Bonnie Lee became chief executive of Hanmi Bank in 2019, overseeing the institution during the Covid-19 crisis, periods of high interest rates and inflation, regional bank closures and now the aftermath of the L.A. wildfires.
Through it all, the Koreatown-based bank has seen a 36% increase in assets, significant loan diversification and continued investment in the community.
The Business Journal sat down with Lee to discuss her strategy for Hanmi’s growth, its target sectors and overall performance.
Tell me about your professional history and how your experience has informed your leadership at Hanmi.
I’ve been a banker for over three decades, pretty much right out of college. I started as a part of trainee program at a bank in Southern California and I’m one of those bankers that has touched upon every aspect of banking. Through the training program, I (had) … an opportunity to be trained at different parts of the organization and … to have a bird’s eye view of community banking, particularly in lending, and then I eventually developed my expertise in credit and lending.
In the late 1980s where, particularly within the Korean business community, there was a lot of small business demand, I did a lot of underwriting of small business loans and then really had opportunities to learn about different types of small businesses…
Then throughout my banking career, I moved into a number of managerial positions within credit and then eventually I became a senior credit officer and then chief credit officer (at Nara Bank) moving to the revenue generation side. And then I became a chief operating officer and president (of BBCN Bank). I then joined Hanmi about 11 and a half years ago (when we were at) about $2.5 billion and we are little bit shy of $8 billion (in assets) as of the year end. It’s given me a tremendous opportunity to be part of a team.
Give me an introduction about Hanmi and its history with the Korean community.
Hanmi is an organization established in 1982. We are the first Korean American bank established by local businessmen and women in the United States… That gave us first mover opportunity in terms of where we established all our branches, so we’re in the all the prime spots. Currently, we have 31 branches throughout the United States: 20 in California, five in Texas, three in Illinois and three in the East Coast. We operate five loan production offices … and our target customer is small to medium sized businesses. At the initiation of the institution, it was predominantly (serving) the Korean American business community. However, fast forward to today it’s not just the Korean American business community but other ethnic groups that we target as customers.
What does Hanmi’s portfolio look like?
We are a little over 60% in commercial real estate … about 15% in the commercial and industrial loans and then the other 15% is in the residential mortgage. We are also very active with SBA loans and we have a small book of equipment leasing.
Many ethnic banks that are headquartered in California have their assets pretty much concentrated in the commercial real estate. But for the last 10 years, one of our strategies that I think we have done a really good job with is diversifying our portfolio, not only diversifying our loans from commercial real estate to the C&I loans, mortgage and equipment leasing, but also geographically.
Through an acquisition of (Central Bancorp. in 2014), we were able to expand out of California into Texas, Illinois and the eastern region. That captured the geographic diversity we are sitting with today.
Would you be open to other acquisition opportunities for the bank?
We’re always open to acquisitive opportunities. Our philosophy is not only does it need to make sense financially but strategically…It’s not just size, but I think that culturally you have to be aligned. And at the end of the day, when you combine two banks, there has to be a synergy… and then also you have to be able to consolidate the social element of the two institutions…
Hanmi also has experience with (partial acquisitions) where we acquired a small equipment leasing platform from (Banc of California in 2016), and that’s how we expanded our current equipment leasing division. We have done that very successfully, so (an acquisition) could be a business vertical, or it could be a whole bank; we are open to it.
Can you discuss the 16% increase Hanmi saw over the course of 2024 in its commercial and industrial loan portfolio? To what extent did the bank’s Corporate Korea Initiative have an impact on this?
The banking community evolves and then business opportunities and the markets that we operate in also evolve. Throughout the last couple of decades, it seems like there are less small business loan opportunities. And so, a couple years ago, we identified the need for creating our USKC (U.S. Korea Corporate) business (which serves) Korean companies with businesses and collaterals within the U.S. … Historically they were using much bigger regional or national banks but now that (we) have grown to the size where we can actually accommodate their banking needs both in loan and deposits, we felt that there was an opportunity for this.
When I first thought about this initiative, it was mostly targeted to companies related to the automobile industry and their supply vendor chains … but there’s such a broad base of industries, including K-entertainment, K-education, K-energy and then also real estate investments from when … (companies) develop or acquire properties in the United States.
Then another big component is our digital banking capabilities and throughout last the couple years, we really steadfastly invested in the digital banking space, because most of the corporate clients really don’t come into the branch.
Hanmi recently opened its first international representative office in Seoul late last year. How has that added value to the bank?
If clients (in Korea) need to have face time with a representative, then we have somebody physically there to communicate and provide the services (such as) getting a document signed (as opposed to going to) the U.S. embassy in Korea to get it notarized…
Additionally, whether it’s individuals a corporation, they may think they know U.S. banking but there’s a vast difference between the banking in Korea and banking in the United States. One of the differentiators is the compliance, particularly on the know-your-customer front, so I think it gives an opportunity for our career rep officer to provide the understanding and the knowledge for any companies that want to come and open an account within the United States.
Shifting gears, I noticed that Hanmi’s stock has been performing quite well in the last year. What in your view has contributed to some of that rise?
In terms of the expectations of what we can perform, we haven’t been deviant in the marketplace. Looking at just our fourth quarter where we experienced our net interest margin, and the major contributor is that we actually managed our deposit costs fairly well…
It’s also our relationship banking strategy. You’ll hear a lot of banks that are promoting relationship banking, but promoting is one thing, but we actually practice top down and that’s why we have been fairly successful delivering our overall numbers. And I think that the marketplace has recognized that.
How do you work to build relationships, especially in times of uncertainty?
The key part of this is communication and this is something that I promote within the bank, internally as well as externally…When challenging times come, we are right there. We don’t just stand by; we get in the middle of it…
(During Covid) the government came up with the PPP (Paycheck Protection Program) and there were banks that were kind of shying away from getting involved but we actually put a front-page advertisement in the community … and we ended up doing $300 million in the first round…
(Last week) we did a partnership with the SBA and YMCA and we put on a fire relief session where we invited the community, business owners, older individuals that were impacted to a session for the various SBA relief programs and then we provided a donation as well.
What do you view as the biggest challenge facing Hanmi and how are you addressing it both in the short term and the long term?
A challenge for a lot of community banks right now is finding talent. Banking is unique in the sense that there’s the risk and compliance element … and because of that, the retention is pretty challenging, particularly for the younger generation. The experienced bankers age and retire so you need a continued influx of talent to have that labor force…
A lot of people think banking is a numbers business, but it’s really a people business so we can only be as good as the talent that we have…
We have our eyes focused on acquiring talented bankers … and just looking at the numbers last year, we very successfully added over two dozen bankers… We also try to grow them internally as well through our internal training program…People also like to be part of a successful organization so that has worked in our favor too. (They) like sharing core values of … integrity, fairness, collaboration, teamwork and transparency.
