Hanmi Financial (US:HAFC)2026-01-27 23:00Financial Data and Key Metrics Changes - Net income for Q4 2025 was $21.2 million, or $0.70 per diluted share, down 3.7% due to lower non-interest income [5] - For the full year 2025, net income reached $76.1 million, or $2.51 per diluted share, an increase of 22% [5] - Net interest income increased by 2.9% in Q4, with net interest margin expanding by six basis points to 3.28% [5][15] - Return on average assets and return on average equity during Q4 were 1.07% and 10.14%, respectively [5] Business Line Data and Key Metrics Changes - Loan production for the full year increased by 36%, with residential and C&I loan production up 90% and 42%, respectively [7] - Commercial real estate exposure decreased from 63.1% to 61.3% of total loans [8] - Deposits grew by 3.8% in 2025, maintaining a healthy mix of non-interest-bearing deposits at approximately 30% of total deposits [8] Market Data and Key Metrics Changes - Fourth quarter loan production was $375 million, down 34% from the prior quarter [10] - Deposits decreased by 1.3% in Q4, driven by a decline in demand deposits, partially offset by an increase in time deposits [12] - USKC loan balance of $862 million represented approximately 13% of the total loan portfolio [12] Company Strategy and Development Direction - The company aims for low to mid-single-digit loan growth in 2026, focusing on further diversifying the portfolio [20] - Plans to grow deposits to support loan growth while maintaining a stable funding mix [20] - Commitment to disciplined expense management and maintaining strong asset quality through conservative underwriting standards [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the effectiveness of their relationship-based banking model and the strength of their operational performance [4] - The company believes it entered 2026 in a strong position to build on momentum and create value for shareholders [22] Other Important Information - Non-performing assets as a percentage of total assets and allowance for credit losses as a percentage of total loans remained healthy at 0.26% and 1.07%, respectively [8] - The efficiency ratio improved to 54.7% from 60.3% the previous year [9] Q&A Session Summary Question: Can you provide details on the hospitality credit that was downgraded to Special Mention? - Management indicated that the loan is a senior loan with a strong sponsor undergoing a Property Improvement Plan, and they do not foresee any loss probabilities [24] Question: What is the outlook for expenses this year? - Management expects mid-single-digit expense growth, with some ongoing costs related to OREO properties [25][26] Question: What is the CD repricing schedule for the first and second quarters? - Approximately $1.8 billion in CDs maturing at high threes and low fours in the first half of the year, with expectations to reprice at around 3.5% to 3.7% [27] Question: Why not be more aggressive on the buyback? - The board evaluates capital return quarterly, and share prices have been above tangible book value, affecting buyback decisions [28] Question: Can you comment on competition within the CD market? - Competition remains intense, with some banks offering higher rates, affecting CD retention rates [31][32]