Hanmi Financial (HAFC) Q3 Earnings call transcript Oct 22, 2024

Hanmi Financial Corporation held its third quarter 2024 earnings call, highlighting a strong financial performance and strategic initiatives aimed at driving growth and enhancing shareholder value. The call, led by President and CEO Bonita Lee, Chief Banking Officer Anthony Kim, and Chief Financial Officer Romolo Santarosa, provided insightful information on the company's financial health, strategic growth initiatives, and credit quality management.

Financial Performance Highlights

For the third quarter, Hanmi reported net income of $14.9 million or $0.49 per diluted share, with a return on average assets (ROA) of 0.79% and return on average stockholder's equity (ROE) of 7.55%. The company's net interest margin expanded by 5 basis points, reflecting higher yields on interest-earning assets and lower funding costs. Total loans grew by 2%, with new loan production increasing by 27%, driven by a 26% increase in commercial real estate, a 78% increase in commercial and industrial, and a 35% increase in residential loan production. Deposits grew by 1.2%, led by a nearly 5% increase in noninterest-bearing deposits and a 3.5% increase in money market and savings accounts.

Strategic Growth Initiatives

Hanmi is focused on strategic growth initiatives, including its corporate Korea initiative, which has seen significant success with a 6.1% sequential growth in corporate Korea loans. The company also recently filed an application to open a representative office in Seoul, South Korea, and plans to open a new branch in Texas in the coming months. These initiatives are expected to further enhance the company's growth and generate cost savings.

Credit Quality Management

In terms of credit quality management, Hanmi successfully resolved several criticized and nonaccrual loans through sales and payoffs, recognizing a recovery on a previously charged off loan. The company proactively moved loans to the special management category to monitor them more closely, ensuring that they are adequately protected. Despite the proactive moves, the allowance for credit losses to loans increased by a single basis point to 1.1%, reflecting the company's commitment to maintaining excellent asset quality over the long term.

Looking Ahead

Hanmi Financial Corporation is well-positioned for a strong close to 2024 and future sustainable growth. The company's balance sheet is robust, with healthy capital ratios and ample liquidity. The loan pipeline is solid, and Hanmi is on track to achieve its low to mid-single-digit loan growth target for the year. The overall credit quality of the loan portfolio remains strong, and the company is committed to driving growth and enhancing franchise value for all stakeholders.

In conclusion, Hanmi Financial Corporation's third quarter 2024 earnings call demonstrated strong financial performance, strategic growth initiatives, and a proactive approach to credit quality management. The company's focus on diversifying and expanding its loan portfolio, deposit franchise, and strategic initiatives in Korea and Texas position Hanmi for continued growth and success in the future.