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HANMI FINANCIAL CORP (HAFC)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered the strongest quarter of the year: diluted EPS $0.58 (+18.8% q/q; -4.9% y/y), net income $17.7M, on a 17 bps NIM expansion to 2.91% as the cost of interest-bearing deposits fell 31 bps to 3.96% while average loan yield was resilient at 5.97% .
  • Total deposits rose 0.5% q/q to $6.44B with noninterest-bearing DDA up 2.2% and comprising 32.6% of deposits; loans were essentially flat at $6.25B; efficiency improved to 56.79% on lower funding costs and an OREO gain .
  • Credit trends remained benign (net recoveries ~$0.1M; NPAs/Assets 0.19%), though criticized loans increased to $165.3M (special mention up; classified down) .
  • Capital return accelerated: dividend raised 8% to $0.27 per share for 1Q25; TBVPS $23.88; CET1 12.11% (Company) .
  • 2025 setup: management targets low-to-mid single-digit loan growth with deposit growth similar; significant CD repricing runway ($770M in 1Q25 at 4.70%; $685M in 2Q25 at 4.42%) supports further deposit cost declines and NIM tailwinds, offset by slight loan-yield drift and a modest uptick in criticized loans .

What Went Well and What Went Wrong

  • What Went Well

    • Net interest margin expanded 17 bps to 2.91% on lower deposit costs; CFO highlighted deposit beta progress and January-to-date further declines in interest-bearing deposit rates vs 4Q average .
    • Core funding mix improved: DDA grew 2.2% q/q to 32.6% of deposits; time deposits declined 2.0% q/q, supporting NIM and funding resilience .
    • Asset quality remained strong: net loan recoveries of $0.1M; NPAs/Assets improved to 0.19%; NPLs fell to 0.23% of loans .
    • CEO: “best quarterly performance of the year… NIM expansion of 17 basis points to 2.91%, disciplined expense management, and vigilant credit administration” .
    • Dividend raised 8% to $0.27, signaling confidence in earnings power and capital .

  • What Went Wrong

    • Noninterest income fell 12.8% q/q to $7.4M due to absence of prior-quarter $0.9M branch sale-leaseback gain; SBA and mortgage gains were roughly steady but volumes slipped .
    • Criticized loans rose to $165.3M (+$5.3M q/q) driven by special mention additions (notably a $12.4M C&I retail relationship), offset by lower classified balances .
    • Loan yield eased 3 bps q/q to 5.97%; Equipment Finance continued to experience charge-offs (gross $3.4M total, including $2.9M in E/F agreements), though net was a small recovery .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Diluted EPS ($)0.61 0.49 0.58
Net Income ($M)18.6 14.9 17.7
Net Interest Income ($M)53.1 50.1 53.4
Noninterest Income ($M)6.7 8.4 7.4
Operating Revenue ($M)59.8 58.5 60.8
Net Interest Margin (%)2.92 2.74 2.91
Efficiency Ratio (%)58.86 59.98 56.79
Loans, End of Period ($B)6.18 6.26 6.25
Deposits, End of Period ($B)6.28 6.40 6.44

Versus estimates (Q4 2024)

  • EPS (diluted): Reported $0.58; S&P Global consensus: N/A at time of request (API limit).
  • Revenue (Operating Revenue): Reported $60.8M; S&P Global consensus: N/A at time of request (API limit).
    Note: Consensus estimates from S&P Global were unavailable at time of analysis due to provider limit. We will update beat/miss once available.

Segment/Lending Mix (Balances and composition)

Loan TypeQ3 2024 Balance ($M)Q4 2024 Balance ($M)Q4 2024 Mix (%)Q4 2024 Avg Yield (%)
Commercial Real Estate3,932.1 3,949.6 63.1 5.70
Residential/Consumer939.3 951.3 15.2 5.23
Commercial & Industrial879.1 863.4 13.8 8.01
Equipment Finance507.3 487.0 7.8 6.31
Total Loans Receivable6,257.7 6,251.4 99.9 —

Deposit Mix (Period-end)

Deposit TypeQ3 2024 ($M)Q4 2024 ($M)Q4 2024 Mix (%)
Noninterest-bearing DDA2,051.8 2,096.6 32.6
Interest-bearing DDA79.3 80.3 1.2
Money Market & Savings1,898.8 1,933.5 30.0
Time Deposits2,373.3 2,325.3 36.2
Total Deposits6,403.2 6,435.8 100.0

Key KPIs (trailing quarters)

KPIQ2 2024Q3 2024Q4 2024
Net Interest Margin (%)2.69 2.74 2.91
Cost of Interest-bearing Deposits (%)4.27 4.27 3.96
Loan Yield (%)5.99 6.00 5.97
DDA (% of Total Deposits, period-end)31.0 32.0 32.6
NPAs / Assets (%)0.26 0.21 0.19
NCOs to Avg Loans (annualized, %)0.12 0.06 -0.01
ACL / Loans (%)1.10 1.11 1.12
CET1 (Company, %)12.05 11.95 12.11
TCE / TA (%)9.19 9.42 9.41

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per share1Q25$0.25 (4Q24 dividend) $0.27 (declared Jan 28, 2025) Raised
Loan growthFY2025Not previously quantifiedLow-to-mid single-digit growth New quantitative range
Deposit growthFY2025Not previously quantified“Similar” to loan growth New directional
ExpensesFY2025Not previously quantifiedTrack general inflation; seasonal Q1/Q2 patterns Qualitative
Funding cost outlook (CDs)1Q25/2Q25Not previously quantified$770M at 4.70% matures in 1Q25; $685M at 4.42% in 2Q25 Insight for NIM tailwind
Deposit rate trajectoryJan-to-date vs 4Q—Avg rate on interest-bearing deposits down ~25 bps vs 4Q avg 3.96% Favorable

Earnings Call Themes & Trends

TopicQ-2 (Q2’24)Q-1 (Q3’24)Current (Q4’24)Trend
Deposit pricing & competitionMargin pressure stabilizing; cost of interest-bearing deposits up; focus on DDA growth NIM +5 bps; cost of IBD 4.27% flat q/q; DDA +4.7% q/q Cost of IBD -31 bps to 3.96%; NIM +17 bps to 2.91%; further Jan declines Improving
USKC (Corporate Korea)Strategic focus; building relationships Continued contribution Loans +23% y/y; 15% of loans; Seoul rep office opened in Nov Positive momentum
Technology / digitalInvestment in new LOS; online account opening —Continued emphasis on efficiency from digital investments Steady
Asset qualityCriticized down q/q; NPAs up modestly Criticized up to $160M; NPLs down; sold large nonaccrual HFS post-Q3 Net recoveries; NPAs/Assets 0.19%; criticized up to $165.3M (special mention ↑, classified ↓) Stable overall; monitor criticized
Capital / shareholder returnsStrong capital ratios; dividends maintained Repurchases; capital ratios solid Dividend raised 8%; buybacks continued (24.5k shares) More shareholder friendly
Loan mix & productionProduction +17% q/q; focus on C&I/SBA; E/F runoff Production +27% q/q; C&I strong Production $339M; CRE led; C&I softer vs Q3; payoff drag higher y/y Mixed; payoff headwind

Management Commentary

  • CEO: “Hanmi achieved exceptional results in the fourth quarter… best quarterly performance of the year… NIM expansion of 17 basis points to 2.91%, disciplined expense management, and vigilant credit administration” .
  • CEO: “Board approved an 8% increase in our quarterly dividend to $0.27… underscores our confidence in our growth strategy” .
  • CFO: “Net interest income increased 6.8%… net interest margin increased 17 bps to 2.91%… decline in the average rate paid on interest-bearing deposits… 3.96%, down 31 bps q/q… January to date [rates] down 25 bps vs 4Q average” .
  • CBO: “4Q loan production $339M at 7.37%; CRE $147M… USKC accounted for $91M of production; lines of credit commitments $1.8B, outstanding balances +27% y/y” .

Q&A Highlights

  • Deposit repricing runway: ~$770M CDs maturing in 1Q25 at 4.70% and ~$685M in 2Q25 at 4.42%; Q4 benefited from repricing (IB deposit cost to 3.96%) .
  • Floating-rate exposure: “Floaters ~10% or less” of loans; loan yields resilient given mix (SBA reprices quarterly; resi ARMs; smaller CRE with 5-year fixed, then float) .
  • SBA portfolio: ~ $250M exposure; management emphasized focus on past performance vs projected cash flows and minimal reliance on brokers .
  • Expenses: run-rate to generally move with inflation; Q1 advertising/promo seasonal down, merit increases in Q2 .
  • 2025 trajectory: targeting low-to-mid single digit loan growth; deposit growth “similar” .

Estimates Context

  • S&P Global consensus (EPS, revenue) was unavailable at the time of this analysis due to provider request limits; therefore, we cannot declare a beat/miss. We will update once S&P data is accessible.
  • Management’s commentary and operating trends (deposit cost declines, CD roll-down, stable loan yields) suggest near-term upward bias to NIM and pretax pre-provision income, absent adverse credit migration .

Key Takeaways for Investors

  • Funding-cost inflection is underway: cost of interest-bearing deposits fell 31 bps q/q and is trending lower in January, positioning NIM for further improvement as ~$1.5B of CDs reprice in 1H25 .
  • Core funding strengthening: DDA rose to 32.6% of deposits; time deposits down 2% q/q—favorable for margin durability in a declining-rate backdrop .
  • Credit remains solid with low losses and improved NPAs, but the rise in special mention balances (criticized loans) warrants monitoring, particularly in select C&I and hospitality exposures; equipment finance charge-offs remain a watch item .
  • Mix strategy working: USKC/Corporate Korea initiative now 15% of loans (23% y/y growth) with Seoul representative office enhancing pipeline; supports C&I growth and sticky operating deposits .
  • Capital return improving: 8% dividend increase to $0.27 and ongoing buybacks indicate confidence in earnings power and capital resilience (CET1 12.11%) .
  • Near-term setup: Expect stable-to-improving PPNR driven by NIM tailwinds and disciplined expenses, with modest loan growth and payoff headwinds balancing production; watch criticized trends and equipment finance .
  • Potential catalysts: sustained NIM expansion, stable credit metrics, further DDA gains, and visible progress in USKC growth could be stock positives; any deterioration in criticized loans or weaker fee income could weigh on sentiment .

Appendix: Additional Context and Prior Quarters

  • Q3 2024: EPS $0.49; NIM 2.74%; operating revenue $58.5M; DDA 32.0%; criticized loans up to $160.0M; noninterest income boosted by $0.9M branch sale-leaseback .
  • Q2 2024: EPS $0.48; NIM 2.69%; production +17% q/q; criticized loans down q/q; deposit costs rising then .

Sources:

  • Q4 2024 8-K (Press Release & Supplemental): .
  • Q4 2024 Earnings Call Transcript: .
  • Q3 2024 Press Release: .
  • Q2 2024 Press Release: .
  • Nov 18, 2024 USKC Seoul Office Press Release: .
  • Dividend Increase Press Release (Jan 28, 2025): .