Hanmi Financial's Q4 2024: Navigating Contradictions in Deposit Strategy and Loan Growth Prospects

These are the key contradictions discussed in Hanmi Financial's latest 2024Q4 earnings call, specifically including: Deposit Competition and Strategy, Loan Production and Pipeline, and Loan Production and Growth:



Financial Performance and Revenue Growth:
- Hanmi Financial Corporation reported net income of $62.2 million or $2.05 per diluted share for 2024, with a return on average assets of 0.83% and a return on average equity of 7.97%.
- The increase in net income was driven by strong operational execution and continued growth in the C&I portfolio.

Deposit and Loan Portfolio Expansion:
- Hanmi's deposits grew by 2.5% in 2024, driven by a 4.6% increase in noninterest-bearing deposits, which now account for 32.6% of total deposits.
- The growth in deposits is attributed to the expansion of the C&I portfolio and the acquisition of new relationships throughout the network.

US KC Initiative and Loan Yield:
- The US KC loan portfolio grew by 23% in 2024, representing 15% of the total loan yield, up from 12.3% last year.
- This growth was driven by the success of the US KC initiative, which focuses on building relationships with U.S. dollar subsidiaries of Korean companies.

Deposit and Loan Yield Trends:
- The average rate paid on interest-bearing deposits decreased by 31 basis points from 4.27% in the prior quarter, contributing to a net interest margin increase of 17 basis points to 2.91%.
- This trend was due to the decline in market interest rates, which allowed Hanmi to reprice its deposits lower while maintaining stable loan yields.

Capital Management and Dividend Increase:
- Hanmi's Board approved an 8% increase in the quarterly dividend to $0.27 per share, indicating confidence in its growth strategy.
- The dividend increase reflects Hanmi's strong financial and capital position, allowing it to invest in growth while rewarding shareholders.