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

Quarterly report pursuant to Section 13 or 15(d)

Earnings Per Share

Earnings Per Share

9 Months Ended

Sep. 30, 2016

Earnings per share (“EPS”) is calculated on both a basic and a diluted basis. Basic EPS excludes dilution and is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted from the issuance of common stock that then shared in earnings, excluding common shares in treasury.

For diluted EPS, weighted-average number of common shares included the impact of restricted stock under the treasury method. The Company amended all restricted stock agreements with time-based vesting criterion as of September 1, 2015 to allow for the payment of non-forfeitable dividends on unvested restricted stock, accordingly, we adopted the two-class method for EPS calculation pursuant to Accounting Standards Codification ("ASC") 260-10, Earnings Per Share. Unvested restricted stock containing rights to non-forfeitable dividends are considered participating securities prior to vesting and have been included in the earnings allocation in computing basic and diluted EPS under the two-class method. Basic EPS is computed by dividing net income, net of income allocated to participating securities, by the weighted-average number of common shares. For diluted EPS, weighted-average number of common shares include the diluted effect of stock options.

The following table is a reconciliation of the components used to derive basic and diluted EPS for the periods indicated:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
	(in thousands, except for share and per share data)
Basic EPS:
Net income	$	13,121	$	13,959	$	42,073	$	38,997
Less: income allocated to unvested restricted shares	81		78		258		78
Income allocated to common shares	$	13,040	$	13,881	$	41,815	$	38,919
Weighted-average shares for basic EPS	31,912,470		31,799,573		31,880,466		31,774,047
Basic EPS	$	0.41	$	0.44	$	1.31	$	1.22

Effect of dilutive securities - options and unvested restricted stock	175,763		110,235		150,829		80,977

Diluted EPS:
Income allocated to common shares	$	13,040	$	13,881	$	41,815	$	38,919
Weighted-average shares for diluted EPS	32,088,233		31,909,808		32,031,295		31,855,024
Diluted EPS	$	0.41	$	0.44	$	1.31	$	1.22

For the three months ended September 30, 2016 and 2015, stock options of 12,034 and 29,000, respectively, were not included in the computation of diluted EPS because their effect was anti-dilutive. For the nine months ended September 30, 2016 and 2015, stock options of 74,389 and 57,000, respectively, were not included in the computation of diluted EPS because their effect was anti-dilutive.