Hanmi Financial Corporation

Ladies and gentlemen, welcome to Hamney Financial Corporation's first quarter 2025 conference call. As a reminder, today's call is being recorded for replay purposes. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. 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 Ben Brodkowitz, investor relations for the company. Please go ahead.

Thank you, operator. And thank you all for joining us today to discuss HOMNY's first quarter 2025 results. This afternoon, HOMNY issued its earnings release and quarterly supplemental slide presentation to accompany today's call. Both documents are available in the IR section of the company's website at homny.com. I'm here today with Bonnie Lee, President and Chief Executive Officer of HOMNY 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. 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 these forward-looking statements can be found in our SEC filings, including our reports on forms 10-K and 10-Q. In particular, we direct you to the discussion of certain risk factors affecting our business contained in our earnings release, our investor presentation, and in our Form 10-Q. With that, I would now like to turn the call over to Bonnie Lee. Bonnie, please go ahead.

Thank you, Ben. Good afternoon, everyone. Thank you for joining us today to discuss our first quarter 2025 results. We are off to a good start to the year with a strong deposit growth another quarter of a margin expansion, and continued discipline expense management. Our credit quality remains strong, and we saw a healthy increase in deposits from our USKC customers. These results reflect the strength of our relationship-based banking model, a key differentiator for Hanmi in the markets we serve. Now, let me review key highlights of the first quarter. Net income was $17.7 million, or $0.58 per diluted share, an increase of 17% and 16%, respectively, compared to the first quarter of 2024. Our return on average assets was 0.94%, and return on average equity was 8.92%. We achieved our third consecutive quarter of a net interest margin expansion, which increased by 11 basis points to 3.02%, driven by our ability to lower funding costs. Total loans grew to $6.28 billion or 0.5% on a lean quarter basis with a solid loan production across all of our loan categories. This is particularly notable since the first quarter is seasonally slower quarter for loan production. Non-interest income grew 5% primarily due to the sale of SBA loans, which provides HANMI with the revenue diversification, enhanced risk management, and capital deployment for loan growth. Deposits grew by 3% in the first quarter, driven by new commercial accounts and contribution from new branches. This growth reflects our success in continuing to build new relationships while deepening those with existing customers. Non-interest-bearing demand deposits have increased by 7% over the past year and remain solid as a percentage of total deposits at 31.2%. Our operating expenses remain well managed, and this results in an efficiency ratio of a 55.69%, our best quarterly performance since the fourth quarter of 2023. Turning to our USKC initiative, one of our core growth strategies. Our USKC loan portfolio remains stable at approximately 15% of our total loans, however, Deposits increased significantly and now represent 15% of total deposits up from 13% at the end of 2024. Since opening our representative office in Seoul, South Korea late last year, we have seen a growing level of interest in Hanmi's capabilities and services. Establishing a local presence has a significantly increased activity levels delivered the visibility we had hoped for. We see growing opportunities to establish new relationships, particularly among midsize companies, and believe we are well positioned to further expand our reach and strengthen our brand among Korean companies that are looking to establish or expand their footprint in the United States. As we continue to execute our strategy of diversifying and growing our loan and deposit portfolio, we maintained strong asset quality. Our asset quality reflects our focus on high quality loans along with the discipline underwriting and credit administration. Our allowance for credit losses as a percentage of loans remains stable at 1.12%. In addition to upholding our asset quality, we made progress in further expanding our geographic footprint. In March, we successfully opened a branch in Duluth, Georgia. which is a part of the Atlanta metropolitan market. This is our first branch in this rapidly growing market, which is home to the third largest Korean community in the United States. In just the first month, we have seen strong production and are pleased with the growing momentum. The Metro Atlanta region is also a major center for Korean manufacturing investment, particularly in automobiles and clean energy. In fact, Just last week, our new team there attended the World Korean Business Convention, an event that convinced the Korean business community from around the world in the heart of Duluth. This was a terrific opportunity to introduce HANMI and our specialized USKC services to more than 15,000 attendees, ranging from local businesses to multinational corporations. As we look ahead to the balance of 2025, we are continuing to focus on executing our growth strategy, and our top priorities include the following. Generating loan growth in the low to mid single-digit range with a focus on further expanding our CNI portfolio while reducing CRE as a percentage of the portfolio. While our current loan pipeline is solid, like all banks, we will continue to monitor the macroeconomic environment closely given the elevated level of uncertainty that currently exists. We will continue to pursue residential mortgage sales to supplement our fee revenues and manage our balance sheet. We plan to hire additional banking talent to expand our CNI business in target verticals and increase our core deposit growth. And finally, we will maintain strong asset quality through our disciplined credit administration practices. In summary, We deliver strong operating performance in the first quarter, reflecting solid growth and ongoing momentum from 2024. As always, we remain closely engaged with our customers to better understand how evolving market conditions are affecting their businesses. This approach ensures our team is providing exceptional service and market leading products our customers need. This, combined with ongoing expense management as a quality discipline, positions us well to the drive growth and long-term value to our shareholders. I'll now turn the call over to Anthony Kim, our Chief Banking Officer, to discuss first quarter loan production and deposit gathering in more detail.