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

Quarterly report pursuant to Section 13 or 15(d)

Securities

Securities

6 Months Ended

Jun. 30, 2016

Investments, Debt and Equity Securities [Abstract]

The following is a summary of securities available for sale as of June 30, 2016 and December 31, 2015:



	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Estimated Fair Value
	(in thousands)
June 30, 2016
Mortgage-backed securities ^{(1) (2)}	$	262,223	$	4,129	$	77	$	266,275
Collateralized mortgage obligations ⁽¹⁾	85,678		554		91		86,141
U.S. government agency securities	15,491		53		—		15,544
SBA loan pool securities	56,553		62		190		56,425
Municipal bonds-tax exempt	160,951		8,475		—		169,426
Municipal bonds-taxable	13,476		616		—		14,092
Corporate bonds	5,014		—		13		5,001
U.S. treasury securities	157		1		—		158
Mutual funds	22,916		382		85		23,213
Total securities available for sale	$	622,459	$	14,272	$	456	$	636,275

December 31, 2015
Mortgage-backed securities ^{(1) (2)}	$	286,450	$	392	$	2,461	$	284,381
Collateralized mortgage obligations ⁽¹⁾	97,904		79		997		96,986
U.S. government agency securities	48,478		—		656		47,822
SBA loan pool securities	63,670		7		411		63,266
Municipal bonds-tax exempt	162,101		1,820		19		163,902
Municipal bonds-taxable	13,932		189		88		14,033
Corporate bonds	5,017		—		24		4,993
U.S. treasury securities	159		1		—		160
Mutual funds	22,916		—		163		22,753
Total securities available for sale	$	700,627	$	2,488	$	4,819	$	698,296


⁽¹⁾	Collateralized by residential mortgages and guaranteed by U.S. government sponsored entities.


⁽²⁾	Include securities collateralized by home equity conversion mortgages with total estimated fair value of $55.7 million and $58.6 million as of June 30, 2016 and December 31, 2015, respectively.

The amortized cost and estimated fair value of securities as of June 30, 2016, by contractual or expected maturity, are shown below. Collateralized mortgage obligations are included in the table shown below based on their expected maturities. Mutual funds do not have contractual maturities. However, they are included in the table shown below as over ten years since the Company intends to hold these securities for at least this duration. All other securities are included based on their contractual maturities.



	Available for Sale
	Amortized Cost		Estimated Fair Value
	(in thousands)
Within one year	$	1	$	1
Over one year through five years	93,040		93,762
Over five years through ten years	273,361		279,870
Over ten years	256,057		262,642
Total	$	622,459	$	636,275

Gross unrealized losses on securities available for sale, the estimated fair value of the related securities and the number of securities aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows as of June 30, 2016 and December 31, 2015:



	Holding Period
	Less Than 12 Months					12 Months or More					Total
	Gross Unrealized Loss		Estimated Fair Value		Number of Securities	Gross Unrealized Loss		Estimated Fair Value		Number of Securities	Gross Unrealized Loss		Estimated Fair Value		Number of Securities
	(in thousands, except number of securities)
June 30, 2016
Mortgage-backed securities	$	43	$	10,746	4	$	34	$	10,912	3	$	77	$	21,658	7
Collateralized mortgage obligations	10		12,778		6	81		13,879		7	91		26,657		13
SBA loan pool securities	117		35,639		10	73		14,518		5	190		50,157		15
Corporate bonds	—		—		—	13		5,001		1	13		5,001		1
Mutual funds	—		—		—	85		941		3	85		941		3
Total	$	170	$	59,163	20	$	286	$	45,251	19	$	456	$	104,414	39

December 31, 2015
Mortgage-backed securities	$	1,734	$	193,931	52	$	727	$	21,659	9	$	2,461	$	215,590	61
Collateralized mortgage obligations	335		48,970		18	662		32,964		13	997		81,934		31
U.S. government agency securities	201		23,289		8	455		24,533		8	656		47,822		16
SBA loan pool securities	161		50,499		12	250		7,036		3	411		57,535		15
Municipal bonds-tax exempt	19		8,922		6	—		—		—	19		8,922		6
Municipal bonds-taxable	88		7,106		4	—		—		—	88		7,106		4
Corporate binds	24		4,994		1	—		—		—	24		4,994		1
Mutual funds	66		21,820		3	97		928		3	163		22,748		6
Total	$	2,628	$	359,531	104	$	2,191	$	87,120	36	$	4,819	$	446,651	140

All individual securities that have been in a continuous unrealized loss position for 12 months or longer as of June 30, 2016 and December 31, 2015 had investment grade ratings upon purchase. The issuers of these securities have not established any cause for default on these securities and the various rating agencies have reaffirmed these securities’ long-term investment grade status as of June 30, 2016 and December 31, 2015. These securities have fluctuated in value since their purchase dates as market interest rates have fluctuated.

The Company does not intend to sell these securities and it is more likely than not that we will not be required to sell the securities before the recovery of their amortized cost basis. In addition, the unrealized losses on municipal and corporate bonds are not considered other-than-temporarily impaired, as the bonds are rated investment grade and there are no credit quality concerns with the issuers. Interest payments have been made as scheduled, and management believes this will continue in the future and that the bonds will be repaid in full as scheduled. Therefore, in management’s opinion, all securities that have been in a continuous unrealized loss position for the past 12 months or longer as of June 30, 2016 and December 31, 2015 were not other-than-temporarily impaired, and therefore, no impairment charges as of June 30, 2016 and December 31, 2015 were warranted.

Realized gains and losses on sales of securities and proceeds from sales of securities were as follows for the periods indicated:



	Three Months Ended June 30,					Six Months Ended June 30,
	2016		2015			2016		2015
	(in thousands)
Gross realized gains on sales of securities	$	—	$	2,067		$	—	$	4,262
Gross realized losses on sales of securities	—		(155		)	—		(166		)
Net realized gains on sales of securities	$	—	$	1,912		$	—	$	4,096
Proceeds from sales of securities	$	—	$	130,594		$	—	$	307,442

There were no sales of securities during the six-month period ended June 30, 2016. For the three months ended June 30, 2015, there was a $1.9 million net gain in earnings resulting from the sale of securities that had previously been recorded as net unrealized gains of $4.1 million in comprehensive income. For the six months ended June 30, 2015, there was a $4.1 million net gain in earnings resulting from the sale of securities that had previously been recorded as net unrealized gains of $1.2 million in comprehensive income.

Securities available for sale with market values of $97.6 million and $72.0 million as of June 30, 2016 and December 31, 2015, respectively, were pledged to secure public deposits and for other purposes as required or permitted by law.

- Definition

The entire disclosure for investments in certain debt and equity securities.

+ References + Details