Hope Bancorp Reports 2019 Third Quarter Financial Results

LOS ANGELES--()--Hope Bancorp, Inc. (the “Company”) (NASDAQ: HOPE), the holding company of Bank of Hope (the “Bank”), today reported unaudited financial results for the three and nine-month periods ended September 30, 2019. Net income for the 2019 third quarter totaled $42.6 million, or $0.34 per diluted common share. This compares with net income for the preceding 2019 second quarter of $42.7 million, or $0.34 per diluted common share and $46.4 million, or $0.36 per diluted common share, for the 2018 third quarter.

“We are pleased to deliver solid third quarter financial results, which reflect a continuation of the many positive trends from the preceding second quarter,” said Kevin S. Kim, Chairman, President and Chief Executive Officer of Hope Bancorp, Inc. “Benefiting from our deposit strategies, we continued to see a favorable mix-shift to growth in core deposits, along with decreases in the higher-rate time deposits. This resulted in what we expect to be the peak in deposit costs in the current rate cycle, and total cost of deposits for the period was stable quarter-over-quarter. Driven by stronger volumes of both CRE and C&I lending, we also had our strongest quarter year-to-date in new loan originations, which resulted in a 1% increase in loans receivable from June 30, 2019. Topping off these highlights, our proactive efforts led to another quarter of considerable improvements in our credit metrics with a 35% reduction in nonaccrual loans and a 20% decrease in total criticized assets.

“Overall, our third quarter performance underscores the progress we are making with our strategic initiatives. Given our ongoing success with expense controls and a robust loan pipeline entering the fourth quarter, we expect another strong performance to close out a solid year for Bank of Hope,” said Kim.

Q3 2019 Highlights

  • 2019 third quarter net income totaled $42.6 million, or $0.34 per diluted common share.
  • 1% growth in total deposits quarter-over-quarter reflects a favorable shift to core deposits, with increases in noninterest bearing demand deposits, savings and money market balances, partially offset by decreases in higher-cost time deposits.
  • Deposit initiatives contributed to a stabilization of total deposit costs, which remained flat quarter-over-quarter.
  • New loan origination volumes were the highest year-to-date at $693.9 million and included a well-balanced mix of 50% commercial real estate, 41% commercial and 9% consumer loans, driving a 1% increase in loans receivable quarter-over-quarter.
  • Continuation of asset quality improvements across the board, most notably a 35% reduction in nonaccrual loans and 20% decrease in criticized loan balances.
  • Total noninterest expenses down 2% quarter-over-quarter and improved as a percentage of average assets to 1.85%.

Financial Highlights

(dollars in thousands, except per share data) (unaudited)

At or for the Three Months Ended

 

9/30/2019

 

6/30/2019

 

9/30/2018

Net income

$

42,592

 

 

$

42,681

 

 

$

46,378

 

Diluted earnings per share

$

0.34

 

 

$

0.34

 

 

$

0.36

 

Net interest income before provision for loan losses

$

116,258

 

 

$

117,221

 

 

$

123,147

 

Net interest margin

 

3.25

%

 

 

3.31

%

 

 

3.47

%

Noninterest income

$

12,995

 

 

$

12,287

 

 

$

13,447

 

Noninterest expense

$

69,995

 

 

$

71,371

 

 

$

67,455

 

Net loans receivable

$

12,010,800

 

 

$

11,883,068

 

 

$

11,836,553

 

Deposits

$

12,234,750

 

 

$

12,172,384

 

 

$

12,045,619

 

Nonaccrual loans (1) (2)

$

42,235

 

 

$

64,934

 

 

$

56,299

 

Nonperforming loans to loans receivable (1) (2)

 

0.64

%

 

 

0.89

%

 

 

0.92

%

ALLL to loans receivable

 

0.78

%

 

 

0.79

%

 

 

0.76

%

ALLL to nonaccrual loans (1) (2)

 

222.28

%

 

 

144.86

%

 

 

160.98

%

ALLL to nonperforming assets (1) (2)

 

97.06

%

 

 

84.24

%

 

 

76.67

%

Provision for loan losses

$

2,100

 

 

$

1,200

 

 

$

7,300

 

Net charge offs

$

1,822

 

 

$

1,351

 

 

$

6,552

 

Return on average assets (“ROA”)

 

1.12

%

 

 

1.12

%

 

 

1.24

%

Return on average equity (“ROE”)

 

8.47

%

 

 

8.71

%

 

 

9.76

%

Return on average common tangible equity (“ROTCE”) (3)

 

11.11

%

 

 

11.51

%

 

 

13.06

%

Noninterest expense / average assets

 

1.85

%

 

 

1.88

%

 

 

1.80

%

Efficiency ratio

 

54.15

%

 

 

55.11

%

 

 

49.38

%

(1)

Excludes delinquent SBA loans that are guaranteed and currently in liquidation

(2)

Excludes purchased credit-impaired loans

(3)

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 7.

Operating Results for the 2019 Third Quarter

Net Interest Income. Net interest income before provision for loan losses for the 2019 third quarter totaled $116.3 million, compared with $117.2 million in the 2019 second quarter and $123.1 million in the year-ago third quarter.

The net interest margin (net interest income divided by average interest earning assets) for the 2019 third quarter declined 6 basis points to 3.25% from 3.31% in the 2019 second quarter, reflecting lower weighted average yield on loans, due to the decreases in the fed funds rate on July 31 and September 18, 2019, and stable deposit costs. In addition, a $1.4 million reduction in accretion income on purchased loans reduced net interest margin by 4 basis points. The net interest margin in the prior-year third quarter was 3.47%.

The weighted average yield on loans for the 2019 third quarter was 5.27%, down 5 basis points from 5.32% in the preceding second quarter, but was up 11 basis points from 5.16% in the year-ago third quarter.

The Company continued to see benefits from its deposit initiatives, and the weighted average cost of deposits for the 2019 third quarter was flat with the preceding second quarter at 1.62%. In the 2018 third quarter, the weighted average cost of deposits was 1.24%.

Noninterest Income. Noninterest income for the 2019 third quarter increased to $13.0 million from $12.3 million in the 2019 second quarter. Management’s proactive interest rate mitigation efforts and expansion of the interest rate swap program drove higher swap fee income for the quarter versus the preceding second quarter. In addition, service fees on deposit accounts rose 6% in line with the higher core deposit balances. These increases were partially offset by lower gains on sales of residential mortgage loans of $804,000 in the 2019 third quarter, versus $1.1 million in the preceding second quarter, which included a bulk sale of the Company’s existing portfolio. In the 2018 third quarter, noninterest income totaled $13.4 million and included a $2.3 million gain on sales of SBA loans to the secondary market. Since the middle of the 2018 fourth quarter, the Company has discontinued its practice of regularly selling SBA loans to the secondary market.

Noninterest Expense. Noninterest expense for the 2019 third quarter declined to $70.0 million, compared with $71.4 million in the preceding second quarter. The reduction reflects a full quarter’s costs saves from the Company’s branch rationalization plan completed at the end of the preceding second quarter, lower professional fees and an FDIC assessment credit. These reductions were offset by higher compensation costs in the 2019 third quarter. In the 2018 third quarter, noninterest expense totaled $67.5 million. Noninterest expense as a percentage of average assets amounted to 1.85%, 1.88% and 1.80% for the 2019 third quarter, 2019 second quarter and 2018 third quarter, respectively.

Salaries and employee benefits expense increased to $41.6 million for the 2019 third quarter from $39.3 million for the 2019 second quarter, largely reflecting a $1.4 million quarter-over-quarter increase in self-funded group insurance costs, which fluctuates based on the volume of insurance claims in a given quarter. In the 2018 third quarter, salaries and employee benefits expense totaled $37.0 million.

Income Tax Provision. The effective tax rate for the 2019 third quarter was 25.5%, compared with 25.0% in the preceding 2019 second quarter and 25.0% in the 2018 third quarter.

Balance Sheet Summary

Loans receivable at September 30, 2019 increased 1% to $12.10 billion from $11.98 billion at June 30, 2019 and was stable compared with $12.10 billion at December 31, 2018.

New loan originations funded during the 2019 third quarter totaled $693.9 million and included SBA loan production of $53.8 million and residential mortgage loan originations of $58.5 million. This compares with 2019 second quarter originations of $503.9 million, including SBA loan production of $37.2 million and residential mortgage loan originations of $74.0 million. The Company attributed the quarter-over-quarter increase in new loan production to stronger volumes of C&I lending during the 2019 third quarter. In the year-ago third quarter, new loan originations funded totaled $784.1 million, including SBA loan production of $71.4 million and residential mortgage loan originations of $165.6 million.

SBA 7(a) loan originations totaled $34.4 million for the 2019 third quarter, compared with $37.2 million for the second quarter of 2019 and $52.5 million for the year-ago third quarter. In accordance with the Company’s decision to retain SBA 7(a) loans in its portfolio effective mid-fourth quarter of 2018, there were no sales to the secondary market during the 2019 third or second quarter. In contrast, the Company sold $48.5 million of its SBA 7(a) loans during the 2018 third quarter.

Total sales of mortgage loans amounted to $30.9 million in the 2019 third quarter, compared with $76.2 million in the 2019 second quarter and $45.8 million in the 2018 third quarter. The Company noted that sales of residential mortgage loans for the preceding second quarter included a bulk sale of $44.5 million from the Company’s existing portfolio.

Aggregate loan payoffs and pay downs in the 2019 third quarter remained at higher-than-usual levels at $632.7 million, compared with $598.5 million in the preceding second quarter due to higher payoff volumes. In the 2018 third quarter, aggregate loan payoffs and pay downs totaled $495.3 million. The Company attributed the higher payoff volumes in the 2019 quarters to the competitive business environment, as well as proactive identification and management of potentially problematic credits. Included in the payoff activity of the 2019 third quarter was $36.0 of loans that the Company had reported as criticized and $14.4 million of loans reported as nonaccrual as of June 30, 2019.

Total deposits at September 30, 2019 grew 1% to $12.23 billion from $12.17 billion at June 30, 2019 and increased 2% from $12.05 billion at September 30, 2018. Benefiting from the Company’s deposit initiatives, the increases predominantly reflect a favorable shift in the mix of deposits with higher money market account balances and decreases in higher-cost time deposits. Noninterest bearing demand deposits increased 1% quarter-over-quarter and accounted for 25% of total deposits at September 30, 2019. Money market and other deposits increased 16% quarter-over-quarter and rose as a percentage of total deposits to 31% at September 30, 2019 from 27% at June 30, 2019.

The favorable mix-shift contributed to a stabilization of deposit costs, and the total cost of deposits was 1.62% for the 2019 third quarter and the preceding second quarter, versus 1.24% for the year-ago third quarter.

Credit Quality

Benefiting from proactive identification and management efforts, the Company reported a second consecutive quarter of considerable improvements in asset quality metrics.

The provision for loan and lease losses for the 2019 third quarter was $2.1 million, compared with $1.2 million for the preceding 2019 second quarter and $7.3 million for the year-ago third quarter.

The Company defines nonperforming loans to include loans on nonaccrual status, delinquent loans past due 90 days or more on accrual status (excluding purchased credit-impaired loans) and accruing restructured loans.

Nonaccrual loans at September 30, 2019 declined by 35% to $42.2 million from $64.9 million at June 30, 2019 and by 25% from $56.3 million at September 30, 2018. Nonaccrual loans as a percentage of loans receivable improved to 0.35% at September 30, 2019 from 0.54% at June 30, 2019 and 0.47% at September 30, 2018.

Accruing delinquent loans totaled $398,000 at September 30, 2019, compared with $353,000 at June 30, 2019 and $401,000 at September 30, 2018. Accruing restructured loans at September 30, 2019 decreased 15% to $34.7 million from $40.7 million at June 30, 2019 and decreased 34% from $52.5 million at September 30, 2018. Total nonperforming loans decreased 27% to $77.4 million at September 30, 2019 from $106.0 million at June 30, 2019 and decreased 29% from $109.2 million at September 30, 2018. Total nonperforming loans as a percentage of loans receivable improved to 0.64% at September 30, 2019 from 0.89% at June 30, 2019 and 0.92% at September 30, 2018.

Other real estate owned increased to $19.4 million at September 30, 2019 from $5.6 million at June 30, 2019 and $9.0 million at September 30, 2018. The Company attributed the increase to proactive efforts to workout problem credits.

Following are the components of criticized loan balances as of September 30, 2019, June 30, 2019, and September 30, 2018:

(dollars in thousands) (unaudited)

9/30/2019

 

6/30/2019

 

9/30/2018

Special Mention (1)

$

139,848

 

$

186,485

 

$

215,586

Classified (1)

 

268,622

 

 

323,842

 

 

302,719

Criticized

$

408,470

 

$

510,327

 

$

518,305

(1)

Balances include purchased loans which were marked to fair value on the date of acquisition.

The Company noted that, as part of management’s proactive strategies, $26.0 million of substandard loans, after charge offs of $599,000, were transferred to loans held for sale during the 2019 third quarter.

In aggregate, the Company recorded net charge offs of $1.8 million during the 2019 third quarter, or 0.06% of average loans receivable on an annualized basis. This compares with net charge offs of $1.4 million, or 0.05% of average loans receivable on an annualized basis, for the 2019 second quarter. In the 2018 third quarter, the Company recorded net charge offs of $6.5 million, or 0.22% of average loans receivable on an annualized basis.

The allowance for loan and lease losses (“ALLL”) was $93.9 million, $94.1 million and $90.6 million at September 30, 2019, June 30, 2019 and September 30, 2018, respectively. As a percentage of loans receivable (excluding loans held for sale), the ALLL was 0.78%, 0.79% and 0.76% at September 30, 2019, June 30, 2019 and September 30, 2018, respectively. The coverage ratio of the ALLL to nonperforming loans (excluding purchased credit-impaired loans) was 121.37% at September 30, 2019, 88.73% at June 30, 2019 and 82.98% at September 30, 2018.

Impaired loans (defined as loans for which it is probable that not all principal and interest payments due will be collected in accordance with the contractual terms) decreased to $77.3 million at September 30, 2019 from $106.0 million at June 30, 2019 and $109.2 million at September 30, 2018.

Capital

At September 30, 2019, the Company and the Bank continued to exceed all regulatory capital requirements to be classified as a “well-capitalized” financial institution, as summarized in the following table:

(unaudited)

9/30/2019

 

6/30/2019

 

9/30/2018

 

Minimum Guideline for “Well-Capitalized” Bank

Common Equity Tier 1 Capital

11.89%

 

11.90%

 

11.61%

 

6.50%

Tier 1 Leverage Ratio

11.18%

 

10.94%

 

10.80%

 

5.00%

Tier 1 Risk-Based Ratio

12.65%

 

12.67%

 

12.38%

 

8.00%

Total Risk-Based Ratio

13.38%

 

13.42%

 

13.10%

 

10.00%

Tangible common equity per share and as a percentage of tangible assets are summarized in the following table:

(unaudited)

9/30/2019

 

6/30/2019

 

9/30/2018

Tangible common equity per share (1)

$12.27

 

$11.98

 

$10.96

Tangible common equity to tangible assets (2)

10.43%

 

10.21%

 

9.66%

(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 7.

(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 7.

Management reviews tangible common equity to tangible assets ratio in evaluating the Company’s and the Bank’s capital levels and has included these figures and tangible common equity per share figures in response to market participant interest in tangible common equity as a measure of capital. A reconciliation of the GAAP to non-GAAP financial measures is provided in the accompanying financial information.

Stock Repurchase Plan

On July 16, 2019, the Company announced a new $50 million stock repurchase program. During the 2019 third quarter, there were no stock repurchases, and the full amount of the plan remained available at September 30, 2019.

Investor Conference Call

The Company previously announced that it will host an investor conference call on Tuesday, October 22, 2019 at 9:30 a.m. Pacific Time / 12:30 p.m. Eastern Time to review financial results for its third quarter ended September 30, 2019. 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 in the Investor Relations section of Hope Bancorp’s website for one year. A telephonic replay of the call will be available at 877-344-7529 (domestic) or 412-317-0088 (international) for one week through October 29, 2019, replay access code 10135311.

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 $15.4 billion in total assets as of September 30, 2019. Headquartered in Los Angeles and serving a multi-ethnic population of customers across the nation, Bank of Hope operates 58 full-service branches in California, Washington, Texas, Illinois, New York, New Jersey, Virginia, Georgia 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; 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 and Quarterly Report on Form 10-Q. The Company does not undertake, and specifically disclaims any obligation, to update any forward-looking statements to reflect the occurrence of events or circumstances after the date of such statements except as required by law.

Hope Bancorp, Inc.

Selected Financial Data

Unaudited (dollars in thousands, except share data)

 

Assets:

9/30/2019

 

6/30/2019

 

% change

 

12/31/2018

 

% change

 

9/30/2018

 

% change

Cash and due from banks

$

549,356

 

 

$

609,795

 

 

(10

)%

 

$

459,606

 

 

20

%

 

$

522,710

 

 

5

%

Securities available for sale, at fair value

1,772,322

 

 

1,826,903

 

 

(3

)%

 

1,846,265

 

 

(4

)%

 

1,854,250

 

 

(4

)%

Federal Home Loan Bank (“FHLB”) stock and other investments

98,848

 

 

100,962

 

 

(2

)%

 

104,705

 

 

(6

)%

 

106,243

 

 

(7

)%

Loans held for sale, at the lower of cost or fair value

29,627

 

 

6,426

 

 

361

%

 

25,128

 

 

18

%

 

15,023

 

 

97

%

Loans receivable

12,104,682

 

 

11,977,134

 

 

1

%

 

12,098,115

 

 

%

 

11,927,182

 

 

1

%

Allowance for loan losses

(93,882

)

 

(94,066

)

 

%

 

(92,557

)

 

(1

)%

 

(90,629

)

 

(4

)%

Net loans receivable

12,010,800

 

 

11,883,068

 

 

1

%

 

12,005,558

 

 

%

 

11,836,553

 

 

1

%

Accrued interest receivable

29,743

 

 

33,980

 

 

(12

)%

 

32,225

 

 

(8

)%

 

33,338

 

 

(11

)%

Premises and equipment, net

52,604

 

 

52,552

 

 

%

 

53,794

 

 

(2

)%

 

55,178

 

 

(5

)%

Bank owned life insurance

75,968

 

 

75,963

 

 

%

 

75,219

 

 

1

%

 

76,081

 

 

%

Goodwill

464,450

 

 

464,450

 

 

%

 

464,450

 

 

%

 

464,450

 

 

%

Servicing assets

17,865

 

 

19,997

 

 

(11

)%

 

23,132

 

 

(23

)%

 

24,354

 

 

(27

)%

Other intangible assets, net

12,390

 

 

12,947

 

 

(4

)%

 

14,061

 

 

(12

)%

 

14,677

 

 

(16

)%

Other assets

265,905

 

 

251,784

 

 

6

%

 

201,809

 

 

32

%

 

226,638

 

 

17

%

Total assets

$

15,379,878

 

 

$

15,338,827

 

 

%

 

$

15,305,952

 

 

%

 

$

15,229,495

 

 

1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

$

12,234,750

 

 

$

12,172,384

 

 

1

%

 

$

12,155,656

 

 

1

%

 

$

12,045,619

 

 

2

%

FHLB advances

625,000

 

 

695,000

 

 

(10

)%

 

821,280

 

 

(24

)%

 

836,637

 

 

(25

)%

Convertible notes, net

198,211

 

 

196,977

 

 

1

%

 

194,543

 

 

2

%

 

193,332

 

 

3

%

Subordinated debentures

102,755

 

 

102,477

 

 

%

 

101,929

 

 

1

%

 

101,657

 

 

1

%

Accrued interest payable

38,197

 

 

36,987

 

 

3

%

 

31,374

 

 

22

%

 

31,717

 

 

20

%

Other liabilities

149,681

 

 

139,830

 

 

7

%

 

97,959

 

 

53

%

 

115,953

 

 

29

%

Total liabilities

$

13,348,594

 

 

$

13,343,655

 

 

%

 

13,402,741

 

 

%

 

$

13,324,915

 

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock, $0.001 par value

$

136

 

 

$

136

 

 

%

 

$

136

 

 

%

 

$

136

 

 

%

Capital surplus

1,426,666

 

 

1,425,262

 

 

%

 

1,423,405

 

 

%

 

1,422,685

 

 

%

Retained earnings

737,209

 

 

712,351

 

 

3

%

 

662,375

 

 

11

%

 

636,080

 

 

16

%

Treasury stock, at cost

(150,000

)

 

(150,000

)

 

%

 

(150,000

)

 

%

 

(100,000

)

 

(50

)%

Accumulated other comprehensive gain (loss), net

17,273

 

 

7,423

 

 

133

%

 

(32,705

)

 

N/A

 

(54,321

)

 

N/A

Total stockholders’ equity

2,031,284

 

 

1,995,172

 

 

2

%

 

1,903,211

 

 

7

%

 

1,904,580

 

 

7

%

Total liabilities and stockholders’ equity

$

15,379,878

 

 

$

15,338,827

 

 

%

 

$

15,305,952

 

 

%

 

$

15,229,495

 

 

1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock shares - authorized

150,000,000

 

 

150,000,000

 

 

 

 

150,000,000

 

 

 

 

150,000,000

 

 

 

Common stock shares - outstanding

126,697,925

 

 

126,673,822

 

 

 

 

126,639,912

 

 

 

 

130,074,103

 

 

Treasury stock shares

9,002,453

 

 

9,002,453

 

 

 

 

9,002,453

 

 

 

 

5,565,696

 

 

 

 

Table Page 1

 

Hope Bancorp, Inc.

Selected Financial Data

Unaudited (dollars in thousands, except share and per share data)

 

Three Months Ended

 

Nine Months Ended

 

9/30/2019

 

6/30/2019

 

% change

 

9/30/2018

 

% change

 

9/30/2019

 

9/30/2018

 

% change

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans

$

158,115

 

 

$

158,627

 

 

%

 

$

153,366

 

 

3

%

 

$

474,878

 

 

$

437,497

 

 

9

%

Interest on securities

11,373

 

 

11,866

 

 

(4

)%

 

11,957

 

 

(5

)%

 

35,558

 

 

32,957

 

 

8

%

Interest on federal funds sold and other investments

2,929

 

 

2,973

 

 

(1

)%

 

2,503

 

 

17

%

 

8,577

 

 

7,692

 

 

12

%

Total interest income

172,417

 

 

173,466

 

 

(1

)%

 

167,826

 

 

3

%

 

519,013

 

 

478,146

 

 

9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest on deposits

49,057

 

 

48,826

 

 

%

 

37,022

 

 

33

%

 

144,730

 

 

92,481

 

 

56

%

Interest on other borrowings and convertible notes

7,102

 

 

7,419

 

 

(4

)%

 

7,657

 

 

(7

)%

 

21,196

 

 

19,631

 

 

8

%

Total interest expense

56,159

 

 

56,245

 

 

%

 

44,679

 

 

26

%

 

165,926

 

 

112,112

 

 

48

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income before provision for loan losses

116,258

 

 

117,221

 

 

(1

)%

 

123,147

 

 

(6

)%

 

353,087

 

 

366,034

 

 

(4

)%

Provision for loan losses

2,100

 

 

1,200

 

 

75

%

 

7,300

 

 

(71

)%

 

6,300

 

 

12,100

 

 

(48

)%

Net interest income after provision for loan losses

114,158

 

 

116,021

 

 

(2

)%

 

115,847

 

 

(1

)%

 

346,787

 

 

353,934

 

 

(2

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service fees on deposit accounts

4,690

 

 

4,416

 

 

6

%

 

4,569

 

 

3

%

 

13,423

 

 

13,983

 

 

(4

)%

Net gains on sales of SBA loans

 

 

 

 

%

 

2,331

 

 

(100

)%

 

 

 

9,261

 

 

(100

)%

Net gains on sales of other loans

804

 

 

1,066

 

 

(25

)%

 

477

 

 

69

%

 

2,611

 

 

2,104

 

 

24

%

Net gains on sales of securities available for sale

153

 

 

129

 

 

19

%

 

 

 

100

%

 

282

 

 

 

 

100

%

Other income and fees

7,348

 

 

6,676

 

 

10

%

 

6,070

 

 

21

%

 

20,388

 

 

23,218

 

 

(12

)%

Total noninterest income

12,995

 

 

12,287

 

 

6

%

 

13,447

 

 

(3

)%

 

36,704

 

 

48,566

 

 

(24

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

41,607

 

 

39,297

 

 

6

%

 

36,969

 

 

13

%

 

121,333

 

 

116,929

 

 

4

%

Occupancy

7,703

 

 

7,839

 

 

(2

)%

 

7,837

 

 

(2

)%

 

23,219

 

 

22,494

 

 

3

%

Furniture and equipment

3,851

 

 

4,026

 

 

(4

)%

 

3,710

 

 

4

%

 

11,323

 

 

11,454

 

 

(1

)%

Advertising and marketing

2,377

 

 

2,245

 

 

6

%

 

1,986

 

 

20

%

 

6,684

 

 

7,022

 

 

(5

)%

Data processing and communications

2,821

 

 

2,587

 

 

9

%

 

3,513

 

 

(20

)%

 

8,364

 

 

10,582

 

 

(21

)%

Professional fees

5,241

 

 

5,959

 

 

(12

)%

 

3,950

 

 

33

%

 

16,580

 

 

11,530

 

 

44

%

FDIC assessment

 

 

1,559

 

 

(100

)%

 

1,788

 

 

(100

)%

 

3,110

 

 

5,166

 

 

(40

)%

Credit related expenses

1,031

 

 

1,549

 

 

(33

)%

 

658

 

 

57

%

 

3,258

 

 

2,356

 

 

38

%

OREO (income) expense, net

(743

)

 

83

 

 

N/A

 

(56

)

 

1,227

%

 

(812

)

 

(115

)

 

606

%

Other

6,107

 

 

6,227

 

 

(2

)%

 

7,100

 

 

(14

)%

 

19,140

 

 

20,119

 

 

(5

)%

Total noninterest expense

69,995

 

 

71,371

 

 

(2

)%

 

67,455

 

 

4

%

 

212,199

 

 

207,537

 

 

2

%

Income before income taxes

57,158

 

 

56,937

 

 

%

 

61,839

 

 

(8

)%

 

171,292

 

 

194,963

 

 

(12

)%

Income tax provision

14,566

 

 

14,256

 

 

2

%

 

15,461

 

 

(6

)%

 

43,261

 

 

49,823

 

 

(13

)%

Net income

$

42,592

 

 

$

42,681

 

 

%

 

$

46,378

 

 

(8

)%

 

$

128,031

 

 

$

145,140

 

 

(12

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings Per Common Share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.34

 

 

$

0.34

 

 

 

 

$

0.36

 

 

 

 

$

1.01

 

 

$

1.09

 

 

 

Diluted

$

0.34

 

 

$

0.34

 

 

 

 

$

0.36

 

 

 

 

$

1.01

 

 

$

1.09

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Shares Outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

126,685,921

 

 

126,658,509

 

 

 

 

130,268,992

 

 

 

 

126,661,798

 

 

132,930,437

 

 

 

Diluted

127,007,469

 

 

126,870,455

 

 

 

 

130,525,474

 

 

 

 

126,895,970

 

 

133,214,069

 

 

 

 

Table Page 2

Hope Bancorp, Inc.

Selected Financial Data

Unaudited (dollars in thousands)

 

For the Three Months Ended

(Annualized)

 

For the Nine Months Ended

(Annualized)

Profitability measures:

9/30/2019

 

6/30/2019

 

9/30/2018

 

9/30/2019

 

9/30/2018

ROA

1.12

%

 

1.12

%

 

1.24

%

 

1.12

%

 

1.32

%

ROE

8.47

%

 

8.71

%

 

9.76

%

 

8.69

%

 

10.09

%

ROTCE 1

11.11

%

 

11.51

%

 

13.06

%

 

11.48

%

 

13.46

%

Net interest margin

3.25

%

 

3.31

%

 

3.47

%

 

3.31

%

 

3.58

%

Efficiency ratio

54.15

%

 

55.11

%

 

49.38

%

 

54.44

%

 

50.06

%

Noninterest expense / average assets

1.85

%

 

1.88

%

 

1.80

%

 

1.86

%

 

1.89

%

 

 

 

 

 

 

 

 

 

 

 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

 

Nine Months Ended

Pre-tax acquisition accounting adjustments and merger-related expenses:

9/30/2019

 

6/30/2019

 

9/30/2018

 

9/30/2019

 

9/30/2018

Accretion on purchased non-impaired loans

$

2,046

 

 

$

1,799

 

 

$

2,969

 

 

$

6,011

 

 

$

9,355

 

Accretion on purchased credit-impaired loans

5,234

 

 

6,848

 

 

5,239

 

 

17,916

 

 

16,970

 

Amortization of premium on low income housing tax credits

(75

)

 

(76

)

 

(84

)

 

(227

)

 

(253

)

Amortization of premium on acquired FHLB borrowings

 

 

 

 

357

 

 

1,280

 

 

1,056

 

Accretion of discount on acquired subordinated debt

(278

)

 

(275

)

 

(271

)

 

(826

)

 

(804

)

Amortization of premium on acquired time deposits and savings

 

 

 

 

 

 

 

 

1

 

Amortization of core deposit intangibles

(557

)

 

(557

)

 

(615

)

 

(1,671

)

 

(1,846

)

Total acquisition accounting adjustments

6,370

 

 

7,739

 

 

7,595

 

 

22,483

 

 

24,479

 

Merger-related expenses

 

 

 

 

 

 

 

 

7

 

Total

$

6,370

 

 

$

7,739

 

 

$

7,595

 

 

$

22,483

 

 

$

24,486

 

 

 

 

 

 

 

 

 

 

 

 

Table Page 3

Hope Bancorp, Inc.

Selected Financial Data

Unaudited (dollars in thousands)

   

 

 

Three Months Ended

 

 

9/30/2019

 

6/30/2019

 

9/30/2018

 

 

 

 

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

 

$

11,911,658

 

 

$

158,115

 

 

5.27

%

 

$

11,959,920

 

 

$

158,627

 

 

5.32

%

 

$

11,781,091

 

 

$

153,366

 

 

5.16

%

Securities available for sale

 

1,798,239

 

 

11,373

 

 

2.51

%

 

1,804,677

 

 

11,866

 

 

2.64

%

 

1,844,493

 

 

11,957

 

 

2.57

%

FHLB stock and other investments

 

482,952

 

 

2,929

 

 

2.41

%

 

460,623

 

 

2,973

 

 

2.59

%

 

446,390

 

 

2,503

 

 

2.22

%

Total interest earning assets

 

$

14,192,849

 

 

$

172,417

 

 

4.82

%

 

$

14,225,220

 

 

$

173,466

 

 

4.89

%

 

$

14,071,974

 

 

$

167,826

 

 

4.73

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST BEARING LIABILITIES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand, interest bearing

 

$

3,450,749

 

 

$

15,802

 

 

1.82

%

 

$

3,094,179

 

 

$

14,019

 

 

1.82

%

 

$

3,237,673

 

 

$

11,526

 

 

1.41

%

Savings

 

252,780

 

 

675

 

 

1.06

%

 

225,978

 

 

608

 

 

1.08

%

 

228,218

 

 

486

 

 

0.84

%

Time deposits

 

5,368,753

 

 

32,580

 

 

2.41

%

 

5,784,980

 

 

34,199

 

 

2.37

%

 

5,344,464

 

 

25,010

 

 

1.86

%

Total interest bearing deposits

 

9,072,282

 

 

49,057

 

 

2.15

%

 

9,105,137

 

 

48,826

 

 

2.15

%

 

8,810,355

 

 

37,022

 

 

1.67

%

FHLB advances

 

632,500

 

 

3,112

 

 

1.95

%

 

706,044

 

 

3,384

 

 

1.92

%

 

837,412

 

 

3,703

 

 

1.75

%

Convertible debt

 

197,410

 

 

2,322

 

 

4.60

%

 

196,244

 

 

2,310

 

 

4.66

%

 

192,541

 

 

2,299

 

 

4.67

%

Subordinated debentures

 

98,690

 

 

1,668

 

 

6.61

%

 

98,406

 

 

1,725

 

 

6.93

%

 

97,589

 

 

1,655

 

 

6.64

%

Total interest bearing liabilities

 

$

10,000,882

 

 

$

56,159

 

 

2.23

%

 

$

10,105,831

 

 

$

56,245

 

 

2.23

%

 

$

9,937,897

 

 

$

44,679

 

 

1.78

%

Noninterest bearing demand deposits

 

2,958,233

 

 

 

 

 

 

2,947,476

 

 

 

 

 

 

3,041,489

 

 

 

 

 

Total funding liabilities/cost of funds

 

$

12,959,115

 

 

 

 

1.72

%

 

$

13,053,307

 

 

 

 

1.73

%

 

$

12,979,386

 

 

 

 

1.37

%

Net interest income/net interest spread

 

 

 

$

116,258

 

 

2.59

%

 

 

 

$

117,221

 

 

2.66

%

 

 

 

$

123,147

 

 

2.95

%

Net interest margin

 

 

 

 

 

3.25

%

 

 

 

 

 

3.31

%

 

 

 

 

 

3.47

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest bearing demand deposits

 

$

2,958,233

 

 

$

 

 

%

 

$

2,947,476

 

 

$

 

 

%

 

$

3,041,489

 

 

$

 

 

%

Interest bearing deposits

 

9,072,282

 

 

49,057

 

 

2.15

%

 

9,105,137

 

 

48,826

 

 

2.15

%

 

8,810,355

 

 

37,022

 

 

1.67

%

Total deposits

 

$

12,030,515

 

 

$

49,057

 

 

1.62

%

 

$

12,052,613

 

 

$

48,826

 

 

1.62

%

 

$

11,851,844

 

 

$

37,022

 

 

1.24

%

   
   

Table Page 4

 

Hope Bancorp, Inc.

Selected Financial Data

Unaudited (dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

9/30/2019

 

9/30/2018

 

 

 

Interest

 

Annualized

 

 

 

Interest

 

Annualized

 

Average

 

Income/

 

Average

 

Average

 

Income/

 

Average

 

Balance

 

Expense

 

Yield/Cost

 

Balance

 

Expense

 

Yield/Cost

INTEREST EARNING ASSETS:

 

 

 

 

 

 

 

 

 

 

 

Loans, including loans held for sale

$

11,985,936

 

 

$

474,878

 

 

5.30

%

 

$

11,416,238

 

 

$

437,497

 

 

5.12

%

Securities available for sale

1,810,068

 

 

35,558

 

 

2.63

%

 

1,750,802

 

 

32,957

 

 

2.52

%

FHLB stock and other investments

450,028

 

 

8,577

 

 

2.55

%

 

506,802

 

 

7,692

 

 

2.03

%

Total interest earning assets

$

14,246,032

 

 

$

519,013

 

 

4.87

%

 

$

13,673,842

 

 

$

478,146

 

 

4.68

%

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST BEARING LIABILITIES:

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

Demand, interest bearing

$

3,197,313

 

 

$

42,807

 

 

1.79

%

 

$

3,327,101

 

 

$

30,828

 

 

1.24

%

Savings

234,203

 

 

1,848

 

 

1.05

%

 

230,909

 

 

1,352

 

 

0.78

%

Time deposits

5,694,778

 

 

100,075

 

 

2.35

%

 

4,932,912

 

 

60,301

 

 

1.63

%

Total interest bearing deposits

9,126,294

 

 

144,730

 

 

2.12

%

 

8,490,922

 

 

92,481

 

 

1.46

%

FHLB advances

715,814

 

 

$

9,110

 

 

1.70

%

 

885,332

 

 

11,453

 

 

1.73

%

Convertible debt

196,217

 

 

6,930

 

 

4.66

%

 

99,212

 

 

3,498

 

 

4.65

%

Subordinated debentures

98,410

 

 

5,156

 

 

6.91

%

 

97,320

 

 

4,680

 

 

6.34

%

Total interest bearing liabilities

$

10,136,735

 

 

$

165,926

 

 

2.19

%

 

$

9,572,786

 

 

$

112,112

 

 

1.57

%

Noninterest bearing demand deposits

2,931,080

 

 

 

 

 

 

3,012,501

 

 

 

 

 

Total funding liabilities/cost of funds

$

13,067,815

 

 

 

 

1.70

%

 

$

12,585,287

 

 

 

 

1.19

%

Net interest income/net interest spread

 

 

$

353,087

 

 

2.68

%

 

 

 

$

366,034

 

 

3.11

%

Net interest margin

 

 

 

 

3.31

%

 

 

 

 

 

3.58

%

 

 

 

 

 

 

 

 

 

 

 

 

Cost of deposits:

 

 

 

 

 

 

 

 

 

 

 

Noninterest bearing demand deposits

$

2,931,080

 

 

$

 

 

%

 

$

3,012,501

 

 

$

 

 

%

Interest bearing deposits

9,126,294

 

 

144,730

 

 

2.12

%

 

8,490,922

 

 

92,481

 

 

1.46

%

Total deposits

$

12,057,374

 

 

$

144,730

 

 

1.60

%

 

$

11,503,423

 

 

$

92,481

 

 

1.07

%

 
 

Table Page 5

Hope Bancorp, Inc.

Selected Financial Data

Unaudited (dollars in thousands)

 

Three Months Ended

 

Nine Months Ended

AVERAGE BALANCES:

9/30/2019

 

6/30/2019

 

% change

 

9/30/2018

 

% change

 

9/30/2019

 

9/30/2018

 

% change

Loans receivable, including loans held for sale

$

11,911,658

 

 

$

11,959,920

 

 

%

 

$

11,781,091

 

 

1

%

 

$

11,985,936

 

 

$

11,416,238

 

 

5

%

Investments

2,281,191

 

 

2,265,300

 

 

1

%

 

2,290,883

 

 

%

 

2,260,096

 

 

2,257,604

 

 

%

Interest earning assets

14,192,849

 

 

14,225,220

 

 

%

 

14,071,974

 

 

1

%

 

14,246,032

 

 

13,673,842

 

 

4

%

Total assets

15,154,661

 

 

15,185,495

 

 

%

 

15,019,224

 

 

1

%

 

15,209,668

 

 

14,613,094

 

 

4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest bearing deposits

9,072,282

 

 

9,105,137

 

 

%

 

8,810,355

 

 

3

%

 

9,126,294

 

 

8,490,922

 

 

7

%

Interest bearing liabilities

10,000,882

 

 

10,105,831

 

 

(1

)%

 

9,937,897

 

 

1

%

 

10,136,735

 

 

9,572,786

 

 

6

%

Noninterest bearing demand deposits

2,958,233

 

 

2,947,476

 

 

%

 

3,041,489

 

 

(3

)%

 

2,931,080

 

 

3,012,501

 

 

(3

)%

Stockholders’ equity

2,010,458

 

 

1,960,500

 

 

3

%

 

1,899,853

 

 

6

%

 

1,964,146

 

 

1,917,696

 

 

2

%

Net interest earning assets

4,191,967

 

 

4,119,389

 

 

2

%

 

4,134,077

 

 

1

%

 

4,109,297

 

 

4,101,056

 

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOAN PORTFOLIO COMPOSITION:

9/30/2019

 

6/30/2019

 

% change

 

12/31/2018

 

% change

 

9/30/2018

 

% change

 

 

Commercial loans

$

2,643,836

 

 

$

2,432,068

 

 

9

%

 

$

2,324,820

 

 

14

%

 

$

2,318,213

 

 

14

%

 

 

Real estate loans

8,587,943

 

 

8,630,852

 

 

%

 

8,721,600

 

 

(2

)%

 

8,639,857

 

 

(1

)%

 

 

Consumer and other loans

870,734

 

 

913,087

 

 

(5

)%

 

1,051,486

 

 

(17

)%

 

969,835

 

 

(10

)%

 

 

Loans outstanding

12,102,513

 

 

11,976,007

 

 

1

%

 

12,097,906

 

 

%

 

11,927,905

 

 

1

%

 

 

Unamortized deferred loan costs (fees), net

2,169

 

 

1,127

 

 

92

%

 

209

 

 

938

%

 

(723

)

 

N/A

 

 

Loans, net of deferred loan fees and costs

12,104,682

 

 

11,977,134

 

 

1

%

 

12,098,115

 

 

%

 

11,927,182

 

 

1

%

 

 

Allowance for loan losses

(93,882

)

 

(94,066

)

 

%

 

(92,557

)

 

1

%

 

(90,629

)

 

4

%

 

 

Loan receivable, net

$

12,010,800

 

 

$

11,883,068

 

 

1

%

 

$

12,005,558

 

 

%

 

$

11,836,553

 

 

1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REAL ESTATE LOANS BY PROPERTY TYPE:

9/30/2019

 

6/30/2019

 

% change

 

12/31/2018

 

% change

 

9/30/2018

 

% change

 

 

Retail buildings

$

2,304,346

 

 

$

2,295,569

 

 

%

 

$

2,379,589

 

 

(3

)%

 

$

2,388,343

 

 

(4

)%

 

 

Hotels/motels

1,664,311

 

 

1,670,758

 

 

%

 

1,694,696

 

 

(2

)%

 

1,663,543

 

 

%

 

 

Gas stations/car washes

911,494

 

 

953,977

 

 

(4

)%

 

980,619

 

 

(7

)%

 

964,019

 

 

(5

)%

 

 

Mixed-use facilities

743,428

 

 

739,467

 

 

1

%

 

698,779

 

 

6

%

 

694,961

 

 

7

%

 

 

Warehouses

949,336

 

 

936,934

 

 

1

%

 

966,413

 

 

(2

)%

 

927,767

 

 

2

%

 

 

Multifamily

473,640

 

 

460,572

 

 

3

%

 

453,555

 

 

4

%

 

457,282

 

 

4

%

 

 

Other

1,541,388

 

 

1,573,575

 

 

(2

)%

 

1,547,949

 

 

%

 

1,543,942

 

 

%

 

 

Total

$

8,587,943

 

 

$

8,630,852

 

 

%

 

$

8,721,600

 

 

(2

)%

 

$

8,639,857

 

 

(1

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DEPOSIT COMPOSITION

9/30/2019

 

6/30/2019

 

% change

 

12/31/2018

 

% change

 

9/30/2018

 

% change

 

 

Noninterest bearing demand deposits

$

3,033,371

 

 

$

3,009,218

 

 

1

%

 

$

3,022,633

 

 

%

 

$

3,020,819

 

 

%

 

 

Money market and other

3,752,274

 

 

3,238,947

 

 

16

%

 

3,036,653

 

 

24

%

 

3,247,420

 

 

16

%

 

 

Saving deposits

259,454

 

 

243,859

 

 

6

%

 

225,746

 

 

15

%

 

229,081

 

 

13

%

 

 

Time deposits

5,189,651

 

 

5,680,360

 

 

(9

)%

 

5,870,624

 

 

(12

)%

 

5,548,299

 

 

(6

)%

 

 

Total deposit balances

$

12,234,750

 

 

$

12,172,384

 

 

1

%

 

$

12,155,656

 

 

1

%

 

$

12,045,619

 

 

2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DEPOSIT COMPOSITION (%)

9/30/2019

 

6/30/2019

 

 

 

12/31/2018

 

 

 

9/30/2018

 

 

 

 

Noninterest bearing demand deposits

24.8

%

 

24.7

%

 

 

 

24.9

%

 

 

 

25.1

%

 

 

 

 

Money market and other

30.7

%

 

26.6

%

 

 

 

25.0

%

 

 

 

27.0

%

 

 

 

 

Saving deposits

2.1

%

 

2.0

%

 

 

 

1.8

%

 

 

 

1.9

%

 

 

 

 

Time deposits

42.4

%

 

46.7

%

 

 

 

48.3

%

 

 

 

46.0

%

 

 

 

 

Total deposit balances

100.0

%

 

100.0

%

 

 

 

100.0

%

 

 

 

100.0

%

 

 

 

 

 
 

Table Page 6

Hope Bancorp, Inc.

Selected Financial Data

Unaudited (dollars in thousands, except share and per share data)

CAPITAL RATIOS:

9/30/2019

 

6/30/2019

 

12/31/2018

 

9/30/2018

Total stockholders’ equity

$

2,031,284

 

 

$

1,995,172

 

 

$

1,903,211

 

 

$

1,904,580

 

Common Equity Tier 1 ratio

11.89

%

 

11.90

%

 

11.44

%

 

11.61

%

Tier 1 risk-based capital ratio

12.65

%

 

12.67

%

 

12.21

%

 

12.38

%

Total risk-based capital ratio

13.38

%

 

13.42

%

 

12.94

%

 

13.10

%

Tier 1 leverage ratio

11.18

%

 

10.94

%

 

10.55

%

 

10.80

%

Total risk weighted assets

$

12,951,936

 

 

$

12,715,685

 

 

$

12,749,403

 

 

$

12,747,343

 

Book value per common share

$

16.03

 

 

$

15.75

 

 

$

15.03

 

 

$

14.64

 

Tangible common equity to tangible assets 1

10.43

%

 

10.21

%

 

9.61

%

 

9.66

%

Tangible common equity per share 1

$

12.27

 

 

$

11.98

 

 

$

11.25

 

 

$

10.96

 

1

Tangible common equity to tangible assets is a non GAAP financial measure that represents common equity less goodwill and core deposit intangible assets, net divided by total assets less goodwill and core deposit intangible assets, net. Management reviews tangible common equity to tangible assets in evaluating the Company’s capital levels and has included this ratio in response to market participant interest in tangible common equity as a measure of capital.

Reconciliation of GAAP financial measures to non-GAAP financial measures:

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

9/30/2019

 

6/30/2019

 

9/30/2018

 

9/30/2019

 

9/30/2018

RETURN ON AVERAGE TANGIBLE COMMON EQUITY

 

 

 

 

 

 

 

 

 

Average stockholders’ equity

$

2,010,458

 

 

$

1,960,500

 

 

$

1,899,853

 

 

$

1,964,146

 

 

$

1,917,696

 

Less: Goodwill and core deposit intangible assets, net

(477,159

)

 

(477,736

)

 

(479,501

)

 

(477,730

)

 

(480,119

)

Average tangible common equity

$

1,533,299

 

 

$

1,482,764

 

 

$

1,420,352

 

 

$

1,486,416

 

 

$

1,437,577

 

 

 

 

 

 

 

 

 

 

 

Net Income

$

42,592

 

 

$

42,681

 

 

$

46,378

 

 

$

128,031

 

 

$

145,140

 

Return on average tangible common equity

11.11

%

 

11.51

%

 

13.06

%

 

11.48

%

 

13.46

%

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

9/30/2019

 

6/30/2019

 

12/31/2018

 

9/30/2018

TANGIBLE COMMON EQUITY

 

 

 

 

 

 

 

Total stockholders’ equity

$

2,031,284

 

 

$

1,995,172

 

 

$

1,903,211

 

 

$

1,904,580

 

Less: Goodwill and core deposit intangible assets, net

(476,840

)

 

(477,397

)

 

(478,511

)

 

(479,127

)

Tangible common equity

$

1,554,444

 

 

$

1,517,775

 

 

$

1,424,700

 

 

$

1,425,453

 

 

 

 

 

 

 

 

 

Total assets

$

15,379,878

 

 

$

15,338,827

 

 

$

15,305,952

 

 

$

15,229,495

 

Less: Goodwill and core deposit intangible assets, net

(476,840

)

 

(477,397

)

 

(478,511

)

 

(479,127

)

Tangible assets

$

14,903,038

 

 

$

14,861,430

 

 

$

14,827,441

 

 

$

14,750,368

 

 

 

 

 

 

 

 

 

Common shares outstanding

126,697,925

 

 

126,673,822

 

 

126,639,912

 

 

130,074,103

 

 

 

 

 

 

 

 

 

Tangible common equity to tangible assets

10.43

%

 

10.21

%

 

9.61

%

 

9.66

%

Tangible common equity per share

$

12.27

 

 

$

11.98

 

 

$

11.25

 

 

$

10.96

 

 
 

Table Page 7

Hope Bancorp, Inc.

Selected Financial Data

Unaudited (dollars in thousands, except share and per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

ALLOWANCE FOR LOAN LOSSES CHANGES:

9/30/2019

 

6/30/2019

 

3/31/2019

 

12/31/2018

 

9/30/2018

 

9/30/2019

 

9/30/2018

Balance at beginning of period

$

94,066

 

 

$

94,217

 

 

$

92,557

 

 

$

90,629

 

 

$

89,881

 

 

$

92,557

 

 

$

84,541

 

Provision for loan losses

2,100

 

 

1,200

 

 

3,000

 

 

2,800

 

 

7,300

 

 

6,300

 

 

12,100

 

Recoveries

780

 

 

725

 

 

1,292

 

 

805

 

 

315

 

 

2,797

 

 

3,186

 

Charge offs

(2,602

)

 

(2,076

)

 

(1,754

)

 

(1,677

)

 

(6,867

)

 

(6,432

)

 

(9,198

)

PCI allowance adjustment

(462

)

 

 

 

(878

)

 

 

 

 

 

(1,340

)

 

 

Balance at end of period

$

93,882

 

 

$

94,066

 

 

$

94,217

 

 

$

92,557

 

 

$

90,629

 

 

$

93,882

 

 

$

90,629

 

Net charge offs/average loans receivable (annualized)

0.06

%

 

0.05

%

 

0.02

%

 

0.03

%

 

0.22

%

 

0.04

%

 

0.07

%

 

ALLOWANCE FOR LOAN LOSSES COMPOSITION:

9/30/2019

 

6/30/2019

 

3/31/2019

 

12/31/2018

 

9/30/2018

 

Legacy loans 1

$

82,267

 

 

$

81,606

 

 

$

80,953

 

 

$

78,259

 

 

$

75,364

 

 

Purchased non-impaired loans 2

3,239

 

 

3,376

 

 

2,948

 

 

2,135

 

 

2,411

 

 

Purchased credit-impaired loans 2

8,376

 

 

9,084

 

 

10,316

 

 

12,163

 

 

12,854

 

 

Total allowance for loan losses

$

93,882

 

 

$

94,066

 

 

$

94,217

 

 

$

92,557

 

 

$

90,629

 

 

1

 

Legacy loans include loans originated by the Bank’s predecessor banks loans originated by Bank of Hope and loans that were acquired that have been refinanced as new loans.

2

 

Purchased loans were marked to fair value at acquisition date and the allowance for loan losses reflects provisions for credit deterioration since the acquisition date.

 

Three Months Ended

 

Nine Months Ended

NET CHARGED OFF (RECOVERED) LOANS BY TYPE:

9/30/2019

 

6/30/2019

 

3/31/2019

 

12/31/2018

 

9/30/2018

 

9/30/2019

 

9/30/2018

Real estate loans

$

951

 

 

$

(388

)

 

$

(1,067

)

 

$

123

 

 

$

6,004

 

 

$

(504

)

 

$

5,577

 

Commercial loans

596

 

 

1,399

 

 

1,250

 

 

436

 

 

230

 

 

3,245

 

 

(428

)

Consumer loans

275

 

 

340

 

 

279

 

 

313

 

 

318

 

 

894

 

 

863

 

Total net charge offs

$

1,822

 

 

$

1,351

 

 

$

462

 

 

$

872

 

 

$

6,552

 

 

$

3,635

 

 

$

6,012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table Page 8

Hope Bancorp, Inc.

Selected Financial Data

Unaudited (dollars in thousands)

 

NONPERFORMING ASSETS

9/30/2019

 

6/30/2019

 

3/31/2019

 

12/31/2018

 

9/30/2018

Loans on nonaccrual status 3

$

42,235

 

 

$

64,934

 

 

$

86,637

 

 

$

53,286

 

 

$

56,299

 

Delinquent loans 90 days or more on accrual status 4

398

 

 

353

 

 

387

 

 

1,529

 

 

401

 

Accruing troubled debt restructured loans

34,717

 

 

40,731

 

 

45,204

 

 

50,410

 

 

52,521

 

Total nonperforming loans

77,350

 

 

106,018

 

 

132,228

 

 

105,225

 

 

109,221

 

Other real estate owned

19,374

 

 

5,644

 

 

6,258

 

 

7,754

 

 

8,981

 

Total nonperforming assets

$

96,724

 

 

$

111,662

 

 

$

138,486

 

 

$

112,979

 

 

$

118,202

 

Nonperforming assets/total assets

0.63

%

 

0.73

%

 

0.90

%

 

0.74

%

 

0.78

%

Nonperforming assets/loans receivable & OREO

0.80

%

 

0.93

%

 

1.15

%

 

0.93

%

 

0.99

%

Nonperforming assets/total capital

4.76

%

 

5.60

%

 

7.12

%

 

5.94

%

 

6.21

%

Nonperforming loans/loans receivable

0.64

%

 

0.89

%

 

1.10

%

 

0.87

%

 

0.92

%

Nonaccrual loans/loans receivable

0.35

%

 

0.54

%

 

0.72

%

 

0.44

%

 

0.47

%

Allowance for loan losses/loans receivable

0.78

%

 

0.79

%

 

0.78

%

 

0.77

%

 

0.76

%

Allowance for loan losses/nonaccrual loans

222.28

%

 

144.86

%

 

108.75

%

 

173.70

%

 

160.98

%

Allowance for loan losses/nonperforming loans

121.37

%

 

88.73

%

 

71.25

%

 

87.96

%

 

82.98

%

Allowance for loan losses/nonperforming assets

97.06

%

 

84.24

%

 

68.03

%

 

81.92

%

 

76.67

%

3

Excludes delinquent SBA loans that are guaranteed and currently in liquidation totaling $37.3 million, $32.1 million, $30.5 million, $29.2 million, and $23.1 million at September 30, 2019, June 30, 2019, March 31, 2019, December 31, 2018, and September 30, 2018, respectively.

4

Excludes purchased credit impaired loans that are delinquent 90 or more days totaling $15.5 million, $17.6 million, $18.4 million, $14.1 million, and $16.6 million at September 30, 2019, June 30, 2019, March 31, 2019, December 31, 2018, and September 30, 2018, respectively.

BREAKDOWN OF ACCRUING TROUBLED DEBT RESTRUCTURED LOANS:

9/30/2019

 

6/30/2019

 

3/31/2019

 

12/31/2018

 

9/30/2018

Retail buildings

$

3,221

 

 

$

2,919

 

 

$

2,965

 

 

$

3,085

 

 

$

3,112

 

Gas stations/car washes

233

 

 

241

 

 

255

 

 

267

 

 

 

Mixed-use facilities

3,200

 

 

3,223

 

 

3,254

 

 

5,956

 

 

5,994

 

Warehouses

10,449

 

 

11,246

 

 

11,315

 

 

7,188

 

 

7,219

 

Other 5

17,614

 

 

23,102

 

 

27,415

 

 

33,914

 

 

36,196

 

Total

$

34,717

 

 

$

40,731

 

 

$

45,204

 

 

$

50,410

 

 

$

52,521

 

5

Includes commercial business, consumer, and other loans

ACCRUING DELINQUENT LOANS 30-89 DAYS PAST DUE

9/30/2019

 

6/30/2019

 

3/31/2019

 

12/31/2018

 

9/30/2018

Legacy

 

 

 

 

 

 

 

 

 

30 - 59 days

$

14,229

 

 

$

16,405

 

 

$

30,971

 

 

$

23,846

 

 

$

26,872

 

60 - 89 days

4,164

 

 

718

 

 

1,227

 

 

218

 

 

2,773

 

Total

$

18,393

 

 

$

17,123

 

 

$

32,198

 

 

$

24,064

 

 

$

29,645

 

 

 

 

 

 

 

 

 

 

 

Acquired

 

 

 

 

 

 

 

 

 

30 - 59 days

$

11,052

 

 

$

1,508

 

 

$

2,717

 

 

$

1,094

 

 

$

5,240

 

60 - 89 days

371

 

 

577

 

 

 

 

406

 

 

18

 

Total

$

11,423

 

 

$

2,085

 

 

$

2,717

 

 

$

1,500

 

 

$

5,258

 

 

 

 

 

 

 

 

 

 

 

Total accruing delinquent loans 30-89 days past due

$

29,816

 

 

$

19,208

 

 

$

34,915

 

 

$

25,564

 

 

$

34,903

 

 

 

 

 

 

 

 

 

 

 

 

Table Page 9

Hope Bancorp, Inc.

Selected Financial Data

Unaudited (dollars in thousands)

 

ACCRUING DELINQUENT LOANS 30-89 DAYS PAST DUE BY TYPE

9/30/2019

 

6/30/2019

 

3/31/2019

 

12/31/2018

 

9/30/2018

Legacy

 

 

 

 

 

 

 

 

 

Real estate loans

$

9,707

 

 

$

9,580

 

 

$

12,324

 

 

$

2,352

 

 

$

13,275

 

Commercial loans

2,004

 

 

1,755

 

 

2,711

 

 

5,159

 

 

986

 

Consumer loans

6,682

 

 

5,788

 

 

17,163

 

 

16,553

 

 

15,384

 

Total

$

18,393

 

 

$

17,123

 

 

$

32,198

 

 

$

24,064

 

 

$

29,645

 

 

 

 

 

 

 

 

 

 

 

Acquired

 

 

 

 

 

 

 

 

 

Real estate loans

$

10,865

 

 

$

214

 

 

$

1,371

 

 

$

905

 

 

$

4,703

 

Commercial loans

278

 

 

77

 

 

374

 

 

595

 

 

555

 

Consumer loans

280

 

 

1,794

 

 

972

 

 

 

 

 

Total

$

11,423

 

 

$

2,085

 

 

$

2,717

 

 

$

1,500

 

 

$

5,258

 

 

 

 

 

 

 

 

 

 

 

Total accruing delinquent loans 30-89 days past due

$

29,816

 

 

$

19,208

 

 

$

34,915

 

 

$

25,564

 

 

$

34,903

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NONACCRUAL LOANS BY TYPE

9/30/2019

 

6/30/2019

 

3/31/2019

 

12/31/2018

 

9/30/2018

Real estate loans

$

27,920

 

 

$

42,921

 

 

$

58,030

 

 

$

33,719

 

 

$

35,614

 

Commercial loans

11,242

 

 

18,997

 

 

27,042

 

 

18,128

 

 

19,119

 

Consumer loans

3,073

 

 

3,016

 

 

1,565

 

 

1,439

 

 

1,566

 

Total nonaccrual loans

$

42,235

 

 

$

64,934

 

 

$

86,637

 

 

$

53,286

 

 

$

56,299

 

 

 

 

 

 

 

 

 

 

 

CRITICIZED LOANS

9/30/2019

 

6/30/2019

 

3/31/2019

 

12/31/2018

 

9/30/2018

Legacy

 

 

 

 

 

 

 

 

 

Special mention

$

101,892

 

 

$

147,050

 

 

$

154,671

 

 

$

121,622

 

 

$

177,563

 

Substandard

184,518

 

 

202,676

 

 

223,511

 

 

193,494

 

 

171,767

 

Doubtful

17

 

 

 

 

 

 

 

 

429

 

Loss

 

 

 

 

351

 

 

 

 

1

 

Total criticized loans - legacy

$

286,427

 

 

$

349,726

 

 

$

378,533

 

 

$

315,116

 

 

$

349,760

 

 

 

 

 

 

 

 

 

 

 

Acquired

 

 

 

 

 

 

 

 

 

Special mention

$

37,956

 

 

$

39,435

 

 

$

50,702

 

 

$

41,467

 

 

$

38,023

 

Substandard

84,087

 

 

121,165

 

 

129,122

 

 

124,421

 

 

130,078

 

Doubtful

 

 

 

 

218

 

 

377

 

 

444

 

Loss

 

 

1

 

 

 

 

35

 

 

 

Total criticized loans - acquired

$

122,043

 

 

$

160,601

 

 

$

180,042

 

 

$

166,300

 

 

$

168,545

 

 

 

 

 

 

 

 

 

 

 

Total criticized loans

$

408,470

 

 

$

510,327

 

 

$

558,575

 

 

$

481,416

 

 

$

518,305

 

 
 

Table Page 10

 

Contacts

Alex Ko
EVP & Chief Financial Officer
213-427-6560
alex.ko@bankofhope.com

Angie Yang
SVP, Director of Investor Relations &
Corporate Communications
213-251-2219
angie.yang@bankofhope.com

Contacts

Alex Ko
EVP & Chief Financial Officer
213-427-6560
alex.ko@bankofhope.com

Angie Yang
SVP, Director of Investor Relations &
Corporate Communications
213-251-2219
angie.yang@bankofhope.com