Hanmi Financial Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Loans (Tables)

Loans (Tables)

3 Months Ended

Mar. 31, 2014

Loans receivable consisted of the following as of the dates indicated:


	March 31, 2014			December 31, 2013
	(In thousands)
Real estate loans:
Commercial property ⁽¹⁾
Retail	$	547,472		$	543,619
Hotel/Motel		331,971			322,927
Gas station		286,919			292,557
Other		751,122			731,617
Construction		125			—
Residential property		110,305			79,078

Total real estate loans		2,027,914			1,969,798
Commercial and industrial loans:
Commercial term		116,903			124,391
Commercial lines of credit		67,079			71,042
International loans		35,120			36,353

Total commercial and industrial loans		219,102			231,786
Consumer loans		29,356			32,505

Total gross loans		2,276,372			2,234,089
Allowance for loans losses		(56,593	)		(57,555	)
Deferred loan costs		1,741			964

Loans receivable, net	$	2,221,520		$	2,177,498

⁽¹⁾

Includes owner-occupied property loans of $958.4 million and $957.3 million as of March 31, 2014 and December 31, 2013, respectively.

Loans Receivable to Loans Held for Sale

The following table details the information on the sales and reclassifications of loans receivable to loans held for sale by portfolio segment for the three months ended March 31, 2014 and 2013:


	Real Estate			Commercial and Industrial			Consumer		Total
	(In thousands)
March 31, 2014
Balance at beginning of period	$	—		$	—		$	—	$	—
Origination of loans held for sale		6,269			85			—		6,354
Sales of loans held for sale		(5,874	)		(84	)		—		(5,958	)
Principal payoffs and amortization		(5	)		(1	)		—		(6	)

Balance at end of period	$	390		$	—		$	—	$	390


March 31, 2013
Balance at beginning of period	$	7,977		$	329		$	—	$	8,306
Origination of loans held for sale		21,340			1,804			—		23,144
Reclassification from loans receivable to loans held for sale		3,373			—			—		3,373
Sales of loans held for sale		(26,907	)		(1,858	)		—		(28,765	)
Principal payoffs and amortization		(14	)		(1	)		—		(15	)

Balance at end of period	$	5,769		$	274		$	—	$	6,043

Allowance for Loan Losses and Allowance for Off-Balance Sheet Items

Activity in the allowance for loan losses and allowance for off-balance sheet items was as follows for the periods indicated:


	As of and for the Three Months Ended
	March 31, 2014			December 31, 2013			March 31, 2013
	(In thousands)
Allowance for loan losses:
Balance at beginning of period	$	57,555		$	57,639		$	63,305
Charge-offs		(1,604	)		(738	)		(3,024	)
Recoveries on loans previously charged off		4,251			572			714

Net loan recoveries (charge-offs)		2,647			(166	)		(2,310	)
(Negative provision) provision charged to operating expense		(3,609	)		82			196

Balance at end of period	$	56,593		$	57,555		$	61,191


Allowance for off-balance sheet items:
Balance at beginning of period	$	1,248		$	1,330		$	1,824
Provision (negative provision) charged to operating expense		309			(82	)		(196	)

Balance at end of period	$	1,557		$	1,248		$	1,628

Allowance for Loan Losses by Portfolio Segment

The following table details the information on the allowance for loan losses by portfolio segment for the three months ended March 31, 2014 and March 31, 2013:


	Real Estate			Commercial and Industrial			Consumer			Unallocated		Total
	(In thousands)
March 31, 2014
Allowance for loan losses:
Beginning balance	$	43,550		$	11,287		$	1,427		$	1,291	$	57,555
Charge-offs		(1,128	)		(422	)		(54	)		—		(1,604	)
Recoveries on loans previously charged off		2,918			1,321			12			—		4,251
(Negative provision) provision		(1,110	)		(1,761	)		(752	)		14		(3,609	)

Ending balance	$	44,230		$	10,425		$	633		$	1,305	$	56,593

Ending balance: individually evaluated for impairment	$	1,029		$	3,973		$	117		$	—	$	5,119

Ending balance: collectively evaluated for impairment	$	43,201		$	6,452		$	516		$	1,305	$	51,474

Loans receivable:
Ending balance	$	2,027,914		$	219,102		$	29,356		$	—	$	2,276,372

Ending balance: individually evaluated for impairment	$	34,294		$	14,503		$	1,553		$	—	$	50,350

Ending balance: collectively evaluated for impairment	$	1,993,620		$	204,599		$	27,803		$	—	$	2,226,022


March 31, 2013
Allowance for loan losses:
Beginning balance	$	49,472		$	10,636		$	2,280		$	917	$	63,305
Charge-offs		(1,285	)		(1,575	)		(164	)		—		(3,024	)
Recoveries on loans previously charged off		181			484			49			—		714
(Negative provision) provision		(2,040	)		1,519			(370	)		1,087		196

Ending balance	$	46,328		$	11,064		$	1,795		$	2,004	$	61,191

Ending balance: individually evaluated for impairment	$	764		$	3,719		$	401		$	—	$	4,884

Ending balance: collectively evaluated for impairment	$	45,564		$	7,345		$	1,394		$	2,004	$	56,307

Loans receivable:
Ending balance	$	1,882,445		$	204,061		$	35,180		$	—	$	2,121,686

Ending balance: individually evaluated for impairment	$	31,317		$	16,695		$	1,639		$	—	$	49,651

Ending balance: collectively evaluated for impairment	$	1,851,128		$	187,366		$	33,541		$	—	$	2,072,035

Credit Quality of Loan Portfolio

As of March 31, 2014 and December 31, 2013, Pass/Pass-Watch (grade 0-4), criticized (grade 5) and classified (grade 6-7) loans, disaggregated by loan class, were as follows:


	Pass/ Pass-Watch (Grade 0-4)		Criticized (Grade 5)		Classified (Grade 6-7)		Total Loans
	(In thousands)
March 31, 2014
Real estate loans:
Commercial property
Retail	$	534,305	$	7,328	$	5,839	$	547,472
Hotel/Motel		322,087		3,960		5,924		331,971
Gas station		279,137		115		7,667		286,919
Other		726,569		7,983		16,570		751,122
Construction		125		—		—		125
Residential property		108,837		—		1,468		110,305
Commercial and industrial loans:
Commercial term		102,243		2,207		12,453		116,903
Commercial lines of credit		66,111		—		968		67,079
International loans		34,540		580		—		35,120
Consumer loans		27,242		157		1,957		29,356

Total gross loans	$	2,201,196	$	22,330	$	52,846	$	2,276,372


December 31, 2013
Real estate loans:
Commercial property
Retail	$	531,014	$	5,309	$	7,296	$	543,619
Hotel/Motel		308,483		1,796		12,648		322,927
Gas station		279,636		3,104		9,817		292,557
Other		690,481		8,524		32,612		731,617
Residential property		77,422		—		1,656		79,078
Commercial and industrial loans:
Commercial term		107,712		2,007		14,672		124,391
Commercial lines of credit		69,823		—		1,219		71,042
International loans		35,777		576		—		36,353
Consumer loans		30,044		163		2,298		32,505

Total gross loans	$	2,130,392	$	21,479	$	82,218	$	2,234,089

Analysis of Past Due Loans, Disaggregated by Loan Class

The following is an aging analysis of past due loans, disaggregated by loan class, as of March 31, 2014 and December 31, 2013:


	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans		Accruing 90 Days or More Past Due
	(In thousands)

March 31, 2014
Real estate loans:
Commercial property
Retail	$	795	$	—	$	2,583	$	3,378	$	544,094	$	547,472	$	—
Hotel/Motel		1,326		—		1,288		2,614		329,357		331,971		—
Gas station		700		—		381		1,081		285,838		286,919		—
Other		1,873		—		1,805		3,678		747,444		751,122		—
Construction		—		—		—		—		125		125		—
Residential property		813		—		114		927		109,378		110,305		—
Commercial and industrial loans:
Commercial term		2,035		123		3,798		5,956		110,947		116,903		—
Commercial lines of credit		192		—		146		338		66,741		67,079		—
International loans		—		—		—		—		35,120		35,120		—
Consumer loans		540		18		227		785		28,571		29,356		—

Total gross loans	$	8,274	$	141	$	10,342	$	18,757	$	2,257,615	$	2,276,372	$	—


December 31, 2013
Real estate loans:
Commercial property
Retail	$	202	$	426	$	2,196	$	2,825	$	540,794	$	543,619	$	—
Hotel/Motel		1,087		—		1,532		2,619		320,308		322,927		—
Gas station		141		410		153		704		291,853		292,557		—
Other		423		2,036		839		3,297		728,320		731,617		—
Residential property		—		122		279		401		78,677		79,078		—
Commercial and industrial loans:
Commercial term		1,443		886		3,269		5,598		118,793		124,391		—
Commercial lines of credit		—		150		250		400		70,642		71,042		—
International loans		—		—		—		—		36,353		36,353		—
Consumer loans		311		42		77		430		32,075		32,505		—

Total gross loans	$	3,607	$	4,072	$	8,595	$	16,274	$	2,217,815	$	2,234,089	$	—

Information on Impaired Loans, Disaggregated by Loan Class

The following table provides information on impaired loans, disaggregated by loan class, as of the dates indicated:


	Recorded Investment		Unpaid Principal Balance		With No Related Allowance Recorded		With an Allowance Recorded		Related Allowance		Average Recorded Investment		Interest Income Recognized
	(In thousands)
March 31, 2014
Real estate loans:
Commercial property
Retail	$	7,278	$	7,398	$	4,620	$	2,658	$	396	$	7,304	$	71
Hotel/Motel		3,510		4,136		2,992		518		59		3,531		49
Gas station		9,421		9,960		8,801		620		218		9,455		188
Other		11,544		12,893		8,314		3,230		355		11,624		223
Residential property		2,540		2,648		2,540		—		—		2,552		27
Commercial and industrial loans:
Commercial term		12,658		13,136		2,642		10,016		3,917		12,819		177
Commercial lines of credit		733		815		733		—		—		745		14
International loans		1,113		1,113		522		591		57		1,130		—
Consumer loans		1,553		1,670		637		916		117		1,558		15

Total gross loans	$	50,350	$	53,769	$	31,801	$	18,549	$	5,119	$	50,718	$	764


December 31, 2013
Real estate loans:
Commercial property
Retail	$	6,244	$	6,332	$	3,767	$	2,477	$	305	$	4,342	$	166
Hotel/Motel		6,200		6,940		4,668		1,532		1,183		5,125		530
Gas station		9,389		9,884		8,592		797		209		8,939		756
Other		11,451		12,882		9,555		1,896		351		10,014		1,047
Residential property		2,678		2,773		2,678		—		—		2,941		117
Commercial and industrial loans:
Commercial term		13,834		14,308		2,929		10,905		3,806		13,083		968
Commercial lines of credit		614		686		173		441		252		1,008		54
International loans		1,087		1,087		286		801		78		1,284		—
Consumer loans		1,569		1,671		644		925		284		1,612		71

Total gross loans	$	53,066	$	56,563	$	33,292	$	19,774	$	6,468	$	48,348	$	3,709

Summary of Interest Foregone on Impaired Loans

The following is a summary of interest foregone on impaired loans for the periods indicated:


	Three Months Ended
	March 31, 2014			March 31, 2013
	(In thousands)
Interest income that would have been recognized had impaired loans performed in accordance with their original terms	$	1,213		$	1,068
Less: Interest income recognized on impaired loans		(764	)		(896	)

Interest foregone on impaired loans	$	449		$	172

Non-Accrual Loans, Disaggregated by Loan Class

The following table details non-accrual loans, disaggregated by loan class, as of the dates indicated:


	March 31, 2014		December 31, 2013
	(In thousands)
Real estate loans:
Commercial property
Retail	$	3,507	$	2,946
Hotel/Motel		2,510		5,200
Gas station		2,560		2,492
Other		5,008		4,808
Residential property		1,180		1,365
Commercial and industrial loans:
Commercial term		8,092		7,146
Commercial lines of credit		546		423
Consumer loans		1,631		1,497

Total non-accrual loans	$	25,034	$	25,877

Non-Performing Assets

The following table details non-performing assets as of the dates indicated:


	March 31, 2014		December 31, 2013
	(In thousands)
Non-accrual loans	$	25,034	$	25,877
Loans 90 days or more past due and still accruing		—		—

Total non-performing loans		25,034		25,877
Other real estate owned		—		756

Total non-performing assets	$	25,034	$	26,633

Troubled Debt Restructurings, Disaggregated by Type of Concession and by Loan Type

The following table details troubled debt restructurings, disaggregated by concession type and by loan type, as of March 31, 2014 and December 31, 2013:


	Non-Accrual TDRs										Accrual TDRs
	Deferral of Principal		Deferral of Principal and Interest		Reduction of Principal and Interest		Extension of Maturity		Total		Deferral of Principal		Deferral of Principal and Interest		Reduction of Principal and Interest		Extension of Maturity		Total
	(In thousands)
March 31, 2014
Real estate loans:
Commercial property
Retail	$	—	$	—	$	—	$	732	$	732	$	310	$	—	$	—	$	—	$	310
Hotel/Motel		1,243		749		—		—		1,992		1,000		—		—		—		1,000
Gas station		1,256		—		716		—		1,972		364		—		—		—		364
Other		393		1,251		528		—		2,172		3,358		—		803		2,020		6,181
Residential property		782		—		—		—		782		—		—		—		—		—
Commercial and industrial loans:
Commercial term		766		497		1,281		482		3,026		136		199		2,340		2,918		5,593
Commercial lines of credit		242		—		—		158		400		—		—		187		—		187
Consumer loans		—		—		149		—		149		—		—		—		—		—

Total	$	4,682	$	2,497	$	2,674	$	1,372	$	11,225	$	5,168	$	199	$	3,330	$	4,938	$	13,635


December 31, 2013
Real estate loans:
Commercial property
Retail	$	—	$	—	$	—	$	750	$	750	$	—	$	—	$	—	$	474	$	474
Hotel/Motel		1,272		758		—		—		2,030		1,000		—		—		—		1,000
Gas station		1,291		—		729		—		2,020		365		—		—		2,609		2,974
Other		403		1,279		555		—		2,237		2,956		—		1,253		2,027		6,236
Residential property		795		—		—		—		795		—		—		—		—		—
Commercial and industrial loans:
Commercial term		25		206		1,449		851		2,531		1,203		—		2,286		3,817		7,306
Commercial lines of credit		—		—		—		173		173		—		—		191		—		191
International loans		—		—		—		—		—		—		—		1,087		—		1,087
Consumer loans		—		—		—		—		—		—		—		149		—		149

Total	$	3,786	$	2,243	$	2,733	$	1,774	$	10,536	$	5,524	$	—	$	4,966	$	8,927	$	19,417

Troubled Debt Restructurings, Disaggregated by Loan Class

The following table details troubled debt restructurings, disaggregated by loan class, for the three months ended March 31, 2014 and 2013:


	March 31, 2014						March 31, 2013
	Number of Loans		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Loans		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
	(In thousands, except number of loans)

Real estate loans:
Commercial property
Other ⁽¹⁾		1	$	943	$	943		—	$	—	$	—
Commercial and industrial loans:
Commercial term ⁽²⁾		5		829		788		2		205		205
Commercial lines of credit ⁽³⁾		1		250		242		—		—		—
International loans ⁽⁴⁾		—		—		—		2		1,584		1,430

Total		7	$	2,022	$	1,973		4	$	1,789	$	1,635

⁽¹⁾

Includes a modification of $943,000 through a payment deferral for the three months ended March 31, 2014.

⁽²⁾

Includes modifications of $491,000 through a payment deferral, $107,000 through reductions of principal or accrued interest and $190,000 through an extension of maturity for the three months ended March 31, 2014, and modifications of $7,000 through a payment deferral and $198,000 through an extension of maturity for the three months ended March 31, 2013.

⁽³⁾

Includes a modification of $242,000 through a payment deferral for the three months ended March 31, 2014.

⁽⁴⁾

Includes modifications of $1.4 million through reductions of principal or accrued interest for the three months ended March 31, 2013.

Troubled Debt Restructurings that Defaulted Subsequent to Modifications Occurring Within Previous Twelve Months, Disaggregated by Loan Class

The following table details troubled debt restructurings that defaulted subsequent to the modifications occurring within the previous twelve months, disaggregated by loan class, for the three months ended March 31, 2014 and 2013, respectively:


	Three Months Ended
	March 31, 2014				March 31, 2013
	Number of Loans		Recorded Investment		Number of Loans		Recorded Investment
	(In thousands, except number of loans)
Real estate loans:
Commercial property
Retail		1	$	310		—	$	—
Hotel/Motel		1		1,000		—		—
Gas station		1		87		1		1,306
Other		2		481		—		—
Commercial and industrial loans:
Commercial term		1		53		8		762
Commercial lines of credit		—		—		1		188
Consumer Loans		1		149		—		—

Total		7	$	2,080		10	$	2,256

Changes in Servicing Assets

The changes in servicing assets for the three months ended March 31, 2014 and 2013 were as follows:


	Three Months Ended March 31,
	2014			2013
	(In thousands)
Balance at beginning of period	$	6,833		$	5,542
Additions		200			791
Amortization		(474	)		(329	)

Balance at end of period	$	6,559		$	6,004