Hanmi Financial Corporation · NASDAQ:HAFC
Hanmi Financial — Piper Sandler California Community Bank Tour October 2022
37 slides from Hanmi Financial's conference presentation, Oct 31, 2022
Slide 1: Piper Sandler California Community Bank Tour October 2022
Piper Sandler California Community Bank Tour October 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: 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, allowance for credit losses to loans r
Slide 4: Hanmi Franchise at a Glance
Hanmi Franchise at a Glance Loans $5.8B Deposits $6.2B TCE/TA (2) Ratio 8.40% 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 5: 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 6: 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 7: 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 66%, as of September 30, 2022, through portfolio diversification that includes equipment finance, RRE, and multi - f
Slide 8: 3Q22 Highlights
3Q22 Highlights Diluted EPS $0.89 ROAA 1.52% NIM 3.66% Efficiency Ratio 46.22% TBVPS (1) $19.60 Net Income $27.2M • Net income was $27.2 million, or $0.89 per diluted share, up 8.5% from $25.1 million, or $0.82 per diluted share, for the prior quarter and up 2.3% from $26.6 million, or $0.86 per dil
Slide 9: Loan Production
Loan Production 43% 47% 46% 42% 27% 24% 19% 18% 16% 18% 13% 15% 17% 17% 29% 11% $625.1 8% 14% $506.9 8% 12% 14% $492.3 9% ($ in millions) $500.0 9% 8% 17% $642.2 3Q21 4Q21 Commercial Real Estate C & I 1Q22 2Q22 Equipment Finance 3Q22 (2) RRE (1) SBA • Average interest rate on new production up 120 b
Slide 10: Average Loan Trend
Average Loan Trend $4,039 $3,423 $2,902 $2,441 $2,157 $4,456 $4,508 $4,685 $4,795 $5,502 2013 2014 2015 2016 2019 2020 2021 2022 YTD 2017 2018 Average Loans Receivable Strong average loan growth reflecting an 11% CAGR since 2013. ($ in millions) 10
Slide 11: Successful Portfolio Diversification Strategy
Successful Portfolio Diversification Strategy 11 Loan Composition 9/30/2022 Loan Composition 12/31/2013 $5.80 Billion $2.23 Billion (1) RRE includes Consumer loans (2) $144.5M or 7.6% and $102.9M or 2.7% of the CRE portfolio is unguaranteed SBA loans for December 2013 and September 2022, respectivel
Slide 12: Loan Portfolio
Loan Portfolio Commercial Real Estate (1) Portfolio Outstanding ($ in millions) $3,854 Median Balance ($ in millions) $0.71 3Q22 Average Yield 4.57% $5.80 Billion Loan Portfolio (as of 09/30/22) CRE Investor Occupied - 45% 12 CRE Owner - 13% CRE Multi Family - 6% CRE Construction - 2% RRE - 11% C&I
Slide 13: Loan Portfolio Diversification
Loan Portfolio Diversification Loan portfolio is well diversified across collateral types and industry types; CRE represents 66% of the total portfolio and C&I represents 13%. CRE Portfolio (1) $3.85B C&I Portfolio (2) $732M Retail – 28% Hospitality – 18% Office – 12% Multifamily – 10% Gas Station –
Slide 14: CRE Portfolio Geographical Exposure
CRE Portfolio Geographical Exposure CRE Composition by State $3,854M Multifamily by State $409M Construction by State $102M Owner Occupied by State $732M Investor Occupied by State $2,610M ($ in millions) California – $2,647 69% Texas – $418 11% New York – $205 5% Illinois – $76 2% Other – $508 13%
Slide 15: Hospitality Segment by Location Type
Hospitality Segment by Location Type Total Hospitality Segment: $682.1M (1) Segment represents exposure in CRE (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 whose location/amenities make it a distinct t
Slide 16: Residential Real Estate Portfolio
Residential Real Estate Portfolio (2) QM - 3% (3) Non - QM - 87% (4) Jumbo Non - QM - 10% Non - QM Jumbo Non - QM QM 16 The RRE (1) portfolio was $649.6 million for the third quarter, representing 11% of the total loan portfolio. Our conservative underwriting policy focuses on high - quality mortgag
Slide 17: Equipment Finance Portfolio
Equipment Finance Portfolio A $565.4 million equipment finance portfolio, with an average size of $46 thousand, is diversified by industry, equipment type and geography. Transportation - 35% Construction - 13% Waste Management - 12% Manufacturing - 11% Health Care - 4% Professional Services - 4% Ret
Slide 18: Average Deposit Trend
31% 31% 30% 33% 30% 29% 27% 34% 41% 46% 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 $5,906 2013 2014 2015 2020 2021 2022 YTD 2016 2017 Noninterest - bearing deposits 2018 2019 Interest - bearing deposits Average Deposit Trend ($ in millions)
Slide 19: Deposit Base
Deposit Base Deposits increased to $6.20 billion, up 4% from the prior quarter and up 8% from the same quarter last year. • Noninterest - bearing demand deposits relatively unchanged from the prior quarter and increased 9% from the same quarter last year. Noninterest - bearing demand deposits repres
Slide 20: Pretax Pre-Provision Income (PTPP)
Pretax Pre - Provision Income (PTPP) • Pretax, pre - provision income (1) was $38.7 million for the third quarter, up 5.0% from the prior quarter and up 29.1% from the same quarter last year. • PTPP over average assets for 3Q22 was 2.17% compared with 2.14% the prior quarter, an increase of 3 bps. (
Slide 21: Net Interest Income | Net Interest Margin
Net Interest Income | Net Interest Margin Net interest income was $63.1 million for the third quarter compared with $59.0 million for the prior quarter; net interest margin for the quarter was 3.66% compared with 3.55% for the prior quarter. $50.0 $49.5 $51.0 $63.1 $59.0 3.07% 2.96% 3.10% 3.55% 3.66
Slide 22: Net Interest Income Sensitivity; CD Maturities
Deposits – CD Maturities $523.4 Net Interest Income Sensitivity 25% of the loan portfolio reprices within 1 - 3 months. $1,598.7 $1,451.2 $541.3 $1,554.2 $2,140.0 $781.2 1 - 3 Months 4 - 12 Months 1 - 2 Years 2 - 3 Years 3 - 5 Years >5 Years Fixed ($) Variable ($) Loans – Months to Reset / Maturity
Slide 23: Noninterest Income
$3.0 45% $1.1 17% $0.6 9% $0.2 4% $1.7 25% Service charges on deposit accounts Trade finance and other service charges and fees Servicing income Bank - owned life insurance income All other operating income Noninterest Income ($ in millions) Service Charges and Fees (as of 1Q22) ($ in millions) SBA
Slide 24: Noninterest Expense
Noninterest Expense • Noninterest expense was $33.3 million in the third quarter, up 5.7% from the prior quarter • The efficiency ratio for the third quarter was 46.22% compared to 46.05% for the prior quarter Continued focus on disciplined expense management. ($ in millions) Noninterest expense / A
Slide 25: ACL Trends
ACL Trends Allowance for credit losses was $71.6 million as of September 30, 2022 generating an allowance for credit losses to loans of 1.23% compared with 1.29% at the end of the prior quarter. ($ in millions) $76.6 $72.6 $71.5 $73.1 $71.6 1.58% 1.41% 1.34% 1.29% 1.23% 3Q21 4Q21 1Q22 2Q22 3Q22 Allo
Slide 26: ACL Analysis by Loan Type
ACL Analysis by Loan Type ($ in millions) September 30, 2022 June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 Allowance Loans Allowance Loans Allowance Loans Allowance Loans Allowance Loans CRE $ 42.7 $ 3,853.9 $ 45.6 $ 3,829.7 $45.9 $3,771.5 $48.4 $3,701.9 $55.3 $3,528.5 C&I 14.9 7
Slide 27: Asset Quality
$0.7 $21.9 $14.0 $12.1 $11.7 $12.4 Asset Quality ($ in millions) 0.32% 0.20% 0.18% 0.17% 0.17% Nonperforming assets / Total assets $130.6 $95.3 $141.0 $80.5 $213.0 $155.9 $198.4 $133.5 $170.7 $21.2 $0.7 $0.7 $13.3 $11.4 $0.7 $11.0 $0.8 $11.6 $82.4 $60.6 $57.4 $53.0 $47.7 3Q21 4Q21 1Q22 2Q22 3Q22 3Q2
Slide 28: 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, June 30, 2022 and September 30, 2022 was $2.8 million, $2.2 million, $2.0 million, and $2.2 million, respectively (2) RRE includes consumer loans
Slide 29: Capital Management
(1) Non - GAAP financial measure, refer to the non - GAAP reconciliation slides (2) Rate at the end of the quarter Capital Management Tangible book value per share (TBVPS) (1) decreased to $19.60 from $19.91 at the end of the prior quarter. 3Q22 TBVPS (1) and TCE/TA (1) ratio were impacted by $29.5
Slide 30: Regulatory Capital
Regulatory Capital The Company exceeds regulatory minimum and the Bank remains well capitalized. 8.00% 6.00% 4.50% 2.50% 2.50% 2.50% 14.36% 11.53% 11.19% 10.50% 8.50% 7.00% Total Capital Tier 1 Capital CET1 Capital Minimum Requirement Capital Conservation Buffer Company 10.00% 8.00% 6.50% 13.73% 12.
Slide 31: 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 (1) 67% Femal
Slide 32: Appendix
Appendix 32
Slide 33: 3Q22 Financial Summary
3Q22 Financial Summary Profitability Metrics Return on average assets Return on average equity TCE/TA (2) Net interest margin Efficiency ratio Note: numbers may not foot due to rounding (1) Percentage change calculated from dollars in thousands; change in basis points for profitability metrics (2) N
Slide 34: Non-GAAP Reconciliation: Tangible Common Equity to Tangible Asset Ratio
Non - GAAP Reconciliation: Tangible Common Equity to Tangible Asset Ratio 34 (1) There were no preferred shares outstanding at the periods indicated September 30, June 30, March 31, December 31, September 30, Hanmi Financial Corporation 2022 2022 2022 2021 2021 Assets $ 7,128,511 $ 6,955,968 $ 6,737
Slide 35: 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 36: 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 37: 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%
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