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)

6 Months Ended

Jun. 30, 2022

Loans consisted of the following as of the dates indicated:

	June 30, 2022			December 31, 2021
	(in thousands)
Real estate loans:
Commercial property
Retail	$	1,071,379		$	970,134
Hospitality		651,586			717,692
Other ⁽¹⁾		2,011,727			1,919,033
Total commercial property loans		3,734,692			3,606,859
Construction		94,882			95,006
Residential ⁽²⁾		521,576			400,546
Total real estate loans		4,351,150			4,102,411
Commercial and industrial loans		766,894			561,831
Equipment financing agreements		537,358			487,299
Loans receivable		5,655,402			5,151,541
Allowance for credit losses		(73,067	)		(72,557	)
Loans receivable, net	$	5,582,335		$	5,078,984

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

⁽²⁾	Includes $2.7 million of home equity loans and lines, and $5.9 million of personal loans.

Activity for Loans Held for Sale

The following is the activity for loans held for sale for the three months ended June 30, 2022 and 2021:

	Real Estate			Commercial and Industrial			Total
	(in thousands)
June 30, 2022
Balance at beginning of period	$	11,825		$	3,792		$	15,617
Originations and transfers		29,531			15,320			44,851
Sales		(30,380	)		(11,557	)		(41,937	)
Principal paydowns and amortization		—			(3	)		(3	)
Balance at end of period	$	10,976		$	7,552		$	18,528

June 30, 2021
Balance at beginning of period	$	10,930		$	21,744		$	32,674
Originations and transfers		26,185			12,938			39,123
Sales		(24,022	)		(11,738	)		(35,760	)
Principal paydowns and amortization		(1	)		(6	)		(7	)
Balance at end of period	$	13,092		$	22,938		$	36,030

The following is the activity for loans held for sale for the six months ended June 30, 2022 and 2021:

	Real Estate			Commercial and Industrial			Total
	(in thousands)
June 30, 2022
Balance at beginning of period	$	6,954		$	6,388		$	13,342
Originations and transfers		49,695			27,009			76,704
Sales		(45,673	)		(25,841	)		(71,514	)
Principal payoffs and amortization		—			(4	)		(4	)
Balance at end of period	$	10,976		$	7,552		$	18,528

June 30, 2021
Balance at beginning of period	$	8,042		$	526		$	8,568
Originations and transfers		42,468			38,834			81,302
Sales		(37,417	)		(16,416	)		(53,833	)
Principal payoffs and amortization		(1	)		(6	)		(7	)
Balance at end of period	$	13,092		$	22,938		$	36,030

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 June 30, 2022 and 2021:

	Real Estate			Commercial and Industrial			Equipment Financing Agreements			Total
	(in thousands)
June 30, 2022
Balance at beginning of period	$	46,355		$	12,944		$	12,213		$	71,512
Less loans charged off		—			21			585			606
Recoveries on loans receivable previously charged off		(64	)		(133	)		(325	)		(522	)
Provision (recovery) for credit losses		(307	)		1,219			727			1,639
Ending balance	$	46,112		$	14,275		$	12,680		$	73,067

June 30, 2021
Balance at beginning of period	$	57,762		$	16,387		$	14,243		$	88,392
Less loans charged off		—			271			1,200			1,471
Recoveries on loans receivable previously charged off		(180	)		(174	)		(209	)		(563	)
Provision (recovery) for credit losses		5,087			(8,231	)		(968	)		(4,112	)
Ending balance	$	63,029		$	8,059		$	12,284		$	83,372

The following table details the information on the allowance for credit losses by portfolio segment as of and for the six months ended June 30, 2022 and 2021:

	Real Estate			Commercial and Industrial			Equipment Financing Agreements			Total
	(in thousands)
June 30, 2022
Balance at beginning of period	$	48,890		$	12,418		$	11,249			72,557
Less loans charged off		530			79			832			1,441
Recoveries on loans receivable previously charged off		(259	)		(451	)		(747	)		(1,457	)
Provision (recovery) for credit losses		(2,507	)		1,485			1,516			494
Ending balance	$	46,112		$	14,275		$	12,680		$	73,067

June 30, 2021
Balance at beginning of period	$	51,876		$	21,410		$	17,140		$	90,426
Less loans charged off		1,509			365			3,102			4,976
Recoveries on loans receivable previously charged off		(453	)		(273	)		(344	)		(1,070	)
Provision (recovery) for credit losses		12,209			(13,259	)		(2,098	)		(3,148	)
Ending balance	$	63,029		$	8,059		$	12,284		$	83,372

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

	June 30, 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	$	7,889		10.8	%	$	1,071,379		18.9	%	$	6,579		9.1	%	$	970,134		18.8	%
Hospitality		16,935		23.2	%		651,586		11.5	%		22,670		31.2	%		717,692		13.9	%
Other		16,832		23.0	%		2,011,727		35.6	%		15,065		20.8	%		1,919,033		37.3	%
Total commercial property loans		41,656		57.0	%		3,734,692		66.0	%		44,314		61.1	%		3,606,859		70.0	%
Construction		3,915		5.4	%		94,882		1.7	%		4,078		5.6	%		95,006		1.8	%
Residential		541		0.7	%		521,576		9.2	%		498		0.7	%		400,546		7.8	%
Total real estate loans		46,112		63.1	%		4,351,150		76.9	%		48,890		67.4	%		4,102,411		79.6	%
Commercial and industrial loans		14,275		19.5	%		766,894		13.6	%		12,418		17.1	%		561,831		10.9	%
Equipment financing agreements		12,680		17.4	%		537,358		9.5	%		11,249		15.5	%		487,299		9.5	%
Total	$	73,067		100.0	%	$	5,655,402		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 June 30, 2022 and December 31, 2021, for which repayment is expected to be obtained through the sale of the underlying collateral.

	June 30, 2022		December 31, 2021
	Amortized Cost		Amortized Cost
	(in thousands)
Real estate loans:
Commercial property
Retail	$	1,647	$	1,917
Hospitality		—		—
Other ⁽¹⁾		1,409		499
Total commercial property loans		3,056		2,416
Residential		1,300		982
Total real estate loans		4,356		3,398
Total	$	4,356	$	3,398

⁽¹⁾	Includes mixed-use, multifamily, office, industrial, gas stations, faith-based facilities, medical 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)
June 30, 2022
Real estate loans:
Commercial property
Risk Rating
Pass / Pass-Watch	$	879,948	$	946,844	$	647,528	$	435,041	$	335,270	$	340,079	$	40,419		$	3,625,129
Special Mention		—		—		18,260		9,665		21,604		15,029		1,702			66,260
Classified		855		—		—		5,846		15,406		21,196		—			43,303
Total commercial property		880,803		946,844		665,788		450,552		372,280		376,304		42,121			3,734,692

Construction
Risk Rating
Pass / Pass-Watch		27,800		67,082		—		—		—		—		—			94,882
Special Mention		—		—		—		—		—		—		—			—
Classified		—		—		—		—		—		—		—			—
Total construction		27,800		67,082		—		—		—		—		—			94,882

Residential
Risk Rating
Pass / Pass-Watch		171,190		181,418		13,869		239		15,061		131,140		7,315			520,232
Special Mention		—		—		351		—		—		44		—			395
Classified		—		—		—		—		—		949		—			949
Total residential		171,190		181,418		14,220		239		15,061		132,133		7,315			521,576

Total real estate loans
Risk Rating
Pass / Pass-Watch		1,078,938		1,195,344		661,397		435,280		350,331		471,219		47,734			4,240,243
Special Mention		—		—		18,611		9,665		21,604		15,073		1,702			66,655
Classified		855		—		—		5,846		15,406		22,145		—			44,252
Total real estate loans		1,079,793		1,195,344		680,008		450,791		387,341		508,437		49,436			4,351,150

Commercial and industrial loans:
Risk Rating
Pass / Pass-Watch		293,422		146,800		48,760		31,896		12,953		15,109		201,245			750,185
Special Mention		—		—		—		13,687		—		112		(1	)		13,798
Classified		—		36		—		94		113		726		1,942			2,911
Total commercial and industrial loans		293,422		146,836		48,760		45,677		13,066		15,947		203,186			766,894

Equipment financing agreements:
Risk Rating
Pass / Pass-Watch		158,217		202,589		61,068		74,023		30,769		4,848		—			531,514
Special Mention		—		—		—		—		—		—		—			—
Classified		—		1,682		480		2,646		903		133		—			5,844
Total equipment financing agreements		158,217		204,271		61,548		76,669		31,672		4,981		—			537,358

Total loans receivable:
Risk Rating
Pass / Pass-Watch		1,530,577		1,544,733		771,225		541,199		394,053		491,176		248,979			5,521,942
Special Mention		—		—		18,611		23,352		21,604		15,185		1,701			80,453
Classified		855		1,718		480		8,586		16,422		23,004		1,942			53,007
Total loans receivable	$	1,531,432	$	1,546,451	$	790,316	$	573,137	$	432,079	$	529,365	$	252,622		$	5,655,402

⁽¹⁾	Includes extensions, renewals, or modifications of credit contracts, which consist of a new credit decision.

	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
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		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

Equipment financing agreements:
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 equipment financing agreements		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.

	Term Loans
	Amortized Cost Basis by Origination Year ⁽¹⁾
	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
	(in thousands)
June 30, 2022
Real estate loans:
Commercial property
Payment performance
Performing	$	880,803	$	946,844	$	665,788	$	450,552	$	372,280	$	372,661	$	42,121	$	3,731,049
Nonperforming		—		—		—		—		—		3,643		—		3,643
Total commercial property		880,803		946,844		665,788		450,552		372,280		376,304		42,121		3,734,692

Construction
Payment performance
Performing		27,800		67,082		—		—		—		—		—		94,882
Nonperforming		—		—		—		—		—		—		—		—
Total construction		27,800		67,082		—		—		—		—		—		94,882

Residential
Payment performance
Performing		171,190		181,418		13,869		239		15,061		131,184		7,315		520,276
Nonperforming		—		—		351		—		—		949		—		1,300
Total residential		171,190		181,418		14,220		239		15,061		132,133		7,315		521,576

Total real estate loans
Payment performance
Performing		1,079,793		1,195,344		679,657		450,791		387,341		503,845		49,436		4,346,207
Nonperforming		—		—		351		—		—		4,592		—		4,943
Total real estate loans		1,079,793		1,195,344		680,008		450,791		387,341		508,437		49,436		4,351,150

Commercial and industrial loans:
Payment performance
Performing		293,422		146,800		48,760		45,669		13,066		15,733		203,186		766,636
Nonperforming		—		36		—		8		—		214		—		258
Total commercial and industrial loans		293,422		146,836		48,760		45,677		13,066		15,947		203,186		766,894

Equipment financing agreements:
Payment performance
Performing		158,217		202,589		61,068		74,023		30,769		4,848		—		531,514
Nonperforming		—		1,682		480		2,646		903		133		—		5,844
Total equipment financing agreements		158,217		204,271		61,548		76,669		31,672		4,981		—		537,358

Total loans receivable:
Payment performance
Performing		1,531,432		1,544,733		789,485		570,483		431,176		524,426		252,622		5,644,357
Nonperforming		—		1,718		831		2,654		903		4,939		—		11,045
Total loans receivable	$	1,531,432	$	1,546,451	$	790,316	$	573,137	$	432,079	$	529,365	$	252,622	$	5,655,402

⁽¹⁾	Includes extensions, renewals, or modifications of credit contracts, which consist of a new credit decision.

	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
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		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

Equipment financing agreements:
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 equipment financing agreements		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.

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)
June 30, 2022
Real estate loans:
Commercial property
Retail	$	—	$	—	$	—	$	—	$	1,071,379	$	1,071,379	$	—
Hospitality		—		—		—		—		651,586		651,586		—
Other		269		—		1,062		1,331		2,010,396		2,011,727		—
Total commercial property loans		269		—		1,062		1,331		3,733,361		3,734,692		—
Construction		—		—		—		—		94,882		94,882		—
Residential		1,078		—		539		1,617		519,959		521,576		—
Total real estate loans		1,347		—		1,601		2,948		4,348,202		4,351,150		—
Commercial and industrial loans		63		8		—		71		766,823		766,894		—
Equipment financing agreements		3,286		587		1,616		5,489		531,869		537,358		—
Total loans receivable	$	4,696	$	595	$	3,217	$	8,508	$	5,646,894	$	5,655,402	$	—

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		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		—
Equipment financing agreements		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 June 30, 2022 and December 31, 2021.

	June 30, 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	$	1,647	$	—	$	—	$	1,647
Other		1,737		259		—		1,996
Total commercial property loans		3,384		259		—		3,643
Residential		1,300		—		—		1,300
Total real estate loans		4,684		259		—		4,943
Commercial and industrial loans		—		258		—		258
Equipment financing agreements		718		5,126		—		5,844
Total	$	5,402	$	5,643	$	—	$	11,045

	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		982		245		—		1,227
Total real estate loans		4,645		582		—		5,227
Commercial and industrial loans		8		980		—		988
Equipment financing agreements		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:

	June 30, 2022		December 31, 2021
	(in thousands)
Nonaccrual loans	$	11,045	$	13,360
Loans receivable 90 days or more past due and still accruing		—		—
Total nonperforming loans receivable		11,045		13,360
Other real estate owned ("OREO")		675		675
Total nonperforming assets	$	11,720	$	14,035

Troubled Debt Restructurings

The following table details TDRs as of June 30, 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)
June 30, 2022
Real estate loans	$	299	$	1,764	$	91	$	—	$	2,154	$	—	$	—	$	—	$	—	$	—
Commercial and industrial loans		—		115		—		—		115		—		—		—		—		—
Total	$	299	$	1,879	$	91	$	—	$	2,269	$	—	$	—	$	—	$	—	$	—

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
	June 30, 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		—	$	—	$	—		—	$	—	$	—
Total		—	$	—	$	—		—	$	—	$	—

	Six Months ended						Twelve Months ended
	June 30, 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	$	91		—	$	—	$	—
Total		1	$	92	$	91		—	$	—	$	—