Hanmi Financial Corporation · NASDAQ:HAFC
Hanmi Financial — IPO Roadshow (August 2021)
43 slides from Hanmi Financial's IPO roadshow presentation, Aug 17, 2021
Slide 1: Subordinated Notes Offering August 2021
Subordinated Notes Offering August 2021 Filed Pursuant to Rule 433 Supplementing the Preliminary Prospectus Dated December 30, 2020 Registration No. 333-251393 August 17, 2021
Slide 2: Forward-looking statements
This presentation supplement contains forward-looking statements within the meaning of the federal securities laws. These statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions and future performance and in
Slide 3: Non-GAAP Financial Measures and Additional Information
Non-GAAP Financial Measures This presentation contains supplemental financial information determined by methods other than in accordance with U.S. generally accepted accounting principles ("GAAP") that management uses in its analysis of the Company's underlying operation performance and business and
Slide 4: Terms of Planned Capital Raise
Terms of Planned Capital Raise Issuer Security Amount Issuance Type Offering Structure Term No Call Period Use of Proceeds Bookrunners Hanmi Financial Corporation Subordinated Notes due 2031 $100 million SEC Registered Fixed-to-Floating Rate (Fixed during First Five Years) 10 Years 5 Years Possible
Slide 5: Investment Highlights
Investment Highlights Leading Korean American Bank with a long history of serving Korean Americans and other ethnic communities across a nationwide footprint Experienced leadership team complemented by a diversified Board Consistent profitability driven by a diversified franchise and business mix Fo
Slide 6: The Hanmi Story
The Hanmi Story 2001 Listed HAFC common stock 2004 Acquired Pacific Union Bank ($1.2B in assets acquired) 2016 Acquired Commercial Equipment Leasing Division (CELD) 2017 Assets surpassed $5 billion Opened a Manhattan, NY branch 2018 Opened Houston Chinatown branch in Texas 2007 Completed $70 million
Slide 7: Experienced, Deep Leadership Team
Experienced, Deep Leadership Team Name Position Banking Experience (Years) Hanmi Experience (Years) Previous Experience Bonita I. “Bonnie” Lee President & CEO 35 8 BBCN Bancorp, Shinhan Bank America, Nara Bank Romolo Santarosa SEVP, Chief Financial Officer 30 6 Opus Bank, First California Financial
Slide 8: Experienced & Diversified Board of Directors
Name Title; Position Age Year Elected John J. Ahn Chairman of the Board; CEO of Whitehawk Capital Partners 56 2014 David L. Rosenblum Vice Chairman of the Board; Former Senior Principal for Deloitte Consulting LLP 68 2014 Bonita I. “Bonnie” Lee Director; President and CEO of Hanmi Bank 58 2019 Kiho
Slide 9: Hanmi at a Glance
Hanmi at a Glance Focus on growth and value preservation for our shareholders Second largest Korean American Bank with 39 years of history and $6.6 billion in assets as of June 30, 2021 35 branches coast-to-coast in highly attractive major banking markets & 9 LPOs Commitment to conservative, discipl
Slide 10: 2Q21 Highlights
2Q21 Highlights $0.72 1.38% 3.19% 52.66% 1.78% Efficiency Ratio ROAA NIM Net Income Diluted EPS $22.1M Net income of $22.1 million, or $0.72 per diluted share, up 32.8% from $16.7 million, or $0.54 per diluted share, from the prior quarter Loans receivable of $4.82 billion, unchanged from the prior
Slide 11: Strong Historical Profitability
Strong Historical Profitability Return on Average Assets (ROAA) Return on Average Equity (ROAE) Net Interest Margin Net Income ($ in millions) & Earnings Per Share Reflects, among other things, elevated charges arising from a $40.7 million single troubled loan relationship identified in 2Q19 compris
Slide 12: Net Interest Income / Net Interest Margin
Net interest income was $49.6 million for the second quarter compared with $46.0 million for the prior quarter; net interest margin for the quarter was 3.19% (3.12%1 excluding PPP loans) compared with 3.09% for the prior quarter (3.13%1 excluding PPP loans). Net Interest Income / Net Interest Margin
Slide 13: Noninterest Expenses
Noninterest Expenses Reflects, among other things, elevated charges arising from a single troubled loan relationship (See pg. 9) Efficiency ratio excluding PPP loans and securities gains for 2Q20 was 60.82% and for FY 2020 was 58.63%. Non-GAAP financial measure (see Non-GAAP Reconciliation beginning
Slide 14: Income Statement Summary
($ in millions) 2Q21 1Q21 4Q20 3Q20 2Q20 Income Statement Summary Net Interest Income $ 49.6 $ 46.0 $ 46.9 $ 45.6 $ 44.4 Adjusted Noninterest Income1,2 8.6 7.0 7.8 7.1 5.2 Adjusted Operating Revenue1 58.2 53.0 54.7 52.7 49.6 Adjusted Noninterest Expense1,3 30.8 30.9 30.9 29.9 30.2 Adjusted Pretax, P
Slide 15: Successful Portfolio Diversification Strategy
Successful Portfolio Diversification Strategy Total Portfolio: $3.4 billion Total Portfolio: $4.8 billion Significant progress in reducing CRE concentration from 82% of total portfolio to 72% as of June 30, 2021 7% CAGR CRE 71.3% C&I 12% CRE 72% SFR 7% Leases 9% Loan Composition 2Q 2016 Loan Composi
Slide 16: Loan Portfolio Composition
Loan Portfolio Composition Granular loan portfolio with small average loan sizes and strong QTD¹ average yields despite the low interest rate environment SFR & Consumer Portfolio2 $ in millions Outstanding $349 Average Size $0.4 QTD Average Yield 3.16% Commercial & Industrial Portfolio3 $ in million
Slide 17: Loan Portfolio Diversification
Loan Portfolio Diversification Loan portfolio is well diversified across property and business types. CRE Portfolio $3.45B¹ C&I Portfolio $588M 2 1.8% represent construction/land 65% of this category represents PPP loans Note: Numbers may not add due to rounding; data as of June 30, 2021
Slide 18: SBA Loan Sales
SBA Loan Sales ($ in millions) ($ in thousands) SBA Gain on Sale SBA Loan Sales Excludes $203 thousand of PPP gains The volume of SBA loans sold and gains on sales of SBA loans, excluding PPP loans, for the second quarter of 2021 were $26.6 million and $3.3 million¹, respectively
Slide 19: Hospitality Segment by Location Type
Hospitality Segment by Location Type Hospitality segment is $847 million, representing 18% of the loan portfolio. Total Hospitality Segment: $847M Average balance within the segment was $3.2 million Weighted average debt coverage ratio of the segment was 2.0x at origination Weighted average loan to
Slide 20: Excellent Modification Trend
Excellent Modification Trend 95% decline in modifications since June 30, 2020 – from $1.4B to $72M as of June 30, 2021 Modified portfolio represents 1.5% of loans receivable as of June 30, 2021 At June 30, 2021, 50.7% of modified loans were special mention and 17.6% were classified; 7.0% were nonacc
Slide 21: Credit Culture Fundamentals
Credit Culture Fundamentals Conservative Policies and Monitoring for Enhanced Diligence Conservative credit culture with well-defined policies and procedures Dual and committee authority structure for loan approval DCR and LTV stress testing conducted as part of underwriting, while individual portfo
Slide 22: Asset Quality – Nonaccrual Loans
Asset Quality – Nonaccrual Loans ($ millions) Nonaccrual loans1 decreased 28% quarter-over-quarter. 47% of nonaccruals represent three loans of $3 million or more. Includes $14.9 million and $5.0 million of modified loans at March 31, 2021 and June 30, 2021, respectively Specific allowance for credi
Slide 23: Historical Credit Statistics
Historical Credit Statistics NCOs / Avg. Loans NPAs / Assets Reserves / Loans HFI Reserves / NPAs Note: SNL US Bank Index includes all major exchange banks in SNL’s coverage universe with total assets between $5 billion and $10 billion; NPAs exclude troubled debt restructurings Adjusted for a single
Slide 24: Diversified Deposit Base
Diversified Deposit Base Deposits ($ in millions) Deposits ($ in millions) Deposits by Type – June 30, 2021 ($ in millions) Note: Numbers may not add due to rounding Time Deposits Money Market & Savings Demand Interest-bearing Demand Noninterest-bearing
Slide 25: Summary of Funding
Summary of Funding $100.0 million of outstanding subordinated debt is callable beginning March 30, 2022 at which time it assumes a floating rate of 3M LIBOR + 313.5 bps Trust Preferred has a fair value of $18.5 million on HAFC’s balance sheet. Includes $150.0 million of advances and $130.0 million l
Slide 26: Securities Portfolio
Securities Portfolio Estimated Fair Value: $862M 100% Available-For-Sale Yield on securities portfolio on a fully taxable equivalent basis of 0.69%¹ Composition of the securities portfolio remains relatively unchanged quarter-over-quarter with the introduction of municipal securities in the second q
Slide 27: Interest Rate Sensitivity
Interest Rate Sensitivity Percent Changes in Net Interest Income Percent Changes in Economic Value of Equity Note: Assumes an instantaneous parallel shift in the yield curve HAFC remains well-positioned for a rising interest rate environment
Slide 28: Capital Ratios Exceed Well-Capitalized Thresholds
Minimum threshold for a well-capitalized institution A capital conservation buffer of 2.5 percent became effective on January 1, 2019, and must be met to avoid limitations on the ability of the Bank to pay dividends, repurchase shares or pay discretionary bonuses. The Bank's capital conservation buf
Slide 29: Capital Ratio Trends
Note: Ratios exceed current regulatory requirements Capital Ratio Trends Total RBC Tier 1 RBC CET1 Tier 1 Leverage
Slide 30: Sources of Holding Company Liquidity
Sources of Holding Company Liquidity Hanmi Financial Corporation’s main source of liquidity is dividends from its subsidiary, Hanmi Bank Dividend capacity from the Bank is $10.5 million in retained earnings without prior regulatory approval, as of June 30, 2021 California law restricts the amount av
Slide 31: Interest Coverage & Double Leverage
Interest Coverage & Double Leverage Assumes $100.0M gross offering with net proceeds of $98.0M 0% of net proceeds assumed to be downstreamed to the Bank Pro forma double leverage is equal to 117.4%; 0% of net proceeds are downstreamed to bank-level Note: For illustrative purposes, assumes $100 milli
Slide 32: Pro Forma Capitalization
Pro Forma Capitalization Note: For illustrative purposes, assumes $100 million of gross proceeds from the subordinated notes (net proceeds of $98.0 million after 1.25% underwriting spread and $750k of expenses) and a risk–weighting of 20%; the after-tax impact of debt extinguishment charges has been
Slide 33: Appendix
Appendix
Slide 34: Historical Balance Sheet
Historical Balance Sheet (Sin thousands) For the Year Ended December 31, Ended Dre 2017 2018 209 22__June 30, 2021, CCash and due fom banks $147,235 $153,826 $155,376 $121,678 1,849 $697,789 ities available forsale, at fair value $516,964 $578,804 $574,908 ATT $753,781 $862,119 Loans held for s $9,3
Slide 35: Historical Income Statement
Historical Income Statement
Slide 36: Interest Coverage & Double Leverage
Interest Coverage & Double Leverage Assumes $100.0M gross offering with net proceeds of $98.0M 0% of net proceeds assumed to be downstreamed to the Bank Pro forma double leverage is equal to 117.4%; 0% of net proceeds are downstreamed to bank-level Note: For illustrative purposes, assumes $100 milli
Slide 37: Non-GAAP Reconciliation – PPP (2Q20)
Non-GAAP Reconciliation – PPP (2Q20) In response to the Covid-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was adopted, which included authorization for the U.S. Small Business Administration (the “SBA”) to introduce a new program, entitled the “Paycheck Prote
Slide 38: Non-GAAP Reconciliation
Non-GAAP Reconciliation ($ in thousands, except per share data) June 30, 2021 March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020 Tangible Common Equity to Tangible Assets Ratio Assets $ 6,578,856 $ 6,438,401 $ 6,201,888 $ 6,106,782 $ 6,218,163 Less goodwill and other intangible assets
Slide 39: Non-GAAP Reconciliation: Pretax Pre-Provision Income
Non-GAAP Reconciliation: Pretax Pre-Provision Income Note: Numbers may not add due to rounding ($ millions) 2Q21 1Q21 4Q20 3Q20 2Q20 Pretax income $ 31.0 $ 24.2 $ 19.7 $ 22.8 $ 13.6 less credit loss expense (3.3) 2.1 5.1 - 24.6 Pretax, Pre-provision, income $ 27.7 $ 26.3 $ 24.8 $ 22.8 $ 38.2 less in
Slide 40: Non-GAAP Reconciliation – PPP (2Q21)
Non-GAAP Reconciliation – PPP (2Q21) In response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was adopted, which included authorization for the U.S. Small Business Administration (the “SBA”) to introduce a new program, entitled the “Paycheck Prote
Slide 41: Non-GAAP Reconciliation – PPP (1Q21)
Non-GAAP Reconciliation – PPP (1Q21) In response to the Covid-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was adopted, which included authorization for the U.S. Small Business Administration (the “SBA”) to introduce a new program, entitled the “Paycheck Prote
Slide 42: Non-GAAP Reconciliation – PPP (4Q20)
Non-GAAP Reconciliation – PPP (4Q20) In response to the Covid-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was adopted, which included authorization for the U.S. Small Business Administration (the “SBA”) to introduce a new program, entitled the “Paycheck Prote
Slide 43: Non-GAAP Reconciliation – PPP (3Q20)
Non-GAAP Reconciliation – PPP (3Q20) In response to the Covid-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was adopted, which included authorization for the U.S. Small Business Administration (the “SBA”) to introduce a new program, entitled the “Paycheck Prote