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, 2021

Loans consisted of the following as of the dates indicated:

	March 31, 2021			December 31, 2020
	(in thousands)
Real estate loans:
Commercial property
Retail	$	811,583		$	824,606
Hospitality		842,014			859,953
Other ⁽¹⁾		1,656,065			1,610,377
Total commercial property loans		3,309,662			3,294,936
Construction		62,626			58,882
Residential/consumer loans		328,228			345,831
Total real estate loans		3,700,516			3,699,649
Commercial and industrial loans		707,073			757,255
Leases receivable		409,562			423,264
Loans receivable		4,817,151			4,880,168
Allowance for credit losses		(88,392	)		(90,426	)
Loans receivable, net	$	4,728,759		$	4,789,742

⁽¹⁾	Includes, among other types, mixed-use, apartment, office, industrial, gas stations, faith-based facilities and warehouse; all other property types represent less than one percent of total loans receivable.

Activity for Loans Held for Sale

The following is the activity for loans held for sale for the three months ended March 31, 2021 and 2020:

	Real Estate			Commercial and Industrial			Total
	(in thousands)
March 31, 2021
Balance at beginning of period	$	8,042		$	526		$	8,568
Originations and transfers		16,283			130,387			146,670
Sales		(13,395	)		(109,169	)		(122,564	)
Principal paydowns and amortization		—			—			—
Balance at end of period	$	10,930		$	21,744		$	32,674

March 31, 2020
Balance at beginning of period	$	2,943		$	3,077		$	6,020
Originations		6,494			5,703			12,197
Sales		(9,432	)		(8,780	)		(18,212	)
Principal paydowns and amortization		(5	)		—			(5	)
Balance at end of period	$	—		$	—		$	—

Allowance for Credit Losses by Portfolio Segment

The following table details the information on the allowance for credit losses by portfolio segment for the periods indicated:

	Real Estate			Commercial and Industrial			Leases Receivable			Total
	(in thousands)
March 31, 2021
Balance at beginning of period		51,877		$	21,410		$	17,139		$	90,426
Less loans charged off		1,509			93			1,903			3,505
Recoveries on loans receivable previously charged off		(273	)		(99	)		(135	)		(507	)
Provision for credit losses		7,121			(5,029	)		(1,128	)		964
Ending balance	$	57,762		$	16,387		$	14,243		$	88,392
Individually evaluated	$	11		$	7,584		$	4,561		$	12,156
Collectively evaluated	$	57,751		$	8,803		$	9,682		$	76,236

Loans receivable	$	3,700,516		$	707,073		$	409,562		$	4,817,151
Individually evaluated	$	39,144		$	14,297		$	10,025		$	63,466
Collectively evaluated	$	3,661,372		$	692,777		$	399,537		$	4,753,686

March 31, 2020
Balance at beginning of period	$	36,435		$	16,206		$	8,767		$	61,408
Adjustment related to adoption of ASU 2016-13		14,028			(2,497	)		5,902			17,433
Adjusted balance as of January 1, 2020		50,463			13,709			14,669			78,841
Less loans charged off		14,143			12,150			1,181			27,474
Recoveries on loans receivable previously charged off		(58	)		(84	)		(74	)		(216	)
Provision for credit losses		2,754			9,945			2,218			14,917
Ending balance	$	39,132		$	11,588		$	15,780		$	66,500
Individually evaluated	$	81		$	147		$	1,671		$	1,899
Collectively evaluated	$	39,051		$	11,441		$	14,109		$	64,601

Loans receivable	$	3,578,395		$	472,714		$	492,527		$	4,543,636
Individually evaluated	$	35,459		$	5,444		$	6,393		$	47,296
Collectively evaluated	$	3,542,936		$	467,270		$	486,134		$	4,496,340

The table below illustrates the allowance for credit losses by loan portfolio segment and each loan portfolio segment as a percentage of total loans.

	March 31, 2021							December 31, 2020
	Allowance Amount		Total Loans		Percentage of Total Loans			Allowance Amount		Total Loans		Percentage of Total Loans
	(in thousands)
Real estate loans:
Commercial property
Retail	$	3,962	$	811,583		16.8	%	$	4,855	$	824,606		16.9	%
Hospitality		38,251		842,014		17.5	%		28,801		859,953		17.6	%
Other		11,121		1,656,065		34.4	%		13,991		1,610,377		32.9	%
Total commercial property loans		53,334		3,309,662		68.7	%		47,647		3,294,936		67.4	%
Construction		3,670		62,626		1.3	%		2,876		58,882		1.2	%
Residential/consumer loans		758		328,228		6.8	%		1,353		345,831		7.1	%
Total real estate loans		57,762		3,700,516		76.8	%		51,876		3,699,649		75.8	%
Commercial and industrial loans		16,387		707,073		14.7	%		21,410		757,255		15.5	%
Leases receivable		14,243		409,562		8.5	%		17,140		423,264		8.7	%
Total	$	88,392	$	4,817,151		100.0	%	$	90,426	$	4,880,168		100.0	%

Summary of Amortized Cost Basis of Collateral Dependent Loans By Class of Loans

The following table represents the amortized cost basis of collateral-dependent loans by class of loans as of March 31, 2021 and December 31, 2020, for which repayment is expected to be obtained through the sale of the underlying collateral.

	March 31, 2021		December 31, 2020
	Amortized Cost		Amortized Cost
	(in thousands)
Real estate loans:
Commercial property
Retail	$	6,270	$	6,330
Hospitality		8,941		20,612
Other ⁽¹⁾		8,137		8,410
Total commercial property loans		23,348		35,352
Construction		11,046		24,854
Residential/consumer loans		2,832		2,867
Total real estate loans		37,226		63,073
Commercial and industrial loans		—		41
Total	$	37,226	$	63,114

⁽¹⁾	Includes, among other types, mixed-use, apartment, office, industrial, gas stations, faith-based facilities and warehouse; all other property types represent less than one percent of total loans receivable.

Credit Quality of Loan Portfolio

	Term Loans
	Amortized Cost Basis by Origination Year ⁽¹⁾
	2021		2020		2019		2018		2017		Prior		Revolving Loans Amortized Cost Basis		Total
	(in thousands)
March 31, 2021
Real estate loans:
Commercial property
Risk Rating
Pass / Pass-Watch	$	248,282	$	824,943	$	499,488	$	457,893	$	333,986	$	757,814	$	40,720	$	3,163,126
Special Mention		—		6,390		18,559		11,023		1,660		38,335		260		76,227
Classified		—		—		5,510		12,572		4,665		47,562		—		70,309
Total commercial property		248,282		831,333		523,557		481,488		340,311		843,711		40,980		3,309,662

Construction
Risk Rating
Pass / Pass Watch		11,659		27,263		—		—		—		—		—		38,922
Special Mention		—		—		—		—		—		—		—		—
Classified		—		—		—		—		—		23,704		—		23,704
Total construction		11,659		27,263		—		—		—		23,704		—		62,626

Residential/consumer loans
Risk Rating
Pass / Pass-Watch		12,640		26,795		947		33,026		117,121		121,431		7,093		319,053
Special Mention		—		—		—		930		378		5,299		—		6,607
Classified		—		—		—		—		2,245		323		—		2,568
Total residential/consumer loans		12,640		26,795		947		33,956		119,744		127,053		7,093		328,228

Total real estate loans
Risk Rating
Pass / Pass-Watch		272,581		879,001		500,435		490,919		451,107		879,245		47,813		3,521,101
Special Mention		—		6,390		18,559		11,953		2,038		43,634		260		82,834
Classified		—		—		5,510		12,572		6,910		71,589		—		96,581
Total real estate loans		272,581		885,391		524,504		515,444		460,055		994,468		48,073		3,700,516

Commercial and industrial loans:
Risk Rating
Pass / Pass-Watch		75,769		327,677		54,566		50,755		16,844		12,987		114,431		653,029
Special Mention		—		3,446		4,690		4,429		75		68		515		13,223
Classified		456		—		15,272		5,070		9,247		6,587		4,189		40,821
Total commercial and industrial loans		76,225		331,123		74,528		60,254		26,166		19,642		119,135		707,073

Leases receivable:
Risk Rating
Pass / Pass-Watch		34,174		107,408		148,514		79,816		24,719		4,906		—		399,537
Special Mention		—		—		—		—		—		—		—		—
Classified		—		488		5,826		2,267		595		849		—		10,025
Total leases receivable		34,174		107,896		154,340		82,083		25,314		5,755		—		409,562

Total loans receivable:
Risk Rating
Pass / Pass-Watch		382,524		1,314,086		703,515		621,490		492,670		897,138		162,244		4,573,667
Special Mention		—		9,836		23,249		16,382		2,113		43,702		775		96,057
Classified		456		488		26,608		19,909		16,752		79,025		4,189		147,427
Total loans receivable	$	382,980	$	1,324,410	$	753,372	$	657,781	$	511,535	$	1,019,865	$	167,208	$	4,817,151

	Term Loans
	Amortized Cost Basis by Origination Year ⁽¹⁾
	2020		2019		2018		2017		2016		Prior		Revolving Loans Amortized Cost Basis		Total

December 31, 2020
Real estate loans:
Commercial property
Risk Rating
Pass / Pass-Watch	$	920,876	$	513,962	$	479,221	$	343,659	$	418,361	$	459,367	$	31,283	$	3,166,729
Special Mention		13,680		2,484		8,630		1,671		14,971		11,907		—		53,343
Classified		—		3,528		7,303		4,712		21,351		37,840		130		74,864
Total commercial property		934,556		519,974		495,154		350,042		454,683		509,114		31,413		3,294,936

Construction
Risk Rating
Pass / Pass-Watch		33,415		613		—		—		—		—		—		34,028
Special Mention		—		—		—		—		—		—		—		—
Classified		—		—		—		—		24,854		—		—		24,854
Total construction		33,415		613		—		—		24,854		—		—		58,882

Residential/consumer loans
Risk Rating
Pass / Pass-Watch		27,997		962		37,123		127,987		82,124		54,003		7,353		337,549
Special Mention		—		—		930		829		537		2,782		—		5,078
Classified		—		—		—		2,259		301		644		—		3,204
Total residential/consumer loans		27,997		962		38,053		131,075		82,962		57,429		7,353		345,831

Total real estate loans
Risk Rating
Pass / Pass-Watch		982,288		515,537		516,344		471,646		500,485		513,370		38,636		3,538,306
Special Mention		13,680		2,484		9,560		2,500		15,508		14,689		—		58,421
Classified		—		3,528		7,303		6,971		46,506		38,484		130		102,922
Total real estate loans		995,968		521,549		533,207		481,117		562,499		566,543		38,766		3,699,649

Commercial and industrial loans:
Risk Rating
Pass / Pass-Watch		406,486		73,159		54,110		17,834		4,464		9,910		146,722		712,685
Special Mention		6,950		4,509		4,436		1,110		31		1,074		447		18,557
Classified		—		890		5,115		9,465		4,380		1,519		4,644		26,013
Total commercial and industrial loans		413,436		78,558		63,661		28,409		8,875		12,503		151,813		757,255

Leases receivable:
Risk Rating
Pass / Pass-Watch		113,712		165,242		91,408		30,405		10,096		1,167		—		412,030
Special Mention		—		—		—		—		—		—		—		—
Classified		452		5,728		3,137		876		804		237		—		11,234
Total leases receivable		114,164		170,970		94,545		31,281		10,900		1,404		—		423,264

Total loans receivable:
Risk Rating
Pass / Pass-Watch		1,502,486		753,938		661,862		519,885		515,045		524,447		185,358		4,663,021
Special Mention		20,630		6,993		13,996		3,610		15,539		15,763		447		76,978
Classified		452		10,146		15,555		17,312		51,690		40,240		4,774		140,169
Total loans receivable	$	1,523,568	$	771,077	$	691,413	$	540,807	$	582,274	$	580,450	$	190,579	$	4,880,168

⁽¹⁾	Includes extensions, renewals, or modifications of credit contracts, which consist of a new credit decision. Certain prior period amounts have been reclassified to conform to current period presentation.

	Term Loans
	Amortized Cost Basis by Origination Year ⁽¹⁾
	2021		2020		2019		2018		2017		Prior		Revolving Loans Amortized Cost Basis		Total
	(in thousands)
March 31, 2021
Real estate loans:
Commercial property
Payment performance
Performing	$	248,282	$	831,333	$	523,557	$	481,467	$	337,960	$	828,069	$	40,980	$	3,291,648
Nonperforming		—		—		—		21		2,351		15,642		—		18,014
Total commercial property		248,282		831,333		523,557		481,488		340,311		843,711		40,980		3,309,662

Construction
Payment performance
Performing		11,659		27,263		—		—		—		12,658		—		51,580
Nonperforming		—		—		—		—		—		11,046		—		11,046
Total construction		11,659		27,263		—		—		—		23,704		—		62,626

Residential/consumer loans
Payment performance
Performing		12,640		26,795		947		33,956		118,347		126,730		7,093		326,508
Nonperforming		—		—		—		—		1,397		323		—		1,720
Total residential/consumer loans		12,640		26,795		947		33,956		119,744		127,053		7,093		328,228

Total real estate loans
Payment performance
Performing		272,581		885,391		524,504		515,423		456,307		967,457		48,073		3,669,736
Nonperforming		—		—		—		21		3,748		27,011		—		30,780
Total real estate loans		272,581		885,391		524,504		515,444		460,055		994,468		48,073		3,700,516

Commercial and industrial loans:
Payment performance
Performing		76,225		331,123		73,638		56,348		16,967		19,384		119,135		692,820
Nonperforming		—		—		890		3,906		9,199		258		—		14,253
Total commercial and industrial loans		76,225		331,123		74,528		60,254		26,166		19,642		119,135		707,073

Leases receivable:
Payment performance
Performing		34,174		107,408		148,515		79,816		24,719		4,906		—		399,538
Nonperforming		—		488		5,825		2,267		595		849		—		10,024
Total leases receivable		34,174		107,896		154,340		82,083		25,314		5,755		—		409,562

Total loans receivable:
Payment performance
Performing		382,980		1,323,922		746,657		651,587		497,993		991,747		167,208		4,762,094
Nonperforming		—		488		6,715		6,194		13,542		28,118		—		55,057
Total loans receivable	$	382,980	$	1,324,410	$	753,372	$	657,781	$	511,535	$	1,019,865	$	167,208	$	4,817,151

	Term Loans
	Amortized Cost Basis by Origination Year ⁽¹⁾
	2020		2019		2018		2017		2016		Prior		Revolving Loans Amortized Cost Basis		Total

December 31, 2020
Real estate loans:
Commercial property
Payment performance
Performing	$	934,556	$	519,582	$	495,132	$	347,656	$	437,230	$	499,410	$	31,283	$	3,264,849
Nonperforming		—		392		22		2,386		17,453		9,704		130		30,087
Total commercial property		934,556		519,974		495,154		350,042		454,683		509,114		31,413		3,294,936

Construction
Payment performance
Performing		33,415		613		—		—		—		—		—		34,028
Nonperforming		—		—		—		—		24,854		—		—		24,854
Total construction		33,415		613		—		—		24,854		—		—		58,882

Residential/consumer loans
Payment performance
Performing		27,997		962		38,053		129,670		82,661		56,785		7,353		343,481
Nonperforming		—		—		—		1,405		301		644		—		2,350
Total residential/consumer loans		27,997		962		38,053		131,075		82,962		57,429		7,353		345,831

Total real estate loans
Payment performance
Performing		995,968		521,157		533,185		477,326		519,891		556,195		38,636		3,642,358
Nonperforming		—		392		22		3,791		42,608		10,348		130		57,291
Total real estate loans		995,968		521,549		533,207		481,117		562,499		566,543		38,766		3,699,649

Commercial and industrial loans:
Payment performance
Performing		413,436		77,668		59,726		19,002		8,875		12,227		151,813		742,747
Nonperforming		—		890		3,935		9,407		—		276		—		14,508
Total commercial and industrial loans		413,436		78,558		63,661		28,409		8,875		12,503		151,813		757,255

Leases receivable:
Payment performance
Performing		113,712		165,242		91,408		30,405		10,096		1,167		—		412,030
Nonperforming		452		5,728		3,137		876		804		237		—		11,234
Total leases receivable		114,164		170,970		94,545		31,281		10,900		1,404		—		423,264

Total loans receivable:
Payment performance
Performing		1,523,116		764,067		684,319		526,733		538,862		569,589		190,449		4,797,135
Nonperforming		452		7,010		7,094		14,074		43,412		10,861		130		83,033
Total loans receivable	$	1,523,568	$	771,077	$	691,413	$	540,807	$	582,274	$	580,450	$	190,579	$	4,880,168

⁽²⁾	Includes extensions, renewals, or modifications of credit contracts, which consist of a new credit decision. Certain prior period amounts have been reclassified to conform to current period presentation.

Analysis of Past Due Loans, Disaggregated by Loan Class

The following is an aging analysis of loans, disaggregated by loan class, as of the dates indicated:

	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total		Accruing 90 Days or More Past Due
	(in thousands)
March 31, 2021
Real estate loans:
Commercial property
Retail	$	1,517	$	—	$	—	$	1,517	$	810,066	$	811,583	$	—
Hospitality		—		—		5,873		5,873		836,141		842,014		—
Other		162		—		877		1,039		1,655,026		1,656,065		—
Total commercial property loans		1,679		—		6,750		8,429		3,301,233		3,309,662		—
Construction		—		—		—		—		62,626		62,626		—
Residential/consumer loans		1,548		—		562		2,110		326,118		328,228		—
Total real estate loans		3,227		—		7,312		10,539		3,689,977		3,700,516		—
Commercial and industrial loans		119		890		12,905		13,914		693,159		707,073		—
Leases receivable		3,402		2,104		3,049		8,555		401,007		409,562		—
Total loans receivable	$	6,748	$	2,994	$	23,266	$	33,008	$	4,784,143	$	4,817,151	$	—

December 31, 2020
Real estate loans:
Commercial property
Retail	$	—	$	—	$	—	$	—	$	824,606	$	824,606	$	—
Hospitality		—		—		11,076		11,076		848,877		859,953		—
Other		—		—		731		731		1,609,646		1,610,377		—
Total commercial property loans		—		—		11,807		11,807		3,283,129		3,294,936		—
Construction		—		12,807		—		12,807		46,075		58,882		—
Residential/consumer loans		4,693		461		564		5,718		340,113		345,831		—
Total real estate loans		4,693		13,268		12,371		30,332		3,669,317		3,699,649		—
Commercial and industrial loans		282		27		12,487		12,796		744,459		757,255		—
Leases receivable		4,051		1,786		4,675		10,512		412,752		423,264		—
Total loans receivable	$	9,026	$	15,081	$	29,533	$	53,640	$	4,826,528	$	4,880,168	$	—

Summary of Interest Foregone on Individually Evaluated Loans

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

	Three Months Ended March 31,
	2021			2020
	(in thousands)
Interest income that would have been recognized had individually evaluated loans performed in accordance with their original terms	$	2,307		$	1,595
Less: Interest income recognized on individually evaluated loans		(177	)		(122	)
Interest foregone on individually evaluated loans	$	2,130		$	1,473

Schedule of Amortized Cost Basis of Loans on Nonaccrual Status and Loans Past Due 90 Days and Still Accruing

The following table represents the amortized cost basis of loans on nonaccrual status and loans past due 90 days and still accruing as of March 31, 2021 and December 31, 2020.

	March 31, 2021
	Nonaccrual Loans With No Allowance for Credit Losses		Nonaccrual Loans With Allowance for Credit Losses		Loans Past Due 90 Days Still Accruing		Total Nonperforming Loans
	(in thousands)
Real estate loans:
Commercial property
Retail	$	6,270	$	—	$	—	$	6,270
Hospitality		8,941		—		—		8,941
Other		2,320		483		—		2,803
Total commercial property loans		17,531		483		—		18,014
Construction		11,046		—		—		11,046
Residential/consumer loans		1,720		—		—		1,720
Total real estate loans		30,297		483		—		30,780
Commercial and industrial loans		196		14,058		—		14,254
Leases receivable		2,742		7,282		—		10,024
Total	$	33,235	$	21,823	$	—	$	55,058

	December 31, 2020
	Nonaccrual Loans With No Allowance for Credit Losses		Nonaccrual Loans With Allowance for Credit Losses		Loans Past Due 90 Days Still Accruing		Total Nonperforming Loans
	(in thousands)
Real estate loans:
Commercial property
Retail	$	6,331	$	—	$	—	$	6,331
Hospitality		20,612		—		—		20,612
Other		2,236		909		—		3,145
Total commercial property loans		29,179		909		—		30,088
Construction		24,854		—		—		24,854
Residential/consumer loans		2,350		—		—		2,350
Total real estate loans		56,383		909		—		57,292
Commercial and industrial loans		58		14,449		—		14,507
Leases receivable		2,318		8,915		—		11,233
Total	$	58,759	$	24,273	$	—	$	83,032

Non-Performing Assets

The following table details nonperforming assets as of the dates indicated:

	March 31, 2021		December 31, 2020
	(in thousands)
Nonaccrual loans	$	55,058	$	83,032
Loans receivable 90 days or more past due and still accruing		—		—
Total nonperforming loans receivable		55,058		83,032
Other real estate owned ("OREO")		1,545		2,360
Total nonperforming assets	$	56,603	$	85,392

Troubled Debt Restructurings

The following table details TDRs as of March 31, 2021 and December 31, 2020:

	Nonaccrual 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, 2021
Real estate loans	$	446	$	3,130	$	11,474	$	—	$	15,050	$	1,103	$	—	$	—	$	7,260	$	8,363
Commercial and industrial loans		—		139		—		—		139		—		—		3		41		44
Total	$	446	$	3,269	$	11,474	$	—	$	15,189	$	1,103	$	—	$	3	$	7,301	$	8,407

December 31, 2020
Real estate loans	$	1,095	$	3,334	$	12,492	$	—	$	16,921	$	513	$	—	$	67	$	7,290	$	7,870
Commercial and industrial loans		—		144		—		—		144		—		—		4		56		60
Total	$	1,095	$	3,478	$	12,492	$	—	$	17,065	$	513	$	—	$	71	$	7,346	$	7,930

Summary of Loans by Class Modified as Troubled Debt Restructurings

The following table presents the number of loans by class modified as troubled debt restructurings that occurred during the periods indicated, with their pre- and post-modification recorded amounts.

	Three Months ended						Twelve Months ended
	March 31, 2021						December 31, 2020
	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 for number of loans)
Real estate loans		—	$	—				5	$	4,479	$	3,676
Commercial and industrial loans		—		—		—		—		—		—
Total		—	$	—	$	—		5	$	4,479	$	3,676