Hanmi Financial ((HAFC)) has held its Q4 earnings call. Read on for the main highlights of the call.
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The recent earnings call of Hanmi Financial Corporation was marked by a generally positive sentiment, reflecting substantial growth in net income and deposits, alongside the success of initiatives like USKC. However, the company faced challenges in maintaining loan production levels and managing noninterest income and expenses.
Strong Net Income and Dividend Increase
The company reported a net income for 2024 of $62.2 million, or $2.05 per diluted share. In a show of confidence, the board approved an 8% increase in the quarterly dividend to $0.27 per share, set for the next payment in February.
C&I Portfolio and USKC Initiative Growth
Hanmi Financial made significant strides in its commercial and industrial (C&I) portfolio, which increased by 16% as part of a diversification strategy. This growth was largely driven by the USKC initiative, which saw its loan portfolio grow by 23%, now making up 15% of the total loan portfolio.
Deposit Growth and Relationship Banking Success
The bank achieved deposit growth of 2.5% in 2024, with noninterest-bearing deposits increasing by 4.6%. These now account for 32.6% of total deposits, underscoring the success of Hanmi’s relationship-driven banking model.
Asset Quality and Capital Ratios
Asset quality showed improvement with nonperforming assets down to 0.19%, and the allowance for credit losses remaining robust at 1.12%. The preliminary common Tier 1 ratio was 12.11%, while the preliminary total capital ratio stood at 14.43%.
Decreased Loan Production
Loan production in the fourth quarter was $339 million, a decrease of $9 million or 2.5% from the third quarter, with a notable 43% drop in C&I production from the previous quarter.
Noninterest Income and Expenses
The fourth quarter saw noninterest income decrease by $1.1 million from the third quarter. Noninterest expenses rose modestly by 3.5% for the year, with specific gains and charges impacting the quarterly figures.
Forward-Looking Guidance
Looking ahead, Hanmi Financial plans to target low to mid-single-digit loan growth in 2025, with a focus on expanding its C&I portfolio while reducing commercial real estate exposure. The company remains committed to optimizing its branch network and managing expenses amidst inflationary pressures.
In summary, Hanmi Financial’s earnings call painted a picture of a company experiencing robust growth in key areas like net income and deposits, driven by successful strategic initiatives. Despite challenges in loan production and noninterest income, the company’s forward-looking strategies suggest a focus on sustainable growth and financial stability.
