On July 23, 2024, Hanmi Financial Corp (HAFC, Financial) released its 8-K filing reporting financial results for the second quarter of 2024. Hanmi Financial Corp, a Los Angeles-based bank serving Korean-Americans and other multi-ethnic communities, focuses on small businesses, commercial, and real estate loans, and offers trade-finance products.
Performance Overview
Hanmi Financial Corp reported a net income of $14.5 million, or $0.48 per diluted share, for Q2 2024, slightly down from $15.2 million, or $0.50 per diluted share, in Q1 2024. Despite the decline, the earnings per share matched the analyst estimate of $0.48. The return on average assets was 0.77%, and the return on average equity was 7.50%, compared to 0.81% and 7.90%, respectively, in the previous quarter.
Key Financial Metrics
| Metric | Q2 2024 | Q1 2024 | Q2 2023 |
|---|---|---|---|
| Net Income ($ millions) | 14.5 | 15.2 | 20.6 |
| EPS ($) | 0.48 | 0.50 | 0.67 |
| Net Interest Income ($ millions) | 48.6 | 50.7 | 55.4 |
| Net Interest Margin (%) | 2.69 | 2.78 | 3.11 |
| Efficiency Ratio (%) | 62.24 | 62.42 | 54.11 |
Financial Achievements and Challenges
Hanmi Financial Corp's net interest income for Q2 2024 was $48.6 million, down 4.0% from Q1 2024, primarily due to increased costs of interest-bearing deposits. The net interest margin decreased to 2.69% from 2.78% in the previous quarter. Noninterest income rose by 4.2% to $8.1 million, driven by gains on sales of SBA loans and bank-owned life insurance benefit income.
Despite the challenging economic environment, Hanmi observed improved business activity and stabilizing margin pressure. CEO Bonnie Lee commented,
Our second quarter results demonstrate that while the economic environment has been challenging, we are observing improved business activity and stabilizing margin pressure."
Income Statement Highlights
Net interest income decreased to $48.6 million from $50.7 million in Q1 2024, reflecting higher costs of interest-bearing deposits. Noninterest expenses were $35.3 million, down 3.2% from the previous quarter, primarily due to lower salaries and benefits. The efficiency ratio improved slightly to 62.24% from 62.42% in Q1 2024.
Balance Sheet and Asset Quality
Total assets increased by 1.0% to $7.59 billion at the end of Q2 2024. Loans receivable remained stable at $6.18 billion, while deposits decreased by 0.7% to $6.33 billion. Asset quality remained favorable, with criticized loans declining by 17.6% to $70.9 million. Nonperforming assets rose to 0.26% of total assets, up from 0.19% in the previous quarter.
Analysis and Outlook
Hanmi Financial Corp's performance in Q2 2024 highlights its resilience in a challenging economic environment. The company's focus on relationship banking and rigorous underwriting practices have contributed to its strong asset quality and market share growth. However, the decline in net interest income and increased costs of deposits pose challenges that need to be addressed to sustain profitability.
For more detailed information, please refer to the 8-K filing.
Explore the complete 8-K earnings release (here) from Hanmi Financial Corp for further details.
