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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Hope Bancorp Inc | NASDAQ:HOPE | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.52 | -3.85% | 13.00 | 12.70 | 13.00 | 13.59 | 12.925 | 13.46 | 1,864,266 | 00:55:16 |
Hope Bancorp, Inc. (the “Company”) (NASDAQ: HOPE), the holding company of Bank of Hope (the “Bank”), today reported unaudited financial results for its fourth quarter and full year ended December 31, 2023. For the three months ended December 31, 2023, net income totaled $26.5 million, or $0.22 per diluted common share. For the full year ended December 31, 2023, net income totaled $133.7 million, or $1.11 per diluted common share.
“Net income for the 2023 fourth quarter was $26.5 million, or $38.3 million excluding the FDIC special assessment and restructuring charges related to our strategic reorganization,” stated Kevin S. Kim, Chairman, President and Chief Executive Officer. “Excluding these notable items, our net income was up 26% quarter-over-quarter. Continued focus on expense discipline and improvements in our credit quality metrics were important contributors to our net income growth. Nonperforming assets decreased 26%, and criticized loans declined 11% from September 30, 2023. Net charge offs for the 2023 fourth quarter were a very low five basis points, annualized, of average loans.
“We grew tangible book value 6% year-over-year, and all our regulatory risk-based capital ratios expanded,” continued Kim. “At December 31, 2023, the Company’s total capital ratio was 13.9% and common equity tier 1 capital ratio was 12.3%. Our strong capital positions the Bank well to support all our customers in their growth plans for the new year.
“The 2023 fourth quarter was an important building quarter for the Company with the announcement of our strategic reorganization in October. We believe our realignment around lines of business and products will enable Bank of Hope to operate more efficiently, support high-quality loan and deposit growth, and deliver improved returns in the years to come, enhancing stockholder value over the long term,” concluded Kim. “I wish to thank all our team members at Bank of Hope for their continued dedication to our organization and their excellence in serving our customers.”
Operating Results for the 2023 Fourth Quarter
Net income and earnings per share. Net income for the 2023 fourth quarter was $26.5 million, or $0.22 per diluted common share, compared with $30.0 million, or $0.25 per diluted common share, for the immediately preceding third quarter. Notable items impacting net income in the fourth quarter of 2023 were $8.7 million of restructuring costs, after tax, related to the Company’s previously announced strategic reorganization, and $3.1 million, after tax, accrued for the Federal Deposit Insurance Corporation (“FDIC”) special assessment, which was approved by the FDIC Board of Directors in November 2023. Excluding these notable items, net income for the 2023 fourth quarter was $38.3 million(1), up 26% from $30.4 million (excluding $376,000, after tax, of restructuring costs) for the third quarter of 2023. Earnings per diluted common share excluding notable items(1) amounted to $0.32 for the three months ended December 31, 2023, up 28% compared with $0.25 per diluted common share for the immediately preceding third quarter.
Net interest income and net interest margin. Net interest income before provision for credit losses for the 2023 fourth quarter totaled $125.9 million, compared with $135.4 million in the immediately preceding third quarter, a decrease of 7% quarter-over-quarter. Fourth quarter 2023 net interest margin contracted 13 basis points to 2.70%, from 2.83% in the 2023 third quarter. The linked quarter change in net interest income and net interest margin reflected a higher cost of interest bearing deposits and a decrease in the average balance of loans, partially offset by higher yields on investment securities and other earning assets, as well as a decrease in the average balance of interest bearing deposits. In addition, the third quarter of 2023 included $3.1 million of recovered interest income related to one borrower relationship, which contributed eight basis points to the average loan yield and six basis points to the net interest margin in the third quarter.
_____________________________________
(1)
Net income, excluding the FDIC special assessment and restructuring charges (also referred to collectively as the “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 10 and 11.
Noninterest income. Noninterest income for the 2023 fourth quarter totaled $9.3 million, increasing 12% from $8.3 million in the immediately preceding third quarter. Growth was well distributed across various fee income lines. The Company did not sell any SBA 7(a) loans during the second half of 2023, retaining loan production on the balance sheet instead.
Noninterest expense. Noninterest expense for the 2023 fourth quarter was $99.9 million, including $11.1 million of pre-tax restructuring costs, primarily comprising severance costs, planned branch consolidation charges and professional fees, and $4.0 million (pre-tax) accrued for the FDIC special assessment. Excluding these notable items, fourth quarter 2023 noninterest expense(2) was $84.8 million, down 2% from $86.4 million (excluding $500,000, pre-tax, of restructuring charges) in the 2023 third quarter. Fourth quarter 2023 salaries and employee benefits expense decreased 7% to $47.4 million, down from $51.0 million in the 2023 third quarter, reflecting the reduction to total headcount related to the restructuring. Other noninterest expense increased quarter-over-quarter, primarily reflecting increased CRA investment expense and provision for unfunded loan commitments.
Tax rate. The effective tax rate for the 2023 fourth quarter was 21.2%, compared with 24.9% for the immediately preceding third quarter. For the full year 2023, the effective tax rate was 24.9%, compared with 26.3% for the full year 2022.
Balance Sheet Summary
Cash and investment securities. At December 31, 2023, cash and cash equivalents totaled $1.93 billion, compared with $2.50 billion at September 30, 2023, primarily driven by a decrease in deposit balances. At December 31, 2022, cash and equivalents were $506.8 million. Investment securities totaled $2.41 billion at December 31, 2023, up from $2.26 billion at September 30, 2023, and $2.24 billion at December 31, 2022.
Loans. Loans receivable of $13.85 billion at December 31, 2023, decreased 3% from $14.31 billion at September 30, 2023, reflecting declines in commercial and commercial real estate loans, partially offset by growth in residential mortgage loans. During the 2023 fourth quarter, the Company exited its residential mortgage warehouse line business, which accounted for $64.7 million of the linked quarter decrease in loans. Fourth quarter average loans of $14.05 billion decreased 3% quarter-over-quarter.
The following table sets forth the loan portfolio composition at December 31, 2023, September 30, 2023, and December 31, 2022:
(dollars in thousands) (unaudited)
12/31/2023
9/30/2023
12/31/2022
Balance
Percentage
Balance
Percentage
Balance
Percentage
Commercial real estate (“CRE”) loans
$
8,797,884
63.6
%
$
8,972,886
62.7
%
$
9,414,580
61.1
%
Commercial and industrial (“C&I”) loans
4,135,044
29.8
%
4,450,341
31.1
%
5,109,532
33.2
%
Residential mortgage and other loans
920,691
6.6
%
882,966
6.2
%
879,428
5.7
%
Loans receivable
$
13,853,619
100.0
%
$
14,306,193
100.0
%
$
15,403,540
100.0
%
Deposits. Total deposits of $14.75 billion at December 31, 2023, decreased 6% from $15.74 billion at September 30, 2023. Fourth quarter 2023 average deposits of $15.26 billion decreased 3% quarter-over-quarter. During the fourth quarter of 2023, the Company reduced brokered time deposits by $449.9 million, or 25% from September 30, 2023. Noninterest bearing demand deposits decreased in the fourth quarter of 2023 primarily due to seasonality of funds from commercial customers in the residential mortgage business; these customers were unrelated to the exit of residential mortgage warehouse lending.
_____________________________________
(2)
Noninterest expense, excluding notable items, is a non-GAAP financial measure. A quantitative reconciliation of the most directly comparable GAAP to non-GAAP financial measures is provided in the accompanying financial information on Table Pages 10 and 11.
The gross loan-to-deposit ratio was 93.9% at December 31, 2023, compared with 91.0% at September 30, 2023, and 98.2% at December 31, 2022.
The following table sets forth the deposit composition at December 31, 2023, September 30, 2023, and December 31, 2022:
(dollars in thousands) (unaudited)
12/31/2023
9/30/2023
12/31/2022
Balance
Percentage
Balance
Percentage
Balance
Percentage
Noninterest bearing demand deposits
$
3,914,967
26.5
%
$
4,249,788
27.0
%
$
4,849,493
30.8
%
Money market, interest bearing
demand, and savings deposits
4,872,029
33.0
%
4,855,683
30.9
%
5,899,248
37.5
%
Time deposits
5,966,757
40.5
%
6,634,388
42.1
%
4,990,060
31.7
%
Total deposits
$
14,753,753
100.0
%
$
15,739,859
100.0
%
$
15,738,801
100.0
%
Gross loan-to-deposit ratio
93.9
%
91.0
%
98.2
%
Borrowings. Federal Home Loan Bank and Federal Reserve Bank borrowings totaled $1.80 billion at December 31, 2023, unchanged from September 30, 2023, and up from $865.0 million at December 31, 2022.
Credit Quality and Allowance for Credit Losses
Nonperforming assets. Nonperforming assets totaled $45.5 million at December 31, 2023, a decrease of 26% from $61.7 million at September 30, 2023. The nonperforming assets ratio was 0.24% of total assets at December 31, 2023, an improvement from 0.31% of total assets at September 30, 2023.
The following table sets forth the components of nonperforming assets at December 31, 2023, September 30, 2023, and December 31, 2022:
(dollars in thousands) (unaudited)
12/31/2023
9/30/2023
12/31/2022
Loans on nonaccrual status (1)
$
45,204
$
39,081
$
49,687
Accruing delinquent loans past due 90 days or more
261
21,579
401
Accruing troubled debt restructured loans (2)
—
—
16,931
Total nonperforming loans
45,465
60,660
67,019
Other real estate owned
63
1,043
2,418
Total nonperforming assets
$
45,528
$
61,703
$
69,437
Nonperforming assets/total assets
0.24
%
0.31
%
0.36
%
_____________________________________
(1)
Excludes delinquent SBA loans that are guaranteed and currently in liquidation totaling $11.4 million, $12.1 million and $9.8 million at December 31, 2023, September 30, 2023, and December 31, 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.
Criticized loans. Criticized loans decreased 11% quarter-over-quarter to $322.4 million at December 31, 2023, down from $360.8 million at September 30, 2023. Both special mention and substandard loans decreased quarter-over-quarter. The decrease was largely driven by upgrades, along with payoffs and note sales. As of December 31, 2022, criticized loans totaled $261.3 million.
Net charge offs and provision for credit losses. The Company recorded net charge offs of $1.8 million in the 2023 fourth quarter, equivalent to 0.05%, annualized, of average loans. This was an improvement from net charge offs of $31.0 million, or 0.85%, annualized, of average loans in the immediately preceding third quarter. Accordingly, the Company recorded a provision for credit losses of $1.7 million for the 2023 fourth quarter, compared with $16.8 million in the immediately preceding third quarter. For the full year 2023, net charge offs were 0.22% of average loans, compared with net recoveries of (0.08)% of average loans for the full year 2022.
The following table sets forth net charge offs (recoveries) and the provision for credit losses for the three months ended December 31, 2023, September 30, 2023, and December 31, 2022, and for the twelve months ended December 31, 2023 and 2022:
For the Three Months Ended
For the Twelve Months Ended
(dollars in thousands) (unaudited)
12/31/2023
9/30/2023
12/31/2022
12/31/2023
12/31/2022
Net charge offs (recoveries)
$
1,815
$
30,987
$
6,402
$
32,358
$
(12,209
)
Net charge offs (recoveries)/average loans receivable (annualized)
0.05
%
0.85
%
0.17
%
0.22
%
(0.08
)%
Provision for credit losses
$
1,700
$
16,800
$
8,200
$
29,100
$
9,600
Allowance for credit losses. The allowance for credit losses totaled $158.7 million at December 31, 2023, compared with $158.8 million at September 30, 2023. The allowance coverage ratio increased to 1.15% of loans receivable at December 31, 2023, up from 1.11% at September 30, 2023. Year-over-year, allowance coverage of loans receivable increased from 1.05% at December 31, 2022.
The following table sets forth the allowance for credit losses and the coverage ratios at December 31, 2023, September 30, 2023, and December 31, 2022:
(dollars in thousands) (unaudited)
12/31/2023
9/30/2023
12/31/2022
Allowance for credit losses
$
158,694
$
158,809
$
162,359
Allowance for credit losses/loans receivable
1.15
%
1.11
%
1.05
%
Capital
The Company’s capital ratios are strong and all regulatory risk-based capital ratios expanded quarter-over-quarter and year-over-year. At December 31, 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 December 31, 2023, September 30, 2023, and December 31, 2022:
(unaudited)
12/31/2023
9/30/2023
12/31/2022
Minimum Guideline for “Well-Capitalized”
Common Equity Tier 1 Capital Ratio
12.28%
11.67%
10.55%
6.50%
Tier 1 Capital Ratio
12.96%
12.32%
11.15%
8.00%
Total Capital Ratio
13.92%
13.23%
11.97%
10.00%
Leverage Ratio
10.11%
9.83%
10.15%
5.00%
At December 31, 2023, total stockholders’ equity was $2.12 billion, or $17.66 per common share. Quarter-over-quarter, stockholders’ equity increased 4%, or $90.8 million, primarily reflecting a positive change in accumulated other comprehensive income (“AOCI”) and growth in retained earnings. Tangible common equity (“TCE”) per share was $13.76 at December 31, 2023, up 6% from September 30, 2023, and the TCE ratio was 8.86%, up 90 basis points quarter-over-quarter.
The following table sets forth the TCE per share and the TCE ratio at December 31, 2023, September 30, 2023, and December 31, 2022:
(unaudited)
12/31/2023
9/30/2023
12/31/2022
TCE per share (1)
$13.76
$13.01
$12.96
TCE ratio (1)
8.86%
7.96%
8.29%
_____________________________________
(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 10 and 11.
Investor Conference Call
The Company previously announced that it will host an investor conference call on Tuesday, January 30, 2024, at 9:30 a.m. Pacific Time / 12:30 p.m. Eastern Time to review unaudited financial results for its fourth quarter and full year ended December 31, 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 February 6, 2024, replay access code 4752295.
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 10 and 11.
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 $19.13 billion in total assets as of December 31, 2023. 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 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, 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 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 and economic 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; potential increases in deposit insurance assessments and regulatory risks associated with current and future regulations. 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:
12/31/2023
9/30/2023
% change
12/31/2022
% change
Cash and due from banks
$
1,928,967
$
2,500,323
(23
)%
$
506,776
281
%
Investment securities
2,408,971
2,260,837
7
%
2,243,195
7
%
Federal Home Loan Bank (“FHLB”) stock and other investments
61,000
60,433
1
%
61,761
(1
)%
Loans held for sale, at the lower of cost or fair value
3,408
19,502
(83
)%
49,245
(93
)%
Loans receivable
13,853,619
14,306,193
(3
)%
15,403,540
(10
)%
Allowance for credit losses
(158,694
)
(158,809
)
—
%
(162,359
)
(2
)%
Net loans receivable
13,694,925
14,147,384
(3
)%
15,241,181
(10
)%
Accrued interest receivable
61,720
60,665
2
%
55,460
11
%
Premises and equipment, net
50,611
51,764
(2
)%
46,859
8
%
Goodwill and intangible assets
468,385
468,832
—
%
470,176
—
%
Other assets
453,535
506,624
(10
)%
489,838
(7
)%
Total assets
$
19,131,522
$
20,076,364
(5
)%
$
19,164,491
—
%
Liabilities:
Deposits
$
14,753,753
$
15,739,859
(6
)%
$
15,738,801
(6
)%
FHLB and Federal Reserve Bank (“FRB”) borrowings
1,795,726
1,795,726
—
%
865,000
108
%
Subordinated debentures and convertible notes, net
108,269
107,949
—
%
323,713
(67
)%
Accrued interest payable
168,174
166,831
1
%
26,668
531
%
Other liabilities
184,357
235,575
(22
)%
190,981
(3
)%
Total liabilities
$
17,010,279
$
18,045,940
(6
)%
$
17,145,163
(1
)%
Stockholders’ Equity:
Common stock, $0.001 par value
$
138
$
137
1
%
$
137
1
%
Additional paid-in capital
1,439,963
1,436,769
—
%
1,431,003
1
%
Retained earnings
1,150,547
1,140,870
1
%
1,083,712
6
%
Treasury stock, at cost
(264,667
)
(264,667
)
—
%
(264,667
)
—
%
Accumulated other comprehensive loss, net
(204,738
)
(282,685
)
28
%
(230,857
)
11
%
Total stockholders’ equity
2,121,243
2,030,424
4
%
2,019,328
5
%
Total liabilities and stockholders’ equity
$
19,131,522
$
20,076,364
(5
)%
$
19,164,491
—
%
Common stock shares - authorized
150,000,000
150,000,000
150,000,000
Common stock shares - outstanding
120,126,786
120,026,220
119,495,209
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
Twelve Months Ended
12/31/2023
9/30/2023
% change
12/31/2022
% change
12/31/2023
12/31/2022
% change
Interest and fees on loans
$
221,020
$
229,937
(4
)%
$
207,958
6
%
$
892,563
$
660,732
35
%
Interest on investment securities
18,398
17,006
8
%
14,758
25
%
66,063
52,220
27
%
Interest on cash and deposits at other banks
29,029
28,115
3
%
942
NM
87,361
1,295
NM
Interest on other investments and FHLB dividends
777
735
6
%
579
34
%
2,891
1,868
55
%
Total interest income
269,224
275,793
(2
)%
224,237
20
%
1,048,878
716,115
46
%
Interest on deposits
121,305
117,854
3
%
63,276
92
%
441,231
114,839
284
%
Interest on borrowings
22,003
22,561
(2
)%
10,440
111
%
81,786
22,855
258
%
Total interest expense
143,308
140,415
2
%
73,716
94
%
523,017
137,694
280
%
Net interest income before provision for credit losses
125,916
135,378
(7
)%
150,521
(16
)%
525,861
578,421
(9
)%
Provision for credit losses
1,700
16,800
(90
)%
8,200
(79
)%
29,100
9,600
203
%
Net interest income after provision for credit losses
124,216
118,578
5
%
142,321
(13
)%
496,761
568,821
(13
)%
Service fees on deposit accounts
2,505
2,415
4
%
2,159
16
%
9,466
8,938
6
%
Net gains on sales of SBA loans
—
—
—
%
2,154
(100
)%
4,097
16,343
(75
)%
Other income and fees
6,775
5,890
15
%
7,797
(13
)%
32,014
26,116
23
%
Total noninterest income
9,280
8,305
12
%
12,110
(23
)%
45,577
51,397
(11
)%
Salaries and employee benefits
47,364
51,033
(7
)%
52,694
(10
)%
207,871
204,719
2
%
Occupancy
7,231
7,149
1
%
7,072
2
%
28,868
28,267
2
%
Furniture and equipment
5,302
5,625
(6
)%
5,045
5
%
21,378
19,434
10
%
Data processing and communications
2,976
2,891
3
%
2,860
4
%
11,606
10,683
9
%
FDIC assessment
3,141
3,683
(15
)%
1,596
97
%
13,296
6,248
113
%
FDIC special assessment
3,971
—
100
%
—
100
%
3,971
—
100
%
Earned interest credit
6,505
6,377
2
%
5,002
30
%
22,399
10,998
104
%
Restructuring costs
11,076
500
NM
—
100
%
11,576
—
100
%
Other noninterest expense
12,325
9,615
28
%
10,249
20
%
43,486
43,821
(1
)%
Total noninterest expense
99,891
86,873
15
%
84,518
18
%
364,451
324,170
12
%
Income before income taxes
33,605
40,010
(16
)%
69,913
(52
)%
177,887
296,048
(40
)%
Income tax provision
7,124
9,961
(28
)%
18,210
(61
)%
44,214
77,771
(43
)%
Net income
$
26,481
$
30,049
(12
)%
$
51,703
(49
)%
$
133,673
$
218,277
(39
)%
Earnings Per Common Share - Diluted
$
0.22
$
0.25
$
0.43
$
1.11
$
1.81
Weighted Average Shares Outstanding - Diluted
120,761,112
120,374,618
120,102,665
120,393,257
120,472,345
Hope Bancorp, Inc.
Selected Financial Data
Unaudited
For the Three Months Ended
For the Twelve Months Ended
Profitability measures (annualized):
12/31/2023
9/30/2023
12/31/2022
12/31/2023
12/31/2022
ROA
0.54
%
0.60
%
1.10
%
0.67
%
1.20
%
ROA excluding notable items (1)
0.78
%
0.61
%
1.10
%
0.73
%
1.20
%
ROE
5.17
%
5.78
%
10.35
%
6.48
%
10.73
%
ROE excluding notable items (1)
7.49
%
5.85
%
10.35
%
7.05
%
10.73
%
ROTCE (1)
6.71
%
7.47
%
13.54
%
8.39
%
13.97
%
ROTCE excluding notable items (1)
9.71
%
7.56
%
13.54
%
9.13
%
13.97
%
Net interest margin
2.70
%
2.83
%
3.36
%
2.81
%
3.36
%
Efficiency ratio (not annualized)
73.89
%
60.46
%
51.97
%
63.78
%
51.47
%
Efficiency ratio excluding notable items (not annualized) (1)
62.76
%
60.11
%
51.97
%
61.06
%
51.47
%
Noninterest expense / average assets
2.04
%
1.73
%
1.79
%
1.84
%
1.78
%
Noninterest expense / average assets, excluding notable items (1)
1.73
%
1.72
%
1.79
%
1.76
%
1.78
%
(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 10 and 11.
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
Three Months Ended
12/31/2023
9/30/2023
12/31/2022
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
$
14,052,953
$
221,020
6.24
%
$
14,550,106
$
229,937
6.27
%
$
15,393,843
$
207,958
5.36
%
Investment securities
2,283,613
18,398
3.20
%
2,275,133
17,006
2.97
%
2,254,678
14,758
2.60
%
Interest earning cash and deposits at
other banks
2,142,147
29,029
5.38
%
2,106,469
28,115
5.30
%
66,075
942
5.66
%
FHLB stock and other investments
47,587
777
6.48
%
47,316
735
6.16
%
48,002
579
4.79
%
Total interest earning assets
$
18,526,300
$
269,224
5.77
%
$
18,979,024
$
275,793
5.77
%
$
17,762,598
$
224,237
5.01
%
INTEREST BEARING LIABILITIES:
Deposits:
Money market, interest bearing demand and
savings
$
4,821,222
$
45,662
3.76
%
$
4,533,430
$
38,814
3.40
%
$
6,030,576
$
35,959
2.37
%
Time deposits
6,327,191
75,643
4.74
%
6,862,038
79,040
4.57
%
4,276,655
27,317
2.53
%
Total interest bearing deposits
11,148,413
121,305
4.32
%
11,395,468
117,854
4.10
%
10,307,231
63,276
2.44
%
FHLB and FRB borrowings
1,795,740
19,224
4.25
%
1,809,322
19,821
4.35
%
838,335
6,988
3.31
%
Subordinated debentures and convertible
notes
104,198
2,779
10.44
%
103,873
2,740
10.32
%
319,498
3,452
4.23
%
Total interest bearing liabilities
$
13,048,351
$
143,308
4.36
%
$
13,308,663
$
140,415
4.19
%
$
11,465,064
$
73,716
2.55
%
Noninterest bearing demand deposits
4,113,680
4,312,117
5,174,306
Total funding liabilities/cost of funds
$
17,162,031
3.31
%
$
17,620,780
3.16
%
$
16,639,370
1.76
%
Net interest income/net interest spread
$
125,916
1.41
%
$
135,378
1.58
%
$
150,521
2.46
%
Net interest margin
2.70
%
2.83
%
3.36
%
Cost of deposits:
Noninterest bearing demand deposits
$
4,113,680
$
—
—
%
$
4,312,117
$
—
—
%
$
5,174,306
$
—
—
%
Interest bearing deposits
11,148,413
121,305
4.32
%
11,395,468
117,854
4.10
%
10,307,231
63,276
2.44
%
Total deposits
$
15,262,093
$
121,305
3.15
%
$
15,707,585
$
117,854
2.98
%
$
15,481,537
$
63,276
1.62
%
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
Twelve Months Ended
12/31/2023
12/31/2022
Interest
Interest
Average
Income/
Average
Average
Income/
Average
Balance
Expense
Yield/Cost
Balance
Expense
Yield/Cost
INTEREST EARNING ASSETS:
Loans, including loans held for sale
$
14,732,166
$
892,563
6.06
%
$
14,634,627
$
660,732
4.51
%
Investment securities
2,262,840
66,063
2.92
%
2,415,621
52,220
2.16
%
Interest earning cash and deposits at
other banks
1,685,462
87,361
5.18
%
116,689
1,295
1.11
%
FHLB stock and other investments
47,249
2,891
6.12
%
59,624
1,868
3.13
%
Total interest earning assets
$
18,727,717
$
1,048,878
5.60
%
$
17,226,561
$
716,115
4.16
%
INTEREST BEARING LIABILITIES:
Deposits:
Money market, interest bearing demand and
savings
$
4,858,919
$
161,751
3.33
%
$
6,517,879
$
72,763
1.12
%
Time deposits
6,409,056
279,480
4.36
%
3,084,851
42,076
1.36
%
Total interest bearing deposits
11,267,975
441,231
3.92
%
9,602,730
114,839
1.20
%
FHLB and FRB borrowings
1,618,292
69,365
4.29
%
528,342
11,525
2.18
%
Subordinated debentures and convertible
notes
181,125
12,421
6.76
%
318,691
11,330
3.51
%
Total interest bearing liabilities
$
13,067,392
$
523,017
4.00
%
$
10,449,763
$
137,694
1.32
%
Noninterest bearing demand deposits
4,362,043
5,569,542
Total funding liabilities/cost of funds
$
17,429,435
3.00
%
$
16,019,305
0.86
%
Net interest income/net interest spread
$
525,861
1.60
%
$
578,421
2.84
%
Net interest margin
2.81
%
3.36
%
Cost of deposits:
Noninterest bearing demand deposits
$
4,362,043
$
—
—
%
$
5,569,542
$
—
—
%
Interest bearing deposits
11,267,975
441,231
3.92
%
9,602,730
114,839
1.20
%
Total deposits
$
15,630,018
$
441,231
2.82
%
$
15,172,272
$
114,839
0.76
%
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
Three Months Ended
Twelve Months Ended
AVERAGE BALANCES:
12/31/2023
9/30/2023
% change
12/31/2022
% change
12/31/2023
12/31/2022
% change
Loans, including loans held for sale
$
14,052,953
$
14,550,106
(3
)%
$
15,393,843
(9
)%
$
14,732,166
$
14,634,627
1
%
Investment securities
2,283,613
2,275,133
—
%
2,254,678
1
%
2,262,840
2,415,621
(6
)%
Interest earning cash and deposits at other banks
2,142,147
2,106,469
2
%
66,075
NM
1,685,462
116,689
NM
Interest earning assets
18,526,300
18,979,024
(2
)%
17,762,598
4
%
18,727,717
17,226,561
9
%
Goodwill and intangible assets
468,622
469,079
—
%
470,442
—
%
469,298
471,176
—
%
Total assets
19,600,942
20,059,304
(2
)%
18,863,726
4
%
19,806,163
18,231,609
9
%
Noninterest bearing demand deposits
4,113,680
4,312,117
(5
)%
5,174,217
(20
)%
4,362,043
5,569,534
(22
)%
Interest bearing deposits
11,148,413
11,395,468
(2
)%
10,307,231
8
%
11,267,975
9,602,730
17
%
Total deposits
15,262,093
15,707,585
(3
)%
15,481,537
(1
)%
15,630,180
15,172,272
3
%
Interest bearing liabilities
13,048,351
13,308,663
(2
)%
11,465,064
14
%
13,067,392
10,449,763
25
%
Stockholders’ equity
2,048,335
2,079,092
(1
)%
1,997,460
3
%
2,061,665
2,034,027
1
%
LOAN PORTFOLIO COMPOSITION:
12/31/2023
9/30/2023
% change
12/31/2022
% change
Commercial real estate (“CRE”) loans
$
8,797,884
$
8,972,886
(2
)%
$
9,414,580
(7
)%
Commercial and industrial (“C&I”) loans
4,135,044
4,450,341
(7
)%
5,109,532
(19
)%
Residential mortgage and other loans
920,691
882,966
4
%
879,428
5
%
Loans receivable
13,853,619
14,306,193
(3
)%
15,403,540
(10
)%
Allowance for credit losses
(158,694
)
(158,809
)
—
%
(162,359
)
(2
)%
Loans receivable, net
$
13,694,925
$
14,147,384
(3
)%
$
15,241,181
(10
)%
CRE LOANS BY PROPERTY TYPE:
12/31/2023
9/30/2023
% change
12/31/2022
% change
Multi-tenant retail
$
1,704,337
$
1,745,430
(2
)%
$
1,866,434
(9
)%
Hotels/motels
796,267
826,732
(4
)%
952,579
(16
)%
Gas stations and car washes
1,030,888
1,037,621
(1
)%
1,054,720
(2
)%
Mixed-use facilities
870,664
813,571
7
%
848,417
3
%
Industrial warehouses
1,226,780
1,254,643
(2
)%
1,294,893
(5
)%
Multifamily
1,226,384
1,234,934
(1
)%
1,295,644
(5
)%
Single-tenant retail
662,705
671,921
(1
)%
718,977
(8
)%
Office
401,821
454,695
(12
)%
473,459
(15
)%
All other
878,038
933,339
(6
)%
909,457
(3
)%
Total CRE loans
$
8,797,884
$
8,972,886
(2
)%
$
9,414,580
(7
)%
DEPOSIT COMPOSITION:
12/31/2023
9/30/2023
% change
12/31/2022
% change
Noninterest bearing demand deposits
$
3,914,967
$
4,249,788
(8
)%
$
4,849,493
(19
)%
Money market, interest bearing demand, and savings
4,872,029
4,855,683
—
%
5,899,248
(17
)%
Time deposits
5,966,757
6,634,388
(10
)%
4,990,060
20
%
Total deposits
$
14,753,753
$
15,739,859
(6
)%
$
15,738,801
(6
)%
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
CAPITAL & CAPITAL RATIOS:
12/31/2023
9/30/2023
12/31/2022
Total stockholders’ equity
$
2,121,243
$
2,030,424
$
2,019,328
Total capital
$
2,120,157
$
2,105,754
$
2,041,319
Common equity tier 1 ratio
12.28
%
11.67
%
10.55
%
Tier 1 capital ratio
12.96
%
12.32
%
11.15
%
Total capital ratio
13.92
%
13.23
%
11.97
%
Leverage ratio
10.11
%
9.83
%
10.15
%
Total risk weighted assets
$
15,230,302
$
15,912,792
$
17,049,410
Book value per common share
$
17.66
$
16.92
$
16.90
TCE per share (1)
$
13.76
$
13.01
$
12.96
TCE ratio (1)
8.86
%
7.96
%
8.29
%
(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
Twelve Months Ended
ALLOWANCE FOR CREDIT LOSSES CHANGES:
12/31/2023
9/30/2023
6/30/2023
3/31/2023
12/31/2022
12/31/2023
12/31/2022
Balance at beginning of period
$
158,809
$
172,996
$
163,544
$
162,359
$
160,561
$
162,359
$
140,550
ASU 2022-02 day 1 adoption impact
—
—
—
(407
)
—
(407
)
—
Provision for credit losses
1,700
16,800
8,900
1,700
8,200
29,100
9,600
Recoveries
306
2,938
1,531
387
3,222
5,162
24,598
Charge offs
(2,121
)
(33,925
)
(979
)
(495
)
(9,624
)
(37,520
)
(12,389
)
Balance at end of period
$
158,694
$
158,809
$
172,996
$
163,544
$
162,359
$
158,694
$
162,359
12/31/2023
9/30/2023
6/30/2023
3/31/2023
12/31/2022
Allowance for unfunded loan commitments
$
3,843
$
3,143
$
3,081
$
2,971
$
1,351
Three Months Ended
Twelve Months Ended
12/31/2023
9/30/2023
6/30/2023
3/31/2023
12/31/2022
12/31/2023
12/31/2022
Provision for credit losses
$
1,700
$
16,800
$
8,900
$
1,700
$
8,200
$
29,100
$
9,600
Provision for unfunded loan commitments
(in noninterest expense)
700
62
110
1,620
120
2,492
250
Total provision expense
$
2,400
$
16,862
$
9,010
$
3,320
$
8,320
$
31,592
$
9,850
Three Months Ended
Twelve Months Ended
NET LOAN CHARGE OFFS (RECOVERIES):
12/31/2023
9/30/2023
6/30/2023
3/31/2023
12/31/2022
12/31/2023
12/31/2022
CRE loans
$
1,560
$
(2,227
)
$
438
$
(109
)
$
2,022
$
(338
)
$
(14,895
)
C&I loans
138
33,145
(1,091
)
196
4,174
32,388
2,299
Residential mortgage and other loans
117
69
101
21
206
308
387
Net loan charge offs (recoveries)
$
1,815
$
30,987
$
(552
)
$
108
$
6,402
$
32,358
$
(12,209
)
Net charge offs (recoveries)/average loans receivable (annualized)
0.05
%
0.85
%
(0.01
)%
—
%
0.17
%
0.22
%
(0.08
)%
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
NONPERFORMING ASSETS:
12/31/2023
9/30/2023
6/30/2023
3/31/2023
12/31/2022
Loans on nonaccrual status (1)
$
45,204
$
39,081
$
61,252
$
78,861
$
49,687
Accruing delinquent loans past due 90 days or more
261
21,579
15,182
364
401
Accruing troubled debt restructured loans (2)
—
—
—
—
16,931
Total nonperforming loans
45,465
60,660
76,434
79,225
67,019
Other real estate owned (“OREO”)
63
1,043
938
938
2,418
Total nonperforming assets
$
45,528
$
61,703
$
77,372
$
80,163
$
69,437
Nonperforming assets/total assets
0.24
%
0.31
%
0.38
%
0.39
%
0.36
%
Nonperforming assets/loans receivable & OREO
0.33
%
0.43
%
0.52
%
0.53
%
0.45
%
Nonperforming assets/total capital
2.15
%
3.04
%
3.74
%
3.89
%
3.44
%
Nonperforming loans/loans receivable
0.33
%
0.42
%
0.51
%
0.53
%
0.44
%
Nonaccrual loans/loans receivable
0.33
%
0.27
%
0.41
%
0.52
%
0.32
%
Allowance for credit losses/loans receivable
1.15
%
1.11
%
1.16
%
1.09
%
1.05
%
Allowance for credit losses/nonperforming loans
349.05
%
261.80
%
226.33
%
206.43
%
242.26
%
(1) Excludes delinquent SBA loans that are guaranteed and currently in liquidation totaling $11.4 million, $12.1 million, $11.9 million, $7.6 million, and $9.8 million, at December 31, 2023, September 30, 2023, June 30, 2023, March 31, 2023, and December 31, 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:
12/31/2023
9/30/2023
6/30/2023
3/31/2023
12/31/2022
CRE loans
$
33,932
$
26,687
$
29,270
$
44,376
$
33,915
C&I loans
5,013
4,234
23,042
26,191
5,620
Residential mortgage and other loans
6,259
8,160
8,940
8,294
10,152
Total nonaccrual loans
$
45,204
$
39,081
$
61,252
$
78,861
$
49,687
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
ACCRUING DELINQUENT LOANS 30-89 DAYS PAST DUE:
12/31/2023
9/30/2023
6/30/2023
3/31/2023
12/31/2022
30 - 59 days past due
$
2,833
$
2,906
$
9,295
$
7,662
$
7,049
60 - 89 days past due
1,289
506
178
249
2,243
Total accruing delinquent loans 30-89 days past due
$
4,122
$
3,412
$
9,473
$
7,911
$
9,292
ACCRUING DELINQUENT LOANS 30-89 DAYS PAST DUE BY TYPE:
12/31/2023
9/30/2023
6/30/2023
3/31/2023
12/31/2022
CRE loans
$
2,160
$
611
$
7,339
$
3,652
$
4,115
C&I loans
1,643
1,168
990
419
3,300
Residential mortgage and other loans
319
1,633
1,144
3,840
1,877
Total accruing delinquent loans 30-89 days past due
$
4,122
$
3,412
$
9,473
$
7,911
$
9,292
CRITICIZED LOANS:
12/31/2023
9/30/2023
6/30/2023
3/31/2023
12/31/2022
Special mention loans
$
178,992
$
186,600
$
210,806
$
166,472
$
157,263
Substandard loans
143,449
174,161
134,203
138,224
104,073
Total criticized loans
$
322,441
$
360,761
$
345,009
$
304,696
$
261,336
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
Twelve Months Ended
RETURN ON AVERAGE TANGIBLE COMMON EQUITY
12/31/2023
9/30/2023
12/31/2022
12/31/2023
12/31/2022
Average stockholders’ equity
$
2,048,335
$
2,079,092
$
1,997,460
$
2,061,665
$
2,034,027
Less: Average goodwill and core deposit intangible assets, net
(468,622
)
(469,079
)
(470,442
)
(469,298
)
(471,176
)
Average TCE
$
1,579,713
$
1,610,013
$
1,527,018
$
1,592,367
$
1,562,851
Net income
$
26,481
$
30,049
$
51,703
$
133,673
$
218,277
ROTCE (annualized)
6.71
%
7.47
%
13.54
%
8.39
%
13.97
%
TANGIBLE COMMON EQUITY
12/31/2023
9/30/2023
12/31/2022
Total stockholders’ equity
$
2,121,243
$
2,030,424
$
2,019,328
Less: Goodwill and core deposit intangible assets, net
(468,385
)
(468,832
)
(470,176
)
TCE
$
1,652,858
$
1,561,592
$
1,549,152
Total assets
$
19,131,522
$
20,076,364
$
19,164,491
Less: Goodwill and core deposit intangible assets, net
(468,385
)
(468,832
)
(470,176
)
Tangible assets
$
18,663,137
$
19,607,532
$
18,694,315
TCE ratio
8.86
%
7.96
%
8.29
%
Common shares outstanding
120,126,786
120,026,220
119,495,209
TCE per share
$
13.76
$
13.01
$
12.96
Three Months Ended
Twelve Months Ended
PROFITABILITY RATIOS EXCLUDING NOTABLE ITEMS
12/31/2023
9/30/2023
12/31/2022
12/31/2023
12/31/2022
Net income
$
26,481
$
30,049
$
51,703
$
133,673
$
218,277
Notable items:
FDIC special assessment expense
3,971
—
—
3,971
—
Restructuring costs
11,076
500
—
11,576
—
Total notable items
15,047
500
—
15,547
—
Tax provision
3,190
124
—
3,864
—
Less: total notable items, net of tax provision
$
11,857
$
376
$
—
$
11,683
$
—
Net income excluding notable items
$
38,338
$
30,425
$
51,703
$
145,356
$
218,277
Diluted common shares
120,761,112
120,374,618
120,102,665
120,393,257
120,472,345
EPS excluding notable items
$
0.32
$
0.25
$
0.43
$
1.21
$
1.81
Average Assets
19,600,942
20,059,304
18,863,726
19,806,163
18,231,609
ROA excluding notable items
0.78
%
0.61
%
1.10
%
0.73
%
1.20
%
Average Equity
2,048,335
2,079,092
1,997,460
2,061,665
2,034,027
ROE excluding notable items
7.49
%
5.85
%
10.35
%
7.05
%
10.73
%
Average TCE
$
1,579,713
$
1,610,013
$
1,527,018
$
1,592,367
$
1,562,851
ROTCE excluding notable items
9.71
%
7.56
%
13.54
%
9.13
%
13.97
%
Three Months Ended
Twelve Months Ended
EFFICIENCY RATIOS EXCLUDING NOTABLE ITEMS
12/31/2023
9/30/2023
12/31/2022
12/31/2023
12/31/2022
Noninterest expense
$
99,891
$
86,873
$
84,518
$
364,451
$
324,170
Less: notable items:
FDIC special assessment expense
(3,971
)
—
—
(3,971
)
—
Restructuring costs
(11,076
)
(500
)
—
(11,576
)
—
Noninterest expense excluding notable items
$
84,844
$
86,373
$
84,518
$
348,904
$
324,170
Revenue
$
135,196
$
143,683
$
162,631
$
571,438
$
629,818
Efficiency ratio excluding notable items
62.76
%
60.11
%
51.97
%
61.06
%
51.47
%
Average assets
19,600,942
20,059,304
18,863,726
19,806,163
18,231,609
Noninterest expense / average assets, excluding notable items
1.73
%
1.72
%
1.79
%
1.76
%
1.78
%
View source version on businesswire.com: https://www.businesswire.com/news/home/20240130078574/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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