Hope Bancorp Reports 2023 Second Quarter Financial Results

LOS ANGELES--(BUSINESS WIRE)-- Hope Bancorp, Inc. (the “Company”) (NASDAQ: HOPE), the holding company of Bank of Hope (the “Bank”), today reported unaudited financial results for its second quarter and six months ended June 30, 2023.

For the three months ended June 30, 2023, net income totaled $38.0 million, or $0.32 per diluted common share. This compares with net income of $39.1 million, or $0.33 per diluted common share, in the preceding first quarter. Pre-provision net revenue (“PPNR”) ⁽¹⁾ for the 2023 second quarter totaled $60.4 million, up 11% from $54.5 million in the preceding first quarter.

“Throughout the second quarter, we continued to maintain high levels of capital and liquidity to prudently navigate an operating environment that is challenging for regional banks,” said Kevin S. Kim, Chairman, President and Chief Executive Officer. “Year-over-year, our total capital ratio increased 51 basis points to 12.64% at June 30, 2023. At the end of the 2023 second quarter, our tangible common equity ratio ⁽¹⁾ was a robust 8.04%.

“Our asset quality remains healthy. We recorded net recoveries of $552 thousand for the 2023 second quarter, and nonperforming assets decreased 30% year-over-year. We have steadily built our allowance for credit losses, with coverage at 1.16% of loans receivable at June 30, 2023.

“Year-over-year, our loans receivable grew 2% to $14.9 billion, and our total deposits grew 4% to $15.6 billion at June 30, 2023. With Bank of Hope’s strong balance sheet and continued investment in enhancing our products and services, we are focused on expanding our relationships with our customers and strengthening our market leadership in the Korean American community and beyond,” said Kim.

Q2 2023 Highlights

• Capital growth. Total capital was $2.10 billion at June 30, 2023, growing 2% from March 31, 2023. The total capital ratio increased 39 basis points quarter-over-quarter to 12.64% at June 30, 2023. Book value per common share at June 30, 2023, was $17.23, and tangible common equity (“TCE”) per share ⁽¹⁾ was $13.32, up 0.3% and 0.5%, respectively, quarter-over-quarter. The TCE ratio of 8.04% as of June 30, 2023, expanded 13 basis points from March 31, 2023.
• Strong liquidity. Cash and cash equivalents increased to $2.30 billion at June 30, 2023, up from $2.21 billion at March 31, 2023. Available borrowing capacity, together with cash and cash equivalents and unpledged investment securities, totaled $7.75 billion, equivalent to 50% of total deposits at June 30, 2023.
• Healthy asset quality. Nonperforming assets declined 3% quarter-over-quarter. The nonperforming assets ratio improved to 0.38% of total assets at June 30, 2023, down from 0.39% at March 31, 2023. The Company recorded net recoveries of $552 thousand during the 2023 second quarter, equivalent to 0.01% annualized of average loans.
• Total deposits of $15.62 billion at June 30, 2023, decreased 1% quarter-over-quarter and grew 4% year-over-year. Uninsured deposits at June 30, 2023, represented 36% of the Bank’s deposits, compared with 38% at March 31, 2023.
• Loans receivable of $14.86 billion at June 30, 2023, decreased 1% quarter-over-quarter and grew 2% year-over-year.
• Efficiency improvement. The efficiency ratio for the 2023 second quarter improved 325 basis points to 59.1% from 62.4% for the preceding first quarter.
• PPNR increase. PPNR for the 2023 second quarter totaled $60.4 million, up 11% from $54.5 million in the preceding first quarter.

(1)

PPNR, TCE ratio, and TCE per share 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.

Financial Summary

		At or for the Three Months Ended
(dollars in thousands, except per share data) (unaudited)		6/30/2023				3/31/2023				6/30/2022
Net income		$	38,022			$	39,121			$	52,088
Diluted earnings per share		$	0.32			$	0.33			$	0.43
Net interest income before provision for credit losses		$	130,689			$	133,878			$	141,538
Pre-provision net revenue (“PPNR”) (1)		$	60,370			$	54,502			$	73,919
Loans receivable		$	14,864,810			$	15,064,849			$	14,546,049
Deposits		$	15,619,352			$	15,828,209			$	15,029,630
Total assets		$	20,366,138			$	20,568,884			$	18,089,062
Total equity		$	2,067,998			$	2,058,580			$	2,000,369
Total capital ratio			12.64	%			12.25	%			12.13	%
Tangible common equity (“TCE”) ratio (1)			8.04	%			7.91	%			8.68	%
Net recoveries (charge offs)		$	552			$	(108	)		$	930
Net recoveries/average loans receivable (2)			0.01	%			—	%			0.03	%
Allowance for credit losses		$	172,996			$	163,544			$	151,580
Allowance for credit losses to loans receivable			1.16	%			1.09	%			1.04	%
Nonperforming assets to total assets (3)			0.38	%			0.39	%			0.61	%
Return on average assets (“ROA”) (2)			0.74	%			0.82	%			1.17	%
Return on average equity (“ROE”) (2)			7.34	%			7.65	%			10.33	%
Return on average TCE (“ROTCE”) (1) (2)			9.49	%			9.93	%			13.48	%
ROA (PPNR) (1) (2)			1.18	%			1.14	%			1.65	%
ROE (PPNR) (1) (2)			11.65	%			10.65	%			14.66	%
Net interest margin (2)			2.70	%			3.02	%			3.36	%
Noninterest expense / average assets (2)			1.71	%			1.89	%			1.80	%
Efficiency ratio			59.13	%			62.38	%			52.09	%

__________________

(1)		PPNR, TCE ratio, ROTCE, ROA (PPNR), and ROE (PPNR) are non-GAAP financial measures. Quantitative reconciliations of the most directly comparable GAAP to non-GAAP financial measures are provided in the accompanying financial information on Table Page 10.
(2)		Annualized.
(3)		Excludes delinquent Small Business Administration (“SBA”) loans that are guaranteed and currently in liquidation.

Operating Results for the 2023 Second Quarter

Net interest income. Net interest income before provision for credit losses for the 2023 second quarter totaled $130.7 million, a decrease of 2% compared with $133.9 million in the preceding first quarter. 2023 second quarter interest income of $267.2 million increased $30.5 million quarter-over-quarter, driven by growth in average interest earning cash and deposits at other banks, as well as expanding loan yields. This was offset by higher interest expense, which increased $33.7 million quarter-over-quarter, reflecting a higher cost of interest bearing deposits and a higher volume of average borrowings.

The net interest margin for the 2023 second quarter decreased 32 basis points to 2.70%, from 3.02% in the preceding first quarter, primarily reflecting a higher cost of funds and an increase in average borrowings, partially offset by loan yield expansion and growth in average interest earning cash and deposits at other banks.

The weighted average yield on loans for the 2023 second quarter was 5.99%, up 24 basis points from 5.75% in the preceding first quarter. This reflected increases in market interest rates and a significant increase in the average rate on new loans. The average rate on new loans originated in the 2023 second quarter was 8.37%, up 84 basis points quarter-over-quarter.

The weighted average cost of total deposits for the 2023 second quarter was 2.79%, up 42 basis points from 2.37% in the preceding first quarter, reflecting higher rates paid on interest bearing deposit accounts.

Noninterest income. Noninterest income for the 2023 second quarter totaled $17.0 million, up 55% from $11.0 million in the preceding first quarter. Other income and fees for the 2023 second quarter included a $5.8 million cash distribution from a gain on an investment in an affordable housing partnership. During the 2023 second quarter, the Company sold $38.4 million of the guaranteed portion of SBA 7(a) loans and $6.6 million of residential mortgage loans, for a gain on loan sales of $2.0 million, compared with $40.7 million and $7.3 million, respectively, sold in the preceding first quarter for a gain on loan sales of $2.3 million.

Noninterest expense. Noninterest expense for the 2023 second quarter decreased 3% to $87.3 million, down from $90.4 million in the preceding first quarter. The quarter-over-quarter change was primarily driven by lower salaries and employee benefits expense, partially offset by the impact of an industry-wide increase in the FDIC assessment rate of two basis points.

The Company’s efficiency ratio for the 2023 second quarter improved to 59.1% from 62.4% in the preceding first quarter. Annualized noninterest expense as a percentage of average assets was 1.71% for the 2023 second quarter, down from 1.89% for the 2023 first quarter.

Tax rate. The effective tax rate for the 2023 second quarter was 26.1%, compared with 25.9% for the preceding first quarter. The year-to-date effective tax rate for the first six months of 2023 was 26.0%.

Balance Sheet Summary

Loans. New loan originations for the 2023 second quarter totaled $490.6 million, compared with $568.7 million for the preceding first quarter. The following table sets forth the components of new loan production for the quarters ended June 30, 2023, March 31, 2023, and June 30, 2022.

		For the Three Months Ended
(dollars in thousands) (unaudited)		6/30/2023			3/31/2023			6/30/2022
Commercial real estate (“CRE”) loans		$	115,444		$	176,798		$	522,093
Commercial and industrial (“C&I”) loans			318,063			344,194			544,639
SBA loans			38,051			29,977			35,085
Residential mortgage loans			18,736			14,317			181,408
Other loans			280			3,375			2,770
Total new loan originations		$	490,574		$	568,661		$	1,285,995

At June 30, 2023, loans receivable decreased 1% quarter-over-quarter to $14.86 billion from $15.06 billion at March 31, 2023. Year-over-year, loans receivable grew 2%, up from $14.55 billion at June 30, 2022. The following table sets forth the loan portfolio composition and percentage of total loans at June 30, 2023, March 31, 2023, and June 30, 2022:

(dollars in thousands) (unaudited)		6/30/2023						3/31/2023						6/30/2022
		Balance			Percentage			Balance			Percentage			Balance			Percentage
C&I loans		$	4,805,126		32.3	%		$	4,821,270		32.0	%		$	4,395,738		30.2	%
CRE loans			9,192,160		61.9	%			9,373,529		62.2	%			9,335,020		64.2	%
Residential mortgage and other loans			867,524		5.8	%			870,050		5.8	%			815,291		5.6	%
Loans receivable		$	14,864,810		100.0	%		$	15,064,849		100.0	%		$	14,546,049		100.0	%

Deposits. At June 30, 2023, total deposits decreased 1% to $15.62 billion from $15.83 billion at March 31, 2023. Year-over-year, total deposits grew 4%, up from $15.03 billion at June 30, 2022. The following table sets forth the deposit composition and percentage of total deposits at June 30, 2023, March 31, 2023, and June 30, 2022:

(dollars in thousands) (unaudited)		6/30/2023						3/31/2023						6/30/2022
		Balance			Percentage			Balance			Percentage			Balance			Percentage
Noninterest bearing demand deposits		$	4,229,247		27.1	%		$	4,504,621		28.4	%		$	5,689,992		37.9	%
Money market and interest bearing demand deposits			4,188,584		26.8	%			4,331,998		27.4	%			6,339,467		42.2	%
Savings deposits			224,495		1.4	%			231,704		1.5	%			326,927		2.1	%
Time deposits			6,977,026		44.7	%			6,759,886		42.7	%			2,673,244		17.8	%
Total deposits		$	15,619,352		100.0	%		$	15,828,209		100.0	%		$	15,029,630		100.0	%

Liquidity. At June 30, 2023, cash and cash equivalents increased to $2.30 billion from $2.21 billion at March 31, 2023, and up from $0.20 billion at June 30, 2022. Available borrowing capacity, cash and cash equivalents, and unpledged investment securities totaled $7.75 billion, equivalent to 50% of total deposits at June 30, 2023, and well exceeding the Bank’s uninsured deposit balances.

Borrowings and Convertible Notes. Federal Home Loan Bank and Federal Reserve Bank borrowings were $2.26 billion at June 30, 2023, compared with $2.13 billion at March 31, 2023, and $0.57 billion at June 30, 2022. At the expiration of the Optional Put for the holders of the Company’s 2% Convertible Senior Notes due 2038, $197 million of the principal amount was paid off on May 15, 2023, with existing cash.

Allowance for Credit Losses

For the 2023 second quarter, the Company recorded a provision for credit losses of $8.9 million, compared with $1.7 million in the preceding first quarter, building its allowance for credit losses. The allowance for credit losses increased to $173.0 million at June 30, 2023, up from $163.5 million at March 31, 2023. The allowance coverage ratio increased to 1.16% of loans receivable at June 30, 2023, up from 1.09% a quarter ago.

The following table sets forth the allowance for credit losses and allowance coverage ratios at June 30, 2023, March 31, 2023, and June 30, 2022:

(dollars in thousands) (unaudited)		6/30/2023				3/31/2023				6/30/2022
Allowance for credit losses		$	172,996			$	163,544			$	151,580
Allowance for credit losses/loans receivable			1.16	%			1.09	%			1.04	%

Credit Quality

Asset quality continued to be healthy. The Company recorded net recoveries of $552 thousand in the 2023 second quarter, representing an annualized net recovery ratio of 0.01% of average loans. The following table sets forth net recoveries (charge offs) and net recoveries to average loans receivable, annualized, for the three months ended June 30, 2023, March 31, 2023, and June 30, 2022:

		For the Three Months Ended
(dollars in thousands) (unaudited)		6/30/2023				3/31/2023				6/30/2022
Net recoveries (charge offs)		$	552			$	(108	)		$	930
Net recoveries/average loans receivable (annualized)			0.01	%			—	%			0.03	%

Nonperforming assets. Nonperforming assets totaled $77.4 million at June 30, 2023, a decrease of 3% quarter-over-quarter, and a decrease of 30% year-over-year. The nonperforming assets ratio improved to 0.38% of total assets at June 30, 2023, down from 0.39% at March 31, 2023, and down from 0.61% at June 30, 2022. Nonperforming loans decreased 4% quarter-over-quarter to $76.4 million at June 30, 2023, down from $79.2 million at March 31, 2023, and decreased 30% year-over-year from $108.6 million at June 30, 2022.

The following table sets forth the components of nonperforming assets at June 30, 2023, March 31, 2023, and June 30, 2022:

(dollars in thousands) (unaudited)		6/30/2023				3/31/2023				6/30/2022
Loans on nonaccrual status (1)		$	61,252			$	78,861			$	69,522
Accruing delinquent loans past due 90 days or more			15,182				364				12,468
Accruing troubled debt restructured loans (2)			—				—				26,572
Total nonperforming loans			76,434				79,225				108,562
Other real estate owned			938				938				2,010
Total nonperforming assets		$	77,372			$	80,163			$	110,572
Nonperforming assets/total assets			0.38	%			0.39	%			0.61	%

__________________

(1)		Excludes delinquent SBA loans that are guaranteed and currently in liquidation totaling $11.9 million, $7.6 million and $13.2 million at June 30, 2023, March 31, 2023, and June 30, 2022, respectively.
(2)		The Company adopted ASU 2022-02 in 2023, which eliminated the concept of troubled debt restructured (“TDR”) loans from GAAP; therefore, accruing TDR loans are no longer included in nonperforming loans.

Criticized loans. Total criticized loans were $345.0 million at June 30, 2023, compared with $304.7 million at March 31, 2023, and $340.5 million at June 30, 2022.

Capital

The Company’s capital ratios remained strong. At June 30, 2023, the Company and the Bank continued to exceed all regulatory capital requirements generally required to meet the definition of a “well-capitalized” financial institution. The following table sets forth the capital ratios for the Company at June 30, 2023, March 31, 2023, and June 30, 2022:

(unaudited)		6/30/2023		3/31/2023		6/30/2022		Minimum Guideline for “Well-Capitalized”
Common Equity Tier 1 Capital Ratio		11.06%		10.75%		10.69%		6.50%
Tier 1 Capital Ratio		11.68%		11.36%		11.33%		8.00%
Total Capital Ratio		12.64%		12.25%		12.13%		10.00%
Leverage Ratio		9.57%		10.13%		10.32%		5.00%

The following table sets forth the TCE per share and the TCE ratio at June 30, 2023, March 31, 2023, and June 30, 2022:

(unaudited)		6/30/2023		3/31/2023		6/30/2022
TCE per share (1)		$13.32		$13.26		$12.80
TCE ratio (1)		8.04%		7.91%		8.68%

__________________

(1)

TCE per share and TCE ratio are non-GAAP financial measures. Quantitative reconciliations of the most directly comparable GAAP to non-GAAP financial measures are provided in the accompanying financial information on Table Page 10.

Investor Conference Call

The Company previously announced that it will host an investor conference call on Monday, July 24, 2023 at 9:30 a.m. Pacific Time / 12:30 p.m. Eastern Time to review unaudited financial results for its second quarter ended June 30, 2023. Investors and analysts are invited to access the conference call by dialing 866-235-9917 (domestic) or 412-902-4103 (international) and asking for the “Hope Bancorp Call.” A presentation to accompany the earnings call will be available at the Investor Relations section of Hope Bancorp’s website at www.ir-hopebancorp.com. Other interested parties are invited to listen to a live webcast of the call available at the Investor Relations section of Hope Bancorp’s website. After the live webcast, a replay will remain available at the Investor Relations section of Hope Bancorp’s website for one year. A telephonic replay of the call will be available at 877-344-7529 (domestic) or 412-317-0088 (international) for one week through July 31, 2023, replay access code 8610354.

Non-GAAP Financial Metrics

This news release contains certain non-GAAP financial measure disclosures, including PPNR, TCE per share, TCE ratio, ROTCE, ROA (PPNR), and ROE (PPNR). Management believes these non-GAAP financial measures provide meaningful supplemental information regarding the Company’s operational performance and the Company’s capital levels and has included these figures in response to market participant interest in these financial metrics. Quantitative reconciliations of the most directly comparable GAAP to non-GAAP financial measures are provided in the accompanying financial information on Table Page 10.

About Hope Bancorp, Inc.

Hope Bancorp, Inc. (NASDAQ: HOPE) is the holding company of Bank of Hope, the first and only super regional Korean American bank in the United States with $20.37 billion in total assets as of June 30, 2023. 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, Alabama, and Georgia. The Bank also operates SBA loan production offices in Seattle, Denver, Dallas, Atlanta, Portland, New York City, Northern California and Houston; commercial loan production offices in Northern California, Seattle and Tampa, Fla.; residential mortgage loan production offices in Southern California; and a representative office in Seoul, Korea. Bank of Hope specializes in core business banking products for small and medium-sized businesses, with an emphasis in commercial real estate lending, commercial and industrial lending, SBA lending, and international trade financing. Bank of Hope is a California-chartered bank, and its deposits are insured by the FDIC to the extent provided by law. Bank of Hope is an Equal Opportunity Lender. For additional information, please go to bankofhope.com. By including the foregoing website address link, the Company does not intend to and shall not be deemed to incorporate by reference any material contained or accessible therein.

Forward-Looking Statements

Some statements in this news release may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements relate to, among other things, expectations regarding the business environment in which we operate, projections of future performance, perceived opportunities in the market 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 further deterioration in economic conditions in our areas of operation; interest rate risk associated with volatile interest rates and related asset-liability matching risk; liquidity risks; risk of significant non-earning assets, and net credit losses that could occur, particularly in times of weak economic conditions or times of rising interest rates; the failure of or changes to assumptions and estimates underlying the Company’s allowances for credit losses; regulatory risks associated with current and future regulations; and the COVID-19 pandemic and its impact on our financial position, results of operations, liquidity, and capitalization. For additional information concerning these and other risk factors, see the Company’s most recent Annual Report on Form 10-K. The Company does not undertake, and specifically disclaims any obligation, to update any forward-looking statements to reflect the occurrence of events or circumstances after the date of such statements except as required by law.

Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands, except share data)
Assets:		6/30/2023				3/31/2023				% change			6/30/2022				% change
Cash and due from banks		$	2,302,339			$	2,212,637			4	%		$	197,062			1,068	%
Investment securities			2,186,346				2,231,989			(2	)%			2,352,997			(7	)%
Federal Home Loan Bank (“FHLB”) stock and other investments			60,213				59,962			—	%			87,109			(31	)%
Loans held for sale, at the lower of cost or fair value			49,246				125,268			(61	)%			76,376			(36	)%
Loans receivable			14,864,810				15,064,849			(1	)%			14,546,049			2	%
Allowance for credit losses			(172,996	)			(163,544	)		6	%			(151,580	)		14	%
Net loans receivable			14,691,814				14,901,305			(1	)%			14,394,469			2	%
Accrued interest receivable			60,118				57,021			5	%			37,845			59	%
Premises and equipment, net			50,513				47,887			5	%			46,093			10	%
Bank owned life insurance			88,238				87,842			—	%			77,692			14	%
Goodwill			464,450				464,450			—	%			464,450			—	%
Servicing assets			11,532				11,628			(1	)%			11,215			3	%
Other intangible assets, net			4,830				5,278			(8	)%			6,698			(28	)%
Other assets			396,499				363,617			9	%			337,056			18	%
Total assets		$	20,366,138			$	20,568,884			(1	)%		$	18,089,062			13	%
Liabilities:
Deposits		$	15,619,352			$	15,828,209			(1	)%		$	15,029,630			4	%
FHLB and Federal Reserve Bank (“FRB”) borrowings			2,260,000				2,130,000			6	%			573,000			294	%
Convertible notes, net			444				206,658			(100	)%			216,678			(100	)%
Subordinated debentures			107,188				106,875			—	%			105,953			1	%
Accrued interest payable			109,236				53,818			103	%			4,112			2,557	%
Other liabilities			201,920				184,744			9	%			159,320			27	%
Total liabilities		$	18,298,140			$	18,510,304			(1	)%		$	16,088,693			14	%
Stockholders’ Equity:
Common stock, $0.001 par value		$	137			$	137			—	%		$	137			—	%
Additional paid-in capital			1,433,788				1,430,977			—	%			1,424,891			1	%
Retained earnings			1,127,624				1,106,390			2	%			1,011,715			11	%
Treasury stock, at cost			(264,667	)			(264,667	)		—	%			(264,667	)		—	%
Accumulated other comprehensive loss, net			(228,884	)			(214,257	)		(7	)%			(171,707	)		(33	)%
Total stockholders’ equity			2,067,998				2,058,580			—	%			2,000,369			3	%
Total liabilities and stockholders’ equity		$	20,366,138			$	20,568,884			(1	)%		$	18,089,062			13	%
Common stock shares - authorized			150,000,000				150,000,000							150,000,000
Common stock shares - outstanding			120,014,888				119,865,732							119,473,939
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															Six Months Ended
		6/30/2023			3/31/2023			% change			6/30/2022			% change			6/30/2023			6/30/2022				% change
Interest and fees on loans		$	225,671		$	215,935		5	%		$	145,024		56	%		$	441,606		$	277,696			59	%
Interest on investment securities			15,534			15,125		3	%			12,308		26	%			30,659			23,964			28	%
Interest on cash and deposits at other banks			25,295			4,922		414	%			74		34,082	%			30,217			211			14,221	%
Interest on other investments			684			695		(2	)%			418		64	%			1,379			825			67	%
Total interest income			267,184			236,677		13	%			157,824		69	%			503,861			302,696			66	%
Interest on deposits			109,724			92,348		19	%			12,220		798	%			202,072			20,896			867	%
Interest on borrowings			26,771			10,451		156	%			4,066		558	%			37,222			7,086			425	%
Total interest expense			136,495			102,799		33	%			16,286		738	%			239,294			27,982			755	%
Net interest income before provision (credit) for credit losses			130,689			133,878		(2	)%			141,538		(8	)%			264,567			274,714			(4	)%
Provision (credit) for credit losses			8,900			1,700		424	%			3,200		178	%			10,600			(7,800	)		N/A
Net interest income after provision (credit) for credit losses			121,789			132,178		(8	)%			138,338		(12	)%			253,967			282,514			(10	)%
Service fees on deposit accounts			2,325			2,221		5	%			2,270		2	%			4,546			4,244			7	%
Net gains on sales of SBA loans			1,872			2,225		(16	)%			5,804		(68	)%			4,097			11,407			(64	)%
Net gains on sales of residential mortgage loans			82			64		28	%			76		8	%			146			833			(82	)%
Other income and fees			12,735			6,468		97	%			4,596		177	%			19,203			9,448			103	%
Total noninterest income			17,014			10,978		55	%			12,746		33	%			27,992			25,932			8	%
Salaries and employee benefits			52,305			57,169		(9	)%			51,058		2	%			109,474			98,803			11	%
Occupancy			6,967			7,521		(7	)%			7,178		(3	)%			14,488			14,513			—	%
Furniture and equipment			5,393			5,058		7	%			4,778		13	%			10,451			9,422			11	%
Data processing and communications			2,917			2,822		3	%			2,893		1	%			5,739			5,354			7	%
FDIC assessment			4,691			1,781		163	%			1,450		224	%			6,472			3,019			114	%
Earned interest credit			5,090			4,427		15	%			835		510	%			9,517			1,311			626	%
Other			9,970			11,576		(14	)%			12,173		(18	)%			21,546			23,316			(8	)%
Total noninterest expense			87,333			90,354		(3	)%			80,365		9	%			177,687			155,738			14	%
Income before income taxes			51,470			52,802		(3	)%			70,719		(27	)%			104,272			152,708			(32	)%
Income tax provision			13,448			13,681		(2	)%			18,631		(28	)%			27,129			39,882			(32	)%
Net income		$	38,022		$	39,121		(3	)%		$	52,088		(27	)%		$	77,143		$	112,826			(32	)%
Earnings Per Common Share - Basic		$	0.32		$	0.33					$	0.43					$	0.64		$	0.94
Earnings Per Common Share - Diluted		$	0.32		$	0.33					$	0.43					$	0.64		$	0.93
Weighted Average Shares Outstanding - Basic			119,953,174			119,551,247						120,219,919						119,753,321			120,175,894
Weighted Average Shares Outstanding - Diluted			120,129,359			120,242,295						120,699,638						120,179,443			120,898,605

Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
		For the Three Months Ended									For the Six Months Ended
Profitability measures (annualized):		6/30/2023			3/31/2023			6/30/2022			6/30/2023			6/30/2022
ROA		0.74	%		0.82	%		1.17	%		0.78	%		1.27	%
ROE		7.34	%		7.65	%		10.33	%		7.49	%		10.99	%
ROA (PPNR) (1)		1.18	%		1.14	%		1.65	%		1.16	%		1.63	%
ROE (PPNR) (1)		11.65	%		10.65	%		14.66	%		11.15	%		14.11	%
ROTCE (1)		9.49	%		9.93	%		13.48	%		9.70	%		14.27	%
Net interest margin		2.70	%		3.02	%		3.36	%		2.85	%		3.28	%
Efficiency ratio (not annualized)		59.13	%		62.38	%		52.09	%		60.74	%		51.80	%
Noninterest expense / average assets		1.71	%		1.89	%		1.80	%		1.80	%		1.75	%

(1)

ROA (PPNR), ROE (PPNR), and ROTCE are non-GAAP financial measures. Quantitative reconciliations of the most directly comparable GAAP to non-GAAP financial measures are provided in the accompanying financial information on Table Page 10.

Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
		Three Months Ended
		6/30/2023									3/31/2023									6/30/2022
		Average Balance			Interest Income/ Expense			Annualized Average Yield/Cost			Average Balance			Interest Income/ Expense			Annualized Average Yield/Cost			Average Balance			Interest Income/ Expense			Annualized Average Yield/Cost
INTEREST EARNING ASSETS:
Loans, including loans held for sale		$	15,105,212		$	225,671		5.99	%		$	15,235,386		$	215,935		5.75	%		$	14,327,476		$	145,024		4.06	%
Investment securities			2,243,614			15,534		2.78	%			2,248,479			15,125		2.73	%			2,424,454			12,308		2.04	%
Interest earning cash and deposits at other banks			1,996,924			25,295		5.08	%			473,344			4,922		4.22	%			64,545			74		0.46	%
FHLB stock and other investments			47,044			684		5.83	%			47,043			695		5.99	%			69,510			418		2.41	%
Total interest earning assets		$	19,392,794		$	267,184		5.53	%		$	18,004,252		$	236,677		5.33	%		$	16,885,985		$	157,824		3.75	%
INTEREST BEARING LIABILITIES:
Deposits:
Money market and interest bearing demand		$	4,279,819		$	34,377		3.22	%		$	5,341,057		$	41,399		3.14	%		$	6,487,890		$	8,655		0.54	%
Savings deposits			216,060			674		1.25	%			256,194			827		1.31	%			323,114			937		1.16	%
Time deposits			6,890,035			74,673		4.35	%			5,543,369			50,122		3.67	%			2,277,938			2,628		0.46	%
Total interest bearing deposits			11,385,914			109,724		3.87	%			11,140,620			92,348		3.36	%			9,088,942			12,220		0.54	%
FHLB and FRB borrowings			2,177,264			23,622		4.35	%			676,444			6,698		4.02	%			577,966			1,457		1.01	%
Convertible notes, net			96,621			598		2.45	%			217,114			1,322		2.44	%			216,540			1,322		2.42	%
Subordinated debentures			103,123			2,551		9.79	%			102,791			2,431		9.46	%			101,880			1,287		5.00	%
Total interest bearing liabilities		$	13,762,922		$	136,495		3.98	%		$	12,136,969		$	102,799		3.44	%		$	9,985,328		$	16,286		0.65	%
Noninterest bearing demand deposits			4,366,820									4,662,139									5,715,830
Total funding liabilities/cost of funds		$	18,129,742					3.02	%		$	16,799,108					2.48	%		$	15,701,158					0.42	%
Net interest income/net interest spread					$	130,689		1.55	%					$	133,878		1.89	%					$	141,538		3.10	%
Net interest margin								2.70	%								3.02	%								3.36	%
Cost of deposits:
Noninterest bearing demand deposits		$	4,366,820		$	—		—	%		$	4,662,139		$	—		—	%		$	5,715,830		$	—		—	%
Interest bearing deposits			11,385,914			109,724		3.87	%			11,140,620			92,348		3.36	%			9,088,942			12,220		0.54	%
Total deposits		$	15,752,734		$	109,724		2.79	%		$	15,802,759		$	92,348		2.37	%		$	14,804,772		$	12,220		0.33	%

Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
		Six Months Ended
		6/30/2023									6/30/2022
		Average Balance			Interest Income/ Expense			Annualized Average Yield/Cost			Average Balance			Interest Income/ Expense			Annualized Average Yield/Cost
INTEREST EARNING ASSETS:
Loans, including loans held for sale		$	15,169,939		$	441,606		5.87	%		$	14,100,983		$	277,696		3.97	%
Investment securities			2,246,033			30,659		2.75	%			2,522,293			23,964		1.92	%
Interest earning cash and deposits at other banks			1,239,343			30,217		4.92	%			173,836			211		0.24	%
FHLB stock and other investments			47,044			1,379		5.91	%			68,974			825		2.41	%
Total interest earning assets		$	18,702,359		$	503,861		5.43	%		$	16,866,086		$	302,696		3.62	%
INTEREST BEARING LIABILITIES:
Deposits:
Money market and interest bearing demand		$	4,807,506		$	75,775		3.18	%		$	6,413,292		$	14,355		0.45	%
Savings deposits			236,016			1,501		1.28	%			320,824			1,865		1.17	%
Time deposits			6,220,422			124,796		4.05	%			2,447,771			4,676		0.39	%
Total interest bearing deposits			11,263,944			202,072		3.62	%			9,181,887			20,896		0.46	%
FHLB and FRB borrowings			1,431,000			30,320		4.27	%			411,187			2,144		1.05	%
Convertible notes, net			156,535			1,920		2.44	%			216,423			2,645		2.43	%
Subordinated debentures			102,958			4,982		9.62	%			101,729			2,297		4.49	%
Total interest bearing liabilities		$	12,954,437		$	239,294		3.73	%		$	9,911,226		$	27,982		0.57	%
Noninterest bearing demand deposits			4,513,664									5,694,418
Total funding liabilities/cost of funds		$	17,468,101					2.76	%		$	15,605,644					0.36	%
Net interest income/net interest spread					$	264,567		1.70	%					$	274,714		3.05	%
Net interest margin								2.85	%								3.28	%
Cost of deposits:
Noninterest bearing demand deposits		$	4,513,664		$	—		—	%		$	5,694,418		$	—		—	%
Interest bearing deposits			11,263,944			202,072		3.62	%			9,181,887			20,896		0.46	%
Total deposits		$	15,777,608		$	202,072		2.58	%		$	14,876,305		$	20,896		0.28	%

Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
		Three Months Ended																		Six Months Ended
AVERAGE BALANCES:		6/30/2023				3/31/2023				% change			6/30/2022				% change			6/30/2023			6/30/2022			% change
Loans, including loans held for sale		$	15,105,212			$	15,235,386			(1	)%		$	14,327,476			5	%		$	15,169,939		$	14,100,983		8	%
Investment securities			2,243,614				2,248,479			—	%			2,424,454			(7	)%			2,246,033			2,522,293		(11	)%
Interest earning cash and deposits at other banks			1,996,924				473,344			322	%			64,545			2994	%			1,239,343			173,836		613	%
Interest earning assets			19,392,794				18,004,252			8	%			16,885,985			15	%			18,702,359			16,866,086		11	%
Total assets			20,468,810				19,087,170			7	%			17,876,945			14	%			19,781,806			17,810,045		11	%
Interest bearing deposits			11,385,914				11,140,620			2	%			9,088,942			25	%			11,263,944			9,181,887		23	%
Interest bearing liabilities			13,762,922				12,136,969			13	%			9,985,328			38	%			12,954,437			9,911,226		31	%
Noninterest bearing demand deposits			4,366,820				4,662,139			(6	)%			5,715,830			(24	)%			4,513,664			5,694,418		(21	)%
Stockholders’ equity			2,072,859				2,046,159			1	%			2,016,577			3	%			2,059,583			2,053,461		—	%
LOAN PORTFOLIO COMPOSITION:		6/30/2023				3/31/2023				% change			6/30/2022				% change
Commercial and industrial (“C&I”) loans		$	4,805,126			$	4,821,270			—	%		$	4,395,738			9	%
Commercial real estate (“CRE”) loans			9,192,160				9,373,529			(2	)%			9,335,020			(2	)%
Residential mortgage and other loans			867,524				870,050			—	%			815,291			6	%
Loans receivable			14,864,810				15,064,849			(1	)%			14,546,049			2	%
Allowance for credit losses			(172,996	)			(163,544	)		6	%			(151,580	)		14	%
Loans receivable, net		$	14,691,814			$	14,901,305			(1	)%		$	14,394,469			2	%
CRE LOANS BY PROPERTY TYPE:		6/30/2023				3/31/2023				% change			6/30/2022				% change
Multi-tenant retail		$	1,778,068			$	1,817,874			(2	)%		$	2,603,516			(32	)%
Hotels/motels			868,286				900,990			(4	)%			1,143,982			(24	)%
Gas stations and car washes			1,042,290				1,046,528			—	%			1,080,777			(4	)%
Mixed-use facilities			834,948				818,227			2	%			833,342			—	%
Industrial warehouses			1,301,075				1,309,763			(1	)%			1,279,647			2	%
Multifamily			1,257,971				1,302,597			(3	)%			989,840			27	%
Single-tenant retail			690,418				706,593			(2	)%			720,413			(4	)%
Office			463,998				464,703			—	%			440,593			5	%
All other			955,106				1,006,254			(5	)%			242,910			293	%
Total CRE loans		$	9,192,160			$	9,373,529			(2	)%		$	9,335,020			(2	)%
DEPOSIT COMPOSITION		6/30/2023				3/31/2023				% change			6/30/2022				% change
Noninterest bearing demand deposits		$	4,229,247			$	4,504,621			(6	)%		$	5,689,992			(26	)%
Money market and interest bearing demand			4,188,584				4,331,998			(3	)%			6,339,467			(34	)%
Savings deposits			224,495				231,704			(3	)%			326,927			(31	)%
Time deposits			6,977,026				6,759,886			3	%			2,673,244			161	%
Total deposits		$	15,619,352			$	15,828,209			(1	)%		$	15,029,630			4	%

Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands, except share and per share data)
CAPITAL & CAPITAL RATIOS:	6/30/2023				3/31/2023				6/30/2022
Total stockholders’ equity	$	2,067,998			$	2,058,580			$	2,000,369
Total capital	$	2,102,625			$	2,068,433			$	1,948,953
Common equity tier 1 ratio		11.06	%			10.75	%			10.69	%
Tier 1 capital ratio		11.68	%			11.36	%			11.33	%
Total capital ratio		12.64	%			12.25	%			12.13	%
Leverage ratio		9.57	%			10.13	%			10.32	%
Total risk weighted assets	$	16,639,593			$	16,886,419			$	16,066,709
Book value per common share	$	17.23			$	17.17			$	16.74
TCE per share (1)	$	13.32			$	13.26			$	12.80
TCE ratio (1)		8.04	%			7.91	%			8.68	%
(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																				Six Months Ended
ALLOWANCE FOR CREDIT LOSSES CHANGES:	6/30/2023				3/31/2023				12/31/2022				9/30/2022				6/30/2022				6/30/2023				6/30/2022
Balance at beginning of period	$	163,544			$	162,359			$	160,561			$	151,580			$	147,450			$	162,359			$	140,550
ASU 2022-02 day 1 adoption impact		—				(407	)			—				—				—				(407	)			—
Provision (credit) for credit losses		8,900				1,700				8,200				9,200				3,200				10,600				(7,800	)
Recoveries		1,531				387				3,222				331				1,642				1,918				21,045
Charge offs		(979	)			(495	)			(9,624	)			(550	)			(712	)			(1,474	)			(2,215	)
Balance at end of period	$	172,996			$	163,544			$	162,359			$	160,561			$	151,580			$	172,996			$	151,580
Net recoveries (charge offs)/average loans receivable (annualized)		0.01	%			—	%			(0.17	)%			(0.01	)%			0.03	%			0.01	%			0.27	%
	6/30/2023				3/31/2023				12/31/2022				9/30/2022				6/30/2022
Allowance for unfunded loan commitments	$	3,081			$	2,971			$	1,351			$	1,231			$	1,481
	Three Months Ended																				Six Months Ended
NET LOAN RECOVERIES (CHARGE OFFS):	6/30/2023				3/31/2023				12/31/2022				9/30/2022				6/30/2022				6/30/2023				6/30/2022
CRE loans	$	(438	)		$	109			$	(2,022	)		$	(9	)		$	508			$	(329	)		$	16,926
C&I loans		1,091				(196	)			(4,174	)			(115	)			461				895				1,990
Residential mortgage and other loans		(101	)			(21	)			(206	)			(95	)			(39	)			(122	)			(86	)
Net loan recoveries (charge offs)	$	552			$	(108	)		$	(6,402	)		$	(219	)		$	930			$	444			$	18,830

Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
NONPERFORMING ASSETS:	6/30/2023				3/31/2023				12/31/2022				9/30/2022				6/30/2022
Loans on nonaccrual status (1)	$	61,252			$	78,861			$	49,687			$	64,571			$	69,522
Accruing delinquent loans past due 90 days or more		15,182				364				401				5,306				12,468
Accruing troubled debt restructured loans (2)		—				—				16,931				25,631				26,572
Total nonperforming loans		76,434				79,225				67,019				95,508				108,562
Other real estate owned (“OREO”)		938				938				2,418				1,480				2,010
Total nonperforming assets	$	77,372			$	80,163			$	69,437			$	96,988			$	110,572
Nonperforming assets/total assets		0.38	%			0.39	%			0.36	%			0.51	%			0.61	%
Nonperforming assets/loans receivable & OREO		0.52	%			0.53	%			0.45	%			0.63	%			0.76	%
Nonperforming assets/total capital		3.74	%			3.89	%			3.44	%			4.91	%			5.53	%
Nonperforming loans/loans receivable		0.51	%			0.53	%			0.44	%			0.62	%			0.75	%
Nonaccrual loans/loans receivable		0.41	%			0.52	%			0.32	%			0.42	%			0.48	%
Allowance for credit losses/loans receivable		1.16	%			1.09	%			1.05	%			1.04	%			1.04	%
Allowance for credit losses/nonperforming loans		226.33	%			206.43	%			242.26	%			168.11	%			139.63	%
(1) Excludes delinquent SBA loans that are guaranteed and currently in liquidation totaling $11.9 million, $7.6 million, $9.8 million, $9.9 million, and $13.2 million, at June 30, 2023, March 31, 2023, December 31, 2022, September 30, 2022, and June 30, 2022, respectively.
(2) The Company adopted ASU 2022-02 in 2023, which eliminated the concept of TDR from GAAP; therefore, accruing TDR loans are no longer included in nonperforming loans.
NONACCRUAL LOANS BY TYPE:	6/30/2023				3/31/2023				12/31/2022				9/30/2022				6/30/2022
CRE loans	$	29,270			$	44,376			$	33,915			$	47,807			$	53,966
C&I loans		23,042				26,191				5,620				7,675				8,206
Residential mortgage and other loans		8,940				8,294				10,152				9,089				7,350
Total nonaccrual loans	$	61,252			$	78,861			$	49,687			$	64,571			$	69,522

Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
ACCRUING DELINQUENT LOANS 30-89 DAYS PAST DUE:	6/30/2023		3/31/2023		12/31/2022		9/30/2022		6/30/2022
30 - 59 days past due	$ 9,295		$ 7,662		$ 7,049		$ 13,092		$ 10,090
60 - 89 days past due	178		249		2,243		4,933		6,354
Total accruing delinquent loans 30-89 days past due	$ 9,473		$ 7,911		$ 9,292		$ 18,025		$ 16,444
ACCRUING DELINQUENT LOANS 30-89 DAYS PAST DUE BY TYPE:	6/30/2023		3/31/2023		12/31/2022		9/30/2022		6/30/2022
CRE loans	$ 7,339		$ 3,652		$ 4,115		$ 9,694		$ 7,919
C&I loans	990		419		3,300		6,165		3,397
Residential mortgage and other loans	1,144		3,840		1,877		2,166		5,128
Total accruing delinquent loans 30-89 days past due	$ 9,473		$ 7,911		$ 9,292		$ 18,025		$ 16,444
CRITICIZED LOANS:	6/30/2023		3/31/2023		12/31/2022		9/30/2022		6/30/2022
Special mention loans	$ 210,806		$ 166,472		$ 157,263		$ 79,399		$ 95,797
Substandard loans	134,203		138,224		104,073		204,713		244,748
Total criticized loans	$ 345,009		$ 304,696		$ 261,336		$ 284,112		$ 340,545

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												Six Months Ended
RETURN ON AVERAGE TANGIBLE COMMON EQUITY	6/30/2023				3/31/2023				6/30/2022				6/30/2023				6/30/2022
Average stockholders’ equity	$	2,072,859			$	2,046,159			$	2,016,577			$	2,059,583			$	2,053,461
Less: Average goodwill and core deposit intangible assets, net		(469,515	)			(469,992	)			(471,421	)			(469,752	)			(471,669	)
Average TCE	$	1,603,344			$	1,576,167			$	1,545,156			$	1,589,831			$	1,581,792
Net income	$	38,022			$	39,121			$	52,088			$	77,143			$	112,826
ROTCE (annualized)		9.49	%			9.93	%			13.48	%			9.70	%			14.27	%
TANGIBLE COMMON EQUITY	6/30/2023				3/31/2023				6/30/2022
Total stockholders’ equity	$	2,067,998			$	2,058,580			$	2,000,369
Less: Goodwill and core deposit intangible assets, net		(469,280	)			(469,728	)			(471,148	)
TCE	$	1,598,718			$	1,588,852			$	1,529,221
Total assets	$	20,366,138			$	20,568,884			$	18,089,062
Less: Goodwill and core deposit intangible assets, net		(469,280	)			(469,728	)			(471,148	)
Tangible assets	$	19,896,858			$	20,099,156			$	17,617,914
TCE ratio		8.04	%			7.91	%			8.68	%
Common shares outstanding		120,014,888				119,865,732				119,473,939
TCE per share	$	13.32			$	13.26			$	12.80
	Three Months Ended												Six Months Ended
PRE-PROVISION NET REVENUE	6/30/2023				3/31/2023				6/30/2022				6/30/2023				6/30/2022
Net interest income before provision (credit) for credit losses	$	130,689			$	133,878			$	141,538			$	264,567			$	274,714
Noninterest income		17,014				10,978				12,746				27,992				25,932
Revenue		147,703				144,856				154,284				292,559				300,646
Less noninterest expense		87,333				90,354				80,365				177,687				155,738
PPNR	$	60,370			$	54,502			$	73,919			$	114,872			$	144,908
Average assets	$	20,468,810			$	19,087,170			$	17,876,945			$	19,781,806			$	17,810,045
ROA (PPNR) (annualized)		1.18	%			1.14	%			1.65	%			1.16	%			1.63	%
Average stockholders’ equity		2,072,859				2,046,159				2,016,577				2,059,583				2,053,461
ROE (PPNR) (annualized)		11.65	%			10.65	%			14.66	%			11.15	%			14.11	%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230724181676/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

Source: Hope Bancorp, Inc.