Hanmi Financial Corporation

Ladies and gentlemen, welcome to the Hanmi Financial Corporation's fourth quarter and full year 2022 conference call. As a reminder, today's call is being recorded for replay purposes. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. I would now like to turn the call over to Larry Clark, Investor Relations for the company. Please go ahead.

Thank you, Doug, and thank you all for joining us today to discuss HOMME's fourth quarter and full year 2022 results. This afternoon, HOMME 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. I'm here today with Bonnie Lee, President and Chief Executive Officer of HOMME, Anthony Kim, Chief Banking Officer, and Ron Santoroza, Chief Financial Officer. Bonnie will begin today's call with an overview, and 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 to your questions. Before we begin, I'd 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 uncertainties. Discussion of the factors that could cause our actual results to differ materially from those 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-K. With that, I'd now like to turn the call over to Bonnie Lee. Bonnie, please go ahead.

Thank you, Larry. Good afternoon, everyone. Thank you for joining us today to discuss our fourth quarter and full year 2022 results. 2022 was a year of a solid execution and record earnings for HOMI. We continue to strengthen and diversify our business by executing our well-defined strategies, enabling us to finish the year with a strong momentum. This strategic model, coupled with our ongoing dedication to customer service, underscores our proven ability to navigate dynamic macroeconomic conditions and deliver strong results. For the year, we generated record net income and loan production and an improved net interest margin all while diligently managing our operating expenses and improving our asset quality. Let me review the highlights. Net income for the year was a record $101.4 million, or $3.32 per diluted share. Loans grew by 15.7 percent in 2022, driven by record new loan production of $2.1 billion. Net interest income for the year increased by 21.8% as a result of a higher average earnings assets and a 42 basis point increase in our net interest margin to 3.50%. Our deposits grew by 6.6% for 2022, which helped fund our loan growth. And the mix of non-interest bearing deposits remains strong at 41.2% of total deposits. We managed our non-interest expenses diligently. They increased by less than 5% for the year, and we recorded a full-year efficiency ratio of 47.93%, a 608 basis point improvement from 2021. Importantly, asset quality improved significantly in 2022 as we continued our focus on high-quality loans, disciplined underwriting, and vigilant credit administration practices. As a result, non-performing assets declined 29% to $10 million, or 0.14% of a total deposit. Career-size loans were down 20%, and net charge-offs were negligible over the course of the year. Last, Our 2022 return on average shareholder equity was strong at 14.83%. We increased our shareholder dividend twice this past year, 25% year over year, in recognition of our improved performance, and our capital ratios remain very strong, positioning us well for continued growth in a safe and sound manner. Our team delivered meaningful progress on each of our strategic growth initiatives, We further diversified our loan portfolio, strengthened our relationships with existing customers, expanded our customer base, bolstered our core deposit franchise. Our commitment to exceptional customer service is the hallmark of our community banking approach, and in tandem with our focus and hard work, enabled us to achieve these results. As we have discussed in the past, Diversifying our loan portfolio has been a key priority over the last two years, and we made excellent progress in 2022. For example, our residential mortgage loan production was a record $421 million for the year and represented approximately 20% of our total loan production, well exceeding our ramp-up targets of 10% to 15%. Our SBA group also generated another strong year of production, originating 209 million of loans for the year, driven by a keen focus on expanding market reach and securing new talent. And we continue to gain solid traction with our Corporate Career Initiative, where both loans and deposits grew meaningfully. As a reminder, this initiative focused on the needs of U.S. divisions of South Korea-based businesses and serves to diversify our portfolio with the high-quality loans. Here, loan balances were up $145 million, or 23%, for the year, and deposit balances grew $213 million, or 59%, and now representing just over 9% of our total deposits. In addition to the diversification achieved in our loan production and loan categories, Nearly 12% of a new commercial real estate and CNI loan production for the year came from outside California, up from 7% last year. We saw strong growth in Texas and our eastern region, reflecting both the healthy market conditions as well as our continued success in attracting new customers in these markets. The results are clear. Our loan diversification strategies are working. Our asset quality remains very strong as we have been proactive in communicating with our customers about their businesses. We want to understand the challenges they may see on the horizon and work together to help them navigate this uncertain macroeconomic environment. Communication with our customers is a critical part of our approach, both in gaining new business and in maintaining existing relationships. With that, I'll turn the call over to Anthony Kim, our Chief Banking Officer, to discuss fourth quarter loan production and deposit gathering in more detail.