Document Contents

Section 1: 10-Q (10-Q)

(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 May 1, 2020, there were 30,617,066 outstanding shares of the Registrant’s Common Stock.

	March 31,			December 31,
	2020			2019

Assets
Cash and due from banks	$	290,546		$	121,678
Securities available for sale, at fair value (amortized cost of $605,530, as of March 31, 2020 and $629,725 as of December 31, 2019)		622,206			634,477
Loans held for sale, at the lower of cost or fair value		—			6,020
Loans receivable, net of allowance for credit losses of $66,500 as of March 31, 2020 and $61,408 as of December 31, 2019		4,477,136			4,548,739
Accrued interest receivable		11,536			11,742
Premises and equipment, net		26,374			26,070
Customers' liability on acceptances		102			66
Servicing assets		6,727			6,956
Goodwill and other intangible assets, net		11,808			11,873
Federal Home Loan Bank ("FHLB") stock, at cost		16,385			16,385
Income tax assets		39,445			36,787
Bank-owned life insurance		53,058			52,782
Prepaid expenses and other assets		62,367			64,609
Total assets	$	5,617,690		$	5,538,184

Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Noninterest-bearing	$	1,366,270		$	1,391,624
Interest-bearing		3,215,797			3,307,338
Total deposits		4,582,068			4,698,962
Accrued interest payable		9,693			11,215
Bank's liability on acceptances		102			66
FHLB borrowings		300,000			90,000
Subordinated debentures ($126,800 face amount less unamortized discount and debt issuance costs of $8,277)		118,523			118,377
Accrued expenses and other liabilities		54,347			56,297
Total liabilities		5,064,732			4,974,917
Stockholders' equity:
Preferred Stock, $0.001 par value; authorized 10,000,000 shares; no shares issued as of March 31, 2020 and December 31, 2019		—			—
Common stock, $0.001 par value; authorized 62,500,000 shares; issued 33,448,214 shares (30,622,741 shares outstanding) as of March 31, 2020 and issued 33,475,402 shares (30,799,624 shares outstanding) as of December 31, 2019		33			33
Additional paid-in capital		576,585			575,816
Accumulated other comprehensive income, net of tax expense of $4,809 as of March 31, 2020 and $1,370 as of December 31, 2019		11,867			3,382
Retained earnings		83,355			100,551
Less treasury stock; 2,825,473 shares as of March 31, 2020 and 2,675,778 shares as of December 31, 2019		(118,882	)		(116,515	)
Total stockholders' equity		552,958			563,267
Total liabilities and stockholders' equity	$	5,617,690		$	5,538,184

	Three Months Ended March 31,
	2020		2019
Interest and dividend income:
Interest and fees on loans receivable	$	54,648	$	58,334
Interest on securities		3,655		3,456
Dividends on FHLB stock		289		289
Interest on deposits in other banks		333		335
Total interest and dividend income		58,925		62,414
Interest expense:
Interest on deposits		12,742		15,683
Interest on borrowings		496		71
Interest on subordinated debentures		1,712		1,772
Total interest expense		14,950		17,526
Net interest income before credit loss expense		43,975		44,888
Credit loss expense		15,739		1,117
Net interest income after credit loss expense		28,236		43,771
Noninterest income:
Service charges on deposit accounts		2,400		2,358
Trade finance and other service charges and fees		986		1,124
Gain on sale of Small Business Administration ("SBA") loans		1,154		926
Net gain on sales of securities		—		725
Other operating income		1,683		1,121
Total noninterest income		6,223		6,254
Noninterest expense:
Salaries and employee benefits		17,749		15,738
Occupancy and equipment		4,475		4,521
Data processing		2,669		2,083
Professional fees		1,915		1,649
Supplies and communications		781		844
Advertising and promotion		734		760
Other operating expenses		2,745		3,470
Total noninterest expense		31,068		29,065
Income before tax		3,391		20,960
Income tax expense		1,041		6,288
Net income	$	2,350	$	14,672
Basic earnings per share	$	0.08	$	0.48
Diluted earnings per share	$	0.08	$	0.48
Weighted-average shares outstanding:
Basic		30,469,022		30,667,378
Diluted		30,472,899		30,720,772

	Three Months Ended March 31,
	2020			2019
Net income	$	2,350		$	14,672
Other comprehensive income, net of tax:
Unrealized gain on securities:
Unrealized holding gain arising during period		11,924			6,619
Less: reclassification adjustment for net gain included in net income		—			(725	)
Income tax expense related to items of other comprehensive income		(3,439	)		(1,697	)
Other comprehensive income, net of tax		8,485			4,197
Comprehensive income	$	10,835		$	18,869

	Common Stock - Number of Shares									Stockholders' Equity
														Accumulated
												Additional		Other						Treasury			Total
	Shares			Treasury			Shares			Common		Paid-in		Comprehensive			Retained			Stock,			Stockholders'
	Issued			Shares			Outstanding			Stock		Capital		Income (Loss)			Earnings			at Cost			Equity
Balance at January 1, 2019		33,202,369			(2,273,932	)		30,928,437		$	33	$	569,712	$	(6,079	)	$	97,539		$	(108,637	)	$	552,568
Stock options exercised		650			—			650			—		8		—			—			—			8
Restricted stock awards, net of forfeitures		(49,131	)		—			(49,131	)		—		—		—			—			—			—
Share-based compensation expense		—			—			—			—		712		—			—			—			712
Restricted stock surrendered due to employee tax liability		—			(19,423	)		(19,423	)		—		—		—			—			(425	)		(425	)
Cash dividends declared (common stock, $0.24/share)		—			—			—			—		—		—			(7,440	)		—			(7,440	)
Net income		—			—

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

3660 Wilshire Boulevard, Penthouse Suite A		90010
Los Angeles, California
(Address of Principal Executive Offices)		(Zip Code)


	Part I – Financial Information

Item 1.	Financial Statements	3

	Consolidated Balance Sheets at March 31, 2020 (unaudited) and December 31, 2019	3

	Consolidated Statements of Income (Unaudited)	4

	Consolidated Statements of Comprehensive Income (Unaudited)	5

	Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)	6

	Consolidated Statements of Cash Flows (Unaudited)	7

	Notes to Consolidated Financial Statements (Unaudited)	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	55

Item 4.	Controls and Procedures	56

	Part II – Other Information

Item 1.	Legal Proceedings	57

Item 1A.	Risk Factors	57

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	58

Item 3.	Defaults Upon Senior Securities	58

Item 4.	Mine Safety Disclosures	58

Item 5.	Other Information	58

Item 6.	Exhibits	59

Signatures		60

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging Growth Company