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Hope Bancorp Reports 2021 Third Quarter Financial Results

Hope Bancorp, Inc. (the “Company”) (NASDAQ: HOPE), the holding company of Bank of Hope (the “Bank”), today reported unaudited financial results for its third quarter and nine months ended September 30, 2021.

For the three months ended September 30, 2021, net income increased 3% to $55.5 million, or $0.45 per diluted common share, from $53.8 million, or $0.43 per diluted common share, in the preceding second quarter and increased 82% from $30.5 million, or $0.25 per diluted common share, in the year-ago third quarter.

“We continued to deliver improved operational performance and profitability in the third quarter of 2021, but more importantly, we took strategic actions to de-risk the loan portfolio which led to significant improvements in asset quality and positioned the Company for a return to organic loan growth in the quarters ahead,” said Kevin S. Kim, Chairman, President and Chief Executive Officer of Hope Bancorp, Inc. “Business development was the strongest it has ever been topping a record $1.0 billion in new loan production and included record high SBA origination volumes of $115.0 million. While SBA PPP loan forgiveness and strategic loan sales of higher-risk credits mitigated loan growth again this quarter, we believe these headwinds are now largely behind us and have renewed our focus on growth and expansion. Deposits at quarter-end totaled a record high $15.1 billion driven primarily by growth in noninterest bearing demand deposits, which led to an eighth consecutive quarter of declining deposit costs. Benefiting from the strategic actions taken during the quarter, we posted meaningful improvements in our credit quality with nonaccrual loans decreasing 51% and criticized assets declining 19% quarter-over-quarter.

“With the significant improvements in asset quality this quarter, together with our track record of robust loan production and positive core deposit growth, we believe we are well positioned to drive even stronger performance in the years ahead,” said Kim.

Q3 2021 Highlights

  • Loan originations increased 13% quarter-over-quarter to a record high $1.01 billion from $894.1 million in the second quarter of 2021.
  • Loans receivable remained at $13.42 billion, as record originations were offset by loan sales, SBA PPP loan forgiveness, other payoffs and pay downs and decreases in mortgage warehouse line utilizations.
  • Excluding SBA PPP loan forgiveness and strategic loan sales and transfers to held-for-sale of potentially problematic loans, loans receivable would have increased 3% quarter-over-quarter or 12% on an annualized basis.
  • Noninterest bearing demand deposits increased 7% quarter-over-quarter and accounted for a record 40% of total deposits, contributing to record high deposits of $15.06 billion.
  • Cost of interest bearing deposits decreased 6 basis points and total cost of deposits decreased 4 basis points quarter-over-quarter marking the eighth consecutive quarter of declining deposit costs.
  • Interest income increased 2% quarter-over-quarter while interest expense declined 8%, resulting in a 3% increase in pre-provision net interest income.
  • Net interest margin declined 4 basis points quarter-over-quarter, as the benefit of lower cost of deposits was more than offset by the impact of excess liquidity on the balance sheet.
  • The Company recorded a negative provision for credit losses of $10.0 million.
  • Net income increased 3% quarter-over-quarter and totaled $55.5 million, or $0.45 per diluted common share.
  • Pre-provision net revenue(1) (“PPNR”) increased 1% quarter-over-quarter and totaled $65.4 million.
  • Net charge offs of $42.7 million reflects strategic actions to eliminate potentially problematic assets and resulted in significantly improved asset quality metrics.
  • Nonaccrual loans decreased 51% quarter-over-quarter and total criticized loans decreased 19%.
  • Return on average assets remained unchanged at 1.25%, while return on average equity increased to 10.61% from 10.41% in the second quarter of 2021.
  • Announced new $50 million share buyback program on July 26, 2021 and repurchased 3,487,426 shares as of September 30, 2021, totaling $47.2 million.

(1)

PPNR is a non-GAAP financial measures, a reconciliation of which is provided in the accompanying financial information on Table Page 10.

Financial Highlights

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

At or for the Three Months Ended

 

9/30/2021

 

6/30/2021

 

9/30/2020

Net income

$

55,499

 

 

$

53,763

 

 

$

30,490

 

Diluted earnings per share

$

0.45

 

 

$

0.43

 

 

$

0.25

 

Net interest income before provision (credit) for credit losses

$

130,296

 

 

$

126,577

 

 

$

117,637

 

Net interest margin

 

3.07

%

 

 

3.11

%

 

 

2.91

%

Noninterest income

$

10,617

 

 

$

11,076

 

 

$

17,513

 

Noninterest expense

$

75,502

 

 

$

73,123

 

 

$

73,406

 

Net loans receivable

$

13,281,917

 

 

$

13,234,849

 

 

$

12,940,376

 

Deposits

$

15,062,527

 

 

$

14,726,230

 

 

$

14,008,356

 

Total cost of deposits

 

0.26

%

 

 

0.30

%

 

 

0.64

%

Nonaccrual loans(1)

$

54,380

 

 

$

111,008

 

 

$

69,205

 

Nonperforming loans to loans receivable(1)

 

0.73

%

 

 

1.24

%

 

 

0.81

%

ACL to loans receivable

 

1.02

%

 

 

1.41

%

 

 

1.37

%

ACL to nonaccrual loans(1)

 

251.52

%

 

 

170.67

%

 

 

259.88

%

ACL to nonperforming assets(1)

 

120.33

%

 

 

103.11

%

 

 

144.36

%

Provision (credit) for credit losses

$

(10,000

)

 

$

(7,000

)

 

$

22,000

 

Net charge offs

$

42,678

 

 

$

11,491

 

 

$

3,922

 

Return on average assets (“ROA”)

 

1.25

%

 

 

1.25

%

 

 

0.72

%

Return on average equity (“ROE”)

 

10.61

%

 

 

10.41

%

 

 

5.98

%

Return on average tangible common equity (“ROTCE”)(2)

 

13.71

%

 

 

13.50

%

 

 

7.80

%

Noninterest expense / average assets

 

1.70

%

 

 

1.70

%

 

 

1.73

%

Efficiency ratio

 

53.58

%

 

 

53.12

%

 

 

54.31

%

(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 10.

Operating Results for the 2021 Third Quarter

Net interest income before the provision (credit) for credit losses for the 2021 third quarter increased 3% to $130.3 million from $126.6 million in the 2021 second quarter and increased 11% from $117.6 million in the 2020 third quarter. The Company attributed the increase to higher interest income on investment securities and loans, as well as lower interest expense on deposits.

The net interest margin for the 2021 third quarter decreased 4 basis points to 3.07% from 3.11% in the preceding 2021 second quarter. The Company noted that excess liquidity on the balance sheet adversely impacted net interest margin by 8 basis points, which more than offset the benefits of lower deposit costs. The net interest margin in the prior-year third quarter was 2.91%.

The weighted average yield on loans for the 2021 third quarter was relatively stable quarter-over-quarter, decreasing 1 basis point to 3.97% from 3.98% in the 2021 second quarter, but declined by 23 basis points from 4.20% in the year-ago third quarter.

The weighted average cost of deposits for the 2021 third quarter decreased for the eighth consecutive quarter to 0.26%, representing a 4 basis point decrease from 0.30% for the 2021 second quarter and a 38 basis point decrease from 0.64% for the 2020 third quarter. The Company attributed the 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 0.42%, 0.48% and 0.92% for the quarters ended September 30, 2021, June 30, 2021 and September 30, 2020, respectively.

Noninterest income for the 2021 third quarter decreased to $10.6 million from $11.1 million for the 2021 second quarter. During the 2021 third quarter, the Company sold $40.2 million in retail mortgage loans and $31.3 million of the guaranteed portion of SBA 7(a) loans, compared with $42.6 million and $30.0 million, respectively, in the preceding second quarter. Noninterest income in the year-ago third quarter totaled $17.5 million, during which quarter the Company recognized $7.5 million in net gains on sales of securities available for sale.

Noninterest expense for the 2021 third quarter increased to $75.5 million from $73.1 million in the preceding second quarter and $73.4 million in the year-ago third quarter.

Salaries and employee benefits expense for the 2021 third quarter increased to $47.0 million from $42.3 million in the preceding second quarter, reflecting a number of factors. The Company increased its bonus reserve for the year to reflect the higher-than-expected financial performance. In addition, employee base salaries increased meaningfully quarter-over-quarter, predominantly reflecting new frontline hires, including a new multi-family lending team recruited from a large money center bank, as well as wage increases necessary to retain existing employees. The Company’s self-funded group insurance expense for the 2021 third quarter was also significantly higher quarter-over-quarter.

In addition, credit related expenses for the 2021 third quarter increased by $1.2 million quarter-over-quarter, but this fluctuation was within normal levels. Altogether, these increases in noninterest expense were partially offset by a $2.0 million quarter-over-quarter decrease in professional fees for the three months ended September 30, 2021, reflecting a favorable outcome and closure of a litigation case.

The Company’s efficiency ratio for the 2021 third quarter was fairly stable at 53.58%, compared with 53.12% for the preceding second quarter and 54.31% for the year-ago third quarter. Noninterest expense as a percentage of average assets remained at 1.70% for the 2021 third quarter but improved from 1.73% in the year-ago third quarter.

The effective tax rate for the 2021 third quarter increased to 26.4% from 24.8% in the preceding quarter. The quarter-over-quarter increase reflects an increase in the Company’s projected annual pretax income compared with previous estimates, combined with the benefit of affordable housing partnership investment tax credits having a smaller effect on the larger annual pretax income. In the year-ago quarter, the effective tax rate was 23.3%.

Balance Sheet Summary

New loan originations funded during the 2021 third quarter increased to a record high $1.01 billion from $894.1 million in the preceding second quarter and $782.4 million in the 2020 third quarter. Following are the components of new loan production for the quarters ended September 30, 2021, June 30, 2021 and September 30, 2020:

(dollars in thousands) (unaudited)

For the Three Months Ended

 

9/30/2021

 

6/30/2021

 

9/30/2020

Commercial real estate

$

488,969

 

 

$

454,857

 

 

$

215,099

 

Commercial

 

329,702

 

 

 

288,726

 

 

 

429,136

 

SBA

 

115,023

 

 

 

77,652

 

 

 

33,262

 

SBA PPP

 

 

 

 

19,816

 

 

 

26

 

Residential mortgage

 

75,007

 

 

 

52,766

 

 

 

102,312

 

Consumer

 

500

 

 

 

275

 

 

 

2,607

 

Total new loan originations

$

1,009,201

 

 

$

894,092

 

 

$

782,442

 

During the 2021 third quarter, the Company also acquired $113.9 million of 30-year adjustable-rate residential mortgage loans. New loan production and loan purchases during the 2021 third quarter were offset by a number of factors. In addition to the sale of $40.2 million in residential mortgage loans and $31.3 million of SBA 7(a) loans during the 2021 third quarter, the Company completed loan sales of $29.6 million and transferred $131.2 million to loans held-for-sale, de-risking the loan portfolio of potentially problematic assets. Altogether with aggregate payoffs and pay downs, which included SBA PPP loan forgiveness of $235.6 million and a $61.4 million quarter-over-quarter decrease in warehouse line utilizations, loans receivable at September 30, 2021 was flat at $13.42 billion versus $13.42 billion at June 30, 2021. Excluding SBA PPP loan forgiveness and loan sales and transfers of potentially problematic assets to held-for-sale, loans receivable at September 30, 2021 would have increased by approximately $401.7 million, or 3.0% quarter-over-quarter. Loans receivable a year ago at September 30, 2020 totaled $13.12 billion.

During the 2021 third quarter, the Company deployed a portion of its excess cash balances and purchased $571.3 million of investment securities. Securities available for sale totaled $2.67 billion at September 30, 2021, up 17% from $2.27 billion at June 30, 2021.

Total deposits at September 30, 2021 increased 2% to $15.06 billion from $14.73 billion at June 30, 2021 and increased 8% from $14.01 billion at September 30, 2020. Quarter-over-quarter, noninterest bearing demand deposits as of September 30, 2021 increased 7% and money market and other interest bearing demand deposit balances increased 1%, while time deposits decreased 4%. On a year-over-year basis, noninterest bearing demand deposits as of September 30, 2021 increased 34% and money market and NOW account balances increased 23%, while time deposits decreased 35%.

Following is the deposit composition as of September 30, 2021, June 30, 2021 and September 30, 2020:

(dollars in thousands) (unaudited)

9/30/2021

 

6/30/2021

 

% change

 

9/30/2020

 

% change

Noninterest bearing demand deposits

$

6,007,586

 

 

$

5,638,115

 

 

7

%

 

$

4,488,529

 

 

34

%

Money market and other

5,871,567

 

 

5,786,697

 

 

1

%

 

4,763,893

 

 

23

%

Saving deposits

314,603

 

 

308,651

 

 

2

%

 

308,943

 

 

2

%

Time deposits

2,868,771

 

 

2,992,767

 

 

(4

)%

 

4,446,991

 

 

(35

)%

Total deposit balances

$

15,062,527

 

 

$

14,726,230

 

 

2

%

 

$

14,008,356

 

 

8

%

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 September 30, 2021, June 30, 2021 and September 30, 2020:

 

Deposit Breakdown

 

Cost of Deposits

(unaudited)

9/30/2021

 

6/30/2021

 

9/30/2020

 

Q3 2021

 

Q2 2021

 

Q3 2020

Noninterest bearing demand deposits

39.9

%

 

38.3

%

 

32.1

%

 

%

 

%

 

%

Money market and other

39.0

%

 

39.2

%

 

34.0

%

 

0.40

%

 

0.43

%

 

0.53

%

Saving deposits

2.1

%

 

2.1

%

 

2.2

%

 

1.18

%

 

1.15

%

 

1.19

%

Time deposits

19.0

%

 

20.4

%

 

31.7

%

 

0.38

%

 

0.49

%

 

1.30

%

Total deposit balances

100.0

%

 

100.0

%

 

100.0

%

 

0.26

%

 

0.30

%

 

0.64

%

Allowance for Credit Losses

In the 2021 third quarter, the Company recorded a negative provision for credit losses of $10.0 million, compared with a negative provision for credit losses of $7.0 million in the preceding second quarter. In the year-ago third quarter, the Company recorded a provision for credit losses of $22.0 million. The allowance release in the 2021 third quarter reflects improvements in macroeconomic forecasts and the Company’s asset quality.

Following is the allowance for credit losses and allowance coverage ratios as of September 30, 2021, June 30, 2021 and September 30, 2020:

(dollars in thousands) (unaudited)

9/30/2021

 

6/30/2021

 

9/30/2020

Allowance for credit losses

$

136,774

 

$

189,452

 

$

179,849

Allowance for credit loss/loans receivable

 

1.02

%

 

 

1.41

%

 

 

1.37

%

Allowance for credit losses/nonperforming loans

 

138.92

%

 

 

113.36

%

 

 

169.40

%

Credit Quality

Following are the components of nonperforming assets as of September 30, 2021, June 30, 2021 and September 30, 2020:

(dollars in thousands) (unaudited)

9/30/2021

 

6/30/2021

 

9/30/2020

Loans on nonaccrual status (1)

$

54,380

 

 

$

111,008

 

 

$

69,205

 

Delinquent loans 90 days or more on accrual status

 

4,567

 

 

 

4,759

 

 

 

1,537

 

Accruing troubled debt restructured loans

 

39,509

 

 

 

51,360

 

 

 

35,429

 

Total nonperforming loans

 

98,456

 

 

 

167,127

 

 

 

106,171

 

Other real estate owned

 

15,213

 

 

 

16,619

 

 

 

18,410

 

Total nonperforming assets

$

113,669

 

 

$

183,746

 

 

$

124,581

 

(1)

Excludes delinquent SBA loans that are guaranteed and currently in liquidation totaling $20.6 million, $23.6 million and $26.2 million, at September 30, 2021, June 30, 2021 and September 30, 2020, respectively.

The significant reductions in nonperforming loans quarter-over-quarter were due to a number of factors, including strategic loan sales and transfers to held-for sale of potentially problematic loans. The loans transferred to held-for-sale are expected to be sold during the fourth quarter of 2021. In addition, one large relationship that was moved to nonaccrual status in the first quarter of 2021 was charged off, and another large relationship on nonaccrual status was paid off in full.

Following are net charge offs and net charge offs to average loans receivable on an annualized basis for the three months ended September 30, 2021, June 30, 2021 and September 30, 2020:

(dollars in thousands) (unaudited)

For the Three Months Ended

 

9/30/2021

 

6/30/2021

 

9/30/2020

Net charge offs

$

42,678

 

$

11,491

 

$

3,922

Net charge offs/average loans receivable (annualized)

 

1.28

%

 

 

0.35

%

 

 

0.12

%

Net charge offs for the 2021 third quarter increased significantly from prior periods. This reflects decisive actions by the Company to eliminate potentially problematic assets from its loan portfolio and included charge offs related to the one large relationship that was moved to nonaccrual status in the first quarter of 2021, along with loan sales and transfers to held-for-sale.

Following are the components of criticized loan balances as of September 30, 2021, June 30, 2021 and September 30, 2020:

(dollars in thousands) (unaudited)

9/30/2021

 

6/30/2021

 

9/30/2020

Special mention

$

306,766

 

$

294,559

 

$

153,388

Substandard

 

243,684

 

 

380,955

 

 

311,902

Doubtful/loss

 

 

 

 

 

 

 

6,640

 

Total criticized loans

$

550,450

 

$

675,514

 

$

471,930

The significant reductions in total criticized loans quarter-over-quarter was due primarily to the strategic loan sales and transfers to held-for-sale, along with charge offs. As previously noted, loan sales totaled $29.6 million and transfers to held-for-sale amounted to $131.2 million, most of which were classified as substandard.

Capital

At September 30, 2021, 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 September 30, 2021, June 30, 2021 and September 30, 2020:

Hope Bancorp, Inc. (unaudited)

9/30/2021

 

6/30/2021

 

9/30/2020

 

Minimum Guideline for

“Well-Capitalized”

Bank

Common Equity Tier 1 Capital

11.01%

 

11.44%

 

11.36%

 

6.50%

Tier 1 Leverage Ratio

9.98%

 

10.43%

 

10.02%

 

5.00%

Tier 1 Risk-Based Ratio

11.70%

 

12.14%

 

12.09%

 

8.00%

Total Risk-Based Ratio

12.42%

 

13.16%

 

13.19%

 

10.00%

Following are tangible common equity (“TCE”) per share and TCE as a percentage of tangible assets as of September 30, 2021, June 30, 2021 and September 30, 2020:

(unaudited)

9/30/2021

 

6/30/2021

 

9/30/2020

Tangible common equity per share (1)

$13.33

 

$13.10

 

$12.70

Tangible common equity to tangible assets (2)

9.24%

 

9.53%

 

9.63%

(1)

Tangible common equity represents common equity less goodwill and net other intangible assets. Tangible common equity per share represents tangible common equity divided by the number of shares issued and outstanding. Both tangible common equity and tangible common equity per share are non-GAAP financial measures. A reconciliation of the Company’s total stockholders’ equity to tangible common equity is provided in the accompanying financial information on Table Page 10.

(2)

Tangible assets represent total assets less goodwill and net other intangible assets. Tangible common equity to tangible assets is the ratio of tangible common equity over tangible assets. Tangible common equity to tangible assets is a non-GAAP financial measure. A reconciliation of the Company’s total assets to tangible assets is provided in the accompanying financial information on Table Page 10.

Investor Conference Call

The Company previously announced that it will host an investor conference call on Tuesday, October 26, 2021 at 9:30 a.m. Pacific Time / 12:30 p.m. Eastern Time to review financial results for its third quarter ended September 30, 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 November 2, 2021, replay access code 10161142.

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 September 30, 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:

9/30/2021

 

6/30/2021

 

% change

 

9/30/2020

 

% change

Cash and due from banks

$

627,352

 

 

 

$

836,957

 

 

 

(25

)%

 

$

629,133

 

 

 

%

Securities available for sale, at fair value

2,669,489

 

 

 

2,274,170

 

 

 

17

%

 

2,060,991

 

 

 

30

%

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

88,102

 

 

 

94,550

 

 

 

(7

)%

 

97,305

 

 

 

(9

)%

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

179,117

 

 

 

54,245

 

 

 

230

%

 

9,170

 

 

 

1,853

%

Loans receivable

13,418,691

 

 

 

13,424,301

 

 

 

%

 

13,120,225

 

 

 

2

%

Allowance for credit losses

(136,774

)

 

 

(189,452

)

 

 

(28

)%

 

(179,849

)

 

 

(24

)%

Net loans receivable

13,281,917

 

 

 

13,234,849

 

 

 

%

 

12,940,376

 

 

 

3

%

Accrued interest receivable

47,102

 

 

 

51,886

 

 

 

(9

)%

 

57,989

 

 

 

(19

)%

Premises and equipment, net

45,307

 

 

 

45,302

 

 

 

%

 

49,552

 

 

 

(9

)%

Bank owned life insurance

76,756

 

 

 

76,428

 

 

 

%

 

77,388

 

 

 

(1

)%

Goodwill

464,450

 

 

 

464,450

 

 

 

%

 

464,450

 

 

 

%

Servicing assets

10,787

 

 

 

11,566

 

 

 

(7

)%

 

13,718

 

 

 

(21

)%

Other intangible assets, net

8,180

 

 

 

8,689

 

 

 

(6

)%

 

10,239

 

 

 

(20

)%

Other assets

300,467

 

 

 

316,535

 

 

 

(5

)%

 

323,456

 

 

 

(7

)%

Total assets

$

17,799,026

 

 

 

$

17,469,627

 

 

 

2

%

 

$

16,733,767

 

 

 

6

%

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

Deposits

$

15,062,527

 

 

 

$

14,726,230

 

 

 

2

%

 

$

14,008,356

 

 

 

8

%

FHLB advances

200,000

 

 

 

200,000

 

 

 

%

 

200,000

 

 

 

%

Convertible notes, net

215,974

 

 

 

215,739

 

 

 

%

 

203,270

 

 

 

6

%

Subordinated debentures

105,057

 

 

 

104,762

 

 

 

%

 

103,889

 

 

 

1

%

Accrued interest payable

5,367

 

 

 

4,946

 

 

 

9

%

 

21,991

 

 

 

(76

)%

Other liabilities

135,703

 

 

 

125,080

 

 

 

8

%

 

155,700

 

 

 

(13

)%

Total liabilities

$

15,724,628

 

 

 

$

15,376,757

 

 

 

2

%

 

$

14,693,206

 

 

 

7

%

 

 

 

 

 

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

 

 

 

 

Common stock, $0.001 par value

$

136

 

 

 

$

136

 

 

 

%

 

$

136

 

 

 

%

Capital surplus

1,420,151

 

 

 

1,418,135

 

 

 

%

 

1,432,773

 

 

 

(1

)%

Retained earnings

897,766

 

 

 

859,548

 

 

 

4

%

 

774,970

 

 

 

16

%

Treasury stock, at cost

(247,198

)

 

 

(200,000

)

 

 

(24

)%

 

(200,000

)

 

 

24

%

Accumulated other comprehensive gain, net

3,543

 

 

 

15,051

 

 

 

(76

)%

 

32,682

 

 

 

(89

)%

Total stockholders’ equity

2,074,398

 

 

 

2,092,870

 

 

 

(1

)%

 

2,040,561

 

 

 

2

%

Total liabilities and stockholders’ equity

$

17,799,026

 

 

 

$

17,469,627

 

 

 

2

%

 

$

16,733,767

 

 

 

6

%

 

 

 

 

 

 

 

 

 

 

Common stock shares - authorized

150,000,000

 

 

 

150,000,000

 

 

 

 

 

150,000,000

 

 

 

 

Common stock shares - outstanding

120,198,061

 

 

 

123,673,832

 

 

 

 

 

123,260,760

 

 

 

 

Treasury stock shares

16,149,007

 

 

 

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

 

Nine Months Ended

 

9/30/2021

 

6/30/2021

 

% change

 

9/30/2020

 

% change

 

9/30/2021

 

9/30/2020

 

% change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans

$

132,794

 

 

$

131,823

 

 

1

%

 

$

134,430

 

 

(1)

%

 

$

394,353

 

 

$

422,850

 

 

(7)

%

Interest on securities

9,207

 

 

7,713

 

 

19

%

 

9,848

 

 

(7)

%

 

24,835

 

 

30,348

 

 

(18)

%

Interest on federal funds sold and other investments

865

 

 

668

 

 

29

%

 

942

 

 

(8)

%

 

2,175

 

 

3,951

 

 

(45)

%

Total interest income

142,866

 

 

140,204

 

 

2

%

 

145,220

 

 

(2)

%

 

421,363

 

 

457,149

 

 

(8)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest on deposits

9,640

 

 

10,696

 

 

(10)

%

 

22,871

 

 

(58)

%

 

33,106

 

 

93,435

 

 

(65)

%

Interest on other borrowings and convertible notes

2,930

 

 

2,931

 

 

%

 

4,712

 

 

(38)

%

 

8,805

 

 

16,972

 

 

(48)

%

Total interest expense

12,570

 

 

13,627

 

 

(8)

%

 

27,583

 

 

(54)

%

 

41,911

 

 

110,407

 

 

(62)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income before provision (credit) for credit losses

130,296

 

 

126,577

 

 

3

%

 

117,637

 

 

11

%

 

379,452

 

 

346,742

 

 

9

%

Provision (credit) for credit losses

(10,000)

 

 

(7,000)

 

 

43

%

 

22,000

 

 

N/A

 

(13,700)

 

 

67,500

 

 

N/A

Net interest income after provision (credit) for credit losses

140,296

 

 

133,577

 

 

5

%

 

95,637

 

 

47

%

 

393,152

 

 

279,242

 

 

41

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service fees on deposit accounts

1,814

 

 

1,777

 

 

2

%

 

2,736

 

 

(34)

%

 

5,381

 

 

9,452

 

 

(43)

%

International service fees

889

 

 

795

 

 

12

%

 

987

 

 

(10)

%

 

2,525

 

 

2,443

 

 

3

%

Loan servicing fees, net

642

 

 

934

 

 

(31)

%

 

772

 

 

(17)

%

 

2,620

 

 

2,243

 

 

17

%

Wire transfer fees

836

 

 

923

 

 

(9)

%

 

892

 

 

(6)

%

 

2,603

 

 

2,710

 

 

(4)

%

Net gains on sales of SBA loans

2,459

 

 

2,375

 

 

4

%

 

 

 

100

%

 

4,834

 

 

 

 

100

%

Net gains on sales of residential mortgage loans

781

 

 

1,028

 

 

(24)

%

 

2,853

 

 

(73)

%

 

3,905

 

 

6,386

 

 

(39)

%

Net gains on sales of securities available for sale

 

 

 

 

%

 

7,531

 

 

(100)

%

 

 

 

7,531

 

 

(100)

%

Other income and fees

3,196

 

 

3,244

 

 

(1)

%

 

1,742

 

 

83

%

 

8,629

 

 

11,252

 

 

(23)

%

Total noninterest income

10,617

 

 

11,076

 

 

(4)

%

 

17,513

 

 

(39)

%

 

30,497

 

 

42,017

 

 

(27)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

47,018

 

 

42,309

 

 

11

%

 

40,659

 

 

16

%

 

130,543

 

 

122,011

 

 

7

%

Occupancy

7,473

 

 

7,067

 

 

6

%

 

7,264

 

 

3

%

 

21,507

 

 

21,717

 

 

(1)

%

Furniture and equipment

4,429

 

 

4,822

 

 

(8)

%

 

4,513

 

 

(2)

%

 

13,437

 

 

13,426

 

 

%

Advertising and marketing

2,656

 

 

2,097

 

 

27

%

 

1,601

 

 

66

%

 

6,378

 

 

4,589

 

 

39

%

Data processing and communications

2,394

 

 

2,411

 

 

(1)

%

 

2,204

 

 

9

%

 

7,542

 

 

7,109

 

 

6

%

Professional fees

2,431

 

 

4,395

 

 

(45)

%

 

1,513

 

 

61

%

 

9,729

 

 

6,323

 

 

54

%

FDIC assessment

1,204

 

 

1,284

 

 

(6)

%

 

1,167

 

 

3

%

 

3,743

 

 

4,378

 

 

(15)

%

Credit related expenses

1,266

 

 

43

 

 

2,844

%

 

1,793

 

 

(29)

%

 

3,527

 

 

4,816

 

 

(27)

%

OREO expense, net

248

 

 

298

 

 

(17)

%

 

1,770

 

 

(86)

%

 

827

 

 

3,951

 

 

(79)

%

Software impairment

 

 

2,146

 

 

(100)

%

 

 

 

%

 

2,146

 

 

 

 

100

%

FHLB advance prepayment fee

 

 

 

 

%

 

3,584

 

 

(100)

%

 

 

 

3,584

 

 

(100)

%

Other

6,383

 

 

6,251

 

 

2

%

 

7,338

 

 

(13)

%

 

19,677

 

 

20,672

 

 

(5)

%

Total noninterest expense

75,502

 

 

73,123

 

 

3

%

 

73,406

 

 

3

%

 

219,056

 

 

212,576

 

 

3

%

Income before income taxes

75,411

 

 

71,530

 

 

5

%

 

39,744

 

 

90

%

 

204,593

 

 

108,683

 

 

88

%

Income tax provision

19,912

 

 

17,767

 

 

12

%

 

9,254

 

 

115

%

 

51,644

 

 

25,487

 

 

103

%

Net income

$

55,499

 

 

$

53,763

 

 

3

%

 

$

30,490

 

 

82

%

 

$

152,949

 

 

$

83,196

 

 

84

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings Per Common Share - Basic

$

0.45

 

 

$

0.44

 

 

 

 

$

0.25

 

 

 

 

$

1.24

 

 

$

0.67

 

 

 

Earnings Per Common Share - Diluted

$

0.45

 

 

$

0.43

 

 

 

 

$

0.25

 

 

 

 

$

1.23

 

 

$

0.67

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Shares Outstanding - Basic

122,244,948

 

 

123,592,695

 

 

 

 

123,251,336

 

 

 

 

123,050,174

 

 

123,581,055

 

 

 

Weighted Average Shares Outstanding - Diluted

122,908,536

 

 

124,323,888

 

 

 

 

123,536,765

 

 

 

 

123,848,512

 

 

123,895,084

 

 

 

Hope Bancorp, Inc.

Selected Financial Data

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

 

 

For the Three Months Ended

(Annualized)

 

For the Nine Months Ended

(Annualized)

Profitability measures:

9/30/2021

 

6/30/2021

 

9/30/2020

 

9/30/2021

 

9/30/2020

ROA

1.25

%

 

1.25

%

 

0.72

%

 

1.18

%

 

0.68

%

ROE

10.61

%

 

10.41

%

 

5.98

%

 

9.86

%

 

5.47

%

ROTCE (1)

13.71

%

 

13.50

%

 

7.80

%

 

12.78

%

 

7.14

%

Net interest margin

3.07

%

 

3.11

%

 

2.91

%

 

3.08

%

 

2.99

%

Efficiency ratio

53.58

%

 

53.12

%

 

54.31

%

 

53.43

%

 

54.68

%

Noninterest expense / average assets

1.70

%

 

1.70

%

 

1.73

%

 

1.68

%

 

1.73

%

(1)

Average tangible equity is calculated by subtracting average goodwill and average core deposit intangible assets from average stockholders’ equity. This is a non-GAAP measure that we believe provides investors with information that is useful in understanding our financial performance and position.

 

Three Months Ended

 

Nine Months Ended

Pre-tax acquisition accounting adjustments:

9/30/2021

 

6/30/2021

 

9/30/2020

 

9/30/2021

 

9/30/2020

Accretion on acquired non-impaired loans

$

368

 

 

$

366

 

 

$

747

 

 

$

1,439

 

 

$

2,464

 

Accretion on acquired credit deteriorated/purchased credit impaired loans

2,093

 

 

2,188

 

 

4,584

 

 

6,536

 

 

17,079

 

Amortization of premium on low income housing tax credits

(73

)

 

(74

)

 

(71

)

 

(220

)

 

(212

)

Accretion of discount on acquired subordinated debt

(295

)

 

(293

)

 

(287

)

 

(879

)

 

(854

)

Amortization of core deposit intangibles

(509

)

 

(510

)

 

(531

)

 

(1,528

)

 

(1,594

)

Total acquisition accounting adjustments

$

1,584

 

 

$

1,677

 

 

$

4,442

 

 

$

5,348

 

 

$

16,883

 

Hope Bancorp, Inc.

Selected Financial Data

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

 

 

Three Months Ended

 

9/30/2021

 

6/30/2021

 

9/30/2020

 

 

 

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

$

13,286,382

 

 

$

132,794

 

 

3.97

%

 

$

13,293,591

 

 

$

131,823

 

 

3.98

%

 

$

12,728,558

 

 

$

134,430

 

 

4.20

%

Securities available for sale

2,370,672

 

 

9,207

 

 

1.54

%

 

2,253,135

 

 

7,713

 

 

1.37

%

 

2,010,907

 

 

9,848

 

 

1.95

%

FHLB stock and other investments

1,197,537

 

 

865

 

 

0.29

%

 

759,182

 

 

668

 

 

0.35

%

 

1,342,641

 

 

942

 

 

0.28

%

Total interest earning assets

$

16,854,591

 

 

$

142,866

 

 

3.36

%

 

$

16,305,908

 

 

$

140,204

 

 

3.45

%

 

$

16,082,106

 

 

$

145,220

 

 

3.59

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST BEARING LIABILITIES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand, interest bearing

$

5,919,225

 

 

$

5,946

 

 

0.40

%

 

$

5,484,047

 

 

$

5,909

 

 

0.43

%

 

$

4,895,101

 

 

$

6,546

 

 

0.53

%

Savings

310,525

 

 

920

 

 

1.18

%

 

308,530

 

 

887

 

 

1.15

%

 

302,882

 

 

907

 

 

1.19

%

Time deposits

2,914,977

 

 

2,774

 

 

0.38

%

 

3,222,457

 

 

3,900

 

 

0.49

%

 

4,703,640

 

 

15,418

 

 

1.30

%

Total interest bearing deposits

9,144,727

 

 

9,640

 

 

0.42

%

 

9,015,034

 

 

10,696

 

 

0.48

%

 

9,901,623

 

 

22,871

 

 

0.92

%

FHLB advances

200,000

 

 

640

 

 

1.27

%

 

202,198

 

 

631

 

 

1.25

%

 

353,587

 

 

1,323

 

 

1.49

%

Convertible notes, net

215,840

 

 

1,321

 

 

2.39

%

 

215,599

 

 

1,323

 

 

2.43

%

 

202,470

 

 

2,370

 

 

4.58

%

Subordinated debentures

100,993

 

 

969

 

 

3.75

%

 

100,701

 

 

977

 

 

3.84

%

 

99,819

 

 

1,019

 

 

3.99

%

Total interest bearing liabilities

$

9,661,560

 

 

$

12,570

 

 

0.52

%

 

$

9,533,532

 

 

$

13,627

 

 

0.57

%

 

$

10,557,499

 

 

$

27,583

 

 

1.04

%

Noninterest bearing demand deposits

5,848,983

 

 

 

 

 

 

5,445,457

 

 

 

 

 

 

4,239,108

 

 

 

 

 

Total funding liabilities/cost of funds

$

15,510,543

 

 

 

 

0.32

%

 

$

14,978,989

 

 

 

 

0.36

%

 

$

14,796,607

 

 

 

 

0.74

%

Net interest income/net interest spread

 

 

$

130,296

 

 

2.84

%

 

 

 

$

126,577

 

 

2.88

%

 

 

 

$

117,637

 

 

2.55

%

Net interest margin

 

 

 

 

3.07

%

 

 

 

 

 

3.11

%

 

 

 

 

 

2.91

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest bearing demand deposits

$

5,848,983

 

 

$

 

 

%

 

$

5,445,457

 

 

$

 

 

%

 

$

4,239,108

 

 

$

 

 

%

Interest bearing deposits

9,144,727

 

 

9,640

 

 

0.42

%

 

9,015,034

 

 

10,696

 

 

0.48

%

 

9,901,623

 

 

22,871

 

 

0.92

%

Total deposits

$

14,993,710

 

 

$

9,640

 

 

0.26

%

 

$

14,460,491

 

 

$

10,696

 

 

0.30

%

 

$

14,140,731

 

 

$

22,871

 

 

0.64

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

9/30/2021

 

9/30/2020

 

 

 

Interest

 

Annualized

 

 

 

Interest

 

Annualized

 

Average

 

Income/

 

Average

 

Average

 

Income/

 

Average

 

Balance

 

Expense

 

Yield/Cost

 

Balance

 

Expense

 

Yield/Cost

INTEREST EARNING ASSETS:

 

 

 

 

 

 

 

 

 

 

 

Loans, including loans held for sale

$

13,308,526

 

 

$

394,353

 

 

3.96

%

 

$

12,581,703

 

 

$

422,850

 

 

4.49

%

Securities available for sale

2,297,450

 

 

24,835

 

 

1.45

%

 

1,825,046

 

 

30,348

 

 

2.22

%

FHLB stock and other investments

867,745

 

 

2,175

 

 

0.34

%

 

1,060,699

 

 

3,951

 

 

0.50

%

Total interest earning assets

$

16,473,721

 

 

$

421,363

 

 

3.42

%

 

$

15,467,448

 

 

$

457,149

 

 

3.95

%

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST BEARING LIABILITIES:

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

Demand, interest bearing

$

5,555,711

 

 

$

17,345

 

 

0.42

%

 

$

4,668,594

 

 

$

28,988

 

 

0.83

%

Savings

306,780

 

 

2,678

 

 

1.17

%

 

287,060

 

 

2,578

 

 

1.20

%

Time deposits

3,298,393

 

 

13,083

 

 

0.53

%

 

4,852,286

 

 

61,869

 

 

1.70

%

Total interest bearing deposits

9,160,884

 

 

33,106

 

 

0.48

%

 

9,807,940

 

 

93,435

 

 

1.27

%

FHLB advances

205,971

 

 

1,913

 

 

1.24

%

 

513,376

 

 

6,208

 

 

1.62

%

Convertible notes, net

215,483

 

 

3,967

 

 

2.43

%

 

201,204

 

 

7,074

 

 

4.62

%

Subordinated debentures

100,697

 

 

2,925

 

 

3.83

%

 

99,536

 

 

3,690

 

 

4.87

%

Total interest bearing liabilities

$

9,683,035

 

 

$

41,911

 

 

0.58

%

 

$

10,622,056

 

 

$

110,407

 

 

1.39

%

Noninterest bearing demand deposits

5,451,908

 

 

 

 

 

 

3,573,448

 

 

 

 

 

Total funding liabilities/cost of funds

$

15,134,943

 

 

 

 

0.37

%

 

$

14,195,504

 

 

 

 

1.04

%

Net interest income/net interest spread

 

 

$

379,452

 

 

2.84

%

 

 

 

$

346,742

 

 

2.56

%

Net interest margin

 

 

 

 

3.08

%

 

 

 

 

 

2.99

%

 

 

 

 

 

 

 

 

 

 

 

 

Cost of deposits:

 

 

 

 

 

 

 

 

 

 

 

Noninterest bearing demand deposits

$

5,451,908

 

 

$

 

 

%

 

$

3,573,448

 

 

$

 

 

%

Interest bearing deposits

9,160,884

 

 

33,106

 

 

0.48

%

 

9,807,940

 

 

93,435

 

 

1.27

%

Total deposits

$

14,612,792

 

 

$

33,106

 

 

0.30

%

 

$

13,381,388

 

 

$

93,435

 

 

0.93

%

 

Hope Bancorp, Inc.

Selected Financial Data

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

 

 

Three Months Ended

 

Nine Months Ended

AVERAGE BALANCES:

9/30/2021

 

6/30/2021

 

% change

 

9/30/2020

 

% change

 

9/30/2021

 

9/30/2020

 

% change

Loans receivable, including loans held for sale

$

13,286,382

 

 

$

13,293,591

 

 

%

 

$

12,728,558

 

 

4

%

 

$

13,308,526

 

 

$

12,581,703

 

 

6

%

Investments

3,568,209

 

 

3,012,317

 

 

18

%

 

3,353,548

 

 

6

%

 

3,165,195

 

 

2,885,745

 

 

10

%

Interest earning assets

16,854,591

 

 

16,305,908

 

 

3

%

 

16,082,106

 

 

5

%

 

16,473,721

 

 

15,467,448

 

 

7

%

Total assets

17,745,066

 

 

17,164,893

 

 

3

%

 

17,020,795

 

 

4

%

 

17,344,095

 

 

16,411,150

 

 

6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest bearing deposits

9,144,727

 

 

9,015,034

 

 

1

%

 

9,901,623

 

 

(8

)%

 

9,160,884

 

 

9,807,940

 

 

(7

)%

Interest bearing liabilities

9,661,560

 

 

9,533,532

 

 

1

%

 

10,557,499

 

 

(8

)%

 

9,683,035

 

 

10,622,056

 

 

(9

)%

Noninterest bearing demand deposits

5,848,983

 

 

5,445,457

 

 

7

%

 

4,239,108

 

 

38

%

 

5,451,908

 

 

3,573,448

 

 

53

%

Stockholders’ equity

2,092,018

 

 

2,066,016

 

 

1

%

 

2,039,555

 

 

3

%

 

2,068,676

 

 

2,028,074

 

 

2

%

Net interest earning assets

7,193,031

 

 

6,772,376

 

 

6

%

 

5,524,607

 

 

30

%

 

6,790,686

 

 

4,845,392

 

 

40

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOAN PORTFOLIO COMPOSITION:

9/30/2021

 

6/30/2021

 

% change

 

12/31/2020

 

% change

 

9/30/2020

 

% change

 

 

Commercial loans

$

3,857,879

 

 

$

4,001,423

 

 

(4

)%

 

$

4,157,787

 

 

(7

)%

 

$

3,700,020

 

 

4

%

 

 

Real estate loans

8,908,657

 

 

8,832,276

 

 

1

%

 

8,772,134

 

 

2

%

 

8,713,536

 

 

2

%

 

 

Consumer and other loans

652,155

 

 

590,602

 

 

10

%

 

633,292

 

 

3

%

 

706,669

 

 

(8

)%

 

 

Loans, net of deferred loan fees and costs

13,418,691

 

 

13,424,301

 

 

%

 

13,563,213

 

 

(1

)%

 

13,120,225

 

 

2

%

 

 

Allowance for credit losses

(136,774

)

 

(189,452

)

 

(28

)%

 

(206,741

)

 

(34

)%

 

(179,849

)

 

(24

)%

 

 

Loan receivable, net

$

13,281,917

 

 

$

13,234,849

 

 

%

 

$

13,356,472

 

 

(1

)%

 

$

12,940,376

 

 

3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REAL ESTATE LOANS BY PROPERTY TYPE:

9/30/2021

 

6/30/2021

 

% change

 

12/31/2020

 

% change

 

9/30/2020

 

% change

 

 

Retail buildings

$

2,466,881

 

 

$

2,361,891

 

 

4

%

 

$

2,293,396

 

 

8

%

 

$

2,311,516

 

 

7

%

 

 

Hotels/motels

1,385,003

 

 

1,439,770

 

 

(4

)%

 

1,634,287

 

 

(15

)%

 

1,675,960

 

 

(17

)%

 

 

Gas stations/car washes

999,069

 

 

954,394

 

 

5

%

 

892,110

 

 

12

%

 

824,378

 

 

21

%

 

 

Mixed-use facilities

819,516

 

 

798,373

 

 

3

%

 

750,867

 

 

9

%

 

754,096

 

 

9

%

 

 

Warehouses

1,160,863

 

 

1,149,393

 

 

1

%

 

1,091,389

 

 

6

%

 

1,022,657

 

 

14

%

 

 

Multifamily

691,262

 

 

575,943

 

 

20

%

 

518,498

 

 

33

%

 

518,295

 

 

33

%

 

 

Other

1,386,063

 

 

1,552,512

 

 

(11

)%

 

1,591,587

 

 

(13

)%

 

1,606,634

 

 

(14

)%

 

 

Total

$

8,908,657

 

 

$

8,832,276

 

 

1

%

 

$

8,772,134

 

 

2

%

 

$

8,713,536

 

 

2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DEPOSIT COMPOSITION

9/30/2021

 

6/30/2021

 

% change

 

12/31/2020

 

% change

 

9/30/2020

 

% change

 

 

Noninterest bearing demand deposits

$

6,007,586

 

 

$

5,638,115

 

 

7

%

 

$

4,814,254

 

 

25

%

 

$

4,488,529

 

 

34

%

 

 

Money market and other

5,871,567

 

 

5,786,697

 

 

1

%

 

5,232,413

 

 

12

%

 

4,763,893

 

 

23

%

 

 

Saving deposits

314,603

 

 

308,651

 

 

2

%

 

300,770

 

 

5

%

 

308,943

 

 

2

%

 

 

Time deposits

2,868,771

 

 

2,992,767

 

 

(4

)%

 

3,986,475

 

 

(28

)%

 

4,446,991

 

 

(35

)%

 

 

Total deposit balances

$

15,062,527

 

 

$

14,726,230

 

 

2

%

 

$

14,333,912

 

 

5

%

 

$

14,008,356

 

 

8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DEPOSIT COMPOSITION (%)

9/30/2021

 

6/30/2021

 

 

 

12/31/2020

 

 

 

9/30/2020

 

 

 

 

Noninterest bearing demand deposits

39.9

%

 

38.3

%

 

 

 

33.6

%

 

 

 

32.1

%

 

 

 

 

Money market and other

39.0

%

 

39.2

%

 

 

 

36.5

%

 

 

 

34.0

%

 

 

 

 

Saving deposits

2.1

%

 

2.1

%

 

 

 

2.1

%

 

 

 

2.2

%

 

 

 

 

Time deposits

19.0

%

 

20.4

%

 

 

 

27.8

%

 

 

 

31.7

%

 

 

 

 

Total deposit balances

100.0

%

 

100.0

%

 

 

 

100.0

%

 

 

 

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CAPITAL RATIOS:

9/30/2021

 

6/30/2021

 

9/30/2020

 

 

 

 

 

 

 

 

Total stockholders’ equity

$

2,074,398

 

 

$

2,092,870

 

 

$

2,040,561

 

 

 

 

 

 

 

 

 

Common equity tier 1 ratio

11.01

%

 

11.44

%

 

11.36

%

 

 

 

 

 

 

 

 

Tier 1 risk-based capital ratio

11.70

%

 

12.14

%

 

12.09

%

 

 

 

 

 

 

 

 

Total risk-based capital ratio

12.42

%

 

13.16

%

 

13.19

%

 

 

 

 

 

 

 

 

Tier 1 leverage ratio

9.98

%

 

10.43

%

 

10.02

%

 

 

 

 

 

 

 

 

Total risk weighted assets

$

14,737,809

 

 

$

14,354,682

 

 

$

13,691,823

 

 

 

 

 

 

 

 

 

Book value per common share

$

17.26

 

 

$

16.92

 

 

$

16.55

 

 

 

 

 

 

 

 

 

Tangible common equity to tangible assets 1

9.24

%

 

9.53

%

 

9.63

%

 

 

 

 

 

 

 

 

Tangible common equity per share 1

$

13.33

 

 

$

13.10

 

 

$

12.70

 

 

 

 

 

 

 

 

 

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

 

Nine Months Ended

ALLOWANCE FOR CREDIT LOSSES CHANGES:

9/30/2021

 

6/30/2021

 

3/31/2021

 

12/31/2020

 

9/30/2020

 

9/30/2021

 

9/30/2020

Balance at beginning of period

$

189,452

 

 

 

$

207,943

 

 

 

$

206,741

 

 

 

$

179,849

 

 

 

$

161,771

 

 

 

$

206,741

 

 

 

$

94,144

 

 

CECL day 1 adoption impact

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

26,200

 

 

Provision (credit) for credit losses

(10,000

)

 

 

(7,000

)

 

 

3,300

 

 

 

27,500

 

 

 

22,000

 

 

 

(13,700

)

 

 

67,500

 

 

Recoveries

1,906

 

 

 

1,301

 

 

 

1,423

 

 

 

2,207

 

 

 

2,428

 

 

 

4,630

 

 

 

5,216

 

 

Charge offs

(44,584

)

 

 

(12,792

)

 

 

(3,521

)

 

 

(2,815

)

 

 

(6,350

)

 

 

(60,897

)

 

 

(13,211

)

 

Balance at end of period

$

136,774

 

 

 

$

189,452

 

 

 

$

207,943

 

 

 

$

206,741

 

 

 

$

179,849

 

 

 

$

136,774

 

 

 

$

179,849

 

 

Net charge offs/average loans receivable (annualized)

1.28

%

 

0.35

%

 

0.06

%

 

0.02

%

 

0.12

%

 

0.56

%

 

0.08

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

NET LOAN CHARGE OFFS (RECOVERIES):

9/30/2021

 

6/30/2021

 

3/31/2021

 

12/31/2020

 

9/30/2020

 

9/30/2021

 

9/30/2020

Real estate loans

$

40,542

 

 

 

$

11,281

 

 

 

$

2,234

 

 

 

$

(726

)

 

 

$

5,154

 

 

 

$

54,057

 

 

 

$

7,532

 

 

Commercial loans

1,117

 

 

 

181

 

 

 

(80

)

 

 

1,167

 

 

 

(1,451

)

 

 

1,218

 

 

 

(535

)

 

Consumer loans

1,019

 

 

 

29

 

 

 

(56

)

 

 

167

 

 

 

219

 

 

 

992

 

 

 

998

 

 

Total net charge offs

$

42,678

 

 

 

$

11,491

 

 

 

$

2,098

 

 

 

$

608

 

 

 

$

3,922

 

 

 

$

56,267

 

 

 

$

7,995

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hope Bancorp, Inc.

Selected Financial Data

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

 

NONPERFORMING ASSETS:

9/30/2021

 

6/30/2021

 

3/31/2021

 

12/31/2020

 

9/30/2020

Loans on nonaccrual status 3

$

54,380

 

 

$

111,008

 

 

$

109,858

 

 

$

85,238

 

 

$

69,205

 

Delinquent loans 90 days or more on accrual status

4,567

 

 

4,759

 

 

384

 

 

614

 

 

1,537

 

Accruing troubled debt restructured loans

39,509

 

 

51,360

 

 

41,773

 

 

37,354

 

 

35,429

 

Total nonperforming loans

98,456

 

 

167,127

 

 

152,015

 

 

123,206

 

 

106,171

 

Other real estate owned

15,213

 

 

16,619

 

 

18,515

 

 

20,121

 

 

18,410

 

Total nonperforming assets

$

113,669

 

 

$

183,746

 

 

$

170,530

 

 

$

143,327

 

 

$

124,581

 

Nonperforming assets/total assets

0.64

%

 

1.05

%

 

0.99

%

 

0.84

%

 

0.74

%

Nonperforming assets/loans receivable & OREO

0.85

%

 

1.37

%

 

1.24

%

 

1.06

%

 

0.95

%

Nonperforming assets/total capital

5.48

%

 

8.78

%

 

8.34

%

 

6.98

%

 

6.11

%

Nonperforming loans/loans receivable

0.73

%

 

1.24

%

 

1.11

%

 

0.91

%

 

0.81

%

Nonaccrual loans/loans receivable

0.41

%

 

0.83

%

 

0.80

%

 

0.63

%

 

0.53

%

Allowance for credit losses/loans receivable

1.02

%

 

1.41

%

 

1.52

%

 

1.52

%

 

1.37

%

Allowance for credit losses/nonaccrual loans

251.52

%

 

170.67

%

 

189.28

%

 

242.55

%

 

259.88

%

Allowance for credit losses/nonperforming loans

138.92

%

 

113.36

%

 

136.79

%

 

167.80

%

 

169.40

%

Allowance for credit losses/nonperforming assets

120.33

%

 

103.11

%

 

121.94

%

 

144.24

%

 

144.36

%

 

 

 

 

 

 

 

 

 

 

3

Excludes delinquent SBA loans that are guaranteed and currently in liquidation totaling $20.6 million, $23.6 million, $25.0 million, $26.5 million, and $26.2 million at September 30, 2021, June 30, 2021, March 31, 2021, December 31, 2020, and September 30, 2020, respectively.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NONACCRUAL LOANS BY TYPE:

9/30/2021

 

6/30/2021

 

3/31/2021

 

12/31/2020

 

9/30/2020

Real estate loans

$

41,673

 

 

$

95,622

 

 

$

91,940

 

 

$

67,450

 

 

$

51,739

 

Commercial loans

10,991

 

 

12,217

 

 

14,080

 

 

13,911

 

 

13,022

 

Consumer loans

1,716

 

 

3,169

 

 

3,838

 

 

3,877

 

 

4,444

 

Total nonaccrual loans

$

54,380

 

 

$

111,008

 

 

$

109,858

 

 

$

85,238

 

 

$

69,205

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BREAKDOWN OF ACCRUING TROUBLED DEBT RESTRUCTURED LOANS:

9/30/2021

 

6/30/2021

 

3/31/2021

 

12/31/2020

 

9/30/2020

Retail buildings

$

11,280

 

 

$

12,110

 

 

$

6,319

 

 

$

5,408

 

 

$

5,451

 

Gas stations/car washes

202

 

 

206

 

 

210

 

 

219

 

 

224

 

Mixed-use facilities

7,937

 

 

7,967

 

 

3,377

 

 

3,521

 

 

4,323

 

Warehouses

4,908

 

 

14,099

 

 

14,124

 

 

7,296

 

 

7,320

 

Other 4

15,182

 

 

16,978

 

 

17,743

 

 

20,910

 

 

18,111

 

Total

$

39,509

 

 

$

51,360

 

 

$

41,773

 

 

$

37,354

 

 

$

35,429

 

 

 

 

 

 

 

 

 

 

 

4

Includes commercial business, consumer, and other loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ACCRUING DELINQUENT LOANS 30-89 DAYS PAST DUE:

9/30/2021

 

6/30/2021

 

3/31/2021

 

12/31/2020

 

9/30/2020

30 - 59 days

$

15,016

 

 

$

22,466

 

 

$

18,175

 

 

$

11,347

 

 

$

5,962

 

60 - 89 days

4,746

 

 

6,987

 

 

8,314

 

 

16,826

 

 

58,065

 

Total

$

19,762

 

 

$

29,453

 

 

$

26,489

 

 

$

28,173

 

 

$

64,027

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ACCRUING DELINQUENT LOANS 30-89 DAYS PAST DUE BY TYPE:

9/30/2021

 

6/30/2021

 

3/31/2021

 

12/31/2020

 

9/30/2020

Real estate loans

$

10,359

 

 

$

21,432

 

 

$

18,331

 

 

$

15,689

 

 

$

60,510

 

Commercial loans

9,377

 

 

560

 

 

1,002

 

 

3,393

 

 

624

 

Consumer loans

26

 

 

7,461

 

 

7,156

 

 

9,091

 

 

2,893

 

Total

$

19,762

 

 

$

29,453

 

 

$

26,489

 

 

$

28,173

 

 

$

64,027

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CRITICIZED LOANS:

9/30/2021

 

6/30/2021

 

3/31/2021

 

12/31/2020

 

9/30/2020

Special mention

$

306,766

 

 

$

294,559

 

 

$

280,974

 

 

$

184,941

 

 

$

153,388

 

Substandard

243,684

 

 

380,955

 

 

379,048

 

 

366,556

 

 

311,902

 

Doubtful/loss

 

 

 

 

 

 

1

 

 

6,640

 

Total criticized loans

$

550,450

 

 

$

675,514

 

 

$

660,022

 

 

$

551,498

 

 

$

471,930

 

 

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

 

Nine Months Ended

 

9/30/2021

 

6/30/2021

 

9/30/2020

 

9/30/2021

 

9/30/2020

RETURN ON AVERAGE TANGIBLE COMMON EQUITY

 

 

 

 

 

 

 

 

 

Average stockholders’ equity

$

2,092,018

 

 

$

2,066,016

 

 

$

2,039,555

 

 

$

2,068,676

 

 

$

2,028,074

 

Less: Goodwill and core deposit intangible assets, net

(472,918

)

 

(473,445

)

 

(475,010

)

 

(473,438

)

 

(475,530

)

Average tangible common equity

$

1,619,100

 

 

$

1,592,571

 

 

$

1,564,545

 

 

$

1,595,238

 

 

$

1,552,544

 

 

 

 

 

 

 

 

 

 

 

Net income

$

55,499

 

 

$

53,763

 

 

$

30,490

 

 

$

152,949

 

 

$

83,196

 

Return on average tangible common equity (annualized)

13.71

%

 

13.50

%

 

7.80

%

 

12.78

%

 

7.14

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9/30/2021

 

6/30/2021

 

12/31/2020

 

9/30/2020

 

 

TANGIBLE COMMON EQUITY

 

 

 

 

 

 

 

 

 

Total stockholders’ equity

$

2,074,398

 

 

$

2,092,870

 

 

$

2,053,745

 

 

$

2,040,561

 

 

 

Less: Goodwill and core deposit intangible assets, net

(472,630

)

 

(473,139

)

 

(474,158

)

 

(474,689

)

 

 

Tangible common equity

$

1,601,768

 

 

$

1,619,731

 

 

$

1,579,587

 

 

$

1,565,872

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

$

17,799,026

 

 

$

17,469,627

 

 

$

17,106,664

 

 

$

16,733,767

 

 

 

Less: Goodwill and core deposit intangible assets, net

(472,630

)

 

(473,139

)

 

(474,158

)

 

(474,689

)

 

 

Tangible assets

$

17,326,396

 

 

$

16,996,488

 

 

$

16,632,506

 

 

$

16,259,078

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares outstanding

120,198,061

 

 

123,673,832

 

 

123,264,864

 

 

123,260,760

 

 

 

 

 

 

 

 

 

 

 

 

 

Tangible common equity to tangible assets

9.24

%

 

9.53

%

 

9.50

%

 

9.63

%

 

 

Tangible common equity per share

$

13.33

 

 

$

13.10

 

 

$

12.81

 

 

$

12.70

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

9/30/2021

 

6/30/2021

 

9/30/2020

 

9/30/2021

 

9/30/2020

PRE-PROVISION NET REVENUE

 

 

 

 

 

 

 

 

 

Net interest income before provision (credit) for credit losses

$

130,296

 

 

$

126,577

 

 

$

117,637

 

 

$

379,452

 

 

$

346,742

 

Noninterest income

10,617

 

 

11,076

 

 

17,513

 

 

30,497

 

 

42,017

 

Revenue

140,913

 

 

137,653

 

 

135,150

 

 

409,949

 

 

388,759

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense

75,502

 

 

73,123

 

 

73,406

 

 

219,056

 

 

212,576

 

Pre-provision net revenue

$

65,411

 

 

$

64,530

 

 

$

61,744

 

 

$

190,893

 

 

$

176,183

 

 

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