Hanmi Financial Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurements (Tables)

Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2024

Assets and Liabilities Measured at Fair Value on Recurring Basis

As of September 30, 2024 and December 31, 2023, assets and liabilities measured at fair value on a recurring basis are as follows:


	Level 1		Level 2		Level 3
			Significant
			Observable
	Quoted Prices in		Inputs with No
	Active Markets		Active Market		Significant
	for Identical		with Identical		Unobservable
	Assets		Characteristics		Inputs		Total Fair Value
	(in thousands)
September 30, 2024
Assets:
Securities available for sale:
U.S. Treasury securities	$	94,206	$	—	$	—	$	94,206
U.S. government agency and sponsored agency obligations:
Mortgage-backed securities - residential		—		416,273		—		416,273
Mortgage-backed securities - commercial		—		63,102		—		63,102
Collateralized mortgage obligations		—		143,856		—		143,856
Debt securities		—		124,250		—		124,250
Total U.S. government agency and sponsored agency obligations		—		747,481		—		747,481
Municipal bonds-tax exempt		—		67,234		—		67,234
Total securities available for sale	$	94,206	$	814,715	$	—	$	908,921
Derivative financial instruments	$	—	$	5,284	$	—	$	5,284

Liabilities:
Derivative financial instruments	$	—	$	4,559	$	—	$	4,559

December 31, 2023
Assets:
Securities available for sale:
U.S. Treasury securities	$	85,488	$	—	$	—	$	85,488
U.S. government agency and sponsored agency obligations:
Mortgage-backed securities - residential		—		442,328		—		442,328
Mortgage-backed securities - commercial		—		47,991		—		47,991
Collateralized mortgage obligations		—		97,411		—		97,411
Debt securities		—		124,625		—		124,625
Total U.S. government agency and sponsored agency obligations		—		712,355		—		712,355
Municipal bonds-tax exempt		—		67,896		—		67,896
Total securities available for sale	$	85,488	$	780,251	$	—	$	865,739
Derivative financial instruments	$	—	$	6,245	$	—	$	6,245

Liabilities:
Derivative financial instruments	$	—	$	5,920	$	—	$	5,920

Assets and Liabilities Measured at Fair Value on Non-Recurring Basis

As of September 30, 2024 and December 31, 2023, assets and liabilities measured at fair value on a non-recurring basis are as follows:


			Level 1		Level 2		Level 3
					Significant
					Observable
			Quoted Prices in		Inputs With No
			Active Markets		Active Market		Significant
			for Identical		With Identical		Unobservable
	Total		Assets		Characteristics		Inputs
	(in thousands)
September 30, 2024
Assets:
Collateral dependent loans (1)	$	5,016	$	—	$	—	$	5,016
Other real estate owned		772		—		—		772
Repossessed personal property		1,216		—		—		1,216

December 31, 2023
Assets:
Collateral dependent loans (2)	$	7,352	$	—	$	—	$	7,352
Other real estate owned		117		—		—		117
Repossessed personal property		1,305		—		—		1,305

(1)

Consisted of real estate loans of $5.0 million.

(2)

Consisted of real estate loans of $2.2 million and commercial and industrial loans of $5.2 million.

Quantitative Information about Level 3 Fair Value Assumptions for Assets Measured at Fair Value on Non-Recurring Basis

The following table represents quantitative information about Level 3 fair value assumptions for assets measured at fair value on a non-recurring basis at September 30, 2024 and December 31, 2023:


	Fair Value		Valuation Techniques	Unobservable Input(s)	Range (Weighted Average)
	(in thousands)
September 30, 2024
Collateral dependent loans:
Real estate loans:
Commercial property
Retail	$	1,683	Market approach	Adjustments to market data	(45%) to 30% / (10)%	(1)
Hospitality		266	Market approach	Adjustments to market data	(30)% to 35% / (3)%	(1)
Construction		1,194	Market approach	Adjustments to market data	5% to 20% / 15%	(1)
Residential		1,873	Market approach	Adjustments to market data	(13) to 8% / (1)%	(1)
Total real estate loans		5,016
Total	$	5,016

Other real estate owned	$	772	Market approach	Adjustments to market data	(35)% to 5% / (12)%	(1)

Repossessed personal property		1,216	Market approach	Adjustments to market data	N/A	(3)

December 31, 2023
Collateral dependent loans:
Real estate loans:
Commercial property
Retail	$	1,530	Market approach	Adjustments to market data	5% to 20% / 15%	(1)
Hospitality		338	Market approach	Adjustments to market data	(30)% to 35% / (1)%	(1)
Other		305	Market approach	Adjustments to market data	(6)% to 1% / (2)%	(1)
Residential		1	Market approach	Adjustments to market data	(15)% to 3% / (6)%	(1)
Total real estate loans		2,174
Commercial and industrial loans		5,178	Market approach	Adjustments to market data	(20)% to 55% / (2)%	(1)
Total	$	7,352

Other real estate owned	$	117	Market approach	Adjustments to market data	(10)% to 5% / (2)%	(1)

Repossessed personal property		1,305	Market approach	Adjustments to market data	N/A	(3)

(1)

Appraisal reports utilize a combination of valuation techniques including a market approach, where prices and other relevant information generated by market transactions involving similar or comparable properties are used to determine the appraised value. Appraisals may include an ‘as is’ and ‘upon completion’ valuation scenarios. Adjustments are routinely made in the appraisal process by third-party appraisers to adjust for differences between the comparable sales and income data. Adjustments also result from the consideration of relevant economic and demographic factors with the potential to affect property values. Also, prospective values are based on the market conditions which exist at the date of inspection combined with informed forecasts based on current trends in supply and demand for the property types under appraisal. Positive adjustments disclosed in this table represent increases to the sales comparison and negative adjustments represent decreases.

(2)

Includes one loan secured by cash and business assets.

(3)

The equipment is usually too small in value to use a professional appraisal service. The values are determined internally using a combination of auction values, vendor recommendations and sales comparisons depending on the equipment type. Some highly commoditized equipment, such as commercial trucks have services that provide industry values.

Estimated Fair Values of Financial Instruments

The estimated fair values of financial instruments were as follows:


	September 30, 2024
	Carrying		Fair Value
	Amount		Level 1		Level 2		Level 3
	(in thousands)
Financial assets:
Cash and due from banks	$	287,767	$	287,767	$	—	$	—
Securities available for sale		908,921		94,206		814,715		—
Loans held for sale		54,336		27,188		27,530		—
Loans receivable, net of allowance for credit losses		6,188,581		—		—		6,163,726
Accrued interest receivable		21,955		21,955		—		—
Derivative financial instruments		5,284		—		5,284		—

Financial liabilities:
Noninterest-bearing deposits		2,051,790		—		2,051,790		—
Interest-bearing deposits		4,351,431		—		—		4,352,288
Borrowings and subordinated debentures		430,478		—		300,082		136,327
Accrued interest payable		52,613		52,613		—		—
Derivative financial instruments		4,559		—		4,559		—


	December 31, 2023
	Carrying		Fair Value
	Amount		Level 1		Level 2		Level 3
	(in thousands)
Financial assets:
Cash and due from banks	$	302,324	$	302,324	$	—	$	—
Securities available for sale		865,739		85,488		780,251		—
Loans held for sale		12,013		—		12,238		—
Loans receivable, net of allowance for credit losses		6,112,972		—		—		6,007,975
Accrued interest receivable		23,371		23,371		—		—
Derivative financial instruments		6,245		—		6,245		—

Financial liabilities:
Noninterest-bearing deposits		2,003,596		—		2,003,596		—
Interest-bearing deposits		4,276,978		—		—		4,271,711
Borrowings and subordinated debentures		455,012		—		323,491		128,229
Accrued interest payable		39,306		39,306		—		—
Derivative financial instruments		5,920		—		5,920		—