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, 2022.
For the three months ended March 31, 2022, net income increased
18% to $60.7 million, or $0.50 per diluted common share, from $51.6
million, or $0.43 per diluted common share, in the 2021 fourth
quarter and increased 39% from $43.7 million, or $0.35 per diluted
common share, in the year-ago first quarter.
“For the three months ended March 31, 2022, we delivered a
strong quarter of profitability that is reflective of the strategic
actions taken in 2021,” said Kevin S. Kim, Chairman, President and
Chief Executive Officer. “As expected, our asset quality improved
materially with criticized loan balances declining 21% from
year-end 2021. Together with a large recovery from a previously
charged off loan, we recorded an $11.0 million negative provision
for credit losses while at the same time further strengthening our
reserves.
“The momentum in our business development efforts continued to
build with record first quarter production volume of $1.03 billion,
which resulted in 6.7% growth in loans receivable on an annualized
basis, excluding PPP loans. Given the increased productivity of our
larger banking teams and our more diversified areas of lending
expertise, we believe we are well positioned to deliver a very
strong year of new loan production that will ultimately lead to
enhanced growth in earnings and shareholder returns,” said Kim.
Q1 2022 Highlights
- Loan originations totaled $1.03 billion, a record first quarter
high and representing a 21% increase over the previous first
quarter record set in 2021.
- Excluding PPP, loans receivable increased 6.7%
quarter-over-quarter on an annualized basis.
- Company recorded net recoveries of $17.9 million, reflecting
additional recoveries related to a large relationship previously
charged off during the 2021 third quarter.
- Asset quality improved meaningfully quarter-over-quarter with
total nonperforming assets decreasing 8.4% and criticized loans
decreasing 21.2%.
- Company recorded a negative provision for credit losses of
$11.0 million, reflecting significant reductions in criticized
loans and a large net recovery.
- Net interest margin expanded 8 basis points from the fourth
quarter of 2021.
- Net income increased 18% quarter-over-quarter to $60.7 million,
or $0.50 per diluted common share.
- Total cost of deposits relatively stable, up 1 basis point
quarter-over-quarter.
- Noninterest expenses continued to be well managed with
efficiency ratio of 51.50% and noninterest expense to average
assets of 1.70%.
Financial Highlights
(dollars in thousands, except per share
data) (unaudited)
At or for the Three Months
Ended
3/31/2022
12/31/2021
3/31/2021
Net income
$
60,738
$
51,623
$
43,687
Diluted earnings per share
$
0.50
$
0.43
$
0.35
Pre-provision net revenue (1)
$
70,989
$
72,179
$
60,952
Net interest income before (credit)
provision for credit losses
$
133,176
$
133,318
$
122,579
Net interest margin
3.21
%
3.13
%
3.06
%
Noninterest income
$
13,186
$
13,097
$
8,804
Noninterest expense
$
75,373
$
74,236
$
70,431
Net loans receivable
$
13,919,224
$
13,812,193
$
13,494,686
Deposits
$
14,515,128
$
15,040,450
$
14,301,269
Total cost of deposits
0.24
%
0.23
%
0.36
%
Nonaccrual loans(2)
$
52,717
$
54,616
$
109,858
Nonperforming loans to loans
receivable(2)
0.71
%
0.78
%
1.11
%
ACL to loans receivable
1.05
%
1.01
%
1.52
%
ACL to nonaccrual loans(2)
279.70
%
257.34
%
189.28
%
ACL to nonperforming assets(2)
144.03
%
125.76
%
121.94
%
(Credit) provision for credit losses
$
(11,000
)
$
1,500
$
3,300
Net (recoveries) charge offs
$
(17,900
)
$
(2,276
)
$
2,098
Return on average assets (“ROA”)
1.37
%
1.16
%
1.02
%
Return on average equity (“ROE”)
11.62
%
9.93
%
8.53
%
Return on average tangible common equity
(“ROTCE”)(1)
15.01
%
12.85
%
11.11
%
Noninterest expense / average assets
1.70
%
1.67
%
1.65
%
Efficiency ratio
51.50
%
50.70
%
53.61
%
(1)
Pre-provision net revenue and return on
average tangible common equity are non-GAAP financial measures.
Management’s reasons and purposes for using these non-GAAP
financial measures are set forth on Page 6 of this earnings
release. A quantitative reconciliation of the Company’s 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 2022 First
Quarter
Net interest income before provision for credit losses for the
2022 first quarter was stable at $133.2 million, compared with
$133.3 million in the 2021 fourth quarter, but increased 9% from
$122.6 million in the 2021 first quarter. The Company attributed
the year-over-year increase to higher interest income due to higher
average balances of loans receivable and investment securities and
lower interest expense on deposits.
The net interest margin for the 2022 first quarter increased 8
basis points to 3.21% from 3.13% in the preceding fourth quarter
and increased 15 basis points from 3.06% in the year-ago first
quarter, primarily due to a decrease in interest earning cash which
was used to fund a portion of the increase in average loan
balances.
The weighted average yield on loans for the 2022 first quarter
was 3.88%, compared with 3.95% in the 2021 fourth quarter. The
Company attributed the quarter-over-quarter decrease in weighted
average yield on loans to the impact of lower interest income
related to SBA PPP loans and lower purchase accounting accretion.
The weighted average yield on loans for the 2021 first quarter was
3.94%.
The weighted average cost of deposits for the 2022 first quarter
increased slightly by 1 basis point to 0.24% from 0.23% in the 2021
fourth quarter, primarily reflecting a lower mix of noninterest
bearing demand deposits. Compared with the year-ago first quarter,
the weighted average cost of deposits for the 2022 first quarter
decreased 12 basis points from 0.36%, largely reflecting a 37 basis
point reduction in the cost of time deposits and a significantly
improved mix of deposits with time deposits accounting for 15.2% of
total deposits at March 31, 2022, versus 24.9% at March 31,
2021.
Noninterest income for the 2022 first quarter increased 1% to
$13.2 million from $13.1 million in the 2021 fourth quarter,
reflecting higher net gain on sale of SBA loans, largely offset by
lower other income and fees, which included quarter-over-quarter
decreases in equity investment fair values, dividend income from
equity investments and swap fee income. During the 2022 first
quarter, the Company sold $58.1 million in the guaranteed portion
of SBA 7(a) loans, compared with $41.0 million in the preceding
fourth quarter. Noninterest income for the 2022 first quarter
increased 50% over $8.8 million in the first quarter of 2021 due to
the absence of SBA loan sales to the secondary market in the first
quarter of 2021.
Noninterest expense for the 2022 first quarter increased 2% to
$75.4 million from $74.2 million for the preceding fourth quarter,
reflecting higher salaries and employee benefits largely offset by
decreases in most other noninterest expense line items. For the
2021 first quarter, noninterest expense totaled $70.4 million.
Salaries and employee benefits expense for the 2022 first
quarter increased to $47.7 million from $44.6 million in the
preceding fourth quarter, largely reflecting seasonal increases
related to payroll taxes and vacation accruals, along with a
decrease in deferred loan origination costs. Salaries and employee
benefits expense for the 2021 first quarter totaled $41.2 million.
The Company attributed the year-over-year increase in salaries and
employee benefits expense to higher base salaries reflecting an
increase in full-time equivalent employees, higher group insurance
expense and lower deferred loan origination costs.
The Company’s efficiency ratio for the 2022 first quarter was
51.50%, compared with 50.70% in the preceding fourth quarter and
53.61% in the year-ago first quarter. Noninterest expense as a
percentage of average assets was 1.70% for the 2022 first quarter,
compared with 1.67% for the 2021 fourth quarter and 1.65% for the
2021 first quarter.
The effective tax rate for the 2022 first quarter was 25.9%,
compared with 27.0% for the preceding fourth quarter and 24.2% in
the year-ago first quarter. The effective tax rate for the 2022
first quarter was higher than the year-ago first quarter due mainly
to a decrease in affordable housing tax credits compared with the
prior year.
Balance Sheet Summary
New loan originations funded during the 2022 first quarter
totaled $1.03 billion, a record first quarter high and reflecting a
21% increase over $847.1 million in the year-ago first quarter.
During the seasonally stronger fourth quarter of 2021, the Company
originated $1.24 billion of new loans, a record high for any given
quarter.
Following are the components of new loan production for the
quarters ended March 31, 2022, December 31, 2021, and March 31,
2021.
(dollars in thousands) (unaudited)
For the Three Months
Ended
3/31/2022
12/31/2021
3/31/2021
Commercial real estate
$
529,730
$
573,978
$
277,704
Commercial
335,756
532,634
156,622
SBA
56,602
54,848
36,802
SBA PPP
—
—
304,727
Residential mortgage
103,473
81,325
69,784
Consumer
401
70
1,473
Total new loan originations
$
1,025,962
$
1,242,855
$
847,112
At March 31, 2022, loans receivable increased 0.8% to $14.07
billion from $13.95 billion at December 31, 2021 and increased 2.7%
from $13.70 billion at March 31, 2021.
Total deposits at March 31, 2022 declined 3.5% to $14.52 billion
from $15.04 billion at December 31, 2021, largely reflecting a
decrease in time deposits, but increased 1.5% year-over-year from
$14.30 billion at March 31, 2021. Quarter-over-quarter, money
market and NOW deposits increased 4.9%, but was offset by a 4.4%
decline in noninterest bearing demand deposits and a 20.7%
reduction in time deposits. On a year-over-year basis, noninterest
bearing demand deposits at March 31, 2022 increased 1.3%, money
market and NOW deposits increased 29.4%, and time deposits
decreased 37.9%.
Following is the deposit composition as of March 31, 2022,
December 31, 2021 and March 31, 2021:
(dollars in thousands) (unaudited)
3/31/2022
12/31/2021
% change
3/31/2021
% change
Noninterest bearing demand deposits
$
5,498,263
$
5,751,870
(4
)%
$
5,427,174
1
%
Money market and other
6,484,677
6,178,850
5
%
5,009,419
29
%
Saving deposits
321,373
321,377
—
%
305,326
5
%
Time deposits
2,210,815
2,788,353
(21
)%
3,559,350
(38
)%
Total deposit balances
$
14,515,128
$
15,040,450
(3
)%
$
14,301,269
1
%
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, 2022, December 31, 2021 and March 31,
2021:
Deposit Breakdown
Cost of Deposits
(unaudited)
3/31/2022
12/31/2021
3/31/2021
Q1 2022
Q4 2021
Q1 2021
Noninterest bearing demand deposits
37.9
%
38.3
%
38.0
%
—
%
—
%
—
%
Money market and other
44.7
%
41.1
%
35.0
%
0.36
%
0.37
%
0.42
%
Saving deposits
2.2
%
2.1
%
2.1
%
1.18
%
1.18
%
1.17
%
Time deposits
15.2
%
18.5
%
24.9
%
0.32
%
0.34
%
0.69
%
Total deposit balances
100.0
%
100.0
%
100.0
%
0.24
%
0.23
%
0.36
%
Allowance for Credit
Losses
In the 2022 first quarter, the Company recorded a negative
provision for credit losses of $11.0 million, compared with a
provision for credit losses of $1.5 million in the preceding fourth
quarter and a provision for credit losses of $3.3 million in the
2021 first quarter.
Following is the allowance for credit losses and allowance
coverage ratios as of March 31, 2022, December 31, 2021 and March
31, 2021:
(dollars in thousands) (unaudited)
3/31/2022
12/31/2021
3/31/2021
Allowance for credit losses
$
147,450
$
140,550
$
207,943
Allowance for credit loss/loans
receivable
1.05
%
1.01
%
1.52
%
Allowance for credit losses/nonperforming
loans
146.92
%
128.75
%
136.79
%
Credit Quality
Following are the components of nonperforming assets as of March
31, 2022, December 31, 2021 and March 31, 2021:
(dollars in thousands) (unaudited)
3/31/2022
12/31/2021
3/31/2021
Loans on nonaccrual status (1)
$
52,717
$
54,616
$
109,858
Delinquent loans 90 days or more on
accrual status
3,090
2,131
384
Accruing troubled debt restructured
loans
44,555
52,418
41,773
Total nonperforming loans
100,362
109,165
152,015
Other real estate owned
2,010
2,597
18,515
Total nonperforming assets
$
102,372
$
111,762
$
170,530
(1)
Excludes delinquent SBA loans that are
guaranteed and currently in liquidation totaling $17.0 million,
$19.5 million and $25.0 million, at March 31, 2022, December 31,
2021 and March 31, 2021, respectively.
Total nonperforming assets at March 31, 2022 declined to $102.4
million from $111.8 million at December 31, 2021 and from $170.5
million at March 31, 2021. The quarter-over-quarter decrease in
total nonperforming assets largely reflects a $1.9 million
reduction in nonaccrual loans and a $7.9 million reduction in
accruing troubled debt restructured loans.
Following are net (recoveries) charge offs and net (recoveries)
charge offs to average loans receivable on an annualized basis for
the three months ended March 31, 2022, December 31, 2021 and March
31, 2021:
(dollars in thousands) (unaudited)
For the Three Months
Ended
3/31/2022
12/31/2021
3/31/2021
Net (recoveries) charge offs
$
(17,900
)
$
(2,276
)
$
2,098
Net (recoveries) charge offs/average loans
receivable (annualized)
(0.52
)%
(0.07
)%
0.06
%
Net recoveries in the 2022 first quarter reflects additional
partial recoveries from a large loan charged off during the 2021
third quarter.
Following are the components of criticized loan balances as of
March 31, 2022, December 31, 2021 and March 31, 2021:
(dollars in thousands) (unaudited)
3/31/2022
12/31/2021
3/31/2021
Special mention
$
166,958
$
257,194
$
280,974
Substandard
226,661
242,397
379,048
Total criticized loans
$
393,619
$
499,591
$
660,022
The Company noted that the quarter-over-quarter decrease in
criticized loan balances at March 31, 2022 largely reflects
upgrades of its borrowers’ post-COVID modifications following the
receipt of updated financial statements and payoffs of criticized
loans.
Capital
At March 31, 2022, the Company and the Bank continued to exceed
all regulatory capital requirements generally required to meet the
definition of a “well-capitalized” financial institution. Following
are capital ratios for the Company as of March 31, 2022, December
31, 2021 and March 31, 2021:
Hope Bancorp, Inc. (unaudited)
3/31/2022
12/31/2021
3/31/2021
Minimum Guideline for
“Well-Capitalized” Bank
Common Equity Tier 1 Capital
11.03%
11.03%
11.08%
6.50%
Tier 1 Leverage Ratio
10.37%
10.11%
10.15%
5.00%
Tier 1 Risk-Based Ratio
11.69%
11.70%
11.78%
8.00%
Total Risk-Based Ratio
12.49%
12.42%
13.03%
10.00%
Following are tangible common equity(1) (“TCE”) per share and
TCE as a percentage of tangible assets(1) as of March 31, 2022,
December 31, 2021 and March 31, 2021:
(unaudited)
3/31/2022
12/31/2021
3/31/2021
Tangible common equity per share (1)
$
13.04
$
13.51
$
12.73
Tangible common equity to tangible assets
(2)
9.05
%
9.31
%
9.40
%
(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 following section.
A quantitative reconciliation of the GAAP to non-GAAP financial
measures is provided in the accompanying financial information on
Table Page 9.
Non-GAAP Financial Metrics
This news release contains certain non-GAAP financial measure
disclosures, including pre-provision net revenue, 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 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 19, 2022 at 9:30 a.m. Pacific
Time / 12:30 p.m. Eastern Time to review financial results for its
first quarter ended March 31, 2022. 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
April 26, 2022, replay access code 1867037.
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 $17.80 billion in total assets as of March 31, 2022.
Headquartered in Los Angeles and serving a multi-ethnic population
of customers across the nation, Bank of Hope operates 54
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, 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 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
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 of the Company. 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:
3/31/2022
12/31/2021
% change
3/31/2021
% change
Cash and due from banks
$
280,373
$
316,266
(11
)%
$
376,666
(26
)%
Securities available for sale, at fair
value
2,492,486
2,666,275
(7
)%
2,233,744
12
%
Federal Home Loan Bank (“FHLB”) stock and
other investments
87,201
87,961
(1
)%
102,242
(15
)%
Loans held for sale, at the lower of cost
or fair value
115,756
99,049
17
%
19,672
488
%
Loans receivable
14,066,674
13,952,743
1
%
13,702,629
3
%
Allowance for credit losses
(147,450
)
(140,550
)
(5
)%
(207,943
)
29
%
Net loans receivable
13,919,224
13,812,193
1
%
13,494,686
3
%
Accrued interest receivable
37,949
41,842
(9
)%
60,498
(37
)%
Premises and equipment, net
45,642
45,667
—
%
47,918
(5
)%
Bank owned life insurance
77,390
77,081
—
%
77,089
—
%
Goodwill
464,450
464,450
—
%
464,450
—
%
Servicing assets
10,874
10,418
4
%
12,084
(10
)%
Other intangible assets, net
7,184
7,671
(6
)%
9,198
(22
)%
Other assets
265,285
260,188
2
%
300,613
(12
)%
Total assets
$
17,803,814
$
17,889,061
—
%
$
17,198,860
4
%
Liabilities:
Deposits
$
14,515,128
$
15,040,450
(3
)%
$
14,301,269
1
%
FHLB and FRB borrowings
772,000
300,000
157
%
400,000
93
%
Convertible notes, net
216,444
216,209
—
%
215,504
—
%
Subordinated debentures
105,652
105,354
—
%
104,469
1
%
Accrued interest payable
4,826
4,272
13
%
8,611
(44
)%
Other liabilities
148,707
129,793
15
%
123,426
20
%
Total liabilities
$
15,762,757
$
15,796,078
—
%
$
15,153,279
4
%
Stockholders’ Equity:
Common stock, $0.001 par value
$
137
$
136
1
%
$
136
1
%
Capital surplus
1,422,602
1,421,698
—
%
1,417,137
—
%
Retained earnings
976,483
932,561
5
%
823,085
19
%
Treasury stock, at cost
(250,000
)
(250,000
)
—
%
(200,000
)
(25
)%
Accumulated other comprehensive (loss)
gain, net
(108,165
)
(11,412
)
(848
)%
5,223
N/A
Total stockholders’ equity
2,041,057
2,092,983
(2
)%
2,045,581
—
%
Total liabilities and stockholders’
equity
$
17,803,814
$
17,889,061
—
%
$
17,198,860
4
%
Common stock shares - authorized
150,000,000
150,000,000
150,000,000
Common stock shares - outstanding
120,327,689
120,006,452
123,480,494
Treasury stock shares
16,343,849
16,343,849
12,661,581
Hope Bancorp, Inc.
Selected Financial
Data
Unaudited (dollars in thousands,
except share and per share data)
Three Months Ended
3/31/2022
12/31/2021
% change
3/31/2021
% change
Interest and fees on loans
$
132,672
$
133,821
(1
)%
$
129,736
2
%
Interest on securities
11,656
10,657
9
%
7,915
47
%
Interest on federal funds sold and other
investments
544
691
(21
)%
642
(15
)%
Total interest income
144,872
145,169
—
%
138,293
5
%
Interest on deposits
8,676
8,905
(3
)%
12,770
(32
)%
Interest on other borrowings and
convertible notes
3,020
2,946
3
%
2,944
3
%
Total interest expense
11,696
11,851
(1
)%
15,714
(26
)%
Net interest income before provision
(credit) for credit losses
133,176
133,318
—
%
122,579
9
%
Provision (credit) for credit losses
(11,000
)
1,500
N/A
3,300
N/A
Net interest income after provision
(credit) for credit losses
144,176
131,818
9
%
119,279
21
%
Service fees on deposit accounts
1,974
1,894
4
%
1,790
10
%
International service fees
794
1,061
(25
)%
841
(6
)%
Loan servicing fees, net
836
747
12
%
1,044
(20
)%
Wire transfer fees
900
916
(2
)%
844
7
%
Net gains on sales of SBA loans
5,603
3,614
55
%
—
100
%
Net gains on sales of residential mortgage
loans
757
530
43
%
2,096
(64
)%
Other income and fees
2,322
4,335
(46
)%
2,189
6
%
Total noninterest income
13,186
13,097
1
%
8,804
50
%
Salaries and employee benefits
47,745
44,608
7
%
41,216
16
%
Occupancy
7,335
7,391
(1
)%
6,967
5
%
Furniture and equipment
4,644
4,642
—
%
4,186
11
%
Advertising and marketing
1,636
2,329
(30
)%
1,625
1
%
Data processing and communications
2,461
2,789
(12
)%
2,737
(10
)%
Professional fees
2,211
2,439
(9
)%
2,903
(24
)%
FDIC assessment
1,569
1,366
15
%
1,255
25
%
Credit related expenses
1,112
873
27
%
2,218
(50
)%
OREO expense, net
357
811
(56
)%
281
27
%
Other
6,303
6,988
(10
)%
7,043
(11
)%
Total noninterest expense
75,373
74,236
2
%
70,431
7
%
Income before income taxes
81,989
70,679
16
%
57,652
42
%
Income tax provision
21,251
19,056
12
%
13,965
52
%
Net income
$
60,738
$
51,623
18
%
$
43,687
39
%
Earnings Per Common Share - Basic
$
0.51
$
0.43
$
0.35
Earnings Per Common Share - Diluted
$
0.50
$
0.43
$
0.35
Weighted Average Shares Outstanding -
Basic
120,131,380
120,160,300
123,324,745
Weighted Average Shares Outstanding -
Diluted
121,089,474
121,025,925
124,336,130
Hope Bancorp, Inc.
Selected Financial
Data
Unaudited (dollars in thousands,
except share and per share data)
For the Three Months
Ended
(Annualized)
Profitability measures:
3/31/2022
12/31/2021
3/31/2021
ROA
1.37
%
1.16
%
1.02
%
ROE
11.62
%
9.93
%
8.53
%
ROTCE (1)
15.01
%
12.85
%
11.11
%
Net interest margin
3.21
%
3.13
%
3.06
%
Efficiency ratio
51.50
%
50.70
%
53.61
%
Noninterest expense / average assets
1.70
%
1.67
%
1.65
%
(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:
3/31/2022
12/31/2021
3/31/2021
Accretion on acquired loans (including
acquired credit deteriorated loans)
$
883
$
1,950
$
2,960
Amortization of premium on low income
housing tax credits
(76
)
(73
)
(73
)
Accretion of discount on acquired
subordinated debt
(298
)
(296
)
(290
)
Amortization of core deposit
intangibles
(487
)
(509
)
(509
)
Total acquisition accounting
adjustments
$
22
$
1,072
$
2,088
Hope Bancorp, Inc.
Selected Financial
Data
Unaudited (dollars in
thousands)
Three Months Ended
3/31/2022
12/31/2021
3/31/2021
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
$
13,871,974
$
132,672
3.88
%
$
13,447,009
$
133,821
3.95
%
$
13,346,264
$
129,736
3.94
%
Securities available for sale
2,621,220
11,656
1.80
%
2,674,903
10,657
1.58
%
2,267,409
7,915
1.42
%
FHLB stock and other investments
352,774
544
0.63
%
773,579
691
0.35
%
640,392
642
0.41
%
Total interest earning assets
$
16,845,968
$
144,872
3.49
%
$
16,895,491
$
145,169
3.41
%
$
16,254,065
$
138,293
3.45
%
INTEREST BEARING LIABILITIES:
Deposits:
Demand, interest bearing
$
6,337,866
$
5,701
0.36
%
$
5,961,363
$
5,522
0.37
%
$
5,256,579
$
5,490
0.42
%
Savings
318,508
927
1.18
%
316,758
946
1.18
%
301,184
870
1.17
%
Time deposits
2,619,491
2,048
0.32
%
2,823,613
2,437
0.34
%
3,767,109
6,410
0.69
%
Total interest bearing deposits
9,275,865
8,676
0.38
%
9,101,734
8,905
0.39
%
9,324,872
12,770
0.56
%
FHLB and FRB borrowings
242,556
687
1.15
%
216,882
648
1.19
%
215,889
642
1.21
%
Convertible notes, net
216,305
1,323
2.45
%
216,078
1,322
2.39
%
215,002
1,322
2.46
%
Subordinated debentures
101,577
1,010
3.98
%
101,295
976
3.77
%
100,392
980
3.90
%
Total interest bearing liabilities
$
9,836,303
$
11,696
0.48
%
$
9,635,989
$
11,851
0.49
%
$
9,856,155
$
15,714
0.65
%
Noninterest bearing demand deposits
5,672,768
5,967,251
5,052,532
Total funding liabilities/cost of
funds
$
15,509,071
0.31
%
$
15,603,240
0.30
%
$
14,908,687
0.43
%
Net interest income/net interest
spread
$
133,176
3.01
%
$
133,318
2.92
%
$
122,579
2.80
%
Net interest margin
3.21
%
3.13
%
3.06
%
Cost of deposits:
Noninterest bearing demand deposits
$
5,672,768
$
—
—
%
$
5,967,251
$
—
—
%
$
5,052,532
$
—
—
%
Interest bearing deposits
9,275,865
8,676
0.38
%
9,101,734
8,905
0.39
%
9,324,872
12,770
0.56
%
Total deposits
$
14,948,633
$
8,676
0.24
%
$
15,068,985
$
8,905
0.23
%
$
14,377,404
$
12,770
0.36
%
Hope Bancorp, Inc.
Selected Financial
Data
Unaudited (dollars in
thousands)
Three Months Ended
AVERAGE BALANCES:
3/31/2022
12/31/2021
% change
3/31/2021
% change
Loans receivable, including loans held for
sale
$
13,871,974
$
13,447,009
3
%
$
13,346,264
4
%
Investments
2,973,994
3,448,482
(14
)%
2,907,801
2
%
Interest earning assets
16,845,968
16,895,491
—
%
16,254,065
4
%
Total assets
17,742,402
17,834,345
(1
)%
17,115,407
4
%
Interest bearing deposits
9,275,865
9,101,734
2
%
9,324,872
(1
)%
Interest bearing liabilities
9,836,303
9,635,989
2
%
9,856,155
—
%
Noninterest bearing demand deposits
5,672,768
5,967,251
(5
)%
5,052,532
12
%
Stockholders’ equity
2,090,755
2,079,694
1
%
2,047,506
2
%
Net interest earning assets
7,009,665
7,259,502
(3
)%
6,397,910
10
%
LOAN PORTFOLIO COMPOSITION:
3/31/2022
12/31/2021
% change
3/31/2021
% change
Commercial loans
$
4,124,715
$
4,208,674
(2
)%
$
4,346,244
(5
)%
Real estate loans
9,262,305
9,105,931
2
%
8,811,423
5
%
Consumer and other loans
679,654
638,138
7
%
544,962
25
%
Loans, net of deferred loan fees and
costs
14,066,674
13,952,743
1
%
13,702,629
3
%
Allowance for credit losses
(147,450
)
(140,550
)
(5
)%
(207,943
)
29
%
Loans receivable, net
$
13,919,224
$
13,812,193
1
%
$
13,494,686
3
%
REAL ESTATE LOANS BY PROPERTY
TYPE:
3/31/2022
12/31/2021
% change
3/31/2021
% change
Retail buildings
$
2,598,373
$
2,522,976
3
%
$
2,317,017
12
%
Hotels/motels
1,208,217
1,308,405
(8
)%
1,619,661
(25
)%
Gas stations/car washes
1,055,383
1,050,730
—
%
913,176
16
%
Mixed-use facilities
872,362
854,793
2
%
752,729
16
%
Warehouses
1,263,791
1,244,339
2
%
1,092,549
16
%
Multifamily
841,316
744,068
13
%
531,306
58
%
Other
1,422,863
1,380,620
3
%
1,584,985
(10
)%
Total
$
9,262,305
$
9,105,931
2
%
$
8,811,423
5
%
DEPOSIT COMPOSITION
3/31/2022
12/31/2021
% change
3/31/2021
% change
Noninterest bearing demand deposits
$
5,498,263
$
5,751,870
(4
)%
$
5,427,174
1
%
Money market and other
6,484,677
6,178,850
5
%
5,009,419
29
%
Saving deposits
321,373
321,377
—
%
305,326
5
%
Time deposits
2,210,815
2,788,353
(21
)%
3,559,350
(38
)%
Total deposit balances
$
14,515,128
$
15,040,450
(3
) %
$
14,301,269
1
%
DEPOSIT COMPOSITION (%)
3/31/2022
12/31/2021
3/31/2021
Noninterest bearing demand deposits
37.9
%
38.3
%
38.0
%
Money market and other
44.7
%
41.1
%
35.0
%
Saving deposits
2.2
%
2.1
%
2.1
%
Time deposits
15.2
%
18.5
%
24.9
%
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:
3/31/2022
12/31/2021
3/31/2021
Total stockholders’ equity
$
2,041,057
$
2,092,983
$
2,045,581
Common equity tier 1 ratio
11.03
%
11.03
%
11.08
%
Tier 1 risk-based capital ratio
11.69
%
11.70
%
11.78
%
Total risk-based capital ratio
12.49
%
12.42
%
13.03
%
Tier 1 leverage ratio
10.37
%
10.11
%
10.15
%
Total risk weighted assets
$
15,393,639
$
15,036,292
$
14,338,828
Book value per common share
$
16.96
$
17.44
$
16.57
Tangible common equity to tangible assets
(1)
9.05
%
9.31
%
9.40
%
Tangible common equity per share (1)
$
13.04
$
13.51
$
12.73
(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:
3/31/2022
12/31/2021
9/30/2021
6/30/2021
3/31/2021
Balance at beginning of period
$
140,550
$
136,774
$
189,452
$
207,943
$
206,741
(Credit) provision for credit losses
(11,000
)
1,500
(10,000
)
(7,000
)
3,300
Recoveries
19,403
3,615
1,906
1,301
1,423
Charge offs
(1,503
)
(1,339
)
(44,584
)
(12,792
)
(3,521
)
Balance at end of period
$
147,450
$
140,550
$
136,774
$
189,452
$
207,943
Net (recoveries) charge offs/average loans
receivable (annualized)
(0.52
) %
(0.07
) %
1.28
%
0.35
%
0.06
%
Three Months Ended
NET LOAN (RECOVERIES) CHARGE
OFFS:
3/31/2022
12/31/2021
9/30/2021
6/30/2021
3/31/2021
Real estate loans
$
(16,418
)
$
(2,352
)
$
40,542
$
11,281
$
2,234
Commercial loans
(1,529
)
144
1,117
181
(80
)
Consumer loans
47
(68
)
1,019
29
(56
)
Total net (recoveries) charge offs
$
(17,900
)
$
(2,276
)
$
42,678
$
11,491
$
2,098
Hope Bancorp, Inc.
Selected Financial
Data
Unaudited (dollars in
thousands)
NONPERFORMING ASSETS:
3/31/2022
12/31/2021
9/30/2021
6/30/2021
3/31/2021
Loans on nonaccrual status (1)
$
52,717
$
54,616
$
54,380
$
111,008
$
109,858
Delinquent loans 90 days or more on
accrual status
3,090
2,131
4,567
4,759
384
Accruing troubled debt restructured
loans
44,555
52,418
39,509
51,360
41,773
Total nonperforming loans
100,362
109,165
98,456
167,127
152,015
Other real estate owned
2,010
2,597
15,213
16,619
18,515
Total nonperforming assets
$
102,372
$
111,762
$
113,669
$
183,746
$
170,530
Nonperforming assets/total assets
0.58
%
0.62
%
0.64
%
1.05
%
0.99
%
Nonperforming assets/loans receivable
& OREO
0.73
%
0.80
%
0.85
%
1.37
%
1.24
%
Nonperforming assets/total capital
5.02
%
5.34
%
5.48
%
8.78
%
8.34
%
Nonperforming loans/loans receivable
0.71
%
0.78
%
0.73
%
1.24
%
1.11
%
Nonaccrual loans/loans receivable
0.37
%
0.39
%
0.41
%
0.83
%
0.80
%
Allowance for credit losses/loans
receivable
1.05
%
1.01
%
1.02
%
1.41
%
1.52
%
Allowance for credit losses/nonaccrual
loans
279.70
%
257.34
%
251.52
%
170.67
%
189.28
%
Allowance for credit losses/nonperforming
loans
146.92
%
128.75
%
138.92
%
113.36
%
136.79
%
Allowance for credit losses/nonperforming
assets
144.03
%
125.76
%
120.33
%
103.11
%
121.94
%
(1) Excludes delinquent SBA loans that are
guaranteed and currently in liquidation totaling $17.0 million,
$19.5 million, $20.6 million, $23.6 million, and $25.0 million, at
March 31, 2022, December 31, 2021, September 30, 2021, June 30,
2021, and March 31, 2021, respectively.
NONACCRUAL LOANS BY TYPE:
3/31/2022
12/31/2021
9/30/2021
6/30/2021
3/31/2021
Real estate loans
$
36,655
$
39,756
$
41,673
$
95,622
$
91,940
Commercial loans
8,686
11,025
10,991
12,217
14,080
Consumer loans
7,376
3,835
1,716
3,169
3,838
Total nonaccrual loans
$
52,717
$
54,616
$
54,380
$
111,008
$
109,858
ACCRUING TROUBLED DEBT RESTRUCTURED
LOANS:
3/31/2022
12/31/2021
9/30/2021
6/30/2021
3/31/2021
Retail buildings
$
24,356
$
28,483
$
11,280
$
12,110
$
6,319
Hotels/motels
—
472
—
—
—
Gas stations/car washes
193
197
202
206
210
Mixed-use facilities
2,836
2,846
7,937
7,967
3,377
Warehouses
5,321
5,366
4,908
14,099
14,124
Other (2)
11,849
15,054
15,182
16,978
17,743
Total
$
44,555
$
52,418
$
39,509
$
51,360
$
41,773
(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:
3/31/2022
12/31/2021
9/30/2021
6/30/2021
3/31/2021
30 - 59 days
$
12,439
$
29,723
$
15,016
$
22,466
$
18,175
60 - 89 days
3,090
10,345
4,746
6,987
8,314
Total
$
15,529
$
40,068
$
19,762
$
29,453
$
26,489
ACCRUING DELINQUENT LOANS 30-89 DAYS
PAST DUE BY TYPE:
3/31/2022
12/31/2021
9/30/2021
6/30/2021
3/31/2021
Real estate loans
$
6,097
$
20,232
$
10,359
$
21,432
$
18,331
Commercial loans
5,003
3,057
9,377
560
1,002
Consumer loans
4,429
16,779
26
7,461
7,156
Total
$
15,529
$
40,068
$
19,762
$
29,453
$
26,489
CRITICIZED LOANS:
3/31/2022
12/31/2021
9/30/2021
6/30/2021
3/31/2021
Special mention
$
166,958
$
257,194
$
306,766
$
294,559
$
280,974
Substandard
226,661
242,397
243,684
380,955
379,048
Total criticized loans
$
393,619
$
499,591
$
550,450
$
675,514
$
660,022
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
3/31/2022
12/31/2021
3/31/2021
RETURN ON AVERAGE TANGIBLE COMMON
EQUITY
Average stockholders’ equity
$
2,090,755
$
2,079,694
$
2,047,506
Less: Goodwill and core deposit intangible
assets, net
(471,921
)
(472,405
)
(473,961
)
Average tangible common equity
$
1,618,834
$
1,607,289
$
1,573,545
Net income
$
60,738
$
51,623
$
43,687
Return on average tangible common equity
(annualized)
15.01
%
12.85
%
11.11
%
3/31/2022
12/31/2021
3/31/2021
TANGIBLE COMMON EQUITY
Total stockholders’ equity
$
2,041,057
$
2,092,983
$
2,045,581
Less: Goodwill and core deposit intangible
assets, net
(471,634
)
(472,121
)
(473,648
)
Tangible common equity
$
1,569,423
$
1,620,862
$
1,571,933
Total assets
$
17,803,814
$
17,889,061
$
17,198,860
Less: Goodwill and core deposit intangible
assets, net
(471,634
)
(472,121
)
(473,648
)
Tangible assets
$
17,332,180
$
17,416,940
$
16,725,212
Common shares outstanding
120,327,689
120,006,452
123,480,494
Tangible common equity to tangible
assets
9.05
%
9.31
%
9.40
%
Tangible common equity per share
$
13.04
$
13.51
$
12.73
Three Months Ended
3/31/2022
12/31/2021
3/31/2021
PRE-PROVISION NET REVENUE
Net interest income before provision
(credit) for credit losses
$
133,176
$
133,318
$
122,579
Noninterest income
13,186
13,097
8,804
Revenue
146,362
146,415
131,383
Noninterest expense
75,373
74,236
70,431
Pre-provision net revenue
$
70,989
$
72,179
$
60,952
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220418005459/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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