Hanmi Financial (HAFC) Q2 Earnings call transcript Jul 23, 2024
Hanmi Financial Corporation recently held its second quarter 2024 conference call to discuss the company's financial results. The call, led by CEO Bonita Lee, provided a comprehensive overview of Hanmi's performance, highlighting key themes and trends that emerged during the quarter.
Financial Highlights and Performance
Hanmi delivered solid results in the second quarter, with net income of $14.5 million or $0.48 per diluted share. The company's return on assets was 0.77%, and return on average stockholders' equity stood at 7.5%. New loan production increased by 17% quarter-over-quarter, driven by a 77% increase in SBA loan production. This growth was a result of increased business activity and strategic investments in talented bankers.
Despite the strong loan production, loans were relatively flat compared to the first quarter due to higher payouts and sales of residential mortgage loans. Deposits were relatively stable, with demand deposits growing 1.4% from the prior quarter and now comprising 31% of total deposits. Noninterest income increased by 4.2% from the first quarter, and noninterest expense declined 3.2%, primarily due to lower salaries and benefits and capitalized labor costs associated with a new loan origination system.
Asset Quality and Strategy
Hanmi's asset quality metrics remained consistently strong, with criticized loans declining by over 17% compared to the first quarter. Net charge-offs were low at 12 basis points of average loans annualized, demonstrating the company's disciplined credit management. Hanmi sold residential mortgage loans into the secondary market and SBA loans during the quarter, supplementing noninterest income and diversifying the revenue base.
The company's strategic growth initiatives, including the Corporate Korea Initiative, are performing well and expanding Hanmi's customer referrals. This reflects confidence in the team's capabilities and highlights the company's commitment to diversifying and expanding its loan portfolio and deposit franchise.
Looking Ahead
Going forward, Hanmi plans to continue its strategy of maximizing growth and generating cost savings. This includes the consolidation of branch locations and the implementation of a new loan origination system to improve efficiency and customer experience. The company's focus on relationship banking and disciplined expense management positions it for sustainable growth, even amidst broader macroeconomic uncertainty.
Earnings Call Insights
During the call, analysts had the opportunity to ask questions directly to Hanmi's management team. These questions provided valuable insights into the concerns and priorities of influential stakeholders, allowing for a deeper understanding of the company's relationship with its investors.
Analysts questioned loan growth and payoffs, asset quality, and deposit rates. Hanmi's management provided detailed responses, highlighting the challenges and opportunities facing the company in these areas. The call also touched on topics like loan maturities, repricing, and expansion plans.
Conclusion
Hanmi Financial Corporation's second quarter 2024 performance showcased the company's resilience and strategic focus in a challenging banking environment. With solid financial results, a robust balance sheet, and a clear growth strategy, Hanmi is well-positioned for sustainable growth in the future.