Hanmi Financial Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurements (Tables)

Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2013

Assets and Liabilities Measured at Fair Value on Recurring Basis

As of September 30, 2013 and December 31, 2012, assets and liabilities measured at fair value on a recurring basis are as follows:


	Level 1		Level 2		Level 3
			Significant
			Observable
	Quoted Prices in		Inputs with No
	Active Markets		Active Market		Significant
	for Identical		with Identical		Unobservable
	Assets		Characteristics		Inputs		Balance
	(In thousands)
September 30, 2013
Assets:
Debt securities available-for-sale:
Mortgage-backed securities	$	—	$	127,085	$	—	$	127,085
U.S. government agency securities		92,878		—		—		92,878
Collateralized mortgage obligations		—		85,110		—		85,110
Municipal bonds-tax exempt		—		5,730		756		6,486
Municipal bonds-taxable		—		34,788		—		34,788
Corporate bonds		—		20,483		—		20,483
SBA loan pools securities		—		12,921		—		12,921
Other securities		—		2,921		—		2,921

Total debt securities available-for-sale		92,878		289,038		756		382,672

Equity securities available-for-sale:
Financial services industry		385		—		—		385

Total equity securities available-for-sale		385		—		—		385

Total securities available-for-sale	$	93,263	$	289,038	$	756	$	383,057

Liabilities:
Stock warrants	$	—	$	—	$	2	$	2

December 31, 2012
Assets:
Debt securities available-for-sale:
Mortgage-backed securities	$	—	$	160,326	$	—	$	160,326
Collateralized mortgage obligations		—		100,487		—		100,487
U.S. government agency securities		93,118		—		—		93,118
Municipal bonds-tax exempt		—		12,033		779		12,812
Municipal bonds-taxable		—		46,142		—		46,142
Corporate bonds		—		20,400		—		20,400
SBA loan pools securities		—		14,026		—		14,026
Other securities		—		3,357		—		3,357

Total debt securities available-for-sale		93,118		356,771		779		450,668

Equity securities available-for-sale:
Financial services industry		392		—		—		392

Total equity securities available-for-sale		392		—		—		392

Total securities available-for-sale	$	93,510	$	356,771	$	779	$	451,060

Liabilities:
Stock warrants	$	—	$	—	$	906	$	906

Reconciliation and Income Statement Classification of Gains and Losses for All Assets and Liabilities

The table below presents a reconciliation and income statement classification of gains and losses for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the nine months ended September 30, 2013:


									Unrealized
									Gains or
	Beginning		Purchases			Realized			Losses			Ending
	Balance as of		Issuances,			Gains or			in Other			Balance as of
	January 1,		and			Losses			Comprehensive			September 30,
	2013		Settlement			In Earnings			Income			2013
	(In thousands)
Assets:
Municipal bonds-tax exempt ⁽¹⁾	$	779	$	—		$	—		$	(23	)	$	756
Liabilities:
Stock warrants ⁽²⁾	$	906	$	(843	)	$	(61	)	$	—		$	2

(1)

Reflects a zero coupon tax credit municipal bond. As the Company was not able to obtain a price from independent external pricing service providers, the discounted cash flow method was used to determine its fair value. The bond carried a par value of $700,000 and an amortized value of $699,000 with a remaining life of 1.5 years at September 30, 2013.

(2)

Reflects warrants for our common stock issued in connection with services Cappello Capital Corp. provided to us as a placement agent in connection with our best efforts public offering and as our financial adviser in connection with our completed rights offering. The warrants were immediately exercisable when issued at an exercise price of $9.60 per share of our common stock and expire on October 14, 2015. See “Note 5 – Stockholders’ Equity” for more details.

Assets and Liabilities Measured at Fair Value on Non-Recurring Basis

As of September 30, 2013 and December 31, 2012, assets and liabilities measured at fair value on a non-recurring basis are as follows:

Level 1

Level 2

Level 3

Significant

Observable

Quoted Prices in

Inputs With No

Active Markets

Active Market

Significant

Loss During The

for Identical

With Identical

Unobservable

Nine Months Ended

Assets

Characteristics

Inputs

September 30, 2013

(In thousands)

September 30, 2013

Assets:

Non-performing loans held for sale

—

Impaired loans ⁽¹⁾

—

30,353

1,099

1,048

Other real estate owned ⁽²⁾

—

290

—

Level 1

Level 2

Level 3

Significant

Observable

Quoted Prices in

Inputs With No

Active Markets

Active Market

Significant

Loss During The

for Identical

With Identical

Unobservable

Twelve Months Ended

Assets

Characteristics

Inputs

December 31, 2012

(In thousands)

December 31, 2012

Assets:

Non-performing loans held for
sale ⁽³⁾

—

484

—

3,747

Impaired loans ⁽⁴⁾

—

27,844

8,888

580

Other real estate owned ⁽⁵⁾

—

774

—

301

(1)

Includes real estate loans of $6.4 million, commercial and industrial loans of $23.8 million, and consumer loans of $1.2 million.

(2)

Includes properties from the foreclosure of a residential property loan of $290,000.

(3)

Includes a SBA loan of $484,000.

(4)

Includes real estate loans of $8.7 million, commercial and industrial loans of $27.0 million, and consumer loans of $1.0 million.

(5)

Includes properties from the foreclosure of real estate loans of $774,000.

Estimated Fair Values of Financial Instruments

The estimated fair values of financial instruments were as follows:


	September 30, 2013				December 31, 2012
	Carrying or				Carrying or
	Contract		Estimated		Contract		Estimated
	Amount		Fair Value		Amount		Fair Value
	(In thousands)
Financial assets:
Cash and cash equivalents	$	193,854	$	193,854	$	268,047	$	268,047
Restricted cash		—		—		5,350		5,350
Investment securities available-for-sale		383,057		383,057		451,060		451,060
Loans receivable, net of allowance for loan losses		2,102,621		2,096,928		1,986,051		1,981,669
Loans held for sale		5,228		5,228		8,306		8,306
Accrued interest receivable		6,957		6,957		7,581		7,581
Investment in federal home loan bank stock		14,060		14,060		17,800		17,800
Investment in federal reserve bank stock		13,200		13,200		12,222		12,222
Financial liabilities:
Noninterest-bearing deposits		778,345		778,345		720,931		720,931
Interest-bearing deposits		1,651,362		1,656,011		1,675,032		1,680,211
Borrowings		2,645		2,674		85,341		85,414
Accrued interest payable		2,705		2,705		11,775		11,775
Off-balance sheet items:
Commitments to extend credit		225,070		190		182,746		146
Standby letters of credit		9,326		42		10,588		24

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

+ References + Details

- Definition

Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

+ References + Details