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Regulatory Matters | 6 Months Ended
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Jun. 30, 2012
Basis of Presentation, Regulatory Matters and Liquidity [Abstract] |
REGULATORY MATTERS | NOTE 2 — REGULATORY MATTERS On November 2, 2009, the members of the Board of Directors of the Bank consented to the issuance of the Final Order (“Final Order”) with the California Department of Financial Institutions (the “DFI”). The Final Order contained a list of requirements ranging from a capital directive to developing a contingency funding plan. Following a target joint examination of the Bank by the DFI and Federal Reserve Bank of San Francisco (the “FRB”) which commenced in February 2012, and based on the improved condition of the Bank noted at the examination, on May 1, 2012, the Bank entered into a Memorandum of Understanding (“MOU”) with the DFI. Concurrently with the entry into the MOU, the DFI issued an order terminating the Final Order. On November 2, 2009, Hanmi Financial and the Bank entered into a Written Agreement (the “Written Agreement”) with the FRB. The Written Agreement contains a list of strict requirements ranging from a capital directive to developing a contingency funding plan. While Hanmi Financial has taken such actions as necessary to enable Hanmi Financial and the Bank to comply with the requirements of the Written Agreement and the MOU, there can be no assurance that compliance with the Written Agreement and the MOU will not have material and adverse effects on the operations and financial condition of Hanmi Financial and the Bank. Any material failure to comply with the provisions of the Written Agreement and the MOU could result in further enforcement actions by both the DFI and the FRB, or the placing of the Bank into conservatorship or receivership. Written Agreement and MOU Pursuant to the Written Agreement, the Board of Directors of the Bank prepared and submitted written plans to the FRB that addressed the following items: (i) strengthening board oversight of the management and operation of the Bank; (ii) strengthening credit risk management practices; (iii) improving credit administration policies and procedures; (iv) improving the Bank’s position with respect to problem assets; (v) maintaining adequate reserves for loan and lease losses; (vi) improving the capital position of the Bank and of Hanmi Financial; (vii) improving the Bank’s earnings through a strategic plan and a budget; and (viii) improving the Bank’s liquidity position, funds management practices, and contingency funding plan. In addition, the Written Agreement places restrictions on the Bank’s lending to borrowers who have adversely classified loans with the Bank. The Written Agreement also requires the Bank to charge off or collect certain problem loans and review and revise its methodology for calculating allowance for loan and lease losses consistent with relevant supervisory guidance. Hanmi Financial and the Bank are also prohibited from paying dividends without prior approval from the FRB. Hanmi Financial and the Bank are required to notify the FRB if their respective capital ratios fall below those set forth in the capital plan approved by the FRB. The MOU imposes substantially less requirements on the Bank than the Final Order. Pursuant to the MOU, the Bank is required to continue to (i) maintain strong board oversight, management and operations of the Bank, (ii) review and implement policies and procedures to address credit administration and credit risk management, (iii) maintain an acceptable methodology for calculating loan and lease losses, (iv) obtain approval from the DFI prior to declaring and paying dividends, and (v) maintain a ratio of tangible stockholders’ equity to total tangible assets of not less than 9.5 percent. On November 18, 2011, we completed an underwritten public offering of our common stock by which we raised $77.1 million in net proceeds. As a result, we satisfied the requirement that the ratio of tangible stockholders’ equity to total tangible assets be not less than 9.5 percent as of December 31, 2011. As of June 30, 2012, Hanmi Financial and the Bank had a ratio of tangible stockholders’ equity to total tangible assets of 12.20 percent and 14.34 percent, respectively. Based on submissions to and consultations with the DFI and the FRB, we believe that the Bank has taken the required corrective action and has complied with substantially all of the requirements of the Written Agreement and the MOU. Risk-Based Capital Federal bank regulatory agencies require bank holding companies such as Hanmi Financial to maintain a minimum ratio of qualifying total capital to risk-weighted assets of 8.0 percent and a minimum ratio of Tier 1 capital to risk-weighted assets of 4.0 percent. In addition to the risk-based guidelines, federal bank regulatory agencies require bank holding companies to maintain a minimum ratio of Tier 1 capital to average total assets, referred to as the leverage ratio, of 4.0 percent. In order to be considered “well capitalized,” federal bank regulatory agencies require depository institutions such as the Bank to maintain a minimum ratio of qualifying total capital to risk-weighted assets of 10.0 percent and a minimum ratio of Tier 1 capital to risk-weighted assets of 6.0 percent. In addition to the risk-based guidelines, the federal bank regulatory agencies require depository institutions to maintain a minimum ratio of Tier 1 capital to average total assets, referred to as the leverage ratio, of 5.0 percent. For a bank rated in the highest of the five categories used by federal bank regulatory agencies to rate banks, the minimum leverage ratio is 3.0 percent. The capital ratios of Hanmi Financial and the Bank were as follows as of June 30, 2012 and 2011:
|  | Actual |  |  | Minimum Regulatory Requirement |  |  | Minimum to Be Categorized as “Well Capitalized” |
|  | Amount |  |  | Ratio |  |  | Amount |  |  | Ratio |  |  | Amount |  |  | Ratio |
|  | (In Thousands) |
June 30, 2012 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total Capital (to Risk-Weighted Assets): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Hanmi Financial |  | $ | 422,301 |  |  |  | 20.02 | % |  | $ | 168,754 |  |  |  | 8.00 | % |  |  | N/A |  |  |  | N/A |
Hanmi Bank |  | $ | 401,456 |  |  |  | 19.06 | % |  | $ | 168,467 |  |  |  | 8.00 | % |  | $ | 210,584 |  |  |  | 10.00 | %
Tier 1 Capital (to Risk-Weighted Assets): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Hanmi Financial |  | $ | 395,342 |  |  |  | 18.74 | % |  | $ | 84,377 |  |  |  | 4.00 | % |  |  | N/A |  |  |  | N/A |
Hanmi Bank |  | $ | 374,540 |  |  |  | 17.79 | % |  | $ | 84,234 |  |  |  | 4.00 | % |  | $ | 126,351 |  |  |  | 6.00 | %
Tier 1 Capital (to Average Assets): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Hanmi Financial |  | $ | 395,342 |  |  |  | 14.70 | % |  | $ | 107,587 |  |  |  | 4.00 | % |  |  | N/A |  |  |  | N/A |
Hanmi Bank |  | $ | 374,540 |  |  |  | 13.95 | % |  | $ | 107,361 |  |  |  | 4.00 | % |  | $ | 134,201 |  |  |  | 5.00 | %
June 30, 2011 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total Capital (to Risk-Weighted Assets): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Hanmi Financial |  | $ | 301,045 |  |  |  | 13.92 | % |  | $ | 173,032 |  |  |  | 8.00 | % |  |  | N/A |  |  |  | N/A |
Hanmi Bank |  | $ | 302,827 |  |  |  | 14.02 | % |  | $ | 172,802 |  |  |  | 8.00 | % |  | $ | 216,003 |  |  |  | 10.00 | %
Tier 1 Capital (to Risk-Weighted Assets): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Hanmi Financial |  | $ | 257,911 |  |  |  | 11.92 | % |  | $ | 86,516 |  |  |  | 4.00 | % |  |  | N/A |  |  |  | N/A |
Hanmi Bank |  | $ | 274,785 |  |  |  | 12.72 | % |  | $ | 86,401 |  |  |  | 4.00 | % |  | $ | 129,602 |  |  |  | 6.00 | %
Tier 1 Capital (to Average Assets): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Hanmi Financial |  | $ | 257,911 |  |  |  | 9.09 | % |  | $ | 113,504 |  |  |  | 4.00 | % |  |  | N/A |  |  |  | N/A |
Hanmi Bank |  | $ | 274,785 |  |  |  | 9.70 | % |  | $ | 113,260 |  |  |  | 4.00 | % |  | $ | 141,576 |  |  |  | 5.00 | %
Reserve Requirement The Bank is required to maintain a certain percentage of its deposits as reserves at the FRB. The daily average reserve balance required to be maintained with the FRB was $1.5 million, and the Bank was in compliance with the such requirement as of June 30, 2012 and December 31, 2011, respectively. Federal Reserve Notices of Proposed Rulemaking. On June 7, 2012, the Board of Governors of the Federal Reserve System approved for publication in the Federal Register three related notices of proposed rulemaking (collectively, the “Notices”) relating to the implementation of revised capital rules to reflect the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 as well as the Basel III international capital standards. Among other things, if adopted as proposed, the Notices would establish a new capital standard consisting of common equity Tier 1 capital; increase the capital ratios required for certain existing capital categories and add a requirement for a capital conservation buffer (failure to meet these standards would result in limitations on capital distributions as well as executive bonuses); and add more conservative standards for including securities in regulatory capital, which would phase-out trust preferred securities as a component of Tier 1 capital effective January 1, 2013. In addition, the Notices contemplate the deduction of certain assets from regulatory capital and revisions to the methodologies for determining risk weighted assets, including applying a more risk-sensitive treatment to residential mortgage exposures and to past due or nonaccrual loans. The Notices provide for various phase-in periods over the next several years. Hanmi Financial and the Bank will be subject to many provisions in the Notices, but until final regulations are issued pursuant to the Notices, Hanmi Financial cannot predict the actual effect of the Notices.

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