Hanmi Financial (HAFC) risk factors, FY2024 10-K

Risks Related to our Lending Activities

1. 01Our concentrations of loans in certain industries could have adverse effects on credit quality
2. 02Our emphasis on commercial lending may expose us to increased lending risks
3. 03The level of the commercial real estate loan portfolio may subject the Bank to additional regulatory scrutiny
4. 04Our focus on lending to small to mid-sized community-based businesses may increase our credit risk
5. 05Our loan portfolio is predominantly secured by real estate and thus we have a higher degree of risk from a downturn in our real estate markets, especially a downturn in the Southern California real estate market
6. 06The performance of our New York multifamily real estate loans could be adversely impacted by regulation
7. 07We are exposed to risk of environmental liabilities with respect to properties to which we take title

Risks Related to Local and International Economic Conditions

1. 08Inflation can have an adverse impact on our business and on our customers
2. 09Deteriorating business and economic conditions can adversely affect our industry and business
3. 10Our Southern California concentration means economic conditions in Southern California could adversely affect our operations
4. 11Changing conditions in South Korea could adversely affect our business
5. 12Interruption of our customers’ supply chains and federal funding could negatively impact their business and operations and impact their ability to repay their loans

Risk Related to Laws and Regulation and Their Enforcement

1. 13Changes in laws and regulations and the associated cost of regulatory compliance may adversely affect our operations and/or increase our costs of operations
2. 14The fiscal and monetary policies and regulations of the federal government and its agencies could adversely affect our business, financial condition, and results of operations
3. 15Additional requirements imposed by Dodd-Frank and other regulations, could adversely affect us
4. 16We face a risk of non-compliance and enforcement action with the Bank Secrecy Act and other anti-money laundering statutes and regulations
5. 17Future changes to the FDIC assessment rate could adversely affect our earnings

Risks Related to Our Operations

1. 18Liquidity risk could impair our ability to fund operations and jeopardize our financial condition
2. 19The soundness of other financial institutions could adversely affect us
3. 20A failure in or breach of our operational or security systems or infrastructure, including as a result of cyber-attacks or data breaches, could disrupt our businesses, result in the disclosure or misuse of confidential or proprietary information, damage our reputation, increase our costs and/or cause losses
4. 21We rely on management and outside consultants in overseeing cybersecurity risk management
5. 22We may not be able to successfully implement future information technology system enhancements, which could adversely affect our business operations and profitability
6. 23We rely on third-party vendors and other service providers, which could expose us to additional risk
7. 24Fraudulent activity could damage our reputation, disrupt our businesses, increase our costs and cause losses
8. 25We are dependent on key personnel and the loss of one or more of those key personnel may materially and adversely affect our prospects
9. 26If we fail to maintain an effective system of internal controls and disclosure controls and procedures, we may not be able to accurately report our financial results or prevent fraud

Risks Related to Accounting Matters

1. 27Our allowance for credit losses may not be adequate to cover actual losses
2. 28Changes in accounting standards may affect how we record and report our financial condition and results of operations

Risks Related to Market Interest Rates

1. 29Our earnings are affected by changing interest rates
2. 30Changes in the estimated fair value of debt securities may reduce stockholders’ equity and net income

Risks Related to Competitive Matters

1. 31Competition may adversely affect our performance

Risks Related to Tax Matters

1. 32If our deferred tax assets are determined not to be recoverable, it would negatively impact our earnings
2. 33Changes to tax regulations could negatively impact our earnings
3. 34We are exposed to the risks of natural disasters and global market disruptions

Risks Relating to Ownership of Our Common Stock

1. 35The Bank could be restricted from paying dividends to us, its sole shareholder, and, thus, we would be restricted from paying dividends to our stockholders in the future
2. 36The price of our common stock may be volatile or may decline
3. 37Your share ownership may be diluted by the issuance of additional shares of our common stock in the future
4. 38Anti-takeover provisions and state and federal law may limit the ability of another party to acquire us, which could cause our stock price to decline