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Hanmi Financial Corp. (HAFC)
NASDAQ:HAFC
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Hanmi Financial
(NASDAQ:HAFC)
72Outperform
Positive Factors
Financial Performance
The stock rating is upgraded to BUY due to expectations of significant earnings per share growth driven by deposit repricing and stable loan yields.
Valuation
Current price multiple to forward earnings is below historical levels seen after the 2016 Presidential Election, suggesting potential for valuation expansion.
Negative Factors
Credit Quality
Criticized loans increased $89 million sequentially to $160 million, primarily driven by two CRE loans in the hospitality industry and one C&I loan in the healthcare industry.
Hanmi Financial (HAFC) vs. S&P 500 (SPY)
Market Cap
$649.82M
Dividend Yield4.54%
Average Volume (3M)184.71K
Price to Earnings (P/E)10.9
Beta (1Y)1.14
Revenue Growth8.33%
EPS Growth-21.76%
CountryUS
Employees615
SectorFinancial
Sector Strength77
IndustryBanking
Share Statistics
EPS (TTM)2.05
Shares Outstanding30,196,234
10 Day Avg. Volume180,046
30 Day Avg. Volume184,712
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)2.83
Price to Cash Flow (P/CF)9.90
P/FCF Ratio3.30
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$28.33Price Target Upside31.64% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
Hanmi Financial Business Overview & Revenue Model
Company DescriptionHanmi Financial Corporation (HAFC) is a holding company headquartered in Los Angeles, California. It operates primarily through its wholly owned subsidiary, Hanmi Bank, which provides a range of financial services to small and medium-sized businesses, as well as individuals. The bank focuses on offering commercial banking products, including loans, deposit services, and cash management solutions. Hanmi Bank serves a diverse customer base with a strong presence in the Korean-American community across the United States, with branches in major metropolitan areas.
How the Company Makes MoneyHanmi Financial makes money primarily through its subsidiary, Hanmi Bank, by offering a variety of financial products and services. The bank's key revenue streams include interest income from loans and mortgages, which are extended to both commercial and individual clients. Additionally, the company generates income from fees and service charges associated with deposit accounts, transaction processing, and cash management services. Hanmi Bank also earns revenue from investment securities and other financial instruments. The bank's focus on the Korean-American community and its extensive branch network in key regions contribute significantly to its earnings. Strategic partnerships and community engagement further enhance its business operations and revenue generation.
Hanmi Financial Financial Statement Overview
Summary
Hanmi Financial demonstrates strong profitability with consistent revenue growth and a robust return on equity. However, recent challenges in cash flow management and relatively low EBIT margins slightly undermine its financial standing.Income Statement
Hanmi Financial demonstrates strong profitability with a net profit margin of 15.60% and consistent revenue growth over the years. Though the EBIT margin is relatively low at 2.70% for 2024, the company has maintained a positive trajectory in total revenue from previous years, showcasing stability in its income generation capabilities.78
Positive
Balance Sheet
The balance sheet of Hanmi Financial reflects a moderate debt-to-equity ratio of 0.54, indicating manageable leverage. The equity ratio stands at 9.54%, suggesting a moderate reliance on equity financing. Return on equity is robust at 8.49%, highlighting efficient use of shareholders' equity, though slightly reduced from prior years.72
Positive
Cash Flow
Cash flow analysis reveals challenges, with the operating cash flow to net income ratio being unavailable for 2024 due to missing data. Historically, free cash flow has been positive, but the lack of free cash flow in 2024 indicates potential cash management issues. Prior years showed positive free cash flow to net income ratios, reflecting effective cash generation relative to net income.65
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 233.50M | 249.16M | 271.85M | 235.55M | 224.00M | Gross Profit |
| 229.94M | 237.91M | 271.85M | 225.97M | 213.98M | EBIT |
| -281.76M | 15.37M | 161.84M | 135.49M | 59.49M | EBITDA |
| 0.00 | 0.00 | 155.78M | 8.06M | 9.63M | Net Income Common Stockholders |
| 62.20M | 80.04M | 101.39M | 98.68M | 42.20M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 304.80M | 1.17B | 1.21B | 1.52B | 1.15B | Total Assets |
| 7.68B | 7.57B | 7.38B | 6.86B | 6.20B | Total Debt |
| 393.14M | 455.01M | 779.41M | 352.51M | 268.97M | Net Debt |
| 88.34M | 152.69M | 426.99M | -256.46M | -122.88M | Total Liabilities |
| 6.95B | 6.87B | 6.74B | 6.22B | 5.62B | Stockholders Equity |
| 732.17M | 701.89M | 637.51M | 643.42M | 577.04M |
| Cash Flow | Free Cash Flow | |||
| 51.33M | 105.38M | 145.38M | 91.00M | 55.81M | Operating Cash Flow |
| 53.95M | 107.80M | 147.31M | 93.73M | 60.20M | Investing Cash Flow |
| -107.47M | -209.99M | -881.51M | -447.04M | -407.59M | Financing Cash Flow |
| 56.00M | 52.10M | 477.65M | 570.43M | 617.55M |
Hanmi Financial Technical Analysis
Negative
21.52
Price Trends
23.31
Negative
23.62
Negative
20.51
Positive
Market Momentum
-0.36
Positive
28.48
Positive
11.95
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HAFC, the sentiment is Negative. The current price of 21.52 is below the 20-day moving average (MA) of 23.73, below the 50-day MA of 23.31, and above the 200-day MA of 20.51, indicating a neutral trend. The MACD of -0.36 indicates Positive momentum. The RSI at 28.48 is Positive, neither overbought nor oversold. The STOCH value of 11.95 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for HAFC.
Hanmi Financial Risk Analysis
Hanmi Financial disclosed 35 risk factors in its most recent earnings report. Hanmi Financial reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Hanmi Financial Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | $649.82M | 10.95 | 8.60% | 4.54% | 8.33% | -21.76% | |
68 Neutral | $11.68B | 10.13 | 15.89% | 2.67% | 13.84% | 2.04% | |
67 Neutral | $1.24B | 12.85 | 4.68% | 5.30% | -6.33% | -25.89% | |
66 Neutral | $2.03B | 12.96 | 5.34% | 6.18% | 26.76% | 455.85% | |
64 Neutral | $3.05B | 11.30 | 10.25% | 3.04% | 8.05% | -18.64% | |
64 Neutral | $13.80B | 10.64 | 9.23% | 4.22% | 17.66% | -7.66% | |
55 Neutral | $2.18B | 26.71 | 3.68% | 2.90% | 345.02% | ― |
* Financial Sector Average
Performance Comparison
HAFC
Hanmi Financial
21.77
7.39
51.39%
HOPE
Hope Bancorp
10.28
-0.29
-2.74%
CATY
Cathay General Bancorp
42.52
4.15
10.82%
EWBC
East West Bancorp
84.35
9.89
13.28%
BANC
Banc of California
13.30
-1.22
-8.40%
PPBI
Pacific Premier Bancorp
21.05
-0.85
-3.88%
Hanmi Financial Earnings Call Summary
Earnings Call Date: Jan 28, 2025 | % Change Since: -4.95% | Next Earnings Date: Apr 29, 2025
Earnings Call Sentiment Positive
The earnings call reflected a generally positive sentiment with substantial growth in net income, deposit growth, and successful initiatives like USKC. However, there were challenges in maintaining loan production levels and managing noninterest income and expenses.Highlights
Strong Net Income and Dividend Increase
Net income for 2024 reached $62.2 million or $2.05 per diluted share. The board approved an 8% increase in the quarterly dividend to $0.27 per share for the next dividend payment in February.
C&I Portfolio and USKC Initiative Growth
C&I portfolio increased by 16% as part of their diversification strategy, driven by the USKC initiative. The USKC loan portfolio grew by 23%, now representing 15% of the total loan portfolio.
Deposit Growth and Relationship Banking Success
Deposits grew by 2.5% in 2024, with a 4.6% increase in noninterest-bearing deposits, now accounting for 32.6% of total deposits. This reflects the success of their relationship-driven banking model.
Asset Quality and Capital Ratios
Nonperforming assets improved to 0.19%, and allowance for credit losses remained healthy at 1.12%. The preliminary common Tier 1 ratio was 12.11%, and the bank's preliminary total capital ratio was 14.43%.
Lowlights
Decreased Loan Production
Fourth quarter loan production was $339 million, down $9 million or 2.5% from the third quarter, with a significant decrease in C&I production by 43% from the prior quarter.
Noninterest Income and Expenses
Noninterest income for the fourth quarter decreased by $1.1 million from the third quarter. Noninterest expenses rose modestly by 3.5% for the year, with specific gains and charges impacting quarterly figures.
Company Guidance
In the Hanmi Financial Corporation's fourth quarter and full year 2024 conference call, several key metrics and strategic initiatives were highlighted. The company reported a net income of $62.2 million, translating to $2.05 per diluted share, with a return on average assets of 0.83% and a return on average equity of 7.97%. Hanmi Financial saw a 16% increase in its commercial and industrial (C&I) portfolio, contributing to a 4.6% rise in noninterest-bearing deposits, which now represent 32.6% of total deposits. The Corporate Korea initiative was a significant growth driver, with a 23% increase in its loan portfolio, now constituting 15% of the total loan portfolio. The company maintained a strong asset quality, with nonperforming assets at 0.19% of total assets and an allowance for credit losses at 1.12%. Hanmi also achieved a 2.5% deposit growth, driven by a strategic focus on relationship banking, while optimizing its branch network and managing expenses, which only rose by 3.5% despite inflationary pressures. The company plans to target low to mid-single-digit loan growth in 2025, focusing on expanding its C&I portfolio and reducing its commercial real estate exposure.Hanmi Financial Corporate Events
Business Operations and StrategyFinancial DisclosuresRegulatory Filings and Compliance
Hanmi Financial Shares Growth Strategies in Presentation
Neutral
Mar 11, 2025
On March 11, 2025, Hanmi Financial Corporation distributed a slide presentation to analysts and prospective investors, detailing its operating and growth strategies along with financial performance. The presentation, part of a Current Report on Form 8-K, is intended to furnish information without being deemed as filed for regulatory purposes, and does not imply the information is material or complete for investment decisions.
Executive/Board Changes
Hanmi Financial Extends CEO and CFO Contracts
Positive
Mar 5, 2025
On March 4, 2025, Hanmi Financial Corporation and its subsidiary Hanmi Bank extended the employment agreements of key executives. The employment agreement for Bonita I. Lee, President and CEO, was extended to April 28, 2028, with automatic annual renewals unless notice is given. Similarly, the agreement for Romolo C. Santarosa, Senior Executive Vice President and CFO, was extended to December 31, 2027, also with automatic renewals. These extensions aim to ensure leadership stability within the company.
Executive/Board Changes
Hanmi Financial Appoints Christine P. Ball to Board
Positive
Mar 3, 2025
On March 3, 2025, Hanmi Financial Corporation announced the appointment of Christine P. Ball to its Board of Directors, effective March 1, 2025. With over 20 years of experience in corporate, commercial, and private banking, Ms. Ball’s expertise in credit and risk management is expected to enhance Hanmi’s financial stewardship and growth strategies. Her appointment to various committees within the company signals a strategic move to strengthen Hanmi’s commitment to sound financial practices.
DividendsBusiness Operations and StrategyFinancial Disclosures
Hanmi Financial Highlights Growth and Community Focus
Positive
Feb 20, 2025
On February 20, 2025, Hanmi Financial Corporation shared a presentation with analysts and prospective investors that highlighted its operating and growth strategies, as well as its financial performance. The company continues to demonstrate strong financial health with significant growth in deposits and loans, disciplined credit administration, and a focus on community support, evidenced by an increased cash dividend and a commitment to community reinvestment efforts.
Business Operations and StrategyFinancial Disclosures
Hanmi Financial Outlines Growth and Financial Performance
Positive
Jan 29, 2025
On January 29, 2025, Hanmi Financial Corporation shared a slide presentation with analysts and prospective investors, highlighting its operating and growth strategies, as well as financial performance. The company reported a net income of $17.7 million for the fourth quarter of 2024, reflecting an increase in net interest income, and demonstrated strong capital management and financial stability through improved efficiency ratios and disciplined credit administration.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.