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, 2023.
For the three months ended March 31, 2023, net income totaled
$39.1 million, or $0.33 per diluted common share. This compares
with net income of $51.7 million, or $0.43 per diluted common
share, in the preceding fourth quarter and $60.7 million, or $0.50
per diluted common share, in the year-ago first quarter.
“The focus this quarter was to maintain a strong balance sheet
with high levels of capital and liquidity, and in this, we
succeeded,” said Kevin S. Kim, Chairman, President and Chief
Executive Officer. “At the close of the 2023 first quarter, total
deposits grew 1% quarter-over-quarter and 9% year-over-year,
underscoring the confidence that our customers have in our
franchise as the largest Korean American bank in the country. Our
capital levels continued to be strong and our total risk-based
capital ratio increased to 12.25% at March 31, 2023. Asset quality
continued to be healthy.
“From a risk management perspective, we fortified our liquidity
to prudently manage through the current environment of heightened
volatility due to the banking industry disruption in mid-March. We
substantially increased the level of cash and cash equivalents on
our balance sheet to $2.2 billion at March 31, 2023. At
quarter-end, our available borrowing capacity, together with cash
and cash equivalents, and unpledged investment securities, totaled
$8.0 billion, equivalent to 50% of total deposits. At the same
time, we continued to execute on initiatives designed to further
strengthen our franchise, support long-term profitability, and
create additional value for stockholders.”
Q1 2023 Highlights
- The Company’s total risk-based capital ratio was 12.25% at
March 31, 2023, up 28 basis points quarter-over-quarter.
- Book value per common share increased to $17.17 and tangible
common equity per share increased to $13.26 at March 31, 2023, both
up 2% quarter-over-quarter.
- Total deposits of $15.83 billion at March 31, 2023, increased
1% quarter-over-quarter and 9% year-over-year.
- Available borrowing capacity, cash and cash equivalents, and
unpledged investment securities totaled $7.99 billion, equivalent
to 50% of total deposits, at March 31, 2023. This is up 11% from
$7.23 billion, or 46% of total deposits, at December 31, 2022.
- During the first quarter, the Company fortified its on-balance
sheet liquidity in response to industry disruption. Cash and cash
equivalents increased to $2.21 billion at March 31, 2023, up from
$506.8 million as of December 31, 2022. This increase in on-balance
sheet liquidity reflects the Company’s conservative approach to
risk management. It was largely funded through the Federal Reserve
Bank’s Bank Term Funding Program (“BTFP”). BTFP borrowings were
$1.40 billion at March 31, 2023, carrying a weighted average
interest rate of 4.49%.
- The Bank’s insured or otherwise collateralized deposits totaled
$9.91 billion at March 31, 2023. The Bank’s uninsured deposit ratio
was 38% at March 31, 2023, a decrease from 41% at December 31,
2022. The available borrowing capacity, cash and cash equivalents,
and unpledged investment securities well exceeded the Bank’s
uninsured deposits at quarter-end.
- First quarter 2023 loan originations totaled $568.7 million,
led by commercial loans and followed by commercial real estate. New
commercial loans accounted for 61% of total originations for the
first quarter of 2023. Loans receivable of $15.06 billion at March
31, 2023, decreased 2% quarter-over-quarter and increased 7%
year-over-year.
Financial Summary
At or for the Three Months
Ended
(dollars in thousands, except per share
data) (unaudited)
3/31/2023
12/31/2022
3/31/2022
Net income
$
39,121
$
51,703
$
60,738
Diluted earnings per share
$
0.33
$
0.43
$
0.50
Net interest income before provision
(credit) for credit losses
$
133,878
$
150,521
$
133,176
Pre-provision net revenue (“PPNR”) (1)
$
54,502
$
78,113
$
70,989
Loans receivable
$
15,064,849
$
15,403,540
$
14,066,674
Deposits
$
15,828,209
$
15,738,801
$
14,515,128
Total assets
$
20,568,884
$
19,164,491
$
17,803,814
Total equity
$
2,058,580
$
2,019,328
$
2,041,057
Total risk-based capital ratio
12.25
%
11.97
%
12.49
%
Net charge offs (recoveries)
$
108
$
6,402
$
(17,900
)
Net charge offs (recoveries)/average loans
receivable
—
%
0.17
%
(0.52
) %
Allowance for credit losses
$
163,544
$
162,359
$
147,450
Allowance for credit losses to loans
receivable
1.09
%
1.05
%
1.05
%
Nonperforming assets to total assets
(2)
0.39
%
0.36
%
0.58
%
Return on average assets (“ROA”)
0.82
%
1.10
%
1.37
%
Return on average equity (“ROE”)
7.65
%
10.35
%
11.62
%
Return on average tangible common equity
(“ROTCE”) (1)
9.93
%
13.54
%
15.01
%
ROA (PPNR) (1)
1.14
%
1.66
%
1.60
%
ROE (PPNR) (1)
10.65
%
15.64
%
13.58
%
Net interest margin
3.02
%
3.36
%
3.21
%
Noninterest expense / average assets
1.89
%
1.79
%
1.70
%
Efficiency ratio
62.38
%
51.97
%
51.50
%
__________________
(1)
Pre-provision net revenue, ROA (PPNR), ROE
(PPNR), and ROTCE are non-GAAP financial measures. Management’s
reasons and purposes for using these non-GAAP financial measures
are set forth on Table Page 9 of this earnings release. A
quantitative reconciliation of the most directly comparable GAAP to
non-GAAP financial measures are provided in the accompanying
financial information on Table Page 9.
(2)
Excludes delinquent SBA loans that are
guaranteed and currently in liquidation.
Operating Results for the 2023
First Quarter
Net interest income before provision (credit) for credit losses
for the 2023 first quarter totaled $133.9 million, compared with
$150.5 million in the 2022 fourth quarter and $133.2 million in the
year-ago first quarter. The Company attributed the
quarter-over-quarter decrease primarily to higher interest expense
on deposits, partially offset by interest income growth due to
expanding earning asset yields and a 1% increase in average
interest earning assets.
The net interest margin for the 2023 first quarter decreased 34
basis points to 3.02% from 3.36% in the preceding fourth quarter as
the increase in the cost of deposits outpaced the expansion of the
yields on interest-earning assets. Compared with the year-ago first
quarter, the net interest margin decreased 19 basis points.
The weighted average yield on loans for the 2023 first quarter
was 5.75%, up 39 basis points from 5.36% in the 2022 fourth quarter
and up 187 basis points from the year-ago first quarter. The
Company attributed the yield expansion to the repricing of its
variable-rate loans following increases in market interest rates,
as well as a significant increase in the average rate on new loans
originated during the last four quarters. The rate on new loans
originated in the 2023 first quarter was 7.53%, up 82 basis points
from 6.71% in the preceding fourth quarter, and up 399 basis points
from 3.54% in the year-ago first quarter.
The weighted average cost of deposits for the 2023 first quarter
increased 79 basis points to 2.41% from 1.62% in the 2022 fourth
quarter, reflecting customer preferences for higher yields in a
rising interest rate environment, as well as the banking industry
disruption in mid-March of 2023. Compared with the year-ago first
quarter, the weighted average cost of deposits for the 2023 first
quarter increased 217 basis points from 0.24%.
Noninterest income for the 2023 first quarter totaled $11.0
million, compared with $12.1 million in the 2022 fourth quarter and
$13.2 million in the year-ago first quarter. Quarter-over-quarter,
deposit service fees and net gains on SBA loan sales increased,
offset by decreases in other income and fees. During the 2023 first
quarter, the Company sold $40.7 million of the guaranteed portion
of SBA 7(a) loans and $7.3 million of residential mortgage loans,
compared with $41.2 million and $3.5 million, respectively, sold in
the preceding fourth quarter.
Noninterest expense for the 2023 first quarter totaled $90.4
million, compared with $84.5 million in the preceding fourth
quarter and $75.4 million in the year-ago first quarter. The
quarter-over-quarter increase in noninterest expense was primarily
driven by higher salaries and employee benefits expense, which
reflected payroll taxes and related expenses that are typically
higher in the first quarter, as well as $1.7 million of severance
charges. Included in other expenses is $1.6 million of provision
for unfunded loan commitments.
The Company’s efficiency ratio for the 2023 first quarter was
62.4%, compared with 52.0% in the preceding fourth quarter and
51.5% in the year-ago first quarter. Noninterest expense as a
percentage of average assets was 1.89% for the 2023 first quarter,
compared with 1.79% for the 2022 fourth quarter and 1.70% for the
2022 first quarter.
The effective tax rate for the 2023 first quarter was 25.9%,
compared with 26.1% for the preceding fourth quarter and 25.9% for
the year-ago first quarter.
Balance Sheet Summary
New loan originations during the 2023 first quarter totaled
$568.7 million, compared with $793.4 million in the preceding
fourth quarter and $1.03 billion in the 2022 first quarter.
The following table sets forth the components of new loan
production for the quarters ended March 31, 2023, December 31, 2022
and March 31, 2022.
For the Three Months
Ended
(dollars in thousands) (unaudited)
3/31/2023
12/31/2022
3/31/2022
Commercial real estate
$
176,798
$
302,983
$
529,730
Commercial
344,194
424,340
335,756
SBA
29,977
28,825
56,602
Residential mortgage
14,317
36,720
103,473
Consumer
3,375
555
401
Total new loan originations
$
568,661
$
793,423
$
1,025,962
At March 31, 2023, loans receivable decreased 2%
quarter-over-quarter to $15.06 billion from $15.40 billion at
December 31, 2022, and increased 7% from $14.07 billion a year ago
at March 31, 2022.
The following table sets forth the loan portfolio composition
and percentage of total loans at March 31, 2023, December 31, 2022
and March 31, 2022:
(dollars in thousands) (unaudited)
3/31/2023
12/31/2022
3/31/2022
Balance
Percentage
Balance
Percentage
Balance
Percentage
Commercial loans
$
4,821,270
32.0
%
$
5,109,532
33.2
%
$
4,124,715
29.3
%
Real estate loans
9,373,529
62.2
%
9,414,580
61.1
%
9,262,305
65.9
%
Consumer and other loans
870,050
5.8
%
879,428
5.7
%
679,654
4.8
%
Loans receivable
$
15,064,849
100.0
%
$
15,403,540
100.0
%
$
14,066,674
100.0
%
At March 31, 2023, total deposits increased 1% to $15.83
billion, up from $15.74 billion at December 31, 2022, and increased
9% year-over-year from $14.52 billion at March 31, 2022, reflecting
growth in time deposits, partially offset by lower levels of
noninterest-bearing demand, money market and savings deposits in a
rising interest rate environment.
The following table sets forth the deposit composition and
percentage of total deposits at March 31, 2023, December 31, 2022
and March 31, 2022:
(dollars in thousands) (unaudited)
3/31/2023
12/31/2022
3/31/2022
Balance
Percentage
Balance
Percentage
Balance
Percentage
Noninterest bearing demand deposits
$
4,504,621
28.4
%
$
4,849,493
30.8
%
$
5,498,263
37.9
%
Money market and interest bearing demand
deposits
4,331,998
27.4
%
5,615,784
35.7
%
6,484,677
44.7
%
Saving deposits
231,704
1.5
%
283,464
1.8
%
321,373
2.2
%
Time deposits
6,759,886
42.7
%
4,990,060
31.7
%
2,210,815
15.2
%
Total deposits
$
15,828,209
100.0
%
$
15,738,801
100.0
%
$
14,515,128
100.0
%
Allowance for Credit
Losses
During the 2023 first quarter, the Company built its allowance
for credit losses to $163.5 million at March 31, 2023, and
increased the allowance coverage to 1.09% of loans receivable. For
the 2023 first quarter, the Company recorded a provision for credit
losses of $1.7 million, compared with $8.2 million in the preceding
fourth quarter and a negative provision for credit losses of $11.0
million in the 2022 first quarter.
The following table sets forth the allowance for credit losses
and allowance coverage ratios at March 31, 2023, December 31, 2022
and March 31, 2022:
(dollars in thousands) (unaudited)
3/31/2023
12/31/2022
3/31/2022
Allowance for credit losses
$
163,544
$
162,359
$
147,450
Allowance for credit loss/loans
receivable
1.09
%
1.05
%
1.05
%
Credit Quality
Asset quality continued to be healthy in the 2023 first quarter.
Net charge offs were only $108 thousand in the 2023 first quarter,
representing an annualized net charge off ratio of 0.00% of average
loans. The following table sets forth net charge offs (recoveries)
and net charge offs (recoveries) to average loans receivable,
annualized, for the three months ended March 31, 2023, December 31,
2022 and March 31, 2022:
For the Three Months
Ended
(dollars in thousands) (unaudited)
3/31/2023
12/31/2022
3/31/2022
Net charge offs (recoveries)
$
108
$
6,402
$
(17,900
)
Net charge offs (recoveries)/average loans
receivable (annualized)
—
%
0.17
%
(0.52
) %
Nonperforming assets represented 0.39% of total assets at March
31, 2023, compared with 0.36% as of December 31, 2022, and 0.58% as
of March 31, 2022. Total nonperforming assets were $80.2 million at
March 31, 2023, an increase of 15% quarter-over-quarter and a
decrease of 22% year-over-year. Included in nonperforming assets
were loans on nonaccrual status of $78.9 million at March 31, 2023,
which increased from $49.7 million at December 31, 2022. This
quarter-over-quarter change was primarily driven by one large
nonaccrual loan, which is expected to be resolved by mid-year with
a minimal risk of loss.
The following table sets forth the components of nonperforming
assets at March 31, 2023, December 31, 2022 and March 31, 2022:
(dollars in thousands) (unaudited)
3/31/2023
12/31/2022
3/31/2022
Loans on nonaccrual status (1)
$
78,861
$
49,687
$
52,717
Delinquent loans 90 days or more on
accrual status
364
401
3,090
Accruing troubled debt restructured loans
(2)
—
16,931
44,555
Total nonperforming loans
79,225
67,019
100,362
Other real estate owned
938
2,418
2,010
Total nonperforming assets
$
80,163
$
69,437
$
102,372
Nonperforming assets/total assets
0.39
%
0.36
%
0.58
%
__________________
(1)
Excludes delinquent SBA loans that are
guaranteed and currently in liquidation totaling $7.6 million, $9.8
million and $17.0 million at March 31, 2023, December 31, 2022 and
March 31, 2022, respectively.
(2)
The Company adopted ASU 2022-02 in 2023
which eliminated the concept of troubled debt restructured (“TDR”)
loans from GAAP and therefore accruing TDR loans are no longer
included in nonperforming loans
Total criticized loans were $304.7 million at March 31, 2023, up
from $261.3 million at December 31, 2022. Year-over-year, total
criticized loans decreased 23% from $393.6 million at March 31,
2022.
Capital
The Company’s capital ratios are strong. At March 31, 2023, the
Company and the Bank continued to exceed all regulatory capital
requirements generally required to meet the definition of a
“well-capitalized” financial institution. The following table sets
forth the capital ratios for the Company at March 31, 2023,
December 31, 2022 and March 31, 2022:
(unaudited)
3/31/2023
12/31/2022
3/31/2022
Minimum Guideline for
“Well-Capitalized” Bank
Common Equity Tier 1 Capital
10.75
%
10.55
%
11.02
%
6.50
%
Tier 1 Leverage Ratio
10.13
%
10.15
%
10.37
%
5.00
%
Tier 1 Risk-Based Ratio
11.36
%
11.15
%
11.68
%
8.00
%
Total Risk-Based Ratio
12.25
%
11.97
%
12.49
%
10.00
%
Following are the tangible common equity (“TCE”) per share and
the TCE as a percentage of tangible assets at March 31, 2023,
December 31, 2022 and March 31, 2022:
(unaudited)
3/31/2023
12/31/2022
3/31/2022
Tangible common equity per share (1)
$13.26
$12.96
$13.04
Tangible common equity to tangible assets
(1)
7.91%
8.29%
9.05%
__________________
(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. 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, tangible common equity per share, tangible assets and
tangible common equity to tangible assets are non-GAAP financial
measures. Management’s reasons and purposes for using these
non-GAAP financial measures are set forth in the accompanying
financial information on Table Page 9. A quantitative
reconciliation of the most directly comparable GAAP to non-GAAP
financial measures is provided in the accompanying financial
information on Table Page 9.
Convertible Senior Notes
At March 31, 2023, the net balance of the Company’s 2.00%
Convertible Senior Notes due 2038 (the “Notes”) was $206.7 million,
compared with $217.1 million at December 31, 2022. The Notes have
an upcoming optional put date on May 15, 2023. During the 2023
first quarter, the Company made repurchases of its Notes in the
aggregate principal amount of $10.7 million. The repurchased Notes
were immediately cancelled subsequent to the repurchase. These
repurchases are separate from the optional put and were made
through a third-party broker.
Non-GAAP Financial Metrics
This news release contains certain non-GAAP financial measure
disclosures, including pre-provision net revenue (“PPNR”), ROA
(PPNR), ROE (PPNR), tangible common equity, tangible common equity
per share, tangible assets and tangible common equity to tangible
assets. Management believes these non-GAAP financial measures
provide meaningful supplemental information regarding its
operational performance and the Company’s and the Bank’s capital
levels and has included these figures in response to market
participant interest in these financial metrics. A reconciliation
of the most directly comparable GAAP to non-GAAP financial measures
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 Tuesday, April 25, 2023 at 9:30 a.m. Pacific
Time / 12:30 p.m. Eastern Time to review unaudited financial
results for its first quarter ended March 31, 2023. Investors and
analysts are invited to access the conference call by dialing
866-235-9917 (domestic) or 412-902-4103 (international) and asking
for the “Hope Bancorp Call.” A presentation to accompany the
earnings call will be available at the Investor Relations section
of Hope Bancorp’s website at www.ir-hopebancorp.com. Other
interested parties are invited to listen to a live webcast of the
call available at the Investor Relations section of Hope Bancorp’s
website. After the live webcast, a replay will remain available at
the Investor Relations section of Hope Bancorp’s website for one
year. A telephonic replay of the call will be available at
877-344-7529 (domestic) or 412-317-0088 (international) for one
week through May 2, 2023, replay access code 9620853.
About Hope Bancorp, Inc.
Hope Bancorp, Inc. (NASDAQ: HOPE) is the holding company of Bank
of Hope, the first and only super regional Korean American bank in
the United States with $20.57 billion in total assets as of March
31, 2023. Headquartered in Los Angeles and serving a multi-ethnic
population of customers across the nation, Bank of Hope operates 53
full-service branches in California, Washington, Texas, Illinois,
New York, New Jersey, Virginia, Alabama and Georgia. The Bank also
operates SBA loan production offices in Seattle, Denver, Dallas,
Atlanta, Portland, New York City, Northern California and Houston;
commercial loan production offices in Northern California, Seattle
and Tampa, Fla.; residential mortgage loan production offices in
Southern California; and a representative office in Seoul, Korea.
Bank of Hope specializes in core business banking products for
small and medium-sized businesses, with an emphasis in commercial
real estate 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 news release may constitute
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These forward-looking
statements relate to, among other things, expectations regarding
the business environment in which we operate, projections of future
performance, perceived opportunities in the market and statements
regarding our business strategies, objectives and vision.
Forward-looking statements include, but are not limited to,
statements preceded by, followed by or that include the words
“will,” “believes,” “expects,” “anticipates,” “intends,” “plans,”
“estimates” or similar expressions. With respect to any such
forward-looking statements, the Company claims the protection
provided for in the Private Securities Litigation Reform Act of
1995. These statements involve risks and uncertainties. The
Company’s actual results, performance or achievements may differ
significantly from the results, performance or achievements
expressed or implied in any forward-looking statements. The risks
and uncertainties include, but are not limited to: possible further
deterioration in economic conditions in our areas of operation;
interest rate risk associated with volatile interest rates and
related asset-liability matching risk; liquidity risks; risk of
significant non-earning assets, and net credit losses that could
occur, particularly in times of weak economic conditions or times
of rising interest rates; the failure of or changes to assumptions
and estimates underlying the Company’s allowances for credit
losses; regulatory risks associated with current and future
regulations; and the COVID-19 pandemic and its impact on our
financial position, results of operations, liquidity, and
capitalization. For additional information concerning these and
other risk factors, see the Company’s most recent Annual Report on
Form 10-K. The Company does not undertake, and specifically
disclaims any obligation, to update any forward-looking statements
to reflect the occurrence of events or circumstances after the date
of such statements except as required by law.
Hope Bancorp, Inc.
Selected Financial
Data
Unaudited (dollars in thousands,
except share and per share data)
Assets:
3/31/2023
12/31/2022
% change
3/31/2022
% change
Cash and due from banks
$
2,212,637
$
506,776
337
%
$
280,373
689
%
Investment securities
2,231,989
2,243,195
—
%
2,492,486
(10
)%
Federal Home Loan Bank (“FHLB”) stock and
other investments
59,962
61,761
(3
)%
87,201
(31
)%
Loans held for sale, at the lower of cost
or fair value
125,268
49,245
154
%
115,756
8
%
Loans receivable
15,064,849
15,403,540
(2
)%
14,066,674
7
%
Allowance for credit losses
(163,544
)
(162,359
)
1
%
(147,450
)
11
%
Net loans receivable
14,901,305
15,241,181
(2
)%
13,919,224
7
%
Accrued interest receivable
57,021
55,460
3
%
37,949
50
%
Premises and equipment, net
47,887
46,859
2
%
45,642
5
%
Bank owned life insurance
87,842
77,078
14
%
77,390
14
%
Goodwill
464,450
464,450
—
%
464,450
—
%
Servicing assets
11,628
11,628
—
%
10,874
7
%
Other intangible assets, net
5,278
5,726
(8
)%
7,184
(27
)%
Other assets
363,617
401,132
(9
)%
265,285
37
%
Total assets
$
20,568,884
$
19,164,491
7
%
$
17,803,814
16
%
Liabilities:
Deposits
$
15,828,209
$
15,738,801
1
%
$
14,515,128
9
%
FHLB and FRB borrowings
2,130,000
865,000
146
%
772,000
176
%
Convertible notes, net
206,658
217,148
(5
)%
216,444
(5
)%
Subordinated debentures
106,875
106,565
—
%
105,652
1
%
Accrued interest payable
53,818
26,668
102
%
4,826
1,015
%
Other liabilities
184,744
190,981
(3
)%
148,707
24
%
Total liabilities
$
18,510,304
$
17,145,163
8
%
$
15,762,757
17
%
Stockholders’ Equity:
Common stock, $0.001 par value
$
137
$
137
—
%
$
137
—
%
Capital surplus
1,430,977
1,431,003
—
%
1,422,602
1
%
Retained earnings
1,106,390
1,083,712
2
%
976,483
13
%
Treasury stock, at cost
(264,667
)
(264,667
)
—
%
(250,000
)
(6
)%
Accumulated other comprehensive loss,
net
(214,257
)
(230,857
)
7
%
(108,165
)
(98
)%
Total stockholders’ equity
2,058,580
2,019,328
2
%
2,041,057
1
%
Total liabilities and stockholders’
equity
$
20,568,884
$
19,164,491
7
%
$
17,803,814
16
%
Common stock shares - authorized
150,000,000
150,000,000
150,000,000
Common stock shares - outstanding
119,865,732
119,495,209
120,327,689
Treasury stock shares
17,382,835
17,382,835
16,343,849
Hope Bancorp, Inc.
Selected Financial
Data
Unaudited (dollars in thousands,
except share and per share data)
Three Months Ended
3/31/2023
12/31/2022
% change
3/31/2022
% change
Interest and fees on loans
$
215,935
$
207,958
4
%
$
132,672
63
%
Interest on investment securities
15,125
14,758
2
%
11,656
30
%
Interest on cash and deposits at other
banks
6,641
942
605
%
137
4,747
%
Interest on other investments
695
579
20
%
407
71
%
Total interest income
238,396
224,237
6
%
144,872
65
%
Interest on deposits
94,067
63,276
49
%
8,676
984
%
Interest on other borrowings and
convertible notes
10,451
10,440
—
%
3,020
246
%
Total interest expense
104,518
73,716
42
%
11,696
794
%
Net interest income before provision
(credit) for credit losses
133,878
150,521
(11
)%
133,176
1
%
Provision (credit) for credit losses
1,700
8,200
(79
)%
(11,000
)
N/A
Net interest income after provision
(credit) for credit losses
132,178
142,321
(7
)%
144,176
(8
)%
Service fees on deposit accounts
2,221
2,159
3
%
1,974
13
%
Net gains on sales of SBA loans
2,225
2,154
3
%
5,603
(60
)%
Net gains on sales of residential mortgage
loans
64
20
220
%
757
(92
)%
Other income and fees
6,468
7,777
(17
)%
4,852
33
%
Total noninterest income
10,978
12,110
(9
)%
13,186
(17
)%
Salaries and employee benefits
57,169
52,694
8
%
47,745
20
%
Occupancy
7,521
7,072
6
%
7,335
3
%
Furniture and equipment
5,058
5,045
—
%
4,644
9
%
Data processing and communications
2,822
2,860
(1
)%
2,461
15
%
FDIC assessment
1,781
1,596
12
%
1,569
14
%
Earnings credit rebates
4,427
5,002
(11
)%
476
830
%
Other
11,576
10,249
13
%
11,143
4
%
Total noninterest expense
90,354
84,518
7
%
75,373
20
%
Income before income taxes
52,802
69,913
(24
)%
81,989
(36
)%
Income tax provision
13,681
18,210
(25
)%
21,251
(36
)%
Net income
$
39,121
$
51,703
(24
)%
$
60,738
(36
)%
Earnings Per Common Share - Basic
$
0.33
$
0.43
$
0.51
Earnings Per Common Share - Diluted
$
0.33
$
0.43
$
0.50
Weighted Average Shares Outstanding -
Basic
119,551,247
119,483,499
120,131,380
Weighted Average Shares Outstanding -
Diluted
120,242,295
120,102,665
121,089,474
For the Three Months
Ended
(Annualized)
Profitability measures:
3/31/2023
12/31/2022
3/31/2022
ROA
0.82
%
1.10
%
1.37
%
ROE
7.65
%
10.35
%
11.62
%
ROA (PPNR) (1)
1.14
%
1.66
%
1.60
%
ROE (PPNR) (1)
10.65
%
15.64
%
13.58
%
ROTCE (2)
9.93
%
13.54
%
15.01
%
Net interest margin
3.02
%
3.36
%
3.21
%
Efficiency ratio
62.38
%
51.97
%
51.50
%
Noninterest expense / average assets
1.89
%
1.79
%
1.70
%
(1) ROA (PPNR) and ROE (PPNR) are non-GAAP
financial measures. Management’s reasons and purposes for using
these non-GAAP financial measures are set forth on Table Page 9 of
this earnings release. A quantitative reconciliation of the most
directly comparable GAAP to non-GAAP financial measures are
provided in the accompanying financial information on Table Page
9.
(2) Average tangible common 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. A quantitative reconciliation of the most
directly comparable GAAP to non-GAAP financial measure is provided
in the accompanying financial information on Table Page 9.
Hope Bancorp, Inc.
Selected Financial
Data
Unaudited (dollars in
thousands)
Three Months Ended
3/31/2023
12/31/2022
3/31/2022
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
$
15,235,386
$
215,935
5.75
%
$
15,393,843
$
207,958
5.36
%
$
13,871,974
$
132,672
3.88
%
Investment securities
2,248,479
15,125
2.73
%
2,254,678
14,758
2.60
%
2,621,220
11,656
1.80
%
Interest bearing cash and deposits at
other banks
473,344
6,641
5.69
%
66,075
942
5.66
%
284,342
137
0.20
%
FHLB stock and other investments
47,043
695
5.99
%
48,002
579
4.79
%
68,432
407
2.41
%
Total interest earning assets
$
18,004,252
$
238,396
5.37
%
$
17,762,598
$
224,237
5.01
%
$
16,845,968
$
144,872
3.49
%
INTEREST BEARING LIABILITIES:
Deposits:
Money market and interest bearing
demand
$
5,341,057
$
43,118
3.27
%
$
5,733,448
$
34,991
2.42
%
$
6,337,866
$
5,701
0.36
%
Savings
256,194
827
1.31
%
297,128
968
1.29
%
318,508
927
1.18
%
Time deposits
5,543,369
50,122
3.67
%
4,276,655
27,317
2.53
%
2,619,491
2,048
0.32
%
Total interest bearing deposits
11,140,620
94,067
3.42
%
10,307,231
63,276
2.44
%
9,275,865
8,676
0.38
%
FHLB and FRB borrowings
676,444
6,698
4.02
%
838,335
6,988
3.31
%
242,556
687
1.15
%
Convertible notes, net
217,114
1,322
2.44
%
217,002
1,322
2.38
%
216,305
1,323
2.45
%
Subordinated debentures
102,791
2,431
9.46
%
102,496
2,130
8.13
%
101,577
1,010
3.98
%
Total interest bearing liabilities
$
12,136,969
$
104,518
3.49
%
$
11,465,064
$
73,716
2.55
%
$
9,836,303
$
11,696
0.48
%
Noninterest bearing demand deposits
4,662,139
5,174,217
5,672,768
Total funding liabilities/cost of
funds
$
16,799,108
2.52
%
$
16,639,281
1.76
%
$
15,509,071
0.31
%
Net interest income/net interest
spread
$
133,878
1.88
%
$
150,521
2.46
%
$
133,176
3.01
%
Net interest margin
3.02
%
3.36
%
3.21
%
Cost of deposits:
Noninterest bearing demand deposits
$
4,662,139
$
—
—
%
$
5,174,217
$
—
—
%
$
5,672,768
$
—
—
%
Interest bearing deposits
11,140,620
94,067
3.42
%
10,307,231
63,276
2.44
%
9,275,865
8,676
0.38
%
Total deposits
$
15,802,759
$
94,067
2.41
%
$
15,481,448
$
63,276
1.62
%
$
14,948,633
$
8,676
0.24
%
Hope Bancorp, Inc.
Selected Financial
Data
Unaudited (dollars in
thousands)
Three Months Ended
AVERAGE BALANCES:
3/31/2023
12/31/2022
% change
3/31/2022
% change
Loans, including loans held for sale
$
15,235,386
$
15,393,843
(1
) %
$
13,871,974
10
%
Investments
2,768,866
2,368,755
17
%
2,973,994
(7
) %
Interest earning assets
18,004,252
17,762,598
1
%
16,845,968
7
%
Total assets
19,087,170
18,863,726
1
%
17,742,402
8
%
Interest bearing deposits
11,140,620
10,307,231
8
%
9,275,865
20
%
Interest bearing liabilities
12,136,969
11,465,064
6
%
9,836,303
23
%
Noninterest bearing demand deposits
4,662,139
5,174,217
(10
) %
5,672,768
(18
) %
Stockholders’ equity
2,046,159
1,997,460
2
%
2,090,755
(2
) %
Net interest earning assets
5,867,283
6,297,534
(7
) %
7,009,665
(16
) %
LOAN PORTFOLIO COMPOSITION:
3/31/2023
12/31/2022
% change
3/31/2022
% change
Commercial loans
$
4,821,270
$
5,109,532
(6
) %
$
4,124,715
17
%
Real estate loans
9,373,529
9,414,580
—
%
9,262,305
1
%
Consumer and other loans
870,050
879,428
(1
) %
679,654
28
%
Loans, net of deferred loan fees and
costs
15,064,849
15,403,540
(2
) %
14,066,674
7
%
Allowance for credit losses
(163,544
)
(162,359
)
1
%
(147,450
)
11
%
Loans receivable, net
$
14,901,305
$
15,241,181
(2
) %
$
13,919,224
7
%
REAL ESTATE LOANS BY PROPERTY
TYPE:
3/31/2023
12/31/2022
% change
3/31/2022
% change
Multi-tenant retail
$
1,817,874
$
1,866,434
(3
) %
$
1,851,150
(2
) %
Hotels/motels
900,990
952,579
(5
) %
1,208,217
(25
) %
Gas stations and car washes
1,046,528
1,054,720
(1
) %
1,055,383
(1
) %
Mixed-use facilities
818,227
848,417
(4
) %
872,362
(6
) %
Industrial warehouses
1,309,763
1,294,893
1
%
1,263,791
4
%
Multifamily
1,302,597
1,295,644
1
%
841,316
55
%
Single-tenant retail
706,593
718,977
(2
)%
747,223
(5
)% Office
464,703
473,459
(2
)%
442,944
5
%
All other
1,006,254
909,457
11
%
979,919
3
%
Total real estate loans
$
9,373,529
$
9,414,580
—
%
$
9,262,305
1
%
DEPOSIT COMPOSITION
3/31/2023
12/31/2022
% change
3/31/2022
% change
Noninterest bearing demand deposits
$
4,504,621
$
4,849,493
(7
) %
$
5,498,263
(18
) %
Money market and interest bearing
demand
4,331,998
5,615,784
(23
) %
6,484,677
(33
) %
Saving deposits
231,704
283,464
(18
) %
321,373
(28
) %
Time deposits
6,759,886
4,990,060
35
%
2,210,815
206
%
Total deposits
$
15,828,209
$
15,738,801
1
%
$
14,515,128
9
%
Hope Bancorp, Inc.
Selected Financial
Data
Unaudited (dollars in thousands,
except share and per share data)
CAPITAL RATIOS:
3/31/2023
12/31/2022
3/31/2022
Total stockholders’ equity
$
2,058,580
$
2,019,328
$
2,041,057
Common equity tier 1 ratio
10.75
%
10.55
%
11.02
%
Tier 1 risk-based capital ratio
11.36
%
11.15
%
11.68
%
Total risk-based capital ratio
12.25
%
11.97
%
12.49
%
Tier 1 leverage ratio
10.13
%
10.15
%
10.37
%
Total risk weighted assets
$
16,886,343
$
17,049,410
$
15,393,639
Book value per common share
$
17.17
$
16.90
$
16.96
Tangible common equity to tangible assets
(1)
7.91
%
8.29
%
9.05
%
Tangible common equity per share (1)
$
13.26
$
12.96
$
13.04
(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. A quantitative
reconciliation of the most directly comparable GAAP to non-GAAP
financial measures are provided in the accompanying financial
information on Table Page 10.
Three Months Ended
ALLOWANCE FOR CREDIT LOSSES
CHANGES:
3/31/2023
12/31/2022
9/30/2022
6/30/2022
3/31/2022
Balance at beginning of period
$
162,359
$
160,561
$
151,580
$
147,450
$
140,550
ASU 2022-02 day 1 adoption impact
(407
)
—
—
—
—
Provision (credit) for credit losses
1,700
8,200
9,200
3,200
(11,000
)
Recoveries
387
3,222
331
1,642
19,403
Charge offs
(495
)
(9,624
)
(550
)
(712
)
(1,503
)
Balance at end of period
$
163,544
$
162,359
$
160,561
$
151,580
$
147,450
Net charge offs (recoveries)/average loans
receivable (annualized)
—
%
0.17
%
0.01
%
(0.03
)%
(0.52
)%
3/31/2023
12/31/2022
9/30/2022
6/30/2022
3/31/2022
Allowance for unfunded loan
commitments
$
2,971
$
1,351
$
1,231
$
1,481
$
1,301
Three Months Ended
NET LOAN CHARGE OFFS
(RECOVERIES):
3/31/2023
12/31/2022
9/30/2022
6/30/2022
3/31/2022
Real estate loans
$
(109
)
$
2,022
$
9
$
(508
)
$
(16,418
)
Commercial loans
196
4,174
115
(461
)
(1,529
)
Consumer loans
21
206
95
39
47
Total net charge offs (recoveries)
$
108
$
6,402
$
219
$
(930
)
$
(17,900
)
Hope Bancorp, Inc.
Selected Financial
Data
Unaudited (dollars in
thousands)
NONPERFORMING ASSETS:
3/31/2023
12/31/2022
9/30/2022
6/30/2022
3/31/2022
Loans on nonaccrual status (1)
$
78,861
$
49,687
$
64,571
$
69,522
$
52,717
Delinquent loans 90 days or more on
accrual status
364
401
5,306
12,468
3,090
Accruing troubled debt restructured loans
(2)
—
16,931
25,631
26,572
44,555
Total nonperforming loans
79,225
67,019
95,508
108,562
100,362
Other real estate owned
938
2,418
1,480
2,010
2,010
Total nonperforming assets
$
80,163
$
69,437
$
96,988
$
110,572
$
102,372
Nonperforming assets/total assets
0.39
%
0.36
%
0.51
%
0.61
%
0.58
%
Nonperforming assets/loans receivable
& OREO
0.53
%
0.45
%
0.63
%
0.76
%
0.73
%
Nonperforming assets/total capital
3.89
%
3.44
%
4.91
%
5.53
%
5.02
%
Nonperforming loans/loans receivable
0.53
%
0.44
%
0.62
%
0.75
%
0.71
%
Nonaccrual loans/loans receivable
0.52
%
0.32
%
0.42
%
0.48
%
0.37
%
Allowance for credit losses/loans
receivable
1.09
%
1.05
%
1.04
%
1.04
%
1.05
%
Allowance for credit losses/nonaccrual
loans
207.38
%
326.76
%
248.66
%
218.03
%
279.70
%
Allowance for credit losses/nonperforming
loans
206.43
%
242.26
%
168.11
%
139.63
%
146.92
%
Allowance for credit losses/nonperforming
assets
204.01
%
233.82
%
165.55
%
137.09
%
144.03
%
(1) Excludes delinquent SBA loans that are
guaranteed and currently in liquidation totaling $7.6 million, $9.8
million, $9.9 million, $13.2 million, and $17.0 million, at March
31, 2023, December 31, 2022, September 30, 2022, June 30, 2022, and
March 31, 2022, respectively.
(2) The Company adopted ASU 2022-02 in
2023 which eliminated the concept of TDR from GAAP and therefore
accruing TDR loans are no longer included in nonperforming
loans.
NONACCRUAL LOANS BY TYPE:
3/31/2023
12/31/2022
9/30/2022
6/30/2022
3/31/2022
Real estate loans
$
44,376
$
33,915
$
47,807
$
53,966
$
36,655
Commercial loans
26,191
5,620
7,675
8,206
8,686
Consumer loans
8,294
10,152
9,089
7,350
7,376
Total
$
78,861
$
49,687
$
64,571
$
69,522
$
52,717
Hope Bancorp, Inc.
Selected Financial
Data
Unaudited (dollars in
thousands)
ACCRUING DELINQUENT LOANS 30-89 DAYS
PAST DUE:
3/31/2023
12/31/2022
9/30/2022
6/30/2022
3/31/2022
30 - 59 days
$
7,662
$
7,049
$
13,092
$
10,090
$
12,439
60 - 89 days
249
2,243
4,933
6,354
3,090
Total
$
7,911
$
9,292
$
18,025
$
16,444
$
15,529
ACCRUING DELINQUENT LOANS 30-89 DAYS
PAST DUE BY TYPE:
3/31/2023
12/31/2022
9/30/2022
6/30/2022
3/31/2022
Real estate loans
$
3,652
$
4,115
$
9,694
$
7,919
$
6,097
Commercial loans
419
3,300
6,165
3,397
5,003
Consumer loans
3,840
1,877
2,166
5,128
4,429
Total
$
7,911
$
9,292
$
18,025
$
16,444
$
15,529
CRITICIZED LOANS:
3/31/2023
12/31/2022
9/30/2022
6/30/2022
3/31/2022
Special mention
$
166,472
$
157,263
$
79,399
$
95,797
$
166,958
Substandard
138,224
104,073
204,713
244,748
226,661
Total criticized loans
$
304,696
$
261,336
$
284,112
$
340,545
$
393,619
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 most directly comparable GAAP to
non-GAAP financial measures utilized by management is provided
below.
Three Months Ended
RETURN ON AVERAGE TANGIBLE COMMON
EQUITY
3/31/2023
12/31/2022
3/31/2022
Average stockholders’ equity
$
2,046,159
$
1,997,460
$
2,090,755
Less: Average goodwill and core deposit
intangible assets, net
(469,992
)
(470,442
)
(471,921
)
Average tangible common equity
$
1,576,167
$
1,527,018
$
1,618,834
Net income
$
39,121
$
51,703
$
60,738
Return on average tangible common equity
(annualized)
9.93
%
13.54
%
15.01
%
TANGIBLE COMMON EQUITY
3/31/2023
12/31/2022
3/31/2022
Total stockholders’ equity
$
2,058,580
$
2,019,328
$
2,041,057
Less: Goodwill and core deposit intangible
assets, net
(469,728
)
(470,176
)
(471,634
)
Tangible common equity
$
1,588,852
$
1,549,152
$
1,569,423
Total assets
$
20,568,884
$
19,164,491
$
17,803,814
Less: Goodwill and core deposit intangible
assets, net
(469,728
)
(470,176
)
(471,634
)
Tangible assets
$
20,099,156
$
18,694,315
$
17,332,180
Common shares outstanding
119,865,732
119,495,209
120,327,689
Tangible common equity to tangible
assets
7.91
%
8.29
%
9.05
%
Tangible common equity per share
$
13.26
$
12.96
$
13.04
Three Months Ended
PRE-PROVISION NET REVENUE
3/31/2023
12/31/2022
3/31/2022
Net interest income before provision
(credit) for credit losses
$
133,878
$
150,521
$
133,176
Noninterest income
10,978
12,110
13,186
Revenue
144,856
162,631
146,362
Less noninterest expense
90,354
84,518
75,373
Pre-provision net revenue
$
54,502
$
78,113
$
70,989
Average assets
$
19,087,170
$
18,863,726
$
17,742,402
ROA (PPNR)
1.14
%
1.66
%
1.60
%
Average stockholders’ equity
2,046,159
1,997,460
2,090,755
ROE (PPNR)
10.65
%
15.64
%
13.58
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230424005850/en/
Julianna Balicka EVP & Chief Financial Officer 213-235-3235
julianna.balicka@bankofhope.com
Angie Yang SVP, Director of Investor Relations & Corporate
Communications 213-251-2219 angie.yang@bankofhope.com
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