0001171843-24-000355.txt : 20240123 0001171843-24-000355.hdr.sgml : 20240123 20240123160534 ACCESSION NUMBER: 0001171843-24-000355 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 14 CONFORMED PERIOD OF REPORT: 20240123 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20240123 DATE AS OF CHANGE: 20240123 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HANMI FINANCIAL CORP CENTRAL INDEX KEY: 0001109242 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] ORGANIZATION NAME: 02 Finance IRS NUMBER: 954788120 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-30421 FILM NUMBER: 24552525 BUSINESS ADDRESS: STREET 1: 3660 WILSHIRE BLVD SUITE PH-A CITY: LOS ANGELES STATE: CA ZIP: 90010 BUSINESS PHONE: 2133822200 8-K 1 f8k_012324.htm FORM 8-K Form 8-K
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________

FORM 8-K

_________________

CURRENT REPORT

Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  January 23, 2024

HANMI FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

Delaware000-3042195-4788120
(State or Other Jurisdiction of Incorporation)(Commission File Number)(I.R.S. Employer Identification No.)

900 Wilshire Boulevard, Suite 1250

Los Angeles, CA 90017

(Address of Principal Executive Offices) (Zip Code)

(213) 382-2200

(Registrant's telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.001 par valueHAFCNasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company,indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 
 
Item 2.02. Results of Operations and Financial Condition.

On January 23, 2024, Hanmi Financial Corporation (“Hanmi Financial”) issued a press release announcing its financial results for the quarter ended December 31, 2023. A copy of the press release is attached as Exhibit 99.1 to this Form 8-K.

This information set forth under “Item 2.02. Results of Operations and Financial Condition,” including Exhibit 99.1 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.

Item 9.01. Financial Statements and Exhibits.

(d)           Exhibits

99.1        Press release issued by Hanmi Financial dated January 23, 2024
104         Cover Page Interactive Data File (embedded within the Inline XBRL document)

Forward-Looking Statements

This press release contains forward-looking statements, which are included in accordance with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are “forward–looking statements” for purposes of federal and state securities laws, including, but not limited to, statements about our anticipated future operating and financial performance, financial position and liquidity, business strategies, regulatory and competitive outlook, investment and expenditure plans, capital and financing needs and availability, plans and objectives of management for future operations, developments regarding our capital and strategic plans, and other similar forecasts and statements of expectation and statements of assumption underlying any of the foregoing. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” or “continue,” or the negative of such terms and other comparable terminology. Although we believe that our forward-looking statements to be reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ from those expressed or implied by the forward-looking statements. These factors include the following:

  • a failure to maintain adequate levels of capital and liquidity to support our operations;
  • general economic and business conditions internationally, nationally and in those areas in which we operate, including any potential recessionary conditions;
  • volatility and deterioration in the credit and equity markets;
  • changes in consumer spending, borrowing and savings habits;
  • availability of capital from private and government sources;
  • demographic changes;
  • competition for loans and deposits and failure to attract or retain loans and deposits;
  • inflation and fluctuations in interest rates that reduce our margins and yields, the fair value of financial instruments, the level of loan originations or prepayments on loans we have made and make, and the cost we pay to retain and attract deposits and secure other types of funding;
  • our ability to enter new markets successfully and capitalize on growth opportunities;
  • the current or anticipated impact of military conflict, terrorism or other geopolitical events;
  • the effect of potential future supervisory action against us or Hanmi Bank and our ability to address any issues raised in our regulatory exams;
  • risks of natural disasters;
  • legal proceedings and litigation brought against us;
  • a failure in or breach of our operational or security systems or infrastructure, including cyberattacks;
  • the failure to maintain current technologies;
  • risks associated with Small Business Administration loans;
  • failure to attract or retain key employees;
  • our ability to access cost-effective funding;
  • changes in liquidity, including the size and composition of our deposit portfolio, including the percentage of uninsured deposits in the portfolio;
  • fluctuations in real estate values;
  • changes in accounting policies and practices;
  • changes in governmental regulation, including, but not limited to, any increase in FDIC insurance premiums and changes in the monetary policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System;
  • the continuing impact of the COVID-19 pandemic on our business and results of operation;
  • the ability of Hanmi Bank to make distributions to Hanmi Financial Corporation, which is restricted by certain factors, including Hanmi Bank’s retained earnings, net income, prior distributions made, and certain other financial tests;
  • strategic transactions we may enter into;
  • the adequacy of our allowance for credit losses;
  • our credit quality and the effect of credit quality on our credit losses expense and allowance for credit losses;
  • changes in the financial performance and/or condition of our borrowers and the ability of our borrowers to perform under the terms of their loans and other terms of credit agreements;
  • our ability to control expenses; and
  • cyber security and fraud risks against our information technology and those of our third-party providers and vendors.

In addition, we set forth certain risks in our reports filed with the U.S. Securities and Exchange Commission, including, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022, our Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K that we will file hereafter, which could cause actual results to differ from those projected. We undertake no obligation to update such forward-looking statements except as required by law.

 
 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 HANMI FINANCIAL CORPORATION
   
  
Date: January 23, 2024By: /s/ Bonita I. Lee        
  Bonita I. Lee
  Chief Executive Officer
  

 

EX-99.1 2 exh_991.htm PRESS RELEASE EdgarFiling

EXHIBIT 99.1

Hanmi Reports 2023 Fourth Quarter and Full Year Results

LOS ANGELES, Jan. 23, 2024 (GLOBE NEWSWIRE) -- Hanmi Financial Corporation (NASDAQ: HAFC, or “Hanmi”), the parent company of Hanmi Bank (the “Bank”), today reported financial results for the 2023 fourth quarter and full year.

Net income for the fourth quarter of 2023 was $18.6 million, or $0.61 per diluted share, compared to $18.8 million, or $0.62 per diluted share, for the third quarter of 2023. The annualized return on average assets for the fourth quarter was 0.99% and the return on average equity was 9.70%.

For the full year of 2023, net income was $80.0 million, or $2.62 per diluted share, compared to $101.4 million, or $3.32 per diluted share, for the full year of 2022. The year-over-year decline in net income reflects a $16.4 million decline in net interest income, a $6.2 million increase in noninterest expense and a $3.5 million increase in credit loss expense. The return on average assets for the full year of 2023 was 1.08% and the return on average equity was 10.70%.

CEO Commentary

“We finished 2023 with positive momentum, delivering strong fourth quarter results and building a solid foundation for 2024,” said Bonnie Lee, President and Chief Executive Officer. “Our full year results reflect our team’s effective execution of our relationship-driven banking strategy, focus on strong credit administration and disciplined expense management. We further optimized our banking network with the opening of two new branch locations in the fourth quarter. Our proven strategies continued to drive growth and diversification in our loan portfolio and expansion of our customer base, all against the backdrop of a challenging interest rate environment and the lingering effects of an uncertain economy.”

“Looking ahead, Hanmi is moving forward with a strong balance sheet, excellent asset quality, a diverse and expanding base of loyal customers and an outstanding team that has repeatedly demonstrated the ability to navigate a variety of economic cycles. We will continue to take a selective and disciplined approach to lending in the current environment with a focus on attractively priced loans and high-quality borrowers, many who will also have a deposit relationship with us. Our consistent performance and growing reputation as a preferred relationship-based banker is enabling us to grow the number of communities we serve. We will also continue to invest in our people, technology and infrastructure to drive operational efficiencies, support disciplined growth and enhance shareholder value.

“I want to thank the entire Hanmi team for their outstanding work this year as well as their dedication to serving our customers and the communities in which we operate. Despite some near-term macroeconomic uncertainty, our future is bright and we will continue to focus on what we do best: building strong relationships and expanding our networks. I look forward to our team delivering another successful year for Hanmi.”

Fourth Quarter 2023 Highlights:

  • Fourth quarter net income was $18.6 million, or $0.61 per diluted share, compared to $18.8 million, or $0.62 per diluted share, for the third quarter of 2023. Fourth quarter results included a $2.9 million recovery of credit loss expense while third quarter results included a $5.2 million charge for credit loss expense and a $4.0 million gain from the sale-leaseback of a branch property. In addition, income tax expense for the fourth quarter included a $0.6 million charge to increase the valuation allowance on state net operating loss carryforwards.
  • Loans receivable were $6.18 billion at December 31, 2023, up 2.7% from the end of the third quarter and up 3.6% from the 2022 year-end; loan production for the fourth quarter was $389.5 million with a weighted average interest rate of 8.10%.
  • Deposits were $6.28 billion at the end of the fourth quarter, up 0.3% from the end of the third quarter and up 1.8% from the 2022 year-end; noninterest-bearing deposits were 31.9% of the deposit portfolio at December 31, 2023.
  • Net interest income was $53.1 million for the fourth quarter, down 3.1% from third quarter, and net interest margin (taxable equivalent) was 2.92%, down 11 basis points; the average yield on loans increased 15 basis points from the third quarter while the cost of interest-bearing deposits increased 30 basis points.
  • Noninterest income for the fourth quarter was $6.7 million, down from $11.2 million for the third quarter primarily reflecting the absence of the third quarter $4.0 million gain on the sale-leaseback of a branch property.
  • Noninterest expenses were $35.2 million for the fourth quarter, up 2.8% from the third quarter primarily reflecting a seasonally higher spend on advertising and communications as well as costs associated with relocation (closing and opening) of two branch offices; the efficiency ratio for the fourth quarter was 58.86%.
  • The fourth quarter included a credit loss expense recovery of $2.9 million; there were net loan recoveries of $5.0 million for the fourth quarter that included a $6.0 million recovery from a 2019 troubled loan relationship; the ratio of the allowance to loans was unchanged from the third quarter at 1.12%.
  • Criticized loans declined 11.8% sequentially from the third quarter to $96.7 million, or 1.6% of loans at year-end; nonperforming assets declined 1.9% sequentially to $15.6 million, or 0.21% of total assets at December 31, 2023.
  • At December 31, 2023, Hanmi had a tangible common equity to tangible assets ratio of 9.14%, a common equity tier 1 capital ratio of 11.86% and a total capital ratio of 14.95%.

For more information about Hanmi, please see the Q4 2023 Investor Update (and Supplemental Financial Information), which is available on the Bank’s website at www.hanmi.com and via a current report on Form 8-K on the website of the Securities and Exchange Commission at www.sec.gov. Also, please refer to “Non-GAAP Financial Measures” herein for further details of the presentation of certain non-GAAP financial measures.

Quarterly Highlights
(Dollars in thousands, except per share data)

 As of or for the Three Months Ended Amount Change
 December 31, September 30, June 30, March 31, December 31, Q4-23 Q4-23
  2023   2023   2023   2023   2022  vs. Q3-23 vs. Q4-22
              
Net income$18,633  $18,796  $20,620  $21,991  $28,479  $(163) $(9,846)
Net income per diluted common share$0.61  $0.62  $0.67  $0.72  $0.93  $(0.01) $(0.32)
              
Assets$7,570,341  $7,350,140  $7,344,924  $7,434,130  $7,378,262  $220,201  $192,079 
Loans receivable$6,182,434  $6,020,785  $5,965,171  $5,980,458  $5,967,133  $161,649  $215,301 
Deposits$6,280,574  $6,260,072  $6,315,768  $6,201,038  $6,168,072  $20,502  $112,502 
              
Return on average assets 0.99%  1.00%  1.12%  1.21%  1.56%  -0.01   -0.57 
Return on average stockholders' equity 9.70%  9.88%  11.14%  12.19%  15.90%  -0.18   -6.20 
              
Net interest margin 2.92%  3.03%  3.11%  3.28%  3.67%  -0.11   -0.75 
Efficiency ratio (1) 58.86%  51.82%  54.11%  49.54%  46.99%  7.04   11.87 
              
Tangible common equity to tangible assets (2) 9.14%  8.89%  8.96%  8.77%  8.50%  0.25   0.64 
Tangible common equity per common share (2)$22.75  $21.45  $21.56  $21.30  $20.54   1.30   2.21 
              
              
(1)       Noninterest expense divided by net interest income plus noninterest income.          
(2)       Refer to "Non-GAAP Financial Measures" for further details.           
              

Results of Operations
Net interest income for the fourth quarter decreased $1.8 million to $53.1 million from $54.9 million for the third quarter of 2023, down 3.1%. The decrease was primarily due to an increase in the cost of interest-bearing deposits, partially offset by an increase in interest-earning asset yields. The cost of interest-bearing deposits increased 30 basis points to 3.83% for the fourth quarter of 2023 from 3.53% for the third quarter of 2023. The increase in the cost of interest-bearing deposits was due to higher market interest rates and a shift in the composition of the portfolio to higher-rate deposits. Average interest-bearing deposits were $4.17 billion for the fourth quarter, compared with $4.13 billion for the third quarter. The yield on average loans for the third quarter increased 15 basis points to 5.88% from 5.73% for the third quarter. Average loans were $6.07 billion for the fourth quarter, compared with $5.92 billion for the third quarter of 2023. Fourth quarter loan prepayment fees were $0.1 million, compared with less than $0.1 million for the third quarter. Net interest margin (taxable-equivalent) for the fourth quarter was 2.92% compared with 3.03% for the third quarter.

Net interest income was $221.3 million for the full year 2023 compared with $237.6 million for 2022, a decline of 6.9%. The decrease reflected the rise in the general level of interest rates during 2023, including an increase in the cost of interest-bearing deposits and a shift in the composition of the portfolio to higher-rate deposits, partially offset by an increase in interest-earning asset yields. The cost of interest-bearing deposits for the full year 2023 increased 256 basis points to 3.35% from 0.79% for 2022. Average interest-bearing deposits for the full year 2023 increased to $4.0 billion from $3.3 billion for 2002 where, for the same period, average time deposits increased $1.2 billion. Average interest-earning assets for the full year 2023 increased 5.6% to $7.18 billion from $6.80 billion for 2022. The yield on average interest-earning assets for the full year 2023 increased 112 basis points to 5.15% from 4.03% for 2022. Average loans for the full year 2023 were $5.97 billion, up 6.6% from $5.60 billion for 2022. Full year 2022 loan prepayment fees were $0.8 million compared with $1.3 million for 2022. Net interest margin (taxable-equivalent) for the full year 2023 was 3.08% compared with 3.50% for 2022. The 42 basis point decrease in the net interest margin reflected the increase in the cost of interest-bearing deposits, partially offset by the increase in average loan yields.

 As of or For the Three Months Ended (in thousands) Percentage Change
 Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Q4-23 Q4-23
Net Interest Income 2023   2023   2023   2023   2022  vs. Q3-23 vs. Q4-22
              
Interest and fees on loans receivable(1)$89,922  $85,398  $83,567  $80,923  $77,123   5.3%  16.6%
Interest on securities 4,583   4,204   4,126   4,025   3,633   9.0%  26.1%
Dividends on FHLB stock 341   317   283   289   289   7.6%  18.0%
Interest on deposits in other banks 2,337   4,153   2,794   2,066   1,194   -43.7%  95.7%
Total interest and dividend income$97,183  $94,072  $90,770  $87,303  $82,239   3.3%  18.2%
              
Interest on deposits 40,277   36,818   32,115   25,498   14,900   9.4%  170.3%
Interest on borrowings 2,112   753   1,633   2,369   1,192   180.5%  77.2%
Interest on subordinated debentures 1,654   1,646   1,600   1,583   1,586   0.5%  4.3%
Total interest expense 44,043   39,217   35,348   29,450   17,678   12.3%  149.1%
Net interest income$53,140  $54,855  $55,422  $57,853  $64,561   -3.1%  -17.7%
              
(1)       Includes loans held for sale.             
              
 For the Three Months Ended (in thousands) Percentage Change
 Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Q4-23 Q4-23
Average Earning Assets and Interest-bearing Liabilities 2023   2023   2023   2023   2022  vs. Q3-23 vs. Q4-22
Loans receivable (1)$6,071,644  $5,915,423  $5,941,071  $5,944,399  $5,877,298   2.6%  3.3%
Securities 961,551   955,473   971,531   980,712   966,299   0.6%  -0.5%
FHLB stock 16,385   16,385   16,385   16,385   16,385   0.0%  0.0%
Interest-bearing deposits in other banks 181,140   317,498   230,974   192,902   138,476   -42.9%  30.8%
Average interest-earning assets$7,230,720  $7,204,779  $7,159,961  $7,134,398  $6,998,458   0.4%  3.3%
              
Demand: interest-bearing$86,679  $94,703  $99,057  $109,391  $119,106   -8.5%  -27.2%
Money market and savings 1,669,973   1,601,826   1,463,304   1,453,569   1,781,834   4.3%  -6.3%
Time deposits 2,417,803   2,438,112   2,403,685   2,223,615   1,585,798   -0.8%  52.5%
Average interest-bearing deposits 4,174,455   4,134,641   3,966,046   3,786,575   3,486,738   1.0%  19.7%
Borrowings 205,951   120,381   196,776   268,056   197,554   71.1%  4.3%
Subordinated debentures 129,933   129,780   129,631   129,483   129,335   0.1%  0.5%
Average interest-bearing liabilities$4,510,339  $4,384,802  $4,292,453  $4,184,114  $3,813,627   2.9%  18.3%
              
Average Noninterest Bearing Deposits             
Demand deposits - noninterest bearing$2,025,212  $2,136,156  $2,213,171  $2,324,413  $2,593,948   -5.2%  -21.9%
              
(1)       Includes loans held for sale.             
              
 For the Three Months Ended Yield/Rate Change
 Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Q4-23 Q4-23
Average Yields and Rates 2023   2023   2023   2023   2022  vs. Q3-23 vs. Q4-22
Loans receivable(1) 5.88%  5.73%  5.64%  5.51%  5.21%  0.15   0.67 
Securities (2) 1.93%  1.79%  1.73%  1.67%  1.47%  0.14   0.46 
FHLB stock 8.25%  7.67%  6.92%  7.16%  7.00%  0.58   1.25 
Interest-bearing deposits in other banks 5.12%  5.19%  4.85%  4.34%  3.42%  -0.07   1.70 
Interest-earning assets 5.34%  5.19%  5.09%  4.96%  4.67%  0.15   0.67 
              
Interest-bearing deposits 3.83%  3.53%  3.25%  2.73%  1.70%  0.30   2.13 
Borrowings 4.07%  2.48%  3.33%  3.58%  2.55%  1.59   1.52 
Subordinated debentures 5.09%  5.07%  4.94%  4.89%  4.67%  0.02   0.42 
Interest-bearing liabilities 3.88%  3.55%  3.30%  2.85%  1.84%  0.33   2.04 
              
Net interest margin (taxable equivalent basis) 2.92%  3.03%  3.11%  3.28%  3.67%  -0.11   -0.75 
              
Cost of deposits 2.58%  2.33%  2.08%  1.69%  0.97%  0.25   1.61 
              
(1)       Includes loans held for sale.             
(2)       Amounts calculated on a fully taxable equivalent basis using the federal tax rate in effect for the periods presented.       
              

Credit loss recovery for the fourth quarter was $2.9 million, which included a $2.9 million recovery for loan losses, offset by a less than $0.1 million provision for off-balance sheet items. There were net loan recoveries of $5.0 million for the fourth quarter that included a $6.0 million recovery from a 2019 troubled loan relationship. For the third quarter, credit loss expense was $5.2 million, which included a $5.2 million provision for loan losses and a recovery for off-balance sheet items of less than $0.1 million.

Credit loss expense was $4.3 million for the full year 2023, compared to a credit loss expense of $0.8 million for 2022. The full year 2023 credit loss expense was comprised of a $4.9 million provision for loan losses and a $0.6 million recovery for off-balance sheet items. The credit loss expense for 2022 was comprised of a $0.3 million provision for loan losses and a $0.5 million provision for off-balance sheet items.

Noninterest income for the fourth quarter declined $4.5 million to $6.7 million from $11.2 million for the third quarter of 2023. The decline primarily reflected the absence of the third quarter $4.0 million gain on the sale-leaseback of a branch property, a $0.2 million decrease in service charges on deposits, and a $0.3 million valuation adjustment to bank-owned life insurance. A $0.3 million increase in the gain on sale of SBA loans partially offset these decreases. The volume of SBA loans sold in the fourth quarter increased to $29.9 million from $21.0 million for the third quarter, while trade premiums decreased to 6.17% for the fourth quarter from 6.84% for the third quarter.

Noninterest income was $34.2 million for the full year 2023, consistent with 2022. Noninterest income for 2023 included a $4.0 million gain on the sale-and-leaseback of a branch property, offset by a $3.8 million decline in gain on sale of SBA loans and a $1.3 million decrease in service charges on deposits. The volume of SBA loans sold for the full year 2023 declined to $100.5 million from $156.1 million and trade premiums also declined to 7.12% from 7.44% for the full year 2022.

 For the Three Months Ended (in thousands) Percentage Change
 Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Q4-23 Q4-23
Noninterest Income 2023   2023   2023   2023   2022  vs. Q3-23 vs. Q4-22
Service charges on deposit accounts$2,391  $2,605  $2,571  $2,579  $2,742   -8.2%  -12.8%
Trade finance and other service charges and fees 1,245   1,155   1,173   1,258   1,115   7.8%  11.7%
Servicing income 772   838   825   742   725   -7.9%  6.5%
Bank-owned life insurance income (expense) (29)  280   271   270   (97)  -110.4%  -70.1%
All other operating income 853   1,178   1,811   1,618   1,039   -27.6%  -17.9%
Service charges, fees & other 5,232   6,056   6,651   6,467   5,524   -13.6%  -5.3%
              
Gain on sale of SBA loans 1,448   1,172   1,212   1,869   1,933   23.5%  -25.1%
Net gain (loss) on sales of securities -   -   (1,871)  -   -   0.0%  0.0%
Gain (loss) on sale of bank premises -   4,000   -   -   -   -100.0%  0.0%
Legal settlement -   -   1,943   -   -   0.0%  0.0%
Total noninterest income$6,680  $11,228  $7,935  $8,336  $7,457   -40.5%  -10.4%
              

Noninterest expense for the fourth quarter increased by $1.0 million to $35.2 million from $34.2 million for the third quarter. Professional fees increased by $0.4 million, advertising and promotion expense increased by $0.5 million and other operating expense increased by $0.6 million. A $0.3 million decline in salaries and employee benefits and a $0.2 million decline in occupancy and equipment expense partially offset the increases noted. The efficiency ratio for the fourth quarter was 58.86%, compared to 51.82% for the third quarter, primarily due to the lower revenue.

Noninterest expense was $136.5 million for the full year 2023, compared with $130.3 million for 2022, up 4.8%. The increase reflected a $5.3 million, or 6.9% increase in salaries and benefits, a $0.7 million increase in occupancy and equipment expense, a $0.6 million increase in data processing expenses and a $0.6 million increase in professional fees. A $0.5 million decrease in advertising and promotion expenses partially offset these increases. The efficiency ratio for the full year 2023 was 53.45%, compared with 47.93% for 2022, primarily due to the higher expenses and lower revenue.

 For the Three Months Ended (in thousands) Percentage Change
 Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Q4-23 Q4-23
  2023   2023   2023   2023   2022  vs. Q3-23 vs. Q4-22
Noninterest Expense             
Salaries and employee benefits$20,062  $20,361  $20,365  $20,610  $20,279   -1.5%  -1.1%
Occupancy and equipment 4,604   4,825   4,500   4,412   3,668   -4.6%  25.5%
Data processing 3,487   3,490   3,465   3,253   3,431   -0.1%  1.6%
Professional fees 1,977   1,568   1,376   1,335   1,783   26.1%  10.9%
Supplies and communication 613   552   638   676   683   11.1%  -10.2%
Advertising and promotion 990   534   748   833   974   85.4%  1.6%
All other operating expenses 3,252   2,852   3,243   1,957   3,041   14.0%  6.9%
Subtotal 34,985   34,182   34,335   33,076   33,859   2.3%  3.3%
              
Other real estate owned expense (income) 15   16   4   (201)  (70)  -6.3%  -121.4%
Repossessed personal property expense (income) 211   47   (59)  (84)  55   348.9%  283.6%
Total noninterest expense$35,211  $34,245  $34,280  $32,791  $33,844   2.8%  4.0%
              

Hanmi recorded a provision for income taxes of $8.8 million for the fourth quarter of 2023, compared to $7.9 million for the third quarter, and representing an effective tax rate of 32.2% and 29.6%, respectively for each period. 2023 fourth quarter income tax expense included a $0.6 million charge to increase the valuation allowance on state net operating loss carryforwards. The effective tax rate for the full year 2023 was 30.1%, compared to 27.9% for the full year 2022.

Financial Position
Total assets at December 31, 2023 increased 3.0%, or $220.2 million, to $7.57 billion from $7.35 billion at September 30, 2023. The sequential quarter increase reflected a 2.7%, or $159.5 million, growth in loans receivable, net, as well as a $48.5 million increase in securities and a $13.3 million increase in cash and due from banks, primarily supported by a $162.5 million increase in borrowings and a $20.5 million increase in deposits. From December 31, 2022, total assets increased 2.6%, or $192.1 million. This year-over-year increase reflected a 3.7%, or $217.4 million, growth in loans receivable, net, supported by a 14.2%, or $50.1 million decrease in cash and due from banks and a 1.8%, or $112.5 million increase in deposits.

Loans receivable, before allowance for credit losses, were $6.18 billion at December 31, 2023, up from $6.02 billion at September 30, 2023. Loans held for sale, representing the guaranteed portion of SBA 7(a) loans, were $12.0 million at the end of the fourth quarter of 2023, up slightly from $11.8 million at the end of the third quarter.

 As of (in thousands) Percentage Change
 Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Q4-23 Q4-23
  2023   2023   2023   2023   2022  vs. Q3-23 vs. Q4-22
Loan Portfolio             
Commercial real estate loans$3,889,739  $3,773,015  $3,738,325  $3,784,176  $3,833,397   3.1%  1.5%
Residential/consumer loans 962,661   926,326   886,984   817,917   734,473   3.9%  31.1%
Commercial and industrial loans 747,819   728,792   753,456   778,149   804,475   2.6%  -7.0%
Equipment finance 582,215   592,652   586,406   600,216   594,788   -1.8%  -2.1%
Loans receivable 6,182,434   6,020,785   5,965,171   5,980,458   5,967,133   2.7%  3.6%
Loans held for sale 12,013   11,767   7,293   3,652   8,043   2.1%  49.4%
Total$6,194,447  $6,032,552  $5,972,464  $5,984,110  $5,975,176   2.7%  3.7%
              
              
 As of  
 Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,    
  2023   2023   2023   2023   2022     
Composition of Loan Portfolio             
Commercial real estate loans 62.8%  62.5%  62.6%  63.2%  64.2%    
Residential/consumer loans 15.5%  15.4%  14.9%  13.7%  12.3%    
Commercial and industrial loans 12.1%  12.1%  12.6%  13.0%  13.5%    
Equipment finance 9.4%  9.8%  9.8%  10.0%  9.9%    
Loans receivable 99.8%  99.8%  99.9%  99.9%  99.9%    
Loans held for sale 0.2%  0.2%  0.1%  0.1%  0.1%    
Total 100.0%  100.0%  100.0%  100.0%  100.0%    
              

New loan production was $389.5 million for the fourth quarter of 2023 at an average rate of 8.10%, while $78.0 million of loans paid-off during the quarter at an average rate of 6.82%.

Commercial real estate loan production for the fourth quarter of 2023 was $178.2 million. Commercial and industrial loan production was $52.1 million, SBA loan production was $48.4 million, equipment finance production was $57.3 million, and residential mortgage loan production was $53.5 million.

New loan production for the full year 2023 was $1.29 billion, a decrease of 39.1%, or $826.6 million, from $2.12 billion for the full year 2022.

 For the Three Months Ended (in thousands)
 Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
  2023   2023   2023   2023   2022 
New Loan Production         
Commercial real estate loans$178,157  $106,151  $40,989  $75,528  $86,500 
Commercial and industrial loans 52,079   67,907   36,322   27,055   137,902 
SBA loans 48,432   36,109   30,926   34,472   53,209 
Equipment finance 57,334   71,075   50,905   69,307   89,193 
Residential/consumer loans 53,465   55,026   100,161   97,201   106,955 
subtotal 389,467   336,268   259,303   303,563   473,759 
          
          
Payoffs (77,961)  (62,140)  (120,609)  (124,923)  (121,409)
Amortization (106,610)  (116,411)  (102,248)  (102,675)  (91,333)
Loan sales (29,861)  (22,496)  (20,933)  (30,002)  (50,550)
Net line utilization (11,609)  (70,238)  (28,092)  (30,401)  (43,124)
Charge-offs & OREO (1,777)  (9,369)  (2,708)  (2,237)  (1,201)
          
Loans receivable-beginning balance 6,020,785   5,965,171   5,980,458   5,967,133   5,800,991 
Loans receivable-ending balance$6,182,434  $6,020,785  $5,965,171  $5,980,458  $5,967,133 
          

Deposits were $6.28 billion at the end of the fourth quarter of 2023, up $20.5 million, or 0.3%, from $6.26 billion at the end of the preceding quarter. Driving the change was a $158.7 million increase in money market and savings deposits and a $20.2 million increase in time deposits, partially offset by a $157.6 decline in noninterest-bearing demand deposits due primarily to higher rates offered due to the higher interest rate environment and competition for deposits. Noninterest-bearing demand deposits represented 31.9% of total deposits at December 31, 2023 and the loan-to-deposit ratio was 98.4%.

 As of (in thousands) Percentage Change
 Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Q4-23 Q4-23
  2023   2023   2023   2023   2022  vs. Q3-23 vs. Q4-22
Deposit Portfolio             
Demand: noninterest-bearing$2,003,596  $2,161,238  $2,206,078  $2,334,083  $2,539,602   -7.3%  -21.1%
Demand: interest-bearing 87,452   88,133   97,076   104,245   115,573   -0.8%  -24.3%
Money market and savings 1,734,658   1,576,006   1,580,691   1,382,472   1,556,690   10.1%  11.4%
Time deposits 2,454,868   2,434,695   2,431,923   2,380,238   1,956,207   0.8%  25.5%
Total deposits$6,280,574  $6,260,072  $6,315,768  $6,201,038  $6,168,072   0.3%  1.8%
              
              
 As of  
 Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,    
  2023   2023   2023   2023   2022     
Composition of Deposit Portfolio             
Demand: noninterest-bearing 31.9%  34.5%  34.9%  37.6%  41.2%    
Demand: interest-bearing 1.4%  1.4%  1.5%  1.7%  1.9%    
Money market and savings 27.6%  25.2%  25.0%  22.3%  25.2%    
Time deposits 39.1%  38.9%  38.6%  38.4%  31.7%    
Total deposits 100.0%  100.0%  100.0%  100.0%  100.0%    
              

Stockholders’ equity at December 31, 2023 was $701.9 million, up $38.5 million from $663.4 million at September 30, 2023. The increase includes a $27.3 million decrease in unrealized after-tax losses on securities available for sale due to changes in intermediate-term interest rates during the fourth quarter. Fourth quarter net income, net of dividends paid, added $11.0 million to stockholders’ equity for the period. In addition, Hanmi repurchased 50,000 shares during the fourth quarter at an average share price of $14.77. At December 31, 2023, 409,972 shares remain under Hanmi’s share repurchase program. Tangible common stockholders’ equity was $690.8 million, or 9.14% of tangible assets, at December 31, 2023, compared with $652.2 million, or 8.89% of tangible assets at the end of the third quarter. Tangible book value per share increased to $22.75 at December 31, 2023 from $21.45 at the end of the prior quarter.

Hanmi and the Bank exceeded the minimum regulatory capital requirements and the Bank continues to exceed the minimum for the “well capitalized” category. At December 31, 2023, Hanmi’s preliminary common equity tier 1 capital ratio was 11.86% and its total risk-based capital ratio was 14.95%, compared with 11.95% and 15.07%, respectively, at the end of the third quarter of 2023.

 As of Ratio Change
 Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Q4-23 Q4-23
  2023   2023   2023   2023   2022  vs. Q3-23 vs. Q4-22
Regulatory Capital ratios (1)             
Hanmi Financial             
Total risk-based capital 14.95%  15.07%  15.11%  14.80%  14.49%  -0.12   0.46 
Tier 1 risk-based capital 12.20%  12.30%  12.25%  11.94%  11.71%  -0.10   0.49 
Common equity tier 1 capital 11.86%  11.95%  11.90%  11.59%  11.37%  -0.09   0.49 
Tier 1 leverage capital ratio 10.37%  10.27%  10.22%  10.09%  10.07%  0.10   0.30 
Hanmi Bank             
Total risk-based capital 14.27%  14.42%  14.45%  14.15%  13.86%  -0.15   0.41 
Tier 1 risk-based capital 13.26%  13.42%  13.39%  13.06%  12.85%  -0.16   0.41 
Common equity tier 1 capital 13.26%  13.42%  13.39%  13.06%  12.85%  -0.16   0.41 
Tier 1 leverage capital ratio 11.32%  11.25%  11.21%  11.06%  11.07%  0.07   0.25 
              
(1)       Preliminary ratios for December 31, 2023             
              

Asset Quality
Loans 30 to 89 days past due and still accruing were 0.17% of loans at the end of the fourth quarter of 2023, compared with 0.16% at the end of the prior quarter.

Criticized loans totaled $96.7 million at the end of the fourth quarter, down from $109.6 million at the end of the third quarter. Special mention loans were $65.3 million at the end of the fourth quarter, down from $76.5 million at September 30, 2023. Reductions in special mention loans included upgrades to pass loans of $12.9 million and paydowns and payoffs of $1.9 million. The quarter-over-quarter change also included increases from downgrades of $3.6 million of pass loans.

Classified loans were $31.4 million at December 31, 2023, down from $33.1 million at the end of the prior quarter. The $1.7 million decrease was primarily driven by charge-offs of $1.5 million and amortization, paydowns and payoffs of $5.3 million, offset by new downgrades to classified of $5.1 million.

Nonperforming loans were $15.5 million at December 31, 2023, down from $15.8 million at the end of the third quarter. As a percentage of the loan portfolio, nonperforming loans improved to 0.25% at quarter-end, down from 0.26% at the end of the third quarter.

Nonperforming assets were $15.6 million at the end of the fourth quarter of 2023, down from $15.9 million at the end of the prior quarter. As a percentage of total assets, nonperforming assets also improved to 0.21% at quarter-end, down from 0.22% at the end of the third quarter.

Gross charge-offs for the fourth quarter of 2023 were $1.8 million, compared with $9.4 million for the preceding quarter. Recoveries of previously charged-off loans for the fourth quarter of 2023 were $6.8 million, which included a $6.0 million recovery from a 2019 troubled loan relationship, compared with $0.5 million of recoveries for the prior quarter. As a result, there were net recoveries of $5.0 million for the fourth quarter of 2023, compared with net charge-offs of $8.9 million for the prior quarter. For the fourth quarter of 2023, net recoveries represented 0.33% of average loans on an annualized basis, compared with net charge-offs of 0.60% of average loans for the third quarter on an annualized basis. For the full year 2023, net charge-offs were 0.12% of average loans, compared with 0.02% for 2022.

The allowance for credit losses was $69.5 million at December 31, 2023, up from $67.3 million at September 30, 2023. Specific allowances for loans increased $0.5 million while the allowance for quantitative and qualitative considerations increased $1.7 million. The ratio of the allowance for credit losses to loans was 1.12% at the end of both the fourth quarter and third quarter of 2023.

 As of or for the Three Months Ended (in thousands) Amount Change
 Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Q4-23 Q4-23
  2023   2023   2023   2023   2022  vs. Q3-23 vs. Q4-22
Asset Quality Data and Ratios             
              
Delinquent loans:             
Loans, 30 to 89 days past due and still accruing$10,263  $9,545  $13,749  $15,377  $7,492  $718  $2,771 
Delinquent loans to total loans 0.17%  0.16%  0.23%  0.26%  0.13%  0.01   0.04 
              
Criticized loans:             
Special mention$65,314  $76,473  $44,632  $64,340  $79,013  $(11,159) $(13,699)
Classified 31,367   33,134   38,840   47,288   46,192   (1,767)  (14,825)
Total criticized loans$96,681  $109,607  $83,472  $111,628  $125,205  $(12,926) $(28,524)
              
Nonperforming assets:             
Nonaccrual loans$15,474  $15,783  $22,178  $20,050  $9,846  $(309) $5,628 
Loans 90 days or more past due and still accruing -   -   -   -   -   -   - 
Nonperforming loans 15,474   15,783   22,178   20,050   9,846   (309)  5,628 
Other real estate owned, net 117   117   117   117   117   -   - 
Nonperforming assets*$15,591  $15,900  $22,295  $20,167  $9,963  $(309) $5,628 
              
Nonperforming assets to assets* 0.21%  0.22%  0.30%  0.27%  0.14%  -0.01   0.07 
Nonperforming loans to total loans 0.25%  0.26%  0.37%  0.34%  0.17%  -0.01   0.09 
              
* Excludes repossessed personal property of $1.3 million, $1.3 million, $0.8 million, $0.6 million, and $0.5 million as of Q4-23, Q3-23, Q2-23, Q1-23, and Q4-22, respectively  
              
 As of or for the Three Months Ended (in thousands)    
 Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,    
  2023   2023   2023   2023   2022     
Allowance for credit losses:             
Balance at beginning of period$67,313  $71,024  $72,249  $71,523  $71,584     
Credit loss expense (recovery) on loans (2,880)  5,167   514   2,181   221     
Net loan (charge-offs) recoveries 5,029   (8,878)  (1,739)  (1,455)  (282)    
Balance at end of period$69,462  $67,313  $71,024  $72,249  $71,523     
              
Net loan charge-offs (recoveries) to average loans (1) -0.33%  0.60%  0.12%  0.10%  0.02%    
Allowance for credit losses to loans 1.12%  1.12%  1.19%  1.21%  1.20%    
              
Allowance for credit losses related to off-balance sheet items:             
Balance at beginning of period$2,463  $2,476  $3,067  $3,115  $3,250     
Credit loss expense (recovery) on off-balance sheet items 11   (13)  (591)  (48)  (135)    
Balance at end of period$2,474  $2,463  $2,476  $3,067  $3,115     
              
Unused commitments to extend credit$813,960  $848,886  $791,818  $924,371  $780,543     
              
(1)       Annualized             
              

Corporate Developments
On October 26, 2023, Hanmi’s Board of Directors declared a cash dividend on its common stock for the 2023 fourth quarter of $0.25 per share. Hanmi paid the dividend on November 22, 2023, to stockholders of record as of the close of business on November 6, 2023.

Earnings Conference Call
Hanmi Bank will host its fourth quarter and year-end 2023 earnings conference call today, January 23, 2024 at 2:00 p.m. PST (5:00 p.m. EST) to discuss these results. This call will also be webcast. To access the call, please dial 1-877-407-9039 before 2:00 p.m. PST, using access code Hanmi Bank. To listen to the call online, either live or archived, please visit Hanmi’s Investor Relations website at https://investors.hanmi.com/ where it will also be available for replay approximately one hour following the call.

About Hanmi Financial Corporation
Headquartered in Los Angeles, California, Hanmi Financial Corporation owns Hanmi Bank, which serves multi-ethnic communities through its network of 35 full-service branches and eight loan production offices in California, Texas, Illinois, Virginia, New Jersey, New York, Colorado, Washington and Georgia. Hanmi Bank specializes in real estate, commercial, SBA and trade finance lending to small and middle market businesses. Additional information is available at www.hanmi.com.

Forward-Looking Statements
This press release contains forward-looking statements, which are included in accordance with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are “forward–looking statements” for purposes of federal and state securities laws, including, but not limited to, statements about our anticipated future operating and financial performance, financial position and liquidity, business strategies, regulatory and competitive outlook, investment and expenditure plans, capital and financing needs and availability, plans and objectives of management for future operations, developments regarding our capital and strategic plans, and other similar forecasts and statements of expectation and statements of assumption underlying any of the foregoing. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” or “continue,” or the negative of such terms and other comparable terminology. Although we believe that our forward-looking statements to be reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ from those expressed or implied by the forward-looking statements. These factors include the following:

  • a failure to maintain adequate levels of capital and liquidity to support our operations;
  • general economic and business conditions internationally, nationally and in those areas in which we operate, including any potential recessionary conditions;
  • volatility and deterioration in the credit and equity markets;
  • changes in consumer spending, borrowing and savings habits;
  • availability of capital from private and government sources;
  • demographic changes;
  • competition for loans and deposits and failure to attract or retain loans and deposits;
  • inflation and fluctuations in interest rates that reduce our margins and yields, the fair value of financial instruments, the level of loan originations or prepayments on loans we have made and make, and the cost we pay to retain and attract deposits and secure other types of funding;
  • our ability to enter new markets successfully and capitalize on growth opportunities;
  • the current or anticipated impact of military conflict, terrorism or other geopolitical events;
  • the effect of potential future supervisory action against us or Hanmi Bank and our ability to address any issues raised in our regulatory exams;
  • risks of natural disasters;
  • legal proceedings and litigation brought against us;
  • a failure in or breach of our operational or security systems or infrastructure, including cyberattacks;
  • the failure to maintain current technologies;
  • risks associated with Small Business Administration loans;
  • failure to attract or retain key employees;
  • our ability to access cost-effective funding;
  • changes in liquidity, including the size and composition of our deposit portfolio, including the percentage of uninsured deposits in the portfolio;
  • fluctuations in real estate values;
  • changes in accounting policies and practices;
  • changes in governmental regulation, including, but not limited to, any increase in FDIC insurance premiums and changes in the monetary policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System;
  • the continuing impact of the COVID-19 pandemic on our business and results of operation;
  • the ability of Hanmi Bank to make distributions to Hanmi Financial Corporation, which is restricted by certain factors, including Hanmi Bank’s retained earnings, net income, prior distributions made, and certain other financial tests;
  • strategic transactions we may enter into;
  • the adequacy of our allowance for credit losses;
  • our credit quality and the effect of credit quality on our credit losses expense and allowance for credit losses;
  • changes in the financial performance and/or condition of our borrowers and the ability of our borrowers to perform under the terms of their loans and other terms of credit agreements;
  • our ability to control expenses; and
  • cyber security and fraud risks against our information technology and those of our third-party providers and vendors.

In addition, we set forth certain risks in our reports filed with the U.S. Securities and Exchange Commission, including, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022, our Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K that we will file hereafter, which could cause actual results to differ from those projected. We undertake no obligation to update such forward-looking statements except as required by law.

Investor Contacts:
Romolo (Ron) Santarosa
Senior Executive Vice President & Chief Financial Officer
213-427-5636

Larry Clark, CFA
Investor Relations
Financial Profiles, Inc.
lclark@finprofiles.com
310-622-8223


Hanmi Financial Corporation and Subsidiaries
Consolidated Balance Sheets (Unaudited)
(Dollars in thousands)

 December 31, September 30,  Percentage December 31,  Percentage
  2023   2023  ChangeChange  2022  ChangeChange
Assets           
Cash and due from banks$302,324  $289,006  $13,318   4.6% $352,421  $(50,097)  -14.2%
Securities available for sale, at fair value 865,739   817,242   48,497   5.9%  853,838   11,901   1.4%
Loans held for sale, at the lower of cost or fair value 12,013   11,767   246   2.1%  8,043   3,970   49.4%
Loans receivable, net of allowance for credit losses 6,112,972   5,953,472   159,500   2.7%  5,895,610   217,362   3.7%
Accrued interest receivable 23,371   20,715   2,656   12.8%  18,537   4,834   26.1%
Premises and equipment, net 21,959   20,707   1,252   6.0%  22,850   (891)  -3.9%
Customers' liability on acceptances 625   1,386   (761)  -54.9%  328   297   90.5%
Servicing assets 7,070   7,156   (86)  -1.2%  7,176   (106)  -1.5%
Goodwill and other intangible assets, net 11,099   11,131   (32)  -0.3%  11,225   (126)  -1.1%
Federal Home Loan Bank ("FHLB") stock, at cost 16,385   16,385   -   0.0%  16,385   -   0.0%
Bank-owned life insurance 56,335   56,364   (29)  -0.1%  55,544   791   1.4%
Prepaid expenses and other assets 140,449   144,809   (4,360)  -3.0%  136,305   4,144   3.0%
Total assets$ 7,570,341  $ 7,350,140  $ 220,201   3.0% $ 7,378,262  $ 192,079   2.6%
            
Liabilities and Stockholders' Equity           
Liabilities:           
Deposits:           
Noninterest-bearing$2,003,596  $2,161,238  $(157,642)  -7.3% $2,539,602  $(536,006)  -21.1%
Interest-bearing 4,276,978   4,098,834   178,144   4.3%  3,628,470   648,508   17.9%
Total deposits 6,280,574   6,260,072   20,502   0.3%  6,168,072   112,502   1.8%
Accrued interest payable 39,306   50,286   (10,980)  -21.8%  7,792   31,514   404.4%
Bank's liability on acceptances 625   1,386   (761)  -54.9%  328   297   90.5%
Borrowings 325,000   162,500   162,500   100.0%  350,000   (25,000)  -7.1%
Subordinated debentures 130,012   129,860   152   0.1%  129,409   603   0.5%
Accrued expenses and other liabilities 92,933   82,677   10,256   12.4%  85,146   7,787   9.1%
Total liabilities 6,868,450   6,686,781   181,669   2.7%  6,740,747   127,703   1.9%
            
Stockholders' equity:           
Common stock 34   34   -   0.0%  33   1   3.0%
Additional paid-in capital 586,912   586,169   743   0.1%  583,410   3,502   0.6%
Accumulated other comprehensive income (71,928)  (99,422)  27,494   27.7%  (88,985)  17,057   19.2%
Retained earnings 319,048   308,007   11,041   3.6%  269,542   49,506   18.4%
Less treasury stock (132,175)  (131,429)  (746)  -0.6%  (126,485)  (5,690)  -4.5%
Total stockholders' equity 701,891   663,359   38,532   5.8%  637,515   64,376   10.1%
Total liabilities and stockholders' equity$ 7,570,341  $ 7,350,140  $ 220,201   3.0% $ 7,378,262  $ 192,079   2.6%
            

Hanmi Financial Corporation and Subsidiaries
Consolidated Statements of Income (Unaudited)
(Dollars in thousands, except share and per share data)

Consolidated Statements of Income             
(In thousands, except share and per share data)             
 Three Months Ended
 December 31, September 30,   Percentage December 31,   Percentage
  2023   2023   Change  2022   Change
Interest and dividend income:             
Interest and fees on loans receivable$89,922  $85,398   5.3% $77,123   16.6%
Interest on securities 4,583   4,204   9.0%  3,633   26.1%
Dividends on FHLB stock 341   317   7.6%  289   18.0%
Interest on deposits in other banks 2,337   4,153   -43.7%  1,194   95.7%
Total interest and dividend income 97,183   94,072   3.3%  82,239   18.2%
Interest expense:             
Interest on deposits 40,277   36,818   9.4%  14,900   170.3%
Interest on borrowings 2,112   753   180.5%  1,192   77.2%
Interest on subordinated debentures 1,654   1,646   0.5%  1,586   4.3%
Total interest expense 44,043   39,217   12.3%  17,678   149.1%
Net interest income before credit loss expense 53,140   54,855   -3.1%  64,561   -17.7%
Credit loss expense (recovery) (2,870)  5,154   -155.7%  52   -5619.2%
Net interest income after credit loss expense 56,010   49,701   12.7%  64,509   -13.2%
Noninterest income:             
Service charges on deposit accounts 2,391   2,605   -8.2%  2,742   -12.8%
Trade finance and other service charges and fees 1,245   1,155   7.8%  1,115   11.7%
Gain on sale of Small Business Administration ("SBA") loans 1,448   1,172   23.5%  1,933   -25.1%
Other operating income 1,596   6,296   -74.7%  1,667   -4.3%
Total noninterest income 6,680   11,228   -40.5%  7,457   -10.4%
Noninterest expense:             
Salaries and employee benefits 20,062   20,361   -1.5%  20,279   -1.1%
Occupancy and equipment 4,604   4,825   -4.6%  3,668   25.5%
Data processing 3,487   3,490   -0.1%  3,431   1.6%
Professional fees 1,977   1,568   26.1%  1,783   10.9%
Supplies and communications 613   552   11.1%  683   -10.2%
Advertising and promotion 990   534   85.4%  974   1.6%
Other operating expenses 3,478   2,915   19.3%  3,026   14.9%
Total noninterest expense 35,211   34,245   2.8%  33,844   4.0%
Income before tax 27,479   26,684   3.0%  38,122   -27.9%
Income tax expense 8,846   7,888   12.1%  9,643   -8.3%
Net income$ 18,633  $ 18,796   -0.9% $ 28,479   -34.6%
             - 
Basic earnings per share:$0.61  $0.62     $0.93    
Diluted earnings per share:$0.61  $0.62     $0.93    
              
Weighted-average shares outstanding:             
Basic 30,189,578   30,251,961      30,346,343    
Diluted 30,251,315   30,292,872      30,442,175    
Common shares outstanding 30,368,655   30,410,582      30,485,621    
              
Consolidated Statements of Income, Continued             
(In thousands, except share and per share data)             
 Twelve Months Ended      
 December 31, December 31,   Percentage      
  2023   2022   Change      
Interest and dividend income:             
Interest and fees on loans receivable$339,811  $257,878   31.8%      
Interest on securities 16,938   12,351   37.1%      
Dividends on FHLB stock 1,229   1,024   20.0%      
Interest on deposits in other banks 11,350   2,560   343.4%      
Total interest and dividend income 369,328   273,813   34.9%      
Interest expense:             
Interest on deposits 134,708   25,938   419.3%      
Interest on borrowings 6,867   2,249   205.3%      
Interest on subordinated debentures 6,482   7,979   -18.8%      
Total interest expense 148,057   36,166   309.4%      
Net interest income before credit loss expense 221,271   237,647   -6.9%      
Credit loss expense (recovery) 4,342   836   -419.4%      
Net interest income after credit loss expense 216,929   236,811   -8.4%      
Noninterest income:             
Service charges on deposit accounts 10,147   11,488   -11.7%      
Trade finance and other service charges and fees 4,832   4,805   0.6%      
Gain on sale of Small Business Administration ("SBA") loans 5,701   9,478   -39.9%      
Other operating income 13,499   8,429   60.1%      
Total noninterest income 34,179   34,200   -0.1%      
Noninterest expense:             
Salaries and employee benefits 81,398   76,140   6.9%      
Occupancy and equipment 18,340   17,648   3.9%      
Data processing 13,695   13,134   4.3%      
Professional fees 6,255   5,692   9.9%      
Supplies and communications 2,479   2,638   -6.0%      
Advertising and promotion 3,105   3,637   -14.6%      
Other operating expenses 11,255   11,395   -1.2%      
Total noninterest expense 136,527   130,284   4.8%      
Income before tax 114,581   140,727   -18.6%      
Income tax expense 34,540   39,333   -12.2%      
Net income$ 80,041  $ 101,394   -21.1%      
       -       
Basic earnings per share:$2.63  $3.33          
Diluted earnings per share:$2.62  $3.32          
              
Weighted-average shares outstanding:             
Basic 30,269,740   30,299,148          
Diluted 30,330,258   30,392,057          
Common shares outstanding 30,368,655   30,485,621          
              

Hanmi Financial Corporation and Subsidiaries
Average Balance, Average Yield Earned, and Average Rate Paid (Unaudited)
(Dollars in thousands)

 Three Months Ended
 December 31, 2023 September 30, 2023 December 31, 2022
   InterestAverage   InterestAverage   InterestAverage
 Average Income /Yield / Average Income /Yield / Average Income /Yield /
 Balance ExpenseRate Balance ExpenseRate Balance ExpenseRate
Assets              
Interest-earning assets:              
Loans receivable (1)$6,071,644  $89,922   5.88% $5,915,423  $85,398   5.73% $5,877,298  $77,123   5.21%
Securities (2) 961,551   4,582   1.93%  955,473   4,204   1.79%  966,299   3,633   1.47%
FHLB stock 16,385   341   8.25%  16,385   317   7.67%  16,385   289   7.00%
Interest-bearing deposits in other banks 181,140   2,338   5.12%  317,498   4,153   5.19%  138,476   1,194   3.42%
Total interest-earning assets 7,230,720   97,183   5.34%  7,204,779   94,072   5.19%  6,998,458   82,239   4.67%
               
Noninterest-earning assets:              
Cash and due from banks 61,146      59,994      70,203    
Allowance for credit losses (68,319)     (70,173)     (71,976)   
Other assets 251,660      240,145      255,493    
               
Total assets$ 7,475,207     $ 7,434,745     $ 7,252,178    
               
Liabilities and Stockholders' Equity              
Interest-bearing liabilities:              
Deposits:              
Demand: interest-bearing$86,679  $29   0.13% $94,703  $32   0.13% $119,106  $32   0.11%
Money market and savings 1,669,973   14,379   3.42%  1,601,826   12,485   3.09%  1,781,834   6,187   1.38%
Time deposits 2,417,803   25,869   4.24%  2,438,112   24,301   3.95%  1,585,798   8,681   2.17%
Total interest-bearing deposits 4,174,455   40,277   3.83%  4,134,641   36,818   3.53%  3,486,738   14,900   1.70%
Borrowings 205,951   2,113   4.07%  120,381   753   2.48%  197,554   1,269   2.55%
Subordinated debentures 129,933   1,653   5.09%  129,780   1,646   5.07%  129,335   1,509   4.67%
Total interest-bearing liabilities 4,510,339   44,043   3.88%  4,384,802   39,217   3.55%  3,813,627   17,678   1.84%
               
Noninterest-bearing liabilities and equity:              
Demand deposits: noninterest-bearing 2,025,212      2,136,156      2,593,948    
Other liabilities 177,321      159,127      134,074    
Stockholders' equity 762,335      754,660      710,529    
               
Total liabilities and stockholders' equity$ 7,475,207     $ 7,434,745     $ 7,252,178    
               
Net interest income (tax equivalent basis)  $ 53,140     $ 54,855     $ 64,561  
               
Cost of deposits     2.58%      2.33%      0.97%
Net interest spread (taxable equivalent basis)     1.47%      1.64%      2.83%
Net interest margin (taxable equivalent basis)     2.92%      3.03%      3.67%
               
               
               
(1)       Includes average loans held for sale     
(2)       Income calculated on a fully taxable equivalent basis using the federal tax rate in effect for the periods presented.     
               
Average Balance, Yield Earned and Rate Paid - YTD              
(In thousands, except ratios)              
 Twelve Months Ended     
 December 31, 2023 December 31, 2022     
   InterestAverage   InterestAverage     
 Average Income /Yield / Average Income /Yield /     
 Balance ExpenseRate Balance ExpenseRate     
Assets              
Interest-earning assets:              
Loans receivable (1)$5,968,339  $339,811   5.69% $5,596,564  $257,878   4.61%     
Securities (2) 967,231   16,938   1.78%  949,889   12,351   1.33%     
FHLB stock 16,385   1,229   7.50%  16,385   1,024   6.25%     
Interest-bearing deposits in other banks 230,835   11,350   4.92%  236,678   2,560   1.08%     
Total interest-earning assets 7,182,790   369,328   5.15%  6,799,516   273,813   4.03%     
               
Noninterest-earning assets:              
Cash and due from banks 62,049      66,993         
Allowance for credit losses (70,501)     (73,094)        
Other assets 240,779      247,838         
               
Total assets$ 7,415,117     $ 7,041,253         
               
Liabilities and Stockholders' Equity              
Interest-bearing liabilities:              
Deposits:              
Demand: interest-bearing$97,388  $117   0.12% $121,992  $100   0.08%     
Money market and savings 1,547,911   44,066   2.85%  2,025,961   12,753   0.63%     
Time deposits 2,371,520   90,525   3.82%  1,136,073   13,085   1.15%     
Total interest-bearing deposits 4,016,819   134,708   3.35%  3,284,026   25,938   0.79%     
Borrowings 197,409   6,867   3.48%  148,047   2,382   1.61%     
Subordinated debentures 129,708   6,482   5.00%  149,891   7,846   5.23%     
Total interest-bearing liabilities 4,343,936   148,057   3.41%  3,581,964   36,166   1.01%     
               
Noninterest-bearing liabilities and equity:              
Demand deposits: noninterest-bearing 2,173,813      2,665,646         
Other liabilities 149,460      109,847         
Stockholders' equity 747,908      683,796         
               
Total liabilities and stockholders' equity$ 7,415,117     $ 7,041,253         
               
Net interest income (tax equivalent basis)  $ 221,271     $ 237,647       
               
Cost of deposits     2.18%      0.44%     
Net interest spread (taxable equivalent basis)     1.74%      3.02%     
Net interest margin (taxable equivalent basis)     3.08%      3.50%     
               
               
(1)       Includes average loans held for sale     
(2)       Amounts calculated on a fully taxable equivalent basis using the federal tax rate in effect for the periods presented.     
               

Non-GAAP Financial Measures

Tangible Common Equity to Tangible Assets Ratio

Tangible common equity to tangible assets ratio is supplemental financial information determined by a method other than in accordance with U.S. generally accepted accounting principles (“GAAP”). This non-GAAP measure is used by management in the analysis of Hanmi’s capital strength. Tangible common equity is calculated by subtracting goodwill and other intangible assets from stockholders’ equity. Banking and financial institution regulators also exclude goodwill and other intangible assets from stockholders’ equity when assessing the capital adequacy of a financial institution. Management believes the presentation of this financial measure excluding the impact of these items provides useful supplemental information that is essential to a proper understanding of the capital strength of Hanmi. This disclosure should not be viewed as a substitute for results determined in accordance with GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies.

The following table reconciles this non-GAAP performance measure to the GAAP performance measure for the periods indicated:

Tangible Common Equity to Tangible Assets Ratio (Unaudited)
(In thousands, except share, per share data and ratios)

 December 31, September 30, June 30, March 31, December 31,
Hanmi Financial Corporation 2023   2023   2023   2023   2022 
Assets$7,570,341  $7,350,140  $7,344,924  $7,434,130  $7,378,262 
Less goodwill and other intangible assets (11,099)  (11,131)  (11,162)  (11,193)  (11,225)
Tangible assets$7,559,242  $7,339,009  $7,333,762  $7,422,937  $7,367,037 
          
Stockholders' equity (1)$701,891  $663,359  $668,560  $662,165  $637,515 
Less goodwill and other intangible assets (11,099)  (11,131)  (11,162)  (11,193)  (11,225)
Tangible stockholders' equity (1)$690,792  $652,228  $657,398  $650,972  $626,290 
          
Stockholders' equity to assets 9.27%  9.03%  9.10%  8.91%  8.64%
Tangible common equity to tangible assets (1) 9.14%  8.89%  8.96%  8.77%  8.50%
          
Common shares outstanding 30,368,655   30,410,582   30,485,788   30,555,287   30,485,621 
Tangible common equity per common share$22.75  $21.45  $21.56  $21.30  $20.54 
          
          
(1)       There were no preferred shares outstanding at the periods indicated.        
          

 

 

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Jan. 23, 2024
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Document Period End Date Jan. 23, 2024
Entity File Number 000-30421
Entity Registrant Name HANMI FINANCIAL CORPORATION
Entity Central Index Key 0001109242
Entity Tax Identification Number 95-4788120
Entity Incorporation, State or Country Code DE
Entity Address, Address Line One 900 Wilshire Boulevard, Suite 1250
Entity Address, City or Town Los Angeles
Entity Address, State or Province CA
Entity Address, Postal Zip Code 90017
City Area Code 213
Local Phone Number 382-2200
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