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Share-based Compensation | 12 Months Ended
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Dec. 31, 2022
Share-Based Payment Arrangement [Abstract] |
Share-based Compensation | Note 15 — Share-based Compensation At December 31, 2022, we had one incentive plan, the 2021 Equity Compensation Plan (the “2021 Plan”), which became effective on May 26, 2021. The 2021 Plan serves as the successor to the 2013 Equity Compensation Plan (the “2013 Plan”). Outstanding awards granted under the 2013 Plan continue to be governed by the 2013 Plan. The Company may provide awards of options, stock appreciation rights, restricted stock awards, restricted stock unit awards, shares granted as a bonus or in lieu of another award, dividend equivalent, other stock-based award or performance award, together with any other right or interest to a participant. Participants include executives and other employees, officers, directors, consultants and other persons who provide services to the Company or its related entities. Under the 2021 Plan, we may grant equity incentive awards for up to 1,500,000 shares of common stock. As of December 31, 2022, 1,326,699 shares were still available for issuance under the 2021 Plan. The table below provides the share-based compensation expense and related tax benefits for the periods indicated:
|  | Year Ended December 31, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
|  | (in thousands) |
Share-based compensation expense |  | $ | 2,595 |  |  | $ | 2,436 |  |  | $ | 2,544 |
Related tax benefits |  | $ | 752 |  |  | $ | 703 |  |  | $ | 734 |
As of December 31, 2022, unrecognized share-based compensation expense was $2.2 million with an average expected recognition period of 1.9 years. 2013 and 2021 Equity Compensation Plans Stock Options All stock options granted under the Plans have an exercise price equal to the fair market value of the underlying common stock on the date of grant. Stock options granted generally vest based on three to five years of continuous service and expire ten years from the date of grant. New shares of common stock are issued or treasury shares are utilized upon the exercise of stock options. There were no options granted during the three years ended December 31, 2022, 2021 or 2020. The following information under the Plans is presented for the periods indicated:
|  | Year Ended December 31, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
|  | (in thousands) |
Total intrinsic value of options exercised (1) |  | $ | 20 |  |  | $ | — |  |  | $ | — |
Cash received from options exercised |  | $ | 19 |  |  | $ | — |  |  | $ | — |
(1) Intrinsic value represents the difference between the closing stock price on the exercise date and the exercise price, multiplied by the number of options. The following is a summary of stock option transactions under the Plans for the periods indicated:
|  | Year Ended December 31, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
|  | Number of Shares |  |  | Weighted- Average Exercise Price Per Share |  |  | Number of Shares |  |  | Weighted- Average Exercise Price Per Share |  |  | Number of Shares |  |  | Weighted- Average Exercise Price Per Share |
Options outstanding at beginning of period |  |  | 115,938 |  |  | $ | 19.58 |  |  |  | 125,938 |  |  | $ | 19.59 |  |  |  | 156,438 |  |  | $ | 18.84 |
Options exercised |  |  | 1,500 |  |  | $ | 12.54 |  |  |  | — |  |  | $ | — |  |  |  | — |  |  | $ | — |
Options forfeited |  |  | — |  |  | $ | — |  |  |  | (10,000 | ) |  | $ | 19.74 |  |  |  | (30,500 | ) |  | $ | 15.73 |
Options expired |  |  | (6,438 | ) |  | $ | 12.54 |  |  |  | — |  |  | $ | — |  |  |  | — |  |  | $ | — |
Options outstanding at end of period |  |  | 111,000 |  |  | $ | 19.89 |  |  |  | 115,938 |  |  | $ | 19.58 |  |  |  | 125,938 |  |  | $ | 19.59 |
Options exercisable at end of period |  |  | 111,000 |  |  | $ | 19.89 |  |  |  | 115,938 |  |  | $ | 19.58 |  |  |  | 125,938 |  |  | $ | 19.59 |
As of December 31, 2022, there was no unrecognized compensation cost as all stock options issued under the plan had fully vested. As of December 31, 2022, stock options outstanding under the Plans were as follows:
|  | Options Outstanding |  |  | Options Exercisable |
|  | Number of Shares |  |  | Intrinsic Value (1) |  |  | Weighted- Average Exercise Price Per Share |  |  | Weighted- Average Remaining Contractual Life |  |  | Number of Shares |  |  | Intrinsic Value (1) |  |  | Weighted- Average Exercise Price Per Share |  |  | Weighted- Average Remaining Contractual Life |
$15.00 to $19.99 |  |  | 50,000 |  |  | $ | 416 |  |  | $ | 16.43 |  |  |  | 1.66 |  |  |  | 50,000 |  |  | $ | 416 |  |  | $ | 16.43 |  |  |  | 1.66 |
$20.00 to $24.83 |  |  | 61,000 |  |  |  | 123 |  |  |  | 22.73 |  |  |  | 2.84 |  |  |  | 61,000 |  |  |  | 123 |  |  |  | 22.73 |  |  |  | 2.84 |
|  |  | 111,000 |  |  | $ | 539 |  |  | $ | 19.89 |  |  |  | 2.30 |  |  |  | 111,000 |  |  | $ | 539 |  |  | $ | 19.89 |  |  |  | 2.30 |
(1) Intrinsic value represents the difference between the closing stock price on the last trading day of the period, which was $24.75 as of December 31, 2022, and the exercise price, multiplied by the number of options. This value is presented in thousands. Restricted Stock Awards Restricted stock awards under the Plans become fully vested after a certain number of years or after certain performance criteria are met. Hanmi Financial becomes entitled to an income tax deduction in an amount equal to the taxable income reported by the holders of the restricted shares when the restrictions are released and the shares are issued. Restricted shares are forfeited if officers and employees terminate prior to the lapsing of restrictions. Forfeitures of restricted stock are treated as canceled shares. The table below provides information for restricted stock awards under the 2013 Plan for the periods indicated:
|  | 2022 |  |  | 2021 |  |  | 2020 |
|  | Number of Shares |  |  | Weighted- Average Grant Date Fair Value Per Share |  |  | Number of Shares |  |  | Weighted- Average Grant Date Fair Value Per Share |  |  | Number of Shares |  |  | Weighted- Average Grant Date Fair Value Per Share |
Restricted stock at beginning of period |  |  | 152,087 |  |  | $ | 17.24 |  |  |  | 243,708 |  |  | $ | 15.60 |  |  |  | 296,201 |  |  | $ | 22.91 |
Restricted stock granted |  |  | 101,271 |  |  | $ | 24.56 |  |  |  | 75,679 |  |  | $ | 19.62 |  |  |  | 125,896 |  |  | $ | 8.51 |
Restricted stock vested |  |  | (89,699 | ) |  | $ | 23.95 |  |  |  | (134,659 | ) |  | $ | 16.01 |  |  |  | (137,892 | ) |  | $ | 24.68 |
Restricted stock forfeited |  |  | (7,485 | ) |  | $ | 23.46 |  |  |  | (32,641 | ) |  | $ | 15.02 |  |  |  | (40,497 | ) |  | $ | 16.55 |
Restricted stock at end of period |  |  | 156,174 |  |  | $ | 21.29 |  |  |  | 152,087 |  |  | $ | 17.24 |  |  |  | 243,708 |  |  | $ | 15.60 |
As of December 31, 2022, there was $2.2 million of total unrecognized compensation cost related to nonvested shares granted under the 2013 Plan. The cost is expected to be recognized over a weighted-average period of 1.9 years. The total fair value of shares vested during the years ended December 31, 2022, 2021 and 2020 was $2.1 million, $2.7 million, and $1.4 million, respectively. Performance Stock Units During the twelve months ended December 31, 2022, the Company granted to members of executive management 38,036 performance stock units (“PSUs”) from the 2021 Plan with a grant date fair value of $0.9 million. PSUs are similar to restricted stock awards, except the recipient does not receive the stock immediately, but instead receives it in accordance to a vesting plan and distribution schedule after achieving required performance milestones and upon remaining with the Company for a particular length of time. Each PSU that vests entitles the recipient to receive one share of the Company’s common stock on a specified issuance date. PSUs granted vest into shares based on a three-year cliff vesting subject to achievement of a total shareholder return (“TSR”) performance metric and, for 2022, were determined to have a grant date fair value of $25.10 per share. The fair value of the performance PSUs at the grant date was determined using a Monte Carlo simulation method. The number of PSUs subject to the TSR that ultimately vest at the end of the three-year vesting performance period, if any, will be based on the relative rank of the Company’s TSR among the TSRs of a peer group of 51 regional banks. Although the recipient does receive dividend equivalent rights for any dividends paid during the performance period based on the target shares granted, no stockholder rights, including voting, or liquidation rights will be conferred upon the recipient until becoming the record holder of those shares. The table below provides information for performance stock units under the 2021 Plans for the periods indicated:
|  | 2022 |  |  | 2021 |  |  | 2020 |
|  | Number of Shares |  |  | Weighted- Average Grant Date Fair Value Per Share |  |  | Number of Shares |  |  | Weighted- Average Grant Date Fair Value Per Share |  |  | Number of Shares |  |  | Weighted- Average Grant Date Fair Value Per Share |
Performance stock at beginning of period |  |  | 66,563 |  |  | $ | 15.25 |  |  |  | 23,937 |  |  | $ | 9.65 |  |  |  | — |  |  | $ | — |
Performance stock granted |  |  | 38,036 |  |  | $ | 25.10 |  |  |  | 42,626 |  |  | $ | 18.40 |  |  |  | 23,937 |  |  | $ | 9.65 |
Performance stock vested |  |  | — |  |  | $ | — |  |  |  | — |  |  | $ | — |  |  |  | — |  |  | $ | — |
Performance stock forfeited |  |  | — |  |  | $ | — |  |  |  | — |  |  | $ | — |  |  |  | — |  |  | $ | — |
Performance stock at end of period |  |  | 104,599 |  |  | $ | 18.83 |  |  |  | 66,563 |  |  | $ | 15.25 |  |  |  | 23,937 |  |  | $ | 9.65 |
Compensation expense for these units is based on the fair value of the grants at the grant date and is amortized on a straight-line basis over the vesting period. For the twelve months ended December 31, 2022, total compensation expense for the PSUs was $0.8 million. The total fair value of the PSUs at December 31, 2022 was $3.9 million.

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