LOS ANGELES, Oct. 24, 2023 (GLOBE NEWSWIRE) -- Hanmi Financial Corporation ( HAFC, or “Hanmi”), the parent company of Hanmi Bank (the “Bank”), today reported financial results for the third quarter of 2023.
Net income for the third quarter of 2023 was $18.8 million, or $0.62 per diluted share, compared with $20.6 million, or $0.67 per diluted share, for the second quarter of 2023. Return on average assets and return on average equity for the third quarter of 2023 were 1.00% and 9.88% annualized, respectively.
Net income for the first nine months of 2023 was $61.4 million, or $2.01 per diluted share, compared with $72.9 million, or $2.39 per diluted share, for the first nine months of 2022. For the first nine months of 2023, return on average assets and return on average equity were 1.11% and 11.05% annualized, respectively.
CEO Commentary
“Our team successfully navigated another quarter of economic uncertainty and higher interest rates to deliver solid third quarter results that reflect the strength of our franchise and the success of our relationship banking model,” said Bonnie Lee, President and Chief Executive Officer of Hanmi Financial Corporation. “Our focus on our core customers where we obtain and have both a lending and deposit relationship continues to serve us well as evidenced by our strong level of demand deposit accounts, a stable deposit base and solid loan production.
“While we continue to take a disciplined and selective approach to lending, third quarter loan production increased, reflecting a contribution from nearly all of our business lines, as well as meaningful increases in new loan yields. Importantly, our asset quality remains excellent, which we attribute to the strength of our direct customer relationships and our proactive approach to credit administration.
“We are entering the fourth quarter with a healthy loan pipeline, stable core deposits, solid credit quality and well-managed expenses. We look forward to opening two new branches in the fourth quarter to capitalize on attractive growth opportunities. We will remain focused on executing on our strategic initiatives to drive disciplined growth and to create value for our shareholders over the long-term.”
Third Quarter 2023 Highlights:
- Third quarter net income was $18.8 million, or $0.62 per diluted share, down 8.8% from $20.6 million, or $0.67 per diluted share, for the second quarter of 2023 and reflects primarily higher credit loss expense offset by higher noninterest income.
- Loans receivable were $6.02 billion at September 30, 2023, up 0.9% sequentially from the end of the second quarter and the end of 2022; loan production for the third quarter was $336.3 million with a weighted average interest rate of 7.80%.
- Deposits were $6.26 billion at the end of the third quarter, down 0.9% sequentially from the end of the second quarter but up 1.5% from year-end; noninterest-bearing deposits were 34.5% of the deposit portfolio at September 30, 2023.
- Net interest income was $54.9 million for the third quarter, down 1.0% from the second quarter and net interest margin (taxable equivalent) was 3.03%, down eight basis points from the prior quarter; sequentially, the average yield on loans increased 9 basis points while the cost of interest-bearing deposits increased 28 basis points.
- Noninterest income for the third quarter was $11.2 million, up 41.5% from the second quarter, primarily reflecting a $4.0 million gain on the sale-and-leaseback of a branch property; noninterest expense for the third quarter was $34.2 million, down 0.1% sequentially and the efficiency ratio for the third quarter was 51.82%.
- Credit loss expense for the third quarter was $5.2 million compared with a recovery of less than $0.1 million for the prior quarter; net loan charge-offs were $8.9 million and included $6.1 million of charge-offs on $11.0 million of previously identified classified loans for which there were $4.3 million of specific allowances.
- The allowance for credit losses was $67.3 million at September 30, 2023, or 1.12% of loans at the end of the third quarter.
- Loans 30 to 89 days past due and still accruing declined to 0.16% of loans and nonperforming assets fell 28.7% to $15.9 million or 0.22% of total assets at September 30, 2023.
- Hanmi had a ratio of tangible common equity to tangible assets of 8.89% at September 30, 2023 and a preliminary Common equity Tier 1 capital ratio of 11.95% and a Total capital ratio of 15.07%.
For more information about Hanmi, please see the Q3 2023 News & Events section (and Supplemental Financial Information), which is available on the Bank’s Investor Relations section of the corporate website at www.hanmi.com. 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 | ||||||||||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | Q3-23 | Q3-23 | |||||||||||||||||||||
| 2023 | 2023 | 2023 | 2022 | 2022 | vs. Q2-23 | vs. Q3-22 | |||||||||||||||||||||
| Net income | $ | 18,796 | $ | 20,620 | $ | 21,991 | $ | 28,479 | $ | 27,169 | $ | (1,824 | ) | $ | (8,373 | ) | |||||||||||
| Net income per diluted common share | $ | 0.62 | $ | 0.67 | $ | 0.72 | $ | 0.93 | $ | 0.89 | $ | (0.05 | ) | $ | (0.27 | ) | |||||||||||
| Assets | $ | 7,350,140 | $ | 7,344,924 | $ | 7,434,130 | $ | 7,378,262 | $ | 7,128,511 | $ | 5,216 | $ | 221,629 | |||||||||||||
| Loans receivable | $ | 6,020,785 | $ | 5,965,171 | $ | 5,980,458 | $ | 5,967,133 | $ | 5,800,991 | $ | 55,614 | $ | 219,794 | |||||||||||||
| Deposits | $ | 6,260,072 | $ | 6,315,768 | $ | 6,201,038 | $ | 6,168,072 | $ | 6,201,376 | $ | (55,696 | ) | $ | 58,696 | ||||||||||||
| Return on average assets | 1.00 | % | 1.12 | % | 1.21 | % | 1.56 | % | 1.52 | % | -0.12 | -0.52 | |||||||||||||||
| Return on average stockholders’ equity | 9.88 | % | 11.14 | % | 12.19 | % | 15.90 | % | 15.58 | % | -1.26 | -5.70 | |||||||||||||||
| Net interest margin | 3.03 | % | 3.11 | % | 3.28 | % | 3.67 | % | 3.66 | % | -0.08 | -0.63 | |||||||||||||||
| Efficiency ratio (1) | 51.82 | % | 54.11 | % | 49.54 | % | 46.99 | % | 46.22 | % | -2.29 | 5.60 | |||||||||||||||
| Tangible common equity to tangible assets (2) | 8.89 | % | 8.96 | % | 8.77 | % | 8.50 | % | 8.40 | % | -0.07 | 0.49 | |||||||||||||||
| Tangible common equity per common share (2) | $ | 21.45 | $ | 21.56 | $ | 21.30 | $ | 20.54 | $ | 19.60 | -0.12 | 1.85 | |||||||||||||||
| (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 third quarter decreased $0.5 million to $54.9 million from $55.4 million for the second quarter of 2023, down 1.0%. 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 and one additional day in the quarter. The cost of interest-bearing deposits increased 28 basis points to 3.53% for the third quarter of 2023 from 3.25% for the second quarter of 2023. The increase 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 $4.13 billion for the third quarter, compared with $3.97 billion for the second quarter. Average loans were $5.92 billion for the third quarter, compared with $5.94 billion for the second quarter of 2023. The yield on average loans for the third quarter increased nine basis points to 5.73% from 5.64% for the second quarter. Third quarter loan prepayment fees were less than $0.1 million, compared with $0.2 million for the second quarter. Net interest margin (taxable-equivalent) for the third quarter was 3.03% compared with 3.11% for the second quarter.
| As of or For the Three Months Ended (in thousands) | Percentage Change | ||||||||||||||||||||||||
| Sep 30, | Jun 30, | Mar 31, | Dec 31, | Sep 30, | Q3-23 | Q3-23 | |||||||||||||||||||
| Net Interest Income | 2023 | 2023 | 2023 | 2022 | 2022 | vs. Q2-23 | vs. Q3-22 | ||||||||||||||||||
| Interest and fees on loans receivable(1) | $ | 85,398 | $ | 83,567 | $ | 80,923 | $ | 77,123 | $ | 66,976 | 2.2 | % | 27.5 | % | |||||||||||
| Interest on securities | 4,204 | 4,126 | 4,025 | 3,633 | 3,271 | 1.9 | % | 28.5 | % | ||||||||||||||||
| Dividends on FHLB stock | 317 | 283 | 289 | 289 | 245 | 12.0 | % | 29.4 | % | ||||||||||||||||
| Interest on deposits in other banks | 4,153 | 2,794 | |||||||||||||||||||||||
