hafc-10q_20210930.htm

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging Growth Company

(Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

As of November 1, 2021, there were 30,407,905 outstanding shares of the Registrant’s Common Stock.

	September 30,			December 31,
	2021			2020
	(Unaudited)
Assets
Cash and due from banks	$	824,347		$	391,849
Securities available for sale, at fair value (amortized cost of $914,649 as of September 30, 2021 and $749,458 as of December 31, 2020)		906,996			753,781
Loans held for sale, at the lower of cost or fair value		17,881			8,568
Loans receivable, net of allowance for credit losses of $76,613 as of September 30, 2021 and $90,426 as of December 31, 2020		4,782,252			4,789,742
Accrued interest receivable		11,943			16,363
Premises and equipment, net		25,582			26,431
Customers' liability on acceptances		352			1,319
Servicing assets		6,838			6,212
Goodwill and other intangible assets, net		11,450			11,612
Federal Home Loan Bank ("FHLB") stock, at cost		16,385			16,385
Income tax assets		42,840			42,704
Bank-owned life insurance		54,653			53,894
Prepaid expenses and other assets		75,014			83,028
Total assets	$	6,776,533		$	6,201,888

Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Noninterest-bearing	$	2,548,591		$	1,898,766
Interest-bearing		3,180,945			3,376,242
Total deposits		5,729,536			5,275,008
Accrued interest payable		1,235			4,564
Bank's liability on acceptances		352			1,319
Borrowings		137,500			150,000
Subordinated debentures ($224,100 and $126,800 face amount less unamortized discount and debt issuance costs of $9,256 and $7,828 as of September 30, 2021 and December 31, 2020, respectively)		214,844			118,972
Accrued expenses and other liabilities		74,011			74,981
Total liabilities		6,157,478			5,624,844
Stockholders' equity:
Preferred stock, $0.001 par value; authorized 10,000,000 shares; no shares issued as of September 30, 2021 and December 31, 2020		—			—
Common stock, $0.001 par value; authorized 62,500,000 shares; issued 33,617,126 shares (30,441,601 shares outstanding) as of September 30, 2021 and issued 33,560,801 shares (30,717,835 shares outstanding) as of December 31, 2020		33			33
Additional paid-in capital		580,259			578,360
Accumulated other comprehensive (loss) income, net of tax benefit of $2,296 as of September 30, 2021 and net of tax expense of $1,247 as of December 31, 2020		(5,357	)		3,076
Retained earnings		169,534			114,621
Less treasury stock; 3,175,525 shares as of September 30, 2021 and 2,842,966 shares as of December 31, 2020		(125,414	)		(119,046	)
Total stockholders' equity		619,055			577,044
Total liabilities and stockholders' equity	$	6,776,533		$	6,201,888

	Three Months Ended September 30,					Nine Months Ended September 30,
	2021			2020		2021			2020
Interest and dividend income:
Interest and fees on loans receivable	$	52,961		$	52,586	$	156,361		$	159,464
Interest on securities		1,865			1,972		4,409			8,852
Dividends on FHLB stock		245			204		693			696
Interest on deposits in other banks		329			84		601			495
Total interest and dividend income		55,400			54,846		162,064			169,507
Interest expense:
Interest on deposits		2,466			7,032		9,419			28,663
Interest on borrowings		409			582		1,332			1,838
Interest on subordinated debentures		2,545			1,627		5,759			4,984
Total interest expense		5,420			9,241		16,510			35,485
Net interest income before credit loss expense		49,980			45,605		145,554			134,022
Credit loss (recovery) expense		(7,234	)		38		(8,452	)		40,371
Net interest income after credit loss (recovery) expense		57,214			45,567		154,006			93,651
Noninterest income:
Service charges on deposit accounts		3,437			2,002		8,036			6,434
Trade finance and other service charges and fees		1,188			972		3,468			2,920
Gain on sale of Small Business Administration ("SBA") loans		5,842			2,324		13,475			3,478
Net gain on sales of securities		—			—		99			15,712
Other operating income		2,042			1,842		6,123			5,751
Total noninterest income		12,509			7,140		31,201			34,295
Noninterest expense:
Salaries and employee benefits		18,795			17,194		53,917			49,645
Occupancy and equipment		5,037			4,650		14,235			13,633
Data processing		2,934			2,761		8,775			8,233
Professional fees		1,263			1,794		4,123			5,255
Supplies and communications		741			698		2,231			2,337
Advertising and promotion		953			594		1,685			1,783
Other operating expenses		2,779			2,233		7,852			7,245
Total noninterest expense		32,502			29,924		92,818			88,131
Income before tax		37,221			22,783		92,389			39,815
Income tax expense		10,656			6,439		27,042			11,945
Net income	$	26,565		$	16,344	$	65,346		$	27,870
Basic earnings per share	$	0.87		$	0.53	$	2.13		$	0.91
Diluted earnings per share	$	0.86		$	0.53	$	2.13		$	0.91
Weighted-average shares outstanding:
Basic		30,474,391			30,464,263		30,222,978			30,276,462
Diluted		30,552,196			30,464,263		30,298,553			30,276,462

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Net income	$	26,565		$	16,344		$	65,346		$	27,870
Other comprehensive income (loss), net of tax:
Unrealized gain on securities:
Unrealized holding (loss) gain arising during period		(3,568	)		1,947			(11,877	)		13,378
Less: reclassification adjustment for net gain included in net income		—			—			(99	)		(15,712	)
Income tax benefit (expense) related to items of other comprehensive income		1,070			(561	)		3,543			673
Other comprehensive income (loss), net of tax		(2,498	)		1,386

Delaware		95-4788120
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification No.)

900 Wilshire Boulevard, Suite 1250
Los Angeles, California		90017
(Address of Principal Executive Offices)		(Zip Code)


	Part I – Financial Information

Item 1.	Financial Statements	3

	Consolidated Balance Sheets at September 30, 2021 (unaudited) and December 31, 2020	3

	Consolidated Statements of Income for the three and nine months ended September 30, 2021 and 2020 (unaudited)	4

	Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2021 and 2020 (unaudited)	5

	Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended September 30, 2021 and 2020 (unaudited)	6

	Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020 (unaudited)	8

	Notes to Consolidated Financial Statements (unaudited)	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	42

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	61

Item 4.	Controls and Procedures	62

	Part II – Other Information

Item 1.	Legal Proceedings	63

Item 1A.	Risk Factors	63

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	63

Item 3.	Defaults Upon Senior Securities	63

Item 4.	Mine Safety Disclosures	63

Item 5.	Other Information	63

Item 6.	Exhibits	64

Signatures		65