Hope Bancorp, Inc. (the “Company”) (NASDAQ: HOPE), the holding
company of Bank of Hope (the “Bank”), today reported unaudited
financial results for its third quarter and nine months ended
September 30, 2023. For the three months ended September 30, 2023,
net income totaled $30.0 million, or $0.25 per diluted common
share. This compares with net income of $38.0 million, or $0.32 per
diluted common share, in the preceding second quarter.
“Our third quarter 2023 net interest margin expanded 13 basis
points, and our net interest income grew 4% quarter-over-quarter,”
stated Kevin S. Kim, Chairman, President and Chief Executive
Officer. “We maintained disciplined expense control and our
noninterest expenses decreased 1% over the same period. However, we
recorded a provision for credit losses of $17 million for the third
quarter, and certain one-time gains in the second quarter 2023
noninterest income did not reoccur. As a result, our net income
declined compared with the prior quarter.”
“Our balance sheet continued to strengthen. Total deposits grew
to $15.7 billion at September 30, 2023, up 1% from June 30, 2023,
reflecting growth in customer deposits, partially offset by a
planned reduction of brokered time deposits. Our total capital
ratio increased to 13.23% as of September 30, 2023, and all our
regulatory capital ratios expanded quarter-over-quarter,” continued
Kim. “Our deposit growth, taken together with our expanding capital
and ample liquidity, positions us well to take advantage of
profitable growth opportunities going forward.”
Strategic Reorganization
The Company also announced today a strategic reorganization
designed to enhance shareholder value over the long term.
Accordingly, the Company realigned its structure around lines of
business and product delivery channels, optimized its production
capacity and reduced headcount. The restructuring is expected to
generate over $40 million in estimated annualized cost savings,
largely related to the reduction in staffing, savings from a
planned branch rationalization, subject to customary notices and
approvals, and operational process improvements. The Company
expects to recognize one-time charges of approximately $12 million
in the fourth quarter of 2023 related to the reorganization.
“As the largest Korean American bank in the United States, Bank
of Hope has made great strides in transitioning from a traditional
community bank into a regional bank serving a wide range of
consumer, small business, commercial and corporate customers,”
commented Kim. “Today’s strategic reorganization further evolves
our business model. As a result, we expect to operate our Bank more
efficiently, strengthen our franchise, enhance the customer
experience and expand our customer relationships, benefiting all
our stakeholders through sustainably improved profitability.”
Financial Summary
At or for the Three Months
Ended
(dollars in thousands, except per share
data) (unaudited)
9/30/2023
6/30/2023
9/30/2022
Net income
$
30,049
$
38,022
$
53,748
Diluted earnings per share
$
0.25
$
0.32
$
0.45
Net interest income before provision for
credit losses
$
135,378
$
130,689
$
153,186
Pre-provision net revenue (“PPNR”) (1)
$
56,810
$
60,370
$
82,627
Loans receivable
$
14,306,193
$
14,864,810
$
15,491,187
Deposits
$
15,739,859
$
15,619,352
$
15,502,209
Total assets
$
20,076,364
$
20,366,138
$
19,083,388
Total equity
$
2,030,424
$
2,067,998
$
1,975,725
Total capital ratio
13.23
%
12.64
%
11.72
%
Tangible common equity (“TCE”) ratio
(1)
7.96
%
8.04
%
8.09
%
Allowance for credit losses to loans
receivable
1.11
%
1.16
%
1.04
%
Nonperforming assets to total assets
(2)
0.31
%
0.38
%
0.51
%
Return on average assets (“ROA”) (3)
0.60
%
0.74
%
1.17
%
Return on average equity (“ROE”) (3)
5.78
%
7.34
%
10.58
%
Return on average TCE (“ROTCE”) (1)
(3)
7.47
%
9.49
%
13.77
%
ROA (PPNR) (1) (3)
1.13
%
1.18
%
1.79
%
Net interest margin (3)
2.83
%
2.70
%
3.49
%
Efficiency ratio
60.5
%
59.1
%
50.4
%
(1)
PPNR, TCE ratio, ROTCE, and ROA (PPNR) are
non-GAAP financial measures. Quantitative reconciliations of the
most directly comparable GAAP to non-GAAP financial measures are
provided in the accompanying financial information on Table Page
10.
(2)
Excludes delinquent Small Business
Administration (“SBA”) loans that are guaranteed and currently in
liquidation.
(3)
Annualized.
Operating Results for the 2023
Third Quarter
Net interest income growth and net interest margin
expansion. Net interest income before provision for credit
losses for the 2023 third quarter totaled $135.4 million, growing
4% from $130.7 million in the preceding second quarter. Third
quarter 2023 net interest margin expanded 13 basis points to 2.83%,
up from 2.70% in the 2023 second quarter. The linked quarter net
interest income growth and net interest margin expansion reflected
higher yields on earning assets, a decrease in the average volume
of borrowings and debt, and an increase in the average volume of
interest-earning cash and deposits at other banks, partially offset
by a higher cost of funds and a lower average volume of loans.
Third quarter 2023 weighted average yield on earning assets of
5.77% expanded 24 basis points quarter-over-quarter; the rate of
change accelerated from the previous quarter. In comparison, the
third quarter 2023 weighted average cost of funds of 3.16%
increased 14 basis points quarter-over-quarter; the rate of change
decelerated from the previous quarter.
Noninterest income. Noninterest income for the 2023 third
quarter totaled $8.3 million, compared with $17.0 million in the
preceding second quarter. Second quarter 2023 noninterest income
included a one-time $5.8 million cash distribution from a gain on
an investment in an affordable housing partnership and $1.9 million
of gains on SBA loan sales. The Company did not sell any SBA 7(a)
loans during the 2023 third quarter, retaining loan production on
its balance sheet instead. In comparison, during the preceding 2023
second quarter, the Company sold $38.4 million of the guaranteed
portion of SBA 7(a) loans for net gains on sale of $1.9
million.
Noninterest expense. Noninterest expense for the 2023
third quarter decreased 1% to $86.9 million, down from $87.3
million in the preceding second quarter. The linked quarter
decrease was largely driven by lower salaries and employee benefits
expense and lower FDIC assessment expense, partially offset by
higher earned interest credit costs. Third quarter 2023 salaries
and employee benefits expense decreased 2% to $51.0 million, down
from $52.3 million in the 2023 second quarter. The Company’s
efficiency ratio for the 2023 third quarter was 60.5%, compared
with 59.1% in the preceding second quarter.
Tax rate. The effective tax rate for the 2023 third
quarter was 24.9%, compared with 26.1% for the preceding second
quarter. The year-to-date effective tax rate for the first nine
months of 2023 was 25.7%.
Balance Sheet Summary
Strong Liquidity. At September 30, 2023, cash and cash
equivalents increased to $2.50 billion, up from $2.30 billion at
June 30, 2023, and up from $331.3 million at September 30, 2022.
Available borrowing capacity, cash and cash equivalents, and
unpledged investment securities totaled $8.29 billion at September
30, 2023, equivalent to 53% of total deposits and well exceeding
the Bank’s uninsured deposit balances.
Loans. Loans receivable of $14.31 billion at September
30, 2023, decreased 4% from $14.86 billion at June 30, 2023,
reflecting our prudent approach to loan growth, an intentional
decrease in mortgage warehouse lines, and the impact of paydowns
and payoffs in a high interest rate environment. Year-over-year,
loans receivable decreased 8%. The following table sets forth the
loan portfolio composition and percentage of total loans at
September 30, 2023, June 30, 2023, and September 30, 2022:
(dollars in thousands) (unaudited)
9/30/2023
6/30/2023
9/30/2022
Balance
Percentage
Balance
Percentage
Balance
Percentage
Commercial real estate (“CRE”) loans
$
8,972,886
62.7
%
$
9,192,160
61.9
%
$
9,504,893
61.3
%
Commercial and industrial (“C&I”)
loans
4,450,341
31.1
%
4,805,126
32.3
%
5,124,421
33.1
%
Residential mortgage and other loans
882,966
6.2
%
867,524
5.8
%
861,873
5.6
%
Loans receivable
$
14,306,193
100.0
%
$
14,864,810
100.0
%
$
15,491,187
100.0
%
Deposits. Total deposits of $15.74 billion at September
30, 2023, grew 1% from $15.62 billion at June 30, 2023, reflecting
growth in customer deposits, partially offset by a planned
reduction of brokered time deposits. Year-over-year, total deposits
increased 2%. The gross loan-to-deposit ratio was 91.0% at
September 30, 2023, compared with 95.5% at June 30, 2023, and
100.2% a year ago at September 30, 2022. The following table sets
forth the deposit composition and percentage of total deposits at
September 30, 2023, June 30, 2023, and September 30, 2022:
(dollars in thousands) (unaudited)
9/30/2023
6/30/2023
9/30/2022
Balance
Percentage
Balance
Percentage
Balance
Percentage
Noninterest bearing demand deposits
$
4,249,788
27.0
%
$
4,229,247
27.1
%
$
5,590,952
36.1
%
Money market and interest bearing demand
deposits
4,424,918
28.1
%
4,188,584
26.8
%
5,885,093
38.0
%
Savings deposits
430,765
2.8
%
224,495
1.4
%
317,841
2.0
%
Time deposits
6,634,388
42.1
%
6,977,026
44.7
%
3,708,323
23.9
%
Total deposits
$
15,739,859
100.0
%
$
15,619,352
100.0
%
$
15,502,209
100.0
%
Gross loan-to-deposit ratio
91.0
%
95.5
%
100.2
%
Uninsured deposits at September 30, 2023, represented 37% of the
Bank’s deposits.
Borrowings. Federal Home Loan Bank and Federal Reserve
Bank borrowings totaled $1.80 billion at September 30, 2023,
compared with $2.26 billion at June 30, 2023, and $1.07 billion at
September 30, 2022. Linked quarter growth in deposits and decrease
in loans reduced the need for borrowings in the 2023 third
quarter.
Credit Quality and Allowance for Credit
Losses
Nonperforming assets. Nonperforming assets totaled $61.7
million at September 30, 2023, a decrease of 20% from June 30,
2023. The quarter-over-quarter decrease in nonperforming assets
reflects charge offs of nonaccrual loans, payoffs and workouts,
partially offset by new inflows. The nonperforming assets ratio was
0.31% of total assets at September 30, 2023, an improvement from
0.38% at June 30, 2023.
The following table sets forth the components of nonperforming
assets at September 30, 2023, June 30, 2023, and September 30,
2022:
(dollars in thousands) (unaudited)
9/30/2023
6/30/2023
9/30/2022
Loans on nonaccrual status (1)
$
39,081
$
61,252
$
64,571
Accruing delinquent loans past due 90 days
or more
21,579
15,182
5,306
Accruing troubled debt restructured loans
(2)
—
—
25,631
Total nonperforming loans
60,660
76,434
95,508
Other real estate owned
1,043
938
1,480
Total nonperforming assets
$
61,703
$
77,372
$
96,988
Nonperforming assets/total assets
0.31
%
0.38
%
0.51
%
(1)
Excludes delinquent SBA loans that are
guaranteed and currently in liquidation totaling $12.1 million,
$11.9 million and $9.9 million at September 30, 2023, June 30,
2023, and September 30, 2022, respectively.
(2)
The Company adopted ASU 2022-02 in 2023,
which eliminated the concept of troubled debt restructured (“TDR”)
loans from GAAP; therefore, accruing TDR loans are no longer
included in nonperforming loans.
Net charge offs. The Company recorded net charge offs of
$31.0 million in the 2023 third quarter. This included an
idiosyncratic full charge off of $23.4 million related to a
borrower that entered into Chapter 7 liquidation in August 2023.
Related to this credit, the Company had recorded impairment
reserves of $9.6 million at June 30, 2023. For the 2023 third
quarter, the Company recorded a provision for credit losses of
$16.8 million, compared with $8.9 million in the preceding second
quarter.
The following table sets forth net charge offs (recoveries) and
net charge offs (recoveries) to average loans receivable,
annualized, for the three months ended September 30, 2023, June 30,
2023, and September 30, 2022:
For the Three Months
Ended
(dollars in thousands) (unaudited)
9/30/2023
6/30/2023
9/30/2022
Net charge offs (recoveries)
$
30,987
$
(552
)
$
219
Net charge offs (recoveries)/average loans
receivable (annualized)
0.85
%
(0.01
)%
0.01
%
Allowance for credit losses. The allowance for credit
losses totaled $158.8 million at September 30, 2023, compared with
$173.0 million at June 30, 2023. The allowance coverage ratio was
1.11% of loans receivable at September 30, 2023, compared with
1.16% at June 30, 2023. Excluding the $9.6 million of impairment
reserves related to the aforementioned charged off credit, the
allowance coverage ratio as of June 30, 2023, was 1.10%.
Year-over-year, allowance coverage of loans receivable increased
from 1.04% at September 30, 2022.
The following table sets forth the allowance for credit losses
and allowance coverage ratios at September 30, 2023, June 30, 2023,
and September 30, 2022:
(dollars in thousands) (unaudited)
9/30/2023
6/30/2023
9/30/2022
Allowance for credit losses
$
158,809
$
172,996
$
160,561
Allowance for credit losses/loans
receivable
1.11
%
1.16
%
1.04
%
Capital
The Company’s capital ratios are strong and all regulatory
capital ratios expanded quarter-over-quarter. At September 30,
2023, the Company and the Bank continued to exceed all regulatory
capital requirements generally required to meet the definition of a
“well-capitalized” financial institution. The following table sets
forth the capital ratios for the Company at September 30, 2023,
June 30, 2023, and September 30, 2022:
(unaudited)
9/30/2023
6/30/2023
9/30/2022
Minimum Guideline
for “Well-Capitalized”
Common Equity Tier 1 Capital Ratio
11.67
%
11.05
%
10.32
%
6.50
%
Tier 1 Capital Ratio
12.32
%
11.68
%
10.92
%
8.00
%
Total Capital Ratio
13.23
%
12.64
%
11.72
%
10.00
%
Leverage Ratio
9.83
%
9.57
%
10.25
%
5.00
%
At September 30, 2023, total stockholders’ equity was $2.03
billion, or $16.92 per share, tangible common equity per share was
$13.01, and the tangible common equity ratio was 7.96%.
Quarter-over-quarter, stockholders’ equity declined by 2%, or $37.6
million, primarily reflecting a negative change in accumulated
other comprehensive income (“AOCI”) of $53.8 million and $16.8
million in common dividends declared, partially offset by $30.0
million in net income. The following table sets forth the TCE per
share and the TCE ratio at September 30, 2023, June 30, 2023, and
September 30, 2022:
(unaudited)
9/30/2023
6/30/2023
9/30/2022
TCE per share (1)
$
13.01
$
13.32
$
12.60
TCE ratio (1)
7.96
%
8.04
%
8.09
%
(1)
TCE per share and TCE ratio are non-GAAP
financial measures. Quantitative reconciliations of the most
directly comparable GAAP to non-GAAP financial measures are
provided in the accompanying financial information on Table Page
10.
Investor Conference Call
The Company previously announced that it will host an investor
conference call on Monday, October 23, 2023, at 9:30 a.m. Pacific
Time / 12:30 p.m. Eastern Time to review unaudited financial
results for its third quarter ended September 30, 2023. Investors
and analysts are invited to access the conference call by dialing
866-235-9917 (domestic) or 412-902-4103 (international) and asking
for the “Hope Bancorp Call.” A presentation to accompany the
earnings call will be available at the Investor Relations section
of Hope Bancorp’s website at www.ir-hopebancorp.com. Other
interested parties are invited to listen to a live webcast of the
call available at the Investor Relations section of Hope Bancorp’s
website. After the live webcast, a replay will remain available at
the Investor Relations section of Hope Bancorp’s website for one
year. A telephonic replay of the call will be available at
877-344-7529 (domestic) or 412-317-0088 (international) for one
week through October 30, 2023, replay access code 5386919.
Non-GAAP Financial Metrics
This news release contains certain non-GAAP financial measure
disclosures, including PPNR, TCE per share, TCE ratio, ROTCE, ROA
(PPNR), and ROE (PPNR). Management believes these non-GAAP
financial measures provide meaningful supplemental information
regarding the Company’s operational performance and the Company’s
capital levels and has included these figures in response to market
participant interest in these financial metrics. Quantitative
reconciliations of the most directly comparable GAAP to non-GAAP
financial measures are provided in the accompanying financial
information on Table Page 10.
About Hope Bancorp, Inc.
Hope Bancorp, Inc. (NASDAQ: HOPE) is the holding company of Bank
of Hope, the first and only super regional Korean American bank in
the United States with $20.08 billion in total assets as of
September 30, 2023. Headquartered in Los Angeles and serving a
multi-ethnic population of customers across the nation, Bank of
Hope operates 54 full-service branches in California, Washington,
Texas, Illinois, New York, New Jersey, Virginia, Alabama, and
Georgia. The Bank also operates SBA loan production offices in
Seattle, Denver, Dallas, Atlanta, Portland, New York City, Northern
California and Houston; commercial loan production offices in
Northern California, Seattle and Tampa, Fla.; residential mortgage
loan production offices in Southern California; and a
representative office in Seoul, Korea. Bank of Hope specializes in
core business banking products for small and medium-sized
businesses, with an emphasis in commercial real estate lending,
commercial and industrial lending, SBA lending, and international
trade financing. Bank of Hope is a California-chartered bank, and
its deposits are insured by the FDIC to the extent provided by law.
Bank of Hope is an Equal Opportunity Lender. For additional
information, please go to bankofhope.com. By including the
foregoing website address link, the Company does not intend to and
shall not be deemed to incorporate by reference any material
contained or accessible therein.
Forward-Looking Statements
Some statements in this news release may constitute
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These forward-looking
statements relate to, among other things, expectations regarding
the business environment in which we operate, projections of future
performance, perceived opportunities in the market, statements
regarding our business strategies, objectives and vision, and
statements about our strategic reorganization. Forward-looking
statements include, but are not limited to, statements preceded by,
followed by or that include the words “will,” “believes,”
“expects,” “anticipates,” “intends,” “plans,” “estimates” or
similar expressions. With respect to any such forward-looking
statements, the Company claims the protection provided for in the
Private Securities Litigation Reform Act of 1995. These statements
involve risks and uncertainties. The Company’s actual results,
performance or achievements may differ significantly from the
results, performance or achievements expressed or implied in any
forward-looking statements. The risks and uncertainties include,
but are not limited to: possible further deterioration in economic
conditions in our areas of operation; interest rate risk associated
with volatile interest rates and related asset-liability matching
risk; liquidity risks; risk of significant non-earning assets, and
net credit losses that could occur, particularly in times of weak
economic conditions or times of rising interest rates; the failure
of or changes to assumptions and estimates underlying the Company’s
allowances for credit losses; regulatory risks associated with
current and future regulations; and the COVID-19 pandemic and its
impact on our financial position, results of operations, liquidity,
and capitalization. For additional information concerning these and
other risk factors, see the Company’s most recent Annual Report on
Form 10-K. The Company does not undertake, and specifically
disclaims any obligation, to update any forward-looking statements
to reflect the occurrence of events or circumstances after the date
of such statements except as required by law.
Hope Bancorp, Inc.
Selected Financial
Data
Unaudited (dollars in thousands,
except share data)
Assets:
9/30/2023
6/30/2023
% change
9/30/2022
% change
Cash and due from banks
$
2,500,323
$
2,302,339
9
%
$
331,336
655
%
Investment securities
2,260,837
2,186,346
3
%
2,264,533
—
%
Federal Home Loan Bank (“FHLB”) stock and
other investments
60,433
60,213
—
%
65,192
(7
)%
Loans held for sale, at the lower of cost
or fair value
19,502
49,246
(60
)%
41,989
(54
)%
Loans receivable
14,306,193
14,864,810
(4
)%
15,491,187
(8
)%
Allowance for credit losses
(158,809
)
(172,996
)
(8
)%
(160,561
)
(1
)%
Net loans receivable
14,147,384
14,691,814
(4
)%
15,330,626
(8
)%
Accrued interest receivable
60,665
60,118
1
%
42,363
43
%
Premises and equipment, net
51,764
50,513
2
%
46,169
12
%
Bank owned life insurance
88,643
88,238
—
%
76,788
15
%
Goodwill
464,450
464,450
—
%
464,450
—
%
Servicing assets
10,457
11,532
(9
)%
11,601
(10
)%
Other intangible assets, net
4,382
4,830
(9
)%
6,212
(29
)%
Other assets
407,524
396,499
3
%
402,129
1
%
Total assets
$
20,076,364
$
20,366,138
(1
)%
$
19,083,388
5
%
Liabilities:
Deposits
$
15,739,859
$
15,619,352
1
%
$
15,502,209
2
%
FHLB and Federal Reserve Bank (“FRB”)
borrowings
1,795,726
2,260,000
(21
)%
1,072,000
68
%
Convertible notes, net
444
444
—
%
216,913
(100
)%
Subordinated debentures
107,505
107,188
—
%
106,258
1
%
Accrued interest payable
166,831
109,236
53
%
11,713
1,324
%
Other liabilities
235,575
201,920
17
%
198,570
19
%
Total liabilities
$
18,045,940
$
18,298,140
(1
)%
$
17,107,663
5
%
Stockholders’ Equity:
Common stock, $0.001 par value
$
137
$
137
—
%
$
137
—
%
Additional paid-in capital
1,436,769
1,433,788
—
%
1,428,052
1
%
Retained earnings
1,140,870
1,127,624
1
%
1,048,738
9
%
Treasury stock, at cost
(264,667
)
(264,667
)
—
%
(264,667
)
—
%
Accumulated other comprehensive loss,
net
(282,685
)
(228,884
)
(24
)%
(236,535
)
(20
)%
Total stockholders’ equity
2,030,424
2,067,998
(2
)%
1,975,725
3
%
Total liabilities and stockholders’
equity
$
20,076,364
$
20,366,138
(1
)%
$
19,083,388
5
%
Common stock shares - authorized
150,000,000
150,000,000
150,000,000
Common stock shares - outstanding
120,026,220
120,014,888
119,479,253
Treasury stock shares
17,382,835
17,382,835
17,382,835
Hope Bancorp, Inc.
Selected Financial
Data
Unaudited (dollars in thousands,
except share and per share data)
Three Months Ended
Nine Months Ended
9/30/2023
6/30/2023
% change
9/30/2022
% change
9/30/2023
9/30/2022
% change
Interest and fees on loans
$
229,937
$
225,671
2
%
$
175,078
31
%
$
671,543
$
452,774
48
%
Interest on investment securities
17,006
15,534
9
%
13,498
26
%
47,665
37,462
27
%
Interest on cash and deposits at other
banks
28,115
25,295
11
%
142
NM
58,332
352
NM
Interest on other investments
735
684
7
%
464
58
%
2,114
1,290
64
%
Total interest income
275,793
267,184
3
%
189,182
46
%
779,654
491,878
59
%
Interest on deposits
117,854
109,724
7
%
30,667
284
%
319,926
51,563
520
%
Interest on borrowings
22,561
26,771
(16
)%
5,329
323
%
59,783
12,415
382
%
Total interest expense
140,415
136,495
3
%
35,996
290
%
379,709
63,978
493
%
Net interest income before provision for
credit losses
135,378
130,689
4
%
153,186
(12
)%
399,945
427,900
(7
)%
Provision for credit losses
16,800
8,900
89
%
9,200
83
%
27,400
1,400
1,857
%
Net interest income after provision for
credit losses
118,578
121,789
(3
)%
143,986
(18
)%
372,545
426,500
(13
)%
Service fees on deposit accounts
2,415
2,325
4
%
2,535
(5
)%
6,961
6,779
3
%
Net gains on sales of SBA loans
—
1,872
(100
)%
2,782
(100
)%
4,097
14,189
(71
)%
Net gains on sales of residential mortgage
loans
118
82
44
%
29
307
%
264
862
(69
)%
Other income and fees
5,772
12,735
(55
)%
8,009
(28
)%
24,975
17,457
43
%
Total noninterest income
8,305
17,014
(51
)%
13,355
(38
)%
36,297
39,287
(8
)%
Salaries and employee benefits
51,033
52,305
(2
)%
53,222
(4
)%
160,507
152,025
6
%
Occupancy
7,149
6,967
3
%
6,682
7
%
21,637
21,195
2
%
Furniture and equipment
5,625
5,393
4
%
4,967
13
%
16,076
14,389
12
%
Data processing and communications
2,891
2,917
(1
)%
2,469
17
%
8,630
7,823
10
%
FDIC assessment
3,683
4,691
(21
)%
1,633
126
%
10,155
4,652
118
%
Earned interest credit
6,377
5,090
25
%
4,685
36
%
15,894
5,996
165
%
Other
10,115
9,970
1
%
10,256
(1
)%
31,661
33,572
(6
)%
Total noninterest expense
86,873
87,333
(1
)%
83,914
4
%
264,560
239,652
10
%
Income before income taxes
40,010
51,470
(22
)%
73,427
(46
)%
144,282
226,135
(36
)%
Income tax provision
9,961
13,448
(26
)%
19,679
(49
)%
37,090
59,561
(38
)%
Net income
$
30,049
$
38,022
(21
)%
$
53,748
(44
)%
$
107,192
$
166,574
(36
)%
Earnings Per Common Share - Basic
$
0.25
$
0.32
$
0.45
$
0.89
$
1.39
Earnings Per Common Share - Diluted
$
0.25
$
0.32
$
0.45
$
0.89
$
1.38
Weighted Average Shares Outstanding -
Basic
120,020,567
119,953,174
119,476,035
119,843,382
119,940,044
Weighted Average Shares Outstanding -
Diluted
120,374,618
120,129,359
119,996,523
120,249,952
120,595,988
Hope Bancorp, Inc.
Selected Financial
Data
Unaudited
For the Three Months
Ended
For the Nine Months
Ended
Profitability measures
(annualized):
9/30/2023
6/30/2023
9/30/2022
9/30/2023
9/30/2022
ROA
0.60
%
0.74
%
1.17
%
0.72
%
1.23
%
ROE
5.78
%
7.34
%
10.58
%
6.92
%
10.85
%
ROA (PPNR) (1)
1.13
%
1.18
%
1.79
%
1.15
%
1.68
%
ROE (PPNR) (1)
10.93
%
11.65
%
16.26
%
11.08
%
14.83
%
ROTCE (1)
7.47
%
9.49
%
13.77
%
8.95
%
14.10
%
Net interest margin
2.83
%
2.70
%
3.49
%
2.84
%
3.36
%
Efficiency ratio (not annualized)
60.46
%
59.13
%
50.39
%
60.65
%
51.30
%
Noninterest expense / average assets
1.73
%
1.71
%
1.82
%
1.77
%
1.77
%
(1) ROA (PPNR), ROE (PPNR), and ROTCE are
non-GAAP financial measures. Quantitative reconciliations of the
most directly comparable GAAP to non-GAAP financial measures are
provided in the accompanying financial information on Table Page
10.
Hope Bancorp, Inc.
Selected Financial
Data
Unaudited (dollars in
thousands)
Three Months Ended
9/30/2023
6/30/2023
9/30/2022
Interest
Annualized
Interest
Annualized
Interest
Annualized
Average
Income/
Average
Average
Income/
Average
Average
Income/
Average
Balance
Expense
Yield/Cost
Balance
Expense
Yield/Cost
Balance
Expense
Yield/Cost
INTEREST EARNING ASSETS:
Loans, including loans held for sale
$
14,550,106
$
229,937
6.27
%
$
15,105,212
$
225,671
5.99
%
$
14,925,298
$
175,078
4.65
%
Investment securities
2,275,133
17,006
2.97
%
2,243,614
15,534
2.78
%
2,366,696
13,498
2.26
%
Interest earning cash and deposits at
other banks
2,106,469
28,115
5.30
%
1,996,924
25,295
5.08
%
54,870
142
1.03
%
FHLB stock and other investments
47,316
735
6.16
%
47,044
684
5.83
%
52,854
464
3.48
%
Total interest earning assets
$
18,979,024
$
275,793
5.77
%
$
19,392,794
$
267,184
5.53
%
$
17,399,718
$
189,182
4.31
%
INTEREST BEARING LIABILITIES:
Deposits:
Money market and interest bearing
demand
$
4,202,076
$
36,574
3.45
%
$
4,279,819
$
34,377
3.22
%
$
6,255,271
$
19,614
1.24
%
Savings deposits
331,354
2,240
2.68
%
216,060
674
1.25
%
324,487
969
1.18
%
Time deposits
6,862,038
79,040
4.57
%
6,890,035
74,673
4.35
%
3,146,432
10,084
1.27
%
Total interest bearing deposits
11,395,468
117,854
4.10
%
11,385,914
109,724
3.87
%
9,726,190
30,667
1.25
%
FHLB and FRB borrowings
1,809,322
19,821
4.35
%
2,177,264
23,622
4.35
%
448,837
2,393
2.12
%
Convertible notes, net
444
2
1.76
%
96,621
598
2.45
%
216,762
1,322
2.39
%
Subordinated debentures
103,429
2,738
10.36
%
103,123
2,551
9.79
%
102,182
1,614
6.18
%
Total interest bearing liabilities
$
13,308,663
$
140,415
4.19
%
$
13,762,922
$
136,495
3.98
%
$
10,493,971
$
35,996
1.36
%
Noninterest bearing demand deposits
4,312,117
4,366,868
5,719,213
Total funding liabilities/cost of
funds
$
17,620,780
3.16
%
$
18,129,790
3.02
%
$
16,213,184
0.88
%
Net interest income/net interest
spread
$
135,378
1.58
%
$
130,689
1.55
%
$
153,186
2.95
%
Net interest margin
2.83
%
2.70
%
3.49
%
Cost of deposits:
Noninterest bearing demand deposits
$
4,312,117
$
—
—
%
$
4,366,868
$
—
—
%
$
5,719,213
$
—
—
%
Interest bearing deposits
11,395,468
117,854
4.10
%
11,385,914
109,724
3.87
%
9,726,190
30,667
1.25
%
Total deposits
$
15,707,585
$
117,854
2.98
%
$
15,752,782
$
109,724
2.79
%
$
15,445,403
$
30,667
0.79
%
Hope Bancorp, Inc.
Selected Financial
Data
Unaudited (dollars in
thousands)
Nine Months Ended
9/30/2023
9/30/2022
Interest
Annualized
Interest
Annualized
Average
Income/
Average
Average
Income/
Average
Balance
Expense
Yield/Cost
Balance
Expense
Yield/Cost
INTEREST EARNING ASSETS:
Loans, including loans held for sale
$
14,961,058
$
671,543
6.00
%
$
14,378,774
$
452,774
4.21
%
Investment securities
2,255,839
47,665
2.83
%
2,469,858
37,462
2.03
%
Interest earning cash and deposits at
other banks
1,531,561
58,332
5.09
%
133,745
352
0.35
%
FHLB stock and other investments
47,135
2,114
6.00
%
63,542
1,290
2.71
%
Total interest earning assets
$
18,795,593
$
779,654
5.55
%
$
17,045,919
$
491,878
3.86
%
INTEREST BEARING LIABILITIES:
Deposits:
Money market and interest bearing
demand
$
4,603,479
$
112,349
3.26
%
$
6,360,040
$
33,970
0.71
%
Savings deposits
268,145
3,741
1.87
%
322,058
2,834
1.18
%
Time deposits
6,436,645
203,836
4.23
%
2,683,217
14,759
0.74
%
Total interest bearing deposits
11,308,269
319,926
3.78
%
9,365,315
51,563
0.74
%
FHLB and FRB borrowings
1,558,493
50,141
4.30
%
423,875
4,537
1.43
%
Convertible notes, net
103,933
1,922
2.44
%
216,538
3,967
2.42
%
Subordinated debentures
103,117
7,720
9.87
%
101,882
3,911
5.06
%
Total interest bearing liabilities
$
13,073,812
$
379,709
3.88
%
$
10,107,610
$
63,978
0.85
%
Noninterest bearing demand deposits
4,445,740
5,702,734
Total funding liabilities/cost of
funds
$
17,519,552
2.90
%
$
15,810,344
0.54
%
Net interest income/net interest
spread
$
399,945
1.67
%
$
427,900
3.01
%
Net interest margin
2.84
%
3.36
%
Cost of deposits:
Noninterest bearing demand deposits
$
4,445,740
$
—
—
%
$
5,702,734
$
—
—
%
Interest bearing deposits
11,308,269
319,926
3.78
%
9,365,315
51,563
0.74
%
Total deposits
$
15,754,009
$
319,926
2.72
%
$
15,068,049
$
51,563
0.46
%
Hope Bancorp, Inc.
Selected Financial
Data
Unaudited (dollars in
thousands)
Three Months Ended
Nine Months Ended
AVERAGE BALANCES:
9/30/2023
6/30/2023
% change
9/30/2022
% change
9/30/2023
9/30/2022
% change
Loans, including loans held for sale
$
14,550,106
$
15,105,212
(4
)%
$
14,925,298
(3
)%
$
14,961,058
$
14,378,774
4
%
Investment securities
2,275,133
2,243,614
1
%
2,366,696
(4
)%
2,255,839
2,469,858
(9
)%
Interest earning cash and deposits at
other banks
2,106,469
1,996,924
5
%
54,870
3739
%
1,531,561
133,745
1045
%
Interest earning assets
18,979,024
19,392,794
(2
)%
17,399,718
9
%
18,795,593
17,045,919
10
%
Total assets
20,059,304
20,468,810
(2
)%
18,428,874
9
%
19,875,322
18,018,588
10
%
Interest bearing deposits
11,395,468
11,385,914
—
%
9,726,190
17
%
11,308,269
9,365,315
21
%
Interest bearing liabilities
13,308,663
13,762,922
(3
)%
10,493,971
27
%
13,073,812
10,107,610
29
%
Noninterest bearing demand deposits
4,312,117
4,366,868
(1
)%
5,719,213
(25
)%
4,445,740
5,702,734
(22
)%
Stockholders’ equity
2,079,092
2,072,859
—
%
2,032,362
2
%
2,066,157
2,046,351
1
%
LOAN PORTFOLIO COMPOSITION:
9/30/2023
6/30/2023
% change
9/30/2022
% change
Commercial real estate (“CRE”) loans
$
8,972,886
$
9,192,160
(2
)%
$
9,504,893
(6
)%
Commercial and industrial (“C&I”)
loans
4,450,341
4,805,126
(7
)%
5,124,421
(13
)%
Residential mortgage and other loans
882,966
867,524
2
%
861,873
2
%
Loans receivable
14,306,193
14,864,810
(4
)%
15,491,187
(8
)%
Allowance for credit losses
(158,809
)
(172,996
)
(8
)%
(160,561
)
(1
)%
Loans receivable, net
$
14,147,384
$
14,691,814
(4
)%
$
15,330,626
(8
)%
CRE LOANS BY PROPERTY TYPE:
9/30/2023
6/30/2023
% change
9/30/2022
% change
Multi-tenant retail
$
1,745,430
$
1,778,068
(2
)%
$
1,904,132
(8
)%
Hotels/motels
826,732
868,286
(5
)%
1,091,047
(24
)%
Gas stations and car washes
1,037,621
1,042,290
—
%
1,056,217
(2
)%
Mixed-use facilities
813,571
834,948
(3
)%
825,289
(1
)%
Industrial warehouses
1,254,643
1,301,075
(4
)%
1,271,104
(1
)%
Multifamily
1,234,934
1,257,971
(2
)%
1,199,320
3
%
Single-tenant retail
671,921
690,418
(3
)%
728,432
(8
)%
Office
454,695
463,998
(2
)%
432,586
5
%
All other
933,339
955,106
(2
)%
996,766
(6
)%
Total CRE loans
$
8,972,886
$
9,192,160
(2
)%
$
9,504,893
(6
)%
DEPOSIT COMPOSITION:
9/30/2023
6/30/2023
% change
9/30/2022
% change
Noninterest bearing demand deposits
$
4,249,788
$
4,229,247
—
%
$
5,590,952
(24
)%
Money market and interest bearing
demand
4,424,918
4,188,584
6
%
5,885,093
(25
)%
Savings deposits
430,765
224,495
92
%
317,841
36
%
Time deposits
6,634,388
6,977,026
(5
)%
3,708,323
79
%
Total deposits
$
15,739,859
$
15,619,352
1
%
$
15,502,209
2
%
Hope Bancorp, Inc.
Selected Financial
Data
Unaudited (dollars in thousands,
except share and per share data)
Three Months Ended
NEW LOAN ORIGINATIONS:
9/30/2023
6/30/2023
9/30/2022
CRE
$
46,011
$
115,444
$
500,826
C&I
201,420
318,063
732,341
SBA loans
48,987
38,051
47,428
Residential mortgage and other loans
32,920
19,016
68,099
Total new loan originations
$
329,338
$
490,574
$
1,348,694
CAPITAL & CAPITAL RATIOS:
9/30/2023
6/30/2023
9/30/2022
Total stockholders’ equity
$
2,030,424
$
2,067,998
$
1,975,725
Total capital
$
2,105,754
$
2,102,625
$
2,000,653
Common equity tier 1 ratio
11.67
%
11.05
%
10.32
%
Tier 1 capital ratio
12.32
%
11.68
%
10.92
%
Total capital ratio
13.23
%
12.64
%
11.72
%
Leverage ratio
9.83
%
9.57
%
10.25
%
Total risk weighted assets
$
15,912,742
$
16,640,323
$
17,065,355
Book value per common share
$
16.92
$
17.23
$
16.54
TCE per share (1)
$
13.01
$
13.32
$
12.60
TCE ratio (1)
7.96
%
8.04
%
8.09
%
(1) TCE per share and TCE ratio are
non-GAAP financial measures. Quantitative reconciliations of the
most directly comparable GAAP to non-GAAP financial measures are
provided in the accompanying financial information on Table Page
10.
Three Months Ended
Nine Months Ended
ALLOWANCE FOR CREDIT LOSSES
CHANGES:
9/30/2023
6/30/2023
3/31/2023
12/31/2022
9/30/2022
9/30/2023
9/30/2022
Balance at beginning of period
$
172,996
$
163,544
$
162,359
$
160,561
$
151,580
$
162,359
$
140,550
ASU 2022-02 day 1 adoption impact
—
—
(407
)
—
—
(407
)
—
Provision for credit losses
16,800
8,900
1,700
8,200
9,200
27,400
1,400
Recoveries
2,938
1,531
387
3,222
331
4,856
21,376
Charge offs
(33,925
)
(979
)
(495
)
(9,624
)
(550
)
(35,399
)
(2,765
)
Balance at end of period
$
158,809
$
172,996
$
163,544
$
162,359
$
160,561
$
158,809
$
160,561
9/30/2023
6/30/2023
3/31/2023
12/31/2022
9/30/2022
Allowance for unfunded loan
commitments
$
3,143
$
3,081
$
2,971
$
1,351
$
1,231
Three Months Ended
Nine Months Ended
NET LOAN CHARGE OFFS
(RECOVERIES):
9/30/2023
6/30/2023
3/31/2023
12/31/2022
9/30/2022
9/30/2023
9/30/2022
CRE loans
$
(2,227
)
$
438
$
(109
)
$
2,022
$
9
$
(1,898
)
$
(16,917
)
C&I loans
33,145
(1,091
)
196
4,174
115
32,250
(1,875
)
Residential mortgage and other loans
69
101
21
206
95
191
181
Net loan charge offs (recoveries)
$
30,987
$
(552
)
$
108
$
6,402
$
219
$
30,543
$
(18,611
)
Net charge offs (recoveries)/average loans
receivable (annualized)
0.85
%
(0.01
)%
—
%
0.17
%
0.01
%
0.27
%
(0.17
)%
NONPERFORMING ASSETS:
9/30/2023
6/30/2023
3/31/2023
12/31/2022
9/30/2022
Loans on nonaccrual status (1)
$
39,081
$
61,252
$
78,861
$
49,687
$
64,571
Accruing delinquent loans past due 90 days
or more
21,579
15,182
364
401
5,306
Accruing troubled debt restructured loans
(2)
—
—
—
16,931
25,631
Total nonperforming loans
60,660
76,434
79,225
67,019
95,508
Other real estate owned (“OREO”)
1,043
938
938
2,418
1,480
Total nonperforming assets
$
61,703
$
77,372
$
80,163
$
69,437
$
96,988
Nonperforming assets/total assets
0.31
%
0.38
%
0.39
%
0.36
%
0.51
%
Nonperforming assets/loans receivable
& OREO
0.43
%
0.52
%
0.53
%
0.45
%
0.63
%
Nonperforming assets/total capital
3.04
%
3.74
%
3.89
%
3.44
%
4.91
%
Nonperforming loans/loans receivable
0.42
%
0.51
%
0.53
%
0.44
%
0.62
%
Nonaccrual loans/loans receivable
0.27
%
0.41
%
0.52
%
0.32
%
0.42
%
Allowance for credit losses/loans
receivable
1.11
%
1.16
%
1.09
%
1.05
%
1.04
%
Allowance for credit losses/nonperforming
loans
261.80
%
226.33
%
206.43
%
242.26
%
168.11
%
(1) Excludes delinquent SBA loans that are
guaranteed and currently in liquidation totaling $12.1 million,
$11.9 million, $7.6 million, $9.8 million, and $9.9 million, at
September 30, 2023, June 30, 2023, March 31, 2023, December 31,
2022, and September 30, 2022, respectively.
(2) The Company adopted ASU 2022-02 in
2023, which eliminated the concept of TDR from GAAP; therefore,
accruing TDR loans are no longer included in nonperforming
loans.
NONACCRUAL LOANS BY TYPE:
9/30/2023
6/30/2023
3/31/2023
12/31/2022
9/30/2022
CRE loans
$
26,687
$
29,270
$
44,376
$
33,915
$
47,807
C&I loans
4,234
23,042
26,191
5,620
7,675
Residential mortgage and other loans
8,160
8,940
8,294
10,152
9,089
Total nonaccrual loans
$
39,081
$
61,252
$
78,861
$
49,687
$
64,571
ACCRUING DELINQUENT LOANS 30-89 DAYS
PAST DUE:
9/30/2023
6/30/2023
3/31/2023
12/31/2022
9/30/2022
30 - 59 days past due
$
2,906
$
9,295
$
7,662
$
7,049
$
13,092
60 - 89 days past due
506
178
249
2,243
4,933
Total accruing delinquent loans 30-89 days
past due
$
3,412
$
9,473
$
7,911
$
9,292
$
18,025
ACCRUING DELINQUENT LOANS 30-89 DAYS
PAST DUE BY TYPE:
9/30/2023
6/30/2023
3/31/2023
12/31/2022
9/30/2022
CRE loans
$
611
$
7,339
$
3,652
$
4,115
$
9,694
C&I loans
1,168
990
419
3,300
6,165
Residential mortgage and other loans
1,633
1,144
3,840
1,877
2,166
Total accruing delinquent loans 30-89 days
past due
$
3,412
$
9,473
$
7,911
$
9,292
$
18,025
CRITICIZED LOANS:
9/30/2023
6/30/2023
3/31/2023
12/31/2022
9/30/2022
Special mention loans
$
186,600
$
210,806
$
166,472
$
157,263
$
79,399
Substandard loans
174,161
134,203
138,224
104,073
204,713
Total criticized loans
$
360,761
$
345,009
$
304,696
$
261,336
$
284,112
Hope Bancorp, Inc.
Selected Financial
Data
Unaudited (dollars in thousands,
except share and per share data)
Reconciliation of GAAP financial
measures to non-GAAP financial measures
Management reviews select non-GAAP financial measures in evaluating
the Company’s and the Bank’s financial performance and in response
to market participant interest. Reconciliations of the most
directly comparable GAAP to non-GAAP financial measures utilized by
management are provided below.
Three Months Ended
Nine Months Ended
RETURN ON AVERAGE TANGIBLE COMMON
EQUITY
9/30/2023
6/30/2023
9/30/2022
9/30/2023
9/30/2022
Average stockholders’ equity
$
2,079,092
$
2,072,859
$
2,032,362
$
2,066,157
$
2,046,351
Less: Average goodwill and core deposit
intangible assets, net
(469,079
)
(469,515
)
(470,941
)
(469,525
)
(471,424
)
Average TCE
$
1,610,013
$
1,603,344
$
1,561,421
$
1,596,632
$
1,574,927
Net income
$
30,049
$
38,022
$
53,748
$
107,192
$
166,574
ROTCE (annualized)
7.47
%
9.49
%
13.77
%
8.95
%
14.10
%
TANGIBLE COMMON EQUITY
9/30/2023
6/30/2023
9/30/2022
Total stockholders’ equity
$
2,030,424
$
2,067,998
$
1,975,725
Less: Goodwill and core deposit intangible
assets, net
(468,832
)
(469,280
)
(470,662
)
TCE
$
1,561,592
$
1,598,718
$
1,505,063
Total assets
$
20,076,364
$
20,366,138
$
19,083,388
Less: Goodwill and core deposit intangible
assets, net
(468,832
)
(469,280
)
(470,662
)
Tangible assets
$
19,607,532
$
19,896,858
$
18,612,726
TCE ratio
7.96
%
8.04
%
8.09
%
Common shares outstanding
120,026,220
120,014,888
119,479,253
TCE per share
$
13.01
$
13.32
$
12.60
Three Months Ended
Nine Months Ended
PRE-PROVISION NET REVENUE
9/30/2023
6/30/2023
9/30/2022
9/30/2023
9/30/2022
Net interest income before provision for
credit losses
$
135,378
$
130,689
$
153,186
$
399,945
$
427,900
Noninterest income
8,305
17,014
13,355
36,297
39,287
Revenue
143,683
147,703
166,541
436,242
467,187
Less: Noninterest expense
86,873
87,333
83,914
264,560
239,652
PPNR
$
56,810
$
60,370
$
82,627
$
171,682
$
227,535
Average assets
$
20,059,304
$
20,468,810
$
18,428,874
$
19,875,322
$
18,018,588
ROA (PPNR) (annualized)
1.13
%
1.18
%
1.79
%
1.15
%
1.68
%
Average stockholders’ equity
2,079,092
2,072,859
2,032,362
2,066,157
2,046,351
ROE (PPNR) (annualized)
10.93
%
11.65
%
16.26
%
11.08
%
14.83
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231023356482/en/
Julianna Balicka EVP & Chief Financial Officer 213-235-3235
julianna.balicka@bankofhope.com
Angie Yang SVP, Director of Investor Relations & Corporate
Communications 213-251-2219 angie.yang@bankofhope.com
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