HAFC - Earnings call transcript Q1 2018 | Hanmi Financial Corporation

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Operator

Ladies and gentlemen, welcome to the Hanmi Financial Corporation's First Quarter 2018 Conference Call.

As a reminder, today’s call is being recorded for replay purposes. At this time, all participants are in a listen-only mode.

Following the presentation, the conference will be opened for questions. I would now like to introduce Mr. President Finance Vice Senior Pimentel, and Officer. Corporate Richard go ahead. Please

Richard Pimentel

earnings And Thank the on questions. plans, an details Hanmi forward-looking quarter, the for our operating XXXX Lee, Kum, we Chief thank Santarosa, more conclusion provide Officer; joining trends with and and Financial At Chief Dianna. open President for of Financial’s C. Mr. on expectations, position. remarks, and performance. session may our then and us quarter industry future financial Operating discuss all begin In Bonnie to Officer. results the you financial you, that Mr. overview will we Executive current will will and G. of statements based and prepared me today. affect first operating may company's call, Santarosa events, Ron Officer, are include Chief With the comments today’s Kum the

our or could results this be actual the by the speakers the The and call Act Our which Safe those claim on contained Reform XXXX. protection of different expressed involve Securities provisions in uncertainties. of risks implied forward-looking Harbor from Litigation statements,

our a our call I Kum. news factors hanmi.com. on refer For affecting results to outlining and including turn XX-K certain may differ website that the found in cause expectations, issued which the to This particular, discussion we please now In the risk to our XX-Qs. release of of our some most our recent to factors Financial business. will from XXXX, first filings, be Mr. SEC XX-K our results our Form can direct our you Hanmi afternoon, for financial over quarter at

C. G. Kum

continues today environment. Thank highly deliver you banking Good to competitive today’s quarter Richard. strong Hanmi to results. afternoon, us you, Thank performance financial in XXXX Hanmi’s first even discuss joining for everyone.

linked a XX% quarter. on income me Let highlights expanded from increase to up first key both XX% briefly from receivable sequential represented year-over-year basis, increased annualized and basis, basis. an year a ago. a the Loans quarter on the which Net leases moment quarter a take were on and and nicely summarize X.X%

loans impact bearing bolstered quarter X% ago. from our deposits, a of by first increase in quarter Non-interest our payroll we year pre-payment after achieve maintaining steady excellent is relatively Importantly, X.X% interest a benefits were quarter prior underwriting margin while announced elevated to the growth disciplined X% held increased our asset first in dividend employee quarter, extremely to for able increased in in despite result and in growth the operating. activities gathering environment Board the And fees. leases the are benefits considering the taxes non-interest seasonal good standards with finally, demand quality. from in this and modestly per in which solid which from quarter. have quarter and and just prior adjusting $X.XX prior competitive expense we XX% compared a Net common the been Deposit This share. of the first nearly

and time was in increase this has In XXXX the fact, this dividend the than since more fifth our grown dividend XXX%. during

to On I’d like to share, first Compared growth primarily the by out $X.XX the negatively leases. generated earnings income $X.XX, by share by $X.X the that quarter detail diluted which sustainable to result XXXX assets income tax per the of in our net of increased was core results, to to to of expanding impacted quarter first XX%, related XXXX, relative These share included net the million $X.XX loans quarter point and to quarter included from reform fourth legislation. Reinvestment the as per net due a quarter events. mutual the approximately Central were acquisition of deferred of reported of X%, adjustment income in portfolio CRA per part or from de revaluation well quarter exit quarter. per and our or as million, the year, prepayment of increased of last a fees recently one-time income share Community passed $XXX,XXX sale minimis first tax Inc., that by funds the or of of Act loss the reduce Looking $XX.X as XXXX per first a fourth net $X.XX our more we acquired basis, the share. or as at compared in Bancorp two linked

an ago. receivable, and annualized on portfolio basis our by XX% first to from XX% the and Turning in leases quarter expanded loans year a

of lease a strong and XX% and basis. lease loan the residential year production. X% represents first in production with first of purchases, on quarter quarter loan commitments excluding increase a very result the last loan and booked for weakest quarter the million, a seasonally quarter This New compared typically increase year what in our linked is is as $XXX in

Equipment strong Commercial Our performance the quarter. continued division exceptionally in Leasing its

of first from First increased this the and production year. in was quarterly since result acquisition best million $XX pleased lease completed XX% quarter quarter that last business I from the the this we quarter prior fourth the am XXXX. of of the X% to quarter report

C&I average of for being banking loan quarter a from with continues addition the portfolio with on yield fourth our reach success as X.XX%. loans as the business portfolio, production leases our areas diversify than specialty focus In of entertainment average is figure previous which effort, higher first weighted yield had such X.XX%. continue the focus to This Hanmi newly generated yield to yield is on to XXXX weighted a was This lease new quarter higher pleased the lending. categories for on lending generate X.XX%. and of the the other and complement generated into of loan benefitting the a than to nice extend footprint to I average ongoing a the our quarter be new coast-to-coast new investments organically weighted geographically

million quarter, C&I $XX a on basis. higher totaled first which and a higher During on was XX% booked commitments basis quarter year-over-year XX% linked the

of loans of to of excluding XX% the XX% our up Leasing portfolio basis the a our part division, first end with C&I C&I in As to on the Commercial strength At diversification loans the the on up of XX% continues was and quarter, ago. Due CRE comprised the improve. quarter-over-quarter outstanding, of was portfolio Equipment year-over-year a and basis. end quarter, compared of a balance leases, of year first X.X% our

as expect to portfolio percentage total throughout continue decline of CRE We year. loans the the a to

in we are first beyond, confident for pipeline loans ramp lease which second generate the SBA and loan remains confident the and growth in the leases can million level. full-year. double-digit I the up that in back that our will am typically ahead per $XX quarter the and Looking production, quarter, to and healthy we quarter loan slows also

to year competitive first for the grown year deposits, bearing Asian the driving coming landscape have American operate at more nearly over banks which appears is Total of growth gathering continue while over basis consistent quarter expanded up increased with linked a last have the in XX% banking moves. terms quarter on from billion than we a non-interest up rate CD deposits of deposits, prior not quarters, activities. CD’s, year-over-year. a core during including Similar pricing which competition to having deposit Fed’s ago. demand recent $X.XX with X% deposit funding year, up It has level a retail X% pressures market CDs from and the deposits of highly In nearly year X% retail categories interest heated are

to However, related control to X.X%, in our first a allow better X.XX% NIM funds. demand ago our ability linked X generate I’d our reduction bearing and will deposits, of quarter margin cost quarter, fourth which basis, in in particularly quarter prior interest provide point quarter. like color to the benefitted us and the quarter X the On core X.XX% non-interest net points to prepayment some year basis deposit that category, of of with fees compares approximately was the on respectively.

compared the in quarters. half the late Furthermore, XXXX. in year-over-year expense only fees sub of attributed last the prepayment the quarter issued debt nearly quarter $XXX,XXX fact, the of four that $XXX NIM million first In a interest were additional the quarterly first of associated average over in was to $XX,XXX, is with contraction with

interest to maintain Nonperforming strong margin in allow us a quality finally, slightly environment. am in ability higher a margin market competitive deposit we that net a past or remain rising over to of strong. relatively XX maintain metrics continue interest basis yielding challenging the our Given our I have deposits generate million year. to $XX.X points costs, to loans pleased tight the combined ability been and with asset And net generate declined core loans. range able will our to to Hanmi’s assets

also for first $XX,XXX. We recorded recoveries of net quarter the XXXXof

over metrics quarter. have of asset other the quarter All quality improved

our at quarter XX for leases maintained was basis end. of loan and allowance Finally, losses at loans points

generate Even credit digit loan of a on culture underwriting. to disciplined double maintain as we basis, annualized we a growth continue

first on and real XX% ratios loan-to-value originations X.XXtimes, new quarter commercial loan the prior coverage with XXXX, the For debt quarters, weighted and consistent were average estate respectively.

and dividend XX% to deliver it to and the our to first Financial $X.XX I’d share profitable in Before I’d Santarosa, first to on With our Board’s to was Chief to annual stock Ron, our of our paid continue power detail. February over dividend dividend represents that, more in of earnings increase an Ron franchise closing our price. growth increased the operating discuss per Ron? yield Hanmi the cash the on to quarter based to confidence This results like ability the turning to in XXrd. call The over yesterday’s turn shareholders. Officer, quarter by X.X% like that reiterate highlights

Ron Santarosa

all. you, C.G. and good Thank afternoon

First, interest more in let’s detail. a bit our revenues discuss net

quarter of and income ago. million from million over or X.X% net $XX.X fourth in quarter increased $X.X decreased million year $XX.X the the a quarter, First million same X.X% or interest approximately $X.X

$XXX $XXX net on XXXX. interest Following level borrowings. was on thousand first a million interest interest $X.X X.X% leases fourth prior from fourth million. the but increased quarter’s million, further results in first as by or first Interest fourth expense reflect deposit fees thousand deposit well higher $XXX upward quarter and a rates pressure on of expense quarter lower from $X.X from quarter a X.X% by for revenues quarter, as experienced borrowing in very down by versus thousand quarter, the the up expense pre-payment or increased linked were increased higher XX.X% was The interest the compounded of in the quarter decline the quarter Total level and $XX.X loans quarter. strong fees and our first

from X.XX see the billion. in last X% X.XX Total first quarter. quarter Our from the loan X.X% and deposits portfolio up at fourth up from billion, solid lease $XXX.X to year-over-year up finished just $X.X and quarter, X% deposits quarter X% Non-interest-bearing continued loan ago. the million, quarter billion, under were by year growth, prior a the to or from billion end of and increased X% up at from X.XX

XX Our for the rate four deposits XXX over quarter. deposit average total points period a for to Fed Federal March XXst was basis this basis on first loan Since basis Fed XX Reserve The up benchmark increased rate Funds points, of ratio quarterly last year. from the the bearing rate. the the representing March XXXX, change XX% the including XXX%, quarter increased of increase times same a XX% paid in of time points on Funds interest

fees. most deposits X.XX% in Funds represented first down interest-bearing X first the paid quarter rate down X.XX% Net point The the average paid margin change basis quarter. prior XX% X basis on The in recent increase basis deposits loans points rate paid the the quarter Federal mutual while average quarter basis of was interest from to the leases to more CRA mostly rate. and XXXX, deposits The of X basis for the the was for primary primarily saw average from on million. prepayment points overall transaction. For on on X of a the of from was X.XX%, of interest-bearing average that rate noninterest quarter sale muted first increased holdovers $XXX loss income, decrease by driver thousand a cost the to the XX% $X.X funds to X.XX%. quarter sequential uptick the UCB realized from the points points saw were fourth a X of now the Switching first

lumpy, higher versus the $XXX equity X.XX% effective account ago. Changes increased Professional re-measurement or XX% $XX.X strong payroll from experienced other quarter. at first million loans, $XX additional service charges seasonably loan remaining the effective Expenses. million The or XX.X% first stockholders’ of sales payouts income Marketing X.X%, QX, decrease expense, the was end assets. and tax noninterest last our XX.X%. XX.X% and in at the quality annual taxes; sequential for efficiency points noninterest of for quarter on rate first coming income ratio costs from lower $XX.X income assets were return noninterest for a included in XX which of income, rate fees, fourth nonperforming and many with XX.X% Salaries for fourth quarter, steady with to XXXX the be in asset this by at the In however importantly, quarter, quarter the relatively million base Very quarter SBA in first normalized year down coupled average from in resulted continues deferred quarter XX.XX%, which expenses to excluding $X.X lower to our at average for the servicing million. were of of of income, in and in from quarter. total thousand quarter and OREO the expenses Noninterest operating on tends more This The to be was the and in banks costs, Additionally, down in increased decrease levels increase the a Other assets respectively. tax assets. an mostly offset to a and bonus tax basis our in million stemming $XX.X increase fees, due the both in was last return with

to decreased XX just leases to for to first quarter. and to basis points basis fell delinquent points Our loans loans X points by our points and basis leases and XX total loans non-performing total loans X the basis

the XXX,XXX Our at from at and provision end expense fourth the increased XX coverage of unchanged our to points. up basis allowance ratio quarter XXX,XXX, remained

$XX.XX flat the the per tangible from at $XX.XX pretty per prior much from Lastly, book quarter. our quarter value finished share share,

will remains common back capital ratios. tangible With Our to call ratio I equity our XX.XX% regulatory as do C.G. that, at strong all of the turn

C. G. Kum

sharing Thank start in in nice deliver look strong With Hanmi Ron. and excellent to we second our year. results our day. the New represents solid conservatively July. to asset performance Hanmi’s and strong when I progress for in expanding Year. you, is have throughout report first quality forward earnings, financial the quarter Thank you your continued a well-positioned quarter the to underwritten loans you results a with leases, and growth attention

Richard Pimentel

Dianna the for call open up let’s questions.

Operator

we line Thank Our question. now Chris question will you. and gentlemen, our begin with session. proceed and Please question answer of from Ladies [Operator first Instructions] comes your the KBW. from McGratty

Chris McGratty

relates and how any the CD it the to about ran the in competitive start as what outlook? if campaigns And thinking Ron, so reiterating peers maybe were? the of I interested if quarter, message commentary in funding interested of am margin the deposit about gathering I'm of duration on should was rising costs quarter, you one margins, nature flatter the deposits. we Thanks. your curve any in a

Ron Santarosa

of G., question? C. Bonnie to you might part take the first want that maybe So

Bonnie Lee

Bonnie. This is

ran relationship a of campaigns, a are when defensive strategy haven’t of had strategy individually CD competition, and really looking we any customers, match it at when saw where at we we competitive look we more profitability. yet overall each the We

Ron Santarosa

elements but a in do, portfolio. C. the of deposit And running yielding as pricing increase do but then out not CD it as the the to if that of not small is try the have and in may recent we we or appears portfolio respect may Fed that did what notice independent only deposits, with the mentioned benefit also higher to of G. point we cost of a other basically

out chance going we a to but play think don’t we pressure, do have about year, where exactly envision the at. being entire I good know of how So for it’s some we’re

Chris McGratty

where understand Just Ron, the so a the and of stability I we’re I little can X.XX, that have of bit going right, few next make sure pressure quarters? that’s to kind hopefully in

Ron Santarosa

X.XX the that that, move on to shot pretty at a maintaining a to Reserve take Let have depending we way. increases, -- in think future Federal number the I rate does hopefully what and the a chance stab had a meaningful we up at me good relative

liability an of the loans to have. number And tried have. this essence in we for structure, fair As in ability have we generate say a you increase the are type of have ability with level position of pricing we higher banks that elasticity bit I have asset pricing, that I than a earlier, very of envision the would loans because though even to that hybrid little that mentioning we few might

leadership commercial the think get Bonnie's we’re return, even cracking generating. So better her the yield, under we the better the be bit on to and leasing a whip little real and can that going estate. portfolio that We a more, loans

Chris McGratty

on that’s run Okay, number, said thank expenses, while that came May last you for I of that exactly inflation quarter off is million that be in. think they rate you Ron is you I have fair? that. and $XX modest The the flat where

Ron Santarosa

so. Yes, I believe

Operator

comes Davidson question Gary the proceed from A. next Please of from with line question. your Company. D. Our Tenner and

Gary Tenner

answered sort at You the better whichever, could you question maybe remind overtime, I C.G of the just but, margin, report, of quarter the unusually low I think has tend where unusually for [indiscernible] or volatility there interim but with good penalties the middle? payment quarter there, your keeping understanding high the in the be, sort been us in somewhere been outlook million guess or has that the truth just to did is fourth just or

Ron Santarosa

that XXX,XXX of unusually number, the figure right followed XXX,XXX. high. the fourth was quarter the third That quarter You’re that actual was figure and

obviously and that penalty the prepaid prepayments a in year million the for frankly second is so half of of slightly an we year, year. had the we level averaged the last X.X surprised was that number unpredictable I the and and So bit under

as what Going believe environment, said stick are the loans of a income going loan whether forward be don't have that in we portfolio, flipside in XXXX, comes prepayment a so high or think from, just we’re that the portfolio whether or generated of level penalty. loan prepayment going will going in I our rate more totaled be rapidly yield there's said in forward is and I higher value our Having that to the fine. the I rising to to we penalty, a a there have is

is XXXX in started level rates the I a that think significantly move fairly to have a given high like to have prepayment the real that category going penalty already of commercial estate.

not more prepayment but we we may stick to So on penalty get the is that generate the of loans our going books.

Gary Tenner

then And a in pursuing just interested been you overtime, have M&A know I that opportunities. follow up, guys

down You levels and where higher whether and kind discussion there perhaps what of things the there, potential are M&A all talk rates the improvements about are opportunities to that the out slow stand you? tax and these conspiring in things for rates, interest activities then

C. G. Kum

I the it have would rate the of all don’t to slow interest are kind environment that that down, of we institution know experiencing. with its if the concerned I say impact been conspiring smaller

at or solos are they in we from. potential a there. at of of position of We're very And mistake let's are partners and ago with made cannot the little stock that by parties. been there regulatory the where to it And one clean as the of from that given I whatever given deal didn’t active reasons signaling we in price potential we organization looking are a discussions but relative have terms the that we viewpoints the looked just interested so and say out few while was quite eminent for happen frankly a where control, us

Operator

proceed the of Raymond Our from [Operator your comes James. Instructions] line Please Don question. with Worthington next from question

Don Worthington

the quarter expect amount of you in to had the I terms be purchases run QX? but… in So, last it would purchased was size know you large some loan similar rate purchase

C. G. Kum

we get even did, off. was level going potential relationship we did that given be did, of first a it that the that paid less. we in was we organically and was the say large there will that be I’d loans, we produced Yes, at that the have to pipeline that maybe to because thought quarter, going

Don Worthington

tax outlook And then what's your of rate, in terms the there?

C. G. Kum

between So, it again to closer XX, I to Don expect we XX XX are the side.

So two be sure point where think the each Not exactly still come between those we will marks. at around will quarter. in I decimal

Don Worthington

quarter? what Ron was number the dollar And seasonal the salary then of the rough amount in first benefits

Ron Santarosa

incremental say About I’d to if that I pretty quarter of benefits. about increase the of XX% XX% much maybe compare increase of reflects the incremental end taxes, year fourth the that X.X, kind probably incentives,

Operator

question your of the next Our line from Davidson. Gary from A. question. D. with Tenner Please proceed comes

Gary Tenner

follow one Just up. quick

maintaining around X.XX, As some to bit initial similar additional maybe a mix the off higher. it of pushing securities contemplate and about or is asset the yielding you any it with talk a run growing in Does it margin [indiscernible]. higher change that loans replace

C. G. Kum

portfolio. -- I significant security is expecting don’t so that to not think we are big, change we're not any our particular book that

So it the mix leases towards CRE expect of than over mix might other bit of than couple that in a significant C&I but more and change the terms in be quarters. a next leaning I little don’t

Operator

the We in Please at further time. questions continue. this have no queue

C. G. Kum

Thank results first with Hanmi quarter We conference. next you Financial’s listening to forward for to look quarter. speaking you XXXX

Operator

gentlemen, this thank and you for participation. this your your Ladies disconnect lines you. at you time conclude today’s may and does teleconference, Thank

Hanmi Financial (HAFC) 24 Apr 182018 Q1 Earnings call transcript