Q2 2025 Hanmi Financial Corp Earnings Call
Unknown Attendee: Unknown Attendee, Ben Brodkowitz, Hanmi Financial Corp. At this time, all participants are in listen-only mode.
Ladies and gentlemen, welcome to Hami Financial Corporation, second quarter 2025 conference call. As a reminder, today's call is being recorded for replay purposes.
Operator: A question-and-answer session will follow the formal presentation, and you may be placed into question queue at any time by pressing Star 1 on your telephone keypad.
at this time, all participants regularly mode,
Ben Brodkowitz: I would now like to turn the conference call over to Ben Brodkowitz, Investor Relations for the company. Please go ahead, Ben.
Speaker Change: A question and answer session will follow the formal presentation. And you may be placed into question Queue at any time by pressing star 1 on your telephone keypad. I would now like to turn the conference call over to Ben brocketts investor relations for the company, please, go ahead been.
Ben Brodkowitz: Thank you, Operator, and thank you all for joining us today to discuss HOMNY's second quarter 2025 results. This afternoon, HOMNY issued its earnings release and quarterly supplemental slide presentation to accompany today's call. Both documents are available in the IR section of the company's website at HOMNY.com.
Ben Brocketts: Thank you, operator. And thank you all for joining us today to discuss how many second quarter 2025 results.
Ben Brocketts: This afternoon, how many issued its earnings release and quarterly supplemental slide presentation to accompany today's call.
Ben Brocketts: both documents are available in the IR section of the company's website, atomy.com,
Ben Brodkowitz: I'm here today with Bonita Lee, President and Chief Executive Officer of Hanmi Financial Corporation. Anthony Kim, Chief Banking Officer, and Ron Santarosa, Chief Financial Officer.
Speaker Change: I'm here today with Bonnie, Lee, president and chief executive officer of how many Financial Corporation.
Ben Brodkowitz: Bonnie will begin today's call with an overview.
Speaker Change: Anthony Kim Chief banking officer and Ron Santa Rosa Chief Financial Officer.
Ben Brodkowitz: Anthony will discuss loan and deposit activities.
Ben Brodkowitz: Ron will provide details on our financial performance, and then Bonnie will provide closing comments before we open the call up for your questions.
Speaker Change: 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 Brodkowitz: Before we begin, I would like to remind you that 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 and financial position. Our actual results may differ materially from those contemplated by our forward-looking statements, which involve risks and uncertainty. Discussions 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-Q. In particular, we direct you to the discussion of certain risk factors affecting our business contained in our earnings release, our investor presentation, and in our Form 10-Q.
Speaker Change: Before we begin, I would like to remind you that 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 and financial position.
Speaker Change: Our actual results May differ materially from those contemplated by our forward-looking statements, which involve risks and uncertainties.
Speaker Change: 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 forums 10K and 10 Q.
Ben Brodkowitz: With that, I would now like to turn the call over to Bonnie Lee. Bonnie, please go ahead.
In particular, we direct you to the discussion of certain risk factors affecting our business contained in our earnings, release, our investor presentation and in our form, 10 Q.
Bonita Lee: Thank you, Ben.
Bonita Lee: Good afternoon, everyone. Thank you for joining us today to discuss our second quarter 2025 results. I am pleased with Hanmi's consistent execution this quarter, building on our progress in the previous quarter for a solid first half of the year. We delivered further margin expansion and drove growth in our loan portfolio with healthy contributions from C&I and residential mortgage loans. Deposit growth was also solid for the quarter with a continued contribution from commercial accounts and new branches. Importantly, asset quality improved significantly from an already strong base, with notable reductions in current size and non-accrual loans. This progress is a testament to our focused and proactive portfolio management through vigilant and prompt action.
Speaker Change: With that I would now like to turn the call over to Bonnie Lee. Bonnie, please go ahead. Thank you been good afternoon, everyone. Thank you for joining us today to discuss our second quarter 2025 results. I am pleased with teams consistent execution, this quarter building on our progress in the previous quarter for a solid first, half of the year.
Speaker Change: We delivered further margin expansion. And drove, growth in our loan, portfolio with a healthy contributions from cni and Residential Mortgage Loans.
Speaker Change: Mythically from already strong base with a notable, reductions in criticized and non crude loans.
Bonita Lee: Now, let me review some key highlights of the. Net income for the first quarter was $15.1 million or $0.50 per diluted share compared to $17.7 million and $0.58 respectively in the first quarter. The decline in net income was primarily due to an increase in credit loss expense. Our return on average assets was 0.79 percent and return on average equity was 7.8 percent. Pre-provisioned net revenues grew 3.7% or $1 million, showing the strength of our core business. Once again, we expanded net interest margin, increasing the five basis points to 3.07%, primarily driven by lower funding couples.
Speaker Change: This progress is a testament to our focus and proactive portfolio management through Vigilant and prompt actions.
Speaker Change: Now, let me review some key highlights of the quarter, net income. For the first quarter was a 15.1 million or 50 cents per diluted, share compared to 17.7 million and 58 cents respectively in the first quarter.
Speaker Change: The decline in net income was primarily due to an increase in credit loss expense.
our return on average assets was 0.79% and return on average Equity was a 7.48%
Speaker Change: 3 per provision, net revenues grew 3.7% or 1 million dollars showing the strength of our Core Business.
Bonita Lee: As I just mentioned, asset quality is excellent, improved significantly from the first quarter due to our proactive portfolio management action. Net charge-ups for the second quarter were considerably higher than the first quarter, reflecting the $8.6 million charge-up from the $20 million non-accrual syndicated commercial real estate office loan we identified last quarter. While disappointing, we believe this action brings the matter closer to resolution and is not reflective of any systematic issue. Total loans increased $6.31 billion, 0.4% on a lean quarter basis, or 1.6% annualized, with a higher CNI and residential mortgage loan production during the quarter.
Speaker Change: Once again, we've spent a net interest margin increasing by 5 basis points to 3.07% primarily driven by lower funding costs.
As I just mentioned, as a quality is excellent, improved significantly from the first quarter due to our proactive, portfolio management actions.
Speaker Change: net charge ups for the second quarter were considerably higher than the first quarter reflecting the 8.6 million charge up on the 20,000 non across indicated commercial real estate office loan, we identified last quarter,
Speaker Change: While disappointing, we believe this action brings the matter closer to resolution and is not reflective of any systemic issues.
Bonita Lee: Deposits increased by 1.7% in the second quarter, driven by new commercial accounts and meaningful contribution from our new branch. This growth underscores our ability to continually forge new customer relationships while strengthening our long-standing Non-interest bearing demand deposits have increased by over 7% from the second quarter of 2024 and continue to represent a noteworthy percentage of total deposits at 31.3%. Non-interest income increased 4.5%, primarily reflecting the success of our SBA effort. We continue to maintain discipline control over our operating expenses, holding our efficiency ratio constant at 55.7% compared to the prior quarter. During the second quarter, we also expanded our commercial banking capabilities by successfully recruiting talented new bankers in both CNI and SBA lending to support growth in these key asset classes.
Speaker Change: total loans, increase 6.31 billion 0.4% and a ling quarter basis or 1.6% annualized with a higher cni and Residential Mortgage Loan Production, during the quarter,
Speaker Change: Deposits increased by 1.7% in the second quarter driven by new commercial accounts and meaningful contribution from our new branches.
Speaker Change: This growth underscores our ability to continually Forge new customer relationships while strengthening our longstanding ones.
Speaker Change: Non-interest-bearing demand deposits have increased by over 7% from the second quarter of 2024 and continued to represent a noteworthy percentage of the total deposits at 31.3%.
Speaker Change: No, interest income increased 4.5% primarily reflecting the success of our SBA efforts.
Speaker Change: We continue to maintain discipline control over our operating expenses. Holding our efficiency ratio constant at 55.7% compared to the prior quarter.
Speaker Change: During the second quarter, we also expanded our Commercial Banking capabilities by successfully. Recruiting talented, new Bankers, in both cni and SBA lending to support growth in these key asset classes.
Bonita Lee: Given the strength of our loan pipeline, we are increasing our quarterly SBA production target to $45 to $50 million from $40 million to $45 million for the second half of 2025.
Speaker Change: Given the strength of our loan pipeline. We are increasing our quarterly, SBA production Target to 45 to 50 million from 40 million to 45 million for the second half of 2025.
Bonita Lee: Turning now to our Corporate Career Initiative. Although the economic outlook remains dynamic, we continue to add new relationships with the Korean manufacturers through our new branch in the Metro-Atlanta area, where many Korean companies have U.S. manufacturing presence. We anticipate new and old production from them in the second half of 2020. Our USKC loan and deposit portfolios remain steady in the quarter, with both portfolios in the low to mid-teens as a percentage of total loans and deposits. While the current economic environment is evolving, we remain optimistic about the long-term growth potential of our USKC initiative. That said, many of our USKC customers are taking a wait and see approach as they look for greater clarity around tariffs and their potential impact on the broader economy.
Speaker Change: Turning now to our corporate career initiative.
Although the economic Outlook remains Dynamic, we continue to add new relationships with the Korean manufacturers, through our new branch, in the Metro Atlanta area, where many Korean companies have us manufacturing presence.
Speaker Change: We anticipate new dome production from them in the second half of the 2025.
Speaker Change: Are you guys learning departed portfolios remain steady in the quarter with a both portfolios in the load to meetings as a percentage of total loans and deposits?
Speaker Change: While the current economic environment is evolving, we remain optimistic about the long-term growth potential of our us, Casey initiative.
Speaker Change: That's that many of our us. Casey customers are taking a wait and see approach as they look for greater Clarity around tariffs and their potential impact on the broader economy.
Bonita Lee: Looking ahead, we believe Hanmi is well-positioned for growth as we execute on our key strategic initiatives and priorities, which include driving loan growth in the low-to-mid single-digit range with a focus on expanding our SBA activities and our CNI portfolios, while reducing our exposure to CRE as a percentage of the overall portfolio. Building on the meaningful improvement in our CNI and SBA loan pipelines as our customers continue to adapt to the current economic environment. leveraging our strong liquidity position and maintaining robust credit metrics which support our standing as a well-capitalized preserving our significantly improved asset quality through proactive management of our portfolio and disciplined credit administration.
Speaker Change: Looking ahead. We believe how many is well positioned for growth as we execute on our key strategic initiatives and priorities.
Speaker Change: Which include driving loan growth in the low to mid single-digit range with a focus on expanding our SBA activities and our cni portfolios while reducing our exposure to CRA as a percentage of the overall portfolio.
Speaker Change: Building on the meaningful improvement in our cni and SBA loan pipelines as our customers continue to adapt to the current economic environment.
Speaker Change: Leveraging, our strong liquidity position and maintaining robust credit metrics which support our standing as a, well, capitalized Bank.
Speaker Change: Preserving our significantly improved asset quality. Through ProActive Management of our portfolio and discipline credit Administration.
Bonita Lee: In summary, we delivered a solid operating performance in the first half of the year, fueling our momentum. We remain deeply engaged with our customers responding to their needs as they navigate the evolving market environment and its effect on their business.
Speaker Change: In summary, we delivered a solid operating performance in the first half of the Year, fueling our momentum.
Bonita Lee: When I look at our performance through the first half of 2025, I see the strength and execution of our growth strategy. Your loan production has increased 33% over the previous year. Pre-provisioned net revenues have increased 31% and net interest margin is 31 basis points higher. Our customer-centric approach enables our team to deliver exceptional service and innovative market-leading solutions. Coupled with our continued focus and disciplined expense management and strong asset quality, we are well-positioned to drive sustainable growth and deliver long-term value to our shareholders.
Speaker Change: We remain deeply engaged with our customers responding to their needs, as they navigate the evolving, markets environments and its effect on their businesses.
When I look at our performance, through the first half of a 2025, I see the strength and execution of our growth strategy.
Speaker Change: New Loan Production has increased 33% over the previous year.
Speaker Change: Free provision. Net revenues have increased 31% and net interest margin is 31 basis points, higher.
Speaker Change: Our customer Centric approach enables our team to deliver exceptional service and Innovative marketing Market leading Solutions.
Ben Brodkowitz: I'll now turn the call over to Anthony Kim, our Chief Banking Officer, to discuss second quarter loan production and deposit gathering in more detail. Thank you, Bonnie. And thank you for joining us today.
Speaker Change: Coupled with our continued focus and discipline expense management and strong asset quality. We are well, positioned to drive sustainable growth and deliver long-term value to our shareholders.
Anthony Kim: I'll now turn the call over to Anthony. Kim, Archie banking officer to discuss, second quarter Loom production and deposit gathering in more detail.
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. Second quarter loan production was $330 million, down $16 million, or 4.7% from the prior quarter, with a weighted average interest rate of 7.10% compared to 7.355% last quarter. The decrease in loan production was primarily due to a decrease in CRE, SBA, and equipment finance, partially offset by higher residential and C&I production.
Anthony Kim: I'll begin by providing additional details on our Loan Production.
Anthony Kim: Second quarter loan Productions was 330 million down 16 million or 4.7% from the prior quarter with a weighted average interest rate of 7.100% compared to 7.355% last quarter.
Anthony Kim: We continue to be disciplined and selective with our underwriting to ensure we only pursue opportunities that meet our high-quality standards. CRE production was $112 million, down 24% from the prior quarter, given our selective approach. The elevated interest rate environment continues to impact traditional and refinancing activity. We remain pleased with the quality of our CRE portfolio. It has a weighted average loan-to-value ratio of approximately 47% and a weighted average debt service coverage ratio of 2.2 times. SV&O production decreased 8 million from the prior quarter to 47 million, but still exceeded the high end of our quarterly target range.
The decrease in Loan Production was primarily due to a decrease in CRA SBA and Equipment Finance. Partially offset by higher residential and cni production.
Anthony Kim: We continue to be disciplined and selective with our underwriting to ensure. We only pursue opportunities that meet our high quality standards.
CRA production was 112 million down 24% from the prior quarter, given our selective approach.
Anthony Kim: The elevated interest rate environment continues to impact traditional and refinancing activity.
Anthony Kim: We remain pleased with the quality of our CRI portfolio and it has a weighted average loan value ratio of approximately 47% generated average debt service coverage ratio of 2.2 times.
Anthony Kim: The study production highlights the impact of our recent team hires and the growth we're driving among small businesses in our market. On a year-to-day basis, SBA production increased 20%. During the quarter, we sold approximately $35.4 million of HBA loans from our portfolio and recognized a gain of $2.2 million during the quarter. CNI production during the second quarter was $53 million, an increase of $11 million, or 26%. The increase was due primarily to adding new CNI talent and our efforts to further grow this portfolio. Total commitments for our commercial lines of credit remain healthy at over $1 billion in the second quarter of 3% or 12% on an annualized basis.
Anthony Kim: Production decreased 8 million from the prior quarter to 47 million but still exceeded the high end of our quarterly target range. The study production highlights the impact of our recent team hires and the growth. We're driving among small businesses in our markets.
Anthony Kim: around here today, basis, SP production, increased 20%
Anthony Kim: During the quarter, we sold approximately 35.4 million of its billions from our portfolio and recognized a gain of 2.2 million during the quarter.
CI production during the second quarter was 53 million and increase of 11 million or 26%.
The increase was to primarily to adding new cni talent and our efforts to further grow this portfolio.
Anthony Kim: Outstanding balances increased by 2% resulting in a utilization rate of 38% consistent with the prior quarter. Residential mortgage loan production was $84 million for the second quarter, up 52% from the previous quarter due primarily to increased activities of our correspondent lenders. Of note, most of our current lending opportunities continue to be in the purchase market as refinance activity remains subdued. residential mortgage loan represent approximately 16% of our total loan portfolio consistent with the previous quarter. During the second quarter, we did not finalize the sale of residential mortgages. However, this was completed at the beginning of the third quarter.
Anthony Kim: Total commitments for our commercial lines of credit remain healthy and over 1 billion in the second quarter of 3% or 12% on an annualized basis.
Anthony Kim: Outstanding balance is increased by 2% resulting. In a utilization rate of 38% consistent with the prior quarter.
Anthony Kim: Residential Mortgage Loan Production was 84 million for the second quarter of 52% from previous quarter to primarily to increased activities of our correspondent. Lenders of notes, most of our current lending opportunities, continue to be in the purchase Market as refinance, activity remains subdued.
Anthony Kim: Residential Mortgage Loan represent approximately 16% of our total loan portfolio, consistent with the previous quarter.
Anthony Kim: will continue to explore additional sales, contingent on market conditions.
Anthony Kim: During the second quarter, we did not finalize the sale of Residential Mortgages. However, this was completed at the beginning of the third quarter.
Anthony Kim: Although we are making good progress expanding our USKC relationships, many of these customers are temporarily on the sidelines, as they await greater clarity, given the current economic conditions. US case loan balances were $842 million, representing approximately 13% of total loan portfolio. Tornado Deposit In the second quarter, deposits were up 1.7% from the prior quarter driven by new commercial accounts and contributions from our new branches. Deposit production for USKC customers were down slightly from the previous quarter, but remained solid at 61 million. Our team is making good progress adding new relationships that we believe can grow over time.
We'll continue to explore additional sales contingent on market conditions.
Although, we are making good progress. Expanding our USC relationships, many of these customers are temporarily on the sidelines as they await greater Clarity. Given the current economic conditions,
Anthony Kim: Us case. Loan balances were 842 million representing approximately 13% of total loan portfolio.
Anthony Kim: At quarter end, Corporate Korea represented 14% of our total deposits and 16% of our demand deposit. The composition of our deposit base remains stable, which reflects the success of our relationship banking model. During the second quarter, our mix of non-interest bearing deposits remained healthy at 31% of total bench deposits.
Anthony Kim: In the second quarter deposits were up. 1.7% from the prior quarter driven by new commercial accounts and contributions from our new branches. Deposit production for us. Casey, customers were down slightly from the previous quarter, but remained solid at 61 million. Our team is making good progress. Adding new relationships that we believe can grow over time.
Anthony Kim: At quarter end, corporate career deposit represented, 14% of our total deposits and 16% of our demand deposits.
Anthony Kim: The competition of our deposit base remains stable, which reflects the success of our relationship banking model.
Anthony Kim: Asset quality improved significantly from the first quarter due to proactive portfolio management as criticized loans decreased 72%, reflecting $85 million in loan upgrades and $20 million in loan payments. Non-offerers also decreased 27% and loan delinquencies declined to 0.17% of total loans. Our credit quality remains strong, which we expect to continue given our vigilant credit administration practice.
During the second quarter, our mix of non-interest bearing deposit remaining, healthy at 31% of total Bank deposits.
Anthony Kim: As a quality improved significantly from the first quarter due to proactive, portfolio management. As criticized loans decreased 72% reflecting 85 million in loan, upgrades and 20 million in loan payments.
Ron Santarosa: And now I'll hand the call over to Ryan Santarosa, our Chief Financial Officer, for more details on our second quarter financial results. Thank you Anthony and good afternoon to all. As Bonnie noted, our pre-provisioned net revenues increased 3.7% quarter-over-quarter reflecting higher levels of net interest income and non-interest income and expanding net interest margin and well-controlled non-interest expenses. Looking to the components of pre-provisioned net revenues, we generated a 3.7% increase in net interest income, posting $57.1 million for the second quarter. net interest margin also improved by five basis points to 3.07%. The growth in net interest income was principally due to lower rates on interest bearing deposits, a higher volume of average loans, and one extra day in the quarter.
Not of growth. Also decreased 27% and Loan delinquencies declined to 0.17% of total loans. Our credit quality remains strong, which we expect to continue given our Vigilant credit Administration practices.
Anthony Kim: And now, I'll hand the call over to answer the Rosa, a Chief Financial Officer for more details on our second quarter Financial results.
Antero Rosa: Thank you, Anthony and good afternoon to all.
Speaker Change: As Bonnie noted, our pre-provision at revenues increased, 3.7% quarter over quarter reflecting higher levels of net interest income and non-interest income and expanding net, interest margin and well-controlled non-interest expenses.
Speaker Change: Looking to the components of pre-provision net revenues. We generated a 3.7% increase in net interest income, posting 57.1 million for the second quarter.
Speaker Change: Net. Interest margin also improved by 5 basis points to 3.07%
Ron Santarosa: The growth in net interest margin primarily reflected a nine basis point benefit from lower levels of borrowed funds offset by a six basis point reduction in the contribution from loans and interest bearing deposits. Notably, the average loan to deposit ratio for the second quarter was 95.4%, down from 97.4% for the first quarter. Non-interest income was $8.1 million, up 4.5% from the first quarter due to a higher level of SBA gains and income from a bank-owned life insurance policy. Gains on SBA loan sales were $2.2 million, up 8% from the first quarter, with a 10% higher volume of loans sold, totaling $35.4 million, while trade premiums declined 21 basis points to 7.61%.
Speaker Change: the growth in net. Interest income was principally due to lower rates on interest bearing deposits. A higher volume of average loans and 1, extra day in the quarter.
Speaker Change: The growth in net interest margin, primarily reflected a 9 basis point benefit from lower levels of borrowed funds offset by a 6 basis. Point reduction in the contribution from loans and interest bearing deposits.
Speaker Change: Notably the average loaner deposit ratio. For the second quarter was 95.4% down from 97.4% for the first quarter.
Ron Santarosa: As Anthony noted, we did not conclude the sale of a residential mortgage loans during the second quarter, and as a result, we had $41.9 million of residential mortgage loans classified as held for sale at quarter end. The sale of these loans closed early in the third quarter for a gain of $699,000. For the second quarter, non-interest expense was $36.3 million, up 3.9% from the first quarter. However, the efficiency ratio remained the same at 55.7%. salaries increased 5.2 percent, reflecting annual merit increases and promotions, along with, however, lower amounts of capitalized salaries. Since quarterly loan production was lower, capitalized salaries were also lower, comprising $400,000 of the quarter-over-quarter increase.
Non-interest income was 8.1. Million up 4.5% from the first quarter due to a higher level of SBA, gains, and income from a bank-owned life insurance policy gains. On SBA loan sales, were 2.2 million up 8% from the first quarter with a 10% higher volume of loans sold totaling 35.4 million. While trade premiums declined, 21 basis, points to 7.61%,
Speaker Change: As Anthony noted, we did not conclude the sale of a Residential Mortgage Loans during the second quarter. And as a result, we had 41.9 million of Residential Mortgage Loans classified as held for sale at quarter end.
Speaker Change: the sale of these loans closed early in the third quarter for a gain of 699,000,
Speaker Change: For the second quarter, non-interest expense, was 36.3 million up 3.9% from the first quarter. However, the efficiency ratio remained the same at 55.7%.
Speaker Change: Salaries increased 5.2%, reflecting, annual Merit, increases and promotions.
Speaker Change: Along with however, lower amounts of capitalized salaries.
Ron Santarosa: Advertising and promotion expenses were higher in the second quarter due to the opening of our Atlanta branch and other promotions. During the quarter, we also sold our sole OREO property for a gain of $596,000. Credit loss expense for the second quarter was $7.6 million and included a loan loss provision of $7.5 million and a provision for off-balance sheet items of $100,000. Notwithstanding the higher level of net charge-offs, the provision also reflects an increase in estimated loss rates for quantitative and qualitative considerations in the allowance and an increase in loans outstanding. Net loan charge-offs were $11.4 million.
Speaker Change: Since quarterly Loan Production was lower capitalized, salaries were also lower comprising, 400,000 of the quarter over quarter increase.
Speaker Change: Advertising and promotion expenses were higher. In the second quarter due to the opening of our Atlanta branch and other promotions.
Speaker Change: During the quarter, we also sold our. So are we owe property for a gain of 596,000?
Provision for off-balance sheet, items of $100,000.
Speaker Change: Notwithstanding the higher level of net, charge offs the provision. Also reflects an increase in estimated loss rates for quantitative and qualitative considerations in the allowance and an increase in loans outstanding.
Ron Santarosa: This included the $8.6 million loan charge-off on the non-accrual commercial real estate loan identified last quarter, for which there was a specific allowance of $6.2 million. As a percentage of average loans, net loan charge-offs annualized were 73 basis points for the second quarter, compared with 13 basis points for the first quarter. Excluding the large loan charge-offs, net loan charge-offs would have been 18 basis points for the second quarter. At the end of the second quarter, the allowance for credit losses stood at 1.06% of loans. As Bonnie and Anthony mentioned earlier, our asset quality metrics are strong with delinquent loans, criticized loans, and non-accrual loans, all less than 1% of total loans.
Net loan, charge offs were 11.4 million. This included the 8.6 million loan charged off on the non-accrual commercial. Real estate loan identified last quarter for which there was a specific allowance of 6.2 million.
Speaker Change: As a percentage of average loans, net loan, charge offs annualized or 73 basis points, for the second quarter, compared with 13 basis points for the first quarter, excluding the large loan, charged off, net loan, charge offs would have been 18 basis points for the second quarter.
Speaker Change: At the end of the second quarter, the allowance for credit losses, stood at 1.06% of loans.
Ron Santarosa: Our capital ratios also remain strong. During the second quarter, in addition to the $0.27 per share common dividend declared and paid, HMDI repurchased 70,000 shares of common stock at an average price of $23.26 for a total of $1.6 million. tangible common book value per share increased to $24.91 and the ratio of tangible common equity to tangible assets was 9.58%. Hanmi's Preliminary Common Tier 1 Capital Ratio was 10.63%, and the bank's Preliminary Total Capital Ratio was 14.39%.
Speaker Change: As Bonnie and Anthony mentioned earlier. Our asset quality metrics are strong with delinquent loans criticized loans, and not a cruel loans, all less than 1% of total loans.
Speaker Change: Our Capital ratios also remain strong.
Speaker Change: During the second quarter in addition to the 27 Cent per share common dividend declared and paid. How many repurchased 70,000 shares of common stock at an average price of 23.26 for a total of 1.6 million.
Speaker Change: Tangible common book value per share, increase to 24 dollars and 91 cents. And the ratio of tangible common Equity to tangible assets, was 9.58%.
Bonita Lee: With that, I will turn it back to Bonnie. Thank you, Ron. We are pleased with the progress we have achieved thus far in 2025 and remain encouraged by the long-term growth opportunities ahead. Although we are mindful of current economic conditions, our unwavering focus is on delivering bespoke relationship-driven banking services that facilitate our customers' objectives and create value for our shareholders. Our strategy is clear, to broaden our loan and deposit base, strengthen and establish new relationships within select deposit-rich markets, and drive growth in key regions. This study and discipline methodology has served us well through challenging economic conditions and we are confident in our ability to execute effectively and deliver sustained profitable growth.
Speaker Change: On these preliminary. Common Tier 1, Capital ratio was 10.63% and the bank's preliminary total Capital ratio was 14.39% with that. I will turn it back to Bonnie.
Bonnie Lee: Thank you, Ron.
Bonnie Lee: We are pleased with the progress. We have achieved thus far in 2025 and remain encouraged by the long-term growth opportunities ahead.
Bonnie Lee: Although, we are mindful of our current economic conditions, our unwavering focus is on delivering, bespoke relationship, driven banking services, that facilitate our customers objectives and create value for our shareholders.
Our strategy is clear to broaden our loan and deposit base strengthen and establish new relationships within select deposit, Rich markets and drive growth in key regions.
Bonita Lee: Thank you.
Bonnie Lee: This study and discipline. Methodology has served us. Well, through challenging economic conditions, and we are confident in our ability to execute effectively and deliver sustained profitable growth.
Operator: We'll now open the call to answer your questions. Operator, please open up the line. Certainly, we'll now be conducting a question and answer session. And 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. Once again, that's star one to be placed in the question queue.
Bonnie Lee: Thank you.
Speaker Change: We'll now open the call to answer your question. Operator, please open up the line.
Kelly Motta: Our first question today is coming from Kelly Motta from KBW.
Speaker Change: Certainly, we're not been conducting a question and answer session, and if you'd like to ask a question, please press star 1 on your telephone keypad. Our confirmation tone will indicate your line is in the question queue. Once again, that star 1 to be placed in the question queue.
Kelly Motta: Your line is now live. Hi, good afternoon, thanks for the question. Maybe starting off on loan growth, I think in your prepared remarks, you reiterated the loan to mid-single-digit range. Mid-single digits would imply a step up from the second half of the year.
Speaker Change: Our first question today is coming from Kelly Malta from KBW, your line is now live.
Hi, good afternoon. Thanks for the question. Um,
Kelly Motta: Just wondering if you could provide some color as to how the pipelines are holding up, the composition of growth ahead, and what would get you towards the upper end of that range.
Maybe starting off on loan growth. I think in your preparator marks, you reiterated the low to mid single digit range. Um, Mid single digits, would imply a step up from the second half of the year. Just wondering if you could provide some some color as to how the pipelines are holding up the composition of growth ahead. And um what would get you towards the upper end of that range? Thanks.
Kelly Motta: Sure, Kelly. So in general, our second half of in terms of production is usually higher than the first half of the of the year. And going into the third quarter, we already have a very strong pipeline of new loans, you know, much higher than the second quarter initial pipeline.
Kelly Motta: So with that, as long as the, you know, the payoffs remain within the range, as well as for the line credit, customers line utilization and fluctuations remain, you know, we could probably reach the mid single digit as we speak. got it. Okay, that's, that's helpful.
Shortly. So, in in general, um, our second half of uh, uh, in terms of production is usually uh uh, higher than the first half of the, uh, of the year and going into the, uh, third quarter. Uh, we already have, uh, very, um, uh, strong pipeline of, uh, a new loans. Um, you know, much higher than the, the second quarter initial, uh, pipeline. So, uh, with that as long as the, um, you know, the payoffs, uh, remained within the range, uh, as well as, uh, for the line, uh, credit, uh, uh, customers line. Neutralization and fluctuations remain, uh, you know, we we could, uh, probably, uh, reach the mid, uh, the single digit, um, as we speak,
Kelly Motta: Then on the margin, you know, you had some continued improvement in deposit costs, although the rate at which is slowing.
Kelly Motta: I believe in the past you provided a spot deposit rate.
Ron Santarosa: Ron, I'm wondering if you could provide the color on that as well as The cadence of time deposit repricing and if there's still an additional pickup from that it's if we get a rate cut here later.
For, um, meta on, on the margin. Um, you know, the you had some continued Improvement and deposit cost so the the rate at which is slowing. Um, I believe in the past, you provided a, a spot deposit rate Ron. I'm wondering if you could provide the color on that as well as um, the Cadence of time deposit repricing. And if there's still an additional pickup from that if um,
Speaker Change: you know, if if we we get a rate cut here,
Um, later this quarter.
Ron Santarosa: Sure, Kelly. So first, looking at interest bearing deposit costs. So for the quarter, Average interest bearing deposit costs were 3.64%. For the month of June, interest bearing deposit costs were 3.6%. So you can see there are about four basis points down. with respect to Time Deposits or CDs. They were 4.05% for the quarter. They were 4.01% for the month of June. So again, down about four basis points. When you look at our maturities that are coming in the third quarter, the average rate of those maturing CDs is 4.12 percent. So roughly 10, 11 basis point differential from where we are for the month of June.
Speaker Change: Sure, Kelly. Um, so first looking at interest bearing deposit costs
so, for the quarter,
Speaker Change: Uh, average interest bearing deposit costs were 3.64%.
Speaker Change: For the month of June.
Interest bearing deposit costs were 3.6%.
Speaker Change: So you can see, there are about 4 basis points down.
Speaker Change: With respect to.
Speaker Change: Time, deposits or CDs.
They were 4.05% for the quarter.
Speaker Change: They were 4.01% for the month of June. So again, down about 4 basis points.
Speaker Change: when you look at our maturities that are coming in the third quarter,
The average rate of those maturing CDs is 4.12%.
Ron Santarosa: So all of that said, I would continue to expect net interest margin to increase. However, the the rate of increase, I think, will continue to slow, given the proportion of time deposit to the total portfolio and again, expecting no other rate increases or decreases, I'm sorry, for the remainder of the year. I just think you'll continue to see kind of a diminishing benefit of net interest margin growth. got it. That's helpful.
So roughly 10 11 basis point differential from where we are um for the month of June.
Speaker Change: So, all of that said I would continue to expect net interest margin to increase.
Speaker Change: However, the the rate of increase, I think will continue to slow, um, given the proportion of time, deposits to the to the total portfolio. Um, and again expecting no other rate increases or decreases, I'm sorry for the remainder of the year. I just think you'll continue to see kind of a, a, a diminishing benefit of net interest margin growth.
Kelly Motta: And then then maybe last one for me on credit. You guys obviously had the one larger net charge off that impacted the provision this quarter. But stepping back from that, it seems like criticized assets are down meaningfully. And if I'm hearing you right, the commentary on credit is actually quite constructive as we look ahead. Um, can you provide some additional color as to what what gives you the confidence and kind of the drivers that brought criticized assets?
Speaker Change: Got it, that's helpful. Um and then then maybe last 1 for me on credit you guys obviously had um the 1 larger net charge off that um impacted the provision this quarter. But stepping back from that it seems like criticized assets are down meaningfully and and if I'm hearing you right the commentary on credit is actually quite constructive as we look ahead. Um can you provide some additional color as to to what what gives you the confidence and kind of the drivers that brought criticized assets? Um
Unknown Attendee: Unknown Attendee.
Unknown Attendee: as well as.
Speaker Change: Criticized levels down.
Unknown Attendee: What was this larger loan? An office credit? And I think you have Lord, a substantial portion of that matures over the next year. So I realize there's a lot in that question, but I'm just hoping to get more, more color all around on that. Thank. Sure. So, you know, within the quarter, we had a, you know, very good success in resolving the loans, particularly in the special mention category, you know, totaling over 100 million, close to 106 million. So mainly it's in two loans. The first loan, you know, the borrower really stepped up and increased the commitment, expressing the commitment by paying down the loan by 20 million.
Speaker Change: Um, as well as.
Speaker Change: What was this larger loan of an office credit and I think you have some large um a a substantial portion of that matures over the next year. So I realized there's a lot in that question but uh I'm just hoping to get more more color all around on that. Thank you.
Sure. Um, so you know, within the quarter, we had a, uh, you know, very good success in uh, resolving the loans, in the particular, in the special mentioned category. Um, you know, totally over 100 million. 100 is close to 1606 million. So the main leads in 2 Lanes, um, the, the first loan, um, you know, the borrower really, uh, uh, stepped up and, uh, uh, increase the commitment, uh, expressing the commitment by paying down the, uh, law.
Unknown Attendee: And the second loan, with the improved operating performance, and then partial pay down in the prior period, we were able to upgrade on these two loans. But not only in the special mention loan, but, you know, in the non-performing category, even in the past two, you know, between 30 and 89, all metrics have improved tremendously. And, you know, already very solid, very strong asset quality numbers. And, you know, one of the reasons that we repeatedly commented is our, you know, very proactive portfolio management, and then, you know, also slicing, dicing over the portfolio. And, you know, that has come to the result.
Unknown Attendee: And the loan that, you know, we Unknown Attendee, Matthew Erdner, Ahmad Hasan, Ben Brodkowitz, Hanmi Financial Corp Unknown Attendee, Matthew Erdner, Ahmad Hasan, Ben Brodkowitz, Hanmi Financial Corp So in the, during the second quarter, with an updated appraisal, we recorded the 8.6 million charge-off with a collateral shortfall. While disappointing, we believe this is the best course of action on a collateral-dependent loan. So, and that's why we provided the charge-off.
By 20 million, uh, and the second loan, um, the the with the improved operating, uh, you know, performance and then, um, partial pay down in the, uh, prior period. We are up. We were able to upgrade on these 2 loans, but not only on the special mention loan. But, um, you know, in the non-performing category, even in the, uh, passed to, you know, between 30 and 89, all metrics have, uh, uh, improved tremendously. Uh, and, you know, already very solid, uh, uh, very strong, uh, uh, uh, asset quality, uh numbers and uh, and you know, 1 of the reasons, is we repeatedly commented is that it is our, you know, very proactive, uh, um, portfolio management. And then, you know, also, slicing dicing over the portfolio. Um, and, and, you know, that has come to the, uh, result, um, and the loan that uh, you know, we, uh,
um,
Property and and the only syndicated office the CRA loan that we have.
Speaker Change: Um, and it has been paid as agreed with the, uh, satisfactory uh, debt service coverage. However, we need matured in early January, the lead lender and the sponsor have not come to the terms for a resolution.
Speaker Change: So in the during the second quarter, uh, with an updated appraisal, we recorded the um, 8.6 million charge up for the collateral shortfall.
Speaker Change: While disappointing, uh, we believe this is the best course of action on a collateral dependent loan. So, um, and that's why we provided the, uh, charge up.
Unknown Attendee: Yeah, Kelly, if I may add on the office portfolio, other than the one large credit that just Bonnie mentioned, we closely monitor all other loans of $550 million, approximately $200 million are maturing within this year. We looked at all the credits. There's no major credit issues or repricing risk that we're seeing right now. So other than those one large one-off loans, we don't see any other major credit issues at this time. Thank you so much for all the color there. Thank you. As a reminder, that star ones be placed in the question queue.
Speaker Change: Yeah, Kelly. Um if I may add on the office portfolio um other than the 1 large credit that just Bonnie mentioned uh we we closely monitor all other loans.
Uh, of uh, 550 million, uh, approximately 200 million are maturing, uh, within this year.
Speaker Change: Uh, we looked at all the credits, uh, there's no no, uh, major credit issues or or repricing risk that we're seeing right now. So, um, other than those, uh, those 1 large, uh, 1-off loans, uh, we don't see any, uh, their major credit issues at this time.
Speaker Change: Thank you so much for all the color there. I'll step back.
Gary Tanner: Our next question is coming from Gary Tanner from D.A. Davis, and your line is now live.
Speaker Change: Thank you. As a reminder that star 1's, be placed in the question queue. Our next question, is coming from Gary tenner from D. Davis, in your line is now live.
Ahmad Hasan: Hey guys, Ahmad Hasan on for Gary. So I've got a quick one on loan growth. So given the strong C&I production this quarter, should we expect C&I to drive loan growth in the back half of the year? Sorry if I missed this earlier. Yes, looking at the pipeline coming into third quarter, CNI pipeline, level of the CNI pipeline is much higher than that of second quarter. And it is our intention to target more CNI with a higher deposit opportunities. That's been our effort for the past year. So yes, CNI, along with our mortgage and SBA will drive the growth.
Martha Sandin: Hey guys, I'm Martha. Sandin for Gary.
Speaker Change: Uh, so I got a quick 1 on loan growth. So given the strong cni production, this quarter should be expect cni to drive loan, growth in the back, half of the Year, sorry, if I missed this earlier.
Speaker Change: Yeah. Um, looking at the pipeline, uh, coming into third quarter, uh, cni pipeline level of the center pipeline, is a much higher than that of second quarter. And, uh, it is Our intention to Target, uh, more cni with a higher deposit opportunities, uh, that's been, um, our effort for the past year. So, uh, yes cni, uh, along with our, uh, mortgage and SBA will drive the growth.
Ahmad Hasan: Yeah, in addition to that, you know, I think that in terms of just as I mentioned earlier, the production and the second quarter is generally high for us for the last couple of years. So we will see, we expect to see more increased activity. So including the CNI, it could possibly come from the CRE as well. But one noticeable area is that, you know, residential mortgage and SBA loans for the last couple of quarters have really contributed to the production and the net balance growth. Right, that makes sense.
Speaker Change: Yeah, in addition to that, you know, I think that in terms of just, as I mentioned earlier, uh, and the production and the second quarter is, is generally high for us for the last couple of, uh, years. So we, we will see, uh, we expect to see more increased activity, so, including the cni it could possibly from come from the, uh, CRA as well. Uh, but
1 noticeable. Uh, area is that, uh, you know, Residential Mortgage and SBA Loans for the last couple of quarters have uh uh really contribute to the um the production and the uh net balance growth.
Ahmad Hasan: And If I can follow up on a buyback question, I see that CET1 is north of 12% and buybacks picked up a tiny bit this quarter. Should we expect similar level of buybacks from you guys?
Speaker Change: Right, that makes sense. And
Speaker Change: if I can follow up on a buyback question,
Speaker Change: I see that the C1 is north of 12% and BuyBacks picked up a tiny bit. This quarter should be expect similar level of BuyBacks from you guys.
Ahmad Hasan: As I mentioned before, the decisions with respect to repurchases are framed each quarter by the Board of Directors. So what I offer to you is a backward look at the ranges in which we've made purchases, I think over the past year plus, from a low of $25,000 to a high of $75,000. So I would just point you to the past and to look at those ranges and that might help you with your questions. Sounds good.
Speaker Change: Um, as I mentioned before, the, the decisions with respect to repurchases are framed uh each quarter by the board of directors.
Speaker Change: So what I offer to you is is a is a backward, look at uh the ranges in which we've made purchases. I think.
Speaker Change: Over the past year plus from a low of 25,000 to a high of 75,000. Um so I would just point you to the the past and and to look at those ranges and that that might help you with your question.
Ahmad Hasan: And maybe last one for me. On the expenses, seems like you guys are holding the line there, the slight pickup in salaries. Should we expect expenses to remain relatively stable for the rest of the year?
Speaker Change: Sounds good and maybe last 1 for me, on the expenses, seems like, you guys are holding the line there with the slight pick up in salaries. Uh, should be expect, uh, expenses to remain.
Relatively stable for the rest of the year.
Ahmad Hasan: I believe so. When you look at our quarterly spend, you'll see some seasonal patterns. Fourth quarter typically has a higher spend in advertising and promotions. First quarter, you see the payroll tax effects. So if you just think about the different seasonalities that occur, that said, I think we will be within relatively the same range as we are currently.
Speaker Change: I believe so.
Speaker Change: When you look at our quarterly spend you'll see some seasonal patterns of fourth quarter typically has a higher, spend in advertising and promotions. Uh, first quarter, you see the payroll tax effects. So if you just think about the different seasonal that occur, um, that said, I think we will be, you know, within the the relatively the same range as we are, uh, currently
Ahmad Hasan: Thank you for taking my question. Thank you.
Thank you for taking my questions.
Speaker Change: Thank you.
Adam Kroll: Next question is coming from Adam Kroll from Papers Handler. Your line is now live. Hi, good afternoon. This is Adam Kroll on for Matthew Clark, and thanks for taking my question. So I guess to start on credit, I was just curious how much remaining exposure there is on the syndicated office loan. And could you just remind us how large the syndicated book is as a percent of the portfolio? Yeah, so on this particular subject, and we have about 11 million outstanding You know, the syndicate portfolio represents approximately 4%, about $250 million-ish. Got it. That's, that's helpful.
Speaker Change: Thank you. Next question, is coming from Adam, crawl from Piper Sandler. Your light is now live.
Hi, good afternoon. This is Adam crawl on for Matthew Clark. And thanks for taking my questions.
Speaker Change: So um, I guess to start on credit. I was just curious how much remaining exposure there is on the syndicated office loan and could you just remind us how large this indicated book is as a percent of the portfolio?
Yeah, so uh, on this particular, uh, subject on, we have about 11 million. Um outstanding
Speaker Change: And under Syndicate portfolio.
Speaker Change: Represents approximately 4% about 250 million is.
Adam Kroll: And then, obviously, the reserve dropped a bit this quarter. And I was just curious, do you feel comfortable where it is today? Or do you plan to build that up kind of towards the 1.1% range?
Got it. That's that's helpful. And then, um, obviously The, the Reserve dropped a bit this quarter, and I was just curious. Um, do you feel comfortable where it is today, or do you plan to build that up, kind of towards the 1.1% range?
Adam Kroll: We are very comfortable with the reserve at this current level. As we pointed out, there was growth attributed to not only an increase in loss factors, but also an increase in the outstanding portfolio. So looking out, we do anticipate the loan book to grow with that then would follow an increase in the provision and potentially the coverage ratio, depending on kind of the mix of the loan book. And then again, the outlook this past quarter, you know, there's still shades of declining economic performance, which could portend, you know, recessionary ideas. We need to see how the economic outlooks unfold as we go through the third and fourth quarter and where the sentiment might be lying with respect to those ideas.
Speaker Change: Where we are very comfortable with the reserve it as a current level. Um, as we pointed out, uh, there was growth, uh, attributed to, uh, not only an increase in loss factors, but also an increase in the outstanding portfolio.
Speaker Change: So looking out, we do anticipate the loan book to grow with that then would follow an increase in the uh provision uh and potentially the coverage ratio, uh, depending on kind of the mix of the loan book.
Speaker Change: uh, and then again, uh, the Outlook, um, this past quarter, you know, there's still shades of of declining economic performance, uh, which
Speaker Change: Could portend you know, recessionary ideas, we need to see how the economic outlooks unfold as we go through the third and fourth quarter, um, and and where the sentiment might be lying with respect to those ideas.
Adam Kroll: Got it. That's super helpful.
Adam Kroll: Last one for me is maybe just on the expense side. Do you have plans to add additional C&I and SBA bankers in the back half of the year? And is that kind of built into that stable expense guide? So all the major hires we have completed during the first half, so that in terms of a number New Relationship Managers or Marketing Managers, I think it'll be holding pretty steady.
Got it, that's that's super helpful. Um, last 1, for me is maybe just on the expense side. Um, do you have plans to add additional cni and SBA Bankers in the back half of the year? And is that kind of built into that stable expense guide?
So, all the um, major hires, uh, uh, we have completed, uh, during the first half. So, um, that the, in terms of an a number of uh, um, uh, uh, new relationship managers or marketing managers, uh, um, I think it would be holding pretty steady.
Adam Kroll: Got it.
Adam Kroll: Thanks for taking my questions.
Speaker Change: Got it. Uh, thanks for taking my questions.
Kelly Motta: Thank you. Next question is a follow up from Kelly Motta from KBW. Your line is now live. Hey, thanks for letting me jump back in. Just a minor cleanup question for Ron. A lot of the California banks have announced, you know, revisions in their tax rate expectations. in the California law.
Kelly Moto: Thank you. Next question, is a follow-up from Kelly Moto from KBW? Your line is now live.
Ron Santarosa: Just wondering, um, any, any thing notable to note, you know, on a go forward basis, or is this, um, call it 29%, a good approximation of the run rate. Yes, Kelly. So we, fortunately, or unfortunately, are largely based in California. And so the change in the apportionment is just not as large for us as it might be for other institutions. That said, the effective tax rate for the six months was 29 and a quarter percent. So an effective tax rate of probably about 29 and a half-ish is probably indicative of how the year might turn out.
Hey thanks for letting me jump back in. Um just uh a minor cleanup question um for Ron. Um a lot of the California banks have announced, you know, um, revisions in their tax rate, expectations with the change in the California law just wondering, um, any any notable to note, you know, on a go forward basis or is this? Um, if you call it 29%, aah a good a good approximation of of the Run rate ahead.
Kelly Moto: Yes. Kelly. So we, um, fortunately or unfortunately are largely based in California. Um, and so, the, the change in the portion, uh, is just not as large for us as it might be for other institutions.
Kelly Moto: That said the effective tax rate for the 6 months.
Kelly Moto: was 29 and a quarter, uh, percent
Kelly Moto: So uh, an effective tax rate of probably about 29.5%.
Ron Santarosa: We have a bit more discrete items in the first half of the year than we do in the second half of the year. And so the effective tax rate tends to drift up as we complete the year. Got it. That's that's helpful.
Kelly Moto: Uh is probably indicative of how the year might uh turn out. We have a bit more discreet items in the first half of the year than we do in the second half of the year. And so the the the the effective tax rate tends to to drift up um, as we complete the year.
Kelly Moto: Got it. Um,
Kelly Motta: Last question for me on occupancy on the occupancy line. I kind of expected that to tick up related to expansionary efforts.
Ron Santarosa: This 4.3 million a good go forward run rate or is there anything to build in as you kind of like add have added there? So in terms of expansion, I would imagine you're speaking to people and for people we have existing infrastructure that will accommodate any additional seats. So there's no, Unknown Attendee, Matthew Erdner, Ahmad Hasan, Ben Brodkowitz, Hanmi Financial Corp.
related to expansionary, efforts is
Kelly Moto: 4 4.3 million, a good go forward, run rate, or is there anything to build in as you kind of like, add have added, their
Kelly Moto: So in terms of expansion, I I would imagine you're speaking to people and for people we have existing infrastructure that will accommodate any additional seats.
Kelly Moto: So there's no, no, no.
Kelly Moto: Expense push because of that idea, with respect to the branch footprint, as we've mentioned in the past.
Ron Santarosa: how we are situated, and we will make decisions on Consolidation on relocation on new markets and so that will continue but if you look backwards I don't think that event or that idea manifested in any large increment or decrement to our spend we kind of try to create headroom fill in headroom you know trying to keep things about the same but for inflation as best we can got it. must have thought you had expanded more recently than you have. Appreciate it. Thank you.
Kelly Moto: We annually. Take a look at how we are situated and we will make decisions on
Kelly Moto: uh consolidation on relocation on new markets and so that will continue. But if you look backwards, I don't think that event or that idea manifested in any large.
Kelly Moto: Increment or decrement to our spend. We kind of
Kelly Moto: Try to create Headroom fill and Headroom you know, trying to keep things about the same. But for inflation as best we can
Kelly Moto: Got it. Um, thanks for the clarification. I, I must have thought you had expanded more recently than you have appreciate it.
Unknown Attendee: We've reached the end of our question and answer session.
Ben Brodkowitz: I'd like to turn the floor back over for further closing comments. Thank you for participating in today's call. We value your interest in Hanmi and look forward to keeping you informed about our progress throughout the year. Thank you.
Kelly Moto: Thank you. We appreciate our question and answer session. I'd like to turn the floor back over for any further. Closing comments.
Kelly Moto: Thank you for participating in today's call. We value your interest in how many, and look forward to keeping you, informed of our our progress throughout the year. Thank you.
Operator: That does conclude today's teleconference. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.
Kelly Moto: Thank you that does conclude today's teleconference. Let me just connect your line at this time and have a wonderful day. We thank you for your participation today.