hafc-10q_20220630.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 August 2, 2022, there were 30,484,719 outstanding shares of the Registrant’s Common Stock.

	June 30,			December 31,
	2022			2021
	(Unaudited)
Assets
Cash and due from banks	$	217,237		$	608,965
Securities available for sale, at fair value (amortized cost of $955,318 and $922,654 as of June 30, 2022 and December 31, 2021, respectively)		860,221			910,790
Loans held for sale, at the lower of cost or fair value		18,528			13,342
Loans receivable, net of allowance for credit losses of $73,067 and $72,557 as of June 30, 2022 and December 31, 2021, respectively		5,582,335			5,078,984
Accrued interest receivable		14,044			11,976
Premises and equipment, net		24,207			24,788
Customers' liability on acceptances		616			—
Servicing assets		7,353			7,080
Goodwill and other intangible assets, net		11,310			11,395
Federal Home Loan Bank ("FHLB") stock, at cost		16,385			16,385
Income tax assets		61,871			44,060
Bank-owned life insurance		55,395			54,905
Prepaid expenses and other assets		86,466			75,917
Total assets	$	6,955,968		$	6,858,587

Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Noninterest-bearing	$	2,782,737		$	2,574,517
Interest-bearing		3,196,653			3,211,752
Total deposits		5,979,390			5,786,269
Accrued interest payable		986			1,161
Bank's liability on acceptances		616			—
Borrowings		145,000			137,500
Subordinated debentures ($136,800 and $224,100 face amount less unamortized discount and debt issuance costs of $7,687 and $9,094 as of June 30, 2022 and December 31, 2021, respectively)		129,113			215,006
Accrued expenses and other liabilities		82,567			75,234
Total liabilities		6,337,672			6,215,170
Stockholders' equity:
Preferred stock, $0.001 par value; authorized 10,000,000 shares; no shares issued as of June 30, 2022 and December 31, 2021		—			—
Common stock, $0.001 par value; authorized 62,500,000 shares; issued 33,701,784 shares (30,482,990 shares outstanding) and 33,603,839 shares (30,407,261 shares outstanding) as of June 30, 2022 and December 31, 2021, respectively		33			33
Additional paid-in capital		582,018			580,796
Accumulated other comprehensive income (loss), net of tax benefit of $28,529 and $3,421 as of June 30, 2022 and December 31, 2021, respectively		(66,568	)		(8,443	)
Retained earnings		229,135			196,784
Less treasury stock; 3,218,794 shares and 3,196,578 shares as of June 30, 2022 and December 31, 2021, respectively		(126,322	)		(125,753	)
Total stockholders' equity		618,296			643,417
Total liabilities and stockholders' equity	$	6,955,968		$	6,858,587

	Three Months Ended June 30,					Six Months Ended June 30,
	2022		2021			2022		2021
Interest and dividend income:
Interest and fees on loans receivable	$	59,855	$	52,785		$	113,779	$	103,400
Interest on securities		2,930		1,404			5,447		2,544
Dividends on FHLB stock		242		242			490		448
Interest on deposits in other banks		193		176			408		272
Total interest and dividend income		63,220		54,607			120,124		106,664
Interest expense:
Interest on deposits		2,457		3,003			4,470		6,953
Interest on borrowings		370		447			707		933
Interest on subordinated debentures		1,349		1,585			4,947		3,204
Total interest expense		4,176		5,035			10,124		11,090
Net interest income before credit loss expense		59,044		49,572			110,000		95,574
Credit loss expense (recovery)		1,596		(3,327	)		220		(1,217	)
Net interest income after credit loss expense (recovery)		57,448		52,899			109,780		96,791
Noninterest income:
Service charges on deposit accounts		2,875		2,344			5,750		4,599
Trade finance and other service charges and fees		1,416		1,259			2,558		2,280
Gain on sale of Small Business Administration ("SBA") loans		2,774		3,508			5,295		7,633
Net gain on sales of securities		—		—			—		99
Other operating income		2,245		1,775			4,226		4,081
Total noninterest income		9,310		8,886			17,829		18,692
Noninterest expense:
Salaries and employee benefits		18,779		18,302			36,496		35,122
Occupancy and equipment		4,597		4,602			9,243		9,198
Data processing		3,114		2,915			6,351		5,841
Professional fees		1,231		1,413			2,661		2,860
Supplies and communications		581		733			1,245		1,489
Advertising and promotion		660		374			1,477		732
Other operating expenses		2,513		2,444			5,694		5,074
Total noninterest expense		31,475		30,783			63,167		60,316
Income before tax		35,283		31,002			64,442		55,167
Income tax expense		10,233		8,880			18,697		16,386
Net income	$	25,050	$	22,122		$	45,745	$	38,781
Basic earnings per share	$	0.82	$	0.72		$	1.50	$	1.26
Diluted earnings per share	$	0.82	$	0.72		$	1.50	$	1.26
Weighted-average shares outstanding:
Basic		30,296,897		30,442,993			30,271,761		30,452,320
Diluted		30,412,348		30,520,456			30,391,273		30,526,120

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2022			2021			2022			2021
Net income	$	25,050		$	22,122		$	45,745		$	38,781
Other comprehensive income (loss), net of tax:
Unrealized gain on securities:
Unrealized holding (loss) gain arising during period		(31,070	)		3,476			(83,233	)		(8,309	)
Less: reclassification adjustment for net gain included in net income		—			—			—			(99	)
Income tax benefit (expense) related to items of other comprehensive income		9,321			(1,042	)		25,108			2,473
Other comprehensive income (loss), net of tax		(21,749	)		2,434			(58,125	)		(5,935	)
Comprehensive income (loss)	$	3,301		$	24,556		$	(12,380	)	$	32,846

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 June 30, 2022 (unaudited) and December 31, 2021	3

	Consolidated Statements of Income for the three and six months ended June 30, 2022 and 2021 (unaudited)	4

	Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2022 and 2021 (unaudited)	5

	Consolidated Statements of Changes in Stockholders’ Equity for the three and six months ended June 30, 2022 and 2021 (unaudited)	6

	Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021 (unaudited)	8

	Notes to Consolidated Financial Statements (unaudited)	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	40

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	59

Item 4.	Controls and Procedures	59

	Part II – Other Information

Item 1.	Legal Proceedings	60

Item 1A.	Risk Factors	60

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	60

Item 3.	Defaults Upon Senior Securities	60

Item 4.	Mine Safety Disclosures	60

Item 5.	Other Information	60

Item 6.	Exhibits	61

Signatures		62