Q3 2024 Hanmi Financial Corp Earnings Call
Unknown Executive: Ladies and gentlemen, thank you for welcoming to Hamlee Financial Corporations, their quarter 2024 conference call. As a reminder, today's call is being recorded for replay purposes.
Ladies and gentlemen, thank you welcome to Hanmi financial corporations third quarter 2024 conference call.
Speaker Change: As a reminder, today's call is being recorded for replay purposes.
Unknown Executive: At this time, all participants are in a whistle-blowny mode. A question and answer session will follow the formal presentation. If anyone should acquire operator assistance, please press star zero and your telephone keypad. What's again, as a reminder, this conference is being recorded.
At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.
Speaker Change: If anyone should require operator assistance. Please press star zero on your telephone keypad. Once again as a reminder, this conference is being recorded.
Ben Brockowitz: Allow me to turn the conference over to Ben Brockowitz, Investor Relations for the company. Thank you; you may go ahead.
Speaker Change: Atlantic to turn the conference over to Ben Rockwood.
Speaker Change: What's the relationship of the company. Thank you you May go ahead.
Unknown Executive: Thank you, Brad.
Ben Rockwood: Thank you, Matt and thank you all for joining us today to discuss <unk> third quarter 2024 results.
Bonnie Lee: And thank you all for joining us today to discuss Hamlee's third quarter 2024 results. The staffs of the Home Lee issued a certain release and quarterly supple little slide presentation to accompany today's call.
Ben Rockwood: And how many issued its earnings release and quarterly supplemental slide presentation to accompany today's call.
Bonnie Lee: Both documents are available in the IR section of the I'm here today with Bonnie Lee, President and Chief Executive Officer of Hamlee Financial Corporation, Anthony Kim, Chief Banking Officer, and Ron Santorosa, Chief Financial Officer. Bonnie will begin today's call with an overview. Anthony will discuss loan and deposit activities. Ron will provide details on our financial performance, and then Bonnie will provide closing comments before we open the call up for your questions.
Ben Rockwood: Both documents are available from the IR section of the company's website at Hanmi Dot com.
Ben Rockwood: I'm here today with Bonnie Lee President and Chief Executive Officer of Hanmi Financial Corporation, Anthony Kim Chief Banking Officer, and Ron Central Hudson Chief Financial Officer.
Speaker Change: I will begin today's call with an overview Anthony will discuss loan and deposit activities Ron will provide details on our financial performance.
Ben Rockwood: And then Bonnie will provide closing comments before we open the call up for your questions.
Unknown Executive: Before we begin, I'd like to remind you today's comments may include forward-looking statements under the Federal Securities Laws. Forward-looking statements are based on current plans, expectations, events, and financial industry trends that may affect the company's future operating results in financial position. Our actual results may differ materially from those contemplated due to our forward-looking statements, which involve risks and uncertainties. Discussion of the factors that could cause our actual results to differ materially from these forward-looking statements can be found in our SEC filings, including our reports on forms 10-K and 10-Qs. In particular, we direct you to the discussion of certain risk factors affecting our business, contained in our earnings release, our investor presentation in our Form 10-Q.
Ben Rockwood: Before we begin I would like to remind you that today's comments may include forward looking statements under the federal Securities laws.
Ben Rockwood: Forward looking statements are based on current plans expectations events and financial industry trends that may affect the company's future operating results and financial position.
Ben Rockwood: Actual results may differ materially from those contemplated by our forward looking statements, which involve risks and uncertainties discussion of factors that could cause our actual results to differ materially from these forward looking statements can be found in our SEC filings, including our reports on forms 10-K and 10-Qs.
Ben Rockwood: In particular, we direct you to the discussion of certain risk factors affecting our business contained in our earnings release, our investor presentation, and our Form 10-Q.
Bonnie Lee: With that, I would now like to turn the call over to Bonnie Lee.
Speaker Change: With that I would now like to turn the call over to Bonnie Lee.
Bonnie Lee: Bonnie, please go ahead. Thank you, Ben.
Speaker Change: Please go ahead.
Bonnie Lee: Good afternoon, everyone. Thank you for joining us today to discuss our third quarter of 2020 for results. I am pleased with our overall performance this quarter as we deliver strong results, including solid performance, across our core operating metrics. We made meaningful progress in executing our growth strategy by further diversifying and spending our loan portfolio and supply different choice. Once again, our results demonstrate the value of our relationship banking model, which continues to differentiate how many in the marketplace. While focusing on growth, we also exercise the discipline of expense management, maintaining a minimal cost structure that positions us well to navigate changing market conditions.
Bonnie Lee: Thank you Dan Good afternoon, everyone. Thank you for joining us today to discuss our third quarter 2024 results.
I am pleased with our overall performance this quarter as we can be very strong result, including solid performance across our core operating metrics, we made meaningful progress in executing our growth strategy.
To find and expanding our loan portfolio and deposit franchise.
Speaker Change: Once again, our results demonstrate the value of buying relationship banking model, which continues to differentiate at hanmi into market place well.
Speaker Change: Well I am focusing unquote, we also exercised the discipline expense management and maintaining a lean cost structure positions us well to navigate changing market conditions.
Bonnie Lee: In addition, we continue to employ rigorous underlying standards and credit administration practices to ensure we maintain excellent asset quality over the long term. In a few minutes, I'll come back to the actions we took this quarter that demonstrates our collective approach to monitoring our own portfolio.
Speaker Change: In addition, we continue to employ rigorous underwriting standards and credit administration practices.
We maintain excellent asset quality over the long term.
Speaker Change: Few minutes I'll come back to the actions we took this quarter that demonstrates our proactive approach to monitoring because all unfortunately.
Bonnie Lee: Now, let me review some highlights of the quarter. Income was 14.9 million, or 49 cents, for buying new share. Our return and average assets were 0.79 per cent and then return on the stock of those equity words, 7.5. Percent. Net interest margins expanded by five basis points due to a combination of higher yields on interest-earning assets and lower funding costs. Total loans grew 2% sequentially, and new loan production increased by 27%. Our robust loan production was driven by a 26% increase in commercial in the Strio and a 35% increase in residential loan production. The pilot scrolled by 1.2%, led by nearly 5% increase in loan interest-bearing deposits and a 3.5% increase in money market and savings amounts.
Speaker Change: Now, let me review some highlights of the third quarter.
Speaker Change: Net income was $14 9 million or 49.
Speaker Change: Sure.
Speaker Change: Turning to our rich gas exports are up seven 9% and then return on App, just stockholders' equity was seven 5% net.
Speaker Change: Net interest margin expanded by five basis points.
Speaker Change: Nation are of higher yields on interest, earning assets and lower funding cost.
Speaker Change: Total loans grew 2% sequentially and new loan production increased by 27%.
Speaker Change: Robust loan production lines, driven by 26% increase in commercial real estate.
Speaker Change: 78% increase in commercial and industrial and 35% increase in residential loan production.
Speaker Change: Deposits grew by one 2% led by nearly 5% increase in non interest bearing deposits and a three 5% increase in money market and savings accounts.
Bonnie Lee: The demand deposits now comprise 32% of total deposits. And finally, known interest expense declined 0.6%. For the third consecutive quarter, we sold residential mortgage loans into the secondary market, bringing year-to-date sales to $17 million. We expect to continue to capitalize on market opportunities to sell residential mortgage loans to diversify our revenue and strengthen our valuation.
Speaker Change: Demand deposits now comprise 72% of total deposits and finally non interest expense declined 0.6%.
Speaker Change: For the third consecutive quarter, we sold them residential mortgage loans into the secondary market.
Year to date sales to $70 million, we expect to continue to capitalize on market opportunities to sell residential mortgage loans to diversify our revenue and strengthen our balance sheet.
Bonnie Lee: Moving on to update on a strategic growth initiative. Our corporate career initiative is performing in line with our expectations. We are seeing a good number of customer referrals, which is a strong show of confidence in our king's expertise and capabilities. In the third quarter, we grow corporate career loans 6.1% reponentially. This growth would be driven by 89% increase in loan production to 103.8 million. Corporate career currently represents approximately 14.5% of our total loan portfolio and 12.4% of our total deposits. Additionally, we recently filed an application to open a representative office in Seoul, South Korea, which we believe were further enhanced the growth of the strategic initiative.
Speaker Change: Moving on to update on our strategic growth initiatives.
Speaker Change: Corporate Korea initiative is performing in line with our expectations. We are seeing a growing number of our customary approvals, which is a strong show of confidence in our team's expertise and capabilities in.
Speaker Change: In the third quarter, we grew our corporate brand loans, 6.1% sequentially.
Speaker Change: This growth was driven by 89% increase in loan production 238 million.
Corporate Korea currently represents approximately 14, 5% of our total loan portfolio and 12, 4%.
Speaker Change: Our total deposits. Additionally, we recently filed an application to open a representative office in Seoul, South Korea, which we can think about a third to enhance the growth of this strategic initiative.
Bonnie Lee: We recently announced the closing of the branch in Korea Tom Plaza in LA, which is scheduled to be finalized in January 2020. As a reminder, this action is an integral part of our strategy to maximize growth and generate cost savings. As I have mentioned previously, we will be opening a new branch in the metro that's not an area in the common market. As always, we will continue to evaluate future opportunities to optimize our branch footprint.
Speaker Change: We recently announced the closing of the branch in Korea Town Plaza in L. A which is scheduled to be finalized in January 2025.
As a reminder, this action is an integral part of our strategy to maximize quant and generate cost savings.
Speaker Change: And I had mentioned previously we won't be opening a new branch in the Metro Atlanta area.
Mark.
Speaker Change: As always we will continue to evaluate opportunities to optimize our French lake.
Bonnie Lee: Next, I'd like to take a minute to discuss our recent credit quality actions, which ends. Then you will cover in more detail. During the third quarter, we successfully resolved a several crore size and no-called loans through sales and payoffs and also recognize the recovery on a previously charged up loan. In addition, we practically looked through loans to the special mentioned category to monitor them more closely. You see, importantly, to note that these loans are current and we are confident that they are adequately protected. In line with our credit administration practices, our goal is to identify and resolve any issues as quickly as possible.
Speaker Change: Next I'd like to take a minute to discuss our recent credit quality actions, which Anthony will cover in more detail.
Speaker Change: During the third quarter, we successfully resolved several criticized and nonaccrual loans from sales and payoffs and also recognized a recovery on a previously charged off.
Speaker Change: In addition, we proactively moved three loans to the special mention category to monitor them more closely.
Speaker Change: Important to note that these loans are crime and we are confident that they are adequately protected.
Speaker Change: In line with our credit administration practices, our goal is to identify and resolve any issues as quickly as possible.
Bonnie Lee: At quarter-end, the ratio of credit losses to loans increased by a single basis point to 1.11%, and importantly, the overall credit quality of our portfolio remains strong.
Speaker Change: At quarter end the ratio of the allowance for credit losses to loans increased by a single basis point to 1.11% and importantly, the overall credit quality of our portfolio remains strong.
Anthony Kim: With this summary, I'll now turn the call over to Anthony Kim, our Chief Banking Officer, to discuss the third quarter's own production and deposit activity in more detail. Bill. During the deposits, in the third quarter, the deposits were up 1% from the previous quarter, although our demand of positive accounts grew up year by 5% or 19% annualized over the same period. We continued to expand our partnership base with our corporate career clients with its positive production of 49 million in the quarter. Our team is building new relationships that we believe can grow over time, at core and appropriate career divided represented 12% of our total deposits and 16% of our demand deposits.
Speaker Change: Finally, I will now turn the call over to Anthony Kim Our Chief banking officer to discuss the third quarter of loan production and deposit activity in more detail. Thank.
Anthony Kim: Thank you Bonnie and thank you for joining us today.
Anthony Kim: I'll begin by providing additional details on our loan production third quarter loan production was $348 million up $74 million or 27% from the second quarter with a weighted average interest rate of 792% compared to $8 three 1% last quarter.
Anthony Kim: The growth in production was primarily due to an increase in commercial real estate C&I and mortgage.
Anthony Kim: We remain disciplined with our underwriting.
Anthony Kim: We see opportunities that meet our high quality standards in the current rate environment.
Anthony Kim: Production was 110 million up from $88 million in the second quarter, primarily due to increased production from our eastern region.
Anthony Kim: The elevated interest rate environment continues to impact the traditional and refinancing activity.
Anthony Kim: We remain pleased with the quality of our CRE portfolio. It has a weighted average loan to value ratio of approximately 48%.
Anthony Kim: Weighted average debt service coverage ratio of two two times.
Anthony Kim: That's been a little production decreased 3 million in the third quarter to 52 from $55 million, the second quarter, but still exceed our quarterly target range of $40 million to $45 million.
Anthony Kim: This consistent production underscores the key hires we have added to the team and the growth we are generating in our SPN markets.
Anthony Kim: C&I production during the third quarter was 105 million, an increase of $46 million or 78%. The increase was driven by strong demand from corporate Korea, which represented 60 million or 57% of total C&I loan production.
Anthony Kim: Hello commitments for our commercial lines of credit were over 1 billion in the third quarter up 2% on an annualized basis.
Anthony Kim: Outstanding balances grew by 12%, resulting in utilization rate of 46% up from 41% last quarter.
Anthony Kim: Residential mortgage loan production was 41 million for the third quarter up 35% from the previous quarter due to higher demand for purchase transaction as interest rates declined.
Anthony Kim: Bubbles.
Anthony Kim: We will suffer a grim that'd be opportunities continue to be in the purchase market as refinance activity remained subdued.
Speaker Change: I mean is your mortgage loans represented 15% of our total loan portfolio. The same as one year ago and Scott you noted during the third quarter, we sold approximately 21 million of residential mortgage for them in our portfolio.
Speaker Change: Currently exploring additional portfolio of sales, it's contingent on market conditions.
Speaker Change: With respect to corporate Korea, Videogames saw healthy demand from these customers who are accounting for 140 million of total production, which includes approximately 60 million of C&I production.
Speaker Change: First Steve spent and grow these relationships on continuing to bear fruit U S. Casey loan balances were 918 million up 52 million or 6% from the second quarter and represent approximately 15% of the portfolio.
Speaker Change: Turning to deposits in the third quarter deposits were up 1% from the previous quarter, although our demand deposit accounts grew only by 5% or 19% annualized over the same period.
Speaker Change: We've continued to expand our partnership base without a corporate Ria clients, whether it's auto production up 49 million in the quarter.
Speaker Change: Our team is building new relationships that we believe can grow over time.
Quarter end corporate Korea deposit represented 12% of our total deposits and 16% of our demand deposits.
Anthony Kim: The composition of our deposit base remains relatively stable, which reflects the success of our relationship banking model. During the third quarter, our mix of non-interest varying deposits increased from 31% to 32%.
Speaker Change: The composition of our deposit base remains relatively stable, which reflects the success of our relationship banking model.
Speaker Change: During the third quarter, our mix of noninterest bearing deposits increased from 31% 32%.
Anthony Kim: Turning to that's a quality, we resolve the wants to criticize and non-accrollums through sales and payoffs, and also recognize a recovery and a previously charged off the loan. We then criticize loans; classified loans decreased by 8.1 million from payoffs, which 6.8 million were non-accruals, resulting in 1.7 million recovery. Upgrades of 6.1 million also decreased as special mentioned loans, and we complete the sale of the 27.2 million non-accrollums subsequent to the end of the end of the quarter. In addition, we practically move three loans to special nations to monitor them closely. Two of the loans totaling 109.7 million are hotels.
Speaker Change: Turning to asset quality, we resolved the bumps to criticized and nonaccrual loans from the <unk>.
Speaker Change: Sales and payoffs and also recognized a recovery on a previously charged off loan.
Speaker Change: Within criticized loans classified loans decreased by $8 1 million from pay offs of which $6 $8 million of our nonaccrual loans, resulting in 1.7 million recovery.
Speaker Change: Upgrades of $6 1 million also decrease our special mention loans and we completed the sale of a $27 2 million nonaccrual loan subsequent to the end of the quarter.
Speaker Change: In addition, we proactively moved three loans to special mention commodities remain more closely.
Total loans totaling $109 7 million barrel hotels, one located on the east coast and the other on the West Coast.
Anthony Kim: One located at the East Coast and the other on the West Coast. Both hotels have had a slow post-coded recovery. The third loan is to see an unknown to a healthcare management company where the cash flow is impacted by a fire in one of the top spittals. Importantly, the guarantors and sponsors for all the three loans that are strongly liquidity and tax flow, which mitigates risk. We do not believe these events are indicative of a larger trend. These loans have been thrown through the entirety of their terms that are adequately protected. One are allowance for credit losses increased relative to the loans.
Speaker Change: Hotels have at a slow post COVID-19 recovery.
Speaker Change: Third loan is C&I loan to a healthcare management company, whereas the cash flow is impacted by a fire in one of these hospitals.
Speaker Change: Importantly, the guarantors and sponsors for all the three loans had a strong liquidity and cash flow, which mitigates risk we.
Speaker Change: We do not believe these events are indicative of a larger trend.
Speaker Change: These loans have been currently doing the entirety of their turns that are adequately protected.
Speaker Change: While our allowance for credit losses increased relative to total loans ratio and your increased one basis point to 1.11%.
Anthony Kim: The ratio increase one basis point to 1.1 percent.
Ron Santorosa: And now I'll hand the call over to Runs on the Chief Financial Officer for one detail on our third quarter of financial results. And thank you, Anthony, and good afternoon all. Third quarter, net interest income was $50.1 million. 2.9 percent from the second quarter. And as Bonnie noted, our net interest margin expanded five basis points to 2.74 percent. Net interest income increased $1.4 million to a $500,000 benefit from one additional day in the quarter. A $700,000 benefit from an improved rate environment and a $200,000 benefit from a higher level of interest earning assets. Looking to net interest margin, we saw a two basis point increase from loans and other interest-earning assets.
Speaker Change: And now I'll end the call over to Ron Santa Rosa, Our Chief Financial Officer for more detail on our third quarter financial results.
Speaker Change: Thank you Anthony and good afternoon all.
Speaker Change: Third quarter net interest income was $50 $1 million up two 9% from the second quarter and as Bonnie noted our net interest margin expanded five basis points to 274%.
Speaker Change: Net interest income increased $1 $4 million due to a $500000 benefit from one additional day in the quarter, a $700000 benefit from an improved rate environment.
A $200000 benefit from higher level of interest earning assets.
Speaker Change: Looking to net interest margin, we saw a two basis point increase from loans and other interest earning assets a two basis point increase from lower borrowing and debt costs and a one basis point increase from lower deposit costs.
Ron Santorosa: A two basis point increase from lower borrowing and debt costs and a one basis point increase from lower deposit costs. Following the Fed's decision to lower the federal funds rate by 50 basis points, we lower the interest rate paid on our savings in money market accounts and lowered our offering rates on new times certificates of deposits. For the month of September, the cost of interest-bearing deposits was 4.22%, down seven basis points from the month of August. Looking more closely at the rate paid on savings in money market accounts, they were each down 11 basis points.
Speaker Change: Following the feds decision to lower the federal funds rate by 50 basis points, we lowered the interest rate paid on our savings in money market accounts and lowered our offering rates in due time certificates of deposits.
Speaker Change: For the month of September the cost of interest bearing deposits was 422% down seven basis points from the month of August.
Looking more closely at the rate paid on savings and money market accounts, they were each down 11 basis points.
Ron Santorosa: Turning to October to date, the rate paid on savings accounts was down 30 basis points from the third quarter average, while the rate paid on money market accounts was down 23 points. Together with our now accounts and time deposits, the cost of interest bearing deposits for October to date was down 17 basis points from the third quarter average of 4.27%. Regardless of what the Fed may or may not do at their upcoming meetings, we will respond accordingly to any changes in interest rates.
Speaker Change: Turning to October to date the rate paid on savings accounts was down 30 basis points from the third quarter average while the rate paid on money market accounts was down 23 points.
Together with our now accounts and time deposits the cost of interest bearing deposits for October to date was down 17 basis points from the third quarter average of 4.27%.
Speaker Change: Regardless of what the fed may or may not too at the upcoming meetings, we will respond accordingly to any changes in interest rates.
Ron Santorosa: Now turning to non-acristened income, here we recognize the gain of $900,000 from a branch sale and lease back that totally 5% increase from the second quarter to $8.4 million. Second quarter, non-acristened income included a $300,000 death benefit on our bank-owned life insurance. In addition, gains on sales of SBA loans for the third quarter were $100,000 less than the second quarter. While trade premiums remain the same quarterly quarter at 8.54%, the volume of loan sell declined $500,000 to $23.0 million. As Bond mentioned, we have sold residential mortgage loans for three consecutive quarters. For the third quarter, we sold a $20.9 million of residential mortgages at a premium of 2.32%.
Speaker Change: Now turning to noninterest income here, we recognized a gain of $900000 from a branch sale and leaseback that drove a 5% increase from the second quarter to $8 $4 million second.
Speaker Change: Second quarter noninterest income included a $300000 death benefit on our bank owned life insurance. In addition gains on sales of SBA loans for the third quarter were $100000 less than the second quarter, while trade premiums remain the same quarterly recorded $8 seven 4%.
Speaker Change: The volume of loans sold declined $500000 to 23 points your $1 billion.
Speaker Change: As Bonnie mentioned, we get sold residential mortgage loans for three consecutive quarters for the third quarter, we sold $29 billion of residential mortgages at a premium of $2 three 2%.
Ron Santorosa: It's non-interest expense for the third quarter was down $200,000, or 0.6%, to $35.1 million. The decrease, essentially, reflects the $300,000 branch consolidation charge that occurred in the second quarter. Pulling this all together, three tax pre-provision income jumped 9.4% from the second quarter with valuable growth in interest income and well-managed expense. Credit loss expense for the third quarter was $2.3 million, representing the entire provision for credit losses, as the provision for off-balance items was milled for the quarter. According to the allowance, we have net charge loss of $900,000 for the quarter, which combined with the provision led to the $69.2 million balance at the end of the quarter or 1.1% of loans.
Speaker Change: Noninterest expense for the third quarter was down $200000 or 0.6% to $35 $1 million.
Speaker Change: The decrease essentially reflects the $300000 branch consolidation charge that occurred in the second quarter.
Speaker Change: Pulling this altogether pretax pre provision income jumped nine 4% from the second quarter with notable growth in net interest income and well managed expenses.
Speaker Change: Credit loss expense for the third quarter was $2 $3 million, representing the entire provision for credit losses as the provision for off balance sheet items.
Speaker Change: Bill for the quarter.
Speaker Change: Turning to the allowance, we had net charge offs of $900000 for the quarter, which combined with the provision led to the $69 $2 million balance at the end of the third quarter or one 1% of loans.
Ron Santorosa: Loan charge loss included $1.1 million, offset by $1.7 million of recoveries on previously charged off loans. The allowance for credit losses increased $1.4 million due to quantitative and qualitative considerations of $3 million, offset by a decline of $1.6 million in specific allowances from non-payoffs.
Speaker Change: Loan charge offs included $1 $1 million offset by $1 $7 million of recoveries on previously charged off loans.
The allowance for credit losses increased $1 $4 million due to quantitative and qualitative considerations of $3 billion offset by a decline of $1 $6 million in.
Speaker Change: Civic allowances from loan payoffs.
Ron Santorosa: Turning to equity capital, our negative annual C9 declined to $22.9 million, as expected, because of the lower interest rate environment at the end of the third quarter. In addition, the company's repurchased 75,000 shares at an average price of $19.10 during the quarter. One million, 255,000 shares remain available under the share purchase program. Tenner will vote value per share at the end of the third quarter, was $24.3 and are tangible equity to tangible asset ratio was 9.42%. The company and the bank continue to exceed minimum regulatory capital requirements, and the bank continues to exceed the minimum capital required ratios for the well-capitalized category.
Speaker Change: Turning to equity capital or a negative <unk> declined to $22 $9 million as expected because of the lower interest rate environment at the end of the third quarter and.
Speaker Change: In addition, the company repurchased 75000 shares at an average price of $19.10 during the quarter.
Speaker Change: $1 million 255000 shares remain available under the share repurchase program.
Tangible book value per share at the end of the third quarter was $24.03 and our tangible equity to tangible asset ratio was 942% the company and the bank continue to exceed minimum regulatory capital requirements and the bank continues to exceed the minimum capital required ratios.
Speaker Change: For the well capitalized category.
Ron Santorosa: The company's common equity tier 1 capital ratio was 11.95%, and the bank's total capital ratio was 14.2 million%.
Speaker Change: The company's common equity tier one capital ratio was 11, 95% and the bank's total capital ratio was 14, 2% with that back to body.
Bonnie Lee: With that, that too, body.
Bonnie Lee: Thank you. I want to express my gratitude to our team for their unwavering commitment and dedication to serving our clients. I especially appreciate our bankers and support staff who consistently build meaningful relationships with our customers and contribute to the unwavering growth of our franchise.
Speaker Change: Thank you Ron.
Speaker Change: I want to express my gratitude to our team for their unwavering commitment and dedication to serving our clients.
Especially appreciate our bankers and support staff, who consistently be able to build meaningful relationships with our customers and contribute to the ongoing growth of our franchise.
Bonnie Lee: We are well positioned for a strong close to 2024 and future sustainable growth. Our challenges robust as evidenced by our healthy capital ratios and ample liquidity.
Speaker Change: We are well positioned for a strong close to 'twenty 'twenty, four and future sustainable growth.
Speaker Change: Our balance sheet is robust as evidenced by our healthy capital ratios and ample liquidity.
Bonnie Lee: Our low pipeline is solid, and we are going to attract to achieve our low-commits single-digit loan growth, high guidelines for this year. We have a stable base of a quarter deposits and a healthy mix of DDAs. We are committing to well-controlled expenses, and finally, overall credit quality of our loan portfolio remains strong.
Speaker Change: Pipeline is solid and we are on track to achieve a low to mid single digit loan growth I guess for this year.
Speaker Change: We have a stable base of core deposits and a healthy mix of Dth.
Speaker Change: We are committed to well controlled expenses and finally overall credit quality of our loan portfolio remains strong we are confident in our ability to continue driving growth and enhancing franchise value for all stakeholders.
Bonnie Lee: We are confident in our ability to continue driving growth and advancing franchise value for all stakeholders.
Unknown Executive: And for your time today, we will now open the poll for your questions.
Speaker Change: Thank you for your time today, we'll now open the call for your questions. Operator, Please open the line.
Unknown Executive: Operator, please open the line. Great, thank you.
Speaker Change: Great. Thank you.
Unknown Executive: We will now be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation total indicator line is in the question queue. You may press star 2 to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker Change: We will now be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two to remove yourself from the queue.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star.
Unknown Executive: One moment, please. Will you pull for questions?
Speaker Change: One moment, please we poll for questions.
Kelly Mata: Our first question is from Kelly Mata, from KPW. Please go ahead. Hey, good afternoon. Thanks for the question.
Speaker Change: Our first question is from Kelly Motta from K P. W. Please go ahead.
Speaker Change: Hey, good afternoon. Thanks for the question I think kicking off with the margin I really appreciate all the comments.
Kelly Mata: I think kicking off with the margin. I really appreciate all the comments with regards to the funding side of things and the spot rates. But I'm hoping you could help me out a bit on the low-inside. I know you have some prime in there that is going to reset next quarter.
With regards to <unk>.
Speaker Change: The funding side of things and in the spot rates, but I'm I'm I'm, hoping you could help me out a bit on the loan side I know you have some prime in there that is kind of reset next quarter.
Kelly Mata: All in all, how should we be thinking about that as it pertains to low-meal, mixing that in with new production and what your idea of the margin is as we look to this next quarter. Do you expect some continued expansion off this level?
Speaker Change: All in all how should we be thinking about that as it pertains to mobile mixing that even with new production and what.
Speaker Change: Your idea of the margin is you know at some gloves to this next quarter. It can do you expect some continued expansion off this level.
Speaker Change: So.
Speaker Change: So Kelly.
Speaker Change: So working backwards on your question.
Speaker Change: Hi.
Speaker Change: Right now with we anticipate I know there are 50 basis points of rate declines.
Speaker Change: 25 for November 25 for December.
Speaker Change: We think that net interest margin again, holding all the other elements are let's say equal could expand between 10 to 20 basis points.
Speaker Change: With respect to the loan yields its a bit more of a challenging question because it starts to involve a little bit of the mix that.
Speaker Change: We have the mix it may change and then the increments that Anthony and team and but that aside what we what we tried to do to ponder that question is we we we introduced another slide in our deck.
Speaker Change: There we.
Speaker Change: Show the weight sensitivity of the loan portfolio and our interest bearing deposits against the day weighted average of the fed funds target rate between the first quarter 2022 to the second quarter of 2024. So again, if you think about it.
Speaker Change: Second quarter 'twenty four is about a year since the fed last rate increase so one way that you can start to think about it is just looking at the.
Speaker Change: But the inverse stair step.
Speaker Change: One way to start to analyze what might what might happen.
Speaker Change: During the fourth quarter in forward, so you'll you'll find that analysis or that sort of.
Speaker Change: Station I'm sorry.
Speaker Change: I didn't write down the number but I'm finding carefully in a second.
Speaker Change: So the portfolio. So that's on page 19 of the illustration.
Speaker Change: Our slide deck.
Speaker Change: No.
Speaker Change: All things being equal we'd like to think that as we stepped up in the rate environment, we should step down in the same fashion.
The caveat to that though again as the time book drags because it has to do the re prices the loans will step down slightly and then we would envision there's a point at which prepayment speeds may start to pick up depending on how far.
The short term rates go up so.
Speaker Change: Against all of the things that we know and don't know that's kind of what we're thinking about.
Speaker Change: Got it that's helpful. Ron and Nick just a point of clarification that 10 to 20 basis points of NIM expansion, you're talking about what is that.
Speaker Change: What what time period does that does that.
Speaker Change: Fourth quarter. So if you will work harder.
Speaker Change: Yes.
Speaker Change: Got it.
Speaker Change: A third of the way to the 25 that could occur in November and then you can just say nil for the last 25 that that may happen in December.
Speaker Change: Got it that's that's how far with him that.
Speaker Change: Great.
Speaker Change: Look with your M. P. He's a really loud your capital is strong you're trading at 80% of tangible book value why or why not get more aggressive with the with the buyback here. How are you guys thinking about it right now.
Unknown Executive: So, we get that question each quarter, and I've got a bit of this. So, you know, for everyone that fears asset quality, we don't have enough capital; for everyone that looks at capital. We have too much of it. So, I think the board and management, you know, taking to consideration all the things that could happen, they happen, will happen and trying to find a line that best manage the, best manages the, the, the, the, the, the, best relative to, to that notion.
Speaker Change: So we get that question each quarter and in <unk>.
Speaker Change: Got it.
Speaker Change: So for everyone that fears asset quality, we don't have enough capital for everyone that looks at capital we have too much of it so.
Speaker Change: I think the board and management.
Speaker Change: Take into consideration all the things that could happen and may happen would happen and trying to find a line that best manage best manages the risk relative to that notion now certainly we were surprised I used that word at the end of September.
Unknown Executive: Now, certainly, we were surprised. I'm going to use that word at the end of September; we weigh rates declined. If you look at the current today, well, that's been erased. So, all the measures that you want to look at from a tangible book value perspective, etc. It just basically retrace their steps.
Speaker Change: Way rates declined if you look at the curve today, all that's been erased. So all the measures that you want to look at it from them.
Speaker Change: Our tangible book value perspective, et cetera, just basically retrace their steps. So so that's the other element of it that you know it makes it a little bit more challenging to try to determine what the correct amount is all of that said I think what we've demonstrated.
Unknown Executive: So, so that's the other element of it that, you know, makes it a little bit more challenging to try to determine, you know, what the correct amount is. All of that said, I think what we demonstrated, um, over, um, I think several courts, uh, that we do manage capital well. Um, our payout ratio for the first nine months, on just on dividends alone, was 51%. Then you, uh, factor in the, uh, the share repurchases that increases it to 64%. So, a large part of our earnings have been repatriated through dividends and through share repurchases.
Speaker Change: Over.
I think several quarters.
Yeah.
Speaker Change: We do manage capital well.
Our payout ratio for the first nine months.
Speaker Change: Just on dividends alone was 51% when you.
Speaker Change: Factor then the share repurchases that increases up to 64%.
Speaker Change: So a large part of our earnings have been repatriated through dividends and through share repurchases.
Unknown Executive: Um, I'll leave it at that.
Speaker Change: I'll leave it at that.
Unknown Executive: Great.
Speaker Change: Right Me, maybe last question for me and then I'll I'll step back, but with a special mention migration. It was good to see you know the MTA worked out I'm, hoping maybe you could spend a couple of minutes I think the commentary on that was.
Unknown Executive: Um, maybe last question for me, and then I'll step back, but with the special mention that migration, it was good to see, you know, the NTA's worked out. Um, hoping maybe you could send a couple minutes. I think the commentary on that was, you're watching it. It's all current.
Speaker Change: You're watching it it's all Karyn just wondering.
Anthony Kim: Just wondering, um, what, what specifically drove that migration there and what can you comfort with, um, the ultimate, you know, lost content of that portfolio and, and, you know, being able to be resolved favorably. I sure I'll handle that. Um, so, you know, we have been very, uh, proactive in identifying and resolving, you know, contains a problem of loans as evidenced by recoverings and payoffs that we had, uh, this quarter. The three loans that we have identified and, and greatest special mention, uh, two of them are, uh, commercial, uh, real estate loans, um, both tell loans to one in the East Coast and then another one in the West Coast.
Speaker Change: What what.
Speaker Change: Specifically drove that that migration, there and what gives you comfort with them the ultimate.
Speaker Change: Net loss.
Speaker Change: Loss content of that portfolio, and you know being able to be resolved favorably.
Sure I'll handle that so you know we have been very proactive in identifying and resolving.
Speaker Change: Okay, some problem loans as evidenced by recoveries and payoffs that we had this quarter.
Speaker Change: The three loans that we have identified and graded special mention.
Speaker Change: Two of them are our commercial real estate loans hotel loans to one in the East Coast and then another one in the West coast.
Anthony Kim: Both loans actually, um, have had a slow post-recovery, uh, post-COVID recovery. Uh, which caused the recent operating performance and mattresses to be less than anticipated. And that's why we, uh, and, and expected to sign, um, PSA doing this quarter. Um, and, you know, all three loans, as I said, they're, they're current and, uh, they're well-saturated by the collateral to count towards, um, and, and the based on the information that we have today, um, we don't anticipate any, uh, um, any of these loans to become on them performing. Great.
Loans actually have had a small post recovery.
Speaker Change: Post Covid recovery.
Speaker Change: Which caused the recent operating performance and bad choices to be less than anticipated and that's why we you know.
Speaker Change: We're actively downgrade it.
Speaker Change: Special mentioned category.
Speaker Change: For the one in the East coast buyer is entertaining a fail and he has already received a LOI from a potential buyer and and expected to sign a PSA during this quarter.
Speaker Change: And all three of those as I sat there crying and they're well secured by the collateral to count them twice.
Speaker Change: And based on the information that we have today, we don't anticipate any are any.
Speaker Change: Any of these loans to become nonperforming.
Speaker Change: Great. Thank you so much for the color Bonnie and thanks, Ron I'll step back.
Unknown Executive: Thank you so much for the color, Bonnie, and thanks, Ron. I'll step back.
Speaker Change: Okay.
Gary Tenner: Very nice questions from Gary Tenner from B.A. Davidson. Please go ahead.
Speaker Change: Our next question comes from Gary Tenner from D. A Davidson. Please go ahead.
Ahmad Hassan: Hey guys, this is Ahmad Hassan on for Gary Tenner. Firstly, can you guys give a little bit more color? I know you guys had a pretty strong introduction to this water. Any commentary on loan pipelines and how we should think about them in the next quarter? Yeah, looking at the 4Q pipeline, it came in similar level as well as similar yields as third quarter. So we are optimistic that we can produce a similar level of loan production in the fourth quarter.
Speaker Change: Hey, guys. This is the amount of time from the <unk> on for Gary Tenner.
Speaker Change: Firstly can you guys give a little bit more color I know you guys had pretty strong production this quarter any commentary on the loan pipelines and how we should think about them.
Speaker Change: In the next quarter.
Yeah, I'm looking at the <unk> pipeline.
Speaker Change: Aim in similar level as well as similar.
Speaker Change: Yields as third quarter.
Speaker Change: So we are.
Speaker Change: Where are you now.
Speaker Change: Optimistic that we can produce similar levels of loan production in fourth quarter.
Ahmad Hassan: Thanks, I appreciate the color on that. And thanks for the detail on the CD maturity slide. You guys have a little over a billion in CD's that are around 5% that are reprising the quarter. How should we think about the cost of that? How aggressive are you guys going to be? Yeah, I mean looking at the last quarter, a little bit less than 500 million mature, and we were able to reprise 73 basis points lower than what it rolled off at. So, and can considering that new production, that rate that we're paying right now ranges from anywhere between 4.1% to 4.3%.
Speaker Change: Thanks, I appreciate the color on that and thanks for the detail on the CD maturity Slide you guys have a little over a billion dollars in Cds at around 5% that are repricing in the quarter.
Speaker Change: How should we think about the cost of that how aggressive are you guys are going to be.
Speaker Change: Yeah, I mean, just looking at the last.
Speaker Change: Last quarter.
Speaker Change: Little little bit Ah.
Speaker Change: They were less than 500 million maturing and we were able to reprice 73 basis points lower than what it rolled off at so and cotton.
Speaker Change: Considering that new production that rate that we're paying right now ranges from anywhere between four point and one to four 3% dip.
Ahmad Hassan: Depending on the term of the CD to the 3, 6, 9 month. So we are hoping that we're optimistic that we will be reprise at 4.18, which is the third quarter retention rate or below. Because we're sensing that all of the competitors also lowering the CD rates more than 50 basis points. So just in terms of just the retention and the historical retention of the CD's, looking at the last four quarters. So the maturing CD's, you know, we retain, you know, on a lower end about 78% and a high end about 84, 85%. So just in terms of the overall retention rate, using that range.
Speaker Change: Depending on the term loan B C D typically three to six.
Speaker Change: Nine months.
So.
Speaker Change: Our and hoping that.
Speaker Change: We're optimistic that will be it will be reprice.
Speaker Change: At four plane, one eight which is the third quarter retention rate or below.
Speaker Change: Because resenting that all of the competitors also lowering the C D rates more than 50 basis points.
Speaker Change: So just in terms of just the retention and the historical retention.
Speaker Change: T D looking at the last four quarters, or so and our maturing Cds you know, we retain them and on a lower end about 78% and our high end about 80, 485%. So just in terms of the Oh broker retention bank isn't that.
Speaker Change: Sure.
Ahmad Hassan: I appreciate the color.
I appreciate the color.
Speaker Change: Sure.
Adam Butler: Next question is from Adam Butler from Piper Sandler, please go ahead. Okay, good afternoon, everyone. This is Adam on for Matthew Clark. Thanks for the disclosure. Again, on that new slide. I'm just curious more on the loan side. Just how the repricing characteristics have progressed quarter to date. Do you guys have a spot rate on the loan portfolio? And can you remind us what the fixed and floating rate portion of your overall portfolio is? Sure. So for loan yields per quarter to date, which is a little bit challenging for us because some of the information doesn't come in until month end.
Speaker Change: Our next question is from Adam Butler from Piper Sandler. Please go ahead.
Speaker Change: Okay.
Adam Butler: Hey, good afternoon, everyone. This is Adam on for Matthew Clark.
Adam Butler: Thanks, Thanks for the disclosure again on that new slide I'm, just curious more on the on the loan side.
Adam Butler:
Just how how the repricing characteristics have moved have progressed quarter to date, you guys have a spot rate on the loan portfolio and can you remind us what the fixed and floating rate portion of your overall portfolio is.
Sure so.
Adam Butler: For loan yields quarter to date.
Adam Butler: Which is a little bit.
Adam Butler: Challenging for us because some of the information doesn't come in until months and but it's it's it's about 6% of idea whether that's <unk>.
Adam Butler: But it's about the 6% idea; whether that's 598 or 601, it can vary, but it seems like for October, it's going to be at pretty much at that level. And so, as we look at the variable rate portfolio, different pricing characteristics, whether it floats, which is a very small piece of our book, adjustable, which you can think of primarily as being the SBA book, but that only moves once a quarter. And then we have a host of hybrids that have even longer tails in terms of when they reprise. So as we try to point out, we think that the loan book will probably keep its yield, particularly given the increments that which Anthony's team are producing.
Adam Butler: <unk> hundred 98 or 601 it it can vary but it seems like for October you're just going to be.
Adam Butler: Pretty much at that level.
Adam Butler: And so as we look at the the variable rate portfolio.
Adam Butler: Different pricing characteristics, whether it floats, which is a very small piece of our book.
Adam Butler: Adjustable, which you can take a primarily being the SBA book, but that'll be a nice once a quarter.
Adam Butler: And then we have a host of hybrids that.
Have you been longer tails in terms of when they re price so.
Adam Butler: As we tried to point out we think that the loan book will probably.
He gets yield, particularly given the increments that which Anthony and his team are producing so we're not going to see we're not anticipating too much of a decline in the loan yields in the in the rate environment.
Adam Butler: So we're not going to see, we're not anticipating too much of a decline in the loan yields in the rate environment. Probably not until such time as the rates drop, falling up that might start pushing borrowers to prepayment activity, but we're not quite there yet. So we think the 4th quarter will be a pretty good quarter. Okay, that's very helpful.
Adam Butler:
Adam Butler: Probably not until such time as the rates dropped fallen off that might start pushing our borrowers to to prepayment activity.
Adam Butler: But we're not we're not quite there yet so we think the fourth quarter will be a pretty good quarter.
Speaker Change: Okay. That's very helpful. Thank you and also just on on deposit balances this quarter. It was.
Adam Butler: Thank you. And also just on deposit balances this quarter, it was good to see some meaningful growth, particularly in the competitive competition that you're seeing. And if there was any seasonality this quarter that we should be aware of. So I would say the seasonality issue, but if you look at our loan production this quarter, we did have a really good production in the CNI category. And most of our net positive DDA growth is coming from our business commercial accounts. And more directly, you know, it's directly tied to the CNI loans. So, and it's been our experience that when we have a really good growth in the CNI loans, we also have a really good growth on DDA.
Speaker Change: Good to see some meaningful growth, particularly in the DDA category I was just trying to get a sense for are the deposit pipeline as you see it the competitive competition that youre seeing and if there was any seasonality this quarter that we should be aware of.
Speaker Change: So I Wouldnt say its a seasonality issue, but if you look at our loan production. This quarter. We did have a really good production and Ah C&I category and most of our our net positive a DDA growth is coming from our business commercial account.
Speaker Change: And and more directly.
Speaker Change: It's attracting tied towards the Oh C&I loans, so and it's been our experience when we have a really good growth in the C&I and honestly also haven't really good crops.
Adam Butler: Okay, great.
Speaker Change: Okay, great. Thanks for the color there and then just moving to expenses.
Adam Butler: Thanks for the color there.
Unknown Executive: And then just moving to the expenses, there's a few moving parts with the closing of the branch planning to open, planning to open a new branch. And I think you opened a new office, and so in your prepared commentary, you mentioned that. I guess, how are you thinking about the overall expense run rate from this quarter going forward? So first of all, we've not opened up a representation office yet in Seoul, South Korea. That's underway, but it could be a 24 event; it could be an early 25 event. With respect to the opening of our Georgia branch to the Atlanta metro area, again, that's scheduled for the fourth quarter.
Speaker Change: A few moving parts, but.
Speaker Change: The closing of the branch planning to opening planning to open a new branch in and I think you opened a new office in Seoul in your prepared commentary you mentioned that I guess, how are you thinking about the overall expense run rate from this quarter going forward.
Speaker Change: So so first of all we've now opened up.
Speaker Change: Septation office, yet in Seoul, South Korea.
Speaker Change: It's underway.
Speaker Change: But it could be a 24 events it could be an early 25%.
Speaker Change: With respect to the opening of our Georgia.
Speaker Change: Branch to the Atlanta Metro area again, that's scheduled for the fourth quarter and then the first quarter, we have planned consol.
Unknown Executive: And then in the first quarter, we have the planned consolidation of an LA-based branch. So altogether, what I would point out is that, seasonally, our spend on advertising and promotion steps up at least a half a million dollars from what you've seen in the third quarter. How much of that will be to promote the new Atlanta branch versus what we do in the ordinary course, I couldn't say, but if you look at our trend, you'll see that season on the bump. The ORIO for close property expense, it seems like it has a run rate now, but that can always be a surprise, particularly as you get to year-end.
Speaker Change: Consolidation of Oh.
Speaker Change: Hawaii based branch so altogether, what I would point out is that seasonally our spend on advertising and promotion steps up at least a half a million dollars from what you've seen in the third quarter, how much of that would be to a.
Speaker Change: Promote.
Speaker Change: Our new Atlanta branch versus what we do in the ordinary course, I couldn't say, but if you look at our trend youll see that seasonal bump.
Speaker Change:
Speaker Change: Oh are we owe foreclosed property expense you know it seems like it has a run rate now, but that can always be a surprise, particularly as you get to year end. So all of that said you probably could at least see non interest expense up at least a half a million to maybe a million.
Unknown Executive: So all of that said, you probably could at least see non-expects up, at least a half a million, to maybe a million, if I want to round up. So what we'll have to see, but the advertising promotion spend, I kind of know that, that I've seen enough of that every fourth quarter, that that's going to be...
To round out.
Speaker Change: So we'll have to see but the advertising promotion spend I kind of knew that debt.
Speaker Change: I've seen enough of that every fourth quarter that that's going to be there.
Unknown Executive: Okay, that was super helpful. Thanks for the clarification.
Speaker Change: Okay that was super helpful. Thanks for the clarification on the timing of the of the offices and branches I appreciate it and thanks for thanks for taking my questions.
Unknown Executive: I'm on the timing of the offices and branches. I appreciate it and thanks for thanks for taking my questions.
Unknown Executive: Thank you. As a reminder, if you would like to ask a question, it is Floor One.
Speaker Change: Thank you.
Speaker Change: As a reminder, if you would like to ask a question. It is star one.
Matthew Erdner: Next question here is from Matthew Erdner from Jones Trading. Please go ahead. Good afternoon, guys. Thanks for taking the question. I want to talk about the loans help for sale. The increase there is pretty significant quarter of a quarter, but it's still not a huge percentage of your loan portfolio. And specifically, the non-accrual, you know, about half of it's on the non-accrual.
Speaker Change: Our next question here is from Matthew O'connor from Jones trading. Please go ahead.
Matthew O'connor: Hey, good afternoon, guys. Thanks for taking the question I wanted to talk about the loans held for sale. The increase there is pretty significant quarter over quarter, but it's still not a huge percentage.
Matthew O'connor: Of your loan portfolio and.
Matthew O'connor: And specifically the non accrual you know about half of it's on the non accrual or is your expectation to sell those at par and what kind of led to the increase in that line item or is it just a timing thing.
Matthew Erdner: Is your expectation to sell those at par, and what kind led to the increase in that line item? Or is it just a timing thing?
So.
Matthew Erdner: So let's deal with the non-accrual loan. You know, we actually play that particular loan and loan help for sale at the end of September. However, we actually successfully saw that note, and it closed this month. And, and we provided the 1.1 million reserve. So we don't expect any further loss to be coming out of that particular sale.
Speaker Change: That's that's a deal what the and then I'll call on them.
Speaker Change: We actually a place that puts you in a moment I know someone held for sale.
Speaker Change: The end of September.
Speaker Change: However, we actually successfully all saw that node and it closed this month and and we provided the a $1 1 million.
Speaker Change: Hum.
Speaker Change: Reserve charged off so are we.
Speaker Change: We don't expect.
Speaker Change: Further our boss to be coming out of that particular sale.
Speaker Change: Yeah.
Matthew Erdner: Yeah, that's helpful for that.
Speaker Change: Yeah that's helpful.
Matthew Erdner: And then you know, going forward, where are you guys going to opportunistically sell loans? Is it mostly going to be out of the residential space? Yeah, the year today we sold about 70 million in the mortgage, and I think we're going to probably continue to be able to do that for at least in the 4Q. And for 2025, I think we have to observe the market condition and make the decision accordingly.
For that and then you know going forward, where are you guys going to Opportunistically sell one does it mostly going to be out of the residential space.
Speaker Change: Yeah.
Speaker Change: Yeah, I've got a year to date, we sold about 700 million in the mortgage and.
Speaker Change: And I think we're going to probably continue to be able to do that.
Speaker Change: For at least a poor Q and an important 2025, I think we have to observe the market conditions and make the decision accordingly.
Matthew Erdner: Yeah, that's helpful.
Yeah. That's helpful. And then one last question on this is it how are the margins been you know a gain on sale wise compared to maybe six months ago, and then you know as part of this strategy. I guess are you guys looking to improve your loan to deposit ratio at all going forward.
Matthew Erdner: And then one last question on this. Is it how are the margins been, you know, gained on sale wise compared to maybe six months ago. And then, you know, as part of this strategy, I guess, are you guys looking to improve your wonder deposit ratio at all going forward? So the SBA loans, which we historically sell each quarter and that typically represents our health or sale category at each reporting date. The premiums on those have been in the dates. I think I get like eight and a half for the third quarter of my recollection. And it seems like it probably will be at or about that same idea for the fourth quarter on the residential mortgages, as we pointed out, we've been selling those each quarter.
Speaker Change: Okay.
Speaker Change: So the SBA loans, which we historically sell each quarter and that typically represents our held for sale category at each reporting date.
Speaker Change: The the premiums on those have been in the eights I think I guess I hate to ask for the for.
Speaker Change: For the third quarter and my recollection.
Speaker Change: And it seems like it probably will be at or about that same idea for the fourth quarter.
On the residential mortgages.
Speaker Change: As we pointed out we've been selling those each quarter.
Matthew Erdner: Excuse me, and it happens that we have a portfolio that we also identified for sale here at the end of the third quarter. Those premiums have been about two to point two to point three ish for the three now maybe the fourth time that we do it. So that is depending upon market appetite and things of that sort. So that's kind of what we're envisioning, and then, you know, SBA clearly will continue. That's been our bread and butter for many, many years. On the mortgages, we think we found a path where we should be able to produce and sell.
Speaker Change: Excuse me and it happens that we have a portfolio that we also identified for sale here at the end of the third quarter.
Speaker Change: Those premiums have been about two.
Speaker Change: Two point to 2.3 ish.
For the three now maybe the fourth time that we do it so that it's depending upon market appetite and things of that sort. So that's kind of what we're envisioning and then SBA clearly will continue that's been our bread and butter for them for many many years on the mortgages we we.
Speaker Change: I think we found a path, where we should be able to produce and sell.
Matthew Erdner: We're not necessarily doing that to manage loan-to-deposit ratio. I understand how you can think of it that way. But rather, we were looking at this, particularly with respect to residential, that we wanted to see a portfolio on balance sheet to produce spread income. And then, if you will, production capabilities such that continue to keep the portfolio on our books as well as have an opportunity to sell production at gains.
Speaker Change: We're not necessarily doing that to manage loan to deposit ratio I understand how you can think of it that way, but rather we were looking at this particularly with respect to residential that we wanted to see a a portfolio on balance sheet to produce spread income and then if you will production.
Speaker Change: <unk> such that continue to keep the portfolio on our books as well as have an opportunity to sell production at.
Speaker Change: Pet gains.
Matthew Erdner: Thank you for that. That was very helpful.
Speaker Change: Yeah. Thank you for that that's very helpful.
Unknown Executive: This concludes the question and answer session.
Speaker Change: This concludes the question and answer session I would like to turn the floor back to management for any closing comments.
Unknown Executive: I would like to turn the floor back to management for any closing comments. Thank you all for joining our call today and for your interest in Hanmi. We look forward to sharing our progress with you for the final quarter of the 2024. Thank you.
Speaker Change: Thank you all for joining our call today and for your interest in Hanmi, we look for.
Speaker Change: Forward to sharing our progress with you throughout the final quarter of 2024. Thank you.
Unknown Executive: This concludes today's teleconference. You may disconnect your eyes at this time. Thank you again for your participation. Thank you.
Speaker Change: This concludes today's teleconference. You may disconnect your lines at this time. Thank you again for your participation.
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