Hanmi Financial (HAFC) 22 Oct 242024 Q3 Earnings call transcript

Ladies and gentlemen, thank you or welcome to Hanmi Financial Corporation's Third Quarter 2024 Conference Call.

As a reminder, today's call is being recorded for replay purposes. [Operator Instructions]. Once again, as a reminder, this conference is being recorded. I'd now like to turn the conference over to Ben Brodkowitz, Investor Relations for the company. Thank you.

ahead. go may You

presentation and the Hanmi's all This third earnings the supplemental issued Matt, documents call. today available website are afternoon, joining at to its in slide quarterly and discuss quarter section release accompany thank you, today's for Both of you IR us Hanmi to company's Thank XXXX results. hanmi.com.

overview. Officer. Lee, Kim, Bonnie Officer Anthony of Santarosa, Corporation; open Anthony Chief and will I'm with Officer; deposit Executive and will Chief begin an for Ron here Hanmi provide will Chief Financial today the call President our activities. and call with Bonnie the on financial will discuss questions. then Ron Banking we loan provide Bonnie your and details before up closing Financial comments performance,

begin, the Laws. Federal may to that remind Before would Securities like under you include statements we today's I forward-looking comments

results that industry Forward-looking the company's statements and events are operating financial financial expectations, based current affect may plans, and position. trends on future

XX-Q. Our risks and from actual statements found involve our factors our discussion could Form of reports Forms SEC our these factors In and presentation contained the release, to to investor our on materially statements, Discussion cause from filings, in those our that in you forward-looking be differ results forward-looking contemplated actual XX-Q. uncertainties. which particular, business results of by XX-K including direct affecting can made and our we risk our the certain our materially earnings

like ahead. to Lee. go Bonnie I would over now Bonnie? With turn to call the that, Please

third our delivered us quarter quarter overall joining strong you pleased performance we including our across this core Good XXXX by discuss and the solid Hanmi results, which with relationship you, afternoon, our Once marketplace. am Ben. measures. progress value Thank diversifying Thank to our made for our our to operating everyone. results. as performance I demonstrate and portfolio differentiate franchise. in results continues executing our banking further expanding model, again, loan deposit growth strategy the We meaningful in today of

the exercised key expense positions new conditions. us cost While model focusing to navigate structure maintaining a disciplined management, market also growth, on that we well

we the monitoring asset underwriting In minutes, to to term. ensure our credit a portfolio. and excellent over our I'll took to quality we demonstrates to employ the continue In loan maintain long come this addition, few standards we administration corrective actions quarter that rigorous approach back practices

me $X.XX review or let third Net highlights share. per was Now some the $XX.X of quarter. diluted income million

margin and points higher lower assets interest-earning on on return due Net average by X stockholder's X.XX%. a return X.XX% basis to combination interest cost. average assets Our expanded were of funding and equity was on yields

Total X% production and loans increased loan by sequentially new grew XX%.

nearly X.X% in by market increase real robust by commercial and declined was grew residential noninterest-bearing Demand deposits. led XX% a money driven And in by total X.X%, a XX% comprise Our production in estate, increase and X.X%. X% XX% loan and noninterest expense Deposits a in a increase XX% in commercial industrial production. loan finally, increase deposits of deposits increase and accounts. a now savings

to we year-to-date quarter, into sold consecutive residential third loans secondary market, bringing the $XX For sales mortgage the million.

continue and to revenue balance -- sell our to expect to loans We diversify sheet. capitalize opportunities residential on market mortgage to our to

strategic the to growth Moving on update on initiatives.

line Our initiative our corporate Korea performing in is expectations. with

of show customer and team's number of a are seeing referrals, our expertise is our confidence great capabilities. in which We a strong

deposits. Corporate Korea XX.X% quarter, represents to Korea This $XXX.X on driven corporate loans third our our total XX.X% of million loan approximately we growth XX% grew the In loan was in currently increase by sequentially. of loan portfolio production X.X% and

Seoul, open of to enhance we this strategic recently the a Additionally, South representative which in initiative. application growth further office Korea, believe we filed an will

scheduled is in branch announced L.A., which recently in XXXX. closing January of the finalized We the Town to Korea be in Plaza

As growth maximize and a is cost generate reminder, part action savings. to integral strategy an our of this

a the be mentioned had will branch new I months. in we Metro -- in previously, As opening the Texas coming area

opportunities evaluate branch optimize we our to always, future continue footprint. As will to

a cover to like I'd actions, quality take recent discuss detail. our to more Anthony which in credit moment Next, will

During the successfully law. third loans nonaccrual previously the we payoffs and several criticized quarter, and a the hard and recovery stock through also recognized resolved sales on

we moved to to category In special closely. note -- are important that current, addition, management that we the are these they adequately It's them protected. more and proactively loans are monitor confident loans to

In of losses single of our basis our to the overall ratio possible. goal increased strong. is quality portfolio X.X%. as point issues Quarter credit for and quickly line with end, practices, loans administration credit And remains to to our allowance as the credit identify resolve a any by importantly,

summary, the Anthony now I loan to detail. activity our Banking Kim, third Officer, turn in Chief discuss that call With to production deposit more will over quarter and the Anthony?

details you, joining production. on our begin loan by additional Bonnie, you Thank I'll thank and providing us for today.

The primarily due environment. and our estate, underwriting standards current $XX the million, loan loan up in second that disciplined quarter an our opportunities rate C&I from as average a in we to $XXX compared Third last to quarter or was production We was high-quality X.XX% remain million production quarter. growth with X.XX% with rate meet real increase mortgage. XX% interest seek in weighted the of commercial

ratio a the quality ratio has approximately of average loan-to-value the from our second refinancing CRE production $XXX weighted traditional and of increased pleased in It the million region. due remain Eastern quarter, interest We activity. $X our XX% to X.Xx. service primarily CRE a and was portfolio. of continues up environment rate production weighted impact average with to debt coverage The million, from elevated

third markets. SBA $XX we team in our million in exceeded the the from $XX second SBA underscores in we but quarter decreased million still million to $XX are to the $X target of and quarter million. the added $XX generating production loan range key consistent have production quarterly hires the This growth million to our

demand an ] which Korea, the quarter, resulting million of Outstanding loan XX% up of product. rate represented over a third million, [ C&I increase driven commercial from by of increase annualized $XXX was $XX in from utilization million XX%, quarter by billion corporate grew The XX%. $XX of third the total or our during $X production commitments or C&I XX% Total XX% strong for X% on balances up lines last credit an in basis. quarter. was were

levels. production was Residential third finance remains mortgage from million the quarter, of for loan quarter activity previous XX% interest decline the the production current demand in $XX due opportunities to rate for as as higher continue elevated from the we to subdued. be Most up market purchase --

same our ago. XX% represented loans portfolio, as mortgage year Residential of total X the loan

we Corporate includes the additional million of are [ total from $XX mortgage portfolio $XX demand residential approximately we production from saw healthy noted, conditions. approximately production. million C&I sold ] who on million for our of portfolio during third contingent of With Bonnie these and customers again to Korea, sales As market which $XXX respect quarter, currently exploring accounted

Our efforts our USKC grow continuing from $XXX fruit. loan or the and were up total expand to million approximately second these $XX X% to portfolio. quarter balances relationships million, XX% of are represent bear and

annualized although grew were quarter, nearly the the by or over period. Turning XX% up the quarter, previous to from deposits. demand accounts same our X% deposits deposit third X% In

production with Korea a expand with million We our continue clients partnership base deposit our Corporate $XX quarter. in of to the

and Korea can over which represented banking base deposit of demand deposits. of deposits of we stable, composition believe time. our deposit our relatively Our Corporate tenuously quarter our end, new remains the model. grow success At total XX% of our XX% The that reflects relationship relationships

XX% increased our XX%. third from of to quarter, the deposits mix noninterest-bearing During

also Turning to $XX.X asset million resulting to the of the loans Within $X.X were loans quality. a million a quarter. the payoffs on of charged We end million, criticized loans, nonaccrual and both and recovery, nonaccrual previously a in resolved criticized recognized $X.X we loans, also classified million of of of and and from sales special nonaccrual million off loan subsequent recovery sale by $X.X the payoffs completed mention $X.X the through decreased which decrease loans, upgrades loan. a

and proactively we special to X moved addition, them more In loans closely. mention monitor

the the on East Coast and the totaling a loans hotels Coast. other are one have West $XXX.X located recovery. hotels, Both had slow post-COVID Total million on

C&I a was its loan flow third to health a cash management by where is in hospitals. of company The one impacted buyer loan care

the Importantly, a entirety of have of larger are indicative guarantors been liquidity mitigates which and These a risk. flow, during protected. for cash X loans events We have and are loans strong the the sponsors believe these their all and trend. adequately not do turns current

increased X.XX%. ratio While our losses point to to increased X the relative credit basis allowance loans, for

now hand more for detail Chief over Santarosa, our financial And our I'll call quarter Financial to results. on Officer, third Ron the

and you, all. good Anthony, Thank afternoon

to points Bonnie income was quarter, benefit $XX.X from X.XX%. quarter. net additional improved increased interest a up from income level $XXX,XXX margin interest the second interest net to benefit $XXX,XXX as rate X the an due quarter a from $XXX,XXX X.X% expanded X basis Third million from noted, in our Net $X.X And assets. a -- benefit earned and day million, interest of higher

lower increase debt net increase increase from other to interest-earning X point costs. Looking loans a point X from margin, from X basis and A point saw basis deposit borrowing interest and assets. a basis we costs lower and

the our and lower our decision points, rates of Fed's the rate define and accounts on interest funds we certificates XX money lowered lowered the federal Following market by rate offering to and basis savings deposits. paid

from of interest-bearing the X.XX%, down of deposits August. of basis month cost For month the X points September, was the

more savings Looking each closely points. the XX paid on were down basis and money they accounts, rate at market

average, of to market any accounts deposits points third for Together in their basis may what we deposits, money meetings, or points quarter now third accounts time from cost not paid interest-bearing do rate at changes down and paid interest our was to the of while X.XX%. date. rates. will was the from down XX respond down basis accordingly The the rate XX the October may Turning Regardless date points. quarter was to on October to with accounts upcoming sales on Fed XX the average of

Now income. noninterest turning to

and million. X% drove increase a second Here, a of leaseback a $X.X we quarter sale from the $XXX,XXX recognized that from gain branch to

bank-owned included benefit our on a quarter Second noninterest income debt insurance. life $XXX,XXX

on loans for second In of than quarter the less addition, the were quarter. SBA third gains sales $XXX,XXX

to premiums sold declined X.XX%, of While remain at trade the same $XX.X the quarter-over-quarter $XXX,XXX million. volume loans

mortgage we residential consecutive sold for mentioned, lines Bonnie X have As quarters.

residential of third premium For sold $XX.X mortgages a of quarter, X.XX%. the at million we a

million. quarter. quarter $XXX,XXX third income pretax $XXX,XXX was well-managed together, interest to quarter, jumped Pulling and that the notable occurred growth the net essentially expenses. X.X% in in for the expense this branch second consolidation $XX.X or decrease charge down pre-provision X.X% the income The Noninterest all from reflects with second

the items the for nil credit quarter. representing the for provision loss was Credit $X.X million, sheet was the as third expense losses entire provision for quarter off-balance

the losses The decline $XX.X allowances $X.X payoffs. had of quarter, the balance end charged recoveries in offset which, the offset charge-offs to with credit due X.XX% qualitative Turning or loans. provision off at and by by We to million the for quantitative million quarter allowance loans. allowance. increased third $XXX,XXX to of million $X.X considerations million, of from net on a led the combined $X.X the of of previously Loan included million $X million, loan $X.X of specific for charge-offs

Turning to capital. equity

rate million negative to end $XX.X expected of interest third the environment at the AOCI of declined because as Our the quarter. lower

In XX,XXX an of program. shares under repurchase X,XXX,XXX company during addition, quarter. the repurchased available the $XX.XX price the shares average share remain at

exceed to continue we the to Tangible book capital quarter ratio the The capital continue the and equity company category. The equity exceed was the X.XX%. and minimum our ratios XX.XX%. well-capitalized at Tier and X bank's $XX.XX was requirements, end common minimum tangible the asset capital was to XX.XX%, third and tangible regulatory ratio of bank value ratio share per was for the company's required capital total

back to Bonnie. With you, that,

staff Thank team appreciate you, expect serving and gratitude want dedication meaningful customers Ron. bankers I to growth who contribute and and build clients. my our to with our our I our relationships the ongoing support unwavering consistently our of their commitment franchise. to to for especially

well are positioned XXXX and future growth. sustainable strong for We a close to

and by ample as ratios robust evidenced liquidity. is sheet healthy our capital balance Our

this loan are growth achieve is pipeline mid-single-digit in loan low for to solid year. and target track our we Our on to

healthy DDAs. of We deposits have of a and base mix a stable core

to loan finally, remains portfolio And strong. committed are of We well-controlled overall, credit expenses. quality our

value franchise We in enhancing all are continue our and stakeholders. confident ability to growth driving for

for you your time today. Thank

line. the your open will now the We please questions. open call for Operator,

[Operator Instructions].

from from Our first KBW. is Motta Kelly question

hoping with you off spot comments I pertains I it we some how quarter, the side this help all, should in appreciate quarter. do But next that low me the things on to loan regards I'm in to with what about in of know prime with bit as there your a thinking of and funding think you of production the to margin the we idea kicking have margin, is All look is level? to the some reset all could that really side. be the new rates. yields, going next you I as continued expansion this that mixing and expect out

XX involve and With team had. and a mix may that loan so working the margin, between a we another of declines November, rate elements it anticipate equal, basis that on we December. the that now, the that other a bit if more points interest net to question points. again, We Kelly, was right of could holding XX So of backwards your XX question, think the because to expand it's yields, for respect challenging the Anthony XX all little change basis it increments bit XX starts to for mix then have,

do with deck show the are But where introduced of first Fed slide in quarter is second weighted between question portfolio power sensitivity we day quarter we to to to the aside, the against we XXXX the and average XXXX. the target rate of that exploring try our deposits that the of phones another of loan rate what

about if again, about last Fed quarter since increase. year a So think was the it, second 'XX rate you

to fourth can you might that way the quarter inverse one stair one as it So just start and is at happen about way to start the step during what analyze forward. to think looking

you you'll number, find that a find second. right or analysis for down here getting I'll I'm -- the in illustration the it So but sorry,

of Page our on illustration slide that's of XX that portfolio, the deck. So

So again, point it depending time slightly far the step there's might book up has all The to though, would we up to speeds prepayment start will rates we in should like because the equal, pick at same and as step on then rate is a the which stepped drags do being reprices. we'd that we the fashion. The down short-term things to envision in environment, to think down go. the that, how loans caveat

that's So we we're know, kind of of that things against the all don't and what about. know thinking

Got And Is expansion a what that what it. -- is helpful, period points talking XX point XX Ron. of about, that? you're of That's basis to just that that... NIM clarification, time is

quarter. Fourth

will... So if you

Fourth quarter.

nil then the [ Full happen month can in of XX could just X/X you of that XX the of November last the the period, way may ] in say, and occur for that December.

helpful. That's your NPAs That's Got low. Look, it. are with great. really

strong. is capital Your

at guys the trading about tangible here? book XX% why value. You're more not get of right thinking aggressive buyback with How you now? are it

that get it. we bit don't got So we that each we of quarter, so everyone capital and I've too that have at enough asset have for fears much quality, -- a capital, looks of question everyone for

risk a things think happen, and the relative to I that the may management manages So notion. to all into happen, and the could take that won't Board consideration happen find that trying best line

weight rates of Now the September, certainly, at we I declined. that word surprised, end use the were

all you today, been erased. If look curve at that's the

look from their cetera, value et tangible measures a retrace basically steps. and just you perspective, all to book the So want at that

So challenging of determine element try makes it that's other correct a little to amount more it is. to that what the the bit

said, that of what I manage several quarters I demonstrated think think, over, that capital we've well. we All do

to it XX%, for repatriated the first been in and payout through just it the share that. repurchase part repurchases. of when leave that on have large Our XX%. X dividends was earnings alone you dividends at share increases our factor I'll ratio months, through A

I the all the it watching the you're couple last maybe see I'm back. worked Maybe think question good that of on I'll was minutes, special hoping could But for step migration, out. was commentary spend NPAs it. then current. mention a you It's me with Great. and to

migration with and Just what comfort there portfolio loss the specifically wondering ultimate resolved content what drove be to favorably. that able and gives that you being of

that. Sure. I'll handle

Both this the loans and payoffs So proactive recoveries real them problem X X of X loans, and and we by special loans, metrics been in that be The operating category. the X we is post-COVID are quite East anticipated. identified hotel than loans less we why another then great slow West which post the -- actually the very identifying proactively in and we special potential that's to caused And have had have Coast recovery, recent recovery had evidenced Coast. and mention, have in loans a are commercial as resolving downgraded estate mention quarter. performance

based And we For loans, [ and force received the the expected any PSA one to buyer. from in are is they well buyer anticipate And the become a quarter. a on we East of collateral And secured began already by that don't today, all sign said, loans the current, to I X entertaining during ]. they're potential sale and information these have a as the this has nonperforming. Coast, LOI

Gary Our next Davidson. from question from D.A. Tenner is

Tenner. Ahmad is Gary This Hasan on for

Firstly, can I should you them guys color? quarter? guys about introduction quarter. Any how in pipelines we strong bit pretty more think the little give and on know a loan you commentary this had next

Yes.

it XQ well third as the quarter. pipeline, similar level similar as at yield Looking as came in

So we produce similar can fourth of we're that a quarter. loan optimistic in level production the

CD that. detail Thanks. the thanks the on color I And slide. on appreciate the maturity for

guys little over we should You of cost revising think quarter. guys about $X aggressive have that next the CDs around going How that? How to X% are billion you be? that's a

X months. paying that between now term at. little ranges to than off I $XXX to bit anywhere typically reprice the X.X%, X, mean than the little less mature, able on rolled And looking it basis in considering we less what that XX depending the from new million points Yes. and a of rate lower production -- at last X.X% right to that X a we're were quarter, CD

X.XX%, retention which that the points. hoping we're the what basis third we are optimistic CD also at we're more or lowering below than sensing rate the of our repriced is we quarter that all that because will -- competitors So be XX rates

of and maturing and the looking at the the XX%. a a we high retention last quarters, X about retention lower retain on terms in just about XX% historical CDs the Just so the CDs, of XX%, end, end,

the So range. is just in that retention terms overall rate in of

next Butler Piper from from question Sandler. is Our Adam

Thanks slide. on loan Adam that curious disclosure just Matthew more the on I'm for side. on Clark. again is new This the for

remind loan of on you portfolio? repricing a characteristics and Just how you floating spot portion the fixed progressed Do rate have quarter-to-date. is? can what your overall portfolio guys the And the have rate us

Sure.

loan the be information ], it challenging a end. [ is but for October, can vary, month that which it's for about level. yields going of is pretty But XXX XXX So or because the to us quarter-to-date, come it's bit at little whether some much for that's until X% idea, in doesn't it the really

And adjustable remove at portfolio, when book, that SBA tails the have rate very small could pricing host whether characteristics, a they which we we floats, so book, very which of is have in of look that being as but then longer once of terms different And as quarter. primarily of think a piece our you hybrids the even a it will reprice.

So as particularly loan that given eat point which and its that increments we probably producing. will think yield, are tried we Anthony his team to the out, the book

in rates a yet. quite that drop not as the there prepayment see we're borrowers rate the we're But we're environment. anticipating not Probably yields might not in So fallen not start pushing going off the such too time much until to loan decline to -- activity. of

we the quarter. good will quarter think would be a fourth So pretty

see And it, seasonality trying Okay. that the good also to deposit quarter just the any aware That's if meaningful was growth, deposit as in the competition you're be get this DDA we It a I quarter. on you that seeing? very for was of? should just category. helpful. to there was balances see pipeline this particularly sense some And

growth issue. I most if in to our really the in say wouldn't directly we is really from have And you tied C&I our loan commercial our quarter, So experience production category. of loans. good directly, the C&I coming did the more But been it's have our good we business production positive at look a seasonality C&I it's accounts. growth loan. this DDA And And it's a when

have also a DDA. growth we good So really in

going your I about And closing commentary, new are to Great. moving few office in There's Okay. with then branch. you think that. forward? open a run rate the the moving I planning from of just prepared how parts a you And new open planning overall to Seoul you the mentioned thinking expense a branch guess, to opened quarter expenses. in this

L.A.-based So could a that's to opened first now that's all, consolidation office Korea event, 'XX be fourth Again, the opening underway. could the be the Seoul, representation an quarter. With the we've Atlanta for the area. a early South of But our respect then yet event. in it Georgia in branch. it scheduled 'XX first we of in planned branch have And of metro quarter, an up

on the promotion ordinary be trend, run what How seasonal altogether, you up steps quarter. and in we Atlanta that if million So is surprise, do can you year-end. be It look seasonally, our rate OREO promote seems advertising branch say. The seen that out new to always has as from but in point expense. a particularly like But the the what spend I property now, see third for it much would a at I of closed our to get versus will you've you'll what couldn't that least bump. $X.X that course, at

that million, could to if see million I So $X.X $X least up. probably maybe noninterest least at all you at round to of said, up expense want

that's that have spend, the I that advertising to kind to quarter for there. we'll be know I've So every enough going see. said But promotion that fourth of

you for That Okay. super the and appreciate my timing offices the taking branches. was and in helpful. questions. thank it, of I

[Operator Instructions].

is Matthew question here from JonesTrading. Erdner from Next

increase timing par? is at of item? led in sell not half your talk huge a the I it it there is sale. is on it's that about loan just to thing? of kind The Or a nonaccrual. pretty the And percentage And of loan still those quarter-over-quarter, portfolio. but increase about the the line for what to nonaccrual, to want significant expectation Is specifically your

for let's particular the So the of We actually held loan. with placed deal end nonaccrual at loan sale that September.

However, saw loss And this don't be to expect that we [ month. the note, out sale. particular closes of provided actually coming that million reserve so it any X.X and further successfully ] we we

Yes, opportunistically going that's Is are guys sell it residential to you where of forward, helpful loans? mostly for to going then And be going out space? that. the

$XX Yes. Year-to-date, about condition we in sold to mortgage, I we're the the and have probably that make for be accordingly. the continue and able in we do to XQ. And going market observe million to to decision think XXXX, I think the

question then ratio are this How loan-to-deposit of Yes, gain as helpful. at months all X are guys And And to compared on the that's sale one your this. forward? last guess, part to strategy, then ago. on looking going margins you been improve I maybe wise

historically So that represents the each our those been Xs. sell quarter, have the in The reporting each which SBA on premiums held-for-sale we loans, typically and at date. category

at about third the for it in my ] same like it will quarter. the idea or X.X fourth And recollection. be seems [ like that quarter probably think I for

On maybe mortgages, at about the out, third quarter. do the end been that we as identified the it. the for Those -- for premiums that residential And X.X-ish X a portfolio we time each happens we it sale we've quarter. fourth X, now here we it X.X, selling the been pointed of that also have have

that and So of market sort. is upon that depending appetite things

many continue. will and clearly SBA then for And envisioning. we're many, butter been what bread That's of our years. kind that's So

with be portfolio think necessarily to have respect opportunity that this, that to spread well we income. can we games. were that then, We're to particularly to where should a keep will, sell see it doing on rather, how our if mortgages, production looking as that of to we ratio. able produce a produce capabilities path at portfolio But to at and not think such an to way. understand residential books production loan-to-deposit we sheet you And you as manage balance see wanted we on continue the I the On sell.

like management question-and-answer closing the the to any I comments. turn floor concludes would to This back session. for

look all in you our today you call quarter Thank final our for you. joining XXXX. of forward and We sharing interest your for the with progress to for Thank Hanmi.

today's concludes teleconference. This

at your this disconnect you for lines Thank may time. your participation. You again