Release Date: April 22, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Hanmi Financial Corp (HAFC, Financial) reported a 17% increase in net income to $17.7 million, or $0.58 per diluted share, compared to the first quarter of 2024.
- The company achieved its third consecutive quarter of net interest margin expansion, increasing by 11 basis points to 3.02%.
- Total loans grew to $6.28 billion, with solid loan production across all categories, despite the first quarter being seasonally slower.
- Deposits grew by 3% in the first quarter, driven by new commercial accounts and contributions from new branches.
- Hanmi Financial Corp (HAFC) successfully opened a new branch in Duluth, Georgia, expanding its geographic footprint and tapping into a rapidly growing market.
Negative Points
- The provision for credit loss expense increased due to a CRE loan downgraded to non-performing status.
- C&I production decreased by 30% in the first quarter, with outstanding balances declining by 6%.
- The average loan yield declined by two basis points to 5.95%, indicating pressure on loan profitability.
- Non-interest expenses increased by 1.3% from the previous quarter, although the efficiency ratio improved.
- The syndicated loan book, although small, includes a $200 million syndicated commercial real estate loan that has not yet been renewed or extended.
Q & A Highlights
Q: How is the loan pipeline looking, and are there any potential tariff impacts on clients?
A: The second quarter pipeline is healthy, but loan demand may soften in the third and fourth quarters due to tariffs and economic uncertainty. Our USKC customers are better prepared for tariffs, having adjusted since the Trump administration. Many are in the automotive industry, producing domestically, so they are less impacted by tariffs.
Q: How should expenses be modeled for the rest of the year?
A: In the second quarter, we expect a 3% to 4% increase in salaries and benefits due to annual merits and promotions. Other expenses should align with inflation, with a slight reduction from the seasonality of payroll taxes.
Q: Should we expect elevated share repurchases given the current stock price?
A: The Board reviews dividends and share repurchases quarterly. We have consistently repurchased shares over the past four quarters, ranging from 25,000 to 75,000 shares. Future repurchases will depend on Board decisions.
Q: Can you provide details on the margin expansion and deposit rates?
A: The average cost of time deposits for March was 4.1%, with interest-bearing deposits at 3.67%. We expect some relief in the second and third quarters, but the rate of margin expansion will likely slow compared to recent quarters.
Q: What is the status of the syndicated commercial real estate loan that migrated to non-performing status?
A: It is a syndicated office property loan in the Central Business District. The loan matured in January, and discussions for renewal are ongoing. We have reserved $6.2 million based on the collateral shortfall.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
