Regulatory Matters

12 Months Ended

Dec. 31, 2021

Regulatory Capital Requirements Under Banking Regulations [Abstract]

Regulatory Matters

Note 13 — Regulatory Matters

Risk-Based Capital

Federal bank regulatory agencies require bank holding companies and banks to maintain a minimum ratio of qualifying total capital to risk-weighted assets of 8.00 percent and a minimum ratio of Tier 1 capital to risk-weighted assets of 6.00 percent. In addition to the risk-based guidelines, federal bank regulatory agencies require bank holding companies and banks to maintain a minimum ratio of Tier 1 capital to average assets, referred to as the leverage ratio, of 4.00 percent.

In order for banks to be considered “well capitalized,” federal bank regulatory agencies require them to maintain a minimum ratio of qualifying total capital to risk-weighted assets of 10.0 percent and a minimum ratio of Tier 1 capital to risk-weighted assets of 8.0 percent. In addition to the risk-based guidelines, federal bank regulatory agencies require depository institutions to maintain a minimum ratio of Tier 1 capital to average assets, referred to as the leverage ratio, of 5.0 percent.

At December 31, 2021, the Bank’s capital ratios exceeded the minimum requirements to place the Bank in the “well capitalized” category and the Company exceeded all of its applicable minimum regulatory capital ratio requirements.

A capital conservation buffer of 2.5 percent became effective on 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. The Bank’s capital conservation buffer was 6.72 percent and 6.86 percent and the Company's capital conservation buffer was 5.97 percent and 5.93 percent as of December 31, 2021 and 2020, respectively.

In 2019, the federal banking agencies jointly issued a final rule that provides for an optional, simplified measure of capital adequacy, the community bank leverage ratio framework (“CBLR”), for qualifying community banking organizations, consistent with Section 201 of the Economic Growth, Regulatory Relief, and Consumer Act. The final rule became effective January 1, 2020, however the Company opted out of the CBLR as of December 31, 2020.

In March 2020, the OCC, the Board of Governors of the Federal Reserve System, and the FDIC announced an interim final rule to delay the impact on regulatory capital arising from the implementation of CECL. The interim final rule maintains the three-year transition option in the previous rule and provides banks the option to delay for two years an estimate of CECL’s effect on regulatory capital, relative to the incurred loss methodology’s effect on regulatory capital, followed by a three-year transition period (five-year transition option). The Company and the Bank adopted the capital transition relief over the permissible five-year period.

The capital ratios of Hanmi Financial and the Bank as of December 31, 2021 and 2020 were as follows:

	Actual					Minimum Regulatory Requirement					Minimum to be Categorized as “Well Capitalized”
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(in thousands)
December 31, 2021
Total capital (to risk-weighted assets):
Hanmi Financial	$	912,527		16.61	%	$	439,386		8.00	%	N/A		N/A
Hanmi Bank	$	809,280		14.72	%	$	439,858		8.00	%	$	549,822		10.00	%
Tier 1 capital (to risk-weighted assets):
Hanmi Financial	$	657,251		11.97	%	$	329,539		6.00	%	N/A		N/A
Hanmi Bank	$	748,178		13.61	%	$	329,893		6.00	%	$	439,858		8.00	%
Common equity Tier 1 capital (to risk-weighted assets)
Hanmi Financial	$	636,420		11.59	%	$	247,155		4.50	%	N/A		N/A
Hanmi Bank	$	748,178		13.61	%	$	247,420		4.50	%	$	357,385		6.50	%
Tier 1 capital (to average assets):
Hanmi Financial	$	657,251		9.63	%	$	273,133		4.00	%	N/A		N/A
Hanmi Bank	$	748,178		10.96	%	$	273,101		4.00	%	$	341,376		5.00	%
December 31, 2020
Total capital (to risk-weighted assets):
Hanmi Financial	$	743,091		15.21	%	$	390,884		8.00	%	N/A		N/A
Hanmi Bank	$	726,532		14.86	%	$	391,114		8.00	%	$	488,893		10.00	%
Tier 1 capital (to risk-weighted assets):
Hanmi Financial	$	583,076		11.93	%	$	293,163		6.00	%	N/A		N/A
Hanmi Bank	$	665,058		13.60	%	$	293,336		6.00	%	$	391,114		8.00	%
Common equity Tier 1 capital (to risk-weighted assets)
Hanmi Financial	$	562,647		11.52	%	$	219,872		4.50	%	N/A		N/A
Hanmi Bank	$	665,058		13.60	%	$	220,002		4.50	%	$	317,780		6.50	%
Tier 1 capital (to average assets):
Hanmi Financial	$	583,076		9.49	%	$	245,882		4.00	%	N/A		N/A
Hanmi Bank	$	665,059		10.83	%	$	245,736		4.00	%	$	307,170		5.00	%