Hanmi Financial (US:HAFC)2026-01-27 23:02Financial Data and Key Metrics Changes - Net income for Q4 was $21.2 million, or $0.70 per diluted share, down 3.7% due to lower non-interest income [6] - For the full year 2025, net income reached $76.1 million, or $2.51 per diluted share, an increase of 22% [6] - Net interest income increased by 2.9% to $62.9 million in Q4, with net interest margin expanding by six basis points to 3.28% [14][16] - Return on average assets and return on average equity during Q4 were 1.07% and 10.14%, respectively [6] 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 - Deposits decreased by 1.3% in Q4, driven by a decline in demand deposits, money market, and savings [12] - USKC loan balance of $862 million represented approximately 13% of the total loan portfolio [12] - The company opened a representative office in Seoul, South Korea, to strengthen relationships and support customers expanding into the U.S. market [13] Company Strategy and Development Direction - The company expects to generate low to mid-single-digit loan growth while further diversifying the portfolio [19] - Focus on growing deposits to support loan growth and maintaining a stable funding mix [19] - Commitment to disciplined expense management while investing selectively in talent and technology [20] Management 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 meaningful value for shareholders [20] 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 color 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 [22] Question: Thoughts around the growth of expenses and OREO costs? - Management noted that OREO costs might continue for a couple of quarters but are not indicative of ongoing run rates [24] Question: What is the outlook for mid-single-digit expense growth? - Management confirmed that mid-single-digit expense growth is a fair expectation based on previous trends [25] Question: Can you remind us about the CD repricing schedule? - Management provided details on maturing CDs and expected repricing rates, indicating a potential benefit to lower deposit costs [26] Question: Why not be more aggressive on the buyback? - Management stated that the board evaluates capital returns quarterly and will address share repurchases based on market conditions [27] Question: Comments on competition within the CD book? - Management acknowledged intense competition for CDs, with some competitors offering higher rates [32][33] Question: How should we think about the jumping-off point for expenses from Q4? - Management discussed predictable seasonal events affecting expenses and indicated a need for further analysis [38]