Hanmi Financial (HAFC) - 2022 Q4 - Annual Report

Capital Adequacy - As of December 31, 2022, the Company's total risk-based capital ratio was 14.49%, exceeding the minimum requirements for being deemed "well-capitalized" [82] - The Bank's Tier 1 risk-based capital ratio was 12.85%, and the Common Equity Tier 1 capital ratio was also 12.85% as of December 31, 2022 [82] - The Bank's capital conservation buffer was 5.86% in 2022, compared to 6.72% in 2021, indicating a decrease in capital conservation [82] - The Company and the Bank met all applicable capital requirements as of December 31, 2022 [84] - The Federal Reserve may require banks to maintain additional capital beyond the new minimum requirements, potentially impacting net income and return on equity [83] Dividend Restrictions - The Company is subject to various federal and state restrictions on its ability to pay dividends, which depend on the Bank's performance [97] - The Bank's ability to pay dividends is restricted if the additional capital conservation buffer is not achieved [98] Community Reinvestment - The Bank was rated "Needs to Improve" in meeting community credit needs under the Community Reinvestment Act (CRA) at its most recent examination [101] Deposit Insurance - The FDIC insures customer deposits up to $250,000 per depositor, per ownership category [93] - The FDIC adopted a rule in October 2022 to increase initial base deposit insurance assessment rates by two basis points starting in 2023, which may adversely affect earnings [94] Borrowing Capacity - As of December 31, 2022, the Bank's investment in Federal Home Loan Bank of San Francisco capital stock was$16.4 million, with total borrowing capacity of $1.54 billion and remaining available borrowing capacity of$1.07 billion [103] - The total borrowing capacity decreased from $1.84 billion in 2021 to$1.54 billion in 2022, while remaining available borrowing capacity decreased from $1.61 billion to$1.07 billion [103] Interest Rate Impact - The Bank's performance is influenced by the differential between the yield on interest-earning assets and rates paid on deposits, affected by monetary policies and economic conditions [105] - The nature and impact of future changes in monetary policies cannot be predicted, affecting the Bank's growth and earnings [105] Economic Support Programs - The CARES Act provided over $2 trillion to support the economy, allowing borrowers to request mortgage forbearance for up to 180 days due to COVID-19 [108] - The Paycheck Protection Program (PPP) offered 100% federally guaranteed loans to small businesses, with maximum amounts up to 2.5 times average monthly payroll costs [109] Corporate Governance - The California Corporations Code requires public companies to have at least three female directors and three directors from underrepresented communities by the end of 2022, which the Company complied with [110] - The SEC approved a Nasdaq rule requiring companies to have at least one diverse director, with compliance deadlines set for one and two years after the rule's approval [111] Regulatory Compliance - The Bank was in compliance with the Federal Home Loan Bank of San Francisco's stock ownership requirement as of December 31, 2022 [103] - Non-bank subsidiaries are subject to additional regulation and supervision by various regulatory bodies [106]