Hope Bancorp, Inc. (the “Company”) (NASDAQ: HOPE), the holding
company of Bank of Hope (the “Bank”), today reported unaudited
financial results for its first quarter ended March 31, 2021.
For the three months ended March 31, 2021, net income totaled
$43.7 million, or $0.35 per diluted common share, representing an
increase of 54% from $28.3 million, or $0.23 per diluted common
share in the fourth quarter of 2020 and an increase of 68% from
$26.0 million, or $0.21 per diluted common share, in the year-ago
first quarter.
“First quarter results were solid, reflecting the continued
benefits of the operational improvements that we implemented in
2020,” said Kevin S. Kim, Chairman, President and Chief Executive
Officer of Hope Bancorp, Inc. “We continued to support our
customers in this pandemic-challenged business environment by
providing $305 million in the second round of PPP funding, which
contributed to new loan originations totaling $847 million in the
first quarter. Noninterest bearing deposits increased 13% from
year-end and accounted for a record high 38% of total deposits at
March 31, 2021. This contributed to a sixth consecutive quarter of
declining cost of deposits, which supported another quarter of net
interest margin expansion for the Company. Additionally, we
continued to proactively manage our expenses which resulted in
noninterest expense to average assets improving to 1.65% from 1.69%
in the preceding quarter.
“During the first quarter, we saw an expected increase in our
criticized assets due to the impact COVID-19 has had on the travel
industry, but remain well reserved given the considerable build up
of our allowance for credit losses last year in anticipation of the
eventual migration of these credits in the normal course of the
credit administration process. We are, however, pleased to see the
continued improvements in the economy, which supported a
significantly lower provision expense this quarter and contributed
to a 54% increase in net income quarter-over-quarter. With the
vaccination campaign in the U.S. well underway and the
COVID-related restrictions gradually being lifted, we have greater
confidence in our ability to deliver enhanced performance as the
year proceeds.”
Q1 2021 Highlights
- Net interest income before provision for credit losses
increased 2% quarter-over-quarter to $122.6 million, benefiting
from reduced interest expense due to lower cost of deposits.
- Net interest margin expanded 4 basis points
quarter-over-quarter.
- Noninterest bearing demand deposits increased 13%
quarter-over-quarter and increased as a percentage of total
deposits to 38% from 34% at year-end 2020.
- Cost of interest bearing deposits decreased 15 basis points and
total cost of deposits decreased 12 basis points
quarter-over-quarter continuing a six-quarter trend of declining
deposit costs.
- Loan originations totaled $847.1 million, including a second
round of PPP fundings of $304.7 million, and contributed to a 1.0%
increase in loans receivable quarter-over-quarter, or 4.1%
annualized.
- Efficiency ratio improved to 53.61% from 53.77%
quarter-over-quarter and noninterest expense to average assets
improved to 1.65% from 1.69%.
- Net income increased 54% quarter-over-quarter and totaled $43.7
million, or $0.35 per diluted common share.
Financial Highlights
(dollars in thousands, except per share
data) (unaudited)
At or for the Three Months
Ended
3/31/2021
12/31/2020
3/31/2020
Net income
$
43,687
$
28,319
$
25,953
Diluted earnings per share
$
0.35
$
0.23
$
0.21
Net interest income before provision for
credit losses
$
122,579
$
120,756
$
119,291
Net interest margin
3.06
%
3.02
%
3.31
%
Noninterest income
$
8,804
$
11,415
$
13,264
Noninterest expense
$
70,431
$
71,063
$
72,140
Net loans receivable
$
13,494,686
$
13,356,472
$
12,438,493
Deposits
$
14,301,269
$
14,333,912
$
12,836,567
Total cost of deposits
0.36
%
0.48
%
1.34
%
Nonaccrual loans(1)
$
109,858
$
85,238
$
72,639
Nonperforming loans to loans
receivable(1)
1.11
%
0.91
%
0.93
%
ACL to loans receivable
1.52
%
1.52
%
1.15
%
ACL to nonaccrual loans(1)
189.28
%
242.55
%
199.51
%
ACL to nonperforming assets(1)
121.94
%
144.24
%
103.62
%
Provision for credit losses
$
3,300
$
27,500
$
28,000
Net charge offs
$
2,098
$
608
$
3,421
Return on average assets (“ROA”)
1.02
%
0.67
%
0.67
%
Return on average equity (“ROE”)
8.53
%
5.54
%
5.12
%
Return on average tangible common equity
(“ROTCE”)(2)
11.11
%
7.21
%
6.69
%
Noninterest expense / average assets
1.65
%
1.69
%
1.87
%
Efficiency ratio
53.61
%
53.77
%
54.42
(1) Excludes delinquent SBA loans that are
guaranteed and currently in liquidation.
(2) Return on average tangible common
equity is a non-GAAP financial measure. A reconciliation of the
Company’s return on average tangible common equity is provided in
the accompanying financial information on Table Page 9.
Operating Results for the 2021 First
Quarter
Net interest income before provision for credit losses for the
2021 first quarter increased 2% to $122.6 million from $120.8
million in the 2020 fourth quarter and increased 3% from $119.3
million in the 2020 first quarter. The Company attributed the
increase in net interest income primarily to meaningful reductions
in interest expense due to lower trending cost of deposits.
The net interest margin for the 2021 first quarter increased 4
basis points to 3.06% from 3.02% in the preceding 2020 fourth
quarter, reflecting the benefits of lower deposit costs, partially
offset by lower weighted average yield on loans. The net interest
margin in the prior-year first quarter was 3.31%.
The weighted average yield on loans for the 2021 first quarter
was 3.94%, compared with 4.03% in the preceding fourth quarter and
5.06% in the year-ago first quarter.
The weighted average cost of deposits for the 2021 first quarter
decreased for the sixth consecutive quarter to 0.36%, representing
a 12 basis point decrease from 0.48% for the 2020 fourth quarter
and a 98 basis point decrease from 1.34% for the 2020 first
quarter. The Company attributed the significant improvements in the
weighted average cost of deposits to a continuing shift in its
deposit mix to lower-cost core deposits and the ongoing downward
repricing of interest bearing deposits. The cost of interest
bearing deposits was 0.56%, 0.71% and 1.76% at March 31, 2021,
December 31, 2020 and March 31, 2020, respectively.
Noninterest income totaled $8.8 million for the 2021 first
quarter, compared with $11.4 million in the preceding fourth
quarter. The largest factors contributing to the decrease included
a $1.5 million decline in quarter-over-quarter swap fee income and
a $1.2 million reduction in deposit service fees which was largely
attributable to the Company’s exiting certain money service
business accounts. These decreases were partially offset by
increases in loan servicing fees and gain on sales of residential
mortgage loans. Noninterest income in the year-ago first quarter
totaled $13.3 million.
Noninterest expense for the 2021 first quarter decreased to
$70.4 million from $71.1 million in the preceding fourth quarter
and $72.1 million in the year-ago first quarter.
Salaries and employee benefits expense for the 2021 first
quarter increased 1% to $41.2 million from $40.9 million in the
preceding fourth quarter and included higher payroll taxes and 401k
contributions partially offset by an increase in loan origination
costs of $1.4 million related to the second round of PPP funding.
On a year-over-year basis, salaries and employee benefits expense
decreased 3% from $42.5 million in the 2020 first quarter.
The Company’s efficiency ratio for the 2021 first quarter
improved to 53.61% from 53.77% for the preceding fourth quarter and
from 54.42% for the year-ago first quarter. Noninterest expense as
a percentage of average assets improved to 1.65% for the 2021 first
quarter from 1.69% for the 2020 fourth quarter and from 1.87% for
the 2020 first quarter.
The effective tax rate for the 2021 first quarter was 24.2%,
compared with 15.7% for the preceding fourth quarter and 19.9% in
the year-ago first quarter. The Company noted that its effective
tax rate for 2020 fourth quarter reflected a lower tax provision
based on adjustments to applicable state apportionment factors.
Balance Sheet Summary
New loan originations funded during the 2021 first quarter
totaled $847.1 million and included second round PPP funding of
$304.7 million, traditional SBA loan production of $36.8 million
and residential mortgage loan originations of $69.8 million. For
the preceding 2020 fourth quarter, new loan originations funded
totaled $844.2 million, including SBA loan production of $25.5
million, residential mortgage loan originations of $62.5 million
and fundings related to two new warehouse mortgage lines of credit
of $106.8 million. In the year-ago first quarter, new loan
originations funded totaled $624.5 million, including SBA loan
production of $49.8 million and residential mortgage loan
originations of $37.4 million. There were no new warehouse mortgage
lines of credit established in the 2021 and 2020 first
quarters.
At March 31, 2021, loans receivable increased 1% to $13.70
billion from $13.56 billion at December 31, 2020 and increased 9%
from $12.58 billion at March 31, 2020.
Total deposits at March 31, 2021 amounted to $14.30 billion,
down slightly from $14.33 billion at December 31, 2020 but up 11%
from $12.84 billion a year ago at March 31, 2020. Reflecting a
continuing positive shift in the mix of deposits, noninterest
bearing demand deposits increased 13% quarter-over-quarter and
increased 80% year-over-year and accounted for 38%, 34% and 24% of
total deposits at March 31, 2021, December 31, 2020 and March 31,
2020, respectively.
Following is the deposit composition as of March 31, 2021,
December 31, 2020 and March 31, 2020:
(dollars in thousands) (unaudited)
3/31/2021
12/31/2020
% change
3/31/2020
% change
Noninterest bearing demand deposits
$
5,427,174
$
4,814,254
13
%
$
3,010,143
80
%
Money market and other
5,009,419
5,232,413
(4
)%
4,851,000
3
%
Saving deposits
305,326
300,770
2
%
272,577
12
%
Time deposits
3,559,350
3,986,475
(11
)%
4,702,847
(24
)%
Total deposit balances
$
14,301,269
$
14,333,912
—
%
$
12,836,567
11
%
Following is the deposit composition as a percentage of total
deposits and a breakdown of cost of deposits as of and for the
quarters ended March 31, 2021, December 31, 2020 and March 31,
2020:
Deposit Breakdown
Cost of Deposits
(dollars in thousands) (unaudited)
3/31/2021
12/31/2020
3/31/2020
Q1 2021
Q4 2020
Q1 2020
Noninterest bearing demand deposits
38.0
%
33.6
%
23.5
%
—
%
—
%
—
%
Money market and other
35.0
%
36.5
%
37.8
%
0.42
%
0.45
%
1.42
%
Saving deposits
2.1
%
2.1
%
2.1
%
1.17
%
1.17
%
1.19
%
Time deposits
24.9
%
27.8
%
36.6
%
0.69
%
0.98
%
2.09
%
Total deposit balances
100.0
%
100.0
%
100.0
%
0.36
%
0.48
%
1.34
%
Allowance for Credit
Losses
The 2021 first quarter provision for credit losses under the
CECL methodology was $3.3 million, compared with $27.5 million for
the preceding fourth quarter and $28.0 million for the 2020 first
quarter. The provision for credit losses for the 2021 first quarter
reflects updated macroeconomic variables incorporating the Moody’s
Analytics Consensus scenario that continue to show improving trends
that support a strong economic recovery and taking into account the
Company’s significant buildup in reserves in prior periods in
consideration of the pandemic’s expected impact on its loan
portfolio, as well as its low level of credit losses.
Following is the Allowance for Credit Losses as of March 31,
2021, December 31, 2020 and March 31, 2020:
(dollars in thousands) (unaudited)
3/31/2021
12/31/2020
3/31/2020
Allowance for credit losses
$
207,943
$
206,741
$
144,923
Allowance for credit loss/loans
receivable
1.52
%
1.52
%
1.15
%
Allowance for credit losses/nonperforming
loans
136.79
%
167.80
%
124.06
%
Credit Quality
Following are the components of nonperforming assets as of March
31, 2021, December 31, 2020 and March 31, 2020:
(dollars in thousands) (unaudited)
3/31/2021
12/31/2020
3/31/2020
Loans on nonaccrual status (1)
$
109,858
$
85,238
$
72,639
Delinquent loans 90 days or more on
accrual status
384
614
387
Accruing troubled debt restructured
loans
41,773
37,354
43,789
Total nonperforming loans
152,015
123,206
116,815
Other real estate owned
18,515
20,121
23,039
Total nonperforming assets
$
170,530
$
143,327
$
139,854
(1) Excludes delinquent SBA loans that are
guaranteed and currently in liquidation totaling $25.0 million,
$26.5 million and $28.8 million, at March 31, 2021, December 31,
2020 and March 31, 2020, respectively.
The $24.6 million increase in loans on nonaccrual status largely
reflects the addition of a $23.5 million retail commercial real
estate loan. The Company noted that this was a unique situation due
to the borrower’s involvement in a legal dispute and not reflective
of any systemic deterioration for these property types.
Following are the components of criticized loan balances as of
March 31, 2021, December 31, 2020 and March 31, 2020:
(dollars in thousands) (unaudited)
3/31/2021
12/31/2020
3/31/2020
Special Mention
$
280,974
$
184,941
$
122,279
Classified
379,048
366,557
278,783
Criticized
$
660,022
$
551,498
$
401,062
The increase in criticized loans quarter-over-quarter primarily
reflects downgrades in the Company’s hotel/motel portfolio to the
Special Mention category. The Company noted that the performance of
these loans was consistent with expectations when reserves were
increased in 2020 and that no new issues for these borrowers have
emerged.
Net charge offs in the 2021 first quarter totaled $2.1 million,
or 0.06% of average loans receivable on an annualized basis. This
compares with net charge offs of $608,000, or 0.02% of average
loans receivable on an annualized basis for the 2020 fourth quarter
and $3.4 million, or 0.11% of average loans receivable on an
annualized basis for the 2020 first quarter.
Capital
At March 31, 2021, the Company and the Bank continued to exceed
all regulatory capital requirements to be classified as a
“well-capitalized” financial institution. Following are capital
ratios for the Company as of March 31, 2021, December 31, 2020 and
March 31, 2020:
Hope Bancorp, Inc. (unaudited)
3/31/2021
12/31/2020
3/31/2020
Minimum Guideline for
“Well-Capitalized” Bank
Common Equity Tier 1 Capital
11.08
%
10.94
%
11.44
%
6.50
%
Tier 1 Leverage Ratio
10.15
%
10.22
%
10.88
%
5.00
%
Tier 1 Risk-Based Ratio
11.78
%
11.64
%
12.19
%
8.00
%
Total Risk-Based Ratio
13.03
%
12.87
%
13.08
%
10.00
%
Following are tangible common equity (“TCE”) per share and TCE
as a percentage of tangible assets as of March 31, 2021, December
31, 2020 and March 31, 2020:
(unaudited)
3/31/2021
12/31/2020
3/31/2020
Tangible common equity per share (1)
$
12.73
$
12.81
$
12.52
Tangible common equity to tangible assets
(2)
9.40
%
9.50
%
9.92
%
(1) Tangible common equity represents
common equity less goodwill and net other intangible assets.
Tangible common equity per share represents tangible common equity
divided by the number of shares issued and outstanding. Both
tangible common equity and tangible common equity per share are
non-GAAP financial measures. A reconciliation of the Company’s
total stockholders’ equity to tangible common equity is provided in
the accompanying financial information on Table Page 9.
(2) Tangible assets represent total assets
less goodwill and net other intangible assets. Tangible common
equity to tangible assets is the ratio of tangible common equity
over tangible assets. Tangible common equity to tangible assets is
a non-GAAP financial measure. A reconciliation of the Company’s
total assets to tangible assets is provided in the accompanying
financial information on Table Page 9.
Investor Conference Call
The Company previously announced that it will host an investor
conference call on Wednesday, April 28, 2021 at 9:30 a.m. Pacific
Time / 12:30 p.m. Eastern Time to review financial results for its
first quarter ended March 31, 2021. Investors and analysts are
invited to access the conference call by dialing 866-235-9917
(domestic) or 412-902-4103 (international) and asking for the “Hope
Bancorp Call.” A presentation to accompany the earnings call will
be available at the Investor Relations section of Hope Bancorp’s
website at www.ir-hopebancorp.com. Other interested parties are
invited to listen to a live webcast of the call available at the
Investor Relations section of Hope Bancorp’s website. After the
live webcast, a replay will remain available at the Investor
Relations section of Hope Bancorp’s website for one year. A
telephonic replay of the call will be available at 877-344-7529
(domestic) or 412-317-0088 (international) for one week through May
5, 2021, replay access code 10154357.
About Hope Bancorp, Inc.
Hope Bancorp, Inc. is the holding company of Bank of Hope, the
first and only super regional Korean-American bank in the United
States with $17.2 billion in total assets as of March 31, 2021.
Headquartered in Los Angeles and serving a multi-ethnic population
of customers across the nation, Bank of Hope operates 53
full-service branches in California, Washington, Texas, Illinois,
New York, New Jersey, Virginia and Alabama. The Bank also operates
SBA loan production offices in Seattle, Denver, Dallas, Atlanta,
Portland, Oregon, New York City, Northern California and Houston;
commercial loan production offices in Northern California and
Seattle; residential mortgage loan production offices in Southern
California; and a representative office in Seoul, Korea. Bank of
Hope specializes in core business banking products for small and
medium-sized businesses, with an emphasis in commercial real estate
and commercial lending, SBA lending and international trade
financing. Bank of Hope is a California-chartered bank, and its
deposits are insured by the FDIC to the extent provided by law.
Bank of Hope is an Equal Opportunity Lender. For additional
information, please go to bankofhope.com. By including the
foregoing website address link, the Company does not intend to and
shall not be deemed to incorporate by reference any material
contained or accessible therein.
Forward-Looking Statements
Some statements in this press release may constitute
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These forward-looking
statements relate to, among other things, expectations regarding
the business environment in which we operate, projections of future
performance, perceived opportunities in the market and statements
regarding our business strategies, objectives and vision.
Forward-looking statements include, but are not limited to,
statements preceded by, followed by or that include the words
“will,” “believes,” “expects,” “anticipates,” “intends,” “plans,”
“estimates” or similar expressions. With respect to any such
forward-looking statements, the Company claims the protection
provided for in the Private Securities Litigation Reform Act of
1995. These statements involve risks and uncertainties. The
Company’s actual results, performance or achievements may differ
significantly from the results, performance or achievements
expressed or implied in any forward-looking statements. The risks
and uncertainties include, but are not limited to: possible
deterioration in economic conditions in our areas of operation;
interest rate risk associated with volatile interest rates and
related asset-liability matching risk; liquidity risks; risk of
significant non-earning assets, and net credit losses that could
occur, particularly in times of weak economic conditions or times
of rising interest rates; the failure of or changes to assumptions
and estimates underlying the Company’s allowances for credit
losses, regulatory risks associated with current and future
regulations; and the COVID-19 pandemic and its impact on our
financial position, results of operations, liquidity, and
capitalization. For additional information concerning these and
other risk factors, see the Company’s most recent Annual Report on
Form 10-K. The Company does not undertake, and specifically
disclaims any obligation, to update any forward-looking statements
to reflect the occurrence of events or circumstances after the date
of such statements except as required by law.
Hope Bancorp, Inc.
Selected Financial
Data
Unaudited (dollars in thousands,
except share and per share data)
Assets:
3/31/2021
12/31/2020
% change
3/31/2020
% change
Cash and due from banks
$
376,666
$
350,579
7
%
$
802,033
(53
)%
Securities available for sale, at fair
value
2,233,744
2,285,611
(2
)%
1,718,702
30
%
Federal Home Loan Bank (“FHLB”) stock and
other investments
102,242
105,591
(3
)%
96,956
5
%
Loans held for sale, at the lower of cost
or fair value
19,672
17,743
11
%
8,281
138
%
Loans receivable
13,702,629
13,563,213
1
%
12,583,416
9
%
Allowance for credit losses
(207,943
)
(206,741
)
1
%
(144,923
)
43
%
Net loans receivable
13,494,686
13,356,472
1
%
12,438,493
8
%
Accrued interest receivable
60,498
59,430
2
%
30,450
99
%
Premises and equipment, net
47,918
48,409
(1
)%
51,392
(7
)%
Bank owned life insurance
77,089
76,765
—
%
76,429
1
%
Goodwill
464,450
464,450
—
%
464,450
—
%
Servicing assets
12,084
12,692
(5
)%
14,847
(19
)%
Other intangible assets, net
9,198
9,708
(5
)%
11,302
(19
)%
Other assets
300,613
319,214
(6
)%
308,099
(2
)%
Total assets
$
17,198,860
$
17,106,664
1
%
$
16,021,434
7
%
Liabilities:
Deposits
$
14,301,269
$
14,333,912
—
%
$
12,836,567
11
%
FHLB advances
400,000
250,000
60
%
675,000
(41
)%
Convertible notes, net
215,504
204,565
5
%
200,716
7
%
Subordinated debentures
104,469
104,178
—
%
103,318
1
%
Accrued interest payable
8,611
14,706
(41
)%
30,436
(72
)%
Other liabilities
123,426
145,558
(15
)%
157,309
(22
)%
Total liabilities
$
15,153,279
$
15,052,919
1
%
$
14,003,346
8
%
Stockholders’ Equity:
Common stock, $0.001 par value
$
136
$
136
—
%
$
136
—
%
Capital surplus
1,417,137
1,434,916
(1
)%
1,429,275
(1
)%
Retained earnings
823,085
785,940
5
%
752,228
9
%
Treasury stock, at cost
(200,000
)
(200,000
)
—
%
(200,000
)
—
%
Accumulated other comprehensive gain,
net
5,223
32,753
(84
)%
36,449
(86
)%
Total stockholders’ equity
2,045,581
2,053,745
—
%
2,018,088
1
%
Total liabilities and stockholders’
equity
$
17,198,860
$
17,106,664
1
%
$
16,021,434
7
%
Common stock shares - authorized
150,000,000
150,000,000
150,000,000
Common stock shares - outstanding
123,480,494
123,264,864
123,169,404
Treasury stock shares
12,661,581
12,661,581
12,661,581
Hope Bancorp, Inc.
Selected Financial
Data
Unaudited (dollars in thousands,
except share and per share data)
Three Months Ended
3/31/2021
12/31/2020
% change
3/31/2020
% change
Interest and fees on loans
$
129,736
$
132,117
(2
)%
$
154,230
(16
)%
Interest on securities
7,915
9,014
(12
)%
10,609
(25
)%
Interest on federal funds sold and other
investments
642
598
7
%
2,029
(68
)%
Total interest income
138,293
141,729
(2
)%
166,868
(17
)%
Interest on deposits
12,770
16,934
(25
)%
41,113
(69
)%
Interest on other borrowings and
convertible notes
2,944
4,039
(27
)%
6,464
(54
)%
Total interest expense
15,714
20,973
(25
)%
47,577
(67
)%
Net interest income before provision for
credit losses
122,579
120,756
2
%
119,291
3
%
Provision for credit losses
3,300
27,500
(88
)%
28,000
(88
)%
Net interest income after provision for
credit losses
119,279
93,256
28
%
91,291
31
%
Service fees on deposit accounts
1,790
2,991
(40
)%
4,133
(57
)%
International service fees
841
696
21
%
790
6
%
Loan servicing fees, net
1,044
566
84
%
365
186
%
Wire transfer fees
844
867
(3
)%
998
(15
)%
Net gains on sales of other loans
2,096
1,618
30
%
1,855
13
%
Other income and fees
2,189
4,677
(53
)%
5,123
(57
)%
Total noninterest income
8,804
11,415
(23
)%
13,264
(34
)%
Salaries and employee benefits
41,216
40,911
1
%
42,502
(3
)%
Occupancy
6,967
7,200
(3
)%
7,410
(6
)%
Furniture and equipment
4,186
4,122
2
%
4,259
(2
)%
Advertising and marketing
1,625
1,695
(4
)%
1,673
(3
)%
Data processing and communications
2,737
2,235
22
%
2,631
4
%
Professional fees
2,903
1,847
57
%
3,300
(12
)%
FDIC assessment
1,255
1,166
8
%
1,559
(19
)%
Credit related expenses
2,218
2,001
11
%
1,662
33
%
OREO expense (income), net
281
(86
)
N/A
843
(67
)%
Branch restructuring costs
—
2,367
(100
)%
—
—
%
Other
7,043
7,605
(7
)%
6,301
12
%
Total noninterest expense
70,431
71,063
(1
)%
72,140
(2
)%
Income before income taxes
57,652
33,608
72
%
32,415
78
%
Income tax provision
13,965
5,289
164
%
6,462
116
%
Net income
$
43,687
$
28,319
54
%
$
25,953
68
%
Earnings Per Common Share:
Basic
$
0.35
$
0.23
$
0.21
Diluted
$
0.35
$
0.23
$
0.21
Weighted Average Shares Outstanding:
Basic
123,324,745
123,264,172
124,295,327
Diluted
124,336,130
123,874,229
124,676,296
Hope Bancorp, Inc.
Selected Financial
Data
Unaudited (dollars in thousands,
except share and per share data)
For the Three Months
Ended
(Annualized)
Profitability measures:
3/31/2021
12/31/2020
3/31/2020
ROA
1.02
%
0.67
%
0.67
%
ROE
8.53
%
5.54
%
5.12
%
ROTCE (1)
11.11
%
7.21
%
6.69
%
Net interest margin
3.06
%
3.02
%
3.31
%
Efficiency ratio
53.61
%
53.77
%
54.42
%
Noninterest expense / average assets
1.65
%
1.69
%
1.87
%
(1) Average tangible equity is calculated
by subtracting average goodwill and average core deposit intangible
assets from average stockholders’ equity. This is a non-GAAP
measure that we believe provides investors with information that is
useful in understanding our financial performance and position.
Three Months Ended
Pre-tax acquisition accounting
adjustments:
3/31/2021
12/31/2020
3/31/2020
Accretion on purchased non-impaired
loans
$
705
$
452
$
1,059
Accretion on purchased credit
deteriorated/purchased credit impaired loans
2,255
3,064
9,449
Amortization of premium on low income
housing tax credits
(73
)
(71
)
(71
)
Accretion of discount on acquired
subordinated debt
(290
)
(289
)
(283
)
Amortization of core deposit
intangibles
(509
)
(531
)
(531
)
Total acquisition accounting
adjustments
$
2,088
$
2,625
$
9,623
Hope Bancorp, Inc.
Selected Financial
Data
Unaudited (dollars in
thousands)
Three Months Ended
3/31/2021
12/31/2020
3/31/2020
Interest
Annualized
Interest
Annualized
Interest
Annualized
Average
Income/
Average
Average
Income/
Average
Average
Income/
Average
Balance
Expense
Yield/Cost
Balance
Expense
Yield/Cost
Balance
Expense
Yield/Cost
INTEREST EARNING ASSETS:
Loans, including loans held for sale
$
13,346,264
$
129,736
3.94
%
$
13,046,443
$
132,117
4.03
%
$
12,259,848
$
154,230
5.06
%
Securities available for sale
2,267,409
7,915
1.42
%
2,123,025
9,014
1.69
%
1,712,033
10,609
2.49
%
FHLB stock and other investments
640,392
642
0.41
%
749,281
598
0.32
%
519,309
2,029
1.57
%
Total interest earning assets
$
16,254,065
$
138,293
3.45
%
$
15,918,749
$
141,729
3.54
%
$
14,491,190
$
166,868
4.63
%
INTEREST BEARING LIABILITIES:
Deposits:
Demand, interest bearing
$
5,256,579
$
5,490
0.42
%
$
4,910,649
$
5,541
0.45
%
$
4,204,406
$
14,880
1.42
%
Savings
301,184
870
1.17
%
305,341
898
1.17
%
274,075
808
1.19
%
Time deposits
3,767,109
6,410
0.69
%
4,240,500
10,495
0.98
%
4,900,405
25,425
2.09
%
Total interest bearing deposits
9,324,872
12,770
0.56
%
9,456,490
16,934
0.71
%
9,378,886
41,113
1.76
%
FHLB advances
215,889
642
1.21
%
204,900
657
1.28
%
594,890
2,647
1.79
%
Convertible notes, net
215,002
1,322
2.46
%
203,807
2,383
4.58
%
199,960
2,346
4.64
%
Subordinated debentures
100,392
980
3.90
%
100,118
999
3.90
%
99,252
1,471
5.86
%
Total interest bearing liabilities
$
9,856,155
$
15,714
0.65
%
$
9,965,315
$
20,973
0.84
%
$
10,272,988
$
47,577
1.86
%
Noninterest bearing demand deposits
5,052,532
4,637,584
2,963,136
Total funding liabilities/cost of
funds
$
14,908,687
0.43
%
$
14,602,899
0.57
%
$
13,236,124
1.45
%
Net interest income/net interest
spread
$
122,579
2.80
%
$
120,756
2.70
%
$
119,291
2.77
%
Net interest margin
3.06
%
3.02
%
3.31
%
Cost of deposits:
Noninterest bearing demand deposits
$
5,052,532
$
—
—
%
$
4,637,584
$
—
—
%
$
2,963,136
$
—
—
%
Interest bearing deposits
9,324,872
12,770
0.56
%
9,456,490
16,934
0.71
%
9,378,886
41,113
1.76
%
Total deposits
$
14,377,404
$
12,770
0.36
%
$
14,094,074
$
16,934
0.48
%
$
12,342,022
$
41,113
1.34
Hope Bancorp, Inc.
Selected Financial
Data
Unaudited (dollars in
thousands)
Three Months Ended
AVERAGE BALANCES:
3/31/2021
12/31/2020
% change
3/31/2020
% change
Loans receivable, including loans held for
sale
$
13,346,264
$
13,046,443
2
%
$
12,259,848
9
%
Investments
2,907,801
2,872,306
1
%
2,231,342
30
%
Interest earning assets
16,254,065
15,918,749
2
%
14,491,190
12
%
Total assets
17,115,407
16,824,700
2
%
15,446,807
11
%
Interest bearing deposits
9,324,872
9,456,490
(1
)%
9,378,886
(1
)%
Interest bearing liabilities
9,856,155
9,965,315
(1
)%
10,272,988
(4
)%
Noninterest bearing demand deposits
5,052,532
4,637,584
9
%
2,963,136
71
%
Stockholders’ equity
2,047,506
2,045,959
—
%
2,027,595
1
%
Net interest earning assets
6,397,910
5,953,434
7
%
4,218,202
52
%
LOAN PORTFOLIO COMPOSITION:
3/31/2021
12/31/2020
% change
3/31/2020
% change
Commercial loans
$
4,346,244
$
4,157,787
5
%
$
3,067,132
42
%
Real estate loans
8,811,423
8,772,134
—
%
8,681,222
1
%
Consumer and other loans
544,962
633,292
(14
)%
835,062
(35
)%
Loans, net of deferred loan fees and
costs
13,702,629
13,563,213
1
%
12,583,416
9
%
Allowance for credit losses
(207,943
)
(206,741
)
1
%
(144,923
)
43
%
Loan receivable, net
$
13,494,686
$
13,356,472
1
%
$
12,438,493
8
%
REAL ESTATE LOANS BY PROPERTY
TYPE:
3/31/2021
12/31/2020
% change
3/31/2020
% change
Retail buildings
$
2,317,017
$
2,293,396
1
%
$
2,314,885
—
%
Hotels/motels
1,619,661
1,634,287
(1
)%
1,706,082
(5
)%
Gas stations/car washes
913,176
892,110
2
%
852,077
7
%
Mixed-use facilities
752,729
750,867
—
%
770,825
(2
)%
Warehouses
1,092,549
1,091,389
—
%
1,024,832
7
%
Multifamily
531,306
518,498
2
%
481,425
10
%
Other
1,584,985
1,591,587
—
%
1,531,096
4
%
Total
$
8,811,423
$
8,772,134
—
%
$
8,681,222
1
%
DEPOSIT COMPOSITION
3/31/2021
12/31/2020
% change
3/31/2020
% change
Noninterest bearing demand deposits
$
5,427,174
$
4,814,254
13
%
$
3,010,143
80
%
Money market and other
5,009,419
5,232,413
(4
)%
4,851,000
3
%
Saving deposits
305,326
300,770
2
%
272,577
12
%
Time deposits
3,559,350
3,986,475
(11
)%
4,702,847
(24
)%
Total deposit balances
$
14,301,269
$
14,333,912
—
%
$
12,836,567
11
%
DEPOSIT COMPOSITION (%)
3/31/2021
12/31/2020
3/31/2020
Noninterest bearing demand deposits
38.0
%
33.6
%
23.5
%
Money market and other
35.0
%
36.5
%
37.8
%
Saving deposits
2.1
%
2.1
%
2.1
%
Time deposits
24.9
%
27.8
%
36.6
%
Total deposit balances
100.0
%
100.0
%
100.0
%
Hope Bancorp, Inc.
Selected Financial
Data
Unaudited (dollars in thousands,
except share and per share data)
CAPITAL RATIOS:
3/31/2021
12/31/2020
3/31/2020
Total stockholders’ equity
$
2,045,581
$
2,053,745
$
2,018,088
Common equity tier 1 ratio
11.08
%
10.94
%
11.44
%
Tier 1 risk-based capital ratio
11.78
%
11.64
%
12.19
%
Total risk-based capital ratio
13.03
%
12.87
%
13.08
%
Tier 1 leverage ratio
10.15
%
10.22
%
10.88
%
Total risk weighted assets
$
14,338,828
$
14,341,456
$
13,348,162
Book value per common share
$
16.57
$
16.66
$
16.38
Tangible common equity to tangible assets
1
9.40
%
9.50
%
9.92
%
Tangible common equity per share 1
$
12.73
$
12.81
$
12.52
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
ALLOWANCE FOR CREDIT LOSSES
CHANGES:
3/31/2021
12/31/2020
9/30/2020
6/30/2020
3/31/2020
Balance at beginning of period
$
206,741
$
179,849
$
161,771
$
144,923
$
94,144
CECL day 1 adoption impact
—
—
—
—
26,200
Provision for credit losses
3,300
27,500
22,000
17,500
28,000
Recoveries
1,423
2,207
2,428
252
2,536
Charge offs
(3,521
)
(2,815
)
(6,350
)
(904
)
(5,957
)
Balance at end of period
$
207,943
$
206,741
$
179,849
$
161,771
$
144,923
Net charge offs/average loans receivable
(annualized)
0.06
%
0.02
%
0.12
%
0.02
%
0.11
%
Three Months Ended
NET LOAN CHARGE OFFS
(RECOVERIES):
3/31/2021
12/31/2020
9/30/2020
6/30/2020
3/31/2020
Real estate loans
$
2,234
$
(726
)
$
5,154
$
148
$
2,230
Commercial loans
(80
)
1,167
(1,451
)
240
676
Consumer loans
(56
)
167
219
264
515
Total net charge offs
$
2,098
$
608
$
3,922
$
652
$
3,421
Hope Bancorp, Inc.
Selected Financial
Data
Unaudited (dollars in
thousands)
NONPERFORMING ASSETS:
3/31/2021
12/31/2020
9/30/2020
6/30/2020
3/31/2020
Loans on nonaccrual status 3
$
109,858
$
85,238
$
69,205
$
82,137
$
72,639
Delinquent loans 90 days or more on
accrual status
384
614
1,537
430
387
Accruing troubled debt restructured
loans
41,773
37,354
35,429
44,026
43,789
Total nonperforming loans
152,015
123,206
106,171
126,593
116,815
Other real estate owned
18,515
20,121
18,410
20,983
23,039
Total nonperforming assets
$
170,530
$
143,327
$
124,581
$
147,576
$
139,854
Nonperforming assets/total assets
0.99
%
0.84
%
0.74
%
0.86
%
0.87
%
Nonperforming assets/loans receivable
& OREO
1.24
%
1.06
%
0.95
%
1.14
%
1.11
%
Nonperforming assets/total capital
8.34
%
6.98
%
6.11
%
7.27
%
6.93
%
Nonperforming loans/loans receivable
1.11
%
0.91
%
0.81
%
0.98
%
0.93
%
Nonaccrual loans/loans receivable
0.80
%
0.63
%
0.53
%
0.64
%
0.58
%
Allowance for credit losses/loans
receivable
1.52
%
1.52
%
1.37
%
1.26
%
1.15
%
Allowance for credit losses/nonaccrual
loans
189.28
%
242.55
%
259.88
%
196.95
%
199.51
%
Allowance for credit losses/nonperforming
loans
136.79
%
167.80
%
169.40
%
127.79
%
124.06
%
Allowance for credit losses/nonperforming
assets
121.94
%
144.24
%
144.36
%
109.62
%
103.62
%
3 Excludes delinquent SBA loans that are
guaranteed and currently in liquidation totaling $25.0 million,
$26.5 million, $26.2 million, $30.3 million, and $28.8 million at
March 31, 2021, December 31, 2020, September 30, 2020, June 30,
2020, and March 31, 2020, respectively.
NONACCRUAL LOANS BY TYPE:
3/31/2021
12/31/2020
9/30/2020
6/30/2020
3/31/2020
Real estate loans
$
91,940
$
67,450
$
51,739
$
64,060
$
56,787
Commercial loans
14,080
13,911
13,022
12,079
12,747
Consumer loans
3,838
3,877
4,444
5,998
3,105
Total nonaccrual loans
$
109,858
$
85,238
$
69,205
$
82,137
$
72,639
BREAKDOWN OF ACCRUING TROUBLED DEBT
RESTRUCTURED LOANS:
3/31/2021
12/31/2020
9/30/2020
6/30/2020
3/31/2020
Retail buildings
$
6,319
$
5,408
$
5,451
$
5,526
$
5,014
Gas stations/car washes
210
219
224
1,789
1,675
Mixed-use facilities
3,377
3,521
4,323
3,583
3,157
Warehouses
14,124
7,296
7,320
13,433
13,381
Other 5
17,743
20,910
18,111
19,695
20,562
Total
$
41,773
$
37,354
$
35,429
$
44,026
$
43,789
5 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:
3/31/2021
12/31/2020
9/30/2020
6/30/2020
3/31/2020
30 - 59 days
$
18,175
$
11,347
$
5,962
$
18,857
$
37,866
60 - 89 days
8,314
16,826
58,065
29,975
2,605
Total
$
26,489
$
28,173
$
64,027
$
48,832
$
40,471
ACCRUING DELINQUENT LOANS 30-89 DAYS
PAST DUE BY TYPE:
3/31/2021
12/31/2020
9/30/2020
6/30/2020
3/31/2020
Real estate loans
$
18,331
$
15,689
$
60,510
$
27,245
$
23,753
Commercial loans
1,002
3,393
624
5,987
4,583
Consumer loans
7,156
9,091
2,893
15,600
12,135
Total
$
26,489
$
28,173
$
64,027
$
48,832
$
40,471
CRITICIZED LOANS:
3/31/2021
12/31/2020
9/30/2020
6/30/2020
3/31/2020
Special mention
$
280,974
$
184,941
$
153,388
$
127,149
$
122,279
Substandard
379,048
366,556
311,902
299,357
278,771
Doubtful/Loss
—
1
6,640
11
12
Total criticized loans
$
660,022
$
551,498
$
471,930
$
426,517
$
401,062
Hope Bancorp, Inc.
Selected Financial
Data
Unaudited (dollars in thousands,
except share and per share data)
Reconciliation of GAAP financial
measures to non-GAAP financial measures
Management reviews select non-GAAP
financial measures in evaluating the Company’s and the Bank’s
financial performance and in response to market participant
interest. A reconciliation of the GAAP to non-GAAP financial
measures utilized by management is provided below.
Three Months Ended
3/31/2021
12/31/2020
3/31/2020
RETURN ON AVERAGE TANGIBLE COMMON
EQUITY
Average stockholders’ equity
$
2,047,506
$
2,045,959
$
2,027,595
Less: Goodwill and core deposit intangible
assets, net
(473,961
)
(474,467
)
(476,053
)
Average tangible common equity
$
1,573,545
$
1,571,492
$
1,551,542
Net income
$
43,687
$
28,319
$
25,953
Return on average tangible common equity
(annualized)
11.11
%
7.21
%
6.69
%
Three Months Ended
3/31/2021
12/31/2020
3/31/2020
TANGIBLE COMMON EQUITY
Total stockholders’ equity
$
2,045,581
$
2,053,745
$
2,018,088
Less: Goodwill and core deposit intangible
assets, net
(473,648
)
(474,158
)
(475,752
)
Tangible common equity
$
1,571,933
$
1,579,587
$
1,542,336
Total assets
$
17,198,860
$
17,106,664
$
16,021,434
Less: Goodwill and core deposit intangible
assets, net
(473,648
)
(474,158
)
(475,752
)
Tangible assets
$
16,725,212
$
16,632,506
$
15,545,682
Common shares outstanding
123,480,494
123,264,864
123,169,404
Tangible common equity to tangible
assets
9.40
%
9.50
%
9.92
%
Tangible common equity per share
$
12.73
$
12.81
$
12.52
Three Months Ended
3/31/2021
12/31/2020
3/31/2020
PRE-TAX PRE-PROVISION INCOME
Net income
$
43,687
$
28,319
$
25,953
Add back - tax provision
13,965
5,289
6,462
Add back - provision for credit losses
3,300
27,500
28,000
Pre-tax pre-provision income
$
60,952
$
61,108
$
60,415
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210427006118/en/
Alex Ko Senior 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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