Hanmi Financial Q4 2025 Hanmi Financial Corp Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Hanmi Financial Corp Earnings Call
Speaker #1: Ladies and gentlemen, welcome to HANMI Financial Corporation's fourth quarter and full year 2025 conference call. As a reminder, today's call is being recorded for replay purposes.
Operator: Ladies and gentlemen, welcome to Hanmi Financial Corporation's Fourth Quarter and Full Year 2025 Conference Call. As a reminder, today's call is being recorded for replay purposes. All participants are in a listen-only mode, and a question-and-answer session will follow the formal presentation. If anyone requires operator assistance, please press star zero on your telephone keypad. I would now like to turn the call over to Ben Brodkowitz, Investor Relations for the company. Please go ahead.
Speaker #1: All participants are in listen-only mode, and the question-and-answer session will follow the formal presentation. If anyone requires operator assistance, please press star zero on your telephone keypad.
Speaker #1: I would now like to turn the call over to Ben Brodkowitz, Investor Relations for the company. Please go ahead.
Speaker #1: ahead. Thank you,
Ben Brodkowitz: Thank you, operator, and thank you all for joining us today to discuss Hanmi's fourth quarter and full year 2025 results. This afternoon, Hanmi issued its earnings release and supplemental slide presentation to accompany today's call. Both documents are available in the IR section of the company's website at hanmi.com. I'm here today with Bonnie Lee, President and Chief Executive Officer of Hanmi Financial Corporation, Anthony Kim, Chief Banking Officer, and Ron Santarosa, 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. Before we begin, I would like to remind you that today's comments may include forward-looking statements under the federal securities laws.
Ben Brodkowitz: Thank you, operator, and thank you all for joining us today to discuss Hanmi's fourth quarter and full year 2025 results. This afternoon, Hanmi issued its earnings release and supplemental slide presentation to accompany today's call. Both documents are available in the IR section of the company's website at hanmi.com. I'm here today with Bonnie Lee, President and Chief Executive Officer of Hanmi Financial Corporation, Anthony Kim, Chief Banking Officer, and Ron Santarosa, Chief Financial Officer.
Speaker #2: Operator: And thank you all for joining us today to discuss HANMI's fourth quarter and full year 2025 results. This afternoon, HANMI issued its earnings release and supplemental slide presentation to accompany today's call.
Speaker #2: Both documents are available in the IR section of the company's website at hanmi.com. I'm here today with Bonita Lee, President and Chief Executive Officer of Hanmi Financial Corporation.
Speaker #2: Anthony Lee, chief banking officer; Imran Santarosa, chief financial officer. Bonita 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 Bonita will provide closing comments before we open the call up for your questions. I want to remind you that today's comments may...
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. Before we begin, I would like to remind you that today's comments may include forward-looking statements under the federal securities laws.
Speaker #2: Before we begin, I would like to 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.
Ben Brodkowitz: 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 uncertainties. A 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-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 SEC filings. With that, I would now like to turn the call over to Bonnie Lee. Bonnie, please go ahead.
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 uncertainties. A 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-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 SEC filings. With that, I would now like to turn the call over to Bonnie Lee. Bonnie, please go ahead.
Speaker #2: Our actual results may differ materially from those contemplated by our forward-looking statements, which involve risks and uncertainties. A 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-Q.
Speaker #2: 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 SEC filings.
Speaker #2: With that, I would now like to turn the call over to Bonita Lee. Bonita, please go ahead.
Speaker #3: Thank you, Ben. Good afternoon, everyone. Thank you for joining us today to discuss our fourth quarter and full year 2025 results. Our teams delivered a solid performance in the fourth quarter, capping a strong year of growth for Hanmi.
Bonita Lee: Thank you, Ben. Good afternoon, everyone. Thank you for joining us today to discuss our fourth quarter and full year 2025 results. Our teams delivered a solid performance in the fourth quarter, capping a strong year of growth for Hanmi. We believe we executed well on our priorities and advanced key initiatives we laid out at the start of the year. Specifically, we further enhanced the diversification of our loan portfolio and achieved mid-single-digit loan growth guidance. We made investments in our banking teams, which led to a significant increase in loan production. We managed the deposit cost and generated net interest margin expansion throughout 2025. Our non-interest-bearing deposits continued to represent 30% of total deposits, a tribute to the stability of our customer base. At the same time, we maintained disciplined expense management and upheld a strong credit quality across the portfolio.
Bonnie Lee: Thank you, Ben. Good afternoon, everyone. Thank you for joining us today to discuss our fourth quarter and full year 2025 results. Our teams delivered a solid performance in the fourth quarter, capping a strong year of growth for Hanmi. We believe we executed well on our priorities and advanced key initiatives we laid out at the start of the year. Specifically, we further enhanced the diversification of our loan portfolio and achieved mid-single-digit loan growth guidance.
Speaker #3: We believe we executed well on our priorities and advanced key initiatives we laid out at the start of the year. Specifically, we further enhanced the diversification of our loan portfolio and achieved mid-single-digit loan growth guidance.
Speaker #3: We made investments in our banking teams, which led to a significant increase in loan production. We managed the deposit cost and generated net interest margin expansion throughout 2025.
We made investments in our banking teams, which led to a significant increase in loan production. We managed the deposit cost and generated net interest margin expansion throughout 2025. Our non-interest-bearing deposits continued to represent 30% of total deposits, a tribute to the stability of our customer base. At the same time, we maintained disciplined expense management and upheld a strong credit quality across the portfolio.
Speaker #3: Deposits continue to represent our non-interest-bearing 30% of total deposits, a tribute to the stability of our customer base. At the same time, we maintained disciplined expense management and upheld strong credit quality across the portfolio.
Speaker #3: The strength and consistency of our operational performance underscore the effectiveness of our relationship-based banking model and reinforce our confidence in the strategy we are executing.
Bonita Lee: The strength and consistency of our operational performance underscore the effectiveness of our relationship-based banking model and reinforce our confidence in the strategy we are executing. Now, turning to some highlights for the fourth quarter. Net income for the fourth quarter was $21.2 million, or $0.70 per diluted share, down 3.7% due to lower non-interest income. However, net interest income increased to 2.9%, and net interest margin expanded by six basis points to 3.28% from the prior quarter, reflecting a lower cost of funds and higher average loan balances. Return on average assets and return on average equity during the quarter were 1.07% and 10.14%, respectively.
The strength and consistency of our operational performance underscore the effectiveness of our relationship-based banking model and reinforce our confidence in the strategy we are executing. Now, turning to some highlights for the fourth quarter. Net income for the fourth quarter was $21.2 million, or $0.70 per diluted share, down 3.7% due to lower non-interest income. However, net interest income increased to 2.9%, and net interest margin expanded by six basis points to 3.28% from the prior quarter, reflecting a lower cost of funds and higher average loan balances. Return on average assets and return on average equity during the quarter were 1.07% and 10.14%, respectively.
Speaker #3: Now, turning to some highlights for the fourth quarter, net income for the fourth quarter was $21.2 million, or $0.70 per diluted share, down 3.7% due to lower non-interest income.
Speaker #3: However, net interest income increased 2.9%, and net interest margin expanded by 6 basis points to 3.28% from the prior quarter, reflecting a lower cost of funds and higher average loan balances.
Speaker #3: Return on average assets and return on average equity during the quarter were 1.07% and 10.14% respectively. For the full year of 2025, netting come reached 76.1 million dollars or 2 dollars and 51 cents per diluted share, an increase of 22%, and we generated a return on average equity of 9.32%.
Bonita Lee: For the full year of 2025, net income reached $76.1 million or $2.51 per diluted share, an increase of 22%, and we generated a return on average equity of 9.32%. As previously guided, we generated loan growth of $312 million, or 5%. Net interest income increased to 16.5%, and our net interest margin expanded by 37 basis points through a combination of a lower interest-bearing deposit cost and a higher average loan balances. Non-interest income increased to 7.6%, primarily due to an increase from the gain on sale of SBA loans, driven by 39% increase in loans sold.
For the full year of 2025, net income reached $76.1 million or $2.51 per diluted share, an increase of 22%, and we generated a return on average equity of 9.32%. As previously guided, we generated loan growth of $312 million, or 5%. Net interest income increased to 16.5%, and our net interest margin expanded by 37 basis points through a combination of a lower interest-bearing deposit cost and a higher average loan balances. Non-interest income increased to 7.6%, primarily due to an increase from the gain on sale of SBA loans, driven by 39% increase in loans sold.
Speaker #3: As previously guided, we generated loan growth of $312 million, or 5%. Net interest income increased 16.5%, and our net interest margin expanded by 37 basis points through a combination of a lower interest-bearing deposit cost and higher average loan balances.
Speaker #3: Non-interest income increased 7.6%, primarily due to an increase from the gain and sale of SBA loans, driven by a 39% increase in loans sold. Pre-provision net revenue increased 31.5%, highlighting the reduction in funding costs and well-managed non-interest expenses throughout the year.
Bonita Lee: Pre-provision net revenue increased 31.5%, highlighting the reduction in funding costs and well-managed non-interest expenses throughout the year. As I just mentioned, we made a significant strides in growing and diversifying our loan portfolio and deposit franchise in 2025. Loan production for the full year increased 36%, driven by the investments we made in our banking team. Residential and C&I loan production was up 90% and 42%, respectively. As part of our ongoing portfolio diversification initiative, we expanded our C&I portfolio by 25% through a deliberate effort to grow this strategic vertical. At the same time, we reduced our commercial real estate exposure from 63.1% to 61.3% of our total loans. Deposits grew by 3.8% in 2025, and we maintained a healthy mix of a non-interest bearing deposits.
Pre-provision net revenue increased 31.5%, highlighting the reduction in funding costs and well-managed non-interest expenses throughout the year. As I just mentioned, we made a significant strides in growing and diversifying our loan portfolio and deposit franchise in 2025. Loan production for the full year increased 36%, driven by the investments we made in our banking team. Residential and C&I loan production was up 90% and 42%, respectively. As part of our ongoing portfolio diversification initiative, we expanded our C&I portfolio by 25% through a deliberate effort to grow this strategic vertical. At the same time, we reduced our commercial real estate exposure from 63.1% to 61.3% of our total loans. Deposits grew by 3.8% in 2025, and we maintained a healthy mix of a non-interest bearing deposits.
Speaker #3: As I just mentioned, we made a significant stride in growing and diversifying our loan portfolio and deposit franchise in 2025. Loan production for the full year increased 36%, driven by the investments we made in our banking team.
Speaker #3: Residential and C&I loan production was up 90% and 42%, respectively. As part of our ongoing portfolio diversification initiative, we expanded our C&I portfolio by 25% through a deliberate effort to grow the strategic vertical.
Speaker #3: At the same time, we reduced our commercial real estate exposure from 63.1% to 61.3% of total loans. Deposits grew by 3.8% in 2025, and we maintained a healthy mix of non-interest-bearing deposits.
Speaker #3: This consistent performance reflects the strength of the long-term relationships we have built with our customers, who depend on us to provide high-quality banking products and services.
Bonita Lee: This consistent performance reflects the strength of the long-term relationships we have built with our customers, who depend on us to provide high quality banking products and services. In today's highly competitive banking environment, our ability to cultivate enduring customer relationships remains a meaningful competitive advantage. As we diversify and grow our loan portfolio, we maintain our firm commitment to asset quality. Our asset quality remains excellent, reflecting our focus on high quality loans, disciplined underwriting, and prudent credit administration. Additionally, non-performing assets as a percentage of total assets and allowance for credit losses as a percentage of total loans both remain healthy at 0.26% and 1.07%, respectively. Our focus on disciplined expense management continues.
This consistent performance reflects the strength of the long-term relationships we have built with our customers, who depend on us to provide high quality banking products and services. In today's highly competitive banking environment, our ability to cultivate enduring customer relationships remains a meaningful competitive advantage. As we diversify and grow our loan portfolio, we maintain our firm commitment to asset quality. Our asset quality remains excellent, reflecting our focus on high quality loans, disciplined underwriting, and prudent credit administration. Additionally, non-performing assets as a percentage of total assets and allowance for credit losses as a percentage of total loans both remain healthy at 0.26% and 1.07%, respectively. Our focus on disciplined expense management continues.
Speaker #3: In today's highly competitive banking environment, our ability to cultivate enduring customer relationships remains a meaningful competitive advantage. As we diversify and grow our loan portfolio, we maintain our firm commitment to asset quality.
Speaker #3: Our asset quality remains excellent, reflecting our focus on high-quality loans, disciplined underwriting, and prudent credit administration. Additionally, non-performing assets as a percentage of total assets and allowance for credit losses as a percentage of total loans both remain healthy at 0.26% and 1.07%, respectively.
Speaker #3: Our focus on disciplined expense management continues. Although non-interest expense increased by 4.6% for the year, this was primarily driven by salaries and benefits related to merit increases and the investment we made in acquiring new banking talent.
Bonita Lee: Although non-interest expense increased by 4.6% for the year, this was primarily driven by salaries and benefits related to merit increases and the investment we made in acquiring new banking talent. Importantly, our efficiency ratio for the full year improved to 54.7% from 60.3% last year. Finally, with our strong financial and capital ratios, we are in a great position to advance our growth strategy and generate healthy returns for our shareholders. During 2025, we returned $42 million of capital to shareholders through the $9 million in share repurchases and $33 million in dividends. I'll now turn the call over to Anthony Kim, our Chief Banking Officer, to discuss our Q4 loan production and deposit details. Anthony?
Although non-interest expense increased by 4.6% for the year, this was primarily driven by salaries and benefits related to merit increases and the investment we made in acquiring new banking talent. Importantly, our efficiency ratio for the full year improved to 54.7% from 60.3% last year. Finally, with our strong financial and capital ratios, we are in a great position to advance our growth strategy and generate healthy returns for our shareholders. During 2025, we returned $42 million of capital to shareholders through the $9 million in share repurchases and $33 million in dividends. I'll now turn the call over to Anthony Kim, our Chief Banking Officer, to discuss our Q4 loan production and deposit details. Anthony?
Speaker #3: Importantly, our efficiency ratio for the full year improved to 54.7% from 60.3% last year. Finally, with our strong financial and capital ratios, we are in a great position to advance our growth returns for our strategy and generate healthy shareholders.
Speaker #3: During 2025, we returned $42 million of capital to shareholders through $9 million in share repurchases and $33 million in dividends.
Speaker #3: I'll now turn the call over to Anthony Kim, Archie Banking Officer, to discuss our fourth quarter loan production and deposit.
Speaker #3: details. Thank you,
Anthony Kim: Thank you, Bonnie, and thank you all for joining us today. I'll begin by providing additional details on our loan production. Q4 loan production was $375 million, down $196 million, or 34% from the prior quarter, with a weighted average interest rate of 6.90% compared to 6.91% last quarter. Although production was down from the high level we saw in Q3, originations for the full year were consistent across categories with continued strength in C&I, residential, and SBA loans. By maintaining disciplined underwriting practices, we ensure that we engage only in opportunities that meet our conservative underwriting standards. CRA production was $126 million, down 29% from the prior quarter, and we remain pleased with the quality of our CRA portfolio.
Anthony Kim: Thank you, Bonnie, and thank you all for joining us today. I'll begin by providing additional details on our loan production. Q4 loan production was $375 million, down $196 million, or 34% from the prior quarter, with a weighted average interest rate of 6.90% compared to 6.91% last quarter. Although production was down from the high level we saw in Q3, originations for the full year were consistent across categories with continued strength in C&I, residential, and SBA loans.
Speaker #2: Bonita. And thank you all for joining us today. I'll begin by providing additional details on our loan production. Fourth quarter loan production was $375 million, down $196 million, or 34%, from the prior quarter, with a weighted average interest rate of 6.90% compared to 6.91% last quarter.
Speaker #2: Production was down from the high level we saw in the third quarter. Originations for the full year were, although consistent across categories, loans. By maintaining continued strength in CNI, residential, and SBA, and with discipline in underwriting practices, we ensure that we engage only in opportunities that meet our conservative underwriting standards.
By maintaining disciplined underwriting practices, we ensure that we engage only in opportunities that meet our conservative underwriting standards. CRA production was $126 million, down 29% from the prior quarter, and we remain pleased with the quality of our CRA portfolio.
Speaker #2: CRA production was $126 million, down 29% from the prior quarter, and we remain pleased with the quality of our CRA portfolio. It has a weighted average loan-to-value ratio of approximately 47.4% and a weighted average debt service coverage ratio of 2.2 times.
Anthony Kim: It has a weighted average loan-to-value ratio of approximately 47.4% and a weighted average debt service coverage ratio of 2.2 times. SBA loan production is consistent with the prior quarter at approximately $44 million, reflecting the positive impact of our recent team additions and the momentum we're building among small businesses across our markets. During the quarter, we sold approximately $29.9 million of SBA loans and recognized a gain of $1.8 million. C&I production was $82 million during Q4, a decrease of $129 million, or 61%. While down for the quarter, we're pleased with our annual production in this strategic vertical, driven by the previously mentioned investments in our C&I teams, the momentum of our USKC initiative, and our strategic efforts to further expand the portfolio.
It has a weighted average loan-to-value ratio of approximately 47.4% and a weighted average debt service coverage ratio of 2.2 times. SBA loan production is consistent with the prior quarter at approximately $44 million, reflecting the positive impact of our recent team additions and the momentum we're building among small businesses across our markets. During the quarter, we sold approximately $29.9 million of SBA loans and recognized a gain of $1.8 million. C&I production was $82 million during Q4, a decrease of $129 million, or 61%. While down for the quarter, we're pleased with our annual production in this strategic vertical, driven by the previously mentioned investments in our C&I teams, the momentum of our USKC initiative, and our strategic efforts to further expand the portfolio.
Speaker #2: SBA loan production is consistent with the prior quarter, at approximately $44 million, reflecting the positive impact of our recent team additions and the momentum we're building among small businesses across our markets.
Speaker #2: During the quarter, we sold approximately $29.9 million of SBA loans and recognized a gain of $1.8 million. CNI production was $82 million during the fourth quarter, a decrease from $129 million, or 61%.
Speaker #2: While down for the quarter, we're pleased in this strategic vertical, driven by the previously mentioned investments in our CNI teams, the momentum of our USKC initiative, and our strategic efforts to further expand the portfolio.
Speaker #2: Total commitments for our commercial lines of credit remain healthy at $1.3 billion in the fourth quarter, with $520 million outstanding balances and a utilization rate of 40%, slightly higher compared to the prior quarter.
Anthony Kim: Total commitments for our commercial lines of credit remain healthy at $1.3 billion in Q4, with outstanding balances of $520 million. This resulted in a utilization rate of 40%, slightly higher compared to the prior quarter. Residential mortgage loan production was $70 million for Q4, down 32% from the previous quarter. Residential mortgage loan represent approximately 16% of our total loan portfolio, consistent with the previous quarter. We sold $33.5 million of residential mortgages during Q4, resulting in a gain on sale of $0.6 million. We'll continue to explore additional sales based on market conditions. USKC loan balance of $862 million represented approximately 13% of our total loan portfolio. Turning to deposits.
Total commitments for our commercial lines of credit remain healthy at $1.3 billion in Q4, with outstanding balances of $520 million. This resulted in a utilization rate of 40%, slightly higher compared to the prior quarter. Residential mortgage loan production was $70 million for Q4, down 32% from the previous quarter. Residential mortgage loan represent approximately 16% of our total loan portfolio, consistent with the previous quarter. We sold $33.5 million of residential mortgages during Q4, resulting in a gain on sale of $0.6 million. We'll continue to explore additional sales based on market conditions. USKC loan balance of $862 million represented approximately 13% of our total loan portfolio. Turning to deposits.
Speaker #2: Residential mortgage loan production was $70 million for the fourth quarter, down 32% from the previous quarter. Residential mortgage loans represent approximately 16% of our total loan portfolio, consistent with the percentage of residential mortgages during the fourth quarter.
Speaker #2: We sold $33.5 million for the quarter, resulting in a gain on sale of $0.6 million. We'll continue to explore additional sales based on market conditions.
Speaker #2: USKC loan balance of $862 million represented approximately 13% of our total loan portfolio. Turning to deposits, in the fourth quarter, deposits decreased 1.3% from the prior quarter, driven by a decline in demand deposits, money market, and savings, partially offset by an increase in time deposits.
Anthony Kim: In Q4, deposits decreased 1.3% from the prior quarter, driven by a decline in demand deposits, money market, and savings, partially offset by an increase in time deposits. Deposit balances for USKC customers decreased slightly by 1.5%. However, we maintained the $1 billion level from last quarter and grew deposits 24% year-over-year. At quarter end, corporate Korea deposits represented 15% of our total deposits and 16% of our demand deposits. Last year at this time, we opened a representative office in Seoul, South Korea, which marked a key milestone for Hanmi. Through this office, we are strengthening relationships and supporting our customers' ability to expand into the US market. This office complements our existing Korea desk in key cities across the US, and it was instrumental in helping us achieve $1 billion in USKC deposits.
In Q4, deposits decreased 1.3% from the prior quarter, driven by a decline in demand deposits, money market, and savings, partially offset by an increase in time deposits. Deposit balances for USKC customers decreased slightly by 1.5%. However, we maintained the $1 billion level from last quarter and grew deposits 24% year-over-year. At quarter end, corporate Korea deposits represented 15% of our total deposits and 16% of our demand deposits. Last year at this time, we opened a representative office in Seoul, South Korea, which marked a key milestone for Hanmi. Through this office, we are strengthening relationships and supporting our customers' ability to expand into the US market. This office complements our existing Korea desk in key cities across the US, and it was instrumental in helping us achieve $1 billion in USKC deposits.
Speaker #2: Deposit balances for USKC customers decreased slightly by 1.5%. However, we maintained the $1 billion level from last quarter and grew deposits 24% year over year.
Speaker #2: At quarter end, corporate credit deposits represented 15% of our total deposits and 16% of our demand deposits. Last year, at this time, we opened a representative office in South Korea, which marked a key milestone for Hanmi.
Speaker #2: We are strengthening relationships and, through this office, supporting our customers' ability to expand into the US market. This office complements our existing Korea Desk in key cities across the US, and it was instrumental in helping us achieve $1 billion in USKC deposits.
Speaker #2: The composition of our deposit base remains stable, underscoring the effectiveness of our relationship banking model. During the fourth quarter, non-interest-bearing deposits remained healthy at approximately 30% of total bank deposits.
Anthony Kim: The composition of our deposit base remains stable, underscoring the effectiveness of our relationship banking model. During the fourth quarter, non-interest-bearing deposits remained healthy at approximately 30% of the total bank deposits. Now, I'll hand the call over to Ron Santarosa, our Chief Financial Officer, for more details on our fourth quarter financial results.
The composition of our deposit base remains stable, underscoring the effectiveness of our relationship banking model. During the fourth quarter, non-interest-bearing deposits remained healthy at approximately 30% of the total bank deposits. Now, I'll hand the call over to Ron Santarosa, our Chief Financial Officer, for more details on our fourth quarter financial results.
Speaker #2: Now, I'll hand the call over to Romolo Santarosa, our Chief Financial Officer, for more detail on our fourth quarter financial results.
Speaker #3: Thank you, Anthony. For the fourth quarter, net interest income grew 2.9% from the previous quarter to $62.9 million, as the average rate on interest-bearing deposits declined 20 basis points, while the average yield on loans declined by only 9 basis points, and the average balance of loans increased 2.4%.
Romolo Santarosa: Thank you, Anthony. For the fourth quarter, net interest income grew 2.9% from the previous quarter to $62.9 million, as the average rate on interest-bearing deposits declined 20 basis points, while the average yield on loans declined by only 9 basis points, and the average balance of loans increased 2.4%. Average interest earning assets and average interest-bearing liabilities both increased 1%. However, average yields on interest earning assets declined 6 basis points, while average rates on interest-bearing liabilities declined 19 basis points. Hanmi reduced deposit interest rates twice during the fourth quarter after the Fed lowered the federal funds rate by 50 basis points. The average rate on interest-bearing deposits for the fourth quarter was 3.36%, and the average balance increased slightly to $4.71 billion.
Ron Santarosa: Thank you, Anthony. For the fourth quarter, net interest income grew 2.9% from the previous quarter to $62.9 million, as the average rate on interest-bearing deposits declined 20 basis points, while the average yield on loans declined by only 9 basis points, and the average balance of loans increased 2.4%. Average interest earning assets and average interest-bearing liabilities both increased 1%.
Speaker #3: Average interest-earning assets and average interest-bearing liabilities both increased 1%. However, average yields on interest-earning assets declined 6 basis points, while average rates on interest-bearing liabilities declined 19 basis points.
However, average yields on interest earning assets declined 6 basis points, while average rates on interest-bearing liabilities declined 19 basis points. Hanmi reduced deposit interest rates twice during the fourth quarter after the Fed lowered the federal funds rate by 50 basis points. The average rate on interest-bearing deposits for the fourth quarter was 3.36%, and the average balance increased slightly to $4.71 billion.
Speaker #3: Hanmi reduced deposit interest rates twice during the fourth quarter, after the Fed lowered the federal funds rate by 50 basis points. The average rate on interest-bearing deposits for the fourth quarter was 3.36%, and the average balance increased slightly to $4.71 billion.
Romolo Santarosa: Fourth quarter average loans increased 2.4% to $6.46 billion, with an average rate of 5.94%. Turning to the deposit portfolio, the average rate on non-maturity savings and money market accounts decreased 40 basis points to 2.82%, while the average balance increased marginally by 0.4%. Average time deposits also increased slightly by 0.5%, and the average rate fell by just 4 basis points to 3.93%. However, the composition of that portfolio shifted away from time deposits over the insurance limit. The weighted average maturity of the time deposit portfolio continues to be under 6 months. Moving to net interest margin, which was up 6 basis points to 3.28%, again, primarily due to lower rates on interest-bearing deposits.
Fourth quarter average loans increased 2.4% to $6.46 billion, with an average rate of 5.94%. Turning to the deposit portfolio, the average rate on non-maturity savings and money market accounts decreased 40 basis points to 2.82%, while the average balance increased marginally by 0.4%. Average time deposits also increased slightly by 0.5%, and the average rate fell by just 4 basis points to 3.93%. However, the composition of that portfolio shifted away from time deposits over the insurance limit. The weighted average maturity of the time deposit portfolio continues to be under 6 months. Moving to net interest margin, which was up 6 basis points to 3.28%, again, primarily due to lower rates on interest-bearing deposits.
Speaker #3: Average loans increased in the fourth quarter by 2.4% to $6.46 billion, with an average rate of 5.94%. Turning to the deposit portfolio, the average rate on non-maturity savings and money market accounts decreased 40 basis points to 2.82%, while the average balance increased marginally by 0.4%.
Speaker #3: Average time deposits also increased slightly by 0.5%, and the average rate fell by just 4 basis points to 3.93%. However, the composition of that portfolio shifted away from time deposits over the insurance limit.
Speaker #3: The weighted average maturity of the time deposit portfolio continues to be under six months. Moving to net interest, points to 3.28%, again, primarily due to lower rates on interest-bearing deposits.
Romolo Santarosa: The decrease in deposit rates benefited net interest margin by approximately 14 basis points. Changes in the average rate on borrowings and changes in the average yield on on other interest earning assets offset the benefit of falling deposit rates on net interest margin, while changes in loan yields had a nil effect. Hanmi's December deposit rate reductions continued to affect January's month-to-date average rates. Interest-bearing deposits are 15 basis points lower than in the Q4, and the month-to-date average rate on savings and money market accounts are 26 basis points lower. Non-interest income for the Q4 of $8.3 million was down from the Q3. The decline was primarily due to lower gains on sales of mortgage loans and the absence of bank-owned life insurance income.
The decrease in deposit rates benefited net interest margin by approximately 14 basis points. Changes in the average rate on borrowings and changes in the average yield on on other interest earning assets offset the benefit of falling deposit rates on net interest margin, while changes in loan yields had a nil effect. Hanmi's December deposit rate reductions continued to affect January's month-to-date average rates. Interest-bearing deposits are 15 basis points lower than in the Q4, and the month-to-date average rate on savings and money market accounts are 26 basis points lower. Non-interest income for the Q4 of $8.3 million was down from the Q3. The decline was primarily due to lower gains on sales of mortgage loans and the absence of bank-owned life insurance income.
Speaker #3: The decrease in deposit rates benefited net interest margin by approximately 14 basis points. Changes in the average rate on borrowings and changes in the average yield on other interest-earning assets offset the benefit of falling deposit rates on net interest margin, while changes in loan yields had a nil effect.
Speaker #3: Hanmi's December deposit rate reductions continue to affect January's month-to-date average rates. Interest-bearing deposits are 15 basis points lower than in the fourth quarter.
Speaker #3: And the month-to-date average rate on savings and money market accounts are 26 basis points lower. Non-interest income for the fourth quarter of $8.3 million was down from the third quarter.
Speaker #3: The decline was primarily due to lower gains on sales of mortgage loans and the absence of bank-owned life insurance income. The timing of mortgage loan sales was also a factor.
Speaker #3: As a reminder, uneven this year, with a delay in second quarter sales which closed early in the third quarter, resulting in no sales in Q2, two in Q3, and one in Q4.
Romolo Santarosa: As a reminder, the timing of mortgage loan sales was uneven this year, with a delay in Q2 sales, which closed early in Q3, resulting in no sales in Q2, two in Q3, and one in Q4. In addition, Q3 included death benefit payouts from our bank-owned life insurance portfolio, while there were no such proceeds in Q4. Non-interest expenses for Q4 were $39.1 million and increased $1.7 million from Q3 because of several items. First, other real estate-owned expenses increased $400,000, reflecting a full quarter of operating expenses for a hospitality property, which also included $300,000 of past due property taxes.
As a reminder, the timing of mortgage loan sales was uneven this year, with a delay in Q2 sales, which closed early in Q3, resulting in no sales in Q2, two in Q3, and one in Q4. In addition, Q3 included death benefit payouts from our bank-owned life insurance portfolio, while there were no such proceeds in Q4. Non-interest expenses for Q4 were $39.1 million and increased $1.7 million from Q3 because of several items. First, other real estate-owned expenses increased $400,000, reflecting a full quarter of operating expenses for a hospitality property, which also included $300,000 of past due property taxes.
Speaker #3: In addition, the third quarter included death benefit payouts from our bank-owned life insurance portfolio, while there were no such proceeds in the fourth quarter.
Speaker #3: Non-interest expenses for the fourth quarter were $39.1 million and increased $1.7 million from the third quarter because of several items. First, other real estate-owned expenses increased $400,000, reflecting a full quarter of operating expenses for a hospitality property, which also included $300,000 of past-due property taxes.
Speaker #3: Additionally, there was a $900,000 increase spread across seasonal advertising and promotion expenses, as well as higher data processing and professional fees from a higher level of activities.
Romolo Santarosa: Additionally, there was a $900,000 increase spread across seasonal advertising and promotion expenses, as well as higher data processing and professional fees from a higher level of activities. Lastly, salaries and benefits increased $300,000, largely because of a mix shift in personnel. Overall, the efficiency ratio remained favorable at 54.95%. Credit loss expense declined to $1.9 million, as asset quality continued to be favorable, with low net charge-offs to loans of 10 basis points, delinquent loans to loans at 0.27%, criticized loans to loans at 1.48%, and non-performing assets to total assets of 0.26%....
Additionally, there was a $900,000 increase spread across seasonal advertising and promotion expenses, as well as higher data processing and professional fees from a higher level of activities. Lastly, salaries and benefits increased $300,000, largely because of a mix shift in personnel. Overall, the efficiency ratio remained favorable at 54.95%. Credit loss expense declined to $1.9 million, as asset quality continued to be favorable, with low net charge-offs to loans of 10 basis points, delinquent loans to loans at 0.27%, criticized loans to loans at 1.48%, and non-performing assets to total assets of 0.26%....
Speaker #3: Lastly, salaries and benefits increased $300,000, largely because of a mixed shift in personnel. Overall, the efficiency ratio remained favorable at 54.95%. Credit loss expense declined to $1.9 million, as asset quality continued to be favorable, with low net charge-offs to loans of 10 basis points, and delinquent loans to loans at 0.27%.
Speaker #3: Criticized loans to loans at 1.48%, and non-performing assets to total assets of 0.26%. Hanmi's tangible common equity per share increased 2.5% to $26.27 per share, and the ratio of tangible common equity to tangible common assets was 9.99% at year-end.
Romolo Santarosa: Hanmi's tangible common equity per share increased 2.5% to $26.27 per share, and the ratio of tangible common equity to tangible common assets was 9.99% at year-end. Hanmi repurchased 73,600 shares during Q4 at an average price of $26.75. I will now turn it back to Bonnie.
Hanmi's tangible common equity per share increased 2.5% to $26.27 per share, and the ratio of tangible common equity to tangible common assets was 9.99% at year-end. Hanmi repurchased 73,600 shares during Q4 at an average price of $26.75. I will now turn it back to Bonnie.
Speaker #3: Hanmi repurchased 73,600 shares during the fourth quarter at an average price of $26.75. I will now turn it back to Bonnie.
Speaker #1: Thank you, Ron. Excuse me. I want to thank the entire Hanmi team for their exceptional efforts over the past year. Their dedication is essential to serving our customers and communities well.
Bonita Lee: Thank you, Ron. Excuse me. I want to thank the entire Hanmi team for their exceptional efforts over the past year. Their dedication is essential to our serving our customers and communities well. I would now like to outline some of our top priorities for 2026, which are firmly aligned with our long-term strategic vision. First, we expect to generate low to mid-single digit loan growth with a continued emphasis on further diversifying the portfolio. Second, we are focused on growing deposits to support loan growth while maintaining a stable, well-balanced funding mix. Our efforts will continue to focus on deepening existing customer relationships, attracting new accounts, and strengthening our core deposit franchise with a particular emphasis on non-interest bearing deposits. Third, we intend to sustain our commitment to disciplined expense management.
Bonnie Lee: Thank you, Ron. Excuse me. I want to thank the entire Hanmi team for their exceptional efforts over the past year. Their dedication is essential to our serving our customers and communities well. I would now like to outline some of our top priorities for 2026, which are firmly aligned with our long-term strategic vision.
Speaker #1: I would now like to outline some of our top priorities for 2026, which are firmly aligned with our long-term strategic vision. First, we expect to generate low- to mid-single-digit loan growth, with a continued emphasis on further diversifying the portfolio.
First, we expect to generate low to mid-single digit loan growth with a continued emphasis on further diversifying the portfolio. Second, we are focused on growing deposits to support loan growth while maintaining a stable, well-balanced funding mix. Our efforts will continue to focus on deepening existing customer relationships, attracting new accounts, and strengthening our core deposit franchise with a particular emphasis on non-interest bearing deposits. Third, we intend to sustain our commitment to disciplined expense management.
Speaker #1: Second, we are focused on growing deposits to support loan growth while maintaining a stable, well-balanced funding mix. Our efforts will continue to focus on deepening existing customer relationships, attracting new accounts, and strengthening our core deposit franchise, with a particular emphasis on non-interest-bearing deposits.
Speaker #1: Third, we intend to sustain our commitment to disciplined expense management while we are investing selectively in talent and technology to support our long-term growth.
Bonita Lee: While we are investing selectively in talent and technology to support our long-term growth, we remain focused on operating efficiently, prioritizing initiatives that drive productivity, and maintaining cost discipline across the organization. Finally, we plan to prudently manage credit to maintain strong asset quality. Conservative underwriting standards, active portfolio monitoring, and robust risk analysis remain foundational to how we operate and will continue to guide our decision-making as the economic environment evolves. In summary, we believe we entered 2026 in a strong position to build on our momentum and create meaningful value for shareholders. We expect healthy loan and deposit growth, ongoing NIM expansion, disciplined expense management, and sustained credit strengths to support consistent and durable performance. We are excited about the opportunities ahead and look forward to sharing our progress with you. Thank you. We'll now open the call for your questions.
While we are investing selectively in talent and technology to support our long-term growth, we remain focused on operating efficiently, prioritizing initiatives that drive productivity, and maintaining cost discipline across the organization. Finally, we plan to prudently manage credit to maintain strong asset quality. Conservative underwriting standards, active portfolio monitoring, and robust risk analysis remain foundational to how we operate and will continue to guide our decision-making as the economic environment evolves. In summary, we believe we entered 2026 in a strong position to build on our momentum and create meaningful value for shareholders. We expect healthy loan and deposit growth, ongoing NIM expansion, disciplined expense management, and sustained credit strengths to support consistent and durable performance. We are excited about the opportunities ahead and look forward to sharing our progress with you. Thank you. We'll now open the call for your questions.
Speaker #1: We remain focused on operating efficiently, prioritizing initiatives that are driving productivity, and maintaining cost discipline across the organization. Finally, we plan to prudently manage credit to maintain strong asset quality. Conservatively underwriting standards, active portfolio monitoring, and robust risk analysis remain foundational to how we operate and will continue to guide our decision-making as the economic environment evolves.
Speaker #1: In summary, we believe we entered 2026 in a strong position to build on our momentum and create meaningful value for shareholders. We expect healthy loan and deposit growth, ongoing expense management, and NIM expansion, with disciplined, sustained credit strength to support consistent and durable performance.
Speaker #1: We are excited about the opportunities ahead and look forward to sharing our progress with you. Thank you. We'll now open the call for your questions.
Speaker #1: Operator, please go ahead.
Bonita Lee: Operator, please go ahead.
Operator, please go ahead.
Speaker #2: Thank you. Ladies and gentlemen, if you would like to ask a question, please press star 1 on your telephone keypad, and a confirmation tone will indicate your line is in the question queue.
Operator: Thank you. Ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from the line of Matthew Clark with Piper Sandler. Please proceed.
Operator: Thank you. Ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from the line of Matthew Clark with Piper Sandler. Please proceed.
Speaker #2: You may press *2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker #2: And our first question comes from the line of Matthew Clark with Piper Sandler. Please.
Speaker #2: proceed. Hey, good
Matthew Clark: Hey, good afternoon, everyone. Thanks for the questions. Wanted to start with the hospitality credit that was downgraded to special mention. Can you just provide some color on what the situation is there and, and how you expect it to play out?
Matthew Clark: Hey, good afternoon, everyone. Thanks for the questions. Wanted to start with the hospitality credit that was downgraded to special mention. Can you just provide some color on what the situation is there and, and how you expect it to play out?
Speaker #3: Afternoon, everyone. Thanks for the questions. I wanted to start with the hospitality credit that was downgraded to special mention. Can you just provide some color on what the situation is there and how you expect it to play out?
Speaker #1: Sure. So, periodically, we proactively monitor all our significant-sized loans. As a part of our periodic review, we decided to place this particular loan in the special mention category.
Bonita Lee: Sure. So, you know, periodically we proactively, you know, monitor all our significant size loans. And as a part of our periodic review, you know, we decided to place this particular loan in Special Mention category. It is a seasoned loan with a very strong sponsor with high liquidity. And, however, the property is going through a Property Improvement Plan, PIP, in anticipation of all the activities that are expected in terms of a World Cup and then also for the Olympics in coming years. So the property is in Southern California. So we don't foresee any loss probabilities on this credit. As I said, it is a very seasoned credit.
Bonnie Lee: Sure. So, you know, periodically we proactively, you know, monitor all our significant size loans. And as a part of our periodic review, you know, we decided to place this particular loan in Special Mention category. It is a seasoned loan with a very strong sponsor with high liquidity.
Speaker #1: It is a seasoned loan, with a very strong sponsor, with high liquidity. And, however, the property is going through a property improvement plan, or PIP.
And, however, the property is going through a Property Improvement Plan, PIP, in anticipation of all the activities that are expected in terms of a World Cup and then also for the Olympics in coming years. So the property is in Southern California. So we don't foresee any loss probabilities on this credit. As I said, it is a very seasoned credit.
Speaker #1: In anticipation of all the activities that are expected, in terms of a World Cup and then also for the Olympics in coming years. So, the property is in Southern California.
Speaker #1: So we don't foresee any loss probabilities on this credit, as I said, as it's a very seasoned credit. But it is due to our proactive monitoring process that we've decided to place the loan on special mention.
Bonita Lee: But you know, it is due to our proactive monitoring process that we decide to place the loan on the Special Mention category.
But you know, it is due to our proactive monitoring process that we decide to place the loan on the Special Mention category.
Speaker #1: category. Okay.
Matthew Clark: Okay. And then, as it relates to your expense outlook for this year, any thoughts around the growth there and whether or not these OREO, you know, some of these OREO costs might continue, for a couple of quarters within that?
Matthew Clark: Okay. And then, as it relates to your expense outlook for this year, any thoughts around the growth there and whether or not these OREO, you know, some of these OREO costs might continue, for a couple of quarters within that?
Speaker #2: And then, as it relates to your expense outlook for this year, any thoughts around the growth there, and whether or not some of these OREO costs might continue for a couple of quarters?
Speaker #2: Within that?
Romolo Santarosa: No, with respect to OREO, again, the, you know, there was a, a, a bulge, particularly with respect to, past due taxes. So, one of the properties, is anticipated to sell. The other one, that'll take a little bit longer. So I, I think there will be continued expense, depending on how long it's gonna take for the sale to close. But I think the bulge we saw is probably, a bit more rearview mirror and not really indicative of the, the ongoing run rate.
Speaker #4: No, with respect to OREO, again, there was a bulge, particularly with respect to past-due taxes. So one of the properties is anticipated to sell.
Ron Santarosa: No, with respect to OREO, again, the, you know, there was a, a, a bulge, particularly with respect to, past due taxes. So, one of the properties, is anticipated to sell. The other one, that'll take a little bit longer. So I, I think there will be continued expense, depending on how long it's gonna take for the sale to close. But I think the bulge we saw is probably, a bit more rearview mirror and not really indicative of the, the ongoing run rate.
Speaker #4: The other one—that'll take a little bit longer. So, I think there will be continued expense depending on how long it's going to take for the sale to close.
Speaker #4: But I think the bulge we saw is probably a bit more rearview mirror and not really indicative of the ongoing run rate.
Speaker #2: Okay. And then for the year, you’re thinking mid-single-digit expense growth? Is that—
Matthew Clark: Okay. And then, you know, for the year, are you thinking mid-single digit expense growth? Is that fair?
Matthew Clark: Okay. And then, you know, for the year, are you thinking mid-single digit expense growth? Is that fair?
Speaker #2: fair? I think that's
Romolo Santarosa: I think that's fair, Matthew. You know, when we look back over the calendar year, which is always a little bit easier to perhaps measure, you know, we had about a 4.6% increase. The year prior, it was 3.5%. I did see, of course, healthcare is gonna run higher than anyone's expectation for a 3% kind of inflation. Service fees seem to run a little bit richer. So I think middle single digits, probably the right expectation over a 12-month scenario.
Ron Santarosa: I think that's fair, Matthew. You know, when we look back over the calendar year, which is always a little bit easier to perhaps measure, you know, we had about a 4.6% increase. The year prior, it was 3.5%. I did see, of course, healthcare is gonna run higher than anyone's expectation for a 3% kind of inflation. Service fees seem to run a little bit richer. So I think middle single digits, probably the right expectation over a 12-month scenario.
Speaker #4: Fair. Matthew, when we look back over the calendar year, which is always a little bit easier to perhaps measure, we had about a 4.6% increase the year prior.
Speaker #4: It was 3.5. I did see, of course, healthcare is going to run higher than anyone's expectation for a 3% kind of inflation. Service fees seem to run a little bit richer.
Speaker #4: So, I think middle single digits are probably the right expectation over a 12-month period.
Speaker #2: Okay. And then, just on the CD repricing schedule, can you remind us what you have maturing here in the first and second quarter, and the roll-off rates and new offering rates?
Matthew Clark: Okay. And then just on the CD repricing schedule, can you remind us what you have maturing here in the first and second quarter and the roll-off rates and new offering rates?
Matthew Clark: Okay. And then just on the CD repricing schedule, can you remind us what you have maturing here in the first and second quarter and the roll-off rates and new offering rates?
Speaker #4: Sure. It's the details on page 10 of your investor deck. So, a little over 900 million CDs are rolling off in the first half.
Anthony Kim: Sure. It's the details on the page 10 of your investor deck. So a little over $900 million CDs are rolling off in first half at 4.01%, and then followed by another little less than $900 million maturing in Q2 with a weighted average of 3.95. So essentially, approximately $1.8 billion is maturing at high threes and low fours in the first half of the year. And in Q4, we were able to retain about 80% of maturing $700 million of retail CD at around 3.66, and December retention pricing was a little less than 3.66, 3.57.
Anthony Kim: Sure. It's the details on the page 10 of your investor deck. So a little over $900 million CDs are rolling off in first half at 4.01%, and then followed by another little less than $900 million maturing in Q2 with a weighted average of 3.95. So essentially, approximately $1.8 billion is maturing at high threes and low fours in the first half of the year.
Speaker #4: At 4.01%. And then followed by another little less than $900 million maturing in the second quarter, with a weighted average of 3.95%. So essentially, approximately $1.8 billion is maturing at high 3s and low 4s in the first half of the year.
Speaker #4: And in the fourth quarter, we were able to reach about 80% of maturing $700 million of retail CDs at around 3.66%. And December retention pricing was a little less than 3.66%, at 3.57%.
And in Q4, we were able to retain about 80% of maturing $700 million of retail CD at around 3.66, and December retention pricing was a little less than 3.66, 3.57.
Speaker #4: So we're hoping to reprice maturing CDs in the first half of the year with anywhere between 3.5% to 3.7%-ish. And that'll benefit us to lower the deposit cost.
Anthony Kim: So we're hoping to reprice maturing CD in first half of the year with anywhere between 3.5 to 3.7-ish. And that'll benefit us to lower the deposit cost.
So we're hoping to reprice maturing CD in first half of the year with anywhere between 3.5 to 3.7-ish. And that'll benefit us to lower the deposit cost.
Speaker #2: Great. Sorry, I missed that. Last one from me, just on the buyback. You have a lot of capital. Why not get more aggressive on the buyback here?
Matthew Clark: Great, sorry, I missed that. Last one from me, just on the buyback. You have a lot of capital. Why not, why not get more aggressive on the buyback here?
Matthew Clark: Great, sorry, I missed that. Last one from me, just on the buyback. You have a lot of capital. Why not, why not get more aggressive on the buyback here?
Romolo Santarosa: Again, Matthew, the board evaluates the capital return each quarter. As you know, in the fourth quarter, relative to our previous share performance, we started to see share prices well above our tangible book. And so that was rewarding, but it also has a little bit of a minimizing effect. So we'll address that again here in 2026. And I think we'll be able to, you know, continue share repurchases. The absolute dollar amounts, I think, again, will be a facts and circumstances, market condition type of idea.
Speaker #4: Again, Matthew, the board evaluates the capital return each quarter. As you know, in the fourth quarter, relative to our previous share performance, we started to see share prices well above our tangible book.
Ron Santarosa: Again, Matthew, the board evaluates the capital return each quarter. As you know, in the fourth quarter, relative to our previous share performance, we started to see share prices well above our tangible book. And so that was rewarding, but it also has a little bit of a minimizing effect. So we'll address that again here in 2026. And I think we'll be able to, you know, continue share repurchases. The absolute dollar amounts, I think, again, will be a facts and circumstances, market condition type of idea.
Speaker #4: And so that was rewarding. But it also has a little bit of a minimizing effect. So we'll address that again here in 2026. And I think we'll be able to continue share repurchases.
Speaker #4: The absolute dollar amounts, I think, again, will be a facts-and-circumstances, market-condition type of idea.
Speaker #2: Okay. Great. Thank you.
Matthew Clark: Okay, great. Thank you.
Matthew Clark: Okay, great. Thank you.
Speaker #1: Thank ank you.
Operator: The next question comes from the line of Gary Tenner with D.A. Davidson. Please proceed.
Operator: The next question comes from the line of Gary Tenner with D.A. Davidson. Please proceed.
Speaker #2: The next question comes from the line of Gary Tenner with D.A. Davidson. Please proceed.
Speaker #5: Thanks, Ron. I appreciate the call you gave on the January deposit costs. And a moment ago, there was some discussion about the repricing of the CD book.
Gary Tenner: Thanks. Ron, I appreciate the color you gave on the January deposit costs. A moment ago, there was some discussion about the repricing of the CD book. I guess I'm a little surprised that there's not been a little more pricing power in the CD book, kind of in this more recent part of the cutting cycle. You know, I just wonder if you could comment on competition in your, you know, within your customer base on that side of things, because the pricing power on the money market side, obviously, is very strong.
Gary Tenner: Thanks. Ron, I appreciate the color you gave on the January deposit costs. A moment ago, there was some discussion about the repricing of the CD book. I guess I'm a little surprised that there's not been a little more pricing power in the CD book, kind of in this more recent part of the cutting cycle. You know, I just wonder if you could comment on competition in your, you know, within your customer base on that side of things, because the pricing power on the money market side, obviously, is very strong.
Speaker #5: I guess I'm a little surprised that there's not been a little more pricing power in the CD book, kind of in this more recent part of the cutting cycle.
Speaker #5: So I just wonder if you could comment on competition within your pricing power on the money market customer base, on that side of things.
Speaker #5: Because the side obviously is very
Speaker #5: strong. Yes.
Romolo Santarosa: Yes, I'll let, I'll let Anthony talk a little bit more about the market, but I also watch wholesale funding, particularly in the brokered market. And, notwithstanding the rate reductions that occurred in Q4, brokered money really hasn't moved much. I can still see 3.70, 3.80 for, you know, 12 months money and a little bit higher for shorter term money. So, that marketplace has not responded as you might think, relative to the actions on the Fed funds. And I would just also observe, before turning it over to Anthony, we're still in an inverted curve on the very short end.
Ron Santarosa: Yes, I'll let, I'll let Anthony talk a little bit more about the market, but I also watch wholesale funding, particularly in the brokered market. And, notwithstanding the rate reductions that occurred in Q4, brokered money really hasn't moved much. I can still see 3.70, 3.80 for, you know, 12 months money and a little bit higher for shorter term money.
Speaker #4: I'll let Anthony talk a little bit more about the market. But I also watch wholesale funding, particularly in the broker market. And, notwithstanding the rate reductions that occurred in the fourth quarter, brokered money really hasn't moved much.
Speaker #4: I can still see 3.70, 3.80 for 12-month money and a little bit higher for shorter-term money. So that marketplace has not responded as you might think relative to the actions on the Fed funds.
So, that marketplace has not responded as you might think, relative to the actions on the Fed funds. And I would just also observe, before turning it over to Anthony, we're still in an inverted curve on the very short end.
Speaker #4: And I would just also observe, before turning it over to Anthony, we're still in an inverted curve on the very short end. It really starts to look like a curve when you get, let's just say, two years.
Romolo Santarosa: You know, it really starts to look like a curve when you get, let's just say two years, it could move in a little bit from the inside, but on the very short end, it's still very inverted. So I'll stop with that. Anthony, competition?
You know, it really starts to look like a curve when you get, let's just say two years, it could move in a little bit from the inside, but on the very short end, it's still very inverted. So I'll stop with that. Anthony, competition?
Speaker #4: It could move in a little bit from the inside. But on the very short end, it's still very inverted. So I'll stop with that, Anthony.
Speaker #4: competition. Yeah.
Anthony Kim: Yeah. Obviously, in a rate-declining rate environment, our customers wanted to lock in their fund in the CD with a higher rate. So competition is getting intense. As you can see, I mean, our CD retention rate has been around 90%, and we chose not to retain some of the CDs at irrational rates. So our CD retention rate went down to 80%. And some of our competitors still offering high threes, high threes, low fours.
Anthony Kim: Yeah. Obviously, in a rate-declining rate environment, our customers wanted to lock in their fund in the CD with a higher rate. So competition is getting intense. As you can see, I mean, our CD retention rate has been around 90%, and we chose not to retain some of the CDs at irrational rates. So our CD retention rate went down to 80%. And some of our competitors still offering high threes, high threes, low fours.
Speaker #3: Obviously, with rates declining and the current rate environment, customers wanted to lock in their funds in CDs with a higher rate. So, competition is getting intense. As you can see, I mean, our CD retention rate has been around 90%.
Speaker #3: And we chose not to retain some of the CDs at irrational rates. So our CD retention rate went down to 80%. And some of our competitors are still offering high 3s, low—
Speaker #3: 4s.
Speaker #1: So, within our corridor, there are
Matthew Clark: So within our corridor, there are still some of the banks that are actually running a CD promotions above 3.85%. So, and we look at our, you know, deposit relationship, you know, one at a time, and we provide the rates that warrant the relationship. But it is fairly competitive still. And then it's also a little bit disruptive in the sense that, you know, some of these shops, smaller shops are still running a CD deposit campaigns.
Bonnie Lee: So within our corridor, there are still some of the banks that are actually running a CD promotions above 3.85%. So, and we look at our, you know, deposit relationship, you know, one at a time, and we provide the rates that warrant the relationship. But it is fairly competitive still. And then it's also a little bit disruptive in the sense that, you know, some of these shops, smaller shops are still running a CD deposit campaigns.
Speaker #1: Still, some of the banks are actually running CD promotions above 3.85%. So we look at our deposit relationship one at a time, and we provide the rates that warrant the relationship.
Speaker #1: But it is fairly competitive still, and then it's also a little bit disruptive in the sense that some of these smaller shops are still running CD deposit.
Speaker #1: campaigns. Okay.
Gary Tenner: Okay, thanks for that. And then just to follow up on the question regarding the buyback. You know, it sounds like obviously a board-level decision, and I think everybody knows you've got a lot of capital. How about the dividend? You know, that's kind of, is that a first quarter decision in terms of thinking about, you know, a higher payout from the board perspective?
Gary Tenner: Okay, thanks for that. And then just to follow up on the question regarding the buyback. You know, it sounds like obviously a board-level decision, and I think everybody knows you've got a lot of capital. How about the dividend? You know, that's kind of, is that a first quarter decision in terms of thinking about, you know, a higher payout from the board perspective?
Speaker #5: Thanks for that. And then, just to follow up on the question regarding the buyback—it sounds like, obviously, a board-level decision. And I think everybody knows you've got a lot of capital.
Speaker #5: How about the dividend? Is that kind of a first quarter decision in terms of thinking about a higher payout from the board?
Speaker #5: perspective?
Speaker #4: Yes. Typically, that
Romolo Santarosa: Yes, typically that would be reviewed at least once a year, and we're at that year mark, if you will, looking not only backwards on what we've accomplished, but looking forward on what we see 2026 to entail.
Ron Santarosa: Yes, typically that would be reviewed at least once a year, and we're at that year mark, if you will, looking not only backwards on what we've accomplished, but looking forward on what we see 2026 to entail.
Speaker #4: would be reviewed at least once a year. And we're at that year mark, if you will, looking not only backwards on what we've accomplished, but looking forward on what we see 2026 to
Speaker #4: entail. Got it.
Speaker #5: Thank
Matthew Clark: ... Thank you.
Gary Tenner: ... Thank you.
Speaker #5: You. The next question comes from the line.
Operator: The next question comes from the line of Kelly Motta with KBW. Please proceed.
Operator: The next question comes from the line of Kelly Motta with KBW. Please proceed.
Speaker #2: Kelly Matta with KBW. Please go ahead.
Speaker #2: proceed.
Speaker #6: Hey, good afternoon. Thanks for the—
Kelly Motta: Hey, good afternoon. Thanks for the question. Let's see. Ron, maybe circling back to expenses, I appreciate the kind of mid-single digit outlook you provided for the course of the year. Just given Q4 was a bit elevated from some discrete items that you called out, but there's also some seasonality in Q1, can you kind of help us out with how we should be thinking about the jumping off point from $39 million in the fourth quarter? Just trying to make sure my cadence and is properly aligning. Thank you.
Kelly Motta: Hey, good afternoon. Thanks for the question. Let's see. Ron, maybe circling back to expenses, I appreciate the kind of mid-single digit outlook you provided for the course of the year. Just given Q4 was a bit elevated from some discrete items that you called out, but there's also some seasonality in Q1, can you kind of help us out with how we should be thinking about the jumping off point from $39 million in the fourth quarter? Just trying to make sure my cadence and is properly aligning. Thank you.
Speaker #6: Question. Let's see. Ron, maybe circling back to expenses—I appreciate the kind of mid-single-digit outlook you provided for the course of the year. Just given Q4 was a bit elevated from some discrete items that you called out, but there's also some seasonality in Q1.
Speaker #6: Can you kind of help us out with how we should be thinking about the jumping-off point from $39 million in the fourth quarter? Just trying to make sure my cadence is properly aligning.
Speaker #6: Thank you.
Speaker #4: So, for our business, in terms of seasonality, there are, I think—I’ll say—let’s say, three events that are somewhat predictable. So, fourth quarter, we do have a higher spend with advertising and promotion.
Romolo Santarosa: So, for our business, in terms of seasonality, there is, I think, I'll say, let's say, three events that are somewhat predictable. So Q4, we do have a higher spend with advertising and promotion, given the holidays and things of that sort. Q1, traditionally, are the payroll tax phenomenon that we see in salaries and benefits. And then Q2 is typically where we see the annual merits. So those are the somewhat seasonal notions. So relative to your jumping off point, I'd have to think about it a little bit, but while the advertising promotion ideas, those will kind of fade, I can start to see a pickup in payroll. You know, I'd have to study the numbers closer to see if they offset, but I guess that would be my starting point.
Ron Santarosa: So, for our business, in terms of seasonality, there is, I think, I'll say, let's say, three events that are somewhat predictable. So Q4, we do have a higher spend with advertising and promotion, given the holidays and things of that sort. Q1, traditionally, are the payroll tax phenomenon that we see in salaries and benefits. And then Q2 is typically where we see the annual merits.
Speaker #4: Given the holidays and things of that sort, first quarter traditionally are the payroll tax phenomenon that we see in salaries and benefits. And then second quarter is typically where we see the annual merits.
So those are the somewhat seasonal notions. So relative to your jumping off point, I'd have to think about it a little bit, but while the advertising promotion ideas, those will kind of fade, I can start to see a pickup in payroll. You know, I'd have to study the numbers closer to see if they offset, but I guess that would be my starting point.
Speaker #4: So those are the somewhat seasonal notions. So, relative to your jumping-off point, I have to think about it a little bit. But while the advertising, promotion ideas—those will kind of fade—I can start to see a pickup in payroll.
Speaker #4: Study the numbers closer to see if they have a point. The little bit of makeshift we saw in the personnel complement—because personnel has been roughly the same on a very rounded idea, like 600.
Romolo Santarosa: The little bit of mix shift we saw in the personnel complement, because personnel has been roughly the same on a very rounded idea, like 600. And so we still behave in that same idea. So we saw just a little bit of that. So I think that's probably where you see the swap of the increase from advertising, the benefit there; it would move up to the top. That's about it. The activity year-end, just you can call it seasonal, although I hesitate to say that, but there's usually at year-end a little bit of pickup in activities for a host of different reasons, but there always seem to be activities that kind of creep in or crop up at the year-end mark.
The little bit of mix shift we saw in the personnel complement, because personnel has been roughly the same on a very rounded idea, like 600. And so we still behave in that same idea. So we saw just a little bit of that. So I think that's probably where you see the swap of the increase from advertising, the benefit there; it would move up to the top. That's about it. The activity year-end, just you can call it seasonal, although I hesitate to say that, but there's usually at year-end a little bit of pickup in activities for a host of different reasons, but there always seem to be activities that kind of creep in or crop up at the year-end mark.
Speaker #4: And so we still behave in that same idea. So we saw just a little bit of that. So I think that's probably where you see the swap of the increase from advertising, the benefit there.
Speaker #4: It would move up to the top. That's about it. The activity year-end, just—you can call it seasonal, although I hesitate to say that.
Speaker #4: But there's usually, at year-end, a little bit of pickup in activities for a host of different reasons. But there always seem to be activities that kind of creep in or crop up at the year-end mark.
Speaker #4: So, I know that's not very strong, but I'd have to really ponder hard, Kelly, to figure out if you should fade on that number or start with that number, and really, I really don't—
Romolo Santarosa: So, I know that's not very strong, but I'd have to really ponder hard, Kelly, to figure out if you should fade on that number and or start with that number. I really don't know.
So, I know that's not very strong, but I'd have to really ponder hard, Kelly, to figure out if you should fade on that number and or start with that number. I really don't know.
Speaker #4: know. Okay.
Kelly Motta: Okay, fair, fair enough. And then, looking at slide six, it's nice to see the yield on new production has really held in really nicely. Wondering if that's a function of mix or, you know, if you're able to get, you know, some better, more rational spreads, on loans here, as rates have come down. Any commentary and color would be helpful.
Kelly Motta: Okay, fair, fair enough. And then, looking at slide six, it's nice to see the yield on new production has really held in really nicely. Wondering if that's a function of mix or, you know, if you're able to get, you know, some better, more rational spreads, on loans here, as rates have come down. Any commentary and color would be helpful.
Speaker #6: Fair enough. And then, looking at slide six, it's nice to see the yield on new production has really held in really nicely. I'm wondering if that's a function of mix, or if you're able to get some better, more rational spreads.
Speaker #6: On loans here, as rates have come down, any commentary or color would be—
Speaker #3: Yeah, so we remain focused on the programs by maintaining appropriate yield on the new loans. So we're being very selective in our loan originations, prioritizing our returns.
Anthony Kim: Yeah, so we remain focused on the protect programs by maintaining appropriate yield on the new loans. So we're being very selective in our loan originations, prioritizing our returns. So we are being selective.
Anthony Kim: Yeah, so we remain focused on the protect programs by maintaining appropriate yield on the new loans. So we're being very selective in our loan originations, prioritizing our returns. So we are being selective.
Speaker #3: So we are being
Speaker #3: selective. Got it.
Kelly Motta: Got it. That's, that's helpful. I'll step back. Thanks so much.
Kelly Motta: Got it. That's, that's helpful. I'll step back. Thanks so much.
Speaker #6: That's helpful. I'll step back. Thanks so much.
Speaker #6: much. As
Anthony Kim: Thank you.
Anthony Kim: Thank you.
Operator: As a reminder, to enter the question queue, please press star one on your telephone keypad. The next question will come again from the line of Matthew Clark with Piper Sandler. Please proceed.
Operator: As a reminder, to enter the question queue, please press star one on your telephone keypad. The next question will come again from the line of Matthew Clark with Piper Sandler. Please proceed.
Speaker #2: A reminder: to enter the question queue, please press star one on your telephone keypad. And the next question will come from the line of Matthew Clark with Piper Sandler.
Speaker #2: Please proceed.
Speaker #7: Hey, thanks for the follow-up. Just wanted to ask about the prepays and payoffs in the quarter and how that compared to Q3. I see the production at $375 million, but I'm just curious how the other side of the equation played.
Matthew Clark: Hey, thanks for the follow-up. Just wanted to ask about the prepays and payoffs in the quarter and how that compared to Q3. See the production at $375, but I'm just curious, you know, how the other side of the equation played out?
Matthew Clark: Hey, thanks for the follow-up. Just wanted to ask about the prepays and payoffs in the quarter and how that compared to Q3. See the production at $375, but I'm just curious, you know, how the other side of the equation played out?
Speaker #7: out. Sure.
Bonita Lee: Sure. Just comparing to the third quarter, payoffs were a little bit elevated, but I think it's probably more meaningful to look at the whole year, because there are fluctuations from quarter to quarter. But you know, comparing 2025 to 2024, although our loan production was up 36% year-over-year, when we tracked the payoffs and paydowns and also net line utilization, as well as loans sold, it is definitely higher. Just on the loan payoffs and the paydown category, just on those two items, just comparing them annually, it's 13% higher than the prior year.
Bonnie Lee: Sure. Just comparing to the third quarter, payoffs were a little bit elevated, but I think it's probably more meaningful to look at the whole year, because there are fluctuations from quarter to quarter.
Speaker #1: Just comparing to the third quarter, payoffs were a little bit elevated. But I think it's probably more meaningful to look at the whole year because there are fluctuations from quarter to quarter.
Speaker #1: But comparing 2025 to 2024, although our loan production was up 36% year over year, when we track the payoffs and paydowns and also net line utilization as well as loans sold, it is definitely higher.
But you know, comparing 2025 to 2024, although our loan production was up 36% year-over-year, when we tracked the payoffs and paydowns and also net line utilization, as well as loans sold, it is definitely higher. Just on the loan payoffs and the paydown category, just on those two items, just comparing them annually, it's 13% higher than the prior year.
Speaker #1: Just on the loan payoffs and the pay down category, just on those two items, just comparing on an annual basis, it's 13% higher than the prior year.
Speaker #2: Okay, great. Thanks again. Thank you. There are no further questions at this time. I'd like to turn the call back over to Ms. Lee for closing.
Matthew Clark: Okay, great. Thanks again.
Matthew Clark: Okay, great. Thanks again.
Operator: Thank you. There are no further questions at this time. I'd like to turn the call back over to Ms. Lee for closing remarks.
Operator: Thank you. There are no further questions at this time. I'd like to turn the call back over to Ms. Lee for closing remarks.
Speaker #2: remarks.
Speaker #1: Thank you for joining our call.
Bonita Lee: Thank you for joining our call today. We appreciate your interest in Hanmi and look forward to sharing our continued progress with you throughout the year.
Bonnie Lee: Thank you for joining our call today. We appreciate your interest in Hanmi and look forward to sharing our continued progress with you throughout the year.
Speaker #1: today. We appreciate your interest in Hanmi and look forward to sharing our continued progress with you throughout the
Speaker #1: year. This does conclude today's
Operator: This does conclude today's conference. You may disconnect your lines at this time, and we thank you for your participation. Have a good night.
Operator: This does conclude today's conference. You may disconnect your lines at this time, and we thank you for your participation. Have a good night.
