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)

9 Months Ended

Sep. 30, 2022

Loans consisted of the following as of the dates indicated:


	September 30, 2022			December 31, 2021
	(in thousands)
Real estate loans:
Commercial property
Retail	$	1,044,287		$	970,134
Hospitality		662,438			717,692
Other (1)		2,044,878			1,919,033
Total commercial property loans		3,751,603			3,606,859
Construction		102,342			95,006
Residential (2)		649,589			400,546
Total real estate loans		4,503,534			4,102,411
Commercial and industrial loans (3)		732,033			561,831
Equipment financing agreements		565,424			487,299
Loans receivable		5,800,991			5,151,541
Allowance for credit losses		(71,584	)		(72,557	)
Loans receivable, net	$	5,729,407		$	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 $2.4 million and $3.9 million of home equity loans and lines, and $5.6 million and $6.0 of personal loans at September 30, 2022 and December 31, 2021, respectively.

(3)

At September 30, 2022 and December 31, 2021, Paycheck Protection Program ("PPP") loans were $1.0 million and $3.0 million, respectively.

Activity for Loans Held for Sale

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


	Real Estate			Commercial and Industrial			Total
	(in thousands)
September 30, 2022
Balance at beginning of period	$	10,976		$	7,552		$	18,528
Originations and transfers		23,013			12,198			35,211
Sales		(27,493	)		(16,192	)		(43,685	)
Principal paydowns and amortization		(6	)		(4	)		(10	)
Balance at end of period	$	6,490		$	3,554		$	10,044

September 30, 2021
Balance at beginning of period	$	13,092		$	22,938		$	36,030
Originations and transfers		28,537			15,228			43,765
Sales		(27,513	)		(34,956	)		(62,469	)
Principal paydowns and amortization		(4	)		559			555
Balance at end of period	$	14,112		$	3,769		$	17,881

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


	Real Estate			Commercial and Industrial			Total
	(in thousands)
September 30, 2022
Balance at beginning of period	$	6,954		$	6,388		$	13,342
Originations and transfers		72,708			39,207			111,915
Sales		(73,166	)		(42,033	)		(115,199	)
Principal payoffs and amortization		(6	)		(8	)		(14	)
Balance at end of period	$	6,490		$	3,554		$	10,044

September 30, 2021
Balance at beginning of period	$	8,042		$	526		$	8,568
Originations and transfers		71,005			162,637			233,642
Sales		(64,930	)		(160,293	)		(225,223	)
Principal payoffs and amortization		(5	)		899			894
Balance at end of period	$	14,112		$	3,769		$	17,881

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 September 30, 2022 and 2021:


	Real Estate			Commercial and Industrial			Equipment Financing Agreements			Total
	(in thousands)
September 30, 2022
Balance at beginning of period	$	46,112		$	14,275		$	12,680		$	73,067
Less loans charged off		1,356			8			716			2,080
Recoveries on loans receivable previously charged off		(373	)		(228	)		(369	)		(970	)
Provision (recovery) for credit losses		395			381			(1,149	)		(373	)
Ending balance	$	45,524		$	14,876		$	11,184		$	71,584

September 30, 2021
Balance at beginning of period	$	63,029		$	8,059		$	12,284		$	83,372
Less loans charged off		—			186			791			977
Recoveries on loans receivable previously charged off		(1,162	)		(330	)		(350	)		(1,842	)
Provision (recovery) for credit losses		(8,128	)		507			(3	)		(7,624	)
Ending balance	$	56,063		$	8,710		$	11,840		$	76,613

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


	Real Estate			Commercial and Industrial			Equipment Financing Agreements			Total
	(in thousands)
September 30, 2022
Balance at beginning of period	$	48,890		$	12,418		$	11,249			72,557
Less loans charged off		1,886			87			1,548			3,521
Recoveries on loans receivable previously charged off		(632	)		(679	)		(1,117	)		(2,428	)
Provision (recovery) for credit losses		(2,112	)		1,866			366			120
Ending balance	$	45,524		$	14,876		$	11,184		$	71,584

September 30, 2021
Balance at beginning of period	$	51,876		$	21,410		$	17,140		$	90,426
Less loans charged off		1,491			550			3,893			5,934
Recoveries on loans receivable previously charged off		(1,597	)		(602	)		(694	)		(2,893	)
Provision (recovery) for credit losses		4,081			(12,752	)		(2,101	)		(10,772	)
Ending balance	$	56,063		$	8,710		$	11,840		$	76,613

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


	September 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	$	7,758		10.8	%	$	1,044,287		18.0	%	$	6,579		9.1	%	$	970,134		18.8	%
Hospitality		15,417		21.5	%		662,438		11.4	%		22,670		31.2	%		717,692		13.9	%
Other		15,450		21.7	%		2,044,878		35.3	%		15,065		20.8	%		1,919,033		37.3	%
Total commercial property loans		38,625		54.0	%		3,751,603		64.7	%		44,314		61.1	%		3,606,859		70.0	%
Construction		4,034		5.6	%		102,342		1.8	%		4,078		5.6	%		95,006		1.8	%
Residential		2,865		4.0	%		649,589		11.2	%		498		0.7	%		400,546		7.8	%
Total real estate loans		45,524		63.6	%		4,503,534		77.7	%		48,890		67.4	%		4,102,411		79.6	%
Commercial and industrial loans		14,876		20.8	%		732,033		12.6	%		12,418		17.1	%		561,831		10.9	%
Equipment financing agreements		11,184		15.6	%		565,424		9.7	%		11,249		15.5	%		487,299		9.5	%
Total	$	71,584		100.0	%	$	5,800,991		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 September 30, 2022 and December 31, 2021, for which repayment is expected to be obtained through the sale of the underlying collateral.


	September 30, 2022		December 31, 2021
	Amortized Cost		Amortized Cost
	(in thousands)
Real estate loans:
Commercial property
Retail	$	3,531	$	1,917
Hospitality		—		—
Other (1)		608		499
Total commercial property loans		4,139		2,416
Residential		912		982
Total real estate loans		5,051		3,398
Total	$	5,051	$	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)
September 30, 2022
Real estate loans:
Commercial property
Risk Rating							`
Pass / Pass-Watch	$	1,035,752	$	924,041	$	629,274	$	422,378	$	320,721	$	252,048	$	57,112	$	3,641,326
Special Mention		—		13,504		18,154		7,159		21,469		9,570		1,701		71,557
Classified		851		—		—		5,816		13,983		18,070		—		38,720
Total commercial property		1,036,603		937,545		647,428		435,353		356,173		279,688		58,813		3,751,603

Construction
Risk Rating
Pass / Pass-Watch		39,090		63,252		—		—		—		—		—		102,342
Special Mention		—		—		—		—		—		—		—		—
Classified		—		—		—		—		—		—		—		—
Total construction		39,090		63,252		—		—		—		—		—		102,342

Residential
Risk Rating
Pass / Pass-Watch		310,794		176,295		13,146		236		737		140,285		6,476		647,969
Special Mention		—		—		343		—		—		—		350		693
Classified		15		—		—		—		—		912		—		927
Total residential		310,809		176,295		13,489		236		737		141,197		6,826		649,589

Total real estate loans
Risk Rating
Pass / Pass-Watch		1,385,636		1,163,588		642,420		422,614		321,458		392,333		63,588		4,391,637
Special Mention		—		13,504		18,497		7,159		21,469		9,570		2,051		72,250
Classified		866		—		—		5,816		13,983		18,982		—		39,647
Total real estate loans		1,386,502		1,177,092		660,917		435,589		356,910		420,885		65,639		4,503,534

Commercial and industrial loans:
Risk Rating
Pass / Pass-Watch		283,314		110,850		45,219		29,583		11,656		13,864		184,223		678,709
Special Mention		—		9,609		—		13,514		—		107		27,472		50,702
Classified		—		35		171		1,183		97		495		641		2,622
Total commercial and industrial loans		283,314		120,494		45,390		44,280		11,753		14,466		212,336		732,033

Equipment financing agreements:
Risk Rating
Pass / Pass-Watch		233,883		183,731		53,553		62,107		23,802		2,878		—		559,954
Special Mention		—		—		—		—		—		—		—		—
Classified		108		1,568		265		2,582		814		133		—		5,470
Total equipment financing agreements		233,991		185,299		53,818		64,689		24,616		3,011		—		565,424

Total loans receivable:
Risk Rating
Pass / Pass-Watch		1,902,833		1,458,169		741,192		514,304		356,916		409,075		247,811		5,630,300
Special Mention		—		23,113		18,497		20,673		21,469		9,677		29,523		122,952
Classified		974		1,603		436		9,581		14,894		19,610		641		47,739
Total loans receivable	$	1,903,807	$	1,482,885	$	760,125	$	544,558	$	393,279	$	438,362	$	277,975	$	5,800,991

(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.

Loans by Vintage Year and Payment Performance


	Term Loans
	Amortized Cost Basis by Origination Year (1)
	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
	(in thousands)
September 30, 2022
Real estate loans:
Commercial property
Payment performance
Performing	$	1,036,603	$	937,545	$	647,428	$	435,353	$	352,642	$	278,434	$	58,813	$	3,746,818
Nonperforming		—		—		—		—		3,531		1,254		—		4,785
Total commercial property		1,036,603		937,545		647,428		435,353		356,173		279,688		58,813		3,751,603

Construction
Payment performance
Performing		39,090		63,252		—		—		—		—		—		102,342
Nonperforming		—		—		—		—		—		—		—		—
Total construction		39,090		63,252		—		—		—		—		—		102,342

Residential
Payment performance
Performing		310,794		176,295		13,489		236		737		140,285		6,826		648,662
Nonperforming		15		—		—		—		—		912		—		927
Total residential		310,809		176,295		13,489		236		737		141,197		6,826		649,589

Total real estate loans
Payment performance
Performing		1,386,487		1,177,092		660,917		435,589		353,379		418,719		65,639		4,497,822
Nonperforming		15		—		—		—		3,531		2,166		—		5,712
Total real estate loans		1,386,502		1,177,092		660,917		435,589		356,910		420,885		65,639		4,503,534

Commercial and industrial loans:
Payment performance
Performing		283,314		120,459		45,219		44,280		11,753		14,263		212,336		731,624
Nonperforming		—		35		171		—		—		203		—		409
Total commercial and industrial loans		283,314		120,494		45,390		44,280		11,753		14,466		212,336		732,033

Equipment financing agreements:
Payment performance
Performing		233,883		183,731		53,553		62,107		23,802		2,878		—		559,954
Nonperforming		108		1,568		265		2,582		814		133		—		5,470
Total equipment financing agreements		233,991		185,299		53,818		64,689		24,616		3,011		—		565,424

Total loans receivable:
Payment performance
Performing		1,903,684		1,481,282		759,689		541,976		388,934		435,860		277,975		5,789,400
Nonperforming		123		1,603		436		2,582		4,345		2,502		—		11,591
Total loans receivable	$	1,903,807	$	1,482,885	$	760,125	$	544,558	$	393,279	$	438,362	$	277,975	$	5,800,991

(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, Including Loans on Nonaccrual Status, Disaggregated by Loan Class

The following is an aging analysis of loans, including loans on nonaccrual status, 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)
September 30, 2022
Real estate loans:
Commercial property
Retail	$	3,531	$	—	$	—	$	3,531	$	1,040,756	$	1,044,287	$	—
Hospitality		991		—		—		991		661,447		662,438		—
Other		214		—		269		483		2,044,395		2,044,878		—
Total commercial property loans		4,736		—		269		5,005		3,746,598		3,751,603		—
Construction		—		—		—		—		102,342		102,342		—
Residential		404		—		10		414		649,175		649,589		—
Total real estate loans		5,140		—		279		5,419		4,498,115		4,503,534		—
Commercial and industrial loans		82		35		—		117		731,916		732,033		—
Equipment financing agreements		3,666		1,130		1,586		6,382		559,042		565,424		—
Total loans receivable	$	8,888	$	1,165	$	1,865	$	11,918	$	5,789,073	$	5,800,991	$	—

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 September 30, 2022 and December 31, 2021.


	September 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	$	3,530	$	—	$	—	$	3,530
Other		914		341		—		1,255
Total commercial property loans		4,444		341		—		4,785
Residential		912		15		—		927
Total real estate loans		5,356		356		—		5,712
Commercial and industrial loans		—		409		—		409
Equipment financing agreements		368		5,102		—		5,470
Total	$	5,724	$	5,867	$	—	$	11,591

	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:


	September 30, 2022		December 31, 2021
	(in thousands)
Nonaccrual loans	$	11,591	$	13,360
Loans receivable 90 days or more past due and still accruing		—		—
Total nonperforming loans receivable		11,591		13,360
Other real estate owned ("OREO")		792		675
Total nonperforming assets	$	12,383	$	14,035

Troubled Debt Restructurings

The following table details TDRs as of September 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)
September 30, 2022
Real estate loans	$	274	$	—	$	88	$	—	$	362	$	—	$	1,144	$	—	$	—	$	1,144
Commercial and industrial loans		—		111		—		—		111		—		—		—		—		—
Total	$	274	$	111	$	88	$	—	$	473	$	—	$	1,144	$	—	$	—	$	1,144

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
	September 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		—	$	—	$	—		—	$	—	$	—

	Nine Months Ended						Twelve Months Ended
	September 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	$	88		—	$	—	$	—
Total		1	$	92	$	88		—	$	—	$	—