Hanmi Financial Corporation · NASDAQ:HAFC
Hanmi Financial — Q3 2024 Earnings Presentation
34 slides from Hanmi Financial's earnings presentation, Oct 22, 2024
Slide 1: 3Q24 Earnings Supplemental Presentation
Los Angeles New York/ New Jersey Virginia Chicago Dallas Houston San Francisco San Diego 3Q24 Earnings Supplemental Presentation October 22, 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: 3Q24 Highlights
3Q24 Highlights Net Income Diluted EPS ROAA ROAE NIM Efficiency Ratio TBVPS(1) $14.9M $0.49 0.79% 7.55% 2.74% 59.98% $24.03 • Net income was $14.9 million, or $0.49 per diluted share, up 3.1% from $14.5 million, or $0.48 per diluted share, for the prior quarter. The increase reflects a $2.0 million,
Slide 5: Loan Production
Loan Production Loan production of $347.8 million in the third quarter reflected meaningful contribution from CRE and C&I. CRE production 90000% increased by 26% to $110.2 million and C&I production 0.0021 increased by 78% to $105.1 million quarter-over- quarter. 80000% 8.10% 8.02% 8.31% 7.92% 7.80%
Slide 6: Loan Portfolio
Loan Portfolio $6.26 Billion Loan Portfolio (as of September 30, 2024) Equipment Commercial Real Estate (CRE)(1,2) Portfolio CRE(2) Investor (non-owner) Finance Outstanding ($ in millions) $3,932 - 8% # of Loans 865 3Q24 Average Yield 5.68% Weighted Average Loan-to-Value Ratio(4) 49.4% Weighted Aver
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 14%. (1) (2) CRE Portfolio C&I Portfolio $3,932M $879M Construction – 2% Mixed Use – 3% Other
Slide 8: CRE Portfolio Geographical Exposure
CRE Portfolio Geographical Exposure ($ in millions) Multifamily by State Construction by State $413 $85 CRE Composition by State Other – $15 $3,932 Illinois – 5% $14 3% Other – New York – $27 $80 32% California – 19% $40 California – 47% $203 Illinois – 49% $105 Other – New York – 3% $638 $18 Texas
Slide 9: Loan Portfolio Distribution
Loan Portfolio Distribution CRE ($ in millions) C&I ($ in millions) Owner Non-owner Term (2) Lines of Credit (2) Multifamily Construction (1) Occupied Occupied Total Balance $378 $502 Total Balance $780 $2,654 $413 $85 Average $0.34 $0.90 Average $1.09 $3.07 $2.77 $7.71 Median $0.06 $0.15 Median $0.
Slide 10: Loan Portfolio Maturities
Loan Portfolio Maturities ($ in millions) <1 Year 1-3 Years >3 Years Total Real estate loans Retail $ 145.0 $ 366.0 $ 576.4 $ 1,087.4 Hospitality 208.2 259.9 350.9 819.0 Office 166.9 270.2 134.5 571.6 Other 229.2 512.4 627.8 1,369.4 Commercial Property 749.3 1,408.5 1,689.6 3,847.4 Construction 70.9
Slide 11: USKC Loans & Deposits
USKC(1) Loans & Deposits USKC portfolio represented $917.6 million, or 15%, of the loan portfolio, and $798.0 million, or 12%, of the deposit portfolio. USKC CRE portfolio had a weighted average debt coverage ratio (2) of 1.92x and weighted average loan-to-value(2) of 55.9%. USKC Loans – Top 10 Indu
Slide 12: Office Loan Portfolio
Office Loan Portfolio The CRE office portfolio(1) was $571.6 million(2) at September 30, 2024, representing 9% of the total loan portfolio. Portfolio by State Rate Distribution • Average balance and median balance of the portfolio were $4.4 million and $1.09 million, respectively • Weighted average
Slide 13: Hospitality Segment
Hospitality Segment Hospitality segment represented $819.0 million(1), or 13% of the loan portfolio, at September 30, 2024. Convention Center – 3% Airport – • Average balance and median balance of the segment (excluding 6% construction) were $4.2 million and $1.0 million, respectively Resort – 8% •
Slide 14: Retail Segment
Retail Segment Retail segment represented $1.09 billion (1), or 17% of the loan portfolio, at September 30, 2024. Illinois • Average balance and median balance of the segment were $1.5 2% million and $0.7 million, respectively Georgia Other 3% 11% • Weighted average debt coverage ratio(2) of the seg
Slide 15: Residential Real Estate Portfolio
Residential Real Estate Portfolio The RRE(1) portfolio was $939.3 million at September 30, 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-
Slide 16: Equipment Finance Portfolio
Equipment Finance Portfolio Equipment finance portfolio represented $507.3 million, or 8% of the loan portfolio, at September 30, 2024. Portfolio by Industry Portfolio by Equipment Portfolio by State Trucks 33% Wholesale (1) Other, Trade, 4% Earth Moving 8% 17% Transportation, 24% Machine Tools 7% H
Slide 17: Deposit Base
Deposit Base Total deposits increased by 1% to $6.40 billion, led by $91.8 million, or 5%, increase in noninterest-bearing deposits quarter-over-quarter. Noninterest-bearing demand deposits represented 32% of total deposits at September 30, 2024. Estimated uninsured deposit liabilities were 42% of t
Slide 18: Net Interest Income | Net Interest Margin
Net Interest Income | Net Interest Margin Net interest income for the third quarter was $50.1 million and net interest margin (taxable equivalent) was 2.74%, both up from the previous quarter primarily due to improvements in the yields on interest-earning assets by 2 bps and the cost of interest-bea
Slide 19: Net Interest Income Sensitivity
Net Interest Income Sensitivity Loan & Deposit Beta(1) . ($ in millions) Fed Funds Rate & Cost of CDs Fed 5.50% 5.50% 5.50% 5.50% 5.00% Funds 6.02% 6.00% Loan Rate(3) 5.91% Cost of Loan Beta: 37% 5.78% Yield 4.24% 4.66% 4.78% 4.79% 5.44% 5.60% 5.64% CDs(2) 3.95% 4.79% 5.50% 5.50% 5.50% 5.50% Fed Fun
Slide 20: Noninterest Income
Noninterest Income Noninterest income for the third quarter was $8.4 million, up 5% from the previous quarter. Noninterest Income ($ in millions) 3Q24 Service Charges and Fees ($ in millions) Service charges on deposit accounts Service charges, fees & other Gain on sale of SBA loans 29% Trade financ
Slide 21: Noninterest Expense
Noninterest Expense Continued focus on disciplined expense management. 1.94% Noninterest $50 1.87% 1.89% 1.83% 1.85% expense / Average assets • Noninterest expense was $35.1 million for the third quarter, down 0.6% from the second quarter of 2024, primarily $36.4 reflecting the absence of the second
Slide 22: Asset Quality – Delinquent & Criticized Loans
Asset Quality – Delinquent & Criticized Loans The $94.7 million increase in special mention in the third quarter was primarily driven by two CRE loans in the hospitality industry for $109.7 million and one C&I loan in the healthcare industry for $20.1 million. These loans are current and adequately
Slide 23: Asset Quality – Nonperforming Assets & Nonaccrual Loans
Asset Quality – Nonperforming Assets & Nonaccrual Loans Nonperforming assets were $16.3 million at the end of the third quarter, down from $20.0 million at the end of the second quarter. Nonperforming Assets(1) ($ in millions) Nonaccrual Loans ($ in millions) $60 0.26% Nonperforming 0.22% 0.21% 0.19
Slide 24: Asset Quality – Gross & Net Loan Charge-offs
Asset Quality – Gross & Net Loan Charge-offs Net charge-offs for the third quarter were $0.9 million. Gross Charge-offs ($ in millions) Net Charge-offs ($ in millions) 0.60% $9.4 0.10% 0.12% 0.06% Net Charge- $8.9 offs / -0.33% Average loans $6.4 $6.6 $1.6 $1.8 $0.9 $2.5 $1.8 $2.0 $1.2 $1.6 $3.8 ($1
Slide 25: ACL Trends
ACL Trends Allowance for credit losses was $69.2 million at September 30, 2024, or 1.11% to total loans, compared with $67.7 million and 1.10% at the end of the prior quarter. Allowance for Credit Losses ($ in millions) Credit Loss Expense (Recovery) ($ in millions) $100 1.50% $6 0 1.40% $5.2 $5 1.3
Slide 26: ACL Analysis by Loan Type
ACL Analysis by Loan Type ($ in millions) September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 September 30, 2023 Allowance Loans Allowance Loans Allowance Loans Allowance Loans Allowance Loans CRE $ 37.8 $ 3,932.1 $ 36.1 $ 3,888.5 $ 36.4 $ 3,878.5 $ 40.2 $ 3,889.7 $ 38.9 $ 3,773.0 C&I
Slide 27: Securities Portfolio
Securities Portfolio The $987 million securities portfolio (all AFS, no HTM) represented 13% of assets at September 30, 2024, and had a weighted average modified duration of 4.2 years with $79 million in an unrealized loss position. (1) Available for Sale US Agy Residential MBS - Maturity Unrealized
Slide 28: Liquidity
Liquidity The Bank and the Company have ample liquidity resources at September 30, 2024. Liquidity Position ($ in millions) Balance % of Assets Liquidity Ratios Cash & cash equivalents $ 288 3.7% Securities (unpledged) 844 11.0% Liquid Assets to Total Assets Liquid Assets to Deposits (1) Liquid asse
Slide 29: Capital Management
Capital Management Tangible book value per share (TBVPS)(1) increased to $24.03 from $22.99 at the end of the prior quarter. The increase reflects $7.3 million of net income, net of cash dividends paid, a $20.7 million decrease in unrealized after-tax losses on securities available for sale and a $2
Slide 30: Regulatory Capital
Regulatory Capital The Company exceeds regulatory minimums and the Bank remains well capitalized at September 30, 2024. Company Bank CET1 CET1 4.50% 2.50% 7.00% 6.50% Capital Capital CET1 CET1 11.95% 13.24% Capital Capital 11.11% 12.40% Tier 1 Tier 1 6.00% 2.50% 8.50% 8.00% Capital Capital Tier 1 Ti
Slide 31: Appendix
Appendix A Hanmi Financial Corporation: 31
Slide 32: 3Q24 Financial Summary
3Q24 Financial Summary September 30, 2024 June 30, 2024 September 30, 2023 Q/Q Y/Y Income Statement Summary Net interest income before credit loss $ 50.1 $ 48.6 $ 54.9 2.9% -8.8% Noninterest income 8.4 8.1 11.2 4.7% -24.8% Operating revenue 58.5 56.7 66.1 3.2% -11.5% Noninterest expense 35.1 35.3 34
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) September 30, June 30, March 31, December 31, September 30, Hanmi Financial Corporation 2024 2024 2024 2023 2023 Assets $ 7,712,299 $ 7,586,347 $ 7,512,046 $ 7,570,341 $ 7,350,140 Less goo
Slide 34: 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 $ 771,741 $ 793,728 $ 970,961 $ 854,672 $ 854,672 $ 921,905 Unrealized losses on AFS securities (55,7