Hope Bancorp, Inc. (“Company”) (NASDAQ: HOPE), the holding
company of Bank of Hope (“Bank”), today reported unaudited
financial results for its first quarter ended March 31, 2024. For
the three months ended March 31, 2024, net income totaled $25.9
million, or $0.21 per diluted common share. This compares with net
income of $26.5 million, or $0.22 per diluted common share, in the
fourth quarter of 2023.
“We are pleased with the progress we are making in our strategic
transformation, realigning our structure around lines of business
and products,” stated Kevin S. Kim, Chairman, President and Chief
Executive Officer. “All our business lines exceeded their deposit
goals for the first quarter of 2024; growth in customer deposits
offset a planned reduction of brokered time deposits, resulting in
stable balances quarter-over-quarter. Our first quarter financial
results demonstrated the benefits of our more efficient structure
with noninterest expenses, excluding notable items(1), decreasing
2% from the preceding fourth quarter of 2023. All our capital
ratios increased quarter-over-quarter, with our tangible common
equity ratio(2) rising to 9.33% and our total capital ratio rising
to 14.19%, both as of March 31, 2024.
“The strength of our balance sheet positioned us well to
capitalize on strategic opportunities in the market. This morning,
we announced the signing of a definitive merger agreement with
Territorial Bancorp, the stock holding company of Territorial
Savings Bank, a $2.2 billion savings bank headquartered in
Hawai‘i,” continued Kim. “Territorial has a stable, low-cost core
deposit base, excellent asset quality, and provides us an entry
point to the attractive Hawai‘i market, which has a large Asian
American and Pacific Islander population. Moreover, the combination
with Territorial would more than double the size of Hope’s
residential mortgage portfolio. We expect this transaction, upon
completion, to be immediately accretive to earnings, sustainably
strengthening our profitability while further diversifying our
franchise.”
_____________________________________
(1)
Noninterest expense, excluding the FDIC
special assessment, restructuring charges and merger-related
expenses (also referred to collectively as the “notable items”), is
a non-GAAP financial measure. Quantitative reconciliations of the
most directly comparable GAAP to non-GAAP financial measures are
provided in the accompanying financial information on Table Pages 9
and 10.
(2)
Tangible common equity (“TCE”) ratio is a
non-GAAP financial measure. Quantitative reconciliations of the
most directly comparable GAAP to non-GAAP financial measures are
provided in the accompanying financial information on Table Pages 9
and 10.
Territorial Bancorp Merger
Agreement
As concurrently announced in a joint news release issued today,
the Company and Territorial Bancorp Inc. (Nasdaq: TBNK)
(“Territorial”) signed a definitive merger agreement, which is
expected to create the largest regional bank catering to
multi-ethnic customers with full-service branches across the
continental United States and Hawai‘i.
Under the terms of the merger agreement, following the
completion of the transaction, Territorial shareholders will
receive a fixed exchange ratio of 0.8048 shares of the Company’s
common stock in exchange for each share of Territorial common stock
they own, in a 100% stock-for-stock transaction valued at
approximately $78.6 million. Based on the closing price of the
Company’s common stock on April 26, 2024, this represents a value
of $8.82 per share of Territorial common stock, although the actual
value will be determined upon transaction closing. Upon completion
of the transaction, it is expected that the Company’s shareholders
will own approximately 94.4% of the combined entity, and
Territorial’s shareholders will own approximately 5.6%, with the
actual percentages being determined as of the transaction closing
date. The transaction is intended to qualify as a tax-free
reorganization for Territorial shareholders.
Upon completion of the merger, the Company intends to preserve
and build upon the 100-plus year legacy of the Territorial Savings
Bank brand name, culture and commitment to its local communities.
Accordingly, the legacy Territorial franchise in Hawai‘i will
continue to do business under the Territorial Savings Bank brand,
as a trade name of Bank of Hope.
The Boards of Directors of both companies have approved the
transaction. The transaction is expected to close by year-end 2024,
subject to regulatory approvals, the approval of Territorial
shareholders, and the satisfaction of other customary closing
conditions.
Operating Results for the 2024 First
Quarter
Net income and earnings per share. Net income for the
2024 first quarter was $25.9 million, or $0.21 per diluted common
share, compared with $26.5 million, or $0.22 per diluted common
share, for the immediately preceding fourth quarter. Notable items
impacting net income for the 2024 first quarter included $752,000
of merger-related expenses, after tax, related to the Company’s
proposed acquisition of Territorial announced today; an accrual of
$721,000, after tax, for an incremental Federal Deposit Insurance
Corporation (“FDIC”) special assessment; and restructuring costs of
$103,000, after tax, related to the Company’s strategic
reorganization announced in the 2023 fourth quarter. In the
immediately preceding fourth quarter, notable items impacting net
income were $8.7 million of restructuring costs, after tax, and
$3.1 million, after tax, accrued for an FDIC special assessment.
Excluding these notable items, net income(3) for the 2024 first
quarter was $27.4 million, compared with $38.3 million for the
fourth quarter of 2023. Earnings per diluted common share excluding
notable items(3) amounted to $0.23 for the three months ended March
31, 2024, compared with $0.32 for the three months ended December
31, 2023.
Net interest income and net interest margin. Net interest
income before provision for credit losses for the 2024 first
quarter totaled $115.0 million, compared with $125.9 million in the
immediately preceding fourth quarter, a decrease of 9%
quarter-over-quarter. First quarter 2024 net interest margin
contracted 15 basis points to 2.55% from 2.70% in the 2023 fourth
quarter. The linked-quarter change in net interest income and net
interest margin largely reflected a decline in the average balance
of loans and a higher cost of interest bearing deposits, partially
offset by a decrease in the average balance of time deposits and
wholesale borrowings.
Noninterest income. Noninterest income for the 2024 first
quarter totaled $8.3 million, compared with $9.3 million in the
immediately preceding fourth quarter. Growth in deposit account
service fees was offset by reductions in other income and fees. The
Company continued to retain SBA 7(a)loan production on its balance
sheet and did not sell any loans in the 2024 first quarter.
Noninterest expense. Noninterest expense for the 2024
first quarter was $84.8 million, including $1.0 million of
merger-related expenses, an incremental accrual of $1.0 million for
the FDIC special assessment, and $143,000 of restructuring-related
costs, all on a pre-tax basis. For the immediately preceding fourth
quarter, noninterest expense was $99.2 million, including $11.1
million of pre-tax restructuring costs and $4.0 million (pre-tax)
accrued for the FDIC special assessment.
Excluding notable items, noninterest expense for the 2024 first
quarter was $82.7 million, down 2% compared with $84.1 million for
the 2023 fourth quarter, and down 7% compared with $88.7 million
for the 2023 first quarter. First quarter 2024 salaries and
employee benefits expense increased 1% quarter-over-quarter to
$47.8 million, up from $47.4 million in the 2023 fourth quarter,
reflecting seasonal increases in payroll taxes and vacation
accruals, partially offset by reduced salary and benefits costs
following the restructuring in the fourth quarter of 2023.
Year-over-year, salaries and employee benefits expense decreased
16% from $57.2 million in the 2023 first quarter. Occupancy
expenses decreased 6% quarter-over-quarter and 10% year-over-year,
reflecting branch rationalization.
Tax rate. The effective tax rate for the 2024 first
quarter was 27.9%, compared with 24.9% for the full year 2023. The
provision for income taxes in the 2024 first quarter was $10.0
million and included $1.1 million of true-up adjustments, which are
not expected to recur. For the full year 2024, the Company expects
the effective tax rate to be approximately 26%.
_____________________________________
(3)
Net income excluding notable items and
earnings per diluted common share excluding notable items 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 Pages 9
and 10.
Balance Sheet Summary
Cash and investment securities. At March 31, 2024, cash
and cash equivalents totaled $1.19 billion, compared with $1.93
billion at December 31, 2023. The decrease primarily reflected the
payoff of $1.00 billion of the Company’s Bank Term Funding Program
(“BTFP”) borrowings with existing cash on March 19, 2024. At March
31, 2023, cash and equivalents were $2.21 billion. Investment
securities totaled $2.28 billion at March 31, 2024, $2.41 billion
at December 31, 2023, and $2.23 billion at March 31, 2023.
Loans. Loans receivable of $13.72 billion at March 31,
2024, decreased 1% from $13.85 billion at December 31, 2023,
reflecting declines in commercial and commercial real estate loans,
partially offset by strong growth in residential mortgage
loans.
The following table sets forth the loan portfolio composition at
March 31, 2024, December 31, 2023, and March 31, 2023:
(dollars in thousands) (unaudited)
3/31/2024
12/31/2023
3/31/2023
Balance
Percentage
Balance
Percentage
Balance
Percentage
Commercial real estate (“CRE”) loans
$
8,707,673
63.5
%
$
8,797,884
63.6
%
$
9,373,529
62.2
%
Commercial and industrial (“C&I”)
loans
4,041,063
29.5
%
4,135,044
29.8
%
4,821,270
32.0
%
Residential mortgage and other loans
970,442
7.0
%
920,691
6.6
%
870,050
5.8
%
Loans receivable
$
13,719,178
100.0
%
$
13,853,619
100.0
%
$
15,064,849
100.0
%
Deposits. Total deposits were stable quarter-over-quarter
with total deposits of $14.75 billion at March 31, 2024 and
December 31, 2023, reflecting growth in customer deposits that
offset a planned reduction of brokered deposits. During the first
quarter of 2024, the Company reduced brokered time deposits by
$182.7 million, or 13% from December 31, 2023.
The following table sets forth the deposit composition at March
31, 2024, December 31, 2023, and March 31, 2023:
(dollars in thousands) (unaudited)
3/31/2024
12/31/2023
3/31/2023
Balance
Percentage
Balance
Percentage
Balance
Percentage
Noninterest bearing demand deposits
$
3,652,592
24.7
%
$
3,914,967
26.5
%
$
4,504,621
28.4
%
Money market, interest bearing demand, and
savings deposits
5,313,064
36.0
%
4,872,029
33.0
%
4,563,702
28.9
%
Time deposits
5,787,761
39.3
%
5,966,757
40.5
%
6,759,886
42.7
%
Total deposits
$
14,753,417
100.0
%
$
14,753,753
100.0
%
$
15,828,209
100.0
%
Gross loan-to-deposit ratio
93.0
%
93.9
%
96.0
%
Borrowings. Federal Home Loan Bank and Federal Reserve
Bank borrowings totaled $795.6 million at March 31, 2024, $1.80
billion at December 31, 2023, and $2.13 billion at March 31, 2023.
The quarter-over-quarter reduction reflects the payoff of $1.00
billion of the Company’s BTFP borrowings during the 2024 first
quarter.
Credit Quality and Allowance for Credit
Losses
Nonperforming assets. Nonperforming assets totaled $106.8
million, or 0.59% of total assets, at March 31, 2024. This compares
with nonperforming assets of $45.5 million, or 0.24% of total
assets, at December 31, 2023, and $80.2 million, or 0.39% of total
assets, at March 31, 2023. The quarter-over-quarter increase in
nonperforming assets largely reflects one relationship consisting
of three commercial real estate loans that were accruing delinquent
loans past due 90 days or more at March 31, 2024. These loans are
fully secured and sales agreements are in place for the collateral
properties.
The following table sets forth the components of nonperforming
assets at March 31, 2024, December 31, 2023, and March 31,
2023:
(dollars in thousands) (unaudited)
3/31/2024
12/31/2023
3/31/2023
Loans on nonaccrual status (1)
$
59,526
$
45,204
$
78,861
Accruing delinquent loans past due 90 days
or more
47,290
261
364
Total nonperforming loans
106,816
45,465
79,225
Other real estate owned
—
63
938
Total nonperforming assets
$
106,816
$
45,528
$
80,163
Nonperforming assets/total assets
0.59
%
0.24
%
0.39
%
_____________________________________
(1)
Excludes delinquent SBA loans that are
guaranteed and currently in liquidation totaling $10.9 million,
$11.4 million and $7.6 million at March 31, 2024, December 31,
2023, and March 31, 2023, respectively.
Net charge offs and provision for credit losses. The
Company recorded net charge offs of $3.5 million in the 2024 first
quarter, equivalent to 0.10%, annualized, of average loans. This
compares with net charge offs of $1.8 million, or 0.05%,
annualized, of average loans in the immediately preceding fourth
quarter.
The following table sets forth net charge offs and annualized
net charge off ratios for the three months ended March 31, 2024,
December 31, 2023, and March 31, 2023:
For the Three Months
Ended
(dollars in thousands) (unaudited)
3/31/2024
12/31/2023
3/31/2023
Net charge offs
$
3,536
$
1,815
$
108
Net charge offs/average loans receivable
(annualized)
0.10
%
0.05
%
—
%
For the 2024 first quarter, the Company recorded a provision for
credit losses of $2.6 million. This compares with a provision for
credit losses of $2.4 million in the immediately preceding fourth
quarter.
Allowance for credit losses. The allowance for credit
losses totaled $158.8 million at March 31, 2024, compared with
$158.7 million at December 31, 2023. The allowance coverage ratio
was 1.16% of loans receivable at March 31, 2024, up one basis point
from 1.15% at December 31, 2023. Year-over-year, allowance coverage
of loans receivable increased from 1.09% at March 31, 2023.
The following table sets forth the allowance for credit losses
and the coverage ratios at March 31, 2024, December 31, 2023, and
March 31, 2023:
(dollars in thousands) (unaudited)
3/31/2024
12/31/2023
3/31/2023
Allowance for credit losses
$
158,758
$
158,694
$
163,544
Allowance for credit losses/loans
receivable
1.16
%
1.15
%
1.09
%
Capital
The Company’s capital ratios are strong and all regulatory
risk-based capital ratios expanded quarter-over-quarter and
year-over-year. At March 31, 2024, 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 March 31, 2024, December 31, 2023, and March 31,
2023:
(unaudited)
3/31/2024
12/31/2023
3/31/2023
Minimum Guideline for
“Well-Capitalized”
Common Equity Tier 1 Capital Ratio
12.47
%
12.28
%
10.75
%
6.50
%
Tier 1 Capital Ratio
13.17
%
12.96
%
11.36
%
8.00
%
Total Capital Ratio
14.19
%
13.92
%
12.25
%
10.00
%
Leverage Ratio
10.42
%
10.11
%
10.13
%
5.00
%
At March 31, 2024, total stockholders’ equity was $2.11 billion,
or $17.51 per common share. Quarter-over-quarter, stockholders’
equity decreased slightly by $9.0 million, primarily reflecting an
adverse change in accumulated other comprehensive income (“AOCI”),
partially offset by growth in retained earnings. Tangible common
equity (“TCE”) per share(1) was $13.63 at March 31, 2024, compared
with $13.76 at December 31, 2023, and the TCE ratio(1) was 9.33%,
up 47 basis points quarter-over-quarter.
The following table sets forth the TCE per share and the TCE
ratio at March 31, 2024, December 31, 2023, and March 31, 2023:
(unaudited)
3/31/2024
12/31/2023
3/31/2023
TCE per share (1)
$
13.63
$
13.76
$
13.26
TCE ratio (1)
9.33
%
8.86
%
7.91
%
_____________________________________
(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 Pages 9
and 10.
Investor Conference Call
The Company previously announced that it will host an investor
conference call on Monday, April 29, 2024, at 9:30 a.m. Pacific
Time / 12:30 p.m. Eastern Time to review unaudited financial
results for its first quarter ended March 31, 2024. 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, along with a presentation regarding the proposed
Territorial merger, 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 at
least 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 May 6, 2024, replay access code 4889007.
Non-GAAP Financial Metrics
This news release and accompanying financial tables contain
certain non-GAAP financial measure disclosures, including net
income excluding notable items, earnings per share excluding
notable items, noninterest expense excluding notable items, TCE per
share, TCE ratio, ROA excluding notable items, ROE excluding
notable items, ROTCE, ROTCE excluding notable items, efficiency
ratio excluding notable items and noninterest expense / average
assets excluding notable items. 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 Pages 9 and 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 $18.09 billion in total assets as of March
31, 2024. Headquartered in Los Angeles and serving a multi-ethnic
population of customers across the nation, the Bank provides a full
suite of commercial, corporate and consumer loans, including
commercial and commercial real estate lending, SBA lending,
residential mortgage and other consumer lending; deposit and
fee-based products and services; international trade financing;
cash management services, foreign currency exchange solutions, and
interest rate derivative products, among others. Bank of Hope
operates 48 full-service branches in California, Washington, Texas,
Illinois, New York, New Jersey, Virginia, Alabama, and Georgia. The
Bank also operates SBA loan production offices, commercial loan
production offices, and residential mortgage loan production
offices in the United States; and a representative office in Seoul,
Korea. 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 www.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.
About Territorial Bancorp Inc.
Territorial Bancorp Inc. (NASDAQ: TBNK), headquartered in
Honolulu, Hawai‘i, is the stock holding company for Territorial
Savings Bank. Territorial Savings Bank is a state-chartered savings
bank which was originally chartered in 1921 by the Territory of
Hawai‘i. Territorial Savings Bank conducts business from its
headquarters in Honolulu, Hawai‘i and has 28 branch offices in the
state of Hawai‘i. For additional information, please visit
Territorial’s website at: https://www.tsbhawaii.bank. By including
the foregoing website address link, Territorial does not intend to
and shall not be deemed to incorporate by reference any material
contained or accessible therein.
Additional Information and Where to Find It
In connection with the proposed merger, Hope Bancorp, Inc. will
file with the Securities and Exchange Commission (“SEC”) a
Registration Statement on Form S-4, which will include a Proxy
Statement of Territorial Bancorp Inc., that also constitutes a
prospectus of Hope Bancorp, Inc. Territorial Bancorp shareholders
are encouraged to read the Registration Statement and the Proxy
Statement/Prospectus regarding the merger when it becomes available
and any other relevant documents filed with the SEC, as well as any
amendments or supplements to those documents, because they will
contain important information about the proposed merger.
Territorial Bancorp shareholders will be able to obtain a free copy
of the Proxy Statement/Prospectus, as well as other filings
containing information about Hope Bancorp and Territorial Bancorp
at the SEC’s Internet site (www.sec.gov). Territorial Bancorp
shareholders will also be able to obtain these documents, free of
charge, from Territorial Bancorp at
https://www.tsbhawaii.bank/tsb/investor-relations/.
Participants in Solicitation
Territorial Bancorp and its directors, executive officers,
management and employees may be deemed to be participants in the
solicitation of proxies in respect of the merger. Information
concerning Territorial Bancorp’s participants is set forth in the
Proxy Statement, dated April 16, 2024, for Territorial Bancorp’s
2024 annual meeting of stockholders as filed with the SEC on
Schedule 14A. Additional information regarding the interests of
participants of Territorial Bancorp in the solicitation of proxies
in respect of the merger will be included in the Registration
Statement and Proxy Statement/Prospectus to be filed with the
SEC.
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
Territorial Bancorp’s low-cost core deposit base, strengthening of
profitability, diversification of franchise, and statements about
the proposed transaction being immediately accretive.
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, Hope Bancorp and Territorial Bancorp
each claims the protection provided for in the Private Securities
Litigation Reform Act of 1995. These statements involve risks and
uncertainties. Hope Bancorp’s actual results, performance or
achievements may differ significantly from the results, performance
or achievements expressed or implied in any forward-looking
statements. The closing of the proposed transaction is subject to
regulatory approvals, the approval of Territorial Bancorp
shareholders, and other customary closing conditions. There is no
assurance that such conditions will be met or that the proposed
merger will be consummated within the expected time frame, or at
all. If the transaction is consummated, factors that may cause
actual outcomes to differ from what is expressed or forecasted in
these forward-looking statements include, among things:
difficulties and delays in integrating Hope Bancorp and Territorial
Bancorp and achieving anticipated synergies, cost savings and other
benefits from the transaction; higher than anticipated transaction
costs; deposit attrition, operating costs, customer loss and
business disruption following the merger, including difficulties in
maintaining relationships with employees and customers, may be
greater than expected; and required governmental approvals of the
merger may not be obtained on its proposed terms and schedule, or
without regulatory constraints that may limit growth. Other risks
and uncertainties include, but are not limited to: possible further
deterioration in economic conditions in Hope Bancorp’s areas of
operation or elsewhere; 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 Hope Bancorp’s
allowances for credit losses; potential increases in deposit
insurance assessments and regulatory risks associated with current
and future regulations; the outcome of any legal proceedings that
may be instituted against Hope Bancorp; the risk that any
announcements relating to the proposed transaction could have
adverse effects on the market price of the common stock of Hope
Bancorp; and diversion of management’s attention from ongoing
business operations and opportunities. For additional information
concerning these and other risk factors, see Hope Bancorp’s most
recent Annual Report on Form 10-K. Hope Bancorp 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:
3/31/2024
12/31/2023
% change
3/31/2023
% change
Cash and due from banks
$
1,185,296
$
1,928,967
(39
)%
$
2,212,637
(46
)%
Investment securities
2,277,990
2,408,971
(5
)%
2,231,989
2
%
Federal Home Loan Bank (“FHLB”) stock and
other investments
61,175
61,000
—
%
59,962
2
%
Loans held for sale, at the lower of cost
or fair value
2,763
3,408
(19
)%
125,268
(98
)%
Loans receivable
13,719,178
13,853,619
(1
)%
15,064,849
(9
)%
Allowance for credit losses
(158,758
)
(158,694
)
—
%
(163,544
)
(3
)%
Net loans receivable
13,560,420
13,694,925
(1
)%
14,901,305
(9
)%
Accrued interest receivable
60,316
61,720
(2
)%
57,021
6
%
Premises and equipment, net
50,541
50,611
—
%
47,887
6
%
Goodwill and intangible assets
467,984
468,385
—
%
469,728
—
%
Other assets
421,729
453,535
(7
)%
463,087
(9
)%
Total assets
$
18,088,214
$
19,131,522
(5
)%
$
20,568,884
(12
)%
Liabilities:
Deposits
$
14,753,417
$
14,753,753
—
%
$
15,828,209
(7
)%
FHLB and Federal Reserve Bank (“FRB”)
borrowings
795,634
1,795,726
(56
)%
2,130,000
(63
)%
Subordinated debentures and convertible
notes, net
108,592
108,269
—
%
313,533
(65
)%
Accrued interest payable
122,467
168,174
(27
)%
53,818
128
%
Other liabilities
195,834
184,357
6
%
184,744
6
%
Total liabilities
$
15,975,944
$
17,010,279
(6
)%
$
18,510,304
(14
)%
Stockholders’ Equity:
Common stock, $0.001 par value
$
138
$
138
—
%
$
137
1
%
Additional paid-in capital
1,439,484
1,439,963
—
%
1,430,977
1
%
Retained earnings
1,159,593
1,150,547
1
%
1,106,390
5
%
Treasury stock, at cost
(264,667
)
(264,667
)
—
%
(264,667
)
—
%
Accumulated other comprehensive loss,
net
(222,278
)
(204,738
)
(9
)%
(214,257
)
(4
)%
Total stockholders’ equity
2,112,270
2,121,243
—
%
2,058,580
3
%
Total liabilities and stockholders’
equity
$
18,088,214
$
19,131,522
(5
)%
$
20,568,884
(12
)%
Common stock shares - authorized
150,000,000
150,000,000
150,000,000
Common stock shares - outstanding
120,610,029
120,126,786
119,865,732
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
3/31/2024
12/31/2023
% change
3/31/2023
% change
Interest and fees on loans
$
213,626
$
221,020
(3
)%
$
215,935
(1
)%
Interest on investment securities
18,049
18,398
(2
)%
15,125
19
%
Interest on cash and deposits at other
banks
27,183
29,029
(6
)%
4,922
452
%
Interest on other investments and FHLB
dividends
816
777
5
%
695
17
%
Total interest income
259,674
269,224
(4
)%
236,677
10
%
Interest on deposits
124,033
121,305
2
%
92,348
34
%
Interest on borrowings
20,594
22,003
(6
)%
10,451
97
%
Total interest expense
144,627
143,308
1
%
102,799
41
%
Net interest income before provision
115,047
125,916
(9
)%
133,878
(14
)%
Provision for credit losses
2,600
2,400
8
%
3,320
(22
)%
Net interest income after provision
112,447
123,516
(9
)%
130,558
(14
)%
Service fees on deposit accounts
2,587
2,505
3
%
2,221
16
%
Net gains on sales of SBA loans
—
—
—
%
2,225
(100
)%
Other income and fees
5,699
6,775
(16
)%
6,532
(13
)%
Total noninterest income
8,286
9,280
(11
)%
10,978
(25
)%
Salaries and employee benefits
47,836
47,364
1
%
57,169
(16
)%
Occupancy
6,786
7,231
(6
)%
7,521
(10
)%
Furniture and equipment
5,340
5,302
1
%
5,058
6
%
Data processing and communications
2,990
2,976
—
%
2,822
6
%
FDIC assessment
2,926
3,141
(7
)%
1,781
64
%
FDIC special assessment
1,000
3,971
(75
)%
—
100
%
Earned interest credit
5,834
6,505
(10
)%
4,427
32
%
Restructuring costs
143
11,076
(99
)%
—
100
%
Merger related costs
1,044
—
100
%
—
100
%
Other noninterest expense
10,940
11,625
(6
)%
9,956
10
%
Total noninterest expense
84,839
99,191
(14
)%
88,734
(4
)%
Income before income taxes
35,894
33,605
7
%
52,802
(32
)%
Income tax provision
10,030
7,124
41
%
13,681
(27
)%
Net income
$
25,864
$
26,481
(2
)%
$
39,121
(34
)%
Earnings Per Common Share - Diluted
$
0.21
$
0.22
$
0.33
Weighted Average Shares Outstanding -
Diluted
121,020,292
120,761,112
120,242,295
Hope Bancorp, Inc.
Selected Financial
Data
Unaudited
For the Three Months
Ended
Profitability measures
(annualized):
3/31/2024
12/31/2023
3/31/2023
ROA
0.54
%
0.54
%
0.82
%
ROA excluding notable items (1)
0.57
%
0.78
%
0.82
%
ROE
4.87
%
5.17
%
7.65
%
ROE excluding notable items (1)
5.16
%
7.49
%
7.65
%
ROTCE (1)
6.24
%
6.71
%
9.93
%
ROTCE excluding notable items (1)
6.62
%
9.71
%
9.93
%
Net interest margin
2.55
%
2.70
%
3.02
%
Efficiency ratio (not annualized)
68.79
%
73.37
%
61.26
%
Efficiency ratio excluding notable items
(not annualized) (1)
67.02
%
62.24
%
61.26
%
Noninterest expense / average assets
1.77
%
2.02
%
1.86
%
Noninterest expense / average assets,
excluding notable items (1)
1.73
%
1.72
%
1.86
%
(1)
ROA excluding notable items, ROE excluding
notable items, ROTCE, ROTCE excluding notable items, efficiency
ratio excluding notable items, and noninterest expense / average
assets excluding notable items 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 Pages 9 and 10.
Hope Bancorp, Inc.
Selected Financial
Data
Unaudited (dollars in
thousands)
Three Months Ended
3/31/2024
12/31/2023
3/31/2023
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
$
13,746,219
$
213,626
6.25
%
$
14,052,953
$
221,020
6.24
%
$
15,235,386
$
215,935
5.75
%
Investment securities
2,317,154
18,049
3.13
%
2,283,613
18,398
3.20
%
2,248,479
15,125
2.73
%
Interest earning cash and deposits at
other banks
2,019,769
27,183
5.41
%
2,142,147
29,029
5.38
%
473,344
4,922
4.22
%
FHLB stock and other investments
48,136
816
6.82
%
47,587
777
6.48
%
47,043
695
5.99
%
Total interest earning assets
$
18,131,278
$
259,674
5.76
%
$
18,526,300
$
269,224
5.77
%
$
18,004,252
$
236,677
5.33
%
INTEREST BEARING LIABILITIES:
Deposits:
Money market, interest bearing demand
and
savings
$
5,072,782
$
50,145
3.98
%
$
4,821,222
$
45,662
3.76
%
$
5,597,251
$
42,226
3.06
%
Time deposits
5,985,501
73,888
4.96
%
6,327,191
75,643
4.74
%
5,543,369
50,122
3.67
%
Total interest bearing deposits
11,058,283
124,033
4.51
%
11,148,413
121,305
4.32
%
11,140,620
92,348
3.36
%
FHLB and FRB borrowings
1,683,334
17,853
4.27
%
1,795,740
19,224
4.25
%
676,444
6,698
4.02
%
Subordinated debentures and
convertible
notes
104,493
2,741
10.38
%
104,198
2,779
10.44
%
319,905
3,753
4.69
%
Total interest bearing liabilities
$
12,846,110
$
144,627
4.53
%
$
13,048,351
$
143,308
4.36
%
$
12,136,969
$
102,799
3.44
%
Noninterest bearing demand deposits
3,803,870
4,113,680
4,662,081
Total funding liabilities/cost of
funds
$
16,649,980
3.49
%
$
17,162,031
3.31
%
$
16,799,050
2.48
%
Net interest income/net interest
spread
$
115,047
1.23
%
$
125,916
1.41
%
$
133,878
1.89
%
Net interest margin
2.55
%
2.70
%
3.02
%
Cost of deposits:
Noninterest bearing demand deposits
$
3,803,870
$
—
—
%
$
4,113,680
$
—
—
%
$
4,662,081
$
—
—
%
Interest bearing deposits
11,058,283
124,033
4.51
%
11,148,413
121,305
4.32
%
11,140,620
92,348
3.36
%
Total deposits
$
14,862,153
$
124,033
3.36
%
$
15,262,093
$
121,305
3.15
%
$
15,802,701
$
92,348
2.37
%
Hope Bancorp, Inc.
Selected Financial
Data
Unaudited (dollars in
thousands)
Three Months Ended
AVERAGE BALANCES:
3/31/2024
12/31/2023
% change
3/31/2023
% change
Loans, including loans held for sale
$
13,746,219
$
14,052,953
(2
)%
$
15,235,386
(10
)%
Investment securities
2,317,154
2,283,613
1
%
2,248,479
3
%
Interest earning cash and deposits at
other banks
2,019,769
2,142,147
(6
)%
473,344
327
%
Interest earning assets
18,131,278
18,526,300
(2
)%
18,004,252
1
%
Goodwill and intangible assets
468,229
468,622
—
%
469,992
—
%
Total assets
19,140,775
19,600,942
(2
)%
19,087,170
—
%
Noninterest bearing demand deposits
3,803,870
4,113,680
(8
)%
4,662,081
(18
)%
Interest bearing deposits
11,058,283
11,148,413
(1
)%
11,140,620
(1
)%
Total deposits
14,862,153
15,262,093
(3
)%
15,802,701
(6
)%
Interest bearing liabilities
12,846,110
13,048,351
(2
)%
12,136,969
6
%
Stockholders’ equity
2,126,333
2,048,335
4
%
2,046,159
4
%
LOAN PORTFOLIO COMPOSITION:
3/31/2024
12/31/2023
% change
3/31/2023
% change
Commercial real estate (“CRE”) loans
$
8,707,673
$
8,797,884
(1
)%
$
9,373,529
(7
)%
Commercial and industrial (“C&I”)
loans
4,041,063
4,135,044
(2
)%
4,821,270
(16
)%
Residential mortgage and other loans
970,442
920,691
5
%
870,050
12
%
Loans receivable
13,719,178
13,853,619
(1
)%
15,064,849
(9
)%
Allowance for credit losses
(158,758
)
(158,694
)
—
%
(163,544
)
(3
)%
Loans receivable, net
$
13,560,420
$
13,694,925
(1
)%
$
14,901,305
(9
)%
CRE LOANS BY PROPERTY TYPE:
3/31/2024
12/31/2023
% change
3/31/2023
% change
Multi-tenant retail
$
1,666,153
$
1,704,337
(2
)%
$
1,817,874
(8
)%
Industrial warehouses
1,221,852
1,226,780
—
%
1,309,763
(7
)%
Multifamily
1,212,941
1,226,384
(1
)%
1,302,597
(7
)%
Gas stations and car washes
1,013,708
1,030,888
(2
)%
1,046,528
(3
)%
Mixed-use facilities
861,613
870,664
(1
)%
818,227
5
%
Hotels/motels
786,198
796,267
(1
)%
900,990
(13
)%
Single-tenant retail
667,898
662,705
1
%
706,593
(5
)%
Office
401,392
401,821
—
%
464,703
(14
)%
All other
875,918
878,038
—
%
1,006,254
(13
)%
Total CRE loans
$
8,707,673
$
8,797,884
(1
)%
$
9,373,529
(7
)%
DEPOSIT COMPOSITION:
3/31/2024
12/31/2023
% change
3/31/2023
% change
Noninterest bearing demand deposits
$
3,652,592
$
3,914,967
(7
)%
$
4,504,621
(19
)%
Money market, interest bearing demand, and
savings
5,313,064
4,872,029
9
%
4,563,702
16
%
Time deposits
5,787,761
5,966,757
(3
)%
6,759,886
(14
)%
Total deposits
$
14,753,417
$
14,753,753
—
%
$
15,828,209
(7
)%
Hope Bancorp, Inc.
Selected Financial
Data
Unaudited (dollars in thousands,
except share and per share data)
CAPITAL & CAPITAL RATIOS:
3/31/2024
12/31/2023
3/31/2023
Total stockholders’ equity
$
2,112,270
$
2,121,243
$
2,058,580
Total capital
$
2,130,033
$
2,120,157
$
2,068,433
Common equity tier 1 ratio
12.47
%
12.28
%
10.75
%
Tier 1 capital ratio
13.17
%
12.96
%
11.36
%
Total capital ratio
14.19
%
13.92
%
12.25
%
Leverage ratio
10.42
%
10.11
%
10.13
%
Total risk weighted assets
$
15,011,661
$
15,230,302
$
16,886,419
Book value per common share
$
17.51
$
17.66
$
17.17
TCE per share (1)
$
13.63
$
13.76
$
13.26
TCE ratio (1)
9.33
%
8.86
%
7.91
%
(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
9.
Three Months Ended
ALLOWANCE FOR CREDIT LOSSES
CHANGES:
3/31/2024
12/31/2023
9/30/2023
6/30/2023
3/31/2023
Balance at beginning of period
$
158,694
$
158,809
$
172,996
$
163,544
$
162,359
ASU 2022-02 day 1 adoption impact
—
—
—
—
(407
)
Provision for credit loss on loans
3,600
1,700
16,800
8,900
1,700
Recoveries
1,184
306
2,938
1,531
387
Charge offs
(4,720
)
(2,121
)
(33,925
)
(979
)
(495
)
Balance at end of period
$
158,758
$
158,694
$
158,809
$
172,996
$
163,544
3/31/2024
12/31/2023
9/30/2023
6/30/2023
3/31/2023
Allowance for unfunded loan
commitments
$
2,843
$
3,843
$
3,143
$
3,081
$
2,971
Three Months Ended
3/31/2024
12/31/2023
9/30/2023
6/30/2023
3/31/2023
Provision for credit loss on loans
$
3,600
$
1,700
$
16,800
$
8,900
$
1,700
Provision for unfunded loan
commitments
(1,000
)
700
62
110
1,620
Provision for credit losses
$
2,600
$
2,400
$
16,862
$
9,010
$
3,320
Hope Bancorp, Inc.
Selected Financial
Data
Unaudited (dollars in
thousands)
NET LOAN CHARGE OFFS
(RECOVERIES):
3/31/2024
12/31/2023
9/30/2023
6/30/2023
3/31/2023
CRE loans
$
(497
)
$
1,560
$
(2,227
)
$
438
$
(109
)
C&I loans
4,072
138
33,145
(1,091
)
196
Residential mortgage and other loans
(39
)
117
69
101
21
Net loan charge offs (recoveries)
$
3,536
$
1,815
$
30,987
$
(552
)
$
108
Net charge offs (recoveries)/average loans
receivable (annualized)
0.10
%
0.05
%
0.85
%
(0.01
)%
—
%
NONPERFORMING ASSETS:
3/31/2024
12/31/2023
9/30/2023
6/30/2023
3/31/2023
Loans on nonaccrual status (1)
$
59,526
$
45,204
$
39,081
$
61,252
$
78,861
Accruing delinquent loans past due 90 days
or more
47,290
261
21,579
15,182
364
Total nonperforming loans
106,816
45,465
60,660
76,434
79,225
Other real estate owned (“OREO”)
—
63
1,043
938
938
Total nonperforming assets
$
106,816
$
45,528
$
61,703
$
77,372
$
80,163
Nonperforming assets/total assets
0.59
%
0.24
%
0.31
%
0.38
%
0.39
%
Nonperforming assets/loans receivable
& OREO
0.78
%
0.33
%
0.43
%
0.52
%
0.53
%
Nonperforming assets/total capital
5.06
%
2.15
%
3.04
%
3.74
%
3.89
%
Nonperforming loans/loans receivable
0.78
%
0.33
%
0.42
%
0.51
%
0.53
%
Nonaccrual loans/loans receivable
0.43
%
0.33
%
0.27
%
0.41
%
0.52
%
Allowance for credit losses/loans
receivable
1.16
%
1.15
%
1.11
%
1.16
%
1.09
%
Allowance for credit losses/nonperforming
loans
148.63
%
349.05
%
261.80
%
226.33
%
206.43
%
(1) Excludes delinquent SBA loans
that are guaranteed and currently in liquidation totaling $10.9
million, $11.4 million, $12.1 million, $11.9 million, and $7.6
million, at March 31, 2024, December 31, 2023,
September 30, 2023, June 30, 2023, and March 31,
2023, respectively.
NONACCRUAL LOANS BY TYPE:
3/31/2024
12/31/2023
9/30/2023
6/30/2023
3/31/2023
CRE loans
$
37,835
$
33,932
$
26,687
$
29,270
$
44,376
C&I loans
15,071
5,013
4,234
23,042
26,191
Residential mortgage and other loans
6,620
6,259
8,160
8,940
8,294
Total nonaccrual loans
$
59,526
$
45,204
$
39,081
$
61,252
$
78,861
Hope Bancorp, Inc.
Selected Financial
Data
Unaudited (dollars in
thousands)
ACCRUING DELINQUENT LOANS 30-89 DAYS
PAST DUE:
3/31/2024
12/31/2023
9/30/2023
6/30/2023
3/31/2023
30 - 59 days past due
$
2,273
$
2,833
$
2,906
$
9,295
$
7,662
60 - 89 days past due
313
1,289
506
178
249
Total accruing delinquent
loans 30-89 days past due
$
2,586
$
4,122
$
3,412
$
9,473
$
7,911
ACCRUING DELINQUENT LOANS 30-89 DAYS
PAST DUE BY TYPE:
3/31/2024
12/31/2023
9/30/2023
6/30/2023
3/31/2023
CRE loans
$
1,639
$
2,160
$
611
$
7,339
$
3,652
C&I loans
551
1,643
1,168
990
419
Residential mortgage and other loans
396
319
1,633
1,144
3,840
Total accruing delinquent
loans 30-89 days past due
$
2,586
$
4,122
$
3,412
$
9,473
$
7,911
CRITICIZED LOANS:
3/31/2024
12/31/2023
9/30/2023
6/30/2023
3/31/2023
Special mention loans
$
215,183
$
178,992
$
186,600
$
210,806
$
166,472
Substandard loans
206,350
143,449
174,161
134,203
138,224
Total criticized loans
$
421,533
$
322,441
$
360,761
$
345,009
$
304,696
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
RETURN ON AVERAGE TANGIBLE COMMON
EQUITY
3/31/2024
12/31/2023
3/31/2023
Average stockholders’ equity
$
2,126,333
$
2,048,335
$
2,046,159
Less: Average goodwill and core deposit
intangible assets, net
(468,229
)
(468,622
)
(469,992
)
Average TCE
$
1,658,104
$
1,579,713
$
1,576,167
Net income
$
25,864
$
26,481
$
39,121
ROTCE (annualized)
6.24
%
6.71
%
9.93
%
TANGIBLE COMMON EQUITY
3/31/2024
12/31/2023
3/31/2023
Total stockholders’ equity
$
2,112,270
$
2,121,243
$
2,058,580
Less: Goodwill and core deposit intangible
assets, net
(467,984
)
(468,385
)
(469,728
)
TCE
$
1,644,286
$
1,652,858
$
1,588,852
Total assets
$
18,088,214
$
19,131,522
$
20,568,884
Less: Goodwill and core deposit intangible
assets, net
(467,984
)
(468,385
)
(469,728
)
Tangible assets
$
17,620,230
$
18,663,137
$
20,099,156
TCE ratio
9.33
%
8.86
%
7.91
%
Common shares outstanding
120,610,029
120,126,786
119,865,732
TCE per share
$
13.63
$
13.76
$
13.26
Three Months Ended
PROFITABILITY RATIOS EXCLUDING NOTABLE
ITEMS
3/31/2024
12/31/2023
3/31/2023
Net income
$
25,864
$
26,481
$
39,121
Notable items:
FDIC special assessment expense
1,000
3,971
—
Restructuring costs
143
11,076
—
Merger related costs
1,044
—
—
Total notable items
2,187
15,047
—
Tax provision
611
3,190
—
Less: total notable items, net of tax
provision
$
1,576
$
11,857
$
—
Net income excluding notable items
$
27,440
$
38,338
$
39,121
Diluted common shares
121,020,292
120,761,112
120,242,295
EPS excluding notable items
$
0.23
$
0.32
$
0.33
Average Assets
19,140,775
19,600,942
19,087,170
ROA excluding notable items
0.57
%
0.78
%
0.82
%
Average Equity
2,126,333
2,048,335
2,046,159
ROE excluding notable items
5.16
%
7.49
%
7.65
%
Average TCE
$
1,658,104
$
1,579,713
$
1,576,167
ROTCE excluding notable items
6.62
%
9.71
%
9.93
%
Three Months Ended
EFFICIENCY RATIOS EXCLUDING NOTABLE
ITEMS
3/31/2024
12/31/2023
3/31/2023
Noninterest expense
$
84,839
$
99,191
$
88,734
Less: notable items:
FDIC special assessment expense
(1,000
)
(3,971
)
—
Restructuring costs
(143
)
(11,076
)
—
Merger related costs
(1,044
)
—
—
Noninterest expense excluding notable
items
$
82,652
$
84,144
$
88,734
Revenue
$
123,333
$
135,196
$
144,856
Efficiency ratio excluding notable
items
67.02
%
62.24
%
61.26
%
Average assets
19,140,775
19,600,942
19,087,170
Noninterest expense / average assets,
excluding notable items
1.73
%
1.72
%
1.86
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240429920065/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
Hope Bancorp (NASDAQ:HOPE)
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