Hanmi Financial Corporation · NASDAQ:HAFC
Hanmi Financial — KBW Virtual West Coast Bank Field Trip November 2024
49 slides from Hanmi Financial's conference presentation, Nov 18, 2024
Slide 1: KBW Virtual West Coast Bank Field Trip November 2024
KBW Virtual West Coast Bank Field Trip November 2024 Los Angeles New York/ New Jersey Virginia Chicago Dallas Houston San Francisco San Diego
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: 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 tangible common equity per share .
Slide 4: Table of Contents
5 – 9 Overview & highlights 10 – 23 Loan portfolio 24 – 25 Deposit portfolio 26 – 30 Margin, fee income, expenses 31 – 35 Asset quality 36 – 37 Securities & liquidity 38 – 39 Capital management 40 – 43 Corporate Sustainability 44 – 49 Appendix 4 Table of Contents
Slide 5: Hanmi Franchise at a Glance
Hanmi Franchise at a Glance Loans $6.3B Deposits $6.4B TCE/TA (2) Ratio 9.42% Second Largest Korean - American Bank in the U.S. • Founded in 1982 in Los Angeles, as the first Korean - American bank • 32 full - service branches and 8 loan production offices across 9 states • Focused on MSAs with high
Slide 6: Management Team
Previous Experience Hanmi Experience (Years) Banking Experience (Years) Position Name BBCN Bancorp, Shinhan Bank America, Nara Bank 11 38 President & CEO Bonnie Lee Opus Bank, First California Financial Group 9 33 SEVP, Chief Financial Officer Romolo Santarosa BBCN Bancorp 11 30 SEVP, Chief Banking
Slide 7: The Hanmi Timeline
The Hanmi Timeline 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 ($1.2 billion in assets) 2007 - Completed $70 million secondary common stock offering 2013 - C.G. Kum appoi
Slide 8: Why Hanmi?
Why Hanmi? • Strong average loan growth reflecting a 10% CAGR since 2013 • Significant progress reducing CRE concentration from 85% of the total portfolio, at December 31, 2013 to 63%, at September 30 , 2024 , through portfolio diversification that includes equipment finance, RRE, and multi - family
Slide 9: 3Q24 Highlights
3Q24 Highlights Diluted EPS $0.49 ROAA 0.79% NIM 2.74% Efficiency Ratio 59.98% TBVPS (1) $24.03 Net Income $14.9M • 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, or 9.4%,
Slide 10: Loan Production
CRE C&I Equipment Finance Loan Production Weighted average 7.92% 8.31% 8.02% 8.10% 7.80% interest rate on Commercial real estate loan production was $110.2 million and Commercial and industrial loan production was $105.1 million. • new production ($ in millions) Equipment finance production was $40.
Slide 11: Average Loan Trend
Average Loan Trend $4,039 $3,423 $2,902 $2,441 $2,157 $4,456 $4,508 $4,685 $4,795 $5,597 $5,968 $6,113 2013 2014 2015 2016 2021 2022 2023 2024 YTD 2017 2018 2019 2020 Average Loans Receivable Strong average loan growth reflecting a 10% CAGR since 2013. ($ in millions) 11
Slide 12: Successful Portfolio Diversification Strategy
Successful Portfolio Diversification Strategy 12 Loan Composition (as of September 30, 2024) Loan Composition (as of December 31, 2013) $2.23 Billion $6.26 Billion (1) RRE includes Consumer loans (2) $144.5 million or 7.6% and $108.0 million or 2.7% of the CRE portfolio is unguaranteed SBA loans at
Slide 13: Loan Portfolio
Loan Portfolio Commercial Real Estate (CRE) (1,2) Portfolio $3,932 Outstanding ($ in millions) 5.68% 3Q24 Average Yield $6.26 Billion Loan Portfolio (as of September 30, 2024) CRE 13 Owner - 13% CRE Multifamily - 7% CRE Construction - 1% C&I - 14% Equipment Finance - 8% CRE (2) Multifamily 149 # of
Slide 14: 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%. CRE Portfolio (1) $3,932M C&I Portfolio (2) $879M Retail – 28% Hospitality – 21% Office –
Slide 15: CRE Portfolio Geographical Exposure
CRE Portfolio Geographical Exposure CRE Composition by State $3,932 Multifamily by State $413 Construction by State $85 Owner Occupied by State $780 Investor (Non - owner Occupied) by State $2,654 California – $2,517 64% Texas – $409 10% New York – $263 7% Illinois – $105 3% Other – $638 16% Califor
Slide 16: Loan Portfolio Distribution
Loan Portfolio Distribution CRE C&I ($ in millions) ($ in millions) Construction (1) Multifamily Non - owner Occupied Owner Occupied $85 $413 $2,654 $780 Total Balance $7.71 $2.77 $3.07 $1.09 Average $2.64 $1.10 $1.11 $0.34 Median $49 $298 $1,904 $589 (3) Top Quintile Balance $15.6 or more $2.6 or m
Slide 17: Loan Portfolio Maturities
<1 Year 1 - 3 Years >3 Years Total Real estate loans $ 1,087.4 $ 576.4 $ 366.0 $ 145.0 Retail 819.0 350.9 259.9 208.2 Hospitality 571.6 134.5 270.2 166.9 Office 1,369.4 627.8 512.4 229.2 Other 3,847.4 1,689.6 1,408.5 749.3 Commercial Property 84.8 - 13.9 70.9 Construction 939.3 932.5 0.1 6.7 RRE / C
Slide 18: USKC Loans & Deposits
USKC (1) Loans & Deposits 26% 11% 9% 9% 8% 5% 3% 3% 3% 3% 20% Real Estate Investment Auto Part Manufacturer Hotel Food Education Steel Transportation Electronics/Home Appliances Golf Course Computer Equipment Other USKC portfolio represented $917.6 million, or 15%, of the loan portfolio, and $798.0
Slide 19: 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. 81% 12% 3% Remaining = 3% 1% Portfolio by State • Average balance and median balance of the portfolio were $ 4 . 4 million and $ 1 . 09 million, respectively
Slide 20: Hospitality Segment
Airport – 6% Resort – 8% 20 Metropolitan – 56% (3) Destination / S u b ur b ( a 3 n ) – 27% Hospitality Segment Hospitality segment represented $819.0 million (1) , or 13% of the loan portfolio, at September 30, 2024. Convention Center – 3% (1) SBA loans in the hospitality segment were $21.5 million
Slide 21: Retail Segment
Retail Segment Retail segment represented $1.09 billion (1) , or 17% of the loan portfolio, at September 30, 2024. (1) SBA loans in the retail segment are $69.0 million, or 6.34% of total retail loans, at September 30, 2024 (2) Weighted average DCR and weighted average LTV calculated when the loan w
Slide 22: Residential Real Estate Portfolio
Residential Real Estate Portfolio QM - 2% (2) 22 Non - QM - 90% (3) Jumbo Non - QM - 8% (4) 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
Slide 23: Equipment Finance Portfolio
Equipment Finance Portfolio Equipment finance portfolio represented $507.3 million, or 8% of the loan portfolio, at September 30, 2024. Transportation, 24% Construction 15% Waste Management, 13% Manufacturing, 12% Professional Services, 5% Retail Trade, 5% Healthcare, 5% Wholesale Trade, 4% (1) Othe
Slide 24: Average Deposit Trend
31% 31% 30% 33% 30% 29% 27% 34% 41% 45% 35% 30% 69% 69% 70% 67% 70% 71% 73% 66% 59% 55% 65% 70% $2,391 $2,872 $3,503 $3,608 $4,160 $4,461 $4,691 $5,560 $4,946 $5,950 $6,191 $6,302 2013 2014 2015 2022 2023 2024 YTD 2016 2017 2018 Noninterest - bearing deposits 2019 2020 2021 Interest - bearing deposi
Slide 25: Deposits
3.53% 3.83% 4.16% 4.27% 4.27% $4,135 $4,174 $4,409 $4,384 $4,397 4Q23 1Q24 2Q24 Average Balance of Interest - bearing Deposits Interest - bearing Deposit Costs 3Q23 3Q24 Deposit Base Total deposits increased by 1% to $6.40 billion, led by $91.8 million, or 5%, increase in noninterest - bearing depos
Slide 26: 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 int
Slide 27: Net Interest Income Sensitivity
Net Interest Income Sensitivity Loan & Deposit Beta (1) . Fed Funds Rate & Cost of CDs $73.2 $60.0 $1,020.9 $677.2 $441.3 $89.8 $1,094.1 $737.2 $441.3 $89.8 5.01% 4.73% 4.40% 3.54% 4Q24 3Q25 1Q25 Wholesale 2Q25 Retail ($ in millions) 4Q23 1Q24 2Q24 Deposits – CD Maturities 5.50% 5.50% 5.50% 5.50% 5.
Slide 28: Noninterest Income
35% $2.3 12% 19% $0.8 $1.3 5% $0.3 29% $1.9 Service charges on deposit accounts Trade finance and other service charges and fees Servicing income Bank - owned life insurance All other operating income Noninterest Income SBA 7(a) Loan Production and Sales ($ in millions) $36.1 $48.4 $30.8 $54.5 $51.6
Slide 29: Noninterest Expense
Noninterest Expense Continued focus on disciplined expense management. $20.4 $20.1 $21.6 $20.4 $20.9 Noninterest expense was $35.1 million for the third quarter, down 0.6% from the second quarter of 2024, primarily • Noninterest expense / Average assets 1.85% 1.89% 1.94% 1.87% 1.83% reflecting the a
Slide 30: Pretax, Pre-Provision Income (PTPP)
Pretax, Pre - Provision Income (PTPP) (1) • Pretax, pre - provision income was $23.4 million for the third quarter, up 9.4% from the prior quarter, propelled by a 2.9% increase in net interest income • PTPP over average assets for 3Q24 was 1.24% compared with 1.15% for the prior quarter $27.8 $24.6
Slide 31: Asset Quality – Delinquent & Criticized Loans
Asset Quality – Delinquent & Criticized Loans Delinquent loans / Total loans $76.5 $65.3 $62.3 $36.9 $109.6 $96.7 $86.0 $70.9 $160.0 1.82% 1.56% 1.39% 1.15% 2.56% Classified Special Mention Delinquent Loans (1) Criticized Loans Criticized loans / Total loans The $94.7 million increase in special men
Slide 32: Asset Quality – Nonperforming Assets & Nonaccrual Loans
$15.8 $15.5 $14.0 $19.2 $15.5 $0.1 $0.1 $0.1 $15.9 $15.6 $14.1 $20.0 3Q23 4Q23 1Q24 Nonperforming loans 2Q24 3Q24 OREO Asset Quality – Nonperforming Assets & Nonaccrual Loans 0.22% 0.21% 0.19% 0.26% 0.21% Nonperforming assets / Total assets Nonperforming Assets (1) Nonaccrual Loans Nonperforming ass
Slide 33: Asset Quality – Gross & Net Loan Charge-offs
Asset Quality – Gross & Net Loan Charge - offs Gross Charge - offs Net Charge - offs Net Charge - offs / Average loans Net charge - offs for the third quarter were $0.9 million. ($ in millions) ($ in millions) $2.8 $1.8 $2.0 $2.1 $2.5 $6.6 $1.3 $9.4 $1.8 $2.1 $0.1 $2.3 $0.2 $3.8 3Q23 4Q23 1Q24 Equip
Slide 34: 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. $67.3 $69.5 $68.3 $67.7 $69.2 1.12% 1.12% 1.11% 1.10% 1.11% 3Q23 4Q23 1Q24 2Q24 3Q24 Allowance for credit losses ACL to Loan
Slide 35: ACL Analysis by Loan Type
ACL Analysis by Loan Type September 30, 2023 December 31, 2023 March 31, 2024 June 30, 2024 September 30, 2024 ($ in millions) Loans Allowance Loans Allowance Loans Allowance Loans Allowance Loans Allowance $ 3,773.0 $ 38.9 $ 3,889.7 $ 40.2 $ 3,878.5 $ 36.4 $ 3,888.5 $ 36.1 $ 3,932.1 $ 37.8 CRE 728.
Slide 36: Securities Portfolio
US Agy Residential MBS - Maturity 15 Year - 70% 20 Year - 18% 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. Princ
Slide 37: Liquidity
Balance % of Assets FHLB available borrowing capacity FRB discount window borrowing capacity Federal funds lines (unsecured) available 1,243 29 115 16.2% 0.4% 1.5% Secondary liquidity sources 1,387 18.1% Bank liquidity (liquid assets + secondary liquidity) $ 2,519 33.5% Liquidity The Bank and the Co
Slide 38: Capital Management
(1) Non - GAAP financial measure, refer to the non - GAAP reconciliation slides (2) Rate at the end of the quarter 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 ca
Slide 39: Regulatory Capital
Regulatory Capital The Company exceeds regulatory minimums and the Bank remains well capitalized at September 30, 2024. 8.00% 6.00% 4.50% 2.50% 2.50% 2.50% 15.04% 12.29% 11.95% 14.20% 11.45% 11.11% 10.50% 8.50% 7.00% Minimum Requirement Capital Conservation Buffer Company Pro Forma 10.00% 8.00% 6.50
Slide 40: 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 Am
Slide 41: Corporate Sustainability (1 of 3)
The board recognizes that sustainability broadly encompasses corporate activities that enhance the long - term value of the Company. Corporate Sustainability (1 of 3) Donated 40 solar panels to the Koreatown Senior and Community Center in Los Angeles. Source: 2023 Hanmi ESG Report (published April 2
Slide 42: 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. Corporate Sustainability (2 of 3) Source: 2023 Hanmi ESG Report (published April 2023) Fostering Human Capital 68% Female Workforce 91% Ethn
Slide 43: Corporate Sustainability (3 of 3)
Governance and management of environmental and social impact create long - term value for our stakeholders. Corporate Sustainability (3 of 3) Source: 2023 Proxy Statement, 2023 Hanmi ESG Report (published April 2023) Oversight Diverse Board Members Our Board Shareholder Engagement • Annual sharehold
Slide 44: Appendix
Appendix Hanmi Financial
Slide 45: Risk Management: CRE Concentration
Risk Management CRE Concentration Hanmi has not exceeded the supervisory criteria to be considered to have CRE concentration risk under regulatory guidance (1) ; however, Hanmi’s risk management practices address the six elements of regulatory guidance (2) (1) Source: FDIC Financial Institution Lett
Slide 46: 3Q24 Financial Summary
3Q24 Financial Summary Note: numbers may not add due to rounding (1) Percentage change calculated from dollars in thousands for income statement summary; change in basis points for selected balance sheet items and profitability metrics (2) Non - GAAP financial measure, refer to the non - GAAP reconc
Slide 47: Pretax, Pre-Provision Income (PTPP) Schedule
Pretax, Pre - Provision Income (PTPP) Schedule Note: numbers may not add due to rounding June 30, 2024 March 31, 2024 September 30, 2024 $ 7,536.1 $ 7,559.5 7,505.6 $ September 30, 2023 $ 7,434.7 $ 48.6 $ 50.1 $ 8.4 8.1 December 31, 2023 $ 7,475.2 50.7 $ 53.1 $ 7.7 6.7 54.9 11.2 35.1 $ 23.4 35.3 $ 2
Slide 48: Non-GAAP Reconciliation: Tangible Common Equity to Tangible Asset Ratio
Non - GAAP Reconciliation: Tangible Common Equity to Tangible Asset Ratio 48 (1) There were no preferred shares outstanding at the periods indicated September 30, December 31, March 31, June 30, September 30, ($ in thousands, except per share data) 2023 2023 2024 2024 2024 Hanmi Financial Corporatio
Slide 49: Non-GAAP Reconciliation: Pro Forma Regulatory Capital
Non - GAAP Reconciliation: Pro Forma Regulatory Capital 49 Bank (1) Company (1) ($ in thousands) Total Risk - based Tier 1 Common Equity Tier 1 Total Risk - based Tier 1 Common Equity Tier 1 $ 921,905 $ 854,672 $ 854,672 $ 970,961 $ 793,728 $ 771,741 Regulatory capital (55,961) (55,961) (55,961) (55
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