HAFC - Earnings call transcript Q1 2024 | Hanmi Financial Corporation

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Operator

Ladies and gentlemen, welcome to the Hanmi Financial Corporation's First Quarter 2024 Conference Call. [Operator Instructions].

I would now like to turn the call over to Ben Brockovich, Investor Relations for the company. Please go ahead.

Unknown Attendee

Thank you, Doug, and thank you all for joining us today to discuss Hanmi's first quarter 2024 results.

its today's and call. issued presentation supplemental Hanmi accompany to afternoon, earnings quarterly release slide This Both section website of are the documents available company's at in hanmi.com. the IR of President I'm Officer; Banking Santarosa, Chief here Bonnie Officer. Ron Corporation; Lee, Financial today Executive Kim, with and Officer Hanmi Chief Chief Financial Anthony and

the then an before begin will our on provide with will up Bonnie provide loan comments overview. call and closing will will open questions. Bonnie call and your discuss we details financial Anthony today's deposit Ron for performance, activities.

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

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

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

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

Bonita Lee

today Good Thank you our discuss to us quarter everyone. first you, results. joining afternoon, Ben. for XXXX Thank

would first elements I the Before of of strategy. like remind we business investors get the into the our quarter, to of key highlights

our efforts diversify expand franchise. portfolio steadfast loan and our remain deposit in to we First, and

and loyal base. to has us us which relationship core to This two-pronged proven market our to again existing our model customer through objective this support achieving once our attract customers new unmatched are share. enables approach expand allowed provide We banking

and administration quality. standards credit Second, to maintain we asset underwriting disciplined practices excellent ensure employ rigorous we consistently

management environment. is has disciplined on been macro current unwavering important in Third, the our which focus expense particularly

strategy. winning with these provides to tenets core Staying us a true

During our first growth quarter, driven by the annualized X% model. deposit banking relationship we generated

annualized portfolio basis helped C&I Our growth. an and new both contribute on relationships. also solid to existing due our deposit to XX% grew by approximately This

to during diligent quarter. credit exercise We continue this management

result, a fourth XX% declining with by asset loans criticized the the As quarter. our from improved quality

X% loans nonperforming Net basis at quarter. by of declined annualized. also in average charge-offs the Additionally, XX were loans points low

mortgage supplement During to our the sold the quarter, helped we into market, residential noninterest secondary income. which loans

expect support base to market to order revenue we forward, sell of our of further to Going more the capitalize and on these loans diversify balance sheet. management opportunity our in

expense area. Disciplined a focus expenses. remains to management key turning Now

expenses noninterest data in expense sequentially investments to declined. up other made due Although were we our management, and categories people all

first now to compared review the fourth the quarter highlights XXXX. me Let quarter for the

$X.XX Net or income was diluted share. the for quarter per million $XX

grew deposits was growth, excluding mortgage Deposits Our income stockholders' noninterest return return was by XX%. X.X% on average remained and X.XX%, on equity XX% and residential at total sales, increased X.X% of X.X%. with strong noninterest-bearing by assets average deposits. Loan was

report to strategic that initiatives pleased well. also performing are I'm growth our

customer referrals, to customers an existing of team's capabilities. strong to and a number increasing continues with initiative of career Hanmi our new corporate Our sign coming in grow confidence through expand

first total of quarter, of XX% the our approximately total production and In currently Korea in both represents strong XX% and deposits. produced our loan Corporate Corporate loans Korea growth deposits.

quarter. down Our last for an level SBA production quarter was the elevated from

target $XX of the million remain $XX remainder on XXXX. million hit for of to our track we However, to production quarterly

consolidation to attracting an gaining of branch our maximize branch integral area growth steps This in traction two open the later of our and also branch three this new Atlanta took metro the to approximately X% with We'll optimize is year. cost new strategy savings a is which are branch within footprint. also our of year, our while of network new which work the locations, network. part we we generating intend year, progress This branch of build customers. locations, Last to both with on our opening the

are investing those people The are relationship Attracting top is importantly, model our heart and In of talented are talented investments paying labor members. competitive constantly our area embrace understand business an has, and off. talent and and market, to very who bankers banking organization. it brought on and our is retaining be, the today's we recently critical across will our in success. we retaining and always This highly we some team attracting

I'll call Banking Anthony? deposit our in Officer, detail. over and quarter to production the more Kim, the now Chief to gathering loan turn discuss Anthony first

Anthony Kim

you, and us for you joining Thank today. thank Bonnie,

on providing I'll details begin by additional our production. loan

selective was loan with finance X.XX% decline while rate underwriting in and production XX% to million, consistent levels. real that remain equipment were C&I and interest million with loans a in compared and current of due lending, weighted high-quality production the last of First our $XXX quarter in meet rate primarily estate, average decline as loan The disciplined quarter a SBA X.XX% quarter. in from pursuit We residential or was the quarter to the fourth commercial our $XXX standards fourth mortgages relatively environment.

and million, of $XXX CRE and million pleased million which with in of $XX environment XX% refinancing quality quarter, activity. our even average at million ratio $XX exceptionally down service in rate the interest portfolio, fourth continues to the both SBA a production high impact the first X.Xx. strong down debt was the traditional the We a approximately from in coverage ratio from was an weighted quarter was production as CRE fourth transaction of average loan results. quarter, loan-to-value $XX remain weighted

of number a had also quarter. loans second the into closing pushed We

small continues have to marketing it across our making markets. talent strong the to businesses this we team, inroads added with As

the rate in $XX current the the our were $XX quarter. Total lending production over on of with utilization last a million, remains quarter at refinance annualized our grew our $XX million an for consistent XX%, XX%, resulting in balances basis. as given with opportunities in credit interest rate continue C&I came subdued. up line environment. quarter, XX% range of current million expected commercial to quarter. billion fourth be $XX purchase activity quarter to from Production on in the the XX% Residential lines up of in mortgage first by $X.X in Outstanding of relatively Most per loan million market first was commitments

Residential represented XX% loan mortgage loans over our ago. of portfolio, from up total XX% year X

portfolio first portfolio conditions. on Bonnie during quarter, our sold of depending exploring million market residential sales from the As are noted, approximately $XX we and additional currently mortgages

Korea, of includes $XX approximately respect these production. from again demand for customers accounted of saw C&I loan production, to With total million which Corporate healthy $XX we who million

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

to deposits quarter, deposits. the X.X% In X.X% were on up Turning basis a first sequential year-over-year. and

growing partnership Korea in the from clients to ago. from X $XX and deposits base by our quarter with We continue the X.X% year or with our Corporate expand million last quarter XX%

our XX% deposits. is in can believe deposits of and adding quarter team good XX% grow Korea of just we that over new progress we relationships represented our Our deposits over making At demand nearly end, total time. Corporate

our total mix of XX% of of loyal base evidence our over relationships of the deposits. the we with noninterest-bearing deposits This customers years. stable deposit composition just banking at developed is relatively The our remains with over have

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

Romolo Santarosa

Thank you, Anthony.

an effect time quarter. X.XX%, declines deposits same. for deposit X.XX% Net and our of growth These and as decline XX balance of our in million, quarter interest-bearing the interest savings, because maturing for time points The balances was deposits declined margin money first increase quarter. the the the deposits well fourth income basis as the interest-bearing the reflect X.X% the first interest increase the X.X% up quarter-over-quarter $XX.X to of the also market a Net basis of from the points of in of primarily principally XX average in accounts. the average cost of was cost

Looking it points XX to date, average that for is the for see than interest-bearing the deposits we April to cost average quarter. first about the basis higher of

and the few when maturities with year. time quarters deposit comparatively that year this see are fourth first of also the for last the We compared quarter of next lighter quarter

average far the average from to of maturing loan Last, current our production the new those addition, In rates. on rate continues not our paid X%. that is time deposits be over rate just

change in the third interest environment the assuming loan in competition, or we rate quarter altogether early inflection margin So deposit no point or net our will reach significant interest in the second quarter. and in and believe its either

from primarily was due we first few future gain that expenses quarter, on on the from Noninterest of $X.X about coming quarter. noninterest and revenue and quarters. but a premium the SBA quarter million, expense notably, residential for note a new sale the continue XX.X% to gain higher we to employer like increased the increased in X.XX% will taxes $XXX,XXX anticipate included of I to quarter fourth would as loans of undertaken, seasonally a have fourth X.XX% the billion sales will the affect income the same items $XX.X mortgages, from sale in last which X.X% benefits. increased to The line Noninterest for quarters.

the of above stock effect vest of the quarter, increase years. start all restricted mitigate received become at vice salary lieu presidents to the X effective in next increases will First, of and annual wage and senior over second the an that that

low loans. a for Net be items was the year. the at the consolidating offices will expense commencing the were $X.XX $XXX,XXX, three a quarter in asset first quality anticipate quarter. favorable other remains in cost quarter as of of and of this first of the Credit recovery million for XX during areas branch loss will average loss addition, with and We loans optimizing charge-offs action Bonnie loan In the loan mentioned, basis as well sheet $XXX,XXX. $XXX,XXX as criticized nonaccrual be savings approximately and comprised provision of in we half second annually, declines second from bank off-balance points of

Turning to equity capital.

after-tax available Our our sale flow and hedges. a on due cash negative in unrealized losses million million a securities AOCI increase to million on unrealized losses our in $X.X increase $X.X $X increased

the $XX.XX In of assets tangible book at stock The addition, shares capital minimum minimum equity the well-capitalized price was quarter. and quarter for exceeds to our Tangible ratio ratio and was the common ratios XXX,XXX and value XX.XX%, tangible at the total an of X.XX%. regulatory ratio share X category. was common requirements exceeded company's average the share, per our equity during first bank's we and XX.X%. bank the ended Tier Hanmi $XX.XX first capital per purchased bank the

it back to will With Bonnie. I that, turn

Bonita Lee

Thank Ron. you,

commitment team performance quarter first consistent the and are like to Their execution. I'd the a for thank work track hard our key ongoing entire their and of solid of ongoing performance and Hanmi dedication. drivers record

The Hanmi franchise for sustainable well is positioned growth.

by evidenced liquidity and capital robust as strong, our Our ratios, is quality. balance sheet excellent credit ample

Our growth our loan increase healthy [indiscernible] ability is an which in in to achieve inquiries, low mid-single-digit with XXXX. pipeline bolsters our in confidence loan to

and has decline the funding in of a growth improved mix Our core with in deposits volumes.

remain expense we to Finally, committed management. disciplined exercising

longer The our our by how guided While in confident operate. drive are our we impact we how uncertainty broader continues underscoring processes our growth relationship and remain our It the growth treat and disciplined customers economy team interest is with to employees, shareholders. value ongoing compass, initiatives ability rate environment, for in we model. higher our and our for to create members. banking We

call for We'll Operator, line the open open please questions. the questions. the you. now to up Thank your

Operator

Instructions]. [Operator

from line Motta KBW. first question comes Our of the Kelly with

Kelly Motta

appreciate out make setting do that work actually put up? do quarterly here. bringing starting take, what on Ron, doing or moving can help -- I I and going year, that's level million expense want you give expenses that a bar a the parts $XXX,XXX, to is this just maybe to you basis, down? go the a expenses expenses I'm the kind think I from because reasonable you I expect just control to if know of front. there's the on Or guess of you're a absolute about to lot creeping of down. I some sure $X.XX

Romolo Santarosa

from measured think XXXX Kelly. fact, expenses as We will, do Thanks, of decline. from first quarter Sure. the that -- in

the will on low mid-XXs. cost a between I where say, the side, you or I the I'll ratio in what's that use would end on want side efficiency probably however hit, if revenue probably it, happening happening up could to phrase a the what's we midpoint think point, characterize

of kind take can and at out, ideas takeover. then see that into we the kind inflationary pointed some point, business you as other mix So enter of pressures of that over kind

kind things then year, inflation level So and we the do should as in take expense -- reaching a decline before calendar XXXX see I of anticipate mentioned, I a in over.

Kelly Motta

there's on Got tick it. appreciate all looks color then I loan It Slide XX, up CRE. there. to turning was looks credit. And on One other the thing strong everything That's early-stage helpful. like in pretty delinquencies. a

any seeing to Just credit? trends wondering managing any there, there's you're viewing you're if read-through sort and of how

Bonita Lee

we were the delinquency current, then previous which a million, Yes, coming been classified administrative the loan an a category, in. mostly for a did of increase most was which XX due have is there's issue we in couple payment already there's $X actual And the really in that to which the loans, and property. another haven't Half $X to seen Kelly, was delinquencies a -- CRE than million of process closing is issue. quarter, XX been loan, of the We in that have category. new little the under mortgage to subsequently of due residential to over brought increase

the XX uptick that was XX the So category. on September to

Kelly Motta

the then thing And was your early in those I or for to appreciate another noninterest-bearing color it. it notice either expectation bottom did on X.X%. this that declined looks margin, next. I like Got the again, quarter that One decline

wondering what and margin that decline? of deposit that, to still drove -- that a as Just if there provide was kind higher start seeing cost what enable any accounts that maybe pretty gives to drove you're to color if chunkier confidence soon? that stabilize migration to you can inflect you bigger, had that will that And if decline

Anthony Kim

quarter other quarter, shift a this few pace or certainly, announcement, -- shift we DDA higher from recent Yes, down interest-bearing with last past been has From to quarters. slowed interest-bearing see We we longer from keep the to track Fed the longer. to for for accounts the account. higher DDA continue see to for

of think we going However, second quarter. towards the it's to the stabilize end

Operator

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

Unknown Analyst

Gary Tenner. is on for This [indiscernible]

what this In terms you production quarter, the of drove the decline do decline last level? in versus loan think quarter

Bonita Lee

we exceptional have actually production. CRE quarter, So did last

is decline CRE. the of most quarter, This in the

environment, first it's just of we transactions think coming the the because we are quarter, pipelines of marketplace overall, still That but that the particularly the And slow. it's the initial rate higher the in. definitely the see quarter, is in higher interest quarter, into second number I the inquiries for than see higher. pipeline the was first will quarter the are than going

Unknown Analyst

right. All

than to fair are quarter So into loan I guess, this that second quarter? pipelines it heading is assume the looking stronger

Bonita Lee

Yes.

Unknown Analyst

All right.

NIM lastly, And reasonable this does second the CDs Or although a amount, maturing quarter, with lower bit in good. bottom? dollar at is X.XX% mark a Sounds but it compresses to assume the more? that

Romolo Santarosa

for only not So bottom. I pointed in basis as than quarter. where quarter deposits were certainly, we're cost the is date, But of that to higher the April out, we the first XX in first interest-bearing points suggesting -- the marks the

We rate are of slowed, addition, as kind occurring rate basis Anthony In mix slowing, points. you increase should when quarters, mentioned, XX deposits been that think say. X rate has of the been last the the are look or deposits change I is narrowing, the in at differentials slowing of on -- interest-bearing what's the about for has

book, In the look increase when about addition, the quarters. basis averaged at of you X on that's points rate the for XX last loan

third, but third So second the think is the we itself quarter near. hand. think why or be in And in really it's early either convergence it so sees in that that's the the quarter in it's do we

Operator

line of Butler Adam Next question comes from the Sandler. Piper with

Adam Butler

Adam is This Clark. Matthew for on

was the was commentary Just lot out and much you but savings noninterest-bearing this came it segment. like provide the Korea like in what on kind of what the wondering money from And quarter? And led just that. talk you're of It forward? And could market seeing amount about production from Corporate remix this the how quarter some curious start if front, that on to looks I just inflow was could increases, deposit of some you was to going initiative deposit from side? looks deposits the I if some a

Anthony Kim

Yes.

The acquire $XX accounts. -- $XX and XX Migration DDA as DDA accounts and well We on to the accounts, to approximately million remainder as -- savings that continue new looking to money money accounts to the going Corporate increase of million-ish. market trend the from savings for new market from accounts. Korea at will of our pipeline continue. due acquisition forward, particularly accounts, accounts, deposit of And is with

Adam Butler

helpful. are I higher points XX that -- that Okay. quarter. That's of Is cost mention And heard date deposits the the think on than that comments I April prepared you average to in or the right? basis the --

Romolo Santarosa

Correct.

Adam Butler

And do the March? to of you guys NIM have for happen month the

Romolo Santarosa

basis lower for It's quarter. about or points than the X average the X

Adam Butler

the then And quarter. the XXX,XXX over the the does like helpful. left look $XXX,XXX That's during to just with What front, repurchased your going saw authorization? shifting appetite under repurchase shares roughly Okay. the I forward

Romolo Santarosa

believe, -- XXX,XXX So been I quarters, doing X we've past varied for XX,XXX or been about the that. we've between

market the disruptions currency. we of but see midyear the our to now, say to it very or of was, want since -- that continue devaluation given last whenever So lost that year time I track began, in

continue So the dividend both actions, meet we'll repurchase. board well to mentioned nibble levels. review And as calls, in at we as as do the those capital I've share previous with the quarterly probably our to the

that continue as as well future quarters. this So will in quarter

Operator

the question of JonesTrading. next comes Matthew line Erdner with Our from

Matthew Erdner

right to buyers talk like you then that sales. it the now are the to? explore into that of mortgage I'd guys selling of step you What to the could residential And time this? you about decide was made guys profile kind

Anthony Kim

reason. sheet. looking into we're first managing balance That our Well, was the

with weighted income. ]. to new rate generate million, revenue rate a continue question, for was get to average of of the but to going noninterest And premium the it's it environment, source cost then about of obviously, loans to opportunity. quick Secondly, interest forward, [ And a last answer your as -- to explore we're trying X.X% higher over us to $XX with higher XX going be a difficult little a we

Matthew Erdner

able are sales? any then guys give should what expect you to in we of And Right. loan guidance terms of on pace

Bonita Lee

And I this double from ability successfully question generate your have think platform. first per started the is quarter. the the million projecting $XX time. and back and the we built platform as going to built around portfolio the we're loans just to this why We've

we quarter, well we -- sale. quarter, first able So do the balance sheet That's as why kind the share And we of that were as said, this. additional last execute income looking realizing Anthony in source. to in managing as we to are the

Matthew Erdner

Yes, that's helpful. certain a margin And it are targeting then then that's And me. these guys you on for sales?

Bonita Lee

We for and are looking range a in X% of X.X%. premium the about

I if forward, we the going that So continue we'll get can to be to able sell think that portfolio.

Operator

questions queue. to like Bonnie no are the I'd There back for more it in remarks. closing Lee to hand

Bonita Lee

you Thank today. call you the throughout your to interest and continued with forward progress appreciate for sharing Hanmi year. our We joining look our in

Operator

conclude gentlemen, and Ladies Thank this today's participation. your does you for teleconference.

day. at your have You may and disconnect time, lines this a wonderful

Hanmi Financial (HAFC) 23 Apr 242024 Q1 Earnings call transcript