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)

3 Months Ended

Mar. 31, 2015

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


	March 31, 2015									December 31, 2014
	Non-PCI Loans			PCI Loans			Total			Non-PCI Loans			PCI Loans			Total
	(In thousands)
Real estate loans:
Commercial property ⁽¹⁾
Retail	$	679,938		$	10,565		$	690,503		$	675,072		$	8,535		$	683,607
Hotel/motel		481,960			11,720			493,680			454,499			7,682			462,181
Gas station		346,798			6,441			353,239			362,240			7,745			369,985
Other		820,707			10,174			830,881			842,126			5,796			847,922
Construction		15,123			—			15,123			9,517			—			9,517
Residential property		154,797			1,716			156,513			120,932			14,371			135,303

Total real estate loans		2,499,323			40,616			2,539,939			2,464,386			44,129			2,508,515
Commercial and industrial loans:
Commercial term		116,252			281			116,533			116,073			327			116,400
Commercial lines of credit		97,761			—			97,761			93,860			—			93,860
International loans		36,338			—			36,338			38,929			—			38,929

Total commercial and industrial loans		250,351			281			250,632			248,862			327			249,189
Consumer loans		25,942			44			25,986			27,512			45			27,557

Total gross loans		2,775,616			40,941			2,816,557			2,740,760			44,501			2,785,261
Allowance for loans losses		(51,515	)		(1,436	)		(52,951	)		(51,640	)		(1,026	)		(52,666	)
Deferred loan costs		3,474			—			3,474			3,237			—			3,237

Loans receivable, net	$	2,727,575		$	39,505		$	2,767,080		$	2,692,357		$	43,475		$	2,735,832

⁽¹⁾

Includes owner-occupied property loans of $1.14 billion and $1.12 billion as of March 31, 2015 and December 31, 2014, 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 (excluding PCI loans) by portfolio segment for the three months ended March 31, 2015 and 2014:


	Real Estate			Commercial and Industrial			Consumer		Total Non-PCI
	(In thousands)
March 31, 2015
Balance at beginning of period	$	3,323		$	2,128		$	—	$	5,451
Origination of loans held for sale		16,927			6,181			—		23,108
Sales of loans held for sale		(13,014	)		(6,840	)		—		(19,854	)
Principal payoffs and amortization		(10	)		(18	)		—		(28	)

Balance at end of period	$	7,226		$	1,451		$	—	$	8,677

March 31, 2014
Balance at beginning of period	$	—		$	—		$	—	$	—
Origination of loans held for sale		6,269			85			—		6,354
Sales of loans held for sale		(5,874	)		(84	)		—		(5,958	)
Principal payoffs and amortization		(5	)		(1	)		—		(6	)

Balance at end of period	$	390		$	—		$	—	$	390

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:


	March 31, 2015									March 31 2014
	Non-PCI Loans			PCI Loans			Total			March 31 2014
	(In thousands)
Allowance for loan losses:
Balance at beginning of period	$	51,640		$	1,026		$	52,666		$	57,555
Charge-offs		(34	)		(52	)		(86	)		(1,604	)
Recoveries on loans previously charged off		1,692			352			2,044			4,251

Net loan recoveries (charge-offs)		1,658			300			1,958			2,647
(Negative provision) provision charged to operating expense		(1,783	)		110			(1,673	)		(3,609	)

Balance at end of period	$	51,515		$	1,436		$	52,951		$	56,593

Allowance for off-balance sheet items:
Balance at beginning of period	$	1,366		$	—		$	1,366		$	1,248
(Negative provision) provision charged to operating expense		(312	)		—			(312	)		309

Balance at end of period	$	1,054		$	—		$	1,054		$	1,557

Allowance for Loan Losses by Portfolio Segment

The following table details the information on the allowance for loan losses by portfolio segment for the three months ended March 31, 2015 and 2014:


	Real Estate			Commercial and Industrial			Consumer			Unallocated			Total
	(In thousands)
March 31, 2015
Allowance for loan losses on Non-PCI loans:
Beginning balance	$	41,194		$	9,142		$	220		$	1,084		$	51,640
Charge-offs		—			(34	)		—			—			(34	)
Recoveries on loans previously charged off		32			1,660			—			—			1,692
(Negative provision) provision		1,324			(2,982	)		(35	)		(90	)		(1,783	)

Ending balance	$	42,550		$	7,786		$	185		$	994		$	51,515

Ending balance: individually evaluated for impairment	$	3,386		$	1,913		$	—		$	—		$	5,299

Ending balance: collectively evaluated for impairment	$	39,164		$	5,873		$	185		$	994		$	46,216

Non-PCI loans receivable:
Ending balance	$	2,499,323		$	250,351		$	25,942		$	—		$	2,775,616

Ending balance: individually evaluated for impairment	$	33,537		$	11,570		$	1,823		$	—		$	46,930

Ending balance: collectively evaluated for impairment	$	2,465,786		$	238,781		$	24,119		$	—		$	2,728,686

Allowance for loan losses on PCI loans:
Beginning balance	$	895		$	131		$	—		$	—		$	1,026
Charge-offs		(52	)		—			—			—			(52	)
Recoveries on loans previously charged off		—			352			—			—			352
Provision		475			(365	)		—			—			110

Ending balance: acquired with deteriorated credit quality	$	1,318		$	118		$	—		$	—		$	1,436

PCI loans receivable:
Ending balance: acquired with deteriorated credit quality	$	40,633		$	282		$	44		$	—		$	40,959

March 31, 2014
Allowance for loan losses on Non-PCI loans :
Beginning balance	$	43,550		$	11,287		$	1,427		$	1,291		$	57,555
Charge-offs		(1,128	)		(422	)		(54	)		—			(1,604	)
Recoveries on loans previously charged off		2,918			1,321			12			—			4,251
Provision (negative provision)		(1,110	)		(1,761	)		(752	)		14			(3,609	)

Ending balance	$	44,230		$	10,425		$	633		$	1,305		$	56,593

Ending balance: individually evaluated for impairment	$	1,029		$	3,973		$	117		$	—		$	5,119

Ending balance: collectively evaluated for impairment	$	43,201		$	6,452		$	516		$	1,305		$	51,474

Non-PCI loans receivable:
Ending balance	$	2,027,914		$	219,102		$	29,356		$	—		$	2,276,372

Ending balance: individually evaluated for impairment	$	34,294		$	14,503		$	1,553		$	—		$	50,350

Ending balance: collectively evaluated for impairment	$	1,993,620		$	204,599		$	27,803		$	—		$	2,226,022

Information on Impaired Loans, Disaggregated by Loan Class

The following tables provide information on impaired loans (excluding PCI 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)
March 31, 2015
Real estate loans:
Commercial property
Retail	$	5,963	$	6,133	$	3,496	$	2,467	$	189	$	5,990	$	72
Hotel/motel		6,228		6,910		4,974		1,254		2,767		6,272		182
Gas station		7,968		8,608		7,527		441		137		7,993		93
Other		10,291		11,896		9,120		1,171		293		10,254		208
Residential property		3,087		3,242		3,087		—		—		3,102		32
Commercial and industrial loans:
Commercial term		8,147		8,716		3,912		4,235		1,881		8,078		99
Commercial lines of credit		2,092		2,210		442		1,650		8		2,439		7
International loans		1,331		1,331		767		563		24		1,360		—
Consumer loans		1,823		2,005		1,823		—		—		1,830		17

Total Non-PCI loans	$	46,930	$	51,051	$	35,148	$	11,781	$	5,299	$	47,318	$	710

December 31, 2014
Real estate loans:
Commercial property
Retail	$	4,436	$	4,546	$	1,938	$	2,498	$	220	$	5,373	$	251
Hotel/motel		5,835		6,426		4,581		1,254		1,828		4,583		398
Gas station		8,974		9,594		8,526		448		150		11,281		787
Other		10,125		11,591		8,890		1,235		319		10,579		885
Residential property		3,127		3,268		3,127		—		—		2,924		115
Commercial and industrial loans:
Commercial term		7,614		8,133		2,999		4,615		2,443		9,458		566
Commercial lines of credit		466		575		466		—		—		1,205		66
International loans		3,546		3,546		2,628		918		286		1,736		33
Consumer loans		1,742		1,907		1,742		—		—		1,651		59

Total Non-PCI loans	$	45,865	$	49,586	$	34,897	$	10,968	$	5,246	$	48,790	$	3,160

Summary of Interest Foregone on Impaired Loans

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


	Three Months Ended
	March 31			March 31
	2015			2014
	(In thousands)
Interest income that would have been recognized had impaired loans performed in accordance with their original terms	$	740		$	1,213
Less: Interest income recognized on impaired loans		(710	)		(764	)

Interest foregone on impaired loans	$	30		$	449

Non-Accrual Loans, Disaggregated by Loan Class

The following table details nonaccrual loans (excluding PCI loans), disaggregated by loan class, as of the dates indicated:


	March 31		December 31
	2015		2014
	(In thousands)
Real estate loans:
Commercial property
Retail	$	3,988	$	2,160
Hotel/motel		4,431		3,835
Gas station		5,023		3,478
Other		5,548		4,961
Residential property		1,537		1,588
Commercial and industrial loans:
Commercial term		5,867		7,052
Commercial lines of credit		1,041		466
Consumer loans		1,823		1,742

Total nonaccrual Non-PCI loans	$	29,258	$	25,282

Non-Performing Assets

The following table details nonperforming assets (excluding PCI loans) as of the dates indicated:


	March 31		December 31
	2015		2014
	(In thousands)
Nonaccrual Non-PCI loans	$	29,258	$	25,282
Loans 90 days or more past due and still accruing		—		—

Total nonperforming Non-PCI loans		29,258		25,282
Other real estate owned		12,114		15,790

Total nonperforming assets	$	41,372	$	41,072

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

The following table details TDRs (excluding PCI loans), disaggregated by concession type and by loan type, as of March 31, 2015 and December 31, 2014:


	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)
March 31, 2015
Real estate loans:
Commercial property
Retail	$	—	$	—		$	—	$	2,003	$	2,003	$	304	$	—	$	—	$	—	$	304
Hotel/motel		1,073		(64	)		—		—		1,009		1,802		—		—		—		1,802
Gas station		3,033		—			—		—		3,033		352		—		—		—		352
Other		932		1,766			407		20		3,125		2,318		—		771		1,373		4,462
Residential property		729		—			—		—		729		—		—		—		306		306
Commercial and industrial loans:
Commercial term		12		(3	)		2,507		1,632		4,148		53		223		481		1,533		2,290
Commercial lines of credit		220		—			124		98		442		1,650		—		—		—		1,650
International loans		—		—			—		—		—		—		—		199		—		199
Consumer loans		—		—			127		—		127		—		—		—		—		—

Total Non-PCI loans	$	5,999	$	1,699		$	3,165	$	3,753	$	14,616	$	6,479	$	223	$	1,451	$	3,212	$	11,365

December 31, 2014
Real estate loans:
Commercial property
Retail	$	—	$	—		$	—	$	2,032	$	2,032	$	306	$	—	$	—	$	—	$	306
Hotel/motel		1,115		(53	)		—		—		1,062		1,807		—		—		—		1,807
Gas station		1,075		—			—		—		1,075		2,335		—		—		—		2,335
Other		943		1,498			433		24		2,898		2,343		—		782		1,372		4,497
Residential property		742		—			—		—		742		—		—		—		308		308
Commercial and industrial loans:
Commercial term		14		(1	)		2,556		1,481		4,050		57		226		567		1,358		2,208
Commercial lines of credit		227		—			126		113		466		2,156		—		—		—		2,156
International loans		—		—			—		—		—		—		—		200		—		200
Consumer loans		—		—			131		—		131		—		—		—		—		—

Total Non-PCI loans	$	4,116	$	1,444		$	3,246	$	3,650	$	12,456	$	9,004	$	226	$	1,549	$	3,038	$	13,817

Troubled Debt Restructurings, Disaggregated by Loan Class

The following table details TDRs (excluding PCI loans), disaggregated by loan class, for the three months ended March 31, 2015 and 2014:


	March 31, 2015						March 31, 2014
	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
Other ⁽¹⁾		—	$	—	$	—		1	$	943	$	943
Commercial and industrial loans:
Commercial term ⁽²⁾		4		543		508		5		829		788
Commercial lines of credit ⁽³⁾		—		—		—		1		250		242

Total Non-PCI loans		4	$	543	$	508		7	$	2,022	$	1,973

⁽¹⁾

Includes a modification of $943,000 through a payment deferral for the three months ended March 31, 2014.

⁽²⁾

Includes modifications of $508,000 through extensions of maturity for the three months ended March 31, 2015, and modifications of $491,000 through a payment deferral, $107,000 through reductions of principal or accrued interest and $190,000 through an extension of maturity for the three months ended March 31, 2014

⁽³⁾

Includes a modification of $242,000 through a payment deferral for the three months ended March 31, 2014.

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

The following table details TDRs (excluding PCI loans) that defaulted subsequent to the modifications occurring within the previous twelve months, disaggregated by loan class, for the three months ended March 31, 2015 and 2014, respectively:


	Three Months Ended
	March 31, 2015				March 31, 2014
	Number of Loans		Recorded Investment		Number of Loans		Recorded Investment
	(In thousands, except number of loans)
Real estate loans:
Commercial property
Retail		1	$	1,832		1	$	310
Hotel/motel		—		—		1		1,000
Gas station		1		1,990		1		87
Other		1		379		2		481
Commercial and industrial loans:
Commercial term		—		—		1		53
Commercial lines of credit		1		124		—		—
Consumer loans		—		—		1		149

Total Non-PCI loans		4	$	4,325		7	$	2,080

Schedule of Changes in Carrying Value of PCI Loans

The following table summarizes the changes in carrying value of PCI loans during the year ended March 31, 2015:


	Carrying			Accretable
	Amount			Yield
	(In thousands)
Balance at January 1, 2015	$	43,475		$	(11,025	)
Accretion		843			843
Payments received		(5,425	)		—
Disposal/transfer to OREO		722			—
Changes in expected cash flows, net		—			376
Provision for credit losses		(110	)		—

Balance at March 31, 2015	$	39,505		$	(9,806	)

Changes in Servicing Assets and Liabilities

Servicing Assets and liabilities

The changes in servicing assets for the three months ended March 31, 2015 and 2014 were as follows:


	Three Months Ended March 31,
	2015			2014
	(In thousands)
Servicing assets:
Balance at beginning of period	$	13,773		$	6,833
Addition related to sale of SBA loans		617			200
Amortization		(1,069	)		(474	)

Balance at end of period	$	13,321		$	6,559

Servicing liabilities:
Balance at beginning of period	$	5,971		$	33
Amortization		(442	)		(3	)

Balance at end of period	$	5,529		$	30

Non-PCI Loans [Member]

Credit Quality of Loan Portfolio

As of March 31, 2015 and December 31, 2014, pass/pass-watch, special mention and classified loans (excluding PCI loans), disaggregated by loan class, were as follows:


	Pass/Pass-Watch		Special Mention		Classified		Total
			(In thousands)
March 31, 2015
Real estate loans:
Commercial property
Retail	$	658,292	$	12,141	$	9,505	$	679,938
Hotel/motel		425,710		42,938		13,312		481,960
Gas station		330,319		9,861		6,618		346,798
Other		800,758		9,087		10,862		820,707
Construction		15,123		—		—		15,123
Residential property		152,673		—		2,124		154,797
Commercial and industrial loans:
Commercial term		106,066		1,089		9,097		116,252
Commercial lines of credit		95,482		—		2,279		97,761
International loans		35,987		152		199		36,338
Consumer loans		23,674		121		2,147		25,942

Total Non-PCI loans	$	2,644,084	$	75,389	$	56,143	$	2,775,616

December 31, 2014
Real estate loans:
Commercial property
Retail	$	654,360	$	18,013	$	2,699	$	675,072
Hotel/motel		397,437		46,365		10,697		454,499
Gas station		345,775		8,899		7,566		362,240
Other		822,037		9,543		10,546		842,126
Construction		9,517		—		—		9,517
Residential property		118,688		66		2,178		120,932
Commercial and industrial loans:
Commercial term		106,326		1,225		8,522		116,073
Commercial lines of credit		92,312		993		555		93,860
International loans		36,121		252		2,556		38,929
Consumer loans		25,313		131		2,068		27,512

Total Non-PCI loans	$	2,607,886	$	85,487	$	47,387	$	2,740,760

Analysis of Gross Loans, Disaggregated by Loan Class

The following is an aging analysis of gross loans (excluding PCI 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		Accruing 90 Days or More Past Due
								(In thousands)
March 31, 2015
Real estate loans:
Commercial property
Retail	$	1,943		$	6,031	$	2,950	$	10,924	$	669,014	$	679,938	$	—
Hotel/motel		2,659			—		3,421		6,080		475,880		481,960		—
Gas station		580			480		4,088		5,148		341,650		346,798		—
Other		1,770			278		3,544		5,592		815,115		820,707		—
Construction		—			—		—		—		15,123		15,123		—
Residential property		—			—		547		547		154,250		154,797		—
Commercial and industrial loans:
Commercial term		(30	)		87		3,062		3,119		113,133		116,252		—
Commercial lines of credit		1,407			—		819		2,226		95,535		97,761		—
International loans		131			—		—		131		36,207		36,338		—
Consumer loans		—			239		348		587		25,355		25,942		—

Total Non-PCI loans	$	8,460		$	7,115	$	18,779	$	34,354	$	2,741,262	$	2,775,616	$	—

December 31, 2014
Real estate loans:
Commercial property
Retail	$	1,554		$	281	$	1,920	$	3,755	$	671,317	$	675,072	$	—
Hotel/motel		1,531			2,340		433		4,304		450,195		454,499		—
Gas station		2,991			1,113		353		4,457		357,783		362,240		—
Other		1,674			2,156		1,142		4,972		837,154		842,126		—
Construction		—			—		—		—		9,517		9,517		—
Residential property		167			—		687		854		120,078		120,932		—
Commercial and industrial loans:
Commercial term		1,107			490		2,847		4,444		111,629		116,073		—
Commercial lines of credit		—			—		227		227		93,633		93,860		—
International loans		200			—		—		200		38,729		38,929		—
Consumer loans		489			349		248		1,086		26,426		27,512		—

Total Non-PCI loans	$	9,713		$	6,729	$	7,857	$	24,299	$	2,716,461	$	2,740,760	$	—

PCI Loans [Member]

Credit Quality of Loan Portfolio

As of March 31, 2015, pass/pass-watch, special mention and classified PCI loans, disaggregated by loan class, were as follows:



	Pass/Pass-Watch		Special Mention		Classified		Total		Allowance		Total PCI Loans
					(In thousands)
March 31, 2015
Real estate loans:
Commercial property
Retail	$	1,201	$	168	$	9,196	$	10,565	$	404	$	10,161
Hotel/motel		252		—		11,468		11,720		146		11,574
Gas station		—		178		6,263		6,441		555		5,886
Other		—		—		10,174		10,174		167		10,007
Residential property		—		—		1,716		1,716		46		1,670
Commercial and industrial loans:
Commercial term		—		—		281		281		118		163
Consumer loans		—		—		44		44		—		44

Total PCI loans	$	1,453	$	346	$	39,142	$	40,941	$	1,436	$	39,505

December 31, 2014
Real estate loans:
Commercial property
Retail	$	1,207	$	219	$	7,109	$	8,535	$	401	$	8,134
Hotel/motel		—		—		7,682		7,682		99		7,583
Gas station		—		1,242		6,503		7,745		302		7,443
Other		—		—		5,796		5,796		65		5,731
Residential property		—		—		14,371		14,371		28		14,343
Commercial and industrial loans:
Commercial term		—		—		327		327		131		196
Consumer loans		—		—		45		45		—		45

Total PCI loans	$	1,207	$	1,461	$	41,833	$	44,501	$	1,026	$	43,475

Analysis of Gross Loans, Disaggregated by Loan Class

The following table presents a summary of the borrowers’ underlying payment status of PCI loans 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		Allowance Amount		Total PCI Loans
							(In thousands)
March 31, 2015
Real estate loans:
Commercial property
Retail	$	13	$	—	$	6,424	$	6,437	$	4,128	$	10,565	$	404	$	10,161
Hotel/motel		—		—		6,801		6,801		4,919		11,720		146		11,574
Gas station		831		—		3,868		4,699		1,742		6,441		555		5,886
Other		62		—		9,719		9,781		393		10,174		167		10,007
Residential property		—		—		1,056		1,056		660		1,716		46		1,670
Commercial and industrial loans:
Commercial term		—		6		110		116		165		281		118		163
Consumer loans		—		16		28		44		—		44		—		44

Total PCI loans	$	906	$	22	$	28,006	$	28,934	$	12,007	$	40,941	$	1,436	$	39,505

December 31, 2014
Real estate loans:
Commercial property
Retail	$	93	$	287	$	3,815	$	4,195	$	4,340	$	8,535	$	401	$	8,134
Hotel/motel		312		—		2,490		2,802		4,880		7,682		99		7,583
Gas station		1,139		1,053		3,178		5,370		2,375		7,745		302		7,443
Other		—		—		5,235		5,235		561		5,796		65		5,731
Residential property		—		—		13,594		13,594		777		14,371		28		14,343
Commercial and industrial loans:
Commercial term		30		—		135		165		162		327		131		196
Consumer loans		—		17		28		45		—		45		—		45

Total PCI loans	$	1,574	$	1,357	$	28,475	$	31,406	$	13,095	$	44,501	$	1,026	$	43,475