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

Quarterly report pursuant to Section 13 or 15(d)

Securities

Securities

3 Months Ended

Mar. 31, 2016

Investments, Debt and Equity Securities [Abstract]

The following is a summary of securities available for sale as of March 31, 2016 and December 31, 2015:



	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Estimated Fair Value
	(in thousands)
March 31, 2016
Mortgage-backed securities ^{(1) (2)}	$	271,395	$	2,642	$	447	$	273,590
Collateralized mortgage obligations ⁽¹⁾	91,947		404		222		92,129
U.S. government agency securities	39,982		66		8		40,040
SBA loan pool securities	60,811		12		216		60,607
Municipal bonds-tax exempt	161,527		4,599		—		166,126
Municipal bonds-taxable	13,888		425		—		14,313
Corporate bonds	5,016		—		18		4,998
U.S. treasury securities	158		2		—		160
Mutual funds	22,916		240		87		23,069
Total securities available for sale	$	667,640	$	8,390	$	998	$	675,032

December 31, 2015
Mortgage-backed securities ^{(1) (2)}	$	286,450	$	392	$	2,461	$	284,381
Collateralized mortgage obligations ⁽¹⁾	97,904		79		997		96,986
U.S. government agency securities	48,478		—		656		47,822
SBA loan pool securities	63,670		7		411		63,266
Municipal bonds-tax exempt	162,101		1,820		19		163,902
Municipal bonds-taxable	13,932		189		88		14,033
Corporate bonds	5,017		—		24		4,993
U.S. treasury securities	159		1		—		160
Mutual funds	22,916		—		163		22,753
Total securities available for sale	$	700,627	$	2,488	$	4,819	$	698,296


⁽¹⁾	Collateralized by residential mortgages and guaranteed by U.S. government sponsored entities.


⁽²⁾	Include securities collateralized by home equity conversion mortgages with total estimated fair value of $56.9 million and $58.6 million as of March 31, 2016 and December 31, 2015, respectively.

The amortized cost and estimated fair value of securities as of March 31, 2016, by contractual maturity, are shown below. Mortgage-backed securities and collateralized mortgage obligations are included in the table shown below based on their contractual maturities. However, their expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Mutual funds do not have contractual maturities. However, they are included in the table shown below as over ten years since the Company intends to hold these securities for at least this duration.



	Available for Sale
	Amortized Cost		Estimated Fair Value
	(in thousands)
Within one year	$	25	$	25
Over one year through five years	87,158		87,606
Over five years through ten years	300,008		303,688
Over ten years	280,449		283,713
Total	$	667,640	$	675,032

Gross unrealized losses on securities available for sale, the estimated fair value of the related securities and the number of securities aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows as of March 31, 2016 and December 31, 2015:



	Holding Period
	Less Than 12 Months					12 Months or More					Total
	Gross Unrealized Loss		Estimated Fair Value		Number of Securities	Gross Unrealized Loss		Estimated Fair Value		Number of Securities	Gross Unrealized Loss		Estimated Fair Value		Number of Securities
	(in thousands, except number of securities)
March 31, 2016
Mortgage-backed securities	$	281	$	65,007	12	$	166	$	18,704	8	$	447	$	83,711	20
Collateralized mortgage obligations	43		18,161		7	179		15,364		8	222		33,525		15
U.S. government agency securities	—		—		—	8		7,984		3	8		7,984		3
SBA loan pool securities	125		47,102		12	91		7,193		3	216		54,295		15
Municipal bonds-tax exempt	—		854		1	—		—		—	—		854		1
Corporate bonds	18		4,998		1	—		—		—	18		4,998		1
Mutual funds	—		—		—	87		939		3	87		939		3
Total	$	467	$	136,122	33	$	531	$	50,184	25	$	998	$	186,306	58

December 31, 2015
Mortgage-backed securities	$	1,734	$	193,931	52	$	727	$	21,659	9	$	2,461	$	215,590	61
Collateralized mortgage obligations	335		48,970		18	662		32,964		13	997		81,934		31
U.S. government agency securities	201		23,289		8	455		24,533		8	656		47,822		16
SBA loan pool securities	161		50,499		12	250		7,036		3	411		57,535		15
Municipal bonds-tax exempt	19		8,922		6	—		—		—	19		8,922		6
Municipal bonds-taxable	88		7,106		4	—		—		—	88		7,106		4
Corporate binds	24		4,994		1	—		—		—	24		4,994		1
Mutual funds	66		21,820		3	97		928		3	163		22,748		6
Total	$	2,628	$	359,531	104	$	2,191	$	87,120	36	$	4,819	$	446,651	140

All individual securities that have been in a continuous unrealized loss position for 12 months or longer as of March 31, 2016 and December 31, 2015 had investment grade ratings upon purchase. The issuers of these securities have not established any cause for default on these securities and the various rating agencies have reaffirmed these securities’ long-term investment grade status as of March 31, 2016 and December 31, 2015. These securities have fluctuated in value since their purchase dates as market interest rates have fluctuated.

The Company does not intend to sell these securities and it is more likely than not that we will not be required to sell the securities before the recovery of their amortized cost basis. In addition, the unrealized losses on municipal and corporate bonds are not considered other-than-temporarily impaired, as the bonds are rated investment grade and there are no credit quality concerns with the issuers. Interest payments have been made as scheduled, and management believes this will continue in the future and that the bonds will be repaid in full as scheduled. Therefore, in management’s opinion, all securities that have been in a continuous unrealized loss position for the past 12 months or longer as of March 31, 2016 and December 31, 2015 were not other-than-temporarily impaired, and therefore, no impairment charges as of March 31, 2016 and December 31, 2015 were warranted.

Realized gains and losses on sales of securities and proceeds from sales of securities were as follows for the periods indicated:



	Three Months Ended March 31,
	2016		2015
	(in thousands)
Gross realized gains on sales of securities	$	—	$	2,194
Gross realized losses on sales of securities	—		(10		)
Net realized gains on sales of securities	$	—	$	2,184
Proceeds from sales of securities	$	—	$	176,848

For the three months ended March 31, 2016, there was no gain or loss included in earnings resulting from the sale of securities. For the three months ended March 31, 2015, there was a $2.2 million net gain in earnings resulting from the sale of securities that had previously been recorded as net unrealized gains of $535,000 in comprehensive income.

Securities available for sale with market values of $70.2 million and $72.0 million as of March 31, 2016 and December 31, 2015, respectively, were pledged to secure public deposits and for other purposes as required or permitted by law.

- Definition

The entire disclosure for investments in certain debt and equity securities.

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