Hanmi Financial Corporation · NASDAQ:HAFC
Hanmi Financial — Q2 2024 Earnings Presentation
34 slides from Hanmi Financial's earnings presentation, Jul 23, 2024
Slide 1: 2Q24 Earnings Supplemental Presentation
Los Angeles New York/ New Jersey Virginia Chicago Dallas Houston San Francisco San Diego 2Q24 Earnings Supplemental Presentation July 23, 2024
Slide 2: Forward-Looking Statements
Forward-Looking Statements Hanmi Financial Corporation (the “Company”) cautions investors that any statements contained herein that are not historical facts are forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, incl
Slide 3: Non-GAAP Financial Information
Non-GAAP Financial Information This presentation contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These non-GAAP measures include tangible common equity to tangible assets, and tangib
Slide 4: 2Q24 Highlights
2Q24 Highlights Net Income Diluted EPS ROAA ROAE NIM Efficiency Ratio TBVPS(1) $14.5M $0.48 0.77% 7.50% 2.69% 62.24% $22.99 • Net income was $14.5 million, or $0.48 per diluted share, down 4.7% from $15.2 million, or $0.50 per diluted share, for the prior quarter Net interest income was $48.6 mill
Slide 5: Loan Production
Loan Production Loan production of $274 million for 2Q24 reflected balanced contribution from nearly all business lines, and a 29 basis 90000%point increase in the weighted average interest rate on0.0021 new production. 80000% 8.10% 8.02% 8.31% 7.39% 7.80% Weighted average 70000% interest rate on ne
Slide 6: Loan Portfolio
Loan Portfolio $6.2 Billion Loan Portfolio (as of June 30, 2024) Equipment Commercial Real Estate (CRE)(1,2) Portfolio CRE(2) Investor (non-owner) Finance Outstanding ($ in millions) $3,889 - 9% # of Loans 872 2Q24 Average Yield 5.63% Weighted Average Loan-to-Value Ratio(4) 49.8% Weighted Average De
Slide 7: Loan Portfolio Diversification
Loan Portfolio Diversification Loan portfolio is well diversified across collateral and industry types; CRE represents 63% of the total portfolio and C&I, excluding Equipment Finance Agreements, represents 13%. (1) (2) CRE Portfolio C&I Portfolio $3.9B $802M Construction – 3% Mixed Use – 3% Other –
Slide 8: CRE Portfolio Geographical Exposure
CRE Portfolio Geographical Exposure ($ in millions) Multifamily by State Construction by State $413 $107 CRE Composition by State Illinois – Other – $14 $3,889 3% $16 4% New York – $80 Other – 19% $25 23% California – California – Illinois – $202 New York – $64 50% $18 60% $88 Other – 17% 2% $606 Te
Slide 9: Loan Portfolio Distribution
Loan Portfolio Distribution CRE ($ in millions) C&I ($ in millions) Owner Non-owner Term (2) Lines of Credit (2) Multifamily Construction (1) Occupied Occupied Total Balance $338 $464 Total Balance $754 $2,614 $414 $107 Average $0.32 $0.87 Average $1.03 $3.00 $2.74 $10.65 Median $0.06 $0.06 Median $
Slide 10: Loan Portfolio Maturities
Loan Portfolio Maturities ($ in millions) <1 Year 1-3 Years >3 Years Total Real estate loans Retail $ 138.5 $ 377.5 $ 578.8 $ 1,094.8 Hospitality 218.3 212.6 323.7 754.6 Office 142.6 292.9 137.1 572.6 Other 150.3 526.4 683.3 1,360.0 Commercial Property 649.7 1,409.4 1,722.9 3,782.0 Construction 65.6
Slide 11: USKC Loans & Deposits
USKC(1) Loans & Deposits USKC portfolio represented $864.7 million in loans, or 14% of the loan portfolio, and $867.3 million in deposits, or 14% of the deposit portfolio. USKC CRE portfolio had a weighted average debt coverage ratio (2) of 1.95x and weighted average loan-to- value(2) of 60.44%. USK
Slide 12: Office Loan Portfolio
Office Loan Portfolio The CRE office portfolio(1) was $572.5 million(2) at June 30, 2024, representing 9% of the total loan portfolio. Portfolio by State Rate Distribution • Average balance and median balance of the portfolio were $4.5 million and $1.1 million, respectively • Weighted average debt c
Slide 13: Hospitality Segment
Hospitality Segment Hospitality segment represented $754.6 million(1), or 12% of the loan portfolio, at June 30, 2024. Convention Center – 4% Airport – • Average balance and median balance of the segment (excluding 6% construction) were $4.0 million and $1.0 million, respectively Resort – 8% • Weigh
Slide 14: Retail Segment
Retail Segment Retail segment represented $1.1 billion (1), or 18% of the loan portfolio, at June 30, 2024. Illinois 2% • Average balance and median balance of the segment were $1.5 million and $0.7 million, respectively Georgia Other 3% 10% • Weighted average debt coverage ratio(2) of the segment w
Slide 15: Residential Real Estate Portfolio
Residential Real Estate Portfolio The RRE(1) portfolio was $954.2 million at June 30, 2024, representing 15% of the total loan portfolio. Our conservative underwriting policy focuses on high-quality mortgage originations with maximum Loan-to-Value (LTV) ratios between 60% and 70%, maximum Debt-to-In
Slide 16: Equipment Finance Portfolio
Equipment Finance Portfolio Equipment finance portfolio represented $531.0 million, or 9% of the loan portfolio, at June 30, 2024. Portfolio by Industry Portfolio by Equipment Portfolio by State Trucks 34% Wholesale (1) Trade, 4% Other, 16% Earth Moving 8% Transportation, 26% Healthcare, Machine Too
Slide 17: Deposit Base
Deposit Base Noninterest-bearing demand deposits represented 31% of total deposits at June 30, 2024. Estimated uninsured deposit liabilities were 41% of the total deposit liabilities. Brokered deposits remained low, at 0.4% of the deposit base. Deposits ($ in millions) Deposits (as of 2Q24) ($ in mi
Slide 18: Net Interest Income | Net Interest Margin
Net Interest Income | Net Interest Margin Net interest income for the second quarter was $48.6 million and net interest margin (taxable equivalent) was 2.69%, both down from the previous quarter due to higher interest-bearing deposit costs. 3.11% 3.03% 2.92% 0.01% 2.78% 2.69% -0.02% -0.07% -0.01% 2.
Slide 19: Net Interest Income Sensitivity
Net Interest Income Sensitivity 29% of the loan portfolio reprices within 1-3 months. Loans – Months to Reset / Maturity(1) . ($ in millions) Fed Funds Rate & Cost of CDs $1,918.0 Fed 5.25% 5.50% 5.50% 5.50% 5.50% Funds Rate(3) Cost of 4.66% 4.78% 3.70% 3.95% 4.24% CDs(2) 2Q23 3Q23 4Q23 1Q24 2Q24 $1
Slide 20: Noninterest Income
Noninterest Income Noninterest income for the second quarter was $8.1 million, up 4% from the previous quarter. Noninterest Income ($ in millions) 2Q24 Service Charges and Fees ($ in millions) Service charges, fees & other Gain on sale of SBA loans Service charges on deposit accounts Gain of sale of
Slide 21: Noninterest Expense
Noninterest Expense Continued focus on disciplined expense management. 1.94% Noninterest $50 1.87% 1.87% 1.89% 1.83% expense / Average assets • Noninterest expense was $35.3 million in $36.4 the second quarter, down 3.2% from the $35.2 $35.3 $34.3 $34.2 prior quarter $4.8 $4.5 $3.9 $5.0 $5.2 • Nonin
Slide 22: Asset Quality – Delinquent & Criticized Loans
Asset Quality – Delinquent & Criticized Loans Asset quality remains strong. Delinquent Loans(1) ($ in millions) Criticized Loans ($ in millions) 1.82% 1.40% 1.56% 1.39% Criticized 0.26% 1.15% loans / 0.23% 0.22% Delinquent loans Total loans 0.16% 0.17% / Total loans $15.8 $109.6 $13.7 $13.8 $96.7 $8
Slide 23: Asset Quality – Nonperforming Assets & Nonaccrual Loans
Asset Quality – Nonperforming Assets & Nonaccrual Loans Nonperforming assets were $20.0 million at the end of the second quarter, up from $14.1 million at the end of the first quarter. The increase in OREO included a $0.7 million addition of a closed branch property. Nonperforming Assets(1) ($ in mi
Slide 24: Asset Quality – Gross & Net Loan Charge-offs
Asset Quality – Gross & Net Loan Charge-offs Net charge-offs for the second quarter were $1.8 million. Gross Charge-offs ($ in millions) Net Charge-offs ($ in millions) 0.60% $9.4 0.12% 0.10% 0.12% Net Charge- $8.9 offs / -0.33% Average loans $6.4 $6.6 $1.7 $1.6 $1.8 $2.3 $2.5 $1.8 $1.2 $1.6 ($0.6)
Slide 25: ACL Trends
ACL Trends Allowance for credit losses was $67.7 million at June 30, 2024, or 1.10% to total loans, compared with $68.3 million and 1.11% at the end of the prior quarter. Allowance for Credit Losses ($ in millions) Credit Loss Expense (Recovery) ($ in millions) $100 1.50% $6 0 1.40% $5.2 $5 1.30% -0
Slide 26: ACL Analysis by Loan Type
ACL Analysis by Loan Type ($ in millions) June 30, 2024 March 31, 2024 December 31, 2023 September 30, 2023 June 30, 2023 Allowance Loans Allowance Loans Allowance Loans Allowance Loans Allowance Loans CRE $ 36.1 $ 3,888.5 $ 36.4 $ 3,878.5 $ 40.2 $ 3,889.7 $ 38.9 $ 3,773.0 $ 38.4 $ 3,738.3 C&I 10.6
Slide 27: Securities Portfolio
Securities Portfolio The $985 million securities portfolio (all AFS, no HTM) represented 13% of assets at June 30, 2024, and had a weighted average modified duration of 4.3 years with $108 million in an unrealized loss position. (1) Available for Sale US Agy Residential MBS - Maturity Unrealized Los
Slide 28: Liquidity
Liquidity The Bank and the Company have ample liquidity resources at June 30, 2024. Liquidity Position ($ in millions) Balance % of Assets Liquidity Ratios Cash & cash equivalents $ 313 4.1% Securities (unpledged) 811 10.7% Liquid Assets to Total Assets Liquid Assets to Deposits Liquid assets 1,124
Slide 29: Capital Management
Capital Management Tangible book value per share (TBVPS)(1) increased to $22.99 from $22.86 at the end of the prior quarter. The increase reflects $6.9 million of net income, net of cash dividends paid, offset by a $0.9 million increase in unrealized after-tax losses on AFS securities, a $0.2 millio
Slide 30: Regulatory Capital
Regulatory Capital The Company exceeds regulatory minimums and the Bank remains well capitalized at June 30, 2024. Company Bank CET1 CET1 4.50% 2.50% 7.00% 6.50% Capital Capital CET1 CET1 12.11% 13.47% Capital Capital 10.93% 12.30% Tier 1 Tier 1 6.00% 2.50% 8.50% 8.00% Capital Capital Tier 1 Tier 1
Slide 31: Appendix
Appendix A Hanmi Financial Corporation: 31
Slide 32: 2Q24 Financial Summary
2Q24 Financial Summary ($ in millions, except EPS) Change (1) June 30, 2024 March 31, 2024 June 30, 2023 Q/Q Y/Y Income Statement Summary Net interest income before credit loss $ 48.6 $ 50.7 $ 55.4 -4.0% -12.3% Noninterest income 8.1 7.7 7.9 4.2% 1.5% Operating revenue 56.7 58.4 63.4 -2.9% -10.5% No
Slide 33: Non-GAAP Reconciliation: Tangible Common Equity to Tangible Asset Ratio
Non-GAAP Reconciliation: Tangible Common Equity to Tangible Asset Ratio ($ in thousands, except per share data) June 30, March 31, December 31, September 30, June 30, Hanmi Financial Corporation 2024 2024 2023 2023 2023 Assets $ 7,586,347 $ 7,512,046 $ 7,570,341 $ 7,350,140 $ 7,344,924 Less goodwill
Slide 34: Non-GAAP Reconciliation: Pro Forma Regulatory Capital
Non-GAAP Reconciliation: Pro Forma Regulatory Capital ($ in thousands) Company(1) Bank(1) Common Total Common Total Equity Tier 1 Tier 1 Risk-based Equity Tier 1 Tier 1 Risk-based Regulatory capital $ 764,886 $ 786,761 $ 962,585 $ 850,613 $ 850,613 $ 916,437 Unrealized losses on AFS securities (76,4