Hanmi Financial Corporation · NASDAQ:HAFC
Hanmi Financial — Q2 2023 Earnings Presentation
33 slides from Hanmi Financial's earnings presentation, Jul 25, 2023
Slide 1: 2Q23 Earnings Supplemental Presentation
Los Angeles New York/ New Jersey Virginia Chicago Dallas Houston San Francisco San Diego 2Q23 Earnings Supplemental Presentation July 25, 2023
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: 2Q23 Highlights
2Q23 Highlights Net Income Diluted EPS ROAA ROAE NIM Efficiency Ratio TBVPS(1) $20.6M $0.67 1.12% 11.14% 3.11% 54.11% $21.56 • Net income was $20.6 million, or $0.67 per diluted share, down 6.2% from $22.0 million, or $0.72 per diluted share, for the prior quarter Net interest income was $55.4 mil
Slide 5: Loan Production
Loan Production Loan production was $259.3 million for 2Q23, reflecting reduced demand because of higher interest rates. 7.19% 7.39% 6.85% 90000% Average interest 0.0021 5.55% rate on new 4.35% production 80000% ($ in millions) 70000% • Average interest rate on new production up $642.2 20 basis poin
Slide 6: Loan Portfolio
Loan Portfolio $5.97 Billion Loan Portfolio (as of June 30, 2023) Equipment Commercial Real Estate (CRE)(1) Portfolio CRE(1) Investor Owned (Non-owner Occupied) Finance Outstanding ($ in millions) $3,738 - 10% # of Loans 892 2Q23 Average Yield 5.27% (3) Weighted Average Loan-to-Value Ratio 50.7% Wei
Slide 7: Loan Portfolio Diversification
Loan Portfolio Diversification Loan portfolio is well diversified across collateral types 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 $3.74B $753M Mixed Use – 3% Other – 9% Gas Stat
Slide 8: CRE Portfolio Geographical Exposure
CRE Portfolio Geographical Exposure ($ in millions) Multifamily by State Construction by State $385 $90 CRE Composition by State Illinois – Other – $14 $3,738 4% $17 3% Other – New York – $12 $79 13% 21% New York – $18 Illinois – 20% $84 2% Other – Texas - California – California – $64 $211 $60 $504
Slide 9: Loan Portfolio Distribution
Loan Portfolio Distribution CRE ($ in millions) C&I ($ in millions) Owner Investor (1) Term (2) Lines of Credit (2) Multifamily Construction Occupied Owned Total Balance $372 $381 Total Balance $719 $2,544 $385 $90 Average $0.37 $0.68 Average $0.94 $2.85 $2.47 $8.96 Median $0.05 $0.06 Median $0.30 $
Slide 10: Loan Portfolio Maturities
Loan Portfolio Maturities ($ in millions) <1 Year 1-3 Years >3 Years Total Real estate loans Retail $ 103.3 $ 248.4 $ 739.0 $ 1,090.7 Hospitality 126.0 244.2 316.0 686.2 Office 51.1 207.0 301.5 559.6 Other 101.5 424.4 786.3 1,312.2 Commercial Property 381.9 1,124.0 2,142.8 3,648.7 Construction 61.3
Slide 11: USKC Loans & Deposits
USKC(1) Loans & Deposits USKC portfolio represented $731.7 million in loans, or 12%, of the loan portfolio and $687.7 million in deposits, or 11%, of the deposit portfolio. USKC CRE portfolio had a weighted average debt coverage ratio(2) of 1.90x and weighted average loan-to- value(2) of 59.5%. USKC
Slide 12: Office Loan Portfolio
Office Loan Portfolio The CRE office portfolio(1) was $559.6 million at June 30, 2023, representing 9% of the total loan portfolio. Portfolio by State • Median balance within the portfolio Rate Distribution was $1.0 million • Weighted average debt coverage ratio(2) of the segment was 2.01x • Weighte
Slide 13: Hospitality Portfolio
Hospitality Portfolio Hospitality portfolio represented $686.2 million or 12% of the loan portfolio at June 30, 2023. Convention Center – 3% Airport – • Average balance and median balance of the portfolio (excluding 7% construction) were $3.5 million and $0.9 million, respectively Resort – 6% • Weig
Slide 14: Residential Real Estate Portfolio
Residential Real Estate Portfolio The RRE(1) portfolio was $887.0 million at June 30, 2023, representing 15% of the total loan portfolio. Our conservative underwriting policy focuses on high-quality mortgage originations with maximum Loan-to-Value (LTV) between 60% and 70%, maximum Debt-to-Income (D
Slide 15: Equipment Finance Portfolio
Equipment Finance Portfolio Equipment finance portfolio represented $586.4 million or 10% of the loan portfolio at June 30, 2023. Portfolio by Industry Portfolio by Equipment Portfolio by State Trucks 40% Other - 21% Transportation - Machine Tools 7% 31% Healthcare - Earth Moving 6% 4% 6% Trailers 5
Slide 16: Deposit Base
Deposit Base Noninterest-bearing demand deposits represented 35% of total deposits at June 30, 2023. Estimated uninsured deposit liabilities, excluding preferred deposits and company deposits, were 38% of the total deposit liabilities. Brokered deposits remained low at 1% of the deposit base. Deposi
Slide 17: Net Interest Income | Net Interest Margin
Net Interest Income | Net Interest Margin Net interest income for the second quarter was $55.4 million and net interest margin (taxable equivalent) was 3.11%, both down from the previous quarter because of higher deposit interest expense. 0.09% 0.04% 3.66% 3.55% 3.67% 3.28% 0.04% 0.01% 3.11% -0.35%
Slide 18: Net Interest Income Sensitivity
Net Interest Income Sensitivity 22% of the loan portfolio reprices within 1-3 months. Loans – Months to Reset / Maturity(1) . ($ in millions) Fed Funds Rate & Cost of CDs Fed $2,007.0 4.50% 5.00% 5.25% Funds Cost of 3.25% Rate(3) CDs(2) 1.75% $485.3 2.17% 3.31% 3.70% 0.39% 0.97% $1,480.8 2Q22 3Q22 4
Slide 19: Noninterest Income
Noninterest Income Noninterest income for the second quarter was $7.9 million, down 5% from the previous quarter, primarily on lower SBA gains. Noninterest Income ($ in millions) 2Q23 Service Charges and Fees ($ in millions) Service charges on deposit accounts Service charges, fees & other Gain on s
Slide 20: Noninterest Expense
Noninterest Expense Continued focus on disciplined expense management. $50 2.00% 1.83% 1.88% 1.87% 1.85% Noninterest 1.81% expense / Average • Noninterest expense was $34.3 million in assets the second quarter, up 4.5% from the $34.3 prior quarter $33.3 $33.8 $32.8 $31.5 • Salaries and employee bene
Slide 21: Asset Quality – Delinquent & Criticized Loans
Asset Quality – Delinquent & Criticized Loans Asset quality remains strong. Delinquent Loans(1) ($ in millions) Criticized Loans ($ in millions) 2.94% 2.36% Criticized 2.10% 0.26% 1.87% loans / 0.23% Delinquent loans 1.40% Total loans / Total loans 0.13% 0.07% 0.09% $170.7 $133.5 $125.2 $111.6 $15.4
Slide 22: Asset Quality – Nonperforming Assets & Nonaccrual Loans
Asset Quality – Nonperforming Assets & Nonaccrual Loans Nonperforming assets and loans remained relatively stable quarter over quarter. Nonperforming Assets ($ in millions) Nonaccrual Loans ($ in millions) (1) $30 $22.2 (1) 0.27% 0.30% Nonperforming $20.1 0.17% 0.17% 0.14% assets / $22.3 Total asset
Slide 23: Asset Quality – Gross & Net Loan Charge-offs
Asset Quality – Gross & Net Loan Charge-offs Net charge-offs for the second quarter represented 0.12% of average loans on an annualized basis. Gross Charge-offs ($ in millions) Net Charge-offs ($ in millions) $2.7 Net Charge- 0.10% 0.12% offs / $0.1 0.08% 0.01% 0.02% Average loans $2.2 $2.1 $0.6 $1.
Slide 24: ACL Trends
ACL Trends Allowance for credit losses was $71.0 million as of June 30, 2023, generating an allowance for credit losses to loans of 1.19% compared with 1.21% at the end of the prior quarter. Allowance for Credit Losses ($ in millions) Credit Loss Expense (Recovery) ($ in millions) $100 1.50% $3 1.40
Slide 25: ACL Analysis by Loan Type
ACL Analysis by Loan Type ($ in millions) June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 Allowance Loans Allowance Loans Allowance Loans Allowance Loans Allowance Loans CRE $ 38.4 $ 3,738.3 $ 39.2 $ 3,784.2 $ 40.6 $ 3,833.4 $ 42.7 $ 3,853.9 $ 45.6 $ 3,829.7 C&I 16.0
Slide 26: Securities Portfolio
Securities Portfolio Securities portfolio (all AFS, no HTM) represented 13% of assets at June 30, 2023, and had a weighted average modified duration of 4.9 years with $119 million in an unrealized loss position. 11% of the portfolio’s principal is expected to be paid down in 2023. (1) Available for
Slide 27: Liquidity
Liquidity The Bank and the Company have ample liquidity resources at June 30, 2023. Liquidity Position ($ in millions) Balance % of Assets Liquidity Ratios Cash & cash equivalents $ 345 4.7% Securities (unpledged) 784 10.7% Liquid Assets to Total Assets Liquid Assets to Deposits Liquid assets 1,129(
Slide 28: Capital Management
Capital Management Tangible book value per share (TBVPS)(1) increased to $21.56 from $21.30 at the end of the prior quarter. 2Q23 TBVPS(1) and TCE/TA(1) ratio were impacted by $84.6 million of negative AOCI reflecting changes in the value of the securities portfolio resulting from interest rate chan
Slide 29: Regulatory Capital
Regulatory Capital The Company exceeds regulatory minimums and the Bank remains well capitalized at June 30, 2023. Company Bank CET1 CET1 4.50% 2.50% 7.00% 6.50% Capital Capital CET1 CET1 11.91% 13.39% Capital Capital 10.56% 12.06% Tier 1 Tier 1 6.00% 2.50% 8.50% 8.00% Capital Capital Tier 1 Tier 1
Slide 30: Appendix
Appendix A Hanmi Financial Corporation: 30
Slide 31: 2Q23 Financial Summary
2Q23 Financial Summary ($ in millions, except EPS) Change (1) June 30, 2023 March 31, 2023 June 30, 2022 Q/Q Y/Y Income Statement Summary Net interest income $ 55.4 $ 57.9 $ 59.0 -4.2% -6.1% Noninterest income 7.9 8.3 9.3 -4.8% -14.8% Operating revenue 63.4 66.2 68.4 -4.3% -7.3% Noninterest expense
Slide 32: 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 2023 2023 2022 2022 2022 Assets $ 7,344,924 $ 7,434,130 $ 7,378,262 $ 7,128,511 $ 6,955,968 Less goodwill
Slide 33: Non-GAAP Reconciliation: Pro Forma Regulatory Capital
Non-GAAP Reconciliation: Pro Forma Regulatory Capital Company Bank ($ in thousands) Common Total Common Total Equity Tier 1 Tier 1 Risk-Based Equity Tier 1 Tier 1 Risk-Based Regulatory capital $ 730,721 $ 752,172 $ 927,843 $ 821,994 $ 821,994 $ 887,665 Unrealized losses on AFS securities (84,639) (8