Slide 1: 4Q23 Earnings Supplemental Presentation
Los Angeles New York/ New Jersey Virginia Chicago Dallas Houston San Francisco San Diego 4Q23 Earnings Supplemental Presentation January 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: 4Q23 Highlights
4Q23 Highlights Net Income Diluted EPS ROAA ROAE NIM Efficiency Ratio TBVPS(1) $18.6M $0.61 0.99% 9.70% 2.92% 58.86% $22.75 • Net income was $18.6 million, or $0.61 per diluted share, down 0.9% from $18.8 million, or $0.62 per diluted share, for the prior quarter Net interest income was $53.1 mill
Slide 5: Loan Production
Loan Production Fourth quarter observed the highest quarterly loan production in 2023. Loan production increased by 16% quarter- over-quarter. 90000% 7.80% 8.10% 0.0021 7.19% 7.39% 6.85% 80000% Weighted average interest rate on new production 70000% • Weighted average interest rate on new production
Slide 6: Loan Portfolio
Loan Portfolio $6.2 Billion Loan Portfolio (as of December 31, 2023) Equipment Commercial Real Estate (CRE)(1,2) Portfolio CRE(2) Investor (non-owner) Finance Outstanding ($ in millions) $3,890 - 9% # of Loans 893 4Q23 Average Yield 5.52% Weighted Average Loan-to-Value Ratio(4) 50.3% Weighted Averag
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 12%. (1) (2) CRE Portfolio C&I Portfolio $3.89B $748M Construction 3% Mixed Use – 3% Oth
Slide 8: CRE Portfolio Geographical Exposure
CRE Portfolio Geographical Exposure ($ in millions) Multifamily by State Construction by State $419 $100 CRE Composition by State Illinois – Other – $14 $3,890 3% $17 4% New York – Other – $80 $19 19% 19% New York – Illinois – $18 California – 18% California – $85 Other – Texas - $211 $63 2% $589 $9
Slide 9: Loan Portfolio Distribution
Loan Portfolio Distribution CRE ($ in millions) C&I ($ in millions) Owner Non-owner Term (2) Lines of Credit (2) Multifamily Construction (1) Occupied Occupied Total Balance $374 $374 Total Balance $763 $2,607 $419 $100 Average $0.36 $0.64 Average $1.01 $2.95 $2.70 $11.15 Median $0.05 $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 $ 143.3 $ 302.5 $ 661.6 $ 1,107.4 Hospitality 223.2 144.7 372.6 740.5 Office 44.7 304.7 225.6 575.0 Other 161.3 449.6 755.6 1,366.5 Commercial Property 572.5 1,201.5 2,015.4 3,789.4 Construction 90.3
Slide 11: USKC Loans & Deposits
USKC(1) Loans & Deposits USKC portfolio represented $764.1 million in loans, or 12% of the loan portfolio and $818.7 million in deposits, or 13% of the deposit portfolio. USKC CRE portfolio had a weighted average debt coverage ratio (2) of 1.94x and weighted average loan-to- value(2) of 58.2%. USKC
Slide 12: Office Loan Portfolio
Office Loan Portfolio The CRE office portfolio(1) was $575.0 million at December 31, 2023, representing 9% of the total loan portfolio. • Average balance and median Portfolio by State Rate Distribution balance of the portfolio were $4.6 million and $1.0 million, respectively • Weighted average debt
Slide 13: Hospitality Segment
Hospitality Segment Hospitality segment represented $740.5 million or 12% of the loan portfolio at December 31, 2023. Convention Center – 3% Airport – • Average balance and median balance of the segment (excluding 7% construction) were $3.8 million and $0.9 million, respectively Resort – 8% • Weight
Slide 14: Retail Segment
Retail Segment Retail segment represented $1.1 billion or 18% of the loan portfolio at December 31, 2023. Illinois • Average balance and median balance of the segment were $1.5 2% million and $0.7 million, respectively Other Georgia 10% 3% • Weighted average debt coverage ratio(1) of the segment was
Slide 15: Residential Real Estate Portfolio
Residential Real Estate Portfolio The RRE(1) portfolio was $962.7 million at December 31, 2023, representing 16% 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-Incom
Slide 16: Equipment Finance Portfolio
Equipment Finance Portfolio Equipment finance portfolio represented $582.3 million or 9% of the loan portfolio at December 31, 2023. Portfolio by Industry Portfolio by Equipment Portfolio by State Wholesale Trade, 4% Trucks 37% (1) Other, Transportation, Machine Tools 7% 21% 28% Earth Moving 8% 6% T
Slide 17: Deposit Base
Deposit Base Noninterest-bearing demand deposits represented 32% of total deposits at December 31, 2023. Estimated uninsured deposit liabilities were 40% of the total deposit liabilities. Brokered deposits remained low at 1% of the deposit base. Deposits ($ in millions) Deposits (as of 4Q23) ($ in m
Slide 18: Net Interest Income | Net Interest Margin
Net Interest Income | Net Interest Margin Net interest income for the fourth quarter was $53.1 million and net interest margin (taxable equivalent) was 2.92%, both down from the previous quarter stemming from higher cost of interest-bearing deposits. 0.23% 3.67% -0.08% 3.28% 3.11% 3.03% 2.92% -0.17%
Slide 19: Net Interest Income Sensitivity
Net Interest Income Sensitivity 24% of the loan portfolio reprices within 1-3 months. Loans – Months to Reset / Maturity(1) . ($ in millions) Fed Funds Rate & Cost of CDs $1,807.1 Fed 4.50% 5.00% 5.25% 5.50% 5.50% Funds Rate(3) Cost of $1,509.6 $414.8 3.31% 3.70% 3.95% 4.24% CDs(2) 2.17% 4Q22 1Q23 2
Slide 20: Noninterest Income
Noninterest Income Noninterest income for the fourth quarter was $6.7 million, down 40% from the previous quarter primarily due to the third quarter benefitting from a $4.0 million gain on a branch sale-and-leaseback. Noninterest Income ($ in millions) 4Q23 Service Charges and Fees ($ in millions) S
Slide 21: Noninterest Expense
Noninterest Expense Continued focus on disciplined expense management. $50 2.00% 1.85% 1.87% 1.87% Noninterest 1.81% 1.83% expense / Average • Noninterest expense was $35.2 million in assets the fourth quarter, up 2.8% from the prior $35.2 quarter $34.3 $34.2 $33.8 $32.8 $4.5 $3.9 $5.0 • Salaries an
Slide 22: Asset Quality – Delinquent & Criticized Loans
Asset Quality – Delinquent & Criticized Loans Asset quality remains strong. Delinquent Loans(1) ($ in millions) Criticized Loans ($ in millions) 2.10% 1.87% 1.82% 1.40% Criticized 0.26% 1.28% 0.23% loans / Delinquent loans Total assets 0.16% / Total assets 0.13% 0.14% $125.2 $15.4 $111.6 $109.6 $13.
Slide 23: Asset Quality – Nonperforming Assets & Nonaccrual Loans
Asset Quality – Nonperforming Assets & Nonaccrual Loans Nonperforming assets were $15.6 million at the end of the fourth quarter, down from $15.9 million at the end of the third quarter. Nonperforming Assets(1) ($ in millions) Nonaccrual Loans ($ in millions) (2) $30 $22.2 (2) 0.27% 0.30% 0.22% 0.21
Slide 24: Asset Quality – Gross & Net Loan Charge-offs
Asset Quality – Gross & Net Loan Charge-offs Net charge-offs for the fourth quarter reflected $6.2 million in recoveries, primarily stemming from $6.1 million in recovery from a 2019 troubled loan relationship. Gross Charge-offs ($ in millions) Net Charge-offs ($ in millions) 0.60% $9.4 0.02% 0.10%
Slide 25: ACL Trends
ACL Trends Allowance for credit losses was $69.5 million as of December 31, 2023, generating an allowance for credit losses to loans of 1.12% consistent with the prior quarter. Allowance for Credit Losses ($ in millions) Credit Loss Expense (Recovery) ($ in millions) $100 1.50% $6 0 1.40% $5.2 $5 1.
Slide 26: ACL Analysis by Loan Type
ACL Analysis by Loan Type ($ in millions) December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 Allowance Loans Allowance Loans Allowance Loans Allowance Loans Allowance Loans CRE $ 40.2 $ 3,889.7 $ 38.9 $ 3,773.0 $ 38.4 $ 3,738.3 $ 39.2 $ 3,784.2 $ 40.6 $ 3,833.4 C&I 1
Slide 27: Securities Portfolio
Securities Portfolio The $967 million securities portfolio (all AFS, no HTM) represented 13% of assets at December 31, 2023, and had a weighted average modified duration of 4.8 years with $101.0 million in an unrealized loss position. (1) Available for Sale US Agy Residential MBS - Maturity Unrealiz
Slide 28: Liquidity
Liquidity The Bank and the Company have ample liquidity resources at December 31, 2023. Liquidity Position ($ in millions) Balance % of Assets Liquidity Ratios Cash & cash equivalents $ 302 4.0% Securities (unpledged) 809 10.7% Liquid Assets to Total Assets Liquid Assets to Deposits Liquid assets 1,
Slide 29: Capital Management
Capital Management Tangible book value per share (TBVPS)(1) increased to $22.75 from $21.45 at the end of the prior quarter. The increase reflects a $27.3 million decrease in the unrealized after-tax loss on AFS, and $11.0 million increase in net income, net of cash dividends paid. TBVPS(1) & TCE/TA
Slide 30: Regulatory Capital
Regulatory Capital The Company exceeds regulatory minimums and the Bank remains well capitalized at December 31, 2023. Company Bank CET1 CET1 4.50% 2.50% 7.00% 6.50% Capital Capital CET1 CET1 11.86% 13.26% Capital Capital 10.75% 12.16% Tier 1 Tier 1 6.00% 2.50% 8.50% 8.00% Capital Capital Tier 1 Tie
Slide 31: Appendix
Appendix A Hanmi Financial Corporation: 31
Slide 32: 4Q23 Financial Summary
4Q23 Financial Summary ($ in millions, except EPS) Change (1) December 31, 2023 September 30, 2023 December 31, 2022 Q/Q Y/Y Income Statement Summary Net interest income $ 53.1 $ 54.9 $ 64.6 -3.1% -17.7% Noninterest income 6.7 11.2 7.5 -40.5% -10.4% Operating revenue 59.8 66.1 72.0 -9.5% -16.9% Noni
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) December 31, September 30, June 30, March 31, December 31, Hanmi Financial Corporation 2023 2023 2023 2023 2022 Assets $ 7,570,341 $ 7,350,140 $ 7,344,924 $ 7,434,130 $ 7,378,262 Less good
Slide 34: Non-GAAP Reconciliation: Pro Forma Regulatory Capital
Non-GAAP Reconciliation: Pro Forma Regulatory Capital ($ in thousands) Company Bank Common Total Common Total Equity Tier 1 Tier 1 Risk-based Equity Tier 1 Tier 1 Risk-based Regulatory capital $ 751,515 $ 773,178 $ 947,285 $ 840,046 $ 840,046 $ 904,153 Unrealized losses on AFS securities (71,928) (7