# HANNON ARMSTRONG SECURITIES, LLC X-17A-5/A (2024-03-21) — Broker-dealer annual report - Company: HANNON ARMSTRONG SECURITIES, LLC - Form: X-17A-5/A - Filed: 2024-03-21 - Period: 2023-12-31 - Accession: 0001497227-24-000003 - CIK: 1497227 - File #: 8-68659 - Type: Broker-dealer - Material weakness: No - Auditor: Ernst & Young - Auditor location: Tysons, VA - Contact: Carolyn Kasky - Phone: 4105716181 - Email: ckasky@hasi.com - Website: hasi.com - Signed by: Carolyn Kasky (CCO, CFO and Financial Operations Principal) Original filing: https://www.sec.gov/Archives/edgar/data/1497227/000149722724000003/hasecuritiesreportpublic-.pdf --- {0}------------------------------------------------ #### UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 **ANNUAL REPORTS FORM X-17A-5 PART** Ill | 0MB APPROVAL | |---------------------------| | 0MB Number: 3235-0123 | | Expires: Nov. 30, 2026 | | Estimated average burden | | hours per response:
12 | ## SEC FILE NUMBER 68659 **FACING PAGE** Information Required Pursuant to Rules 17a-5, 17a-12, and 18a-7 under the Securities Exchange Act of 1934 FILING FOR THE PERIOD BEGINNING **O 1/01/2023** MM/DD/VY AND ENDING **12/31/2023** MM/DD/VY **A. REGISTRANT IDENTIFICATION** NAME oF FIRM: Hannon Armstrong Securities, LLC TYPE OF REGISTRANT (check all applicable boxes): C!l Broker-dealer D Security-based swap dealer □ Major security-based swap participant □ Check here if respondent is also an OTC derivatives dealer ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) 200 Park Place, Suite 200 (No. and Street) Annapolis Maryland 21401 (City) (State) (Zip Code) PERSON TO CONTACT WITH REGARD TO THIS FILING Carolyn J Kasky 410-571-6181 ckasky@hasi.com (Name) (Area Code -Telephone Number) (Email Address) **B. ACCOUNTANT IDENTIFICATION** INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing\* Ernst & Young LLP (Name - if individual, state last, first, and middle name) 1775 Tysons Blvd Tysons VA 22102 (Address) (City) (State) (Zip Code) 10/20/2003 42 (Date of Registration with PCAOB)(if applicable) (PCAOB Registration Number, if applicable) **FOR OFFICIAL USE ONLY** \* Claims for exemption from t he requirement that the annual reports be covered by the reports of an independent public accountant must be supported by a statement of facts and circumstances relied on as the basis of the exemption. See 17 CFR 240.17a-5(e)(l)(ii), if applicable. **Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid 0MB control number.** {1}------------------------------------------------ #### OATH OR AFFIRMATION I, Carolyn J Kasky swear (or affirm) that, to the best of my knowledge and belief, the financial report pertaining to the firm of Hannon Armstrong Securities, LLC as of 3/20 2~ is true and correct. I further swear (or affirm) that neither the company nor any partner, officer, director, or equivalent person, as the case may be, has any proprietary interest in any account classified solely as that of a customer. **-MJ""""E~----'----...... ----+--** Commi,slon **HwmNr 1299136** Commonwealth of Pennsylvania • Hota.ry Seal JOSEPH FLAHERTY. Notary Public Bucks County My Commission Expires October 16, 2024 | Signature | | | | |-----------|-------------------------------------|--|--| | | | | | | Title: | | | | | | CFO, Financial Operations Principal | | | **Notary** Public #### **This filing\*\* contains (check all applicable boxes):** - **!!!ii (a)** Statement of financial condition. - □ (b) Notes to consolidated statement of financial condition. - **!!!ii** (c) Statement of income (loss) or, if there is other comprehensive income in the period(s) presented, a statement of comprehensive income (as defined in§ 210.1-02 of Regulation **S-X).** - !!!ii (d) Statement of cash flows. - **!!!ii** (e) Statement of changes in stockholders' or partners' or sole proprietor's equity. - D (f) Statement of changes in liabilities subordinated to claims of creditors. - **!!!ii** (g) Notes to consolidated financial statements. - **!!!ii** (h) Computation of net capital under 17 CFR 240.15c3-1 or 17 CFR 240.lSa-1, as applicable. - D (i) Computation of tangible net worth under 17 CFR 240.lSa-2. - □ U) Computation for determination of customer reserve requirements pursuant to Exhibit A to 17 CFR 240.15c3-3. - □ (k) Computation for determination of security-based swap reserve requirements pursuant to Exhibit B to 17 CFR 240.15c3-3 or Exhibit A to 17 CFR 240.18a-4, as applicable. - □ (I) Computation for Determination of PAB Requirements under Exhibit A to§ 240.15c3-3. - □ (m) Information relating to possession or control requirements for customers under 17 CFR 240.15c3-3. - □ (n) Information relating to possession or control requirements for security-based swap customers under 17 CFR 240.15c3-3(p)(2) or 17 CFR 240.18a-4, as applicable. - **!!!ii** (o) Reconciliations, including appropriate explanations, of the FOCUS Report with computation of net capital or tangible net worth under 17 CFR 240.15c3-1, 17 CFR 240.18a-l, or 17 CFR 240.18a-2, as applicable, and the reserve requirements under 17 CFR 240.15c3-3 or 17 CFR 240.18a-4, as applicable, if material differences exist, or a statement that no material differences exist. - □ (p) Summary of financial data for subsidiaries not consolidated in the statement of financial condition. - D (q) Oath or affirmation in accordance with 17 CFR 240.17a-5, 17 CFR 240.17a-12, or 17 CFR 240.18a-7, as applicable. - □ (r) Compliance report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - **!!!ii** (s) Exemption report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - □ (t) Independent public accountant's report based on an examination of the statement of financial condition. - □ (u) Independent public accountant's report based on an examination of the financial report or financial statements under 17 CFR 240.17a-5, 17 CFR 240.18a-7, or 17 CFR 240.17a-12, as applicable. - □ (v) Independent public accountant's report based on an examination of certain statements in the compliance report under 17 CFR 240.17a-5 or 17 CFR 240.lSa-7, as applicable. - **!!!ii** (w) Independent public accountant's report based on a review of the exemption report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - **!!!ii** (x) Supplemental reports on applying agreed-upon procedures, in accordance with 17 CFR 240.15c3-le or 17 CFR 240.17a-12, as applicable. - □ (y) Report describing any material inadequacies found to exist or found to have existed since the date of the previous audit, or a statement that no material inadequacies exist, under 17 CFR 240.17a-12(k). D (z) Other: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ \_ - ••ro request confidential treatment of certain portions of this filing, see 17 CFR 240.17a-5{e)(3) or 17 CFR 240.18a-7(d)(2), as applicable. {2}------------------------------------------------ ![](_page_2_Picture_0.jpeg) FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION Hannon Armstrong Securities, LLC For the Year Ended December 31, 2023 With Report oflndependent Registered Public Accounting Firm {3}------------------------------------------------ # Financial Statements and Supplementary Information # For the Year Ended December 31, 2023 # **Contents** | Report oflndependent Registered Public Accounting Firm 1 | | |-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--| | Financial Statements and Related Notes 2 | | | Statement of Financial Condition 3
Statement of Operations 4
Statement of Changes in Member's Equity 5
Statement of Cash Flows 6
Notes to Financial Statements 7 | | | Supplementary Information 10 | | | Computation of Net Capital 11 | | {4}------------------------------------------------ Report of Independent Registered Public Accounting Firm {5}------------------------------------------------ ![](_page_5_Picture_0.jpeg) ErASt & 'wullg LLP 1 775 Tysons Blvd Ty&ens,VA 22102 Tel: + 1 703 7"7 1000 F.ax: +l 703 747 0100 ey.com #### Report of Independent Registered Public Accounting Firm To the Member and Officers of Hannon Armstrong Securities, LLC #### Opinion on the Financial Statements We have audited the accompanying statement of financial condition of Hannon Armstrong Securities, LLC (the Company) as of December 31, 2023, the related statements of operations, changes in member's equity, and cash flows for the year then ended, and the related notes ( collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023, and the results of its operations and its cash flows for the year then ended in confonnity with U.S. generally accepted accounting principles. #### **Basis for Opinion** These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We ·are a public accounting finn registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. **We** conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perfonn the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included perfonning procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and perfonning procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe-that our audit provides a reasonable basis for our opinion. #### Supplemental **Information** The accompanying information contained in the Computation of Net Capi~I schedule has been subjected to audit procedures perfonned in conjw,ction with the audit of the Company's financial statements. Such information is the responsibility of the Company's management. Our audit procedures included determining whether the infonnation reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the infonnation. In fonning our opinion on the information, we evaluated whether such information, including its form and content. is presented in conformity with Rule I 7a-5·under the Securities Exchange {6}------------------------------------------------ ![](_page_6_Picture_0.jpeg) **Tyson\$,** VA 22102 ey,com Ernst & Young LLP **Tai:+** 1 703 7'7 1000 1775 Tysons Blvd Fax: +-1703747 0100 Act of 1934. In our opinion. the infonnation is fairly stated, in all material·respects, in relation to the financial statements as a whole. We have served as the Company's auditor since 2011. Tysons, Virginia March 20. 2024 {7}------------------------------------------------ Financial Statements and Related Notes {8}------------------------------------------------ # Statement of Financial Condition As of December 3 1 , 2023 | Assets | | |---------------------------------------|-----------------| | Cash and cash equivalents | \$
1,413,267 | | Other assets | 21,642 | | Total assets | \$
1,434,909 | | | | | Liabilities and member's equity | | | Accounts payable and accrued expenses | \$
80,506 | | Other liabilities | 17,660 | | Total liabilities | 98,166 | | | | | | | | Total liabilities and member's equity | \$
1,434,909 | | Member's equity | 1,336,743 | {9}------------------------------------------------ ## Statement of Operations #### For the Year Ended December 31, 2023 | Revenue: | | |-----------------------------------------------|-----------------| | Advisory services | \$
1,299,851 | | Total revenues | 1,299,851 | | Expenses: | | | Professional and consulting services | 170,888 | | General and administrative -
related party | 65,388 | | General and administrative | 7,313 | | Regulatory expenses | 7,263 | | Total expenses | 250,852 | | Net income (loss) | 1,048,999
\$ | {10}------------------------------------------------ Statement of Changes in Member's Equity | Balance, December 31, 2022 | \$
3,724,679 | |----------------------------|-----------------| | Capital contributions | 63,065 | | Distribution to Member | (3,500,000) | | Net income (loss) | 1,048,999 | | Balance, December 31, 2023 | \$
1,336,743 | | | | {11}------------------------------------------------ # Statement of Cash Flows For the Year Ended December 31, 2023 ### **Operating activities** | Net income (loss) | \$
1,048,999 | |-----------------------------------------------------------------------------------|-----------------| | Adjustments to reconcile net income to net cash provided by operating activities: | | | Amortization expense | 230 | | Related party expenses (See Note 4) | 63,065 | | Changes in operating assets and liabilities: | | | Accounts receivable | 200 | | Prepaid expenses | (846) | | Accounts payable and accrued expenses | 19,006 | | Net cash provided by (used in) operating activities | 1,130,654 | | Financing activities | | | Capital distribution | (3,500,000) | | Net cash used in financing activities | (3,500,000) | | Increase (decrease) in cash, cash equivalents, and restricted cash | (2,369,346) | | Cash, cash equivalents, and restricted cash at beginning of year | 3,783,929 | | Cash, cash equivalents, and restricted cash at end of year | \$
1,414,583 | | | | {12}------------------------------------------------ ## Notes to Financial Statements December 31, 2023 ### **1. Background** Hannon Armstrong Securities, LLC (the "Company") is a broker-dealer registered with the Securities and Exchange Commission ("SEC") and a member of the Financial Industry Regulation Authority ("FINRA") effective February 1, 2011. The Company, which was formed on July 22, 2008, is a Maryland limited liability company and is wholly owned by HAT Holdings I, LLC ("Member"), which is a wholly owned subsidiary of Hannon Armstrong Capital, LLC (collectively referred to as the "Parent"). The Company's principal business involves providing advisory services to clients seeking financing for infrastructure projects. ### **2. Summary of Significant Accounting Policies** ### **Basis of Presentation and Use of Estimates** The accompanying financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The preparation of financial statements in accordance with U.S. GAAP requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. ### **Revenue Recognition** The Company recognizes revenue for financial advisory services provided to customers in accordance with ASC 606, *Revenue from Contracts with Customers.* The revenue recognition guidance requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance requires an entity to follow a fivestep model to (a) identify the contract(s) with a customer, which includes assessing the collectability of the consideration to which it will be entitled in exchange for the good or services transferred to the customer, (b) identify the performance obligations in the contract, (c) determine the transaction price, ( d) allocate the transaction price to the performance obligations in the contract, and (e) recognize revenue when (or as) the entity satisfies a performance obligation. For the year ended December 31, 2023, the Company recognized revenue for certain structured transactions in the amount of \$1,229,851 upon the completion of advisory services specified within the contract. The associated performance obligations are satisfied by the Company in full upon closing of a transaction, and payment for those performance obligations are due and paid at closing. {13}------------------------------------------------ ## **Cash and Cash Equivalents** Cash and cash equivalents include unrestricted cash and short-term cash investments with an original maturity of three months or less at the date of purchase. As of December 31, 2023, we had cash deposits subject to credit risk and in excess of amounts federally insured of\$1,163,267. ### **Income Taxes** No provision has been made for federal and state income taxes since the income, if any, from the Company's operations is included in the tax returns of the Member. Franchise and other taxes paid to state authorities are recorded as general and administrative expenses on the Statement of Operations when incurred. We have no income tax examinations in progress, and none are expected at this time, although 2019 through 2022 are open. The Company does not have any uncertain tax positions as of December 31, 2023. ### **Segment Reporting** We manage our business as a single portfolio and report all of our activities as one business segment. ### **Recently Issued Accounting Pronouncements** There are no accounting standards updates issued before March 20, 2024, and effective after December 31, 2023, that are expected to have a material effect on our Statement of Financial Condition, Statement of Operations, Statement of Changes in Member's Equity or the Statement of Cash Flows. ## **3. Net Capital Requirements** The Company is subject to the SEC Uniform Net Capital Rule ("SEC Rule l 5c3-l "), which requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 12 to 1. In addition, it also provides that equity capital may not be withdrawn, or cash dividends paid if the resulting indebtedness to net capital ratio would exceed 10 to 1. As of December 31, 2023, the Company had net capital of \$1,332,279 which exceeded required net capital by \$1,327,279 and the Company's indebtedness to net capital ratio was 0.014 to 1. ## **4. Related-Party Transactions** The Company has entered into an Expense Sharing and Administrative Services Agreement (the Agreement) with the Parent. Pursuant to this Agreement, the Parent provides management services and other support costs to the Company. These services and costs, primarily payroll and benefits, rent, and other shared services, are allocated and charged to the Company based on estimates of time spent by key personnel and other rational allocation methods and are recorded as "General {14}------------------------------------------------ and administrative - related party" expenses on the Statement of Operations. If the Parent is not reimbursed, the amounts are recorded as capital contributions to the Company by the Parent. During the year ended December 31, 2023, non-cash capital contributions were made to the Company by the Parent in the amount of \$63,065 related to expenses paid by the Parent on behalf of the Company. The \$65,388 of general and administrative expense sharing costs with the Parent includes cash rent payments by the Company in the amount of \$2,095. There were no outstanding general and administrative expenses due to the Parent as of December 31, 2023. Further, as discussed in Footnote 2, the Company received advisory fees for performing certain structured transactions throughout the year ended December 31, 2023. During the year, the Company performed such services to an entity in which the Parent owns an equity interest. The Company recognized \$1,299,851 in Advisory fees within the Statement of Operations for the services performed. ### **5. Commitments and Contingences** #### **Leases** The Company is the sublessee to one sublease for office space that extends through January 31, 2033 that qualifies as an operating lease. As of December 31, 2023, we have a Right ofUse asset of \$17,177 and a lease liability of \$17,660 held in Other Assets and Other Liabilities, respectively, on the balance sheet related to this lease. The minimum rental payments for the sublease are as follows: | Year Ending December 31, | Minimum Rental Payments | | |--------------------------|-------------------------|--| | 2024 | 2,147 | | | 2025 | 2,201 | | | 2026 | 2,256 | | | 2027 | 2,313 | | | 2028 | 2,370 | | | Thereafter | 10,307 | | | Total | \$21,594 | | ### **6. Subsequent Events** The Company evaluated subsequent events through March 20, 2024, the date the financial statements were issued. The Company closed a transaction on February 22, 2024 and received an advisory fee of \$1,125,027.34. The Company has determined there are no other material events or transactions that would affect their financial statements or require disclosure in their financial statements. {15}------------------------------------------------ Supplementary Information {16}------------------------------------------------ # Computation of Net Capital December 3 I , 2023 | Computation of net capital | | |------------------------------------------------|-----------------| | Member's Equity | \$
1,336,743 | | Less: Deductions and/or Other Charges | | | Non-Allowable Assets | {4,464) | | Net Capital | 1,332,279 | | Minimum Net Capital Required | 5,000 | | Excess Net Capital | \$
1,327,279 | | Computation of aggregate indebtedness | | | Total aggregate indebtedness | 19,184
\$ | | Ratio of Aggregate Indebtedness to Net Capital | 0.014 | There are no material differences between the preceding computation and the Company's corresponding unaudited part II of Form X-17 A-5 as of December 31, 2023, filed on January 23, 2024. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.