Hanmi Financial Corporation Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Loans Receivable (Tables)

Loans Receivable (Tables)

12 Months Ended

Dec. 31, 2022

Loans receivable consisted of the following as of the dates indicated:


	December 31,
	2022			2021
	(in thousands)
Real estate loans:
Commercial property
Retail	$	1,023,608		$	970,134
Hospitality		646,893			717,692
Other (1)		2,053,675			1,919,033
Total commercial property loans		3,724,176			3,606,859
Construction		109,205			95,006
Residential (2)		734,472			400,546
Total real estate loans		4,567,853			4,102,411
Commercial and industrial loans (3)		804,492			561,831
Equipment financing agreements		594,788			487,299
Loans receivable		5,967,133			5,151,541
Allowance for credit losses		(71,523	)		(72,557	)
Loans receivable, net	$	5,895,610		$	5,078,984

(1)

Includes, among other property types, mixed-use, gas station, apartment, office, industrial, faith-based facilities and warehouse; the remaining real estate categories represent less than 1% of the Bank's total loans receivable.

(2)

Includes $2.4 million and $3.9 million of home equity loans and lines, and $4.6 million and $6.0 million of personal loans at December 31, 2022 and 2021, respectively.

(3)

At December 31, 2022 and 2021, PPP loans were $0.9 million and $3.0 million, respectively.

Information on SBA Loans Held for Sale

The following table details the information on SBA loans held for sale by portfolio segment for the years ended December 31, 2022 and 2021:


	Real Estate			Commercial and Industrial			Total
	(in thousands)
December 31, 2022
Balance at beginning of period	$	6,954		$	6,388		$	13,342
Originations and transfers		99,547			51,278			150,825
Sales		(102,720	)		(53,389	)		(156,109	)
Principal paydowns and amortization		(6	)		(9	)		(15	)
Balance at end of period	$	3,775		$	4,268		$	8,043

December 31, 2021
Balance at beginning of period	$	8,042		$	526		$	8,568
Originations and transfers		87,775			177,968			265,743
Sales		(88,858	)		(172,995	)		(261,853	)
Principal paydowns and amortization		(5	)		889			884
Balance at end of period	$	6,954		$	6,388		$	13,342

Allowance for Credit Losses

Allowance for Credit Losses by Portfolio Segment

he following table details the information on the allowance for credit losses by portfolio segment for the years ended December 31, 2022, 2021 and 2020:


	Real Estate			Commercial and Industrial			Equipment financing agreements			Total
	(in thousands)
December 31, 2022
Allowance for credit losses:
Beginning balance	$	48,890		$	12,418		$	11,249		$	72,557
Chargeoffs		(1,886	)		(524	)		(2,312	)		(4,722	)
Recoveries		848			1,178			1,322			3,348
Provision (recovery) for credit losses		(3,826	)		2,195			1,971			340
Ending balance	$	44,026		$	15,267		$	12,230		$	71,523

December 31, 2021
Allowance for credit losses:
Beginning balance	$	51,876		$	21,410		$	17,140		$	90,426
Chargeoffs		(1,427	)		(546	)		(4,400	)		(6,373	)
Recoveries		10,807			897			946			12,650
Provision (recovery) for credit losses		(12,366	)		(9,343	)		(2,437	)		(24,146	)
Ending balance	$	48,890		$	12,418		$	11,249		$	72,557

December 31, 2020
Allowance for credit losses:
Beginning balance	$	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		50,463			13,709			14,669			78,841
Chargeoffs		(15,567	)		(13,312	)		(5,073	)		(33,952	)
Recoveries		2,124			336			603			3,063
Provision (recovery) for credit losses		14,856			20,677			6,941			42,474
Ending balance	$	51,876		$	21,410		$	17,140		$	90,426

The table below presents the allowance for credit losses by portfolio segment as a percentage of the total allowance for credit losses and loans by portfolio segment as a percentage of the aggregate investment of loans receivable for the years ended December 31, 2022 and 2021:


	December 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	$	7,872		11.0	%	$	1,023,608		17.2	%	$	6,579		9.1	%	$	970,134		18.8	%
Hospitality		13,407		18.7			646,893		10.8			22,670		31.2			717,692		13.9
Other		15,349		21.5			2,053,675		34.4			15,065		20.8			1,919,033		37.3
Total commercial property loans		36,628		51.2			3,724,176		62.4			44,314		61.1			3,606,859		70.0
Construction		4,022		5.7			109,205		1.8			4,078		5.6			95,006		1.8
Residential		3,376		4.7			734,472		12.4			498		0.7			400,546		7.8
Total real estate loans		44,026		61.6			4,567,853		76.6			48,890		67.4			4,102,411		79.6
Commercial and industrial loans		15,267		21.3			804,492		13.5			12,418		17.1			561,831		10.9
Equipment financing agreements		12,230		17.1			594,788		10.0			11,249		15.5			487,299		9.5
Total	$	71,523		100.0	%	$	5,967,133		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 December 31, 2022 and 2021, for which repayment is expected to be obtained through the sale of the underlying collateral and any collateral dependent loans that are still accruing but are considered nonperforming.


	December 31,
	2022		2021
	(in thousands)
Real estate loans:
Commercial property
Retail	$	1,930	$	1,917
Hospitality		—		—
Other (1)		256		499
Total commercial property loans		2,186		2,416
Residential		508		982
Total real estate loans		2,694		3,398
Total	$	2,694	$	3,398

(1)

Credit Quality of Loan Portfolio

As of December 31, 2022 and 2021, the recorded investment in pass/pass-watch, special mention and classified (substandard, doubtful and loss) loans, disaggregated by loan class, were as follows:


	Pass/Pass- Watch		Special Mention		Classified		Total
	(in thousands)
December 31, 2022
Real estate loans:
Commercial property
Retail	$	1,016,442	$	5,236	$	1,930	$	1,023,608
Hospitality		628,698		—		18,195		646,893
Other		2,006,464		29,748		17,463		2,053,675
Total commercial property loans		3,651,604		34,984		37,588		3,724,176
Construction		109,205		—		—		109,205
Residential		733,464		500		508		734,472
Total real estate loans		4,494,273		35,484		38,096		4,567,853
Commercial and industrial loans		758,584		43,529		2,379		804,492
Equipment financing agreements		589,071		—		5,717		594,788
Total loans receivable	$	5,841,928	$	79,013	$	46,192	$	5,967,133

December 31, 2021
Real estate loans:
Commercial property
Retail	$	952,651	$	5,949	$	11,534	$	970,134
Hospitality		662,834		36,248		18,610		717,692
Other		1,891,877		9,846		17,310		1,919,033
Total commercial property loans		3,507,362		52,043		47,454		3,606,859
Construction		74,439		20,567		—		95,006
Residential		396,007		3,557		982		400,546
Total real estate loans		3,977,808		76,167		48,436		4,102,411
Commercial and industrial loans		537,652		19,127		5,052		561,831
Equipment financing agreements		480,154		—		7,145		487,299
Total loans receivable	$	4,995,614	$	95,294	$	60,633	$	5,151,541

Loans by Vintage Year and Risk Rating


	Term Loans
	Amortized Cost Basis by Origination Year (1)
	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
	(in thousands)
December 31, 2022
Real estate loans:
Commercial property
Risk Rating
Pass / Pass Watch	$	1,184,361	$	901,029	$	600,740	$	404,786	$	301,950	$	207,861	$	50,877	$	3,651,604
Special Mention		847		13,384		5,857		7,115		—		6,080		1,701		34,984
Classified		—		—		412		4,312		12,304		20,560		—		37,588
Total commercial property		1,185,208		914,413		607,009		416,213		314,254		234,501		52,578		3,724,176

Construction
Risk Rating
Pass / Pass Watch		41,662		67,543		—		—		—		—		—		109,205
Special Mention		—		—		—		—		—		—		—		—
Classified		—		—		—		—		—		—		—		—
Total construction		41,662		67,543		—		—		—		—		—		109,205

Residential
Risk Rating
Pass / Pass Watch		405,975		173,236		13,102		232		731		134,766		5,422		733,464
Special Mention		—		—		—		—		—		—		500		500
Classified		12		—		—		—		—		496		—		508
Total residential		405,987		173,236		13,102		232		731		135,262		5,922		734,472

Total real estate loans
Risk Rating
Pass / Pass Watch		1,631,998		1,141,808		613,842		405,018		302,681		342,627		56,299		4,494,273
Special Mention		847		13,384		5,857		7,115		—		6,080		2,201		35,484
Classified		12		—		412		4,312		12,304		21,056		—		38,096
Total real estate loans		1,632,857		1,155,192		620,111		416,445		314,985		369,763		58,500		4,567,853

Commercial and industrial loans:
Risk Rating
Pass / Pass Watch		368,778		100,537		39,577		24,117		7,342		12,282		205,951		758,584
Special Mention		—		9,285		—		—		29		102		34,113		43,529
Classified		—		—		171		1,097		81		391		639		2,379
Total commercial and industrial loans		368,778		109,822		39,748		25,214		7,452		12,775		240,703		804,492

Equipment financing agreements:
Risk Rating
Pass / Pass Watch		305,249		165,313		46,970		52,133		17,608		1,798		—		589,071
Special Mention		—		—		—		—		—		—		—		—
Classified		630		2,542		311		1,581		565		88		—		5,717
Total equipment financing agreements		305,879		167,855		47,281		53,714		18,173		1,886		—		594,788

Total loans receivable:
Risk Rating
Pass / Pass Watch		2,306,025		1,407,658		700,389		481,268		327,631		356,707		262,250		5,841,928
Special Mention		847		22,669		5,857		7,115		29		6,182		36,314		79,013
Classified		642		2,542		894		6,990		12,950		21,535		639		46,192
Total loans receivable	$	2,307,514	$	1,432,869	$	707,140	$	495,373	$	340,610	$	384,424	$	299,203	$	5,967,133

(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
	(in thousands)
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)
December 31, 2022
Real estate loans:
Commercial property
Payment performance
Performing	$	1,185,208	$	914,413	$	606,597	$	416,213	$	312,324	$	233,643	$	52,578	$	3,720,976
Nonperforming		—		—		412		—		1,930		858				3,200
Total commercial property		1,185,208		914,413		607,009		416,213		314,254		234,501		52,578		3,724,176

Construction
Payment performance
Performing		41,662		67,543		—		—		—		—		—		109,205
Nonperforming		—		—		—		—		—		—		—		—
Total construction		41,662		67,543		—		—		—		—		—		109,205

Residential
Payment performance
Performing		405,975		173,236		13,102		232		731		134,766		5,922		733,964
Nonperforming		12		—		—		—		—		496		—		508
Total residential		405,987		173,236		13,102		232		731		135,262		5,922		734,472

Total real estate loans
Payment performance
Performing		1,632,845		1,155,192		619,699		416,445		313,055		368,409		58,500		4,564,145
Nonperforming		12		—		412		—		1,930		1,354		—		3,708
Total real estate loans		1,632,857		1,155,192		620,111		416,445		314,985		369,763		58,500		4,567,853

Commercial and industrial loans:
Payment performance
Performing		368,778		109,822		39,577		25,199		7,452		12,539		240,703		804,070
Nonperforming		—		—		171		15		—		236		—		422
Total commercial and industrial loans		368,778		109,822		39,748		25,214		7,452		12,775		240,703		804,492

Equipment financing agreements:
Payment performance
Performing		305,249		165,313		46,970		52,133		17,608		1,798		—		589,071
Nonperforming		630		2,542		311		1,581		565		88		—		5,717
Total equipment financing agreements		305,879		167,855		47,281		53,714		18,173		1,886		—		594,788

Total loans receivable:
Payment performance
Performing		2,306,872		1,430,327		706,246		493,777		338,115		382,746		299,203		5,957,286
Nonperforming		642		2,542		894		1,596		2,495		1,678		—		9,847
Total loans receivable	$	2,307,514	$	1,432,869	$	707,140	$	495,373	$	340,610	$	384,424	$	299,203	$	5,967,133

(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
	(in thousands)
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

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

The following tables represent the amortized cost basis of loans on nonaccrual status and loans past due 90 days and still accruing as of December 31, 2022 and 2021.


	December 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	$	1,929	$	—	$	—	$	1,929
Other		540		731		—		1,271
Total commercial property loans		2,469		731		—		3,200
Residential		508		—		—		508
Total real estate loans		2,977		731		—		3,708
Commercial and industrial loans		—		422		—		422
Equipment financing agreements		215		5,501		—		5,716
Total	$	3,192	$	6,654	$	—	$	9,846

	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

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
	(in thousands)
December 31, 2022
Real estate loans:
Commercial property
Retail	$	—	$	—	$	—	$	—	$	1,023,608	$	1,023,608
Hospitality		—		—		—		—		646,893		646,893
Other		—		494		—		494		2,053,181		2,053,675
Total commercial property loans		—		494		—		494		3,723,682		3,724,176
Construction		—		—		—		—		109,205		109,205
Residential		313		804		7		1,124		733,348		734,472
Total real estate loans		313		1,298		7		1,618		4,566,235		4,567,853
Commercial and industrial loans		77		79		—		156		804,336		804,492
Equipment financing agreements		5,825		1,271		2,949		10,045		584,743		594,788
Total loans receivable	$	6,215	$	2,648	$	2,956	$	11,819	$	5,955,314	$	5,967,133

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

Non-Performing Assets

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


	As of December 31,
	2022		2021
	(in thousands)
Nonaccrual loans	$	9,846	$	13,360
Loans receivable 90 days or more past due and still accruing		—		—
Total nonperforming loans receivable		9,846		13,360
Other real estate owned ("OREO")		117		675
Total nonperforming assets	$	9,963	$	14,035

Troubled Debt Restructurings, Disaggregated by Type of Concession and by Loan Type

The following table details the recorded investment in TDRs, disaggregated by concession type and by loan type, as of December 31, 2022 and 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)
December 31, 2022
Real estate loans	$	255	$	—	$	84	$	—	$	339	$	—	$	1,185	$	—	$	—	$	1,185
Commercial and industrial loans		—		106		—		—		106		—		—		—		—		—
Total	$	255	$	106	$	84	$	—	$	445	$	—	$	1,185	$	—	$	—	$	1,185

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 Troubled Debt Restructurings

The following table presents the number of loans by class modified as troubled debt restructurings that occurred during the years ending December 31, 2022, 2021 and 2020 with their pre- and post-modification recorded amounts.


	December 31, 2022						December 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		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	$	84		—	$	—	$	—		5	$	4,479	$	3,676
Commercial and industrial loans		—		—		—		—		—		—		—		—		—
Total		1	$	92	$	84		—	$	—	$	—		5	$	4,479	$	3,676