Hope Bancorp, Inc. (the “Company”) (NASDAQ: HOPE), the holding
company of Bank of Hope (the “Bank”), today reported unaudited
financial results for its fourth quarter and year ended December
31, 2020.
For the three months ended December 31, 2020, net income totaled
$28.3 million, or $0.23 per diluted common share. This compares
with net income of $30.5 million, or $0.25 per diluted common
share, in the third quarter of 2020 and $43.0 million, or $0.34 per
diluted common share, in the fourth quarter of 2019. For the year
ended December 31, 2020, net income totaled $111.5 million, or
$0.90 per diluted common share, compared with net income of $171.0
million, or $1.35 per diluted common share for the year ended
December 31, 2019.
“Fourth quarter results represent a continuation of the many
positive trends we have delivered in 2020 and underscore how well
we have been able to manage through a year that has been plagued by
a global pandemic,” said Kevin S. Kim, Chairman, President and
Chief Executive Officer of Hope Bancorp, Inc. “Notwithstanding the
challenging business environment, we recorded very strong loan
originations of $844 million during the quarter. We are also
extremely pleased with the success of our expanded commercial
lending capabilities, with commercial loans accounting for 52% of
new loan production during the fourth quarter of 2020. New
commercial customer relationships that we have won during the year
have been valuable contributors to our deposit achievements as
well, with total deposits increasing 2% quarter-over-quarter and
noninterest bearing deposits expanding to a record 34% of total
deposits at the end of 2020. The improved mix in our deposit
composition and reductions in deposit costs led to a second
consecutive quarter of margin expansion with our net interest
margin increasing 11 basis points quarter-over-quarter to 3.02% for
the fourth quarter. We also continued to maintain a tight grip on
expenses with our efficiency ratio improving to 53.77% for the 2020
fourth quarter.
“With the highly effective vaccines in distribution and the
support of additional government stimulus programs, it appears the
groundwork for a faster economic recovery is being paved, and we
believe we are well positioned with a stronger allowance coverage
ratio that we have prudently built to date,” said Kim. “2020
required more commitment and dedication from our employees than any
period in the history of our Bank, and I am extremely proud of how
we, as a team, adapted and succeeded this last year. As a result of
all of the challenges we have successfully endured this year, I
have great conviction that we are a stronger franchise today than
ever before, and we move forward in 2021 with cautious optimism
that we will indeed get through this unprecedented period of time
together and deliver increased value to all the stakeholders of
Bank of Hope.”
Q4 2020 Highlights
- Net interest income before provision for credit losses
increased 3% quarter-over-quarter to $120.8 million, largely
reflecting reduced interest expense due to lower cost of
deposits.
- Net interest margin expanded 11 basis points
quarter-over-quarter.
- Noninterest bearing demand deposits increased 7%
quarter-over-quarter and accounted for 34% of total deposits at
year-end.
- Total cost of deposits decreased 16 basis points
quarter-over-quarter benefiting from an on going positive mix-shift
to lower-cost core deposits.
- Loan originations totaled $844.2 million and contributed to a
3.4% increase in loans receivable quarter-over-quarter, or 13.5%
annualized.
- Noninterest expenses continued to be well managed with
efficiency ratio improving to 53.77% from 54.31%
quarter-over-quarter and noninterest expense to average assets
improving to 1.69% from 1.73%
Financial
Highlights
(dollars in thousands, except per share
data) (unaudited)
At or for the Three Months
Ended
12/31/2020
9/30/2020
12/31/2019
Net income
$
28,319
$
30,490
$
43,009
Diluted earnings per share
$
0.23
$
0.25
$
0.34
Net interest income before provision for
loan losses
$
120,756
$
117,637
$
113,508
Net interest margin
3.02
%
2.91
%
3.16
%
Noninterest income
$
11,415
$
17,513
$
12,979
Noninterest expense
$
71,063
$
73,406
$
70,429
Net loans receivable
$
13,356,472
$
12,940,376
$
12,181,863
Deposits
$
14,333,912
$
14,008,356
$
12,527,364
Total cost of deposits
0.48
%
0.64
%
1.49
%
Nonaccrual loans (1) (2)
$
85,238
$
69,205
$
54,785
Nonperforming loans to loans receivable
(1) (2)
0.91
%
0.81
%
0.80
%
ACL to loans receivable (3)
1.52
%
1.37
%
0.77
%
ACL to nonaccrual loans (1) (2)(3)
242.55
%
259.88
%
171.84
%
ACL to nonperforming assets (1) (2)(3)
144.24
%
144.36
%
77.08
%
Provision for credit losses
$
27,500
$
22,000
$
1,000
Net charge offs
$
608
$
3,922
$
738
Return on average assets (“ROA”)
0.67
%
0.72
%
1.13
%
Return on average equity (“ROE”)
5.54
%
5.98
%
8.46
%
Return on average tangible common equity
(“ROTCE”) (4)
7.21
%
7.80
%
11.04
%
Noninterest expense / average assets
1.69
%
1.73
%
1.85
%
Efficiency ratio
53.77
%
54.31
%
55.68
(1)
Excludes delinquent SBA loans that are
guaranteed and currently in liquidation
(2)
Excludes purchased credit-impaired loans
for December 31, 2019
(3)
Allowance for credit losses for
current-year periods were calculated under the CECL methodology
while allowance for loan losses for the prior-year period was
calculated under the incurred loss methodology.
(4)
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 10.
Operating Results for the 2020 Fourth
Quarter
Net interest income before provision for credit losses for the
2020 fourth quarter increased 3% to $120.8 million from $117.6
million in the 2020 third quarter and increased 6% from $113.5
million in the year-ago fourth quarter. As with the preceding third
quarter, the Company attributed the increases primarily to
meaningful reductions in interest expense due to lower cost of
deposits and lower average FHLB borrowing balances.
The net interest margin for the 2020 fourth quarter increased 11
basis points to 3.02% from 2.91% in the preceding third quarter,
reflecting the benefits of lower deposit costs and reductions in
cash on the Company’s balance sheet, partially offset by lower
weighted average yield on loans. The net interest margin in the
prior-year fourth quarter was 3.16%.
The weighted average yield on loans for the 2020 fourth quarter
was 4.03%, compared with 4.20% in the preceding third quarter,
largely reflecting a significant increase in the lower-yielding
warehouse line balances during the quarter and lower accretion
income. The weighted average yield on loans for the 2019 fourth
quarter was 5.04%.
The weighted average cost of deposits for the 2020 fourth
quarter decreased for the fifth consecutive quarter to 0.48%,
representing a 16 basis point decrease from 0.64% for the 2020
third quarter and a 101 basis point decrease from 1.49% for the
2019 fourth quarter. The Company attributed the significant
improvements in the weighted average cost of deposits to a
continuing shift in its deposit mix to lower-cost core deposits and
the ongoing downward repricing of time deposits. Noninterest
bearing demand deposits increased 7% quarter-over-quarter and
increased 55% year-over-year and accounted for 34%, 32% and 25% of
total deposits at December 31, 2020, September 30, 2020 and
December 31, 2019, respectively.
Noninterest income totaled $11.4 million for the 2020 fourth
quarter, compared with $17.5 million in the preceding third
quarter. The largest factor contributing to the decrease was a $7.5
million net gain on the sale of $161 million of available-for-sale
investment securities in the preceding third quarter, compared with
zero in the 2020 fourth quarter. In addition, net gains on sales of
other loans decreased to $1.6 million for the 2020 fourth quarter
from $2.9 million for the preceding third quarter. These decreases
were partially offset by an increase in other income and fees in
the 2020 fourth quarter, reflecting higher levels of swap fee
income and a gain in the fair value change in derivatives.
Noninterest income in the 2019 fourth quarter totaled $13.0
million.
Noninterest expense for the 2020 fourth quarter decreased to
$71.1 million from $73.4 million for the preceding third quarter.
Noninterest expense for the 2020 fourth quarter included $2.4
million in branch restructuring costs while the 2020 third quarter
included a $3.6 million FHLB prepayment penalty. For the 2019
fourth quarter, noninterest expense totaled $70.4 million.
Salaries and employee benefits expense totaled $40.9 million,
$40.7 million and $39.8 million for the 2020 fourth quarter, 2020
third quarter and 2019 fourth quarter.
Noninterest expense as a percentage of average assets improved
to 1.69% for the 2020 fourth quarter from 1.73% for the 2020 third
quarter and from 1.85% for the 2019 fourth quarter.
The effective tax rate for the 2020 fourth quarter was 15.74%,
compared with 23.3% for the preceding third quarter and 21.9% in
the year-ago fourth quarter. The decrease in the effective tax rate
for 2020 fourth quarter reflects lower tax provision based on
adjustments to the applicable state apportionment factors.
Balance Sheet Summary
New loan originations funded during the 2020 fourth quarter
totaled $844.2 million and included SBA loan production of $25.5
million and residential mortgage loan originations of $62.5
million. In addition, two new warehouse mortgage lines of credit
were booked during the 2020 fourth quarter, of which $106.8 million
was funded as of December 31, 2020. For the preceding 2020 third
quarter, new loan originations funded totaled $782.4 million,
including SBA loan originations of $33.3 million, residential
mortgage loan originations of $102.3 million and four new warehouse
mortgages lines of credit, of which $301 million was funded as of
September 30, 2020. In the year-ago fourth quarter, new loan
originations funded totaled $847.6 million, including SBA loan
production of $61.8 million and residential mortgage loan
originations of $64.2 million. There were no new warehouse mortgage
lines of credit established in the 2019 fourth quarter.
At December 31, 2020, loans receivable increased 3.4% to $13.56
billion from $13.12 billion at September 30, 2020 and increased
10.5% from $12.28 billion at December 31, 2019.
Total deposits at December 31, 2020 increased 2.3% to $14.33
billion from $14.01 billion at September 30, 2020 and increased
14.4% from $12.53 billion at December 31, 2019.
Following is the deposit composition as of December 31, 2020,
September 30, 2020 and December 31, 2019:
(dollars in thousands) (unaudited)
12/31/2020
9/30/2020
% change
12/31/2019
% change
Noninterest bearing demand deposits
$
4,814,254
$
4,488,529
7
%
$
3,108,687
55
%
Money market and other
5,232,413
4,763,893
10
%
3,985,556
31
%
Saving deposits
300,770
308,943
(3
)%
274,151
10
%
Time deposits
3,986,475
4,446,991
(10
)%
5,158,970
(23
)%
Total deposit balances
$
14,333,912
$
14,008,356
2
%
$
12,527,364
14
%
Following is the deposit composition as a percentage of total
deposits as of December 31, 2020, September 30, 2020 and December
31, 2019 and a breakdown of cost of deposits for the quarters ended
December 31, 2020, September 30, 2020 and December 31, 2019:
Deposit Breakdown
Cost of Deposits
(dollars in thousands) (unaudited)
12/31/2020
9/30/2020
12/31/2019
Q4 2020
Q3 2020
Q4 2019
Noninterest bearing demand deposits
33.6
%
32.1
%
24.8
%
—
%
—
%
—
%
Money market and other
36.5
%
34.0
%
31.8
%
0.45
%
0.53
%
1.61
%
Saving deposits
2.1
%
2.2
%
2.2
%
1.17
%
1.19
%
1.12
%
Time deposits
27.8
%
31.7
%
41.2
%
0.98
%
1.30
%
2.29
%
Total deposit balances
100.0
%
100.0
%
100.0
%
0.48
%
0.64
%
1.49
%
Allowance for Credit
Losses
The 2020 fourth quarter provision for credit losses under the
CECL methodology was $27.5 million, compared with $22.0 million for
the preceding third quarter. This compares with a provision for
loan losses under the prior incurred loss methodology of $1.0
million for the 2019 fourth quarter.
The provision for credit losses for the 2020 fourth quarter
generally utilizes the most recent available Moody’s Analytics
Baseline scenario, as well as more specific information, including
updated CRE market data which reflects deterioration primarily in
the hospitality industry, updated qualitative factors in the
Company’s ACL methodology, and downgrades following the receipt of
updated financial statements of the borrowers. As such, the buildup
of the reserves in the 2020 fourth quarter was largely driven by
additional allocations made to the hotel and motel portfolio as the
Company continued to assess the full impact of the pandemic on this
sector of its portfolio.
Following is the Allowance for Credit Losses as of December 31,
2020, September 30, 2020 and December 31, 2019:
(dollars in thousands) (unaudited)
12/31/2020
9/30/2020
12/31/2019
Allowance for credit losses
$
206,741
$
179,849
$
94,144
Allowance for credit loss/loans
receivable
1.52
%
1.37
%
0.77
%
Allowance for credit losses/nonperforming
loans
167.80
%
169.40
%
96.03
%
Credit Quality
Following are the components of nonperforming assets as of
December 31, 2020, September 30, 2020 and December 31, 2019:
(dollars in thousands) (unaudited)
12/31/2020
9/30/2020
12/31/2019
Loans on nonaccrual status (1)
$
85,238
$
69,205
$
54,785
Delinquent loans 90 days or more on
accrual status (2)
614
1,537
7,547
Accruing troubled debt restructured
loans
37,354
35,429
35,709
Total nonperforming loans
123,206
106,171
98,041
Other real estate owned
20,121
18,410
24,091
Total nonperforming assets
$
143,327
$
124,581
$
122,132
(1)
Excludes delinquent SBA loans that are
guaranteed and currently in liquidation totaling $26.5 million,
$26.2 million, and $28.1 million, at December 31, 2020, September
30, 2020, and December 31, 2019, respectively.
(2)
Excludes PCI loans totaling $13.2 million
at December 31, 2019.
Following are the components of criticized loan balances as of
December 31, 2020, September 30, 2020 and December 31, 2019:
(dollars in thousands) (unaudited)
12/31/2020
9/30/2020
12/31/2019
Special Mention (3)
$
184,941
$
153,388
$
141,452
Classified (3)
366,557
318,542
259,291
Criticized
$
551,498
$
471,930
$
400,743
(3)
Balances include purchased loans which
were marked to fair value on the date of acquisition.
During the 2020 fourth quarter, net charge offs totaled
$608,000, or 0.02% of average loans receivable on an annualized
basis. This compares with net charge offs of $3.9 million, or 0.12%
of average loans receivable on an annualized basis for the 2020
third quarter and net charge offs for the 2019 fourth quarter of
$738,000, or 0.02% of average loans receivable on an annualized
basis.
Capital
At December 31, 2020, the Company and the Bank continued to
exceed all regulatory capital requirements to be classified as a
“well-capitalized” financial institution. Following are capital
ratios for the Company as of December 31, 2020, September 30, 2020
and December 31, 2019:
(unaudited)
12/31/2020
9/30/2020
12/31/2019
Minimum Guideline for
“Well-Capitalized” Bank
Common Equity Tier 1 Capital
10.94%
11.36%
11.76%
6.50%
Tier 1 Leverage Ratio
10.22%
10.02%
11.22%
5.00%
Tier 1 Risk-Based Ratio
11.64%
12.09%
12.51%
8.00%
Total Risk-Based Ratio
12.87%
13.19%
13.23%
10.00%
Following are tangible common equity (“TCE”) per share and TCE
as a percentage of tangible assets as of December 31, 2020,
September 30, 2020 and December 31, 2019:
(unaudited)
12/31/2020
9/30/2020
12/31/2019
Tangible common equity per share (1)
$12.81
$12.70
$12.40
Tangible common equity to tangible assets
(2)
9.50%
9.63%
10.27%
(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 10.
(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 10.
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.
Investor Conference Call
The Company previously announced that it will host an investor
conference call on Wednesday, January 27, 2021 at 9:30 a.m. Pacific
Time / 12:30 p.m. Eastern Time to review financial results for its
fourth quarter ended December 31, 2020 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
February 3, 2021, replay access code 10150976.
About Hope Bancorp, Inc.
Hope Bancorp, Inc. is the holding company of Bank of Hope, the
first and only super regional Korean-American bank in the United
States with $17.1 billion in total assets as of December 31, 2020.
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 and Alabama. The Bank also operates
SBA loan production offices in Seattle, Denver, Dallas, Atlanta,
Portland, Oregon, New York City, Northern California and Houston;
commercial loan production offices in Northern California and
Seattle; residential mortgage loan production offices in Southern
California; and a representative office in Seoul, Korea. Bank of
Hope specializes in core business banking products for small and
medium-sized businesses, with an emphasis in commercial real estate
and commercial lending, SBA lending and international trade
financing. Bank of Hope is a California-chartered bank, and its
deposits are insured by the FDIC to the extent provided by law.
Bank of Hope is an Equal Opportunity Lender. For additional
information, please go to bankofhope.com.By including the foregoing
website address link, the Company does not intend to and shall not
be deemed to incorporate by reference any material contained or
accessible therein.
Forward-Looking Statements
Some statements in this press release may constitute
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These forward-looking
statements relate to, among other things, expectations regarding
the business environment in which we operate, projections of future
performance, perceived opportunities in the market and statements
regarding our business strategies, objectives and vision.
Forward-looking statements include, but are not limited to,
statements preceded by, followed by or that include the words
“will,” “believes,” “expects,” “anticipates,” “intends,” “plans,”
“estimates” or similar expressions. With respect to any such
forward-looking statements, the Company claims the protection
provided for in the Private Securities Litigation Reform Act of
1995. These statements involve risks and uncertainties. The
Company’s actual results, performance or achievements may differ
significantly from the results, performance or achievements
expressed or implied in any forward-looking statements. The risks
and uncertainties include, but are not limited to: possible
deterioration in economic conditions in our areas of operation;
interest rate risk associated with volatile interest rates and
related asset-liability matching risk; liquidity risks; risk of
significant non-earning assets, and net credit losses that could
occur, particularly in times of weak economic conditions or times
of rising interest rates; the failure of or changes to assumptions
and estimates underlying the Company’s allowances for credit
losses, regulatory risks associated with current and future
regulations, and the COVID-19 pandemic and its impact on our
financial position, results of operations, liquidity, and
capitalization. For additional information concerning these and
other risk factors, see the Company’s most recent Annual Report on
Form 10-K 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
12/31/2020
9/30/2020
% change
12/31/2019
% change
Cash and due from banks
$
350,579
$
629,133
(44
)%
$
698,567
(50
)%
Securities available for sale, at fair
value
2,285,611
2,060,991
11
%
1,715,987
33
%
Federal Home Loan Bank (“FHLB”) stock and
other investments
105,591
97,305
9
%
97,659
8
%
Loans held for sale, at the lower of cost
or fair value
17,743
9,170
93
%
54,271
(67
)%
Loans receivable
13,563,213
13,120,225
3
%
12,276,007
10
%
Allowance for credit losses
(206,741
)
(179,849
)
(15
)%
(94,144
)
(120
)%
Net loans receivable
13,356,472
12,940,376
3
%
12,181,863
10
%
Accrued interest receivable
59,430
57,989
2
%
30,772
93
%
Premises and equipment, net
48,409
49,552
(2
)%
52,012
(7
)%
Bank owned life insurance
76,765
77,388
(1
)%
76,339
1
%
Goodwill
464,450
464,450
—
%
464,450
—
%
Servicing assets
12,692
13,718
(7
)%
16,417
(23
)%
Other intangible assets, net
9,708
10,239
(5
)%
11,833
(18
)%
Other assets
319,214
323,456
(1
)%
267,270
19
%
Total assets
$
17,106,664
$
16,733,767
2
%
$
15,667,440
9
%
Liabilities
Deposits
$
14,333,912
$
14,008,356
2
%
$
12,527,364
14
%
FHLB advances
250,000
200,000
25
%
625,000
(60
)%
Convertible notes, net
204,565
203,270
1
%
199,458
3
%
Subordinated debentures
104,178
103,889
—
%
103,035
1
%
Accrued interest payable
14,706
21,991
(33
)%
33,810
(57
)%
Other liabilities
145,558
155,700
(7
)%
142,762
2
%
Total liabilities
15,052,919
14,693,206
2
%
13,631,429
10
%
Stockholders’ Equity
Common stock, $0.001 par value
136
136
—
%
136
—
%
Capital surplus
1,434,916
1,432,773
—
%
1,428,066
—
%
Retained earnings
785,940
774,970
1
%
762,480
3
%
Treasury stock, at cost
(200,000
)
(200,000
)
—
%
(163,820
)
(22
)%
Accumulated other comprehensive gain,
net
32,753
32,682
—
%
9,149
258
%
Total stockholders’ equity
2,053,745
2,040,561
1
%
2,036,011
1
%
Total liabilities and stockholders’
equity
$
17,106,664
$
16,733,767
2
%
$
15,667,440
9
%
Common stock shares - authorized
150,000,000
150,000,000
150,000,000
Common stock shares - outstanding
123,264,864
123,260,760
125,756,543
Treasury stock shares
12,661,581
12,661,581
9,945,547
Hope Bancorp, Inc.
Selected Financial
Data
Unaudited (dollars in thousands,
except share data)
Three Months Ended
Twelve Months Ended
12/31/2020
9/30/2020
% change
12/31/2019
% change
12/31/2020
12/31/2019
% change
Interest and fees on loans
$
132,117
$
134,430
(2
)%
$
152,795
(14
)%
$
554,967
$
627,673
(12
)%
Interest on securities
9,014
9,848
(8
)%
10,737
(16
)%
39,362
46,295
(15
)%
Interest on federal funds sold and other
investments
598
942
(37
)%
2,241
(73
)%
4,549
10,818
(58
)%
Total interest income
141,729
145,220
(2
)%
165,773
(15
)%
598,878
684,786
(13
)%
Interest on deposits
16,934
22,871
(26
)%
45,428
(63
)%
110,369
190,158
(42
)%
Interest on other borrowings and
convertible notes
4,039
4,712
(14
)%
6,837
(41
)%
21,011
28,033
(25
)%
Total interest expense
20,973
27,583
(24
)%
52,265
(60
)%
131,380
218,191
(40
)%
Net interest income before provision for
credit losses
120,756
117,637
3
%
113,508
6
%
467,498
466,595
—
%
Provision for credit losses
27,500
22,000
25
%
1,000
2,650
%
95,000
7,300
1,201
%
Net interest income after provision for
credit losses
93,256
95,637
(2
)%
112,508
(17
)%
372,498
459,295
(19
)%
Service fees on deposit accounts
2,991
2,736
9
%
4,510
(34
)%
12,443
17,933
(31
)%
International service fees
696
987
(29
)%
780
(11
)%
3,139
3,926
(20
)%
Loan servicing fees, net
566
772
(27
)%
660
(14
)%
2,809
2,316
21
%
Wire transfer fees
867
892
(3
)%
1,100
(21
)%
3,577
4,558
(22
)%
Net gains on sales of other loans
1,618
2,853
(43
)%
1,876
(14
)%
8,004
4,487
78
%
Net gains on sales of securities available
for sale
—
7,531
(100
)%
—
—
%
7,531
282
2,571
%
Other income and fees
4,677
1,742
168
%
4,053
15
%
15,929
16,181
(2
)%
Total noninterest income
11,415
17,513
(35
)%
12,979
(12
)%
53,432
49,683
8
%
Salaries and employee benefits
40,911
40,659
1
%
39,841
3
%
162,922
161,174
1
%
Occupancy
7,200
7,264
(1
)%
7,516
(4
)%
28,917
30,735
(6
)%
Furniture and equipment
4,122
4,513
(9
)%
4,260
(3
)%
17,548
15,583
13
%
Advertising and marketing
1,695
1,601
6
%
2,462
(31
)%
6,284
9,146
(31
)%
Data processing and communications
2,235
2,204
1
%
2,416
(7
)%
9,344
10,780
(13
)%
Professional fees
1,847
1,513
22
%
5,948
(69
)%
8,170
22,528
(64
)%
FDIC assessment
1,166
1,167
—
%
772
51
%
5,544
3,882
43
%
Credit related expenses
2,001
1,793
12
%
1,717
17
%
6,817
4,975
37
%
OREO (income) expense, net
(86
)
1,770
N/A
(122
)
(30
)%
3,865
(934
)
N/A
FHLB prepayment fee
—
3,584
(100
)%
—
—
%
3,584
—
100
%
Branch restructuring costs
2,367
—
100
%
—
100
%
2,367
—
100
%
Other
7,605
7,338
4
%
5,619
35
%
28,277
24,759
14
%
Total noninterest expense
71,063
73,406
(3
)%
70,429
1
%
283,639
282,628
—
%
Income before income taxes
33,608
39,744
(15
)%
55,058
(39
)%
142,291
226,350
(37
)%
Income tax provision
5,289
9,254
(43
)%
12,049
(56
)%
30,776
55,310
(44
)%
Net income
$
28,319
$
30,490
(7
)%
$
43,009
(34
)%
$
111,515
$
171,040
(35
)%
Earnings per Common Share:
Basic
$
0.23
$
0.25
$
0.34
$
0.90
$
1.35
Diluted
$
0.23
$
0.25
$
0.34
$
0.90
$
1.35
Average Shares Outstanding:
Basic
123,264,172
123,251,336
126,410,924
123,501,401
126,598,564
Diluted
123,874,229
123,536,765
126,835,273
123,889,343
126,875,320
Hope Bancorp, Inc.
Selected Financial
Data
Unaudited
At or for the Three Months
Ended (Annualized)
At or for the Twelve Months
Ended
Profitability measures:
12/31/2020
9/30/2020
12/31/2019
12/31/2020
12/31/2019
ROA
0.67
%
0.72
%
1.13
%
0.68
%
1.12
%
ROE
5.54
%
5.98
%
8.46
%
5.49
%
8.63
%
ROTCE (1)
7.21
%
7.80
%
11.04
%
7.16
%
11.37
%
Net interest margin
3.02
%
2.91
%
3.16
%
3.00
%
3.27
%
Efficiency ratio
53.77
%
54.31
%
55.68
%
54.45
%
54.74
%
Noninterest expense / average assets
1.69
%
1.73
%
1.85
%
1.72
%
1.86
%
1 Average tangible equity is calculated by
subtracting average goodwill and average core deposit intangibles
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
Twelve Months Ended
Pre-tax acquisition accounting
adjustments
12/31/2020
9/30/2020
12/31/2019
12/31/2020
12/31/2019
Accretion on acquired non-impaired
loans
$
452
$
747
$
1,945
$
2,916
$
7,956
Accretion on acquired credit
deteriorated/purchased credit impaired loans
3,064
4,584
5,958
20,143
23,874
Amortization of premium on low income
housing tax credits
(71
)
(71
)
(76
)
(283
)
(303
)
Amortization of premium on acquired FHLB
borrowings
—
—
—
—
1,280
Accretion of discount on acquired
subordinated debt
(289
)
(287
)
(281
)
(1,143
)
(1,107
)
Amortization of core deposit
intangibles
(531
)
(531
)
(557
)
(2,125
)
(2,228
)
Total acquisition accounting
adjustments
$
2,625
$
4,442
$
6,989
$
19,508
$
29,472
Hope Bancorp, Inc.
Selected Financial
Data
Unaudited (dollars in
thousands)
Three Months Ended
12/31/2020
9/30/2020
12/31/2019
Interest
Annualized
Interest
Annualized
Interest
Annualized
Average
Income/
Average
Average
Income/
Average
Average
Income/
Average
Balance
Expense
Yield/Cost
Balance
Expense
Yield/Cost
Balance
Expense
Yield/Cost
INTEREST EARNING ASSETS:
Loans, including loans held for sale
$
13,046,443
$
132,117
4.03
%
$
12,728,558
$
134,430
4.20
%
$
12,036,477
$
152,795
5.04
%
Securities available for sale
2,123,025
9,014
1.69
%
2,010,907
9,848
1.95
%
1,755,887
10,737
2.43
%
FHLB stock and other investments
749,281
598
0.32
%
1,342,641
942
0.28
%
463,615
2,241
1.92
%
Total interest earning assets
$
15,918,749
$
141,729
3.54
%
$
16,082,106
$
145,220
3.59
%
$
14,255,979
$
165,773
4.61
%
INTEREST BEARING LIABILITIES:
Deposits:
Demand, interest bearing
$
4,910,649
$
5,541
0.45
%
$
4,895,101
$
6,546
0.53
%
$
3,682,300
$
14,924
1.61
%
Savings
305,341
898
1.17
%
302,882
907
1.19
%
265,008
748
1.12
%
Time deposits
4,240,500
10,495
0.98
%
4,703,640
15,418
1.30
%
5,148,092
29,756
2.29
%
Total interest bearing deposits
9,456,490
16,934
0.71
%
9,901,623
22,871
0.92
%
9,095,400
45,428
1.98
%
FHLB advances
204,900
657
1.28
%
353,587
1,323
1.49
%
608,052
2,921
1.91
%
Convertible notes, net
203,807
2,383
4.58
%
202,470
2,370
4.58
%
198,669
2,334
4.60
%
Subordinated debentures
100,118
999
3.90
%
99,819
1,019
3.99
%
98,972
1,582
6.25
%
Total interest bearing liabilities
9,965,315
$
20,973
0.84
%
10,557,499
$
27,583
1.04
%
10,001,093
$
52,265
2.07
%
Noninterest bearing demand deposits
4,637,584
4,239,108
2,999,048
Total funding liabilities/cost of
funds
$
14,602,899
0.57
%
$
14,796,607
0.74
%
$
13,000,141
1.60
%
Net interest income/net interest
spread
$
120,756
2.70
%
$
117,637
2.55
%
$
113,508
2.54
%
Net interest margin
3.02
%
2.91
%
3.16
%
Cost of deposits:
Noninterest bearing demand deposits
$
4,637,584
$
—
—
%
$
4,239,108
$
—
—
%
$
2,999,048
$
—
—
%
Interest bearing deposits
9,456,490
16,934
0.71
%
9,901,623
22,871
0.92
%
9,095,400
45,428
1.98
%
Total deposits
$
14,094,074
$
16,934
0.48
%
$
14,140,731
$
22,871
0.64
%
$
12,094,448
$
45,428
1.49
%
Hope Bancorp, Inc.
Selected Financial
Data
Unaudited (dollars in
thousands)
Twelve Months Ended
12/31/2020
12/31/2019
Interest
Interest
Average
Income/
Average
Average
Income/
Average
Balance
Expense
Yield/Cost
Balance
Expense
Yield/Cost
INTEREST EARNING ASSETS:
Loans, including loans held for sale
$
12,698,523
$
554,967
4.37
%
$
11,998,675
$
627,673
5.23
%
Securities available for sale
1,899,948
39,362
2.07
%
1,796,412
46,295
2.58
%
FHLB stock and other investments
982,419
4,549
0.46
%
453,452
10,818
2.39
%
Total interest earning assets
$
15,580,890
$
598,878
3.84
%
$
14,248,539
$
684,786
4.81
%
INTEREST BEARING LIABILITIES:
Deposits:
Demand, interest bearing
$
4,729,438
$
34,529
0.73
%
$
3,319,556
$
57,731
1.74
%
Savings
291,655
3,475
1.19
%
241,968
2,596
1.07
%
Time deposits
4,698,503
72,365
1.54
%
5,556,983
129,831
2.34
%
Total interest bearing deposits
9,719,596
110,369
1.14
%
9,118,507
190,158
2.09
%
FHLB advances
435,836
6,865
1.58
%
688,652
12,031
1.75
%
Convertible notes, net
201,859
9,457
4.61
%
196,835
9,264
4.64
%
Subordinated debentures
99,682
4,689
4.63
%
98,551
6,738
6.74
%
Total interest bearing liabilities
10,456,973
$
131,380
1.26
%
10,102,545
$
218,191
2.16
%
Noninterest bearing demand deposits
3,840,935
2,948,212
Total funding liabilities/cost of
funds
$
14,297,908
0.92
%
$
13,050,757
1.67
%
Net interest income/net interest
spread
$
467,498
2.58
%
$
466,595
2.65
%
Net interest margin
3.00
%
3.27
%
Cost of deposits:
Noninterest bearing demand deposits
$
3,840,935
$
—
—
%
$
2,948,212
$
—
—
%
Interest bearing deposits
9,719,596
110,369
1.14
%
9,118,507
190,158
2.09
%
Total deposits
$
13,560,531
$
110,369
0.81
%
$
12,066,719
$
190,158
1.58
%
Hope Bancorp, Inc.
Selected Financial
Data
Unaudited (dollars in
thousands)
Three Months Ended
Twelve Months Ended
AVERAGE BALANCES:
12/31/2020
9/30/2020
% change
12/31/2019
% change
12/31/2020
12/31/2019
% change
Loans receivable, including loans held for
sale
$
13,046,443
$
12,728,558
2
%
$
12,036,477
8
%
$
12,698,523
$
11,998,675
6
%
Investments
2,872,306
3,353,548
(14
)%
2,219,502
29
%
2,882,367
2,249,864
28
%
Interest earning assets
15,918,749
16,082,106
(1
)%
14,255,979
12
%
15,580,890
14,248,539
9
%
Total assets
16,824,700
17,020,795
(1
)%
15,228,488
10
%
16,515,102
15,214,412
9
%
Interest bearing deposits
9,456,490
9,901,623
(4
)%
9,095,400
4
%
9,719,596
9,118,507
7
%
Interest bearing liabilities
9,965,315
10,557,499
(6
)%
10,001,093
—
%
10,456,973
10,102,545
4
%
Noninterest bearing demand deposits
4,637,584
4,239,108
9
%
2,999,048
55
%
3,840,935
2,948,212
30
%
Stockholders’ equity
2,045,959
2,039,555
—
%
2,034,231
1
%
2,032,570
1,981,811
3
%
Net interest earning assets
5,953,434
5,524,607
8
%
4,254,886
40
%
5,123,917
4,145,994
24
%
LOAN PORTFOLIO COMPOSITION:
12/31/2020
9/30/2020
% change
12/31/2019
% change
Commercial loans
$
4,157,787
$
3,700,020
12
%
$
2,719,818
53
%
Real estate loans
8,772,134
8,713,536
1
%
8,666,901
1
%
Consumer and other loans
633,292
706,669
(10
)%
889,288
(29
)%
Loans, net of deferred loan fees and
costs
13,563,213
13,120,225
3
%
12,276,007
10
%
Allowance for credit losses
(206,741
)
(179,849
)
(15
)%
(94,144
)
(120
)%
Loans receivable, net
$
13,356,472
$
12,940,376
3
%
$
12,181,863
10
%
REAL ESTATE LOANS BY PROPERTY
TYPE:
12/31/2020
9/30/2020
% change
12/31/2019
% change
Retail buildings
$
2,293,396
$
2,311,516
(1
)%
$
2,298,872
—
%
Hotels/motels
1,634,287
1,675,960
(2
)%
1,709,189
(4
)%
Gas stations/car washes
892,110
824,378
8
%
844,081
6
%
Mixed-use facilities
750,867
754,096
—
%
785,882
(4
)%
Warehouses
1,091,389
1,022,657
7
%
1,030,876
6
%
Multifamily
518,498
518,295
—
%
465,397
11
%
Other
1,591,587
1,606,634
(1
)%
1,532,604
4
%
Total
$
8,772,134
$
8,713,536
1
%
$
8,666,901
1
%
DEPOSIT COMPOSITION:
12/31/2020
9/30/2020
% change
12/31/2019
% change
Noninterest bearing demand deposits
$
4,814,254
$
4,488,529
7
%
$
3,108,687
55
%
Money market and other
5,232,413
4,763,893
10
%
3,985,556
31
%
Saving deposits
300,770
308,943
(3
)%
274,151
10
%
Time deposits
3,986,475
4,446,991
(10
)%
5,158,970
(23
)%
Total deposit balances
$
14,333,912
$
14,008,356
2
%
$
12,527,364
14
%
DEPOSIT COMPOSITION (%):
12/31/2020
9/30/2020
12/31/2019
Noninterest bearing demand deposits
33.6
%
32.1
%
24.8
%
Money market and other
36.5
%
34.0
%
31.8
%
Saving deposits
2.1
%
2.2
%
2.2
%
Time deposits
27.8
%
31.7
%
41.2
%
Total deposit balances
100.0
%
100.0
%
100.0
%
Hope Bancorp, Inc.
Selected Financial
Data
Unaudited (dollars in thousands,
except per share data)
CAPITAL RATIOS:
12/31/2020
9/30/2020
12/31/2019
Total stockholders’ equity
$
2,053,745
$
2,040,561
$
2,036,011
Common equity tier 1 ratio
10.94
%
11.36
%
11.76
%
Tier 1 risk-based capital ratio
11.64
%
12.09
%
12.51
%
Total risk-based capital ratio
12.87
%
13.19
%
13.23
%
Tier 1 leverage ratio
10.22
%
10.02
%
11.22
%
Total risk weighted assets
$
14,341,456
$
13,691,823
$
13,208,299
Book value per common share
$
16.66
$
16.55
$
16.19
Tangible common equity to tangible assets
1
9.50
%
9.63
%
10.27
%
Tangible common equity per share 1
$
12.81
$
12.70
$
12.40
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.
Three Months Ended
Twelve Months Ended
ALLOWANCE FOR CREDIT LOSSES
CHANGES:
12/31/2020
9/30/2020
6/30/2020
3/31/2020
12/31/2019
12/31/2020
12/31/2019
Balance at beginning of period
$
179,849
$
161,771
$
144,923
$
94,144
$
93,882
$
94,144
$
92,557
CECL day 1 adoption impact
—
—
—
26,200
—
26,200
—
Provision for credit losses
27,500
22,000
17,500
28,000
1,000
95,000
7,300
Recoveries
2,207
2,428
252
2,536
939
7,423
3,736
Charge offs
(2,815)
(6,350)
(904)
(5,957)
(1,677)
(16,026)
(8,109)
PCI allowance adjustment
—
—
—
—
—
—
(1,340)
Balance at end of period
$
206,741
$
179,849
$
161,771
$
144,923
$
94,144
$
206,741
$
94,144
Net charge offs/average loans receivable
(annualized)
0.02
%
0.12
%
0.02
%
0.11
%
0.02
%
0.07
%
0.04
%
Three Months Ended
Twelve Months Ended
NET CHARGE OFFS (RECOVERIES) BY
TYPE:
12/31/2020
9/30/2020
6/30/2020
3/31/2020
12/31/2019
12/31/2020
12/31/2019
Real estate loans
$
(726)
$
5,154
$
148
$
2,230
$
203
$
6,806
$
(301)
Commercial loans
1,167
(1,451)
240
676
245
632
3,490
Consumer loans
167
219
264
515
290
1,165
1,184
Total net charge offs
$
608
$
3,922
$
652
$
3,421
$
738
$
8,603
$
4,373
Hope Bancorp, Inc.
Selected Financial
Data
Unaudited (dollars in
thousands)
NONPERFORMING ASSETS:
12/31/2020
9/30/2020
6/30/2020
3/31/2020
12/31/2019
Loans on nonaccrual status 1
$
85,238
$
69,205
$
82,137
$
72,639
$
54,785
Delinquent loans 90 days or more on
accrual status
614
1,537
430
387
7,547
Accruing troubled debt restructured
loans
37,354
35,429
44,026
43,789
35,709
Total nonperforming loans
123,206
106,171
126,593
116,815
98,041
Other real estate owned
20,121
18,410
20,983
23,039
24,091
Total nonperforming assets
$
143,327
$
124,581
$
147,576
$
139,854
$
122,132
Nonperforming assets/total assets
0.84
%
0.74
%
0.86
%
0.87
%
0.78
%
Nonperforming assets/loans receivable
& OREO
1.06
%
0.95
%
1.14
%
1.11
%
0.99
%
Nonperforming assets/total capital
6.98
%
6.11
%
7.27
%
6.93
%
6.00
%
Nonperforming loans/loans receivable
0.91
%
0.81
%
0.98
%
0.93
%
0.80
%
Nonaccrual loans/loans receivable
0.63
%
0.53
%
0.64
%
0.58
%
0.45
%
Allowance for credit losses/loans
receivable
1.52
%
1.37
%
1.26
%
1.15
%
0.77
%
Allowance for credit losses/nonaccrual
loans
242.55
%
259.88
%
196.95
%
199.51
%
171.84
%
Allowance for credit losses/nonperforming
loans
167.80
%
169.40
%
127.79
%
124.06
%
96.03
%
Allowance for credit losses/nonperforming
assets
144.24
%
144.36
%
109.62
%
103.62
%
77.08
%
1 Excludes delinquent SBA loans that are
guaranteed and currently in liquidation totaling $26.5 million,
$26.2 million, $30.3 million, $28.8 million, and $28.1 million, at
December 31, 2020, September 30, 2020, June 30, 2020, March 31,
2020, and December 31, 2019, respectively.
NONACCRUAL LOANS BY TYPE:
12/31/2020
9/30/2020
6/30/2020
3/31/2020
12/31/2019
Real estate loans
$
67,450
$
51,739
$
64,060
$
56,787
$
40,935
Commercial loans
13,911
13,022
12,079
12,747
10,893
Consumer loans
3,877
4,444
5,998
3,105
2,957
Total nonaccrual loans
$
85,238
$
69,205
$
82,137
$
72,639
$
54,785
BREAKDOWN OF ACCRUING TROUBLED DEBT
RESTRUCTURED LOANS:
12/31/2020
9/30/2020
6/30/2020
3/31/2020
12/31/2019
Retail buildings
$
5,408
$
5,451
$
5,526
$
5,014
$
4,215
Gas stations/car washes
219
224
1,789
1,675
—
Mixed-use facilities
3,521
4,323
3,583
3,157
3,175
Warehouses
7,296
7,320
13,433
13,381
10,381
Other 2
20,910
18,111
19,695
20,562
17,938
Total
$
37,354
$
35,429
$
44,026
$
43,789
$
35,709
2 Includes commercial business, consumer
and other loans
Hope Bancorp, Inc.
Selected Financial
Data
Unaudited (dollars in
thousands)
ACCRUING DELINQUENT LOANS 30-89 DAYS
PAST DUE:
12/31/2020
9/30/2020
6/30/2020
3/31/2020
12/31/2019
30 - 59 days
$
11,347
$
5,962
$
18,857
$
37,866
$
14,433
60 - 89 days
16,826
58,065
29,975
2,605
4,712
Total
$
28,173
$
64,027
$
48,832
$
40,471
$
19,145
ACCRUING DELINQUENT LOANS 30-89 DAYS
PAST DUE BY TYPE:
12/31/2020
9/30/2020
6/30/2020
3/31/2020
12/31/2019
Real estate loans
$
15,689
$
60,510
$
27,245
$
23,753
$
7,689
Commercial loans
3,393
624
5,987
4,583
692
Consumer loans
9,091
2,893
15,600
12,135
10,764
Total
$
28,173
$
64,027
$
48,832
$
40,471
$
19,145
CRITICIZED LOANS:
12/31/2020
9/30/2020
6/30/2020
3/31/2020
12/31/2019
Special mention
$
184,941
$
153,388
$
127,149
$
122,279
$
141,452
Substandard
366,556
311,902
299,357
278,771
259,278
Doubtful/Loss
1
6,640
11
12
13
Total criticized loans
$
551,498
$
471,930
$
426,517
$
401,062
$
400,743
Hope Bancorp, Inc.
Selected Financial
Data
Unaudited (dollars in
thousands)
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. A reconciliation of the GAAP to non-GAAP financial
measures utilized by management is provided below.
Three Months Ended
Twelve Months Ended
12/31/2020
9/30/2020
12/31/2019
12/31/2020
12/31/2019
RETURN ON AVERAGE TANGIBLE COMMON
EQUITY
Average stockholders’ equity
$
2,045,959
$
2,039,555
$
2,034,231
$
2,032,570
$
1,981,811
Less: Goodwill and core deposit intangible
assets, net
(474,467
)
(475,010
)
(476,596
)
(475,263
)
(477,444
)
Average tangible common equity
$
1,571,492
$
1,564,545
$
1,557,635
$
1,557,307
$
1,504,367
Net Income
$
28,319
$
30,490
$
43,009
$
111,515
$
171,040
Return on average tangible common equity
(annualized)
7.21
%
7.80
%
11.04
%
7.16
%
11.37
%
TANGIBLE COMMON EQUITY
12/31/2020
9/30/2020
12/31/2019
Total stockholders’ equity
$
2,053,745
$
2,040,561
$
2,036,011
Less: Goodwill and core deposit intangible
assets, net
(474,158
)
(474,689
)
(476,283
)
Tangible common equity
$
1,579,587
$
1,565,872
$
1,559,728
Total assets
$
17,106,664
$
16,733,767
$
15,667,440
Less: Goodwill and core deposit intangible
assets, net
(474,158
)
(474,689
)
(476,283
)
Tangible assets
$
16,632,506
$
16,259,078
$
15,191,157
Common shares outstanding
123,264,864
123,260,760
125,756,543
Tangible common equity to tangible
assets
9.50
%
9.63
%
10.27
%
Tangible common equity per share
$
12.81
$
12.70
$
12.40
Three Months Ended
Twelve Months Ended
12/31/2020
9/30/2020
12/31/2019
12/31/2020
12/31/2019
PRE-TAX PRE-PROVISION INCOME
Net income
$
28,319
$
30,490
$
43,009
$
111,515
$
171,040
Add back - tax provision
5,289
9,254
12,049
30,776
55,310
Add back - provision for credit losses
27,500
22,000
1,000
95,000
7,300
Pre-tax pre-provision income
$
61,108
$
61,744
$
56,058
$
237,291
$
233,650
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210126006095/en/
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
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