EX-99.1 2 hope-12312022ex991financia.htm EX-99.1 Document

hopebancorp5a03.jpg
News Release


HOPE BANCORP REPORTS 2022 FOURTH QUARTER AND
FULL-YEAR FINANCIAL RESULTS


LOS ANGELES - January 23, 2023 - 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, 2022.

For the three months ended December 31, 2022, net income totaled $51.7 million, or $0.43 per diluted common share. This compares with net income of $53.7 million, or $0.45 per diluted common share, in the preceding third quarter and $51.6 million, or $0.43 per diluted common share, in the year-ago fourth quarter. Pre-provision net revenue(1) totaled $78.1 million for the 2022 fourth quarter, versus $82.6 million for the 2022 third quarter and $72.2 million for the 2021 fourth quarter.

For the full year ended December 31, 2022, net income totaled $218.3 million, or $1.81 per diluted common share, compared with $204.6 million, or $1.66 per diluted common share for the year ended December 31, 2021. Pre-provision net revenue for the full year 2022 increased 16.2% to $305.6 million from $263.1 million for 2021.

“Notwithstanding the operating environment becoming more challenging during the fourth quarter of 2022, we delivered solid financial results which reflect the benefits of the lower-risk, more diversified loan portfolio that we have built,” said Kevin S. Kim, Chairman, President and Chief Executive Officer. “Given the market’s expectations for the economic conditions to weaken further in 2023, we became even more selective with the loans that we added to the portfolio in terms of loan types and rates. New loan originations for the fourth quarter of 2022 totaled $793 million with commercial loans accounting for 54% of new production. While we had a slight decline in our loans receivable quarter-over-quarter, we closed the year with loans increasing more than 10% year-over-year, or greater than 12% when excluding SBA PPP loans. Total deposits increased 2% quarter-over-quarter, but the growth reflects increased balances of time deposits, representing in part the migration to higher-yielding deposit accounts in the current interest rate environment. The highlight of our fourth quarter was clearly the continued improvements we are experiencing in our asset quality with total nonperforming assets and total criticized loans decreasing 28% and 8%, respectively, quarter-over-quarter.

“While we are cognizant that 2023 will bring further challenges, we believe the progress we have made to strengthen and diversify our franchise over the past few years will serve us well with more sustainable earnings power. We are confident in our ability to continue strengthening franchise value during an economic downturn, while generating profitable growth that will further enhance long-term shareholder value,” said Kim.
Q4 2022 Highlights
•Loan originations totaled $793.4 million, representing a well-diversified mix of new loan production with new commercial loans accounting for 54% of total originations for the quarter.
•Loans receivable decreased 0.6% quarter-over-quarter, but increased 10.4% year-over-year. Excluding PPP, loans receivable decreased 0.5% quarter-over-quarter, but increased 12.2% year-over-year.
•Criticized loan balances decreased 8.0% quarter-over-quarter, or 47.7% year-over-year.
•Total nonperforming assets declined 28.4% quarter-over-quarter and represented 0.36% of total assets at year-end.
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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 noninterest income less noninterest expense. Management’s reasons and purposes for using this non-GAAP financial measure are set forth on Page 7 of this earnings release. A quantitative reconciliation of the most directly comparable GAAP to this non-GAAP financial measures is provided in the accompanying financial information on Table Page 10.
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2-2-2    NASDAQ: HOPE


•Company recorded a provision for credit losses of $8.2 million, primarily to account for declines in certain projected macroeconomic factors.
•Net interest income decreased 1.7% quarter-over-quarter, but increased 12.9% year-over-year.
•Net interest margin decreased 13 basis points quarter-over-quarter, but increased 23 basis points year-over-year.
•Total deposits increased 1.5% quarter-over-quarter and 4.6% year-over-year.
•Total cost of deposits increased 83 basis points quarter-over-quarter and 139 basis points year-over-year, reflecting the impact of an aggregate increase of 425 basis points in the Federal Funds target rates during 2022.
•Pre-provision net revenue decreased 5.5% quarter-over-quarter, but increased 8.2% year-over-year.

Financial Highlights
At or for the Three Months Ended
(dollars in thousands, except per share data) (unaudited)12/31/20229/30/202212/31/2021
Net income$51,703 $53,748 $51,623 
Diluted earnings per share$0.43 $0.45 $0.43 
Pre-provision net revenue (“PPNR”) (1)
$78,113 $82,627 $72,179 
Net interest income before provision for credit losses$150,521 $153,186 $133,318 
Net interest margin3.36 %3.49 %3.13 %
Noninterest income$12,110 $13,355 $13,097 
Noninterest expense$84,518 $83,914 $74,236 
Net loans receivable$15,241,181 $15,330,626 $13,812,193 
Deposits$15,738,801 $15,502,209 $15,040,450 
Total cost of deposits1.62 %0.79 %0.23 %
Nonaccrual loans(2)
$49,687 $64,571 $54,616 
Nonperforming loans to loans receivable(2)
0.44 %0.62 %0.78 %
ACL to loans receivable
1.05 %1.04 %1.01 %
ACL to nonaccrual loans(2)
326.76 %248.66 %257.34 %
ACL to nonperforming assets(2)
233.82 %165.55 %125.76 %
Provision for credit losses$8,200 $9,200 $1,500 
Net charge offs (recoveries)$6,402 $219 $(2,276)
Return on average assets (“ROA”)1.10 %1.17 %1.16 %
Return on average equity (“ROE”)10.35 %10.58 %9.93 %
ROA (PPNR) (1)
1.66 %1.79 %1.62 %
ROE (PPNR) (1)
15.64 %16.26 %13.88 %
Return on average tangible common equity (“ROTCE”)(1)
13.54 %13.77 %12.85 %
Noninterest expense / average assets1.79 %1.82 %1.67 %
Efficiency ratio51.97 %50.39 %50.70 %

(1) Pre-provision net revenue, ROA (PPNR), ROE (PPNR), and ROTCE are non-GAAP financial measures. Management’s reasons and purposes for using these non-GAAP financial measures are set forth on Table Page 10 of this earnings release. A quantitative reconciliation of the most directly comparable GAAP to non-GAAP financial measures are provided in the accompanying financial information on Table Page 10.
(2) Excludes delinquent SBA loans that are guaranteed and currently in liquidation.


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3-3-3    NASDAQ: HOPE

Operating Results for the 2022 Fourth Quarter

Net interest income before provision for credit losses for the 2022 fourth quarter decreased 2% to $150.5 million from $153.2 million in the 2022 third quarter and increased 13% from $133.3 million in the 2021 fourth quarter. The Company attributed the quarter-over-quarter decrease predominantly to higher interest expense on deposits and borrowings, which more than offset higher levels of interest income due to increases in loan yields and the average balance of loans receivable.

The net interest margin for the 2022 fourth quarter decreased 13 basis points to 3.36% from 3.49% in the preceding third quarter as the increase in the cost of deposits outpaced the expansion of the yields on interest-earning assets. Compared with the year-ago fourth quarter, the net interest margin increased 23 basis points.
The weighted average yield on loans for the 2022 fourth quarter was 5.36%, up 71 basis points from 4.65% in the 2022 third quarter and up 141 basis points from the year-ago fourth quarter. The Company attributed the increases in weighted average yield on loans to the repricing of its variable rate loans following the increases in the market interest rates, as well as a significant increase in the average rate of new loans originated during the quarter and throughout the year.

The weighted average cost of deposits for the 2022 fourth quarter increased by 83 basis points to 1.62% from 0.79% in the 2022 third quarter, reflecting a 119 basis point increase in the cost of interest bearing deposits due to the accelerated pace of Federal Funds target rate hikes in the second half of the year. Compared with the year-ago fourth quarter, the weighted average cost of deposits for the 2022 fourth quarter increased 139 basis points from 0.23%, reflecting a 205 basis point increase in the cost of interest bearing deposits.

Noninterest income for the 2022 fourth quarter decreased 9% to $12.1 million from $13.4 million in the 2022 third quarter. Quarter-over-quarter reductions in the net gains on sales of SBA loans, service fees on deposit accounts and other income and fees were partially offset by an increase in net gains on sales of other loans. The decrease in other income and fees largely reflects lower swap fee income versus the preceding third quarter. During the 2022 fourth quarter, the Company sold $41.2 million in the guaranteed portion of SBA 7(a) loans and $3.5 million in retail mortgage loans, compared with $57.8 million and $3.7 million, respectively, sold in the preceding third quarter. Noninterest income for the 2021 fourth quarter totaled $13.1 million.

Noninterest expense for the 2022 fourth quarter increased 1% to $84.5 million from $83.9 million for the preceding third quarter and increased 14% from $74.2 million for the year-ago fourth quarter. The quarter-over-quarter increase largely reflects higher costs associated with earnings credit rebates. The year-over-year increase is attributed to higher salaries and employee benefits and higher costs of earnings credit rebates.

Salaries and employee benefits expense for the 2022 fourth quarter decreased to $52.7 million from $53.2 million in the preceding third quarter, largely reflecting a decrease in incentive compensation expense. Salaries and employee benefits expense for the 2021 fourth quarter totaled $44.6 million. The Company’s FTE count was 1,549 at December 31, 2022, 1,539 at September 30, 2022 and 1,476 at December 31, 2021.

Earnings credit rebates for the 2022 fourth quarter increased to $5.0 million from $4.7 million in the 2022 third quarter and $555,000 in the 2021 fourth quarter, as a result of the increases in the Federal Funds rates.

The Company’s efficiency ratio for the 2022 fourth quarter was 51.97%, compared with 50.39% in the preceding third quarter and 50.70% in the year-ago fourth quarter. Noninterest expense as a percentage of average assets was 1.79% for the 2022 fourth quarter, compared with 1.82% for the 2022 third quarter and 1.67% for the 2021 fourth quarter.

The effective tax rate for the 2022 fourth quarter was 26.1%, compared with 26.8% for the preceding third quarter and 27.0% for the year-ago fourth quarter.


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4-4-4    NASDAQ: HOPE

Balance Sheet Summary
New loan originations during the 2022 fourth quarter totaled $793.4 million, compared with $1.35 billion in the preceding third quarter and $1.24 billion in the 2021 fourth quarter.

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

For the Three Months Ended
(dollars in thousands) (unaudited)12/31/20229/30/202212/31/2021
Commercial real estate$302,983 $500,826 $573,978 
Commercial424,340 732,341 532,634 
SBA28,825 47,428 54,848 
Residential mortgage36,720 67,079 81,325 
Consumer555 1,020 70 
Total new loan originations$793,423 $1,348,694 $1,242,855 

At December 31, 2022, loans receivable decreased 0.6% to $15.40 billion from $15.49 billion at September 30, 2022, but increased 10.4% from $13.95 billion at December 31, 2021.

Following is the loan portfolio composition and percentage of total loans as of December 31, 2022, September 30, 2022 and December 31, 2021:
(dollars in thousands) 12/31/20229/30/202212/31/2021
(unaudited)BalancePercentageBalancePercentageBalancePercentage
Commercial loans$5,109,532 33.2 %$5,124,421 33.1 %$4,208,674 30.2 %
Real estate loans9,414,580 61.1 %9,504,893 61.3 %9,105,931 65.3 %
Consumer and other loans879,428 5.7 %861,873 5.6 %638,138 4.5 %
    Loans receivable$15,403,540 100.0 %$15,491,187 100.0 %$13,952,743 100.0 %


Total deposits at December 31, 2022 increased 1.5% to $15.74 billion from $15.50 billion at September 30, 2022, largely reflecting an increase in time deposits, and increased 4.6% year-over-year from $15.04 billion at December 31, 2021. Quarter-over-quarter, noninterest bearing demand and money market and NOW deposits decreased 13.3% and 4.6%, respectively, but these decreases were more than offset by a 34.6% increase in time deposits. On a year-over-year basis, noninterest bearing demand deposits at December 31, 2022 decreased 15.7%, money market and NOW deposits decreased 9.1%, and time deposits increased 79.0%.

Following is the deposit composition as of December 31, 2022, September 30, 2022 and December 31, 2021:

(dollars in thousands) (unaudited)12/31/20229/30/202212/31/2021
  Noninterest bearing demand deposits$4,849,493 $5,590,952 $5,751,870 
  Money market and other5,615,784 5,885,093 6,178,850 
  Saving deposits283,464 317,841 321,377 
  Time deposits 4,990,060 3,708,323 2,788,353 
    Total deposit balances$15,738,801 $15,502,209 $15,040,450 


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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 December 31, 2022, September 30, 2022 and December 31, 2021:
Deposit BreakdownCost of Deposits
(unaudited)12/31/20229/30/202212/31/2021
Q4 2022
Q3 2022
Q4 2021
  Noninterest bearing demand deposits30.8 %36.1 %38.3 %— %— %— %
  Money market and other35.7 %38.0 %41.1 %2.42 %1.24 %0.37 %
  Saving deposits1.8 %2.0 %2.1 %1.29 %1.18 %1.18 %
  Time deposits 31.7 %23.9 %18.5 %2.53 %1.27 %0.34 %
    Total deposit balances100.0 %100.0 %100.0 %1.62 %0.79 %0.23 %

Allowance for Credit Losses
For the 2022 fourth quarter, the Company recorded a provision for credit losses of $8.2 million, compared with $9.2 million in the preceding third quarter and $1.5 million in the 2021 fourth quarter.

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

(dollars in thousands) (unaudited)12/31/20229/30/202212/31/2021
Allowance for credit losses$162,359 $160,561 $140,550 
Allowance for credit loss/loans receivable1.05 %1.04 %1.01 %
Allowance for credit losses/nonperforming loans (1)
242.26 %168.11 %128.75 %

(1)     Excludes delinquent SBA loans that are guaranteed and currently in liquidation totaling $9.8 million, $9.9 million and $19.5 million at December 31, 2022, September 30, 2022 and December 31, 2021, respectively.

Credit Quality
Following are the components of nonperforming assets as of December 31, 2022, September 30, 2022 and December 31, 2021:
(dollars in thousands) (unaudited)12/31/20229/30/202212/31/2021
Loans on nonaccrual status (1)
$49,687 $64,571 $54,616 
Delinquent loans 90 days or more on accrual status
401 5,306 2,131 
Accruing troubled debt restructured loans16,931 25,631 52,418 
Total nonperforming loans67,019 95,508 109,165 
Other real estate owned2,418 1,480 2,597 
Total nonperforming assets$69,437 $96,988 $111,762 

(1)     Excludes delinquent SBA loans that are guaranteed and currently in liquidation totaling $9.8 million, $9.9 million and $19.5 million at December 31, 2022, September 30, 2022 and December 31, 2021, respectively.

Total nonperforming assets at December 31, 2022 decreased 28.4% to $69.4 million from $97.0 million at September 30, 2022 and decreased 37.9% from $111.8 million at December 31, 2021.

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Following are net charge offs (recoveries) and net charge offs (recoveries) to average loans receivable on an annualized basis for the three months ended December 31, 2022, September 30, 2022 and December 31, 2021:
For the Three Months Ended
(dollars in thousands) (unaudited)12/31/20229/30/202212/31/2021
Net charge offs (recoveries) $6,402 $219 $(2,276)
Net charge offs (recoveries)/average loans receivable (annualized)0.17 %0.01 %(0.07)%

Following are the components of criticized loan balances as of December 31, 2022, September 30, 2022 and December 31, 2021:
(dollars in thousands) (unaudited)12/31/20229/30/202212/31/2021
Special mention$157,263$79,399$257,194
Substandard104,073204,713242,397
     Total criticized loans$261,336$284,112$499,591

At December 31, 2022, total criticized loans decreased 8.0% quarter-over-quarter and decreased 47.7% year-over-year, representing the lowest level experienced by the Company since 2011.


Capital
At December 31, 2022, the Company and the Bank continued to exceed all regulatory capital requirements generally required to meet the definition of a “well-capitalized” financial institution. Following are capital ratios for the Company as of December 31, 2022, September 30, 2022 and December 31, 2021:
(unaudited)
12/31/20229/30/202212/31/2021Minimum Guideline for “Well-Capitalized” Bank
Common Equity Tier 1 Capital10.55%10.32%11.03%6.50%
Tier 1 Leverage Ratio10.15%10.25%10.11%5.00%
Tier 1 Risk-Based Ratio11.15%10.92%11.70%8.00%
Total Risk-Based Ratio11.97%11.72%12.42%10.00%

Following are tangible common equity (“TCE”) per share and TCE as a percentage of tangible assets as of December 31, 2022, September 30, 2022 and December 31, 2021:
(unaudited)12/31/20229/30/202212/31/2021
Tangible common equity per share (1)
$12.96$12.60$13.51
Tangible common equity to tangible assets (1)
8.29%8.09%9.31%

(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 most directly comparable 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 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 most directly comparable 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 24, 2023 at 9:30 a.m. Pacific Time / 12:30 p.m. Eastern Time to review unaudited financial results for its fourth quarter and full year ended December 31, 2022. Investors and analysts are invited to access the conference call by dialing 866-235-9917 (domestic) or 412-902-4103 (international) and asking for the “Hope Bancorp Call.” A presentation to accompany the earnings call will be available at the Investor Relations section of Hope Bancorp’s website at www.ir-hopebancorp.com. Other interested parties are invited to listen to a live webcast of the call available at the Investor Relations section of Hope Bancorp’s website. After the live webcast, a replay will remain available at the Investor Relations section of Hope Bancorp’s website for one year. A telephonic replay of the call will be available at 877-344-7529 (domestic) or 412-317-0088 (international) for one week through January 31, 2023, replay access code 9204177.


8-8-8    NASDAQ: HOPE

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 $19.16 billion in total assets as of December 31, 2022. Headquartered in Los Angeles and serving a multi-ethnic population of customers across the nation, Bank of Hope operates 54 full-service branches in California, Washington, Texas, Illinois, New York, New Jersey, Virginia, Alabama and Georgia. The Bank also operates SBA loan production offices in Seattle, Denver, Dallas, Atlanta, Portland, 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 further deterioration in economic conditions in our areas of operation; interest rate risk associated with volatile interest rates and related asset-liability matching risk; liquidity risks; risk of significant non-earning assets, and net credit losses that could occur, particularly in times of weak economic conditions or times of rising interest rates; the failure of or changes to assumptions and estimates underlying the Company’s allowances for credit losses; regulatory risks associated with current and future regulations; and the COVID-19 pandemic and its impact on our financial position, results of operations, liquidity, and capitalization. For additional information concerning these and other risk factors, see the Company’s most recent Annual Report on Form 10-K. The Company does not undertake, and specifically disclaims any obligation, to update any forward-looking statements to reflect the occurrence of events or circumstances after the date of such statements except as required by law.



Contacts:

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:12/31/20229/30/2022% change12/31/2021% change
Cash and due from banks$506,776 $331,336 53 %$316,266 60 %
Investment securities2,243,195 2,264,533 (1)%2,666,275 (16)%
Federal Home Loan Bank (“FHLB”) stock and other investments61,761 65,192 (5)%87,961 (30)%
Loans held for sale, at the lower of cost or fair value49,245 41,989 17 %99,049 (50)%
Loans receivable15,403,540 15,491,187 (1)%13,952,743 10 %
Allowance for credit losses(162,359)(160,561)1 %(140,550)16 %
  Net loans receivable15,241,181 15,330,626 (1)%13,812,193 10 %
Accrued interest receivable55,460 42,363 31 %41,842 33 %
Premises and equipment, net46,859 46,169 1 %45,667 3 %
Bank owned life insurance77,078 76,788 — %77,081 — %
Goodwill464,450 464,450 — %464,450 — %
Servicing assets11,628 11,601 — %10,418 12 %
Other intangible assets, net5,726 6,212 (8)%7,671 (25)%
Other assets401,132 402,129 — %260,188 54 %
  Total assets$19,164,491 $19,083,388 — %$17,889,061 7 %
Liabilities:
Deposits$15,738,801 $15,502,209 2 %$15,040,450 5 %
FHLB and FRB borrowings865,000 1,072,000 (19)%300,000 188 %
Convertible notes, net217,148 216,913 — %216,209 — %
Subordinated debentures106,565 106,258 — %105,354 1 %
Accrued interest payable26,668 11,713 128 %4,272 524 %
Other liabilities190,981 198,570 (4)%129,793 47 %
  Total liabilities$17,145,163 $17,107,663 — %$15,796,078 9 %
Stockholders’ Equity:
Common stock, $0.001 par value$137 $137 — %$136 1 %
Capital surplus 1,431,003 1,428,052 — %1,421,698 1 %
Retained earnings1,083,712 1,048,738 3 %932,561 16 %
Treasury stock, at cost(264,667)(264,667)— %(250,000)(6)%
Accumulated other comprehensive loss, net(230,857)(236,535)2 %(11,412)(1,923)%
  Total stockholders’ equity2,019,328 1,975,725 2 %2,092,983 (4)%
  Total liabilities and stockholders’ equity$19,164,491 $19,083,388 — %$17,889,061 7 %
Common stock shares - authorized150,000,000 150,000,000 150,000,000 
Common stock shares - outstanding119,495,209 119,479,253 120,006,452 
Treasury stock shares17,382,835 17,382,835 16,343,849 
Table Page 1
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands, except share and per share data)

Three Months EndedTwelve Months Ended
12/31/20229/30/2022% change12/31/2021% change12/31/202212/31/2021% change
  Interest and fees on loans$207,958 $175,078 19 %$133,821 55 %$660,732 $528,174 25 %
  Interest on investment securities14,758 13,498 9 %10,657 38 %52,220 35,492 47 %
  Interest on federal funds sold and other investments1,521 606 151 %691 120 %3,163 2,866 10 %
    Total interest income224,237 189,182 19 %145,169 54 %716,115 566,532 26 %
  Interest on deposits 63,276 30,667 106 %8,905 611 %114,839 42,011 173 %
  Interest on other borrowings and convertible notes10,440 5,329 96 %2,946 254 %22,855 11,751 94 %
    Total interest expense73,716 35,996 105 %11,851 522 %137,694 53,762 156 %
Net interest income before provision (credit) for credit losses150,521 153,186 (2)%133,318 13 %578,421 512,770 13 %
Provision (credit) for credit losses8,200 9,200 (11)%1,500 447 %9,600 (12,200)N/A
Net interest income after provision (credit) for credit losses142,321 143,986 (1)%131,818 8 %568,821 524,970 8 %
  Service fees on deposit accounts2,159 2,535 (15)%1,894 14 %8,938 7,275 23 %
  International service fees762 834 (9)%1,061 (28)%3,134 3,586 (13)%
  Loan servicing fees, net 928 981 (5)%747 24 %3,588 3,367 7 %
  Wire transfer fees 863 856 1 %916 (6)%3,477 3,519 (1)%
  Net gains on sales of SBA loans2,154 2,782 (23)%3,614 (40)%16,343 8,448 93 %
  Net gains on sales of residential mortgage loans20 29 (31)%530 (96)%882 4,435 (80)%
  Net gains on sales of other loans623 117 432 %— 100 %193 — 100 %
  Other income and fees4,601 5,221 (12)%4,335 6 %14,842 12,964 14 %
    Total noninterest income12,110 13,355 (9)%13,097 (8)%51,397 43,594 18 %
  Salaries and employee benefits52,694 53,222 (1)%44,608 18 %204,719 175,151 17 %
  Occupancy7,072 6,682 6 %7,391 (4)%28,267 28,898 (2)%
  Furniture and equipment5,045 4,967 2 %4,642 9 %19,434 18,079 7 %
  Advertising and marketing1,869 1,739 7 %2,329 (20)%7,470 8,707 (14)%
  Data processing and communications2,860 2,469 16 %2,789 3 %10,683 10,331 3 %
  Professional fees1,325 1,196 11 %2,439 (46)%6,314 12,168 (48)%
  FDIC assessment1,596 1,633 (2)%1,366 17 %6,248 5,109 22 %
  Credit related expenses1,040 873 19 %873 19 %5,897 4,400 34 %
  OREO (income) expense(425)378 N/A811 N/A315 1,638 (81)%
  Software impairment— — — %— — %— 2,146 (100)%
  Earnings credit rebates5,002 4,685 7 %555 801 %10,998 1,842 497 %
  Other6,440 6,070 6 %6,433 — %23,825 24,823 (4)%
    Total noninterest expense84,518 83,914 1 %74,236 14 %324,170 293,292 11 %
Income before income taxes69,913 73,427 (5)%70,679 (1)%296,048 275,272 8 %
Income tax provision18,210 19,679 (7)%19,056 (4)%77,771 70,700 10 %
Net income $51,703 $53,748 (4)%$51,623 — %$218,277 $204,572 7 %
Earnings Per Common Share - Basic$0.43 $0.45 $0.43 $1.82 $1.67 
Earnings Per Common Share - Diluted$0.43 $0.45 $0.43 $1.81 $1.66 
Weighted Average Shares Outstanding - Basic119,483,499 119,476,035 120,160,300 119,824,970 122,321,768 
Weighted Average Shares Outstanding - Diluted120,102,665 119,996,523 121,025,925 120,472,345 123,133,025 
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
Twelve Months Ended
Profitability measures:12/31/20229/30/202212/31/202112/31/202212/31/2021
  ROA 1.10 %1.17 %1.16 %1.20 %1.17 %
  ROE 10.35 %10.58 %9.93 %10.73 %9.88 %
  ROA (PPNR) (1)
1.66 %1.79 %1.62 %1.68 %1.51 %
  ROE (PPNR) (1)
15.64 %16.26 %13.88 %15.03 %12.70 %
  ROTCE (2)
13.54 %13.77 %12.85 %13.97 %12.80 %
  Net interest margin3.36 %3.49 %3.13 %3.36 %3.09 %
  Efficiency ratio51.97 %50.39 %50.70 %51.47 %52.72 %
  Noninterest expense / average assets1.79 %1.82 %1.67 %1.78 %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 Page 10 of this earnings release. A quantitative reconciliation of the most directly comparable GAAP to non-GAAP financial measures are provided in the accompanying financial information on Table Page 10.
(2) Average tangible common equity is calculated by subtracting average goodwill and average core deposit intangible assets from average stockholders’ equity. This is a non-GAAP measure that we believe provides investors with information that is useful in understanding our financial performance and position. A quantitative reconciliation of the most directly comparable GAAP to non-GAAP financial measure is provided in the accompanying financial information on Table Page 10.

Table Page 3
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
Three Months Ended
12/31/20229/30/202212/31/2021
InterestAnnualizedInterestAnnualizedInterestAnnualized
AverageIncome/AverageAverageIncome/AverageAverageIncome/ Average
BalanceExpenseYield/CostBalanceExpenseYield/CostBalanceExpense Yield/Cost
INTEREST EARNING ASSETS:
    Loans, including loans held for sale $15,393,843 $207,958 5.36 %$14,925,298 $175,078 4.65 %$13,447,009 $133,821 3.95 %
    Investment securities2,254,678 14,758 2.60 %2,366,696 13,498 2.26 %2,674,903 10,657 1.58 %
    FHLB stock and other investments 114,077 1,521 5.29 %107,724 606 2.23 %773,579 691 0.35 %
Total interest earning assets$17,762,598 $224,237 5.01 %$17,399,718 $189,182 4.31 %$16,895,491 $145,169 3.41 %
 
INTEREST BEARING LIABILITIES:
  Deposits:
    Demand, interest bearing $5,733,448 $34,991 2.42 %$6,255,271 $19,614 1.24 %$5,961,363 $5,522 0.37 %
    Savings 297,128 968 1.29 %324,487 969 1.18 %316,758 946 1.18 %
    Time deposits4,276,655 27,317 2.53 %3,146,432 10,084 1.27 %2,823,613 2,437 0.34 %
    Total interest bearing deposits10,307,231 63,276 2.44 %9,726,190 30,667 1.25 %9,101,734 8,905 0.39 %
    FHLB and FRB borrowings838,335 6,988 3.31 %448,837 2,393 2.12 %216,882 648 1.19 %
    Convertible notes, net217,002 1,322 2.38 %216,762 1,322 2.39 %216,078 1,322 2.39 %
    Subordinated debentures102,496 2,130 8.13 %102,182 1,614 6.18 %101,295 976 3.77 %
Total interest bearing liabilities$11,465,064 $73,716 2.55 %$10,493,971 $35,996 1.36 %$9,635,989 $11,851 0.49 %
Noninterest bearing demand deposits5,174,217 5,719,155 5,967,251 
Total funding liabilities/cost of funds$16,639,281 1.76 %$16,213,126 0.88 %$15,603,240 0.30 %
Net interest income/net interest spread$150,521 2.46 %$153,186 2.95 %$133,318 2.92 %
Net interest margin3.36 %3.49 %3.13 %
Cost of deposits:
    Noninterest bearing demand deposits$5,174,217 $— — %$5,719,155 $— — %$5,967,251 $— — %
    Interest bearing deposits10,307,231 63,276 2.44 %9,726,190 30,667 1.25 %9,101,734 8,905 0.39 %
Total deposits$15,481,448 $63,276 1.62 %$15,445,345 $30,667 0.79 %$15,068,985 $8,905 0.23 %

Table Page 4
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
Twelve Months Ended
12/31/202212/31/2021
InterestInterest
AverageIncome/AverageAverageIncome/Average
BalanceExpenseYield/CostBalanceExpenseYield/Cost
INTEREST EARNING ASSETS:
    Loans, including loans held for sale $14,634,627 $660,732 4.51 %$13,343,431 $528,174 3.96 %
    Investment securities2,415,621 52,220 2.16 %2,392,589 35,492 1.48 %
    FHLB stock and other investments 176,313 3,163 1.79 %844,010 2,866 0.34 %
Total interest earning assets$17,226,561 $716,115 4.16 %$16,580,030 $566,532 3.42 %
INTEREST BEARING LIABILITIES:
  Deposits:
    Demand, interest bearing $6,202,104 $68,961 1.11 %$5,657,958 $22,867 0.40 %
    Savings 315,775 3,802 1.20 %309,295 3,623 1.17 %
    Time deposits3,084,851 42,076 1.36 %3,178,722 15,521 0.49 %
    Total interest bearing deposits9,602,730 114,839 1.20 %9,145,975 42,011 0.46 %
    FHLB and FRB borrowings528,342 11,525 2.18 %208,721 2,561 1.23 %
    Convertible notes, net216,654 5,289 2.41 %215,633 5,289 2.42 %
    Subordinated debentures102,037 6,041 5.84 %100,848 3,901 3.82 %
Total interest bearing liabilities$10,449,763 $137,694 1.32 %$9,671,177 $53,762 0.56 %
Noninterest bearing demand deposits5,569,534 5,581,803 
Total funding liabilities/cost of funds$16,019,297 0.86 %$15,252,980 0.35 %
Net interest income/net interest spread$578,421 2.84 %$512,770 2.86 %
Net interest margin3.36 %3.09 %
Cost of deposits:
    Noninterest bearing demand deposits$5,569,534 $— — %$5,581,803 $— — %
    Interest bearing deposits9,602,730 114,839 1.20 %9,145,975 42,011 0.46 %
Total deposits$15,172,264 $114,839 0.76 %$14,727,778 $42,011 0.29 %

Table Page 5
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
 Three Months Ended Twelve Months Ended
AVERAGE BALANCES:12/31/20229/30/2022% change12/31/2021% change12/31/202212/31/2021% change
Loans, including loans held for sale $15,393,843 $14,925,298 3 %$13,447,009 14 %$14,634,627 $13,343,431 10 %
Investments2,368,755 2,474,420 (4)%3,448,482 (31)%2,591,934 3,236,599 (20)%
Interest earning assets17,762,598 17,399,718 2 %16,895,491 5 %17,226,561 16,580,030 4 %
Total assets18,863,726 18,428,874 2 %17,834,345 6 %18,231,609 17,467,665 4 %
Interest bearing deposits10,307,231 9,726,190 6 %9,101,734 13 %9,602,730 9,145,975 5 %
Interest bearing liabilities11,465,064 10,493,971 9 %9,635,989 19 %10,449,763 9,671,177 8 %
Noninterest bearing demand deposits5,174,217 5,719,155 (10)%5,967,251 (13)%5,569,534 5,581,803 — %
Stockholders’ equity1,997,460 2,032,362 (2)%2,079,694 (4)%2,034,027 2,071,453 (2)%
Net interest earning assets6,297,534 6,905,747 (9)%7,259,502 (13)%6,776,798 6,908,853 (2)%
LOAN PORTFOLIO COMPOSITION: 12/31/20229/30/2022% change12/31/2021% change
Commercial loans$5,109,532 $5,124,421 — %$4,208,674 21 %
Real estate loans9,414,580 9,504,893 (1)%9,105,931 3 %
Consumer and other loans879,428 861,873 2 %638,138 38 %
    Loans, net of deferred loan fees and costs15,403,540 15,491,187 (1)%13,952,743 10 %
Allowance for credit losses(162,359)(160,561)1 %(140,550)16 %
    Loans receivable, net$15,241,181 $15,330,626 (1)%$13,812,193 10 %
REAL ESTATE LOANS BY PROPERTY TYPE:12/31/20229/30/2022% change12/31/2021% change
Retail buildings$2,585,383 $2,632,564 (2)%$2,522,976 2 %
Hotels/motels952,579 1,091,047 (13)%1,308,405 (27)%
Gas stations/car washes1,054,720 1,056,217 — %1,050,730 — %
Mixed-use facilities848,417 825,289 3 %854,793 (1)%
Warehouses1,294,893 1,271,104 2 %1,244,339 4 %
Multifamily1,295,644 1,199,320 8 %744,068 74 %
Other1,382,944 1,429,352 (3)%1,380,620 — %
  Total$9,414,580 $9,504,893 (1)%$9,105,931 3 %
DEPOSIT COMPOSITION12/31/20229/30/2022% change12/31/2021% change
Noninterest bearing demand deposits$4,849,493 $5,590,952 (13)%$5,751,870 (16)%
Money market and other5,615,784 5,885,093 (5)%6,178,850 (9)%
Saving deposits283,464 317,841 (11)%321,377 (12)%
Time deposits 4,990,060 3,708,323 35 %2,788,353 79 %
  Total deposits$15,738,801 $15,502,209 2 %$15,040,450 5 %



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

CAPITAL RATIOS:12/31/20229/30/202212/31/2021
Total stockholders’ equity$2,019,328 $1,975,725 $2,092,983 
Common equity tier 1 ratio10.55 %10.32 %11.03 %
Tier 1 risk-based capital ratio 11.15 %10.92 %11.70 %
Total risk-based capital ratio 11.97 %11.72 %12.42 %
Tier 1 leverage ratio 10.15 %10.25 %10.11 %
Total risk weighted assets$17,049,410 $17,065,355 $15,036,292 
Book value per common share$16.90 $16.54 $17.44 
Tangible common equity to tangible assets (1)
8.29 %8.09 %9.31 %
Tangible common equity per share (1)
$12.96 $12.60 $13.51 
(1) Tangible common equity to tangible assets is a non-GAAP financial measure that represents common equity less goodwill and core deposit intangible assets, net divided by total assets less goodwill and core deposit intangible assets, net. Management reviews tangible common equity to tangible assets in evaluating the Company’s capital levels and has included this ratio in response to market participant interest in tangible common equity as a measure of capital. A quantitative reconciliation of the most directly comparable GAAP to non-GAAP financial measures are provided in the accompanying financial information on Table Page 10.
Three Months EndedTwelve Months Ended
ALLOWANCE FOR CREDIT LOSSES CHANGES:12/31/20229/30/20226/30/20223/31/202212/31/202112/31/202212/31/2021
Balance at beginning of period$160,561 $151,580 $147,450 $140,550 $136,774 $140,550 $206,741 
Provision (credit) for credit losses8,200 9,200 3,200 (11,000)1,500 9,600 (12,200)
Recoveries3,222 331 1,642 19,403 3,615 24,598 8,245 
Charge offs (9,624)(550)(712)(1,503)(1,339)(12,389)(62,236)
Balance at end of period$162,359 $160,561 $151,580 $147,450 $140,550 $162,359 $140,550 
Net charge offs (recoveries)/average loans receivable (annualized)0.17 %0.01 %(0.03)%(0.52)%(0.07)%(0.08)%0.40 %
Three Months EndedTwelve Months Ended
NET LOAN CHARGE OFFS (RECOVERIES):12/31/20229/30/20226/30/20223/31/202212/31/202112/31/202212/31/2021
Real estate loans$2,022 $9 $(508)$(16,418)$(2,352)$(14,895)$51,705 
Commercial loans4,174 115 (461)(1,529)144 2,299 1,362 
Consumer loans206 95 39 47 (68)387 924 
Total net charge offs (recoveries)$6,402 $219 $(930)$(17,900)$(2,276)$(12,209)$53,991 
Table Page 7
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
NONPERFORMING ASSETS:12/31/20229/30/20226/30/20223/31/202212/31/2021
Loans on nonaccrual status (1)
$49,687 $64,571 $69,522 $52,717 $54,616 
Delinquent loans 90 days or more on accrual status401 5,306 12,468 3,090 2,131 
Accruing troubled debt restructured loans16,931 25,631 26,572 44,555 52,418 
Total nonperforming loans67,019 95,508 108,562 100,362 109,165 
Other real estate owned2,418 1,480 2,010 2,010 2,597 
Total nonperforming assets$69,437 $96,988 $110,572 $102,372 $111,762 
Nonperforming assets/total assets0.36 %0.51 %0.61 %0.58 %0.62 %
Nonperforming assets/loans receivable & OREO0.45 %0.63 %0.76 %0.73 %0.80 %
Nonperforming assets/total capital3.44 %4.91 %5.53 %5.02 %5.34 %
Nonperforming loans/loans receivable0.44 %0.62 %0.75 %0.71 %0.78 %
Nonaccrual loans/loans receivable0.32 %0.42 %0.48 %0.37 %0.39 %
Allowance for credit losses/loans receivable1.05 %1.04 %1.04 %1.05 %1.01 %
Allowance for credit losses/nonaccrual loans326.76 %248.66 %218.03 %279.70 %257.34 %
Allowance for credit losses/nonperforming loans242.26 %168.11 %139.63 %146.92 %128.75 %
Allowance for credit losses/nonperforming assets233.82 %165.55 %137.09 %144.03 %125.76 %
(1) Excludes delinquent SBA loans that are guaranteed and currently in liquidation totaling $9.8 million, $9.9 million, $13.2 million, $17.0 million, and $19.5 million, at December 31, 2022, September 30, 2022, June 30, 2022, March 31, 2022, and December 31, 2021, respectively.
NONACCRUAL LOANS BY TYPE:12/31/20229/30/20226/30/20223/31/202212/31/2021
Real estate loans$33,915 $47,807 $53,966 $36,655 $39,756 
Commercial loans5,620 7,675 8,206 8,686 11,025 
Consumer loans10,152 9,089 7,350 7,376 3,835 
   Total$49,687 $64,571 $69,522 $52,717 $54,616 
ACCRUING TROUBLED DEBT RESTRUCTURED LOANS:12/31/20229/30/20226/30/20223/31/202212/31/2021
Retail buildings$3,331 $5,474 $6,337 $24,356 $28,483 
Hotels/motels— — — — 472 
Gas stations/car washes181 185 189 193 197 
Mixed-use facilities6 2,832 2,837 2,836 2,846 
Warehouses4,940 4,988 4,770 5,321 5,366 
Other (2)
8,473 12,152 12,439 11,849 15,054 
Total$16,931 $25,631 $26,572 $44,555 $52,418 
(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:12/31/20229/30/20226/30/20223/31/202212/31/2021
30 - 59 days$7,049 $13,092 $10,090 $12,439 $29,723 
60 - 89 days2,243 4,933 6,354 3,090 10,345 
   Total$9,292 $18,025 $16,444 $15,529 $40,068 
ACCRUING DELINQUENT LOANS 30-89 DAYS PAST DUE BY TYPE:12/31/20229/30/20226/30/20223/31/202212/31/2021
Real estate loans$4,115 $9,694 $7,919 $6,097 $20,232 
Commercial loans3,300 6,165 3,397 5,003 3,057 
Consumer loans1,877 2,166 5,128 4,429 16,779 
   Total$9,292 $18,025 $16,444 $15,529 $40,068 
CRITICIZED LOANS:12/31/20229/30/20226/30/20223/31/202212/31/2021
Special mention$157,263 $79,399 $95,797 $166,958 $257,194 
Substandard104,073 204,713 244,748 226,661 242,397 
   Total criticized loans$261,336 $284,112 $340,545 $393,619 $499,591 
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 most directly comparable GAAP to non-GAAP financial measures utilized by management is provided below.
Three Months EndedTwelve Months Ended
RETURN ON AVERAGE TANGIBLE COMMON EQUITY12/31/20229/30/202212/31/202112/31/202212/31/2021
Average stockholders’ equity$1,997,460 $2,032,362 $2,079,694 $2,034,027 $2,071,453 
Less: Goodwill and core deposit intangible assets, net(470,442)(470,941)(472,405)(471,176)(473,177)
Average tangible common equity$1,527,018 $1,561,421 $1,607,289 $1,562,851 $1,598,276 
Net income$51,703 $53,748 $51,623 $218,277 $204,572 
Return on average tangible common equity (annualized)13.54 %13.77 %12.85 %13.97 %12.80 %
TANGIBLE COMMON EQUITY12/31/20229/30/202212/31/2021
Total stockholders’ equity$2,019,328 $1,975,725 $2,092,983 
Less: Goodwill and core deposit intangible assets, net(470,176)(470,662)(472,121)
Tangible common equity$1,549,152 $1,505,063 $1,620,862 
Total assets$19,164,491 $19,083,388 $17,889,061 
Less: Goodwill and core deposit intangible assets, net(470,176)(470,662)(472,121)
Tangible assets$18,694,315 $18,612,726 $17,416,940 
Common shares outstanding119,495,209 119,479,253 120,006,452 
Tangible common equity to tangible assets8.29 %8.09 %9.31 %
Tangible common equity per share$12.96 $12.60 $13.51 
Three Months EndedTwelve Months Ended
PRE-PROVISION NET REVENUE12/31/20229/30/202212/31/202112/31/202212/31/2021
Net interest income before provision (credit) for credit losses$150,521 $153,186 $133,318 $578,421 $512,770 
Noninterest income12,110 13,355 13,097 51,397 43,594 
Revenue162,631 166,541 146,415 629,818 556,364 
Less noninterest expense84,518 83,914 74,236 324,170 293,292 
Pre-provision net revenue$78,113 $82,627 $72,179 $305,648 $263,072 
Average assets$18,863,726 $18,428,874 $17,834,345 $18,231,609 $17,467,665 
ROA (PPNR)1.66 %1.79 %1.62 %1.68 %1.51 %
Average stockholders’ equity1,997,460 2,032,362 2,079,694 2,034,027 2,071,453 
ROE (PPNR)15.64 %16.26 %13.88 %15.03 %12.70 %
Table Page 10