Hanmi Financial Corporation · NASDAQ:HAFC
Hanmi Financial — Janney Financial Services Conference September 2024
49 slides from Hanmi Financial's conference presentation, Sep 16, 2024
Slide 1: Janney Financial Services Conference September 2024
Los Angeles New York/ New Jersey Virginia Chicago Dallas Houston San Francisco San Diego Janney Financial Services Conference September 2024
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 $6.2B Deposits $6.3B TCE/TA (2) Ratio 9.19% 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 experience
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 an 10% CAGR since 2013 • Significant progress reducing CRE concentration from 85% of the total portfolio, at December 31, 2013 to 63%, at June 30, 2024, through portfolio diversification that includes equipment finance, RRE, and multi - family • All
Slide 9: 2Q24 Highlights
2Q24 Highlights Diluted EPS $0.48 ROAA 0.77% NIM 2.69% Efficiency Ratio 62.24% TBVPS (1) $22.99 Net Income $14.5M • Net income was $14.5 million, or $0.48 per diluted share, down 4.7% from $15.2 million, or $0.50 per diluted share, for the prior quarter » Net interest income was $48.6 million, down
Slide 10: Loan Production
32% 46% 11% 16% 21% 20% $259.3 12% 39% 20% 13% 16% $336.3 $389.5 12% 14% 15% 13% $234.0 12% 23% 17% 22% 26% $273.9 20% 11% 16% 21% 32% 2Q23 3Q23 4Q23 1Q24 CRE C&I Equipment Finance RRE (1,4) 2Q24 SBA (2,3) 7.39% 7.80% 8.10% 8.02% 8.31% Loan Production • Commercial real estate loan production was $87
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 $6,114 2013 2014 2015 2016 2021 2022 2023 2024 YTD 2017 2018 2019 2020 Average Loans Receivable Strong average loan growth reflecting an 10% CAGR since 2013. ($ in millions) 11
Slide 12: Successful Portfolio Diversification Strategy
Successful Portfolio Diversification Strategy 12 Loan Composition (as of June 30, 2024) Loan Composition (as of December 31, 2013) $2.23 Billion $6.18 Billion (1) RRE includes Consumer loans (2) $144.5 million or 7.6% and $103.1 million or 2.7% of the CRE portfolio is unguaranteed SBA loans at Decem
Slide 13: Loan Portfolio
Loan Portfolio Commercial Real Estate (CRE) (1,2) Portfolio $3,889 Outstanding ($ in millions) 5.63% 2Q24 Average Yield $6.2 Billion Loan Portfolio (as of June 30, 2024) C&I - 13% 13 Equipment Finance - 9% CRE (2) Multifamily 151 # of Loans 54.7% Weighted Average Loan - to - Value Ratio (4) 1.58x We
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 13%. CRE Portfolio (1) $3.9B C&I Portfolio (2) $802M Retail – 28% Hospitality – 19% Office – 1
Slide 15: CRE Portfolio Geographical Exposure
CRE Portfolio Geographical Exposure CRE Composition by State $3,889 Multifamily by State $413 Construction by State $107 Owner Occupied by State $754 Investor (Non - owner Occupied) by State $2,615 California – $2,546 66% Texas – $415 11% New York – $234 6% Illinois – $88 2% Other – $606 15% Califor
Slide 16: Loan Portfolio Distribution
Loan Portfolio Distribution CRE C&I ($ in millions) ($ in millions) Construction (1) Multifamily Non - owner Occupied Owner Occupied $107 $414 $2,614 $754 Total Balance $10.65 $2.74 $3.00 $1.03 Average $4.97 $1.10 $1.11 $0.33 Median $59 $299 $1,868 $565 (3) Top Quintile Balance $20.1 or more $2.5 or
Slide 17: Loan Portfolio Maturities
<1 Year 1 - 3 Years >3 Years Total Real estate loans $ 1,094.8 $ 578.8 $ 377.5 $ 138.5 Retail 754.6 323.7 212.6 218.3 Hospitality 572.6 137.1 292.9 142.6 Office 1,360.0 683.3 526.4 150.3 Other 3,782.0 1,722.9 1,409.4 649.7 Commercial Property 106.5 1.9 39.0 65.6 Construction 954.2 949.2 0.1 4.9 RRE
Slide 18: USKC Loans & Deposits
USKC (1) Loans & Deposits 28% 27% 19% 5% 3% 3% 2% 2% 2% 2% 7% Real Estate Investment Auto Part Manufacturer Hotel Food Education Steel Electronics/Home Appliances Golf Course Computer Equipment Transportation Other USKC portfolio represented $864.7 million in loans, or 14% of the loan portfolio, and
Slide 19: Office Loan Portfolio
Office Loan Portfolio The CRE office portfolio (1) was $572.5 million (2) at June 30, 2024, representing 9% of the total loan portfolio. 80% 12% 3% Remaining = 4% 1% Portfolio by State • Average balance and median balance of the portfolio were $4.5 million and $1.1 million, respectively • Weighted a
Slide 20: Hospitality Segment
Airport – 6% Resort – 8% 20 Metropolitan – 55% (3) Destination / Suburban – 27% (3) Hospitality Segment Hospitality segment represented $754.6 million (1) , or 12% of the loan portfolio, at June 30, 2024. Convention Center – 4% (1) SBA loans in the hospitality segment were $19.5 million, or 2.6% of
Slide 21: Retail Segment
Retail Segment Retail segment represented $1.1 billion (1) , or 18% of the loan portfolio, at June 30, 2024. (1) SBA loans in the retail segment are $61.0 million, or 5.6% of total retail loans, at June 30, 2024 (2) Weighted average DCR and weighted average LTV calculated when the loan was first und
Slide 22: Residential Real Estate Portfolio
Residential Real Estate Portfolio QM - 2% 22 The RRE (1) portfolio was $954.2 million at June 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%,
Slide 23: Equipment Finance Portfolio
Equipment Finance Portfolio Equipment finance portfolio represented $531.0 million, or 9% of the loan portfolio, at June 30, 2024. Transportation, 26% Construction, 15% Waste Management, 13% Manufacturing, 12% Professional Services, 5% Retail Trade, 5% Healthcare, 4% Wholesale Trade, 4% Other, 16% 3
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 $6,299 2013 2014 2015 2022 2023 2024 YTD 2016 2017 2018 Noninterest - bearing deposits 2019 2020 2021 Interest - bearing deposi
Slide 25: Deposit Base
3.25% 3.53% 3.83% 4.16% 4.27% $3,966 $4,135 $4,174 $4,409 $4,384 3Q23 4Q23 1Q24 Average Balance of Interest - bearing Deposits Interest - bearing Deposit Costs 2Q23 2Q24 Deposit Base Noninterest - bearing demand deposits represented 31% of total deposits at June 30, 2024. Estimated uninsured deposit
Slide 26: Net Interest Income | Net Interest Margin
Net Interest Income | Net Interest Margin Net interest income for the second quarter was $48.6 million and net interest margin (taxable equivalent) was 2.69%, both down from the previous quarter due to higher interest - bearing deposit costs. ($ in millions) 2.78% - 0.02% 0.01% - 0.07% - 0.01% 2.69%
Slide 27: Deposits – CD Maturities; Net Interest Income Sensitivity
Deposits – CD Maturities Net Interest Income Sensitivity 29% of the loan portfolio reprices within 1 - 3 months. $127.6 $404.2 $542.7 $814.5 $801.7 $1,790.4 $184.2 $368.2 $350.1 $371.2 $520.6 $116.4 $1,918.0 $726.9 $1,182.7 $1,151.8 $684.9 $313.7 >3 - 5 Years >5 Years ≤3 Months >3 - 12 Months >1 - 2
Slide 28: Noninterest Income
39% $2.4 21% $1.3 13% $0.8 10% $0.6 17% $1.0 Service charges on deposit accounts Trade finance and other service charges and fees Servicing income Bank - owned life insurance All other operating income Noninterest Income SBA 7(a) Loan Production and Sales ($ in millions) $30.9 $36.1 $48.4 $30.8 $54.
Slide 29: Noninterest Expense
Noninterest Expense Continued focus on disciplined expense management. 1.83% Noninterest expense / Average assets 1.94% 1.89% 1.87% 1.87% Noninterest expense was $35.3 million in the second quarter, down 3.2% from the prior quarter • $35.3 $36.4 $35.2 $34.2 $34.3 Noninterest expense over average ass
Slide 30: Pretax, Pre-Provision Income (PTPP)
Pretax, Pre - Provision Income (PTPP) (1) • Pretax, pre - provision income was $21.4 million for the second quarter, down 2.5% from the prior quarter and down 26.4% from the same quarter last year • PTPP over average assets for 2Q24 was 1.15% compared with 1.17% for the prior quarter $29.1 $27.8 $24
Slide 31: Asset Quality – Delinquent & Criticized Loans
Asset Quality – Delinquent & Criticized Loans Delinquent loans / Total loans $38.8 $33.1 $31.4 $23.7 $33.9 $44.6 $76.5 $65.3 $62.3 $36.9 $83.5 $109.6 $96.7 $86.0 $70.9 1.40% 1.82% 1.56% 1.39% 1.15% 2Q23 3Q23 4Q23 1Q24 2Q24 Classified Special Mention Delinquent Loans (1) Criticized Loans Criticized l
Slide 32: Asset Quality – Nonperforming Assets & Nonaccrual Loans
$22.2 $15.8 $15.5 $14.0 $19.2 $0.1 $0.1 $0.1 $0.1 $0.8 $22.3 $15.9 $15.6 $14.1 $20.0 1Q24 2Q24 2Q23 3Q23 4Q23 Nonperforming loans Note: Numbers may not add due to rounding OREO Asset Quality – Nonperforming Assets & Nonaccrual Loans 0.30% 0.22% 0.21% 0.19% 0.26% Nonperforming assets / Total assets N
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 second quarter were $1.8 million. ($ in millions) ($ in millions) $2.6 $2.8 $1.8 $2.0 $2.1 $6.6 $2.7 $0.1 $9.4 $1.8 $2.1 $0.1 $2.3 $0.2 2Q23 3Q23 4Q23 Equi
Slide 34: ACL Trends
ACL Trends Allowance for credit losses was $67.7 million at June 30, 2024, or 1.10% to total loans, compared with $68.3 million and 1.11% at the end of the prior quarter. $71.0 $67.3 $69.5 $68.3 $67.7 1.19% 1.12% 1.12% 1.11% 1.10% 2Q23 3Q23 4Q23 1Q24 2Q24 Allowance for credit losses ACL to Loans ($0
Slide 35: ACL Analysis by Loan Type
ACL Analysis by Loan Type June 30, 2023 September 30, 2023 December 31, 2023 March 31, 2024 June 30, 2024 ($ in millions) Loans Allowance Loans Allowance Loans Allowance Loans Allowance Loans Allowance $ 3,738.3 $ 38.4 $ 3,773.0 $ 38.9 $ 3,889.7 $ 40.2 $ 3,878.5 $ 36.4 $ 3,888.5 $ 36.1 CRE 753.5 16.
Slide 36: Securities Portfolio
US Agy Residential MBS - Maturity 15 Year - 71% 20 Year - 18% Securities Portfolio The $985 million securities portfolio (all AFS, no HTM) represented 13% of assets at June 30, 2024, and had a weighted average modified duration of 4.3 years with $108 million in an unrealized loss position. Principal
Slide 37: Liquidity
16.0% 1,219 FHLB available borrowing capacity 0.4% 29 FRB discount window borrowing capacity 1.5% 115 Federal funds lines (unsecured) available 17.9% 1,363 Secondary liquidity sources 4.1% $ 313 Cash & cash equivalents Liquid Assets to Deposits Liquid Assets to Total Assets 10.7% 811 Securities (unp
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 $22.99 from $22.86 at the end of the prior quarter. The increase reflects $6.9 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 June 30, 2024. 8.00% 6.00% 4.50% 2.50% 2.50% 2.50% 15.24% 12.46% 12.11% 14.07% 11.28% 10.93% 10.50% 8.50% 7.00% Minimum Requirement Capital Conservation Buffer Company Pro Forma 10.00% 8.00% 6.50% 14.
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 44
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: 2Q24 Financial Summary
2Q24 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 June 30, 2023 $ 7,559.5 7,505.6 $ December 31, 2023 $ 7,475.2 7,382.0 $ 50.7 $ 48.6 $ 8.1 7.7 September 30, 2023 $ 7,434.7 $ 53.1 $ 54.9 $ 6.7 11.2 55.4 7.9 35.3 $ 21.4 36.4 $ 21.9 3
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 June 30, September 30, December 31, March 31, June 30, 2023 2023 2023 2024 2024 Hanmi Financial Corporation $ 7,344,924 $ 7,350,140 $ 7,570,341 $ 7,512
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 $ 916,437 $ 850,613 $ 850,613 $ 962,585 $ 786,761 $ 764,886 Regulatory capital (76,375) (76,375) (76,375) (76
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