Quarterly report pursuant to Section 13 or 15(d)

Regulatory Matters

v3.10.0.1
Regulatory Matters
 9 Months Ended
Sep. 30, 2018
Banking and Thrift [Abstract]  
Regulatory Matters
Regulatory Matters

In July 2013, the Board of Governors of the Federal Reserve, the Office of the Comptroller of the Currency and the FDIC approved the Basel III regulatory capital framework and related changes under the Dodd-Frank Wall Street Reform and Consumer Protection Act. The rules revise minimum capital requirements and adjust prompt corrective action thresholds. The rules also revise the regulatory capital elements, add a new common equity Tier I capital ratio, and increase the minimum Tier I capital ratio requirement. The revisions permit banking organizations to retain, through a one-time election, the existing treatment for accumulated other comprehensive income. Basel III rules, including certain transitional provisions, became effective January 1, 2015, and its requirements are included in the capital ratios presented in the table shown below.

In addition, a new capital conservation buffer of 2.5% began to be phased in effective January 1, 2016 through January 1, 2019, and must be met to avoid limitations on the ability of the Bank to pay dividends, repurchase shares or pay discretionary bonuses. In January 2016, the new capital conservation buffer requirement was 0.625% of risk-weighted assets and will increase each year until fully implemented in January 2019. The Company and the Bank's capital conservation buffer was 6.21% and 6.76%, respectively, as of September 30, 2018, and 6.55% and 7.20%, respectively, as of December 31, 2017.

As a result of the recently enacted Economic Growth, Regulatory Relief, and Consumer Protection Act, the federal banking agencies are required to develop a “Community Bank Leverage Ratio” (the ratio of a bank’s tangible equity capital to average total consolidated assets) for financial institutions with assets of less than $10 billion.  A “qualifying community bank” that exceeds this ratio will be deemed to be in compliance with all other capital and leverage requirements, including the capital requirements to be considered “well capitalized” under Prompt Corrective Action statutes.  The federal banking agencies may consider a financial institution’s risk profile when evaluating whether it qualifies as a community bank for purposes of the capital ratio requirement. The federal banking agencies must set the minimum capital for the new Community Bank Leverage Ratio at not less than 8% and not more than 10%.  A financial institution can elect to be subject to this new definition.

The capital ratios of Hanmi Financial and the Bank as of September 30, 2018 and December 31, 2017 were as follows:
 
Actual
 
Minimum
Regulatory
Requirement
 
Minimum to Be
Categorized as
“Well Capitalized”
 
Amount
 
Ratio
 
Amount
 
Ratio
 
Amount
 
Ratio
 
(dollars in thousands)
September 30, 2018
 
 
 
 
 
 
 
 
 
 
 
Total capital (to risk-weighted assets):
 
 
 
 
 
 
 
 
 
 
 
Hanmi Financial
$
702,278

 
15.01
%
 
$
374,228

 
8.00
%
 
 N/A

 
N/A

Hanmi Bank
$
689,866

 
14.76
%
 
$
373,906

 
8.00
%
 
$
467,382

 
10.00
%
Tier 1 capital (to risk-weighted assets):
 
 
 
 
 
 
 
 
 
 
 
Hanmi Financial
$
571,146

 
12.21
%
 
$
280,671

 
6.00
%
 
 N/A

 
N/A

Hanmi Bank
$
656,833

 
14.05
%
 
$
280,429

 
6.00
%
 
$
373,906

 
8.00
%
Common equity Tier 1 capital (to risk-weighted assets):
 
 
 
 
 
 
 
 
 
 
 
Hanmi Financial
$
551,575

 
11.79
%
 
$
210,503

 
4.50
%
 
 N/A

 
N/A

Hanmi Bank
$
656,833

 
14.05
%
 
$
210,322

 
4.50
%
 
$
303,798

 
6.50
%
Tier 1 capital (to average assets):
 
 
 
 
 
 
 
 
 
 
 
Hanmi Financial
$
571,146

 
10.53
%
 
$
217,047

 
4.00
%
 
 N/A

 
N/A

Hanmi Bank
$
656,833

 
12.11
%
 
$
217,044

 
4.00
%
 
$
271,304

 
5.00
%
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
Total capital (to risk-weighted assets):
 
 
 
 
 
 
 
 
 
 
 
Hanmi Financial
$
684,272

 
15.50
%
 
$
353,171

 
8.00
%
 
 N/A

 
N/A

Hanmi Bank
$
670,896

 
15.20
%
 
$
353,091

 
8.00
%
 
$
441,364

 
10.00
%
Tier 1 capital (to risk-weighted assets):
 
 
 
 
 
 
 
 
 
 
 
Hanmi Financial
$
553,970

 
12.55
%
 
$
264,878

 
6.00
%
 
 N/A

 
N/A

Hanmi Bank
$
638,557

 
14.47
%
 
$
264,818

 
6.00
%
 
$
353,091

 
8.00
%
Common equity Tier 1 capital (to risk-weighted assets):
 
 
 
 
 
 
 
 
 
 
 
Hanmi Financial
$
537,950

 
12.19
%
 
$
198,658

 
4.50
%
 
 N/A

 
N/A

Hanmi Bank
$
638,557

 
14.47
%
 
$
198,614

 
4.50
%
 
$
286,886

 
6.50
%
Tier 1 capital (to average assets):
 
 
 
 
 
 
 
 
 
 
 
Hanmi Financial
$
553,970

 
10.79
%
 
$
205,344

 
4.00
%
 
 N/A

 
N/A

Hanmi Bank
$
638,557

 
12.44
%
 
$
205,385

 
4.00
%
 
$
256,731

 
5.00
%