Hanmi Financial Corporation (NASDAQ:HAFC) Q3 2020 Earnings Conference Call - Final Transcript

Thank you. [Operator Instructions] Our first question comes from Matthew Clark with Piper Jaffray. Please proceed with the question.

Good afternoon. The single-family resi portfolio has been running off for quite some time now and turn the corner, though, this quarter. Is the expectation with some new originators that those balances may start to stabilize and maybe grow in this environment?

That's correct. That's our plan, yes.

Okay. And then your reserves on commercial real estate declined about 18 basis points to 146. Can you isolate the reserves on your hospitality portfolio and retail CRE portfolio separately?

The real estate secured element of our portfolio, my recollection, a coverage ratio of about 2.3%, but that excludes the C&I elements, which we do have as part of that. And I don't remember that number as well off the top of my head. It's not a larger piece, but there's another element to it.

Okay. Okay. And then I was going through the release, I thought I might have seen something, but the contribution of PPP to NII this quarter. If you happen to have that?

Just give me a minute, Matt.

Yes.

So for the third quarter, interest includes fee and cost amortization, $1.7 million.

Okay. And then just on the SBA gain on sale, it looked like good volume sold and premiums are a little bit higher than expected. What's your expectation in terms of production going forward in premiums? Can we sustain this level? Or do you think we'll have some seasonal slowdown here in 4Q?

Based on the pipelines that we have for the FDA, in terms of production, I think that, that will probably sustain the production level in the fourth Q and hopefully, in the first Q. As far as the premium levels are concerned, at least it's holding up, and it's 9.5% -- in between 9.5% to 10%. And hopefully, it will stay at that level as well.

Okay. Thank you.

Thank you. Our next question comes from Kelly Motta with KBW. Please proceed with the question.

Hi. Thank you for the question. I guess my first question has to do with the migration of special mention and classifieds. I was just wondering, was that mostly within what's in second round deferrals? And about how much of that second round deferral amount has migrated into these categories at this time?

So our release covers in terms of a special mention category, about $31.6 million is COVID-impacted loans, and that's composed about six loans. For the substandard category, it's about $21.7 million impacted by COVID and that includes about five loans.

Okay. So since the ones highlighted as COVID impacted, are those currently in those second round deferral buckets? Or are they currently paying right now?

The ones in the special management category, some of -- most of them are in the interest paying bucket. And there is a -- in terms of a substandard category, there are -- some are in the interest-only -- interest payment