Hanmi Financial Corporation · NASDAQ:HAFC
Hanmi Financial — Community Bank Investor Conference August 2022
36 slides from Hanmi Financial's conference presentation, Aug 1, 2022
Slide 1: Community Bank Investor Conference August 2022
Community Bank Investor Conference August 2022 Los Angeles New York/ New Jersey Virginia Chicago Dallas Houston San Francisco San Diego
Slide 2: 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 , including, but not limited t
Slide 3: Hanmi Franchise at a Glance
Hanmi Franchise at a Glance Loans $5.6B Deposits $5.9B TCE/TA (2) Ratio 8.74% Second Largest Korean - American Bank in the U.S. • Founded in 1982 in Los Angeles, as the first Korean - American bank • 35 full - service branches and 8 loan production offices across 9 states • Focused on MSAs with high
Slide 4: Management Team
Name Position Banking Experience (Years) Hanmi Experience (Years) Previous Experience Bonnie Lee President & CEO 36 9 BBCN Bancorp, Shinhan Bank America, Nara Bank Romolo Santarosa SEVP, Chief Financial Officer 31 7 Opus Bank, First California Financial Group Anthony Kim EVP, Chief Banking Officer 2
Slide 5: The Hanmi Story
The Hanmi Story “For 40 years, we have been dedicated to helping our stakeholders bank on their dreams . Our close customer partnerships , along with our deep community ties , have enabled Hanmi to grow and flourish and position us exceptionally well for the next 40 years.” 1982 1988 2001 2004 First
Slide 6: Why Hanmi?
Why Hanmi? • Strong average loan growth reflecting an 11% CAGR since 2013 • Significant progress reducing CRE concentration from 85% of the total portfolio, as of December 31, 2013 to 67%, as of June 30, 2022, through portfolio diversification that includes leasing (equipment finance), RRE, and mult
Slide 7: 2Q22 Highlights
2Q22 Highlights Diluted EPS $0.82 ROAA 1.45% NIM 3.55% Efficiency Ratio 46.05% TBVPS * $19.91 Net Income $25.1M *Non - GAAP financial measure; refer to the non - GAAP reconciliation slide • Net income was $25.1 million, or $0.82 per diluted share, up 21.0% from $20.7 million, or $0.68 per diluted sh
Slide 8: Loan Production
Loan Production 3.74% 3.90% 3.91% 3.95% 4.35% Commercial Real Estate C & I Leases RRE • Commercial real estate loan production for the second quarter was $271.0 million $625.1 8% $642.2 11% – Weighted average loan to value on new CRE origination for the second quarter was 61 . 6 % , compared to 42 .
Slide 9: Average Loan Trend
Average Loan Trend $4,039 $3,423 $2,902 $2,441 $2,157 $4,456 $4,508 $4,685 $4,795 $5,403 2013 2014 2015 2016 2019 2020 2021 2022 YTD 2017 2018 Average Loans Receivable Strong average loan growth reflecting an 11% CAGR since 2013. ($ in millions) 9
Slide 10: Successful Portfolio Diversification Strategy
Successful Portfolio Diversification Strategy Loan Composition 6/30/2022 Loan Composition 12/31/2013 CRE – 85% C&I – 10% RRE – 5% $5.66 Billion $2.23 Billion CRE – 67% 10 RRE – 9% C&I – 14% Leasing – 10% Significant progress reducing CRE concentration from 85% of total portfolio to 67%. (1) RRE incl
Slide 11: Loan Portfolio
Loan Portfolio RRE & Consumer Portfolio $ in millions Outstanding $433 1Q22 Average Yield 3.46% Commercial & Industrial Portfolio $ in millions Outstanding $633 1Q22 Average Yield 4.06% Commercial Real Estate Portfolio (1) $ in millions Outstanding $3,830 2Q22 Average Yield 4.26% $5.66 Billion Loan
Slide 12: Loan Portfolio Diversification
Loan Portfolio Diversification Loan portfolio is well diversified across collateral types and industry types; CRE represents 68% of the total portfolio and C&I represents 14%. CRE Portfolio $3.83B C&I Portfolio $767M Retail – 29% Hospitality – 18% Office – 13% Multifamily – 9% Gas Station – 6% Indus
Slide 13: CRE Portfolio Geographical Exposure
CRE Portfolio Geographical Exposure CRE Composition by State $3,830M Multifamily by State $362M Construction by State $95M Owner Occupied by State $751M Investor Occupied by State $2,621M ($ in millions) California – $2,687 70% Texas – $366 10% New York – $187 5% Illinois – $78 2% Other – $512 13% C
Slide 14: Hospitality Segment by Location Type
Hospitality Segment by Location Type Total Hospitality Segment: $672.5M (1) Segment represents exposure across the loan portfolio, inclusive of CRE and C&I (2) Metropolitan is categorized as a location that is in a major city and in proximity to downtown areas; destination is categorized as a hotel
Slide 15: Residential Real Estate Portfolio
Residential Real Estate Portfolio Jumbo Non - QM - 13% QM ( - 2) 3% (3) Non - QM - 84% Non - QM Jumbo Non - QM QM 15 The RRE (1) portfolio was $521.6 million for the second quarter, representing 9% of the total loan portfolio. Our conservative underwriting policy focuses on high - quality mortgage o
Slide 16: Leasing Portfolio
Leasing Portfolio A $537.4 million equipment finance portfolio, with an average size of $45 thousand, is diversified by industry, equipment type and geography. Transportation - 36% Construction - 12% Waste Management - 11% Manufacturing - 11% Health Care - 4% Professional Services - 4% Retail Trade
Slide 17: Average Deposit Trend
31% 31% 30% 33% 30% 29% 27% 34% 41% 46.00% 69% 69% 70% 67% 70% 71% 73% 66% 59% 54% $2,391 $2,872 $3,503 $3,608 $4,160 $4,461 $4,691 $5,560 $4,946 $5,838 2013 2014 2015 2020 2021 2022 YTD 2016 2017 Noninterest - bearing deposits 2018 2019 Interest - bearing deposits Average Deposit Trend ($ in millio
Slide 18: Deposit Base
Deposit Base Deposits increased to $5.98 billion, up 3% from the prior quarter and up 6% from the same quarter last year. • Noninterest - bearing demand deposits increased 4% from the prior quarter and 18% from the same quarter last year • Noninterest - bearing demand deposits increased to 47% of to
Slide 19: Pretax Pre-Provision Income (PTPP)
Pretax Pre - Provision Income (PTPP) • Pretax, pre - provision income (1) was $36.9 million for the second quarter, up 32.7% from the prior quarter and up 33.3% from the same quarter last year. • PTPP over average assets for 2Q22 was 2.14% compared with 1.63% the prior quarter, an increase of 51 bps
Slide 20: Net Interest Income | Net Interest Margin
Net Interest Income | Net Interest Margin Net interest income was $59.0 million for the second quarter compared with $51.0 million for the prior quarter; net interest margin for the quarter was 3.55% compared with 3.10% for the prior quarter. $49.6 $50.0 $49.5 $51.0 $59.0 3.19% 3.07% 2.96% 3.10% 3.5
Slide 21: Deposits – CD Maturities; Net Interest Income Sensitivity
Deposits – CD Maturities Net Interest Income Sensitivity 28.1% of the loan portfolio reprices within 1 - 3 months. $168.1 $366.7 $1,619.7 $404.8 $1,595.8 $128.7 $550.9 $247.6 $1,763.9 $300.2 $69.2 $231.0 $290.6 $102.7 $187.9 $495.4 $2,170.6 $652.4 1 - 3 Months 4 - 12 Months 1 - 2 Years 2 - 3 Years 3
Slide 22: Noninterest Income
$2.9 44% $0.7 10% $0.2 4% $1.3 20% Service charges on deposit accounts Trade finance and other service charges and fees Servicing income Bank - owned life insurance income $1.4 22% All other operating income Noninterest Income ($ in millions) Service Charges and Fees (as of 1Q22) ($ in millions) SBA
Slide 23: Noninterest Expense
Noninterest Expense • Noninterest expense was $31.5 million for the second quarter, down 0.7% from the prior quarter and up 2.2% from the same quarter last year • The efficiency ratio for the second quarter improved to 46.05% from 53.29% for the prior quarter Continued focus on disciplined expense m
Slide 24: ACL Trends
ACL Trends Allowance for credit losses was $73.1 million as of June 30, 2022 generating an allowance for credit losses to loans of 1.29% compared with 1.34% at the end of the prior quarter. ($ in millions) $83.4 $76.6 $72.6 $71.5 $73.1 1.73% 1.58% 1.41% 1.34% 1.29% 2Q21 3Q21 4Q21 1Q22 2Q22 Allowance
Slide 25: ACL Analysis by Loan Type
ACL Analysis by Loan Type ($ in millions) June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 Allowance Loans Allowance Loans Allowance Loans Allowance Loans Allowance Loans CRE $ 45.6 $ 3,829.7 $45.9 $3,771.5 $48.4 $3,701.9 $55.3 $3,528.5 $62.3 $3,452.0 C&I 14.3 766.8 12
Slide 26: Asset Quality
$52.0 $0.7 $0.7 $52.7 $21.9 $14.0 $12.1 $11.7 Nonperforming loans OREO ($ in millions) Asset Quality 0.80% 0.32% 0.20% 0.18% 0.17% Nonperforming assets / Total assets $110.1 $121.8 $130.6 $141.0 $95.3 $80.5 $231.9 $213.0 $155.9 $198.4 $133.5 3.52% 3.14% 2.27% 2.94% 1.92% $21.2 $0.7 $13.3 $0.7 $11.4
Slide 27: Asset Quality – Nonaccrual Loans
Asset Quality – Nonaccrual Loans Note: Numbers may not add due to rounding (1) Specific allowance for credit losses at December 31, 2021, March 31, 2022, and June 30, 2022 was $2.8 million, $2.2 million, and $2.0 million respectively (2) RRE includes consumer loans $9.1 $6.9 $7.1 $1.7 $9.7 $4.8 $2.5
Slide 28: Capital Management
Capital Management • Tangible book value per share (TBVPS) grew by 3.3% in the last twelve months • 2Q22 TBVPS (1) and TCE/TA (1) ratio were impacted by $21.7 million unrealized after - tax loss recorded in AOCI due to changes in the value of the securities portfolio stemming from increased interest
Slide 29: Strong Company Culture and ESG Commitment
Strong Company Culture and ESG Commitment We are challenging ourselves to do more and lead the way to achieve our vision of the Company • Seasoned team with deep community ties • Close customer partnerships • Investments in talent and technology Strong Company Culture Commitment to ESG 67% Female ~8
Slide 30: Appendix
Appendix Ls CCT
Slide 31: 2Q22 Financial Summary
2Q22 Financial Summary Note: numbers may not foot due to rounding (1) Percentage change calculated from dollars in thousands; change in basis points for profitability metrics (2) Non - GAAP financial measure, refer to the non - GAAP reconciliation slide EPS - Diluted $ 0.82 $ 0.68 $ 0.72 20.6% 13.9%
Slide 32: Non-GAAP Reconciliation: Tangible Common Equity to Tangible Asset Ratio
Non - GAAP Reconciliation: Tangible Common Equity to Tangible Asset Ratio 32 (1) There were no preferred shares outstanding at the periods indicated June 30, March 31, December 31, September 30, June 30, Hanmi Financial Corporation 2022 2022 2021 2021 2021 Assets $ 6,955,968 $ 6,737,052 $ 6,858,587
Slide 33: Non-GAAP Reconciliation – PPP (FY 2021)
Non - GAAP Reconciliation – PPP (FY 2021) (1) Net interest income (as applicable) divided by average interest - earning assets (as applicable), annualized (2) Noninterest expense (as applicable) divided by the sum of net interest income and noninterest income (as applicable) In response to the COVID
Slide 34: Non-GAAP Reconciliation – PPP (4Q21)
Non - GAAP Reconciliation – PPP (4Q21) As of December 31, 2021 Tangible Common Equity to Tangible Assets Tangible assets $ 6,847,192 Less first and second draw PPP loans (2,976) Tangible assets adjusted for PPP loans $ 6,844,216 Tangible stockholders' equity (1) $ 632,022 TCE / TA Ratio (1) 9.23% TC
Slide 35: Non-GAAP Reconciliation – PPP (3Q21)
Non - GAAP Reconciliation – PPP (3Q21) As of September 30, 2021 Tangible Common Equity to Tangible Assets Tangible assets $ 6,765,083 Less first and second draw PPP loans (21,895) Tangible assets adjusted for PPP loans $ 6,743,188 Tangible stockholders' equity (1) $ 607,605 TCE / TA Ratio (1) 8.98%
Slide 36: Non-GAAP Reconciliation – PPP (2Q21)
Non - GAAP Reconciliation – PPP (2Q21) GAAP financial measures that may be used by other companies. 36 As of June 30, 2021 Tangible Common Equity to Tangible Assets Tangible assets $ 6,567,352 Less first and second draw PPP loans (158,134) Tangible assets adjusted for PPP loans $ 6,409,218 Tangible
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