Hanmi Financial Corporation · NASDAQ:HAFC
Hanmi Financial — Q3 2023 Earnings Presentation
34 slides from Hanmi Financial's earnings presentation, Oct 24, 2023
Slide 1: 3Q23 Earnings Supplemental Presentation
Los Angeles New York/ New Jersey Virginia Chicago Dallas Houston San Francisco San Diego 3Q23 Earnings Supplemental Presentation October 24, 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: 3Q23 Highlights
3Q23 Highlights Net Income Diluted EPS ROAA ROAE NIM Efficiency Ratio TBVPS(1) $18.8M $0.62 1.00% 9.88% 3.03% 51.82% $21.45 • Net income was $18.8 million, or $0.62 per diluted share, down 8.8% from $20.6 million, or $0.67 per diluted share, for the prior quarter Net interest income was $54.9 mill
Slide 5: Loan Production
Loan Production Loan production of $336.3 million for 3Q23 reflected balanced contribution from nearly all business lines and meaningful increases in the weighted average interest rate on new production. 90000% 7.80% 0.0021 7.19% 7.39% 6.85% 80000% Weighted average 5.55% interest rate on new product
Slide 6: Loan Portfolio
Loan Portfolio $6.02 Billion Loan Portfolio (as of September 30, 2023) Equipment Commercial Real Estate (CRE)(1,2) Portfolio CRE(2) Investor (non-owner) Finance Outstanding ($ in millions) $3,773 - 10% # of Loans 887 3Q23 Average Yield 5.39% Weighted Average Loan-to-Value Ratio(4) 50.4% Weighted Ave
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 12%. (1) (2) CRE Portfolio C&I Portfolio $3.77B $729M Construction 2% Mixed Use – 3% Other – 6% Gas Station – Manufacturing 6% Re
Slide 8: CRE Portfolio Geographical Exposure
CRE Portfolio Geographical Exposure ($ in millions) Multifamily by State Construction by State $388 $85 CRE Composition by State Illinois – Other – $14 $3,773 4% $16 4% Other – New York – $7 $79 7% 20% New York – $18 22% Illinois – $85 2% Other – Texas - California – California – $65 $513 17% $214 $
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 $375 $354 Total Balance $728 $2,572 $388 $85 Average $0.38 $0.64 Average $0.96 $2.90 $2.46 $9.42 Median $0.05 $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 $ 106.9 $ 309.4 $ 681.4 $ 1,097.7 Hospitality 112.7 221.2 371.8 705.7 Office 47.1 224.2 304.0 575.3 Other 115.8 455.9 737.8 1,309.5 Commercial Property 382.5 1,210.7 2,095.0 3,688.2 Construction 54.4
Slide 11: USKC Loans & Deposits
USKC(1) Loans & Deposits USKC portfolio represented $719.6 million in loans, or 12% of the loan portfolio and $794.4 million in deposits, or 13% of the deposit portfolio. USKC CRE portfolio had a weighted average debt coverage ratio (2) of 1.91x and weighted average loan-to- value(2) of 60.6%. USKC
Slide 12: Office Loan Portfolio
Office Loan Portfolio The CRE office portfolio(1) was $575.3 million at September 30, 2023, representing 10% of the total loan portfolio. • Average balance and median Portfolio by State Rate Distribution balance of the portfolio were $4.6 million and $1.0 million, respectively • Weighted average deb
Slide 13: Hospitality Segment
Hospitality Segment Hospitality segment represented $705.7 million or 12% of the loan portfolio at September 30, 2023. Convention Center – 3% Airport – • Average balance and median balance of the portfolio (excluding 7% construction) were $3.6 million and $0.9 million, respectively Resort – 6% • Wei
Slide 14: Retail Segment
Retail Segment Retail segment represented $1.1 billion or 18% of the loan portfolio at September 30, 2023. Illinois • Average balance and median balance of the portfolio were $1.4 2% million and $0.7 million, respectively Other Georgia 10% 3% • Weighted average debt coverage ratio(1) of the segment
Slide 15: Residential Real Estate Portfolio
Residential Real Estate Portfolio The RRE(1) portfolio was $926.3 million at September 30, 2023, representing 15% of the total loan portfolio. Our conservative underwriting policy focuses on high-quality mortgage originations with maximum Loan-to-Value (LTV) between 60.0% and 70.0%, maximum Debt-to-
Slide 16: Equipment Finance Portfolio
Equipment Finance Portfolio Equipment finance portfolio represented $592.7 million or 10% of the loan portfolio at September 30, 2023. Portfolio by Industry Portfolio by Equipment Portfolio by State Wholesale Trade, 4% Trucks 39% Other, 20% Transportation, Machine Tools 8% 30% Earth Moving 7% 6% Tra
Slide 17: Deposit Base
Deposit Base Noninterest-bearing demand deposits represented 35% of total deposits at September 30, 2023. Estimated uninsured deposit liabilities were 37% of the total deposit liabilities. Brokered deposits remained low at 1% of the deposit base. Deposits ($ in millions) Deposits (as of 3Q23) ($ in
Slide 18: Net Interest Income | Net Interest Margin
Net Interest Income | Net Interest Margin Net interest income for the third quarter was $54.9 million and net interest margin (taxable equivalent) was 3.03%, both down from the previous quarter because of higher deposit interest expense. 0.07% 0.03% 3.66% 3.67% 0.05% 3.28% 3.11% 3.03% -0.23% 3.11% 3
Slide 19: Net Interest Income Sensitivity
Net Interest Income Sensitivity 22% of the loan portfolio reprices within 1-3 months. Loans – Months to Reset / Maturity(1) . ($ in millions) Fed Funds Rate & Cost of CDs $1,926.0 Fed 4.50% 5.00% 5.25% 5.50% Funds Cost of 3.25% Rate(3) CDs(2) $444.4 3.31% 3.70% 3.95% 0.97% 2.17% $1,421.7 3Q22 4Q22 1
Slide 20: Noninterest Income
Noninterest Income Noninterest income for the third quarter was $11.2 million, up 42% from the previous quarter, which primarily reflected $4.0 million gain on the sale-and-leaseback of a branch property. Noninterest Income ($ in millions) 3Q23 Service Charges and Fees ($ in millions) Service charge
Slide 21: Noninterest Expense
Noninterest Expense Continued focus on disciplined expense management. $50 2.00% 1.88% 1.85% 1.87% Noninterest 1.81% 1.83% expense / Average • Noninterest expense was $34.2 million in assets the third quarter, down 0.1% from the prior quarter $33.8 $32.8 $34.3 $34.2 $33.3 $4.5 $3.9 • Salaries and em
Slide 22: Asset Quality – Delinquent & Criticized Loans
Asset Quality – Delinquent & Criticized Loans Asset quality remains strong. Delinquent Loans(1) ($ in millions) Criticized Loans ($ in millions) 2.94% 2.10% Criticized 0.26% 1.87% 1.82% loans / 0.23% Delinquent loans 1.40% Total loans 0.16% / Total loans 0.13% 0.09% $170.7 $125.2 $15.4 $111.6 $109.6
Slide 23: Asset Quality – Nonperforming Assets & Nonaccrual Loans
Asset Quality – Nonperforming Assets & Nonaccrual Loans Nonperforming assets were $17.2 million at the end of the third quarter, down from $23.1 million at the end of the second quarter, primarily due to $6.1 million of charge-offs on $11.0 million of previously identified classified loans. Nonperfo
Slide 24: Asset Quality – Gross & Net Loan Charge-offs
Asset Quality – Gross & Net Loan Charge-offs Net charge-offs for the third quarter represented 0.60% of average loans on an annualized basis. Gross Charge-offs ($ in millions) Net Charge-offs ($ in millions) 0.60% $9.4 Net Charge- offs / 0.08% 0.10% 0.12% Average loans 0.02% $8.9 $6.6 $6.4 $2.7 $2.1
Slide 25: ACL Trends
ACL Trends Allowance for credit losses was $67.3 million as of September 30, 2023, generating an allowance for credit losses to loans of 1.12% compared with 1.19% at the end of the prior quarter. Allowance for Credit Losses ($ in millions) Credit Loss Expense (Recovery) ($ in millions) $100 1.50% $6
Slide 26: ACL Analysis by Loan Type
ACL Analysis by Loan Type ($ in millions) September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022 Allowance Loans Allowance Loans Allowance Loans Allowance Loans Allowance Loans CRE $ 38.9 $ 3,773.0 $ 38.4 $ 3,738.3 $ 39.2 $ 3,784.2 $ 40.6 $ 3,833.4 $ 42.7 $ 3,853.9 C&I
Slide 27: Securities Portfolio
Securities Portfolio The $957 million securities portfolio (all AFS, no HTM) represented 13% of assets at September 30, 2023, and had a weighted average modified duration of 4.6 years with $140 million in an unrealized loss position. (1) Available for Sale US Agy Residential MBS - Maturity Unrealize
Slide 28: Liquidity
Liquidity The Bank and the Company have ample liquidity resources at September 30, 2023. Liquidity Position ($ in millions) Balance % of Assets Liquidity Ratios Cash & cash equivalents $ 289 3.9% Securities (unpledged) 765 10.5% Liquid Assets to Total Assets Liquid Assets to Deposits Loans held for
Slide 29: Capital Management
Capital Management Tangible book value per share (TBVPS)(1) decreased to $21.45 from $21.56 at the end of the prior quarter. The decline reflects the $14.8 million increase in the unrealized after-tax loss on AFS and a $1.9 million share repurchase offset by $11.1 million of net income, net of cash
Slide 30: Regulatory Capital
Regulatory Capital The Company exceeds regulatory minimums and the Bank remains well capitalized at September 30, 2023. Company Bank CET1 CET1 4.50% 2.50% 7.00% 6.50% Capital Capital CET1 CET1 11.95% 13.42% Capital Capital 10.38% 11.86% Tier 1 Tier 1 6.00% 2.50% 8.50% 8.00% Capital Capital Tier 1 Ti
Slide 31: Appendix
Appendix A Hanmi Financial Corporation: 31
Slide 32: 3Q23 Financial Summary
3Q23 Financial Summary ($ in millions, except EPS) Change (1) September 30, 2023 June 30, 2023 September 30, 2022 Q/Q Y/Y Income Statement Summary Net interest income $ 54.9 $ 55.4 $ 63.1 -1.0% -13.0% Noninterest income 11.2 7.9 8.9 41.5% 26.0% Operating revenue 66.1 63.4 72.0 4.3% -8.2% Noninterest
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 2023 2023 2023 2022 2022 Assets $ 7,350,140 $ 7,344,924 $ 7,434,130 $ 7,378,262 $ 7,128,511 Less goo
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 $ 740,411 $ 761,968 $ 933,915 $ 831,428 $ 831,428 $ 893,375 Unrealized losses on AFS securities (99,422) (9