Hanmi Financial Corporation (HAFC): 5 FORCES Analysis [Nov-2025 Updated]

You're digging into a regional bank like Hanmi Financial Corporation (HAFC) right now, trying to see where the real pressure points are in late 2025. Honestly, the landscape is tight: we're seeing supplier power-the cost of interest-bearing deposits-sitting high at 3.56% as of Q3 2025, which directly squeezes that 3.22% Net Interest Margin. So, while HAFC's niche focus on multi-ethnic communities gives them some defense against rivals, the threat of substitutes like FinTechs and private credit funds is definitely real, especially when retail customers can switch deposits easily. This deep dive into Porter's Five Forces breaks down exactly how HAFC is managing this intense rivalry and what the barriers to entry mean for their long-term play; you'll want to see the specifics on their 52.65% efficiency ratio next.

Hanmi Financial Corporation (HAFC) - Porter's Five Forces: Bargaining power of suppliers

When you look at Hanmi Financial Corporation (HAFC), the suppliers aren't widgets or raw materials; they are the providers of capital-primarily depositors and, secondarily, wholesale funding sources like the Federal Home Loan Bank (FHLB). The power these suppliers hold directly impacts HAFC's net interest margin, which is the engine of its profitability. As of the third quarter of 2025, we see a clear dynamic at play.

The cost of interest-bearing deposits is a major lever for suppliers. For Q3 2025, the average rate paid on average interest-bearing deposits settled at 3.56%. While this rate actually declined by eight basis points from the prior quarter, the absolute level still represents a significant cost component that HAFC must manage against its asset yields, which averaged 6.03% for the same period. This cost pressure keeps the bargaining power of the interest-bearing deposit segment relatively high.

However, HAFC benefits significantly from its low-cost funding base. Noninterest-bearing deposits are the gold standard for banks, and for Hanmi Financial Corporation, these deposits were a key low-cost source, making up 30.8% of total deposits at the end of Q3 2025. Total deposits stood at $6.77 billion as of September 30, 2025. The overall cost of deposits for the quarter was 2.51%, down from 2.97% in Q3 2024, showing good management of the overall funding mix.

Here's a quick look at the funding structure as of the end of Q3 2025:

When it comes to wholesale funding markets, like the FHLB, they are definitely available to Hanmi Financial Corporation, but they are inherently price-sensitive. You know how it is; if HAFC needs to tap those markets, the pricing will reflect current market conditions and HAFC's perceived credit risk at that moment. It's a necessary backstop, but not the preferred primary source.

The bargaining power of the retail depositor segment is shaped by switching costs. For basic, un-contracted deposit accounts, switching costs are low. So, if a competitor bank offers even a slightly better rate, those funds can move pretty quickly, especially in a competitive Southern California market where Hanmi Financial Corporation operates. This low switching cost definitely increases rate competition for that segment of the funding base.

• Depositors can move funds easily for basic accounts.
• Wholesale funding is available but is price-sensitive.
• Noninterest-bearing deposits offer the lowest cost leverage.
• The average cost of interest-bearing deposits was 3.56%.

Finance: draft the sensitivity analysis on a 25-basis-point shift in the cost of interest-bearing deposits by Friday.

Hanmi Financial Corporation (HAFC) - Porter's Five Forces: Bargaining power of customers

You're analyzing Hanmi Financial Corporation (HAFC), and when looking at customer power, you see a mixed bag, which is typical for a regional bank focused on commercial lending. The power of your customers-both commercial borrowers and retail depositors-is shaped by the sheer number of alternatives available in the market.

For your commercial clients, the Small and Medium-sized Enterprise (SME) segment, the bargaining power stems from having many options. These customers can look toward national banks, other regional players, and increasingly, non-bank specialty lenders. Still, the relationship banking aspect adds a layer of friction. Commercial borrowers face what we consider moderate switching costs due to the complexity involved in moving established credit facilities and the deep, ongoing relationship management required for commercial and industrial (C&I) or commercial real estate (CRE) loans.

The strong demand for Hanmi Financial Corporation's products is evident in the recent production figures, but this demand exists within a competitive environment. Loan production accelerated to $570.8 million in Q3 2025, which was a significant 73% increase from the prior quarter, showing that Hanmi Financial Corporation is winning business. However, management commentary noted that CRE loan pricing competition was a factor during the quarter, indicating that customers are actively shopping rates and terms. This high production volume, therefore, reflects both strong underlying demand and the need to compete aggressively for that volume.

Here's a quick look at the key metrics that frame this competitive dynamic for commercial and retail segments as of late 2025:

On the retail side, the power dynamic shifts significantly toward the customer, especially concerning deposits. Retail customers, or depositors, can defintely switch easily to competitive deposit offerings. If a competitor offers a better rate on a Certificate of Deposit (CD), moving that money is logistically simple compared to restructuring a commercial loan. The CFO noted that CD competition remains elevated, even with potential Federal Reserve cuts anticipated, which directly pressures Hanmi Financial Corporation's funding costs and highlights the low switching costs for these customers.

The stickiness that Hanmi Financial Corporation does have with its deposit base is concentrated in its non-lending services, which is where relationship banking helps mitigate pure price competition. You can see this in the composition of their funding:

• Noninterest-bearing demand deposits held steady at 30.8% of total deposits.
• Total deposits grew by 0.6% quarter-over-quarter.
• The Net Interest Margin (NIM) expanded by 15 basis points to 3.22%, partly due to lower interest-bearing deposit costs.
• The bank's focus on commercial lending, including C&I, drives relationship depth.

Overall, for Hanmi Financial Corporation, customer power is moderate for commercial borrowers due to relationship complexity, but high for retail depositors due to easy switching options for their funds.

Hanmi Financial Corporation (HAFC) - Porter's Five Forces: Competitive rivalry

You're looking at Hanmi Financial Corporation (HAFC) in a market where scale matters a lot. The competitive rivalry force here is definitely high because HAFC operates right in the thick of it, particularly in California and New York. These aren't small towns; these are massive, highly competitive banking arenas dominated by much larger national and regional players. Still, HAFC carves out its space by not trying to be everything to everyone. That's the key differentiator you need to see.

HAFC competes by leaning hard into its niche. They focus on serving multi-ethnic communities, which requires a relationship-based banking model that big national banks often struggle to replicate effectively. Plus, their expertise in specific lending areas-like commercial and industrial (C&I) loans, SBA lending, and trade finance-gives them an edge with small and middle-market businesses. For instance, Q3 2025 saw loan production hit $570.8 million, with C&I being a major driver, showing where they are putting their competitive muscle.

The pressure from this rivalry shows up clearly in the margins. When you're fighting for every deposit dollar and trying to price loans competitively, your Net Interest Margin (NIM) tells the story. For Q3 2025, HAFC's NIM was 3.22%. Here's the quick math: that margin reflects the spread between their average loan yield, which was 6.03%, and the average cost they paid on interest-bearing deposits, which settled at 3.56%. You can see the competition in those deposit costs; they were actively working to bring that cost down by 8 basis points quarter-over-quarter.

To fight back against margin compression and operational scale, cost control becomes a weapon. Hanmi Financial Corporation's efficiency ratio improved to 52.65% in Q3 2025. That's a tangible result of disciplined expense management, which is crucial when you're competing against giants. A lower efficiency ratio means HAFC is generating more revenue for every dollar it spends on overhead, helping them stay profitable even when loan yields are under pressure. Honestly, this improvement shows management is focused on what they can control.

Here is a snapshot of the key financial metrics reflecting this competitive environment as of Q3 2025:

The competitive strategy hinges on several factors that you should watch closely:

• Maintain strong commercial lending momentum, evidenced by $211 million in C&I production in Q3 2025.
• Leverage the U.S. Korea Corporate (USKC) initiative for relationship growth.
• Keep noninterest-bearing demand deposits high; they were 30.8% of total deposits in Q3 2025.
• Continue to improve asset quality, as seen by NPLs dropping to 0.30% of loans.

The bank's physical presence supports this rivalry, with operations spanning key states. You can find Hanmi Financial Corporation's network across:

• California (Headquarters)
• New York
• Texas
• Colorado
• Georgia
• Illinois
• New Jersey
• Virginia
• Washington

Finance: draft a comparison of HAFC's Q3 2025 NIM against three key regional competitors by next Tuesday.

Hanmi Financial Corporation (HAFC) - Porter's Five Forces: Threat of substitutes

You're looking at how outside options are pressuring Hanmi Financial Corporation (HAFC)'s core business, and honestly, the pressure is coming from several directions at once. The threat of substitutes is quite real, especially when you consider how quickly technology and alternative capital sources are evolving.

Non-bank FinTechs substitute for payment services and small business loans

FinTechs are definitely eating into the traditional bank's share of the small business lending pie. Globally, the fintech lending market hit $590 billion in 2025. To give you a sense of the shift, in developed regions, more than half of SME loans are now sourced through fintech platforms in 2025. For context, traditional community banks historically held 45% of the small business lending market, but now they are competing with fintech lenders who captured 28% of new originations. This speed is a major draw; some fintechs offer funding in as little as 24-48 hours, with same-day funding available from others. Hanmi Financial Corporation, despite its own strong quarter, reported loan production of $570.8 million in the third quarter of 2025, showing they are still active, but the competitive landscape for new originations is clearly fragmented.

Here are some key competitive metrics in small business lending as of 2025:

Private credit funds and direct lending platforms substitute for commercial real estate and C&I loans

When it comes to larger, more complex commercial real estate (CRE) and commercial & industrial (C&I) loans, private credit is stepping in where banks are pulling back. Banks, including Hanmi Financial Corporation, have acknowledged this competition in CRE lending, asking for lower rates. Private credit has seen massive growth, expanding nearly tenfold to reach $1.5 trillion in Assets Under Management (AUM) in 2024, with projections pointing toward $3.5 trillion by 2028. This is partly fueled by banks repositioning exposure; since 2022, managers have acquired over $30 billion in portfolios from banks. Furthermore, the maturity wall for existing loans is a major factor; nearly $3 trillion of mortgage loans are estimated to mature over the next four years, creating a significant need for private debt capital as banks remain cautious. Hanmi Financial Corporation noted strong contribution from commercial loans in its Q3 2025 production, but the persistent availability of private capital for these asset classes remains a substitute threat.

Money market funds and government securities are strong substitutes for large commercial deposits

For Hanmi Financial Corporation's funding side, the threat comes from liquid, safe alternatives to bank deposits. Money market funds and government securities offer attractive, low-risk yields, especially in a higher rate environment. Hanmi Financial Corporation's own data shows the pressure: their average cost of interest-bearing deposits was 3.56% in the third quarter of 2025, while their Net Interest Margin (NIM) stood at 3.22%. This suggests that the cost of attracting and retaining deposits is high relative to the yield they are earning on assets, a classic sign of deposit substitution pressure. The bank is relying heavily on its non-interest-bearing deposits, which were 30.8% of total deposits at September 30, 2025, to keep overall funding costs manageable.

Key funding metrics for Hanmi Financial Corporation as of Q3 2025:

• Net Interest Margin (NIM): 3.22%
• Average Cost of Interest-Bearing Deposits: 3.56% (down 8 basis points from Q2 2025)
• Noninterest-Bearing Demand Deposits as % of Total Deposits: 30.8%
• Total Deposits at September 30, 2025: $6.77 billion

Deposit substitution is high due to the current interest rate environment

The current rate environment definitely makes deposit substitution a high-probability risk for Hanmi Financial Corporation. When you see the average cost of interest-bearing deposits at 3.56% in Q3 2025, customers with large balances are actively comparing that to the yields available in Treasury bills or money market funds, which can often be higher or more flexible. This dynamic forces banks to compete aggressively on deposit rates, which compresses the NIM. Hanmi Financial Corporation's NIM was 3.22% in Q3 2025. Furthermore, the ratio of average loans to average deposits was 94.6% for the third quarter, indicating that the bank is running a relatively tight liquidity position, which can increase sensitivity to deposit outflows if substitutes become significantly more attractive. If depositors move funds out to chase better yields elsewhere, Hanmi Financial Corporation would need to replace that funding at potentially higher market rates, further straining margins.

Hanmi Financial Corporation (HAFC) - Porter's Five Forces: Threat of new entrants

The threat of new entrants for Hanmi Financial Corporation is currently moderated by significant structural barriers, though the digital landscape presents a persistent, evolving challenge that bypasses some of those traditional hurdles.

High regulatory and capital requirements for obtaining a new traditional bank charter.

Starting a traditional, deposit-taking bank remains an endeavor characterized by regulatory intensity. The Interagency Charter and Federal Deposit Insurance Application process requires a business plan that is often hundreds of pages long, demanding extensive documentation on finances, risk management, and senior management teams. Regulators have shown reluctance to grant charters to fintech applicants, contributing to a low rate of new bank formation; for instance, only about 86 new banks have been formed since 2010, with more than half of those coming between 2019 and 2022. Even when a new charter is conditionally approved, as was the case for Erebor Bank in October 2025, the entrant faces strict initial conditions, such as maintaining a minimum 12% Tier 1 leverage ratio for the first three years of operation. This level of scrutiny acts as a substantial financial and administrative moat around established players like Hanmi Financial Corporation.

HAFC's established network of 32 branches and loan offices creates a physical barrier.

Hanmi Financial Corporation owns Hanmi Bank, which maintains a tangible, physical footprint that new entrants must replicate or strategically circumvent. As of the third quarter of 2025, this network consists of:

This physical presence, spread across states like California, Texas, Illinois, and New York, helps Hanmi Financial Corporation build the necessary local relationships and service points that are difficult for a purely remote competitor to match immediately. It represents sunk costs and established market presence.

New FinTech entrants bypass traditional banking, focusing on specific, low-friction services.

The primary competitive pressure comes from the digital sector, which sidesteps the chartering hurdles by operating under different regulatory perimeters, at least initially. The U.S. FinTech market size was estimated at approximately $95.2 billion in 2025, with projections showing a 14.7% CAGR through 2032. This growth is fueled by rapid product launches and consumer demand for speed. Specifically, neobanking, a direct competitor to traditional deposit-taking, is anticipated to grow even faster, with a projected 21.67% CAGR from 2025 to 2030. While Hanmi Financial Corporation's core business is traditional lending and deposits, these digital players target specific, high-volume, low-friction services like payments, which accounted for over 35% of the fintech revenue share in 2025.

• FinTech market size in 2025: ~$95.2 billion.
• Projected market CAGR (2025-2032): 14.7%.
• Neobanking segment CAGR (2025-2030): 21.67%.
• H1 2025 U.S. FinTech investment: ~$20.9 billion.

Building the necessary community trust and specialized lending expertise takes significant time.

For Hanmi Financial Corporation, which specializes in real estate, commercial, SBA, and trade finance lending to small and middle market businesses, trust is a non-negotiable asset. This trust is earned over years of consistent underwriting and community engagement, something a new entrant cannot instantly acquire. While fintechs can deploy capital quickly, they often lack the deep, localized credit underwriting experience that Hanmi Bank has cultivated across its operating regions. For example, Hanmi Bank's loan production for Q3 2025 was $570.8 million, demonstrating active, real-world lending expertise. New entrants, especially those without a physical presence, must overcome a significant trust deficit to convince commercial clients to entrust them with complex financing needs, which is a softer, but equally potent, barrier to entry.

Finance: draft a sensitivity analysis on the impact of a 15% drop in new commercial loan origination volume due to a new digital competitor by next Tuesday.