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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended March 31, 2024
or
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☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Transition Period From To
Commission File Number: 000-30421
HANMI FINANCIAL CORPORATION
(Exact Name of Registrant as Specified in its Charter)
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Delaware |
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95-4788120 |
(State or Other Jurisdiction of |
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(I.R.S. Employer |
Incorporation or Organization) |
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Identification No.) |
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900 Wilshire Boulevard, Suite 1250 |
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Los Angeles, California |
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90017 |
(Address of Principal Executive Offices) |
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(Zip Code) |
(213) 382-2200
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report)
Securities Registered Pursuant to Section 12(b) of the Act:
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Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
Common Stock, $0.001 par value |
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HAFC |
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Nasdaq Global Select Market |
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer |
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☐ |
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Accelerated filer |
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☒ |
Non-accelerated filer |
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☐ |
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Smaller reporting company |
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☐ |
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Emerging Growth Company |
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☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
As of April 30, 2024, there were 30,387,062 outstanding shares of the Registrant’s Common Stock.
Hanmi Financial Corporation and Subsidiaries Quarterly Report on Form 10-Q
Three Months Ended March 31, 2024
Table of Contents
Part I — Financial Information
Item 1. Financial Statements
Hanmi Financial Corporation and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share data)
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March 31, |
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December 31, |
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2024 |
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2023 |
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(Unaudited) |
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Assets |
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Cash and due from banks |
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$ |
256,038 |
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$ |
302,324 |
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Securities available for sale, at fair value (amortized cost of $978,580 and $967,031 as of March 31, 2024 and December 31, 2023, respectively) |
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872,190 |
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865,739 |
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Loans held for sale, at the lower of cost or fair value |
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3,999 |
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12,013 |
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Loans receivable, net of allowance for credit losses of $68,270 and $69,462 as of March 31, 2024 and December 31, 2023, respectively |
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6,109,570 |
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6,112,972 |
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Accrued interest receivable |
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23,032 |
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23,371 |
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Premises and equipment, net |
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21,952 |
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21,959 |
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Customers' liability on acceptances |
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161 |
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625 |
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Servicing assets |
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6,890 |
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7,070 |
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Goodwill and other intangible assets, net |
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11,074 |
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11,099 |
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Federal Home Loan Bank ("FHLB") stock, at cost |
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16,385 |
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16,385 |
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Income tax assets |
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35,863 |
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35,226 |
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Bank-owned life insurance |
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56,639 |
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56,335 |
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Prepaid expenses and other assets |
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98,253 |
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105,223 |
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Total assets |
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$ |
7,512,046 |
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$ |
7,570,341 |
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Liabilities and Stockholders’ Equity |
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Liabilities: |
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Deposits: |
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Noninterest-bearing |
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$ |
1,933,060 |
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$ |
2,003,596 |
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Interest-bearing |
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4,443,000 |
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4,276,978 |
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Total deposits |
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6,376,060 |
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6,280,574 |
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Accrued interest payable |
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38,007 |
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39,306 |
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Bank's liability on acceptances |
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161 |
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625 |
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Borrowings |
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172,500 |
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325,000 |
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Subordinated debentures ($136,800 and $136,800 face amount less unamortized discount and debt issuance costs of $6,635 and $6,788 as of March 31, 2024 and December 31, 2023, respectively) |
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130,165 |
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130,012 |
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Accrued expenses and other liabilities |
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92,053 |
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92,933 |
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Total liabilities |
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6,808,946 |
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6,868,450 |
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Stockholders’ equity: |
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Preferred stock, $0.001 par value; authorized 10,000,000 shares; no shares issued as of March 31, 2024 and December 31, 2023 |
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— |
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— |
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Common stock, $0.001 par value; authorized 62,500,000 shares; issued 33,957,284 shares (30,276,358 shares outstanding) and 33,918,035 shares (30,368,655 shares outstanding) as of March 31, 2024 and December 31, 2023, respectively |
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34 |
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34 |
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Additional paid-in capital |
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587,687 |
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586,912 |
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Accumulated other comprehensive loss, net of tax benefit of $31,401 and $29,058 as of March 31, 2024 and December 31, 2023, respectively |
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(76,890 |
) |
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(71,928 |
) |
Retained earnings |
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|
326,526 |
|
|
|
319,048 |
|
Less treasury stock; 3,680,926 shares and 3,549,380 shares as of March 31, 2024 and December 31, 2023, respectively |
|
|
(134,257 |
) |
|
|
(132,175 |
) |
Total stockholders’ equity |
|
|
703,100 |
|
|
|
701,891 |
|
Total liabilities and stockholders’ equity |
|
$ |
7,512,046 |
|
|
$ |
7,570,341 |
|
See Accompanying Notes to Consolidated Financial Statements (Unaudited)
Hanmi Financial Corporation and Subsidiaries
Consolidated Statements of Income (Unaudited)
(in thousands, except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2024 |
|
|
2023 |
|
Interest and dividend income: |
|
|
|
|
|
|
Interest and fees on loans receivable |
|
$ |
91,674 |
|
|
$ |
80,923 |
|
Interest on securities |
|
|
4,955 |
|
|
|
4,025 |
|
Dividends on FHLB stock |
|
|
361 |
|
|
|
289 |
|
Interest on deposits in other banks |
|
|
2,604 |
|
|
|
2,066 |
|
Total interest and dividend income |
|
|
99,594 |
|
|
|
87,303 |
|
Interest expense: |
|
|
|
|
|
|
Interest on deposits |
|
|
45,638 |
|
|
|
25,498 |
|
Interest on borrowings |
|
|
1,655 |
|
|
|
2,369 |
|
Interest on subordinated debentures |
|
|
1,646 |
|
|
|
1,583 |
|
Total interest expense |
|
|
48,939 |
|
|
|
29,450 |
|
Net interest income before credit loss expense |
|
|
50,655 |
|
|
|
57,853 |
|
Credit loss expense |
|
|
227 |
|
|
|
2,133 |
|
Net interest income after credit loss expense |
|
|
50,428 |
|
|
|
55,720 |
|
Noninterest income: |
|
|
|
|
|
|
Service charges on deposit accounts |
|
|
2,450 |
|
|
|
2,579 |
|
Trade finance and other service charges and fees |
|
|
1,414 |
|
|
|
1,258 |
|
Gain on sale of Small Business Administration ("SBA") loans |
|
|
1,482 |
|
|
|
1,869 |
|
Other operating income |
|
|
2,387 |
|
|
|
2,630 |
|
Total noninterest income |
|
|
7,733 |
|
|
|
8,336 |
|
Noninterest expense: |
|
|
|
|
|
|
Salaries and employee benefits |
|
|
21,585 |
|
|
|
20,610 |
|
Occupancy and equipment |
|
|
4,537 |
|
|
|
4,412 |
|
Data processing |
|
|
3,551 |
|
|
|
3,253 |
|
Professional fees |
|
|
1,893 |
|
|
|
1,335 |
|
Supplies and communications |
|
|
601 |
|
|
|
676 |
|
Advertising and promotion |
|
|
907 |
|
|
|
833 |
|
Other operating expenses |
|
|
3,371 |
|
|
|
1,672 |
|
Total noninterest expense |
|
|
36,445 |
|
|
|
32,791 |
|
Income before tax |
|
|
21,716 |
|
|
|
31,265 |
|
Income tax expense |
|
|
6,552 |
|
|
|
9,274 |
|
Net income |
|
$ |
15,164 |
|
|
$ |
21,991 |
|
Basic earnings per share |
|
$ |
0.50 |
|
|
$ |
0.72 |
|
Diluted earnings per share |
|
$ |
0.50 |
|
|
$ |
0.72 |
|
Weighted-average shares outstanding: |
|
|
|
|
|
|
Basic |
|
|
30,119,646 |
|
|
|
30,347,325 |
|
Diluted |
|
|
30,119,646 |
|
|
|
30,430,745 |
|
See Accompanying Notes to Consolidated Financial Statements (Unaudited)
Hanmi Financial Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2024 |
|
|
2023 |
|
Net income |
|
$ |
15,164 |
|
|
$ |
21,991 |
|
Other comprehensive income (loss), net of tax: |
|
|
|
|
|
|
Unrealized gain (loss): |
|
|
|
|
|
|
Unrealized holding gain (loss) on available for sale securities |
|
|
(5,098 |
) |
|
|
13,607 |
|
Unrealized gain (loss) on cash flow hedges |
|
|
(2,207 |
) |
|
|
— |
|
Unrealized gain (loss) |
|
|
(7,305 |
) |
|
|
13,607 |
|
Income tax benefit (expense) related to other comprehensive income items |
|
|
2,343 |
|
|
|
(3,681 |
) |
Other comprehensive income (loss), net of tax |
|
|
(4,962 |
) |
|
|
9,926 |
|
Total comprehensive income |
|
$ |
10,202 |
|
|
$ |
31,917 |
|
See Accompanying Notes to Consolidated Financial Statements (Unaudited)
Hanmi Financial Corporation and Subsidiaries
Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)
For the Three Months Ended March 31, 2024 and 2023
(in thousands, except share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock - Number of Shares |
|
|
Stockholders' Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
Other |
|
|
|
|
|
Treasury |
|
|
Total |
|
|
|
Shares |
|
|
Treasury |
|
|
Shares |
|
|
Common |
|
|
Paid-in |
|
|
Comprehensive |
|
|
Retained |
|
|
Stock, |
|
|
Stockholders' |
|
|
|
Issued |
|
|
Shares |
|
|
Outstanding |
|
|
Stock |
|
|
Capital |
|
|
Loss |
|
|
Earnings |
|
|
at Cost |
|
|
Equity |
|
Balance at January 1, 2023 |
|
|
33,708,234 |
|
|
|
(3,222,613 |
) |
|
|
30,485,621 |
|
|
$ |
33 |
|
|
$ |
583,410 |
|
|
$ |
(88,985 |
) |
|
$ |
269,542 |
|
|
$ |
(126,485 |
) |
|
$ |
637,515 |
|
Stock options exercised |
|
|
50,000 |
|
|
|
(35,273 |
) |
|
|
14,727 |
|
|
|
— |
|
|
|
822 |
|
|
|
— |
|
|
|
— |
|
|
|
(1,003 |
) |
|
|
(181 |
) |
Issuance of awards pursuant to equity incentive plans, net of forfeitures |
|
|
69,567 |
|
|
|
— |
|
|
|
69,567 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Share-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
652 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
652 |
|
Shares surrendered to satisfy tax liability upon vesting of equity awards |
|
|
— |
|
|
|
(11,392 |
) |
|
|
(11,392 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(115 |
) |
|
|
(115 |
) |
Repurchase of common stock |
|
|
— |
|
|
|
(3,236 |
) |
|
|
(3,236 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Cash dividends paid (common stock, $0.25/share) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(7,623 |
) |
|
|
— |
|
|
|
(7,623 |
) |
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
21,991 |
|
|
|
— |
|
|
|
21,991 |
|
Change in unrealized gain (loss) on securities available for sale, net of income taxes |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
9,926 |
|
|
|
— |
|
|
|
— |
|
|
|
9,926 |
|
Balance at March 31, 2023 |
|
|
33,827,801 |
|
|
|
(3,272,514 |
) |
|
|
30,555,287 |
|
|
$ |
33 |
|
|
$ |
584,884 |
|
|
$ |
(79,059 |
) |
|
$ |
283,910 |
|
|
$ |
(127,603 |
) |
|
$ |
662,165 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2024 |
|
|
33,918,035 |
|
|
|
(3,549,380 |
) |
|
|
30,368,655 |
|
|
$ |
34 |
|
|
$ |
586,912 |
|
|
$ |
(71,928 |
) |
|
$ |
319,048 |
|
|
$ |
(132,175 |
) |
|
$ |
701,891 |
|
Issuance of awards pursuant to equity incentive plans, net of forfeitures |
|
|
39,249 |
|
|
|
— |
|
|
|
39,249 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Share-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
775 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
775 |
|
Shares surrendered to satisfy tax liability upon vesting of equity awards |
|
|
— |
|
|
|
(31,546 |
) |
|
|
(31,546 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(490 |
) |
|
|
(490 |
) |
Repurchase of common stock |
|
|
— |
|
|
|
(100,000 |
) |
|
|
(100,000 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,592 |
) |
|
|
(1,592 |
) |
Cash dividends paid (common stock, $0.25/share) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(7,686 |
) |
|
|
— |
|
|
|
(7,686 |
) |
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
15,164 |
|
|
|
— |
|
|
|
15,164 |
|
Change in unrealized gain (loss) on securities available for sale, net of income taxes |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3,394 |
) |
|
|
— |
|
|
|
— |
|
|
|
(3,394 |
) |
Change in unrealized gain (loss) on cash flow hedge, net of income taxes |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,568 |
) |
|
|
— |
|
|
|
— |
|
|
|
(1,568 |
) |
Balance at March 31, 2024 |
|
|
33,957,284 |
|
|
|
(3,680,926 |
) |
|
|
30,276,358 |
|
|
$ |
34 |
|
|
$ |
587,687 |
|
|
$ |
(76,890 |
) |
|
$ |
326,526 |
|
|
$ |
(134,257 |
) |
|
$ |
703,100 |
|
See Accompanying Notes to Consolidated Financial Statements (Unaudited)
Hanmi Financial Corporation and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2024 |
|
|
2023 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
Net income |
|
$ |
15,164 |
|
|
$ |
21,991 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
1,604 |
|
|
|
1,742 |
|
Amortization of servicing assets - net |
|
|
694 |
|
|
|
634 |
|
Share-based compensation expense |
|
|
775 |
|
|
|
652 |
|
Credit loss expense |
|
|
227 |
|
|
|
2,133 |
|
Gain on sales of SBA loans |
|
|
(1,482 |
) |
|
|
(1,869 |
) |
Origination of SBA loans held for sale |
|
|
(17,632 |
) |
|
|
(25,316 |
) |
Proceeds from sales of SBA loans |
|
|
26,555 |
|
|
|
30,954 |
|
Gain on sales of mortgage loans |
|
|
(443 |
) |
|
|
— |
|
Change in bank-owned life insurance |
|
|
(304 |
) |
|
|
(270 |
) |
Change in prepaid expenses and other assets |
|
|
5,564 |
|
|
|
(3,000 |
) |
Change in income tax assets |
|
|
1,707 |
|
|
|
8,585 |
|
Valuation adjustment on servicing assets |
|
|
— |
|
|
|
(384 |
) |
Change in accrued interest payable and other liabilities |
|
|
(2,446 |
) |
|
|
276 |
|
Net cash provided by operating activities |
|
|
29,983 |
|
|
|
36,128 |
|
Cash flows from investing activities: |
|
|
|
|
|
|
Purchases of securities available for sale |
|
|
(38,424 |
) |
|
|
(29,504 |
) |
Proceeds from matured, called and repayment of securities |
|
|
26,233 |
|
|
|
17,499 |
|
Purchases of loans receivable |
|
|
(10,198 |
) |
|
|
— |
|
Proceeds from sales of mortgage loans |
|
|
30,427 |
|
|
|
— |
|
Purchases of premises and equipment |
|
|
(794 |
) |
|
|
(617 |
) |
Change in loans receivable, excluding purchases |
|
|
(16,729 |
) |
|
|
(14,773 |
) |
Net cash used in investing activities |
|
|
(9,485 |
) |
|
|
(27,395 |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
Change in deposits |
|
|
95,486 |
|
|
|
32,966 |
|
Change in borrowings |
|
|
(152,500 |
) |
|
|
— |
|
Proceeds from exercise of stock options |
|
|
— |
|
|
|
822 |
|
Cash paid for employee vested shares surrendered due to employee tax liability |
|
|
(490 |
) |
|
|
(1,118 |
) |
Repurchase of common stock |
|
|
(1,594 |
) |
|
|
— |
|
Cash dividends paid |
|
|
(7,686 |
) |
|
|
(7,623 |
) |
Net cash provided by (used in) financing activities |
|
|
(66,784 |
) |
|
|
25,047 |
|
Net increase (decrease) in cash and due from banks |
|
|
(46,286 |
) |
|
|
33,780 |
|
Cash and due from banks at beginning of year |
|
|
302,324 |
|
|
|
352,421 |
|
Cash and due from banks at end of period |
|
$ |
256,038 |
|
|
$ |
386,201 |
|
Supplemental disclosures of cash flow information: |
|
|
|
|
|
|
Interest paid |
|
$ |
50,238 |
|
|
$ |
16,730 |
|
Income taxes paid |
|
$ |
175 |
|
|
$ |
334 |
|
Non-cash activities: |
|
|
|
|
|
|
Income tax benefit (expense) related to other comprehensive income items |
|
$ |
2,343 |
|
|
$ |
(3,681 |
) |
Change in right-of-use asset obtained in exchange for lease liability |
|
$ |
(1,873 |
) |
|
$ |
(145 |
) |
See Accompanying Notes to Consolidated Financial Statements (Unaudited)
Hanmi Financial Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
Note 1 — Organization and Basis of Presentation
Hanmi Financial Corporation (“Hanmi Financial,” the “Company,” “we,” “us” or “our”) is a bank holding company whose primary subsidiary is Hanmi Bank (the “Bank”). Our primary operations are related to traditional banking activities, including the acceptance of deposits and the lending and investing of money by the Bank.
In management’s opinion, the accompanying unaudited consolidated financial statements of Hanmi Financial and its subsidiaries reflect all adjustments of a normal and recurring nature that are necessary for a fair presentation of the results for the interim period ended March 31, 2024. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted. The unaudited consolidated financial statements are prepared in conformity with GAAP and in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission. Operating results for the three-month period ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ended December 31, 2024 or for any other period. The interim information should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Annual Report on Form 10-K”).
The preparation of interim unaudited consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. These estimates and assumptions affect the amounts reported in the unaudited financial statements and disclosures provided, and actual results could differ.
Recently Issued Accounting Standards Not Yet Effective
Accounting Standards Update (“ASU”) 2023-09,