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, 2023

Loans consisted of the following as of the dates indicated:


	September 30, 2023			December 31, 2022
	(in thousands)
Real estate loans:
Commercial property
Retail	$	1,097,650		$	1,023,608
Hospitality		705,735			646,893
Office		575,319			499,946
Other (1)		1,309,507			1,553,729
Total commercial property loans		3,688,211			3,724,176
Construction		84,804			109,205
Residential (2)		926,326			734,472
Total real estate loans		4,699,341			4,567,853
Commercial and industrial loans (3)		728,792			804,492
Equipment financing agreements		592,652			594,788
Loans receivable		6,020,785			5,967,133
Allowance for credit losses		(67,313	)		(71,523	)
Loans receivable, net	$	5,953,472		$	5,895,610

(1)

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

(2)

Includes $2.0 million and $2.4 million of home equity loans and lines, and $4.2 million and $4.6 million of personal loans at September 30, 2023 and December 31, 2022, respectively.

(3)

At September 30, 2023 and December 31, 2022, Paycheck Protection Program loans were $0.2 million and $0.9 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, 2023 and 2022:


	Real Estate			Commercial and Industrial			Total
	(in thousands)
September 30, 2023
Balance at beginning of period	$	5,544		$	1,749		$	7,293
Originations and transfers		12,588			13,398			25,986
Sales		(11,520	)		(9,490	)		(21,010	)
Principal paydowns and amortization		(75	)		(427	)		(502	)
Balance at end of period	$	6,537		$	5,230		$	11,767

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

The following is the activity for loans held for sale for the nine months ended September 30, 2023 and 2022:


	Real Estate			Commercial and Industrial			Total
	(in thousands)
September 30, 2023
Balance at beginning of period	$	3,775		$	4,268		$	8,043
Originations and transfers		43,468			31,420			74,888
Sales		(40,630	)		(30,022	)		(70,652	)
Principal payoffs and amortization		(76	)		(436	)		(512	)
Balance at end of period	$	6,537		$	5,230		$	11,767

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

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, 2023 and 2022:


	Real Estate			Commercial and Industrial			Equipment Financing Agreements			Total
	(in thousands)
September 30, 2023
Balance at beginning of period	$	43,054		$	16,028		$	11,942			71,024
Charge-offs		(216	)		(6,323	)		(2,831	)		(9,370	)
Recoveries		50			141			301			492
Provision (recovery) for credit losses		948			1,396			2,823			5,167
Ending balance	$	43,836		$	11,242		$	12,235		$	67,313

September 30, 2022
Balance at beginning of period	$	46,112		$	14,275		$	12,680		$	73,067
Charge-offs		(1,356	)		(8	)		(716	)		(2,080	)
Recoveries		373			228			369			970
Provision (recovery) for credit losses		395			381			(1,149	)		(373	)
Ending balance	$	45,524		$	14,876		$	11,184		$	71,584

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, 2023 and 2022:


	Real Estate			Commercial and Industrial			Equipment Financing Agreements			Total
	(in thousands)
September 30, 2023
Balance at beginning of period	$	44,026		$	15,267		$	12,230			71,523
Charge-offs		(627	)		(6,635	)		(7,052	)		(14,314	)
Recoveries		180			931			1,131			2,242
Provision (recovery) for credit losses		257			1,679			5,926			7,862
Ending balance	$	43,836		$	11,242		$	12,235		$	67,313

September 30, 2022
Balance at beginning of period	$	48,890		$	12,418		$	11,249		$	72,557
Charge-offs		(1,886	)		(87	)		(1,548	)		(3,521	)
Recoveries		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

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, 2023										December 31, 2022
	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	$	10,083		15.0	%	$	1,097,650		18.3	%	$	7,872		11.0	%	$	1,023,608		17.2	%
Hospitality		15,083		22.4			705,735		11.7			13,407		18.7			646,893		10.8
Office		2,884		4.3			575,319		9.6			2,293		3.2			499,946		8.4
Other		8,321		12.3			1,309,507		21.7			13,056		18.3			1,553,729		26.0
Total commercial property loans		36,371		54.0			3,688,211		61.3			36,628		51.2			3,724,176		62.4
Construction		2,594		3.9			84,804		1.4			4,022		5.7			109,205		1.8
Residential		4,871		7.2			926,326		15.4			3,376		4.7			734,472		12.4
Total real estate loans		43,836		65.1			4,699,341		78.1			44,026		61.6			4,567,853		76.6
Commercial and industrial loans		11,242		16.7			728,792		12.1			15,267		21.3			804,492		13.4
Equipment financing agreements		12,235		18.2			592,652		9.8			12,230		17.1			594,788		10.0
Total	$	67,313		100.0	%	$	6,020,785		100.0	%	$	71,523		100.0	%	$	5,967,133		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, 2023 and December 31, 2022, for which repayment is expected to be obtained through the sale of the underlying collateral.


	September 30, 2023		December 31, 2022
	Amortized Cost		Amortized Cost
	(in thousands)
Real estate loans:
Commercial property
Retail	$	1,637	$	1,930
Hospitality		333		—
Office		—		—
Other		22		256
Total commercial property loans		1,992		2,186
Residential		3		508
Total real estate loans		1,995		2,694
Commercial and industrial loans		4,847		—
Total	$	6,842	$	2,694

Credit Quality of Loan Portfolio


	Term Loans
	Amortized Cost Basis by Origination Year (1)
	2023		2022		2021			2020		2019		Prior			Revolving Loans Amortized Cost Basis		Total
	(in thousands)
September 30, 2023
Real estate loans:
Commercial property
Risk Rating								`
Pass / Pass-Watch	$	511,148	$	1,013,414	$	863,200		$	578,433	$	384,562	$	264,284		$	26,171	$	3,641,212
Special Mention		5,194		4,032		10,141			4,328		715		1,556			1,700		27,666
Classified		4,430		977		4,936					5,606		3,384					19,333
Total commercial property		520,772		1,018,423		878,277			582,761		390,883		269,224			27,871		3,688,211
YTD gross charge-offs		—		—		—			411		—		216			—		627
YTD net charge-offs		—		—		—			407		—		46			—		453

Construction
Risk Rating
Pass / Pass-Watch		38,129		—		18,375			—		—		—			—		56,504
Special Mention		—		—		28,300			—		—		—			—		28,300
Classified		—		—		—			—		—		—			—		—
Total construction		38,129		—		46,675			—		—		—			—		84,804
YTD gross charge-offs		—		—		—			—		—		—			—		—
YTD net charge-offs		—		—		—			—		—		—			—		—

Residential
Risk Rating
Pass / Pass-Watch		241,830		381,167		160,856			12,791		221		124,047			4,911		925,823
Special Mention		—		—		—			—		—		—			500		500
Classified		—		—		—			—		—		3			—		3
Total residential		241,830		381,167		160,856			12,791		221		124,050			5,411		926,326
YTD gross charge-offs		—		—		—			—		—		—			—		—
YTD net charge-offs		—		—		—			—		—		(6	)		—		(6	)

Total real estate loans
Risk Rating
Pass / Pass-Watch		791,107		1,394,581		1,042,431			591,224		384,783		388,331			31,082		4,623,539
Special Mention		5,194		4,032		38,441			4,328		715		1,556			2,200		56,466
Classified		4,430		977		4,936			—		5,606		3,387			—		19,336
Total real estate loans		800,731		1,399,590		1,085,808			595,552		391,104		393,274			33,282		4,699,341
YTD gross charge-offs		—		—		—			411		—		216			—		627
YTD net charge-offs		—		—		—			407		—		40			—		447

Commercial and industrial loans:
Risk Rating
Pass / Pass-Watch		142,240		176,815		88,316			33,403		11,156		10,047			240,951		702,928
Special Mention		—		16,128		—			104		—		3,775			—		20,007
Classified		378		—		—			84		46		210			5,139		5,857
Total commercial and industrial loans		142,618		192,943		88,316			33,591		11,202		14,032			246,090		728,792
YTD gross charge-offs		—		17		—			—		110		388			6,120		6,635
YTD net charge-offs		—		5		(5	)		—		107		(522	)		6,119		5,704

Equipment financing agreements:
Risk Rating
Pass / Pass-Watch		174,377		234,753		115,310			29,380		25,457		5,434			—		584,711
Special Mention		—		—		—			—		—		—			—		—
Classified		329		3,630		2,719			167		830		266			—		7,941
Total equipment financing agreements		174,706		238,383		118,029			29,547		26,287		5,700			—		592,652
YTD gross charge-offs		56		3,030		2,732			294		725		215			—		7,052
YTD net charge-offs		56		2,961		2,455			217		335		(103	)		—		5,921

Total loans receivable:
Risk Rating
Pass / Pass-Watch		1,107,724		1,806,149		1,246,057			654,007		421,396		403,812			272,033		5,911,178
Special Mention		5,194		20,160		38,441			4,432		715		5,331			2,200		76,473
Classified		5,137		4,607		7,655			251		6,482		3,863			5,139		33,134
Total loans receivable	$	1,118,055	$	1,830,916	$	1,292,153		$	658,690	$	428,593	$	413,006		$	279,372	$	6,020,785
YTD gross charge-offs		56		3,047		2,732			705		835		819			6,120		14,314
YTD net charge-offs		56		2,966		2,450			624		442		(585	)		6,119		12,072

(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

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.

Loans by Vintage Year and Payment Performance


	Term Loans
	Amortized Cost Basis by Origination Year (1)
	2023		2022		2021			2020		2019		Prior			Revolving Loans Amortized Cost Basis		Total
	(in thousands)
September 30, 2023
Real estate loans:
Commercial property
Payment performance
Performing	$	519,135	$	1,018,423	$	878,124		$	582,761	$	390,800	$	268,305		$	27,871	$	3,685,419
Nonperforming		1,637		—		153			—		83		919			—		2,792
Total commercial property		520,772		1,018,423		878,277			582,761		390,883		269,224			27,871		3,688,211
YTD gross charge-offs		—		—		—			411		—		216			—		627
YTD net charge-offs		—		—		—			407		—		46			—		453

Construction
Payment performance
Performing		38,129		—		46,675			—		—		—			—		84,804
Nonperforming		—		—		—			—		—		—			—		—
Total construction		38,129		—		46,675			—		—		—			—		84,804
YTD gross charge-offs		—		—		—			—		—		—			—		—
YTD net charge-offs		—		—		—			—		—		—			—		—

Residential
Payment performance
Performing		241,830		381,167		160,856			12,791		221		124,047			5,411		926,323
Nonperforming		—		—		—			—		—		3			—		3
Total residential		241,830		381,167		160,856			12,791		221		124,050			5,411		926,326
YTD gross charge-offs		—		—		—			—		—		—			—		—
YTD net charge-offs		—		—		—			—		—		(6	)		—		(6	)

Total real estate loans
Payment performance
Performing		799,094		1,399,590		1,085,655			595,552		391,021		392,352			33,282		4,696,546
Nonperforming		1,637		—		153			—		83		922			—		2,795
Total real estate loans		800,731		1,399,590		1,085,808			595,552		391,104		393,274			33,282		4,699,341
YTD gross charge-offs		—		—		—			411		—		216			—		627
YTD net charge-offs		—		—		—			407		—		40			—		447

Commercial and industrial loans:
Payment performance
Performing		142,618		192,943		88,316			33,507		11,202		13,919			241,241		723,746
Nonperforming		—		—		—			84		—		113			4,849		5,046
Total commercial and industrial loans		142,618		192,943		88,316			33,591		11,202		14,032			246,090		728,792
YTD gross charge-offs		—		17		—			—		110		388			6,120		6,635
YTD net charge-offs		—		5		(5	)		—		107		(522	)		6,119		5,704

Equipment financing agreements:
Payment performance
Performing		174,377		234,753		115,310			29,380		25,456		5,434			—		584,710
Nonperforming		329		3,630		2,719			167		831		266			—		7,942
Total equipment financing agreements		174,706		238,383		118,029			29,547		26,287		5,700			—		592,652
YTD gross charge-offs		56		3,030		2,732			294		725		215			—		7,052
YTD net charge-offs		56		2,961		2,455			217		335		(103	)		—		5,921

Total loans receivable:
Payment performance
Performing		1,116,089		1,827,286		1,289,281			658,439		427,679		411,705			274,523		6,005,002
Nonperforming		1,966		3,630		2,872			251		914		1,301			4,849		15,783
Total loans receivable	$	1,118,055	$	1,830,916	$	1,292,153		$	658,690	$	428,593	$	413,006		$	279,372	$	6,020,785
YTD gross charge-offs		56		3,047		2,732			705		835		819			6,120		14,314
YTD net charge-offs		56		2,966		2,450			624		442		(585	)		6,119		12,072

(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

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.

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
	(in thousands)
September 30, 2023
Real estate loans:
Commercial property
Retail	$	260	$	—	$	—	$	260	$	1,097,390	$	1,097,650
Hospitality		153		33		—		186		705,549		705,735
Office		—		—		—		—		575,319		575,319
Other		704		—		22		726		1,308,781		1,309,507
Total commercial property loans		1,117		33		22		1,172		3,687,039		3,688,211
Construction		—		—		—		—		84,804		84,804
Residential		935		364		3		1,302		925,024		926,326
Total real estate loans		2,052		397		25		2,474		4,696,867		4,699,341
Commercial and industrial loans		384		151		4,849		5,384		723,408		728,792
Equipment financing agreements		6,527		2,195		3,382		12,104		580,548		592,652
Total loans receivable	$	8,963	$	2,743	$	8,256	$	19,962	$	6,000,823	$	6,020,785

December 31, 2022
Real estate loans:
Commercial property
Retail	$	—	$	—	$	—	$	—	$	1,023,608	$	1,023,608
Hospitality		—		—		—		—		646,893		646,893
Office		—		—		—		—		499,946		499,946
Other		—		494		—		494		1,553,235		1,553,729
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

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, 2023 and December 31, 2022.


	September 30, 2023
	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	$	1,849	$	402	$	—	$	2,251
Hospitality		333		186		—		519
Office		—		—		—		—
Other		22		—		—		22
Total commercial property loans		2,204		588		—		2,792
Construction		—		—		—		—
Residential		3		—		—		3
Total real estate loans		2,207		588		—		2,795
Commercial and industrial loans		—		5,046		—		5,046
Equipment financing agreements		848		7,094		—		7,942
Total	$	3,055	$	12,728	$	—	$	15,783

	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
Hospitality		—		—		—		—
Office		—		—		—		—
Other		540		731		—		1,271
Total commercial property loans		2,469		731		—		3,200
Construction		—		—		—		—
Residential		508		—		—		508
Total real estate loans		2,977		731		—		3,708
Commercial and industrial loans		—		422		—		422
Equipment financing agreements		215		5,502		—		5,717
Total	$	3,192	$	6,655	$	—	$	9,847

Non-Performing Assets

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


	September 30, 2023		December 31, 2022
	(in thousands)
Nonaccrual loans	$	15,783	$	9,847
Loans receivable 90 days or more past due and still accruing		—		—
Total nonperforming loans receivable		15,783		9,847
Other real estate owned ("OREO")		117		117
Total nonperforming assets	$	15,900	$	9,964