EX-99.1 2 hope-06302022ex991financia.htm EX-99.1 Document

hopebancorp5a03.jpg
News Release


HOPE BANCORP REPORTS 2022 SECOND QUARTER FINANCIAL RESULTS


LOS ANGELES - July 19, 2022 - Hope Bancorp, Inc. (the “Company”) (NASDAQ: HOPE), the holding company of Bank of Hope (the “Bank”), today reported unaudited financial results for its second quarter and six months ended June 30, 2022.

For the three months ended June 30, 2022, net income totaled $52.1 million, or $0.43 per diluted common share, compared with $60.7 million, or $0.50 per diluted common share, in the preceding first quarter and $53.8 million, or $0.43 per diluted common share, in the year-ago second quarter.

“We continued the positive momentum from the beginning of the year and delivered another strong financial performance for the second quarter of 2022 with record loan production and enhanced pre-provision net revenue,” said Kevin S. Kim, Chairman, President and Chief Executive Officer. “We originated $1.29 billion in new loans, the highest level of production in the history of the Bank. This represented the fourth consecutive quarter of originations in excess of $1.0 billion, and exemplifies the benefits of the investments we have made in our business development platform. We are particularly pleased that our loan production was well diversified. Given our asset sensitive position, our weighted average loan yields increased 18 basis points quarter-over-quarter and contributed to a 15 basis point increase in our net interest margin. With the meaningful increases in loans outstanding contributing to a 6% quarter-over-quarter increase in net interest income, we delivered a 4% increase in our pre-provision net revenue, and our PPNR return on average equity improved 108 basis points to 14.66%.

“As we look ahead to the second half of the year, we remain confident that the investments made to strengthen and diversify our business model over the past few years will continue to generate solid loan and deposit growth, despite the challenges of the current economy. With a lower-risk, more diversified loan portfolio and enhanced credit administration framework, we believe we are well positioned to navigate the potential challenges of a recessionary environment while continuing to enhance our franchise value,” said Kim.
Q2 2022 Highlights
•Loan originations totaled a record $1.29 billion, up 25% over the preceding first quarter and representing a well-diversified mix of new loan production.
•Excluding PPP, loans receivable increased 16% quarter-over-quarter on an annualized basis.
•Company recorded net recoveries of $930 thousand, reflecting the third consecutive quarter of total net recoveries.
•Criticized loan balances decreased 13% quarter-over-quarter, contributing to stable asset quality metrics.
•Company recorded a provision for credit losses of $3.2 million, primarily reflecting loan growth and continued reductions in criticized loans.
•Net interest margin expanded 15 basis points from the preceding first quarter, largely benefiting from higher loan yields.
•Total deposits increased 3.5% quarter-over-quarter, reflecting higher balances of noninterest bearing demand deposits and strategic increases in time deposits.
•Total cost of deposits increased 9 basis points quarter-over-quarter, reflecting an aggregate 150 basis point increase in the Federal Funds target rate since March 2022.
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•Noninterest expenses were relatively well managed despite the higher compensation expense environment, with efficiency ratio of 52.09% versus 51.50% in the 2022 first quarter.
•Repurchased 1,038,986 shares of common stock of the Company during the second quarter, utilizing $14.7 million of the $50 million share repurchase program announced in January 2022.

Financial Highlights
(dollars in thousands, except per share data) (unaudited)At or for the Three Months Ended
6/30/20223/31/20226/30/2021
Net income$52,088 $60,738 $53,763 
Diluted earnings per share$0.43 $0.50 $0.43 
Pre-provision net revenue (“PPNR”) (1)
$73,919 $70,989 $64,530 
Net interest income before provision (credit) for credit losses$141,538 $133,176 $126,577 
Net interest margin3.36 %3.21 %3.11 %
Noninterest income$12,746 $13,186 $11,076 
Noninterest expense$80,365 $75,373 $73,123 
Net loans receivable$14,394,469 $13,919,224 $13,234,849 
Deposits$15,029,630 $14,515,128 $14,726,230 
Total cost of deposits0.33 %0.24 %0.30 %
Nonaccrual loans(2)
$69,522 $52,717 $111,008 
Nonperforming loans to loans receivable(2)
0.75 %0.71 %1.24 %
ACL to loans receivable
1.04 %1.05 %1.41 %
ACL to nonaccrual loans(2)
218.03 %279.70 %170.67 %
ACL to nonperforming assets(2)
137.09 %144.03 %103.11 %
Provision (credit) for credit losses$3,200 $(11,000)$(7,000)
Net (recoveries) charge offs$(930)$(17,900)$11,491 
Return on average assets (“ROA”)1.17 %1.37 %1.25 %
Return on average equity (“ROE”)10.33 %11.62 %10.41 %
ROA (PPNR) (1)
1.65 %1.60 %1.50 %
ROE (PPNR) (1)
14.66 %13.58 %12.49 %
Return on average tangible common equity (“ROTCE”)(1)
13.48 %15.01 %13.50 %
Noninterest expense / average assets1.80 %1.70 %1.70 %
Efficiency ratio52.09 %51.50 %53.12 %

(1) Pre-provision net revenue, ROA (PPNR), ROE (PPNR), 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 Table Pages 10 and 11 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 Pages 10 and 11.
(2) Excludes delinquent SBA loans that are guaranteed and currently in liquidation.




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Operating Results for the 2022 Second Quarter

Net interest income before provision for credit losses for the 2022 second quarter increased 6% to $141.5 million from $133.2 million in the 2022 first quarter and increased 12% from $126.6 million in the 2021 second quarter. The Company attributed the increase to higher interest income largely due to an increase in loan yields and higher average balances of loans receivable, partially offset by higher interest expense on deposits.

The net interest margin for the 2022 second quarter increased 15 basis points to 3.36% from 3.21% in the preceding first quarter and increased 25 basis points from 3.11% in the year-ago second quarter, primarily reflecting higher loan yields and improved mix of interest earning assets.

The weighted average yield on loans for the 2022 second quarter was 4.06%, up 18 basis points from 3.88% in the 2022 first quarter and up 8 basis points from the year-ago second quarter. The Company attributed the quarter-over-quarter increase in weighted average yield on loans to the repricing of its variable rate loans as a result of an aggregate 150 basis point increase in the Federal Funds target rate since March 2022 and a significant increase in the average rate of new loans originated during the quarter.

The weighted average cost of deposits for the 2022 second quarter increased by 9 basis points to 0.33% from 0.24% in the 2022 first quarter, primarily reflecting a 16 basis point increase in the cost of interest bearing deposits due to the Federal Funds target rate hikes since March 2022. Compared with the year-ago second quarter, the weighted average cost of deposits for the 2022 second quarter increased 3 basis points from 0.30%, reflecting a 6 basis point increase in the cost of interest bearing deposits.

Noninterest income for the 2022 second quarter decreased 3% to $12.7 million from $13.2 million in the 2022 first quarter. Increases in service fees on deposit accounts, net gains on sales of SBA loans and other income and fees were offset by lower levels of net gains on sales of residential mortgage loans. In addition, the Company recorded a loss of $547,000 related to the sale of $35.0 million in problem loans that had been transferred to held-for-sale as of March 31, 2022. During the 2022 second quarter, the Company sold $70.2 million in the guaranteed portion of SBA 7(a) loans and $4.1 million in retail mortgage loans, compared with $58.1 million and $37.8 million, respectively, in the preceding first quarter. Noninterest income for the 2022 second quarter increased 15% compared with $11.1 million in the second quarter of 2021, primarily reflecting higher net gains on sales of SBA loans and service fees on deposit accounts.

Noninterest expense for the 2022 second quarter increased 7% to $80.4 million from $75.4 million for the preceding first quarter, largely reflecting higher salaries and employee benefits, credit-related expenses, and advertising and marketing expenses. For the 2021 second quarter, noninterest expense totaled $73.1 million.

Salaries and employee benefits expense for the 2022 second quarter increased to $51.1 million from $47.7 million in the preceding first quarter, largely reflecting the impact of annual merit increases, higher costs associated with retaining staff in the extremely competitive staffing market, and increased FTE count to support continued growth. Salaries and employee benefits expense for the 2021 second quarter totaled $42.3 million.

The Company’s efficiency ratio for the 2022 second quarter was 52.09%, compared with 51.50% in the preceding first quarter and 53.12% in the year-ago second quarter. Noninterest expense as a percentage of average assets was 1.80% for the 2022 second quarter, compared with 1.70% for the 2022 first quarter and 1.70% for the 2021 second quarter.

The effective tax rate for the 2022 second quarter was 26.4%, compared with 25.9% for the preceding first quarter and 24.8% in the year-ago second quarter. The effective tax rate for the 2022 second quarter was higher than the year-ago second quarter mainly due to a decrease in affordable housing tax credits compared with the prior year.

Balance Sheet Summary
New loan originations funded during the 2022 second quarter totaled $1.29 billion, reflecting a 25% increase over the preceding first quarter and a 44% increase over the year-ago second quarter.

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Following are the components of new loan production for the quarters ended June 30, 2022, March 31, 2022, and June 30, 2021.

(dollars in thousands) (unaudited)For the Three Months Ended
6/30/20223/31/20226/30/2021
Commercial real estate$522,093 $529,730 $454,857 
Commercial544,639 335,756 288,726 
SBA35,085 56,602 77,652 
SBA PPP— — 19,816 
Residential mortgage181,408 103,473 275 
Consumer2,770 401 52,766 
Total new loan originations$1,285,995 $1,025,962 $894,092 


At June 30, 2022, loans receivable increased 3.4% to $14.55 billion from $14.07 billion at March 31, 2022 and increased 8.4% from $13.42 billion at June 30, 2021.

Total deposits at June 30, 2022 increased 3.5% to $15.03 billion from $14.52 billion at March 31, 2022, largely reflecting an increase in demand deposits and time deposits, and increased 2.1% year-over-year from $14.73 billion at June 30, 2021. Quarter-over-quarter, money market and NOW deposits decreased 2.2%, but this decrease was more than offset by a 3.5% increase in noninterest bearing demand deposits and a 20.9% increase in time deposits. On a year-over-year basis, noninterest bearing demand deposits at June 30, 2022 increased 0.9%, money market and NOW deposits increased 9.6%, and time deposits decreased 10.7%.

Following is the deposit composition as of June 30, 2022, March 31, 2022 and June 30, 2021:
(dollars in thousands) (unaudited)6/30/20223/31/2022% change6/30/2021% change
  Noninterest bearing demand deposits$5,689,992 $5,498,263 3.5 %$5,638,115 0.9 %
  Money market and other6,339,467 6,484,677 (2.2)%5,786,697 9.6 %
  Saving deposits326,927 321,373 1.7 %308,651 5.9 %
  Time deposits 2,673,244 2,210,815 20.9 %2,992,767 (10.7)%
    Total deposit balances$15,029,630 $14,515,128 3.5 %$14,726,230 2.1 %

Following is the deposit composition as a percentage of total deposits and a breakdown of cost of deposits as of and for the quarters ended June 30, 2022, March 31, 2022 and June 30, 2021:
Deposit BreakdownCost of Deposits
(unaudited)6/30/20223/31/20226/30/2021
Q2 2022
Q1 2022
Q2 2021
  Noninterest bearing demand deposits37.9 %37.9 %38.3 %— %— %— %
  Money market and other42.2 %44.7 %39.2 %0.54 %0.36 %0.43 %
  Saving deposits2.1 %2.2 %2.1 %1.16 %1.18 %1.15 %
  Time deposits 17.8 %15.2 %20.4 %0.46 %0.32 %0.49 %
    Total deposit balances100.0 %100.0 %100.0 %0.33 %0.24 %0.30 %

Allowance for Credit Losses
For the 2022 second quarter, the Company recorded a provision for credit losses of $3.2 million, compared with a negative provision for credit losses of $11.0 million in the preceding first quarter and a negative provision for credit losses of $7.0 million in the 2021 second quarter.

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Following is the allowance for credit losses and allowance coverage ratios as of June 30, 2022, March 31, 2022 and June 30, 2021:

(dollars in thousands) (unaudited)6/30/20223/31/20226/30/2021
Allowance for credit losses$151,580 $147,450 $189,452 
Allowance for credit loss/loans receivable1.04 %1.05 %1.41 %
Allowance for credit losses/nonperforming loans139.63 %146.92 %113.36 %


Credit Quality
Following are the components of nonperforming assets as of June 30, 2022, March 31, 2022 and June 30, 2021:
(dollars in thousands) (unaudited)6/30/20223/31/20226/30/2021
Loans on nonaccrual status (1)
$69,522 $52,717 $111,008 
Delinquent loans 90 days or more on accrual status
12,468 3,090 4,759 
Accruing troubled debt restructured loans26,572 44,555 51,360 
Total nonperforming loans108,562 100,362 167,127 
Other real estate owned2,010 2,010 16,619 
Total nonperforming assets$110,572 $102,372 $183,746 

(1)     Excludes delinquent SBA loans that are guaranteed and currently in liquidation totaling $13.2 million, $17.0 million and $23.6 million, at June 30, 2022, March 31, 2022 and June 30, 2021, respectively.

Total nonperforming assets at June 30, 2022 increased to $110.6 million from $102.4 million at March 31, 2022 but decreased from $183.7 million at June 30, 2021. Quarter-over-quarter, the increase in total nonperforming assets reflects higher balances of nonaccrual loans and delinquent loans 90 days or more on accrual status, partially offset by a reduction in accruing troubled debt restructured loans. During the quarter, an $18.6 million relationship migrated to nonaccrual status. Of the delinquent loans 90 days or more on accrual status as of June 30, 2022, $10.7 million represented loans that were addressed in the first week of July 2022 through renewals of maturing loans and pay offs. On a year-over-year basis, the decrease in total nonperforming assets reflects reductions in nonaccrual loans, accruing troubled debt restructured loans and other real estate owned, partially offset by an increase in delinquent loans 90 days or more on accrual status.

Following are net (recoveries) charge offs and net (recoveries) charge offs to average loans receivable on an annualized basis for the three months ended June 30, 2022, March 31, 2022 and June 30, 2021:
(dollars in thousands) (unaudited)For the Three Months Ended
6/30/20223/31/20226/30/2021
Net (recoveries) charge offs $(930)$(17,900)$11,491 
Net (recoveries) charge offs/average loans receivable (annualized)(0.03)%(0.52)%0.35 %

Following are the components of criticized loan balances as of June 30, 2022, March 31, 2022 and June 30, 2021:
(dollars in thousands) (unaudited)6/30/20223/31/20226/30/2021
Special mention$95,797$166,958$294,559
Substandard244,748226,661380,955
     Total criticized loans$340,545$393,619$675,514

The Company noted that the decreases in criticized loan balances at June 30, 2022 largely reflects previously COVID-19 modified loans that were upgraded following the receipt of updated financial statements.


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Capital
At June 30, 2022, the Company and the Bank continued to exceed all regulatory capital requirements generally required to meet the definition of a “well-capitalized” financial institution. Following are capital ratios for the Company as of June 30, 2022, March 31, 2022 and June 30, 2021:
Hope Bancorp, Inc. (unaudited)
6/30/20223/31/20226/30/2021Minimum Guideline for “Well-Capitalized” Bank
Common Equity Tier 1 Capital10.70%11.02%11.44%6.50%
Tier 1 Leverage Ratio10.32%10.37%10.43%5.00%
Tier 1 Risk-Based Ratio11.33%11.68%12.14%8.00%
Total Risk-Based Ratio12.14%12.49%13.16%10.00%

Following are tangible common equity (“TCE”) per share and TCE as a percentage of tangible assets as of June 30, 2022, March 31, 2022 and June 30, 2021:
(unaudited)6/30/20223/31/20226/30/2021
Tangible common equity per share (1)
$12.80$13.04$13.10
Tangible common equity to tangible assets (1)
8.68%9.05%9.53%

(1)    Tangible common equity represents common equity less goodwill and net other intangible assets. Tangible common equity per share represents tangible common equity divided by the number of shares issued and outstanding. Tangible assets represent total assets less goodwill and net other intangible assets. Tangible common equity to tangible assets is the ratio of tangible common equity over tangible assets. Tangible common equity, tangible common equity per share, tangible assets and tangible common equity to tangible assets are non-GAAP financial measures. Management’s reasons and purposes for using these non-GAAP financial measures are set forth in the following section. A quantitative reconciliation of the GAAP to non-GAAP financial measures is provided in the accompanying financial information on Table Pages 10 and 11.


Non-GAAP Financial Metrics

This news release contains certain non-GAAP financial measure disclosures, including pre-provision net revenue, ROA (PPNR), ROE (PPNR), tangible common equity, tangible common equity per share, tangible assets and tangible common equity to tangible assets. Management believes these non-GAAP financial measures provide meaningful supplemental information regarding its operational performance and the Company’s and the Bank’s capital levels and has included these figures in response to market participant interest in these financial metrics. A reconciliation of the GAAP to non-GAAP financial measures is provided in the accompanying financial information on Table Pages 10 and 11.

Investor Conference Call

The Company previously announced that it will host an investor conference call on Wednesday, July 20, 2022 at 9:30 a.m. Pacific Time / 12:30 p.m. Eastern Time to review financial results for its second quarter ended June 30, 2022. Investors and analysts are invited to access the conference call by dialing 866-235-9917 (domestic) or 412-902-4103 (international) and asking for the “Hope Bancorp Call.” A presentation to accompany the earnings call will be available at the Investor Relations section of Hope Bancorp’s website at www.ir-hopebancorp.com. Other interested parties are invited to listen to a live webcast of the call available at the Investor Relations section of Hope Bancorp’s website. After the live webcast, a replay will remain available at the Investor Relations section of Hope Bancorp’s website for one year. A telephonic replay of the call will be available at 877-344-7529 (domestic) or 412-317-0088 (international) for one week through July 27, 2022, replay access code 7509556.

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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 $18.09 billion in total assets as of June 30, 2022. Headquartered in Los Angeles and serving a multi-ethnic population of customers across the nation, Bank of Hope operates 54 full-service branches in California, Washington, Texas, Illinois, New York, New Jersey, Virginia, Alabama and Georgia. The Bank also operates SBA loan production offices in Seattle, Denver, Dallas, Atlanta, Portland, Oregon, New York City, Northern California and Houston; commercial loan production offices in Northern California and Seattle; residential mortgage loan production offices in Southern California; and a representative office in Seoul, Korea. Bank of Hope specializes in core business banking products for small and medium-sized businesses, with an emphasis in commercial real estate and commercial lending, SBA lending and international trade financing. Bank of Hope is a California-chartered bank, and its deposits are insured by the FDIC to the extent provided by law. Bank of Hope is an Equal Opportunity Lender. For additional information, please go to bankofhope.com. By including the foregoing website address link, the Company does not intend to and shall not be deemed to incorporate by reference any material contained or accessible therein.


Forward-Looking Statements

Some statements in this news release may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements relate to, among other things, expectations regarding the business environment in which we operate, projections of future performance, perceived opportunities in the market and statements regarding our business strategies, objectives and vision. Forward-looking statements include, but are not limited to, statements preceded by, followed by or that include the words “will,” “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates” or similar expressions. With respect to any such forward-looking statements, the Company claims the protection provided for in the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties. The Company’s actual results, performance or achievements may differ significantly from the results, performance or achievements expressed or implied in any forward-looking statements. The risks and uncertainties include, but are not limited to: possible deterioration in economic conditions in our areas of operation; interest rate risk associated with volatile interest rates and related asset-liability matching risk; liquidity risks; risk of significant non-earning assets, and net credit losses that could occur, particularly in times of weak economic conditions or times of rising interest rates; the failure of or changes to assumptions and estimates underlying the Company’s allowances for credit losses, regulatory risks associated with current and future regulations; and the COVID-19 pandemic and its impact on our financial position, results of operations, liquidity, and capitalization. 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.



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:6/30/20223/31/2022% change6/30/2021% change
Cash and due from banks$197,062 $280,373 (30)%$836,957 (76)%
Investment securities2,352,997 2,492,486 (6)%2,274,170 3 %
Federal Home Loan Bank (“FHLB”) stock and other investments87,109 87,201 — %94,550 (8)%
Loans held for sale, at the lower of cost or fair value76,376 115,756 (34)%54,245 41 %
Loans receivable14,546,049 14,066,674 3 %13,424,301 8 %
Allowance for credit losses(151,580)(147,450)3 %(189,452)(20)%
  Net loans receivable14,394,469 13,919,224 3 %13,234,849 9 %
Accrued interest receivable37,845 37,949 — %51,886 (27)%
Premises and equipment, net46,093 45,642 1 %45,302 2 %
Bank owned life insurance77,692 77,390 — %76,428 2 %
Goodwill464,450 464,450 — %464,450 — %
Servicing assets11,215 10,874 3 %11,566 (3)%
Other intangible assets, net6,698 7,184 (7)%8,689 (23)%
Other assets337,056 265,285 27 %316,535 6 %
  Total assets$18,089,062 $17,803,814 2 %$17,469,627 4 %
Liabilities:
Deposits$15,029,630 $14,515,128 4 %$14,726,230 2 %
FHLB and FRB borrowings573,000 772,000 (26)%200,000 187 %
Convertible notes, net216,678 216,444 — %215,739 — %
Subordinated debentures105,953 105,652 — %104,762 1 %
Accrued interest payable4,112 4,826 (15)%4,946 (17)%
Other liabilities159,320 148,707 7 %125,080 27 %
  Total liabilities$16,088,693 $15,762,757 2 %$15,376,757 5 %
Stockholders’ Equity:
Common stock, $0.001 par value$137 $137 — %$136 1 %
Capital surplus 1,424,891 1,422,602 — %1,418,135 — %
Retained earnings1,011,715 976,483 4 %859,548 18 %
Treasury stock, at cost(264,667)(250,000)(6)%(200,000)(32)%
Accumulated other comprehensive (loss) gain, net(171,707)(108,165)(59)%15,051 N/A
  Total stockholders’ equity2,000,369 2,041,057 (2)%2,092,870 (4)%
  Total liabilities and stockholders’ equity$18,089,062 $17,803,814 2 %$17,469,627 4 %
Common stock shares - authorized150,000,000 150,000,000 150,000,000 
Common stock shares - outstanding119,473,939 120,327,689 123,673,832 
Treasury stock shares17,382,835 16,343,849 12,661,581 
Table Page 1
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands, except share and per share data)

Three Months EndedSix Months Ended
6/30/20223/31/2022% change6/30/2021% change6/30/20226/30/2021% change
  Interest and fees on loans$145,024 $132,672 9 %$131,823 10 %$277,696 $261,559 6 %
  Interest on investment securities12,308 11,656 6 %7,713 60 %23,964 15,628 53 %
  Interest on federal funds sold and other investments492 544 (10)%668 (26)%1,036 1,310 (21)%
    Total interest income157,824 144,872 9 %140,204 13 %302,696 278,497 9 %
  Interest on deposits 12,220 8,676 41 %10,696 14 %20,896 23,466 (11)%
  Interest on other borrowings and convertible notes4,066 3,020 35 %2,931 39 %7,086 5,875 21 %
    Total interest expense16,286 11,696 39 %13,627 20 %27,982 29,341 (5)%
Net interest income before provision (credit) for credit losses141,538 133,176 6 %126,577 12 %274,714 249,156 10 %
Provision (credit) for credit losses3,200 (11,000)N/A(7,000)N/A(7,800)(3,700)111 %
Net interest income after provision (credit) for credit losses138,338 144,176 (4)%133,577 4 %282,514 252,856 12 %
  Service fees on deposit accounts2,270 1,974 15 %1,777 28 %4,244 3,567 19 %
  International service fees744 794 (6)%795 (6)%1,538 1,636 (6)%
  Loan servicing fees, net 843 836 1 %934 (10)%1,679 1,978 (15)%
  Wire transfer fees 858 900 (5)%923 (7)%1,758 1,767 (1)%
  Net gains on sales of SBA loans5,804 5,603 4 %2,375 144 %11,407 2,375 380 %
  Net gains on sales of residential mortgage loans76 757 (90)%1,028 (93)%833 3,124 (73)%
  Net losses on sales of other loans(547)— 100 %— 100 %(547)— 100 %
  Other income and fees2,698 2,322 16 %3,244 (17)%5,020 5,433 (8)%
    Total noninterest income12,746 13,186 (3)%11,076 15 %25,932 19,880 30 %
  Salaries and employee benefits51,058 47,745 7 %42,309 21 %98,803 83,525 18 %
  Occupancy7,178 7,335 (2)%7,067 2 %14,513 14,034 3 %
  Furniture and equipment4,778 4,644 3 %4,822 (1)%9,422 9,008 5 %
  Advertising and marketing2,226 1,636 36 %2,097 6 %3,862 3,722 4 %
  Data processing and communications2,893 2,461 18 %2,411 20 %5,354 5,148 4 %
  Professional fees1,582 2,211 (28)%4,395 (64)%3,793 7,298 (48)%
  FDIC assessment1,450 1,569 (8)%1,284 13 %3,019 2,539 19 %
  Credit related expenses2,872 1,112 158 %43 6,579 %3,984 2,261 76 %
  OREO expense5 357 (99)%298 (98)%362 579 (37)%
  Software impairment— — — %2,146 (100)%— 2,146 (100)%
  Other6,323 6,303 — %6,251 1 %12,626 13,294 (5)%
    Total noninterest expense80,365 75,373 7 %73,123 10 %155,738 143,554 8 %
Income before income taxes70,719 81,989 (14)%71,530 (1)%152,708 129,182 18 %
Income tax provision18,631 21,251 (12)%17,767 5 %39,882 31,732 26 %
Net income $52,088 $60,738 (14)%$53,763 (3)%$112,826 $97,450 16 %
Earnings Per Common Share - Basic$0.43 $0.51 $0.44 $0.94 $0.79 
Earnings Per Common Share - Diluted$0.43 $0.50 $0.43 $0.93 $0.78 
Weighted Average Shares Outstanding - Basic120,219,919 120,131,380 123,592,695 120,175,894 123,459,461 
Weighted Average Shares Outstanding - Diluted120,699,638 121,089,474 124,323,888 120,898,605 124,334,227 
Table Page 2
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands, except share and per share data)


For the Three Months Ended
(Annualized)		For the Six Months Ended
(Annualized)
Profitability measures:6/30/20223/31/20226/30/20216/30/20226/30/2021
  ROA 1.17 %1.37 %1.25 %1.27 %1.14 %
  ROE 10.33 %11.62 %10.41 %10.99 %9.48 %
  ROA (PPNR) (1)
1.65 %1.60 %1.50 %1.63 %1.46 %
  ROE (PPNR) (1)
14.66 %13.58 %12.49 %14.11 %12.20 %
  ROTCE (2)
13.48 %15.01 %13.50 %14.27 %12.31 %
  Net interest margin3.36 %3.21 %3.11 %3.28 %3.09 %
  Efficiency ratio52.09 %51.50 %53.12 %51.80 %53.36 %
  Noninterest expense / average assets1.80 %1.70 %1.70 %1.75 %1.68 %
(1) ROA (PPNR) and ROE (PPNR) are non-GAAP financial measures. Management’s reasons and purposes for using these non-GAAP financial measures are set forth on Table Pages 10 and 11 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 Pages 10 and 11.
(2) Average tangible common equity is calculated by subtracting average goodwill and average core deposit intangible assets from average stockholders’ equity. This is a non-GAAP measure that we believe provides investors with information that is useful in understanding our financial performance and position.

Table Page 3
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
Three Months Ended
6/30/20223/31/20226/30/2021
InterestAnnualizedInterestAnnualizedInterestAnnualized
AverageIncome/AverageAverageIncome/AverageAverageIncome/ Average
BalanceExpenseYield/CostBalanceExpenseYield/CostBalanceExpense Yield/Cost
INTEREST EARNING ASSETS:
    Loans, including loans held for sale $14,327,476 $145,024 4.06 %$13,871,974 $132,672 3.88 %$13,293,591 $131,823 3.98 %
    Investment securities2,424,454 12,308 2.04 %2,621,220 11,656 1.80 %2,253,135 7,713 1.37 %
    FHLB stock and other investments 134,055 492 1.47 %352,774 544 0.63 %759,182 668 0.35 %
Total interest earning assets$16,885,985 $157,824 3.75 %$16,845,968 $144,872 3.49 %$16,305,908 $140,204 3.45 %
 
INTEREST BEARING LIABILITIES:
  Deposits:
    Demand, interest bearing $6,487,890 $8,655 0.54 %$6,337,866 $5,701 0.36 %$5,484,047 $5,909 0.43 %
    Savings 323,114 937 1.16 %318,508 927 1.18 %308,530 887 1.15 %
    Time deposits2,277,938 2,628 0.46 %2,619,491 2,048 0.32 %3,222,457 3,900 0.49 %
    Total interest bearing deposits9,088,942 12,220 0.54 %9,275,865 8,676 0.38 %9,015,034 10,696 0.48 %
    FHLB and FRB borrowings577,966 1,457 1.01 %242,556 687 1.15 %202,198 631 1.25 %
    Convertible notes, net216,540 1,322 2.42 %216,305 1,323 2.45 %215,599 1,323 2.43 %
    Subordinated debentures101,880 1,287 5.00 %101,577 1,010 3.98 %100,701 977 3.84 %
Total interest bearing liabilities$9,985,328 $16,286 0.65 %$9,836,303 $11,696 0.48 %$9,533,532 $13,627 0.57 %
Noninterest bearing demand deposits5,715,830 5,672,768 5,445,457 
Total funding liabilities/cost of funds$15,701,158 0.42 %$15,509,071 0.31 %$14,978,989 0.36 %
Net interest income/net interest spread$141,538 3.10 %$133,176 3.01 %$126,577 2.88 %
Net interest margin3.36 %3.21 %3.11 %
Cost of deposits:
    Noninterest bearing demand deposits$5,715,830 $— — %$5,672,768 $— — %$5,445,457 $— — %
    Interest bearing deposits9,088,942 12,220 0.54 %9,275,865 8,676 0.38 %9,015,034 10,696 0.48 %
Total deposits$14,804,772 $12,220 0.33 %$14,948,633 $8,676 0.24 %$14,460,491 $10,696 0.30 %

Table Page 4
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
Six Months Ended
6/30/20226/30/2021
InterestAnnualizedInterestAnnualized
AverageIncome/AverageAverageIncome/Average
BalanceExpenseYield/CostBalanceExpenseYield/Cost
INTEREST EARNING ASSETS:
    Loans, including loans held for sale $14,100,983 $277,696 3.97 %$13,319,782 $261,559 3.96 %
    Investment securities2,522,293 23,964 1.92 %2,260,233 15,628 1.39 %
    FHLB stock and other investments 242,810 1,036 0.86 %700,115 1,310 0.38 %
Total interest earning assets$16,866,086 $302,696 3.62 %$16,280,130 $278,497 3.45 %
INTEREST BEARING LIABILITIES:
  Deposits:
    Demand, interest bearing $6,413,292 $14,355 0.45 %$5,370,941 $11,399 0.43 %
    Savings 320,824 1,865 1.17 %304,877 1,757 1.16 %
    Time deposits2,447,771 4,676 0.39 %3,493,278 10,310 0.60 %
    Total interest bearing deposits9,181,887 20,896 0.46 %9,169,096 23,466 0.52 %
    FHLB and FRB borrowings411,187 2,144 1.05 %209,006 1,273 1.23 %
    Convertible notes, net216,423 2,644 2.43 %215,302 2,645 2.44 %
    Subordinated debentures101,729 2,298 4.49 %100,547 1,957 3.87 %
Total interest bearing liabilities$9,911,226 $27,982 0.57 %$9,693,951 $29,341 0.61 %
Noninterest bearing demand deposits5,694,418 5,250,080 
Total funding liabilities/cost of funds$15,605,644 0.36 %$14,944,031 0.40 %
Net interest income/net interest spread$274,714 3.05 %$249,156 2.84 %
Net interest margin3.28 %3.09 %
Cost of deposits:
    Noninterest bearing demand deposits$5,694,418 $— — %$5,250,080 $— — %
    Interest bearing deposits9,181,887 20,896 0.46 %9,169,096 23,466 0.52 %
Total deposits$14,876,305 $20,896 0.28 %$14,419,176 $23,466 0.33 %

Table Page 5
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
 Three Months Ended Six Months Ended
AVERAGE BALANCES:6/30/20223/31/2022% change6/30/2021% change6/30/20226/30/2021% change
Loans, including loans held for sale $14,327,476 $13,871,974 3 %$13,293,591 8 %$14,100,983 $13,319,782 6 %
Investments2,558,509 2,973,994 (14)%3,012,317 (15)%2,765,103 2,960,348 (7)%
Interest earning assets16,885,985 16,845,968 — %16,305,908 4 %16,866,086 16,280,130 4 %
Total assets17,876,945 17,742,402 1 %17,164,893 4 %17,810,045 17,140,286 4 %
Interest bearing deposits9,088,942 9,275,865 (2)%9,015,034 1 %9,181,887 9,169,096 — %
Interest bearing liabilities9,985,328 9,836,303 2 %9,533,532 5 %9,911,226 9,693,951 2 %
Noninterest bearing demand deposits5,715,830 5,672,768 1 %5,445,457 5 %5,694,418 5,250,080 8 %
Stockholders’ equity2,016,577 2,090,755 (4)%2,066,016 (2)%2,053,461 2,056,812 — %
Net interest earning assets6,900,657 7,009,665 (2)%6,772,376 2 %6,954,860 6,586,179 6 %
LOAN PORTFOLIO COMPOSITION: 6/30/20223/31/2022% change6/30/2021% change
Commercial loans$4,395,738 $4,124,715 7 %$4,001,423 10 %
Real estate loans9,335,020 9,262,305 1 %8,832,276 6 %
Consumer and other loans815,291 679,654 20 %590,602 38 %
    Loans, net of deferred loan fees and costs14,546,049 14,066,674 3 %13,424,301 8 %
Allowance for credit losses(151,580)(147,450)3 %(189,452)(20)%
    Loans receivable, net$14,394,469 $13,919,224 3 %$13,234,849 9 %
REAL ESTATE LOANS BY PROPERTY TYPE:6/30/20223/31/2022% change6/30/2021% change
Retail buildings$2,603,516 $2,598,373 — %$2,361,891 10 %
Hotels/motels1,143,982 1,208,217 (5)%1,439,770 (21)%
Gas stations/car washes1,080,777 1,055,383 2 %954,394 13 %
Mixed-use facilities833,342 872,362 (4)%798,373 4 %
Warehouses1,279,647 1,263,791 1 %1,149,393 11 %
Multifamily989,840 841,316 18 %575,943 72 %
Other1,403,916 1,422,863 (1)%1,552,512 (10)%
  Total$9,335,020 $9,262,305 1 %$8,832,276 6 %
DEPOSIT COMPOSITION6/30/20223/31/2022% change6/30/2021% change
Noninterest bearing demand deposits$5,689,992 $5,498,263 3 %$5,638,115 1 %
Money market and other6,339,467 6,484,677 (2)%5,786,697 10 %
Saving deposits326,927 321,373 2 %308,651 6 %
Time deposits 2,673,244 2,210,815 21 %2,992,767 (11)%
  Total deposit balances$15,029,630 $14,515,128 4 %$14,726,230 2 %

Table Page 6
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands, except share and per share data)

CAPITAL RATIOS:6/30/20223/31/20226/30/2021
Total stockholders’ equity$2,000,369 $2,041,057 $2,092,870 
Common equity tier 1 ratio10.70 %11.02 %11.44 %
Tier 1 risk-based capital ratio 11.33 %11.68 %12.14 %
Total risk-based capital ratio 12.14 %12.49 %13.16 %
Tier 1 leverage ratio 10.32 %10.37 %10.43 %
Total risk weighted assets$16,059,739 $15,393,639 $14,354,682 
Book value per common share$16.74 $16.96 $16.92 
Tangible common equity to tangible assets (1)
8.68 %9.05 %9.53 %
Tangible common equity per share (1)
$12.80 $13.04 $13.10 
(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 EndedSix Months Ended
ALLOWANCE FOR CREDIT LOSSES CHANGES:6/30/20223/31/202212/31/20219/30/20216/30/20216/30/20226/30/2021
Balance at beginning of period$147,450 $140,550 $136,774 $189,452 $207,943 $140,550 $206,741 
Provision (credit) for credit losses3,200 (11,000)1,500 (10,000)(7,000)(7,800)(3,700)
Recoveries1,642 19,403 3,615 1,906 1,301 21,045 2,724 
Charge offs (712)(1,503)(1,339)(44,584)(12,792)(2,215)(16,313)
Balance at end of period$151,580 $147,450 $140,550 $136,774 $189,452 $151,580 $189,452 
Net (recoveries) charge offs/average loans receivable (annualized)(0.03)%(0.52)%(0.07)%1.28 %0.35 %(0.27)%0.20 %
Three Months EndedSix Months Ended
NET LOAN (RECOVERIES) CHARGE OFFS:6/30/20223/31/202212/31/20219/30/20216/30/20216/30/20226/30/2021
Real estate loans$(508)$(16,418)$(2,352)$40,542 $11,281 $(16,926)$13,515 
Commercial loans(461)(1,529)144 1,117 181 (1,990)101 
Consumer loans39 47 (68)1,019 29 86 (27)
Total net (recoveries) charge offs$(930)$(17,900)$(2,276)$42,678 $11,491 $(18,830)$13,589 
Table Page 7
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
NONPERFORMING ASSETS:6/30/20223/31/202212/31/20219/30/20216/30/2021
Loans on nonaccrual status (1)
$69,522 $52,717 $54,616 $54,380 $111,008 
Delinquent loans 90 days or more on accrual status12,468 3,090 2,131 4,567 4,759 
Accruing troubled debt restructured loans26,572 44,555 52,418 39,509 51,360 
Total nonperforming loans108,562 100,362 109,165 98,456 167,127 
Other real estate owned2,010 2,010 2,597 15,213 16,619 
Total nonperforming assets$110,572 $102,372 $111,762 $113,669 $183,746 
Nonperforming assets/total assets0.61 %0.58 %0.62 %0.64 %1.05 %
Nonperforming assets/loans receivable & OREO0.76 %0.73 %0.80 %0.85 %1.37 %
Nonperforming assets/total capital5.53 %5.02 %5.34 %5.48 %8.78 %
Nonperforming loans/loans receivable0.75 %0.71 %0.78 %0.73 %1.24 %
Nonaccrual loans/loans receivable0.48 %0.37 %0.39 %0.41 %0.83 %
Allowance for credit losses/loans receivable1.04 %1.05 %1.01 %1.02 %1.41 %
Allowance for credit losses/nonaccrual loans218.03 %279.70 %257.34 %251.52 %170.67 %
Allowance for credit losses/nonperforming loans139.63 %146.92 %128.75 %138.92 %113.36 %
Allowance for credit losses/nonperforming assets137.09 %144.03 %125.76 %120.33 %103.11 %
(1) Excludes delinquent SBA loans that are guaranteed and currently in liquidation totaling $13.2 million, $17.0 million, $19.5 million, $20.6 million, and $23.6 million, at June 30, 2022, March 31, 2022, December 31, 2021, September 30, 2021, and June 30, 2021, respectively.
NONACCRUAL LOANS BY TYPE:6/30/20223/31/202212/31/20219/30/20216/30/2021
Real estate loans$53,966 $36,655 $39,756 $41,673 $95,622 
Commercial loans8,206 8,686 11,025 10,991 12,217 
Consumer loans7,350 7,376 3,835 1,716 3,169 
   Total nonaccrual loans$69,522 $52,717 $54,616 $54,380 $111,008 
ACCRUING TROUBLED DEBT RESTRUCTURED LOANS:6/30/20223/31/202212/31/20219/30/20216/30/2021
Retail buildings$6,337 $24,356 $28,483 $11,280 $12,110 
Hotels/motels— — 472 — — 
Gas stations/car washes189 193 197 202 206 
Mixed-use facilities2,837 2,836 2,846 7,937 7,967 
Warehouses4,770 5,321 5,366 4,908 14,099 
Other (2)
12,439 11,849 15,054 15,182 16,978 
Total$26,572 $44,555 $52,418 $39,509 $51,360 
(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:6/30/20223/31/202212/31/20219/30/20216/30/2021
30 - 59 days$10,090 $12,439 $29,723 $15,016 $22,466 
60 - 89 days6,354 3,090 10,345 4,746 6,987 
   Total$16,444 $15,529 $40,068 $19,762 $29,453 
ACCRUING DELINQUENT LOANS 30-89 DAYS PAST DUE BY TYPE:6/30/20223/31/202212/31/20219/30/20216/30/2021
Real estate loans$7,919 $6,097 $20,232 $10,359 $21,432 
Commercial loans3,397 5,003 3,057 9,377 560 
Consumer loans5,128 4,429 16,779 26 7,461 
   Total$16,444 $15,529 $40,068 $19,762 $29,453 
CRITICIZED LOANS:6/30/20223/31/202212/31/20219/30/20216/30/2021
Special mention$95,797 $166,958 $257,194 $306,766 $294,559 
Substandard244,748 226,661 242,397 243,684 380,955 
   Total criticized loans$340,545 $393,619 $499,591 $550,450 $675,514 
Table Page 9
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 EndedSix Months Ended
6/30/20223/31/20226/30/20216/30/20226/30/2021
RETURN ON AVERAGE TANGIBLE COMMON EQUITY
Average stockholders’ equity$2,016,577 $2,090,755 $2,066,016 $2,053,461 $2,056,812 
Less: Goodwill and core deposit intangible assets, net(471,421)(471,921)(473,445)(471,669)(473,702)
Average tangible common equity$1,545,156 $1,618,834 $1,592,571 $1,581,792 $1,583,110 
Net income$52,088 $60,738 $53,763 $112,826 $97,450 
Return on average tangible common equity (annualized)13.48 %15.01 %13.50 %14.27 %12.31 %
6/30/20223/31/20226/30/2021
TANGIBLE COMMON EQUITY
Total stockholders’ equity$2,000,369 $2,041,057 $2,092,870 
Less: Goodwill and core deposit intangible assets, net(471,148)(471,634)(473,139)
Tangible common equity$1,529,221 $1,569,423 $1,619,731 
Total assets$18,089,062 $17,803,814 $17,469,627 
Less: Goodwill and core deposit intangible assets, net(471,148)(471,634)(473,139)
Tangible assets$17,617,914 $17,332,180 $16,996,488 
Common shares outstanding119,473,939 120,327,689 123,673,832 
  Tangible common equity to tangible assets8.68 %9.05 %9.53 %
  Tangible common equity per share$12.80 $13.04 $13.10 
Table Page 10
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands, except share and per share data)

Three Months EndedSix Months Ended
6/30/20223/31/20226/30/20216/30/20226/30/2021
PRE-PROVISION NET REVENUE
Net interest income before provision (credit) for credit losses$141,538 $133,176 $126,577 $274,714 $249,156 
Noninterest income12,746 13,186 11,076 25,932 19,880 
Revenue154,284 146,362 137,653 300,646 269,036 
Noninterest expense80,365 75,373 73,123 155,738 143,554 
Pre-provision net revenue$73,919 $70,989 $64,530 $144,908 $125,482 
Average assets$17,876,945 $17,742,402 $17,164,893 $17,810,045 $17,140,286 
ROA (PPNR)1.65 %1.60 %1.50 %1.63 %1.46 %
Average stockholders’ equity2,016,577 2,090,755 2,066,016 2,053,461 2,056,812 
ROE (PPNR)14.66 %13.58 %12.49 %14.11 %12.20 %
Table Page 11