LOS ANGELES, Oct. 22, 2024 (GLOBE NEWSWIRE) -- Hanmi Financial Corporation (NASDAQ: HAFC, or "Hanmi”), the parent company of Hanmi Bank (the "Bank”), today reported financial results for the third quarter of 2024.
Net income for the third quarter of 2024 was $14.9 million, or $0.49 per diluted share, compared with $14.5 million, or $0.48 per diluted share, for the second quarter of 2024. The return on average assets for the third quarter of 2024 was 0.79% and the return on average equity was 7.55%, compared with a return on average assets of 0.77% and the return on average equity of 7.50% for the second quarter of 2024.
CEO Commentary
"Our third quarter results were strong, with solid performance across all key operating metrics in the third quarter,” said Bonnie Lee, President and Chief Executive Officer of Hanmi. "Net interest margin increased five basis points to 2.74% driven by higher yields on interest-earning assets and lower funding costs. Loans grew by 2% driven by a 27% increase in loan production and total deposits were up led by 5% growth in noninterest-bearing demand deposits. These results reflect the continued success of our relationship banking model and our portfolio diversification strategy.”
"During the quarter, we remained focused on our disciplined credit administration practices and are pleased to report that we resolved several criticized and nonaccrual loans and recognized a recovery on a previously charged-off loan. We also proactively moved three loans to the special mention category to monitor them more closely. These loans are current, and we are confident they are well protected.”
"Hanmi is well-positioned for a strong close to 2024 with a robust balance sheet, ample liquidity, healthy capital ratios, and a solid loan pipeline. Our team remains committed to delivering the solutions our customers need and results our shareholders expect,” concluded Lee.
Third Quarter 2024 Highlights:
- Third quarter net income was $14.9 million, or $0.49 per diluted share, compared with $14.5 million, or $0.48 per diluted share for the second quarter of 2024. The increase reflects a $2.0 million, or 9.4%, increase in pretax, preprovision income, propelled by a 2.9% increase in net interest income.
- Loans receivable were $6.26 billion at September 30, 2024, up 1.3% from the end of the second quarter of 2024, driven by a 27% increase in loan production to $347.8 million with a weighted average interest rate of 7.92%.
- Deposits were $6.40 billion at September 30, 2024, up 1.2% from the end of the second quarter of 2024; noninterest-bearing demand deposits were 32.0% of total deposits. During the quarter, noninterest bearing demand deposits grew 4.7%, while time deposits declined 3.2% from the prior quarter.
- Net interest income for the third quarter was $50.1 million, up 2.9% from the second quarter of 2024, driven by strong operational performance. Net interest margin (taxable equivalent) expanded five basis points to 2.74%, as the average yield on loans increased to 6.00%, while the cost of interest-bearing deposits remained unchanged at 4.27%.
- Noninterest expense was $35.1 million for the third quarter, down 0.6% from the second quarter of 2024, primarily reflecting the absence of the second quarter $0.3 million branch consolidation charge.
- Credit loss expense for the third quarter was $2.3 million, compared with $1.0 million for the prior quarter. The allowance for credit losses increased $1.4 million to $69.2 million at September 30, 2024, or 1.11% of loans. For the third quarter, net loan charge-offs of $0.9 million included a $1.1 million charge-off on a nonaccrual loan transferred to held-for-sale and a $1.7 million recovery of a nonaccrual loan.
- Asset quality included several notable actions: nonaccrual loans fell 18.8% to $15.2 million and included pay-offs of $6.8 million while criticized assets increased, with downgrades to special mention of three loans totaling $129.8 million, offset by the move to the held-for-sale nonaccrual loan category of the previously identified $28.3 million completed construction loan, upgrades of $6.1 million, and additional loan pay-offs of $1.3 million. Subsequent to the end of the third quarter, the Bank completed the sale of the nonaccrual loan.
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, | Q3-24 | Q3-24 | |||||||||||||||||||||
| 2024 | 2024 | 2024 | 2023 | 2023 | vs. Q2-24 | vs. Q3-23 | |||||||||||||||||||||
| Net income | $ | 14,892 | $ | 14,451 | $ | 15,164 | $ | 18,633 | $ | 18,796 | $ | 441 | $ | (3,904 | ) | ||||||||||||
| Net income per diluted common share | $ | 0.49 | $ | 0.48 | $ | 0.50 | $ | 0.61 | $ | 0.62 | $ | 0.01 | $ | (0.13 | ) | ||||||||||||
| Assets | $ | 7,712,299 | $ | 7,586,347 | $ | 7,512,046 | $ | 7,570,341 | $ | 7,350,140 | $ | 125,952 | $ | 362,159 | |||||||||||||
| Loans receivable | $ | 6,257,744 | $ | 6,176,359 | $ | 6,177,840 | $ | 6,182,434 | $ | 6,020,785 | $ | 81,385 | $ | 236,959 | |||||||||||||
| Deposits | $ | 6,403,221 | $ | 6,329,340 | $ | 6,376,060 | $ | 6,280,574 | $ | 6,260,072 | $ | 73,881 | $ | 143,149 | |||||||||||||
| Return on average assets | 0.79 | % | 0.77 | % | 0.81 | % | 0.99 | % | 1.00 | % | 0.02 | -0.21 | |||||||||||||||
| Return on average stockholders' equity | 7.55 | % | 7.50 | % | 7.90 | % | 9.70 | % | 9.88 | % | 0.06 | -2.33 | |||||||||||||||
| Net interest margin | 2.74 | % | 2.69 | % | 2.78 | % | 2.92 | % | 3.03 | % | 0.05 | -0.29 | |||||||||||||||
| Efficiency ratio (1) | 59.98 | % | 62.24 | % | 62.42 | % | 58.86 | % | 51.82 | % | -2.26 | 8.16 | |||||||||||||||
| Tangible common equity to tangible assets (2) | 9.42 | % | 9.19 | % | 9.23 | % | 9.14 | % | 8.89 | % | 0.23 | 0.53 | |||||||||||||||
| Tangible common equity per common share (2) | $ | 24.03 | $ | 22.99 | $ | 22.86 | $ | 22.75 | $ | 21.45 | 1.04 | 2.58 | |||||||||||||||
| (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 was $50.1 million, up 2.9% from $48.6 million for the second quarter of 2024. The increase was primarily due to an increase in loan interest income. The increase in loan interest income was a result of increases in loan yields and average balances. The yield on average loans for the third quarter increased slightly to 6.00% from 5.99% for the second quarter of 2024. Average loans were $6.11 billion for the third quarter of 2024, up 0.4% from $6.09 billion for the second quarter. The cost of interest-bearing deposits was 4.27% for the third quarter of 2024, unchanged from the prior quarter. Average interest-bearing deposits were $4.40 billion for the third quarter, up 0.3%, from $4.38 billion for the prior quarter. Net interest margin (taxable equivalent) for the third quarter was 2.74%, compared with 2.69% for the second quarter of 2024.
| For the Three Months Ended (in thousands) | Percentage Change | ||||||||||||||||||||||||||
| Sep 30, | Jun 30, | Mar 31, | Dec 31, | Sep 30, | Q3-24 | Q3-24 | |||||||||||||||||||||
| Net Interest Income | 2024 | 2024 | 2024 | 2023 | 2023 | vs. Q2-24 | vs. Q3-23 | ||||||||||||||||||||
| Interest and fees on loans receivable(1) | $ | 92,182 | $ | 90,752 | $ | 91,674 | $ | 89,922 | $ | 85,398 | 1.6 | % | 7.9 | % | |||||||||||||
| Interest on securities | 5,523 | 5,238 | 4,955 | 4,583 | 4,204 | 5.4 | % | 31.4 | % | ||||||||||||||||||
| Dividends on FHLB stock | 356 | 357 | 361 | 341 | 317 | -0.3 | % | 12.3 | % | ||||||||||||||||||
| Interest on deposits in other banks | 2,356 | 2,313 | 2,604 | 2,337 | 4,153 | 1.9 | % | -43.3 | % | ||||||||||||||||||
| Total interest and dividend income | $ | 100,417 | $ | 98,660 | $ | 99,594 | $ | 97,183 | $ | 94,072 | 1.8 | % | 6.7 | % | |||||||||||||
| Interest on deposits | 47,153 | 46,495 | 45,638 | 40,277 | 36,818 | 1.4 | % | 28.1 | % | ||||||||||||||||||
| Interest on borrowings | 1,561 | 1,896 | 1,655 | 2,112 | 753 | -17.7 | % | 107.3 | % | ||||||||||||||||||
| Interest on subordinated debentures | 1,652 | 1,649 | 1,646 | 1,654 | 1,646 | 0.2 | % | 0.4 | % | ||||||||||||||||||
| Total interest expense | 50,366 | 50,040 | 48,939 | 44,043 | 39,217 | 0.7 | % | 28.4 | % | ||||||||||||||||||
| Net interest income | $ | 50,051 | $ | 48,620 | $ | 50,655 | $ |
| |||||||||||||||||||