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Accounting for Investments in Qualified Affordable Housing Projects | 12 Months Ended
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Dec. 31, 2014
Accounting Changes and Error Corrections [Abstract] |
Accounting for Investments in Qualified Affordable Housing Projects | Note 3 — Accounting for Investments in Qualified Affordable Housing Projects The Bank invests in qualified affordable housing projects (low income housing) and previously accounted for them under the equity method of accounting. The Bank recognized its share of partnership losses in other operating expenses with the tax benefits recognized in the income tax provision. In January 2014, the FASB issued ASU 2014-01, Accounting for Investments in Qualified Affordable Housing Projects, which amends ASC 323 to provide the ability to elect the proportional amortization method with the amortization expense and tax benefits recognized through the income tax provision. This ASU is effective for the annual period beginning after December 15, 2014, with early adoption being permitted. The Bank elected to early adopt the provisions of the ASU in the second quarter of 2014 and elected the proportional amortization method as retrospective transition. This accounting change in the amortization methodology resulted in changes to account for amortization recognized in prior periods, which impacted the balance of tax credit investments and related tax accounts. The investment amortization expense is presented as a component of the income tax provision. The cumulative effect of the retrospective application of this accounting principle as of January 1, 2012 was a negative $1.1 million. Net incomes for the years ended December 31, 2014 and 2013 decreased by $49,000 and $50,000, respectively, due to the change in accounting principle. The following tables present the effect of the retrospective application of this change in accounting principle on the Company’s Consolidated Balance Sheets, Statements of Income and Statement of Cash Flows for the respective periods: Hanmi Financial Corporations and Subsidiaries Consolidated Balance Sheet
|  | As of December 31, 2013 |
|  | As Previously Reported |  |  | Effect of Change in Accounting Principle |  |  | As Adjusted |
|  | (In thousands) |
Assets |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 179,357 |  |  | $ | — |  |  | $ | 179,357 |
Securities available for sale |  |  | 530,926 |  |  |  | — |  |  |  | 530,926 |
Loans receivable |  |  | 2,177,498 |  |  |  | — |  |  |  | 2,177,498 |
Deferred tax assets |  |  | 51,767 |  |  |  | 121 |  |  |  | 51,888 |
Current tax assets |  |  | 11,769 |  |  |  | 184 |  |  |  | 11,953 |
Other assets |  |  | 104,222 |  |  |  | (1,465 | ) |  |  | 102,757 |
Total assets |  | $ | 3,055,539 |  |  | $ | (1,160 | ) |  | $ | 3,054,379 |
Liabilities and stockholders’ equity |  |  |  |  |  |  |  |  |  |  |  |
Liabilities |  | $ | 2,654,302 |  |  | $ | — |  |  | $ | 2,654,302 |
Stockholders’ equity |  |  | 401,237 |  |  |  | (1,160 | ) |  |  | 400,077 |
Total liabilities and stockholders’ equity |  | $ | 3,055,539 |  |  | $ | (1,160 | ) |  | $ | 3,054,379 |
Hanmi Financial Corporations and Subsidiaries Consolidated Statements of Income
|  | As Previously Reported |  |  | Effect of Change in Accounting Principle |  |  | As Adjusted |
|  | (In thousands, except per share data) |
For the Year Ended December 31, 2013 |  |  |  |  |  |  |  |  |  |  |  |
Interest and dividend income |  | $ | 119,140 |  |  | $ | — |  |  | $ | 119,140 |
Interest expense |  |  | 13,507 |  |  |  | — |  |  |  | 13,507 |
Net interest income |  | $ | 105,633 |  |  | $ | — |  |  | $ | 105,633 |
Noninterest income |  |  | 27,900 |  |  |  | — |  |  |  | 27,900 |
Noninterest expense |  |  | 71,656 |  |  |  | (639 | ) |  |  | 71,017 |
Income before provision for income taxes |  | $ | 61,877 |  |  | $ | 639 |  |  | $ | 62,516 |
Provision for income taxes |  |  | 22,044 |  |  |  | 688 |  |  |  | 22,732 |
Income from continuing operations |  | $ | 39,833 |  |  | $ | (49 | ) |  | $ | 39,784 |
Earnings per share from continuing operations |  |  |  |  |  |  |  |  |  |  |  |
Basic |  | $ | 1.26 |  |  | $ | — |  |  | $ | 1.26 |
Diluted |  | $ | 1.26 |  |  | $ | — |  |  | $ | 1.26 |
For the Year Ended December 31, 2012 |  |  |  |  |  |  |  |  |  |  |  |
Interest and dividend income |  | $ | 117,282 |  |  | $ | — |  |  | $ | 117,282 |
Interest expense |  |  | 18,745 |  |  |  | — |  |  |  | 18,745 |
Provision for credit losses |  |  | 6,000 |  |  |  | — |  |  |  | 6,000 |
Net interest income |  | $ | 92,537 |  |  | $ | — |  |  | $ | 92,537 |
Noninterest income |  |  | 21,413 |  |  |  | — |  |  |  | 21,413 |
Noninterest expense |  |  | 71,231 |  |  |  | (620 | ) |  |  | 70,611 |
Income before provision for income taxes |  | $ | 42,719 |  |  | $ | 620 |  |  | $ | 43,339 |
(Benefit) provision for income taxes |  |  | (47,488 | ) |  |  | 670 |  |  |  | (46,818 | )
Income from continuing operations |  | $ | 90,207 |  |  | $ | (50 | ) |  | $ | 90,157 |
Earnings per share from continuing operations |  |  |  |  |  |  |  |  |  |  |  |
Basic |  | $ | 2.87 |  |  | $ | (0.01 | ) |  | $ | 2.86 |
Diluted |  | $ | 2.86 |  |  | $ | — |  |  | $ | 2.86 |
Hanmi Financial Corporations and Subsidiaries Consolidated Statement of Cash Flows
|  | As Previously Reported |  |  | Effect of Change in Accounting Principle |  |  | As Adjusted |
|  | (In thousands) |
For the Year Ended December 31, 2013 |  |  |  |  |  |  |  |  |  |  |  |
Cash flows from operating activities: |  |  |  |  |  |  |  |  |  |  |  |
Net income |  | $ | 39,906 |  |  | $ | (49 | ) |  | $ | 39,857 |
Total adjustment in net income |  |  | 20,812 |  |  |  | 49 |  |  |  | 20,861 |
Net cash provided by operating activities |  | $ | 60,718 |  |  | $ | — |  |  | $ | 60,718 |
Cash flows from investing activities: |  |  |  |  |  |  |  |  |  |  |  |
Net cash used in investing activities |  |  | (304,366 | ) |  |  | — |  |  |  | (304,366 | )
Cash flows from financing activities: |  |  |  |  |  |  |  |  |  |  |  |
Net cash provided by financing activities |  |  | 154,958 |  |  |  | — |  |  |  | 154,958 |
Net decrease in cash and cash equivalents |  | $ | (88,690 | ) |  | $ | — |  |  | $ | (88,690 | )
Cash and cash equivalents at beginning of period |  |  | 268,047 |  |  |  | — |  |  |  | 268,047 |
Cash and cash equivalents at end of period |  | $ | 179,357 |  |  | $ | — |  |  | $ | 179,357 |
For the Year Ended December 31, 2012 |  |  |  |  |  |  |  |  |  |  |  |
Cash flows from operating activities: |  |  |  |  |  |  |  |  |  |  |  |
Net income |  | $ | 90,374 |  |  | $ | (50 | ) |  | $ | 90,324 |
Total adjustment in net income |  |  | (37,547 | ) |  |  | 50 |  |  |  | (37,497 | )
Net cash provided by operating activities |  | $ | 52,827 |  |  | $ | — |  |  | $ | 52,827 |
Cash flows from investing activities: |  |  |  |  |  |  |  |  |  |  |  |
Net cash used in investing activities |  |  | (37,158 | ) |  |  | — |  |  |  | (37,158 | )
Cash flows from financing activities: |  |  |  |  |  |  |  |  |  |  |  |
Net cash provided by financing activities |  |  | 50,695 |  |  |  | — |  |  |  | 50,695 |
Net increase in cash and cash equivalents |  | $ | 66,364 |  |  | $ | — |  |  | $ | 66,364 |
Cash and cash equivalents at beginning of period |  |  | 201,683 |  |  |  | — |  |  |  | 201,683 |
Cash and cash equivalents at end of period |  | $ | 268,047 |  |  | $ | — |  |  | $ | 268,047 |
The Bank determined that there were no events or changes in circumstances indicating that it is more likely than not that the carrying amount of the investment will not be realized. Therefore, no impairment was recognized as of December 31, 2014 or December 31, 2013. The investment in low income housing was $21.3 million and $3.0 million as of December, 2014 and 2013, respectively. The Bank’s unfunded commitments related to low income housing investments was $11.9 million as of December 31, 2014 and there were none as of December 31, 2013. The Bank recognized $1.6 million and $804,000 as a component of income tax expense for the year ended December 31, 2014 and 2013, respectively, and tax credits and other benefits received from the tax expenses were $1.6 million and $775,000 for the year ended December 31, 2014 and 2013, respectively.

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