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

Annual report pursuant to Section 13 and 15(d)

Loans (Tables)

Loans (Tables)

12 Months Ended

Dec. 31, 2013

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


	As of December 31,
	2013			2012
	(In thousands)
Real estate loans:
Commercial property	$	933,398		$	787,094
Residential property		79,078			101,778

Total real estate loans		1,012,476			888,872
Commercial and industrial loans:
Commercial term ⁽¹⁾		929,648			884,364
Commercial lines of credit ⁽²⁾		71,577			56,121
SBA loans ⁽³⁾		151,530			148,306
International loans		36,353			34,221

Total commercial and industrial loans		1,189,108			1,123,012
Consumer loans		32,505			36,676

Total gross loans		2,234,089			2,048,560
Allowance for loans losses		(57,555	)		(63,305	)
Deferred loan fees		964			796

Loans receivable, net	$	2,177,498		$	1,986,051

⁽¹⁾

Includes owner-occupied property loans of $822.0 million and $774.2 million as of December 31, 2013 and 2012, respectively.

⁽²⁾

Includes owner-occupied property loans of $535,000 and $1.4 million as of December 31, 2013 and 2012, respectively.

⁽³⁾

Includes owner-occupied property loans of $144.5 million and $128.4 million as of December 31, 2013 and 2012, respectively.

Loans Receivable to Loans Held for Sale

The following table details the information on the sales and reclassifications of loans receivable to loans held for sale by portfolio segment for the years ended December 31, 2013 and 2012:


	Real Estate			Commercial and Industrial			Consumer		Total
	(In thousands)
December 31, 2013
Balance at beginning of period	$	—		$	8,306		$	—	$	8,306
Origination of loans held for sale		—			83,027			—		83,027
Reclassification from loans receivable to loans held for sale		780			7,230			—		8,010
Reclassification from Loans held for sale to loans receivable		(774	)		(1,760	)		—		(2,534	)
Sales of loans held for sale		—			(96,754	)		—		(96,754	)
Principal payoffs and amortization		(6	)		(49	)		—		(55	)

Balance at end of period	$	—		$	—		$	—	$	—

December 31, 2012
Balance at beginning of period	$	11,068		$	11,519		$	—	$	22,587
Origination of loans held for sale		—			116,829			—		116,829
Reclassification from loans receivable to loans held for sale		46,960			48,651			—		95,611
Reclassification from loans held for sale to other real estate owned		(360	)		—			—		(360	)
Reclassification from loans held for sale to loans receivable		(1,647	)		(132	)		—		(1,779	)
Sales of loans held for sale		(54,669	)		(165,563	)		—		(220,232	)
Principal payoffs and amortization		(228	)		(376	)		—		(604	)
Valuation adjustments		(1,124	)		(2,622	)		—		(3,746	)

Balance at end of period	$	—		$	8,306		$	—	$	8,306

Allowance for Loan Losses and Allowance for Off-Balance Sheet Items

Activity in the allowance for loan losses and allowance for off-balance sheet items was as follows for the periods indicated:


	As of and for the
	Year Ended December 31,
	2013			2012			2011
	(In thousands)
Allowance for loan losses:
Balance at beginning of period	$	63,305		$	89,936		$	146,059
Actual charge-offs		(11,862	)		(38,227	)		(78,652	)
Recoveries on loans previously charged off		5,536			4,439			9,993

Net loan charge-offs		(6,326	)		(33,788	)		(68,659	)
Provision charged to operating expense		576			7,157			12,536

Balance at end of period	$	57,555		$	63,305		$	89,936

Allowance for off-balance sheet items:
Balance at beginning of period	$	1,824		$	2,981		$	3,417
Provision charged to operating expense		(576	)		(1,157	)		(436	)

Balance at end of period	$	1,248		$	1,824		$	2,981

Allowance for Loan Losses by Portfolio Segment

The following table details the information on the allowance for loan losses by portfolio segment for the years ended December 31, 2013 and 2012:


	Real Estate			Commercial and Industrial			Consumer			Unallocated			Total
	(In thousands)
December 31, 2013
Allowance for loan losses:
Beginning balance	$	18,180		$	41,928		$	2,280		$	917		$	63,305
Charge-offs		(359	)		(11,236	)		(267	)		—			(11,862	)
Recoveries on loans previously charged off		1,784			3,583			169			—			5,536
Provision		(1,044	)		2,001			(755	)		374			576

Ending balance	$	18,561		$	36,276		$	1,427		$	1,291		$	57,555

Ending balance: individually evaluated for impairment	$	204		$	5,980		$	284		$	—		$	6,468

Ending balance: collectively evaluated for impairment	$	18,357		$	30,296		$	1,143		$	1,291		$	51,087

Loans receivable:
Ending balance	$	1,012,476		$	1,189,108		$	32,505		$	—		$	2,234,089

Ending balance: individually evaluated for impairment	$	8,817		$	42,680		$	1,569		$	—		$	53,066

Ending balance: collectively evaluated for impairment	$	1,003,659		$	1,146,428		$	30,936		$	—		$	2,181,023

December 31, 2012
Allowance for loan losses:
Beginning balance	$	19,637		$	66,005		$	2,243		$	2,051		$	89,936
Charge-offs		(11,382	)		(25,897	)		(948	)		—			(38,227	)
Recoveries on loans previously charged off		583			3,758			98			—			4,439
Provision		9,342			(1,938	)		887			(1,134	)		7,157

Ending balance	$	18,180		$	41,928		$	2,280		$	917		$	63,305

Ending balance: individually evaluated for impairment	$	161		$	5,456		$	615		$	—		$	6,232

Ending balance: collectively evaluated for impairment	$	18,019		$	36,472		$	1,665		$	917		$	57,073

Loans receivable:														—
Ending balance	$	888,872		$	1,123,012		$	36,676		$	—		$	2,048,560

Ending balance: individually evaluated for impairment	$	8,819		$	44,273		$	1,652		$	—		$	54,744

Ending balance: collectively evaluated for impairment	$	880,053		$	1,078,739		$	35,024		$	—		$	1,993,816

Credit Quality of Loan Portfolio

As of December 31, 2013 and 2012, pass (grade 0-4), criticized (grade 5) and classified (grade 6-7) loans, disaggregated by loan class, were as follows:


	Pass (Grade 0-4)		Criticized (Grade 5)		Classified (Grade 6-7)		Total Loans
			(In thousands)
December 31, 2013
Real estate loans:
Commercial property
Retail	$	473,435	$	5,308	$	4,264	$	483,007
Land		4,419		981		157		5,557
Other		427,355		4,363		13,116		444,834
Residential property		77,422		—		1,656		79,078
Commercial and industrial loans:
Commercial term
Unsecured		94,306		1,699		11,608		107,613
Secured by real estate		777,114		7,818		37,103		822,035
Commercial lines of credit		70,358		—		1,219		71,577
SBA loans		140,162		571		10,797		151,530
International loans		35,777		576		—		36,353
Consumer loans		30,044		163		2,298		32,505

Total gross loans	$	2,130,392	$	21,479	$	82,218	$	2,234,089

December 31, 2012
Real estate loans:
Commercial property
Retail	$	386,650	$	3,971	$	2,324	$	392,945
Land		5,491		—		8,516		14,007
Other		366,518		12,132		1,492		380,142
Residential property		99,250		—		2,528		101,778
Commercial and industrial loans:
Commercial term
Unsecured		87,370		663		22,139		110,172
Secured by real estate		710,723		13,038		50,431		774,192
Commercial lines of credit		53,391		863		1,867		56,121
SBA loans		136,058		1,119		11,129		148,306
International loans		34,221		—		—		34,221
Consumer loans		33,707		201		2,768		36,676

Total gross loans	$	1,913,379	$	31,987	$	103,194	$	2,048,560

Analysis of Past Due Loans, Disaggregated by Loan Class

The following is an aging analysis of past due loans, disaggregated by loan class, as of December 31, 2013 and 2012:


	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans		Accruing 90 Days or More Past Due
	(In thousands)
December 31, 2013
Real estate loans:
Commercial property
Retail	$	—	$	404	$	2,196	$	2,600	$	480,407	$	483,007	$	—
Land		—		—		—		—		5,557		5,557		—
Other		411		—		—		411		444,423		444,834		—
Residential property		—		122		279		401		78,677		79,078		—
Commercial and industrial loans:
Commercial term
Unsecured		224		386		1,159		1,770		105,843		107,613		—
Secured by real estate		802		952		1,012		2,766		819,269		822,035		—
Commercial lines of credit		—		150		250		400		71,177		71,577		—
SBA loans		1,859		2,016		3,622		7,496		144,034		151,530		—
International loans		—		—		—		—		36,353		36,353		—
Consumer loans		311		42		77		430		32,075		32,505		—

Total gross loans	$	3,607	$	4,072	$	8,595	$	16,274	$	2,217,815	$	2,234,089	$	—

December 31, 2012
Real estate loans:
Commercial property
Retail	$	—	$	111	$	—	$	111	$	392,834	$	392,945	$	—
Land		—		—		335		335		13,672		14,007		—
Other		—		—		—		—		380,142		380,142		—
Residential property		—		588		311		899		100,879		101,778		—
Commercial and industrial loans:
Commercial term
Unsecured		918		1,103		1,279		3,300		106,872		110,172		—
Secured by real estate		1,949		—		926		2,875		771,317		774,192		—
Commercial lines of credit		—		188		416		604		55,517		56,121		—
SBA loans		3,759		1,039		2,800		7,598		140,708		148,306		—
International loans		—		—		—		—		34,221		34,221		—
Consumer loans		61		146		538		745		35,931		36,676		—

Total gross loans	$	6,687	$	3,175	$	6,605	$	16,467	$	2,032,093	$	2,048,560	$	—

Information on Impaired Loans, Disaggregated by Loan Class

The following table provides information on impaired loans, disaggregated by loan class, as of the dates indicated:


	Recorded Investment		Unpaid Principal Balance		With No Related Allowance Recorded		With an Allowance Recorded		Related Allowance		Average Recorded Investment		Interest Income Recognized
	(In thousands)
December 31, 2013
Real estate loans:
Commercial property
Retail	$	4,402	$	4,491	$	2,400	$	2,002	$	199	$	2,819	$	93
Land		—		—		—		—		—		837		80
Other		1,737		1,754		1,219		518		5		991		44
Residential property		2,678		2,773		2,678		—		—		2,941		117
Commercial and industrial loans:
Commercial term
Unsecured		11,612		11,827		2,166		9,446		2,581		12,048		732
Secured by real estate		21,093		22,429		19,346		1,746		493		18,313		1,322
Commercial lines of credit		614		686		173		441		252		1,008		54
SBA loans		8,274		9,845		4,380		3,894		2,576		6,495		1,195
International loans		1,087		1,087		286		801		78		1,284		—
Consumer loans		1,569		1,671		644		925		284		1,612		71

Total	$	53,066	$	56,563	$	33,292	$	19,773	$	6,468	$	48,348	$	3,708

December 31, 2012
Real estate loans:
Commercial property
Retail	$	2,930	$	3,024	$	2,930	$	—	$	—	$	2,357	$	136
Land		2,097		2,307		2,097		—		—		2,140		179
Other		527		527		—		527		67		835		43
Construction		—		—		—		—		—		6,012		207
Residential property		3,265		3,308		1,866		1,399		94		3,268		164
Commercial and industrial loans:
Commercial term
Unsecured		14,532		15,515		6,826		7,706		2,144		14,160		821
Secured by real estate		22,050		23,221		9,520		12,530		2,319		21,894		1,723
Commercial lines of credit		1,521		1,704		848		673		230		1,688		64
SBA loans		6,170		10,244		4,294		1,876		762		7,173		1,131
Consumer loans		1,652		1,711		449		1,203		615		1,205		73

Total	$	54,744	$	61,561	$	28,830	$	25,914	$	6,231	$	60,732	$	4,541

December 31, 2011
Real estate loans:
Commercial property
Retail	$	1,260	$	1,260	$	1,100	$	160	$	126	$	105	$	—
Land		3,178		3,210		—		3,178		360		16,910		78
Other		14,773		14,823		1,131		13,642		3,004		14,850		907
Construction		14,120		14,120		14,120		—		—		14,353		1,077
Residential property		5,368		5,408		3,208		2,160		128		5,399		279
Commercial and industrial loans:
Commercial term
Unsecured		16,035		16,559		244		15,791		10,793		15,685		1,043
Secured by real estate		53,159		54,156		14,990		38,169		7,062		51,977		3,652
Commercial lines of credit		1,431		1,554		715		716		716		1,590		82
SBA loans		11,619		12,971		9,445		2,174		1,167		12,658		1,186
Consumer loans		746		788		511		235		26		832		44

Total	$	121,689	$	124,849	$	45,464	$	76,225	$	23,382	$	134,359	$	8,348

Summary of Interest Foregone on Impaired Loans

The following is a summary of interest foregone on impaired loans for the periods indicated:


	Year Ended December 31,
	2013			2012			2011
	(In thousands)
Interest income that would have been recognized had impaired loans performed in accordance with their original terms	$	4,451		$	5,887		$	9,192
Less: Interest income recognized on impaired loans ⁽¹⁾		(3,708	)		(4,541	)		(8,348	)

Interest foregone on impaired loans	$	743		$	1,346		$	844

⁽¹⁾

Includes interest recognized on accrual basis prior to classification as impaired.

Non-Accrual Loans, Disaggregated by Loan Class

The following table details non-accrual loans, disaggregated by loan class, as of the dates indicated:


	As of December 31,
	2013		2012
	(In thousands)
Real estate loans:
Commercial property
Retail	$	2,946	$	1,079
Land		—		2,097
Other		574		—
Construction		—		—
Residential property		1,365		1,270
Commercial and industrial loans:
Commercial term
Unsecured		3,144		8,311
Secured by real estate		6,773		8,679
Commercial lines of credit		423		1,521
SBA loans		9,155		12,563
Consumer loans		1,497		1,759

Total non-accrual loans	$	25,877	$	37,279

Non-Performing Assets

The following table details non-performing assets as of the dates indicated:


	As of December 31,
	2013		2012
	(In thousands)
Non-accrual loans	$	25,877	$	37,279
Loans 90 days or more past due and still accruing		—		—

Total non-performing loans		25,877		37,279
Other real estate owned		756		774

Total non-performing assets	$	26,633	$	38,053

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

The following table details troubled debt restructurings, disaggregated by concession type and by loan type, as of December 31, 2013, 2012 and 2011:


	Non-Accrual 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, 2013
Real estate loans:
Commercial property
Retail	$	—	$	—	$	—	$	750	$	750	$	—	$	—	$	—	$	—	$	—
Other		—		—		—		—		—		518		—		—		645		1,163
Residential property		795		—		—		—		795		—		—		—		—		—
Commercial and industrial loans:
Commercial term
Unsecured		—		198		1,016		851		2,065		1,130		—		2,221		3,816		7,167
Secured by real estate		2,115		967		976		—		4,058		3,437		—		1,253		4,466		9,156
Commercial lines of credit		—		—		—		173		173		—		—		191		—		191
SBA loans		876		1,078		741		—		2,695		439		—		65		—		504
International loans		—		—		—		—		—		—		—		1,087		—		1,087
Consumer loans		—		—		—		—		—		—		—		149		—		149

Total	$	3,786	$	2,243	$	2,733	$	1,774	$	10,536	$	5,524	$	—	$	4,966	$	8,927	$	19,417

December 31, 2012
Real estate loans:
Commercial property
Retail	$	—	$	—	$	—	$	1,080	$	1,080	$	357	$	—	$	—	$	175	$	532
Other		—		—		—		—		—		527		—		—		—		527
Residential property		827		—		—		—		827		—		572		—		—		572
Commercial and industrial loans:
Commercial term
Unsecured		—		658		4,558		1,413		6,629		976		—		1,090		3,260		5,326
Secured by real estate		2,317		1,343		318		—		3,978		4,444		—		448		4,547		9,439
Commercial lines of credit		673		—		188		244		1,105		—				—		—		—
SBA loans		2,831		1,287		1,032		—		5,150		484		—		100		—		584

Total	$	6,648	$	3,288	$	6,096	$	2,737	$	18,769	$	6,788	$	572	$	1,638	$	7,982	$	16,980

December 31, 2011
Real estate loans:
Commercial property
Retail	$	—	$	—	$	—	$	1,260	$	1,260	$	—	$	—	$	—	$	—	$	—
Other		900		—		—		—		900		1,480		—		—		—		1,480
Residential property		—		—		138		—		138		2,167		572		—		—		2,739
Commercial and industrial loans:
Commercial term
Unsecured		1,480		669		4,650		682		7,481		185		—		7,069		1,584		8,838
Secured by real estate		1,202		1,523		2,403		3,243		8,371		2,005		—		8,628		2,699		13,332
SBA loans		2,758		1,524		794		—		5,076		1,354		468		—		—		1,822

Total	$	6,340	$	3,716	$	7,985	$	5,185	$	23,226	$	7,191	$	1,040	$	15,697	$	4,283	$	28,211

Troubled Debt Restructuring, Disaggregated by Loan Class

The following table details troubled debt restructuring, disaggregated by loan class, for the years ended December 31, 2013, 2012 and 2011:


	For the Year Ended
	December 31, 2013						December 31, 2012						December 31, 2011
	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 number of loans)
Real estate loans:
Commercial property
Retail ⁽¹⁾		—	$	—	$	—		2	$	562	$	533		2	$	1,260	$	1,260
Other ⁽²⁾		1		658		645		1		547		527		2		2,387		2,381
Residential property ⁽³⁾		—		—		—		—		—		—		3		2,740		2,739
Commercial and industrial loans:
Commercial term
Unsecured ⁽⁴⁾		19		4,060		3,528		37		6,024		5,277		50		15,410		14,797
Secured by real estate⁽⁵⁾		5		2,833		2,755		7		7,963		7,570		12		15,363		14,268
Commercial lines of credit ⁽⁶⁾		2		220		191		1		202		188		—		—		—
SBA loans ⁽⁷⁾		3		273		221		11		1,022		951		29		7,954		6,670
International loans ⁽⁸⁾		2		1,584		1,087		—		—		—		—		—		—
Consumer loans ⁽⁹⁾		1		149		149		—		—		—		—		—		—

Total		33	$	9,777	$	8,576		59	$	16,320	$	15,046		98	$	45,114	$	42,115

⁽¹⁾

Includes modifications of $357,000 through a payment deferral and $175,000 through an extension of maturity for the year ended December 31, 2012, and modifications of $1.3 million through extensions of maturity for the year ended December 31, 2011.

⁽²⁾

Includes a modification of $645,000 through an extension of maturity for the year ended December 31, 2013, a modification of $527,000 through a payment deferral for the year ended December 31, 2012, and modifications of $2.4 million through payment deferrals for the year ended December 31, 2011.

⁽³⁾

Includes modifications of $2.7 million through payment deferrals for the year ended December 31, 2011.

⁽⁴⁾

Includes modifications of $380,000 through payment deferrals, $733,000 through reductions of principal or accrued interest and $2.4 million through extensions of maturity for the year ended December 31, 2013, modifications of $909,000 through payment deferrals, $723,000 through reductions of principal or accrued interest and $3.6 million through extensions of maturity for the year ended December 31, 2012, and modifications of $1.6 million through payment deferrals, $11.5 million through reductions of principal or accrued interest and $1.5 million through extension of maturity for the year ended December 31, 2011 .

⁽⁵⁾

Includes modifications of $1.4 million through payment deferrals and $1.4 million through reductions of principal or accrued interest for the year ended December 31, 2013, modifications of $5.4 million through payment deferrals, $318,000 through reductions of principal or accrued interest and $1.9 million through extensions of maturity for the year ended December 31, 2012, and modifications of $2.4 million through payment deferrals, $9.1 million through reduction of principal or accrued interest and $2.7 million through extensions of maturity for the year ended December 31, 2011.

⁽⁶⁾

Includes modifications of $191,000 through reductions of principal or accrued interest for the year ended December 31, 2013 and a modification of $188,000 through a reduction of principal or accrued interest for the year ended December 31, 2012.

⁽⁷⁾

Includes modifications of $97,000 through payment deferrals and $124,000 through reductions of principal or accrued interest for the year ended December 31, 2013, modifications of $504,000 through payment deferrals and $447,000 through reductions of principal or accrued interest for the year ended December 31, 2012, and modifications of $5.7 million through payment deferrals and $957,000 through reductions of principal or accrued interest for the year ended December 31, 2011.

⁽⁸⁾

Includes modifications of $1.1 million through reductions of principal or accrued interest for the year ended December 31, 2013.

⁽⁹⁾

Includes a modification of $149,000 through a reduction of principal or accrued interest for the year ended December 31, 2013.

Troubled Debt Restructurings that Defaulted Subsequent to Modifications Occurring Within Previous Twelve Months, Disaggregated by Loan Class

The following table details troubled debt restructurings that defaulted subsequent to the modifications occurring within the previous twelve months, disaggregated by loan class, for years ended December 31, 2013, 2012 and 2011, respectively:


	For the Year Ended
	December 31, 2013				December 31, 2012				December 31, 2011
	Number of Loans		Recorded Investment		Number of Loans		Recorded Investment		Number of Loans		Recorded Investment
	(In thousands except number of loans)
Commercial and industrial loans:
Commercial term
Unsecured		2	$	123		8	$	554		6	$	2,368
Secured by real estate		—		—		—		—		—		—
Commercial lines of credit		—		—		1		188		—		—
SBA loans		2		215		3		165		8		1,450

Total		4	$	338		12	$	907		14	$	3,818

Changes in Servicing Assets

The changes in servicing assets for the years ended December 31, 2013 and 2012 were as follows:


	As of December 31,
	2013			2012
	(In thousands)
Balance at beginning of period	$	5,542		$	3,720
Additions		2,755			2,889
Amortization		(1,463	)		(1,067	)

Balance at end of period	$	6,834		$	5,542