UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

Filed by the Registrant ☑

Filed by a Party other than the Registrant ☐

Check the appropriate box:

 ☐    Preliminary Proxy Statement

 ☐    Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 ☑    Definitive Proxy Statement

 ☐    Definitive Additional Materials

 ☐    Soliciting Material Pursuant to §240.14a-12

HANMI FINANCIAL CORPORATION

(Name of Registrant as Specified In Its Charter)

Not Applicable

 

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

 

☑	No fee required.

 

☐	Fee paid previously with preliminary materials.

 

☐	Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

 

A MESSAGE TO OUR STOCKHOLDERS

 

 

Dear Fellow Stockholders,

Thank you for your continued investment in Hanmi Financial Corporation. On behalf of the Board of Directors and the management team, we are pleased to invite you to attend the 2022 Annual Meeting of Stockholders, which will be held virtually on Wednesday, May 25, 2022 at 10:30 a.m., Pacific Time.

Celebrating 40 Years of Success – Helping our Customers Bank on their Dreams

Founded in Los Angeles, Hanmi Bank was the first Korean American institution established to serve the underbanked immigrant community in Koreatown. Since we opened our doors, we have helped our customers capitalize on opportunities as well as navigate many challenges including recessions, inflation, debt and housing crises, social unrest, natural disasters and, most recently, a global pandemic. Through it all, we have remained true to our mission and our values while supporting the communities we serve.

For 40 years, Hanmi Bank has served our customers with relationship-based banking products and services that have helped them achieve their American dreams. We have done this by providing access to capital, advice, and business connections. Our close customer partnerships, along with our deep community ties, have enabled Hanmi to grow and flourish over the past four decades and position us exceptionally well for the next 40 years.

We are now the second-largest Korean American bank with $6.9 billion in assets, serving multi-ethnic communities through a network of 35 full-service branches and eight loan production offices across nine states, coast-to-coast. Over the past few years, we have made meaningful investments in new products, talent, and technology to accelerate our evolution into a leading community bank and to ensure we meet our customers’ needs and expectations. As a well-capitalized bank with a strong financial profile and a diversified business model, Hanmi is well positioned to serve a growing customer base by deepening ties with existing customers while building new relationships across our markets and business lines.

Record 2021 Financial Performance

Our team of 600 bankers performed exceptionally well in 2021 while continuing to navigate the challenges of the ongoing global pandemic, political and social volatility, and shifting economic dynamics. Guided by our strategic growth plan, we expanded our product and service offerings and diversified our loan and deposit portfolios. Working closely with our customers, we also further strengthened our portfolio and asset quality metrics. All of this resulted in very strong financial results for the year, including:

 

•

Net income of $98.7 million, or $3.22 per diluted share, up from $42.2 million, or $1.38 per diluted share in 2020.

 

•

Record loan production of $1.81 billion, a year-over-year increase of 12 percent, excluding $133.1 million of second round Paycheck Protection Program (PPP) loans.

 

•

Deposit growth of 9.7 percent, bringing deposits to $5.79 billion at year-end.

 

•

Improved asset quality by reducing nonperforming loans by 84 percent year-over-year.

Success of Strategic Growth Initiatives

We successfully ramped up production in our residential mortgage program, which accounted for 11 percent of originations in 2021, excluding PPP loans, in its first full year of operation. In this business, we originate nonqualified residential loans and mortgage warehouse lines that help diversify our loan portfolio with a lower-risk asset class that we can grow profitably for years to come.

We also advanced our Corporate Korea initiative, which accounted for more than 14 percent of our 2021 loan production and 12 percent of loans outstanding at year end. Through this initiative, Hanmi’s dedicated

 

 

bankers build relationships with Korean companies based in the U.S., providing them with banking advice and lines of credit, real estate investment loans, asset-based loans, and other services. In addition, driven by the strong relationships our bankers forge with clients, deposits from our Corporate Korea initiative clients represented six percent of deposits at year end. We expect this important program to make a growing contribution to both loan production and deposit growth in 2022 and beyond.

These strategic growth initiatives, along with strong momentum across our diverse business lines, fueled record growth in loan and lease production in 2021. Our commercial leasing business made a solid contribution to this performance, complementing our strength in commercial real estate and commercial and industrial lending businesses.    

Community Banking Starts with Community

At Hanmi, we believe long-term corporate value is created from investing in the diverse communities we serve. This was never more evident than during the past two years as we managed through the global pandemic. While so much of the world seemed to close its doors, our teams immediately engaged to protect the financial stability of our customers and communities by processing nearly 2,500 loan modification requests and funding more than 4,400 PPP loans to help them navigate these uncertain times. We also continued to make loans and to collaborate closely with our customers to support their business needs and objectives.

From natural disasters to everyday needs in the community, our team members responded with both their time and ingenuity. Through our Hanmi Neighbor Volunteer Service Program, our team volunteered in a variety of educational efforts such as financial literacy, financial education for seniors, affordable housing education, and more. And, since 2016, our Hanmi Bank Dream Scholarship program has awarded life-changing scholarships to help many at-risk youths achieve their educational goals and future dreams.

Hanmi Team: Our People Make Things Happen

We cannot achieve our mission without our talented team – an exemplary team that operates with a customer focus and a growth mindset. A team that brings not just relevant expertise and talent, but one that is diverse in ethnicity, gender, background, skills, and experiences. As we continue to expand our products and services, we will further evolve our internal resources and ensure our workforce reflects the customers we serve. A key factor in attracting and retaining diverse talent is fostering a corporate culture where every individual feels comfortable and safe and can see career mobility. This requires every Hanmi team member to live by our values of integrity, transparency, fairness, and collaboration.

The Next Chapter for Hanmi

As we celebrate our rich 40-year history, we are very proud of what the entire Hanmi team – from our founders to our current team – has achieved on behalf of our customers and our communities. We will build upon those successes as we continue to grow Hanmi into a leading community bank. Hanmi is better positioned than ever to meet the evolving needs of tomorrow’s customers, while continuing to be a trusted community partner to customers who have banked with us for 40 years.

In closing, we want to extend our deepest appreciation for your continued support and investment. We kindly request your support for our voting recommendations and we invite you to share your perspectives with us throughout the year.

Sincerely,
John J. Ahn				Bonita I. Lee
Chairman of the Board				President and Chief Executive Officer

 

 

 

HANMI FINANCIAL CORPORATION

900 Wilshire Boulevard, Suite 1250

Los Angeles, California 90017

(213) 382-2200

NOTICE OF ANNUAL MEETING OF

STOCKHOLDERS TO BE HELD ON MAY 25, 2022

 

 

TO THE STOCKHOLDERS OF HANMI FINANCIAL CORPORATION:

NOTICE IS HEREBY GIVEN that the 2022 annual meeting of stockholders (the “Annual Meeting”) of Hanmi Financial Corporation (“Hanmi,” the “Company,” “we,” “us” or “our”) will be held virtually, via live webcast, on Wednesday, May 25, 2022 at 10:30 a.m., Pacific Time, for the following purposes:

 

1.

To elect ten (10) directors to serve for terms expiring at the 2023 Annual Meeting of Stockholders and until their successors are elected and qualified;

 

2.

To provide a non-binding advisory vote to approve the compensation of our Named Executive Officers (“Say-on-Pay” vote);

 

3.

To ratify the appointment of Crowe LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022; and

 

4.

To consider any other business properly brought before the meeting.

Please note that this year’s meeting will be virtual. You will not be able to attend the Annual Meeting in person. A live webcast of the Annual Meeting will be available. Registration is required online at www.proxydocs.com/HAFC. Whether or not you plan to attend virtually, your vote is important and we encourage you to vote promptly by mail, telephone or via the Internet. If you attend the Annual Meeting virtually, you may vote online during the Annual Meeting.

By Order of Our Board of Directors,

 

John J. Ahn

Chairman of the Board

Los Angeles, California

April 15, 2022

 

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 2022 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 25, 2022:   This Proxy Statement and the 2021 Annual Report on Form 10-K are available electronically at www.hanmi.com by clicking on “Investor Relations” and then “Proxy Materials.”

 

 

 

VIRTUAL ANNUAL MEETING

The Annual Meeting will be held in a virtual-only meeting format, via live video webcast that will provide stockholders of record and beneficial owners as of the close of business on the March 31, 2022 record date with the ability to participate in the Annual Meeting, vote their shares electronically at the Annual Meeting via the virtual-only meeting platform and submit questions. The virtual-only meeting format this year is reflective of the continuing COVID-19 pandemic, taking into consideration the concern for the health and safety of all stakeholders.

BENEFITS OF A VIRTUAL ANNUAL MEETING

The virtual-only meeting format will give stockholders the opportunity to exercise the same rights as if they had attended an in-person meeting and we believe that these measures will enhance stockholder access and encourage participation and communication with our Board of Directors and management.

We believe a virtual-only meeting format facilitates stockholder attendance and participation by enabling all stockholders to participate fully and equally, and without cost, using an Internet-connected device from any location around the world. In addition, the virtual-only meeting format increases our ability to engage with all stockholders, regardless of size, resources or physical location.

ATTENDANCE AT THE VIRTUAL ANNUAL MEETING

Only stockholders of record and beneficial owners of shares of our common stock as of the close of business on March 31, 2022, the record date, may attend and participate in the Annual Meeting, including voting and asking questions during the virtual Annual Meeting. You will not be able to attend the Annual Meeting physically in person.

In order to attend the Annual Meeting, you must register at www.proxydocs.com/HAFC. Upon completing your registration, you will receive further instructions via email, including a unique link that will allow you access to the Annual Meeting and to vote and submit questions during the Annual Meeting.

As part of the registration process, you must enter the control number located on your proxy card, voting instruction form, or Notice of Internet Availability. If you are a beneficial owner of shares registered in the name of a broker, bank or other nominee, you will also need to provide the registered name on your account and the name of your broker, bank or other nominee as part of the registration process.

On May 25, 2022, the day of the Annual Meeting, stockholders may begin to log in to the virtual-only Annual Meeting 15 minutes prior to the Annual Meeting. The Annual Meeting will begin promptly at 10:30 a.m., Pacific Time.

We will have technicians ready to assist you with any technical difficulties you may have accessing the Annual Meeting. If you encounter any difficulties accessing the virtual-only Annual Meeting platform, including any difficulties voting or submitting questions, you may call the technical support number that will be posted in your instructional email.

QUESTIONS AT THE VIRTUAL ANNUAL MEETING

Our virtual Annual Meeting will allow stockholders to submit questions before the Annual Meeting to be addressed during a designated question and answer period at the Annual Meeting. We will answer as many stockholder-submitted questions as time permits, and any questions that we are unable to address during the Annual Meeting will be answered following the meeting, with the exception of any questions that are irrelevant to the purpose of the Annual Meeting or our business or that contain inappropriate or derogatory references which are not in good taste. If we receive substantially similar questions, we will group such questions together and provide a single response to avoid repetition.

PLEASE NOTE YOU WILL NOT BE ABLE TO ATTEND THE ANNUAL MEETING IN PERSON.

 

 

TABLE OF CONTENTS

 

 

 

 

 

PROXY STATEMENT

FOR THE ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON MAY 25, 2022

 

 

The Board of Directors (our “Board”) of Hanmi Financial Corporation is soliciting your proxy for use at the 2022 annual meeting of stockholders (the “Annual Meeting”) to be held virtually on Wednesday, May 25, 2022 at 10:30 a.m., Pacific Time, and at any adjournments or postponements thereof.

PROXY STATEMENT SUMMARY

MATTERS TO BE CONSIDERED AND VOTE RECOMMENDATION

We are asking stockholders to vote on the following matters at the Annual Meeting of Stockholders:

 

Proposal		Our Board’s Recommendation
Item 1. Election of Directors (page 13)
The Board believes that the ten (10) director nominees possess the necessary qualifications to provide effective oversight of the Company’s business and quality advice and counsel to our management.		“FOR” each Director Nominee
Item 2. Advisory Vote to Approve Executive Compensation (“Say-on-Pay” Vote) (page 47)
The Company seeks a non-binding advisory vote from its stockholders to approve the compensation of its Named Executive Officers (“NEOs”) as described in the Compensation Discussion and Analysis and Executive Compensation sections beginning on page 20. Your vote is advisory. Thus it will not be binding upon our Board and may not be construed as overruling any decision by our Board. However, the Compensation and Human Resources Committee will take into account the outcome of the vote when considering future executive compensation arrangements.		“FOR”
Item 3. Ratification of Auditors (page 48)
The Audit Committee and the Board believe that the continued retention of Crowe LLP to serve as the independent registered public accounting firm of the Company for the fiscal year ending December 31, 2022 is in the best interests of the Company and its stockholders. As a matter of good corporate governance, stockholders are being asked to ratify the Audit Committee’s selection of the independent registered public accounting firm. If the stockholders do not ratify the selection, the Audit Committee will reconsider whether to retain Crowe LLP. Even if the selection is ratified, the Audit Committee may, in its discretion, appoint a different independent registered public accounting firm at any time during the year if it determines that such a change would be in our and our stockholders’ best interests.		“FOR”

 

 

PROXY STATEMENT SUMMARY

 

 

QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS AND THE ANNUAL MEETING

 

Q:	Why did I receive this Proxy Statement?

 

A:

You received this Proxy Statement and the enclosed proxy card because we are soliciting your vote at the Annual Meeting. As a stockholder of record of our common stock, you are invited to virtually attend the Annual Meeting, and are entitled and requested to vote on the proposals described in this Proxy Statement. This Proxy Statement summarizes the information you need to know to cast an informed vote at the Annual Meeting. However, you do not need to attend the Annual Meeting to vote your shares. Instead, you may simply complete, sign and return the enclosed proxy card by mail. You may also vote by telephone or via the Internet.

We will post this Proxy Statement, notice of the Annual Meeting, and the enclosed proxy card on or about April 15, 2022 to all stockholders entitled to vote.

 

Q:	Who is entitled to vote and how many votes do I have?

 

A:	All stockholders of our common stock as of the close of business on March 31, 2022, and only those stockholders, will be entitled to vote at the Annual Meeting. You have one vote for each share of our common stock you owned as of the close of business on the record date.

 

Q:	How many shares are eligible to be voted?

 

A:	As of March 31, 2022, 30,468,458 shares of our common stock were outstanding. Each outstanding share of our common stock will entitle its holder to one vote on each matter to be voted on at the Annual Meeting.

 

Q:	What is the difference between holding shares as a “record” holder and in “street name”?

 

A:

•

Record Holders: If your shares of common stock are registered directly in your name on our stock records, you are considered the stockholder of record, or the “record holder” of those shares. As the record holder, you have the right to vote your shares online at the virtual Annual Meeting or by proxy.

 

•

Street Name Holders: If your shares of common stock are held in an account at a brokerage firm, bank, or other similar entity, then you are the beneficial owner of shares held in “street name.” The entity holding your account is considered the record holder for purposes of voting at the Annual Meeting. As the beneficial owner, you have the right to direct this entity on how to vote the shares held in your account. However, as described below, you may not vote these shares online at the virtual Annual Meeting unless you obtain a legal proxy from the entity that holds your shares giving you the right to vote the shares online at the virtual Annual Meeting.

 

Q:	What is a broker non-vote?

 

A:

Current regulations restrict the ability of your brokerage firm, bank or similar entity to vote your shares, on the election of directors and other matters, on a discretionary basis. Thus, if you hold your shares in street name and you do not instruct your bank or broker how to vote in the election of directors or for the advisory vote regarding the compensation of our NEOs, no votes will be cast on your behalf. These are referred to as broker non-votes. Your bank or broker does, however, continue to have discretion to vote any shares for which you do not provide instructions on how to vote on the ratification of the appointment of our independent registered public accounting firm (Proposal 3 of this Proxy Statement).

 

Q:	What is the required quorum at the Annual Meeting?

 

A:	A quorum for the transaction of business at the Annual Meeting requires the presence, online or by proxy, of the holders of a majority of all shares entitled to vote at a meeting of stockholders. Abstentions and broker non-votes are treated as being present for purposes of establishing a quorum.

 

 

2				Annual Meeting Proxy Statement 2022

PROXY STATEMENT SUMMARY

 

 

Q:	What vote is required to approve each proposal at the Annual Meeting?

 

A:

1.

Election of Directors. Directors are elected by a majority of votes cast in uncontested elections. In order to be elected to the Board, the votes cast “for” the nominee must exceed the number of votes cast “against” the nominee.

 

2.

Advisory Vote on the Compensation of our NEOs. Approval, on an advisory basis, of the compensation of our NEOs requires the affirmative vote of a majority of the shares present online or represented by proxy.

 

3.

Ratification of Selection of Auditors. Ratification of the selection of Crowe LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022 requires the affirmative vote of a majority of the shares present online or represented by proxy.

 

Q:	What is the effect of broker non-votes and abstentions?

 

A:	Abstentions and broker non-votes will be counted for determining a quorum. Your broker, however, will not be entitled to vote without your instruction on the election of directors and the advisory (non-binding) proposal to approve the compensation of our NEOs.

Your broker will be authorized to vote your shares on the ratification of our independent registered public accounting firm even if it does not receive instructions from you, and accordingly, broker non-votes will have no effect on this proposal.

Abstentions and broker non-votes will have no effect on the election of directors in Proposal 1. Abstentions and broker non-votes will have the effect of a vote “AGAINST” the advisory (non-binding) vote to approve the compensation of NEOs. Abstentions will have the effect of a vote “AGAINST” the ratification of our independent registered public accounting firm.

 

Q:	How can I vote my shares?

 

A:	If you hold your shares of common stock in your own name and not through a broker or another nominee, you may vote your shares of common stock by the following methods, subject to compliance with the applicable cutoff times and deadlines described below:

 

		By Internet You can vote via the internet using the internet address printed on your proxy card. Internet voting is available 24 hours a day until 11:59 p.m., Pacific Time, on May 24, 2022. If you vote via the Internet, you do not need to return your proxy card.				By Telephone You can vote by dialing the toll-free number printed on your proxy card. Telephone voting is available 24 hours a day until 11:59 p.m., Pacific Time, on May 24, 2022. If you vote by telephone, you do not need to return your proxy card.
		By Mail You can vote by mail by signing, dating and returning the proxy card in the postage-paid envelope provided to you. Proxy cards sent by mail must be received by May 24, 2022.				In Person By attending the Annual Meeting virtually and voting through www.proxydocs.com/HAFC. To attend the Annual Meeting and vote your shares, you must register for the Annual Meeting and provide the control number located on your Notice or proxy card.

 

 

PROXY STATEMENT SUMMARY

 

 

Whichever of these methods you select to transmit your instructions, the proxy holder will vote your shares of common stock in accordance with your instructions. If you give a proxy without specific voting instructions, your proxy will be voted by the proxy holder “FOR” each of the director nominees named in this Proxy Statement, “FOR” the approval, on an advisory basis, of the compensation of our NEOs, “FOR” the ratification of our independent registered public accounting firm, and at the proxy holders’ discretion on such other matters, if any, as may properly come before the Annual Meeting (including any proposal to adjourn the Annual Meeting).

 

Q:	Can I change or revoke my vote after I return my proxy card?

 

A:

You may revoke a proxy at any time before the vote is taken at the Annual Meeting by advising our Corporate Secretary in writing before the vote at the Annual Meeting is taken, by submitting a properly executed proxy of a later date by mail, telephone or via the Internet, or by attending the Annual Meeting virtually and voting online. Attendance at the Annual Meeting will not by itself constitute revocation of a proxy. Any filing with the Corporate Secretary should be addressed to Hanmi Financial Corporation, 900 Wilshire Boulevard, Suite 1250, Los Angeles, California 90017.

 

Q:	How do I attend the virtual Annual Meeting?

 

A:

To ensure the health and well-being of our stockholders, employees and Board during the COVID-19 pandemic, we have determined that the Annual Meeting will be held solely in a virtual meeting format via the Internet. You will be able to attend and participate in the Annual Meeting online by visiting and registering at www.proxydocs.com/HAFC. See “Virtual Annual Meeting” above for further information.

 

Q:	How will proxies be solicited?

 

A:

In addition to soliciting proxies by mail, our officers, directors, and employees, without receiving any additional compensation, may solicit proxies by telephone, fax, in person, or by other means. Arrangements may also be made with brokerage firms and other custodians, nominees, and fiduciaries to forward proxy solicitation materials to the beneficial owners of our common stock held of record by such persons, and we will reimburse such brokerage firms, custodians, nominees, and fiduciaries for reasonable out-of-pocket expenses incurred by them in connection therewith.

 

Q:	Will any other matters be considered at the Annual Meeting?

 

A:

We are not aware of any matter to be presented at the Annual Meeting other than the proposals discussed in this Proxy Statement. If other matters are properly presented at the Annual Meeting, then the person named as a proxy will have the authority to vote all properly executed proxies in accordance with the direction of our Board, or, if no such direction is given, in accordance with the judgment of the person holding such proxies on any such matter, including any proposal to adjourn or postpone the Annual Meeting.

 

Q:	Are there any rules regarding admission to the Annual Meeting?

 

A:

Yes. You are entitled to attend the Annual Meeting only if you were a stockholder as of the record date, or you hold a valid legal proxy naming you to act for one of our stockholders on the record date. To attend the virtual, live webcast, please follow the directions regarding registering online at www.proxydocs.com/HAFC.

 

Q:	Is my vote confidential?

 

A:	Your vote will not be disclosed either within the Company or to third parties, except as necessary to meet applicable legal requirements or to allow for the tabulation and certification of the vote.

 

Q:	Where can I find the voting results of the Annual Meeting?

 

A:	We will disclose voting results on a Current Report on Form 8-K to be filed with the U.S. Securities and Exchange Commission (the “SEC”) within four business days after the Annual Meeting.

 

 

4				Annual Meeting Proxy Statement 2022

CORPORATE GOVERNANCE AND BOARD MATTERS

The following table provides summary information about our directors as of March 31, 2022.

 

								Committee Memberships
Name		Age		Director Since		Principal Occupation		A		CHR		NCG		RCP
John J. Ahn* (Chairman)		57		2014		CEO of WhiteHawk Capital Partners
Christie K. Chu*		57		2015		President & CEO of CKC Accountancy Corporation
Harry H. Chung*FE		52		2016		Chief Operating Officer & Chief Financial Officer of WhiteHawk Capital Partners
Scott R. Diehl*		60		2018		Retired (former Group Head of Global Capital Solutions of Wells Fargo Capital Finance)
Bonita I. Lee		59		2019		President & CEO of Hanmi and Hanmi Bank
Gloria J. Lee*		44		2021		Client Relations Partner of Rutan & Tucker Co-Founder, Kwell Laboratories
David L. Rosenblum*FE (Vice Chairman)		69		2014		Retired (former Senior Principal of Deloitte Consulting LLP)
Thomas J. Williams*		59		2016		Retired (former Senior Vice President & Chief Risk Officer of BofI Federal Bank)
Michael M. Yang*		60		2016		Founder & CEO of Michael Yang Capital Management, LLC
Gideon Yu*		51		2021		Co-owner & Former President of San Francisco 49ers

  Chairperson               Member

Committees: A = Audit; CHR = Compensation and Human Resources; NCG = Nominating and Corporate Governance;

RCP = Risk, Compliance and Planning

* = Independent Director; FE = Audit Committee Financial Expert

CORPORATE GOVERNANCE

Hanmi is committed to sound corporate governance principles and maintains formal Corporate Governance Guidelines and a Code of Business Conduct and Ethics for employees, executive officers and directors. The Corporate Governance Guidelines, the Code of Business Conduct and Ethics and other governance documents, are available through Hanmi’s website at www.hanmi.com on the “Investor Relations” page. Any amendments or waivers applicable to an executive officer or director to the Code of Business Conduct and Ethics will also be posted on Hanmi’s website.

The Nominating and Corporate Governance (“NCG”) Committee has primary oversight of our efforts to be a responsible corporate citizen in our communities. In order to address opportunities and challenges arising from Environmental, Social and Governance (“ESG”) matters, the NCG Committee maintains an interdisciplinary subcommittee of directors and officers to discuss how Hanmi directly impacts our stakeholders – our valued employees, customers, and communities. The ESG Subcommittee has published an Environmental, Social and Governance Report, available on our website under the “Investor Relations” page, which seeks to provide insight into our continuing efforts to stand in partnership with our various stakeholders.

DIRECTOR INDEPENDENCE

Our common stock is listed on the Nasdaq Global Select Market (“Nasdaq”). Under Nasdaq rules, independent directors must comprise a majority of a listed company’s board of directors. In addition, Nasdaq requires that, subject to specified exceptions, each member of a listed company’s audit, compensation, and nominating and corporate governance committees must be independent. Under these rules, a director is

 

 

CORPORATE GOVERNANCE AND BOARD MATTERS

 

 

independent only if the board of directors of a company makes an affirmative determination that the director has no material relationship with the company that would impair his or her independence.

Our Board has reviewed the independence of each director in accordance with Nasdaq rules and the requirements of the SEC. Based on this review, our Board has determined that all of its directors are independent under the applicable listing standards of Nasdaq, except for Bonita I. Lee, our President and Chief Executive Officer. In making this determination, our Board considered the relationships that each non-employee director has with us and all other facts and circumstances that the Board deemed relevant in determining their independence, including those relationships that are not required to be disclosed in this proxy statement under the heading “Certain Relationships and Related Transactions,” and loans made to non-employee directors.

BOARD MEETINGS AND COMMITTEES

During the fiscal year ended December 31, 2021, our Board held nine (9) joint board meetings with the Board of Hanmi Bank (the “Bank”), the wholly-owned subsidiary of Hanmi. All Board members were present for more than 75% of the aggregate number of meetings of our Board and the committees on which he or she served. Hanmi’s policy is to encourage all directors to attend all Annual and Special Meetings of Stockholders. Hanmi’s 2021 Annual Meeting of Stockholders was attended by all directors.

Our Board has four (4) standing committees: the Audit Committee, the Compensation and Human Resources Committee (the “CHR Committee”), the NCG Committee, and the Risk, Compliance and Planning Committee (the “RCP Committee”). Each committee is governed by a charter, each of which is available through Hanmi’s website at www.hanmi.com on the “Investor Relations” page. All members of each committee are independent in accordance with applicable Nasdaq listing requirements.

Audit Committee

The Audit Committee reports to the Board and is responsible for overseeing and monitoring financial accounting and reporting, the system of internal controls established by management, and our audit process and policies. Through its oversight of the audit function, the Audit Committee ensures compliance with laws and regulations.

As outlined in its charter, the Audit Committee has the following responsibilities, among others:

 

•

Assist the Board in fulfilling its oversight responsibilities for the financial reporting process, the system of internal controls, the audit process, and Hanmi’s process for monitoring compliance with laws and regulations and the code of conduct;

 

•

Review the unaudited quarterly and audited annual financial statements;

 

•

Review the adequacy of internal control systems and financial reporting procedures with management and the independent auditor;

 

•

Review and approve the general scope of the annual audit and the fees charged by the independent registered public accounting firm;

 

•

Appoint the independent registered public accounting firm and meet with them to discuss the results of the annual audit and the independence of the independent registered public accounting firm; and

 

•

Review and approve the general scope of the annual internal audit plan and associated fees.

The Audit Committee held twelve (12) meetings during the fiscal year ended December 31, 2021.

Compensation and Human Resources Committee

The CHR Committee assists the Board by overseeing the compensation of Hanmi’s executive officers, including Hanmi’s Chief Executive Officer, as well as administering Hanmi’s compensation plans. As outlined in its charter, the CHR Committee has the following responsibilities, among others:

 

•

Review and approve the Company’s overall compensation philosophy, plans, policies and programs as it relates to directors, the Chief Executive Officer and executive officers;

 

 

6				Annual Meeting Proxy Statement 2022

CORPORATE GOVERNANCE AND BOARD MATTERS

 

 

•

Approve directors overall compensation, policies and programs;

 

•

Oversee management development and management succession planning;

 

•

Review and approve executive officers’ separation plan and employment and severance agreements; and

 

•

Lead the Board in its annual review of executive management’s performance as it relates to metrics for short- and long-term incentive payouts.

The CHR Committee also sets the compensation policy of the Company as more fully described below under Executive Compensation – Compensation Discussion and Analysis. To evaluate and administer the compensation programs of our NEOs, the CHR Committee meets at least four (4) times a year or more frequently as necessary. The CHR Committee is also authorized to retain and provide funding to outside consultants to assist it in determining executive officer compensation.

Each member of the CHR Committee is a “non-employee director” (as defined in Section 16 of the Securities Exchange Act of 1934 (the “Exchange Act”)). The CHR Committee held eleven (11) meetings during the fiscal year ended December 31, 2021.

Nominating and Corporate Governance Committee

As described in its charter, the NCG Committee assists the Board as follows:

 

•

Identify individuals qualified to become directors;

 

•

Recommend to the Board nominees for the Board and its committees;

 

•

Develop, recommend, implement and monitor adherence to a set of corporate governance principles applicable to Hanmi;

 

•

Monitor the process to determine the effectiveness of the Board and its committees; and

 

•

Monitor the activities of the ESG Sub-Committee regarding its efforts to oversee the Company’s ongoing commitment to environmental performance, health and safety, corporate social responsibility, corporate governance, sustainability, and other public policy matters relevant to the Company.

See Consideration of Director Nominees below for additional information regarding the director nomination process. The NCG Committee is authorized to retain outside consultants to assist it in fulfilling any of its duties, including Board and director assessment and Board evaluation.

The NCG Committee held five (5) meetings during the fiscal year ended December 31, 2021.

Risk, Compliance and Planning Committee

As outlined in its charter, the RCP Committee provides oversight of the enterprise risk management framework, including the strategies, policies, procedures and systems established by management to identify, assess, measure and manage the significant risks facing the Company. It also oversees strategic planning generally and recommends new lines of business and the budget to our Board.

The RCP Committee held seven (7) meetings during the fiscal year ended December 31, 2021.

BOARD LEADERSHIP STRUCTURE

The Board is committed to having a sound governance structure that promotes the best interest of Hanmi stockholders. Our leadership structure includes the following principles:

 

•

We believe that annual elections hold the directors of the Board more accountable to our stockholders.

 

•

All of the directors are independent, except for Bonita I. Lee, our President and Chief Executive Officer. The Board has affirmatively determined that the other nine (9) directors nominated for re-election are independent under applicable SEC and Nasdaq corporate governance rules.

 

 

CORPORATE GOVERNANCE AND BOARD MATTERS

 

 

•

We have separated the positions of the Chairman of the Board and Chief Executive Officer in the Company’s Bylaws to ensure the independence of the Chairman. The Chairman focuses on board oversight responsibilities, strategic planning and mentoring Company officers. The Chairman also periodically represents the Bank at public functions. John J. Ahn serves as the Chairman. The Chief Executive Officer focuses on the development and execution of Company strategies.

 

•

We also maintain a Vice Chairman of the Board, who is an independent director exercising all the powers and discharging all the duties of the Chairman of the Board in such circumstances before a Chairman is appointed or a sitting Chairman is absent or becomes disabled. Director David L. Rosenblum serves as Vice Chairman.

 

•

We believe the Board structure serves the interests of the stockholders by balancing the practicalities of running the Company with the need for director accountability.

BOARD’S ROLE IN RISK OVERSIGHT

The Board oversees an enterprise-wide approach to risk management, designed to support the achievement of organization objectives in the areas of strategy, operations, reporting and compliance. The Board recognizes that these objectives are important to improve and sustain long-term performance and stockholder value. A fundamental part of risk management is not only identifying the risks the Company faces and the steps management is taking to manage those risks, but also determining what constitutes the appropriate level of risk based upon the Company’s activities and risk appetite.

The RCP Committee goes through an extensive review of the enterprise risk assessment on a quarterly basis with the guidance of the RCP Committee Chairperson and the Bank’s Chief Risk Officer. The risk assessment is also reviewed by the Board quarterly. In this process, risk is assessed throughout the Company by focusing on the following ten (10) areas: credit, liquidity, market, operations, compliance, human resources / legal, reputational, strategic, information technology and security, and capital. Risks that simultaneously affect different parts of the Company are identified, and an interrelated assessment is made.

While the Board has the ultimate oversight responsibility for the risk management process, various committees of the Board also have responsibility for risk management. In particular, the RCP Committee assists the Board in fulfilling its oversight responsibility with respect to regulatory, compliance, operational risk and enterprise risk management issues that affect the Company and works closely with the Company’s legal and risk departments. The RCP Committee also oversees risks associated with the short- and long-term direction of the Company and ensures ongoing Board involvement and oversight of the Company’s strategic plan. The Audit Committee helps the Board monitor financial risk and internal controls from a risk-based perspective, and oversees compliance and the annual audit plan. Reports from the Company’s internal audit department are also reviewed by the Audit Committee.

In overseeing compensation, the CHR Committee ensures that incentives encourage a conservative level of risk-taking behavior consistent with the Company’s business strategy and in compliance with all laws and the Interagency Guidance on Incentive Compensation. The NCG Committee oversees the Code of Business Conduct and Ethics and conducts an annual assessment of corporate governance policies and any potential risk associated with governance and related party matters.

The Bank also has two other board committees that oversee risk. The Loan and Credit Policy Committee (the “LCP Committee”) oversees credit risk by identifying, monitoring, and controlling repayment risk associated with the Bank’s lending activities. The Asset Liability Management Committee oversees the process for managing the Bank’s interest rate, liquidity, and similar market risks relating to the Bank’s balance sheet and associated activities.

The Board is committed to protecting personal and financial information, and devotes a significant amount of time to information security and cybersecurity risks. Members of the RCP Committee receive regular reports from the Chief Risk Officer related to information technology and information security to fulfill its role of assisting management in identifying, assessing, measuring and managing certain risks facing the Company.

 

 

8				Annual Meeting Proxy Statement 2022

CORPORATE GOVERNANCE AND BOARD MATTERS

 

 

The Bank’s Information Security Officer meets at least quarterly with the RCP Committee to provide updates on cybersecurity and information security risk, and the Board annually reviews and approves our Information Security Program and Information Security Policy. The RCP Committee engages in key decisions to help set the direction for information security strategy, as well as to understand and prioritize information security capabilities and associated risk remediation. The Executive IT Steering Committee is an internal Bank committee created to ensure that members of executive management overseeing multiple business units actively understand information security protections and associated risks. The Information Security Officer presents quarterly cybersecurity reports to the Executive IT Steering Committee. In addition, the Bank purchases cyber liability and other insurance to protect against cyber security risks.

CONSIDERATION OF DIRECTOR NOMINEES

The NCG Committee believes that the Board should encompass a broad range of talent, skill, knowledge, experience, diversity and expertise enabling it to provide sound guidance with respect to Hanmi’s operations and interests. In addition to considering a candidate’s background and accomplishments, candidates are reviewed in the context of the current composition of the Board and the evolving needs of Hanmi’s business. Our Board has identified certain core competencies that its directors should possess, including: broad experience in business, finance, accounting, risk management, strategic planning, marketing or administration; familiarity with national and international business matters; familiarity with the Company’s industry; and the ability to understand the Company’s business. In addition to possessing one or more of these core competencies, the members of our Board should have and demonstrate personal qualities such as integrity, leadership, community prominence and a strong reputation. The experience, skills and qualifications contributed by each of our directors should diversify and complement the core competencies of our collective Board.

The NCG Committee seeks directors with a strong reputation and experience in areas relevant to the strategy and operation of Hanmi’s business, particularly industries and growth segments that Hanmi operates in, such as the banking and financial services industry, as well as key geographic markets and customer segments. The NCG Committee annually reviews the individual skills and characteristics of the directors, as well as the composition of the Board as a whole. This assessment includes a consideration of independence, diversity, age, skills, expertise and industry background in the context of the needs of the Board and Hanmi.

The Board conducts an annual evaluation to determine whether the Board and its committees are functioning effectively. The NCG Committee oversees the evaluation method and criteria for the Board’s annual evaluation of the composition, competence and performance of the Board and its committees. The NCG Committee may retain consultants or advisors to assess the performance and effectiveness of the Board, its committees and each individual director.

The results of any self-evaluations, peer evaluations or evaluations by any consultant or advisor are submitted to the Board. The Board then takes appropriate action based on the Board’s assessment and performance evaluations. The Board and director evaluation process considers the best interests of Hanmi, its Board, employees, customers and stockholders. The assessment includes director succession planning and expected future needs of the Board and the Company, so as to ensure that Board effectiveness is not diminished during periods of transition.

 

 

CORPORATE GOVERNANCE AND BOARD MATTERS

 

 

Board Diversity   The Corporate Governance Guidelines require the NCG Committee to consider diversity when reviewing the qualifications of candidates to the Board. The NCG Committee seeks to nominate members with diverse backgrounds, skills, professional and industry experience, and other personal qualities, attributes and perspectives that will help ensure a strong and effective governing body that, as a whole, reflects the current and anticipated needs of our Board and Company and can provide oversight responsibility to our stockholders.

The table below provides certain highlights of the composition of our board members and nominees, representing our compliance with Nasdaq Rule 5605(f). Each of the categories listed in the below table has the meaning used in the rule.

 

		Board Diversity Matrix As of December 31, 2021
Total Number of Directors			10
		Female				Male				Non-Binary				Did Not Disclose Gender
Part I: Gender Identity
Directors			3				7				—				—
Part II: Demographic Background
African American or Black			—				—				—				—
Alaskan Native or Native American			—				—				—				—
Asian			3				4				—				—
Hispanic or Latinx			—				—				—				—
Native Hawaiian or Pacific Islander			—				—				—				—
White			—				3				—				—
Two or More Races or Ethnicities			—				—				—				—
LGBTQ+			—
Did Not Disclose Demographic Background			—

Stockholder Recommendations

The NCG Committee will consider stockholder recommendations for director nominees. The Board of Directors may choose not to consider an unsolicited recommendation if no vacancy exists on the Board of Directors and the Board of Directors does not perceive a need to increase the size of the Board of Directors. Such notices must be submitted in writing to Hanmi Financial Corporation, 900 Wilshire Boulevard, Suite 1250, Los Angeles, California 90017, Attention: Corporate Secretary. Such notices also must comply with other requirements set forth in the Company’s Bylaws and be received by the Corporate Secretary within the deadlines provided below under Stockholder Proposals for the 2023 Annual Meeting.

 

 

10				Annual Meeting Proxy Statement 2022

CORPORATE GOVERNANCE AND BOARD MATTERS

 

 

In identifying and evaluating director candidates, the NCG Committee will solicit and receive recommendations, and review qualifications of potential director candidates. The NCG Committee may also use search firms to identify director candidates when necessary. To enable the NCG Committee to effectively evaluate director candidates, the NCG Committee may also conduct appropriate inquiries into the backgrounds and qualifications of director candidates, including reference checks. As stated above, the NCG Committee will consider director candidates recommended by stockholders utilizing the same criteria as candidates identified by the NCG Committee.

COMMUNICATIONS WITH THE BOARD

Our Board has a process for stockholders to send communications to directors. Hanmi’s stockholders and interested parties may send communications to our Board by writing to our Board at Hanmi Financial Corporation, 900 Wilshire Boulevard, Suite 1250, Los Angeles, California 90017, Attention: Board of Directors. All such communications will be relayed directly to our Board. Any interested party wishing to communicate directly with Hanmi’s independent directors regarding any matter may send such communication in writing to Hanmi’s independent directors at Hanmi Financial Corporation, 900 Wilshire Boulevard, Suite 1250, Los Angeles, California 90017, Attention: Chairman of the Board. Any interested party wishing to communicate directly with the Audit Committee regarding any matter, including any accounting, internal accounting controls, or auditing matter, may submit such communication in writing to Hanmi Financial Corporation, 900 Wilshire Boulevard, Suite 1250, Los Angeles, California 90017, Attention: Chairperson of the Audit Committee.

Correspondence may be submitted on an anonymous basis and submissions of complaints or concerns will not be traced. Confidentiality is a priority, and all communications will be treated confidentially to the fullest extent possible. For submissions that are not anonymous, the sender may be contacted in order to confirm information or to obtain additional information. The Company reserves the right not to forward to Board members any abusive, threatening or otherwise inappropriate materials.

DIRECTOR COMPENSATION

The following table sets forth certain information regarding compensation paid to persons who served as outside (or non-employee) directors of Hanmi for the fiscal year ended December 31, 2021:

 

Name		Fees Earned or Paid in Cash								Stock Awards(4)								Total
John J. Ahn		$	72,500							$	41,016							$	113,516
Kiho Choi(1)		$	57,292							$	41,016							$	98,308
Christie K. Chu		$	59,417							$	41,016							$	100,433
Harry H. Chung		$	60,000							$	41,016							$	101,016
Scott R. Diehl		$	60,500							$	41,016							$	101,516
Gloria J. Lee(2)		$	3,958								—							$	3,958
David L. Rosenblum		$	61,500							$	41,016							$	102,516
Thomas J. Williams		$	62,500							$	41,016							$	103,516
Michael M. Yang		$	53,667							$	41,016							$	94,683
Gideon Yu(3)		$	39,458							$	41,016							$	80,474

 

(1)	Mr. Choi retired from the Boards in October 2021.

 

(2)	Ms. Lee joined the Boards in November 2021.

 

(3)	Mr. Yu joined the Boards in January 2021.

 

(4)

On May 26, 2021, the Company granted 1,993 shares of restricted stock to each non-employee director, which vest one year from the grant date. The grant date fair value is based on the closing price of the Company’s stock on the grant date, which was $20.58, in accordance with FASB ASC Topic 718. At December 31, 2021, each of the current independent directors, except for Ms. Lee, had 1,993 restricted shares outstanding and no stock options outstanding. Ms. Lee had no restricted shares outstanding and no stock options outstanding at that date.

 

 

CORPORATE GOVERNANCE AND BOARD MATTERS

 

 

NON-EMPLOYEE DIRECTOR COMPENSATION POLICY

Following the annual review of a director compensation review conducted by the Company’s independent compensation consultants, the Board of Directors unanimously confirmed the following director compensation plan design. The Company provides its non-employee directors an annual cash retainer of $38,500 for service on the Board. In addition, members of committees receive additional annual cash retainers as follows:

 

Audit Committee		$	5,000
LCP Committee		$	5,000
CHR Committee		$	4,000
NCG Committee		$	2,500
RCP Committee		$	2,500
Asset Liability Management Committee		$	2,500

 

The Chairman of the Board receives an additional annual cash retainer of $24,000, and the chairs of each committee receive an additional annual cash retainer, as follows:

 

Audit Committee		$	10,000
LCP Committee		$	8,000
CHR Committee		$	9,000
NCG Committee		$	9,000
RCP Committee		$	9,000
Asset Liability Management Committee		$	9,000

In addition, the directors receive an annual grant of restricted stock in the second quarter of the year. For 2021, the value of the restricted stock grant was reduced to approximately $41,000, in line with updated market compensation data.

DIRECTOR STOCK OWNERSHIP GUIDELINES

Each director is encouraged to own shares of common stock of the Company at a level that demonstrates a meaningful commitment to the Company and the Bank, and to better align the director’s interests with the Company’s stockholders. A director’s stock ownership will be one of the factors considered in deciding whether to nominate or appoint a director to the Board of Directors of the Company.

All directors should acquire shares of the Company’s common stock valued at three times (3x) the yearly retainer. Directors are expected to meet the ownership standards set forth herein within five years from April 25, 2018, the date the guidelines were approved by the CHR Committee, or their first day as a director, whichever is later. Once the guidelines are met, if the stock price decreases, the director will not be required to acquire additional shares. In addition to the stock ownership guidelines described above, each director who acquires shares of Company common stock through the exercise or vesting of a stock option, stock appreciation right or restricted stock will be required to retain fifty percent (50%) of the “net” shares acquired (net of tax impact that the exercise or vesting has on the individual) for at least twelve (12) months following the date of exercise or vesting, or such earlier time if the individual ceases to be a member of the Board as a result of death, disability, illness, resignation, termination or other reason.

As of December 31, 2021, all directors have met the stock ownership guidelines with the exception of Directors Gideon Yu and Gloria J. Lee, each of whom joined our Board in 2021.

 

 

12				Annual Meeting Proxy Statement 2022

PROPOSAL NO. 1    ELECTION OF DIRECTORS

Stockholders are being asked to elect ten (10) director nominees for a one-year term. Subject to their earlier resignation or retirement, directors elected at the Annual Meeting will serve until the 2023 annual meeting of stockholders and until their successors are elected and qualified. Our Board believes that each director nominee satisfies our director qualification standards and accordingly nominates: John J. Ahn, Christie K. Chu, Harry H. Chung, Scott R. Diehl, Bonita I. Lee, Gloria J. Lee, David L. Rosenblum, Thomas J. Williams, Michael M. Yang and Gideon Yu.

BOARD OF DIRECTORS AND NOMINEES

Hanmi’s directors have a mix of experience and backgrounds, including those that started a business and grew it into a substantial entity, holding senior executive positions in large, complex organizations and holding positions of importance within regulatory agencies. In those positions, they have also gained experience in core management skills, such as strategic and financial planning, public company financial reporting, corporate governance, risk management, leadership development and, importantly, a deep understanding of our customers.

In addition to each director nominee’s professional experience, our Board believes that each director nominee has other key attributes that are important to an effective Board of Directors, such as, integrity and demonstrated high ethical standards; sound judgment; analytical skills; the ability to engage management and each other in a constructive and collaborative fashion; diversity of origin, background, experience, and thought; and the commitment to devote significant time and energy to service on our Board and its committees.

None of the director nominees was nominated pursuant to any arrangement or understanding. There are no family relationships among the director nominees or the executive officers of Hanmi.

The following sets forth information with respect to the director nominees.

 

		John J. Ahn         Director since: 2014   Age: 57   Chairman of our Board   Board Committees: NCG, RCP				Experience Mr. Ahn brings more than 30 years of experience in capital markets and financial advisory services to Hanmi. He is currently the founder and Chief Executive Officer of WhiteHawk Capital Partners, a middle market direct lending fund and SEC Registered Investment Advisor. Prior to his role at WhiteHawk, Mr. Ahn served as Chief Executive Officer of Great American Capital Partners, LLC, an SEC Registered Investment Advisor that originated and underwrote senior secured loans across a wide array of industries from 2015 to 2020. From 2004 to 2015, Mr. Ahn served as President of B. Riley & Co., a full-service investment banking firm providing corporate finance, research, sales and trading services, and asset management to corporate and institutional clients. Prior to joining B. Riley, Mr. Ahn held numerous leadership positions in the investment banking and sales and trading sectors. He currently serves on the Board of Directors of Keppel Pacific Oak, an office REIT with properties located in key growth markets in the U.S. and traded on the Singapore Exchange (SGX: CMOU). Mr. Ahn earned his B.A. degree in economics from Williams College.   Qualifications Our Board believes that Mr. Ahn should serve as a director because of his extensive experience and background in investment banking, finance, strategic planning and his strong understanding of institutional investors.

 

 

PROPOSAL NO. 1    ELECTION OF DIRECTORS

 

 

		Christie K. Chu         Director since: 2015   Age: 57   Board Committees: Audit, CHR, NCG				Experience Ms. Chu currently serves as the founder, President and CEO of CKC Accountancy Corporation, a tax management and financial consulting firm. Ms. Chu brings over 30 years of experience as a Certified Public Accountant, the last 25 years at CKC Accountancy Corp, and previous to that at KPMG, Ernst & Young, LLP, and Arthur Anderson & Co. She also served as a past President of the Korean American CPA Society of Southern California, where she has been a board member since 2004. Ms. Chu is a member and past Treasurer of the National Korean American Society of CPAs. She is also a current member of the California Society of Certified Public Accountants. She is a board member and Treasurer of the Pacific Southwest Chapter of the National Association of Corporate Directors. Ms. Chu earned her B.A. degree in business and economics from the University of California, Los Angeles. She also completed the Director Education and Certification Program at the UCLA Anderson School of Management.   Qualifications Our Board believes that Ms. Chu should serve as a director because of her extensive business and accounting background and experiences at several major accounting firms. Ms. Chu understands our core business customer and how to appeal to the next generation of business leaders and the Korean business community.

 

		Harry H. Chung         Director since: 2016   Age: 52   Board Committees: Audit, CHR				Experience Mr. Chung brings over 25 years of experience in capital markets and financial services. He has served as the Chief Operating Officer and Chief Financial Officer of WhiteHawk Capital Partners since 2020. Previously, Mr. Chung served as Chief Operating Officer and Chief Financial Officer of Great American Capital Partners, LLC from 2017 to 2020. Prior to that role, Mr. Chung served as Chief Financial Officer of Breakwater Investment Management, a private investment firm based in Los Angeles, California specializing in direct debt and equity investments in leading lower middle market growth companies. Mr. Chung also served as the Chief Financial Officer of Imperial Capital, a full-service investment bank offering comprehensive services to institutional investors and middle market companies. He also has held numerous leadership positions at Jefferies and Company, Inc., a global investment bank. Mr. Chung earned his B.S. degree in accounting from the University of Illinois at Urbana-Champaign.   Qualifications Our Board believes that Mr. Chung should serve as a director because of his experience in capital markets and financial services, including strategic planning and corporate development. Mr. Chung’s experience as a Chief Financial Officer has provided him with financial expertise that is valuable in his role as chair of the Audit Committee.

 

		Scott R. Diehl         Director since: 2018   Age: 60   Board Committees: CHR, NCG, RCP				Experience Mr. Diehl brings over 30 years of experience from the banking and financial industry, having spent his entire career at Wells Fargo Capital Finance and its predecessor corporation, Foothill Capital Corporation. Prior to his retirement in 2017, Mr. Diehl was a Group Head overseeing the Factoring, Receivable Securitization and Supply Chain Finance lending units. Prior to this role, his Industries Group oversaw the Lender Finance, Technology Finance, Healthcare Finance and Supply Chain Finance business units. Mr. Diehl also served in various other leadership positions related to asset-based lending and commercial finance for Wells Fargo Finance and Foothill Capital Corporation. Mr. Diehl earned his B.A. degree in history from Brown University.   Qualifications Our Board believes that Mr. Diehl should serve as a director because his experience in specialty lending is valuable to the Company. Mr. Diehl’s broad banking experience as an executive at Wells Fargo, and its predecessor, will enable him to positively contribute to the growth of Hanmi and its product lines.

 

 

14				Annual Meeting Proxy Statement 2022

PROPOSAL NO. 1    ELECTION OF DIRECTORS

 

 

		Bonita I. Lee         Director since: April 2019   Age: 59   Board Committees: RCP				Experience Ms. Lee has served as the President and Chief Executive Officer since May 2019. Prior to her promotion to Chief Executive Officer, she served as Senior Executive Vice President and Chief Operating Officer of Hanmi and Hanmi Bank since August 2013. She was promoted to serve as our President on June 15, 2018. She was the Senior Executive Vice President and Chief Operating Officer of BBCN Bank and BBCN Bancorp, Inc., where she was named Acting President and Chief Operating Officer from February 2013 to April 2013 and led an Executive Council carrying out the duties of the Chief Executive Officer during a management transition period at BBCN Bank. Prior to this, Ms. Lee served as director and Regional President of the Western Region for Shinhan Bank America from September 2008 to March 2009. Prior to joining Shinhan Bank America, she served as Executive Vice President and Chief Credit Officer at Nara Bank from April 2005 to September 2008, and as a Member of the Office of the President from March 2006 to September 2008. Ms. Lee earned her B.S. degree in business administration from the University of Illinois at Chicago and completed an executive program in corporate strategy from the University of Chicago Booth School of Business.   Qualifications Our Board believes that Ms. Lee should serve as a director because she brings to the Board her extensive experience in the Korean-American banking industry, her many successes in safely and profitably growing her organization, her business acumen and good relationship with the investors in the Korean-American community.

 

		Gloria J. Lee         Director since: 2021   Age: 44   Board Committees: CHR, NCG				Experience Ms. Lee has served as the Client Relations Partner for Rutan & Tucker, LLP, a full-service law firm in California, since 2014. She is the Chair of the firm’s Business Development Committee and is responsible for the strategic growth of business development opportunities and the implementation of client relationship initiatives for the firm. Before becoming the firm’s Client Relations Partner, Ms. Lee was a transactional real estate attorney from 2011 through 2013 focused on representing lenders on the financing of commercial real estate properties. In April 2020, Ms. Lee co-founded Kwell Laboratories LLC, the exclusive United States distributor, manufacturer and clinical trial sponsor for a leading South Korean biotech company. Ms. Lee serves on numerous non-profit boards, including the Board of the Council of Korean Americans. Ms. Lee is also a past President of the Orange County Asian American Bar Association where she was a board member from 2004-2012. In 2018, Ms. Lee was awarded the California Minority Council Emerging Diversity Leader Award for her contributions promoting diversity within the legal profession and in 2017 was selected by the California Diversity Council as one of Southern California’s Most Powerful and Influential Women. Ms. Lee is a received her B.A. and M.A., with distinction, from Stanford University and her J.D. from the University of California, Berkeley School of Law.   Qualifications Our Board believes that Ms. Lee should serve as a director because of her business development and real estate experience, as well as her focus on diversity, which we believe will enable her to positively contribute to Hanmi’s continued growth and development.

 

 

PROPOSAL NO. 1    ELECTION OF DIRECTORS

 

 

		David L. Rosenblum         Director since: 2014   Age: 69   Vice Chairman of our Board   Board Committees: Audit, CHR, RCP				Experience Mr. Rosenblum is retired and is a former Senior Principal at Deloitte Consulting LLP (1979 to 2013), where he was the National Managing Director of Consulting Corporate Development and a key leader of the Strategy & Operations practice. Mr. Rosenblum is a member of Sage Partners, LLC, a strategic advisory firm, and is also an operating partner of Interlock Equity LP, a private equity firm focused on mid-and lower-mid market business, including technology services and healthcare firms. Mr. Rosenblum currently is a board member of Apply Digital, an Interlock Equity portfolio company. He is also a director of the Library Foundation of Los Angeles, where he chairs the Finance Committee and is a member of the Executive Committee. He is Chair-Emeritus of the Pacific Southwest Chapter of the National Association of Corporate Directors (“NACD”) and previously served on the board of Deloitte Consulting, LLP and as a trustee of Wesleyan University. Mr. Rosenblum earned his B.A. degree in economics from Wesleyan University and his M.B.A. degree in finance from the Wharton School at the University of Pennsylvania.   Qualifications Our Board believes that Mr. Rosenblum should serve as a director because of his strategic planning, mergers and acquisitions, and corporate development experience in assisting financial institutions. In addition, his experience with NACD demonstrates his deep knowledge regarding best practices in running our Board.

 

		Thomas J. Williams         Director since: 2016   Age: 59   Board Committees: Audit, RCP				Experience Mr. Williams brings over 30 years of experience in bank regulation and the broader banking industry. Specifically, Mr. Williams brings extensive experience across a broad range of risk and lending activities. Prior to his retirement in May 2015, Mr. Williams served as Senior Vice President and Chief Risk Officer at BofI Federal Bank, overseeing all risk and control-related functions. Before that role, he served as Executive Director of Commercial Credit Review at Capital One and Director of Regulatory Relations at Silicon Valley Bank. Earlier in his career, Mr. Williams spent five years as Principal Examiner at the Federal Reserve Bank of San Francisco and ten years as a National Bank Examiner with the Office of the Comptroller of the Currency. Mr. Williams earned his B.S. degree in economics from the University of South Dakota.   Qualifications Our Board believes that Mr. Williams should serve as a director because of his broad-based regulatory experience and expertise. In the present regulatory environment, we believe Mr. Williams’ strength in risk management is critical to assisting with the safe and sound operation of the Bank.

 

		Michael M. Yang         Director since: 2016   Age: 60   Board Committees: Audit, CHR, NCG				Experience Mr. Yang brings over 30 years of experience as a successful technology entrepreneur and investor. He is currently the Founder and CEO of Michael Yang Capital Management, LLC, an investment management company that invests in public equities of disruptive technology companies. Prior to his current role, Mr. Yang was Co-Founder and CEO of three technology start-ups that were sold to larger enterprises at significant premiums, including mySimon.com Inc., which was acquired by CNET. Mr. Yang began his career at Xerox Corporation and Samsung Electronics Co., Ltd., where he held positions of increasing responsibility in engineering, marketing and corporate development. Mr. Yang earned his B.S. degree in electrical engineering from the University of California, Berkeley, his M.S. degree in computer science from Columbia University and his M.B.A. degree from the Haas School of Business, University of California, Berkeley.   Qualifications Our Board believes that Mr. Yang should serve as a director because of his executive experience in growing companies, as well as his strategic planning, mergers and acquisitions, corporate development and technological knowledge.

 

 

16				Annual Meeting Proxy Statement 2022

PROPOSAL NO. 1    ELECTION OF DIRECTORS

 

 

		Gideon Yu         Director since: 2021   Age: 51   Board Committees: NCG, RCP				Experience Mr. Yu has more than 20 years of experience as a finance executive, investor and advisor specializing in venture capital, technology and media companies. Mr. Yu is currently a co-owner and the former president of the San Francisco 49ers. Mr. Yu holds the distinction of being the first President of color of any team in the history of the National Football League. Mr. Yu previously served as the Chief Financial Officer of both Facebook and YouTube. Mr. Yu was also a General Partner at Khosla Ventures, a venture capital firm focused on early-stage technology companies, where he led the firm’s investment in Square, Inc., a leading fintech company, and was its first outside board member. Mr. Yu serves as a director of Enjoy Technology, Inc. (Nasdaq: ENJY), a technology-powered platform operating the Smart Last MileTM solution, and Razer, Inc., a multinational technology company that designs and builds a gamer-focused ecosystem, traded on the Hong Kong Exchange (HKG:1337). Mr. Yu currently serves on the Board of Trustees of the Monterey Bay Aquarium and the Council of Korean Americans and is on the National Leadership Council of the Navy SEAL Foundation. Mr. Yu earned his B.S. degree in Industrial Engineering and Engineering Management from Stanford University and received an M.B.A. degree from Harvard Business School.   Qualifications Our Board believes that Mr. Yu should serve as a director because of his executive experience in the finance and technology sectors, as well as his strategic views on digital growth opportunities. We believe Mr. Yu’s experience with managing strategy and risk in a high-growth environment will positively contribute to the development of Hanmi as a leader among regional community banks.

The director nominees receiving a majority of the votes cast, in uncontested elections, will be elected. If an incumbent director is not elected by a majority of votes cast, in an uncontested election, the incumbent director will tender his or her resignation to the Board for consideration. In contested elections, the Company will use plurality voting. Each director nominee has indicated their willingness to serve on our Board. Each proxy will be voted “FOR” the election of such director nominees unless instructions are given on the proxy to vote “AGAINST” such director nominees. In the event a director nominee is unable to serve, your proxy will be voted for an alternative director nominee as determined by our Board. Alternatively, the Board of Directors may adopt a resolution to reduce the size of the Board of Directors. At this time, our Board knows of no reason why any of the nominees might be unable to serve.

OUR BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE

“FOR” EACH OF THE TEN DIRECTOR NOMINEES

 

 

EXECUTIVE OFFICERS

The following sets forth information with respect to the executive officers of the Company. None of the executive officers of the Company were hired pursuant to any arrangement or understanding. There are no family relationships among the directors or the executive officers.

 

Name		Age				Experience and Qualifications
Bonita I. Lee President and Chief Executive Officer (“CEO”); Director			59			For Ms. Lee’s experience and qualifications, see Board of Directors and Nominees beginning on page 13.
Romolo C. Santarosa Senior Executive Vice President and Chief Financial Officer (“CFO”)			65			Mr. Santarosa has served as Senior Executive Vice President and Chief Financial Officer of Hanmi and Hanmi Bank since November 2015, after joining in June 2015, and brings more than 30 years of experience in banking and financial services. Over his career, he has been responsible for leading and directing growth strategies, cost reduction and process improvement initiatives, technology implementations and capital management. Prior to his tenure with the Hanmi and Hanmi Bank, he was Executive Vice President and Chief Operating Officer at Opus Bank for three years, Senior Executive Vice President and Chief Financial Officer and Chief Operating Officer at First California Financial Group, Inc. and its bank subsidiary for 11 years, and served in leadership positions with several West Coast and East Coast financial institutions. Mr. Santarosa is a Certified Public Accountant, was an Audit Senior Manager with Price Waterhouse and earned his B.S. degree in accounting with a minor in mathematics from Ithaca College.
Anthony Kim Executive Vice President and Chief Banking Officer (“CBO”)			54			Mr. Kim serves as Executive Vice President and Chief Banking Officer. He joined Hanmi Bank as Executive Vice President and Chief Lending Officer in September 2013, and served in that capacity until his promotion. Prior to his tenure with Hanmi Bank, he was Senior Vice President and District Manager at BBCN Bank for five years. Mr. Kim has over 25 years of banking experience, with significant expertise in commercial and retail banking. Mr. Kim earned his B.A. degree in business administration from California State University and is a graduate of Pacific Coast Banking School.
Matthew D. Fuhr Executive Vice President and Chief Credit Administration Officer (“CCAO”)			59			Mr. Fuhr has served as Executive Vice President and Chief Credit Administration Officer of Hanmi Bank since March 2017. He previously served as Senior Vice President and Deputy Chief Credit Officer from June 2015 until his promotion. Prior to his tenure with Hanmi Bank, he was Senior Vice President and Credit Administrator at Pacific Western Bank for 13 years. Earlier in his career, Mr. Fuhr served as a Commissioned Bank Examiner with the Federal Deposit Insurance Corporation. Mr. Fuhr earned his B.A. degree in business administration with emphasis in finance from the University of Northern Colorado.

 

 

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EXECUTIVE OFFICERS

 

 

Name		Age				Experience and Qualifications
Min Park Executive Vice President and Chief Credit Risk Officer (“CCRO”)			59			Mr. Park has served as Executive Vice President and Chief Credit Risk Officer of Hanmi Bank since March 2017. He previously served as Executive Vice President and Chief Credit Officer from April 2015 until the organizational change of the credit administration division. Mr. Park joined Hanmi Bank as Executive Vice President and Deputy Chief Credit Officer in August 2014. Prior to his tenure with Hanmi Bank, he was Senior Vice President and Manager of Commercial Business Credit at East West Bank for four years. Mr. Park has over 35 years of banking experience. Mr. Park earned his B.A. degree in business administration from Kansas State University.
Michael Du Senior Vice President and Chief Risk Officer (“CRO”)			49			Mr. Du joined Hanmi Bank in November 2019. He previously served as the Director of Internal Audit for Pacific Western Bank from June 2017 to November 2019 and Vice President of Risk Management for Unify Federal Financial Credit Union from May 2015 to November 2019. Mr. Du served in the United States Air Force/Reserves for over 25 years, and retired with the rank of Command Chief Master Sergeant. He is a Certified Public Accountant and holds certifications in multiple risk and audit disciplines. Mr. Du earned his B.S. degree in accounting and a M.S. in business administration from California State Universities, and completed an executive management program at the University of California, Los Angeles.
Joseph Pangrazio Senior Vice President and Chief Accounting Officer (“CAO”)			63			Mr. Pangrazio joined Hanmi Bank in October 2021. Before joining the Company, Mr. Pangrazio has held accounting and financial positions for various financial institutions for over 25 years, most recently serving as the Senior Manager, Vice President of Accounting Controls and Reporting for Bank of the West in San Francisco, California from April 2015 until July 2021. Mr. Pangrazio is a Certified Public Accountant and started his career working for Arthur Anderson for four years. Mr. Pangrazio earned his B.A. degree in business administration, accounting from California State University, Fullerton and his M.B.A. degree from California Polytechnic State University, San Luis Obispo.

 

 

EXECUTIVE COMPENSATION

 

 

EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

Introduction

This Compensation Discussion and Analysis (“CD&A”) describes our compensation philosophy, methodologies and our current practices with respect to the remuneration programs for our NEOs. The compensation programs of our NEOs are established, evaluated and maintained by the CHR Committee. The CHR Committee is comprised entirely of independent directors as defined by the Nasdaq listing requirements and SEC regulations. The NEOs for the fiscal year ended December 31, 2021 are:

 

•

Bonita I. Lee: President and Chief Executive Officer

 

•

Romolo C. Santarosa: Senior EVP and Chief Financial Officer

 

•

Anthony Kim: EVP and Chief Banking Officer

 

•

Matthew D. Fuhr: EVP and Chief Credit Administration Officer

 

•

Michael Du: SVP and Chief Risk Officer

2021 Financial and Strategic Highlights

In 2021, we delivered strong financial performance, meeting and even exceeding our objectives. We are currently positioned to meet the evolving needs of tomorrow’s customers, while continuing to be a trusted community partner to customers. With pandemic-related uncertainties diminished, strong recoveries of 2020 loan loss provisions, robust loan growth, a favorable mix of low-cost deposits and effective management of credit quality, Hanmi was able to achieve the following results during 2021.

 

Operating Results, Profitability and Value Creation		•  Net income was $98.7 million, an increase of $42.2 million, or 133.9%, over the prior year net income of $42.2 million, showing both the earnings power and the ongoing potential of our Company.   •  Loan production was a record high of $1.81 billion, excluding $133.1 million of second draw Paycheck Protection Program (PPP) loans, demonstrating that our growth strategies are working.   •  Deposits were $5.79 billion, up 9.7% from 2020. Noninterest-bearing deposits increased $675.8 million while interest-bearing deposits decreased by $164.5 million.   •  Efficiency ratio of 52.8%   •  Nonperforming loans were down 84% to $13.4 million, from $83.0 million at December 31, 2020, representing 26 basis points of total loans, reflecting our comprehensive approach to credit management. The allowance for credit losses was 1.41% of loans at December 31, 2021.   •  Dividends of $0.54 per share for 2021, up from $0.52 for 2020. The Board prudently managed capital throughout the pandemic – lowering the dividend in 2020 and then increasing the dividend in 2021 as the uncertainties of the pandemic receded. The 2022 first quarter dividend of $0.22 per share reflects both the Board’s confidence in our performance and the ongoing potential of the Hanmi franchise.

Management Say-On-Pay Results and Stockholder Engagement

The CHR Committee evaluates the Company’s executive compensation programs in light of market conditions, stockholder views, and governance considerations, and makes changes as appropriate. As required by the Dodd-Frank Act, the Company seeks a separate non-binding advisory stockholder vote to

 

 

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EXECUTIVE COMPENSATION

 

 

approve the compensation of its NEOs. At our 2021 annual meeting, our stockholders approved the compensation of our NEOs, with 97.5% of the stockholder vote cast in favor of the advisory say-on-pay proposal, a significant improvement from 2020. The CHR Committee viewed the approval by stockholders of the executive compensation program at such a strong level as evidence that a substantial majority of stockholders are aligned with our executive compensation program.

The Company continued our efforts to actively engage with our stockholders in 2021. We reached out to our top 15 stockholders representing approximately 63% of our outstanding shares and invited them to discuss our executive compensation and governance practices. We received responses from 8 of our investors, 7 of whom advised us that they did not seek to engage at this time. In January 2022, we had a conversation with one of our largest institutional stockholders, representing approximately 14.5% of our shares. During the engagement discussion with this investor, the Company provided an update since our discussion in 2020, noted the changes on the Board and the diversity of our current directors, management changes and our goal of long-term value creation, the changes to our compensation design, capital management and liquidity, as well as our efforts related to ESG. The stockholder provided valuable commentary and insight regarding our positive movement with regard to compensation and the importance of our human capital management strategy. All feedback received was shared and discussed with the full Board.

Pay Program and 2021 Compensation Overview

The CHR Committee establishes and oversees the compensation practices, including the determination of base salary and annual and long-term incentives. The CHR Committee understands the importance of human capital management to our long-term success. We believe that our executive compensation design is generally aligned with our peer market norms for quantum and design. Compensation plans are designed to encourage the achievement of strategic objectives, to create stockholder value, to recognize individual performance, and to allow the Company to effectively compete for, retain and motivate talented executives critical to its success.

 

Element

Type

2021 Highlights

Base Salary

Fixed

When setting base salaries, the CHR Committee considers factors such as experience, responsibilities, job performance, and market compensation information.   In 2021, the CHR Committee approved base salary increases for all NEOs in 2021.

Short-Term Cash Incentive Compensation (Annual Incentive Plan)

Variable

The Company maintains a performance-based annual cash incentive plan for the NEOs, which is contingent on the achievement of pre-established financial results for the Company and individual performance objectives tied to each NEO’s specific role and responsibilities. The financial performance metrics have threshold, target and maximum goals to further align pay with performance.   As in years past, the CHR Committee established target incentive award opportunities for each NEO and assessed performance relative to established goals. Resulting annual incentive payouts for each NEO are summarized in the table below:

Executive

Annual Cash Incentive (% of Target)

Annual Cash Incentive (% of Salary)

Ms. Lee

135%

102%

Mr. Santarosa

130%

65%

Mr. Kim

129%

51%

Mr. Fuhr

137%

48%

Mr. Du

124%

31%

 

 

EXECUTIVE COMPENSATION

 

 

Element

Type

2021 Highlights

Long-Term   Incentive Awards   (Equity)

The CHR Committee, in its discretion, determines equity grants for the NEOs after considering each executive’s performance, previous grant history, stock ownership level, comparison to our peer group, and retention needs.

•  In 2021, the CHR Committee adopted a new long-term incentive award program for NEOs using a mix of 45% time-based restricted stock and 55% performance-based restricted stock units. The time-based restricted stock will vest in equal installments over three years beginning on the first anniversary of the date of grant. The performance-based restricted stock units will vest at the end of the three-year performance period based on the Company’s Total Shareholder Return (“TSR”) relative to companies in the KBW Regional Banking Index for the three-year performance period. No shares will be issued unless the Company’s TSR is positioned at or above the 35th percentile for the three-year performance period.

Good Governance

The Company is committed to pay for performance and sound compensation and governance practices, including the following:

 

•

A clawback policy applicable to all executive officers which was adopted in 2018.

 

•

Stock ownership guidelines established for the CEO and CFO.

 

•

No excise tax gross-up payments.

 

•

No dividends are accrued or paid on unvested shares of performance-based awards.

 

•

No hedging or pledging transactions.

 

•

A focus on variable compensation, evidenced by the fact that variable, performance-based compensation comprises a majority of our CEO’s pay. The target pay mix for our CEO and other NEOs, on average, is shown in the charts below. Target pay mix includes 2021 salary, 2021 Annual Incentive Plan target, and the grant date fair value of equity awards granted in 2021.

 

 

 

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EXECUTIVE COMPENSATION

 

 

Compensation Objective and Philosophy

The CHR Committee uses competitive compensation data from the annual total compensation study of peer companies to inform its decisions about overall compensation opportunities and specific compensation elements. Additionally, the CHR Committee uses multiple reference points when establishing targeted compensation levels. The CHR Committee does not benchmark specific compensation elements or total compensation to any specific percentile relative to the peer companies or the broader market. Instead, the CHR Committee applies judgment and discretion in establishing targeted pay levels, taking into account not only competitive market data, but also factors such as Company and individual performance, scope of responsibility, critical needs and skill sets, leadership potential and succession planning. All decisions are made in consideration of the key goal of aligning executive pay and performance.

The policies and underlying philosophy governing the Company’s executive compensation program, as endorsed by the CHR Committee and the Board of Directors, are designed to accomplish the following:

 

•

Maintain a compensation program that is equitable in a competitive marketplace.

 

•

Provide opportunities that integrate pay with the Company’s annual and long-term performance goals.

 

•

Align NEO compensation with the Company’s performance.

 

•

Manage the risk profile of the Company by aligning risk mitigation within the performance of individual and Company-wide goals.

 

•

Encourage achievement of strategic objectives and the creation of stockholder value.

 

•

Recognize and reward individual initiative and achievements while managing risk.

 

•

Maintain an appropriate balance between base salary and short- and long-term incentive opportunities.

 

•

Allow the Company to compete for, retain and motivate talented executives critical to its success, consistent with its compensation philosophy.

 

•

Allow the Company to effectively engage institutional stockholders. Hanmi values our stockholders and works to have open two-way communication on all matters of importance. We proactively seek out our stockholders’ opinions, as appropriate.

 

•

Establish bonus and equity plans subject to “clawback” in the event of material inaccurate financial statements or materially inaccurate performance metric criteria resulting in the payment of excess incentive compensation.

 

•

Foster an ownership culture among the chief executive officer, chief financial officer and the directors through minimum stock ownership guidelines.

Compensation Determination Process

Role of CHR Committee

The CHR Committee is responsible for the creation, implementation, and administration of the overall compensation program for the CEO and other senior executive officers. The CHR Committee takes into consideration the recommendations of the CEO for executive officers other than the CEO, as well as considering and making recommendations concerning compensation, benefit plans, and implementation of sound personnel policies and practices Company wide. The CHR Committee has the following responsibilities:

 

•

Review the overall human resource development and compensation strategy for the CEO, executive officers, and directors.

 

•

Lead the Board in its annual review of executive management’s performance.

 

•

Evaluate CEO performance, set annual goals and evaluate total compensation.

 

 

EXECUTIVE COMPENSATION

 

 

•

Evaluate compensation recommendations from the CEO for other NEOs.

 

•

Evaluate the annual executive incentive compensation plan in light of participation, goals and budgetary considerations.

 

•

Review broad-based incentive compensation plans to ensure compliance with regulations and laws.

 

•

Administer the Company’s long-term incentive program.

The CHR Committee approves compensation for all NEOs other than the CEO. The CHR Committee discloses all compensation decisions related to the CEO to the full Board of Directors. The full Board has ultimate responsibility for determining the compensation of our CEO, after considering the recommendation from the CHR Committee.

Role of Compensation Consultant

In 2021, the CHR Committee retained the services of Aon’s Human Capital Solutions practice, a division of Aon plc (otherwise known as McLagan), to provide executive compensation consulting services. McLagan helped facilitate the executive officer compensation process, including the creation of a compensation peer group for comparing our NEOs’ compensation to the market. McLagan reported directly to the CHR Committee, who has the authority, in its sole discretion, to retain any adviser to assist in the performance of its duties or to terminate any advisor to the CHR Committee. The CHR Committee determined that McLagan is independent and that there is no conflict of interest resulting from retaining McLagan during 2021 after taking into account the factors set forth in the SEC rules.

Role of Management

Management assists the CHR Committee in recommending agenda items for its meetings and by gathering and producing information for these meetings. The CEO and other executive officers may participate in CHR Committee meetings to provide background information and other requested items, but are not present during the voting or discussions of their own compensation. The CEO provides recommendations to the CHR Committee for the other NEOs regarding compensation, performance goals, and other employment-related matters, such as hiring, promotions, terminations or severance payments. The CHR Committee considers the CEO’s recommendations but retains authority to approve or recommend to the Board of Directors compensation decisions to be approved.

Peer Group

In April 2021, the CHR Committee worked with McLagan to construct a peer group of banking companies with assets at the time of selection generally between $3.0 and $12.0 billion that have similar business models and that are likely to compete with Hanmi for executive talent. The peer group was modified from 2020 to reflect peer asset size changes and acquisitions. The following changes were made to the 2021 peer group: Farmers & Merchants Bancorp and Peapack-Gladstone Financial Corp. were added; Century Bancorp Inc. was removed as they were acquired; and CVB Financial Corp. and First Financial Bankshares were removed as they were no longer appropriate peers for the Company. Although the decisions regarding the compensation levels are guided by the information provided from the peer group and market survey data, the CHR Committee does not commit to setting our executive pay levels at any particular percentile of the peer group. The CHR Committee also takes into account the prevailing economic environment, individual performance, experience and the current financial condition of Hanmi. The 2021 peer group was as follows:

 

 

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EXECUTIVE COMPENSATION

 

 

Allegiance Bancshares Inc.		National Bank Holdings Corporation
Banc of California Inc.		PCB Bancorp
Bank of Marin Bancorp		Peapack-Gladstone Financial Corp.
Central Pacific Financial Corp.		Preferred Bank
Farmers & Merchants Bancorp		RBB Bancorp
First Foundation Inc.		Sierra Bancorp
Heritage Commerce Corp.		Southside Bancshares Inc.
Heritage Financial Corp.		TriCo Bancshares
Lakeland Bancorp Inc.		Triumph Bancorp Inc.
Meridian Bancorp Inc.		Westamerica Bancorporation

2021 Pay Components and Compensation Decisions

Base Salary

Annual base salaries are the fixed portion of our NEOs’ cash compensation and are intended to reward the day-to-day aspects of their roles and responsibilities and to reflect the value that they bring to the Company. Our NEOs’ annual salaries are established after taking into account several factors including the executive’s experience, responsibilities, management abilities, job performance and market compensation information. The CHR Committee believes that the 2021 base salaries of Hanmi’s NEOs are competitive with companies of similar size, including those in the peer group.

Pay adjustments, if any, are generally made annually, after reviewing overall Company performance, individual performance and the affordability of the increases. In 2021, the CHR Committee approved base salary increases for all NEOs, ranging from 5% to 24%. The CHR Committee determined the salary increases for the NEOs based on individual officer performance, the breadth of specific duties and responsibilities assigned to each officer, and a compensation comparison to external market data. The Company approved the CEO’s base salary increase for 2021 in an amendment to the CEO’s employment agreement. The amendment to the CEO’s employment agreement became effective on July 30, 2021, but the CEO’s 2021 base salary of $650,000 was retroactively effective as of April 4, 2021.

The table below shows the NEOs’ annual base salaries in 2020 and 2021.

 

Name		Title					2020 Base Salary					Increase Percentage					2021 Base Salary
Bonita I. Lee		President & CEO						$	525,000					24	%			$	650,000
Romolo C. Santarosa		Sr. EVP & CFO						$	400,000					5	%			$	420,000
Anthony Kim		EVP & CBO						$	267,157					12	%			$	300,000
Matthew D. Fuhr		EVP & CCAO						$	266,508					5	%			$	280,000
Michael Du1		SVP & CRO							—					—				$	239,113

 

(1)	Mr. Du was not a Named Executive Officer in 2020.

Short-Term Cash Incentives – Annual Incentive Plan (“AIP”)

In accordance with Hanmi’s compensation philosophy, a significant portion of the compensation of our NEOs is performance-based and payable only if pre-established Company and individual performance objectives are achieved. For each NEO, target AIP bonuses are stated as a percentage of annual base salary. Under the terms of the CEO’s amended employment agreement, the 2021 target AIP bonus payable to the CEO was reduced from 100% to 75% of her annual base salary. In addition, the CEO’s target payout cap was removed and replaced with a maximum payout opportunity of 112.5% of the CEO’s annual base salary. The target AIP bonuses payable to the other NEOs for 2021 performance were, as a percentage of their respective annual base salary, as follows: Mr. Santarosa – 50%, Mr. Kim – 40%, Mr. Fuhr – 35%, and Mr. Du – 25%.

 

 

EXECUTIVE COMPENSATION

 

 

The CHR Committee reviews performance against pre-established financial and non-financial goals on an annual basis to determine the short-term cash incentive compensation of our NEOs. Awards under the AIP are substantially based on formulaic scorecard results across weighted performance measure categories. The CHR Committee reviewed and approved scorecards for each NEO to be used for 2021 performance, which are summarized in the tables below. Payments under the AIP are contingent upon the achievement of pre-established goals relating to objective Company financial metrics for all NEOs, and upon the goals specific to each NEO’s area of responsibility. Each of the metrics has an assigned weight and the CHR Committee established threshold, target, and maximum performance levels for each of the Company financial metrics.

In 2021, the CHR Committee set the threshold payout at 50% of each NEO’s target opportunity upon attaining a threshold level of all the metrics, a target payout of 100% upon attaining 100% of the target level of all the metrics, and a maximum payout of 150% of the target opportunity upon attaining certain maximum performance levels. Payouts are interpolated on a straight-line basis for achievement for a particular performance metric between these three levels of performance.

The measurements in the AIP for all NEOs are based on the approved 2021 budget in the strategic plan. For 2021, all NEOs were allocated certain weightings of three corporate financial measures: return on average assets (“ROAA”), non-performing assets to total assets ratio (“NPA/Total Assets”), and efficiency ratio. As shown in the table below, all three corporate financial measures were earned at maximum.

 

		Performance Goals						Actual Result		Actual Result as % of Target
Metric		Threshold		Target		Maximum
ROAA		0.63%		0.79%		0.87%		1.64%		150%
NPA/Assets		2.20%		1.83%		1.46%		0.20%		150%
Efficiency Ratio		63.34%		57.58%		54.70%		52.84%		150%

Each of the NEOs also had additional objective metrics to reflect each individual’s specific area of control and responsibility, while retaining accountability for overall Company profitability, risk management and regulatory compliance. The AIP was designed to allow for objective goal measurement while also allowing for the exercise of judgment by the CHR Committee and the Board of Directors. If an NEO has met or exceeded the requirements for a specific goal, the NEO is given 100% credit for the weighting of a particular category. However, if a category is met at the minimum expected level, the NEO is given 50% credit for the weighting of a particular credit. Achievement between threshold and target, and target and maximum, is interpolated on a straight-line basis.

 

 

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Performance measures, weightings, target award opportunities, and results for each NEO are summarized in the tables below.

Bonita Lee – President & CEO

 

				Performance Goals
		Weight		Threshold		Target		Maximum		Actual		Achievement %
ROAA		20%		0.63%		0.79%		0.87%		1.64%		30%
NPA/Assets		20%		2.20%		1.83%		1.46%		0.2%		30%
Efficiency Ratio		20%		63.34%		57.58%		54.70%		52.84%		30%
Risk Management		10%		Based on bank risk management results						See footnote (1)		10%
Strategic Plan / Project		20%		Based on completion of strategic plan business initiatives						See footnote (2)		20.2%
Discretionary		10%		Discretionarily assessed based on personal performance factors						See footnote (3)		12.5%
Eligible Salary												$650,000
Target % of Salary												75%
% Achieved												135%
Payout % of Base Salary												101.55%
Actual Payout												$660,750

 

(1)	In its evaluation of Ms. Lee’s performance, the CHR Committee based achievement on the Company’s effective risk management results for the performance period.

 

(2)	The strategic plan/project metric achievement is based on the completion of strategic plan initiatives and projects.

 

(3)	The discretionary metric achievement is based on the progress on key operational and strategic initiatives.

 

 

EXECUTIVE COMPENSATION

 

 

Romolo Santarosa – Sr. EVP & CFO

 

				Performance Goals
		Weight		Threshold		Target		Maximum		Actual		Achievement %
ROAA		20%		0.63%		0.79%		0.87%		1.64%		30%
NPA/Assets		15%		2.20%		1.83%		1.46%		0.20%		22.5%
Efficiency Ratio		15%		63.34%		57.58%		54.70%		52.84%		22.5%
Risk Management		10%		Based on bank risk management results						See footnote (1)		9.8%
Strategic Plan / Project		30%		Based on completion of strategic plan business initiatives						See footnote (2)		30%
Discretionary		10%		Discretionarily assessed based on personal performance factors.						See footnote (3)		12.5%
Eligible Salary												$420,000
Target % of Salary												50%
% Achieved												130%
Payout % of Base Salary												64.80%
Actual Payout												$272,160

 

(1)	In its evaluation of Mr. Santarosa’s performance, the CHR Committee based achievement on the Company’s effective risk management results for the performance period.

 

(2)	The CHR Committee based achievement of the strategic plan / project metric on the progress on four strategic growth initiatives.

 

(3)	The CHR Committee based achievement of the discretionary component on the progress on key operational and strategic initiatives.

 

 

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EXECUTIVE COMPENSATION

 

 

Anthony Kim – EVP & CBO

 

				Performance Goals
		Weight		Threshold		Target		Maximum		Actual		Achievement %
ROAA		10%		0.63%		0.79%		0.87%		1.64%		15%
NPA/Assets		10%		2.20%		1.83%		1.46%		0.075%(1)		15%
Efficiency Ratio		10%		63.34%		57.58%		54.70%		52.84%		15%
Loan Balance		10%		~$3.25B		~$4.3B		~$5.4B		~$4.5B		10.3%
Loan Production Budget		5%		~$703.5M		~$938M		~$1.17B		~$1.4B		7.3%
Deposit Balance		10%		~$3.6B		~$4.8B		~$5.9		~$5.5B		11.5%
Income Budget		10%		~$54.5M		~$72.6M		~$90.8M		~$97.45M		13.4%
Residential Mortgage		5%		$157.5M		$210M		$267.5M		$336.7M		8.0%
CRM / OAO		5%		Based on internal review of CRM system						See footnote (2)		2.5%
Risk Management		10%		Based on bank risk management results and internal and external audit reviews						See footnote (3)		8.8%
Discretionary		15%		Discretionarily assessed based on personal performance factors						See footnote (4)		18.75%
Eligible Salary												$300,000
Target % of Salary												40%
% Achieved												129%
Payout % of Base Salary												51.44%
Actual Payout												$154,324

 

(1)	As applied to Mr. Kim’s assigned divisions, which excludes Small Business Administration loans and commercial equipment leasing division.

 

(2)	For the CRM / OAO metric, the CHR Committee based achievement on the Company’s evaluation of the current CRM system compared to other CRM options in the market.

 

(3)	In its evaluation of Mr. Kim’s performance, the CHR Committee based achievement related to the Company’s effective risk management and internal and external audit results.

 

(4)	In its evaluation of Mr. Kim’s performance, the CHR Committee based achievement on certain financial metrics in specific regions.

 

 

EXECUTIVE COMPENSATION

 

 

Matthew Fuhr – EVP & CCAO

 

				Performance Goals
		Weight		Threshold		Target		Maximum		Actual		Achievement %
ROAA		15%		0.63%		0.79%		0.87%		1.64%		22.5%
NPA/Assets		15%		2.20%		1.83%		1.46%		0.20%		22.5%
Efficiency Ratio		10%		63.34%		57.58%		54.70%		52.84%		15%
Risk Management		30%		Based on bank risk management results and, audit and key operational initiatives						See footnote (1)		36%
Strategic Plan / Project		20%		Based on support of initiatives in business units and transition of CELD leadership						See footnote (2)		20%
Discretionary		10%		Discretionarily assessed based on personal performance factors						See footnote (3)		12.5%
Eligible Salary												$280,000
Target % of Salary												35%
% Achieved												137%
Payout % of Base Salary												47.95%
Actual Payout												$134,260

 

(1)	In its evaluation of Mr. Fuhr’s performance, the CHR Committee based achievement on internal and external audit ratings, the Company’s effective risk management, and progress on other key operational initiatives related to risk management.

 

(2)	In its evaluation of Mr. Fuhr’s performance, the CHR Committee based achievement on Mr. Fuhr supporting key strategic and operational initiatives in certain business units.

 

(3)	In its evaluation of Mr. Fuhr’ s performance, CHR Committee based achievement on the completion of key operational and strategic initiatives.

 

 

30				Annual Meeting Proxy Statement 2022

EXECUTIVE COMPENSATION

 

 

Michael Du – SVP & CRO

 

				Performance Goals
		Weight		Threshold		Target		Maximum		Actual		Achievement %
ROAA		20%		0.63%		0.79%		0.87%		1.64%		30%
NPA/Assets		10%		2.20%		1.83%		1.46%		0.20%		15%
Efficiency Ratio		10%		63.34%		57.58%		54.70%		52.84%		15%
BSA		15%		Based on enhancements to BSA program						See footnote (1)		18.75%
Information Security		15%		Based on enhancements to information security program and compliance management system						See footnote (2)		14%
Compliance		10%		Based on enhancements to compliance management system						See footnote (3)		7.5%
Risk Management		10%		Based on enhancements to risk management program and internal audit reviews						See footnote (4)		9%
Discretionary		10%		Discretionarily assessed based on personal performance factors						See footnote (5)		12.5%
Eligible Salary												$239,113
Target % of Salary												25%
% Achieved												124%
Payout % of Base Salary												30.88%
Actual Payout												$73,826

 

(1)	In its evaluation of Mr. Du’s performance, the CHR Committee based achievement on the completion of operational and risk management goals related to the Bank Security Act (“BSA”) program.

 

(2)	In its evaluation of Mr. Du’s performance, the CHR Committee based achievement on the progress made on IT strategy and data security goals.

 

(3)	In its evaluation of Mr. Du’s performance, the CHR Committee based achievement on the progress made on improving the Company’s compliance programs.

 

(4)	In its evaluation of Mr. Du’s performance, the CHR Committee based achievement on successfully leading enhancements to the Company’s risk management programs.

 

(5)	In its evaluation of Mr. Du’s performance, the CHR Committee based achievement on the progress made on risk management of the Company’s key strategic initiatives.

Long-Term Incentives

Long-term incentive awards, such as stock options, restricted stock and performance stock units, are the third key component of our NEOs’ total compensation. The CHR Committee believes employee stock ownership is significant for our NEOs, thereby aligning the interests of employees and stockholders. The CHR Committee also believes equity-based compensation complements the short-term cash incentive compensation and helps balance short-term decisions with long-term outcomes. This compensation approach limits an executive’s ability to reap short-term gains at the expense of Hanmi’s long-term success. This is also an important tool in retaining NEOs.