8-K
HOPE BANCORP INC (HOPE)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
October 24, 2022
Date of Report (Date of earliest event reported)
| HOPE BANCORP INC | ||||
|---|---|---|---|---|
| (Exact name of registrant as specified in its charter) | Delaware | 000-50245 | 95-4849715 | |
| --- | --- | --- | ||
| (State of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
3200 Wilshire Boulevard, Suite 1400
Los Angeles, California 90010
(Address of principal executives offices, including zip code)
(213) 639-1700
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Common Stock | , | par value $0.001 per share | HOPE | NASDAQ Global Select Market |
|---|---|---|---|---|
| (Title of class) | (Trading Symbol) | (Name of exchange on which registered) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On October 24, 2022, Hope Bancorp, Inc. (“HOPE” or the “Company”) issued a news release concerning its results of operations and financial condition for the third quarter and nine months ended and as of September 30, 2022. A copy of the October 24, 2022 news release is furnished as Exhibit 99.1 and incorporated herein by reference.
The information furnished under Item 2.02, Item 7.01 and certain exhibits under Item 9.01 of this Current Report on Form 8-K (including Exhibits 99.1 and 99.4 to this Current Report on Form 8-K) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to liabilities under that Section, nor shall it be deemed incorporated by reference in any registration statement or other filings of the Company under the Securities Act of 1933 or the Exchange Act, except as shall be set forth as a specific reference in such filing.
Item 7.01. Regulation FD Disclosure
The Company previously announced that it will host an investor conference call on Tuesday, October 25, 2022 at 9:30 a.m. Pacific Time / 12:30 p.m. Eastern Time to review financial results for its third quarter ended September 30, 2022. A presentation to accompany the conference call, which contains certain historical and forward-looking information relating to the Company (the “Presentation Materials”), has been made available at the Investor Relations section of Hope Bancorp’s website at www.ir-hopebancorp.com. A copy of the Presentation Materials is furnished as Exhibit 99.3 and incorporated herein by reference.
Item 8.01 Other Events.
On October 24, 2022, the Company issued a news release announcing that its Board of Directors declared a quarterly cash dividend of $0.14 per common share. The cash dividend is payable on or about November 17, 2022 to all stockholders of record as of the close of business on November 3, 2022. A copy of the October 24, 2022 news release is attached hereto as Exhibit 99.2.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
| Exhibit No. | Description of Exhibit |
|---|---|
| 99.1 | News release, datedOctober 24,2022, concerning the results of operations and financial condition for thethirdquarter ended and as ofSeptember30, 2022. |
| 99.2 | News release, datedOctober 24, 2022, announcing the declaration of a quarterly cash dividend. |
| 99.3 | Presentation Materials, datedOctober 24, 2022. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| HOPE BANCORP, INC. | ||
|---|---|---|
| Date: October 24, 2022 | By: | /s/ Kevin S. Kim |
| Kevin S. Kim | ||
| Chairman, President and Chief Executive Officer |
Document
News Release
HOPE BANCORP REPORTS 2022 THIRD QUARTER FINANCIAL RESULTS
LOS ANGELES - October 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 third quarter and nine months ended September 30, 2022.
For the three months ended September 30, 2022, net income totaled $53.7 million, or $0.45 per diluted common share, compared with $52.1 million, or $0.43 per diluted common share, in the preceding second quarter and $55.5 million, or $0.45 per diluted common share, in the year-ago third quarter.
“We delivered a strong performance for the third quarter of 2022 that demonstrates the significant strides we have made in transforming the profile of our franchise to a lower-risk, high-performing regional bank,” said Kevin S. Kim, Chairman, President and Chief Executive Officer. “We broke new ground yet again with another record high in originations totaling $1.35 billion and representing a well diversified mix with commercial loans accounting for 55% of new loans. Loans receivable grew 6.5% quarter-over-quarter or 11% year-to-date, and together with the increased yields on our interest-earning assets outpacing deposit cost growth, our net interest margin expanded by 13 basis points for the quarter. This, together with the strong loan growth and higher loan yields, resulted in an 8% quarter-over-quarter and 18% year-over-year increase in our net interest income for the third quarter of 2022. We are also pleased that our enhanced credit administration framework is driving ongoing improvements in our asset quality with total nonperforming assets and total criticized loans decreasing 12% and 17%, respectively, quarter-over-quarter. The improved earnings power of Bank of Hope is underscored by the improvements in our pre-provision net revenue, which increased 12% quarter-over-quarter to a record high for the Company.
“As we move forward into the final quarter of the year, our board and management team remain confident in our ability to navigate through the challenges of the current environment and deliver strong financial results for our stockholders for the long term,” said Kim.
Q3 2022 Highlights
•Loan originations totaled a record $1.35 billion, representing a well-diversified mix of new loan production with new commercial loans accounting for 55% of total originations for the quarter.
•Loans receivable increased 6.5% quarter-over-quarter, or 11% year-to-date.
•Criticized loan balances continued its downward trend, decreasing 17% quarter-over-quarter, or 43% year-to-date.
•Total nonperforming assets declined 12% quarter-over-quarter and represented 0.51% of total assets.
•Company recorded a provision for credit losses of $9.2 million, primarily reflecting strong loan growth and increased recessionary risk factors.
•Net interest income increased 8% quarter-over-quarter and 18% year-over-year.
•Net interest margin expanded 13 basis points from the preceding second quarter, benefiting from 4% linked-quarter increase in average loans outstanding and a 59 basis-point expansion in average loan yields.
•Total deposits increased 3.1% quarter-over-quarter, reflecting increases in time deposits.
•Total cost of deposits increased 46 basis points quarter-over-quarter, reflecting the impact of increases in the Federal Funds target rates since June 2022.
•Pre-provision net revenue increased 11.8% quarter-over-quarter to a record high $82.6 million.
(more)
2-2-2 NASDAQ: HOPE
Financial Highlights
| At or for the Three Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| (dollars in thousands, except per share data) (unaudited) | 9/30/2022 | 6/30/2022 | 9/30/2021 | ||||||
| Net income | $ | 53,748 | $ | 52,088 | $ | 55,499 | |||
| Diluted earnings per share | $ | 0.45 | $ | 0.43 | $ | 0.45 | |||
| Pre-provision net revenue (“PPNR”) (1) | $ | 82,627 | $ | 73,919 | $ | 65,411 | |||
| Net interest income before provision (credit) for credit losses | $ | 153,186 | $ | 141,538 | $ | 130,296 | |||
| Net interest margin | 3.49 | % | 3.36 | % | 3.07 | % | |||
| Noninterest income | $ | 13,355 | $ | 12,746 | $ | 10,617 | |||
| Noninterest expense | $ | 83,914 | $ | 80,365 | $ | 75,502 | |||
| Net loans receivable | $ | 15,330,626 | $ | 14,394,469 | $ | 13,281,917 | |||
| Deposits | $ | 15,502,209 | $ | 15,029,630 | $ | 15,062,527 | |||
| Total cost of deposits | 0.79 | % | 0.33 | % | 0.26 | % | |||
| Nonaccrual loans(2) | $ | 64,571 | $ | 69,522 | $ | 54,380 | |||
| Nonperforming loans to loans receivable(2) | 0.62 | % | 0.75 | % | 0.73 | % | |||
| ACL to loans receivable | 1.04 | % | 1.04 | % | 1.02 | % | |||
| ACL to nonaccrual loans(2) | 248.66 | % | 218.03 | % | 251.52 | % | |||
| ACL to nonperforming assets(2) | 165.55 | % | 137.09 | % | 120.33 | % | |||
| Provision (credit) for credit losses | $ | 9,200 | $ | 3,200 | $ | (10,000) | |||
| Net charge offs (recoveries) | $ | 219 | $ | (930) | $ | 42,678 | |||
| Return on average assets (“ROA”) | 1.17 | % | 1.17 | % | 1.25 | % | |||
| Return on average equity (“ROE”) | 10.58 | % | 10.33 | % | 10.61 | % | |||
| ROA (PPNR) (1) | 1.79 | % | 1.65 | % | 1.47 | % | |||
| ROE (PPNR) (1) | 16.26 | % | 14.66 | % | 12.51 | % | |||
| Return on average tangible common equity (“ROTCE”)(1) | 13.77 | % | 13.48 | % | 13.71 | % | |||
| Noninterest expense / average assets | 1.82 | % | 1.80 | % | 1.70 | % | |||
| Efficiency ratio | 50.39 | % | 52.09 | % | 53.58 | % |
(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 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.
(more)
3-3-3 NASDAQ: HOPE
Operating Results for the 2022 Third Quarter
Net interest income before provision for credit losses for the 2022 third quarter increased 8% to $153.2 million from $141.5 million in the 2022 second quarter and increased 18% from $130.3 million in the 2021 third quarter. The Company attributed the increase to higher interest income largely due to a favorable shift in our mix of earning assets, as well as higher average balances of loans receivable and an increase in loan yields, partially offset by higher interest expense on deposits.
The net interest margin for the 2022 third quarter increased 13 basis points to 3.49% from 3.36% in the preceding second quarter and increased 42 basis points from 3.07% in the year-ago third quarter, as the expansion of the yields on interest-earning assets outpaced the increase in the cost of deposits.
The weighted average yield on loans for the 2022 third quarter was 4.65%, up 59 basis points from 4.06% in the 2022 second quarter and up 68 basis points from the year-ago third quarter. The Company attributed the quarter-over-quarter increase 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.
The weighted average cost of deposits for the 2022 third quarter increased by 46 basis points to 0.79% from 0.33% in the 2022 second quarter, primarily reflecting a 71 basis point increase in the cost of interest bearing deposits due to the previously mentioned Federal Funds target rate hikes. Compared with the year-ago third quarter, the weighted average cost of deposits for the 2022 third quarter increased 53 basis points from 0.26%, reflecting an 83 basis point increase in the cost of interest bearing deposits.
Noninterest income for the 2022 third quarter increased 5% to $13.4 million from $12.7 million in the 2022 second quarter. Quarter-over-quarter reductions in the net gains on sales of SBA loans and residential mortgage loans were more than offset by increases across most all other noninterest income categories. Most notably, other income and fees increased 94% quarter-over-quarter, which largely reflects higher swap fee income and a reduction in fair value losses on equity investments. During the 2022 third quarter, the Company sold $57.8 million in the guaranteed portion of SBA 7(a) loans and $3.7 million in retail mortgage loans, compared with $70.2 million and $4.1 million, respectively, sold in the preceding second quarter. Noninterest income for the 2022 third quarter increased 26% compared with $10.6 million in the third quarter of 2021, primarily reflecting higher service fees on deposit accounts, as well as other income and fees.
Noninterest expense for the 2022 third quarter increased 4% to $83.9 million from $80.4 million for the preceding second quarter, largely reflecting higher salaries and employee benefits and other noninterest expenses, partially offset by lower credit related expenses. For the 2021 third quarter, noninterest expense totaled $75.5 million.
Salaries and employee benefits expense for the 2022 third quarter increased to $53.2 million from $51.1 million in the preceding second quarter, largely reflecting higher incentive compensation accruals related to the strong financial performance. Salaries and employee benefits expense for the 2021 third quarter totaled $47.0 million.
Other noninterest expense for the 2022 third quarter increased to $10.8 million from $6.3 million in the 2022 second quarter and $6.4 million in the 2021 third quarter, largely reflecting higher earnings credit expenses as a result of recent Fed Fund rate hikes and higher amortization expense related to low-income housing tax credits.
The Company’s efficiency ratio for the 2022 third quarter was 50.39%, compared with 52.09% in the preceding second quarter and 53.58% in the year-ago third quarter. Noninterest expense as a percentage of average assets was 1.82% for the 2022 third quarter, compared with 1.80% for the 2022 second quarter and 1.70% for the 2021 third quarter.
The effective tax rate for the 2022 third quarter was 26.8%, compared with 26.4% for the preceding second quarter and 26.4% in the year-ago third quarter.
(more)
4-4-4 NASDAQ: HOPE
Balance Sheet Summary
New loan originations during the 2022 third quarter totaled $1.35 billion, reflecting a 5% increase over the preceding second quarter and a 34% increase over the year-ago third quarter.
Following are the components of new loan production for the quarters ended September 30, 2022, June 30, 2022, and September 30, 2021.
| For the Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| (dollars in thousands) (unaudited) | 9/30/2022 | 6/30/2022 | 9/30/2021 | |||
| Commercial real estate | $ | 500,826 | $ | 522,093 | $ | 488,969 |
| Commercial | 732,341 | 544,639 | 329,702 | |||
| SBA | 47,428 | 35,085 | 115,023 | |||
| Residential mortgage | 67,079 | 181,408 | 75,007 | |||
| Consumer | 1,020 | 2,770 | 500 | |||
| Total new loan originations | $ | 1,348,694 | $ | 1,285,995 | $ | 1,009,201 |
At September 30, 2022, loans receivable increased 6.5% to $15.49 billion from $14.55 billion at June 30, 2022 and increased 15.4% from $13.42 billion at September 30, 2021.
Total deposits at September 30, 2022 increased 3.1% to $15.50 billion from $15.03 billion at June 30, 2022, largely reflecting an increase in time deposits, and increased 2.9% year-over-year from $15.06 billion at September 30, 2021. Quarter-over-quarter, noninterest bearing demand and money market and NOW deposits decreased 1.7% and 7.2%, respectively, but these decreases were more than offset by a 38.7% increase in time deposits. On a year-over-year basis, noninterest bearing demand deposits at September 30, 2022 decreased 6.9%, money market and NOW deposits increased 0.2%, and time deposits increased 29.3%.
Following is the deposit composition as of September 30, 2022, June 30, 2022 and September 30, 2021:
| (dollars in thousands) (unaudited) | 9/30/2022 | 6/30/2022 | 9/30/2021 | |||
|---|---|---|---|---|---|---|
| Noninterest bearing demand deposits | $ | 5,590,952 | $ | 5,689,992 | $ | 6,007,586 |
| Money market and other | 5,885,093 | 6,339,467 | 5,871,567 | |||
| Saving deposits | 317,841 | 326,927 | 314,603 | |||
| Time deposits | 3,708,323 | 2,673,244 | 2,868,771 | |||
| Total deposit balances | $ | 15,502,209 | $ | 15,029,630 | $ | 15,062,527 |
Following is the deposit composition as a percentage of total deposits and a breakdown of cost of deposits as of and for the quarters ended September 30, 2022, June 30, 2022 and September 30, 2021:
| Deposit Breakdown | Cost of Deposits | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (unaudited) | 9/30/2022 | 6/30/2022 | 9/30/2021 | Q3 2022 | Q2 2022 | Q3 2021 | ||||||
| Noninterest bearing demand deposits | 36.1 | % | 37.9 | % | 39.9 | % | — | % | — | % | — | % |
| Money market and other | 38.0 | % | 42.2 | % | 39.0 | % | 1.24 | % | 0.54 | % | 0.40 | % |
| Saving deposits | 2.0 | % | 2.1 | % | 2.1 | % | 1.18 | % | 1.16 | % | 1.18 | % |
| Time deposits | 23.9 | % | 17.8 | % | 19.0 | % | 1.27 | % | 0.46 | % | 0.38 | % |
| Total deposit balances | 100.0 | % | 100.0 | % | 100.0 | % | 0.79 | % | 0.33 | % | 0.26 | % |
(more)
5-5-5 NASDAQ: HOPE
Allowance for Credit Losses
For the 2022 third quarter, the Company recorded a provision for credit losses of $9.2 million, compared with a provision for credit losses of $3.2 million in the preceding second quarter and a negative provision for credit losses of $10.0 million in the 2021 third quarter.
Following is the allowance for credit losses and allowance coverage ratios as of September 30, 2022, June 30, 2022 and September 30, 2021:
| (dollars in thousands) (unaudited) | 9/30/2022 | 6/30/2022 | 9/30/2021 | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Allowance for credit losses | $ | 160,561 | $ | 151,580 | $ | 136,774 | |||
| Allowance for credit loss/loans receivable | 1.04 | % | 1.04 | % | 1.02 | % | |||
| Allowance for credit losses/nonperforming loans | 168.11 | % | 139.63 | % | 138.92 | % |
Credit Quality
Following are the components of nonperforming assets as of September 30, 2022, June 30, 2022 and September 30, 2021:
| (dollars in thousands) (unaudited) | 9/30/2022 | 6/30/2022 | 9/30/2021 | |||
|---|---|---|---|---|---|---|
| Loans on nonaccrual status (1) | $ | 64,571 | $ | 69,522 | $ | 54,380 |
| Delinquent loans 90 days or more on accrual status | 5,306 | 12,468 | 4,567 | |||
| Accruing troubled debt restructured loans | 25,631 | 26,572 | 39,509 | |||
| Total nonperforming loans | 95,508 | 108,562 | 98,456 | |||
| Other real estate owned | 1,480 | 2,010 | 15,213 | |||
| Total nonperforming assets | $ | 96,988 | $ | 110,572 | $ | 113,669 |
(1) Excludes delinquent SBA loans that are guaranteed and currently in liquidation totaling $9.9 million, $13.2 million and $20.6 million, at September 30, 2022, June 30, 2022 and September 30, 2021, respectively.
Total nonperforming assets at September 30, 2022 decreased to $97.0 million from $110.6 million at June 30, 2022 and from $113.7 million at September 30, 2021. Quarter-over-quarter, the decrease in total nonperforming assets reflects reductions across the board in all categories.
Following are net charge offs (recoveries) and net charge offs (recoveries) to average loans receivable on an annualized basis for the three months ended September 30, 2022, June 30, 2022 and September 30, 2021:
| For the Three Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| (dollars in thousands) (unaudited) | 9/30/2022 | 6/30/2022 | 9/30/2021 | ||||||
| Net charge offs (recoveries) | $ | 219 | $ | (930) | $ | 42,678 | |||
| Net charge offs (recoveries)/average loans receivable (annualized) | 0.01 | % | (0.03) | % | 1.28 | % |
Following are the components of criticized loan balances as of September 30, 2022, June 30, 2022 and September 30, 2021:
| (dollars in thousands) (unaudited) | 9/30/2022 | 6/30/2022 | 9/30/2021 | |||
|---|---|---|---|---|---|---|
| Special mention | $ | 79,399 | $ | 95,797 | $ | 306,766 |
| Substandard | 204,713 | 244,748 | 243,684 | |||
| Total criticized loans | $ | 284,112 | $ | 340,545 | $ | 550,450 |
(more)
6-6-6 NASDAQ: HOPE
At September 30, 2022, special mention loans decreased 17.1% quarter-over-quarter and total criticized loans decreased 16.6% quarter-over-quarter. Compared with a year ago at September 30, 2021, special mention and total criticized loans decreased 74.1% and 48.4%, respectively.
Capital
At September 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 September 30, 2022, June 30, 2022 and September 30, 2021:
| (unaudited) | 9/30/2022 | 6/30/2022 | 9/30/2021 | Minimum Guideline for “Well-Capitalized” Bank |
|---|---|---|---|---|
| Common Equity Tier 1 Capital | 10.32% | 10.69% | 11.01% | 6.50% |
| Tier 1 Leverage Ratio | 10.25% | 10.32% | 9.98% | 5.00% |
| Tier 1 Risk-Based Ratio | 10.91% | 11.33% | 11.70% | 8.00% |
| Total Risk-Based Ratio | 11.72% | 12.13% | 12.42% | 10.00% |
Following are tangible common equity (“TCE”) per share and TCE as a percentage of tangible assets as of September 30, 2022, June 30, 2022 and September 30, 2021:
| (unaudited) | 9/30/2022 | 6/30/2022 | 9/30/2021 |
|---|---|---|---|
| Tangible common equity per share (1) | $12.60 | $12.80 | $13.33 |
| Tangible common equity to tangible assets (1) | 8.09% | 8.68% | 9.24% |
(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 Tuesday, October 25, 2022 at 9:30 a.m. Pacific Time / 12:30 p.m. Eastern Time to review financial results for its third quarter ended September 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 November 1, 2022, replay access code 7421375.
(more)
7-7-7 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 $19.08 billion in total assets as of September 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, 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<br><br>Senior EVP & Chief Financial Officer<br><br>213-427-6560<br><br>alex.ko@bankofhope.com | Angie Yang<br><br>SVP, Director of Investor Relations &<br><br>Corporate Communications<br><br>213-251-2219<br><br>angie.yang@bankofhope.com |
|---|
#
(tables follow)
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands, except share data)
| Assets: | 9/30/2022 | 6/30/2022 | % change | 9/30/2021 | % change | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Cash and due from banks | $ | 331,336 | $ | 197,062 | 68 | % | $ | 627,352 | (47) | % |
| Investment securities | 2,264,533 | 2,352,997 | (4) | % | 2,669,489 | (15) | % | |||
| Federal Home Loan Bank (“FHLB”) stock and other investments | 65,192 | 87,109 | (25) | % | 88,102 | (26) | % | |||
| Loans held for sale, at the lower of cost or fair value | 41,989 | 76,376 | (45) | % | 179,117 | (77) | % | |||
| Loans receivable | 15,491,187 | 14,546,049 | 6 | % | 13,418,691 | 15 | % | |||
| Allowance for credit losses | (160,561) | (151,580) | 6 | % | (136,774) | 17 | % | |||
| Net loans receivable | 15,330,626 | 14,394,469 | 7 | % | 13,281,917 | 15 | % | |||
| Accrued interest receivable | 42,363 | 37,845 | 12 | % | 47,102 | (10) | % | |||
| Premises and equipment, net | 46,169 | 46,093 | — | % | 45,307 | 2 | % | |||
| Bank owned life insurance | 76,788 | 77,692 | (1) | % | 76,756 | — | % | |||
| Goodwill | 464,450 | 464,450 | — | % | 464,450 | — | % | |||
| Servicing assets | 11,601 | 11,215 | 3 | % | 10,787 | 8 | % | |||
| Other intangible assets, net | 6,212 | 6,698 | (7) | % | 8,180 | (24) | % | |||
| Other assets | 402,129 | 337,056 | 19 | % | 300,467 | 34 | % | |||
| Total assets | $ | 19,083,388 | $ | 18,089,062 | 5 | % | $ | 17,799,026 | 7 | % |
| Liabilities: | ||||||||||
| Deposits | $ | 15,502,209 | $ | 15,029,630 | 3 | % | $ | 15,062,527 | 3 | % |
| FHLB and FRB borrowings | 1,072,000 | 573,000 | 87 | % | 200,000 | 436 | % | |||
| Convertible notes, net | 216,913 | 216,678 | — | % | 215,974 | — | % | |||
| Subordinated debentures | 106,258 | 105,953 | — | % | 105,057 | 1 | % | |||
| Accrued interest payable | 11,713 | 4,112 | 185 | % | 5,367 | 118 | % | |||
| Other liabilities | 198,570 | 159,320 | 25 | % | 135,703 | 46 | % | |||
| Total liabilities | $ | 17,107,663 | $ | 16,088,693 | 6 | % | $ | 15,724,628 | 9 | % |
| Stockholders’ Equity: | ||||||||||
| Common stock, $0.001 par value | $ | 137 | $ | 137 | — | % | $ | 136 | 1 | % |
| Capital surplus | 1,428,052 | 1,424,891 | — | % | 1,420,151 | 1 | % | |||
| Retained earnings | 1,048,738 | 1,011,715 | 4 | % | 897,766 | 17 | % | |||
| Treasury stock, at cost | (264,667) | (264,667) | — | % | (247,198) | (7) | % | |||
| Accumulated other comprehensive (loss) gain, net | (236,535) | (171,707) | (38) | % | 3,543 | N/A | ||||
| Total stockholders’ equity | 1,975,725 | 2,000,369 | (1) | % | 2,074,398 | (5) | % | |||
| Total liabilities and stockholders’ equity | $ | 19,083,388 | $ | 18,089,062 | 5 | % | $ | 17,799,026 | 7 | % |
| Common stock shares - authorized | 150,000,000 | 150,000,000 | 150,000,000 | |||||||
| Common stock shares - outstanding | 119,479,253 | 119,473,939 | 120,198,061 | |||||||
| Treasury stock shares | 17,382,835 | 17,382,835 | 16,149,007 |
Table Page 1
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands, except share and per share data)
| Three Months Ended | Nine Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 9/30/2022 | 6/30/2022 | % change | 9/30/2021 | % change | 9/30/2022 | 9/30/2021 | % change | |||||||||
| Interest and fees on loans | $ | 175,078 | $ | 145,024 | 21 | % | $ | 132,794 | 32 | % | $ | 452,774 | $ | 394,353 | 15 | % |
| Interest on investment securities | 13,498 | 12,308 | 10 | % | 9,207 | 47 | % | 37,462 | 24,835 | 51 | % | |||||
| Interest on federal funds sold and other investments | 606 | 492 | 23 | % | 865 | (30) | % | 1,642 | 2,175 | (25) | % | |||||
| Total interest income | 189,182 | 157,824 | 20 | % | 142,866 | 32 | % | 491,878 | 421,363 | 17 | % | |||||
| Interest on deposits | 30,667 | 12,220 | 151 | % | 9,640 | 218 | % | 51,563 | 33,106 | 56 | % | |||||
| Interest on other borrowings and convertible notes | 5,329 | 4,066 | 31 | % | 2,930 | 82 | % | 12,415 | 8,805 | 41 | % | |||||
| Total interest expense | 35,996 | 16,286 | 121 | % | 12,570 | 186 | % | 63,978 | 41,911 | 53 | % | |||||
| Net interest income before provision (credit) for credit losses | 153,186 | 141,538 | 8 | % | 130,296 | 18 | % | 427,900 | 379,452 | 13 | % | |||||
| Provision (credit) for credit losses | 9,200 | 3,200 | 188 | % | (10,000) | N/A | 1,400 | (13,700) | N/A | |||||||
| Net interest income after provision (credit) for credit losses | 143,986 | 138,338 | 4 | % | 140,296 | 3 | % | 426,500 | 393,152 | 8 | % | |||||
| Service fees on deposit accounts | 2,535 | 2,270 | 12 | % | 1,814 | 40 | % | 6,779 | 5,381 | 26 | % | |||||
| International service fees | 834 | 744 | 12 | % | 889 | (6) | % | 2,372 | 2,525 | (6) | % | |||||
| Loan servicing fees, net | 981 | 843 | 16 | % | 642 | 53 | % | 2,660 | 2,620 | 2 | % | |||||
| Wire transfer fees | 856 | 858 | — | % | 836 | 2 | % | 2,614 | 2,603 | — | % | |||||
| Net gains on sales of SBA loans | 2,782 | 5,804 | (52) | % | 2,459 | 13 | % | 14,189 | 4,834 | 194 | % | |||||
| Net gains on sales of residential mortgage loans | 29 | 76 | (62) | % | 781 | (96) | % | 862 | 3,905 | (78) | % | |||||
| Net gains (losses) on sales of other loans | 117 | (547) | N/A | — | 100 | % | (430) | — | 100 | % | ||||||
| Other income and fees | 5,221 | 2,698 | 94 | % | 3,196 | 63 | % | 10,241 | 8,629 | 19 | % | |||||
| Total noninterest income | 13,355 | 12,746 | 5 | % | 10,617 | 26 | % | 39,287 | 30,497 | 29 | % | |||||
| Salaries and employee benefits | 53,222 | 51,058 | 4 | % | 47,018 | 13 | % | 152,025 | 130,543 | 16 | % | |||||
| Occupancy | 6,682 | 7,178 | (7) | % | 7,473 | (11) | % | 21,195 | 21,507 | (1) | % | |||||
| Furniture and equipment | 4,967 | 4,778 | 4 | % | 4,429 | 12 | % | 14,389 | 13,437 | 7 | % | |||||
| Advertising and marketing | 1,739 | 2,226 | (22) | % | 2,656 | (35) | % | 5,601 | 6,378 | (12) | % | |||||
| Data processing and communications | 2,469 | 2,893 | (15) | % | 2,394 | 3 | % | 7,823 | 7,542 | 4 | % | |||||
| Professional fees | 1,196 | 1,582 | (24) | % | 2,431 | (51) | % | 4,989 | 9,729 | (49) | % | |||||
| FDIC assessment | 1,633 | 1,450 | 13 | % | 1,204 | 36 | % | 4,652 | 3,743 | 24 | % | |||||
| Credit related expenses | 873 | 2,872 | (70) | % | 1,266 | (31) | % | 4,857 | 3,527 | 38 | % | |||||
| OREO expense | 378 | 5 | 7,460 | % | 248 | 52 | % | 740 | 827 | (11) | % | |||||
| Software impairment | — | — | — | % | — | — | % | — | 2,146 | (100) | % | |||||
| Other | 10,755 | 6,323 | 70 | % | 6,383 | 68 | % | 23,381 | 19,677 | 19 | % | |||||
| Total noninterest expense | 83,914 | 80,365 | 4 | % | 75,502 | 11 | % | 239,652 | 219,056 | 9 | % | |||||
| Income before income taxes | 73,427 | 70,719 | 4 | % | 75,411 | (3) | % | 226,135 | 204,593 | 11 | % | |||||
| Income tax provision | 19,679 | 18,631 | 6 | % | 19,912 | (1) | % | 59,561 | 51,644 | 15 | % | |||||
| Net income | $ | 53,748 | $ | 52,088 | 3 | % | $ | 55,499 | (3) | % | $ | 166,574 | $ | 152,949 | 9 | % |
| Earnings Per Common Share - Basic | $ | 0.45 | $ | 0.43 | $ | 0.45 | $ | 1.39 | $ | 1.24 | ||||||
| Earnings Per Common Share - Diluted | $ | 0.45 | $ | 0.43 | $ | 0.45 | $ | 1.38 | $ | 1.23 | ||||||
| Weighted Average Shares Outstanding - Basic | 119,476,035 | 120,219,919 | 122,244,948 | 119,940,044 | 123,050,174 | |||||||||||
| Weighted Average Shares Outstanding - Diluted | 119,996,523 | 120,699,638 | 122,908,536 | 120,595,988 | 123,848,512 |
Table Page 2
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands, except share and per share data)
| For the Three Months Ended <br>(Annualized) | For the Nine Months Ended<br>(Annualized) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Profitability measures: | 9/30/2022 | 6/30/2022 | 9/30/2021 | 9/30/2022 | 9/30/2021 | |||||
| ROA | 1.17 | % | 1.17 | % | 1.25 | % | 1.23 | % | 1.18 | % |
| ROE | 10.58 | % | 10.33 | % | 10.61 | % | 10.85 | % | 9.86 | % |
| ROA (PPNR) (1) | 1.79 | % | 1.65 | % | 1.47 | % | 1.68 | % | 1.47 | % |
| ROE (PPNR) (1) | 16.26 | % | 14.66 | % | 12.51 | % | 14.83 | % | 12.30 | % |
| ROTCE (2) | 13.77 | % | 13.48 | % | 13.71 | % | 14.10 | % | 12.78 | % |
| Net interest margin | 3.49 | % | 3.36 | % | 3.07 | % | 3.36 | % | 3.08 | % |
| Efficiency ratio | 50.39 | % | 52.09 | % | 53.58 | % | 51.30 | % | 53.43 | % |
| Noninterest expense / average assets | 1.82 | % | 1.80 | % | 1.70 | % | 1.77 | % | 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 | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 9/30/2022 | 6/30/2022 | 9/30/2021 | ||||||||||||||||
| Interest | Annualized | Interest | Annualized | Interest | Annualized | |||||||||||||
| Average | Income/ | Average | Average | Income/ | Average | Average | Income/ | Average | ||||||||||
| Balance | Expense | Yield/Cost | Balance | Expense | Yield/Cost | Balance | Expense | Yield/Cost | ||||||||||
| INTEREST EARNING ASSETS: | ||||||||||||||||||
| Loans, including loans held for sale | $ | 14,925,298 | $ | 175,078 | 4.65 | % | $ | 14,327,476 | $ | 145,024 | 4.06 | % | $ | 13,286,382 | $ | 132,794 | 3.97 | % |
| Investment securities | 2,366,696 | 13,498 | 2.26 | % | 2,424,454 | 12,308 | 2.04 | % | 2,370,672 | 9,207 | 1.54 | % | ||||||
| FHLB stock and other investments | 107,724 | 606 | 2.23 | % | 134,055 | 492 | 1.47 | % | 1,197,537 | 865 | 0.29 | % | ||||||
| Total interest earning assets | $ | 17,399,718 | $ | 189,182 | 4.31 | % | $ | 16,885,985 | $ | 157,824 | 3.75 | % | $ | 16,854,591 | $ | 142,866 | 3.36 | % |
| INTEREST BEARING LIABILITIES: | ||||||||||||||||||
| Deposits: | ||||||||||||||||||
| Demand, interest bearing | $ | 6,255,271 | $ | 19,614 | 1.24 | % | $ | 6,487,890 | $ | 8,655 | 0.54 | % | $ | 5,919,225 | $ | 5,946 | 0.40 | % |
| Savings | 324,487 | 969 | 1.18 | % | 323,114 | 937 | 1.16 | % | 310,525 | 920 | 1.18 | % | ||||||
| Time deposits | 3,146,432 | 10,084 | 1.27 | % | 2,277,938 | 2,628 | 0.46 | % | 2,914,977 | 2,774 | 0.38 | % | ||||||
| Total interest bearing deposits | 9,726,190 | 30,667 | 1.25 | % | 9,088,942 | 12,220 | 0.54 | % | 9,144,727 | 9,640 | 0.42 | % | ||||||
| FHLB and FRB borrowings | 448,837 | 2,393 | 2.12 | % | 577,966 | 1,457 | 1.01 | % | 200,000 | 640 | 1.27 | % | ||||||
| Convertible notes, net | 216,762 | 1,322 | 2.39 | % | 216,540 | 1,322 | 2.42 | % | 215,840 | 1,321 | 2.39 | % | ||||||
| Subordinated debentures | 102,182 | 1,614 | 6.18 | % | 101,880 | 1,287 | 5.00 | % | 100,993 | 969 | 3.75 | % | ||||||
| Total interest bearing liabilities | $ | 10,493,971 | $ | 35,996 | 1.36 | % | $ | 9,985,328 | $ | 16,286 | 0.65 | % | $ | 9,661,560 | $ | 12,570 | 0.52 | % |
| Noninterest bearing demand deposits | 5,719,155 | 5,715,830 | 5,848,983 | |||||||||||||||
| Total funding liabilities/cost of funds | $ | 16,213,126 | 0.88 | % | $ | 15,701,158 | 0.42 | % | $ | 15,510,543 | 0.32 | % | ||||||
| Net interest income/net interest spread | $ | 153,186 | 2.95 | % | $ | 141,538 | 3.10 | % | $ | 130,296 | 2.84 | % | ||||||
| Net interest margin | 3.49 | % | 3.36 | % | 3.07 | % | ||||||||||||
| Cost of deposits: | ||||||||||||||||||
| Noninterest bearing demand deposits | $ | 5,719,155 | $ | — | — | % | $ | 5,715,830 | $ | — | — | % | $ | 5,848,983 | $ | — | — | % |
| Interest bearing deposits | 9,726,190 | 30,667 | 1.25 | % | 9,088,942 | 12,220 | 0.54 | % | 9,144,727 | 9,640 | 0.42 | % | ||||||
| Total deposits | $ | 15,445,345 | $ | 30,667 | 0.79 | % | $ | 14,804,772 | $ | 12,220 | 0.33 | % | $ | 14,993,710 | $ | 9,640 | 0.26 | % |
Table Page 4
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
| Nine Months Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 9/30/2022 | 9/30/2021 | |||||||||||
| Interest | Annualized | Interest | Annualized | |||||||||
| Average | Income/ | Average | Average | Income/ | Average | |||||||
| Balance | Expense | Yield/Cost | Balance | Expense | Yield/Cost | |||||||
| INTEREST EARNING ASSETS: | ||||||||||||
| Loans, including loans held for sale | $ | 14,378,774 | $ | 452,774 | 4.21 | % | $ | 13,308,526 | $ | 394,353 | 3.96 | % |
| Investment securities | 2,469,858 | 37,462 | 2.03 | % | 2,297,450 | 24,835 | 1.45 | % | ||||
| FHLB stock and other investments | 197,287 | 1,642 | 1.11 | % | 867,745 | 2,175 | 0.34 | % | ||||
| Total interest earning assets | $ | 17,045,919 | $ | 491,878 | 3.86 | % | $ | 16,473,721 | $ | 421,363 | 3.42 | % |
| INTEREST BEARING LIABILITIES: | ||||||||||||
| Deposits: | ||||||||||||
| Demand, interest bearing | $ | 6,360,040 | $ | 33,970 | 0.71 | % | $ | 5,555,711 | $ | 17,345 | 0.42 | % |
| Savings | 322,058 | 2,834 | 1.18 | % | 306,780 | 2,678 | 1.17 | % | ||||
| Time deposits | 2,683,217 | 14,759 | 0.74 | % | 3,298,393 | 13,083 | 0.53 | % | ||||
| Total interest bearing deposits | 9,365,315 | 51,563 | 0.74 | % | 9,160,884 | 33,106 | 0.48 | % | ||||
| FHLB and FRB borrowings | 423,875 | 4,537 | 1.43 | % | 205,971 | 1,913 | 1.24 | % | ||||
| Convertible notes, net | 216,538 | 3,967 | 2.42 | % | 215,483 | 3,967 | 2.43 | % | ||||
| Subordinated debentures | 101,882 | 3,911 | 5.06 | % | 100,697 | 2,925 | 3.83 | % | ||||
| Total interest bearing liabilities | $ | 10,107,610 | $ | 63,978 | 0.85 | % | $ | 9,683,035 | $ | 41,911 | 0.58 | % |
| Noninterest bearing demand deposits | 5,702,754 | 5,451,908 | ||||||||||
| Total funding liabilities/cost of funds | $ | 15,810,364 | 0.54 | % | $ | 15,134,943 | 0.37 | % | ||||
| Net interest income/net interest spread | $ | 427,900 | 3.01 | % | $ | 379,452 | 2.84 | % | ||||
| Net interest margin | 3.36 | % | 3.08 | % | ||||||||
| Cost of deposits: | ||||||||||||
| Noninterest bearing demand deposits | $ | 5,702,754 | $ | — | — | % | $ | 5,451,908 | $ | — | — | % |
| Interest bearing deposits | 9,365,315 | 51,563 | 0.74 | % | 9,160,884 | 33,106 | 0.48 | % | ||||
| Total deposits | $ | 15,068,069 | $ | 51,563 | 0.46 | % | $ | 14,612,792 | $ | 33,106 | 0.30 | % |
Table Page 5
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
| Three Months Ended | Nine Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| AVERAGE BALANCES: | 9/30/2022 | 6/30/2022 | % change | 9/30/2021 | % change | 9/30/2022 | 9/30/2021 | % change | ||||||||
| Loans, including loans held for sale | $ | 14,925,298 | $ | 14,327,476 | 4 | % | $ | 13,286,382 | 12 | % | $ | 14,378,774 | $ | 13,308,526 | 8 | % |
| Investments | 2,474,420 | 2,558,509 | (3) | % | 3,568,209 | (31) | % | 2,667,145 | 3,165,195 | (16) | % | |||||
| Interest earning assets | 17,399,718 | 16,885,985 | 3 | % | 16,854,591 | 3 | % | 17,045,919 | 16,473,721 | 3 | % | |||||
| Total assets | 18,428,874 | 17,876,945 | 3 | % | 17,745,066 | 4 | % | 18,018,588 | 17,344,095 | 4 | % | |||||
| Interest bearing deposits | 9,726,190 | 9,088,942 | 7 | % | 9,144,727 | 6 | % | 9,365,315 | 9,160,884 | 2 | % | |||||
| Interest bearing liabilities | 10,493,971 | 9,985,328 | 5 | % | 9,661,560 | 9 | % | 10,107,610 | 9,683,035 | 4 | % | |||||
| Noninterest bearing demand deposits | 5,719,155 | 5,715,830 | — | % | 5,848,983 | (2) | % | 5,702,754 | 5,451,908 | 5 | % | |||||
| Stockholders’ equity | 2,032,362 | 2,016,577 | 1 | % | 2,092,018 | (3) | % | 2,046,351 | 2,068,676 | (1) | % | |||||
| Net interest earning assets | 6,905,747 | 6,900,657 | — | % | 7,193,031 | (4) | % | 6,938,309 | 6,790,686 | 2 | % | |||||
| LOAN PORTFOLIO COMPOSITION: | 9/30/2022 | 6/30/2022 | % change | 9/30/2021 | % change | |||||||||||
| Commercial loans | $ | 5,124,421 | $ | 4,395,738 | 17 | % | $ | 3,857,879 | 33 | % | ||||||
| Real estate loans | 9,504,893 | 9,335,020 | 2 | % | 8,908,657 | 7 | % | |||||||||
| Consumer and other loans | 861,873 | 815,291 | 6 | % | 652,155 | 32 | % | |||||||||
| Loans, net of deferred loan fees and costs | 15,491,187 | 14,546,049 | 6 | % | 13,418,691 | 15 | % | |||||||||
| Allowance for credit losses | (160,561) | (151,580) | 6 | % | (136,774) | 17 | % | |||||||||
| Loans receivable, net | $ | 15,330,626 | $ | 14,394,469 | 7 | % | $ | 13,281,917 | 15 | % | ||||||
| REAL ESTATE LOANS BY PROPERTY TYPE: | 9/30/2022 | 6/30/2022 | % change | 9/30/2021 | % change | |||||||||||
| Retail buildings | $ | 2,632,564 | $ | 2,603,516 | 1 | % | $ | 2,466,881 | 7 | % | ||||||
| Hotels/motels | 1,091,047 | 1,143,982 | (5) | % | 1,385,003 | (21) | % | |||||||||
| Gas stations/car washes | 1,056,217 | 1,080,777 | (2) | % | 999,069 | 6 | % | |||||||||
| Mixed-use facilities | 825,289 | 833,342 | (1) | % | 819,516 | 1 | % | |||||||||
| Warehouses | 1,271,104 | 1,279,647 | (1) | % | 1,160,863 | 9 | % | |||||||||
| Multifamily | 1,199,320 | 989,840 | 21 | % | 691,262 | 73 | % | |||||||||
| Other | 1,429,352 | 1,403,916 | 2 | % | 1,386,063 | 3 | % | |||||||||
| Total | $ | 9,504,893 | $ | 9,335,020 | 2 | % | $ | 8,908,657 | 7 | % | ||||||
| DEPOSIT COMPOSITION | 9/30/2022 | 6/30/2022 | % change | 9/30/2021 | % change | |||||||||||
| Noninterest bearing demand deposits | $ | 5,590,952 | $ | 5,689,992 | (2) | % | $ | 6,007,586 | (7) | % | ||||||
| Money market and other | 5,885,093 | 6,339,467 | (7) | % | 5,871,567 | — | % | |||||||||
| Saving deposits | 317,841 | 326,927 | (3) | % | 314,603 | 1 | % | |||||||||
| Time deposits | 3,708,323 | 2,673,244 | 39 | % | 2,868,771 | 29 | % | |||||||||
| Total deposits | $ | 15,502,209 | $ | 15,029,630 | 3 | % | $ | 15,062,527 | 3 | % |
Table Page 6
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands, except share and per share data)
| CAPITAL RATIOS: | 9/30/2022 | 6/30/2022 | 9/30/2021 | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Total stockholders’ equity | $ | 1,975,725 | $ | 2,000,369 | $ | 2,074,398 | |||||||||||||||
| Common equity tier 1 ratio | 10.32 | % | 10.69 | % | 11.01 | % | |||||||||||||||
| Tier 1 risk-based capital ratio | 10.91 | % | 11.33 | % | 11.70 | % | |||||||||||||||
| Total risk-based capital ratio | 11.72 | % | 12.13 | % | 12.42 | % | |||||||||||||||
| Tier 1 leverage ratio | 10.25 | % | 10.32 | % | 9.98 | % | |||||||||||||||
| Total risk weighted assets | $ | 17,070,444 | $ | 16,059,739 | $ | 14,737,809 | |||||||||||||||
| Book value per common share | $ | 16.54 | $ | 16.74 | $ | 17.26 | |||||||||||||||
| Tangible common equity to tangible assets (1) | 8.09 | % | 8.68 | % | 9.24 | % | |||||||||||||||
| Tangible common equity per share (1) | $ | 12.60 | $ | 12.80 | $ | 13.33 | |||||||||||||||
| (1) Tangible common equity to tangible assets is a non-GAAP financial measure that represents common equity less goodwill and core deposit intangible assets, net divided by total assets less goodwill and core deposit intangible assets, net. Management reviews tangible common equity to tangible assets in evaluating the Company’s capital levels and has included this ratio in response to market participant interest in tangible common equity as a measure of capital. | |||||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||
| ALLOWANCE FOR CREDIT LOSSES CHANGES: | 9/30/2022 | 6/30/2022 | 3/31/2022 | 12/31/2021 | 9/30/2021 | 9/30/2022 | 9/30/2021 | ||||||||||||||
| Balance at beginning of period | $ | 151,580 | $ | 147,450 | $ | 140,550 | $ | 136,774 | $ | 189,452 | $ | 140,550 | $ | 206,741 | |||||||
| Provision (credit) for credit losses | 9,200 | 3,200 | (11,000) | 1,500 | (10,000) | 1,400 | (13,700) | ||||||||||||||
| Recoveries | 331 | 1,642 | 19,403 | 3,615 | 1,906 | 21,376 | 4,630 | ||||||||||||||
| Charge offs | (550) | (712) | (1,503) | (1,339) | (44,584) | (2,765) | (60,897) | ||||||||||||||
| Balance at end of period | $ | 160,561 | $ | 151,580 | $ | 147,450 | $ | 140,550 | $ | 136,774 | $ | 160,561 | $ | 136,774 | |||||||
| Net charge offs (recoveries)/average loans receivable (annualized) | 0.01 | % | (0.03) | % | (0.52) | % | (0.07) | % | 1.28 | % | (0.17) | % | 0.56 | % | |||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||
| NET LOAN CHARGE OFFS (RECOVERIES): | 9/30/2022 | 6/30/2022 | 3/31/2022 | 12/31/2021 | 9/30/2021 | 9/30/2022 | 9/30/2021 | ||||||||||||||
| Real estate loans | $ | 9 | $ | (508) | $ | (16,418) | $ | (2,352) | $ | 40,542 | $ | (16,917) | $ | 54,057 | |||||||
| Commercial loans | 115 | (461) | (1,529) | 144 | 1,117 | (1,875) | 1,218 | ||||||||||||||
| Consumer loans | 95 | 39 | 47 | (68) | 1,019 | 181 | 992 | ||||||||||||||
| Total net charge offs (recoveries) | $ | 219 | $ | (930) | $ | (17,900) | $ | (2,276) | $ | 42,678 | $ | (18,611) | $ | 56,267 |
Table Page 7
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
| NONPERFORMING ASSETS: | 6/30/2022 | 3/31/2022 | 12/31/2021 | 9/30/2021 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Loans on nonaccrual status (1) | 64,571 | $ | 69,522 | $ | 52,717 | $ | 54,616 | $ | 54,380 | |||||
| Delinquent loans 90 days or more on accrual status | 12,468 | 3,090 | 2,131 | 4,567 | ||||||||||
| Accruing troubled debt restructured loans | 26,572 | 44,555 | 52,418 | 39,509 | ||||||||||
| Total nonperforming loans | 108,562 | 100,362 | 109,165 | 98,456 | ||||||||||
| Other real estate owned | 2,010 | 2,010 | 2,597 | 15,213 | ||||||||||
| Total nonperforming assets | 96,988 | $ | 110,572 | $ | 102,372 | $ | 111,762 | $ | 113,669 | |||||
| Nonperforming assets/total assets | % | 0.61 | % | 0.58 | % | 0.62 | % | 0.64 | % | |||||
| Nonperforming assets/loans receivable & OREO | % | 0.76 | % | 0.73 | % | 0.80 | % | 0.85 | % | |||||
| Nonperforming assets/total capital | % | 5.53 | % | 5.02 | % | 5.34 | % | 5.48 | % | |||||
| Nonperforming loans/loans receivable | % | 0.75 | % | 0.71 | % | 0.78 | % | 0.73 | % | |||||
| Nonaccrual loans/loans receivable | % | 0.48 | % | 0.37 | % | 0.39 | % | 0.41 | % | |||||
| Allowance for credit losses/loans receivable | % | 1.04 | % | 1.05 | % | 1.01 | % | 1.02 | % | |||||
| Allowance for credit losses/nonaccrual loans | % | 218.03 | % | 279.70 | % | 257.34 | % | 251.52 | % | |||||
| Allowance for credit losses/nonperforming loans | % | 139.63 | % | 146.92 | % | 128.75 | % | 138.92 | % | |||||
| Allowance for credit losses/nonperforming assets | % | 137.09 | % | 144.03 | % | 125.76 | % | 120.33 | % | |||||
| (1) Excludes delinquent SBA loans that are guaranteed and currently in liquidation totaling 9.9 million, 13.2 million, 17.0 million, 19.5 million, and 20.6 million, at September 30, 2022, June 30, 2022, March 31, 2022, December 31, 2021, and September 30, 2021, respectively. | ||||||||||||||
| NONACCRUAL LOANS BY TYPE: | 6/30/2022 | 3/31/2022 | 12/31/2021 | 9/30/2021 | ||||||||||
| Real estate loans | 47,807 | $ | 53,966 | $ | 36,655 | $ | 39,756 | $ | 41,673 | |||||
| Commercial loans | 8,206 | 8,686 | 11,025 | 10,991 | ||||||||||
| Consumer loans | 7,350 | 7,376 | 3,835 | 1,716 | ||||||||||
| Total | 64,571 | $ | 69,522 | $ | 52,717 | $ | 54,616 | $ | 54,380 | |||||
| ACCRUING TROUBLED DEBT RESTRUCTURED LOANS: | 6/30/2022 | 3/31/2022 | 12/31/2021 | 9/30/2021 | ||||||||||
| Retail buildings | 5,474 | $ | 6,337 | $ | 24,356 | $ | 28,483 | $ | 11,280 | |||||
| Hotels/motels | — | — | 472 | — | ||||||||||
| Gas stations/car washes | 189 | 193 | 197 | 202 | ||||||||||
| Mixed-use facilities | 2,837 | 2,836 | 2,846 | 7,937 | ||||||||||
| Warehouses | 4,770 | 5,321 | 5,366 | 4,908 | ||||||||||
| Other (2) | 12,439 | 11,849 | 15,054 | 15,182 | ||||||||||
| Total | 25,631 | $ | 26,572 | $ | 44,555 | $ | 52,418 | $ | 39,509 | |||||
| (2) Includes commercial business, consumer, and other loans |
All values are in US Dollars.
Table Page 8
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
| ACCRUING DELINQUENT LOANS 30-89 DAYS PAST DUE: | 9/30/2022 | 6/30/2022 | 3/31/2022 | 12/31/2021 | 9/30/2021 | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| 30 - 59 days | $ | 13,092 | $ | 10,090 | $ | 12,439 | $ | 29,723 | $ | 15,016 |
| 60 - 89 days | 4,933 | 6,354 | 3,090 | 10,345 | 4,746 | |||||
| Total | $ | 18,025 | $ | 16,444 | $ | 15,529 | $ | 40,068 | $ | 19,762 |
| ACCRUING DELINQUENT LOANS 30-89 DAYS PAST DUE BY TYPE: | 9/30/2022 | 6/30/2022 | 3/31/2022 | 12/31/2021 | 9/30/2021 | |||||
| Real estate loans | $ | 9,694 | $ | 7,919 | $ | 6,097 | $ | 20,232 | $ | 10,359 |
| Commercial loans | 6,165 | 3,397 | 5,003 | 3,057 | 9,377 | |||||
| Consumer loans | 2,166 | 5,128 | 4,429 | 16,779 | 26 | |||||
| Total | $ | 18,025 | $ | 16,444 | $ | 15,529 | $ | 40,068 | $ | 19,762 |
| CRITICIZED LOANS: | 9/30/2022 | 6/30/2022 | 3/31/2022 | 12/31/2021 | 9/30/2021 | |||||
| Special mention | $ | 79,399 | $ | 95,797 | $ | 166,958 | $ | 257,194 | $ | 306,766 |
| Substandard | 204,713 | 244,748 | 226,661 | 242,397 | 243,684 | |||||
| Total criticized loans | $ | 284,112 | $ | 340,545 | $ | 393,619 | $ | 499,591 | $ | 550,450 |
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 Ended | Nine Months Ended | ||||||||||||||
| 9/30/2022 | 6/30/2022 | 9/30/2021 | 9/30/2022 | 9/30/2021 | |||||||||||
| RETURN ON AVERAGE TANGIBLE COMMON EQUITY | |||||||||||||||
| Average stockholders’ equity | $ | 2,032,362 | $ | 2,016,577 | $ | 2,092,018 | $ | 2,046,351 | $ | 2,068,676 | |||||
| Less: Goodwill and core deposit intangible assets, net | (470,941) | (471,421) | (472,918) | (471,424) | (473,438) | ||||||||||
| Average tangible common equity | $ | 1,561,421 | $ | 1,545,156 | $ | 1,619,100 | $ | 1,574,927 | $ | 1,595,238 | |||||
| Net income | $ | 53,748 | $ | 52,088 | $ | 55,499 | $ | 166,574 | $ | 152,949 | |||||
| Return on average tangible common equity (annualized) | 13.77 | % | 13.48 | % | 13.71 | % | 14.10 | % | 12.78 | % | |||||
| 9/30/2022 | 6/30/2022 | 9/30/2021 | |||||||||||||
| TANGIBLE COMMON EQUITY | |||||||||||||||
| Total stockholders’ equity | $ | 1,975,725 | $ | 2,000,369 | $ | 2,074,398 | |||||||||
| Less: Goodwill and core deposit intangible assets, net | (470,662) | (471,148) | (472,630) | ||||||||||||
| Tangible common equity | $ | 1,505,063 | $ | 1,529,221 | $ | 1,601,768 | |||||||||
| Total assets | $ | 19,083,388 | $ | 18,089,062 | $ | 17,799,026 | |||||||||
| Less: Goodwill and core deposit intangible assets, net | (470,662) | (471,148) | (472,630) | ||||||||||||
| Tangible assets | $ | 18,612,726 | $ | 17,617,914 | $ | 17,326,396 | |||||||||
| Common shares outstanding | 119,479,253 | 119,473,939 | 120,198,061 | ||||||||||||
| Tangible common equity to tangible assets | 8.09 | % | 8.68 | % | 9.24 | % | |||||||||
| Tangible common equity per share | $ | 12.60 | $ | 12.80 | $ | 13.33 |
Table Page 10
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands, except share and per share data)
| Three Months Ended | Nine Months Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 9/30/2022 | 6/30/2022 | 9/30/2021 | 9/30/2022 | 9/30/2021 | |||||||||||
| PRE-PROVISION NET REVENUE | |||||||||||||||
| Net interest income before provision (credit) for credit losses | $ | 153,186 | $ | 141,538 | $ | 130,296 | $ | 427,900 | $ | 379,452 | |||||
| Noninterest income | 13,355 | 12,746 | 10,617 | 39,287 | 30,497 | ||||||||||
| Revenue | 166,541 | 154,284 | 140,913 | 467,187 | 409,949 | ||||||||||
| Less noninterest expense | 83,914 | 80,365 | 75,502 | 239,652 | 219,056 | ||||||||||
| Pre-provision net revenue | $ | 82,627 | $ | 73,919 | $ | 65,411 | $ | 227,535 | $ | 190,893 | |||||
| Average assets | $ | 18,428,874 | $ | 17,876,945 | $ | 17,745,066 | $ | 18,018,588 | $ | 17,344,095 | |||||
| ROA (PPNR) | 1.79 | % | 1.65 | % | 1.47 | % | 1.68 | % | 1.47 | % | |||||
| Average stockholders’ equity | 2,032,362 | 2,016,577 | 2,092,018 | 2,046,351 | 2,068,676 | ||||||||||
| ROE (PPNR) | 16.26 | % | 14.66 | % | 12.51 | % | 14.83 | % | 12.30 | % |
Table Page 11
Document
News Release
HOPE BANCORP DECLARES QUARTERLY CASH DIVIDEND OF $0.14 PER SHARE
LOS ANGELES - October 24, 2022 - Hope Bancorp, Inc. (NASDAQ: HOPE) today announced that its Board of Directors declared a quarterly cash dividend of $0.14 per common share. The dividend is payable on or about November 17, 2022 to all stockholders of record as of the close of business on November 3, 2022.
Investor Conference Call
The Company previously announced that it will host an investor conference call on Tuesday, October 25, 2022 at 9:30 a.m. Pacific Time / 12:30 p.m. Eastern Time to review financial results for its third quarter ended September 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 November 1, 2022, replay access code 7421375.
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 $19.08 billion in total assets as of September 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.
Contacts:
| Alex Ko<br><br>Senior EVP & Chief Financial Officer<br><br>213-427-6560<br><br>alex.ko@bankofhope.com | Angie Yang<br><br>SVP, Director of Investor Relations &<br><br>Corporate Communications<br><br>213-251-2219<br><br>angie.yang@bankofhope.com |
|---|
#
hope-q32022earningsconfe
2022 Third Quarter Earnings Conference Call Tuesday, October 25, 2022
Forward Looking Statements & Additional Disclosures This presentation may contain statements regarding future events or the future financial performance of the Company that cons titute 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, including the effects of the implementation of the current expected credit losses model; 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.
Record Loan Production, Improved Asset Quality & Enhanced Profitability Earnings & Profitability • Net interest income increased 8% Q-o-Q and 18% Y-o-Y, reflecting increased average loans receivable and loan yields compounded with higher net interest margin • Net interest margin expanded 13bps Q-o-Q with expansion of interest-earning asset yields outpacing rising cost of deposits • Pre-provision net revenue (“PPNR”) increased 12% Q-o-Q to a record $82.6MM Loans • Record new loan production of $1.35 billion, up 5% Q-o-Q and up 34% Y-o-Y • Mix of new originations well diversified with C&I 55%, CRE 40% and Mortgage and Consumer 5% • Loans receivable increased 6.5% Q-o-Q, or 11% year-to-date Deposits • Deposits increased 3.1% Q-o-Q, supporting the strong loan growth in the third quarter • Total cost of deposits increased 46bps Q-o-Q, reflecting the acceleration of recent Fed Funds rate hikes Asset Quality • Criticized loans decreased 16.6% Q-o-Q or 43.1% YTD, representing 5th consecutive quarter of reductions • Total nonperforming assets decreased 12.3% Q-o-Q or 14.7% Y-o-Y • Losses remain minimal with annualized net charge offs to average loans receivable of 0.01% Q3 2022 Financial Highlights 3 Net Income $53.7M Diluted EPS $0.45 Gross Loans $15.49B Total Deposits $15.50B 1 PPNR (pre-provision net revenue) is a non-GAAP financial measure. A quantitative reconciliation of GAAP to non-GAAP financial measure is provided on Slide 16.
Loan Production & Portfolio Trends New Loan Originations Funded ($ Millions) $590 $623 $578 $545 $534 $344 $539 $344 $557 $747 $75 $81 $104 $184 $68 3Q21 4Q21 1Q22 2Q22 3Q22 $1,243 $1,026 $1,286 $1,009 $1,349 CRE C&I Mortgage and Consumer • Total loans receivable increased 6.5% Q-o-Q, or 11% year-to-date • Aggregate payoffs and paydowns decreased to $710.6 from $870.0 million in 2Q22 • C&I loans increased to 33% of loans receivable as of 9/30/22 from 30% as of 6/30/22; CRE loans declined to 61% from 64% over the same period +25%+23% -17% +5% $13.42 $13.95 $14.07 $14.55 $15.49 12 .25 12 .75 13 .25 13 .75 14 .25 14 .75 15 .25 15 .75 09/30/21 12/31/21 03/31/22 06/30/22 09/30/22 • Record new loans funded of $1.35 billion, representing 5% increase Q-o-Q, 34% increase Y-o-Y and the 5th consecutive quarter of $1 billion-plus loan production • Originations reflect record C&I production volume accounting for 55% of new loans, with CRE 40% and Mortgage and Consumer loans 5% • Average rate on new loans increased 111bps Q-o-Q to 5.37% Loans Receivable ($ Billions) Q-o-Q change +4% +3% +6% +1% Average Rate of New Loans 3Q21 4Q21 1Q22 2Q22 3Q22 3.36% 3.38% 3.54% 4.26% 5.37% 4 Q-o-Q change
Transformation to Lower-Risk Loan Portfolio 71% 22% 7% 61% 33% 6% $15.49 B (as of 9/30/2022) $12.10 B (as of 9/30/2019) $9.50 Billion CRE Portfolio Retail – Multi 20% Industrial & Warehouse 13% Multi-family 13% Hotel & Motel 11% Gas Station & Car Wash 11% Mixed Use 9% Retail – Single 8% All Other CRE 15% $8.59 Billion CRE Portfolio Retail – Multi 20% Hotel Motel 19% Industrial & Warehouse 11% Gas Station & Car Wash 11% Mixed Use 9% Office Building 7% All Other CRE 23% $5.12 Billion C&I Portfolio Manufacturing 14% Wholesale Trade 13% Information 12% Warehouse Line 7% Gas Station 5% Restaurant 5% Health Care/Social Asst. 4% All Other C&I 40% $2.64 Billion C&I Portfolio Wholesale Trade 25% Manufacturing 15% Warehouse Line 11% Supermarkets 5% Restaurant 5% Gas Station 5% Transportation & Warehouse 4% All Other C&I 30% Note: All Others includes business types representing less than 4% of total C&I portfolio, including: Gas Station, Restaurant, Real Estate & Leasing, Retail, Laundries/Drycleaners, Liquor Stores, Hotel/Motel, Services, and Other smaller segments. Note: All Others includes property types representing less than 7% of total CRE portfolio, including: Mixed Use, Retail-Single, Church, Residential, Office, Golf Course and Other smaller segments. Note: All Other C&I includes business types representing less than 4% of total C&I portfolio, including: Retail Trade, RE & Leasing, Hotel/Motel, Laundries & Drycleaners, Liquor Store, Supermarkets, Transportation and Other smaller segments. Note: All Other CRE includes property types representing less than 7% of total CRE portfolio, including: Office, Church, Golf Course, and Other smaller segments. 5
Net Interest Income and Margin 6 • Net interest income before provision for credit losses increased 8% Q-o-Q and 18% Y-o-Y • Increase attributed to higher average loans receivable and loan yields, combined with net interest margin expansion Net Interest Income & NIM ($ Millions) $130.3 $133.3 $133.2 $141.5 $153.2 3.07% 3.13% 3.21% 3.36% 3.49% 3Q21 4Q21 1Q22 2Q22 3Q22 3.36% 3.49% Loan yield increase Borrowings cost increase +50bps 3Q22 net interest margin increased 13bps Q-o-Q Net Interest Income NIM Increase Decrease Total Q-o-Q increase +8% +2% -0% +6% Net Interest Margin 2Q22 3Q22 -45bps • 13bps Q-o-Q increase in net interest margin primarily reflected increases in loan yield (+50bps) and average loan balance (+8bps) partially offset by higher interest bearing deposit costs (-45bps) Inv securities decrease + yield increase +8bps Interest bearing deposit cost increase + balance increase -4bps +4bps Loan balance increase
95% 4% 99% 43% 5% 96% 100% 1% 57% 0% 20 % 40 % 60 % 80 % 10 0% 12 0% CRE Commercial SBA Mortgage Consumer Total Origination Fixed/Hybrid Variable Loan Portfolio Interest Rate Breakdown Variable 46% @6.00% 2 Fixed 25% @3.91% 2 Hybrid 1 29% @3.98% 2 Fixed/Variable & Average Rate of New Loan Originations (As of 9/30/2022) Fixed / Variable Breakdown of Total Loan Portfolio (As of 9/30/2022) 1 Hybrid loans have fixed interest rates for a specified period and then convert to variable rates (fixed as of 9 /30/2022) 2 The weighted average rate represents coupon rate and excludes loan discount accretion and interest on nonaccrual loans • Variable rate loans as percentage of total new loan originations increased to 57% of new production from 41% in 2Q 2022 • As of 9/30/2022, variable rate loans increased to 46% of total loans from 44% for 2Q 2022 • Positioned as asset sensitive at 9/30/2022 • $522 million in hybrid interest rate loans will change from fixed to variable rate within the next 12 months 7 4.94% 5.55% 7.59% 4.99% 5.37% 1 Hybrid loans have fixed interest rates for a specified period and then convert to variable rates (fixed as of 9/30/2022) 1
Noninterest Income 8 • Noninterest income increased 5% Q-o-Q to $13.4 million vs. $12.7 million in 2Q22 – Primary customer-related service fees increased 10% Q-o-Q – Other income and fees increased 94% Q-o-Q, largely reflecting an increase in swap fee income and a reduction in fair value losses on investments – These increases were offset by lower net gains on the sale of SBA loans and residential mortgage loans • Sold $57.8 million of the guaranteed portion of SBA 7(a) loans to the secondary market in 3Q22 vs. $70.2 million in 2Q22 • Sold $3.7 million of residential mortgage loans vs. $4.1 million in 2Q22 1 Gain on Sale of Other Loans includes net gains on sales of residential mortgage loans, as well as other loans 2 Primary Customer-Related Service Fees include service fees on deposit accounts, international service fees, loan servicing fees, and wire transfer fees $4.2 $4.6 $4.5 $4.7 $5.2 $2.5 $3.6 $5.6 $5.8 $2.8 $0.8 $0.5 $0.8 -$0.5 $0.1 $3.2 $4.3 $2.3 $2.7 $5.2 3Q21 4Q21 1Q22 2Q22 3Q22 Other Income and Fees Gain on Sale of Other Loans Gain on Sale of SBA Loans Primary Customer-Related Service Fees $13.1 $13.2 $12.7 $13.4 $10.6 Noninterest Income ($ Millions) 1 2
• Noninterest expense increased to $83.9 million from $80.4 million in 2Q22 • Q-o-Q increase in salaries and benefits for 3Q22 largely reflects full impact of FTE count increase in prior quarter, and higher incentive compensation accruals resulting from strong financial performance • Q-o-Q increase in other noninterest expense reflects an increase in earnings credit expense on deposit accounts as a result of the significant rate hikes Efficiency Ratio & Noninterest Expense to Average Assets 4 53.58% 50.70% 51.50% 52.09% 50.39% 1.70% 1.67% 1.70% 1.80% 1.82% 3Q21 4Q21 1Q22 2Q22 3Q22 Efficiency Ratio Noninterest Expense/Avg Assets 9 $47.0 $44.6 $47.7 $51.1 $53.2 $20.6 $21.0 $19.9 $20.1 $18.7 $1.5 $1.7 $1.5 $2.9 $1.3$6.4 $7.0 $6.3 $6.3 $10.8 1,449 1,476 1,509 1,537 1,539 3Q21 4Q21 1Q22 2Q22 3Q22 Compensation Other core operating expenses Credit related & OREO Other Full-time employee (FTE) $75.4 $80.4 $83.9 $75.5 $74.2 Noninterest Expense and Efficiency Noninterest Expense & FTE ($ Millions) 1 Other core operating expenses include: Occupancy & equipment, Advertising & marketing, Data & communications, Professional fees and FDIC assessment • Efficiency ratio improved to 50.39% for 3Q22 primarily reflecting strong revenue growth outpacing higher noninterest expense 1
Deposit Trends 10 Deposit Composition ($ Billions) Deposit Cost Trend Average Deposits and Cost of Interest-Bearing Deposits ($ Billions) 0.27% 0.25% 0.24% 0.24% 0.23% 0.23% 0.23% 0.23% 0.25% 0.26% 0.32% 0.41% 0.56% 0.79% 1.02% $9.1 $9.1 $9.3 $9.1 $9.7 $5.8 $6.0 $5.7 $5.7 $5.7 0.42% 0.39% 0.38% 0.54% 1.25% 0.00% 0.50% 1.00% 1.50% 2.00% 3Q21 4Q21 1Q22 2Q22 3Q22 Average Noninterest Bearing Deposits Average Interest Bearing Deposits Cost of Interest Bearing Deposits $6.0 $5.8 $5.5 $5.7 $5.6 $5.9 $6.2 $6.5 $6.3 $5.9 $0.3 $0.3 $0.3 $0.3 $0.3 $2.9 $2.8 $2.2 $2.7 $3.7 9/30/21 12/31/21 3/31/22 6/30/22 9/30/22 $15.06 $15.50$15.03 $14.52 $15.04 +4%-3% 0% +3% Q-o-Q growth annualized Quarterly Cost of Deposits Monthly Cost of DepositsDDA MMA/NOW Savings Time 0.26% 3Q21 0.79% 3Q22 0.33% 2Q22 0.24% 1Q22 0.23% 4Q21 $14.99 $15.45 $14.80$14.95$15.07 • Total cost of deposits increased 46bps Q-o-Q reflecting acceleration of recent Fed Funds rate hikes • Average interest-bearing deposits increased 7% Q-o-Q • Average noninterest bearing deposits were stable at $5.72 billion • Total cost of interest-bearing deposits increased 71bps Q-o-Q • Total deposits increased 3% Q-o-Q • The increase in time deposits Q-o-Q reflects short- term funding to support strong loan growth
Asset Quality Nonperforming Assets ($ Millions) Total Criticized Loans ($ Millions) 11 $98.5 $109.2 $100.4 $108.6 $95.5 $15.2 $2.6 $2.0 $2.0 $1.5 0.64% 0.62% 0.58% 0.61% 0.51% 3Q21 4Q21 1Q22 2Q22 3Q22 NPLs OREO NPAs/Total Assets $306.8 $257.2 $167.0 $95.8 $79.4 $243.7 $242.4 $226.7 $244.7 $204.7 4.10% 3.58% 2.80% 2.34% 1.83% 3Q21 4Q21 1Q22 2Q22 3Q22 Substandard & Doubtful Special Mention Total Criticized Loans as a % of Total Loans -$10.0 $1.5 -$11.0 $3.2 $9.2 1.28% -0.07% -0.52% -0.03% 0.01% 3Q21 4Q21 1Q22 2Q22 3Q22 Provision for Credit Losses Net (Recoveries) Charge Offs (annualized) (Credit) for Credit Losses • Special mention loans decreased 17% Q-o-Q • Substandard loans decreased 16% Q-o-Q • Total criticized loans declined 17% Q-o-Q to 1.83% of loans receivable vs. 2.34% at 6/30/22 • YTD, total criticized loans declined 43% • Provision for credit losses of $9.2 million primarily reflects strong loan growth and addresses future economic headwinds • Net charge offs of $219,000 or 0.01% of average loans receivable, annualized • Total nonperforming assets decreased 12% Q-o-Q, reflecting reductions in all categories – Nonaccrual loans declined 7% Q-o-Q – Delinquent loans on accrual status declined 57% Q-o-Q – Accruing TDR loans declined 4% Q-o-Q – OREO declined 26% Q-o-Q $111.8 $102.4 $110.6 $97.0 $113.7 $499.6 $393.6 $340.5 $284.1 $550.5 Provision (Credit) for Credit Losses & Net Charge Offs (Recoveries) ($ Millions)
12.13% 10.32% 10.69% 11.33% $12.80 11.72% 10.25% 10.32% 10.91% $12.60 Total Risk-Based Capital Ratio Tier 1 Leverage Ratio Tier 1 Common Equity Ratio Tier 1 Capital Ratio Tangible Common Equity per Share 6/30/2022 9/30/20222 $17.3 $16.8 $16.8 $16.9 $16.7 $47.2 $2.8 $14.7 3Q21 4Q21 1Q22 2Q22 3Q22 Dividends Buybacks Strong Capital Position & Returns Capital Positions Dividends & Buybacks ($ Millions) Maintaining strong levels of capital • All regulatory capital ratios remain at strong levels • Tangible common equity per share decreased Q-o-Q to $12.60 reflecting impact to AOCI from marks on securities portfolios Committed to strong stockholder returns • Quarterly common stock dividend maintained at $0.14 per share • $35.3 million remaining of $50.0 million share buyback plan as of 9/30/22 • Dividend yield: 4.43% (9/30/22) | Dividend payout ratio: 30.98% (TTM) 12 1 Tangible common equity per share is a non-GAAP financial measure. A quantitative reconciliation of the GAAP to non-GAAP financial measure is provided on Slide 16. 1
2022 Full-Year Outlook Loan Growth: A greater level of confidence for achieving the higher end of 2022 full-year guidance of high single-digit to low double-digit loan growth, excluding SBA PPP Noninterest Expenses: Noninterest expense to average assets expected to be approximately 1.75%- 1.78% for 2022 full-year Net Interest Margin: Expect continued margin expansion for 2H 2022, but at a lower magnitude of expansion than Q2 2022 Asset Quality: Anticipate improving asset quality metrics with criticized balances continuing downward trend in 2H 2022, resulting in approximately 30-40% reduction for 2022 full-year Profitability: Net interest income expansion driven by rising interest rates and earnings asset growth Current outlook as of 3Q22 Loan Growth: Continued loan growth in 4Q 2022, achieving the higher end of 2022 full-year guidance of high single-digit to low double-digit growth, excluding SBA PPP Noninterest Expenses: Noninterest expense to average assets expected to be approximately 1.75%- 1.80% for 2022 full-year Net Interest Margin: Expect flat to slight margin compression in 4Q 2022, potentially offsetting to a small degree year-to-date expansion Asset Quality: Continuation of improving asset quality metrics with criticized balances continuing downward trend in 4Q 2022, resulting in approximately 50-60% reduction for 2022 full-year Profitability: Net interest income expansion expected to range from 13-16% for 2022 full-year Previous outlook as of 2Q22
Q&A 2022 Third Quarter Earnings Conference Call
Appendix 15
Appendix: Non-GAAP Financials Management reviews select non-GAAP financial measures in evaluating the Company’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. 16 Pre-provision Net Revenue (PPNR) ($ in thousands) 3Q21 2Q22 3Q22 Net interest income before provision (credit) for credit losses $ 130,296 $ 141,538 $ 153,186 Noninterest income 10,617 12,746 13,355 Revenue 140,913 154,284 166,541 Less: noninterest expense 75,502 80,365 83,914 Pre-provision net revenue $ 65,411 $ 73,919 $ 82,627 Tangible Common Equity Per Share ($ in thousands) 3Q21 2Q22 3Q22 Total stockholders’ equity $ 2,074,398 $ 2,000,369 $ 1,975,725 Less: Goodwill and core deposit intangible assets, net (472,630) (471,148) (470,662) Tangible common equity 1,601,768 1,529,221 1,505,063 Common shares outstanding 120,198,061 119,473,939 119,479,253 Tangible common equity per share $ 13.33 $ 12.80 $ 12.60