Hanmi Financial Corporation

Ladies and gentlemen, welcome to Hanmi's Financial Corporation's fourth quarter and year-end 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, Alicia. And thank you all for joining us today to discuss Hanmi's fourth quarter and full year 2023 results. This afternoon, Hanmi 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 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 then 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 a 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 would 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 2023 results. I am proud of our team's performance as we finished 2023 with a positive momentum, delivering solid fourth quarter results and building a good foundation for 2024. As all of you are aware, the industry faced notable challenges during the past year. I believe our team successfully navigated these challenges as we have done so in the past by focusing on the execution of our long-term growth initiatives and proven diversification strategies. We continue to do what we do best, build and expand our customer relationships by providing the products and services our customers need in this ever-changing world. During the past year, we further strengthened and expanded our business, executing on our relationship-driven banking strategy. We also focused on strong credit administration, which was essential given the uncertain and dynamic macro environments. In addition, while we could not avoid inflationary pressures, we did exercise disciplined expense management while continuing important investments in personnel and technology. Our diversified lending capabilities allowed us to grow our residential mortgage portfolio by 31% for the year, despite the challenging interest rate environment. Our asset quality remained excellent during the year with a very low delinquencies, non-performing assets and HR jobs. We also pursued optimizing our branch network with the opening of two new branch locations in markets with a great growth potential. These are just a few examples that give me confidence that we have the right strategy and the right culture to address the challenges of 2024. Now, let me review some highlights for the past year. Net income for 2023 was $80 million, or $2.62 per diluted share. Our return on average assets was 1.08%, and our return on average equity was 10.70%. As expected, given the higher interest rate environment and economic uncertainty, overall, our loan growth was constrained to 3.6% for 2023. Our deposits grew by 1.8% for 2023, and we ended the year with a healthy mix of non-interest-fearing deposits at 32% of total deposits. This is especially encouraging given the competitive nature in our markets in this particular environment. We managed our non-interest expenses diligently. Expenses increased by less than 5% for the year as we were able to offset the inflationary pressure on salaries, and employee benefits with the cost savings and other expense categories. Importantly, asset quality remains strong as we continue our focus on high-quality loans, discipline underwriting, and vigilant credit administration practices. As a result, current-size loans were down 23% year-over-year. Net charge-offs for the full year of 2023 were a low 0.12% of average loans and non-performing assets ended the year at 0.21% of total assets. Last, we finished the year with a solid financial position and very strong capital ratios. This positions us well for continued growth in 2024 and beyond in a safe and sound manner. Looking ahead to 2024, we see continued uncertainty about the economy and interest rates. As a result, we will remain vigilant in our credit practices prudent in our growth objectives, and disciplined with our operating expenses. As I have mentioned, I am very pleased with our diversified lending capabilities. For 2024, we will explore the use of our production capabilities in residential mortgages and equipment finance agreements towards the secondary market activities to generate another source of non-interest income and assist in balance sheet management. Our corporate Korea initiative continues to deliver strong results with the deposits from these customers increasing 42% for the year. During the later part of 2023, we made a good progress in our efforts to increase awareness of this strategic growth initiative. And this month, we enter into a memorandum of understanding with the Korea Creative Content Agency, under which we will jointly work in helping Korean content companies expand into U.S. market. We believe this will further propel our USKC initiative. As I noted earlier, we opened new offices in two markets, and we believe have a great growth potential. For 2024, we'll continue to analyze our banking network for consolidation, relocation, and growth opportunities. Finally, we'll continue to make strategic investments in our people, technology, and infrastructure. We want to ensure that our team is empowered to bring the innovative thinking, adaptability, and collaborative spirit needed to drive sustained growth. We believe our technology and infrastructure improvements will help drive operational efficiencies and deliver improved profitability, ultimately creating more value for our shareholders. So for 2024, we remain committed to executing our strategy. Our consistent performance and growing reputation as a preferred relationship-based banker is enabling us to increase the number of communities we serve. I'll now turn the call over to Anthony Kim, our Chief Banking Officer, to discuss fourth quarter loan production and deposit gathering in more detail.