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
January 23, 2023
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 January 23, 2023, Hope Bancorp, Inc. (“HOPE” or the “Company”) issued a news release concerning its results of operations and financial condition for the fourth quarter and full year ended and as of December 31, 2022. A copy of the January 23, 2023 news release is furnished as Exhibit 99.1 and incorporated herein by reference.
The information furnished under Item 2.02, Item 7.01, Item 8.01 and certain exhibits under Item 9.01 of this Current Report on Form 8-K (including Exhibits 99.1, 99.2 and 99.3 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, January 24, 2023 at 9:30 a.m. Pacific Time / 12:30 p.m. Eastern Time to review financial results for its fourth quarter and full year ended and as of December 31, 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 January 23, 2023, 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 February 16, 2023 to all stockholders of record as of the close of business on February 2, 2023. A copy of the January 23, 2023 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, datedJanuary 23, 2023, concerning the results of operations and financial condition for thefourth quarter and yearended and as ofDecember 31, 2022. |
| 99.2 | News release, datedJanuary 23, 2023, announcing the declaration of a quarterly cash dividend. |
| 99.3 | Presentation Materials, datedJanuary 24, 2023. |
| 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: January 23, 2023 | By: | /s/ Kevin S. Kim |
| Kevin S. Kim | ||
| Chairman, President and Chief Executive Officer |
Document
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.
______________
(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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•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) | 12/31/2022 | 9/30/2022 | 12/31/2021 | ||||||
| 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 margin | 3.36 | % | 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 deposits | 1.62 | % | 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 assets | 1.79 | % | 1.82 | % | 1.67 | % | |||
| Efficiency ratio | 51.97 | % | 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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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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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) | 12/31/2022 | 9/30/2022 | 12/31/2021 | |||
| Commercial real estate | $ | 302,983 | $ | 500,826 | $ | 573,978 |
| Commercial | 424,340 | 732,341 | 532,634 | |||
| SBA | 28,825 | 47,428 | 54,848 | |||
| Residential mortgage | 36,720 | 67,079 | 81,325 | |||
| Consumer | 555 | 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) | 12/31/2022 | 9/30/2022 | 12/31/2021 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (unaudited) | Balance | Percentage | Balance | Percentage | Balance | Percentage | ||||||
| Commercial loans | $ | 5,109,532 | 33.2 | % | $ | 5,124,421 | 33.1 | % | $ | 4,208,674 | 30.2 | % |
| Real estate loans | 9,414,580 | 61.1 | % | 9,504,893 | 61.3 | % | 9,105,931 | 65.3 | % | |||
| Consumer and other loans | 879,428 | 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) | 12/31/2022 | 9/30/2022 | 12/31/2021 | |||
|---|---|---|---|---|---|---|
| Noninterest bearing demand deposits | $ | 4,849,493 | $ | 5,590,952 | $ | 5,751,870 |
| Money market and other | 5,615,784 | 5,885,093 | 6,178,850 | |||
| Saving deposits | 283,464 | 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 Breakdown | Cost of Deposits | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (unaudited) | 12/31/2022 | 9/30/2022 | 12/31/2021 | Q4 2022 | Q3 2022 | Q4 2021 | ||||||
| Noninterest bearing demand deposits | 30.8 | % | 36.1 | % | 38.3 | % | — | % | — | % | — | % |
| Money market and other | 35.7 | % | 38.0 | % | 41.1 | % | 2.42 | % | 1.24 | % | 0.37 | % |
| Saving deposits | 1.8 | % | 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 balances | 100.0 | % | 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) | 12/31/2022 | 9/30/2022 | 12/31/2021 | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Allowance for credit losses | $ | 162,359 | $ | 160,561 | $ | 140,550 | |||
| Allowance for credit loss/loans receivable | 1.05 | % | 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) | 12/31/2022 | 9/30/2022 | 12/31/2021 | |||
|---|---|---|---|---|---|---|
| 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 loans | 16,931 | 25,631 | 52,418 | |||
| Total nonperforming loans | 67,019 | 95,508 | 109,165 | |||
| Other real estate owned | 2,418 | 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) | 12/31/2022 | 9/30/2022 | 12/31/2021 | ||||||
| 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) | 12/31/2022 | 9/30/2022 | 12/31/2021 | |||
|---|---|---|---|---|---|---|
| Special mention | $ | 157,263 | $ | 79,399 | $ | 257,194 |
| Substandard | 104,073 | 204,713 | 242,397 | |||
| 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) | 12/31/2022 | 9/30/2022 | 12/31/2021 | Minimum Guideline for “Well-Capitalized” Bank |
|---|---|---|---|---|
| Common Equity Tier 1 Capital | 10.55% | 10.32% | 11.03% | 6.50% |
| Tier 1 Leverage Ratio | 10.15% | 10.25% | 10.11% | 5.00% |
| Tier 1 Risk-Based Ratio | 11.15% | 10.92% | 11.70% | 8.00% |
| Total Risk-Based Ratio | 11.97% | 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) | 12/31/2022 | 9/30/2022 | 12/31/2021 |
|---|---|---|---|
| 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.
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About Hope Bancorp, Inc.
Hope Bancorp, Inc. is the holding company of Bank of Hope, the first and only super regional Korean American bank in the United States with $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
#
(tables follow)
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands, except share data)
| Assets: | 12/31/2022 | 9/30/2022 | % change | 12/31/2021 | % change | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Cash and due from banks | $ | 506,776 | $ | 331,336 | 53 | % | $ | 316,266 | 60 | % |
| Investment securities | 2,243,195 | 2,264,533 | (1) | % | 2,666,275 | (16) | % | |||
| Federal Home Loan Bank (“FHLB”) stock and other investments | 61,761 | 65,192 | (5) | % | 87,961 | (30) | % | |||
| Loans held for sale, at the lower of cost or fair value | 49,245 | 41,989 | 17 | % | 99,049 | (50) | % | |||
| Loans receivable | 15,403,540 | 15,491,187 | (1) | % | 13,952,743 | 10 | % | |||
| Allowance for credit losses | (162,359) | (160,561) | 1 | % | (140,550) | 16 | % | |||
| Net loans receivable | 15,241,181 | 15,330,626 | (1) | % | 13,812,193 | 10 | % | |||
| Accrued interest receivable | 55,460 | 42,363 | 31 | % | 41,842 | 33 | % | |||
| Premises and equipment, net | 46,859 | 46,169 | 1 | % | 45,667 | 3 | % | |||
| Bank owned life insurance | 77,078 | 76,788 | — | % | 77,081 | — | % | |||
| Goodwill | 464,450 | 464,450 | — | % | 464,450 | — | % | |||
| Servicing assets | 11,628 | 11,601 | — | % | 10,418 | 12 | % | |||
| Other intangible assets, net | 5,726 | 6,212 | (8) | % | 7,671 | (25) | % | |||
| Other assets | 401,132 | 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 borrowings | 865,000 | 1,072,000 | (19) | % | 300,000 | 188 | % | |||
| Convertible notes, net | 217,148 | 216,913 | — | % | 216,209 | — | % | |||
| Subordinated debentures | 106,565 | 106,258 | — | % | 105,354 | 1 | % | |||
| Accrued interest payable | 26,668 | 11,713 | 128 | % | 4,272 | 524 | % | |||
| Other liabilities | 190,981 | 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 earnings | 1,083,712 | 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’ equity | 2,019,328 | 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 - authorized | 150,000,000 | 150,000,000 | 150,000,000 | |||||||
| Common stock shares - outstanding | 119,495,209 | 119,479,253 | 120,006,452 | |||||||
| Treasury stock shares | 17,382,835 | 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 Ended | Twelve Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 12/31/2022 | 9/30/2022 | % change | 12/31/2021 | % change | 12/31/2022 | 12/31/2021 | % change | |||||||||
| Interest and fees on loans | $ | 207,958 | $ | 175,078 | 19 | % | $ | 133,821 | 55 | % | $ | 660,732 | $ | 528,174 | 25 | % |
| Interest on investment securities | 14,758 | 13,498 | 9 | % | 10,657 | 38 | % | 52,220 | 35,492 | 47 | % | |||||
| Interest on federal funds sold and other investments | 1,521 | 606 | 151 | % | 691 | 120 | % | 3,163 | 2,866 | 10 | % | |||||
| Total interest income | 224,237 | 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 notes | 10,440 | 5,329 | 96 | % | 2,946 | 254 | % | 22,855 | 11,751 | 94 | % | |||||
| Total interest expense | 73,716 | 35,996 | 105 | % | 11,851 | 522 | % | 137,694 | 53,762 | 156 | % | |||||
| Net interest income before provision (credit) for credit losses | 150,521 | 153,186 | (2) | % | 133,318 | 13 | % | 578,421 | 512,770 | 13 | % | |||||
| Provision (credit) for credit losses | 8,200 | 9,200 | (11) | % | 1,500 | 447 | % | 9,600 | (12,200) | N/A | ||||||
| Net interest income after provision (credit) for credit losses | 142,321 | 143,986 | (1) | % | 131,818 | 8 | % | 568,821 | 524,970 | 8 | % | |||||
| Service fees on deposit accounts | 2,159 | 2,535 | (15) | % | 1,894 | 14 | % | 8,938 | 7,275 | 23 | % | |||||
| International service fees | 762 | 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 loans | 2,154 | 2,782 | (23) | % | 3,614 | (40) | % | 16,343 | 8,448 | 93 | % | |||||
| Net gains on sales of residential mortgage loans | 20 | 29 | (31) | % | 530 | (96) | % | 882 | 4,435 | (80) | % | |||||
| Net gains on sales of other loans | 623 | 117 | 432 | % | — | 100 | % | 193 | — | 100 | % | |||||
| Other income and fees | 4,601 | 5,221 | (12) | % | 4,335 | 6 | % | 14,842 | 12,964 | 14 | % | |||||
| Total noninterest income | 12,110 | 13,355 | (9) | % | 13,097 | (8) | % | 51,397 | 43,594 | 18 | % | |||||
| Salaries and employee benefits | 52,694 | 53,222 | (1) | % | 44,608 | 18 | % | 204,719 | 175,151 | 17 | % | |||||
| Occupancy | 7,072 | 6,682 | 6 | % | 7,391 | (4) | % | 28,267 | 28,898 | (2) | % | |||||
| Furniture and equipment | 5,045 | 4,967 | 2 | % | 4,642 | 9 | % | 19,434 | 18,079 | 7 | % | |||||
| Advertising and marketing | 1,869 | 1,739 | 7 | % | 2,329 | (20) | % | 7,470 | 8,707 | (14) | % | |||||
| Data processing and communications | 2,860 | 2,469 | 16 | % | 2,789 | 3 | % | 10,683 | 10,331 | 3 | % | |||||
| Professional fees | 1,325 | 1,196 | 11 | % | 2,439 | (46) | % | 6,314 | 12,168 | (48) | % | |||||
| FDIC assessment | 1,596 | 1,633 | (2) | % | 1,366 | 17 | % | 6,248 | 5,109 | 22 | % | |||||
| Credit related expenses | 1,040 | 873 | 19 | % | 873 | 19 | % | 5,897 | 4,400 | 34 | % | |||||
| OREO (income) expense | (425) | 378 | N/A | 811 | N/A | 315 | 1,638 | (81) | % | |||||||
| Software impairment | — | — | — | % | — | — | % | — | 2,146 | (100) | % | |||||
| Earnings credit rebates | 5,002 | 4,685 | 7 | % | 555 | 801 | % | 10,998 | 1,842 | 497 | % | |||||
| Other | 6,440 | 6,070 | 6 | % | 6,433 | — | % | 23,825 | 24,823 | (4) | % | |||||
| Total noninterest expense | 84,518 | 83,914 | 1 | % | 74,236 | 14 | % | 324,170 | 293,292 | 11 | % | |||||
| Income before income taxes | 69,913 | 73,427 | (5) | % | 70,679 | (1) | % | 296,048 | 275,272 | 8 | % | |||||
| Income tax provision | 18,210 | 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 - Basic | 119,483,499 | 119,476,035 | 120,160,300 | 119,824,970 | 122,321,768 | |||||||||||
| Weighted Average Shares Outstanding - Diluted | 120,102,665 | 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 <br>(Annualized) | For the <br>Twelve Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Profitability measures: | 12/31/2022 | 9/30/2022 | 12/31/2021 | 12/31/2022 | 12/31/2021 | |||||
| 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 margin | 3.36 | % | 3.49 | % | 3.13 | % | 3.36 | % | 3.09 | % |
| Efficiency ratio | 51.97 | % | 50.39 | % | 50.70 | % | 51.47 | % | 52.72 | % |
| Noninterest expense / average assets | 1.79 | % | 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 | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 12/31/2022 | 9/30/2022 | 12/31/2021 | ||||||||||||||||
| 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 | $ | 15,393,843 | $ | 207,958 | 5.36 | % | $ | 14,925,298 | $ | 175,078 | 4.65 | % | $ | 13,447,009 | $ | 133,821 | 3.95 | % |
| Investment securities | 2,254,678 | 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 deposits | 4,276,655 | 27,317 | 2.53 | % | 3,146,432 | 10,084 | 1.27 | % | 2,823,613 | 2,437 | 0.34 | % | ||||||
| Total interest bearing deposits | 10,307,231 | 63,276 | 2.44 | % | 9,726,190 | 30,667 | 1.25 | % | 9,101,734 | 8,905 | 0.39 | % | ||||||
| FHLB and FRB borrowings | 838,335 | 6,988 | 3.31 | % | 448,837 | 2,393 | 2.12 | % | 216,882 | 648 | 1.19 | % | ||||||
| Convertible notes, net | 217,002 | 1,322 | 2.38 | % | 216,762 | 1,322 | 2.39 | % | 216,078 | 1,322 | 2.39 | % | ||||||
| Subordinated debentures | 102,496 | 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 deposits | 5,174,217 | 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 margin | 3.36 | % | 3.49 | % | 3.13 | % | ||||||||||||
| Cost of deposits: | ||||||||||||||||||
| Noninterest bearing demand deposits | $ | 5,174,217 | $ | — | — | % | $ | 5,719,155 | $ | — | — | % | $ | 5,967,251 | $ | — | — | % |
| Interest bearing deposits | 10,307,231 | 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 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 12/31/2022 | 12/31/2021 | |||||||||||
| Interest | Interest | |||||||||||
| Average | Income/ | Average | Average | Income/ | Average | |||||||
| Balance | Expense | Yield/Cost | Balance | Expense | Yield/Cost | |||||||
| INTEREST EARNING ASSETS: | ||||||||||||
| Loans, including loans held for sale | $ | 14,634,627 | $ | 660,732 | 4.51 | % | $ | 13,343,431 | $ | 528,174 | 3.96 | % |
| Investment securities | 2,415,621 | 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 deposits | 3,084,851 | 42,076 | 1.36 | % | 3,178,722 | 15,521 | 0.49 | % | ||||
| Total interest bearing deposits | 9,602,730 | 114,839 | 1.20 | % | 9,145,975 | 42,011 | 0.46 | % | ||||
| FHLB and FRB borrowings | 528,342 | 11,525 | 2.18 | % | 208,721 | 2,561 | 1.23 | % | ||||
| Convertible notes, net | 216,654 | 5,289 | 2.41 | % | 215,633 | 5,289 | 2.42 | % | ||||
| Subordinated debentures | 102,037 | 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 deposits | 5,569,534 | 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 margin | 3.36 | % | 3.09 | % | ||||||||
| Cost of deposits: | ||||||||||||
| Noninterest bearing demand deposits | $ | 5,569,534 | $ | — | — | % | $ | 5,581,803 | $ | — | — | % |
| Interest bearing deposits | 9,602,730 | 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: | 12/31/2022 | 9/30/2022 | % change | 12/31/2021 | % change | 12/31/2022 | 12/31/2021 | % 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 | % |
| Investments | 2,368,755 | 2,474,420 | (4) | % | 3,448,482 | (31) | % | 2,591,934 | 3,236,599 | (20) | % | |||||
| Interest earning assets | 17,762,598 | 17,399,718 | 2 | % | 16,895,491 | 5 | % | 17,226,561 | 16,580,030 | 4 | % | |||||
| Total assets | 18,863,726 | 18,428,874 | 2 | % | 17,834,345 | 6 | % | 18,231,609 | 17,467,665 | 4 | % | |||||
| Interest bearing deposits | 10,307,231 | 9,726,190 | 6 | % | 9,101,734 | 13 | % | 9,602,730 | 9,145,975 | 5 | % | |||||
| Interest bearing liabilities | 11,465,064 | 10,493,971 | 9 | % | 9,635,989 | 19 | % | 10,449,763 | 9,671,177 | 8 | % | |||||
| Noninterest bearing demand deposits | 5,174,217 | 5,719,155 | (10) | % | 5,967,251 | (13) | % | 5,569,534 | 5,581,803 | — | % | |||||
| Stockholders’ equity | 1,997,460 | 2,032,362 | (2) | % | 2,079,694 | (4) | % | 2,034,027 | 2,071,453 | (2) | % | |||||
| Net interest earning assets | 6,297,534 | 6,905,747 | (9) | % | 7,259,502 | (13) | % | 6,776,798 | 6,908,853 | (2) | % | |||||
| LOAN PORTFOLIO COMPOSITION: | 12/31/2022 | 9/30/2022 | % change | 12/31/2021 | % change | |||||||||||
| Commercial loans | $ | 5,109,532 | $ | 5,124,421 | — | % | $ | 4,208,674 | 21 | % | ||||||
| Real estate loans | 9,414,580 | 9,504,893 | (1) | % | 9,105,931 | 3 | % | |||||||||
| Consumer and other loans | 879,428 | 861,873 | 2 | % | 638,138 | 38 | % | |||||||||
| Loans, net of deferred loan fees and costs | 15,403,540 | 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: | 12/31/2022 | 9/30/2022 | % change | 12/31/2021 | % change | |||||||||||
| Retail buildings | $ | 2,585,383 | $ | 2,632,564 | (2) | % | $ | 2,522,976 | 2 | % | ||||||
| Hotels/motels | 952,579 | 1,091,047 | (13) | % | 1,308,405 | (27) | % | |||||||||
| Gas stations/car washes | 1,054,720 | 1,056,217 | — | % | 1,050,730 | — | % | |||||||||
| Mixed-use facilities | 848,417 | 825,289 | 3 | % | 854,793 | (1) | % | |||||||||
| Warehouses | 1,294,893 | 1,271,104 | 2 | % | 1,244,339 | 4 | % | |||||||||
| Multifamily | 1,295,644 | 1,199,320 | 8 | % | 744,068 | 74 | % | |||||||||
| Other | 1,382,944 | 1,429,352 | (3) | % | 1,380,620 | — | % | |||||||||
| Total | $ | 9,414,580 | $ | 9,504,893 | (1) | % | $ | 9,105,931 | 3 | % | ||||||
| DEPOSIT COMPOSITION | 12/31/2022 | 9/30/2022 | % change | 12/31/2021 | % change | |||||||||||
| Noninterest bearing demand deposits | $ | 4,849,493 | $ | 5,590,952 | (13) | % | $ | 5,751,870 | (16) | % | ||||||
| Money market and other | 5,615,784 | 5,885,093 | (5) | % | 6,178,850 | (9) | % | |||||||||
| Saving deposits | 283,464 | 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: | 12/31/2022 | 9/30/2022 | 12/31/2021 | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Total stockholders’ equity | $ | 2,019,328 | $ | 1,975,725 | $ | 2,092,983 | |||||||||||||||
| Common equity tier 1 ratio | 10.55 | % | 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 Ended | Twelve Months Ended | ||||||||||||||||||||
| ALLOWANCE FOR CREDIT LOSSES CHANGES: | 12/31/2022 | 9/30/2022 | 6/30/2022 | 3/31/2022 | 12/31/2021 | 12/31/2022 | 12/31/2021 | ||||||||||||||
| Balance at beginning of period | $ | 160,561 | $ | 151,580 | $ | 147,450 | $ | 140,550 | $ | 136,774 | $ | 140,550 | $ | 206,741 | |||||||
| Provision (credit) for credit losses | 8,200 | 9,200 | 3,200 | (11,000) | 1,500 | 9,600 | (12,200) | ||||||||||||||
| Recoveries | 3,222 | 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 Ended | Twelve Months Ended | ||||||||||||||||||||
| NET LOAN CHARGE OFFS (RECOVERIES): | 12/31/2022 | 9/30/2022 | 6/30/2022 | 3/31/2022 | 12/31/2021 | 12/31/2022 | 12/31/2021 | ||||||||||||||
| Real estate loans | $ | 2,022 | $ | 9 | $ | (508) | $ | (16,418) | $ | (2,352) | $ | (14,895) | $ | 51,705 | |||||||
| Commercial loans | 4,174 | 115 | (461) | (1,529) | 144 | 2,299 | 1,362 | ||||||||||||||
| Consumer loans | 206 | 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: | 9/30/2022 | 6/30/2022 | 3/31/2022 | 12/31/2021 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Loans on nonaccrual status (1) | 49,687 | $ | 64,571 | $ | 69,522 | $ | 52,717 | $ | 54,616 | |||||
| Delinquent loans 90 days or more on accrual status | 5,306 | 12,468 | 3,090 | 2,131 | ||||||||||
| Accruing troubled debt restructured loans | 25,631 | 26,572 | 44,555 | 52,418 | ||||||||||
| Total nonperforming loans | 95,508 | 108,562 | 100,362 | 109,165 | ||||||||||
| Other real estate owned | 1,480 | 2,010 | 2,010 | 2,597 | ||||||||||
| Total nonperforming assets | 69,437 | $ | 96,988 | $ | 110,572 | $ | 102,372 | $ | 111,762 | |||||
| Nonperforming assets/total assets | % | 0.51 | % | 0.61 | % | 0.58 | % | 0.62 | % | |||||
| Nonperforming assets/loans receivable & OREO | % | 0.63 | % | 0.76 | % | 0.73 | % | 0.80 | % | |||||
| Nonperforming assets/total capital | % | 4.91 | % | 5.53 | % | 5.02 | % | 5.34 | % | |||||
| Nonperforming loans/loans receivable | % | 0.62 | % | 0.75 | % | 0.71 | % | 0.78 | % | |||||
| Nonaccrual loans/loans receivable | % | 0.42 | % | 0.48 | % | 0.37 | % | 0.39 | % | |||||
| Allowance for credit losses/loans receivable | % | 1.04 | % | 1.04 | % | 1.05 | % | 1.01 | % | |||||
| Allowance for credit losses/nonaccrual loans | % | 248.66 | % | 218.03 | % | 279.70 | % | 257.34 | % | |||||
| Allowance for credit losses/nonperforming loans | % | 168.11 | % | 139.63 | % | 146.92 | % | 128.75 | % | |||||
| Allowance for credit losses/nonperforming assets | % | 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: | 9/30/2022 | 6/30/2022 | 3/31/2022 | 12/31/2021 | ||||||||||
| Real estate loans | 33,915 | $ | 47,807 | $ | 53,966 | $ | 36,655 | $ | 39,756 | |||||
| Commercial loans | 7,675 | 8,206 | 8,686 | 11,025 | ||||||||||
| Consumer loans | 9,089 | 7,350 | 7,376 | 3,835 | ||||||||||
| Total | 49,687 | $ | 64,571 | $ | 69,522 | $ | 52,717 | $ | 54,616 | |||||
| ACCRUING TROUBLED DEBT RESTRUCTURED LOANS: | 9/30/2022 | 6/30/2022 | 3/31/2022 | 12/31/2021 | ||||||||||
| Retail buildings | 3,331 | $ | 5,474 | $ | 6,337 | $ | 24,356 | $ | 28,483 | |||||
| Hotels/motels | — | — | — | 472 | ||||||||||
| Gas stations/car washes | 185 | 189 | 193 | 197 | ||||||||||
| Mixed-use facilities | 2,832 | 2,837 | 2,836 | 2,846 | ||||||||||
| Warehouses | 4,988 | 4,770 | 5,321 | 5,366 | ||||||||||
| Other (2) | 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 |
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: | 12/31/2022 | 9/30/2022 | 6/30/2022 | 3/31/2022 | 12/31/2021 | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| 30 - 59 days | $ | 7,049 | $ | 13,092 | $ | 10,090 | $ | 12,439 | $ | 29,723 |
| 60 - 89 days | 2,243 | 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: | 12/31/2022 | 9/30/2022 | 6/30/2022 | 3/31/2022 | 12/31/2021 | |||||
| Real estate loans | $ | 4,115 | $ | 9,694 | $ | 7,919 | $ | 6,097 | $ | 20,232 |
| Commercial loans | 3,300 | 6,165 | 3,397 | 5,003 | 3,057 | |||||
| Consumer loans | 1,877 | 2,166 | 5,128 | 4,429 | 16,779 | |||||
| Total | $ | 9,292 | $ | 18,025 | $ | 16,444 | $ | 15,529 | $ | 40,068 |
| CRITICIZED LOANS: | 12/31/2022 | 9/30/2022 | 6/30/2022 | 3/31/2022 | 12/31/2021 | |||||
| Special mention | $ | 157,263 | $ | 79,399 | $ | 95,797 | $ | 166,958 | $ | 257,194 |
| Substandard | 104,073 | 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 Ended | Twelve Months Ended | ||||||||||||||
| RETURN ON AVERAGE TANGIBLE COMMON EQUITY | 12/31/2022 | 9/30/2022 | 12/31/2021 | 12/31/2022 | 12/31/2021 | ||||||||||
| 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 EQUITY | 12/31/2022 | 9/30/2022 | 12/31/2021 | ||||||||||||
| 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 outstanding | 119,495,209 | 119,479,253 | 120,006,452 | ||||||||||||
| Tangible common equity to tangible assets | 8.29 | % | 8.09 | % | 9.31 | % | |||||||||
| Tangible common equity per share | $ | 12.96 | $ | 12.60 | $ | 13.51 | |||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||||||
| PRE-PROVISION NET REVENUE | 12/31/2022 | 9/30/2022 | 12/31/2021 | 12/31/2022 | 12/31/2021 | ||||||||||
| Net interest income before provision (credit) for credit losses | $ | 150,521 | $ | 153,186 | $ | 133,318 | $ | 578,421 | $ | 512,770 | |||||
| Noninterest income | 12,110 | 13,355 | 13,097 | 51,397 | 43,594 | ||||||||||
| Revenue | 162,631 | 166,541 | 146,415 | 629,818 | 556,364 | ||||||||||
| Less noninterest expense | 84,518 | 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’ equity | 1,997,460 | 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
Document
News Release
HOPE BANCORP DECLARES QUARTERLY CASH DIVIDEND OF $0.14 PER SHARE
LOS ANGELES - January 23, 2023 - 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 February 16, 2023 to all stockholders of record as of the close of business on February 2, 2023.
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.
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, 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:
Angie Yang
SVP, Director of Investor Relations & Corporate Communications
213-251-2219
angie.yang@bankofhope.com
#
hope-q42022earningscalls
2022 Fourth Quarter Earnings Conference Call Tuesday, January 24, 2023
Forward Looking Statements & Additional Disclosures This presentation may contain statements regarding future events or the future financial performance of the Company that 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. 2
Earnings & Profitability • Net interest income for 4Q22 decreased 2% Q-o-Q but increased 13% for the full year vs. 2021 • Net interest margin for 4Q22 decreased 13bps Q-o-Q but increased 27bps for the full year vs. 2021 • Net income for 4Q22 decreased 4% Q-o-Q but increased 7% for the full year vs. 2021 • Pre-provision net revenue1 (“PPNR”) decreased 5% Q-o-Q but increased 16% for the full year vs. 2021 Loans • New loan production for 4Q22 totaled $793 million and aggregated to a record $4.45 billion for the full year • Mix of new originations well diversified with C&I 54%, CRE 41% and Mortgage and Consumer 5% for 4Q22, and C&I 47%, CRE 44% and Mortgage and Consumer 9% for the full year • Loans receivable decreased 1% Q-o-Q but increased 10% Y-o-Y (12% excluding SBA PPP loans) Deposits • Deposits for 4Q22 increased 2% Q-o-Q and increased 5% Y-o-Y • Total cost of deposits for 4Q22 increased 83bps Q-o-Q and increased 139bps Y-o-Y Asset Quality • Total nonperforming assets decreased 28% Q-o-Q and decreased 38% Y-o-Y • Total criticized loans as of 12/31/22 decreased 8% Q-o-Q and decreased 48% Y-o-Y • Losses remain minimal with annualized net charge offs to average loans receivable of 0.17% for 4Q22, and net recoveries to average loans receivable for 2022 of 0.08% 4Q22 & FY 2022 Financial Highlights Net Income $51.7M (4Q22) $218.3M (FY2022) Diluted EPS $0.43 (4Q22) $1.81 (FY 2022) Gross Loans $15.40B Total Deposits $15.74B 1 PPNR (Pre-provision net revenue) is a non-GAAP financial measure. A quantitative reconciliation of most directly comparable GAAP to non-GAAP financial measure is provided on Slide 17. (as of 12/31/22) (as of 12/31/22) 3
Loan Production & Portfolio Trends New Loan Originations Funded ($ Millions) $623 $578 $545 $534 $324 $539 $344 $557 $747 $432 $81 $104 $184 $68 $37 4Q21 1Q22 2Q22 3Q22 4Q22 $1,243 $1,026 $1,286 $793 $1,349 CRE C&I Mortgage and Consumer • Total loans receivable decreased 0.6% Q-o-Q, but increased 10.4% year-over-year • Excluding PPP, loans receivable increased 12.2% year-over-year • Aggregate payoffs and paydowns relatively stable at $734 million vs. $711 million in 3Q22 $13.95 $14.07 $14.55 $15.49 $15.40 12.25 12.75 13.25 13.75 14.25 14.75 15.25 15.75 16.25 16.75 12/31/21 03/31/22 06/30/22 09/30/22 12/31/22 • Total new loan originations of $793 million reflects more selective and prudent approach to new loan credit risk and overall profitability • Well diversified mix of new loans with C&I production volume accounting for 54%, CRE 41% and Mortgage and Consumer loans 5% • Average rate on new loans increased 134bps Q-o-Q to 6.71% Loans Receivable ($ Billions) Q-o-Q change -1% +3% +6% +1% Average Rate of New Loans 4Q21 1Q22 2Q22 3Q22 4Q22 3.38% 3.54% 4.26% 5.37% 6.71% 4 Full-year loan growth 10.4%, or 12.2% excluding PPP
Transformation to Lower-Risk Loan Portfolio 5 65% 30% 5% 61% 33% 6% $15.24 B (as of 12/31/2022) $13.95 B (as of 12/31/2021) Note: All Other CRE includes property types representing less than 7% of total CRE portfolio unless otherwise noted, including: Mixed Use, Retail-Single, Church, Residential, Office, Golf Course and Other smaller segments. Note: All Other C&I includes business types representing less than 4% of total C&I portfolio unless otherwise noted, including: Retail Trade, Real Estate & Leasing, Hotel/Motel, Laundries & Drycleaners, Liquor Store, Supermarkets, Transportation and Other smaller segments. CRE Loan Portfolio % of CRE Portfolio As of 12/31/2021 As of 12/31/2022 Multi-tenant Retail 20% 20% Multi-family 8% 14% Industrial & Warehouse 14% 14% Gas Station & Car Wash 12% 11% Hotel/Motel 14% 10% Mixed Use 9% 9% Single-tenant Retail 8% 8% All Others 15% 14% C&I Loan Portfolio % of C&I Portfolio As of 12/31/2021 As of 12/31/2022 Manufacturing 13% 14% Information 9% 13% Wholesale Trade 15% 11% Gas Station 4% 5% Healthcare & Social Assistance 4% 5% Warehouse Line 13% 5% Restaurant 7% 5% Real Estate & Leasing 3% 4% Supermarkets 4% 3% All Others 28% 35% Ongoing transformation to lower-risk loan portfolio reflects: • Lower concentration of CRE loans • Reduced exposure to hotel/motel loans • Higher mix of lower-risk multifamily loans • Growth and diversification of C&I portfolio primarily driven by loans to larger, recessionary-resistant industry verticals CRE C&I Consumer
Net Interest Income and Margin 6 • Net interest income before provision for credit losses decreased 1.7% Q-o-Q, but increased 12.9% Y-o-Y Net Interest Income & NIM ($ Millions) $133.3 $133.2 $141.5 $153.2 $150.5 3.13% 3.21% 3.36% 3.49% 3.36% 4Q21 1Q22 2Q22 3Q22 4Q22 3.36% 3.49% Loan yield increase Increase in average borrowings and cost +61bps 4Q22 net interest margin decreased 13bps Q-o-Q Net Interest Income NIM Increase Decrease Total Q-o-Q increase +8% -2% -0% +6% Net Interest Margin 3Q22 4Q22 -74bps • 13bps Q-o-Q decrease in net interest margin largely reflected higher interest-bearing deposit balances and costs offsetting loan yield and loan balance increases Inv securities decrease + yield increase + cash yield increase +3bps Interest bearing deposit cost increase + balance increase -11bps +8bps Loan balance increase
70% 6% 8% 99% 35% 30% 94% 92% 1% 65% 0% 20% 40% 60% 80% 100% 120% CRE Commercial SBA Mortgage Consumer Total Origination Fixed/Hybrid Variable Loan Portfolio Interest Rate Breakdown Variable 46% @7.31% 2 Fixed 24% @3.96% 2 Hybrid 1 30% @4.07% 2 Fixed/Variable & Average Rate of New Loan Originations (As of 12/31/2022) Fixed/Variable Breakdown of Total Loan Portfolio (As of 12/31/2022) 1 Hybrid loans have fixed interest rates for a specified period and then convert to variable rates (fixed as of 12/31/2022) 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 65% of new production from 57% in 3Q 2022 • As of 12/31/2022, variable rate loans represented 46% of total loans, the same level as for 3Q 2022 • $591 million in hybrid interest rate loans are scheduled to change from fixed to variable rate during 2023 7 5.95% 7.18% 8.38% 6.12% 6.71% 1 Hybrid loans have fixed interest rates for a specified period and then convert to variable rates (fixed as of 12/31/2022) 1
Noninterest Income 8 • Noninterest income decreased 9% Q-o-Q to $12.1 million vs. $13.4 million in 3Q22 – Gains on sales of SBA loans decreased to $2.2 million from $2.8 million in 3Q22 – Other income and fees decreased to $4.6 million from $5.2 million in 3Q22, reflecting lower swap fee income • 3Q22 also included recognition of $375,000 in gains from the sale of equity investments vs. no similar gains in 4Q22 – These decreases in noninterest income were partially offset by higher net gains on sale of other loans from the sale of CRE and mortgage loans • Sold $41.2 million of the guaranteed portion of SBA 7(a) loans to the secondary market in 4Q22 vs. $57.8 million in 3Q22 • Sold $3.5 million of residential mortgage loans in 4Q22 vs. $3.7 million in 3Q22 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 $4.6 $4.5 $4.7 $5.2 $4.7 $3.6 $5.6 $5.8 $2.8 $2.2 $0.5 $0.8 -$0.5 $0.1 $0.6 $4.3 $2.3 $2.7 $5.2 $4.6 4Q21 1Q22 2Q22 3Q22 4Q22 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 $12.1 Noninterest Income ($ Millions) 1 2
• Noninterest expense increased to $84.5 million from $83.9 million in 3Q22 • Q-o-Q decrease in compensation for 4Q22 largely reflects lower incentive compensation Efficiency Ratio & Noninterest Expense to Average Assets 50.70% 51.50% 52.09% 50.39% 51.97% 1.67% 1.70% 1.80% 1.82% 1.79% 4Q21 1Q22 2Q22 3Q22 4Q22 Efficiency Ratio Noninterest Expense/Avg Assets (annualized) 9 $44.6 $47.7 $51.1 $53.2 $52.7 $21.0 $19.9 $20.1 $18.7 $19.8 $1.7 $1.5 $2.9 $1.3 $0.6$7.0 $6.3 $6.3 $10.8 $11.4 1,476 1,509 1,537 1,539 1,549 4Q21 1Q22 2Q22 3Q22 4Q22 Compensation Other core operating expenses Credit related & OREO Other Full-time employee (FTE) $75.4 $80.4 $83.9 $84.5 $74.2 Noninterest Expense and Efficiency Noninterest Expense & FTE ($ Millions) 1 Other core operating expenses include: Occupancy & equipment, Advertising & marketing, Data & communications, Professional fees and FDIC assessment • Efficiency ratio increased to 51.97% from 50.39% for 3Q22, while noninterest expense as a percentage of average assets improved to 1.79% from 1.82% for 3Q22 1
Deposit Trends 10 Deposit Composition ($ Billions) Deposit Costs Average Deposits ($ Billions) $9.1 $9.3 $9.1 $9.7 $10.3 $6.0 $5.7 $5.7 $5.7 $5.2 4Q21 1Q22 2Q22 3Q22 4Q22 Average Noninterest Bearing Deposits Average Interest Bearing Deposits $5.8 $5.5 $5.7 $5.6 $4.8 $6.2 $6.5 $6.3 $5.9 $5.6 $0.3 $0.3 $0.3 $0.3 $0.3 $2.8 $2.2 $2.7 $3.7 $5.0 12/31/21 3/31/22 6/30/22 9/30/22 12/31/22 $15.74$15.50$15.03 $14.52$15.04 +4% -3% +2%+3% Q-o-Q growth annualized DDA MMA/NOW Savings Time $15.48$15.45 $14.80$14.95$15.07 • Total cost of deposits increased 83bps Q-o-Q reflecting acceleration of Fed Funds rate hikes in 2H22 • Total cost of interest-bearing deposits increased 119bps Q-o-Q • Average interest-bearing deposits increased 6% Q-o-Q • Average noninterest bearing deposits decreased 10% Q-o-Q • Total deposits increased 2% Q-o-Q • Decreased balances of noninterest-bearing deposits and MMAs offset by an increase in time deposits 0.23% 0.24% 0.33% 0.79% 1.62% 0.39% 0.38% 0.54% 1.25% 2.44% 4Q21 1Q22 2Q22 3Q22 4Q22 Total Cost of Deposits Cost of Interest-Bearing Deposits
Asset Quality Nonperforming Assets ($ Millions) Total Criticized Loans ($ Millions) 11 $109.2 $100.4 $108.6 $95.5 $67.0 $2.6 $2.0 $2.0 $1.5 $2.40.62% 0.58% 0.61% 0.51% 0.36% 4Q21 1Q22 2Q22 3Q22 4Q22 NPLs OREO NPAs/Total Assets $257.2 $167.0 $95.8 $79.4 $157.3 $242.4 $226.7 $244.7 $204.7 $104.1 3.58% 2.80% 2.34% 1.83% 1.70% 4Q21 1Q22 2Q22 3Q22 4Q22 Substandard Special Mention Total Criticized Loans as a % of Total Loans $1.5 -$11.0 $3.2 $9.2 $8.2 -0.07% -0.52% -0.03% 0.01% 0.17% 4Q21 1Q22 2Q22 3Q22 4Q22 Provision for Credit Losses Net Charge Offs (Recoveries) to Average Loans (annualized) (Credit) for Credit Losses • Total criticized loans declined 8% Q-o-Q to 1.70% of loans receivable vs. 1.83% at 9/30/22 • Special mention loans increased 98% Q-o-Q • Substandard loans decreased 49% Q-o-Q • For the full year, total criticized loans declined 48% • Provision for credit losses of $8.2 million primarily reflecting declining macroeconomic projections • Net charge offs of $6.4 million, or 0.17% of average loans receivable, annualized • Total nonperforming assets decreased 28% Q-o-Q, reflecting reductions in all NPL categories – Nonaccrual loans declined 23% Q-o-Q – Delinquent loans on accrual status declined 92% Q-o-Q – Accruing TDR loans declined 34% Q-o-Q $111.8 $102.4 $110.6 $97.0 $69.4 $499.6 $393.6 $340.5 $284.1 $261.3 Provision (Credit) for Credit Losses & Net Charge Offs (Recoveries) ($ Millions)
11.72% 10.25% 10.32% 10.92% $12.60 11.97% 10.15% 10.55% 11.15% $12.96 Total Risk-Based Capital Ratio Tier 1 Leverage Ratio Tier 1 Common Equity Ratio Tier 1 Capital Ratio Tangible Common Equity per Share 9/30/2022 12/31/2022 $16.8 $16.8 $16.9 $16.7 $16.7 $2.8 $14.7 4Q21 1Q22 2Q22 3Q22 4Q22 Dividends Buybacks Capital Position & Returns Capital Positions Dividends & Buybacks ($ Millions) Maintaining strong levels of capital • All regulatory capital ratios, except Tier 1 Leverage Ratio increased Q-o-Q • Tangible common equity per share increased by $0.37 Q-o-Q to $12.96 Committed to stockholder returns • Quarterly common stock dividend maintained at $0.14 per share • As of 12/31/22, $35.3 million remaining of new $50.0 million share buyback plan announced 1Q22 • Dividend yield: 4.37% (12/31/22) | Dividend payout ratio: 30.91% (TTM) 12 1 Tangible common equity per share is a non-GAAP financial measure. A quantitative reconciliation of the most directly comparable GAAP to non-GAAP financial measure is provided on Slide 17. 1
2022 Performance vs. Outlook Initial 2022 Outlook Actual 2022 Performance Loan Growth Re-energized focus on business development expected to lead to high single-digit to low double-digit loan growth for 2022, excluding PPP Achieved higher end of guidance with 12.2% loan growth, excluding SBA PPP Noninterest Expenses Noninterest expense to average assets expected to be in the range of 1.65% to 1.70% in the near-term; updated to 1.75% to 1.80% for full year Achieved middle range of guidance with 1.78% noninterest expense to average assets Net Interest Margin Stable NIM expected for 1Q22 due to stability in loan yields and deposit costs; updated to continued margin expansion for 2H 2022, but at a lower magnitude of expansion than 2Q 2022; further updated to expect flat to slight margin compression in 4Q 2022, potentially offsetting to small degree YTD expansion NIM expansion of 8bps in 1Q, 15bps in 2Q and 13bps in 3Q, partially offset by 13bps compression in 4Q, aggregating to 23 basis point increase in NIM for the full year Asset Quality Anticipate improving asset quality metrics with criticized loan balances trending down approximately 20-30% by year-end; revised further to 30-40% reduction for full year Exceeded guidance with total criticized loans decreasing 48% during 2022 Profitability Enhanced profitability metrics expected to be driven by increasing earning assets and improving asset quality metrics; updated to net interest income expansion driven by rising interest rates and earnings asset growth; further revised to range from 13-16% for full year. Achieved lower range of guidance with net interest income increasing 13% over 2021 13
2023 & Near-Term Outlook Loan Growth: Full-year loan growth projected in the mid-single digit range, reflective of more prudent and selective approach to new loan production Net Interest Income: Anticipate modest net interest income growth for the full-year driven by increased earnings assets partially offset by higher cost of deposits and borrowings Net Interest Margin: Expect velocity of margin compression to peak in 1Q23 and then moderate in 2Q23 before stabilizing in 2H23 and possibly improving slightly by year-end Noninterest Income: Anticipate noninterest income to trend lower than 2022 due largely to lower net gain on sale of SBA loans; expect 1Q 2023 noninterest income of approximately $11 million Noninterest Expenses: Planning for further strengthened focus on disciplined expense controls while leveraging investments in talent and capabilities; expect noninterest expense to average assets to be approximately 1.79%-1.81% for 1Q23 Asset Quality: Anticipate continuation of improving asset quality metrics and expect criticized loan balances continuing downward trend in 1Q 2023 14
Q&A 2022 Fourth Quarter Earnings Conference Call
Appendix 16
Appendix: Non-GAAP Financials Management reviews select non-GAAP financial measures in evaluating the Company’s financial performance and in response to market participant interest. A reconciliation of the most directly comparable GAAP to non-GAAP financial measures utilized by management is provided below. Pre-provision Net Revenue (PPNR) ($ in thousands) 4Q21 3Q22 4Q22 FY 2021 FY 2022 Net interest income before provision (credit) for credit losses $ 133,318 $ 153,186 $ 150,521 $ 512,770 $ 578,421 Noninterest income 13,097 13,355 12,110 43,594 51,397 Revenue 146,415 166,541 162,631 556,364 629,818 Less: noninterest expense 74,236 83,914 84,518 293,292 324,170 Pre-provision net revenue $ 72,179 $ 82,627 $ 78,113 $ 263,072 $ 305,648 Tangible Common Equity Per Share ($ in thousands) 4Q21 3Q22 4Q22 Total stockholders’ equity $ 2,092,983 $ 1,975,725 $ 2,019,328 Less: Goodwill and core deposit intangible assets, net (472,121) (470,662) (470,176) Tangible common equity 1,620,862 1,505,063 1,549,152 Common shares outstanding 120,006,452 119,479,253 119,495,209 Tangible common equity per share $ 13.51 $ 12.60 $ 12.96 17