Hanmi Financial Corporation · NASDAQ:HAFC
Hanmi Financial — Q1 2023 Earnings Presentation
33 slides from Hanmi Financial's earnings presentation, Apr 25, 2023
Slide 1: 1Q23 Earnings Supplemental Presentation
Los Angeles New York/ New Jersey Virginia Chicago Dallas Houston San Francisco San Diego 1Q23 Earnings Supplemental Presentation April 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: 1Q23 Highlights
1Q23 Highlights Net Income Diluted EPS ROAA ROAE NIM Efficiency Ratio TBVPS(1) $22.0M $0.72 1.21% 12.19% 3.28% 49.54% $21.30 • Net income was $22.0 million, or $0.72 per diluted share, down 22.8% from $28.5 million, or $0.93 per diluted share, for the prior quarter Net interest income was $57.9 mi
Slide 5: Loan Production
Loan Production Loan production of $303.6 million for 1Q23, reflecting higher interest rates. 6.85% 7.19% 90000% Average interest 0.0021 5.55% rate on new 4.35% production 80000% 3.95% 70000% ($ in millions) • Average interest rate on new production up $642.2 34 basis points sequentially. 60000% 11%
Slide 6: Loan Portfolio
Loan Portfolio $5.98 Billion Loan Portfolio (as of March 31, 2023) Equipment Commercial Real Estate (CRE)(1) Portfolio CRE(1) Investor (Non-owner Occupied) Finance Outstanding ($ in millions) $3,784 - 10% # of Loans 938 1Q23 Average Yield 5.19% (3) Weighted Average Loan-to-Value Ratio 50.9% Weighted
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 represents 13%. (1) (2) CRE Portfolio C&I Portfolio $3.78B $778M Other – 12% Manufacturing Mixed Use – Construction Other - 27% Retail – - 2
Slide 8: CRE Portfolio Geographical Exposure
CRE Portfolio Geographical Exposure ($ in millions) Multifamily by State Construction by State $370 $113 CRE Composition by State Illinois – Other – $14 $3,784 4% $18 5% New York – Other – $68 $13 18% 12% New York – $18 16% Illinois – $86 2% Other – Texas - California – $64 California – $508 17% $20
Slide 9: Loan Portfolio Distribution
Loan Portfolio Distribution CRE ($ in millions) C&I ($ in millions) Owner Non-owner (1) Term (2) Lines of Credit (2) Multifamily Construction Occupied Occupied Total Balance $396 $382 Total Balance $702 $2,599 $370 $113 Average $0.39 $0.63 Average $0.92 $2.77 $2.42 $11.34 Median $0.05 $0.10 Median $
Slide 10: Loan Portfolio Maturities
Loan Portfolio Maturities ($ in millions) <1 Year 1-3 Years >3 Years Total Real estate loans Retail $ 100.0 $ 230.2 $ 722.2 $ 1,052.4 Hospitality 129.5 229.8 309.6 669.0 Office 41.9 184.4 307.3 533.7 Other 120.9 393.8 901.0 1,415.7 Commercial Property 392.4 1,038.3 2,240.2 3,670.8 Construction 85.1
Slide 11: USKC Loans & Deposits
USKC(1) Loans & Deposits USKC portfolio represented $764.3 million in loans, or 13%, of the loan portfolio and $565.0 million in deposits, or 9%, of the deposit portfolio. USKC CRE portfolio had a weighted average debt coverage ratio(2) of 1.98x and weighted average loan-to- value(2) of 63%. USKC Lo
Slide 12: Office Loan Portfolio
Office Loan Portfolio The CRE office portfolio was $533.7 million at March 31, 2023, representing 9% of the total loan portfolio. Portfolio by State • Median balance within the portfolio Rate Distribution was $0.9 million • Weighted average debt coverage ratio(1) of the segment was 1.99x • Weighted
Slide 13: Hospitality Segment
Hospitality Segment Hospitality segment(1) represented $669.0 million or 11% of the loan portfolio at March 31, 2023. Convention Casino – Center – 1% 4% • The average balance and median balance of the portfolio (excluding Airport – construction) was $3.0 million and $928 thousand, respectively 7% Re
Slide 14: Residential Real Estate Portfolio
Residential Real Estate Portfolio The RRE(1) portfolio was $817.9 million at March 31, 2023, representing 14% 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 (
Slide 15: Equipment Finance Portfolio
Equipment Finance Portfolio Equipment finance portfolio represented $600.2 million or 10% of the loan portfolio at March 31, 2023. Portfolio by Industry Portfolio by Equipment Portfolio by State Trucks 42% Transportation - Machine Tools 8% Other - 23% 31% Earth Moving 6% Healthcare - 6% 4% Trailers
Slide 16: Deposit Base
Deposit Base Noninterest-bearing demand deposits represented 38% of total deposits at March 31, 2023. Estimated uninsured deposit liabilities, excluding preferred deposits and company deposits, were 40% of the total deposit liabilities. Brokered deposits remained low at 1% of the deposit base. Depos
Slide 17: Net Interest Income | Net Interest Margin
Net Interest Income | Net Interest Margin Net interest income for the first quarter was $57.9 million and net interest margin (taxable equivalent) was 3.28%, both down from the previous quarter because of higher deposit interest expense. 3.66% 0.05% 3.67% 0.21% 0.03% 3.55% 3.28% 3.10% -0.60% -0.06%
Slide 18: Net Interest Income Sensitivity
Net Interest Income Sensitivity 23% of the loan portfolio reprices within 1-3 months. (1) Loans – Months to Reset / Maturity . ($ in millions) Fed Funds Rate & Cost of CDs $2,164.3 Fed 5.00% Funds Cost of 3.25% 4.50% Rate(3) CDs(2) 1.75% 0.50% $524.8 3.31% 0.35% 0.97% 2.17% 0.39% $1,545.3 1Q22 2Q22
Slide 19: Noninterest Income
Noninterest Income Noninterest income for the first quarter was $8.3 million, up 11.8% from the previous quarter principally from loan- customer rate-swap fees and the absence of the fourth quarter valuation adjustment to bank-owned life insurance. Noninterest Income ($ in millions) 1Q23 Service Cha
Slide 20: Noninterest Expense
Noninterest Expense Continued focus on disciplined expense management. $50 2.00% 1.86% 1.88% 1.85% Noninterest 1.83% 1.81% expense / Average • Noninterest expense was $32.8 million in assets the first quarter, down 3.1% from the prior quarter, primarily stemming from $31.7 $31.5 $33.3 $33.8 $32.8 lo
Slide 21: Asset Quality – Delinquent & Criticized Loans
Asset Quality – Delinquent & Criticized Loans Asset quality remains strong. Delinquent Loans(1) ($ in millions) Criticized Loans ($ in millions) 3.72% 2.94% Criticized 0.26% loans / Delinquent loans 2.36% 2.10% Total loans / Total loans 1.87% 0.13% 0.10% 0.09% $198.4 0.07% $170.7 $133.5 $125.2 (3) $
Slide 22: Asset Quality – Nonperforming Assets & Nonaccrual Loans
Asset Quality – Nonperforming Assets & Nonaccrual Loans Nonperforming assets and loans increased from the previous quarter because of a $10.0 million C&I loan in the healthcare industry (specific allowance of $2.5 million). Nonperforming Assets ($ in millions) Nonaccrual Loans ($ in millions) $30 (1
Slide 23: Asset Quality – Gross & Net Loan Charge-offs
Asset Quality – Gross & Net Loan Charge-offs Net charge-offs for the first quarter represented 0.10% of average loans on an annualized basis. Gross Charge-offs ($ in millions) Net Charge-offs ($ in millions) $2.2 Net Charge- $2.1 0.08% 0.10% offs / 0.01% 0.02% Average loans $0.6 -0.01% $1.5 $1.4 $1.
Slide 24: ACL Trends
ACL Trends Allowance for credit losses was $72.2 million as of March 31, 2023, generating an allowance for credit losses to loans of 1.21% compared with 1.20% at the end of the prior quarter. Allowance for Credit Losses ($ in millions) Credit Loss Expense (Recovery) ($ in millions) $100 1.50% $4 1.4
Slide 25: ACL Analysis by Loan Type
ACL Analysis by Loan Type ($ in millions) March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 Allowance Loans Allowance Loans Allowance Loans Allowance Loans Allowance Loans CRE $ 39.2 $ 3,784.2 $ 40.6 $ 3,833.4 $ 42.7 $ 3,853.9 $ 45.6 $ 3,829.7 $45.9 $3,771.5 C&I 15.3 7
Slide 26: Securities Portfolio
Securities Portfolio Securities portfolio (all AFS, no HTM) represented 13% of assets at March 31, 2023, and had a weighted average modified duration of 5.2 years with $111 million in an unrealized loss position. 12% of the portfolio’s principal is expected to be paid down in 2023. (1) Available for
Slide 27: Liquidity
Liquidity The Bank and the Company have ample liquidity resources at March 31, 2023. Liquidity Position ($ in millions) Balance % of Assets Liquidity Ratios Cash & cash equivalents $ 386 5.2% Securities (unpledged) 832 11.2% Liquid Assets to Total Assets Liquid Assets to Deposits Liquid assets 1,221
Slide 28: Capital Management
Capital Management Tangible book value per share (TBVPS)(1) increased to $21.30 from $20.54 at the end of the prior quarter. 1Q23 TBVPS(1) and TCE/TA(1) ratio were impacted by $79.1 million of negative AOCI reflecting changes in the value of the securities portfolio resulting from interest rate chan
Slide 29: Regulatory Capital
Regulatory Capital The Company exceeds regulatory minimums and the Bank remains well capitalized at March 31, 2023. Company Bank CET1 CET1 4.50% 2.50% 7.00% 6.50% Capital Capital CET1 CET1 11.59% 13.06% Capital Capital 10.36% 11.83% Tier 1 Tier 1 6.00% 2.50% 8.50% 8.00% Capital Capital Tier 1 Tier 1
Slide 30: Appendix
Appendix A Hanmi Financial Corporation: 30
Slide 31: 1Q23 Financial Summary
1Q23 Financial Summary ($ in millions, except EPS) Change (1) March 31, 2023 December 31, 2022 March 31, 2022 Q/Q Y/Y Income Statement Summary Net interest income $ 57.9 $ 64.6 $ 51.0 -10.4% 13.5% Noninterest income 8.3 7.5 8.5 11.8% -2.2% Operating revenue 66.2 72.0 59.5 -8.1% 11.3% Noninterest exp
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) March 31, December 31, September 30, June 30, March 31, Hanmi Financial Corporation 2023 2022 2022 2022 2022 Assets $ 7,434,130 $ 7,378,262 $ 7,128,511 $ 6,955,968 $ 6,737,052 Less goodwil
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 $ 718,717 $ 740,064 $ 917,551 $ 809,474 $ 809,474 $ 879,961 Unrealized losses on AFS securities (79,059) (7