Hanmi Financial Corporation

Ladies and gentlemen, welcome to Harmony Financial Corporation's second quarter 2025 conference call. As a reminder, today's call is being recorded for replay purposes. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation, and you may be placed into question queue at any time by pressing star 1 on your telephone keypad. I would now like to turn the conference call over to Ben Brodkiewicz, investor relations for the company. Please go ahead, Ben.

Thank you, Operator, and thank you all for joining us today to discuss Hominy's second quarter 2025 results. This afternoon, Hominy 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 hominy.com. I'm here today with Bonnie Lee, President and Chief Executive Officer of Hominy 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. Discussions 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 second quarter 2025 results. I am pleased with Hanmi's consistent execution this quarter, building on our progress in the previous quarter for a solid first half of the year. We delivered further margin expansion and drove growth in our loan portfolio with healthy contributions from CNI and residential mortgage loans. Deposit growth was also solid for the quarter with a continued contribution from commercial accounts and new branches. Importantly, Asset quality improved significantly from an already strong base, with notable reductions in current size and non-accrued loans. This progress is a testament to our focus on proactive portfolio management through vigilant and prompt actions. Now, let me review some key highlights of the quarter. Net income for the first quarter was $15.1 million, or 50 cents per diluted share, compared to 17.7 million and 58 cents respectively in the first quarter. The decline in net income was primarily due to an increase in credit loss expense. Our return on average assets was 0.79% and return on average equity was a 7.8%. Pre-provision net revenues grew 3.7% or $1 million, showing the strength of our core business. Once again, we expanded net interest margin, increasing by five basis points to 3.07%, primarily driven by lower funding costs. As I just mentioned, asset quality is excellent, improved significantly from the first quarter due to our proactive portfolio management actions. Net charge-ups for the second quarter were considerably higher than the first quarter, reflecting the $8.6 million charge-up on the $20 million non-accrual syndicated commercial real estate office loan we identified last quarter. While disappointing, we believe this action brings the matter closer to resolution and is not reflective of any systematic issues. Total loans increased $6.31 billion, 0.4% on a linked quarter basis, or 1.6% annualized. with a higher CNI and residential mortgage loan production during the quarter. Deposits increased by 1.7% in the second quarter, driven by new commercial accounts and meaningful contribution from our new branches. This growth underscores our ability to continually forge new customer relationships while strengthening our long-standing ones. Non-interest-bearing demand deposits have increased by over 7% from the second quarter of 2024 and continue to represent a noteworthy percentage of total deposits at 31.3%. Non-interest income increased 4.5%, primarily reflecting the success of our SBA efforts. We continue to maintain disciplined control over our operating expenses holding our efficiency ratio constant at 55.7% compared to the prior quarter. During the second quarter, we also expanded our commercial banking capabilities by successfully recruiting talented new bankers in both CNI and SBA lending to support growth in these key asset classes. Given the strength of our loan pipeline, we are increasing our quarterly SBA production target to 45%. to 50 million from 40 million to 45 million for the second half of 2025. Turning now to our corporate career initiative. Although the economic outlook remains dynamic, we continue to add new relationships with the Korean manufacturers through our new branch in the metro Atlanta area where many Korean companies have U.S. manufacturing presence. We anticipate new loan production from them in the second half of 2025. Our USKC loan and deposit portfolios remain steady in the quarter, with both portfolios in the low to medium as a percentage of total loans and deposits. While the current economic environment is evolving, we remain optimistic about the long-term growth potential of our USKC initiative. That said, many of our USKC customers are taking a wait-and-see approach as they look for greater clarity around tariffs and their potential impact on the broader economy. Looking ahead, we believe Hanmi is well-positioned for growth as we execute on our key strategic initiatives and priorities, which include driving loan growth in the low-to-mid single-digit range with a focus on expanding our SBA activities, and our CNI portfolios, while reducing our exposure to CRE as a percentage of the overall portfolio. Building on the meaningful improvement in our CNI and SBA loan pipelines as our customers continue to adapt to the current economic environment. Leveraging our strong liquidity position and maintaining robust credit metrics, which support our standing as a well-capitalized bank. preserving our significantly improved asset quality through proactive management of our portfolio and disciplined credit administration. In summary, we delivered a solid operating performance in the first half of the year, fueling our momentum. We remain deeply engaged with our customers, responding to their needs as they navigate the evolving market environment and its effect on their businesses. When I look at our performance through the first half of 2025, I see the strength and execution of our growth strategy. New loan production has increased 33% over the previous year. Pre-provision net revenues have increased 31%, and net interest margin is 31 basis points higher. Our customer-centric approach enables our team to deliver exceptional service and innovative market-leading solutions. Coupled with our continued focus and disciplined expense management and strong asset quality, we are well positioned to drive sustainable growth and deliver long-term value to our shareholders. I'll now turn the call over to Anthony Kim, our Chief Banking Officer, to discuss second quarter loan production and deposit gathering in more detail.