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)

6 Months Ended

Jun. 30, 2014

Assets and Liabilities Measured at Fair Value on Recurring Basis

As of June 30, 2014 and December 31, 2013, 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)
June 30, 2014
Assets:
Securities available for sale:
Mortgage-backed securities	$	—	$	214,635	$	—	$	214,635
Collateralized mortgage obligations		—		159,625		—		159,625
U.S. government agency securities		77,864		—		—		77,864
Municipal bonds-tax exempt		—		3,719		728		4,447
Municipal bonds-taxable		—		16,731		—		16,731
Corporate bonds		—		16,925		—		16,925
SBA loan pools securities		—		12,561		—		12,561
Other securities		—		2,939		—		2,939
Equity security		—		250		—		250

Total securities available for sale	$	77,864	$	427,385	$	728	$	505,977

December 31, 2013
Assets:
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
U.S. treasury bills		19,997		—		—		19,997
SBA loan pools securities		—		12,629		—		12,629
Other securities		—		2,886		—		2,886

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

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

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 six months ended June 30, 2014:


	Beginning Balance as of January 1, 2014		Purchases, Issuances and Settlement			Realized Gains or Losses in Earnings		Unrealized Gains or Losses in Other Comprehensive Income			Ending Balance as of June 30, 2014
						(In thousands)
Assets:
Municipal bonds-tax exempt ⁽¹⁾	$	748	$	—		$	—	$	(20	)	$	728
Liabilities:
Stock warrants ⁽²⁾	$	2	$	(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 0.74 year at June 30, 2014.

⁽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 7 – Stockholders’ Equity” for more details. The carrying value at June 30, 2014 was $400.

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

As of June 30, 2014 and December 31, 2013, 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 Six Months Ended June 30, 2014
			(In thousands)
June 30, 2014
Assets:
Impaired loans ⁽¹⁾	$	—	$	32,714	$	3,251	$	2,301
Other real estate owned ⁽²⁾		—		1,714		—		17


	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 Twelve Months Ended December 31, 2013
			(In thousands)
December 31, 2013
Assets:
Impaired loans ⁽³⁾	$	—	$	36,254	$	1,738	$	2,431
Other real estate owned ⁽⁴⁾		—		756		—		10

⁽¹⁾

Include real estate loans of $33.2 million, commercial and industrial loans of $1.4 million, and consumer loans of $1.4 million.

⁽²⁾

Includes properties from the foreclosure of real estate loans of $1.7 million.

⁽³⁾

Include real estate loans of $32.2 million, commercial and industrial loans of $2.8 million, and consumer loans of $1.3 million.

⁽⁴⁾

Includes properties from the foreclosure of real estate loans of $756,000.

Estimated Fair Values of Financial Instruments

The estimated fair values of financial instruments were as follows:


	June 30, 2014
	Carrying		Fair Value
	Amount		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	123,782	$	123,782	$	—	$	—
Securities available for sale		505,977		77,864		427,385		728
Loans receivable, net of allowance for loan losses		2,300,810		—		—		2,298,104
Loans held for sale		3,842		—		3,842		—
Accrued interest receivable		6,355		6,355		—		—
Investment in federal home loan bank stock		16,385		16,385		—		—
Investment in federal reserve bank stock		11,514		11,514		—		—
Financial liabilities:
Noninterest-bearing deposits		910,320		—		910,320
Interest-bearing deposits		1,634,529		—		—		1,622,879
Borrowings		97,000		—		—		97,000
Accrued interest payable		3,423		3,423		—		—
Off-balance sheet items:
Commitments to extend credit		271,225		—		—		271,225
Standby letters of credit		8,310		—		—		8,310


	December 31, 2013
	Carrying		Fair Value
	Amount		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	179,357	$	179,357	$	—	$	—
Securities available for sale		530,926		103,533		426,645		748
Loans receivable, net of allowance for loan losses		2,177,498		—		—		2,204,069
Loans held for sale		—		—		—		—
Accrued interest receivable		7,055		7,055		—		—
Investment in federal home loan bank stock		14,060		14,060		—		—
Investment in federal reserve bank stock		11,196		11,196		—		—
Financial liabilities:
Noninterest-bearing deposits		819,015		—		819,015
Interest-bearing deposits		1,693,310		—		—		1,693,739
Borrowings		127,546		—		—		127,249
Accrued interest payable		3,366		3,366		—		—
Off-balance sheet items:
Commitments to extend credit		246,161		—		—		246,161
Standby letters of credit		8,926		—		—		8,926

- 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