7
Notes to Consolidated Financial Statements (unaudited) 8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 39
Item 3. Quantitative and Qualitative Disclosures About Market Risk 55
Item 4. Controls and Procedures 55
Part II – Other Information
Item 1. Legal Proceedings 56
Item 1A. Risk Factors 56
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities 56
Item 3. Defaults Upon Senior Securities 56
Item 4. Mine Safety Disclosures 56
Item 5. Other Information 56
Item 6. Exhibits 57
Signatures 58

Hanmi Financial Corporation and Subsidiaries

Consolidated Statements of Income (Unaudited)

(in thousands, except share and per share data)

Three Months Ended
March 31,
2026 2025
Interest and dividend income:
Interest and fees on loans $ 93,866 $ 90,887
Interest on securities 5,959 6,169
Dividends on FHLB stock 831 360
Interest on deposits in other banks 1,496 1,841
Total interest and dividend income 102,152 99,257
Interest expense:
Interest on deposits 36,738 40,559
Interest on borrowings 676 2,024
Interest on subordinated debentures 1,535 1,582
Total interest expense 38,949 44,165
Net interest income before credit loss expense 63,203 55,092
Credit loss expense 2,892 2,721
Net interest income after credit loss expense 60,311 52,371
Noninterest income:
Service charges on deposit accounts 2,127 2,217
Trade finance and other service charges and fees 1,501 1,396
Gain on sale of Small Business Administration ("SBA") loans 2,102 2,000
Gain on sale of residential mortgage loans 485 175
Other operating income 2,324 1,938
Total noninterest income 8,539 7,726
Noninterest expense:
Salaries and employee benefits 21,956 20,972
Occupancy and equipment 4,414 4,450
Data processing 4,386 3,787
Professional fees 2,780 1,468
Supplies and communications 556 517
Advertising and promotion 688 585
Other operating expenses 3,588 3,205
Total noninterest expense 38,368 34,984
Income before tax 30,482 25,113
Income tax expense 7,925 7,441
Net income $ 22,557 $ 17,672
Basic earnings per share $ 0.76 $ 0.59
Diluted earnings per share $ 0.75 $ 0.58
Weighted-average shares outstanding:
Basic 29,629,130 29,937,660
Diluted 29,808,999 30,058,248

See Accompanying Notes to Consolidated Financial Statements (Unaudited)

Hanmi Financial Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income (Unaudited)

(in thousands)

Three Months Ended
March 31,
2026 2025
Net income $ 22,557 $ 17,672
Other comprehensive income (loss), net of tax:
Unrealized gain (loss):
Unrealized holding gain (loss) on available for sale securities (3,157 ) 14,542
Unrealized gain (loss) on cash flow hedges (57 ) 190
Unrealized gain (loss) (3,214 ) 14,732
Income tax benefit (expense) related to other comprehensive income items 879 (4,183 )
Other comprehensive income (loss) (2,335 ) 10,549
Reclassification adjustment for (gains) losses included in net income (60 ) 245
Income tax benefit (expense) related to reclassification adjustment 17 (73 )
Reclassification adjustment for (gains) losses included in net income, net of tax (43 ) 172
Other comprehensive income (loss), net of tax (2,378 ) 10,721
Total comprehensive income $ 20,179 $ 28,393

See Accompanying Notes to Consolidated Financial Statements (Unaudited)

Hanmi Financial Corporation and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)

For the Three Months Ended March 31, 2026 and 2025

(in thousands, except share data)

Stockholders' Equity
Accumulated
Additional Other Treasury Total
Treasury Shares Common Paid-in Comprehensive Retained Stock, Stockholders'
Shares Outstanding Stock Capital Loss Earnings at Cost Equity
Balance at January 1, 2026 34,287,779 (4,393,022 ) 29,894,757 $ 34 $ 594,667 $ (43,175 ) $ 394,335 $ (149,475 ) $ 796,386
Net income — — — — — — 22,557 — 22,557
Change in unrealized gain (loss) on securities available for sale, net of income taxes — — — — — (2,293 ) — — (2,293 )
Change in unrealized gain (loss) on cash flow hedge, net of income taxes — — — — — (85 ) — — (85 )
Cash dividends paid (common stock, 0.28/share) — — — — — — (8,565 ) — (8,565 )
Repurchase of common stock — (185,707 ) (185,707 ) — — — — (4,808 ) (4,808 )
Issuance of awards pursuant to equity incentive plans, net of forfeitures 138,912 — 138,912 — — — — — —
Share-based compensation expense — — — — 707 — — — 707
Shares surrendered to satisfy tax liability upon vesting of equity awards — (41,268 ) (41,268 ) — — — — (1,080 ) (1,080 )
Balance at March 31, 2026 34,426,691 (4,619,997 ) 29,806,694 $ 34 $ 595,374 $ (45,553 ) $ 408,327 $ (155,363 ) $ 802,819
Balance at January 1, 2025 34,151,464 (3,955,465 ) 30,195,999 $ 34 $ 591,069 $ (70,723 ) $ 350,869 $ (139,075 ) $ 732,174
Net income — — — — — — 17,672 — 17,672
Change in unrealized gain (loss) on securities available for sale, net of income taxes — — — — — 10,411 — — 10,411
Change in unrealized gain (loss) on cash flow hedge, net of income taxes — — — — — 310 — — 310
Cash dividends paid (common stock, 0.27/share) — — — — — — (8,252 ) — (8,252 )
Repurchase of common stock — (50,000 ) (50,000 ) — — — — (1,124 ) (1,124 )
Issuance of awards pursuant to equity incentive plans, net of forfeitures 113,566 — 113,566 — — — — — —
Share-based compensation expense — — — — 873 — — — 873
Shares surrendered to satisfy tax liability upon vesting of equity awards — (26,051 ) (26,051 ) — — — — (579 ) (579 )
Balance at March 31, 2025 34,265,030 (4,031,516 ) 30,233,514 $ 34 $ 591,942 $ (60,002 ) $ 360,289 $ (140,778 ) $ 751,485

All values are in US Dollars.

See Accompanying Notes to Consolidated Financial Statements (Unaudited)

Hanmi Financial Corporation and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

Three Months Ended March 31,
2026 2025
Cash flows from operating activities:
Net income $ 22,557 $ 17,672
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 862 801
Amortization of servicing assets - net 612 668
Share-based compensation expense 707 873
Credit loss expense 2,892 2,721
Gain on sales of other real estate owned (850 ) —
Gain on sales of SBA loans (2,102 ) (2,000 )
Origination of loans held for sale (62,542 ) (35,420 )
Proceeds from sales of loans 67,749 45,007
Gain on sales of residential mortgage loans (485 ) (175 )
Change in bank-owned life insurance 163 (308 )
Change in prepaid expenses and other assets (211 ) 1,157
Change in income tax assets 3,808 2,660
Change in accrued interest payable and other liabilities (9,283 ) (7,298 )
Net cash provided by operating activities 23,877 26,358
Cash flows from investing activities:
Purchases of securities available for sale (35,715 ) (32,466 )
Proceeds from matured, called and repayment of securities 76,846 45,141
Purchases of loans — (34,301 )
Purchases of premises and equipment (499 ) (263 )
Proceeds from disposition of premises and equipment — 14
Proceeds from sales of other real estate owned ("OREO") 2,830 —
Change in loans, excluding purchases and sales 15,155 (9,122 )
Net cash provided by (used in) investing activities 58,617 (30,997 )
Cash flows from financing activities:
Change in deposits 122,972 183,699
Change in open FHLB advances — (145,000 )
Repayments of FHLB term advances (150,000 ) —
Cash paid for surrendered employee vested shares due to tax liability (1,080 ) (579 )
Repurchase of common stock (4,812 ) (1,125 )
Cash dividends paid (8,370 ) (8,153 )
Net cash provided by (used in) financing activities (41,290 ) 28,842
Net increase in cash and due from banks 41,204 24,203
Cash and due from banks at beginning of year 212,841 304,800
Cash and due from banks at end of period $ 254,045 $ 329,003
Supplemental disclosures of cash flow information:
Interest paid $ 43,140 $ 49,343
Income taxes paid $ 336 $ 550
Non-cash activities:
Income tax benefit (expense) related to other comprehensive income items $ 896 $ (4,256 )
Right-of-use asset obtained in exchange for lease liability $ (3,722 ) $ (4,442 )

See Accompanying Notes to Consolidated Financial Statements (Unaudited)

Hanmi Financial Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Note 1 — Organization and Basis of Presentation

Hanmi Financial Corporation (“Hanmi Financial,” the “Company,” “we,” “us” or “our”) is a bank holding company whose primary subsidiary is Hanmi Bank (the “Bank”). Our primary operations are related to traditional banking activities, including the acceptance of deposits and the lending and investing of money by the Bank.

In management’s opinion, the accompanying unaudited consolidated financial statements of Hanmi Financial and its subsidiaries reflect all adjustments of a normal and recurring nature that are necessary for a fair presentation of the results for the interim period ended March 31, 2026. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted. The unaudited consolidated financial statements are prepared in conformity with GAAP and in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission. Operating results for the three-month period ended March 31, 2026 are not necessarily indicative of the results that may be expected for the year ended December 31, 2026 or for any other period. The interim information should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Annual Report on Form 10-K”).

The preparation of interim unaudited consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. These estimates and assumptions affect the amounts reported in the unaudited financial statements and disclosures provided, and actual results could differ.

Descriptions of our significant accounting policies are included in Note 1 - Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements in the 2025 Annual Report on Form 10-K.

Accounting Standards Adopted in 2026

The Company has not adopted any accounting standards in 2026.

Recently Issued Accounting Standards Not Yet Effective

ASU 2024-03, Income Statement Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40), as amended by ASU 2025-01, Clarifying the Effective Date: In November 2024, the FASB issued ASU 2024-03 to require additional information about specific expense categories in the financial statement notes at interim and annual reporting periods. The amendments in this ASU do not change or remove current expense disclosure requirements. The amendments affect where the information appears in the financial statement notes. ASU 2025-01 amends the changes in ASU 2024-03 to be effective for fiscal years beginning after December 15, 2026. The adoption of ASU 2024-03 is not expected to have a material effect on the Company’s operating results or financial condition.

ASU 2025-06, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software: In September 2025, the FASB issued ASU 2025-06 to simplify the accounting for internal-use software by replacing the existing project-stage-based model with a principles-based approach to determine capitalizable versus non-capitalizable costs. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027, with early adoption permitted. The adoption of ASU 2025-06 is not expected to have a material effect on the Company’s operating results or financial condition.

ASU 2025-08, Financial Instruments - Credit Losses (Topic 316): Purchased Loans: In November 2025, the FASB issued ASU 2025-08 to improve the accounting for acquired financial assets by expanding the gross-up approach to all purchased loans and eliminating the previous duplication inherent in Day 1 credit loss measurement. ASU 2025-08 is effective for fiscal years beginning after December 15, 2026, with early adoption permitted. The adoption of ASU 2025-08 is not expected to have a material effect on the Company's operating results or financial condition.

ASU 2025-09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements: In November 2025, the FASB issued ASU 2025-09 to more closely align hedge accounting with the economics of an entity's risk management activities by enabling entities to achieve and maintain hedge accounting for highly effective economic hedges of forecasted transactions. ASU 2025-09 is effective for fiscal years beginning after December 15, 2026, with early adoption permitted. The adoption of ASU 2025-08 is not expected to have a material effect on the Company's operating results or financial condition.

Note 2 — Securities

The following is a summary of securities available for sale as of the dates indicated:

Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gain Loss Value
(in thousands)
March 31, 2026
U.S. Treasury securities $ 128,708 $ 107 $ (224 ) $ 128,591
U.S. government agency and sponsored agency obligations:
Mortgage-backed securities - residential 399,917 608 (39,165 ) 361,360
Mortgage-backed securities - commercial 74,289 75 (11,466 ) 62,898
Collateralized mortgage obligations 169,268 1,008 (6,117 ) 164,159
Debt securities 53,062 — (779 ) 52,283
Total U.S. government agency and sponsored agency obligations 696,536 1,691 (57,527 ) 640,700
Municipal bonds-tax exempt 74,774 — (8,340 ) 66,434
Total securities available for sale $ 900,018 $ 1,798 $ (66,091 ) $ 835,725
December 31, 2025
U.S. Treasury securities $ 128,569 $ 298 $ (157 ) $ 128,710
U.S. government agency and sponsored agency obligations:
Mortgage-backed securities - residential 411,223 926 (38,741 ) 373,408
Mortgage-backed securities - commercial 71,751 116 (11,295 ) 60,572
Collateralized mortgage obligations 188,120 1,768 (5,933 ) 183,955
Debt securities 67,059 — (1,105 ) 65,954
Total U.S. government agency and sponsored agency obligations 738,153 2,810 (57,074 ) 683,889
Municipal bonds-tax exempt 75,038 — (7,013 ) 68,025
Total securities available for sale $ 941,760 $ 3,108 $ (64,244 ) $ 880,624

The amortized cost and estimated fair value of securities as of March 31, 2026 and December 31, 2025, by contractual or expected maturity, are shown below. Collateralized mortgage obligations are included in the table shown below based on their expected maturities. All other securities are included based on their contractual maturities. Mortgage-backed securities included in the table below may mature before their contractual maturities.

March 31, 2026 December 31, 2025
Available for Sale Available for Sale
Amortized Estimated Amortized Estimated
Cost Fair Value Cost Fair Value
(in thousands)
Within one year $ 155,672 $ 155,029 $ 159,050 $ 158,399
Over one year through five years 52,718 51,631 65,994 64,919
Over five years through ten years 269,806 243,477 234,306 213,596
Over ten years 421,822 385,588 482,410 443,710
Total $ 900,018 $ 835,725 $ 941,760 $ 880,624

The following table summarizes debt securities available for sale in an unrealized loss position for which an allowance for credit losses has not been recorded at March 31, 2026 or December 31, 2025, aggregated by major security type and length of time in a continuous unrealized loss position:

Holding Period
Less than 12 Months 12 Months or More Total
Gross Estimated Number Gross Estimated Number Gross Estimated Number
Unrealized Fair of Unrealized Fair of Unrealized Fair of
Loss Value Securities Loss Value Securities Loss Value Securities
(in thousands, except number of securities)
March 31, 2026
U.S. Treasury securities $ (108 ) $ 43,060 13 $ (116 ) $ 10,389 3 $ (224 ) $ 53,449 16
U.S. government agency and sponsored agency obligations:
Mortgage-backed securities - residential (246 ) 17,161 5 (38,919 ) 309,753 114 (39,165 ) 326,914 119
Mortgage-backed securities - commercial (88 ) 4,697 2 (11,378 ) 48,831 15 (11,466 ) 53,528 17
Collateralized mortgage obligations (33 ) 13,942 4 (6,084 ) 43,879 21 (6,117 ) 57,821 25
Debt securities — — — (779 ) 52,284 10 (779 ) 52,283 10
Total U.S. government agency and sponsored agency obligations (367 ) 35,800 11 (57,160 ) 454,747 160 (57,527 ) 490,546 171
Municipal bonds-tax exempt — — — (8,340 ) 66,434 19 (8,340 ) 66,434 19
Total $ (475 ) $ 78,860 24 $ (65,616 ) $ 531,570 182 $ (66,091 ) $ 610,429 206
December 31, 2025
U.S. Treasury securities $ — $ 4,999 1 $ (157 ) $ 10,351 3 $ (157 ) $ 15,350 4
U.S. government agency and sponsored agency obligations:
Mortgage-backed securities - residential (46 ) 4,629 2 (38,695 ) 322,912 114 (38,741 ) 327,541 116
Mortgage-backed securities - commercial — — — (11,295 ) 54,316 16 (11,295 ) 54,316 16
Collateralized mortgage obligations — — — (5,933 ) 50,264 24 (5,933 ) 50,264 24
Debt securities — — — (1,105 ) 65,954 13 (1,105 ) 65,954 13
Total U.S. government agency and sponsored agency obligations (46 ) 4,629 2 (57,028 ) 493,446 167 (57,074 ) 498,075 169
Municipal bonds-tax exempt — — — (7,013 ) 68,025 19 (7,013 ) 68,025 19
Total $ (46 ) $ 9,628 3 $ (64,198 ) $ 571,822 189 $ (64,244 ) $ 581,450 192

The Company evaluates its available for sale securities portfolio for impairment on a quarterly basis. The Company did not recognize unrealized losses in income because it has the ability and the intent to hold and does not expect to be required to sell these securities until the recovery of their cost basis. The quarterly impairment assessment takes into account the changes in the credit quality of these debt securities since acquisition and the likelihood of a credit loss occurring over the life of the securities. If a credit loss is expected to occur, an allowance is established and a corresponding credit loss is recognized. Based on this analysis, the Company determined that no credit losses are expected to be realized on the tax-exempt municipal bond portfolio. The remainder of the securities portfolio consists of U.S. Treasury obligations, U.S. government agency securities, and U.S. government sponsored agency securities, all of which have the backing of the U.S. government, and are therefore not expected to incur credit losses.

There were no sales of securities during the three months ended March 31, 2026 or March 31, 2025.

As of March 31, 2026 and December 31, 2025, there were no securities available for sale that were pledged to secure advances or other borrowings.

At March 31, 2026, there were no holdings of securities of any one issuer, other than the U.S. government and its agencies, in an amount greater than 10% of stockholders’ equity.

Note 3 — Loans

Loans, net of allowance for credit losses

Loans, net of allowance for credit losses, consisted of the following as of the dates indicated:

March 31, 2026 December 31, 2025
(in thousands)
Real estate loans:
Commercial property
Retail $ 1,167,739 $ 1,132,439
Hospitality 865,202 847,989
Office 486,537 503,268
Other (1) 1,464,915 1,532,667
Total commercial property loans 3,984,393 4,016,363
Construction 13,751 13,742
Residential (2) 1,002,223 1,049,872
Total real estate loans 5,000,367 5,079,977
Commercial and industrial loans 1,152,544 1,074,908
Equipment financing agreements 392,555 408,483
Total loans 6,545,466 6,563,368
Allowance for credit losses (70,468 ) (69,903 )
Total loans, net of allowance for credit losses $ 6,474,998 $ 6,493,465

  • (1)

  • (2)

Accrued interest on loans was $20.1 million and $20.7 million at March 31, 2026 and December 31, 2025, respectively.

At March 31, 2026 and December 31, 2025, loans with carrying values of $2.26 billion and $2.40 billion, respectively, were pledged to secure advances from the FHLB, and loans with carrying values of $515.7 million and $528.1 million, respectively, were pledged to the Federal Reserve Bank of San Francisco Discount Window.

Loans Held for Sale

Activity in loans held for sale is presented below for the following periods:

Real Estate Commercial and Industrial Total
(in thousands)
Three months ended March 31, 2026
Balance at beginning of period $ 4,985 $ 2,418 $ 7,403
Originations and transfers 51,624 10,918 62,542
Sales (53,127 ) (11,117 ) (64,244 )
Principal paydowns and amortization (768 ) (1 ) (769 )
Balance at end of period $ 2,714 $ 2,218 $ 4,932
Three months ended March 31, 2025
Balance at beginning of period $ 3,994 $ 4,585 $ 8,579
Originations and transfers 18,615 16,805 35,420
Sales (17,594 ) (14,570 ) (32,164 )
Principal paydowns and amortization — (4 ) (4 )
Balance at end of period $ 5,015 $ 6,816 $ 11,831

All loans sold during the three months ended March 31, 2026, were sold from the held for sale portfolio. During 2025, we sold residential mortgage loans from the held for investment portfolio when the decision to sell the loans and the sale of the loans occurred within the same quarter. During the three months ended March 31, 2025, we sold $10.0 million of residential mortgage loans from the held for investment portfolio, and none from the held for sale portfolio.

Loan Purchases

The following table presents loans purchased by portfolio segment for the following periods:

Three Months Ended
March 31,
2026 2025
(in thousands)
Commercial real estate $ — $ 15,113
Commercial and industrial — 9,203
Residential real estate — 9,985
Total $ — $ 34,301

Allowance for Credit Losses

The following table details the information on the allowance for credit losses by portfolio segment for the following periods:

Real Estate Commercial and Industrial Equipment Financing Agreements Total
(in thousands)
Three months ended March 31, 2026
Balance at beginning of period $ 51,670 $ 7,792 $ 10,441 $ 69,903
Charge-offs (132 ) (127 ) (2,912 ) (3,171 )
Recoveries 45 39 489 573
Credit loss expense (recovery) (1,475 ) 1,107 3,531 3,163
Ending balance $ 50,108 $ 8,811 $ 11,549 $ 70,468
Three months ended March 31, 2025
Balance at beginning of period $ 45,099 $ 10,006 $ 15,042 $ 70,147
Charge-offs (169 ) (222 ) (2,798 ) (3,189 )
Recoveries 424 36 783 1,243
Credit loss expense (recovery) 5,948 (3,578 ) 26 2,396
Ending balance $ 51,302 $ 6,242 $ 13,053 $ 70,597

The table below presents the allowance for credit losses by portfolio segment as a percentage of the total allowance for credit losses and loans by portfolio segment as a percentage of the total investment in loans as of:

March 31, 2026 December 31, 2025
Allowance Loans Allowance Loans
Amount % Amount % Amount % Amount %
(dollars in thousands)
Real estate loans:
Commercial property
Retail $ 9,623 13.7 % $ 1,167,739 17.8 % $ 9,999 14.3 % $ 1,132,439 17.3 %
Hospitality 8,098 11.5 865,202 13.2 8,737 12.5 847,989 12.9
Office 5,253 7.5 486,537 7.4 5,700 8.2 503,268 7.7
Other 13,629 19.4 1,464,915 22.4 14,078 20.1 1,532,667 23.4
Total commercial property loans 36,603 51.9 3,984,393 60.9 38,514 55.1 4,016,363 61.3
Construction 201 0.3 13,751 0.2 208 0.3 13,742 0.2
Residential 13,304 18.9 1,002,223 15.3 12,948 18.5 1,049,872 16.0
Total real estate loans 50,108 71.2 5,000,367 76.5 51,670 73.9 5,079,977 77.5
Commercial and industrial loans 8,811 12.4 1,152,544 17.6 7,792 11.1 1,074,908 16.4
Equipment financing agreements 11,549 16.4 392,555 6.0 10,441 15.0 408,483 6.1
Total $ 70,468 100.0 % $ 6,545,466 100.0 % $ 69,903 100.0 % $ 6,563,368 100.0 %

The following table represents the amortized cost basis of collateral-dependent loans by class, for which repayment is expected to be obtained through the sale or operation of the underlying collateral, as of:

March 31, 2026 December 31, 2025
(in thousands)
Real estate loans:
Commercial property
Retail $ 436 $ 596
Hospitality 3,175 —
Office 337 10,159
Other 1,156 671
Total commercial property loans 5,104 11,426
Residential 2,005 1,113
Total real estate loans 7,109 12,539
Total $ 7,109 $ 12,539

Loan Quality Indicators

As part of the on-going monitoring of the quality of our loans portfolio, we utilize an internal loan grading system to identify credit risk and assign an appropriate grade (from 1 to 8) for each loan in our portfolio. Third-party loan reviews are conducted annually on a sample basis. Additional adjustments are made when determined to be necessary. The loan grade definitions are as follows:

Pass and Pass-Watch: Pass loans, grades (1-4), are in compliance with the Bank’s credit policy and regulatory requirements and do not exhibit any potential or defined weaknesses as defined under “Special Mention”, “Substandard” or “Doubtful.” This category is the strongest level of the Bank’s loan grading system. It consists of all performing loans with no identified credit weaknesses. It includes cash and stock/security secured loans or other investment grade loans. Pass-Watch loans, grade (4), require enhanced attention due to financial or other circumstances facing the borrowers, which may adversely affect future financial performance.

Special Mention: A Special Mention loan, grade (5), has potential weaknesses that deserve management’s close attention. If not corrected, these potential weaknesses may result in deterioration of the repayment of the debt and result in a Substandard classification. Loans that have significant actual, not potential, weaknesses are considered more severely classified.

Substandard: A Substandard loan, grade (6), has a well-defined weakness that jeopardizes the liquidation of the debt. A loan graded Substandard is not protected by the sound worth and paying capacity of the borrower, or of the value and type of collateral pledged. With a Substandard loan, there is a distinct possibility that the Bank will sustain some loss if the weaknesses or deficiencies are not corrected.

Doubtful: A Doubtful loan, grade (7), is one that has critical weaknesses that would make the collection or liquidation of the full amount due improbable. However, there may be pending events which may work to strengthen the loan, and therefore the amount or timing of a possible loss cannot be determined at the current time.

Loss: A loan classified as Loss, grade (8), is considered uncollectible and of such little value that their continuance as active bank assets is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this asset even though partial recovery may be possible in the future. Loans classified as Loss will be charged off in a timely manner.

Under regulatory guidance, loans graded special mention or worse are considered criticized loans, and loans graded substandard or worse are considered classified loans.

Loans by Vintage Year and Risk Rating

Term Loans
Amortized Cost Basis by Origination Year (1)
2026 2025 2024 2023 2022 Prior Revolving<br>Loans<br>Amortized<br>Cost Basis Total
(in thousands)
March 31, 2026
Real estate loans:
Commercial property
Risk Rating
Pass / Pass-Watch $ 393,929 $ 935,164 $ 382,505 $ 404,811 $ 799,378 $ 924,146 $ 55,860 $ 3,895,793
Special Mention 811 54,758 — 21,762 596 1,650 — 79,577
Classified — 3,771 — — 1,347 3,905 — 9,023
Total commercial property 394,740 993,693 382,505 426,573 801,321 929,701 55,860 3,984,393
YTD gross charge-offs — — — — 40 92 — 132
YTD net charge-offs (recoveries) — (2 ) — — 41 50 — 89
Construction
Risk Rating
Pass / Pass-Watch — 9,753 3,998 — — — — 13,751
Special Mention — — — — — — — —
Classified — — — — — — — —
Total construction — 9,753 3,998 — — — — 13,751
YTD gross charge-offs — — — — — — — —
YTD net charge-offs (recoveries) — — — — — — — —
Residential
Risk Rating
Pass / Pass-Watch 29,143 225,155 68,357 132,608 313,940 221,289 6,180 996,672
Special Mention — — — — 2,416 — — 2,416
Classified — — 682 892 1,114 447 — 3,135
Total residential 29,143 225,155 69,039 133,500 317,470 221,736 6,180 1,002,223
YTD gross charge-offs — — — — — — — —
YTD net charge-offs (recoveries) — — — — — (2 ) — (2 )
Total real estate loans
Risk Rating
Pass / Pass-Watch 423,072 1,170,072 454,860 537,419 1,113,318 1,145,435 62,040 4,906,216
Special Mention 811 54,758 — 21,762 3,012 1,650 — 81,993
Classified — 3,771 682 892 2,461 4,352 — 12,158
Total real estate loans 423,883 1,228,601 455,542 560,073 1,118,791 1,151,437 62,040 5,000,367
YTD gross charge-offs — — — — 40 92 — 132
YTD net charge-offs (recoveries) — (2 ) — — 41 48 — 87
Commercial and industrial loans:
Risk Rating
Pass / Pass-Watch 211,962 318,176 147,703 37,688 32,825 25,923 360,845 1,135,122
Special Mention 253 — 36 — 11,399 — — 11,688
Classified — 19 5,105 43 136 31 400 5,734
Total commercial and industrial loans 212,215 318,195 152,844 37,731 44,360 25,954 361,245 1,152,544
YTD gross charge-offs — — 76 — — 51 — 127
YTD net charge-offs (recoveries) — — 76 — (24 ) 37 (1 ) 88
Equipment financing agreements:
Risk Rating
Pass / Pass-Watch 41,008 129,519 77,544 72,870 52,847 13,922 — 387,710
Special Mention — — — — — — — —
Classified — 945 772 1,062 1,415 651 — 4,845
Total equipment financing agreements 41,008 130,464 78,316 73,932 54,262 14,573 — 392,555
YTD gross charge-offs — 1,124 301 512 799 176 — 2,912
YTD net charge-offs (recoveries) — 1,124 259 461 678 (99 ) — 2,423
Total loans:
Risk Rating
Pass / Pass-Watch 676,042 1,617,767 680,107 647,977 1,198,990 1,185,280 422,885 6,429,048
Special Mention 1,064 54,758 36 21,762 14,411 1,650 — 93,681
Classified — 4,735 6,559 1,997 4,012 5,034 400 22,737
Total loans $ 677,106 $ 1,677,260 $ 686,702 $ 671,736 $ 1,217,413 $ 1,191,964 $ 423,285 $ 6,545,466
YTD gross charge-offs — 1,124 377 512 839 319 — 3,171
YTD net charge-offs (recoveries) — 1,122 335 461 695 (14 ) (1 ) 2,598
  • (1)
Term Loans
Amortized Cost Basis by Origination Year (1)
2025 2024 2023 2022 2021 Prior Revolving<br>Loans<br>Amortized<br>Cost Basis Total
December 31, 2025
Real estate loans:
Commercial property
Risk Rating
Pass / Pass-Watch $ 1,181,833 $ 402,354 $ 472,027 $ 808,330 $ 735,411 $ 285,598 $ 54,824 $ 3,940,377
Special Mention 55,029 — — 148 1,371 298 — 56,846
Classified 3,846 — — 11,225 — 4,069 — 19,140
Total commercial property 1,240,708 402,354 472,027 819,703 736,782 289,965 54,824 4,016,363
YTD gross charge-offs — — — 8,820 — 392 — 9,212
YTD net charge-offs (recoveries) (8 ) — — 8,547 — (24 ) — 8,515
Construction
Risk Rating
Pass / Pass-Watch 9,745 3,997 — — — — — 13,742
Special Mention — — — — — — — —
Classified — — — — — — — —
Total construction 9,745 3,997 — — — — — 13,742
YTD gross charge-offs — — — — — — — —
YTD net charge-offs (recoveries) — — — — — — — —
Residential
Risk Rating
Pass / Pass-Watch 258,847 84,457 142,926 326,126 132,510 97,076 4,154 1,046,096
Special Mention — — — 2,417 — — 250 2,667
Classified — — — 1,113 — (4 ) — 1,109
Total residential 258,847 84,457 142,926 329,656 132,510 97,072 4,404 1,049,872
YTD gross charge-offs — — — — — — — —
YTD net charge-offs (recoveries) — — — — — (4 ) — (4 )
Total real estate loans
Risk Rating
Pass / Pass-Watch 1,450,425 490,808 614,953 1,134,456 867,921 382,674 58,978 5,000,215
Special Mention 55,029 — — 2,565 1,371 298 250 59,513
Classified 3,846 — — 12,338 — 4,065 — 20,249
Total real estate loans 1,509,300 490,808 614,953 1,149,359 869,292 387,037 59,228 5,079,977
YTD gross charge-offs — — — 8,820 — 392 — 9,212
YTD net charge-offs (recoveries) (8 ) — — 8,547 — (28 ) — 8,511
Commercial and industrial loans:
Risk Rating
Pass / Pass-Watch 426,520 168,307 40,485 44,797 19,772 16,931 345,975 1,062,787
Special Mention — — — 11,600 — — — 11,600
Classified — — — 148 — 21 352 521
Total commercial and industrial loans 426,520 168,307 40,485 56,545 19,772 16,952 346,327 1,074,908
YTD gross charge-offs 19 373 59 853 82 322 — 1,708
YTD net charge-offs (recoveries) 19 366 54 750 82 46 (2,723 ) (1,406 )
Equipment financing agreements:
Risk Rating
Pass / Pass-Watch 144,142 87,819 85,652 65,042 19,188 1,529 — 403,372
Special Mention — — — — — — — —
Classified 506 726 1,202 1,962 583 132 — 5,111
Total equipment financing agreements 144,648 88,545 86,854 67,004 19,771 1,661 — 408,483
YTD gross charge-offs — 875 2,728 4,658 1,706 159 — 10,126
YTD net charge-offs (recoveries) — 831 2,297 3,579 831 (234 ) (2 ) 7,302
Total loans:
Risk Rating
Pass / Pass-Watch 2,021,087 746,934 741,090 1,244,295 906,881 401,134 404,953 6,466,374
Special Mention 55,029 — — 14,165 1,371 298 250 71,113
Classified 4,352 726 1,202 14,448 583 4,218 352 25,881
Total loans $ 2,080,468 $ 747,660 $ 742,292 $ 1,272,908 $ 908,835 $ 405,650 $ 405,555 $ 6,563,368
YTD gross charge-offs 19 1,248 2,787 14,331 1,788 873 — 21,046
YTD net charge-offs (recoveries) 11 1,197 2,351 12,876 913 (216 ) (2,725 ) 14,407
  • (1)

Loans by Vintage Year and Payment Performance

Term Loans
Amortized Cost Basis by Origination Year (1)
2026 2025 2024 2023 2022 Prior Revolving<br>Loans<br>Amortized<br>Cost Basis Total
(in thousands)
March 31, 2026
Real estate loans:
Commercial property
Payment performance
Performing $ 394,740 $ 989,922 $ 382,505 $ 426,573 $ 800,880 $ 928,336 $ 55,860 $ 3,978,816
Nonperforming — 3,771 — — 441 1,365 — 5,577
Total commercial property 394,740 993,693 382,505 426,573 801,321 929,701 55,860 3,984,393
YTD gross charge-offs — — — — 40 92 — 132
YTD net charge-offs (recoveries) — (2 ) — — 41 50 — 89
Construction
Payment performance
Performing — 9,753 3,998 — — — — 13,751
Nonperforming — — — — — — — —
Total construction — 9,753 3,998 — — — — 13,751
YTD gross charge-offs — — — — — — — —
YTD net charge-offs (recoveries) — — — — — — — —
Residential
Payment performance
Performing 29,143 225,155 69,039 132,608 316,357 221,740 6,180 1,000,222
Nonperforming — — — 892 1,113 (4 ) — 2,001
Total residential 29,143 225,155 69,039 133,500 317,470 221,736 6,180 1,002,223
YTD gross charge-offs — — — — — — — —
YTD net charge-offs (recoveries) — — — — — (2 ) — (2 )
Total real estate loans
Payment performance
Performing 423,883 1,224,830 455,542 559,181 1,117,237 1,150,076 62,040 4,992,789
Nonperforming — 3,771 — 892 1,554 1,361 — 7,578
Total real estate loans 423,883 1,228,601 455,542 560,073 1,118,791 1,151,437 62,040 5,000,367
YTD gross charge-offs — — — — 40 92 — 132
YTD net charge-offs (recoveries) — (2 ) — — 41 48 — 87
Commercial and industrial loans:
Payment performance
Performing 212,215 318,195 152,753 37,731 44,323 25,954 361,245 1,152,416
Nonperforming — — 91 — 37 — 128
Total commercial and industrial loans 212,215 318,195 152,844 37,731 44,360 25,954 361,245 1,152,544
YTD gross charge-offs — — 76 — — 51 — 127
YTD net charge-offs (recoveries) — — 76 — (24 ) 37 (1 ) 88
Equipment financing agreements:
Payment performance
Performing 41,008 129,571 77,544 72,870 52,886 13,963 387,842
Nonperforming — 893 772 1,062 1,376 610 4,713
Total equipment financing agreements 41,008 130,464 78,316 73,932 54,262 14,573 — 392,555
YTD gross charge-offs — 1,124 301 512 799 176 — 2,912
YTD net charge-offs (recoveries) — 1,124 259 461 678 (99 ) — 2,423
Total loans:
Payment performance
Performing 677,106 1,672,596 685,839 669,782 1,214,446 1,189,993 423,285 6,533,047
Nonperforming — 4,664 863 1,954 2,967 1,971 — 12,419
Total loans $ 677,106 $ 1,677,260 $ 686,702 $ 671,736 $ 1,217,413 $ 1,191,964 $ 423,285 $ 6,545,466
YTD gross charge-offs — 1,124 377 512 839 319 — 3,171
YTD net charge-offs (recoveries) — 1,122 335 461 695 (14 ) (1 ) 2,598
  • (1)
Term Loans
Amortized Cost Basis by Origination Year (1)
2025 2024 2023 2022 2021 Prior Revolving<br>Loans<br>Amortized<br>Cost Basis Total
December 31, 2025
Real estate loans:
Commercial property
Payment performance
Performing $ 1,240,037 $ 402,354 $ 472,027 $ 809,391 $ 736,782 $ 289,102 $ 54,824 $ 4,004,517
Nonperforming 671 — — 10,312 — 863 — 11,846
Total commercial property 1,240,708 402,354 472,027 819,703 736,782 289,965 54,824 4,016,363
YTD gross charge-offs — — — 8,820 — 392 — 9,212
YTD net charge-offs (recoveries) (8 ) — — 8,547 — (24 ) — 8,515
Construction
Payment performance
Performing 9,745 3,997 — — — — — 13,742
Nonperforming — — — — — — — —
Total construction 9,745 3,997 — — — — — 13,742
YTD gross charge-offs — — — — — — — —
YTD net charge-offs (recoveries) — — — — — — — —
Residential
Payment performance
Performing 258,847 84,457 142,926 328,543 132,510 97,076 4,404 1,048,763
Nonperforming — — — 1,113 — (4 ) — 1,109
Total residential 258,847 84,457 142,926 329,656 132,510 97,072 4,404 1,049,872
YTD gross charge-offs — — — — — — — —
YTD net charge-offs (recoveries) — — — — — (4 ) — (4 )
Total real estate loans
Payment performance
Performing 1,508,629 490,808 614,953 1,137,934 869,292 386,178 59,228 5,067,022
Nonperforming 671 — — 11,425 — 859 — 12,955
Total real estate loans 1,509,300 490,808 614,953 1,149,359 869,292 387,037 59,228 5,079,977
YTD gross charge-offs — — — 8,820 — 392 — 9,212
YTD net charge-offs (recoveries) (8 ) — — 8,547 — (28 ) — 8,511
Commercial and industrial loans:
Payment performance
Performing 426,520 168,307 40,485 56,499 19,772 16,952 346,327 1,074,862
Nonperforming — — — 46 — — — 46
Total commercial and industrial loans 426,520 168,307 40,485 56,545 19,772 16,952 346,327 1,074,908
YTD gross charge-offs 19 373 59 853 82 322 — 1,708
YTD net charge-offs (recoveries) 19 366 54 750 82 46 (2,723 ) (1,406 )
Equipment financing agreements:
Payment performance
Performing 144,142 87,819 85,652 65,042 19,188 1,529 — 403,372
Nonperforming 506 726 1,202 1,962 583 132 — 5,111
Total equipment financing agreements 144,648 88,545 86,854 67,004 19,771 1,661 — 408,483
YTD gross charge-offs — 875 2,728 4,658 1,706 159 — 10,126
YTD net charge-offs (recoveries) — 831 2,297 3,579 831 (234 ) (2 ) 7,302
Total loans:
Payment performance
Performing 2,079,291 746,934 741,090 1,259,475 908,252 404,659 405,555 6,545,256
Nonperforming 1,177 726 1,202 13,433 583 991 — 18,112
Total loans $ 2,080,468 $ 747,660 $ 742,292 $ 1,272,908 $ 908,835 $ 405,650 $ 405,555 $ 6,563,368
YTD gross charge-offs 19 1,248 2,787 14,331 1,788 873 — 21,046
YTD net charge-offs (recoveries) 11 1,197 2,351 12,876 913 (216 ) (2,725 ) 14,407
  • (1)

The following is an aging analysis of loans, including loans on nonaccrual status, disaggregated by loan class, as of:

30-59<br>Days<br>Past Due 60-89<br>Days<br>Past Due 90 Days<br>or More<br>Past Due Total<br>Past Due Current Total
(in thousands)
March 31, 2026
Real estate loans:
Commercial property
Retail $ 1,524 $ — $ 436 $ 1,960 $ 1,165,779 $ 1,167,739
Hospitality 190 — 3,175 3,365 861,837 865,202
Office — — 337 337 486,200 486,537
Other 1,050 — 540 1,590 1,463,325 1,464,915
Total commercial property loans 2,764 — 4,488 7,252 3,977,141 3,984,393
Construction — — — — 13,751 13,751
Residential 4,743 1,082 2,001 7,826 994,397 1,002,223
Total real estate loans 7,507 1,082 6,489 15,078 4,985,289 5,000,367
Commercial and industrial loans 627 — — 627 1,151,917 1,152,544
Equipment financing agreements 3,541 1,442 2,907 7,890 384,665 392,555
Total loans $ 11,675 $ 2,524 $ 9,396 $ 23,595 $ 6,521,871 $ 6,545,466
December 31, 2025
Real estate loans:
Commercial property
Retail $ 2,002 $ 590 $ 154 $ 2,746 $ 1,129,693 $ 1,132,439
Hospitality 3,135 — — 3,135 844,854 847,989
Office — — 10,159 10,159 493,109 503,268
Other 325 657 — 982 1,531,685 1,532,667
Total commercial property loans 5,462 1,247 10,313 17,022 3,999,341 4,016,363
Construction — — — — 13,742 13,742
Residential 4,311 1,259 1,109 6,679 1,043,193 1,049,872
Total real estate loans 9,773 2,506 11,422 23,701 5,056,276 5,079,977
Commercial and industrial loans 788 — — 788 1,074,120 1,074,908
Equipment financing agreements 4,604 1,788 2,956 9,348 399,135 408,483
Total loans $ 15,165 $ 4,294 $ 14,378 $ 33,837 $ 6,529,531 $ 6,563,368

Nonaccrual Loans and Nonperforming Assets

The following tables represent the amortized cost basis of loans on nonaccrual status and loans past due 90 days and still accruing as of:

March 31, 2026
Nonaccrual Loans<br>With<br>No Allowance for<br>Credit Losses Nonaccrual Loans<br>With<br>Allowance for<br>Credit Losses Loans<br>Past Due<br>90 Days Still<br>Accruing Total<br>Nonperforming<br>Loans
(in thousands)
Real estate loans:
Commercial property
Retail $ 436 $ 466 $ — $ 902
Hospitality 3,133 68 — 3,201
Office 337 — — 337
Other 1,136 — — 1,136
Total commercial property loans 5,042 534 — 5,576
Construction — — — —
Residential 888 1,113 — 2,001
Total real estate loans 5,930 1,647 — 7,577
Commercial and industrial loans — 128 — 128
Equipment financing agreements — 4,715 — 4,715
Total $ 5,930 $ 6,490 $ — $ 12,420
December 31, 2025
Nonaccrual Loans<br>With<br>No Allowance for<br>Credit Losses Nonaccrual Loans<br>With<br>Allowance for<br>Credit Losses Loans<br>Past Due<br>90 Days Still<br>Accruing Total<br>Nonperforming<br>Loans
(in thousands)
Real estate loans:
Commercial property
Retail $ 589 $ 376 $ — $ 965
Hospitality (39 ) 83 — 44
Office 10,159 — — 10,159
Other 671 7 — 678
Total commercial property loans 11,380 466 — 11,846
Residential 1,109 — — 1,109
Total real estate loans 12,489 466 — 12,955
Commercial and industrial loans — 46 — 46
Equipment financing agreements (6 ) 5,117 — 5,111
Total $ 12,483 $ 5,629 $ — $ 18,112

The Company recognized $1,000 and $346,000 of interest income on nonaccrual loans for the three months ended March 31, 2026 and 2025, respectively.

The following table details nonperforming assets as of the dates indicated:

December 31, 2025
Nonaccrual loans 12,420 $ 18,112
Loans 90 days or more past due and still accruing — —
Total nonperforming loans 12,420 18,112
Other real estate owned (“OREO”) — 1,980
Total nonperforming assets* 12,420 $ 20,092
* Excludes repossessed personal property of 0.3 million and 0.6 million as of March 31, 2026 and December 31, 2025, respectively.

All values are in US Dollars.

There was no OREO as of March 31, 2026. As of December 31, 2025, OREO consisted of two properties with combined carrying values of $2.0 million. OREO is included in prepaid expenses and other assets in the accompanying Consolidated Balance Sheets.

Loan Modifications

The following table presents the amortized cost of loans that were modified to borrowers experiencing financial difficulty during the period indicated:

Interest Only/Principal Deferment
Amortized Cost Basis % of Total Class of Loans Financial Effect
(in thousands)
March 31, 2026
Commercial and industrial loans $ 4,998 0.4 % One loan with 12-month interest-only modification

The modified loan above was current at March 31, 2026. The Company has not committed to lend any additional amounts to the borrower included in the table above as of March 31, 2026. During the three months ended March 31, 2026 and 2025, there were no payment defaults on loans that were modified within the preceding 12 months.

No loans were modified to borrowers experiencing financial difficulty during the three months ended March 31, 2025.

Note 4 — Servicing Assets

The activity in servicing assets was as follows for the periods indicated:

Three Months Ended March 31,
2026 2025
(in thousands)
Balance at beginning of period $ 6,459 $ 6,457
Addition related to sale of loans 687 657
Amortization (611 ) (692 )
Balance at end of period $ 6,535 $ 6,422

At March 31, 2026 and December 31, 2025, we serviced loans sold by the Bank to unaffiliated parties of $561.8 million and $615.9 million, respectively. These loans are maintained off-balance sheet and are not included in loans, net of allowance for credit losses on the consolidated balance sheets. At March 31, 2026 and December 31, 2025, all loans serviced were SBA loans, except for $57.9 million and $62.5 million, respectively, of residential mortgage loans.

The Company recorded servicing fee income of $1.4 million and $1.3 million for three months ended March 31, 2026 and 2025, respectively. Servicing fee income, net of amortization of servicing assets, is included in other operating income in the consolidated statements of income. Amortization expense was $0.6 million and $0.7 million for the three months ended March 31, 2026 and 2025, respectively.

The fair value of servicing rights was $8.8 million at March 31, 2026, which was determined using discount rates ranging from 7.4% to 20.9% and prepayment speeds ranging from 13.2% to 28.7%, depending on the stratification of the specific right. The fair value of servicing rights was $8.5 million at December 31, 2025, which was determined using discount rates ranging from 9.7% to 18.9% and prepayment speeds ranging from 20.2% to 28.0%, depending on the stratification of the specific right.

Note 5 — Income Taxes

The Company’s income tax expense was $7.9 million and $7.4 million, representing effective tax rates of 26.0% and 29.6% for the three months ended March 31, 2026 and 2025, respectively.

Management concluded that as of both March 31, 2026 and December 31, 2025, a valuation allowance of $1.5 million was appropriate against certain state net operating loss carry forwards. For all other deferred tax assets, management believed it was more likely than not that these deferred tax assets will be realized principally through future taxable income and reversal of existing taxable temporary differences. Net deferred tax assets were $37.5 million and $37.4 million as of March 31, 2026 and December 31, 2025, respectively.

As of March 31, 2026, the Company was subject to examination by federal and various state tax authorities for the years ended December 31, 2021 through 2024. During the three months ended March 31, 2026, there were no material changes to the Company’s uncertain tax positions. The Company does not expect its unrecognized tax positions to change significantly over the next twelve months.

Note 6 — Goodwill

The Company had goodwill with a carrying amount of $11.0 million at March 31, 2026 and December 31, 2025. The Company performed an impairment analysis in the first quarter of 2026 and determined there was no impairment as of March 31, 2026. No triggering event occurred as of, or subsequent to March 31, 2026, that would require a reassessment of goodwill.

Note 7 — Deposits

The scheduled maturities of time deposits are as follows for the periods indicated:

TimeDeposits MoreThan 250,000 Other Time<br>Deposits Total
(in thousands)
At March 31, 2026
2026 $ 1,151,092 $ 2,188,266
2027 238,130 369,400
2028 16,844 16,844
2029 313 313
2030 and thereafter 373 642
Total $ 1,406,752 $ 2,575,465
At December 31, 2025
2026 $ 1,285,988 $ 2,422,865
2027 62,900 63,290
2028 16,473 16,473
2029 183 183
2030 and thereafter 341 610
Total $ 1,365,885 $ 2,503,421

All values are in US Dollars.

Included in time deposits more than $250,000 were State of California time deposits of $150.0 million at March 31, 2026 and December 31, 2025. Included in other time deposits were brokered deposits of $88.5 million at March 31, 2026 and December 31, 2025.

Accrued interest payable on deposits was $30.6 million and $34.8 million at March 31, 2026 and December 31, 2025, respectively. Total deposits reclassified to loans due to overdrafts at March 31, 2026 and December 31, 2025 were $1.5 million and $2.4 million, respectively.

Note 8 — Borrowings and Subordinated Debentures

Borrowings consisted of FHLB advances, which represent collateralized obligations with the FHLB. The following is a summary of contractual maturities of FHLB advances:

March 31, 2026 December 31, 2025
Outstanding<br>Balance Weighted<br>Average Rate Outstanding<br>Balance Weighted<br>Average Rate
(dollars in thousands)
Open advances $ — — % $ — — %
Advances due within 12 months — — 150,000 4.20
Advances due over 12 months through 24 months — — — —
Outstanding advances $ — — % $ 150,000 4.02 %

The following is financial data pertaining to FHLB advances:

March 31, 2026 December 31, 2025
(dollars in thousands)
Weighted-average interest rate at end of period 0.00 % 4.02 %
Weighted-average interest rate during the period 3.94 % 4.52 %
Average balance of FHLB advances $ 68,944 $ 82,390
Maximum amount outstanding at any month-end $ 90,000 $ 150,000

We have pledged loans with carrying values of $2.26 billion and $2.40 billion as collateral with the FHLB as of March 31, 2026 and December 31, 2025, respectively. The total borrowing capacity available from pledged collateral was $1.66 billion and $1.76 billion at March 31, 2026 and December 31, 2025, respectively. The remaining available borrowing capacity from pledged collateral was $1.51 billion and $1.46 billion at March 31, 2026 and December 31, 2025, respectively.

We have also pledged loans with carrying values of $515.7 million and $528.1 million as collateral with the Federal Reserve Bank of San Francisco Discount Window as of March 31, 2026 and December 31, 2025, respectively. The borrowing capacity available through the Discount Window based on pledged loans was $411.8 million and $424.5 million as of March 31, 2026 and December 31, 2025, respectively. There was no balance outstanding as of March 31, 2026 or December 31, 2025.

Interest expense on FHLB advances for the three months ended March 31, 2026 and 2025 was $0.7 million and $2.0 million, respectively.

On August 20, 2021, the Company issued $110.0 million of Fixed-to-Floating Subordinated Notes (“2031 Notes”) with a maturity date of September 1, 2031. The 2031 Notes have an initial fixed interest rate of 3.75% per annum, payable semiannually in arrears on March 1 and September 1 of each year, up to but excluding September 1, 2026. From and including September 1, 2026 and thereafter, the 2031 Notes will bear interest at a floating rate per annum equal to the Three-Month Term SOFR plus 310 basis points, payable quarterly in arrears on March 1, June 1, September 1 and December 1 of each year. If the then current three-month term SOFR rate is less than zero, the three-month SOFR will be deemed to be zero. Debt issuance cost was $2.1 million, which is being amortized through the 2031 Notes’ maturity date. At March 31, 2026 and December 31, 2025, the balance of the 2031 Notes included in the Company’s Consolidated Balance Sheet, net of issuance cost, was $108.8 million and $108.7 million, respectively.

The Company assumed Junior Subordinated Deferrable Interest Debentures (“Subordinated Debentures”) as a result of an acquisition in 2014 with an unpaid principal balance of $26.8 million and an estimated fair value of $18.5 million. The $8.3 million discount is being amortized to interest expense through the debentures’ maturity date of March 15, 2036. A trust was formed in 2005 which issued $26.0 million of Trust Preferred Securities (“TPS”) at a 6.26% fixed rate for the first five years and a variable rate of three-month LIBOR plus 140 basis points thereafter and invested the proceeds in the Subordinated Debentures. Beginning September 15, 2023, the variable rate on the TPS changed to three-month SOFR plus 166 basis points, representing the credit spread of 140 basis points and a 26 basis point adjustment to convert three-month LIBOR to three-month SOFR.

The rate on the TPS at March 31, 2026 was 5.34%. The Company may redeem the Subordinated Debentures at an earlier date if certain conditions are met. The TPS will be subject to mandatory redemption if the Subordinated Debentures are repaid by the Company. Interest is payable quarterly, and the Company has the option to defer interest payments on the Subordinated Debentures from time to time for a period not to exceed five consecutive years. At March 31, 2026 and December 31, 2025, the balance of Subordinated Debentures included in the Company’s Consolidated Balance Sheets, net of discount of $4.2 million and $4.3 million, was $22.6 million and $22.5 million, respectively. Amortization of the discount was $104,000 and $112,000 for the three month periods ended March 31, 2026 and 2025, respectively.

Note 9 — Earnings Per Share

Earnings per share (“EPS”) is calculated on both a basic and a diluted basis. Basic EPS excludes dilution and is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock, or resulted from the issuance of common stock that then shared in earnings. Both basic and diluted EPS exclude common shares in treasury. For diluted EPS, the weighted-average number of common shares outstanding was diluted only by unvested performance stock units (“PSUs”) under the treasury method for the three month periods ended March 31, 2026 and 2025.

Unvested restricted stock awards contain rights to non-forfeitable dividends and are therefore considered participating securities prior to vesting. As a result, they have been included in the earnings allocation in computing basic and diluted EPS under the two-class method.

The following table is a reconciliation of the components used to derive basic and diluted EPS for the periods indicated:

Three Months Ended March 31,
2026 2025
(dollars in thousands, except per share and unit amounts)
Basic EPS
Net income $ 22,557 $ 17,672
Less: income allocated to unvested restricted stock 181 148
Income allocated to common shares $ 22,376 $ 17,524
Weighted-average shares for basic EPS 29,629,130 29,937,660
Basic EPS (1) $ 0.76 $ 0.59
Effect of dilutive PSUs 179,869 120,588
Diluted EPS
Income allocated to common shares $ 22,376 $ 17,524
Weighted-average shares for diluted EPS 29,808,999 30,058,248
Diluted EPS (1) $ 0.75 $ 0.58
  • (1)

There were no options outstanding during the three months ended March 31, 2026. On a weighted-average basis, options to purchase 3,000 shares of common stock were excluded from the calculation of diluted earnings per share for the three months ended March 31, 2025 because their effect would have been anti-dilutive. Options with an exercise price greater than the average market price of the common shares are considered anti-dilutive. There were no anti-dilutive unvested PSUs outstanding for the three months ended March 31, 2026 or 2025.

During the three months ended March 31, 2026, 57,754 PSUs were awarded to executive officers from the 2021 Equity Compensation Plan, with a fair value of $1.5 million on the grant date of March 13, 2026. These units have a three-year cliff vesting period and include dividend equivalent rights. During the three months ended March 31, 2025, 52,526 PSUs were awarded to executive officers from the 2021 Equity Compensation Plan, with a fair value of $1.2 million on the grant date of March 26, 2025. These units also have a three-year cliff vesting period and include dividend equivalent rights. Total PSUs outstanding as of March 31, 2026 were 197,417 with an aggregate grant fair value of $3.8 million. Total PSUs outstanding as of March 31, 2025 were 194,820 with an aggregate grant fair value of $3.6 million.

Note 10 — Regulatory Matters

Federal bank regulatory agencies require bank holding companies and banks to maintain a minimum ratio of qualifying total capital to risk-weighted assets of 8.0% and a minimum ratio of Tier 1 capital to risk-weighted assets of 6.0%. In addition to the risk-based guidelines, federal bank regulatory agencies require bank holding companies and banks to maintain a minimum ratio of Tier 1 capital to average assets, referred to as the leverage ratio, of 4.0%.

In order for banks to be considered “well capitalized,” federal bank regulatory agencies require a minimum ratio of qualifying total capital to risk-weighted assets of 10.0% and a minimum ratio of Tier 1 capital to risk-weighted assets of 8.0%. In addition to the risk-based guidelines, federal bank regulatory agencies require depository institutions to maintain a minimum ratio of Tier 1 capital to average assets, referred to as the leverage ratio, of 5.0%.

At March 31, 2026, the Bank’s capital ratios exceeded the minimum requirements for the Bank to be considered “well capitalized” and the Company exceeded all of its applicable minimum regulatory capital ratio requirements.

A capital conservation buffer of 2.5% must be met to avoid limitations on the ability of the Bank and the Company to pay dividends, repurchase shares or pay discretionary bonuses. The Bank's capital conservation buffer was 6.45% and 6.25% and the Company’s capital conservation buffer was 6.52% and 6.37% as of March 31, 2026 and December 31, 2025, respectively.

The capital ratios of Hanmi Financial and the Bank as of March 31, 2026 and December 31, 2025 were as follows:

Minimum Minimum to Be
Regulatory Categorized as
Actual Requirement “Well Capitalized”
Amount Ratio Amount Ratio Amount Ratio
(dollars in thousands)
March 31, 2026
Total capital (to risk-weighted assets):
Hanmi Financial $ 1,030,325 15.22 % $ 541,435 8.00 % N/A N/A
Hanmi Bank $ 977,985 14.45 % $ 541,456 8.00 % $ 676,820 10.00 %
Tier 1 capital (to risk-weighted assets):
Hanmi Financial $ 847,283 12.52 % $ 406,076 6.00 % N/A N/A
Hanmi Bank $ 904,943 13.37 % $ 406,092 6.00 % $ 541,456 8.00 %
Common equity Tier 1 capital (to risk-weighted assets)
Hanmi Financial $ 825,453 12.20 % $ 304,557 4.50 % N/A N/A
Hanmi Bank $ 904,943 13.37 % $ 304,569 4.50 % $ 439,933 6.50 %
Tier 1 capital (to average assets):
Hanmi Financial $ 847,283 10.93 % $ 310,153 4.00 % N/A N/A
Hanmi Bank $ 904,943 11.74 % $ 308,220 4.00 % $ 385,275 5.00 %
December 31, 2025
Total capital (to risk-weighted assets):
Hanmi Financial $ 1,020,898 15.06 % $ 542,150 8.00 % N/A N/A
Hanmi Bank $ 965,543 14.25 % $ 542,197 8.00 % $ 677,747 10.00 %
Tier 1 capital (to risk-weighted assets):
Hanmi Financial $ 838,150 12.37 % $ 406,612 6.00 % N/A N/A
Hanmi Bank $ 892,795 13.17 % $ 406,648 6.00 % $ 542,197 8.00 %
Common equity Tier 1 capital (to risk-weighted assets)
Hanmi Financial $ 816,424 12.05 % $ 304,959 4.50 % N/A N/A
Hanmi Bank $ 892,795 13.17 % $ 304,986 4.50 % $ 440,535 6.50 %
Tier 1 capital (to average assets):
Hanmi Financial $ 838,150 10.70 % $ 313,270 4.00 % N/A N/A
Hanmi Bank $ 892,795 11.47 % $ 311,425 4.00 % $ 389,281 5.00 %

Note 11 — Fair Value Measurements

Fair Value Measurements

ASC 820, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value including a three-level valuation hierarchy, and expands disclosures about fair value measurements. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The three-level fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair value are defined as follows:

  • Level 1 - Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.
  • Level 2 - Significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, and other inputs that are observable or can be corroborated by observable market data.
  • Level 3 - Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

Fair value is used on a recurring basis for certain assets and liabilities in which fair value is the primary basis of accounting. Additionally, fair value is used on a non-recurring basis to evaluate assets or liabilities for impairment or for disclosure purposes.

We record securities available for sale at fair value on a recurring basis. Certain other assets, such as loans held for sale, impaired loans, OREO, and core deposit intangible, are recorded at fair value on a non-recurring basis. Non-recurring fair value measurements typically involve assets that are periodically evaluated for impairment and for which any impairment is recorded in the period in which the re-measurement is performed.

The following methods and assumptions were used to estimate the fair value of each class of financial instrument below:

Securities available for sale - The fair values of securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges. If quoted prices are not available, fair values are measured using matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities, or other model-based valuation techniques requiring observable inputs other than quoted prices such as yield curve, prepayment speeds, and default rates. Level 1 securities include U.S. Treasury securities that are traded on an active exchange or by dealers or brokers in active over-the-counter markets. The fair value of these securities is determined by quoted prices on an active exchange or over-the-counter market. Level 2 securities primarily include U.S. government agency and sponsored agency mortgage-backed securities, collateralized mortgage obligations and debt securities as well as municipal bonds in markets that are active. In determining the fair value of the securities categorized as Level 2, we obtain reports from nationally recognized broker-dealers detailing the fair value of each investment security held as of each reporting date. The broker-dealers use prices obtained from nationally recognized pricing services to value our fixed income securities. The fair value of the municipal securities is determined based on pricing data provided by nationally recognized pricing services. We review the prices obtained for reasonableness based on our understanding of the marketplace, and also consider any credit issues related to the bonds. As we have not made any adjustments to the market quotes provided to us and as they are based on observable market data, they have been categorized as Level 2 within the fair value hierarchy. Level 3 securities are instruments that are not traded in the market. As such, no observable market data for the instrument is available, which necessitates the use of significant unobservable inputs.

Derivatives – The fair values of derivatives are based on valuation models using observable market data as of the measurement date (Level 2). Our derivatives are traded in an over-the-counter market where quoted market prices are not always available. Therefore, the fair values of derivatives are determined using quantitative models that utilize multiple market inputs. The inputs will vary based on the type of derivative, but could include interest rates, prices and indices to generate continuous yield or pricing curves, prepayment rates, and volatility factors to value the position. The majority of market inputs are actively quoted and can be validated through external sources, including brokers, market transactions and third-party pricing services.

Loans held for sale - Loans held for sale includes the guaranteed portion of SBA 7(a) loans carried at the lower of cost or fair value. Management obtains quotes, bids or pricing indication sheets on all or part of the loans directly from the purchasing financial institutions. Premiums received or to be received on the quotes, bids or pricing indication sheets are indicative of the fact that cost is lower than fair value. At March 31, 2026 and December 31, 2025, the SBA 7(a) loans held for sale were recorded at its cost. We record SBA 7(a) loans held for sale at fair value on a nonrecurring basis with Level 2 inputs.

Nonperforming loans – Nonaccrual loans and loans 90 days past due and still accruing interest are considered nonperforming for reporting purposes. All nonperforming loans with a carrying balance over $250,000 are individually evaluated for the amount of impairment, if any. Nonperforming loans with a carrying balance of $250,000 or less are evaluated collectively. However, from time to time, nonrecurring fair value adjustments to collateral dependent nonperforming loans, for which repayment is expected to be obtained through the sale of the underlying collateral, are recorded based on either the current appraised value of the collateral, or management’s judgment, that are then adjusted based on recent market trends. When the fair value of the collateral is less than the book value, a valuation allowance is established to carry the loan at the fair value of the collateral, and results in a Level 3 measurement.

OREO - Fair value of OREO is based primarily on third party appraisals, less costs to sell and result in a Level 3 classification of the inputs for determining fair value. Appraisals are required annually and may be updated more frequently as circumstances require and the fair value adjustments are made to OREO based on the updated appraised value of the property.

Servicing assets - On a quarterly basis, the Company utilizes a third party service to evaluate servicing assets related to loans sold to unaffiliated parties with servicing retained, and result in a Level 3 classification. Servicing assets are assessed for impairment or increased obligation based on fair value at each reporting date.

Other repossessed assets – Fair value of equipment from equipment financing agreements is based primarily on a third party valuation service, less costs to sell and result in a Level 3 classification of the inputs for determining fair value. Valuations are required at the time the asset is repossessed and may be subsequently updated periodically due to the Company’s short-term possession of the asset prior to sale or as circumstances require and the fair value adjustments are made to the asset based on its value prior to sale.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

As of March 31, 2026 and December 31, 2025, assets and liabilities measured at fair value on a recurring basis are as follows:

Level 1 Level 2 Level 3
Significant
Observable
Quoted Prices in Inputs with No
Active Markets Active Market Significant
for Identical with Identical Unobservable
Assets Characteristics Inputs Total Fair Value
(in thousands)
March 31, 2026
Assets:
Securities available for sale:
U.S. Treasury securities $ 128,591 $ — $ — $ 128,591
U.S. government agency and sponsored agency obligations:
Mortgage-backed securities - residential — 361,360 — 361,360
Mortgage-backed securities - commercial — 62,898 — 62,898
Collateralized mortgage obligations — 164,159 — 164,159
Debt securities — 52,283 — 52,283
Total U.S. government agency and sponsored agency obligations — 640,700 — 640,700
Municipal bonds-tax exempt — 66,434 — 66,434
Total securities available for sale $ 128,591 $ 707,134 $ — $ 835,725
Derivative financial instruments $ — $ 2,377 $ — $ 2,377
Liabilities:
Derivative financial instruments $ — $ 2,318 $ — $ 2,318
December 31, 2025
Assets:
Securities available for sale:
U.S. Treasury securities $ 128,710 $ — $ — $ 128,710
U.S. government agency and sponsored agency obligations:
Mortgage-backed securities - residential — 373,408 — 373,408
Mortgage-backed securities - commercial — 60,572 — 60,572
Collateralized mortgage obligations — 183,955 — 183,955
Debt securities — 65,954 — 65,954
Total U.S. government agency and sponsored agency obligations — 683,889 — 683,889
Municipal bonds-tax exempt — 68,025 — 68,025
Total securities available for sale $ 128,710 $ 751,914 $ — $ 880,624
Derivative financial instruments $ — $ 2,719 $ — $ 2,719
Liabilities:
Derivative financial instruments $ — $ 2,568 $ — $ 2,568

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

As of March 31, 2026 and December 31, 2025, assets and liabilities measured at fair value on a non-recurring basis are as follows:

Level 1 Level 2 Level 3
Significant
Observable
Quoted Prices in Inputs With No
Active Markets Active Market Significant
for Identical With Identical Unobservable
Total Assets Characteristics Inputs
(in thousands)
March 31, 2026
Assets:
Collateral dependent loans (1) $ 1,104 $ — $ — $ 1,104
Repossessed personal property 294 — — 294
December 31, 2025
Assets:
Collateral dependent loans (2) $ 12,539 $ — $ — $ 12,539
Other real estate owned 1,980 — — 1,980
Repossessed personal property 588 — — 588
  • (1)
  • (2)

The following table represents quantitative information about Level 3 fair value assumptions for assets measured at fair value on a non-recurring basis at March 31, 2026 and December 31, 2025:

Fair Value Valuation<br>Techniques Unobservable<br>Input(s) Range (Weighted<br>Average)
(in thousands)
March 31, 2026
Collateral dependent loans:
Real estate loans:
Residential 1,104 Market approach Adjustments to market data (13)% to 1% / (5)% (1)
Total loans $ 1,104
Repossessed personal property $ 294 Market approach Adjustments to market data N/A (2)
December 31, 2025
Collateral dependent loans:
Real estate loans:
Commercial property
Retail $ 596 Market approach Adjustments to market data (26)% to 20% / (8)% (1)
Office 10,159 Market approach Adjustments to market data (26)% to (4)% / (14)% (1)
Other 671 Market approach Adjustments to market data (6)% to 1% / (3)% (1)
Residential 1,113 Market approach Adjustments to market data (13)% to 1% / (5%) (1)
Total loans $ 12,539
Other real estate owned $ 1,980 Market approach Adjustments to market data (10)% to 5% / 0% (1)
Repossessed personal property 588 Market approach Adjustments to market data N/A (2)

  • (1)

  • (2)

ASC 825, Financial Instruments, requires disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis. The methodologies for estimating the fair value of financial assets and financial liabilities that are measured on a recurring basis or non-recurring basis are discussed above.

The estimated fair value of financial instruments has been determined by using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret market data to develop estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that we could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

Recognition and Measurement of Financial Assets and Financial Liabilities (Topic 825), among other provisions, requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. Other than certain financial instruments for which we had concluded that the carrying amounts approximate fair value, the fair value estimates shown below were based on an exit price notion as of March 31, 2026, as required by Topic 825. The financial instruments for which we had concluded that the carrying amounts approximate fair value include cash and due from banks, accrued interest receivable and payable, and noninterest-bearing deposits.

The estimated fair values of financial instruments were as follows:

March 31, 2026
Carrying Fair Value
Amount Level 1 Level 2 Level 3
(in thousands)
Financial assets:
Cash and due from banks $ 254,045 $ 254,045 $ — $ —
Securities available for sale 835,725 128,591 707,134 —
Loans held for sale 4,932 — 5,179 —
Loans, net of allowance for credit losses 6,474,998 — — 6,512,774
Accrued interest receivable 23,320 23,320 — —
Financial liabilities:
Interest-bearing deposits 4,769,879 — — 4,769,082
Borrowings and subordinated debentures 130,618 — — 138,545
Accrued interest payable 30,592 30,592 — —
December 31, 2025
--- --- --- --- --- --- --- --- ---
Carrying Fair Value
Amount Level 1 Level 2 Level 3
(in thousands)
Financial assets:
Cash and due from banks $ 212,841 $ 212,841 $ — $ —
Securities available for sale 880,624 128,710 751,914 —
Loans held for sale 7,403 — 7,715 —
Loans, net of allowance for credit losses 6,493,465 — — 6,532,980
Accrued interest receivable 24,466 24,466 — —
Financial liabilities:
Interest-bearing deposits 4,662,438 — — 4,664,018
Borrowings and subordinated debentures 280,463 — 149,761 137,296
Accrued interest payable 34,783 34,783 — —

The methods and assumptions used to estimate the fair value of each class of financial instruments for which it was practicable to estimate that value are explained below:

Cash and due from banks – The carrying amounts of cash and due from banks approximate fair value due to the short-term nature of these instruments (Level 1).

Securities – The fair value of securities, consisting of securities available for sale, is generally obtained from market bids for similar or identical securities, from independent securities brokers or dealers, or from other model-based valuation techniques described above (Level 1 and 2).

Loans held for sale – Loans held for sale are carried at the lower of aggregate cost or fair market value, as determined based upon quotes, bids or sales contract prices (Levels 1 and 2).

Loans, net of allowance for credit losses – The fair value of loans is estimated based on the discounted cash flow approach. To estimate the fair value of the loans, certain loan characteristics such as account types, remaining terms, annual interest rates or coupons, interest types, past delinquencies, timing of principal and interest payments, current market rates, loan-to-value ratios, loss exposures, and remaining balances are considered. Additionally, the Company’s prior charge-off rates and loss ratios as well as various other assumptions relating to credit, interest, and prepayment risks are used as part of valuing the loan portfolio. Subsequently, the loans were individually evaluated by sorting and pooling them based on loan types, credit risk grades, and payment types. Consistent with the requirements of ASU 2016-01, the fair value of the Company’s loans is considered to be an exit price notion as of March 31, 2026 (Level 3).

The fair value of collateral dependent loans is estimated based on the net realizable fair value of the collateral or the observable market price of the most recent sale or quoted price from loans held for sale. The Company does not record loans at fair value on a recurring basis. Nonrecurring fair value adjustments to collateral dependent loans are recorded based on the current appraised value of the collateral (Level 3).

Accrued interest receivable – The carrying amount of accrued interest receivable approximates its fair value (Level 1).

Interest-bearing deposits – The fair value of interest-bearing deposits, such as savings accounts, money market checking, and certificates of deposit, is estimated based on discounted cash flows. The cash flows for non-maturity deposits, including savings accounts and money market checking, are estimated based on their historical decaying experiences. The discount rate used for fair valuation is based on interest rates currently being offered by the Bank on comparable deposits as to amount and term (Level 3).

Borrowings and subordinated debentures – Borrowings consist of FHLB advances, subordinated debentures and other borrowings. Discounted cash flows based on current market rates for borrowings with similar remaining maturities are used to estimate the fair value of borrowings (Level 2 and 3).

Accrued interest payable – The carrying amount of accrued interest payable approximates its fair value (Level 1).

Note 12 — Off-Balance Sheet Commitments

The Bank is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. These instruments involve, to varying degrees, elements of credit and interest rate risk similar to the risk involved with on-balance sheet items.

The Bank’s exposure to losses in the event of non-performance by the other party to commitments to extend credit and standby letters of credit is represented by the contractual notional amount of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for extending loan facilities to customers. The Bank evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Bank upon an extension of credit, was based on management’s credit evaluation of the counterparty. Collateral held varies but may include accounts receivable, inventory, premises and equipment, and income-producing or borrower-occupied properties.

Some of the commitments to fund existing loans, lines of credit and letters of credit are expected to expire without being drawn upon. Therefore, the total commitments do not necessarily represent future cash requirements. As of March 31, 2026, the Bank was obligated on $150.0 million of letters of credit to the FHLB of San Francisco, which were being used as collateral for $150.0 million in public fund deposits from the State of California.

The following table shows the distribution of total loan commitments as of the dates indicated:

March 31, December 31,
2026 2025
(in thousands)
Unused commitments to extend credit $ 891,594 $ 930,122
Standby letters of credit 177,459 163,071
Commercial letters of credit 8,165 5,761
Total commitments $ 1,077,218 $ 1,098,954

The allowance for credit losses related to off-balance sheet items was maintained at a level believed to be sufficient to absorb current expected lifetime losses related to these unfunded credit facilities. The determination of the allowance adequacy was based on periodic evaluations of the unfunded credit facilities including an assessment of the probability of commitment usage, credit risk factors for loans outstanding to these same customers, and the terms and expiration dates of the unfunded credit facilities.

Activity in the allowance for credit losses related to off-balance sheet items was as follows for the periods indicated:

Three Months Ended March 31,
2026 2025
(in thousands)
Balance at beginning of period $ 2,349 $ 2,074
Credit loss expense (recovery) (271 ) 325
Balance at end of period $ 2,078 $ 2,399

Note 13 — Leases

The Company enters into leases in the normal course of business primarily for bank branch offices, back-office operations locations, business development offices, information technology data centers and information technology equipment. At March 31, 2026, the Company’s leases had remaining terms ranging from one month to eight years, some of which include renewal or termination options to extend the lease for up to ten years.

The Company includes lease extension and termination options in the lease term if, after considering relevant economic factors, it is reasonably certain the Company will exercise the option. In addition, the Company has elected to account for any non-lease components in its real estate leases as part of the associated lease component. The Company has also elected not to recognize leases with original lease terms of 12 months or less (short-term leases) on the Company’s balance sheet.

Leases are classified as operating or finance leases at the lease commencement date. Lease expense for operating leases and short-term leases is recognized on a straight-line basis over the term of the lease. Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of the lease payments over the lease term.

As of March 31, 2026, the outstanding balances for our right-of-use asset and lease liability were $34.0 million and $38.0 million, respectively. As of December 31, 2025, the outstanding balances of the right-of-use asset and lease liability were $32.0 million and $36.0 million, respectively. The right-of-use asset is reported in prepaid expenses and other assets, and the lease liability is reported in accrued expenses and other liabilities on the Consolidated Balance Sheets.

In determining the discount rates, since most of our leases do not provide an implicit rate, we used our incremental borrowing rate provided by the FHLB of San Francisco based on the information available at the commencement date to calculate the present value of lease payments.

At March 31, 2026, future minimum rental commitments under these non-cancelable operating leases, with initial or remaining terms of one year or more, were as follows:

Amount
(in thousands)
2026 $ 6,395
2027 8,469
2028 7,978
2029 7,222
2030 5,471
Thereafter 6,573
Remaining lease commitments 42,108
Interest (4,108 )
Present value of lease liability $ 38,000

Net lease expense recognized for the three months ended March 31, 2026 and 2025 was $2.4 million and $2.1 million, respectively. Sublease income was immaterial for both periods.

Weighted average remaining lease terms for the Company’s operating leases were

5.33

years and

5.59

years as of March 31, 2026 and December 31, 2025, respectively. Weighted average discount rates used for the Company’s operating leases were 3.84% and 3.85% as of March 31, 2026 and December 31, 2025, respectively. Cash paid and included in cash flows from operating activities for amounts used in the measurement of the lease liability of the Company’s operating leases was $2.1 million for the three months ended March 31, 2026, and $2.2 million for the three months ended March 31, 2025.

Note 14 — Liquidity

Hanmi Financial

As of March 31, 2026, Hanmi Financial had $1.3 million in cash on deposit with its bank subsidiary and $48.6 million of U.S. Treasury securities at fair value. As of December 31, 2025, the Company had $8.8 million in cash on deposit with its bank subsidiary and $46.2 million of U.S. Treasury securities at fair value. Management believes that Hanmi Financial, on a stand-alone basis, had adequate liquid assets to meet its current debt obligations.

Hanmi Bank

The principal objective of our liquidity management program is to maintain the Bank’s ability to meet the day-to-day cash flow requirements of its customers who wish either to withdraw funds or to draw upon credit facilities to meet their cash needs. Management believes that the Bank, on a stand-alone basis, has adequate liquid assets to meet its current obligations. The Bank’s primary funding source will continue to be deposits originating from its branch platform. The Bank’s wholesale funds historically consisted of FHLB advances, brokered deposits, and State of California time deposits. As of March 31, 2026, the Bank had no outstanding FHLB advances. As of December 31, 2025, the Bank had $150.0 million of outstanding FHLB advances. The Bank had $88.5 million of brokered deposits at March 31, 2026 and December 31, 2025, and $150.0 million of State of California time deposits at March 31, 2026 and December 31, 2025.

We monitor the sources and uses of funds on a regular basis to maintain an acceptable liquidity position. The Bank’s primary source of borrowings is the FHLB, from which the Bank is eligible to borrow up to 30% of its assets. As of March 31, 2026 and

December 31, 2025, the total borrowing capacity, based on pledged collateral was $1.66 billion and $1.76 billion, respectively, while the remaining available borrowing capacity was $1.51 billion and $1.46 billion, respectively.

The amount that the FHLB is willing to advance differs based on the quality and character of qualifying collateral pledged by the Bank, and the FHLB may adjust the advance rates for qualifying collateral upwards or downwards from time to time. To the extent deposit renewals and deposit growth are not sufficient to fund maturing and withdrawable deposits, repay maturing borrowings, fund existing and future loans, equipment financing agreements and securities, and otherwise fund working capital needs and capital expenditures, the Bank may utilize the remaining borrowing capacity from its FHLB borrowing arrangement.

As a means of augmenting its liquidity, the Bank also had an available borrowing source of $411.8 million from the Federal Reserve Bank of San Francisco Discount Window, to which the Bank pledged loans with a carrying value of $515.7 million, with no borrowings outstanding as of March 31, 2026. At December 31, 2025, the available borrowing capacity through the Federal Reserve Bank of San Francisco Discount Window was $424.5 million on pledged loans with carrying values of $528.1 million, with no borrowings outstanding. The Bank maintains other source of liquidity, including a line of credit for repurchase agreements up to $100.0 million and four unsecured federal funds lines of credit totaling $140.0 million. These sources had no outstanding balances as of March 31, 2026 or December 31, 2025.

Note 15 — Derivatives and Hedging Activities

Risk Management Objective of Using Derivative

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its assets and liabilities and through the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates.

Derivatives Designated as Hedging Instruments - Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest income and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of fixed-rate amounts from a counterparty in exchange for the Company making variable-rate payments over the life of the agreements without exchange of the underlying notional amount. Such derivatives were used to hedge the variable cash flows associated with existing variable-rate assets. During the fourth quarter of 2023, the Company entered into a $100.0 million notional interest rate swap designated as a cash flow hedge, with an effective date of May 1, 2024 and a maturity date of May 1, 2026, to hedge a pool of Prime-indexed loans against falling rates. The principal balance of the loan pool designated for the Prime-indexed loans was $134.0 million as of March 31, 2026. During the first quarter of 2024, the Company entered into a $75.0 million notional interest rate swap designated as a cash flow hedge, with an effective date of May 1, 2024 and a maturity date of May 1, 2026, to hedge a pool of one-month SOFR-indexed loans against falling rates. The principal balance of the loan pool designated for the SOFR-indexed loans was $115.8 million as of March 31, 2026.

For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in accumulated other comprehensive income and subsequently reclassified into interest income in the same period(s) during which the hedged transaction affects earnings. Management evaluated the effectiveness of the Company’s derivatives designated as cash flow hedges at inception and at the balance sheet date and determined they are effective. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest income as interest payments are received on the Company’s variable-rate asset. During the next 12 months, the Company estimates that an additional $22 thousand will be reclassified as an increase to interest income.

Derivatives Not Designated as Hedging Instruments

The Company also enters into interest rate swap agreements between the Company and its customers and other third-party counterparties. The Company enters into “back to back swap” arrangements whereby the Company executes interest rate swap agreements with its customers and acquires an offsetting swap position from a third-party counterparty. These derivative financial statements are accounted for at fair value, with changes in fair value recognized in the Company’s Consolidated Statements of Income.

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025.

As of March 31, 2026 Derivative Assets Derivative Liabilities
Notional Amount Balance Sheet Location Fair Value Notional Amount Balance Sheet Location Fair Value
(in thousands)
Derivatives not designated as hedging instruments
Interest rate products $ 60,614 Other Assets $ 2,334 $ 60,614 Other Liabilities $ 2,318
Total derivatives not designated as hedging instruments $ 2,334 $ 2,318
Derivatives designated as hedging instruments
Interest rate products $ 175,000 Other Assets $ 43 $ — Other Liabilities $ —
Total derivatives designated as hedging instruments $ 43 $ —
As of December 31, 2025 Derivative Assets Derivative Liabilities
Notional Amount Balance Sheet Location Fair Value Notional Amount Balance Sheet Location Fair Value
(in thousands)
Derivatives not designated as hedging instruments
Interest rate products $ 61,350 Other Assets $ 2,579 $ 61,350 Other Liabilities $ 2,568
Total derivatives not designated as hedging instruments $ 2,579 $ 2,568
Derivatives designated as hedging instruments
Interest rate products $ 175,000 Other Assets $ 140 $ — Other Liabilities $ —
Total derivatives designated as hedging instruments $ 140 $ —

The table below presents the effect of cash flow hedge accounting on Accumulated Other Comprehensive Income for the three months ended March 31, 2026 and 2025.

Three Months Ended March 31, 2026
Derivatives in Subtopic 815-20 Hedging Relationships Amount of Gain or (Loss) Recognized in OCI on Derivative Amount of Gain or (Loss)<br>Recognized in OCI Included<br>Component Amount of Gain or (Loss)<br>Recognized in OCI Excluded<br>Component Location of Gain or (Loss) Recognized from Accumulated Other Comprehensive Income into Income Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income Included Component Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income Excluded Component
(in thousands)
Derivatives in Cash Flow Hedging Relationships
Interest Rate Products $ (57 ) $ (57 ) $ — Interest Income $ 60 $ 60 $ —
Total $ (57 ) $ (57 ) $ — $ 60 $ 60 $ —
Three Months Ended March 31, 2025
Derivatives in Subtopic 815-20 Hedging Relationships Amount of Gain or (Loss) Recognized in OCI on Derivative Amount of Gain or (Loss)<br>Recognized in OCI Included<br>Component Amount of Gain or (Loss)<br>Recognized in OCI Excluded<br>Component Location of Gain or (Loss) Recognized from Accumulated Other Comprehensive Income into Income Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income Included Component Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income Excluded Component
(in thousands)
Derivatives in Cash Flow Hedging Relationships
Interest Rate Products $ 191 $ 191 $ — Interest Income $ (245 ) $ (245 ) $ —
Total $ 191 $ 191 $ — $ (245 ) $ (245 ) $ —

The table below presents the effect of cash flow hedge accounting on the Consolidated Statements of Income for the three months ended March 31, 2026 and 2025.

Location and Amount of Gain or (Loss) Recognized in Income on Cash Flow Hedging Relationship
Three Months Ended
March 31,
2026 2025
Interest Income Interest Expense Interest Income Interest Expense
(in thousands)
Gain or (loss) on cash flow hedging relationships in Subtopic 815-20
Interest contracts
Amount of gain or (loss) reclassified from accumulated other comprehensive loss into income $ 60 $ — $ (245 ) $ —
Amount of gain or (loss) reclassified from accumulated other comprehensive loss into income - included component 60 — (245 ) —

The table below presents the effect of the Company’s derivative financial instruments that are not designated as hedging instruments on the Consolidated Statements of Income for the three months ended March 31, 2026 and 2025.

Derivatives Not Designated as Hedging<br>Instruments under Subtopic 815-20 Location of Gain or (Loss) Recognized in Income on Derivative Amount of Gain or (Loss)<br>Recognized in Income on Derivative
Three Months Ended March 31,
2026 2025
(in thousands)
Interest rate products Other income $ 5 $ (15 )
Total $ 5 $ (15 )

No fee income was recognized from the Company’s derivative financial instruments for the three months ended March 31, 2026 or 2025.

The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of March 31, 2026 and December 31, 2025. The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The derivative assets are located within the prepaid and other assets line item on the Consolidated Balance Sheets and the derivative liabilities are located within the accrued expenses and other liabilities line item on the Consolidated Balance Sheets.

Offsetting of Derivative Assets
As of March 31, 2026
Gross Amounts Not Offset in the Consolidated Balance Sheets
Gross Amounts of Recognized Assets Gross Amounts Offset in the Statement of Financial Position Net Amounts of Assets presented in the Statement of Financial Position Financial Instruments Cash Collateral Received Net Amount
(in thousands)
Derivatives $ 2,377 $ — $ 2,377 $ 144 $ 2,097 $ 136
Offsetting of Derivative Liabilities
As of March 31, 2026
Gross Amounts Not Offset in the Consolidated Balance Sheets
Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Statement of Financial Position Net Amounts of Assets presented in the Statement of Financial Position Financial Instruments Cash Collateral Provided Net Amount
(in thousands)
Derivatives $ 2,318 $ — $ 2,318 $ 144 $ — $ 2,174
Offsetting of Derivative Assets
As of December 31, 2025
Gross Amounts Not Offset in the Consolidated Balance Sheets
Gross Amounts of Recognized Assets Gross Amounts Offset in the Statement of Financial Position Net Amounts of Assets presented in the Statement of Financial Position Financial Instruments Cash Collateral Received Net Amount
(in thousands)
Derivatives $ 2,719 $ — $ 2,719 $ 397 $ 1,938 $ 384
Offsetting of Derivative Liabilities
As of December 31, 2025
Gross Amounts Not Offset in the Consolidated Balance Sheets
Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Statement of Financial Position Net Amounts of Assets presented in the Statement of Financial Position Financial Instruments Cash Collateral Provided Net Amount
(in thousands)
Derivatives $ 2,568 $ — $ 2,568 $ 397 $ — $ 2,171

The Company has agreements with each of its derivative counterparties that contain a provision stating if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in

default on its derivative obligations. In addition, these agreements may also require the Company to post additional collateral should it fail to maintain its status as a well- or adequately- capitalized institution.

As of March 31, 2026 and December 31, 2025, the fair value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $0. As of March 31, 2026 and December 31, 2025, no collateral was provided related to these agreements.

Note 16 — Segment Reporting

The Company has one reportable segment, Banking, as determined by the Chief Financial Officer, who is designated the chief operating decision maker, based upon information provided about the Company’s products and services offered, which are primarily banking operations. The Banking segment is also distinguished by the level of information provided to the chief operating decision maker, who uses such information to review performance of various components of the business. The chief operating decision maker uses net interest income, net interest margin, non-interest income, non-interest expense, credit loss expense, and net income to assess performance and in the determination of allocating resources. These metrics, coupled with monitoring of budget to actual results, are used in assessment performance and in establishing compensation. Loans, investments, and deposits provide the revenues in our banking operations. Interest expense, provisions for credit losses, and salaries and benefits provide the significant expenses in our banking operations.

The following table presents information reported internally for performance assessment by the chief operating decision maker for the following periods:

Banking Segment
Quarter Ended March 31,
2026 2025
(in thousands)
Net interest income $ 63,203 $ 55,092
Noninterest income 8,539 7,726
Segment revenues 71,742 62,818
Other revenues — —
Total consolidated revenues 71,742 62,818
Less:
Credit loss expense 2,892 2,721
Noninterest expenses 38,368 34,984
Income tax expense 7,925 7,441
Segment net income 22,557 17,672
Reconciliation of profit:
Adjustments and reconciling items — —
Consolidated net income $ 22,557 $ 17,672
Segment assets $ 7,839,227 $ 7,729,035
Other assets — —
Consolidated assets $ 7,839,227 $ 7,729,035

Note 17 — Subsequent Events

Cash Dividend

On April 23, 2026, the Company announced that the Board of Directors of the Company declared a quarterly cash dividend of $0.28 per share to be paid on May 20, 2026 to stockholders of record as of the close of business on May 4, 2026.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following is management’s discussion and analysis of our results of operations and financial condition as of and for the three months ended March 31, 2026. This analysis should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Annual Report on Form 10-K”) and with the unaudited consolidated financial statements and notes thereto set forth in this Quarterly Report on Form 10-Q for the period ended March 31, 2026 (this “Report”).

Forward-Looking Statements

Some of the statements contained in this Report are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements in this Report other than statements of historical fact are “forward–looking statements” for purposes of federal and state securities laws, including, but not limited to, statements about anticipated future operating and financial performance, financial condition and liquidity, business strategies, regulatory and competitive outlook, investment and expenditure plans, capital and financing needs and availability, plans and objectives of management for future operations, developments regarding our capital and strategic plans and other similar forecasts and statements of expectation and statements of assumptions underlying any of the foregoing. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” or “continue,” or the negative of such terms and other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, financial condition, levels of activity, performance or achievements to differ from those expressed or implied by the forward-looking statements. These factors include the following:

  • a failure to maintain adequate levels of capital and liquidity to support our operations;

  • general economic and business conditions internationally, nationally and in those areas in which we operate, including any potential recessionary conditions;

  • volatility and deterioration in the credit and equity markets;

  • changes in investor sentiment or consumer spending, borrowing and savings habits;

  • availability of capital from private and government sources;

  • demographic changes;

  • competition for loans and deposits and failure to attract or retain loans and deposits;

  • inflation and fluctuations in interest rates that reduce our margins and yields, the fair value of financial instruments, the level of loan originations or prepayments on loans we have made and make, the level of loan sales and the cost we pay to retain and attract deposits and secure other types of funding;

  • our ability to enter new markets successfully and capitalize on growth opportunities;

  • the current or anticipated impact of military conflict, terrorism or other geopolitical events;

  • the effect of potential future supervisory action against us or Hanmi Bank and our ability to address any issues raised in our regulatory exams;

  • risks of natural disasters;

  • legal proceedings and litigation brought against us;

  • a failure in or breach of our operational or security systems or infrastructure, including cyberattacks;

  • the failure to maintain current technologies;

  • risks associated with Small Business Administration loans;

  • failure to attract or retain key employees;

  • our ability to access cost-effective funding;

  • the imposition of tariffs or other domestic or international governmental policies and any retaliatory responses;

  • the impact of a potential federal government shutdown, which may impact on our ability to effect sales of Small Business Administration loans;

  • changes in liquidity, including the size and composition of our deposit portfolio and the percentage of uninsured deposits in the portfolio;

  • fluctuations in real estate values;

  • changes in accounting policies and practices;

  • changes in governmental regulation, including, but not limited to, any increase in FDIC insurance premiums and changes in the monetary policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System;

  • the ability of Hanmi Bank to make distributions to Hanmi Financial Corporation, which is restricted by certain factors, including Hanmi Bank’s retained earnings, net income, prior distributions made, and certain other financial tests;

  • strategic transactions we may enter into, including the costs associated with the evaluation of any strategic opportunities and the overall effects of any acquisitions or dispositions we may make;

  • the adequacy of and changes in the economic assumptions and methodology for computing our allowance for credit losses;

  • our credit quality and the effect of credit quality on our credit losses expense and allowance for credit losses;

  • changes in the financial performance and/or condition of our borrowers and the ability of our borrowers to perform under the terms of their loans and other terms of credit agreements;

  • our ability to control expenses;

  • cyber security and fraud risks against our information technology and those of our third-party providers and vendors;

  • the inability of third-party service providers to perform their obligations to us; and

  • the ability of the Company to withstand disruptions that may be caused by any failure of the operational systems of third parties.

For additional information concerning risks we face, see “Part II, Item 1A. Risk Factors” in this Report and “Item 1A. Risk Factors” in Part I of the 2025 Annual Report on Form 10-K. We undertake no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made, except as required by law.

Critical Accounting Policies

We have established various accounting policies that govern the application of GAAP in the preparation of our financial statements. Our significant accounting policies are described in the Notes to the consolidated financial statements in the 2025 Annual Report on Form 10-K. We had no significant changes in what constituted our accounting policies since the filing of the 2025 Annual Report on Form 10-K.

Certain accounting policies require us to make significant estimates and assumptions that have a material impact on the carrying value of certain assets and liabilities, and we consider these to be critical accounting policies. For a description of these critical accounting policies, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies” in the 2025 Annual Report on Form 10-K. Actual results could differ significantly from these estimates and assumptions, which could have a material impact on the carrying value of assets and liabilities at the balance sheet dates and our results of operations for the reporting periods. Management has discussed the development and selection of these critical accounting policies with the Audit Committee of the Company’s Board of Directors.

Results of Operations

Net Interest Income

Our primary source of revenue is net interest income, which is the difference between interest derived from assets, and interest paid on liabilities obtained to fund those assets. Our net interest income is affected by changes in the level and mix of interest-earning assets and interest-bearing liabilities, referred to as volume changes. Net interest income is also affected by changes in the yields earned on assets and rates paid on liabilities, referred to as rate changes. Interest rates charged on loans are affected principally by changes to market interest rates, the demand for loans, the supply of money available for lending purposes, and other competitive factors. Those factors are, in turn, affected by general economic conditions and other factors beyond our control, such as federal economic policies, the general supply of money in the economy, legislative tax policies, governmental budgetary matters, and the actions of the Federal Reserve.

The following table shows the average balance of assets, liabilities and stockholders’ equity; the amount of interest income, and interest expense; the average yield or rate for each category of interest-earning assets and interest-bearing liabilities; and the net interest spread and the net interest margin on a taxable-equivalent basis for the periods indicated. All average balances are daily average balances.

Three Months Ended
March 31, 2026 March 31, 2025
Interest Average Interest Average
Average Income / Yield / Average Income / Yield /
Balance Expense Rate Balance Expense Rate
Assets (dollars in thousands)
Interest-earning assets:
Loans:
Commercial real estate (1) $ 3,964,174 $ 55,836 5.71 % $ 3,938,099 $ 54,861 5.65 %
Residential mortgage 1,035,929 14,035 5.42 % 960,862 12,750 5.38 %
Commercial and industrial (1) 1,024,117 16,970 6.72 % 797,524 15,252 7.76 %
Consumer 5,295 84 6.40 % 6,893 119 7.01 %
Equipment finance 404,801 6,941 6.86 % 486,153 7,905 6.50 %
Loans (1) 6,434,316 93,866 5.90 % 6,189,531 90,887 5.95 %
Securities (2) 921,065 5,959 2.62 % 1,001,499 6,169 2.49 %
FHLB stock 16,385 831 20.56 % 16,385 360 8.92 %
Interest-bearing deposits in other banks 171,953 1,496 3.53 % 176,028 1,841 4.24 %
Total interest-earning assets 7,543,719 102,152 5.48 % 7,383,443 99,257 5.45 %
Noninterest-earning assets:
Cash and due from banks 52,668 53,670
Allowance for credit losses (69,284 ) (69,648 )
Other assets 247,771 249,148
Total assets $ 7,774,874 $ 7,616,613
Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Deposits:
Demand: interest-bearing $ 74,963 $ 27 0.15 % $ 79,369 $ 27 0.14 %
Money market and savings 2,063,186 13,082 2.57 % 2,037,224 16,437 3.27 %
Time deposits 2,522,505 23,629 3.80 % 2,345,346 24,095 4.17 %
Total interest-bearing deposits 4,660,654 36,738 3.20 % 4,461,939 40,559 3.69 %
Borrowings 69,388 675 3.94 % 179,444 2,024 4.57 %
Subordinated debentures 130,541 1,536 4.70 % 130,718 1,582 4.84 %
Total interest-bearing liabilities 4,860,583 38,949 3.25 % 4,772,101 44,165 3.75 %
Noninterest-bearing liabilities and equity:
Demand deposits: noninterest-bearing 1,937,628 1,895,953
Other liabilities 134,153 144,654
Stockholders’ equity 842,510 803,905
Total liabilities and stockholders’ equity $ 7,774,874 $ 7,616,613
Net interest income $ 63,203 $ 55,092
Cost of deposits (3) 2.26 % 2.59 %
Net interest spread (taxable equivalent basis) (4) 2.23 % 1.70 %
Net interest margin (taxable equivalent basis) (5) 3.38 % 3.02 %

  • (1)

  • (2)

  • (3)

  • (4)

  • (5)

The table below shows changes in interest income and interest expense and the amounts attributable to variations in interest rates and volumes for the periods indicated. The variances attributable to simultaneous volume and rate changes have been allocated to the change due to volume and the change due to rate categories in proportion to the relationship of the absolute dollar amount attributable solely to the change in volume and to the change in rate.

Three Months Ended
March 31, 2026 vs March 31, 2025
Increases (Decreases) Due to Change In
Volume Rate Total
(in thousands)
Interest and dividend income:
Loans (1) $ 3,457 $ (478 ) $ 2,979
Securities (2) (501 ) 291 (210 )
FHLB stock — 471 471
Interest-bearing deposits in other banks (43 ) (302 ) (345 )
Total interest and dividend income 2,913 (18 ) 2,895
Interest expense:
Demand: interest-bearing $ (1 ) $ 1 $ —
Money market and savings 209 (3,564 ) (3,355 )
Time deposits 1,820 (2,286 ) (466 )
Borrowings (1,246 ) (103 ) (1,349 )
Subordinated debentures (2 ) (44 ) (46 )
Total interest expense 780 (5,996 ) (5,216 )
Change in net interest income $ 2,133 $ 5,978 $ 8,111
  • (1)
  • (2)

For the three months ended March 31, 2026 and 2025, net interest income was $63.2 million and $55.1 million, respectively, reflecting an increase of $8.1 million, or 14.7%. This increase was primarily due to a $6.0 million effect from a decrease in interest rates and a $2.1 million effect from an increase in the average balance of interest-earning assets, net of the effect of an increase in the average balance of interest-bearing liabilities.

Interest expense decreased $5.2 million, or 11.8%, to $38.9 million for the three months ended March 31, 2026, from $44.2 million for the three months ended March 31, 2025. This decrease primarily resulted from $3.4 million of lower interest expense on money market and savings accounts and $1.3 million of lower interest expense on borrowings. Interest and dividend income increased $2.9 million, or 2.9%, to $102.2 million for the three months ended March 31, 2026 from $99.3 million for the same period in 2025. This increase was primarily due to $1.7 million and $1.3 million of higher interest income on commercial and industrial loans and residential loans, respectively, due to higher average loan balances, as well as a special dividend received on FHLB stock of $0.5 million during the three months ended March 31, 2026. On a taxable equivalent basis, net interest spread and net interest margin for the quarter ended March 31, 2026, were 2.23% and 3.38%, respectively, compared to 1.70% and 3.02%, respectively, for the same period in 2025.

The average balance of interest-earning assets increased $160.3 million, or 2.2%, to $7.54 billion for the three months ended March 31, 2026, from $7.38 billion for the three months ended March 31, 2025. This increase was primarily driven by growth in average loans, which increased $244.8 million, or 4.0%, partially offset by a decrease of $80.4 million, or 8.0%, in the average balance of securities. The decline in the average balance of securities was due to maturities exceeding purchases between the first quarter of 2025 and the first quarter of 2026, which aided the growth in loans and the decline in borrowings.

The average yield on interest-earning assets, on a taxable equivalent basis, increased three basis points to 5.48% for the three months ended March 31, 2026, from 5.45% for the three months ended March 31, 2025. The average yield on FHLB stock increased by 11.64% to 20.56% for the three months ended March 31, 2026, from 8.92% for the three months ended March 31, 2025, primarily

due to a $0.5 million special dividend received on FHLB stock. The average yield on securities, on a taxable equivalent basis, increased to 2.62% for the three months ended March 31, 2026, from 2.49% for the three months ended March 31, 2025. The average yield on loans decreased to 5.90% for the three months ended March 31, 2026, from 5.95% for the three months ended March 31, 2025.

The average balance of interest-bearing liabilities increased $88.5 million, or 1.9%, to $4.86 billion for the three months ended March 31, 2026 compared with $4.77 billion for the three months ended March 31, 2025. The average balances of time deposits and money market and savings accounts increased by $177.2 million and $26.0 million, respectively, offset partially by a decrease in the average balance of borrowings of $110.1 million and a decrease in the average balance of interest-bearing demand deposit accounts of $4.4 million.

The average cost of interest-bearing liabilities declined by 50 basis points to 3.25% for the three months ended March 31, 2026, from 3.75% for the three months ended March 31, 2025, primarily due to a decline of 49 basis points in the average cost of interest-bearing deposits, which was 3.20% for the three months ended March 31, 2026 and 3.69% for the three months ended March 31, 2025. Within interest-bearing deposits, the average cost of money market and savings accounts and time deposits decreased by 70 basis points and 37 basis points, respectively, due to a decline in market rates. The average cost of borrowings decreased by 63 basis points to 3.94% for the three months ended March 31, 2026 compared with 4.57% for the three months ended March 31, 2025.

Credit Loss Expense

For the first quarter of 2026, the Company recorded $2.9 million of credit loss expense, comprising a $3.2 million provision for loan losses and a $0.3 million recovery for off-balance sheet items. For the same period in 2025, the Company recorded $2.7 million of credit loss expense, comprising a $2.4 million provision for loan losses and a $0.3 million provision for off-balance sheet items. The $0.8 million increase in the provision for loan losses was primarily due to higher net charge-offs, which were $0.7 million higher in the three months ended March 31, 2026 than in the three months ended March 31, 2025.

See also “Allowance for Credit Losses and Allowance for Credit Losses Related to Off-Balance Sheet Items” for further details.

Noninterest Income

The following table sets forth the various components of noninterest income for the periods indicated:

Three Months Ended March 31, Increase<br>(Decrease) Increase<br>(Decrease)
2026 2025 Amount Percent
(in thousands)
Service charges on deposit accounts $ 2,127 $ 2,217 $ (90 ) (4.06 )%
Trade finance and other service charges and fees 1,501 1,396 105 7.52
Servicing income 870 732 138 18.85
Bank-owned life insurance income 610 309 301 97.41
All other operating income 844 897 (53 ) (5.91 )
Service charges, fees & other 5,952 5,551 401 7.22
Gain on sale of SBA loans 2,102 2,000 102 5.10
Gain on sale of residential mortgage loans 485 175 310 177.14
Total noninterest income $ 8,539 $ 7,726 $ 813 10.52 %

For the three months ended March 31, 2026, noninterest income was $8.5 million, an increase of $0.8 million compared with noninterest income of $7.7 million for the three months ended March 31, 2025. The increase was due primarily to higher gain on the sale of residential mortgage loans, which increased by $0.3 million due to a higher volume of loans sold, and higher bank-owned life insurance income, which increased $0.3 million due to death benefit claims.

During the first quarter of 2026, the Company sold $31.7 million of residential loans, recognizing a net gain of $0.5 million, and sold $32.5 million of SBA loans, recognizing a net gain of $2.1 million. During the first quarter of 2025, the Company sold $10.0 million of residential loans, recognizing a net gain of $0.2 million, and sold $32.2 million of SBA loans, recognizing a net gain of $2.0 million. Trade premiums on SBA loan sales were 7.88% and 7.82% for the three months ended March 31, 2026 and 2025, respectively. Trade premiums on residential mortgage loan sales remained consistent at 2.50% for the first three months of both 2026 and 2025.

Noninterest Expense

The following table sets forth the components of noninterest expense for the periods indicated:

Three Months Ended March 31, Increase<br>(Decrease) Increase<br>(Decrease)
2026 2025 Amount Percent
(in thousands)
Salaries and employee benefits $ 21,956 $ 20,972 $ 984 4.69 %
Occupancy and equipment 4,414 4,450 (36 ) (0.81 )
Data processing 4,386 3,787 599 15.82
Professional fees 2,780 1,468 1,312 89.37
Supplies and communications 556 517 39 7.54
Advertising and promotion 688 585 103 17.61
All other operating expenses 3,849 3,175 674 21.23
Subtotal 38,629 34,954 3,675 10.51
Other real estate owned expense (income) (345 ) 41 (386 ) (941.46 )
Repossessed personal property expense (income) 84 (11 ) 95 (863.64 )
Total noninterest expense $ 38,368 $ 34,984 $ 3,384 9.67 %

For the three months ended March 31, 2026, noninterest expense was $38.4 million, an increase of $3.4 million, or 9.7%, compared with $35.0 million for the same period in 2025. The increase was mainly attributed to a $1.3 million increase in professional fees, a $1.0 million increase in salaries and employee benefits, a $0.7 million increase in all other operating expenses, and a $0.6 million increase in data processing, partially offset by a $0.4 million reduction in other-real-estate-owned expense (income).

The $1.3 million increase in professional fees was due primarily to a $0.8 million increase in legal fees related to business activities and a $0.5 million increase in consulting and advisory fees for various corporate initiatives. The $1.0 million increase in salaries and employee benefits was due to merit increases and higher headcount. The $0.7 million increase in all other operating expenses was related to several administrative matters. The $0.6 million increase in data processing was due to higher software license and maintenance expenses and higher transaction processing fees. The $0.4 million decrease in other-real-estate-owned expense (income) was due primarily to a $0.9 million gain on the sales of two properties, partially offset by $0.3 million in property taxes paid for one of those properties at the time of sale during the first quarter of 2026.

Income Tax Expense

Income tax expense was $7.9 million and $7.4 million, representing an effective income tax rate of 26.0% and 29.6% for the three months ended March 31, 2026 and 2025, respectively. The lower effective tax rate for the three months ended March 31, 2026 reflects the tax benefit arising from the first-quarter vesting of performance stock units, as well as a favorable change in the State of California's apportionment calculation.

Financial Condition

Securities

As of March 31, 2026, our securities portfolio consisted of U.S. government agency and sponsored agency mortgage-backed securities, collateralized mortgage obligations and debt securities, tax-exempt municipal bonds and U.S. Treasury securities. Most of these securities carry fixed interest rates. Other than holdings of U.S. government agency and sponsored agency obligations, there were no securities of any one issuer exceeding 10% of stockholders’ equity as of March 31, 2026 or December 31, 2025.

Securities decreased $44.9 million to $835.7 million at March 31, 2026 from $880.6 million at December 31, 2025, mainly attributed to $76.8 million in payments and maturities as well as a $3.2 million decline in market value , partially offset by $35.7 million in purchases.

The following table summarizes the contractual or expected maturity schedule for securities, at amortized cost, and their cost-weighted average yield, as of March 31, 2026:

After One<br>Year But After Five<br>Years But
Within One<br>Year Within Five<br>Years Within Ten<br>Years After Ten<br>Years Total
Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield
(dollars in thousands)
Securities available for sale:
U.S. Treasury securities $ 107,119 3.79 % $ 21,589 3.58 % $ — 0.00 % $ — 0.00 % $ 128,708 3.76 %
U.S. government agency and sponsored agency obligations:
Mortgage-backed securities - residential — — 1,861 3.29 190,111 1.40 207,945 2.54 399,917 2.00
Mortgage-backed securities - commercial 24 0.88 2,977 3.39 3,335 4.23 67,953 2.53 74,289 2.64
Collateralized mortgage obligations 459 5.07 21,299 2.98 3,723 1.75 143,787 4.43 169,268 4.19
Debt securities 48,070 1.25 4,992 1.00 — — — — 53,062 1.23
Total U.S. government agency and sponsored agency obligations 48,553 1.29 31,129 2.72 197,169 1.46 419,685 3.18 696,536 2.54
Municipal bonds-tax exempt — — — — 72,637 1.33 2,137 1.70 74,774 1.34
Total securities available for sale $ 155,672 3.01 % $ 52,718 3.07 % $ 269,806 1.42 % $ 421,822 3.18 % $ 900,018 2.62 %

Loans

As of March 31, 2026 and December 31, 2025, loans (excluding loans held for sale), net of deferred loan fees and costs, discounts and the allowance for credit losses, were $6.47 billion and $6.49 billion, respectively. For the three months ended March 31, 2026, there was $377.9 million in new loan production, offset by $263.6 million in loan sales and payoffs, and amortization and other reductions of $132.2 million. Loan production consisted of commercial real estate loans of $131.4 million, residential mortgage loans of $29.1 million, commercial and industrial loans of $134.7 million, equipment financing agreements of $40.7 million and SBA loans of $42.1 million.

The table below shows the maturity distribution of outstanding loans, before the allowance for credit losses as of March 31, 2026. In addition, the table shows the distribution of such loans between those with floating or variable interest rates and those with fixed or predetermined interest rates.

Within One<br>Year After One<br>Year but<br>Within<br>Three<br>Years After Three<br>Years but<br>Within<br>Five<br>Years After Five<br>Years but<br>Within<br>Fifteen<br>Years After<br>Fifteen<br>Years Total
(in thousands)
Real estate loans:
Commercial property
Retail $ 225,149 $ 381,777 $ 351,904 $ 127,703 $ 81,206 $ 1,167,739
Hospitality 250,874 281,427 297,088 16,731 19,082 865,202
Office 223,188 203,421 37,104 12,837 9,987 486,537
Other 329,234 488,699 521,995 85,745 39,242 1,464,915
Total commercial property loans 1,028,445 1,355,324 1,208,091 243,016 149,517 3,984,393
Construction 13,751 — — — — 13,751
Residential 5,594 77 208 9,084 987,260 1,002,223
Total real estate loans 1,047,790 1,355,401 1,208,299 252,100 1,136,777 5,000,367
Commercial and industrial loans 443,885 204,361 266,198 238,100 — 1,152,544
Equipment financing agreements 37,764 187,119 151,943 15,729 — 392,555
Total loans $ 1,529,439 $ 1,746,881 $ 1,626,440 $ 505,929 $ 1,136,777 $ 6,545,466
Loans with predetermined interest rates 993,046 876,834 654,630 26,785 252,137 2,803,432
Loans with variable interest rates 536,393 870,047 971,810 479,144 884,640 3,742,034

The table below shows the maturity distribution of outstanding loans, before the allowance for credit losses, with fixed or predetermined interest rates, as of March 31, 2026.

Within One<br>Year After One<br>Year but<br>Within Three<br>Years After Three<br>Years but<br>Within Five<br>Years After Five<br>Years but<br>Within<br>Fifteen<br>Years After<br>Fifteen<br>Years Total
(in thousands)
Real estate loans:
Commercial property
Retail $ 178,875 $ 199,365 $ 197,587 $ 13 $ 435 $ 576,275
Hospitality 202,429 99,512 37,601 — — 339,542
Office 164,294 156,249 28,166 — — 348,709
Other 242,556 213,885 230,096 4,371 3,702 694,610
Total commercial property loans 788,154 669,011 493,450 4,384 4,137 1,959,136
Construction — — — — — —
Residential 2,400 — 56 5,402 248,000 255,858
Total real estate loans 790,554 669,011 493,506 9,786 252,137 2,214,994
Commercial and industrial loans 164,728 20,704 9,181 1,270 — 195,883
Equipment financing agreements 37,764 187,119 151,943 15,729 — 392,555
Total loans $ 993,046 $ 876,834 $ 654,630 $ 26,785 $ 252,137 $ 2,803,432

The table below shows the maturity distribution of outstanding loans, before the allowance for credit losses, with floating or variable interest rates (including floating, adjustable and hybrids), as of March 31, 2026.

Within One<br>Year After One<br>Year but<br>Within Three<br>Years After Three<br>Years but<br>Within Five<br>Years After Five<br>Years but<br>Within<br>Fifteen<br>Years After<br>Fifteen<br>Years Total
(in thousands)
Real estate loans:
Commercial property
Retail $ 46,274 $ 182,412 $ 154,317 $ 127,690 $ 80,771 $ 591,464
Hospitality 48,445 181,915 259,487 16,731 19,082 525,660
Office 58,894 47,172 8,938 12,837 9,987 137,828
Other 86,678 274,814 291,899 81,374 35,540 770,305
Total commercial property loans 240,291 686,313 714,641 238,632 145,380 2,025,257
Construction 13,751 — — — — 13,751
Residential 3,194 77 152 3,682 739,260 746,365
Total real estate loans 257,236 686,390 714,793 242,314 884,640 2,785,373
Commercial and industrial loans 279,157 183,657 257,017 236,830 — 956,661
Total loans $ 536,393 $ 870,047 $ 971,810 $ 479,144 $ 884,640 $ 3,742,034

Industry

As of March 31, 2026, the loan portfolio included the following concentrations of loan types to borrowers in industries that represented greater than 10.0% of loans outstanding:

Percentage of
Balance as of Loans Receivable
March 31, 2026 Outstanding
(in millions)
Lessor of nonresidential buildings $ 1,566,403 23.9 %
Hospitality 864,652 13.2 %

Loan Quality Indicators

Criticized Loans

Activity in criticized loans was as follows for the three months ended March 31:

2026 2025
(in thousands)
Special Mention
Downgrades from pass loans $ 23,206 $ 148
Reductions:
Upgrades to pass loans — (20,502 )
Downgrades to classified loans (103 ) —
Payoffs and paydowns (493 ) (879 )
Charge-offs (41 ) —
Increase (decrease) 22,569 (21,233 )
Balance at beginning of period 71,113 139,613
Balance at end of period $ 93,682 $ 118,380
Classified
Downgrades $ 9,616 $ 26,169
Reductions:
Upgrades — (188 )
Payoffs and paydowns (10,891 ) (2,106 )
Charge-offs (1,880 ) (3,039 )
Increase (decrease) (3,155 ) 20,836
Balance at beginning of period 25,891 25,683
Balance at end of period $ 22,736 $ 46,519

Special mention loans were $93.7 million and $71.1 million at March 31, 2026 and December 31, 2025, respectively. The $22.6 million increase in the first quarter of 2026 was primarily due to the downgrade of a $21.2 million commercial real estate loan in the retail industry.

Classified loans were $22.7 million and $25.9 million at March 31, 2026 and December 31, 2025, respectively. The $3.2 million decrease in classified loans for the three months ended March 31, 2026 resulted from $12.8 million of reductions and $9.6 million of additions. Included in reductions is a $9.7 million payment on a commercial real estate office loan that had a balance of $10.2 million at December 31, 2025. Included in additions is a $5.0 million commercial and industrial loan in the hospitality industry, which was modified during the first quarter of 2026 to allow for temporary interest-only payments.

Nonperforming Assets

Loans 30 to 89 days past due and still accruing were $13.3 million at March 31, 2026, compared with $19.9 million at December 31, 2025. There were no loans 90 or more days past due and still accruing at March 31, 2026 or December 31, 2025.

Nonperforming loans consist of nonaccrual loans and loans 90 days or more past due and still accruing interest. Nonperforming assets consist of nonperforming loans and OREO. Loans are placed on nonaccrual status when, in the opinion of management, the full timely collection of principal or interest is in doubt. Generally, the accrual of interest is discontinued when principal or interest payments become more than 90 days past due, unless we believe the loan is adequately collateralized and in the process of collection. However, in certain instances, we may place a particular loan on nonaccrual status earlier, depending upon the individual circumstances surrounding the loan’s delinquency. When a loan is placed on nonaccrual status, previously accrued but unpaid interest is reversed against current income. Subsequent collections of cash are applied as principal reductions when received, except when the ultimate collectability of principal is probable, in which case interest payments are credited to income. Nonaccrual loans may be restored to accrual status when principal and interest become current and full repayment is expected, which generally occurs after sustained payment of six months. Interest income is recognized on the accrual basis for loans not meeting the criteria for nonaccrual. OREO consists of properties acquired by foreclosure or similar means.

Except for nonaccrual loans, management is not aware of any other loans as of March 31, 2026 for which known credit problems of the borrower would cause serious doubts as to the ability of such borrowers to comply with their present loan repayment terms, or any known events that would result in a loan being designated as nonperforming at some future date.

Activity in nonperforming loans was as follows for the three months ended March 31:

2026 2025
(in thousands)
Nonperforming Loans
Additions:
Downgrades $ 7,006 $ 26,195
Reductions:
Upgrades — (169 )
Charge-offs (1,880 ) (2,961 )
Payoffs and paydowns (10,818 ) (1,766 )
Increase (decrease) (5,692 ) 21,299
Balance at beginning of period 18,112 14,272
Balance at end of period $ 12,420 $ 35,571

Nonperforming loans were $12.4 million and $18.1 million as of March 31, 2026 and December 31, 2025, respectively, representing a decrease of $5.7 million, or 31.5%. The decrease was primarily due to the previously mentioned $9.7 million payment received on a commercial real estate office loan, originally designated as nonaccrual during the first quarter of 2025. This was partially offset by the downgrades of several smaller loans during the first quarter of 2026. As of March 31, 2026 and December 31, 2025, 1.2% and 1.3% of equipment financing agreements were on nonaccrual status, respectively. At March 31, 2026 and December 31, 2025, there were no loans 90 days or more past due and still accruing interest.

The $12.4 million of nonperforming loans as of March 31, 2026 had specific allowances of $3.2 million, compared to $18.1 million of nonperforming loans with specific allowances of $3.4 million as of December 31, 2025.

Nonperforming assets were $12.4 million at March 31, 2026, or 0.16% of total assets, compared to $20.1 million, or 0.26%, at December 31, 2025. Additionally, not included in nonperforming assets was repossessed personal property associated with equipment finance agreements of $0.3 million and $0.6 million at March 31, 2026 and December 31, 2025, respectively.

Individually Evaluated Loans

The Company reviews loans on an individual basis when the loan does not share similar risk characteristics with loan pools. Individually evaluated loans are measured for expected credit losses based on the present value of expected cash flows discounted at the effective interest rate, the observable market price, or the fair value of collateral.

Individually evaluated loans were $12.4 million and $18.1 million as of March 31, 2026 and December 31, 2025, respectively, representing a decrease of $5.7 million, or 31.5%. Specific allowances associated with individually evaluated loans decreased $0.2 million to $3.2 million as of March 31, 2026, compared with $3.4 million as of December 31, 2025.

Loan Modifications to Borrowers Experiencing Financial Difficulty

A borrower is experiencing financial difficulties when there is a probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. The Company may modify loans to borrowers experiencing financial difficulties by providing principal forgiveness, a term extension, an other-than-insignificant payment delay, or an interest rate reduction.

The following table presents loan modifications made to borrowers experiencing financial difficulty by type of modification, with related amortized cost balances, respective percentage shares of the total class of loans, and the related financial effect, as of the period indicated:

Interest Only/Principal Deferment
Amortized Cost Basis % of Total Class of Loans Financial Effect
(in thousands)
March 31, 2026
Commercial and industrial loans $ 4,998 0.4 % One loan with 12-month interest-only modification

No loans were modified to borrowers experiencing financial difficulty during the three months ended March 31, 2025.

The modified loan above was current at March 31, 2026. The Company has not committed to lend any additional amounts to the borrower included in the table above as of March 31, 2026. During the three months ended March 31, 2026 and 2025, there were no payment defaults on loans modified within the preceding 12 months.

Allowance for Credit Losses and Allowance for Credit Losses Related to Off-Balance Sheet Items

The Company’s estimate of the allowance for credit losses at March 31, 2026 and December 31, 2025 reflected losses expected over the remaining contractual life of assets based on historical, current, and forward-looking information. The contractual term does not consider extensions, renewals or modifications.

Our allowance for credit losses incorporate a variety of risk considerations, both quantitative and qualitative, that management believes is appropriate to absorb lifetime credit losses at each reporting date. Quantitative factors include the general economic forecast in our markets, risk ratings, delinquency trends, collateral values, changes in nonperforming, criticized and classified loans, and other factors.

We use qualitative factors to adjust the allowance calculation for risks not considered by the quantitative calculations. Qualitative factors considered in our methodologies include concentrations of credit, changes in lending management and staff, and quality of the loan review system.

The Company reviews baseline and alternative economic scenarios from Moody’s (previously known as Moody’s Analytics, a subsidiary of Moody’s Corporation) for consideration in the quantitative portion of our analysis of the allowance for credit losses. Moody’s publishes a baseline forecast that represents the estimate of the most likely path for the United States economy through the current business cycle (50% probability that economic conditions will be worse and 50% probability that economic conditions will be better) as well as alternative scenarios to examine how different types of shocks will affect the future performance of the United States economy.

The Company utilizes a midpoint approach of multiple forward-looking scenarios to incorporate losses from a baseline, upside (stronger near-term growth) and downside (slower near-term growth) economy. As a result, the upside and downside scenarios each receive a weight of 30%, and the baseline receives a weight of 40%.

Certain quantitative and qualitative factors used to estimate credit losses and establish an allowance for credit losses are subject to uncertainty. The adequacy of our allowance for credit losses is sensitive to changes in current and forecasted economic conditions that may affect the ability of borrowers to make contractual payments as well as the value of the collateral securing such payments.

Although management believes it uses the best information available to establish the allowance for credit losses, future adjustments to the allowance for credit losses may be necessary and the Company’s results of operations could be adversely affected if circumstances differ substantially from the assumptions used in making the determinations.

In addition, because future events affecting borrowers and collateral cannot be predicted without uncertainty, the existing allowance for credit losses may not be adequate or increases may be necessary should the quality of any loans deteriorate as a result of the factors discussed. Any material increase in the allowance for credit losses would adversely impact the Company’s financial condition and results of operations.

The following table reflects our allocation of the allowance for credit losses by loan category as well as the amount of loans in each loan category, including related percentages, as of the periods indicated:

March 31, 2026 December 31, 2025
Allowance Loans Allowance Loans
Amount % Amount % Amount % Amount %
(dollars in thousands)
Real estate loans:
Commercial property
Retail $ 9,623 13.7 % $ 1,167,739 17.8 % $ 9,999 14.3 % $ 1,132,439 17.3 %
Hospitality 8,098 11.5 865,202 13.2 8,737 12.5 847,989 12.9
Office 5,253 7.5 486,537 7.4 5,700 8.2 503,268 7.7
Other 13,629 19.4 1,464,915 22.4 14,078 20.1 1,532,667 23.4
Total commercial property loans 36,603 51.9 3,984,393 60.9 38,514 55.1 4,016,363 61.3
Construction 201 0.3 13,751 0.2 208 0.3 13,742 0.2
Residential 13,304 18.9 1,002,223 15.3 12,948 18.5 1,049,872 16.0
Total real estate loans 50,108 71.2 5,000,367 76.5 51,670 73.9 5,079,977 77.5
Commercial and industrial loans 8,811 12.4 1,152,544 17.6 7,792 11.1 1,074,908 16.4
Equipment financing agreements 11,549 16.4 392,555 6.0 10,441 15.0 408,483 6.1
Total $ 70,468 100.0 % $ 6,545,466 100.0 % $ 69,903 100.0 % $ 6,563,368 100.0 %

The following table sets forth certain ratios related to our allowance for credit losses at the dates presented:

As of
March 31, 2026 December 31, 2025
(dollars in thousands)
Ratios:
Allowance for credit losses to loans 1.08 % 1.07 %
Nonaccrual loans to loans 0.19 % 0.28 %
Allowance for credit losses to nonaccrual loans 567.38 % 385.95 %
Balance:
Nonaccrual loans at end of period $ 12,420 $ 18,112
Nonperforming loans at end of period $ 12,420 $ 18,112

The allowance for credit losses was $70.5 million and $69.9 million at March 31, 2026 and December 31, 2025, respectively. The allowance attributed to individually evaluated loans was $3.2 million and $3.4 million as of March 31, 2026 and December 31, 2025, respectively. The allowance attributed to collectively evaluated loans was $67.3 million and $66.5 million as of March 31, 2026 and December 31, 2025, respectively.

As of March 31, 2026 and December 31, 2025, the allowance for credit losses related to off-balance sheet items, primarily unfunded loan commitments, was $2.1 million and $2.3 million, respectively. The Bank closely monitors each borrower’s repayment capabilities while funding existing commitments to ensure losses are minimized. Based on management’s evaluation and analysis of portfolio credit quality, prevailing economic conditions and economic forecasts, we believe these allowances were adequate for current expected lifetime losses in the loan portfolio and off-balance sheet exposure as of March 31, 2026.

The following table presents a summary of gross charge-offs and recoveries for the loan portfolio:

Three Months Ended March 31,
2026 2025
(in thousands)
Gross charge-offs $ (3,171 ) $ (3,189 )
Gross recoveries 573 1,243
Net (charge-offs) recoveries $ (2,598 ) $ (1,946 )

For the three months ended March 31, 2026, gross charge-offs were consistent with the same period in 2025 at $3.2 million. Gross recoveries for the three months ended March 31, 2026 decreased $0.7 million from the same period in 2025. Gross charge-offs for the three months ended March 31, 2026 and 2025 primarily consisted of $2.9 million and $2.8 million of equipment financing agreements charge-offs, respectively. Gross recoveries for the three months ended March 31, 2026 and 2025 primarily consisted of $0.5 million and $0.8 million of recoveries on equipment financing agreements, respectively.

The following table presents a summary of net (charge-offs) recoveries for the loan portfolio:

Three Months Ended
Average Loans Net (Charge-Offs) Recoveries Net (Charge-Offs) Recoveries to Average Loans (1)
(dollars in thousands)
March 31, 2026
Commercial real estate loans $ 3,964,174 $ (89 ) (0.01 )%
Residential loans 1,041,224 2 —
Commercial and industrial loans 1,024,117 (88 ) (0.03 )
Equipment financing agreements 404,801 (2,423 ) (2.39 )
Total $ 6,434,316 $ (2,598 ) (0.16 )%
March 31, 2025
Commercial real estate loans $ 3,938,099 $ 254 0.03 %
Residential loans 967,755 1 —
Commercial and industrial loans 797,524 (186 ) (0.09 )
Equipment financing agreements 486,153 (2,015 ) (1.66 )
Total $ 6,189,531 $ (1,946 ) (0.13 )%
  • (1)

Net loan charge-offs were $2.6 million, or 0.16% of average loans, and $1.9 million, or 0.13% of average loans, for the three months ended March 31, 2026 and 2025, respectively.

Deposits

The following table shows the composition of deposits by type as of the dates indicated:

December 31, 2025
Percent Balance Percent
Demand – noninterest-bearing 2,030,743 29.9 % $ 2,015,212 30.2 %
Interest-bearing:
Demand 78,341 1.1 74,799 1.1
Money market and savings 2,116,073 31.1 2,084,218 31.2
Uninsured amount of time deposits more than 250,000:
Three months or less 343,661 5.1 317,086 4.7
Over three months through six months 292,354 4.3 276,791 4.1
Over six months through twelve months 173,038 2.5 156,750 2.3
Over twelve months 159 — 159 —
All other insured time deposits 1,766,253 26.0 1,752,635 26.4
Total deposits 6,800,622 100.0 % $ 6,677,650 100.0 %

All values are in US Dollars.

Total deposits were $6.80 billion and $6.68 billion as of March 31, 2026 and December 31, 2025, respectively, representing an increase of $123.0 million, or 1.8%. While all deposit types increased, deposit growth was primarily driven by a $72.0 million increase in time deposits, a $31.9 million increase in money market and savings deposits, and a $15.5 million increase in noninterest-bearing demand deposits. At March 31, 2026, the loan-to-deposit ratio was 96.2% compared to 98.3% at December 31, 2025.

As of March 31, 2026, the aggregate amount of uninsured deposits (deposits in amounts greater than $250,000, which is the maximum amount for federal deposit insurance) was $3.0 billion. The aggregate amount of uninsured time deposits was $809.2 million. Other uninsured deposits, such as demand and money market and savings deposits were $2.19 billion. At March 31, 2026, $1.44 billion of total uninsured deposits were in accounts with balances of $5.0 million or more. As of December 31, 2025, the aggregate amount of uninsured deposits was $2.92 billion. The aggregate amount of uninsured time deposits was $750.8 million. Other uninsured deposits, such as demand, money market and savings deposits, were $2.17 billion. At December 31, 2025, $1.34 billion of total uninsured deposits were in accounts with balances of $5.0 million or more.

The Bank’s wholesale funds historically consisted of FHLB advances, brokered deposits as well as State of California time deposits. As of March 31, 2026, the Bank had no outstanding FHLB advances. As of December 31, 2025, the Bank had $150.0 million of FHLB advances. The Bank had $88.5 million of brokered deposits at both March 31, 2026 and December 31, 2025. The Bank also had had $150.0 million of State of California time deposits as of both March 31, 2026 and December 31, 2025.

Borrowings and Subordinated Debentures

Borrowings mostly take the form of FHLB advances. At March 31, 2026, there were no outstanding FHLB advances. At December 31, 2025, FHLB advances were $150.0 million, all of which were term advances. Funds from deposit growth not used to fund loan production were used to pay off borrowings. The weighted-average interest rate of all FHLB advances at December 31, 2025 was 4.02%. The FHLB maximum amount outstanding at any month end during each of the year-to-date periods ended March 31, 2026 and December 31, 2025 was $90.0 million and $150.0 million, respectively. There were no contractual maturities of FHLB advances greater than twelve months at December 31, 2025.

Subordinated debentures were $131.4 million and $131.3 million as of March 31, 2026 and December 31, 2025, respectively. Subordinated debentures are comprised of fixed-to-floating subordinated notes of $108.8 million and $108.7 million as of March 31, 2026 and December 31, 2025, respectively, and junior subordinated deferrable interest debentures of $22.6 million and $22.5 million as of March 31, 2026 and December 31, 2025, respectively. See “Note 8 – Borrowings and Subordinated Debentures” to the consolidated financial statements for more details.

Stockholders' Equity

Stockholders’ equity was $802.8 million and $796.4 million as of March 31, 2026 and December 31, 2025, respectively. The $6.4 million increase included net income of $22.6 million and share-based compensation of $0.7 million, partially offset by $8.6 million of dividends paid, $4.8 million in share repurchases, a $2.3 million increase in unrealized after-tax losses on securities available for sale, a $0.1 million decrease in unrealized after-tax gains on cash flow hedges due to changes in interest rates, and $1.1 million of shares that were purchased to satisfy employees' tax liabilities for the vesting of stock compensation. The Company repurchased 185,707 shares of common stock during the period at an average share price of $25.89. At March 31, 2026, 2,151,495 shares remain under the Company’s share repurchase program.

Interest Rate Risk Management

The spread between interest income on interest-earning assets and interest expense on interest-bearing liabilities is the principal component of net interest income, and interest rate changes substantially affect our financial performance. We emphasize capital protection through stable earnings. In order to achieve stable earnings, we prudently manage our assets and liabilities and closely monitor the percentage changes in net interest income and equity value in relation to limits established within our guidelines.

The Company performs simulation modeling to estimate the potential effects of interest rate changes. The following table summarizes one of the stress simulations performed to forecast the impact of changing interest rates on net interest income and the value of interest-earning assets and interest-bearing liabilities reflected on our balance sheet (i.e., an instantaneous parallel shift in the yield curve of the magnitude indicated below) as of March 31, 2026. The Company compares this stress simulation to policy limits, which specify the maximum tolerance level for net interest income exposure over 1- to 12-month and 13- to 24- month horizons, given the basis point adjustment in interest rates reflected below.

Net Interest Income Simulation
1- to 12-Month Horizon 13- to 24-Month Horizon
Change in Interest Dollar Percentage Dollar Percentage
Rates (Basis Points) Change Change Change Change
(dollars in thousands)
300 $ 36,651 12.67 % $ 58,676 18.88 %
200 $ 25,271 8.74 % $ 40,733 13.11 %
100 $ 12,932 4.47 % $ 21,299 6.85 %
(100) $ (13,151 ) (4.55 %) $ (23,914 ) (7.70 %)
(200) $ (23,509 ) (8.13 %) $ (47,268 ) (15.21 %)
(300) $ (30,986 ) (10.71 %) $ (68,897 ) (22.17 %)
Economic Value of Equity (EVE)
--- --- --- --- --- --- ---
Change in Interest Dollar Percentage
Rates (Basis Points) Change Change
(dollars in thousands)
300 $ 100,585 9.90 %
200 $ 83,518 8.22 %
100 $ 51,361 5.06 %
(100) $ (70,026 ) (6.89 %)
(200) $ (152,943 ) (15.05 %)
(300) $ (245,658 ) (24.18 %)

The estimated sensitivity does not necessarily represent our forecast, and the results may not be indicative of actual changes to our net interest income. These estimates are based upon a number of assumptions, including the timing and magnitude of interest rate changes, prepayments on loans and securities, pricing strategies on loans and deposits, and replacement of asset and liability cash flows.

The key assumptions, based upon loans, securities and deposits, are as follows:

Conditional prepayment rates*:
Loans receivable 18 %
Securities 6 %
Deposit rate betas*:
NOW, savings, money market demand 49 %
Time deposits, retail and wholesale 76 %
* Balance-weighted average

While the assumptions used are based on current economic and local market conditions, there is no assurance as to the predictive nature of these conditions, including how customer preferences or competitor influences might change.

Capital Resources and Liquidity

Capital Resources

Historically, our primary source of capital has been the retention of operating earnings. In order to ensure adequate capital levels, the Board regularly assesses projected sources and uses of capital, expected loan growth, anticipated strategic actions (such as stock repurchases and dividends), and projected capital thresholds under adverse and severely adverse economic conditions. In addition, the Board considers the Company’s access to capital from financial markets through the issuance of additional debt and securities, including common stock or notes, to meet its capital needs.

The Company’s ability to pay dividends to stockholders depends in part upon dividends it receives from the Bank. California law restricts the amount available for cash dividends to the lesser of a bank’s retained earnings or net income for its last three fiscal years (less any distributions to stockholders made during such period). Where the above test is not met, cash dividends may still be paid, with the prior approval of the Department of Financial Protection and Innovation (“DFPI”), in an amount not exceeding the greater of: (1) retained earnings of the Bank; (2) net income of the Bank for its last fiscal year; or (3) the net income of the Bank for its current fiscal year. The Company paid dividends of $8.4 million ($0.28 per share) for the three months ended March 31, 2026 and $32.6 million ($1.08 per share) for the year 2025. As of April 1, 2026, the Bank had the ability to pay dividends of approximately $68.4 million, after giving effect to the $0.28 dividend declared on April 23, 2026, for the second quarter of 2026, without the prior approval of the Commissioner of the DFPI.

At March 31, 2026, the Bank’s total risk-based capital ratio of 14.45%, Tier 1 risk-based capital ratio of 13.37%, common equity Tier 1 capital ratio of 13.37% and Tier 1 leverage capital ratio of 11.74% placed the Bank in the “well capitalized” category pursuant to capital rules, which is defined as institutions with a total risk-based capital ratio equal to or greater than 10.00%, Tier 1 risk-based capital ratio equal to or greater than 8.00%, common equity Tier 1 capital ratios equal to or greater than 6.50%, and Tier 1 leverage capital ratio equal to or greater than 5.00%.

At March 31, 2026, the Company’s total risk-based capital ratio was 15.22%, Tier 1 risk-based capital ratio was 12.52%, common equity Tier 1 capital ratio was 12.20% and Tier 1 leverage capital ratio was 10.93%.

For a discussion of the applicable capital adequacy framework, see "Regulation and Supervision - Capital Adequacy Requirements" in our 2025 Annual Report on Form 10-K.

Liquidity

For a discussion of liquidity for the Company, see Note 14 - Liquidity, included in the notes to unaudited consolidated financial statements in this Report, and Note 22 – Liquidity in our 2025 Annual Report on Form 10-K.

Off-Balance Sheet Arrangements

For a discussion of off-balance sheet arrangements, see Note 12 - Off-Balance Sheet Commitments included in the notes to unaudited consolidated financial statements in this Report and “Item 1. Business - Off-Balance Sheet Commitments” in our 2025 Annual Report on Form 10-K.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

For quantitative and qualitative disclosures regarding market risks, see “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Interest Rate Risk Management” in this Report.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Management is responsible for the disclosure controls and procedures of the Corporation. Disclosure controls and procedures are controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods required by the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of the Corporation’s management, including the Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), of the effectiveness of the design and operation of the Corporation’s disclosure controls and procedures. Based on that evaluation, the Corporation’s Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of March 31, 2026.

Changes in Internal Control over Financial Reporting

There were no changes in the Corporation's internal control over financial reporting (as defined in Rule 13a-15(f)) during the quarter ended March 31, 2026 that materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

Item 6. Exhibits

Exhibit<br><br>Number Document
31.1 Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS Inline XBRL Instance Document *
101.SCH Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents *
104 The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2026, formatted in Inline XBRL

* Attached as Exhibit 101 to this report are documents formatted in Inline XBRL (Extensible Business Reporting Language).

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

Hanmi Financial Corporation
Date: May 8, 2026 By: /s/ Bonita I. Lee
Bonita I. Lee
President and Chief Executive Officer (Principal Executive Officer)
Date: May 8, 2026 By: /s/ Romolo C. Santarosa
--- --- --- ---
Romolo C. Santarosa
Senior Executive Vice President and Chief Financial Officer (Principal Financial Officer)

EX-31.1

Exhibit 31.1

Certification of Principal Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Bonita I. Lee, President and Chief Executive Officer, certify that:

  • I have reviewed this Quarterly Report on Form 10-Q of Hanmi Financial Corporation;
  • Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;
  • Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this Report;
  • The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
  • designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;
  • designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
  • evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and
  • disclosed in this Report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
  • The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the Audit Committee of the Registrant’s Board of Directors (or persons performing the equivalent functions):
  • all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
  • any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
Date: May 8, 2026 /s/ Bonita I. Lee
Bonita I. Lee
President and Chief Executive Officer<br><br>(Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certification of Principal Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Romolo C. Santarosa, Senior Executive Vice President and Chief Financial Officer, certify that:

  • I have reviewed this Quarterly Report on Form 10-Q of Hanmi Financial Corporation;
  • Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;
  • Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this Report;
  • The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
  • designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;
  • designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
  • evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and
  • disclosed in this Report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
  • The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the Audit Committee of the Registrant’s Board of Directors (or persons performing the equivalent functions):
  • all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
  • any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
Date: May 8, 2026 /s/ Romolo C. Santarosa
Romolo C. Santarosa
Senior Executive Vice President and Chief Financial Officer<br><br>(Principal Financial Officer)

EX-32.1

Exhibit 32.1

Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To

Section 906 of The Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Hanmi Financial Corporation (the “Company”) on Form 10-Q for the period ended March 31, 2026, as filed with the Securities and Exchange Commission (the “SEC”) on the date hereof (the “Report”), I, Bonita I. Lee, President and Chief Executive Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge that:

  • The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and
  • The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of, and for, the period presented.
Date: May 8, 2026 /s/ Bonita I. Lee
Bonita I. Lee
President and Chief Executive Officer

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure statement. A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff upon request.

EX-32.2

Exhibit 32.2

Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To

Section 906 of The Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Hanmi Financial Corporation (the “Company”) on Form 10-Q for the period ended March 31, 2026, as filed with the Securities and Exchange Commission (the “SEC”) on the date hereof (the “Report”), I, Romolo C. Santarosa, Senior Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge that:

  • The Report fully complies with the requirements of Section13(a) or Section 15(d) of the Securities Exchange Act of 1934; and
  • The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of, and for, the periods presented.
Date: May 8, 2026 /s/ Romolo C. Santarosa
Romolo C. Santarosa
Senior Executive Vice President and Chief Financial Officer

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure statement. A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff upon request.

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