Hanmi Financial Corporation

Ladies and gentlemen, welcome to the Honme Financial Corporation's first quarter 2023 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 Honme's first quarter 2023 financial results. This afternoon, Omni issued its earning 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 Omni Financial Corporation, Anthony Kim, Chief Banking Officer, and Ron Santoroza, Chief Financial Officer. Bonnie will begin today's call with an overview, Anthony will discuss loan and deposit activities, and 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 forelooking statements, which involve risks and uncertainties. Discussions of the factors that could cause our actual results to differ materially from these forelooking 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. in 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 first quarter results. PAMI delivered strong financial results in the first quarter of 2023, even in the face of a continued rising interest rates, economic uncertainty, and a highly volatile banking environment. We believe these results are a testament to the strength of our relationship banking model and our team's consistent execution. I am pleased to report that we delivered 6% year-over-year growth in net income of $22 million, or $0.72 per diluted share, all while maintaining high levels of liquidity, being selective on new loan originations, and exercising disciplined expense management. We added net new customers during the quarter, which led to a sequential growth in deposits. This reflects our disciplined execution of new business initiatives and the strength of our relationships in the communities we serve. As anticipated, loan production moderated during the quarter. However, we were still able to grow our loan portfolio with a new production outpacing payoffs, paydowns, amortization as we maintain our disciplined underwriting standards. Importantly, our overall asset quality metrics remain excellent. We continue to focus on high-quality loans, discipline underwriting, and vigilant credit administration practices. Other highlights for the quarter include the following. Loan balances grew to $6 billion at quarter end, up nearly 1% on an annualized basis. First quarter loan production was $304 million, with an attractive weighted average interest rate of 7.19%. Deposits increased 2% on an annualized basis from year-end 2022 to $6.2 billion. We are proud of the robust deposit franchise that we have built over four decades, with a consistent focus on pursuing new customers and expanding our existing relationships. As a result, non-interest-bearing deposits remain high at 38% of the deposit portfolio at quarter-ends. We continue to exercise disciplined expense management, leading to a 3% decline in non-interest expense quarter over quarter. Our overall asset quality metrics are excellent as non-performing assets to total assets remain low at 27 basis points. We generated a return on average assets of 1.21% and a return on average equity of 12.19%. And we also improved upon our already strong capital levels with a total risk-based capital at 14.8% and a tangible common equity ratio of 8.77%. Turning to our strategic initiatives, our residential mortgage production was a solid at 97.2 million, even in a challenging mortgage market. We attribute this success to the strong relationships we have established with our corresponding lending partners over the past couple of years. While we experienced some deposit outflows from our corporate career customers in mid-March, we gained new corporate career customers during the quarter that offset those outflows. During the quarter, we remained focused on what we do best, serving our customers and helping them to manage through challenging times. For much of 2022 and continuing into 2023, we stepped up direct communication with our customers to better understand the impact of shifting economic factors on their businesses, and to identify solutions to meet their evolving banking needs. As industry events were unfolding in March, we doubled our customer outreach efforts. While our intent was to assure customers that our bank was in a very strong financial condition, I was especially moved as some of our customers asked me what they could do for us. This response is truly an example of the deep relationships we have built over the years. And we continue to look for new opportunities to grow and expand our franchise. For example, we are targeting to open a new branch in the East Bay region of San Francisco in the fourth quarter of this year. This move will enable us to serve growing client demand in this vibrant regional sub-market. Of course, we will continue to explore opportunities to further optimize our footprint in key markets across the United States. In summary, I am grateful to our team of highly skilled bankers who work tirelessly to build and maintain the trusted banking relationship with our customers, which is the hallmark of the Hanmi Bank brand. With that, I'll turn the call to our Chief Banking Officer, Anthony Kim, to discuss the first quarter loan production and deposit gathering in more detail.