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, 2022

Loans consisted of the following as of the dates indicated:

	March 31, 2022			December 31, 2021
	(in thousands)
Real estate loans:
Commercial property
Retail	$	990,716		$	970,134
Hospitality		718,721			717,692
Other ⁽¹⁾		1,974,091			1,919,033
Total commercial property loans		3,683,528			3,606,859
Construction		87,925			95,006
Residential/consumer loans		432,805			400,546
Total real estate loans		4,204,258			4,102,411
Commercial and industrial loans		633,107			561,831
Leases receivable		500,135			487,299
Loans receivable		5,337,500			5,151,541
Allowance for credit losses		(71,512	)		(72,557	)
Loans receivable, net	$	5,265,988		$	5,078,984

⁽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, 2022 and 2021:

	Real Estate			Commercial and Industrial			Total
	(in thousands)
March 31, 2022
Balance at beginning of period	$	6,954		$	6,388		$	13,342
Originations and transfers		20,164			11,689			31,853
Sales		(15,293	)		(14,284	)		(29,577	)
Principal paydowns and amortization		—			(1	)		(1	)
Balance at end of period	$	11,825		$	3,792		$	15,617

March 31, 2021
Balance at beginning of period	$	8,042		$	526		$	8,568
Originations		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

Allowance for Credit Losses by Portfolio Segment

The following table details the information on the allowance for credit losses by portfolio segment as of and for the three months ended March 31, 2022 and 2021:

	Real Estate			Commercial and Industrial			Leases Receivable			Total
	(in thousands)
March 31, 2022
Balance at beginning of period	$	48,890		$	12,418		$	11,249		$	72,557
Less loans charged off		530			58			247			835
Recoveries on loans receivable previously charged off		(197	)		(317	)		(423	)		(937	)
Provision (recovery) for credit losses		(2,202	)		267			788			(1,147	)
Ending balance	$	46,355		$	12,944		$	12,213		$	71,512

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 (recovery) for credit losses		7,121			(5,029	)		(1,128	)		964
Ending balance	$	57,762		$	16,387		$	14,243		$	88,392

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, 2022										December 31, 2021
	Allowance Amount		Percentage of Total Allowance			Total Loans		Percentage of Total Loans			Allowance Amount		Percentage of Total Allowance			Total Loans		Percentage of Total Loans
	(dollars in thousands)
Real estate loans:
Commercial property
Retail	$	6,827		9.5	%	$	990,716		18.6	%	$	6,579		9.1	%	$	970,134		18.8	%
Hospitality		19,625		27.5	%		718,721		13.5	%		22,670		31.2	%		717,692		13.9	%
Other		15,904		22.2	%		1,974,091		36.9	%		15,065		20.8	%		1,919,033		37.3	%
Total commercial property loans		42,356		59.2	%		3,683,528		69.0	%		44,314		61.1	%		3,606,859		70.0	%
Construction		3,531		4.9	%		87,925		1.6	%		4,078		5.6	%		95,006		1.8	%
Residential/consumer loans		468		0.7	%		432,805		8.1	%		498		0.7	%		400,546		7.8	%
Total real estate loans		46,355		64.8	%		4,204,258		78.7	%		48,890		67.4	%		4,102,411		79.6	%
Commercial and industrial loans		12,944		18.1	%		633,107		11.9	%		12,418		17.1	%		561,831		10.9	%
Leases receivable		12,213		17.1	%		500,135		9.4	%		11,249		15.5	%		487,299		9.5	%
Total	$	71,512		100.0	%	$	5,337,500		100.0	%	$	72,557		100.0	%	$	5,151,541		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, 2022 and December 31, 2021, for which repayment is expected to be obtained through the sale of the underlying collateral.

	March 31, 2022		December 31, 2021
	Amortized Cost		Amortized Cost
	(in thousands)
Real estate loans:
Commercial property
Retail	$	1,708	$	1,917
Hospitality		—		—
Other ⁽¹⁾		482		499
Total commercial property loans		2,190		2,416
Residential/consumer loans		951		982
Total real estate loans		3,141		3,398
Total	$	3,141	$	3,398

⁽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⁾
	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
	(in thousands)
March 31, 2022
Real estate loans:
Commercial property
Risk Rating
Pass / Pass-Watch	$	459,277	$	1,036,000	$	664,427	$	462,571	$	365,194	$	517,843	$	44,192	$	3,549,504
Special Mention		—		19,530		16,932		9,720		21,746		18,266		1,702		87,896
Classified		858		—		—		5,875		17,228		22,167		—		46,128
Total commercial property		460,135		1,055,530		681,359		478,166		404,168		558,276		45,894		3,683,528

Construction
Risk Rating
Pass / Pass Watch		1,147		63,764		602		—		—		—		—		65,513
Special Mention		—		—		—		—		—		22,412		—		22,412
Classified		—		—		—		—		—		—		—		—
Total construction		1,147		63,764		602		—		—		22,412		—		87,925

Residential/consumer loans
Risk Rating
Pass / Pass-Watch		60,512		189,043		15,420		243		17,446		141,405		7,483		431,552
Special Mention		—		—		—		—		—		289		—		289
Classified		—		—		—		—		—		964		—		964
Total residential/consumer loans		60,512		189,043		15,420		243		17,446		142,658		7,483		432,805

Total real estate loans
Risk Rating
Pass / Pass-Watch		520,936		1,288,807		680,449		462,814		382,640		659,248		51,675		4,046,569
Special Mention		—		19,530		16,932		9,720		21,746		40,967		1,702		110,597
Classified		858		—		—		5,875		17,228		23,131		—		47,092
Total real estate loans		521,794		1,308,337		697,381		478,409		421,614		723,346		53,377		4,204,258

Commercial and industrial loans:
Risk Rating
Pass / Pass-Watch		198,803		152,230		51,415		34,109		14,216		12,567		135,207		598,547
Special Mention		—		8,808		—		13,853		—		4,703		2,997		30,361
Classified		—		—		—		283		129		738		3,049		4,199
Total commercial and industrial loans		198,803		161,038		51,415		48,245		14,345		18,008		141,253		633,107

Leases receivable:
Risk Rating
Pass / Pass-Watch		68,511		222,018		69,739		86,682		38,946		8,126		—		494,022
Special Mention		—		—		—		—		—		—		—		—
Classified		—		1,050		492		3,175		1,123		273		—		6,113
Total leases receivable		68,511		223,068		70,231		89,857		40,069		8,399		—		500,135

Total loans receivable:
Risk Rating
Pass / Pass-Watch		788,250		1,663,055		801,603		583,605		435,802		679,941		186,882		5,139,138
Special Mention		—		28,338		16,932		23,573		21,746		45,670		4,699		140,958
Classified		858		1,050		492		9,333		18,480		24,142		3,049		57,404
Total loans receivable	$	789,108	$	1,692,443	$	819,027	$	616,511	$	476,028	$	749,753	$	194,630	$	5,337,500

⁽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

December 31, 2021
Real estate loans:
Commercial property
Risk Rating
Pass / Pass-Watch	$	1,203,197	$	706,470	$	488,250	$	406,288	$	277,680	$	384,064	$	41,413		$	3,507,362
Special Mention		—		18,869		7,593		—		6,999		16,879		1,703			52,043
Classified		—		—		5,450		17,247		2,965		21,792		—			47,454
Total commercial property		1,203,197		725,339		501,293		423,535		287,644		422,735		43,116			3,606,859

Construction
Risk Rating
Pass / Pass-Watch		73,808		631		—		—		—		—		—			74,439
Special Mention		—		—		—		—		—		20,567		—			20,567
Classified		—		—		—		—		—		—		—			—
Total construction		73,808		631		—		—		—		20,567		—			95,006

Residential/consumer loans
Risk Rating
Pass / Pass-Watch		194,948		16,975		247		19,813		73,567		82,076		8,381			396,007
Special Mention		—		—		—		930		406		2,221		—			3,557
Classified		—		—		—		—		965		17		—			982
Total residential/consumer loans		194,948		16,975		247		20,743		74,938		84,314		8,381			400,546

Total real estate loans
Risk Rating
Pass / Pass-Watch		1,471,953		724,076		488,497		426,101		351,247		466,140		49,794			3,977,808
Special Mention		—		18,869		7,593		930		7,405		39,667		1,703			76,167
Classified		—		—		5,450		17,247		3,930		21,809		—			48,436
Total real estate loans		1,471,953		742,945		501,540		444,278		362,582		527,616		51,497			4,102,411

Commercial and industrial loans:
Risk Rating
Pass / Pass-Watch		264,762		55,135		36,937		15,780		10,874		6,016		148,148			537,652
Special Mention		—		274		13,989		—		67		4,802		(5	)		19,127
Classified		—		3		708		145		19		886		3,291			5,052
Total commercial and industrial loans		264,762		55,412		51,634		15,925		10,960		11,704		151,434			561,831

Leases receivable:
Risk Rating
Pass / Pass-Watch		239,738		79,400		101,460		47,485		10,683		1,388		—			480,154
Special Mention		—		—		—		—		—		—		—			—
Classified		716		981		3,575		1,328		347		198		—			7,145
Total leases receivable		240,454		80,381		105,035		48,813		11,030		1,586		—			487,299

Total loans receivable:
Risk Rating
Pass / Pass-Watch		1,976,453		858,611		626,894		489,366		372,804		473,544		197,942			4,995,614
Special Mention		—		19,143		21,582		930		7,472		44,469		1,698			95,294
Classified		716		984		9,733		18,720		4,296		22,893		3,291			60,633
Total loans receivable	$	1,977,169	$	878,738	$	658,209	$	509,016	$	384,572	$	540,906	$	202,931		$	5,151,541

⁽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⁾
	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
	(in thousands)
March 31, 2022
Real estate loans:
Commercial property
Payment performance
Performing	$	460,135	$	1,055,530	$	681,359	$	478,166	$	404,168	$	554,596	$	45,894	$	3,679,848
Nonperforming		—		—		—		—		—		3,680		—		3,680
Total commercial property		460,135		1,055,530		681,359		478,166		404,168		558,276		45,894		3,683,528

Construction
Payment performance
Performing		1,147		63,764		602		—		—		22,412		—		87,925
Nonperforming		—		—		—		—		—		—		—		—
Total construction		1,147		63,764		602		—		—		22,412		—		87,925

Residential/consumer loans
Payment performance
Performing		60,512		189,043		15,420		243		17,446		141,457		7,483		431,604
Nonperforming		—		—		—		—		—		1,201		—		1,201
Total residential/consumer loans		60,512		189,043		15,420		243		17,446		142,658		7,483		432,805

Total real estate loans
Payment performance
Performing		521,794		1,308,337		697,381		478,409		421,614		718,465		53,377		4,199,377
Nonperforming		—		—		—		—		—		4,881		—		4,881
Total real estate loans		521,794		1,308,337		697,381		478,409		421,614		723,346		53,377		4,204,258

Commercial and industrial loans:
Payment performance
Performing		198,803		161,038		51,415		48,014		14,345		17,763		141,253		632,631
Nonperforming		—		—		—		231		—		245				476
Total commercial and industrial loans		198,803		161,038		51,415		48,245		14,345		18,008		141,253		633,107

Leases receivable:
Payment performance
Performing		68,511		222,018		69,739		86,682		38,946		8,126		—		494,022
Nonperforming		—		1,050		492		3,175		1,123		273		—		6,113
Total leases receivable		68,511		223,068		70,231		89,857		40,069		8,399		—		500,135

Total loans receivable:
Payment performance
Performing		789,108		1,691,393		818,535		613,105		474,905		744,354		194,630		5,326,030
Nonperforming		—		1,050		492		3,406		1,123		5,399		—		11,470
Total loans receivable	$	789,108	$	1,692,443	$	819,027	$	616,511	$	476,028	$	749,753	$	194,630	$	5,337,500

⁽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

December 31, 2021
Real estate loans:
Commercial property
Payment performance
Performing	$	1,203,197	$	725,339	$	501,293	$	423,515	$	286,935	$	419,464	$	43,116	$	3,602,859
Nonperforming		—		—		—		20		709		3,271		—		4,000
Total commercial property		1,203,197		725,339		501,293		423,535		287,644		422,735		43,116		3,606,859

Construction
Payment performance
Performing		73,808		631		—		—		—		20,567		—		95,006
Nonperforming		—		—		—		—		—		—		—		—
Total construction		73,808		631		—		—		—		20,567		—		95,006

Residential/consumer loans
Payment performance
Performing		194,948		16,975		247		20,743		73,973		84,052		8,381		399,319
Nonperforming		—		—		—		—		965		262		—		1,227
Total residential/consumer loans		194,948		16,975		247		20,743		74,938		84,314		8,381		400,546

Total real estate loans
Payment performance
Performing		1,471,953		742,945		501,540		444,258		360,908		524,083		51,497		4,097,184
Nonperforming		—		—		—		20		1,674		3,533		—		5,227
Total real estate loans		1,471,953		742,945		501,540		444,278		362,582		527,616		51,497		4,102,411

Commercial and industrial loans:
Payment performance
Performing		264,762		55,409		50,926		15,925		10,956		11,431		151,434		560,843
Nonperforming		—		3		708		—		4		273		—		988
Total commercial and industrial loans		264,762		55,412		51,634		15,925		10,960		11,704		151,434		561,831

Leases receivable:
Payment performance
Performing		239,738		79,400		101,460		47,484		10,684		1,388		—		480,154
Nonperforming		716		981		3,575		1,329		346		198		—		7,145
Total leases receivable		240,454		80,381		105,035		48,813		11,030		1,586		—		487,299

Total loans receivable:
Payment performance
Performing		1,976,453		877,754		653,926		507,667		382,548		536,902		202,931		5,138,181
Nonperforming		716		984		4,283		1,349		2,024		4,004		—		13,360
Total loans receivable	$	1,977,169	$	878,738	$	658,209	$	509,016	$	384,572	$	540,906	$	202,931	$	5,151,541

⁽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.

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, 2022
Real estate loans:
Commercial property
Retail	$	—	$	—	$	—	$	—	$	990,716	$	990,716	$	—
Hospitality		—		—		—		—		718,721		718,721		—
Other		120		—		482		602		1,973,489		1,974,091		—
Total commercial property loans		120		—		482		602		3,682,926		3,683,528		—
Construction		—		—		—		—		87,925		87,925		—
Residential/consumer loans		1,871		—		534		2,405		430,400		432,805		—
Total real estate loans		1,991		—		1,016		3,007		4,201,251		4,204,258		—
Commercial and industrial loans		64		—		—		64		633,043		633,107		—
Leases receivable		3,414		1,099		1,748		6,261		493,874		500,135		—
Total loans receivable	$	5,469	$	1,099	$	2,764	$	9,332	$	5,328,168	$	5,337,500	$	—

December 31, 2021
Real estate loans:
Commercial property
Retail	$	—	$	—	$	—	$	—	$	970,134	$	970,134	$	—
Hospitality		556		—		—		556		717,136		717,692		—
Other		92		691		499		1,282		1,917,751		1,919,033		—
Total commercial property loans		648		691		499		1,838		3,605,021		3,606,859		—
Construction		—		—		—		—		95,006		95,006		—
Residential/consumer loans		570		750		556		1,876		398,670		400,546		—
Total real estate loans		1,218		1,441		1,055		3,714		4,098,697		4,102,411		—
Commercial and industrial loans		56		9		—		65		561,766		561,831		—
Leases receivable		3,764		1,992		1,181		6,937		480,362		487,299		—
Total loans receivable	$	5,038	$	3,442	$	2,236	$	10,716	$	5,140,825	$	5,151,541	$	—

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, 2022 and December 31, 2021.

	March 31, 2022
	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	$	1,708	$	—	$	—	$	1,708
Other		1,676		296		—		1,972
Total commercial property loans		3,384		296		—		3,680
Residential/consumer loans		950		251		—		1,201
Total real estate loans		4,334		547		—		4,881
Commercial and industrial loans		6		470		—		476
Leases receivable		1,188		4,925		—		6,113
Total	$	5,528	$	5,942	$	—	$	11,470

	December 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	$	1,918	$	—	$	—	$	1,918
Other		1,745		337		—		2,082
Total commercial property loans		3,663		337		—		4,000
Residential/consumer loans		982		245		—		1,227
Total real estate loans		4,645		582		—		5,227
Commercial and industrial loans		8		980		—		988
Leases receivable		1,172		5,973		—		7,145
Total	$	5,825	$	7,535	$	—	$	13,360

Non-Performing Assets

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

	March 31, 2022		December 31, 2021
	(in thousands)
Nonaccrual loans	$	11,470	$	13,360
Loans receivable 90 days or more past due and still accruing		—		—
Total nonperforming loans receivable		11,470		13,360
Other real estate owned ("OREO")		675		675
Total nonperforming assets	$	12,145	$	14,035

Troubled Debt Restructurings

The following table details TDRs as of March 31, 2022 and December 31, 2021:

	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, 2022
Real estate loans	$	323	$	1,824	$	353	$	—	$	2,500	$	—	$	—	$	92	$	—	$	92
Commercial and industrial loans		—		120		—		—		120		—		—		—		—		—
Total	$	323	$	1,944	$	353	$	—	$	2,620	$	—	$	—	$	92	$	—	$	92

December 31, 2021
Real estate loans	$	346	$	2,046	$	372	$	—	$	2,764	$	—	$	—	$	—	$	—	$	—
Commercial and industrial loans		—		124		—		—		124		—		—		—		—		—
Total	$	346	$	2,170	$	372	$	—	$	2,888	$	—	$	—	$	—	$	—	$	—

Summary of Loans by Class Modified as TDRs

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

	Three Months ended						Twelve Months ended
	March 31, 2022						December 31, 2021
	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		1	$	92	$	92		—	$	—	$	—
Total		1	$	92	$	92		—	$	—	$	—