News Release
HOPE BANCORP REPORTS 2021 FOURTH QUARTER AND
FULL-YEAR FINANCIAL RESULTS
LOS ANGELES - January 24, 2022 - Hope Bancorp, Inc. (the “Company”) (NASDAQ: HOPE), the holding company of Bank of Hope (the “Bank”), today reported unaudited financial results for its fourth quarter and full year ended December 31, 2021.
For the three months ended December 31, 2021, net income totaled $51.6 million, or $0.43 per diluted common share. This compares with net income of $55.5 million, or $0.45 per diluted common share, in the third quarter of 2021 and $28.3 million, or $0.23 per diluted common share, in the fourth quarter of 2020. Pre-provision net revenue(1) for the 2021 fourth quarter increased 10% over the 2021 third quarter and increased 18% over the prior-year fourth quarter.
For the full year ended December 31, 2021, net income totaled $204.6 million, or $1.66 per diluted common share, compared with net income of $111.5 million, or $0.90 per diluted common share for the year ended December 31, 2020. Pre-provision net revenue(1) for 2021 increased 11% over 2020.
“We delivered an outstanding financial performance in the fourth quarter of 2021 to close out a year with record levels of loan production, a more diversified, lower-risk loan portfolio, continued improvement in our deposit composition, and enhanced efficiencies and profitability,” said Kevin S. Kim, Chairman, President and Chief Executive Officer. “Following the successful de-risking and rebalancing of our loan portfolio, record loan production of $1.24 billion in the fourth quarter led to a 4% quarter-over-quarter increase in loans receivable. We also continued to enhance the quality of our deposit franchise with core deposit growth leading to a ninth consecutive quarter of decreasing deposit costs. The redeployment of excess cash into higher-yielding earning assets resulted in increased levels of net interest income and drove a 6 basis point expansion of our net interest margin quarter-over-quarter. Altogether with our continued expense management, we delivered double-digit growth in our pre-provision net revenue(1) for the 2021 fourth quarter versus the preceding third quarter, as well as for the full 2021 year compared with the prior year.
“The strong headwinds of 2021 are behind us, and we began 2022 with tremendous momentum following a solid fourth quarter performance reflective of our more traditional growth levels. Armed with greater confidence in our ability to navigate through a new normal that includes a lingering pandemic and with an expanded and improved business development team and focus, I believe the long-term prospects of our franchise is stronger today than it has ever been,” said Kim.
Q4 2021 Highlights
•Loan originations increased 23% quarter-over-quarter to a record $1.24 billion and contributed to a 4.0% increase in loans receivable quarter-over-quarter, or 15.9% annualized.
•Excluding PPP, loans receivable increased 4.9% quarter-over-quarter, or 19.6% annualized.
•Net interest income before provision for credit losses increased 2% quarter-over-quarter to $133.3 million, reflecting the redeployment of excess cash into loans and investment securities and lower cost of deposits.
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(1) Pre-provision net revenue, a non-GAAP financial measure, represents the sum of net interest income before provision (credit) for credit losses and non-interest income less noninterest expense. Management’s reasons and purposes for using this non-GAAP financial measure is set forth on page 7 of this earnings release. A quantitative reconciliation of the GAAP to non-GAAP financial measures is provided in the accompanying financial information on Table Page 10.
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•Total cost of deposits decreased 3 basis points quarter-over-quarter, reflecting the ongoing downward repricing of interest bearing deposits, and represented the ninth consecutive quarter of declining deposit costs.
•Noninterest expenses continued to be well managed with efficiency ratio improving 288 basis points quarter-over-quarter to 50.70% and noninterest expense to average assets improving to 1.67%.
•Pre-provision net revenue(1) increased 10% quarter-over-quarter and totaled $72.2 million.
•Company recorded net recoveries of $2.3 million related to a large loan previously charged off during the 2021 third quarter.
•Total nonperforming assets declined quarter-over-quarter by $1.9 million, and criticized loans decreased by $50.9 million.
•Re-entered the state of Georgia with a new branch opening in the epicenter of Atlanta’s growing Korean American community.
Financial Highlights
| (dollars in thousands, except per share data) (unaudited) | At or for the Three Months Ended | |||||||||||||||||||||||||
| 12/31/2021 | 9/30/2021 | 12/31/2020 | ||||||||||||||||||||||||
| Net income | $ | 51,623 | $ | 55,499 | $ | 28,319 | ||||||||||||||||||||
| Diluted earnings per share | $ | 0.43 | $ | 0.45 | $ | 0.23 | ||||||||||||||||||||
Pre-provision net revenue (1) | $ | 72,179 | $ | 65,411 | $ | 61,108 | ||||||||||||||||||||
| Net interest income before provision (credit) for credit losses | $ | 133,318 | $ | 130,296 | $ | 120,756 | ||||||||||||||||||||
| Net interest margin | 3.13 | % | 3.07 | % | 3.02 | % | ||||||||||||||||||||
| Noninterest income | $ | 13,097 | $ | 10,617 | $ | 11,415 | ||||||||||||||||||||
| Noninterest expense | $ | 74,236 | $ | 75,502 | $ | 71,063 | ||||||||||||||||||||
| Net loans receivable | $ | 13,812,193 | $ | 13,281,917 | $ | 13,356,472 | ||||||||||||||||||||
| Deposits | $ | 15,040,450 | $ | 15,062,527 | $ | 14,333,912 | ||||||||||||||||||||
| Total cost of deposits | 0.23 | % | 0.26 | % | 0.48 | % | ||||||||||||||||||||
Nonaccrual loans (2) | $ | 54,616 | $ | 54,380 | $ | 85,238 | ||||||||||||||||||||
Nonperforming loans to loans receivable (2) | 0.78 | % | 0.73 | % | 0.91 | % | ||||||||||||||||||||
| ACL to loans receivable | 1.01 | % | 1.02 | % | 1.52 | % | ||||||||||||||||||||
ACL to nonaccrual loans (2) | 257.34 | % | 251.52 | % | 242.55 | % | ||||||||||||||||||||
ACL to nonperforming assets (2) | 125.76 | % | 120.33 | % | 144.24 | % | ||||||||||||||||||||
| Provision (credit) for credit losses | $ | 1,500 | $ | (10,000) | $ | 27,500 | ||||||||||||||||||||
| Net (recoveries) charge offs | $ | (2,276) | $ | 42,678 | $ | 608 | ||||||||||||||||||||
| Return on average assets (“ROA”) | 1.16 | % | 1.25 | % | 0.67 | % | ||||||||||||||||||||
| Return on average equity (“ROE”) | 9.93 | % | 10.61 | % | 5.54 | % | ||||||||||||||||||||
Return on average tangible common equity (“ROTCE”) (1) | 12.85 | % | 13.71 | % | 7.21 | % | ||||||||||||||||||||
| Noninterest expense / average assets | 1.67 | % | 1.70 | % | 1.69 | % | ||||||||||||||||||||
| Efficiency ratio | 50.70 | % | 53.58 | % | 53.77 | % | ||||||||||||||||||||
(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 7 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 10.
(2) Excludes delinquent SBA loans that are guaranteed and currently in liquidation
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Operating Results for the 2021 Fourth Quarter
Net interest income before provision for credit losses for the 2021 fourth quarter increased 2% to $133.3 million from $130.3 million in the 2021 third quarter and increased 10% from $120.8 million in the year-ago fourth quarter. The Company attributed the increase to higher interest income due to higher average balances of loans receivable and investment securities, as well as lower interest expense on deposits.
The net interest margin for the 2021 fourth quarter increased 6 basis points to 3.13% from 3.07% in the preceding third quarter, primarily attributed to the redeployment of cash into loans and investment securities, and a 3 basis point reduction in the cost of deposits. The net interest margin in the prior-year fourth quarter was 3.02%.
The weighted average yield on loans for the 2021 fourth quarter was 3.95%, compared with 3.97% in the preceding third quarter, and 4.03% in the year-ago fourth quarter.
The weighted average cost of deposits for the 2021 fourth quarter decreased for the ninth consecutive quarter to 0.23%, representing a 3 basis point decrease from 0.26% for the 2021 third quarter and a 25 basis point decrease from 0.48% for the 2020 fourth quarter. The Company attributed the improvements in the weighted average cost of deposits to the ongoing downward repricing of interest bearing deposits. The cost of interest bearing deposits was 0.39%, 0.42%, and 0.71% for the quarters ended December 31, 2021, September 30, 2021, and December 31, 2020, respectively.
Noninterest income for the 2021 fourth quarter increased 23% quarter-over-quarter to $13.1 million from $10.6 million in the preceding third quarter, reflecting higher levels of deposit and transaction fees, net gain on sale of SBA loans, swap fee income, and equity investment dividend income. During the 2021 fourth quarter, the Company sold $41.0 million in the guaranteed portion of SBA 7(a) loans, compared with $31.3 million in the preceding third quarter. Noninterest income in the 2020 fourth quarter totaled $11.4 million.
Noninterest expense for the 2021 fourth quarter decreased to $74.2 million from $75.5 million for the preceding third quarter, largely reflecting lower salaries and employee benefits expense, partially offset by higher OREO expenses. For the 2020 fourth quarter, noninterest expense totaled $71.1 million.
Salaries and employee benefits expense for the 2021 fourth quarter decreased to $44.6 million from $47.0 million in the preceding third quarter, and is attributable to more normalized bonus reserves, a decrease in stock compensation expense, and an increase in deferred loan origination costs. Salaries and employee benefits expense for the 2020 fourth quarter totaled $40.9 million.
The Company’s efficiency ratio for the 2021 fourth quarter improved to 50.7% from 53.6% in the preceding third quarter and 53.8% in the year-ago fourth quarter. Noninterest expense as a percentage of average assets improved to 1.67% for the 2021 fourth quarter from 1.70% for the 2021 third quarter and from 1.69% for the 2020 fourth quarter.
The effective tax rate for the 2021 fourth quarter was 27.0%, compared with 26.4% for the preceding third quarter, reflecting an increase in the Company’s actual 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 fourth quarter, the effective tax rate was materially lower than the preceding quarters of 2020 at 15.7%, which reflected a lower tax provision based on adjustments to the applicable state apportionment factors. The effective tax rate for the full-year 2021 was 25.7%, compared with 21.6% for 2020. The increase in the full-year tax rate was mainly due to an increase in pretax income during 2021 and the change in the Company’s state apportionment in 2020 which materially lowered the tax rate for that year.
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Balance Sheet Summary
New loan originations funded during the 2021 fourth quarter increased 23% quarter-over-quarter to a record $1.24 billion from the previous record of $1.01 billion in the preceding third quarter. In the year-ago fourth quarter, the Company originated $844.2 million of new loans.
Following are the components of new loan production for the quarters ended December 31, 2021, September 30, 2021, and December 31, 2020.
| (dollars in thousands) (unaudited) | For the Three Months Ended | |||||||||||||||||||||||||
| 12/31/2021 | 9/30/2021 | 12/31/2020 | ||||||||||||||||||||||||
| Commercial real estate | $ | 573,978 | $ | 488,969 | $ | 326,512 | ||||||||||||||||||||
| Commercial | 532,634 | 329,702 | 435,151 | |||||||||||||||||||||||
| SBA (excluding SBA PPP) | 54,848 | 115,023 | 17,141 | |||||||||||||||||||||||
| Residential mortgage | 81,325 | 75,007 | 62,492 | |||||||||||||||||||||||
| Consumer | 70 | 500 | 2,932 | |||||||||||||||||||||||
| Total new loan originations | $ | 1,242,855 | $ | 1,009,201 | $ | 844,228 | ||||||||||||||||||||
At December 31, 2021, loans receivable increased 4.0% to $13.95 billion from $13.42 billion at September 30, 2021 and increased 2.9% from $13.56 billion at December 31, 2020.
Total deposits at December 31, 2021 declined slightly to $15.04 billion from $15.06 billion at September 30, 2021, but increased 4.9% year-over-year from $14.33 billion at December 31, 2020. Quarter-over-quarter, money market and NOW deposits increased 5.2%, but was offset by a seasonal decline in noninterest bearing demand deposits and a reduction in time deposits. On a year-over-year basis, noninterest bearing demand deposits at year-end increased 19.5%, money market and NOW deposits increased 18.1%, and time deposits decreased 30.1%.
Following is the deposit composition as of December 31, 2021, September 30, 2021 and December 31, 2020:
| (dollars in thousands) (unaudited) | 12/31/2021 | 9/30/2021 | % change | 12/31/2020 | % change | ||||||||||||||||||||||||
| Noninterest bearing demand deposits | $ | 5,751,870 | $ | 6,007,586 | (4.3) | % | $ | 4,814,254 | 19.5 | % | |||||||||||||||||||
| Money market and other | 6,178,850 | 5,871,567 | 5.2 | % | 5,232,413 | 18.1 | % | ||||||||||||||||||||||
| Saving deposits | 321,377 | 314,603 | 2.2 | % | 300,770 | 6.9 | % | ||||||||||||||||||||||
| Time deposits | 2,788,353 | 2,868,771 | (2.8) | % | 3,986,475 | (30.1) | % | ||||||||||||||||||||||
| Total deposit balances | $ | 15,040,450 | $ | 15,062,527 | (0.1) | % | $ | 14,333,912 | 4.9 | % | |||||||||||||||||||
While noninterest bearing demand deposits decreased to $5.75 billion at December 31, 2021 from $6.01 billion as of September 30, 2021 due to seasonality related to larger corporate banking deposit relationships, the average noninterest bearing deposit balance for the 2021 fourth quarter increased 2.0% over the third quarter of 2021.
Following is the deposit composition as a percentage of total deposits as of December 31, 2021, September 30, 2021 and December 31, 2020 and a breakdown of cost of deposits for the quarters ended December 31, 2021, September 30, 2021 and December 31, 2020:
| Deposit Breakdown | Cost of Deposits | ||||||||||||||||||||||||||||||||||
| (dollars in thousands) (unaudited) | 12/31/2021 | 9/30/2021 | 12/31/2020 | Q4 2021 | Q3 2021 | Q4 2020 | |||||||||||||||||||||||||||||
| Noninterest bearing demand deposits | 38.3 | % | 39.9 | % | 33.6 | % | — | % | — | % | — | % | |||||||||||||||||||||||
| Money market and other | 41.1 | % | 39.0 | % | 36.5 | % | 0.37 | % | 0.40 | % | 0.45 | % | |||||||||||||||||||||||
| Saving deposits | 2.1 | % | 2.1 | % | 2.1 | % | 1.18 | % | 1.18 | % | 1.17 | % | |||||||||||||||||||||||
| Time deposits | 18.5 | % | 19.0 | % | 27.8 | % | 0.34 | % | 0.38 | % | 0.98 | % | |||||||||||||||||||||||
| Total deposit balances | 100.0 | % | 100.0 | % | 100.0 | % | 0.23 | % | 0.26 | % | 0.48 | % | |||||||||||||||||||||||
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Allowance for Credit Losses
In the 2021 fourth quarter, the Company recorded a provision for credit losses of $1.5 million, compared with a negative provision for credit losses of $10.0 million in the preceding third quarter, and a provision for credit losses of $27.5 million in the 2020 fourth quarter.
Following is the allowance for credit losses as of December 31, 2021, September 30, 2021 and December 31, 2020:
| (dollars in thousands) (unaudited) | 12/31/2021 | 9/30/2021 | 12/31/2020 | |||||||||||||||||||||||
| Allowance for credit losses | $ | 140,550 | $ | 136,774 | $ | 206,741 | ||||||||||||||||||||
| Allowance for credit loss/loans receivable | 1.01 | % | 1.02 | % | 1.52 | % | ||||||||||||||||||||
| Allowance for credit losses/nonperforming loans | 128.75 | % | 138.92 | % | 167.80 | % | ||||||||||||||||||||
Credit Quality
Following are the components of nonperforming assets as of December 31, 2021, September 30, 2021 and December 31, 2020:
| (dollars in thousands) (unaudited) | 12/31/2021 | 9/30/2021 | 12/31/2020 | |||||||||||||||||||||||
Loans on nonaccrual status (1) | $ | 54,616 | $ | 54,380 | $ | 85,238 | ||||||||||||||||||||
| Delinquent loans 90 days or more on accrual status | 2,131 | 4,567 | 614 | |||||||||||||||||||||||
| Accruing troubled debt restructured loans | 52,418 | 39,509 | 37,354 | |||||||||||||||||||||||
| Total nonperforming loans | 109,165 | 98,456 | 123,206 | |||||||||||||||||||||||
| Other real estate owned | 2,597 | 15,213 | 20,121 | |||||||||||||||||||||||
| Total nonperforming assets | $ | 111,762 | $ | 113,669 | $ | 143,327 | ||||||||||||||||||||
(1) Excludes delinquent SBA loans that are guaranteed and currently in liquidation totaling $19.5 million, $20.6 million, and $26.5 million, at December 31, 2021, September 30, 2021, and December 31, 2020, respectively.
Total nonperforming assets at December 31, 2021 declined to $111.8 million from $113.7 million at September 30, 2021 and from $143.3 million at December 31, 2020. The quarter-over-quarter decrease in total nonperforming assets largely reflects a $12.6 million reduction in other real estate owned, partially offset by a $10.7 million increase in nonperforming loans due to one large commercial real estate loan.
Following are net (recoveries) charge offs and net (recoveries) charge offs to average loans receivable on an annualized basis for the three months ended December 31, 2021, September 30, 2021 and December 31, 2020:
| (dollars in thousands) (unaudited) | For the Three Months Ended | |||||||||||||||||||||||||
| 12/31/2021 | 9/30/2021 | 12/31/2020 | ||||||||||||||||||||||||
| Net (recoveries) charge offs | $ | (2,276) | $ | 42,678 | $ | 608 | ||||||||||||||||||||
| Net (recoveries) charge offs/average loans receivable (annualized) | (0.07) | % | 1.28 | % | 0.02 | % | ||||||||||||||||||||
Net recoveries in the 2021 fourth quarter reflects a partial recovery from a large loan charged off during the preceding third quarter.
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Following are the components of criticized loan balances as of December 31, 2021, September 30, 2021 and December 31, 2020:
| (dollars in thousands) (unaudited) | 12/31/2021 | 9/30/2021 | 12/31/2020 | |||||||||||||||||||||||
| Special Mention | $ | 257,194 | $ | 306,766 | $ | 184,941 | ||||||||||||||||||||
| Classified | 242,397 | 243,684 | 366,557 | |||||||||||||||||||||||
| Criticized | $ | 499,591 | $ | 550,450 | $ | 551,498 | ||||||||||||||||||||
The Company noted that the quarter-over-quarter decrease in criticized loans at December 31, 2021 reflects the benefits of its de-risking strategy focused on reducing higher-risk commercial real estate properties.
Capital
At December 31, 2021, the Company and the Bank continued to exceed all regulatory capital requirements to be
classified as a “well-capitalized” financial institution. Following are capital ratios for the Company as of December 31, 2021, September 30, 2021 and December 31, 2020:
| (unaudited) | 12/31/2021 | 9/30/2021 | 12/31/2020 | Minimum Guideline for “Well-Capitalized” Bank | |||||||||||||||||||
| Common Equity Tier 1 Capital | 11.03% | 11.01% | 10.94% | 6.50% | |||||||||||||||||||
| Tier 1 Leverage Ratio | 10.11% | 9.98% | 10.22% | 5.00% | |||||||||||||||||||
| Tier 1 Risk-Based Ratio | 11.70% | 11.70% | 11.64% | 8.00% | |||||||||||||||||||
| Total Risk-Based Ratio | 12.42% | 12.42% | 12.87% | 10.00% | |||||||||||||||||||
Following are tangible common equity(1) (“TCE”) per share and TCE as a percentage of tangible assets(1) as of December 31, 2021, September 30, 2021 and December 31, 2020:
| (unaudited) | 12/31/2021 | 9/30/2021 | 12/31/2020 | ||||||||||||||
Tangible common equity per share (1) | $13.51 | $13.33 | $12.81 | ||||||||||||||
Tangible common equity to tangible assets (1) | 9.31% | 9.24% | 9.50% | ||||||||||||||
(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 on Page 7 of this earnings release. A quantitative reconciliation of the GAAP to non-GAAP financial measures is provided in the accompanying financial information on Table Page 10.
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Non-GAAP Financial Metrics
This news release contains certain non-GAAP financial disclosures, including pre-provision net revenue, tangible common equity, tangible common equity per share 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 10.
Investor Conference Call
The Company previously announced that it will host an investor conference call on Tuesday, January 25, 2022 at 9:30 a.m. Pacific Time / 12:30 p.m. Eastern Time to review financial results for its fourth quarter and full year ended December 31, 2021. Investors and analysts are invited to access the conference call by dialing 866-235-9917 (domestic) or 412-902-4103 (international) and asking for the “Hope Bancorp Call.” A presentation to accompany the earnings call will be available at the Investor Relations section of Hope Bancorp’s website at www.ir-hopebancorp.com. Other interested parties are invited to listen to a live webcast of the call available at the Investor Relations section of Hope Bancorp’s website. After the live webcast, a replay will remain available in the Investor Relations section of Hope Bancorp’s website for one year. A telephonic replay of the call will be available at 877-344-7529 (domestic) or 412-317-0088 (international) for one week through February 1, 2022, replay access code 7703555.
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 $17.89 billion in total assets as of December 31, 2021. 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 press release may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements relate to, among other things, expectations regarding the business environment in which we operate, projections of future performance, perceived opportunities in the market and statements regarding our business strategies, objectives and vision. Forward-looking statements include, but are not limited to, statements preceded by, followed by or that include the words “will,” “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates” or similar expressions. With respect to any such forward-looking statements, the Company claims the protection provided for in the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties. The Company’s actual results, performance or achievements may differ significantly from the results, performance or achievements expressed or implied in any forward-looking statements. The risks and uncertainties include, but are not limited to: possible deterioration in economic conditions in our areas of operation; interest rate risk associated with volatile interest rates and related asset-liability matching risk; liquidity risks; risk of significant non-earning assets, and net credit losses that could occur, particularly in times of weak economic conditions or times of rising interest rates; the failure of or changes to assumptions and estimates underlying the Company’s allowances for credit losses, regulatory risks associated with current and future regulations, and the COVID-19 pandemic and its impact on our financial position, results of operations, liquidity, and capitalization. For additional information concerning these and other risk factors, see the Company’s most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q. The Company does not undertake, and specifically disclaims any obligation, to update any forward-looking statements to reflect the occurrence of events or circumstances after the date of such statements except as required by law.
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Contacts:
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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Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands, except share data)
| Assets | 12/31/2021 | 9/30/2021 | % change | 12/31/2020 | % change | ||||||||||||||||||||||||
| Cash and due from banks | $ | 316,266 | $ | 627,352 | (50) | % | $ | 350,579 | (10) | % | |||||||||||||||||||
| Securities available for sale, at fair value | 2,666,275 | 2,669,489 | — | % | 2,285,611 | 17 | % | ||||||||||||||||||||||
| Federal Home Loan Bank (“FHLB”) stock and other investments | 87,961 | 88,102 | — | % | 105,591 | (17) | % | ||||||||||||||||||||||
| Loans held for sale, at the lower of cost or fair value | 99,049 | 179,117 | (45) | % | 17,743 | 458 | % | ||||||||||||||||||||||
| Loans receivable | 13,952,743 | 13,418,691 | 4 | % | 13,563,213 | 3 | % | ||||||||||||||||||||||
| Allowance for credit losses | (140,550) | (136,774) | 3 | % | (206,741) | (32) | % | ||||||||||||||||||||||
| Net loans receivable | 13,812,193 | 13,281,917 | 4 | % | 13,356,472 | 3 | % | ||||||||||||||||||||||
| Accrued interest receivable | 41,842 | 47,102 | (11) | % | 59,430 | (30) | % | ||||||||||||||||||||||
| Premises and equipment, net | 45,667 | 45,307 | 1 | % | 48,409 | (6) | % | ||||||||||||||||||||||
| Bank owned life insurance | 77,081 | 76,756 | — | % | 76,765 | — | % | ||||||||||||||||||||||
| Goodwill | 464,450 | 464,450 | — | % | 464,450 | — | % | ||||||||||||||||||||||
| Servicing assets | 10,418 | 10,787 | (3) | % | 12,692 | (18) | % | ||||||||||||||||||||||
| Other intangible assets, net | 7,671 | 8,180 | (6) | % | 9,708 | (21) | % | ||||||||||||||||||||||
| Other assets | 260,188 | 300,467 | (13) | % | 319,214 | (18) | % | ||||||||||||||||||||||
| Total assets | $ | 17,889,061 | $ | 17,799,026 | 1 | % | $ | 17,106,664 | 5 | % | |||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||
| Deposits | $ | 15,040,450 | $ | 15,062,527 | — | % | $ | 14,333,912 | 5 | % | |||||||||||||||||||
| FHLB advances | 300,000 | 200,000 | 50 | % | 250,000 | 20 | % | ||||||||||||||||||||||
| Convertible notes, net | 216,209 | 215,974 | — | % | 204,565 | 6 | % | ||||||||||||||||||||||
| Subordinated debentures | 105,354 | 105,057 | — | % | 104,178 | 1 | % | ||||||||||||||||||||||
| Accrued interest payable | 4,272 | 5,367 | (20) | % | 14,706 | (71) | % | ||||||||||||||||||||||
| Other liabilities | 129,793 | 135,703 | (4) | % | 145,558 | (11) | % | ||||||||||||||||||||||
| Total liabilities | 15,796,078 | 15,724,628 | — | % | 15,052,919 | 5 | % | ||||||||||||||||||||||
| Stockholders’ Equity | |||||||||||||||||||||||||||||
Common stock, $0.001 par value | 136 | 136 | — | % | 136 | — | % | ||||||||||||||||||||||
| Capital surplus | 1,421,698 | 1,420,151 | — | % | 1,434,916 | (1) | % | ||||||||||||||||||||||
| Retained earnings | 932,561 | 897,766 | 4 | % | 785,940 | 19 | % | ||||||||||||||||||||||
| Treasury stock, at cost | (250,000) | (247,198) | 1 | % | (200,000) | 25 | % | ||||||||||||||||||||||
| Accumulated other comprehensive (loss) gain, net | (11,412) | 3,543 | N/A | 32,753 | N/A | ||||||||||||||||||||||||
| Total stockholders’ equity | 2,092,983 | 2,074,398 | 1 | % | 2,053,745 | 2 | % | ||||||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 17,889,061 | $ | 17,799,026 | 1 | % | $ | 17,106,664 | 5 | % | |||||||||||||||||||
| Common stock shares - authorized | 150,000,000 | 150,000,000 | 150,000,000 | ||||||||||||||||||||||||||
| Common stock shares - outstanding | 120,006,452 | 120,198,061 | 123,264,864 | ||||||||||||||||||||||||||
| Treasury stock shares | 16,343,849 | 16,149,007 | 12,661,581 | ||||||||||||||||||||||||||
Table Page 1
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands, except per share data)
| Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||
| 12/31/2021 | 9/30/2021 | % change | 12/31/2020 | % change | 12/31/2021 | 12/31/2020 | % change | ||||||||||||||||||||||||||||||||||||||||
| Interest and fees on loans | $ | 133,821 | $ | 132,794 | 1 | % | $ | 132,117 | 1 | % | $ | 528,174 | $ | 554,967 | (5) | % | |||||||||||||||||||||||||||||||
| Interest on securities | 10,657 | 9,207 | 16 | % | 9,014 | 18 | % | 35,492 | 39,362 | (10) | % | ||||||||||||||||||||||||||||||||||||
| Interest on federal funds sold and other investments | 691 | 865 | (20) | % | 598 | 16 | % | 2,866 | 4,549 | (37) | % | ||||||||||||||||||||||||||||||||||||
| Total interest income | 145,169 | 142,866 | 2 | % | 141,729 | 2 | % | 566,532 | 598,878 | (5) | % | ||||||||||||||||||||||||||||||||||||
| Interest on deposits | 8,905 | 9,640 | (8) | % | 16,934 | (47) | % | 42,011 | 110,369 | (62) | % | ||||||||||||||||||||||||||||||||||||
| Interest on other borrowings and convertible notes | 2,946 | 2,930 | 1 | % | 4,039 | (27) | % | 11,751 | 21,011 | (44) | % | ||||||||||||||||||||||||||||||||||||
| Total interest expense | 11,851 | 12,570 | (6) | % | 20,973 | (43) | % | 53,762 | 131,380 | (59) | % | ||||||||||||||||||||||||||||||||||||
| Net interest income before provision (credit) for credit losses | 133,318 | 130,296 | 2 | % | 120,756 | 10 | % | 512,770 | 467,498 | 10 | % | ||||||||||||||||||||||||||||||||||||
| Provision (credit) for credit losses | 1,500 | (10,000) | N/A | 27,500 | (95) | % | (12,200) | 95,000 | N/A | ||||||||||||||||||||||||||||||||||||||
| Net interest income after provision (credit) for credit losses | 131,818 | 140,296 | (6) | % | 93,256 | 41 | % | 524,970 | 372,498 | 41 | % | ||||||||||||||||||||||||||||||||||||
| Service fees on deposit accounts | 1,894 | 1,814 | 4 | % | 2,991 | (37) | % | 7,275 | 12,443 | (42) | % | ||||||||||||||||||||||||||||||||||||
| International service fees | 1,061 | 889 | 19 | % | 696 | 52 | % | 3,586 | 3,139 | 14 | % | ||||||||||||||||||||||||||||||||||||
| Loan servicing fees, net | 747 | 642 | 16 | % | 566 | 32 | % | 3,367 | 2,809 | 20 | % | ||||||||||||||||||||||||||||||||||||
| Wire transfer fees | 916 | 836 | 10 | % | 867 | 6 | % | 3,519 | 3,577 | (2) | % | ||||||||||||||||||||||||||||||||||||
| Net gains on sales of SBA loans | 3,614 | 2,459 | 47 | % | — | 100 | % | 8,448 | — | 100 | % | ||||||||||||||||||||||||||||||||||||
| Net gains on sales of residential mortgage loans | 530 | 781 | (32) | % | 1,618 | (67) | % | 4,435 | 8,004 | (45) | % | ||||||||||||||||||||||||||||||||||||
| Net gains on sales of securities available for sale | — | — | — | % | — | — | % | — | 7,531 | (100) | % | ||||||||||||||||||||||||||||||||||||
| Other income and fees | 4,335 | 3,196 | 36 | % | 4,677 | (7) | % | 12,964 | 15,929 | (19) | % | ||||||||||||||||||||||||||||||||||||
| Total noninterest income | 13,097 | 10,617 | 23 | % | 11,415 | 15 | % | 43,594 | 53,432 | (18) | % | ||||||||||||||||||||||||||||||||||||
| Salaries and employee benefits | 44,608 | 47,018 | (5) | % | 40,911 | 9 | % | 175,151 | 162,922 | 8 | % | ||||||||||||||||||||||||||||||||||||
| Occupancy | 7,391 | 7,473 | (1) | % | 7,200 | 3 | % | 28,898 | 28,917 | — | % | ||||||||||||||||||||||||||||||||||||
| Furniture and equipment | 4,642 | 4,429 | 5 | % | 4,122 | 13 | % | 18,079 | 17,548 | 3 | % | ||||||||||||||||||||||||||||||||||||
| Advertising and marketing | 2,329 | 2,656 | (12) | % | 1,695 | 37 | % | 8,707 | 6,284 | 39 | % | ||||||||||||||||||||||||||||||||||||
| Data processing and communications | 2,789 | 2,394 | 16 | % | 2,235 | 25 | % | 10,331 | 9,344 | 11 | % | ||||||||||||||||||||||||||||||||||||
| Professional fees | 2,439 | 2,431 | — | % | 1,847 | 32 | % | 12,168 | 8,170 | 49 | % | ||||||||||||||||||||||||||||||||||||
| FDIC assessment | 1,366 | 1,204 | 13 | % | 1,166 | 17 | % | 5,109 | 5,544 | (8) | % | ||||||||||||||||||||||||||||||||||||
| Credit related expenses | 873 | 1,266 | (31) | % | 2,001 | (56) | % | 4,400 | 6,817 | (35) | % | ||||||||||||||||||||||||||||||||||||
| OREO expense (income), net | 811 | 248 | 227 | % | (86) | N/A | 1,638 | 3,865 | (58) | % | |||||||||||||||||||||||||||||||||||||
| Software impairment | — | — | — | % | — | — | % | 2,146 | — | 100 | % | ||||||||||||||||||||||||||||||||||||
| FHLB advance prepayment fee | — | — | — | % | — | — | % | — | 3,584 | (100) | % | ||||||||||||||||||||||||||||||||||||
| Branch restructuring costs | — | — | — | % | 2,367 | (100) | % | — | 2,367 | (100) | % | ||||||||||||||||||||||||||||||||||||
| Other | 6,988 | 6,383 | 9 | % | 7,605 | (8) | % | 26,665 | 28,277 | (6) | % | ||||||||||||||||||||||||||||||||||||
| Total noninterest expense | 74,236 | 75,502 | (2) | % | 71,063 | 4 | % | 293,292 | 283,639 | 3 | % | ||||||||||||||||||||||||||||||||||||
| Income before income taxes | 70,679 | 75,411 | (6) | % | 33,608 | 110 | % | 275,272 | 142,291 | 93 | % | ||||||||||||||||||||||||||||||||||||
| Income tax provision | 19,056 | 19,912 | (4) | % | 5,289 | 260 | % | 70,700 | 30,776 | 130 | % | ||||||||||||||||||||||||||||||||||||
| Net income | $ | 51,623 | $ | 55,499 | (7) | % | $ | 28,319 | 82 | % | $ | 204,572 | $ | 111,515 | 83 | % | |||||||||||||||||||||||||||||||
| Earnings per Common Share - Basic | $ | 0.43 | $ | 0.45 | $ | 0.23 | $ | 1.67 | $ | 0.90 | |||||||||||||||||||||||||||||||||||||
| Earnings per Common Share - Diluted | $ | 0.43 | $ | 0.45 | $ | 0.23 | $ | 1.66 | $ | 0.90 | |||||||||||||||||||||||||||||||||||||
| Weighted Average Shares Outstanding - Basic | 120,160,300 | 122,244,948 | 123,264,172 | 122,321,768 | 123,501,401 | ||||||||||||||||||||||||||||||||||||||||||
| Weighted Average Shares Outstanding - Diluted | 121,025,925 | 122,908,536 | 123,874,229 | 123,133,025 | 123,889,343 | ||||||||||||||||||||||||||||||||||||||||||
Table Page 2
Hope Bancorp, Inc.
Selected Financial Data
Unaudited
| At or for the Three Months Ended (Annualized) | At or for the Twelve Months Ended | ||||||||||||||||||||||||||||
| Profitability measures: | 12/31/2021 | 9/30/2021 | 12/31/2020 | 12/31/2021 | 12/31/2020 | ||||||||||||||||||||||||
| ROA | 1.16 | % | 1.25 | % | 0.67 | % | 1.17 | % | 0.68 | % | |||||||||||||||||||
| ROE | 9.93 | % | 10.61 | % | 5.54 | % | 9.88 | % | 5.49 | % | |||||||||||||||||||
ROTCE (1) | 12.85 | % | 13.71 | % | 7.21 | % | 12.80 | % | 7.16 | % | |||||||||||||||||||
| Net interest margin | 3.13 | % | 3.07 | % | 3.02 | % | 3.09 | % | 3.00 | % | |||||||||||||||||||
| Efficiency ratio | 50.70 | % | 53.58 | % | 53.77 | % | 52.72 | % | 54.45 | % | |||||||||||||||||||
| Noninterest expense / average assets | 1.67 | % | 1.70 | % | 1.69 | % | 1.68 | % | 1.72 | % | |||||||||||||||||||
(1) Average tangible equity is calculated by subtracting average goodwill and average core deposit intangibles assets from average stockholders’ equity. This is a non-GAAP measure that we believe provides investors with information that is useful in understanding our financial performance and position. | |||||||||||||||||||||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||||||||
| Pre-tax acquisition accounting adjustments | 12/31/2021 | 9/30/2021 | 12/31/2020 | 12/31/2021 | 12/31/2020 | ||||||||||||||||||||||||
| Accretion on acquired loans | $ | 283 | $ | 368 | $ | 452 | $ | 1,722 | $ | 2,916 | |||||||||||||||||||
| Accretion on acquired credit deteriorated loans | 1,667 | 2,093 | 3,064 | 8,203 | 20,143 | ||||||||||||||||||||||||
| Amortization of premium on low income housing tax credits | (73) | (73) | (71) | (293) | (283) | ||||||||||||||||||||||||
| Accretion of discount on acquired subordinated debt | (296) | (295) | (289) | (1,175) | (1,143) | ||||||||||||||||||||||||
| Amortization of core deposit intangibles | (509) | (509) | (531) | (2,037) | (2,125) | ||||||||||||||||||||||||
| Total acquisition accounting adjustments | $ | 1,072 | $ | 1,584 | $ | 2,625 | $ | 6,420 | $ | 19,508 | |||||||||||||||||||
Table Page 3
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
| Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 12/31/2021 | 9/30/2021 | 12/31/2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest | Annualized | Interest | Annualized | Interest | Annualized | ||||||||||||||||||||||||||||||||||||||||||||||||
| Average | Income/ | Average | Average | Income/ | Average | Average | Income/ | Average | |||||||||||||||||||||||||||||||||||||||||||||
| Balance | Expense | Yield/Cost | Balance | Expense | Yield/Cost | Balance | Expense | Yield/Cost | |||||||||||||||||||||||||||||||||||||||||||||
| INTEREST EARNING ASSETS: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans, including loans held for sale | $ | 13,447,009 | $ | 133,821 | 3.95 | % | $ | 13,286,382 | $ | 132,794 | 3.97 | % | $ | 13,046,443 | $ | 132,117 | 4.03 | % | |||||||||||||||||||||||||||||||||||
| Securities available for sale | 2,674,903 | 10,657 | 1.58 | % | 2,370,672 | 9,207 | 1.54 | % | 2,123,025 | 9,014 | 1.69 | % | |||||||||||||||||||||||||||||||||||||||||
| FHLB stock and other investments | 773,579 | 691 | 0.35 | % | 1,197,537 | 865 | 0.29 | % | 749,281 | 598 | 0.32 | % | |||||||||||||||||||||||||||||||||||||||||
| Total interest earning assets | $ | 16,895,491 | $ | 145,169 | 3.41 | % | $ | 16,854,591 | $ | 142,866 | 3.36 | % | $ | 15,918,749 | $ | 141,729 | 3.54 | % | |||||||||||||||||||||||||||||||||||
| INTEREST BEARING LIABILITIES: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Deposits: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Demand, interest bearing | $ | 5,961,363 | $ | 5,522 | 0.37 | % | $ | 5,919,225 | $ | 5,946 | 0.40 | % | $ | 4,910,649 | $ | 5,541 | 0.45 | % | |||||||||||||||||||||||||||||||||||
| Savings | 316,758 | 946 | 1.18 | % | 310,525 | 920 | 1.18 | % | 305,341 | 898 | 1.17 | % | |||||||||||||||||||||||||||||||||||||||||
| Time deposits | 2,823,613 | 2,437 | 0.34 | % | 2,914,977 | 2,774 | 0.38 | % | 4,240,500 | 10,495 | 0.98 | % | |||||||||||||||||||||||||||||||||||||||||
| Total interest bearing deposits | 9,101,734 | 8,905 | 0.39 | % | 9,144,727 | 9,640 | 0.42 | % | 9,456,490 | 16,934 | 0.71 | % | |||||||||||||||||||||||||||||||||||||||||
| FHLB advances | 216,882 | 648 | 1.19 | % | 200,000 | 640 | 1.27 | % | 204,900 | 657 | 1.28 | % | |||||||||||||||||||||||||||||||||||||||||
| Convertible notes, net | 216,078 | 1,322 | 2.39 | % | 215,840 | 1,321 | 2.39 | % | 203,807 | 2,383 | 4.58 | % | |||||||||||||||||||||||||||||||||||||||||
| Subordinated debentures | 101,295 | 976 | 3.77 | % | 100,993 | 969 | 3.75 | % | 100,118 | 999 | 3.90 | % | |||||||||||||||||||||||||||||||||||||||||
| Total interest bearing liabilities | 9,635,989 | $ | 11,851 | 0.49 | % | 9,661,560 | $ | 12,570 | 0.52 | % | 9,965,315 | $ | 20,973 | 0.84 | % | ||||||||||||||||||||||||||||||||||||||
| Noninterest bearing demand deposits | 5,967,251 | 5,848,983 | 4,637,584 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total funding liabilities/cost of funds | $ | 15,603,240 | 0.30 | % | $ | 15,510,543 | 0.32 | % | $ | 14,602,899 | 0.57 | % | |||||||||||||||||||||||||||||||||||||||||
| Net interest income/net interest spread | $ | 133,318 | 2.92 | % | $ | 130,296 | 2.84 | % | $ | 120,756 | 2.70 | % | |||||||||||||||||||||||||||||||||||||||||
| Net interest margin | 3.13 | % | 3.07 | % | 3.02 | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Cost of deposits: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Noninterest bearing demand deposits | $ | 5,967,251 | $ | — | — | % | $ | 5,848,983 | $ | — | — | % | $ | 4,637,584 | $ | — | — | % | |||||||||||||||||||||||||||||||||||
| Interest bearing deposits | 9,101,734 | 8,905 | 0.39 | % | 9,144,727 | 9,640 | 0.42 | % | 9,456,490 | 16,934 | 0.71 | % | |||||||||||||||||||||||||||||||||||||||||
| Total deposits | $ | 15,068,985 | $ | 8,905 | 0.23 | % | $ | 14,993,710 | $ | 9,640 | 0.26 | % | $ | 14,094,074 | $ | 16,934 | 0.48 | % | |||||||||||||||||||||||||||||||||||
Table Page 4
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
| Twelve Months Ended | |||||||||||||||||||||||||||||||||||
| 12/31/2021 | 12/31/2020 | ||||||||||||||||||||||||||||||||||
| Interest | Interest | ||||||||||||||||||||||||||||||||||
| Average | Income/ | Average | Average | Income/ | Average | ||||||||||||||||||||||||||||||
| Balance | Expense | Yield/Cost | Balance | Expense | Yield/Cost | ||||||||||||||||||||||||||||||
| INTEREST EARNING ASSETS: | |||||||||||||||||||||||||||||||||||
| Loans, including loans held for sale | $ | 13,343,431 | $ | 528,174 | 3.96 | % | $ | 12,698,523 | $ | 554,967 | 4.37 | % | |||||||||||||||||||||||
| Securities available for sale | 2,392,589 | 35,492 | 1.48 | % | 1,899,948 | 39,362 | 2.07 | % | |||||||||||||||||||||||||||
| FHLB stock and other investments | 844,010 | 2,866 | 0.34 | % | 982,419 | 4,549 | 0.46 | % | |||||||||||||||||||||||||||
| Total interest earning assets | $ | 16,580,030 | $ | 566,532 | 3.42 | % | $ | 15,580,890 | $ | 598,878 | 3.84 | % | |||||||||||||||||||||||
| INTEREST BEARING LIABILITIES: | |||||||||||||||||||||||||||||||||||
| Deposits: | |||||||||||||||||||||||||||||||||||
| Demand, interest bearing | $ | 5,657,958 | $ | 22,867 | 0.40 | % | $ | 4,729,438 | $ | 34,529 | 0.73 | % | |||||||||||||||||||||||
| Savings | 309,295 | 3,623 | 1.17 | % | 291,655 | 3,475 | 1.19 | % | |||||||||||||||||||||||||||
| Time deposits | 3,178,722 | 15,521 | 0.49 | % | 4,698,503 | 72,365 | 1.54 | % | |||||||||||||||||||||||||||
| Total interest bearing deposits | 9,145,975 | 42,011 | 0.46 | % | 9,719,596 | 110,369 | 1.14 | % | |||||||||||||||||||||||||||
| FHLB advances | 208,721 | 2,561 | 1.23 | % | 435,836 | 6,865 | 1.58 | % | |||||||||||||||||||||||||||
| Convertible notes, net | 215,633 | 5,289 | 2.42 | % | 201,859 | 9,457 | 4.61 | % | |||||||||||||||||||||||||||
| Subordinated debentures | 100,848 | 3,901 | 3.82 | % | 99,682 | 4,689 | 4.63 | % | |||||||||||||||||||||||||||
| Total interest bearing liabilities | 9,671,177 | $ | 53,762 | 0.56 | % | 10,456,973 | $ | 131,380 | 1.26 | % | |||||||||||||||||||||||||
| Noninterest bearing demand deposits | 5,581,803 | 3,840,935 | |||||||||||||||||||||||||||||||||
| Total funding liabilities/cost of funds | $ | 15,252,980 | 0.35 | % | $ | 14,297,908 | 0.92 | % | |||||||||||||||||||||||||||
| Net interest income/net interest spread | $ | 512,770 | 2.86 | % | $ | 467,498 | 2.58 | % | |||||||||||||||||||||||||||
| Net interest margin | 3.09 | % | 3.00 | % | |||||||||||||||||||||||||||||||
| Cost of deposits: | |||||||||||||||||||||||||||||||||||
| Noninterest bearing demand deposits | $ | 5,581,803 | $ | — | — | % | $ | 3,840,935 | $ | — | — | % | |||||||||||||||||||||||
| Interest bearing deposits | 9,145,975 | 42,011 | 0.46 | % | 9,719,596 | 110,369 | 1.14 | % | |||||||||||||||||||||||||||
| Total deposits | $ | 14,727,778 | $ | 42,011 | 0.29 | % | $ | 13,560,531 | $ | 110,369 | 0.81 | % | |||||||||||||||||||||||
Table Page 5
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
| Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||
| AVERAGE BALANCES: | 12/31/2021 | 9/30/2021 | % change | 12/31/2020 | % change | 12/31/2021 | 12/31/2020 | % change | |||||||||||||||||||||||||||||||||||||||
| Loans receivable, including loans held for sale | $ | 13,447,009 | $ | 13,286,382 | 1 | % | $ | 13,046,443 | 3 | % | $ | 13,343,431 | $ | 12,698,523 | 5 | % | |||||||||||||||||||||||||||||||
| Securities, FHLB stock, and other investments | 3,448,482 | 3,568,209 | (3) | % | 2,872,306 | 20 | % | 3,236,599 | 2,882,367 | 12 | % | ||||||||||||||||||||||||||||||||||||
| Interest earning assets | 16,895,491 | 16,854,591 | — | % | 15,918,749 | 6 | % | 16,580,030 | 15,580,890 | 6 | % | ||||||||||||||||||||||||||||||||||||
| Total assets | 17,834,345 | 17,745,066 | 1 | % | 16,824,700 | 6 | % | 17,467,665 | 16,515,102 | 6 | % | ||||||||||||||||||||||||||||||||||||
| Interest bearing deposits | 9,101,734 | 9,144,727 | — | % | 9,456,490 | (4) | % | 9,145,975 | 9,719,596 | (6) | % | ||||||||||||||||||||||||||||||||||||
| Interest bearing liabilities | 9,635,989 | 9,661,560 | — | % | 9,965,315 | (3) | % | 9,671,177 | 10,456,973 | (8) | % | ||||||||||||||||||||||||||||||||||||
| Noninterest bearing demand deposits | 5,967,251 | 5,848,983 | 2 | % | 4,637,584 | 29 | % | 5,581,803 | 3,840,935 | 45 | % | ||||||||||||||||||||||||||||||||||||
| Stockholders’ equity | 2,079,694 | 2,092,018 | (1) | % | 2,045,959 | 2 | % | 2,071,453 | 2,032,570 | 2 | % | ||||||||||||||||||||||||||||||||||||
| Net interest earning assets | 7,259,502 | 7,193,031 | 1 | % | 5,953,434 | 22 | % | 6,908,853 | 5,123,917 | 35 | % | ||||||||||||||||||||||||||||||||||||
| LOAN PORTFOLIO COMPOSITION: | 12/31/2021 | 9/30/2021 | % change | 12/31/2020 | % change | ||||||||||||||||||||||||||||||||||||||||||
| Commercial loans | $ | 4,208,674 | $ | 3,857,879 | 9 | % | $ | 4,157,787 | 1 | % | |||||||||||||||||||||||||||||||||||||
| Real estate loans | 9,105,931 | 8,908,657 | 2 | % | 8,772,134 | 4 | % | ||||||||||||||||||||||||||||||||||||||||
| Consumer and other loans | 638,138 | 652,155 | (2) | % | 633,292 | 1 | % | ||||||||||||||||||||||||||||||||||||||||
| Loans, net of deferred loan fees and costs | 13,952,743 | 13,418,691 | 4 | % | 13,563,213 | 3 | % | ||||||||||||||||||||||||||||||||||||||||
| Allowance for credit losses | (140,550) | (136,774) | (3) | % | (206,741) | 32 | % | ||||||||||||||||||||||||||||||||||||||||
| Loans receivable, net | $ | 13,812,193 | $ | 13,281,917 | 4 | % | $ | 13,356,472 | 3 | % | |||||||||||||||||||||||||||||||||||||
| REAL ESTATE LOANS BY PROPERTY TYPE: | 12/31/2021 | 9/30/2021 | % change | 12/31/2020 | % change | ||||||||||||||||||||||||||||||||||||||||||
| Retail buildings | $ | 2,522,976 | $ | 2,466,881 | 2 | % | $ | 2,293,396 | 10 | % | |||||||||||||||||||||||||||||||||||||
| Hotels/motels | 1,308,405 | 1,385,003 | (6) | % | 1,634,287 | (20) | % | ||||||||||||||||||||||||||||||||||||||||
| Gas stations/car washes | 1,050,730 | 999,069 | 5 | % | 892,110 | 18 | % | ||||||||||||||||||||||||||||||||||||||||
| Mixed-use facilities | 854,793 | 819,516 | 4 | % | 750,867 | 14 | % | ||||||||||||||||||||||||||||||||||||||||
| Warehouses | 1,244,339 | 1,160,863 | 7 | % | 1,091,389 | 14 | % | ||||||||||||||||||||||||||||||||||||||||
| Multifamily | 744,068 | 691,262 | 8 | % | 518,498 | 44 | % | ||||||||||||||||||||||||||||||||||||||||
| Other | 1,380,620 | 1,386,063 | — | % | 1,591,587 | (13) | % | ||||||||||||||||||||||||||||||||||||||||
| Total | $ | 9,105,931 | $ | 8,908,657 | 2 | % | $ | 8,772,134 | 4 | % | |||||||||||||||||||||||||||||||||||||
| DEPOSIT COMPOSITION: | 12/31/2021 | 9/30/2021 | % change | 12/31/2020 | % change | ||||||||||||||||||||||||||||||||||||||||||
| Noninterest bearing demand deposits | $ | 5,751,870 | $ | 6,007,586 | (4) | % | $ | 4,814,254 | 19 | % | |||||||||||||||||||||||||||||||||||||
| Money market and other | 6,178,850 | 5,871,567 | 5 | % | 5,232,413 | 18 | % | ||||||||||||||||||||||||||||||||||||||||
| Saving deposits | 321,377 | 314,603 | 2 | % | 300,770 | 7 | % | ||||||||||||||||||||||||||||||||||||||||
| Time deposits | 2,788,353 | 2,868,771 | (3) | % | 3,986,475 | (30) | % | ||||||||||||||||||||||||||||||||||||||||
| Total deposit balances | $ | 15,040,450 | $ | 15,062,527 | — | % | $ | 14,333,912 | 5 | % | |||||||||||||||||||||||||||||||||||||
| DEPOSIT COMPOSITION (%): | 12/31/2021 | 9/30/2021 | 12/31/2020 | ||||||||||||||||||||||||||||||||||||||||||||
| Noninterest bearing demand deposits | 38.3 | % | 39.9 | % | 33.6 | % | |||||||||||||||||||||||||||||||||||||||||
| Money market and other | 41.1 | % | 39.0 | % | 36.5 | % | |||||||||||||||||||||||||||||||||||||||||
| Saving deposits | 2.1 | % | 2.1 | % | 2.1 | % | |||||||||||||||||||||||||||||||||||||||||
| Time deposits | 18.5 | % | 19.0 | % | 27.8 | % | |||||||||||||||||||||||||||||||||||||||||
| Total deposit balances | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||||||||||||||||||||||||||||||||
Table Page 6
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands, except per share data)
| CAPITAL RATIOS: | 12/31/2021 | 9/30/2021 | 12/31/2020 | ||||||||||||||||||||||||||||||||||||||
| Total stockholders’ equity | $ | 2,092,983 | $ | 2,074,398 | $ | 2,053,745 | |||||||||||||||||||||||||||||||||||
| Common equity tier 1 ratio | 11.03 | % | 11.01 | % | 10.94 | % | |||||||||||||||||||||||||||||||||||
| Tier 1 risk-based capital ratio | 11.70 | % | 11.70 | % | 11.64 | % | |||||||||||||||||||||||||||||||||||
| Total risk-based capital ratio | 12.42 | % | 12.42 | % | 12.87 | % | |||||||||||||||||||||||||||||||||||
| Tier 1 leverage ratio | 10.11 | % | 9.98 | % | 10.22 | % | |||||||||||||||||||||||||||||||||||
| Total risk weighted assets | $ | 15,036,292 | $ | 14,737,809 | $ | 14,341,456 | |||||||||||||||||||||||||||||||||||
| Book value per common share | $ | 17.44 | $ | 17.26 | $ | 16.66 | |||||||||||||||||||||||||||||||||||
Tangible common equity to tangible assets (1) | 9.31 | % | 9.24 | % | 9.50 | % | |||||||||||||||||||||||||||||||||||
Tangible common equity per share (1) | $ | 13.51 | $ | 13.33 | $ | 12.81 | |||||||||||||||||||||||||||||||||||
(1) Tangible common equity to tangible assets is a non-GAAP financial measure that represents common equity less goodwill and core deposit intangible assets, net divided by total assets less goodwill and core deposit intangible assets, net. Management reviews tangible common equity to tangible assets in evaluating the Company’s capital levels and has included this ratio in response to market participant interest in tangible common equity as a measure of capital. | |||||||||||||||||||||||||||||||||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||||||||||||||||||||
| ALLOWANCE FOR CREDIT LOSSES CHANGES: | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | 12/31/2020 | 12/31/2021 | 12/31/2020 | ||||||||||||||||||||||||||||||||||
| Balance at beginning of period | $ | 136,774 | $ | 189,452 | $ | 207,943 | $ | 206,741 | $ | 179,849 | $ | 206,741 | $ | 94,144 | |||||||||||||||||||||||||||
| CECL day 1 adoption impact | — | — | — | — | — | — | 26,200 | ||||||||||||||||||||||||||||||||||
| Provision (credit) for credit losses | 1,500 | (10,000) | (7,000) | 3,300 | 27,500 | (12,200) | 95,000 | ||||||||||||||||||||||||||||||||||
| Recoveries | 3,615 | 1,906 | 1,301 | 1,423 | 2,207 | 8,245 | 7,423 | ||||||||||||||||||||||||||||||||||
| Charge offs | (1,339) | (44,584) | (12,792) | (3,521) | (2,815) | (62,236) | (16,026) | ||||||||||||||||||||||||||||||||||
| Balance at end of period | $ | 140,550 | $ | 136,774 | $ | 189,452 | $ | 207,943 | $ | 206,741 | $ | 140,550 | $ | 206,741 | |||||||||||||||||||||||||||
| Net (recoveries) charge offs / average loans receivable (annualized) | (0.07) | % | 1.28 | % | 0.35 | % | 0.06 | % | 0.02 | % | 0.40 | % | 0.07 | % | |||||||||||||||||||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||||||||||||||||||||
| NET (RECOVERIES) CHARGE OFFS: | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | 12/31/2020 | 12/31/2021 | 12/31/2020 | ||||||||||||||||||||||||||||||||||
| Real estate loans | $ | (2,352) | $ | 40,542 | $ | 11,281 | $ | 2,234 | $ | (726) | $ | 51,705 | $ | 6,806 | |||||||||||||||||||||||||||
| Commercial loans | 144 | 1,117 | 181 | (80) | 1,167 | 1,362 | 632 | ||||||||||||||||||||||||||||||||||
| Consumer loans | (68) | 1,019 | 29 | (56) | 167 | 924 | 1,165 | ||||||||||||||||||||||||||||||||||
| Total net (recoveries) charge offs | $ | (2,276) | $ | 42,678 | $ | 11,491 | $ | 2,098 | $ | 608 | $ | 53,991 | $ | 8,603 | |||||||||||||||||||||||||||
Table Page 7
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
| NONPERFORMING ASSETS: | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | 12/31/2020 | ||||||||||||||||||||||||
Loans on nonaccrual status (1) | $ | 54,616 | $ | 54,380 | $ | 111,008 | $ | 109,858 | $ | 85,238 | |||||||||||||||||||
| Delinquent loans 90 days or more on accrual status | 2,131 | 4,567 | 4,759 | 384 | 614 | ||||||||||||||||||||||||
| Accruing troubled debt restructured loans | 52,418 | 39,509 | 51,360 | 41,773 | 37,354 | ||||||||||||||||||||||||
| Total nonperforming loans | 109,165 | 98,456 | 167,127 | 152,015 | 123,206 | ||||||||||||||||||||||||
| Other real estate owned | 2,597 | 15,213 | 16,619 | 18,515 | 20,121 | ||||||||||||||||||||||||
| Total nonperforming assets | $ | 111,762 | $ | 113,669 | $ | 183,746 | $ | 170,530 | $ | 143,327 | |||||||||||||||||||
| Nonperforming assets/total assets | 0.62 | % | 0.64 | % | 1.05 | % | 0.99 | % | 0.84 | % | |||||||||||||||||||
| Nonperforming assets/loans receivable & OREO | 0.80 | % | 0.85 | % | 1.37 | % | 1.24 | % | 1.06 | % | |||||||||||||||||||
| Nonperforming assets/total capital | 5.34 | % | 5.48 | % | 8.78 | % | 8.34 | % | 6.98 | % | |||||||||||||||||||
| Nonperforming loans/loans receivable | 0.78 | % | 0.73 | % | 1.24 | % | 1.11 | % | 0.91 | % | |||||||||||||||||||
| Nonaccrual loans/loans receivable | 0.39 | % | 0.41 | % | 0.83 | % | 0.80 | % | 0.63 | % | |||||||||||||||||||
| Allowance for credit losses/loans receivable | 1.01 | % | 1.02 | % | 1.41 | % | 1.52 | % | 1.52 | % | |||||||||||||||||||
| Allowance for credit losses/nonaccrual loans | 257.34 | % | 251.52 | % | 170.67 | % | 189.28 | % | 242.55 | % | |||||||||||||||||||
| Allowance for credit losses/nonperforming loans | 128.75 | % | 138.92 | % | 113.36 | % | 136.79 | % | 167.80 | % | |||||||||||||||||||
| Allowance for credit losses/nonperforming assets | 125.76 | % | 120.33 | % | 103.11 | % | 121.94 | % | 144.24 | % | |||||||||||||||||||
(1) Excludes delinquent SBA loans that are guaranteed and currently in liquidation totaling $19.5 million, $20.6 million, $23.6 million, $25.0 million, and $26.5 million, at December 31, 2021, September 30, 2021, June 30, 2021, March 31, 2021, and December 31, 2020, respectively. | |||||||||||||||||||||||||||||
| NONACCRUAL LOANS BY TYPE: | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | 12/31/2020 | ||||||||||||||||||||||||
| Real estate loans | $ | 39,756 | $ | 41,673 | $ | 95,622 | $ | 91,940 | $ | 67,450 | |||||||||||||||||||
| Commercial loans | 11,025 | 10,991 | 12,217 | 14,080 | 13,911 | ||||||||||||||||||||||||
| Consumer loans | 3,835 | 1,716 | 3,169 | 3,838 | 3,877 | ||||||||||||||||||||||||
| Total nonaccrual loans | $ | 54,616 | $ | 54,380 | $ | 111,008 | $ | 109,858 | $ | 85,238 | |||||||||||||||||||
| BREAKDOWN OF ACCRUING TROUBLED DEBT RESTRUCTURED LOANS: | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | 12/31/2020 | ||||||||||||||||||||||||
| Retail buildings | $ | 28,483 | $ | 11,280 | $ | 12,110 | $ | 6,319 | $ | 5,408 | |||||||||||||||||||
| Hotels/motels | 472 | — | — | — | — | ||||||||||||||||||||||||
| Gas stations/car washes | 197 | 202 | 206 | 210 | 219 | ||||||||||||||||||||||||
| Mixed-use facilities | 2,846 | 7,937 | 7,967 | 3,377 | 3,521 | ||||||||||||||||||||||||
| Warehouses | 5,366 | 4,908 | 14,099 | 14,124 | 7,296 | ||||||||||||||||||||||||
Other (2) | 15,054 | 15,182 | 16,978 | 17,743 | 20,910 | ||||||||||||||||||||||||
| Total | $ | 52,418 | $ | 39,509 | $ | 51,360 | $ | 41,773 | $ | 37,354 | |||||||||||||||||||
(2) Includes commercial business, consumer and other loans | |||||||||||||||||||||||||||||
Table Page 8
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
| ACCRUING DELINQUENT LOANS 30-89 DAYS PAST DUE: | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | 12/31/2020 | ||||||||||||||||||||||||
| 30 - 59 days | $ | 29,723 | $ | 15,016 | $ | 22,466 | $ | 18,175 | $ | 11,347 | |||||||||||||||||||
| 60 - 89 days | 10,345 | 4,746 | 6,987 | 8,314 | 16,826 | ||||||||||||||||||||||||
| Total | $ | 40,068 | $ | 19,762 | $ | 29,453 | $ | 26,489 | $ | 28,173 | |||||||||||||||||||
| ACCRUING DELINQUENT LOANS 30-89 DAYS PAST DUE BY TYPE: | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | 12/31/2020 | ||||||||||||||||||||||||
| Real estate loans | $ | 20,232 | $ | 10,359 | $ | 21,432 | $ | 18,331 | $ | 15,689 | |||||||||||||||||||
| Commercial loans | 3,057 | 9,377 | 560 | 1,002 | 3,393 | ||||||||||||||||||||||||
| Consumer loans | 16,779 | 26 | 7,461 | 7,156 | 9,091 | ||||||||||||||||||||||||
| Total | $ | 40,068 | $ | 19,762 | $ | 29,453 | $ | 26,489 | $ | 28,173 | |||||||||||||||||||
| CRITICIZED LOANS: | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | 12/31/2020 | ||||||||||||||||||||||||
| Special mention | $ | 257,194 | $ | 306,766 | $ | 294,559 | $ | 280,974 | $ | 184,941 | |||||||||||||||||||
| Substandard | 242,397 | 243,684 | 380,955 | 379,048 | 366,557 | ||||||||||||||||||||||||
| Total criticized loans | $ | 499,591 | $ | 550,450 | $ | 675,514 | $ | 660,022 | $ | 551,498 | |||||||||||||||||||
Table Page 9
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
| Reconciliation of GAAP financial measures to non-GAAP financial measures: | |||||||||||||||||||||||||||||
Management reviews select non-GAAP financial measures in evaluating the Company’s and the Bank’s financial performance and in response to market participant interest. A reconciliation of the GAAP to non-GAAP financial measures utilized by management is provided below. | |||||||||||||||||||||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||||||||
| 12/31/2021 | 9/30/2021 | 12/31/2020 | 12/31/2021 | 12/31/2020 | |||||||||||||||||||||||||
| RETURN ON AVERAGE TANGIBLE COMMON EQUITY | |||||||||||||||||||||||||||||
| Average stockholders’ equity | $ | 2,079,694 | $ | 2,092,018 | $ | 2,045,959 | $ | 2,071,453 | $ | 2,032,570 | |||||||||||||||||||
| Less: Goodwill and core deposit intangible assets, net | (472,405) | (472,918) | (474,467) | (473,177) | (475,263) | ||||||||||||||||||||||||
| Average tangible common equity | $ | 1,607,289 | $ | 1,619,100 | $ | 1,571,492 | $ | 1,598,276 | $ | 1,557,307 | |||||||||||||||||||
| Net Income | $ | 51,623 | $ | 55,499 | $ | 28,319 | $ | 204,572 | $ | 111,515 | |||||||||||||||||||
| Return on average tangible common equity (annualized) | 12.85 | % | 13.71 | % | 7.21 | % | 12.80 | % | 7.16 | % | |||||||||||||||||||
| TANGIBLE COMMON EQUITY | 12/31/2021 | 9/30/2021 | 12/31/2020 | ||||||||||||||||||||||||||
| Total stockholders’ equity | $ | 2,092,983 | $ | 2,074,398 | $ | 2,053,745 | |||||||||||||||||||||||
| Less: Goodwill and core deposit intangible assets, net | (472,121) | (472,630) | (474,158) | ||||||||||||||||||||||||||
| Tangible common equity | $ | 1,620,862 | $ | 1,601,768 | $ | 1,579,587 | |||||||||||||||||||||||
| Total assets | $ | 17,889,061 | $ | 17,799,026 | $ | 17,106,664 | |||||||||||||||||||||||
| Less: Goodwill and core deposit intangible assets, net | (472,121) | (472,630) | (474,158) | ||||||||||||||||||||||||||
| Tangible assets | $ | 17,416,940 | $ | 17,326,396 | $ | 16,632,506 | |||||||||||||||||||||||
| Common shares outstanding | 120,006,452 | 120,198,061 | 123,264,864 | ||||||||||||||||||||||||||
| Tangible common equity to tangible assets | 9.31 | % | 9.24 | % | 9.50 | % | |||||||||||||||||||||||
| Tangible common equity per share | $ | 13.51 | $ | 13.33 | $ | 12.81 | |||||||||||||||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||||||||
| 12/31/2021 | 9/30/2021 | 12/31/2020 | 12/31/2021 | 12/31/2020 | |||||||||||||||||||||||||
| PRE-PROVISION NET REVENUE | |||||||||||||||||||||||||||||
| Net interest income before provision (credit) for credit losses | $ | 133,318 | $ | 130,296 | $ | 120,756 | $ | 512,770 | $ | 467,498 | |||||||||||||||||||
| Noninterest income | 13,097 | 10,617 | 11,415 | 43,594 | 53,432 | ||||||||||||||||||||||||
| Revenue | 146,415 | 140,913 | 132,171 | 556,364 | 520,930 | ||||||||||||||||||||||||
| Noninterest expense | 74,236 | 75,502 | 71,063 | 293,292 | 283,639 | ||||||||||||||||||||||||
| Pre-provision net revenue | $ | 72,179 | $ | 65,411 | $ | 61,108 | $ | 263,072 | $ | 237,291 | |||||||||||||||||||
Table Page 10
