Annual report pursuant to Section 13 and 15(d)

Sale of Insurance Subsidiaries and Discontinued Operations

v2.4.1.9
Sale of Insurance Subsidiaries and Discontinued Operations
 12 Months Ended
Dec. 31, 2014
Discontinued Operations and Disposal Groups [Abstract]  
Sale of Insurance Subsidiaries and Discontinued Operations

Note 4 — Sale of Insurance Subsidiaries and Discontinued Operations

In June 2014, Hanmi Financial sold its insurance subsidiaries, Chun-Ha and All World, and entered into a stock purchase agreement for their sale. The subsidiaries were classified as held for sale in April 2014 and accounted for as discontinued operations. The operations and cash flows of the businesses have been eliminated and in accordance with the provisions of ASC 205, Presentation of Financial Statements, the results are reported as discontinued operations for all periods presented.

Hanmi Financial completed the sale of its two insurance subsidiaries to Chunha Holding Corporation on June 30, 2014 when total assets and net assets of Chun-Ha and All World were $5.6 million and $3.3 million as of June 30, 2014, respectively. The total sales price was $3.5 million, of which $2.0 million was paid upon signing. The $2.0 million was reduced by $1.6 million cash and cash equivalents included in net assets of Chun-Ha and All World, resulting in $398,000 net cash proceeds. The remaining $1.5 million will be payable in three equal installments on each anniversary of the closing date through June 30, 2017.

The sale resulted in a $51,000 gain, offset by a $470,000 capital gain tax, a $14,000 operating losses and an $11,000 income tax expense. Consequently, the net loss from discontinued operations for the year ended December 31, 2014 was $444,000, or $0.01 per diluted share. For the year ended December 31, 2014, the discontinued operations generated noninterest income, primarily in the line item for insurance commissions, of $2.7 million and incurred noninterest expense of $2.7 million in various line items.

 

Summarized financial information for our discontinued operations related to Chun-Ha and All World are as follows:

 

     2014      2013      2012  
    

(In thousands)

  

Noninterest (loss) income

    $ (14 )     $ 115       $ 287   

Gain on disposal

      51         —           —     
  

 

 

     

 

 

     

 

 

  

Income before taxes

 $ 37    $ 115    $ 287   

Provision for income taxes

   481      42      120   
  

 

 

     

 

 

     

 

 

  

Net (loss) income from discontinued operations

 $ (444 )  $ 73    $ 167   
  

 

 

     

 

 

     

 

 

  

Total assets

 $ —      $ 5,944   
  

 

 

     

 

 

     

Net assets of discontinued operations

 $ —      $ 2,469