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, 2021.
For the three months ended September 30, 2021, net income increased 3% to $55.5 million, or $0.45 per diluted common share, from $53.8 million, or $0.43 per diluted common share, in the preceding second quarter and increased 82% from $30.5 million, or $0.25 per diluted common share, in the year-ago third quarter.
“We continued to deliver improved operational performance and profitability in the third quarter of 2021, but more importantly, we took strategic actions to de-risk the loan portfolio which led to significant improvements in asset quality and positioned the Company for a return to organic loan growth in the quarters ahead,” said Kevin S. Kim, Chairman, President and Chief Executive Officer of Hope Bancorp, Inc. “Business development was the strongest it has ever been topping a record $1.0 billion in new loan production and included record high SBA origination volumes of $115.0 million. While SBA PPP loan forgiveness and strategic loan sales of higher-risk credits mitigated loan growth again this quarter, we believe these headwinds are now largely behind us and have renewed our focus on growth and expansion. Deposits at quarter-end totaled a record high $15.1 billion driven primarily by growth in noninterest bearing demand deposits, which led to an eighth consecutive quarter of declining deposit costs. Benefiting from the strategic actions taken during the quarter, we posted meaningful improvements in our credit quality with nonaccrual loans decreasing 51% and criticized assets declining 19% quarter-over-quarter.
“With the significant improvements in asset quality this quarter, together with our track record of robust loan production and positive core deposit growth, we believe we are well positioned to drive even stronger performance in the years ahead,” said Kim.
Q3 2021 Highlights
- Loan originations increased 13% quarter-over-quarter to a record high $1.01 billion from $894.1 million in the second quarter of 2021.
- Loans receivable remained at $13.42 billion, as record originations were offset by loan sales, SBA PPP loan forgiveness, other payoffs and pay downs and decreases in mortgage warehouse line utilizations.
- Excluding SBA PPP loan forgiveness and strategic loan sales and transfers to held-for-sale of potentially problematic loans, loans receivable would have increased 3% quarter-over-quarter or 12% on an annualized basis.
- Noninterest bearing demand deposits increased 7% quarter-over-quarter and accounted for a record 40% of total deposits, contributing to record high deposits of $15.06 billion.
- Cost of interest bearing deposits decreased 6 basis points and total cost of deposits decreased 4 basis points quarter-over-quarter marking the eighth consecutive quarter of declining deposit costs.
- Interest income increased 2% quarter-over-quarter while interest expense declined 8%, resulting in a 3% increase in pre-provision net interest income.
- Net interest margin declined 4 basis points quarter-over-quarter, as the benefit of lower cost of deposits was more than offset by the impact of excess liquidity on the balance sheet.
- The Company recorded a negative provision for credit losses of $10.0 million.
- Net income increased 3% quarter-over-quarter and totaled $55.5 million, or $0.45 per diluted common share.
- Pre-provision net revenue(1) (“PPNR”) increased 1% quarter-over-quarter and totaled $65.4 million.
- Net charge offs of $42.7 million reflects strategic actions to eliminate potentially problematic assets and resulted in significantly improved asset quality metrics.
- Nonaccrual loans decreased 51% quarter-over-quarter and total criticized loans decreased 19%.
- Return on average assets remained unchanged at 1.25%, while return on average equity increased to 10.61% from 10.41% in the second quarter of 2021.
- Announced new $50 million share buyback program on July 26, 2021 and repurchased 3,487,426 shares as of September 30, 2021, totaling $47.2 million.
(1) | PPNR is a non-GAAP financial measures, a reconciliation of which is provided in the accompanying financial information on Table Page 10. |
Financial Highlights
(dollars in thousands, except per share data) (unaudited) | At or for the Three Months Ended | ||||||||||
9/30/2021 | 6/30/2021 | 9/30/2020 | |||||||||
Net income | $ | 55,499 | $ | 53,763 | $ | 30,490 | |||||
Diluted earnings per share | $ | 0.45 | $ | 0.43 | $ | 0.25 | |||||
Net interest income before provision (credit) for credit losses | $ | 130,296 | $ | 126,577 | $ | 117,637 | |||||
Net interest margin | 3.07 | % | 3.11 | % | 2.91 | % | |||||
Noninterest income | $ | 10,617 | $ | 11,076 | $ | 17,513 | |||||
Noninterest expense | $ | 75,502 | $ | 73,123 | $ | 73,406 | |||||
Net loans receivable | $ | 13,281,917 | $ | 13,234,849 | $ | 12,940,376 | |||||
Deposits | $ | 15,062,527 | $ | 14,726,230 | $ | 14,008,356 | |||||
Total cost of deposits | 0.26 | % | 0.30 | % | 0.64 | % | |||||
Nonaccrual loans(1) | $ | 54,380 | $ | 111,008 | $ | 69,205 | |||||
Nonperforming loans to loans receivable(1) | 0.73 | % | 1.24 | % | 0.81 | % | |||||
ACL to loans receivable | 1.02 | % | 1.41 | % | 1.37 | % | |||||
ACL to nonaccrual loans(1) | 251.52 | % | 170.67 | % | 259.88 | % | |||||
ACL to nonperforming assets(1) | 120.33 | % | 103.11 | % | 144.36 | % | |||||
Provision (credit) for credit losses | $ | (10,000 | ) | $ | (7,000 | ) | $ | 22,000 | |||
Net charge offs | $ | 42,678 | $ | 11,491 | $ | 3,922 | |||||
Return on average assets (“ROA”) | 1.25 | % | 1.25 | % | 0.72 | % | |||||
Return on average equity (“ROE”) | 10.61 | % | 10.41 | % | 5.98 | % | |||||
Return on average tangible common equity (“ROTCE”)(2) | 13.71 | % | 13.50 | % | 7.80 | % | |||||
Noninterest expense / average assets | 1.70 | % | 1.70 | % | 1.73 | % | |||||
Efficiency ratio | 53.58 | % | 53.12 | % | 54.31 | % | |||||
(1) | Excludes delinquent SBA loans that are guaranteed and currently in liquidation. |
(2) | Return on average tangible common equity is a non-GAAP financial measure. A reconciliation of the Company’s return on average tangible common equity is provided in the accompanying financial information on Table Page 10. |
Operating Results for the 2021 Third Quarter
Net interest income before the provision (credit) for credit losses for the 2021 third quarter increased 3% to $130.3 million from $126.6 million in the 2021 second quarter and increased 11% from $117.6 million in the 2020 third quarter. The Company attributed the increase to higher interest income on investment securities and loans, as well as lower interest expense on deposits.
The net interest margin for the 2021 third quarter decreased 4 basis points to 3.07% from 3.11% in the preceding 2021 second quarter. The Company noted that excess liquidity on the balance sheet adversely impacted net interest margin by 8 basis points, which more than offset the benefits of lower deposit costs. The net interest margin in the prior-year third quarter was 2.91%.
The weighted average yield on loans for the 2021 third quarter was relatively stable quarter-over-quarter, decreasing 1 basis point to 3.97% from 3.98% in the 2021 second quarter, but declined by 23 basis points from 4.20% in the year-ago third quarter.
The weighted average cost of deposits for the 2021 third quarter decreased for the eighth consecutive quarter to 0.26%, representing a 4 basis point decrease from 0.30% for the 2021 second quarter and a 38 basis point decrease from 0.64% for the 2020 third quarter. The Company attributed the improvements in the weighted average cost of deposits to a continuing shift in its deposit mix to lower-cost core deposits and the ongoing downward repricing of interest bearing deposits. The cost of interest bearing deposits was 0.42%, 0.48% and 0.92% for the quarters ended September 30, 2021, June 30, 2021 and September 30, 2020, respectively.
Noninterest income for the 2021 third quarter decreased to $10.6 million from $11.1 million for the 2021 second quarter. During the 2021 third quarter, the Company sold $40.2 million in retail mortgage loans and $31.3 million of the guaranteed portion of SBA 7(a) loans, compared with $42.6 million and $30.0 million, respectively, in the preceding second quarter. Noninterest income in the year-ago third quarter totaled $17.5 million, during which quarter the Company recognized $7.5 million in net gains on sales of securities available for sale.
Noninterest expense for the 2021 third quarter increased to $75.5 million from $73.1 million in the preceding second quarter and $73.4 million in the year-ago third quarter.
Salaries and employee benefits expense for the 2021 third quarter increased to $47.0 million from $42.3 million in the preceding second quarter, reflecting a number of factors. The Company increased its bonus reserve for the year to reflect the higher-than-expected financial performance. In addition, employee base salaries increased meaningfully quarter-over-quarter, predominantly reflecting new frontline hires, including a new multi-family lending team recruited from a large money center bank, as well as wage increases necessary to retain existing employees. The Company’s self-funded group insurance expense for the 2021 third quarter was also significantly higher quarter-over-quarter.
In addition, credit related expenses for the 2021 third quarter increased by $1.2 million quarter-over-quarter, but this fluctuation was within normal levels. Altogether, these increases in noninterest expense were partially offset by a $2.0 million quarter-over-quarter decrease in professional fees for the three months ended September 30, 2021, reflecting a favorable outcome and closure of a litigation case.
The Company’s efficiency ratio for the 2021 third quarter was fairly stable at 53.58%, compared with 53.12% for the preceding second quarter and 54.31% for the year-ago third quarter. Noninterest expense as a percentage of average assets remained at 1.70% for the 2021 third quarter but improved from 1.73% in the year-ago third quarter.
The effective tax rate for the 2021 third quarter increased to 26.4% from 24.8% in the preceding quarter. The quarter-over-quarter increase reflects an increase in the Company’s projected annual pretax income compared with previous estimates, combined with the benefit of affordable housing partnership investment tax credits having a smaller effect on the larger annual pretax income. In the year-ago quarter, the effective tax rate was 23.3%.
Balance Sheet Summary
New loan originations funded during the 2021 third quarter increased to a record high $1.01 billion from $894.1 million in the preceding second quarter and $782.4 million in the 2020 third quarter. Following are the components of new loan production for the quarters ended September 30, 2021, June 30, 2021 and September 30, 2020:
(dollars in thousands) (unaudited) | For the Three Months Ended | ||||||||||
9/30/2021 | 6/30/2021 | 9/30/2020 | |||||||||
Commercial real estate | $ | 488,969 | $ | 454,857 | $ | 215,099 | |||||
Commercial | 329,702 | 288,726 | 429,136 | ||||||||
SBA | 115,023 | 77,652 | 33,262 | ||||||||
SBA PPP | — | 19,816 | 26 | ||||||||
Residential mortgage | 75,007 | 52,766 | 102,312 | ||||||||
Consumer | 500 | 275 | 2,607 | ||||||||
Total new loan originations | $ | 1,009,201 | $ | 894,092 | $ | 782,442 | |||||
During the 2021 third quarter, the Company also acquired $113.9 million of 30-year adjustable-rate residential mortgage loans. New loan production and loan purchases during the 2021 third quarter were offset by a number of factors. In addition to the sale of $40.2 million in residential mortgage loans and $31.3 million of SBA 7(a) loans during the 2021 third quarter, the Company completed loan sales of $29.6 million and transferred $131.2 million to loans held-for-sale, de-risking the loan portfolio of potentially problematic assets. Altogether with aggregate payoffs and pay downs, which included SBA PPP loan forgiveness of $235.6 million and a $61.4 million quarter-over-quarter decrease in warehouse line utilizations, loans receivable at September 30, 2021 was flat at $13.42 billion versus $13.42 billion at June 30, 2021. Excluding SBA PPP loan forgiveness and loan sales and transfers of potentially problematic assets to held-for-sale, loans receivable at September 30, 2021 would have increased by approximately $401.7 million, or 3.0% quarter-over-quarter. Loans receivable a year ago at September 30, 2020 totaled $13.12 billion.
During the 2021 third quarter, the Company deployed a portion of its excess cash balances and purchased $571.3 million of investment securities. Securities available for sale totaled $2.67 billion at September 30, 2021, up 17% from $2.27 billion at June 30, 2021.
Total deposits at September 30, 2021 increased 2% to $15.06 billion from $14.73 billion at June 30, 2021 and increased 8% from $14.01 billion at September 30, 2020. Quarter-over-quarter, noninterest bearing demand deposits as of September 30, 2021 increased 7% and money market and other interest bearing demand deposit balances increased 1%, while time deposits decreased 4%. On a year-over-year basis, noninterest bearing demand deposits as of September 30, 2021 increased 34% and money market and NOW account balances increased 23%, while time deposits decreased 35%.
Following is the deposit composition as of September 30, 2021, June 30, 2021 and September 30, 2020:
(dollars in thousands) (unaudited) | 9/30/2021 | 6/30/2021 | % change | 9/30/2020 | % change | ||||||||||||
Noninterest bearing demand deposits | $ | 6,007,586 | $ | 5,638,115 | 7 | % | $ | 4,488,529 | 34 | % | |||||||
Money market and other | 5,871,567 | 5,786,697 | 1 | % | 4,763,893 | 23 | % | ||||||||||
Saving deposits | 314,603 | 308,651 | 2 | % | 308,943 | 2 | % | ||||||||||
Time deposits | 2,868,771 | 2,992,767 | (4 | )% | 4,446,991 | (35 | )% | ||||||||||
Total deposit balances | $ | 15,062,527 | $ | 14,726,230 | 2 | % | $ | 14,008,356 | 8 | % | |||||||
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, 2021, June 30, 2021 and September 30, 2020:
Deposit Breakdown | Cost of Deposits | ||||||||||||||||
(unaudited) | 9/30/2021 | 6/30/2021 | 9/30/2020 | Q3 2021 | Q2 2021 | Q3 2020 | |||||||||||
Noninterest bearing demand deposits | 39.9 | % | 38.3 | % | 32.1 | % | — | % | — | % | — | % | |||||
Money market and other | 39.0 | % | 39.2 | % | 34.0 | % | 0.40 | % | 0.43 | % | 0.53 | % | |||||
Saving deposits | 2.1 | % | 2.1 | % | 2.2 | % | 1.18 | % | 1.15 | % | 1.19 | % | |||||
Time deposits | 19.0 | % | 20.4 | % | 31.7 | % | 0.38 | % | 0.49 | % | 1.30 | % | |||||
Total deposit balances | 100.0 | % | 100.0 | % | 100.0 | % | 0.26 | % | 0.30 | % | 0.64 | % | |||||
Allowance for Credit Losses
In the 2021 third quarter, the Company recorded a negative provision for credit losses of $10.0 million, compared with a negative provision for credit losses of $7.0 million in the preceding second quarter. In the year-ago third quarter, the Company recorded a provision for credit losses of $22.0 million. The allowance release in the 2021 third quarter reflects improvements in macroeconomic forecasts and the Company’s asset quality.
Following is the allowance for credit losses and allowance coverage ratios as of September 30, 2021, June 30, 2021 and September 30, 2020:
(dollars in thousands) (unaudited) | 9/30/2021 | 6/30/2021 | 9/30/2020 | ||||||||
Allowance for credit losses | $ | 136,774 | $ | 189,452 | $ | 179,849 | |||||
Allowance for credit loss/loans receivable | 1.02 | % | 1.41 | % | 1.37 | % | |||||
Allowance for credit losses/nonperforming loans | 138.92 | % | 113.36 | % | 169.40 | % | |||||
Credit Quality
Following are the components of nonperforming assets as of September 30, 2021, June 30, 2021 and September 30, 2020:
(dollars in thousands) (unaudited) | 9/30/2021 | 6/30/2021 | 9/30/2020 | ||||||||
Loans on nonaccrual status (1) | $ | 54,380 | $ | 111,008 | $ | 69,205 | |||||
Delinquent loans 90 days or more on accrual status | 4,567 | 4,759 | 1,537 | ||||||||
Accruing troubled debt restructured loans | 39,509 | 51,360 | 35,429 | ||||||||
Total nonperforming loans | 98,456 | 167,127 | 106,171 | ||||||||
Other real estate owned | 15,213 | 16,619 | 18,410 | ||||||||
Total nonperforming assets | $ | 113,669 | $ | 183,746 | $ | 124,581 | |||||
(1) | Excludes delinquent SBA loans that are guaranteed and currently in liquidation totaling $20.6 million, $23.6 million and $26.2 million, at September 30, 2021, June 30, 2021 and September 30, 2020, respectively. |
The significant reductions in nonperforming loans quarter-over-quarter were due to a number of factors, including strategic loan sales and transfers to held-for sale of potentially problematic loans. The loans transferred to held-for-sale are expected to be sold during the fourth quarter of 2021. In addition, one large relationship that was moved to nonaccrual status in the first quarter of 2021 was charged off, and another large relationship on nonaccrual status was paid off in full.
Following are net charge offs and net charge offs to average loans receivable on an annualized basis for the three months ended September 30, 2021, June 30, 2021 and September 30, 2020:
(dollars in thousands) (unaudited) | For the Three Months Ended | ||||||||||
9/30/2021 | 6/30/2021 | 9/30/2020 | |||||||||
Net charge offs | $ | 42,678 | $ | 11,491 | $ | 3,922 | |||||
Net charge offs/average loans receivable (annualized) | 1.28 | % | 0.35 | % | 0.12 | % | |||||
Net charge offs for the 2021 third quarter increased significantly from prior periods. This reflects decisive actions by the Company to eliminate potentially problematic assets from its loan portfolio and included charge offs related to the one large relationship that was moved to nonaccrual status in the first quarter of 2021, along with loan sales and transfers to held-for-sale.
Following are the components of criticized loan balances as of September 30, 2021, June 30, 2021 and September 30, 2020:
(dollars in thousands) (unaudited) | 9/30/2021 | 6/30/2021 | 9/30/2020 | ||||||||
Special mention | $ | 306,766 | $ | 294,559 | $ | 153,388 | |||||
Substandard | 243,684 | 380,955 | 311,902 | ||||||||
Doubtful/loss | — | — | 6,640 | ||||||||
Total criticized loans | $ | 550,450 | $ | 675,514 | $ | 471,930 | |||||
The significant reductions in total criticized loans quarter-over-quarter was due primarily to the strategic loan sales and transfers to held-for-sale, along with charge offs. As previously noted, loan sales totaled $29.6 million and transfers to held-for-sale amounted to $131.2 million, most of which were classified as substandard.
Capital
At September 30, 2021, 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, 2021, June 30, 2021 and September 30, 2020:
Hope Bancorp, Inc. (unaudited) | 9/30/2021 | 6/30/2021 | 9/30/2020 | Minimum Guideline for
| |||
Common Equity Tier 1 Capital | 11.01% | 11.44% | 11.36% | 6.50% | |||
Tier 1 Leverage Ratio | 9.98% | 10.43% | 10.02% | 5.00% | |||
Tier 1 Risk-Based Ratio | 11.70% | 12.14% | 12.09% | 8.00% | |||
Total Risk-Based Ratio | 12.42% | 13.16% | 13.19% | 10.00% |
Following are tangible common equity (“TCE”) per share and TCE as a percentage of tangible assets as of September 30, 2021, June 30, 2021 and September 30, 2020:
(unaudited) | 9/30/2021 | 6/30/2021 | 9/30/2020 | ||
Tangible common equity per share (1) | $13.33 | $13.10 | $12.70 | ||
Tangible common equity to tangible assets (2) | 9.24% | 9.53% | 9.63% |
(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. Both tangible common equity and tangible common equity per share are non-GAAP financial measures. A reconciliation of the Company’s total stockholders’ equity to tangible common equity is provided in the accompanying financial information on Table Page 10. |
(2) | 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 to tangible assets is a non-GAAP financial measure. A reconciliation of the Company’s total assets to tangible assets 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, October 26, 2021 at 9:30 a.m. Pacific Time / 12:30 p.m. Eastern Time to review financial results for its third quarter ended September 30, 2021. Investors and analysts are invited to access the conference call by dialing 866-235-9917 (domestic) or 412-902-4103 (international) and asking for the “Hope Bancorp Call.” A presentation to accompany the earnings call will be available at the Investor Relations section of Hope Bancorp’s website at www.ir-hopebancorp.com. Other interested parties are invited to listen to a live webcast of the call available at the Investor Relations section of Hope Bancorp’s website. After the live webcast, a replay will remain available 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 2, 2021, replay access code 10161142.
About Hope Bancorp, Inc.
Hope Bancorp, Inc. is the holding company of Bank of Hope, the first and only super regional Korean-American bank in the United States with $17.80 billion in total assets as of September 30, 2021. Headquartered in Los Angeles and serving a multi-ethnic population of customers across the nation, Bank of Hope operates 53 full-service branches in California, Washington, Texas, Illinois, New York, New Jersey, Virginia and Alabama. The Bank also operates SBA loan production offices in Seattle, Denver, Dallas, Atlanta, Portland, Oregon, New York City, Northern California and Houston; commercial loan production offices in Northern California and Seattle; residential mortgage loan production offices in Southern California; and a representative office in Seoul, Korea. Bank of Hope specializes in core business banking products for small and medium-sized businesses, with an emphasis in commercial real estate and commercial lending, SBA lending and international trade financing. Bank of Hope is a California-chartered bank, and its deposits are insured by the FDIC to the extent provided by law. Bank of Hope is an Equal Opportunity Lender. For additional information, please go to bankofhope.com. By including the foregoing website address link, the Company does not intend to and shall not be deemed to incorporate by reference any material contained or accessible therein.
Forward-Looking Statements
Some statements in this press release may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements relate to, among other things, expectations regarding the business environment in which we operate, projections of future performance, perceived opportunities in the market and statements regarding our business strategies, objectives and vision. Forward-looking statements include, but are not limited to, statements preceded by, followed by or that include the words “will,” “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates” or similar expressions. With respect to any such forward-looking statements, the Company claims the protection provided for in the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties. The Company’s actual results, performance or achievements may differ significantly from the results, performance or achievements expressed or implied in any forward-looking statements. The risks and uncertainties include, but are not limited to: possible deterioration in economic conditions in our areas of operation; interest rate risk associated with volatile interest rates and related asset-liability matching risk; liquidity risks; risk of significant non-earning assets, and net credit losses that could occur, particularly in times of weak economic conditions or times of rising interest rates; the failure of or changes to assumptions and estimates underlying the Company’s allowances for credit losses, regulatory risks associated with current and future regulations; and the COVID-19 pandemic and its impact on our financial position, results of operations, liquidity, and capitalization. For additional information concerning these and other risk factors, see the Company’s most recent Annual Report on Form 10-K. 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.
Hope Bancorp, Inc. Selected Financial Data Unaudited (dollars in thousands, except share and per share data) | ||||||||||||||||||||
Assets: | 9/30/2021 | 6/30/2021 | % change | 9/30/2020 | % change | |||||||||||||||
Cash and due from banks | $ | 627,352 | $ | 836,957 | (25 | )% | $ | 629,133 | — | % | ||||||||||
Securities available for sale, at fair value | 2,669,489 | 2,274,170 | 17 | % | 2,060,991 | 30 | % | |||||||||||||
Federal Home Loan Bank (“FHLB”) stock and other investments | 88,102 | 94,550 | (7 | )% | 97,305 | (9 | )% | |||||||||||||
Loans held for sale, at the lower of cost or fair value | 179,117 | 54,245 | 230 | % | 9,170 | 1,853 | % | |||||||||||||
Loans receivable | 13,418,691 | 13,424,301 | — | % | 13,120,225 | 2 | % | |||||||||||||
Allowance for credit losses | (136,774 | ) | (189,452 | ) | (28 | )% | (179,849 | ) | (24 | )% | ||||||||||
Net loans receivable | 13,281,917 | 13,234,849 | — | % | 12,940,376 | 3 | % | |||||||||||||
Accrued interest receivable | 47,102 | 51,886 | (9 | )% | 57,989 | (19 | )% | |||||||||||||
Premises and equipment, net | 45,307 | 45,302 | — | % | 49,552 | (9 | )% | |||||||||||||
Bank owned life insurance | 76,756 | 76,428 | — | % | 77,388 | (1 | )% | |||||||||||||
Goodwill | 464,450 | 464,450 | — | % | 464,450 | — | % | |||||||||||||
Servicing assets | 10,787 | 11,566 | (7 | )% | 13,718 | (21 | )% | |||||||||||||
Other intangible assets, net | 8,180 | 8,689 | (6 | )% | 10,239 | (20 | )% | |||||||||||||
Other assets | 300,467 | 316,535 | (5 | )% | 323,456 | (7 | )% | |||||||||||||
Total assets | $ | 17,799,026 | $ | 17,469,627 | 2 | % | $ | 16,733,767 | 6 | % | ||||||||||
Liabilities: | ||||||||||||||||||||
Deposits | $ | 15,062,527 | $ | 14,726,230 | 2 | % | $ | 14,008,356 | 8 | % | ||||||||||
FHLB advances | 200,000 | 200,000 | — | % | 200,000 | — | % | |||||||||||||
Convertible notes, net | 215,974 | 215,739 | — | % | 203,270 | 6 | % | |||||||||||||
Subordinated debentures | 105,057 | 104,762 | — | % | 103,889 | 1 | % | |||||||||||||
Accrued interest payable | 5,367 | 4,946 | 9 | % | 21,991 | (76 | )% | |||||||||||||
Other liabilities | 135,703 | 125,080 | 8 | % | 155,700 | (13 | )% | |||||||||||||
Total liabilities | $ | 15,724,628 | $ | 15,376,757 | 2 | % | $ | 14,693,206 | 7 | % | ||||||||||
Stockholders’ Equity: | ||||||||||||||||||||
Common stock, $0.001 par value | $ | 136 | $ | 136 | — | % | $ | 136 | — | % | ||||||||||
Capital surplus | 1,420,151 | 1,418,135 | — | % | 1,432,773 | (1 | )% | |||||||||||||
Retained earnings | 897,766 | 859,548 | 4 | % | 774,970 | 16 | % | |||||||||||||
Treasury stock, at cost | (247,198 | ) | (200,000 | ) | (24 | )% | (200,000 | ) | 24 | % | ||||||||||
Accumulated other comprehensive gain, net | 3,543 | 15,051 | (76 | )% | 32,682 | (89 | )% | |||||||||||||
Total stockholders’ equity | 2,074,398 | 2,092,870 | (1 | )% | 2,040,561 | 2 | % | |||||||||||||
Total liabilities and stockholders’ equity | $ | 17,799,026 | $ | 17,469,627 | 2 | % | $ | 16,733,767 | 6 | % | ||||||||||
Common stock shares - authorized | 150,000,000 | 150,000,000 | 150,000,000 | |||||||||||||||||
Common stock shares - outstanding | 120,198,061 | 123,673,832 | 123,260,760 | |||||||||||||||||
Treasury stock shares | 16,149,007 | 12,661,581 | 12,661,581 | |||||||||||||||||
Hope Bancorp, Inc. Selected Financial Data Unaudited (dollars in thousands, except share and per share data) | ||||||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||
9/30/2021 | 6/30/2021 | % change | 9/30/2020 | % change | 9/30/2021 | 9/30/2020 | % change | |||||||||||||||||||||
Interest and fees on loans | $ | 132,794 | $ | 131,823 | 1 | % | $ | 134,430 | (1) | % | $ | 394,353 | $ | 422,850 | (7) | % | ||||||||||||
Interest on securities | 9,207 | 7,713 | 19 | % | 9,848 | (7) | % | 24,835 | 30,348 | (18) | % | |||||||||||||||||
Interest on federal funds sold and other investments | 865 | 668 | 29 | % | 942 | (8) | % | 2,175 | 3,951 | (45) | % | |||||||||||||||||
Total interest income | 142,866 | 140,204 | 2 | % | 145,220 | (2) | % | 421,363 | 457,149 | (8) | % | |||||||||||||||||
Interest on deposits | 9,640 | 10,696 | (10) | % | 22,871 | (58) | % | 33,106 | 93,435 | (65) | % | |||||||||||||||||
Interest on other borrowings and convertible notes | 2,930 | 2,931 | — | % | 4,712 | (38) | % | 8,805 | 16,972 | (48) | % | |||||||||||||||||
Total interest expense | 12,570 | 13,627 | (8) | % | 27,583 | (54) | % | 41,911 | 110,407 | (62) | % | |||||||||||||||||
Net interest income before provision (credit) for credit losses | 130,296 | 126,577 | 3 | % | 117,637 | 11 | % | 379,452 | 346,742 | 9 | % | |||||||||||||||||
Provision (credit) for credit losses | (10,000) | (7,000) | 43 | % | 22,000 | N/A | (13,700) | 67,500 | N/A | |||||||||||||||||||
Net interest income after provision (credit) for credit losses | 140,296 | 133,577 | 5 | % | 95,637 | 47 | % | 393,152 | 279,242 | 41 | % | |||||||||||||||||
Service fees on deposit accounts | 1,814 | 1,777 | 2 | % | 2,736 | (34) | % | 5,381 | 9,452 | (43) | % | |||||||||||||||||
International service fees | 889 | 795 | 12 | % | 987 | (10) | % | 2,525 | 2,443 | 3 | % | |||||||||||||||||
Loan servicing fees, net | 642 | 934 | (31) | % | 772 | (17) | % | 2,620 | 2,243 | 17 | % | |||||||||||||||||
Wire transfer fees | 836 | 923 | (9) | % | 892 | (6) | % | 2,603 | 2,710 | (4) | % | |||||||||||||||||
Net gains on sales of SBA loans | 2,459 | 2,375 | 4 | % | — | 100 | % | 4,834 | — | 100 | % | |||||||||||||||||
Net gains on sales of residential mortgage loans | 781 | 1,028 | (24) | % | 2,853 | (73) | % | 3,905 | 6,386 | (39) | % | |||||||||||||||||
Net gains on sales of securities available for sale | — | — | — | % | 7,531 | (100) | % | — | 7,531 | (100) | % | |||||||||||||||||
Other income and fees | 3,196 | 3,244 | (1) | % | 1,742 | 83 | % | 8,629 | 11,252 | (23) | % | |||||||||||||||||
Total noninterest income | 10,617 | 11,076 | (4) | % | 17,513 | (39) | % | 30,497 | 42,017 | (27) | % | |||||||||||||||||
Salaries and employee benefits | 47,018 | 42,309 | 11 | % | 40,659 | 16 | % | 130,543 | 122,011 | 7 | % | |||||||||||||||||
Occupancy | 7,473 | 7,067 | 6 | % | 7,264 | 3 | % | 21,507 | 21,717 | (1) | % | |||||||||||||||||
Furniture and equipment | 4,429 | 4,822 | (8) | % | 4,513 | (2) | % | 13,437 | 13,426 | — | % | |||||||||||||||||
Advertising and marketing | 2,656 | 2,097 | 27 | % | 1,601 | 66 | % | 6,378 | 4,589 | 39 | % | |||||||||||||||||
Data processing and communications | 2,394 | 2,411 | (1) | % | 2,204 | 9 | % | 7,542 | 7,109 | 6 | % | |||||||||||||||||
Professional fees | 2,431 | 4,395 | (45) | % | 1,513 | 61 | % | 9,729 | 6,323 | 54 | % | |||||||||||||||||
FDIC assessment | 1,204 | 1,284 | (6) | % | 1,167 | 3 | % | 3,743 | 4,378 | (15) | % | |||||||||||||||||
Credit related expenses | 1,266 | 43 | 2,844 | % | 1,793 | (29) | % | 3,527 | 4,816 | (27) | % | |||||||||||||||||
OREO expense, net | 248 | 298 | (17) | % | 1,770 | (86) | % | 827 | 3,951 | (79) | % | |||||||||||||||||
Software impairment | — | 2,146 | (100) | % | — | — | % | 2,146 | — | 100 | % | |||||||||||||||||
FHLB advance prepayment fee | — | — | — | % | 3,584 | (100) | % | — | 3,584 | (100) | % | |||||||||||||||||
Other | 6,383 | 6,251 | 2 | % | 7,338 | (13) | % | 19,677 | 20,672 | (5) | % | |||||||||||||||||
Total noninterest expense | 75,502 | 73,123 | 3 | % | 73,406 | 3 | % | 219,056 | 212,576 | 3 | % | |||||||||||||||||
Income before income taxes | 75,411 | 71,530 | 5 | % | 39,744 | 90 | % | 204,593 | 108,683 | 88 | % | |||||||||||||||||
Income tax provision | 19,912 | 17,767 | 12 | % | 9,254 | 115 | % | 51,644 | 25,487 | 103 | % | |||||||||||||||||
Net income | $ | 55,499 | $ | 53,763 | 3 | % | $ | 30,490 | 82 | % | $ | 152,949 | $ | 83,196 | 84 | % | ||||||||||||
Earnings Per Common Share - Basic | $ | 0.45 | $ | 0.44 | $ | 0.25 | $ | 1.24 | $ | 0.67 | ||||||||||||||||||
Earnings Per Common Share - Diluted | $ | 0.45 | $ | 0.43 | $ | 0.25 | $ | 1.23 | $ | 0.67 | ||||||||||||||||||
Weighted Average Shares Outstanding - Basic | 122,244,948 | 123,592,695 | 123,251,336 | 123,050,174 | 123,581,055 | |||||||||||||||||||||||
Weighted Average Shares Outstanding - Diluted | 122,908,536 | 124,323,888 | 123,536,765 | 123,848,512 | 123,895,084 | |||||||||||||||||||||||
Hope Bancorp, Inc. Selected Financial Data Unaudited (dollars in thousands, except share and per share data) | ||||||||||||||
For the Three Months Ended
| For the Nine Months Ended
| |||||||||||||
Profitability measures: | 9/30/2021 | 6/30/2021 | 9/30/2020 | 9/30/2021 | 9/30/2020 | |||||||||
ROA | 1.25 | % | 1.25 | % | 0.72 | % | 1.18 | % | 0.68 | % | ||||
ROE | 10.61 | % | 10.41 | % | 5.98 | % | 9.86 | % | 5.47 | % | ||||
ROTCE (1) | 13.71 | % | 13.50 | % | 7.80 | % | 12.78 | % | 7.14 | % | ||||
Net interest margin | 3.07 | % | 3.11 | % | 2.91 | % | 3.08 | % | 2.99 | % | ||||
Efficiency ratio | 53.58 | % | 53.12 | % | 54.31 | % | 53.43 | % | 54.68 | % | ||||
Noninterest expense / average assets | 1.70 | % | 1.70 | % | 1.73 | % | 1.68 | % | 1.73 | % | ||||
(1) | Average tangible 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. | |||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||
Pre-tax acquisition accounting adjustments: | 9/30/2021 | 6/30/2021 | 9/30/2020 | 9/30/2021 | 9/30/2020 | ||||||||||||||
Accretion on acquired non-impaired loans | $ | 368 | $ | 366 | $ | 747 | $ | 1,439 | $ | 2,464 | |||||||||
Accretion on acquired credit deteriorated/purchased credit impaired loans | 2,093 | 2,188 | 4,584 | 6,536 | 17,079 | ||||||||||||||
Amortization of premium on low income housing tax credits | (73 | ) | (74 | ) | (71 | ) | (220 | ) | (212 | ) | |||||||||
Accretion of discount on acquired subordinated debt | (295 | ) | (293 | ) | (287 | ) | (879 | ) | (854 | ) | |||||||||
Amortization of core deposit intangibles | (509 | ) | (510 | ) | (531 | ) | (1,528 | ) | (1,594 | ) | |||||||||
Total acquisition accounting adjustments | $ | 1,584 | $ | 1,677 | $ | 4,442 | $ | 5,348 | $ | 16,883 | |||||||||
Hope Bancorp, Inc. Selected Financial Data Unaudited (dollars in thousands, except share and per share data) | ||||||||||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||||||||||
9/30/2021 | 6/30/2021 | 9/30/2020 | ||||||||||||||||||||||||||||||
Interest | Annualized | Interest | Annualized | Interest | Annualized | |||||||||||||||||||||||||||
Average | Income/ | Average | Average | Income/ | Average | Average | Income/ | Average | ||||||||||||||||||||||||
Balance | Expense | Yield/Cost | Balance | Expense | Yield/Cost | Balance | Expense | Yield/Cost | ||||||||||||||||||||||||
INTEREST EARNING ASSETS: | ||||||||||||||||||||||||||||||||
Loans, including loans held for sale | $ | 13,286,382 | $ | 132,794 | 3.97 | % | $ | 13,293,591 | $ | 131,823 | 3.98 | % | $ | 12,728,558 | $ | 134,430 | 4.20 | % | ||||||||||||||
Securities available for sale | 2,370,672 | 9,207 | 1.54 | % | 2,253,135 | 7,713 | 1.37 | % | 2,010,907 | 9,848 | 1.95 | % | ||||||||||||||||||||
FHLB stock and other investments | 1,197,537 | 865 | 0.29 | % | 759,182 | 668 | 0.35 | % | 1,342,641 | 942 | 0.28 | % | ||||||||||||||||||||
Total interest earning assets | $ | 16,854,591 | $ | 142,866 | 3.36 | % | $ | 16,305,908 | $ | 140,204 | 3.45 | % | $ | 16,082,106 | $ | 145,220 | 3.59 | % | ||||||||||||||
INTEREST BEARING LIABILITIES: | ||||||||||||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||||||||||||
Demand, interest bearing | $ | 5,919,225 | $ | 5,946 | 0.40 | % | $ | 5,484,047 | $ | 5,909 | 0.43 | % | $ | 4,895,101 | $ | 6,546 | 0.53 | % | ||||||||||||||
Savings | 310,525 | 920 | 1.18 | % | 308,530 | 887 | 1.15 | % | 302,882 | 907 | 1.19 | % | ||||||||||||||||||||
Time deposits | 2,914,977 | 2,774 | 0.38 | % | 3,222,457 | 3,900 | 0.49 | % | 4,703,640 | 15,418 | 1.30 | % | ||||||||||||||||||||
Total interest bearing deposits | 9,144,727 | 9,640 | 0.42 | % | 9,015,034 | 10,696 | 0.48 | % | 9,901,623 | 22,871 | 0.92 | % | ||||||||||||||||||||
FHLB advances | 200,000 | 640 | 1.27 | % | 202,198 | 631 | 1.25 | % | 353,587 | 1,323 | 1.49 | % | ||||||||||||||||||||
Convertible notes, net | 215,840 | 1,321 | 2.39 | % | 215,599 | 1,323 | 2.43 | % | 202,470 | 2,370 | 4.58 | % | ||||||||||||||||||||
Subordinated debentures | 100,993 | 969 | 3.75 | % | 100,701 | 977 | 3.84 | % | 99,819 | 1,019 | 3.99 | % | ||||||||||||||||||||
Total interest bearing liabilities | $ | 9,661,560 | $ | 12,570 | 0.52 | % | $ | 9,533,532 | $ | 13,627 | 0.57 | % | $ | 10,557,499 | $ | 27,583 | 1.04 | % | ||||||||||||||
Noninterest bearing demand deposits | 5,848,983 | 5,445,457 | 4,239,108 | |||||||||||||||||||||||||||||
Total funding liabilities/cost of funds | $ | 15,510,543 | 0.32 | % | $ | 14,978,989 | 0.36 | % | $ | 14,796,607 | 0.74 | % | ||||||||||||||||||||
Net interest income/net interest spread | $ | 130,296 | 2.84 | % | $ | 126,577 | 2.88 | % | $ | 117,637 | 2.55 | % | ||||||||||||||||||||
Net interest margin | 3.07 | % | 3.11 | % | 2.91 | % | ||||||||||||||||||||||||||
Cost of deposits: | ||||||||||||||||||||||||||||||||
Noninterest bearing demand deposits | $ | 5,848,983 | $ | — | — | % | $ | 5,445,457 | $ | — | — | % | $ | 4,239,108 | $ | — | — | % | ||||||||||||||
Interest bearing deposits | 9,144,727 | 9,640 | 0.42 | % | 9,015,034 | 10,696 | 0.48 | % | 9,901,623 | 22,871 | 0.92 | % | ||||||||||||||||||||
Total deposits | $ | 14,993,710 | $ | 9,640 | 0.26 | % | $ | 14,460,491 | $ | 10,696 | 0.30 | % | $ | 14,140,731 | $ | 22,871 | 0.64 | % | ||||||||||||||
Nine Months Ended | |||||||||||||||||||||
9/30/2021 | 9/30/2020 | ||||||||||||||||||||
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 | $ | 13,308,526 | $ | 394,353 | 3.96 | % | $ | 12,581,703 | $ | 422,850 | 4.49 | % | |||||||||
Securities available for sale | 2,297,450 | 24,835 | 1.45 | % | 1,825,046 | 30,348 | 2.22 | % | |||||||||||||
FHLB stock and other investments | 867,745 | 2,175 | 0.34 | % | 1,060,699 | 3,951 | 0.50 | % | |||||||||||||
Total interest earning assets | $ | 16,473,721 | $ | 421,363 | 3.42 | % | $ | 15,467,448 | $ | 457,149 | 3.95 | % | |||||||||
INTEREST BEARING LIABILITIES: | |||||||||||||||||||||
Deposits: | |||||||||||||||||||||
Demand, interest bearing | $ | 5,555,711 | $ | 17,345 | 0.42 | % | $ | 4,668,594 | $ | 28,988 | 0.83 | % | |||||||||
Savings | 306,780 | 2,678 | 1.17 | % | 287,060 | 2,578 | 1.20 | % | |||||||||||||
Time deposits | 3,298,393 | 13,083 | 0.53 | % | 4,852,286 | 61,869 | 1.70 | % | |||||||||||||
Total interest bearing deposits | 9,160,884 | 33,106 | 0.48 | % | 9,807,940 | 93,435 | 1.27 | % | |||||||||||||
FHLB advances | 205,971 | 1,913 | 1.24 | % | 513,376 | 6,208 | 1.62 | % | |||||||||||||
Convertible notes, net | 215,483 | 3,967 | 2.43 | % | 201,204 | 7,074 | 4.62 | % | |||||||||||||
Subordinated debentures | 100,697 | 2,925 | 3.83 | % | 99,536 | 3,690 | 4.87 | % | |||||||||||||
Total interest bearing liabilities | $ | 9,683,035 | $ | 41,911 | 0.58 | % | $ | 10,622,056 | $ | 110,407 | 1.39 | % | |||||||||
Noninterest bearing demand deposits | 5,451,908 | 3,573,448 | |||||||||||||||||||
Total funding liabilities/cost of funds | $ | 15,134,943 | 0.37 | % | $ | 14,195,504 | 1.04 | % | |||||||||||||
Net interest income/net interest spread | $ | 379,452 | 2.84 | % | $ | 346,742 | 2.56 | % | |||||||||||||
Net interest margin | 3.08 | % | 2.99 | % | |||||||||||||||||
Cost of deposits: | |||||||||||||||||||||
Noninterest bearing demand deposits | $ | 5,451,908 | $ | — | — | % | $ | 3,573,448 | $ | — | — | % | |||||||||
Interest bearing deposits | 9,160,884 | 33,106 | 0.48 | % | 9,807,940 | 93,435 | 1.27 | % | |||||||||||||
Total deposits | $ | 14,612,792 | $ | 33,106 | 0.30 | % | $ | 13,381,388 | $ | 93,435 | 0.93 | % | |||||||||
Hope Bancorp, Inc. Selected Financial Data Unaudited (dollars in thousands, except share and per share data) | ||||||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||
AVERAGE BALANCES: | 9/30/2021 | 6/30/2021 | % change | 9/30/2020 | % change | 9/30/2021 | 9/30/2020 | % change | ||||||||||||||||||||
Loans receivable, including loans held for sale | $ | 13,286,382 | $ | 13,293,591 | — | % | $ | 12,728,558 | 4 | % | $ | 13,308,526 | $ | 12,581,703 | 6 | % | ||||||||||||
Investments | 3,568,209 | 3,012,317 | 18 | % | 3,353,548 | 6 | % | 3,165,195 | 2,885,745 | 10 | % | |||||||||||||||||
Interest earning assets | 16,854,591 | 16,305,908 | 3 | % | 16,082,106 | 5 | % | 16,473,721 | 15,467,448 | 7 | % | |||||||||||||||||
Total assets | 17,745,066 | 17,164,893 | 3 | % | 17,020,795 | 4 | % | 17,344,095 | 16,411,150 | 6 | % | |||||||||||||||||
Interest bearing deposits | 9,144,727 | 9,015,034 | 1 | % | 9,901,623 | (8 | )% | 9,160,884 | 9,807,940 | (7 | )% | |||||||||||||||||
Interest bearing liabilities | 9,661,560 | 9,533,532 | 1 | % | 10,557,499 | (8 | )% | 9,683,035 | 10,622,056 | (9 | )% | |||||||||||||||||
Noninterest bearing demand deposits | 5,848,983 | 5,445,457 | 7 | % | 4,239,108 | 38 | % | 5,451,908 | 3,573,448 | 53 | % | |||||||||||||||||
Stockholders’ equity | 2,092,018 | 2,066,016 | 1 | % | 2,039,555 | 3 | % | 2,068,676 | 2,028,074 | 2 | % | |||||||||||||||||
Net interest earning assets | 7,193,031 | 6,772,376 | 6 | % | 5,524,607 | 30 | % | 6,790,686 | 4,845,392 | 40 | % | |||||||||||||||||
LOAN PORTFOLIO COMPOSITION: | 9/30/2021 | 6/30/2021 | % change | 12/31/2020 | % change | 9/30/2020 | % change | |||||||||||||||||||||
Commercial loans | $ | 3,857,879 | $ | 4,001,423 | (4 | )% | $ | 4,157,787 | (7 | )% | $ | 3,700,020 | 4 | % | ||||||||||||||
Real estate loans | 8,908,657 | 8,832,276 | 1 | % | 8,772,134 | 2 | % | 8,713,536 | 2 | % | ||||||||||||||||||
Consumer and other loans | 652,155 | 590,602 | 10 | % | 633,292 | 3 | % | 706,669 | (8 | )% | ||||||||||||||||||
Loans, net of deferred loan fees and costs | 13,418,691 | 13,424,301 | — | % | 13,563,213 | (1 | )% | 13,120,225 | 2 | % | ||||||||||||||||||
Allowance for credit losses | (136,774 | ) | (189,452 | ) | (28 | )% | (206,741 | ) | (34 | )% | (179,849 | ) | (24 | )% | ||||||||||||||
Loan receivable, net | $ | 13,281,917 | $ | 13,234,849 | — | % | $ | 13,356,472 | (1 | )% | $ | 12,940,376 | 3 | % | ||||||||||||||
REAL ESTATE LOANS BY PROPERTY TYPE: | 9/30/2021 | 6/30/2021 | % change | 12/31/2020 | % change | 9/30/2020 | % change | |||||||||||||||||||||
Retail buildings | $ | 2,466,881 | $ | 2,361,891 | 4 | % | $ | 2,293,396 | 8 | % | $ | 2,311,516 | 7 | % | ||||||||||||||
Hotels/motels | 1,385,003 | 1,439,770 | (4 | )% | 1,634,287 | (15 | )% | 1,675,960 | (17 | )% | ||||||||||||||||||
Gas stations/car washes | 999,069 | 954,394 | 5 | % | 892,110 | 12 | % | 824,378 | 21 | % | ||||||||||||||||||
Mixed-use facilities | 819,516 | 798,373 | 3 | % | 750,867 | 9 | % | 754,096 | 9 | % | ||||||||||||||||||
Warehouses | 1,160,863 | 1,149,393 | 1 | % | 1,091,389 | 6 | % | 1,022,657 | 14 | % | ||||||||||||||||||
Multifamily | 691,262 | 575,943 | 20 | % | 518,498 | 33 | % | 518,295 | 33 | % | ||||||||||||||||||
Other | 1,386,063 | 1,552,512 | (11 | )% | 1,591,587 | (13 | )% | 1,606,634 | (14 | )% | ||||||||||||||||||
Total | $ | 8,908,657 | $ | 8,832,276 | 1 | % | $ | 8,772,134 | 2 | % | $ | 8,713,536 | 2 | % | ||||||||||||||
DEPOSIT COMPOSITION | 9/30/2021 | 6/30/2021 | % change | 12/31/2020 | % change | 9/30/2020 | % change | |||||||||||||||||||||
Noninterest bearing demand deposits | $ | 6,007,586 | $ | 5,638,115 | 7 | % | $ | 4,814,254 | 25 | % | $ | 4,488,529 | 34 | % | ||||||||||||||
Money market and other | 5,871,567 | 5,786,697 | 1 | % | 5,232,413 | 12 | % | 4,763,893 | 23 | % | ||||||||||||||||||
Saving deposits | 314,603 | 308,651 | 2 | % | 300,770 | 5 | % | 308,943 | 2 | % | ||||||||||||||||||
Time deposits | 2,868,771 | 2,992,767 | (4 | )% | 3,986,475 | (28 | )% | 4,446,991 | (35 | )% | ||||||||||||||||||
Total deposit balances | $ | 15,062,527 | $ | 14,726,230 | 2 | % | $ | 14,333,912 | 5 | % | $ | 14,008,356 | 8 | % | ||||||||||||||
DEPOSIT COMPOSITION (%) | 9/30/2021 | 6/30/2021 | 12/31/2020 | 9/30/2020 | ||||||||||||||||||||||||
Noninterest bearing demand deposits | 39.9 | % | 38.3 | % | 33.6 | % | 32.1 | % | ||||||||||||||||||||
Money market and other | 39.0 | % | 39.2 | % | 36.5 | % | 34.0 | % | ||||||||||||||||||||
Saving deposits | 2.1 | % | 2.1 | % | 2.1 | % | 2.2 | % | ||||||||||||||||||||
Time deposits | 19.0 | % | 20.4 | % | 27.8 | % | 31.7 | % | ||||||||||||||||||||
Total deposit balances | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||||||||||
CAPITAL RATIOS: | 9/30/2021 | 6/30/2021 | 9/30/2020 | ||||||||||||||||
Total stockholders’ equity | $ | 2,074,398 | $ | 2,092,870 | $ | 2,040,561 | |||||||||||||
Common equity tier 1 ratio | 11.01 | % | 11.44 | % | 11.36 | % | |||||||||||||
Tier 1 risk-based capital ratio | 11.70 | % | 12.14 | % | 12.09 | % | |||||||||||||
Total risk-based capital ratio | 12.42 | % | 13.16 | % | 13.19 | % | |||||||||||||
Tier 1 leverage ratio | 9.98 | % | 10.43 | % | 10.02 | % | |||||||||||||
Total risk weighted assets | $ | 14,737,809 | $ | 14,354,682 | $ | 13,691,823 | |||||||||||||
Book value per common share | $ | 17.26 | $ | 16.92 | $ | 16.55 | |||||||||||||
Tangible common equity to tangible assets 1 | 9.24 | % | 9.53 | % | 9.63 | % | |||||||||||||
Tangible common equity per share 1 | $ | 13.33 | $ | 13.10 | $ | 12.70 | |||||||||||||
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: | 9/30/2021 | 6/30/2021 | 3/31/2021 | 12/31/2020 | 9/30/2020 | 9/30/2021 | 9/30/2020 | |||||||||||||||||||||||||||
Balance at beginning of period | $ | 189,452 | $ | 207,943 | $ | 206,741 | $ | 179,849 | $ | 161,771 | $ | 206,741 | $ | 94,144 | ||||||||||||||||||||
CECL day 1 adoption impact | — | — | — | — | — | — | 26,200 | |||||||||||||||||||||||||||
Provision (credit) for credit losses | (10,000 | ) | (7,000 | ) | 3,300 | 27,500 | 22,000 | (13,700 | ) | 67,500 | ||||||||||||||||||||||||
Recoveries | 1,906 | 1,301 | 1,423 | 2,207 | 2,428 | 4,630 | 5,216 | |||||||||||||||||||||||||||
Charge offs | (44,584 | ) | (12,792 | ) | (3,521 | ) | (2,815 | ) | (6,350 | ) | (60,897 | ) | (13,211 | ) | ||||||||||||||||||||
Balance at end of period | $ | 136,774 | $ | 189,452 | $ | 207,943 | $ | 206,741 | $ | 179,849 | $ | 136,774 | $ | 179,849 | ||||||||||||||||||||
Net charge offs/average loans receivable (annualized) | 1.28 | % | 0.35 | % | 0.06 | % | 0.02 | % | 0.12 | % | 0.56 | % | 0.08 | % | ||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||||
NET LOAN CHARGE OFFS (RECOVERIES): | 9/30/2021 | 6/30/2021 | 3/31/2021 | 12/31/2020 | 9/30/2020 | 9/30/2021 | 9/30/2020 | |||||||||||||||||||||||||||
Real estate loans | $ | 40,542 | $ | 11,281 | $ | 2,234 | $ | (726 | ) | $ | 5,154 | $ | 54,057 | $ | 7,532 | |||||||||||||||||||
Commercial loans | 1,117 | 181 | (80 | ) | 1,167 | (1,451 | ) | 1,218 | (535 | ) | ||||||||||||||||||||||||
Consumer loans | 1,019 | 29 | (56 | ) | 167 | 219 | 992 | 998 | ||||||||||||||||||||||||||
Total net charge offs | $ | 42,678 | $ | 11,491 | $ | 2,098 | $ | 608 | $ | 3,922 | $ | 56,267 | $ | 7,995 | ||||||||||||||||||||
Hope Bancorp, Inc. Selected Financial Data Unaudited (dollars in thousands, except share and per share data) | ||||||||||||||||||||
NONPERFORMING ASSETS: | 9/30/2021 | 6/30/2021 | 3/31/2021 | 12/31/2020 | 9/30/2020 | |||||||||||||||
Loans on nonaccrual status 3 | $ | 54,380 | $ | 111,008 | $ | 109,858 | $ | 85,238 | $ | 69,205 | ||||||||||
Delinquent loans 90 days or more on accrual status | 4,567 | 4,759 | 384 | 614 | 1,537 | |||||||||||||||
Accruing troubled debt restructured loans | 39,509 | 51,360 | 41,773 | 37,354 | 35,429 | |||||||||||||||
Total nonperforming loans | 98,456 | 167,127 | 152,015 | 123,206 | 106,171 | |||||||||||||||
Other real estate owned | 15,213 | 16,619 | 18,515 | 20,121 | 18,410 | |||||||||||||||
Total nonperforming assets | $ | 113,669 | $ | 183,746 | $ | 170,530 | $ | 143,327 | $ | 124,581 | ||||||||||
Nonperforming assets/total assets | 0.64 | % | 1.05 | % | 0.99 | % | 0.84 | % | 0.74 | % | ||||||||||
Nonperforming assets/loans receivable & OREO | 0.85 | % | 1.37 | % | 1.24 | % | 1.06 | % | 0.95 | % | ||||||||||
Nonperforming assets/total capital | 5.48 | % | 8.78 | % | 8.34 | % | 6.98 | % | 6.11 | % | ||||||||||
Nonperforming loans/loans receivable | 0.73 | % | 1.24 | % | 1.11 | % | 0.91 | % | 0.81 | % | ||||||||||
Nonaccrual loans/loans receivable | 0.41 | % | 0.83 | % | 0.80 | % | 0.63 | % | 0.53 | % | ||||||||||
Allowance for credit losses/loans receivable | 1.02 | % | 1.41 | % | 1.52 | % | 1.52 | % | 1.37 | % | ||||||||||
Allowance for credit losses/nonaccrual loans | 251.52 | % | 170.67 | % | 189.28 | % | 242.55 | % | 259.88 | % | ||||||||||
Allowance for credit losses/nonperforming loans | 138.92 | % | 113.36 | % | 136.79 | % | 167.80 | % | 169.40 | % | ||||||||||
Allowance for credit losses/nonperforming assets | 120.33 | % | 103.11 | % | 121.94 | % | 144.24 | % | 144.36 | % | ||||||||||
3 | Excludes delinquent SBA loans that are guaranteed and currently in liquidation totaling $20.6 million, $23.6 million, $25.0 million, $26.5 million, and $26.2 million at September 30, 2021, June 30, 2021, March 31, 2021, December 31, 2020, and September 30, 2020, respectively. | |||||||||||||||||||
NONACCRUAL LOANS BY TYPE: | 9/30/2021 | 6/30/2021 | 3/31/2021 | 12/31/2020 | 9/30/2020 | |||||||||||||||
Real estate loans | $ | 41,673 | $ | 95,622 | $ | 91,940 | $ | 67,450 | $ | 51,739 | ||||||||||
Commercial loans | 10,991 | 12,217 | 14,080 | 13,911 | 13,022 | |||||||||||||||
Consumer loans | 1,716 | 3,169 | 3,838 | 3,877 | 4,444 | |||||||||||||||
Total nonaccrual loans | $ | 54,380 | $ | 111,008 | $ | 109,858 | $ | 85,238 | $ | 69,205 | ||||||||||
BREAKDOWN OF ACCRUING TROUBLED DEBT RESTRUCTURED LOANS: | 9/30/2021 | 6/30/2021 | 3/31/2021 | 12/31/2020 | 9/30/2020 | |||||||||||||||
Retail buildings | $ | 11,280 | $ | 12,110 | $ | 6,319 | $ | 5,408 | $ | 5,451 | ||||||||||
Gas stations/car washes | 202 | 206 | 210 | 219 | 224 | |||||||||||||||
Mixed-use facilities | 7,937 | 7,967 | 3,377 | 3,521 | 4,323 | |||||||||||||||
Warehouses | 4,908 | 14,099 | 14,124 | 7,296 | 7,320 | |||||||||||||||
Other 4 | 15,182 | 16,978 | 17,743 | 20,910 | 18,111 | |||||||||||||||
Total | $ | 39,509 | $ | 51,360 | $ | 41,773 | $ | 37,354 | $ | 35,429 | ||||||||||
4 | Includes commercial business, consumer, and other loans | |||||||||||||||||||
ACCRUING DELINQUENT LOANS 30-89 DAYS PAST DUE: | 9/30/2021 | 6/30/2021 | 3/31/2021 | 12/31/2020 | 9/30/2020 | ||||||||||||||
30 - 59 days | $ | 15,016 | $ | 22,466 | $ | 18,175 | $ | 11,347 | $ | 5,962 | |||||||||
60 - 89 days | 4,746 | 6,987 | 8,314 | 16,826 | 58,065 | ||||||||||||||
Total | $ | 19,762 | $ | 29,453 | $ | 26,489 | $ | 28,173 | $ | 64,027 | |||||||||
ACCRUING DELINQUENT LOANS 30-89 DAYS PAST DUE BY TYPE: | 9/30/2021 | 6/30/2021 | 3/31/2021 | 12/31/2020 | 9/30/2020 | ||||||||||||||
Real estate loans | $ | 10,359 | $ | 21,432 | $ | 18,331 | $ | 15,689 | $ | 60,510 | |||||||||
Commercial loans | 9,377 | 560 | 1,002 | 3,393 | 624 | ||||||||||||||
Consumer loans | 26 | 7,461 | 7,156 | 9,091 | 2,893 | ||||||||||||||
Total | $ | 19,762 | $ | 29,453 | $ | 26,489 | $ | 28,173 | $ | 64,027 | |||||||||
CRITICIZED LOANS: | 9/30/2021 | 6/30/2021 | 3/31/2021 | 12/31/2020 | 9/30/2020 | ||||||||||||||
Special mention | $ | 306,766 | $ | 294,559 | $ | 280,974 | $ | 184,941 | $ | 153,388 | |||||||||
Substandard | 243,684 | 380,955 | 379,048 | 366,556 | 311,902 | ||||||||||||||
Doubtful/loss | — | — | — | 1 | 6,640 | ||||||||||||||
Total criticized loans | $ | 550,450 | $ | 675,514 | $ | 660,022 | $ | 551,498 | $ | 471,930 | |||||||||
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 | |||||||||||||||||||
9/30/2021 | 6/30/2021 | 9/30/2020 | 9/30/2021 | 9/30/2020 | ||||||||||||||||
RETURN ON AVERAGE TANGIBLE COMMON EQUITY | ||||||||||||||||||||
Average stockholders’ equity | $ | 2,092,018 | $ | 2,066,016 | $ | 2,039,555 | $ | 2,068,676 | $ | 2,028,074 | ||||||||||
Less: Goodwill and core deposit intangible assets, net | (472,918 | ) | (473,445 | ) | (475,010 | ) | (473,438 | ) | (475,530 | ) | ||||||||||
Average tangible common equity | $ | 1,619,100 | $ | 1,592,571 | $ | 1,564,545 | $ | 1,595,238 | $ | 1,552,544 | ||||||||||
Net income | $ | 55,499 | $ | 53,763 | $ | 30,490 | $ | 152,949 | $ | 83,196 | ||||||||||
Return on average tangible common equity (annualized) | 13.71 | % | 13.50 | % | 7.80 | % | 12.78 | % | 7.14 | % | ||||||||||
9/30/2021 | 6/30/2021 | 12/31/2020 | 9/30/2020 | |||||||||||||||||
TANGIBLE COMMON EQUITY | ||||||||||||||||||||
Total stockholders’ equity | $ | 2,074,398 | $ | 2,092,870 | $ | 2,053,745 | $ | 2,040,561 | ||||||||||||
Less: Goodwill and core deposit intangible assets, net | (472,630 | ) | (473,139 | ) | (474,158 | ) | (474,689 | ) | ||||||||||||
Tangible common equity | $ | 1,601,768 | $ | 1,619,731 | $ | 1,579,587 | $ | 1,565,872 | ||||||||||||
Total assets | $ | 17,799,026 | $ | 17,469,627 | $ | 17,106,664 | $ | 16,733,767 | ||||||||||||
Less: Goodwill and core deposit intangible assets, net | (472,630 | ) | (473,139 | ) | (474,158 | ) | (474,689 | ) | ||||||||||||
Tangible assets | $ | 17,326,396 | $ | 16,996,488 | $ | 16,632,506 | $ | 16,259,078 | ||||||||||||
Common shares outstanding | 120,198,061 | 123,673,832 | 123,264,864 | 123,260,760 | ||||||||||||||||
Tangible common equity to tangible assets | 9.24 | % | 9.53 | % | 9.50 | % | 9.63 | % | ||||||||||||
Tangible common equity per share | $ | 13.33 | $ | 13.10 | $ | 12.81 | $ | 12.70 | ||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||
9/30/2021 | 6/30/2021 | 9/30/2020 | 9/30/2021 | 9/30/2020 | |||||||||||||||
PRE-PROVISION NET REVENUE | |||||||||||||||||||
Net interest income before provision (credit) for credit losses | $ | 130,296 | $ | 126,577 | $ | 117,637 | $ | 379,452 | $ | 346,742 | |||||||||
Noninterest income | 10,617 | 11,076 | 17,513 | 30,497 | 42,017 | ||||||||||||||
Revenue | 140,913 | 137,653 | 135,150 | 409,949 | 388,759 | ||||||||||||||
Noninterest expense | 75,502 | 73,123 | 73,406 | 219,056 | 212,576 | ||||||||||||||
Pre-provision net revenue | $ | 65,411 | $ | 64,530 | $ | 61,744 | $ | 190,893 | $ | 176,183 | |||||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20211025005743/en/
Contacts:
Senior EVP & Chief Financial Officer
213-427-6560
alex.ko@bankofhope.com
