HANMI FINANCIAL CORP Leases Disclosure

Note 6 — Leases

The Company enters into leases in the normal course of business primarily for financial centers, back-office operations locations, business development offices, information technology data centers and information technology equipment. At December 31, 2025, the Company’s leases have remaining terms ranging from less than one month up to 8.5 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. 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.

In determining whether a contract contained a lease, we determined whether an arrangement was or included a lease at contract inception. Operating lease right-of-use asset and liability were recognized at commencement date and initially measured based on the present value of lease payments over the defined lease term. The right-of-use asset and lease liability were $32.0 million and $36.0 million, respectively, as of December 31, 2025, and $35.6 million and $39.8 million, respectively, as of December 31, 2024. The right-of-use asset is included in prepaid expenses and other assets and the lease liability is included in accrued expenses and other liabilities in the Company's balance sheet.

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 commencement date to calculate the present value of lease payments.

We lease our premises under non-cancelable operating leases. At December 31, 2025, future minimum annual rental commitments under these non-cancelable operating leases, with initial or remaining terms of one year or more, were as follows:

Net lease expense recognized for the years ended December 31, 2025, 2024 and 2023 was $9.4 million, $10.2 million, and $10.0 million, respectively. This included operating lease costs of $9.6 million, $10.3 million, and $10.1 million, respectively, reduced by sublease income of $0.2 million, $0.1 million, and $0.1 million, respectively.

Weighted average remaining lease terms for the Company’s operating leases were 5.59 years and 6.35 years as of December 31, 2025 and 2024, respectively. Weighted average discount rates used for the Company’s operating leases were 3.85% and 3.30% as of December 31, 2025 and 2024, respectively.

Cash paid, and included in cash flows from operating activities, for amounts included in the measurement of the lease liability for the Company's operating leases for the years ended December 31, 2025, 2024 and 2023 was $9.7 million, $9.9 million and $9.9 million, respectively.