Hope Bancorp Reports 2021 First Quarter Financial Results

Rhea-AI Summary

Hope Bancorp reported a strong first quarter for 2021, with net income of $43.7 million ($0.35 per diluted share), up 54% from Q4 2020 and 68% year-over-year. Key highlights include $847 million in loan originations, significantly aided by $305 million in PPP funding. Noninterest bearing deposits rose 13% from year-end, comprising a record 38% of total deposits. The net interest margin expanded 4 basis points to 3.06%, supported by declining deposit costs. However, criticized assets increased due to COVID-19 impacts on the travel sector.

Positive

• Net income increased by 54% quarter-over-quarter to $43.7 million.
• Loan originations totaled $847.1 million, bolstered by $304.7 million in second round PPP funding.
• Noninterest bearing deposits rose 13% and made up a record 38% of total deposits.
• Net interest margin expanded 4 basis points quarter-over-quarter to 3.06%.
• Noninterest expense to average assets improved to 1.65% from 1.69% in the previous quarter.

Negative

• Criticized assets increased due to the impact of COVID-19 on the travel industry.
• Provision for credit losses decreased but remained a concern at $3.3 million.

Hope Bancorp, Inc. (the “Company”) (NASDAQ: HOPE), the holding company of Bank of Hope (the “Bank”), today reported unaudited financial results for its first quarter ended March 31, 2021.

For the three months ended March 31, 2021, net income totaled $43.7 million, or $0.35 per diluted common share, representing an increase of 54% from $28.3 million, or $0.23 per diluted common share in the fourth quarter of 2020 and an increase of 68% from $26.0 million, or $0.21 per diluted common share, in the year-ago first quarter.

“First quarter results were solid, reflecting the continued benefits of the operational improvements that we implemented in 2020,” said Kevin S. Kim, Chairman, President and Chief Executive Officer of Hope Bancorp, Inc. “We continued to support our customers in this pandemic-challenged business environment by providing $305 million in the second round of PPP funding, which contributed to new loan originations totaling $847 million in the first quarter. Noninterest bearing deposits increased 13% from year-end and accounted for a record high 38% of total deposits at March 31, 2021. This contributed to a sixth consecutive quarter of declining cost of deposits, which supported another quarter of net interest margin expansion for the Company. Additionally, we continued to proactively manage our expenses which resulted in noninterest expense to average assets improving to 1.65% from 1.69% in the preceding quarter.

“During the first quarter, we saw an expected increase in our criticized assets due to the impact COVID-19 has had on the travel industry, but remain well reserved given the considerable build up of our allowance for credit losses last year in anticipation of the eventual migration of these credits in the normal course of the credit administration process. We are, however, pleased to see the continued improvements in the economy, which supported a significantly lower provision expense this quarter and contributed to a 54% increase in net income quarter-over-quarter. With the vaccination campaign in the U.S. well underway and the COVID-related restrictions gradually being lifted, we have greater confidence in our ability to deliver enhanced performance as the year proceeds.”

Q1 2021 Highlights

• Net interest income before provision for credit losses increased 2% quarter-over-quarter to $122.6 million, benefiting from reduced interest expense due to lower cost of deposits.
• Net interest margin expanded 4 basis points quarter-over-quarter.
• Noninterest bearing demand deposits increased 13% quarter-over-quarter and increased as a percentage of total deposits to 38% from 34% at year-end 2020.
• Cost of interest bearing deposits decreased 15 basis points and total cost of deposits decreased 12 basis points quarter-over-quarter continuing a six-quarter trend of declining deposit costs.
• Loan originations totaled $847.1 million, including a second round of PPP fundings of $304.7 million, and contributed to a 1.0% increase in loans receivable quarter-over-quarter, or 4.1% annualized.
• Efficiency ratio improved to 53.61% from 53.77% quarter-over-quarter and noninterest expense to average assets improved to 1.65% from 1.69%.
• Net income increased 54% quarter-over-quarter and totaled $43.7 million, or $0.35 per diluted common share.

Financial Highlights

(dollars in thousands, except per share data) (unaudited)	At or for the Three Months Ended
	3/31/2021				12/31/2020				3/31/2020
Net income	$	43,687			$	28,319			$	25,953
Diluted earnings per share	$	0.35			$	0.23			$	0.21
Net interest income before provision for credit losses	$	122,579			$	120,756			$	119,291
Net interest margin		3.06	%			3.02	%			3.31	%
Noninterest income	$	8,804			$	11,415			$	13,264
Noninterest expense	$	70,431			$	71,063			$	72,140
Net loans receivable	$	13,494,686			$	13,356,472			$	12,438,493
Deposits	$	14,301,269			$	14,333,912			$	12,836,567
Total cost of deposits		0.36	%			0.48	%			1.34	%
Nonaccrual loans(1)	$	109,858			$	85,238			$	72,639
Nonperforming loans to loans receivable(1)		1.11	%			0.91	%			0.93	%
ACL to loans receivable		1.52	%			1.52	%			1.15	%
ACL to nonaccrual loans(1)		189.28	%			242.55	%			199.51	%
ACL to nonperforming assets(1)		121.94	%			144.24	%			103.62	%
Provision for credit losses	$	3,300			$	27,500			$	28,000
Net charge offs	$	2,098			$	608			$	3,421
Return on average assets (“ROA”)		1.02	%			0.67	%			0.67	%
Return on average equity (“ROE”)		8.53	%			5.54	%			5.12	%
Return on average tangible common equity (“ROTCE”)(2)		11.11	%			7.21	%			6.69	%
Noninterest expense / average assets		1.65	%			1.69	%			1.87	%
Efficiency ratio		53.61	%			53.77	%			54.42

(1) Excludes delinquent SBA loans that are guaranteed and currently in liquidation.

(2) Return on average tangible common equity is a non-GAAP financial measure. A reconciliation of the Company’s return on average tangible common equity is provided in the accompanying financial information on Table Page 9.

Operating Results for the 2021 First Quarter

Net interest income before provision for credit losses for the 2021 first quarter increased 2% to $122.6 million from $120.8 million in the 2020 fourth quarter and increased 3% from $119.3 million in the 2020 first quarter. The Company attributed the increase in net interest income primarily to meaningful reductions in interest expense due to lower trending cost of deposits.

The net interest margin for the 2021 first quarter increased 4 basis points to 3.06% from 3.02% in the preceding 2020 fourth quarter, reflecting the benefits of lower deposit costs, partially offset by lower weighted average yield on loans. The net interest margin in the prior-year first quarter was 3.31%.

The weighted average yield on loans for the 2021 first quarter was 3.94%, compared with 4.03% in the preceding fourth quarter and 5.06% in the year-ago first quarter.

The weighted average cost of deposits for the 2021 first quarter decreased for the sixth consecutive quarter to 0.36%, representing a 12 basis point decrease from 0.48% for the 2020 fourth quarter and a 98 basis point decrease from 1.34% for the 2020 first quarter. The Company attributed the significant improvements in the weighted average cost of deposits to a continuing shift in its deposit mix to lower-cost core deposits and the ongoing downward repricing of interest bearing deposits. The cost of interest bearing deposits was 0.56%, 0.71% and 1.76% at March 31, 2021, December 31, 2020 and March 31, 2020, respectively.

Noninterest income totaled $8.8 million for the 2021 first quarter, compared with $11.4 million in the preceding fourth quarter. The largest factors contributing to the decrease included a $1.5 million decline in quarter-over-quarter swap fee income and a $1.2 million reduction in deposit service fees which was largely attributable to the Company’s exiting certain money service business accounts. These decreases were partially offset by increases in loan servicing fees and gain on sales of residential mortgage loans. Noninterest income in the year-ago first quarter totaled $13.3 million.

Noninterest expense for the 2021 first quarter decreased to $70.4 million from $71.1 million in the preceding fourth quarter and $72.1 million in the year-ago first quarter.

Salaries and employee benefits expense for the 2021 first quarter increased 1% to $41.2 million from $40.9 million in the preceding fourth quarter and included higher payroll taxes and 401k contributions partially offset by an increase in loan origination costs of $1.4 million related to the second round of PPP funding. On a year-over-year basis, salaries and employee benefits expense decreased 3% from $42.5 million in the 2020 first quarter.

The Company’s efficiency ratio for the 2021 first quarter improved to 53.61% from 53.77% for the preceding fourth quarter and from 54.42% for the year-ago first quarter. Noninterest expense as a percentage of average assets improved to 1.65% for the 2021 first quarter from 1.69% for the 2020 fourth quarter and from 1.87% for the 2020 first quarter.

The effective tax rate for the 2021 first quarter was 24.2%, compared with 15.7% for the preceding fourth quarter and 19.9% in the year-ago first quarter. The Company noted that its effective tax rate for 2020 fourth quarter reflected a lower tax provision based on adjustments to applicable state apportionment factors.

Balance Sheet Summary

New loan originations funded during the 2021 first quarter totaled $847.1 million and included second round PPP funding of $304.7 million, traditional SBA loan production of $36.8 million and residential mortgage loan originations of $69.8 million. For the preceding 2020 fourth quarter, new loan originations funded totaled $844.2 million, including SBA loan production of $25.5 million, residential mortgage loan originations of $62.5 million and fundings related to two new warehouse mortgage lines of credit of $106.8 million. In the year-ago first quarter, new loan originations funded totaled $624.5 million, including SBA loan production of $49.8 million and residential mortgage loan originations of $37.4 million. There were no new warehouse mortgage lines of credit established in the 2021 and 2020 first quarters.

At March 31, 2021, loans receivable increased 1% to $13.70 billion from $13.56 billion at December 31, 2020 and increased 9% from $12.58 billion at March 31, 2020.

Total deposits at March 31, 2021 amounted to $14.30 billion, down slightly from $14.33 billion at December 31, 2020 but up 11% from $12.84 billion a year ago at March 31, 2020. Reflecting a continuing positive shift in the mix of deposits, noninterest bearing demand deposits increased 13% quarter-over-quarter and increased 80% year-over-year and accounted for 38%, 34% and 24% of total deposits at March 31, 2021, December 31, 2020 and March 31, 2020, respectively.

Following is the deposit composition as of March 31, 2021, December 31, 2020 and March 31, 2020:

(dollars in thousands) (unaudited)	3/31/2021				12/31/2020				% change			3/31/2020				% change
Noninterest bearing demand deposits	$	5,427,174			$	4,814,254			13	%		$	3,010,143			80	%
Money market and other	5,009,419				5,232,413				(4	)%		4,851,000				3	%
Saving deposits	305,326				300,770				2	%		272,577				12	%
Time deposits	3,559,350				3,986,475				(11	)%		4,702,847				(24	)%
Total deposit balances	$	14,301,269			$	14,333,912			—	%		$	12,836,567			11	%

Following is the deposit composition as a percentage of total deposits and a breakdown of cost of deposits as of and for the quarters ended March 31, 2021, December 31, 2020 and March 31, 2020:

	Deposit Breakdown									Cost of Deposits
(dollars in thousands) (unaudited)	3/31/2021			12/31/2020			3/31/2020			Q1 2021			Q4 2020			Q1 2020
Noninterest bearing demand deposits	38.0	%		33.6	%		23.5	%		—	%		—	%		—	%
Money market and other	35.0	%		36.5	%		37.8	%		0.42	%		0.45	%		1.42	%
Saving deposits	2.1	%		2.1	%		2.1	%		1.17	%		1.17	%		1.19	%
Time deposits	24.9	%		27.8	%		36.6	%		0.69	%		0.98	%		2.09	%
Total deposit balances	100.0	%		100.0	%		100.0	%		0.36	%		0.48	%		1.34	%

Allowance for Credit Losses

The 2021 first quarter provision for credit losses under the CECL methodology was $3.3 million, compared with $27.5 million for the preceding fourth quarter and $28.0 million for the 2020 first quarter. The provision for credit losses for the 2021 first quarter reflects updated macroeconomic variables incorporating the Moody’s Analytics Consensus scenario that continue to show improving trends that support a strong economic recovery and taking into account the Company’s significant buildup in reserves in prior periods in consideration of the pandemic’s expected impact on its loan portfolio, as well as its low level of credit losses.

Following is the Allowance for Credit Losses as of March 31, 2021, December 31, 2020 and March 31, 2020:

(dollars in thousands) (unaudited)	3/31/2021				12/31/2020				3/31/2020
Allowance for credit losses	$	207,943			$	206,741			$	144,923
Allowance for credit loss/loans receivable		1.52	%			1.52	%			1.15	%
Allowance for credit losses/nonperforming loans		136.79	%			167.80	%			124.06	%

Credit Quality

Following are the components of nonperforming assets as of March 31, 2021, December 31, 2020 and March 31, 2020:

(dollars in thousands) (unaudited)	3/31/2021				12/31/2020				3/31/2020
Loans on nonaccrual status (1)	$	109,858			$	85,238			$	72,639
Delinquent loans 90 days or more on accrual status		384				614				387
Accruing troubled debt restructured loans		41,773				37,354				43,789
Total nonperforming loans		152,015				123,206				116,815
Other real estate owned		18,515				20,121				23,039
Total nonperforming assets	$	170,530			$	143,327			$	139,854

(1) Excludes delinquent SBA loans that are guaranteed and currently in liquidation totaling $25.0 million, $26.5 million and $28.8 million, at March 31, 2021, December 31, 2020 and March 31, 2020, respectively.

The $24.6 million increase in loans on nonaccrual status largely reflects the addition of a $23.5 million retail commercial real estate loan. The Company noted that this was a unique situation due to the borrower’s involvement in a legal dispute and not reflective of any systemic deterioration for these property types.

Following are the components of criticized loan balances as of March 31, 2021, December 31, 2020 and March 31, 2020:

(dollars in thousands) (unaudited)	3/31/2021			12/31/2020			3/31/2020
Special Mention	$	280,974		$	184,941		$	122,279
Classified		379,048			366,557			278,783
Criticized	$	660,022		$	551,498		$	401,062

The increase in criticized loans quarter-over-quarter primarily reflects downgrades in the Company’s hotel/motel portfolio to the Special Mention category. The Company noted that the performance of these loans was consistent with expectations when reserves were increased in 2020 and that no new issues for these borrowers have emerged.

Net charge offs in the 2021 first quarter totaled $2.1 million, or 0.06% of average loans receivable on an annualized basis. This compares with net charge offs of $608,000, or 0.02% of average loans receivable on an annualized basis for the 2020 fourth quarter and $3.4 million, or 0.11% of average loans receivable on an annualized basis for the 2020 first quarter.

Capital

At March 31, 2021, the Company and the Bank continued to exceed all regulatory capital requirements to be classified as a “well-capitalized” financial institution. Following are capital ratios for the Company as of March 31, 2021, December 31, 2020 and March 31, 2020:

Hope Bancorp, Inc. (unaudited)	3/31/2021			12/31/2020			3/31/2020			Minimum Guideline for “Well-Capitalized” Bank
Common Equity Tier 1 Capital	11.08	%		10.94	%		11.44	%		6.50	%
Tier 1 Leverage Ratio	10.15	%		10.22	%		10.88	%		5.00	%
Tier 1 Risk-Based Ratio	11.78	%		11.64	%		12.19	%		8.00	%
Total Risk-Based Ratio	13.03	%		12.87	%		13.08	%		10.00	%

Following are tangible common equity (“TCE”) per share and TCE as a percentage of tangible assets as of March 31, 2021, December 31, 2020 and March 31, 2020:

(unaudited)	3/31/2021				12/31/2020				3/31/2020
Tangible common equity per share (1)	$	12.73			$	12.81			$	12.52
Tangible common equity to tangible assets (2)		9.40	%			9.50	%			9.92	%

(1) Tangible common equity represents common equity less goodwill and net other intangible assets. Tangible common equity per share represents tangible common equity divided by the number of shares issued and outstanding. Both tangible common equity and tangible common equity per share are non-GAAP financial measures. A reconciliation of the Company’s total stockholders’ equity to tangible common equity is provided in the accompanying financial information on Table Page 9.

(2) Tangible assets represent total assets less goodwill and net other intangible assets. Tangible common equity to tangible assets is the ratio of tangible common equity over tangible assets. Tangible common equity to tangible assets is a non-GAAP financial measure. A reconciliation of the Company’s total assets to tangible assets is provided in the accompanying financial information on Table Page 9.

Investor Conference Call

The Company previously announced that it will host an investor conference call on Wednesday, April 28, 2021 at 9:30 a.m. Pacific Time / 12:30 p.m. Eastern Time to review financial results for its first quarter ended March 31, 2021. 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 May 5, 2021, replay access code 10154357.

About Hope Bancorp, Inc.

Hope Bancorp, Inc. is the holding company of Bank of Hope, the first and only super regional Korean-American bank in the United States with $17.2 billion in total assets as of March 31, 2021. Headquartered in Los Angeles and serving a multi-ethnic population of customers across the nation, Bank of Hope operates 53 full-service branches in California, Washington, Texas, Illinois, New York, New Jersey, Virginia and Alabama. The Bank also operates SBA loan production offices in Seattle, Denver, Dallas, Atlanta, Portland, Oregon, New York City, Northern California and Houston; commercial loan production offices in Northern California and Seattle; 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 and commercial 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 press 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 and statements regarding our business strategies, objectives and vision. 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 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 and per share data)
Assets:	3/31/2021					12/31/2020					% change			3/31/2020					% change
Cash and due from banks	$	376,666				$	350,579				7	%		$	802,033				(53	)%
Securities available for sale, at fair value	2,233,744					2,285,611					(2	)%		1,718,702					30	%
Federal Home Loan Bank (“FHLB”) stock and other investments	102,242					105,591					(3	)%		96,956					5	%
Loans held for sale, at the lower of cost or fair value	19,672					17,743					11	%		8,281					138	%
Loans receivable	13,702,629					13,563,213					1	%		12,583,416					9	%
Allowance for credit losses	(207,943		)			(206,741		)			1	%		(144,923		)			43	%
Net loans receivable	13,494,686					13,356,472					1	%		12,438,493					8	%
Accrued interest receivable	60,498					59,430					2	%		30,450					99	%
Premises and equipment, net	47,918					48,409					(1	)%		51,392					(7	)%
Bank owned life insurance	77,089					76,765					—	%		76,429					1	%
Goodwill	464,450					464,450					—	%		464,450					—	%
Servicing assets	12,084					12,692					(5	)%		14,847					(19	)%
Other intangible assets, net	9,198					9,708					(5	)%		11,302					(19	)%
Other assets	300,613					319,214					(6	)%		308,099					(2	)%
Total assets	$	17,198,860				$	17,106,664				1	%		$	16,021,434				7	%
Liabilities:
Deposits	$	14,301,269				$	14,333,912				—	%		$	12,836,567				11	%
FHLB advances	400,000					250,000					60	%		675,000					(41	)%
Convertible notes, net	215,504					204,565					5	%		200,716					7	%
Subordinated debentures	104,469					104,178					—	%		103,318					1	%
Accrued interest payable	8,611					14,706					(41	)%		30,436					(72	)%
Other liabilities	123,426					145,558					(15	)%		157,309					(22	)%
Total liabilities	$	15,153,279				$	15,052,919				1	%		$	14,003,346				8	%
Stockholders’ Equity:
Common stock, $0.001 par value	$	136				$	136				—	%		$	136				—	%
Capital surplus	1,417,137					1,434,916					(1	)%		1,429,275					(1	)%
Retained earnings	823,085					785,940					5	%		752,228					9	%
Treasury stock, at cost	(200,000		)			(200,000		)			—	%		(200,000		)			—	%
Accumulated other comprehensive gain, net	5,223					32,753					(84	)%		36,449					(86	)%
Total stockholders’ equity	2,045,581					2,053,745					—	%		2,018,088					1	%
Total liabilities and stockholders’ equity	$	17,198,860				$	17,106,664				1	%		$	16,021,434				7	%
Common stock shares - authorized	150,000,000					150,000,000								150,000,000
Common stock shares - outstanding	123,480,494					123,264,864								123,169,404
Treasury stock shares	12,661,581					12,661,581								12,661,581

Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands, except share and per share data)
	Three Months Ended
	3/31/2021				12/31/2020					% change			3/31/2020				% change
Interest and fees on loans	$	129,736			$	132,117				(2	)%		$	154,230			(16	)%
Interest on securities	7,915				9,014					(12	)%		10,609				(25	)%
Interest on federal funds sold and other investments	642				598					7	%		2,029				(68	)%
Total interest income	138,293				141,729					(2	)%		166,868				(17	)%
Interest on deposits	12,770				16,934					(25	)%		41,113				(69	)%
Interest on other borrowings and convertible notes	2,944				4,039					(27	)%		6,464				(54	)%
Total interest expense	15,714				20,973					(25	)%		47,577				(67	)%
Net interest income before provision for credit losses	122,579				120,756					2	%		119,291				3	%
Provision for credit losses	3,300				27,500					(88	)%		28,000				(88	)%
Net interest income after provision for credit losses	119,279				93,256					28	%		91,291				31	%
Service fees on deposit accounts	1,790				2,991					(40	)%		4,133				(57	)%
International service fees	841				696					21	%		790				6	%
Loan servicing fees, net	1,044				566					84	%		365				186	%
Wire transfer fees	844				867					(3	)%		998				(15	)%
Net gains on sales of other loans	2,096				1,618					30	%		1,855				13	%
Other income and fees	2,189				4,677					(53	)%		5,123				(57	)%
Total noninterest income	8,804				11,415					(23	)%		13,264				(34	)%
Salaries and employee benefits	41,216				40,911					1	%		42,502				(3	)%
Occupancy	6,967				7,200					(3	)%		7,410				(6	)%
Furniture and equipment	4,186				4,122					2	%		4,259				(2	)%
Advertising and marketing	1,625				1,695					(4	)%		1,673				(3	)%
Data processing and communications	2,737				2,235					22	%		2,631				4	%
Professional fees	2,903				1,847					57	%		3,300				(12	)%
FDIC assessment	1,255				1,166					8	%		1,559				(19	)%
Credit related expenses	2,218				2,001					11	%		1,662				33	%
OREO expense (income), net	281				(86		)			N/A			843				(67	)%
Branch restructuring costs	—				2,367					(100	)%		—				—	%
Other	7,043				7,605					(7	)%		6,301				12	%
Total noninterest expense	70,431				71,063					(1	)%		72,140				(2	)%
Income before income taxes	57,652				33,608					72	%		32,415				78	%
Income tax provision	13,965				5,289					164	%		6,462				116	%
Net income	$	43,687			$	28,319				54	%		$	25,953			68	%
Earnings Per Common Share:
Basic	$	0.35			$	0.23							$	0.21
Diluted	$	0.35			$	0.23							$	0.21
Weighted Average Shares Outstanding:
Basic	123,324,745				123,264,172								124,295,327
Diluted	124,336,130				123,874,229								124,676,296

Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands, except share and per share data)
	For the Three Months Ended (Annualized)
Profitability measures:	3/31/2021				12/31/2020				3/31/2020
ROA	1.02		%		0.67		%		0.67		%
ROE	8.53		%		5.54		%		5.12		%
ROTCE (1)	11.11		%		7.21		%		6.69		%
Net interest margin	3.06		%		3.02		%		3.31		%
Efficiency ratio	53.61		%		53.77		%		54.42		%
Noninterest expense / average assets	1.65		%		1.69		%		1.87		%
(1) Average tangible equity is calculated by subtracting average goodwill and average core deposit intangible assets from average stockholders’ equity. This is a non-GAAP measure that we believe provides investors with information that is useful in understanding our financial performance and position.
	Three Months Ended
Pre-tax acquisition accounting adjustments:	3/31/2021				12/31/2020				3/31/2020
Accretion on purchased non-impaired loans	$	705			$	452			$	1,059
Accretion on purchased credit deteriorated/purchased credit impaired loans	2,255				3,064				9,449
Amortization of premium on low income housing tax credits	(73		)		(71		)		(71		)
Accretion of discount on acquired subordinated debt	(290		)		(289		)		(283		)
Amortization of core deposit intangibles	(509		)		(531		)		(531		)
Total acquisition accounting adjustments	$	2,088			$	2,625			$	9,623

Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
	Three Months Ended
	3/31/2021											12/31/2020											3/31/2020
					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	$	13,346,264			$	129,736			3.94	%		$	13,046,443			$	132,117			4.03	%		$	12,259,848			$	154,230			5.06	%
Securities available for sale	2,267,409				7,915				1.42	%		2,123,025				9,014				1.69	%		1,712,033				10,609				2.49	%
FHLB stock and other investments	640,392				642				0.41	%		749,281				598				0.32	%		519,309				2,029				1.57	%
Total interest earning assets	$	16,254,065			$	138,293			3.45	%		$	15,918,749			$	141,729			3.54	%		$	14,491,190			$	166,868			4.63	%
INTEREST BEARING LIABILITIES:
Deposits:
Demand, interest bearing	$	5,256,579			$	5,490			0.42	%		$	4,910,649			$	5,541			0.45	%		$	4,204,406			$	14,880			1.42	%
Savings	301,184				870				1.17	%		305,341				898				1.17	%		274,075				808				1.19	%
Time deposits	3,767,109				6,410				0.69	%		4,240,500				10,495				0.98	%		4,900,405				25,425				2.09	%
Total interest bearing deposits	9,324,872				12,770				0.56	%		9,456,490				16,934				0.71	%		9,378,886				41,113				1.76	%
FHLB advances	215,889				642				1.21	%		204,900				657				1.28	%		594,890				2,647				1.79	%
Convertible notes, net	215,002				1,322				2.46	%		203,807				2,383				4.58	%		199,960				2,346				4.64	%
Subordinated debentures	100,392				980				3.90	%		100,118				999				3.90	%		99,252				1,471				5.86	%
Total interest bearing liabilities	$	9,856,155			$	15,714			0.65	%		$	9,965,315			$	20,973			0.84	%		$	10,272,988			$	47,577			1.86	%
Noninterest bearing demand deposits	5,052,532											4,637,584											2,963,136
Total funding liabilities/cost of funds	$	14,908,687							0.43	%		$	14,602,899							0.57	%		$	13,236,124							1.45	%
Net interest income/net interest spread					$	122,579			2.80	%						$	120,756			2.70	%						$	119,291			2.77	%
Net interest margin									3.06	%										3.02	%										3.31	%
Cost of deposits:
Noninterest bearing demand deposits	$	5,052,532

FAQ

What were Hope Bancorp's Q1 2021 earnings results?

Hope Bancorp reported a net income of $43.7 million, or $0.35 per diluted share, for Q1 2021.

How much did Hope Bancorp originate in loans during Q1 2021?

Hope Bancorp originated $847.1 million in loans during Q1 2021.

What percentage of deposits are noninterest bearing for Hope Bancorp as of Q1 2021?

As of March 31, 2021, noninterest bearing deposits comprised 38% of total deposits.

What influenced the net interest margin for Hope Bancorp in Q1 2021?

The net interest margin expanded to 3.06% due to declining deposit costs.

What impact did COVID-19 have on Hope Bancorp's financials in Q1 2021?

Criticized assets increased due to COVID-19, particularly affecting the travel industry.