Hanmi Financial Corporation Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Fair Value Measurements (Tables)

Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2013

Assets and Liabilities Measured at Fair Value on Recurring Basis

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


	Level 1		Level 2		Level 3
	Quoted Prices in Active Markets for Identical Assets		Significant Observable Inputs with No Active Market with Identical Characteristics		Significant Unobservable Inputs		Balance
	(In thousands)
December 31, 2013
Assets:
Debt securities available for sale:
Mortgage-backed securities	$	—	$	217,059	$	—	$	217,059
Collateralized mortgage obligations		—		127,693		—		127,693
U.S. government agency securities		83,536		—		—		83,536
Municipal bonds-tax exempt		—		13,189		748		13,937
Municipal bonds-taxable		—		32,354		—		32,354
Corporate bonds		—		20,835		—		20,835
SBA loan pools securities		—		12,629		—		12,629
U.S. treasury bills		19,997		—		—		19,997
Other securities		—		2,886		—		2,886

Total debt securities available for sale		103,533		426,645		748		530,926

Total securities available for sale	$	103,533	$	426,645	$	748	$	530,926

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 year ended December 31, 2013:


	Beginning Balance as of January 1, 2013		Purchases Issuances, and Settlement			Realized Gains or Losses In Earnings			Unrealized Gains or Losses in Other Comprehensive Income			Ending Balance as of December 31, 2013
	(In thousands)
Assets:
Municipal bonds-tax exempt ⁽¹⁾	$	779	$	—		$	—		$	(31	)	$	748
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 1.2 years at December 31, 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 9 – Stockholders’ Equity” for more details.

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

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


	Level 1		Level 2		Level 3
	Quoted Prices in Active Markets for Identical Assets		Significant Observable Inputs With No Active Market With Identical Characteristics		Significant Unobservable Inputs		Loss During The Years Ended
	(In thousands)
December 31, 2013
Assets:
Non-performing loans held for sale	$	—	$	—	$	—	$	—
Impaired loans ⁽¹⁾		—		36,254		1,738		2,431
Other real estate owned ⁽²⁾		—		756		—		10
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 $8.6 million, commercial and industrial loans of $28.1 million, and consumer loans of $1.3 million.

⁽²⁾

Includes properties from the foreclosure of a residential property loan of $756,000.

⁽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:


	December 31, 2013				December 31, 2012
	Carrying or Contract Amount		Estimated Fair Value		Carrying or Contract Amount		Estimated Fair Value
	(In thousands)
Financial assets:
Cash and cash equivalents	$	179,357	$	179,357	$	268,047	$	268,047
Restricted cash		—		—		5,350		5,350
Investment securities available for sale		530,926		530,926		451,060		451,060
Loans receivable, net of allowance for loan losses		2,177,498		2,204,069		1,986,051		1,981,669
Loans held for sale		—		—		8,306		8,306
Accrued interest receivable		7,055		7,055		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		11,196		11,196		12,222		12,222
Financial liabilities:
Noninterest-bearing deposits		819,015		819,015		720,931		720,931
Interest-bearing deposits		1,693,310		1,693,739		1,675,032		1,680,211
Borrowings		127,546		127,249		85,341		85,414
Accrued interest payable		3,366		3,366		11,775		11,775
Off-balance sheet items:
Commitments to extend credit		246,161		190		182,746		146
Standby letters of credit		8,926		25		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.

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- 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.

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