Hanmi Financial Corporation

Ladies and gentlemen, welcome to Harmony Financial Corporation's fourth quarter and full year 2025 conference call. As a reminder, today's call is being recorded for replay purposes. All participants are in a listen-only mode, and a question and answer session will follow the formal presentation. If anyone requires operator assistance, please press star zero on your telephone keypad. I would now like to turn the call over to Ben Brockowitz, investor relations for the company. Please go ahead.

Thank you, operator, and thank you all for joining us today to discuss HOMNY's fourth quarter and full year 2025 results. This afternoon, HOMNY issued its earnings release and 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 Lee, 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. A 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 SEC filings. 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 fourth quarter and full year 2025 results. Our teams delivered a solid performance in the fourth quarter, keeping a strong year-over-growth for HOMNI. We believe we executed well on our priorities and advanced key initiatives we laid out at the start of the year. Specifically, we further enhanced the diversification of our loan portfolio and achieved mid-single-digit loan growth guidance. We made investments in our banking teams, which led to a significant increase in loan production. We managed the deposit cost and generated net interest margin expansion throughout 2025. our non-interest-bearing deposits continue to represent 30% of total deposits, a tribute to the stability of our customer base. At the same time, we maintain disciplined expense management and upheld a strong credit quality across the portfolio. The strength and consistency of our operational performance underscore the effectiveness of our relationship-based banking model and reinforce our confidence in the strategy we are executing. Now, turning to some highlights for the fourth quarter, net income for the fourth quarter was $21.2 million, or 70 cents per diluted share, down 3.7 percent due to lower non-interest income. However, net interest income increased 2.9 percent, and net interest margin expanded by six basis points to 3.28 percent from the prior quarter. reflecting a lower cost of funds and a higher average loan balances. Return on average assets and return on average equity during the quarter were 1.07% and 10.14% respectively. For the full year of 2025, net income reached $76.1 million, or $2.51 per diluted share, an increase of 22%, and we generated a return on average equity of 9.32%. As previously guided, we generated loan growth of $312 million, or 5%. Net interest income increased to 16.5%, and our net interest margin expanded by 37 basis points through a combination of a lower interest-bearing deposit cost and higher average loan balances. Non-interest income increased 7.6%, primarily due to an increase from the gain and sale of SBA loans, driven by 39% increase in loans sold. And pre-provision net revenue increased 31.5%, highlighting the reduction in funding costs and well-managed non-interest expenses throughout the year. As I just mentioned, we made a significant stride in growing and diversifying our loan portfolio and deposit franchise in 2025. Loan production for the full year increased 36% driven by the investments we made in our banking team. Residential and C&I loan production was up 90% and 42% respectively. As part of our ongoing portfolio diversification initiative, We've expanded our CNI portfolio by 25% through a deliberate effort to grow this strategic vertical. At the same time, we reduced our commercial real estate exposure from 63.1% to 61.3% of our total loans. Deposits grew by 3.8% in 2025, and we maintained a healthy mix of non-interest-bearing deposits. This consistent performance reflects the strength of the long-term relationships we have built with our customers who depend on us to provide high-quality banking products and services. In today's highly competitive banking environment, our ability to cultivate enduring customer relationships remains a meaningful competitive advantage. As we diversify through our loan portfolio, we maintain our firm commitment to asset quality, Our asset quality remains excellent, reflecting our focus on high-quality loans, disciplined underwriting, and prudent credit administration. Additionally, non-performing assets as a percentage of total assets and allowance of credit losses as a percentage of the total loans both remain healthy at 0.26% and 1.07% respectively. Our focus on disciplined expense management continues. Although non-interest expense increased by 4.6% for the year, this was primarily driven by salaries and benefits related to merit increases and the investment we made in acquiring new banking talent. Importantly, our efficiency ratio for the full year improved to 54.7% from 60.3% last year. Finally, with our strong financial and capital ratios, we are in a great position to advance our growth strategy and generate healthy returns for our shareholders. During 2025, we return $42 million of capital to shareholders through the $9 million in share repurchases and $33 million in dividends. I'll now turn the call over to Anthony Kim, our Chief Banking Officer, to discuss our fourth quarter loan production and deposit details.