Hanmi Financial Corporation · NASDAQ:HAFC
Hanmi Financial — 2020 U.S. Bank Conference
33 slides from Hanmi Financial's conference presentation, Sep 8, 2020
Slide 1: 2020 U.S. Bank Conference
2020 U.S. Bank Conference September 9 - 10, 2020
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: Message from President and CEO Bonnie Lee
“Hanmi remains committed to providing value and support to our customers, while making sure we are staying safe for our families and our communities. Amidst the easing of shelter in place restrictions, we are seeing a resurgence of new COVID - 19 cases. Some states are pausing reopening plans in res
Slide 4: Managing Through Turbulent Times
Managing Through Turbulent Times C o mmu n ity Customers Employees C O M M U N I T Y • Published financial literacy videos through social media channels in response to the increase in phishing and scams related to COVID - 19 • Continue to educate our customers about the SBA’s Disaster Loan Programs
Slide 5: Hanmi's Strengths in the Midst of COVID-Crisis
Hanmi’s Strengths in the Midst of COVID - 19 Crisis C a p it a l L i q u i d ity B a l a nce Sheet B A L A N C E S H E E T • The bank’s asset quality remains stable, with NPAs at 0.94% of total assets and ACL at 1.79% of loans (1.91% excluding PPP loans) 5 C A P I T A L • The bank remains well capit
Slide 6: Supporting our Customers
Supporting our Customers PAYCHECK PROTECTION PROGRAM (1) 3,064 # of Loans Funded $309M $ of Loans Funded $11M Total Fees FUNDING DISTRIBUTION LOANS UP TO $350K (5% FEE) 2,913 $155M $53K $7.8M # of Loans Funded $ Total Fund i ng $ Total Fees $ Average Balance LOANS BETWEEN $350K AND $2M (3% FEE) 134
Slide 7: Encouraging Modification Trend
$339 $290 $437 CRE - Hospitality CRE - Retail CRE - Other ($ million) C&I / Consumer $531 $238 $227 $82 $222 Encouraging Modification Trend • 49% decline in modifications (1) since June 30 th – from $1.3B to $671M • Nearly half of these second - round modifications (1) will provide interest payments
Slide 8: The Hanmi Story
The Hanmi Story 1982 First Korean American Bank in the U.S. 1988 Began offering SBA loans Acquired First Global Bank 2001 Listed HAFC common stock 2004 Acquired Pacific Union Bank 2007 Completed $70 million secondary common stock offering 8 2016 Acquired & commenced Commercial Equipment Leasing Divi
Slide 9: Management Team
Management Team 9 Name Position Banking Experience (Years) Hanmi Experience (Years) Previous Experience Bonnie Lee President & CEO 34 7 BBCN Bancorp, Shinhan Bank America, Nara Bank Romolo Santarosa SEVP, Chief Financial Officer 29 5 Opus Bank, First California Financial Group, Sanwa Bank, Shawmut N
Slide 10: Hanmi at a Glance
Hanmi at a Glance Focus on growth and value preservation for our shareholders • Second largest Korean American Bank with 38 years of history and $6.2 billion in assets • 35 branches coast - to - coast in major banking markets & 9 LPOs • Commitment to conservative, disciplined underwriting, and stron
Slide 11: 2Q20 Highlights
2Q20 Highlights Diluted EPS $ 0 .30 ROAA 0. 63 % NIM 3. 15 % Efficiency TBVPS * 41.51% $17.47 Net Income $ 9 .2M • Net income of $9.2 million, or $0.30 per diluted share; second quarter results included credit loss expense of $24.6 million • Loans receivable increased 6.2% from prior quarter to $4.8
Slide 12: Income Statement Summary
($ million, except EPS) Change (1,2) 2Q20 1Q20 2Q19 Q/Q Y/Y Income Statement Summary Net interest income $ 44.4 $ 44.0 $ 43.0 1.1% 3.4% Noninterest income 20.9 6.2 7.7 236.4% 170.8% Operating revenue 65.4 50.2 50.7 30.2% 28.9% Noninterest expense 27.1 31.1 30.1 - 12.7% - 10.0% Credit Loss Expense 24
Slide 13: Pretax, Pre-Provision Income and Noninterest Expense
$34 .1 $31 .1 4Q19 1Q20 2Q20 (1) Excludes gains on securities of $15.7 million for 2Q20 and $0.6 million for 4Q19 $19 .1 $19 .4 4 Q 19 1 Q 20 2 Q 20 ($ million) 2Q20 1Q20 4Q19 • Operating revenue was relatively stable Income Statement Summary Net interest income $ 44.4 $ 44.0 $ 43.9 quarter - over -
Slide 14: Successful Portfolio Diversification Strategy
Successful Portfolio Diversification Strategy Total Portfolio: $2.9 billion Total Portfolio: $4.8 billion Significant progress in reducing CRE concentration from 84% of total portfolio to 68% today 11% CAGR CRE 68% Loan Composition 2Q 2015 Loan Composition 2Q 2020 C&I (1) 9% (3) RRE includes Consume
Slide 15: Loan Portfolio Composition
CRE $ 3 ,266 (68%) 15 Leases $463 (9%) RRE $366 (8%) Loan Portfolio Composition $4.83 Billion Loan Portfolio (as of 2Q20) Loan Portfolio Composition ($ million) RRE & Consumer Portfolio (1) $ in million Outstanding $366 Average Size $0.4 QTD Average Yield 3.53% Commercial & Industrial Portfolio (2)
Slide 16: Loan Portfolio Diversification
Reta il 26% Gas Station 6% Of f i c e 8% In f orma t ion 6% S er v i c es 5% Mixed Use Other 15% Wholesale T rade 15% 5% Industrial 5% H o spitality 29% Manufacturing 10% A partment 6% Other s (1) 55% Retail Trade 9% Loan Portfolio Diversification 16 Loan portfolio is well diversified across propert
Slide 17: Hospitality Segment
$294 $131 $55 $94 $209 $13 $50 $22 $16 $50 California Texas Il l inois Washington New York Other Modifi e d Non - Modified 17 Hospitality Segment Total Hospitality Segment: $935M *Geography based on the collateral address ** Debt coverage and loan to value ratio calculated at the time of origination
Slide 18: Retail Segment
Retail Segment Retail segment is $843 million, representing 18% of the loan portfolio. Retail Portfolio Detail Total Retail Segment: $843M • Average balance within the segment is $1.2 million • 53% of the segment representing $443 million has 1.5x or better debt coverage ** ratio o Weighted average
Slide 19: Loan Trends
$ 4 ,4 9 1 $ 4 ,5 2 0 $ 4 ,4 8 8 $ 4 ,5 1 8 $ 4 ,6 8 0 5.08% 5.08% 4.97% 4.86% 4.49% 2 Q 19 3 Q 19 4 Q 19 1 Q 20 2 Q 20 Average Loans Receivable Average Yield $ 4 ,0 3 9 $3,423 $2,902 $ 4 ,4 5 6 $ 4 ,5 0 8 5.13% 4.81% 4.85% 4.93% 5.09% 4.75% 4.67% 2 0 15 2 0 16 2 0 17 2 0 18 2 0 19 Average Loans Rec
Slide 20: SBA Loan Sales and Gain on Sale
$ 1 ,0 6 0 $1,767 $ 1 ,4 9 9 $ 1 ,1 5 4 8.60% 9.15% 7.60% 8.35% Gain on Sale SBA Premium ($ in thousands) SBA Loan Sales $ 1 5.4 20 $ 2 4.3 $ 2 5.0 $ 1 8.2 $0.0 $0 2Q19 3Q19 4Q19 1Q20 2Q20 2Q19 3Q19 4Q19 1Q20 2Q20 ($ in millions) Hanmi did not sell any SBA loans during the second quarter because of
Slide 21: Asset Quality in New CRE Originations
Asset Quality in New CRE Originations 5 4 .5% 5 4 .2% 5 3 .7% 5 1 .9% 5 5 .5% 2 Q 19 3 Q 19 4 Q 19 1 Q 20 2 Q 20 Weighted Average Loan to Value 1.78x 1.71x 1.68x 1.78x 1.70x 2 Q 19 3 Q 19 4 Q 19 1 Q 20 2 Q 20 Weighted Average Debt Coverage Ratio 21
Slide 22: Asset Quality
1.3 8 % 1.42% 1.38% 1.15% 1.21% 2 Q 19 3 Q 19 4 Q 19 1 Q 20 2 Q 20 Nonperforming Loans to Total Loans (1) Asset Quality 1.15% 1.18% 1.15% 0.93% 0.94% 2 Q 19 3 Q 19 4 Q 19 1 Q 20 2 Q 20 Nonperforming Assets to Assets (1) 1.08% 1.11% 1.33% 1.46% 1.79% 2Q19 (2) 3Q19 (2) 4Q19 (2) 1 Q 20 2 Q 20 Allowance
Slide 23: Diversified Deposit Base
$0 $ 1 ,0 0 0 $ 2 ,0 0 0 $ 3 ,0 0 0 $ 4 , 0 0 0 $ 5 ,0 0 0 2015 2016 2017 2018 2019 Time Deposits Money Market & Savings Demand Interest - bearing Demand Noninterest - bearing Diversified Deposit Base $ 1 ,0 0 0 $0 $ 3 ,0 0 0 $ 2 ,0 0 0 $ 4 ,0 0 0 $ 5 ,0 0 0 $ 6 ,0 0 0 2 Q 19 3 Q 19 4 Q 19 1 Q 20 2
Slide 24: Net Interest Income and Net Interest Margin
$ 1 3 1 .6 $ 1 5 3 .2 $ 1 7 6 .8 $ 1 8 1 .0 $ 1 7 5 .9 3.90% 3.95% 3.82% 3.57% 3.3 7 % 3.4 7 % 3.79% Net Interest Income w/o PCI Net Interest Margin Net Interest Margin w/o PCI 2020: Net Interest Margin ($ in millions) $ 4 3.0 3.30% 2015 2016 2017 2018 2019 2Q19 3Q19 4Q19 1Q20 2Q20 $44.1 $43.9 $44.0
Slide 25: Noninterest Expenses
Noninterest Expenses 5 9 .4 4 % 6 4 .0 4 % 6 7 .3 1 % 6 1 .8 9 % 4 1 .5 1 % 1 Q 20 2 Q 20 Efficiency Ratio 2.83% 2.47% 2.30% 2.19% 2.30% 2015 2016 2017 2018 (1) 2019 NIE/Avg. Assets 5 8 .9 3 % 5 6 .0 0 % 5 4 .2 8 % 5 7 .2 0 % 6 1 .8 9 % 2015 2016 2017 2018 2019 (1) 2Q19 3Q19 (1) 4Q19 (1) (1) Reflect
Slide 26: Capital Ratios Exceed Well-Capitalized Thresholds
10 . 00 % 14 . 9 9% 15 . 0 7% 15 . 1 1% 14 . 7 7% 14 . 0 4% 2 Q 19 3 Q 19 4 Q 19 1 Q 20 2 Q 20 Total RBC (2) + 40 % (1) Capital ratios are preliminary for June 30, 2020. (2) Minimum threshold for a well - capitalized institution. 6 . 50 % 1 1 . 4 1% 1 1 . 4 9% 1 1 . 3 6% 1 1 . 0 9% 10 . 4 7% 2 Q 19
Slide 27: ACL Analysis
ACL Analysis Allowance for credit losses was $86.3 million as of June 30, 2020 generating an allowance for credit losses to loans of 1.79% (1.91% excluding PPP loans) compared with 1.46% at the end of the prior quarter. The increase in the allowance from the first quarter reflects the change in macr
Slide 28: ACL by Loan Components
ACL by Loan Components ($ million) 28 June 30, 2020 Allowance Loans March 31, 2020 Allowance Loans January 1, 2020 (1) Allowance Loans Loan Components CRE $ 5 3 .6 $ 3, 2 6 6 .2 $ 3 7 .0 $ 3, 1 8 7 .2 $ 3 4 .7 $ 3, 2 1 3 .0 C&I 1 3 .4 7 3 0.4 1 1 .6 4 7 2.7 2.0 4 7 2.4 Leases 1 6 .5 4 6 2.8 1 5 .8 4
Slide 29: Liquidity
Li q ui d ity With $20.3 million in cash on deposit with its bank subsidiary as of June 30, 2020, Hanmi Financial has ample liquidity resources to operate in the evolving, uncertain macroeconomic environment resulting from the COVID - 19 crisis. ($ million) 2Q20 1Q20 4Q19 Bank Liquidity Cash and Cas
Slide 30: Securities Portfolio
Securities Portfolio 30 The composition of the securities portfolio remains relatively unchanged quarter - over - quarter, with allocation to U.S. treasuries, and U.S. government agencies and sponsored agencies – mortgage - backed securities, collateralized mortgage obligations, and notes. ($ thousa
Slide 31: Investment Highlights & Opportunities
Investment Highlights & Opportunities 31 • Strong balance sheet – Diversified loan portfolio – Premier core deposit franchise – Sound asset quality – Well capitalized • Prudent capital management – Dividends appropriate with earnings level – Share repurchase in place, although paused for time being
Slide 32: Non-GAAP Reconciliation
Non - GAAP Reconciliation 32 ($ thousand, except share, per share data and ratios) 2Q20 1Q20 4Q19 3Q19 2Q19 Tangible Common Equity to Tangible Assets Ratio Assets $ 6, 2 1 8 ,1 6 3 $ 5, 6 1 7 ,6 9 0 $ 5, 5 3 8 ,1 8 4 $ 5, 5 2 7 ,9 8 2 $ 5, 5 1 1 ,7 5 2 Less goodwill and other intangible assets (11,
Slide 33: Non-GAAP Reconciliation – Paycheck Protection Program
Non - GAAP Reconciliation – Paycheck Protection Program 33 ($ in thousands, except share and per share data) As of June 30, 2020 Tangible Common Equity to Tangible Assets Tangible assets $ 6,206,4 2 1 Less PPP loans (301,836) Tangible assets adjusted for PPP loans $ 5,904,585 Tangible stockholders'