Hanmi Financial Corporation · NASDAQ:HAFC
Hanmi Financial — Q1 2024 Earnings Presentation
34 slides from Hanmi Financial's earnings presentation, Apr 23, 2024
Slide 1: 1Q24 Earnings Supplemental Presentation
Los Angeles New York/ New Jersey Virginia Chicago Dallas Houston San Francisco San Diego 1Q24 Earnings Supplemental Presentation April 23, 2024
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: 1Q24 Highlights
1Q24 Highlights Net Income Diluted EPS ROAA ROAE NIM Efficiency Ratio TBVPS(1) $15.2M $0.50 0.81% 7.90% 2.78% 62.42% $22.86 • Net income was $15.2 million, or $0.50 per diluted share, down 18.6% from $18.6 million, or $0.61 per diluted share, for the prior quarter Net interest income was $50.7 mil
Slide 5: Loan Production
Loan Production Loan production of $234 million for 1Q24 reflected balanced contribution from nearly all business lines, and an 8 basis 90000%point decrease in the weighted average interest rate on new production. 0.0021 80000% 7.80% 8.10% 8.02% 7.19% 7.39% Weighted average 70000% interest rate on n
Slide 6: Loan Portfolio
Loan Portfolio $6.2 Billion Loan Portfolio (as of March 31, 2024) Equipment Commercial Real Estate (CRE)(1,2) Portfolio CRE(2) Investor (non-owner) Finance Outstanding ($ in millions) $3,879 - 9% # of Loans 871 1Q24 Average Yield 5.70% Weighted Average Loan-to-Value Ratio(4) 49.8% Weighted Average D
Slide 7: Loan Portfolio Diversification
Loan Portfolio Diversification Loan portfolio is well diversified across collateral and industry types; CRE represents 63% of the total portfolio and C&I, excluding Equipment Finance Agreements, represents 12%. (1) (2) CRE Portfolio C&I Portfolio $3.9B $775M Construction 3% Mixed Use – 3% Other – Ga
Slide 8: CRE Portfolio Geographical Exposure
CRE Portfolio Geographical Exposure ($ in millions) Multifamily by State Construction by State $417 $106 CRE Composition by State Illinois – Other – $14 $3,879 3% $15 4% New York – $81 Other – 19% $24 23% California – New York – Illinois – $206 $18 California – 50% $86 Other – Texas - 17% $64 60% 2%
Slide 9: Loan Portfolio Distribution
Loan Portfolio Distribution CRE ($ in millions) C&I ($ in millions) Owner Non-owner Term (2) Lines of Credit (2) Multifamily Construction (1) Occupied Occupied Total Balance $366 $409 Total Balance $767 $2,589 $417 $106 Average $0.35 $0.68 Average $1.05 $2.97 $2.71 $9.59 Median $0.06 $0.05 Median $0
Slide 10: Loan Portfolio Maturities
Loan Portfolio Maturities ($ in millions) <1 Year 1-3 Years >3 Years Total Real estate loans Retail $ 150.3 $ 311.4 $ 629.4 $ 1,091.1 Hospitality 233.7 193.2 313.3 740.2 Office 54.5 342.6 178.7 575.8 Other 169.2 473.4 724.8 1,367.4 Commercial Property 607.7 1,320.6 1,846.2 3,774.5 Construction 63.4
Slide 11: USKC Loans & Deposits
USKC(1) Loans & Deposits USKC portfolio represented $833.8 million in loans, or 14% of the loan portfolio and $847.5 million in deposits, or 13% of the deposit portfolio. USKC CRE portfolio had a weighted average debt coverage ratio (2) of 1.85x and weighted average loan-to- value(2) of 54.6%. USKC
Slide 12: Office Loan Portfolio
Office Loan Portfolio The CRE office portfolio(1) was $575.8 million(3) at March 31, 2024, representing 9% of the total loan portfolio. Portfolio by State Rate Distribution • Average balance and median balance of the portfolio were $4.5 million and $1.0 million, respectively • Weighted average debt
Slide 13: Hospitality Segment
Hospitality Segment Hospitality segment represented $740.2 million(3), or 12% of the loan portfolio, at March 31, 2024. Convention Center – 3% Airport – • Average balance and median balance of the segment (excluding 7% construction) were $3.9 million and $1.0 million, respectively Resort – 6% • Weig
Slide 14: Retail Segment
Retail Segment Retail segment represented $1.1 billion (2), or 18% of the loan portfolio, at March 31, 2024. Illinois 2% • Average balance and median balance of the segment were $1.5 Georgia Other million and $0.7 million, respectively 3% 9% • Weighted average debt coverage ratio(1) of the segment w
Slide 15: Residential Real Estate Portfolio
Residential Real Estate Portfolio The RRE(1) portfolio was $970.4 million at March 31, 2024, representing 16% 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-to-I
Slide 16: Equipment Finance Portfolio
Equipment Finance Portfolio Equipment finance portfolio represented $554.0 million, or 9% of the loan portfolio, at March 31, 2024. Portfolio by Industry Portfolio by Equipment Portfolio by State Retail Trucks 36% (1) Trade, 4% Other, Transportation, Earth Moving 15% 8% 27% Wholesale Trade, 4% Machi
Slide 17: Deposit Base
Deposit Base Noninterest-bearing demand deposits represented 30% of total deposits at March 31, 2024. Estimated uninsured deposit liabilities were 40% of the total deposit liabilities. Brokered deposits remained low, at less than 1% of the deposit base. Deposits ($ in millions) Deposits (as of 1Q24)
Slide 18: Net Interest Income | Net Interest Margin
Net Interest Income | Net Interest Margin Net interest income for the first quarter was $50.7 million and net interest margin (taxable equivalent) was 2.78%, both down from the previous quarter due to the higher cost of interest-bearing deposits. 0.03% 0.10% 3.28% 3.11% 3.03% 2.92% 2.78% 0.03% -0.30
Slide 19: Net Interest Income Sensitivity
Net Interest Income Sensitivity 28% of the loan portfolio reprices within 1-3 months. Loans – Months to Reset / Maturity(1) . ($ in millions) Fed Funds Rate & Cost of CDs Fed $1,857.6 5.00% 5.25% 5.50% 5.50% 5.50% Funds Rate(3) Cost of 4.66% 3.70% 3.95% 4.24% CDs(2) 3.31% 1Q23 2Q23 3Q23 4Q23 1Q24 $1
Slide 20: Noninterest Income
Noninterest Income Noninterest income for the first quarter was $7.7 million, up 16% from the previous quarter, which included a $0.4 million gain on the sale of mortgage loans in the first quarter. Noninterest Income ($ in millions) 1Q24 Service Charges and Fees ($ in millions) Service charges, fee
Slide 21: Noninterest Expense
Noninterest Expense Continued focus on disciplined expense management. 1.94% Noninterest $50 1.87% 1.87% 1.83% expense / Average 1.81% assets $35.2 $36.4 • Noninterest expense was $36.4 million in $34.3 $34.2 the first quarter, up 3.5% from the prior $32.8 $4.8 quarter $4.5 $3.9 $5.0 $3.2 $1.9 $1.3
Slide 22: Asset Quality – Delinquent & Criticized Loans
Asset Quality – Delinquent & Criticized Loans Asset quality remains strong. Delinquent Loans(1) ($ in millions) Criticized Loans ($ in millions) 1.87% 1.82% 1.40% 1.56% 1.39% Criticized 0.26% 0.26% loans / 0.23% Delinquent loans Total loans 0.16% 0.17% / Total loans $15.4 $15.8 $111.6 $109.6 $13.7 $
Slide 23: Asset Quality – Nonperforming Assets & Nonaccrual Loans
Asset Quality – Nonperforming Assets & Nonaccrual Loans Nonperforming assets were $14.1 million at the end of the first quarter, down from $15.6 million at the end of the fourth quarter of 2023. Nonperforming Assets(1) ($ in millions) Nonaccrual Loans ($ in millions) (2) $30 $22.2 Nonperforming (2)
Slide 24: Asset Quality – Gross & Net Loan Charge-offs
Asset Quality – Gross & Net Loan Charge-offs Net charge-offs for the first quarter were $1.6 million. Gross Charge-offs ($ in millions) Net Charge-offs ($ in millions) 0.60% $9.4 0.10% 0.12% 0.10% Net Charge- $8.9 offs / -0.33% Average loans $6.4 $6.6 $1.7 $1.5 $1.6 $0.4 $2.3 $2.5 $1.1 $1.2 $1.6 ($0
Slide 25: ACL Trends
ACL Trends Allowance for credit losses was $68.3 million as of March 31, 2024, or 1.11% to total loans, compared with $69.5 million and 1.12% at the end of the prior quarter. Allowance for Credit Losses ($ in millions) Credit Loss Expense (Recovery) ($ in millions) $100 1.50% $6 0 1.40% $5.2 $5 1.30
Slide 26: ACL Analysis by Loan Type
ACL Analysis by Loan Type ($ in millions) March 31, 2024 December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023 Allowance Loans Allowance Loans Allowance Loans Allowance Loans Allowance Loans CRE $ 36.4 $ 3,878.5 $ 40.2 $ 3,889.7 $ 38.9 $ 3,773.0 $ 38.4 $ 3,738.3 $ 39.2 $ 3,784.2 C&I 11.8
Slide 27: Securities Portfolio
Securities Portfolio The $979 million securities portfolio (all AFS, no HTM) represented 13% of assets at March 31, 2024, and had a weighted average modified duration of 4.6 years with $106 million in an unrealized loss position. (1) Available for Sale US Agy Residential MBS - Maturity Unrealized Lo
Slide 28: Liquidity
Liquidity The Bank and the Company have ample liquidity resources at March 31, 2024. Liquidity Position ($ in millions) Balance % of Assets Liquidity Ratios Cash & cash equivalents $ 256 3.4% Securities (unpledged) 814 10.8% Liquid Assets to Total Assets Liquid Assets to Deposits Liquid assets 1,070
Slide 29: Capital Management
Capital Management Tangible book value per share (TBVPS)(1) increased to $22.86 from $22.75 at the end of the prior quarter. The increase reflects $7.5 million of net income, net of cash dividends paid, offset by a $3.4 million increase in unrealized after-tax losses on AFS securities, a $1.6 millio
Slide 30: Regulatory Capital
Regulatory Capital The Company exceeds regulatory minimums and the Bank remains well capitalized at March 31, 2024. Company Bank CET1 CET1 4.50% 2.50% 7.00% 6.50% Capital Capital CET1 CET1 12.05% 13.44% Capital Capital 10.88% 12.28% Tier 1 Tier 1 6.00% 2.50% 8.50% 8.00% Capital Capital Tier 1 Tier 1
Slide 31: Appendix
Appendix A Hanmi Financial Corporation: 31
Slide 32: 1Q24 Financial Summary
1Q24 Financial Summary ($ in millions, except EPS) Change (1) March 31, 2024 December 31, 2023 March 31, 2023 Q/Q Y/Y Income Statement Summary Net interest income $ 50.7 $ 53.1 $ 57.9 -4.7% -12.4% Noninterest income 7.7 6.7 8.3 15.8% -7.2% Operating revenue 58.4 59.8 66.2 -2.4% -11.8% Noninterest ex
Slide 33: 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 2024 2023 2023 2023 2023 Assets $ 7,512,046 $ 7,570,341 $ 7,350,140 $ 7,344,924 $ 7,434,130 Less goodwil
Slide 34: Non-GAAP Reconciliation: Pro Forma Regulatory Capital
Non-GAAP Reconciliation: Pro Forma Regulatory Capital ($ in thousands) Company Bank Common Total Common Total Equity Tier 1 Tier 1 Risk-based Equity Tier 1 Tier 1 Risk-based Regulatory capital $ 759,752 $ 781,521 $ 958,173 $ 847,409 $ 847,409 $ 914,061 Unrealized losses on AFS securities (75,537) (7