Hanmi Financial Corporation · NASDAQ:HAFC
Hanmi Financial — Janney CEO Forum 2025
47 slides from Hanmi Financial's conference presentation, January 2025
Slide 1: Janney CEO Forum
Los Angeles New York/ New Jersey Virginia Chicago Dallas Houston San Francisco San Diego Janney CEO Forum January 2025
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: Table of Contents
Table of Contents Overview & highlights 5–9 Loan portfolio 10 – 23 Deposit portfolio 24 – 25 Margin, fee income, expenses 26 – 29 Asset quality 30 – 34 Securities & liquidity 35 – 36 Capital management 37 – 38 Corporate Sustainability 39 – 42 Appendix 43 – 47 4
Slide 5: Hanmi Franchise at a Glance
Hanmi Franchise at a Glance As of 4Q24 Total Assets 1 2 1 $7.7B 3 Loans 1 $6.3B 1 1 Deposits 20 2 1 $6.4B Branch 5 1 Loan Production Office (LPO) Loan Growth(1) 9.9% Experienced Bankers with Deep Community Ties Second Largest Korean-American Bank in the U.S. TBVPS(2) • Founded in 1982 in Los Angeles
Slide 6: Management Team
Management Team Banking Hanmi Name Position Experience Experience Previous Experience (Years) (Years) BBCN Bancorp, Shinhan Bank America, Nara Bonnie Lee President & CEO 39 12 Bank Romolo Santarosa SEVP, Chief Financial Officer 34 10 Opus Bank, First California Financial Group Anthony Kim SEVP, Chie
Slide 7: The Hanmi Timeline
The Hanmi Timeline For over 40 years, we have been dedicated to helping our stakeholders bank on their dreams. 2022 2007 2017 - Assets surpassed $7 billion - Completed $70 million secondary - Celebrated 40th Anniversary common stock offering - Assets surpassed $5 billion - Nasdaq Closing Bell Ceremo
Slide 8: Why Hanmi?
Why Hanmi? • Strong average deposit growth reflecting a • Strong average loan growth reflecting a 10% 9% CAGR since 2013 CAGR since 2013 • Average noninterest-bearing deposit at • Significant progress reducing CRE $1.92 billion, represents 30% of average concentration from 85% of the total portfolio
Slide 9: 4Q24 Highlights
4Q24 Highlights Net Income Diluted EPS ROAA ROAE NIM Efficiency Ratio TBVPS(1) $17.7M $0.58 0.93% 8.89% 2.91% 56.79% $23.88 • Net income was $17.7 million, or $0.58 per diluted share, up 18.8% from $14.9 million, or $0.49 per diluted share, for the prior linked quarter. The increase reflects a $3.4
Slide 10: Loan Production
Loan Production Loan production of $339.0 million in the fourth quarter reflected meaningful contribution from CRE, which increased 33% to $146.7 million quarter-over-quarter. 75000% 0.0021 65000% 8.10% 8.02% 8.31% 7.92% 7.37% Weighted average 55000% interest rate on new production • Commercial real
Slide 11: Average Loan Trend
Average Loan Trend Strong average loan growth reflecting a 10% CAGR since 2013. ($ in millions) $5,968 $6,111 $5,597 $4,685 $4,795 $4,456 $4,508 $4,039 $3,423 $2,902 $2,441 $2,157 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Average Loans Receivable 11
Slide 12: Successful Portfolio Diversification Strategy
Successful Portfolio Diversification Strategy Significant progress reducing CRE concentration from 85% of total portfolio to 63%. Loan Composition Loan Composition (as of December 31, 2013) (as of December 31, 2024) Equipment Finance – 8% (3) (3) C&I – (1) RRE – C&I – 14% 5% 10% (2) CRE – 63% (1) RR
Slide 13: Loan Portfolio
Loan Portfolio $6.25 Billion Loan Portfolio (as of December 31, 2024) Equipment Commercial Real Estate (CRE)(1,2) Portfolio CRE(2) Investor (non-owner) Finance Outstanding ($ in millions) $3,950 - 8% # of Loans 862 4Q24 Average Yield 5.70% Weighted Average Loan-to-Value Ratio(4) 49.0% Weighted Avera
Slide 14: Loan Portfolio Diversification
Loan Portfolio Diversification Loan portfolio is well diversified across collateral and industry; CRE represents 63% of the total portfolio and C&I, excluding Equipment Finance Agreements, represents 14%. (1) (2) CRE Portfolio C&I Portfolio $3,950M $863M Construction – 2% Mixed Use – 3% Other – Gas
Slide 15: CRE Portfolio Geographical Exposure
CRE Portfolio Geographical Exposure ($ in millions) Multifamily by State Construction by State $412 $79 CRE Composition by State Other – $15 $3,950 Illinois – 4% $12 3% Other – New York – $24 $80 30% California – 19% $38 California – $205 48% 50% Illinois – $103 Other – New York – $17 3% $692 Texas
Slide 16: Loan Portfolio Distribution
Loan Portfolio Distribution CRE ($ in millions) C&I ($ in millions) Owner Non-owner Term (2) Lines of Credit (2) Multifamily Construction (1) Occupied Occupied Total Balance $390 $473 Total Balance $811 $2,647 $413 $79 Average $0.34 $0.92 Average $1.14 $3.07 $2.79 $11.23 Median $0.07 $0.20 Median $0
Slide 17: Loan Portfolio Maturities
Loan Portfolio Maturities ($ in millions) <1 Year 1-3 Years >3 Years Total Real estate loans Retail $ 154.4 $ 325.2 $ 589.4 $ 1,069.0 Hospitality 162.3 301.9 383.9 848.1 Office 232.8 241.0 95.1 568.9 Other 220.7 641.6 522.8 1,385.1 Commercial Property 770.2 1,509.7 1,591.2 3,871.1 Construction 74.6
Slide 18: USKC Loans & Deposits
USKC(1) Loans & Deposits USKC portfolio represented $936.6 million, or 15%, of the loan portfolio, and $823.1 million, or 13%, of the deposit portfolio. USKC CRE portfolio had a weighted average debt coverage ratio (2) of 2.39x and weighted average loan-to-value(2) of 54.8%. USKC Loans – Top 10 Indu
Slide 19: Office Loan Portfolio
Office Loan Portfolio The CRE office portfolio(1) was $568.9 million(2) at December 31, 2024, representing 9% of the total loan portfolio and 14% of the total CRE portfolio. Portfolio by State Rate Distribution • Average balance and median balance of the portfolio were $4.3 million and $0.97 million
Slide 20: Hospitality Segment
Hospitality Segment Hospitality segment represented $848.0 million(1), or 14% of the total loan portfolio and 21% of the total CRE portfolio, at December 31, 2024. Convention Center – 2% • Average balance and median balance of the segment (excluding construction) were $4.3 million and $1.0 million,
Slide 21: Retail Segment
Retail Segment Retail segment represents $1.07 billion (1), or 17% of the total loan portfolio and 27% of the total CRE portfolio, at December 31, 2024. Illinois • Average balance and median balance of the segment were $1.5 2% million and $0.7 million, respectively Georgia Other 3% 12% • Weighted av
Slide 22: Residential Real Estate Portfolio
Residential Real Estate Portfolio The RRE(1) portfolio was $951.3 million at December 31, 2024, representing 15% of the total loan portfolio. Our conservative underwriting policy focuses on high-quality mortgage originations with maximum Loan-to-Value (LTV) ratios between 60% and 70%, maximum Debt-t
Slide 23: Equipment Finance Portfolio
Equipment Finance Portfolio Equipment finance portfolio represented $487.0 million, or 8% of the loan portfolio, at December 31, 2024. Portfolio by Industry Portfolio by Equipment Portfolio by State Trucks 33% (1) Wholesale Other, Trade, 4% Transportation, Machine Tools 7% 18% 23% Earth Moving 7% He
Slide 24: Average Deposit Trend
Average Deposit Trend Strong deposit growth reflecting a 9% CAGR since 2013. Average noninterest-bearing deposits have grown by 9% CAGR since 2013, and now represents 30% of total deposits. $6,191 $6,308 ($ in millions) $5,950 $5,560 $4,946 $4,691 $4,461 $4,160 55% 65% 70% $3,503 $3,608 59% $2,872 6
Slide 25: Deposit Base
Deposit Base Total deposits increased by 1% to $6.44 billion, led by a $44.8 million, or 2%, increase in noninterest-bearing deposits quarter-over-quarter. Noninterest-bearing demand deposits represented 33% of total deposits at December 31, 2024. Estimated uninsured deposit liabilities were 43% of
Slide 26: Net Interest Income | Net Interest Margin
Net Interest Income | Net Interest Margin Net interest income for the fourth quarter was $53.4 million and net interest margin (taxable equivalent) was 2.91%, both up from the third quarter primarily due to a decrease in deposit interest expense. 0.21% -0.01% 2.92% 2.91% 2.78% 2.69% 2.74% 0.02% -0.0
Slide 27: Net Interest Income Sensitivity
Net Interest Income Sensitivity Loan & Deposit Beta(1) . ($ in millions) Fed Funds Rate & Cost of CDs Fed 5.50% 5.50% 5.50% 5.00% Funds 4.55% Rate(3) Loan 5.91% 6.02% 6.00% 5.95% 5.90% Cost of 5.64% 5.78% Yield 4.24% 4.66% 4.78% 4.79% 4.50% 5.60% CDs(2) 5.44% 5.00% 5.50% 5.50% 5.50% 5.50% Fed 4Q23 1
Slide 28: Noninterest Income
Noninterest Income Noninterest income for the fourth quarter was $7.4 million, down 13% from the third quarter primarily because of a $0.9 million gain from the sale-leaseback of a branch property in the third quarter. Noninterest Income ($ in millions) 4Q24 Service Charges and Fees ($ in millions)
Slide 29: Noninterest Expense
Noninterest Expense Continued focus on disciplined expense management. 1.94% Noninterest $50 1.87% 1.89% 1.85% 1.82% expense / Average assets $36.4 $35.2 $35.3 $35.1 $34.5 • Noninterest expense was $34.5 million $4.8 (1) for the fourth quarter, down 1.6% from $5.0 $5.2 $4.4 $3.9 $1.9 $1.5 the third
Slide 30: Asset Quality – Delinquent & Criticized Loans
Asset Quality – Delinquent & Criticized Loans The $8.0 million increase in special mention loans in the fourth quarter was primarily driven by a $12.4 million C&I relationship in the retail industry, offset primarily due to a $3.0 million principal paydown for a previously mentioned CRE loan in the
Slide 31: Asset Quality – Nonperforming Assets & Nonaccrual Loans
Asset Quality – Nonperforming Assets & Nonaccrual Loans Nonperforming assets were $14.4 million at the end of the fourth quarter, down from $16.3 million at the end of the third quarter. Nonperforming Assets(1) ($ in millions) Nonaccrual Loans ($ in millions) $60 0.26% Nonperforming 0.21% 0.19% 0.21
Slide 32: Asset Quality – Gross & Net Loan Charge-offs
Asset Quality – Gross & Net Loan Charge-offs Net recoveries for the fourth quarter were $0.1 million. Gross Charge-offs ($ in millions) Net Charge-offs (Recoveries) ($ in millions) $3.8 0.10% 0.12% 0.06% Net Charge- -0.01% offs / $3.4 -0.33% Average loans $1.3 $0.5 $2.3 $2.1 $1.8 $0.9 $0.2 $1.6 $1.8
Slide 33: ACL Trends
ACL Trends Allowance for credit losses was $70.1 million at December 31, 2024, or 1.12% to total loans, compared with $69.2 million and 1.11% at the end of the prior quarter. Allowance for Credit Losses ($ in millions) Credit Loss Expense (Recovery) ($ in millions) $100 1.50% $3 0 1.40% $2.3 $2 1.30
Slide 34: ACL Analysis by Loan Type
ACL Analysis by Loan Type ($ in millions) December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 Allowance Loans Allowance Loans Allowance Loans Allowance Loans Allowance Loans CRE $ 39.3 $ 3,949.6 $ 37.8 $ 3,932.1 $ 36.1 $ 3,888.5 $ 36.4 $ 3,878.5 $ 40.2 $ 3,889.7 C&I 1
Slide 35: Securities Portfolio
Securities Portfolio The $1.00 billion securities portfolio (all AFS, no HTM) represented 13% of assets at December 31, 2024, and had a weighted average modified duration of 4.2 years with $99.0 million in an unrealized loss position. (1) Available for Sale US Agy Residential MBS - Maturity Unrealiz
Slide 36: Liquidity
Liquidity The Bank and the Company have strong liquidity resources at December 31, 2024. Liquidity Position ($ in millions) Balance % of Assets Liquidity Ratios Cash & cash equivalents $ 305 4.0% Securities (unpledged) 838 11.0% Liquid Assets to Total Assets Liquid Assets to Deposits Loans available
Slide 37: Capital Management
Capital Management Prudent capital management while driving shareholder return through stable quarterly dividends and share repurchase program. Tangible book value per share (TBVPS)(1) decreased to $23.88 at the end of the fourth quarter. The decrease was due to a $14.6 million increase in unrealize
Slide 38: Regulatory Capital
Regulatory Capital The Company exceeds regulatory minimums and the Bank remains well capitalized at December 31, 2024. Company Bank CET1 CET1 4.50% 2.50% 7.00% 6.50% Capital Capital CET1 CET1 12.11% 13.36% Capital Capital 11.05% 12.30% Tier 1 Tier 1 6.00% 2.50% 8.50% 8.00% Capital Capital Tier 1 Tie
Slide 39: The Hanmi Story & Corporate Sustainability
The Hanmi Story & Corporate Sustainability Established in 1982 in Los Angeles, Hanmi Bank was originally founded to serve the underserved immigrant community in Koreatown. From our humble beginnings as the first Korean-American bank, Hanmi Bank has grown to embrace and support the dreams of all Amer
Slide 40: Corporate Sustainability (1 of 3)
Corporate Sustainability (1 of 3) The board recognizes that sustainability broadly encompasses corporate activities that enhance the long-term value of the Company. Sustainability In 2021, Hanmi Financial Donated 40 solar panels to Corporation moved its the Koreatown Senior and headquarters to the W
Slide 41: Corporate Sustainability (2 of 3)
Corporate Sustainability (2 of 3) As a community bank, we are an equal opportunity employer and we are proud to work with our communities to build a stronger future for all of our stakeholders. Fostering Human Capital Serving Our Communities $7.5M Long-term commitment to a Community 68% 91% 60% Rein
Slide 42: Corporate Sustainability (3 of 3)
Corporate Sustainability (3 of 3) Governance and management of environmental and social impact create long-term value for our stakeholders. Oversight DiverseOur Board Board Members Hanmi is committed to sound corporate governance principles and The NCG Committee believes the Board should encompass a
Slide 43: Appendix
Appendix A Hanmi Financial Corporation: 43
Slide 44: Risk Management
Risk Management CRE Concentration Liquidity Stress Test Capital Stress Test Hanmi has not exceeded the supervisory Hanmi’s risk management practices include Hanmi is not required to perform a capital criteria to be considered to have CRE comprehensive contingency funding plans stress test; however,
Slide 45: 4Q24 Financial Summary
4Q24 Financial Summary ($ in millions, except EPS) Change (1) December 31, 2024 September 30, 2024 December 31, 2023 Q/Q Y/Y Income Statement Summary Net interest income before credit loss $ 53.4 $ 50.1 $ 53.1 6.8% 0.6% Noninterest income 7.4 8.4 6.7 -12.8% 10.1% Operating revenue 60.8 58.5 59.8 4.0
Slide 46: 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 2024 2024 2024 2024 2023 Assets $ 7,677,925 $ 7,712,299 $ 7,586,347 $ 7,512,046 $ 7,570,341 Less good
Slide 47: Non-GAAP Reconciliation: Pro Forma Regulatory Capital
Non-GAAP Reconciliation: Pro Forma Regulatory Capital ($ in thousands) Company(1) Bank(1) Common Total Common Total Equity Tier 1 Tier 1 Risk-based Equity Tier 1 Tier 1 Risk-based Regulatory capital $ 778,941 $ 801,040 $ 979,843 $ 859,309 $ 859,309 $ 928,112 Unrealized losses on AFS securities (70,3