Hanmi Financial (HAFC) Q3 2024 earnings summary

Executive summary

• Net income for Q3 2024 was $14.9 million ($0.49 per diluted share), up 3.1% from Q2 2024 but down from $18.8 million ($0.62) year-over-year, reflecting lower net interest and noninterest income and higher expenses, partially offset by lower credit loss and tax expenses.

• Loans receivable grew 1.3% sequentially to $6.26 billion; deposits rose 1.2% to $6.40 billion, led by 4.7% growth in noninterest-bearing demand deposits.

• Tangible book value per share increased to $24.03, reflecting higher net income and reduced unrealized losses.

• Asset quality remained stable with nonperforming assets at 0.21% of total assets and net charge-offs at $0.9 million; nonaccrual loans declined 18.8% to $15.2 million, though criticized assets increased due to downgrades of three large loans.

• Return on average assets was 0.79% and return on average equity was 7.55% for Q3 2024.

Financial highlights

• Net interest income was $50.1 million, up 2.9% sequentially but down 8.8% year-over-year; net interest margin expanded 5 bps to 2.74%.

• Noninterest income increased 4.7% sequentially to $8.4 million, including a $0.9 million gain from a branch sale-leaseback, but declined 24.8% year-over-year.

• Noninterest expense was $35.1 million, down 0.6% sequentially but up 2.4% year-over-year, mainly due to higher salaries and data processing costs.

• Pre-tax pre-provision income increased 9.4% from the prior quarter; efficiency ratio improved to 59.98% from 62.24% in Q2 2024.

• Credit loss expense was $2.3 million, down from $5.2 million year-over-year, reflecting lower net charge-offs.

Outlook and guidance

• Management expects a strong close to 2024, with a robust balance sheet, ample liquidity, healthy capital ratios, and a solid loan pipeline; loan pipeline for Q4 expected to be similar in level and yield to Q3.

• Management anticipates net interest margin could expand 10–20 bps in Q4 if rates decline as expected.

• On track to achieve low- to mid-single-digit loan growth target for 2024.

• Declared a quarterly cash dividend of $0.25 per share, payable November 20, 2024.

• Liquidity and capital levels are considered adequate to meet current obligations and support future growth.