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Hope Bancorp Reports 2019 Second Quarter Financial Results

LOS ANGELES--(BUSINESS WIRE)--

Hope Bancorp, Inc. (the “Company”) (HOPE), the holding company of Bank of Hope (the “Bank”), today reported unaudited financial results for the three and six-month periods ended June 30, 2019. Net income for the 2019 second quarter totaled $42.7 million, or $0.34 per diluted common share. This compares with net income for the preceding 2019 first quarter of $42.8 million, or $0.34 per diluted common share and $47.5 million, or $0.36 per diluted common share, for the 2018 second quarter.

“Second quarter results demonstrate a number of achievements amidst challenging operating conditions for commercial banks, marked by a rapidly changing rate environment and coupled with intense competition,” said Kevin S. Kim, Chairman, President and Chief Executive Officer of Hope Bancorp, Inc. “Most notably, our asset quality rebounded from the preceding quarter and improved on all fronts with considerable reductions in nonaccrual and criticized loan balances. We also began to see the initial benefits of our deposit initiatives and reported a favorable shift in the mix of our deposits to lower-cost deposit categories. Additionally, our company-wide focus on cost management enabled us to contain expenses relatively in line with prior quarters despite ongoing long-term investments in our organization. New loan originations for the quarter totaled $504 million, reflecting prudent underwriting in an aggressively priced competitive market. We are particularly pleased with the higher volumes of C&I loan originations, which accounted for 35% of new production in the quarter. However, the inverted yield curve and the growing assumption for near-term rate cuts have intensified an already competitive business environment and contributed to higher levels of payoffs, which offset our loan growth for the quarter.”

Q2 2019 Highlights

  • 2019 second quarter net income totaled $42.7 million, or $0.34 per diluted common share.
  • Asset quality improvements across the board, most notably a 25% reduction in nonaccrual loans and 9% decrease in criticized loan balances.
  • Favorable shift in deposit mix, with increases in noninterest bearing demand deposits, savings and money market balances, and decreases in time deposits. Ongoing deposit initiatives minimized the increase in total deposit costs over the preceding quarter to 5 basis points from a 17 basis point quarter-over-quarter increase in the 2019 first quarter.
  • Net loan-to-deposits (including HFS loans) as of June 30, 2019 was stable at 97.7%.
  • Noninterest expense fairly consistent with prior quarters.

Financial Highlights

(dollars in thousands, except per share data) (unaudited)

At or for the Three Months Ended

 

6/30/2019

 

3/31/2019

 

6/30/2018

Net income

$

42,681

 

 

$

42,758

 

 

$

47,530

 

Diluted earnings per share

$

0.34

 

 

$

0.34

 

 

$

0.36

 

Net interest income before provision for loan losses

$

117,221

 

 

$

119,608

 

 

$

122,819

 

Net interest margin

 

3.31

%

 

 

3.39

%

 

 

3.61

%

Noninterest income

$

12,287

 

 

$

11,422

 

 

$

15,269

 

Noninterest expense

$

71,371

 

 

$

70,833

 

 

$

71,629

 

Net loans receivable

$

11,883,068

 

 

$

11,959,787

 

 

$

11,581,559

 

Deposits

$

12,172,384

 

 

$

12,249,196

 

 

$

11,734,595

 

Nonaccrual loans (1) (2)

$

64,934

 

 

$

86,637

 

 

$

68,226

 

Nonperforming loans to loans receivable (1) (2)

 

0.89

%

 

 

1.10

%

 

 

1.03

%

ALLL to loans receivable

 

0.79

%

 

 

0.78

%

 

 

0.77

%

ALLL to nonaccrual loans (1) (2)

 

144.86

%

 

 

108.75

%

 

 

131.74

%

ALLL to nonperforming assets (1) (2)

 

84.24

%

 

 

68.03

%

 

 

69.60

%

Provision for loan losses

$

1,200

 

 

$

3,000

 

 

$

2,300

 

Net charge offs (recoveries)

$

1,351

 

 

$

462

 

 

$

(1,120

)

Return on average assets (“ROA”)

 

1.12

%

 

 

1.12

%

 

 

1.30

%

Return on average equity (“ROE”)

 

8.71

%

 

 

8.91

%

 

 

9.89

%

Return on average common tangible equity (“ROTCE”) (3)

 

11.51

%

 

 

11.86

%

 

 

13.18

%

Noninterest expense / average assets

 

1.88

%

 

 

1.85

%

 

 

1.96

%

Efficiency ratio

 

55.11

%

 

 

54.06

%

 

 

51.87

%

(1)

Excludes delinquent SBA loans that are guaranteed and currently in liquidation

(2)

Excludes purchased credit-impaired loans

(3)

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 7.

Operating Results for the 2019 Second Quarter

Net Interest Income. Net interest income before provision for loan losses for the 2019 second quarter totaled $117.2 million, compared with $119.6 million in the 2019 first quarter and $122.8 million in the year-ago second quarter.

The net interest margin (net interest income divided by average interest earning assets) for the 2019 second quarter was 3.31%, compared with 3.39% in the 2019 first quarter and 3.61% in the prior-year second quarter.

The weighted average yield on loans for the 2019 second quarter was 5.32%, up 1 basis point from 5.31% in the preceding first quarter. This deceleration from the 10 basis point increase in the weighted average yield on loans from the 2018 fourth quarter to the 2019 first quarter reflects the impact on new business activity of an inverted yield curve and growing assumption for near-term rate cuts. Compared with the year-ago second quarter, the weighted average yield on loans was up 16 basis points over 5.16%.

The weighted average cost of deposits for the 2019 second quarter increased 5 basis points to 1.62% from 1.57% in the preceding first quarter. This reflects a deceleration from the 17 basis point increase in the weighted average cost of deposits from the 2018 fourth quarter to the 2019 first quarter and underscores the initial successes with the Company’s deposit initiatives. Compared with the year-ago second quarter, the weighted average cost of deposits increased 56 basis points from 1.06%.

Noninterest Income. Noninterest income for the 2019 second quarter totaled $12.3 million, compared with $11.4 million in the 2019 first quarter and $15.3 million in the 2018 second quarter. The variance in noninterest income typically reflects the changes in the net gains on sales of SBA and mortgage loans. As previously announced, the Company discontinued its practice of regularly selling SBA loans to the secondary market during the 2018 fourth quarter. Net gains on sales of SBA loans amounted to $0 for the 2019 second and first quarter, in contrast with a net gain of $3.5 million for the year-ago second quarter. Net gains on sales of other loans, largely residential mortgage loans, amounted to $1.1 million for the 2019 second quarter, $741,000 for the 2019 first quarter, and $431,000 for the year-ago second quarter.

Noninterest Expense. Noninterest expense for the 2019 second quarter was relatively stable totaling $71.4 million, compared with $70.8 million in the preceding first quarter and $71.6 million in the 2018 second quarter. Noninterest expense as a percentage of average assets amounted to 1.88%, 1.85% and 1.96% for the 2019 second quarter, 2019 first quarter and 2018 second quarter, respectively.

Salaries and employee benefits expense decreased to $39.3 million for the 2019 second quarter from $40.4 million for the 2019 first quarter and $40.6 million for the year-ago second quarter.

Income Tax Provision. The effective tax rate for the 2019 second quarter was 25.0%, compared with 25.2% in the preceding 2019 first quarter and 25.9% in the 2018 second quarter.

Balance Sheet Summary

Loans receivable at June 30, 2019 totaled $11.98 billion, compared with $12.05 billion at March 31, 2019 and $11.67 million at June 30, 2018.

New loan originations funded during the 2019 second quarter totaled $503.9 million and included SBA loan production of $37.2 million and residential mortgage loan originations of $74.0 million. This compares with 2019 first quarter originations of $442.0 million, including SBA loan production of $48.0 million and residential mortgage loan originations of $64.3 million. In the year-ago second quarter, new loan originations funded totaled $792.3 million, including SBA loan production of $87.0 million and residential mortgage loan originations of $182.1 million.

SBA 7(a) loan originations totaled $32.7 million for the 2019 second quarter, compared with $33.0 million for the first quarter of 2019 and $65.8 million for the year-ago second quarter. In accordance with the Company’s decision to retain SBA 7(a) loans in its portfolio, there were no sales to the secondary market during the 2019 second or first quarter. In contrast, the Company sold $52.5 million of its SBA 7(a) loans during the 2018 second quarter.

Sales of residential mortgage loans to the secondary market totaled $76.2 million in the 2019 second quarter and included $49.6 million of sales from the Company’s existing portfolio. This compares with total sales of $69.8 million in the 2019 first quarter and $12.3 million in the 2018 second quarter.

Aggregate loan payoffs and pay downs in the 2019 second quarter increased considerably to $598.5 million from $364.0 million for the 2019 first quarter and $435.1 million in the year-ago second quarter. The increase was largely due to a nearly two-fold level of pay offs versus recent quarters, reflecting the more competitive business environment and the proactive workout of problem credits identified in the preceding quarter.

Total deposits at June 30, 2019 decreased modestly to $12.17 billion from $12.25 billion at March 31, 2019, as inflows of noninterest bearing demand deposits, savings and money market accounts were more than offset by decreases in higher-cost time deposits. Total deposits at June 30, 2018 amounted to $11.73 billion.

Credit Quality

The provision for loan and lease losses for the 2019 second quarter was $1.2 million, compared with $3.0 million for the preceding 2019 first quarter and $2.3 million for the year-ago second quarter.

The Company defines nonperforming loans to include loans on nonaccrual status, delinquent loans past due 90 days or more on accrual status (excluding purchased credit-impaired loans) and accruing restructured loans. Nonaccrual loans at June 30, 2019 declined by 25% to $64.9 million from $86.6 million at March 31, 2019 and by 5% from $68.2 million at June 30, 2018. Nonaccrual loans as a percentage of loans receivable were 0.54%, 0.72% and 0.58% at June 30, 2019, March 31, 2019 and June 30, 2018, respectively. Accruing delinquent loans decreased to $353,000 at June 30, 2019 from $387,000 at March 31, 2019 and $3.0 million at June 30, 2018. Accruing restructured loans at June 30, 2019 decreased to $40.7 million from $45.2 million at March 31, 2019 and $49.2 million at June 30, 2018. Total nonperforming loans decreased to $106.0 million, or 0.89% of loans receivable, at June 30, 2019 from $132.2 million, or 1.10% of loans receivable, at March 31, 2019 and $120.5 million, or 1.03% of loans receivable, at June 30, 2018.

Other real estate owned declined to $5.6 million at June 30, 2019 from $6.3 million at March 31, 2019 and $8.7 million at June 30, 2018.

Following are the components of criticized loan balances as of June 30, 2019, March 31, 2019 and June 30, 2018:

(dollars in thousands) (unaudited)

6/30/2019

 

3/31/2019

 

6/30/2018

Special Mention (1)

$

186,485

 

$

205,373

 

$

139,494

Classified (1)

 

323,842

 

 

353,202

 

 

357,671

Criticized

$

510,327

 

$

558,575

 

$

497,165

(1)

Balances include purchased loans which were marked to fair value on the date of acquisition.

During the 2019 second quarter, the Company recorded net charge offs of $1.4 million, or 0.05% of average loans receivable on an annualized basis. This compares with net charge offs of $462,000, or 0.02% of average loans receivable on an annualized basis, for the 2019 first quarter. In the 2018 second quarter, the Company realized a net recovery of $1.1 million, or 0.04% of average loans receivable on an annualized basis.

The ALLL was $94.1 million, $94.2 million and $89.9 million at June 30, 2019, March 31, 2019 and June 30, 2018, respectively. As a percentage of loans receivable (excluding loans held for sale), the ALLL was 0.79%, 0.78% and 0.77% at June 30, 2019, March 31, 2019 and June 30, 2018, respectively. The coverage ratio of the ALLL to nonperforming loans (excluding purchased credit-impaired loans) was 88.73% at June 30, 2019, 71.25% at March 31, 2019, and 74.61% at June 30, 2018.

Impaired loans (defined as loans for which it is probable that not all principal and interest payments due will be collected in accordance with the contractual terms) decreased to $106.0 million at June 30, 2019 from $132.1 million at March 31, 2019 and $117.8 million at June 30, 2018.

Capital

At June 30, 2019, the Company and the Bank continued to exceed all regulatory capital requirements to be classified as a “well-capitalized” financial institution, as summarized in the following table:

 

 

 

 

 

 

Minimum Guideline

 

 

 

 

 

 

for “Well-Capitalized”

(unaudited)

6/30/2019

 

3/31/2019

 

6/30/2018

 

Bank

Common Equity Tier 1 Capital

11.90

%

 

11.59

%

 

11.74

%

 

6.50

%

Tier 1 Leverage Ratio

10.94

%

 

10.66

%

 

11.06

%

 

5.00

%

Tier 1 Risk-Based Ratio

12.67

%

 

12.36

%

 

12.52

%

 

8.00

%

Total Risk-Based Ratio

13.42

%

 

13.10

%

 

13.24

%

 

10.00

%

Tangible common equity per share and as a percentage of tangible assets are summarized in the following table:

(unaudited)

6/30/2019

 

3/31/2019

 

6/30/2018

Tangible common equity per share (1)

$

11.98

 

 

$

11.59

 

 

$

10.87

 

Tangible common equity to tangible assets (2)

 

10.21

%

 

 

9.84

%

 

 

9.91

%

(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 7.

(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 7.

Management reviews tangible common equity to tangible assets ratio in evaluating the Company’s and the Bank’s capital levels and has included these figures and tangible common equity per share figures in response to market participant interest in tangible common equity as a measure of capital. A reconciliation of the GAAP to non-GAAP financial measures is provided in the accompanying financial information.

Investor Conference Call

The Company previously announced that it will host an investor conference call on Wednesday, July 17, 2019 at 9:30 a.m. Pacific Time / 12:30 p.m. Eastern Time to review financial results for its second quarter ended June 30, 2019. 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 in the Investor Relations section of Hope Bancorp’s website for one year. A telephonic replay of the call will be available at 877-344-7529 (domestic) or 412-317-0088 (international) for one week through July 24, 2019, replay access code 10132888.

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 $15.3 billion in total assets as of June 30, 2019. Headquartered in Los Angeles and serving a multi-ethnic population of customers across the nation, Bank of Hope operates 58 full-service branches in California, Washington, Texas, Illinois, New York, New Jersey, Virginia, Georgia 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; and regulatory risks associated with current and future regulations. For additional information concerning these and other risk factors, see the Company’s most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q. 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 data)

Assets:

6/30/2019

 

3/31/2019

 

% change

 

12/31/2018

 

% change

 

6/30/2018

 

% change

Cash and due from banks

$

609,795

 

 

$

612,884

 

 

(1

)%

 

$

459,606

 

 

33

%

 

$

466,364

 

 

31

%

Securities available for sale, at fair value

1,826,903

 

 

1,818,343

 

 

%

 

1,846,265

 

 

(1

)%

 

1,835,106

 

 

%

Federal Home Loan Bank (“FHLB”) stock and other investments

100,962

 

 

102,594

 

 

(2

)%

 

104,705

 

 

(4

)%

 

104,764

 

 

(4

)%

Loans held for sale, at the lower of cost or fair value

6,426

 

 

921

 

 

598

%

 

25,128

 

 

(74

)%

 

26,866

 

 

(76

)%

Loans receivable

11,977,134

 

 

12,054,004

 

 

(1

)%

 

12,098,115

 

 

(1

)%

 

11,671,440

 

 

3

%

Allowance for loan losses

(94,066

)

 

(94,217

)

 

%

 

(92,557

)

 

(2

)%

 

(89,881

)

 

(5

)%

Net loans receivable

11,883,068

 

 

11,959,787

 

 

(1

)%

 

12,005,558

 

 

(1

)%

 

11,581,559

 

 

3

%

Accrued interest receivable

33,980

 

 

34,831

 

 

(2

)%

 

32,225

 

 

5

%

 

30,954

 

 

10

%

Premises and equipment, net

52,552

 

 

53,218

 

 

(1

)%

 

53,794

 

 

(2

)%

 

56,242

 

 

(7

)%

Bank owned life insurance

75,963

 

 

75,586

 

 

%

 

75,219

 

 

1

%

 

75,693

 

 

%

Goodwill

464,450

 

 

464,450

 

 

%

 

464,450

 

 

%

 

464,450

 

 

%

Servicing assets

19,997

 

 

21,407

 

 

(7

)%

 

23,132

 

 

(14

)%

 

25,050

 

 

(20

)%

Other intangible assets, net

12,947

 

 

13,504

 

 

(4

)%

 

14,061

 

 

(8

)%

 

15,292

 

 

(15

)%

Other assets

251,784

 

 

241,144

 

 

4

%

 

201,809

 

 

25

%

 

187,668

 

 

34

%

Total assets

$

15,338,827

 

 

$

15,398,669

 

 

%

 

$

15,305,952

 

 

%

 

$

14,870,008

 

 

3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

$

12,172,384

 

 

$

12,249,196

 

 

(1

)%

 

$

12,155,656

 

 

%

 

$

11,734,595

 

 

4

%

FHLB advances

695,000

 

 

720,000

 

 

(3

)%

 

821,280

 

 

(15

)%

 

836,994

 

 

(17

)%

Convertible notes, net

196,977

 

 

195,754

 

 

1

%

 

194,543

 

 

1

%

 

192,120

 

 

3

%

Subordinated debentures

102,477

 

 

102,201

 

 

%

 

101,929

 

 

1

%

 

101,386

 

 

1

%

Accrued interest payable

36,987

 

 

37,511

 

 

(1

)%

 

31,374

 

 

18

%

 

24,594

 

 

50

%

Other liabilities

139,830

 

 

147,796

 

 

(5

)%

 

97,959

 

 

43

%

 

74,643

 

 

87

%

Total liabilities

$

13,343,655

 

 

$

13,452,458

 

 

(1

)%

 

13,402,741

 

 

%

 

$

12,964,332

 

 

3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock, $0.001 par value

$

136

 

 

$

136

 

 

%

 

$

136

 

 

%

 

$

136

 

 

%

Capital surplus

1,425,262

 

 

1,424,029

 

 

%

 

1,423,405

 

 

%

 

1,421,679

 

 

%

Retained earnings

712,351

 

 

687,404

 

 

4

%

 

662,375

 

 

8

%

 

607,944

 

 

17

%

Treasury stock, at cost

(150,000

)

 

(150,000

)

 

%

 

(150,000

)

 

%

 

(78,961

)

 

(90

)%

Accumulated other comprehensive gain (loss), net

7,423

 

 

(15,358

)

 

N/A

 

 

(32,705

)

 

N/A

 

 

(45,122

)

 

N/A

 

Total stockholders’ equity

1,995,172

 

 

1,946,211

 

 

3

%

 

1,903,211

 

 

5

%

 

1,905,676

 

 

5

%

Total liabilities and stockholders’ equity

$

15,338,827

 

 

$

15,398,669

 

 

%

 

$

15,305,952

 

 

%

 

$

14,870,008

 

 

3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock shares - authorized

150,000,000

 

 

150,000,000

 

 

 

 

150,000,000

 

 

 

 

150,000,000

 

 

 

Common stock shares - outstanding

126,673,822

 

 

126,635,584

 

 

 

 

126,639,912

 

 

 

 

131,167,705

 

 

 

Treasury stock shares

9,002,453

9,002,453

 

9,002,453

4,361,740

 

 

Table Page 1

Hope Bancorp, Inc.

Selected Financial Data

Unaudited (dollars in thousands, except share and per share data)

 

Three Months Ended

 

Six Months Ended

 

6/30/2019

 

3/31/2019

 

% change

 

6/30/2018

 

% change

 

6/30/2019

 

6/30/2018

 

% change

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans

$

158,627

 

 

$

158,136

 

 

%

 

$

146,188

 

 

9

%

 

$

316,763

 

 

$

284,131

 

 

11

%

Interest on securities

11,866

 

 

12,319

 

 

(4

)%

 

10,899

 

 

9

%

 

24,185

 

 

21,000

 

 

15

%

Interest on federal funds sold and other investments

2,973

 

 

2,675

 

 

11

%

 

2,823

 

 

5

%

 

5,648

 

 

5,189

 

 

9

%

Total interest income

173,466

 

 

173,130

 

 

%

 

159,910

 

 

8

%

 

346,596

 

 

310,320

 

 

12

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest on deposits

48,826

 

 

46,847

 

 

4

%

 

30,610

 

 

60

%

 

95,673

 

 

55,459

 

 

73

%

Interest on other borrowings and convertible notes

7,419

 

 

6,675

 

 

11

%

 

6,481

 

 

14

%

 

14,094

 

 

11,974

 

 

18

%

Total interest expense

56,245

 

 

53,522

 

 

5

%

 

37,091

 

 

52

%

 

109,767

 

 

67,433

 

 

63

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income before provision for loan losses

117,221

 

 

119,608

 

 

(2

)%

 

122,819

 

 

(5

)%

 

236,829

 

 

242,887

 

 

(2

)%

Provision for loan losses

1,200

 

 

3,000

 

 

(60

)%

 

2,300

 

 

(48

)%

 

4,200

 

 

4,800

 

 

(13

)%

Net interest income after provision for loan losses

116,021

 

 

116,608

 

 

(1

)%

 

120,519

 

 

(4

)%

 

232,629

 

 

238,087

 

 

(2

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service fees on deposit accounts

4,416

 

 

4,317

 

 

2

%

 

4,613

 

 

(4

)%

 

8,733

 

 

9,414

 

 

(7

)%

Net gains on sales of SBA loans

 

 

 

 

%

 

3,480

 

 

(100

)%

 

 

 

6,930

 

 

(100

)%

Net gains on sales of other loans

1,066

 

 

741

 

 

44

%

 

431

 

 

147

%

 

1,807

 

 

1,627

 

 

11

%

Net gains on sales of securities available for sale

129

 

 

 

 

100

%

 

 

 

%

 

129

 

 

 

 

100

%

Other income and fees

6,676

 

 

6,364

 

 

5

%

 

6,745

 

 

(1

)%

 

13,040

 

 

17,148

 

 

(24

)%

Total noninterest income

12,287

 

 

11,422

 

 

8

%

 

15,269

 

 

(20

)%

 

23,709

 

 

35,119

 

 

(32

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

39,297

 

 

40,429

 

 

(3

)%

 

40,575

 

 

(3

)%

 

79,726

 

 

79,960

 

 

%

Occupancy

7,839

 

 

7,677

 

 

2

%

 

7,418

 

 

6

%

 

15,516

 

 

14,657

 

 

6

%

Furniture and equipment

4,026

 

 

3,446

 

 

17

%

 

4,023

 

 

%

 

7,472

 

 

7,744

 

 

(4

)%

Advertising and marketing

2,245

 

 

2,062

 

 

9

%

 

2,737

 

 

(18

)%

 

4,307

 

 

5,036

 

 

(14

)%

Data processing and communications

2,587

 

 

2,956

 

 

(12

)%

 

3,574

 

 

(28

)%

 

5,543

 

 

7,069

 

 

(22

)%

Professional fees

5,959

 

 

5,380

 

 

11

%

 

4,474

 

 

33

%

 

11,339

 

 

7,580

 

 

50

%

FDIC assessment

1,559

 

 

1,551

 

 

1

%

 

1,611

 

 

(3

)%

 

3,110

 

 

3,378

 

 

(8

)%

Credit related expenses

1,549

 

 

678

 

 

128

%

 

926

 

 

67

%

 

2,227

 

 

1,698

 

 

31

%

Other real estate owned (“OREO”) expense, net

83

 

 

(152

)

 

N/A

 

 

45

 

 

84

%

 

(69

)

 

(59

)

 

17

%

Other

6,227

 

 

6,806

 

 

(9

)%

 

6,246

 

 

%

 

13,033

 

 

13,019

 

 

%

Total noninterest expense

71,371

 

 

70,833

 

 

1

%

 

71,629

 

 

%

 

142,204

 

 

140,082

 

 

2

%

Income before income taxes

56,937

 

 

57,197

 

 

%

 

64,159

 

 

(11

)%

 

114,134

 

 

133,124

 

 

(14

)%

Income tax provision

14,256

 

 

14,439

 

 

(1

)%

 

16,629

 

 

(14

)%

 

28,695

 

 

34,362

 

 

(16

)%

Net income

$

42,681

 

 

$

42,758

 

 

%

 

$

47,530

 

 

(10

)%

 

$

85,439

 

 

$

98,762

 

 

(13

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings Per Common Share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.34

 

 

$

0.34

 

 

 

 

$

0.36

 

 

 

 

$

0.67

 

 

$

0.74

 

 

 

Diluted

$

0.34

 

 

$

0.34

 

 

 

 

$

0.36

 

 

 

 

$

0.67

 

 

$

0.73

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Shares Outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

126,658,509

 

 

126,640,464

 

 

 

 

133,061,304

 

 

 

 

126,649,536

 

 

134,283,216

 

 

 

Diluted

126,870,455

 

 

126,819,672

 

 

 

 

133,352,841

 

 

 

 

126,842,870

 

 

134,576,744

 

 

 

Table Page 2

Hope Bancorp, Inc.

Selected Financial Data

Unaudited (dollars in thousands)

 

For the Three Months Ended

 

For the Six Months Ended

(Annualized)

(Annualized)

Profitability measures:

6/30/2019

 

3/31/2019

 

6/30/2018

 

6/30/2019

 

6/30/2018

ROA

1.12

%

 

1.12

%

 

1.30

%

 

1.12

%

 

1.37

%

ROE

8.71

%

 

8.91

%

 

9.89

%

 

8.81

%

 

10.25

%

ROTCE 1

11.51

%

 

11.86

%

 

13.18

%

 

11.68

%

 

13.66

%

Net interest margin

3.31

%

 

3.39

%

 

3.61

%

 

3.35

%

 

3.64

%

Efficiency ratio

55.11

%

 

54.06

%

 

51.87

%

 

54.58

%

 

50.39

%

Noninterest expense / average assets

1.88

%

 

1.85

%

 

1.96

%

 

1.87

%

 

1.94

%

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

 

Six Months Ended

Pre-tax acquisition accounting adjustments and merger-related expenses:

6/30/2019

 

3/31/2019

 

6/30/2018

 

6/30/2019

 

6/30/2018

Accretion on purchased non-impaired loans

$

1,799

 

 

$

2,166

 

 

$

3,189

 

 

$

3,965

 

 

$

6,386

 

Accretion on purchased credit-impaired loans

6,980

 

 

5,833

 

 

5,959

 

 

12,813

 

 

11,731

 

Amortization of premium on low income housing tax credits

(76

)

 

(76

)

 

(85

)

 

(152

)

 

(169

)

Amortization of premium on acquired FHLB borrowings

 

 

1,280

 

 

352

 

 

1,280

 

 

699

 

Accretion of discount on acquired subordinated debt

(275

)

 

(273

)

 

(269

)

 

(548

)

 

(533

)

Amortization of premium on acquired time deposits and savings

 

 

 

 

 

 

 

 

1

 

Amortization of core deposit intangibles

(557

)

 

(557

)

 

(615

)

 

(1,114

)

 

(1,231

)

Total acquisition accounting adjustments

7,871

 

 

8,373

 

 

8,531

 

 

16,244

 

 

16,884

 

Merger-related expenses

 

 

 

 

 

 

 

 

7

 

Total

$

7,871

 

 

$

8,373

 

 

$

8,531

 

 

$

16,244

 

 

$

16,891

 

 

 Table Page 3

Hope Bancorp, Inc.

Selected Financial Data

Unaudited (dollars in thousands)

 

Three Months Ended

 

6/30/2019

 

3/31/2019

 

6/30/2018

 

 

 

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

$

11,959,920

 

 

$

158,627

 

 

5.32

%

 

$

12,088,169

 

 

$

158,136

 

 

5.31

%

 

$

11,364,229

 

 

$

146,188

 

 

5.16

%

Securities available for sale

1,804,677

 

 

11,866

 

 

2.64

%

 

1,827,612

 

 

12,319

 

 

2.73

%

 

1,732,908

 

 

10,899

 

 

2.52

%

FHLB stock and other investments

460,623

 

 

2,973

 

 

2.59

%

 

405,660

 

 

2,675

 

 

2.67

%

 

561,230

 

 

2,823

 

 

2.02

%

Total interest earning assets

$

14,225,220

 

 

$

173,466

 

 

4.89

%

 

$

14,321,441

 

 

$

173,130

 

 

4.90

%

 

$

13,658,367

 

 

$

159,910

 

 

4.70

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST BEARING LIABILITIES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand, interest bearing

$

3,094,179

 

 

$

14,019

 

 

1.82

%

 

$

3,042,524

 

 

$

12,987

 

 

1.73

%

 

$

3,342,685

 

 

$

10,438

 

 

1.25

%

Savings

225,978

 

 

608

 

 

1.08

%

 

223,531

 

 

565

 

 

1.03

%

 

228,381

 

 

442

 

 

0.78

%

Time deposits

5,784,980

 

 

34,199

 

 

2.37

%

 

5,936,842

 

 

33,295

 

 

2.27

%

 

4,919,465

 

 

19,730

 

 

1.61

%

Total interest bearing deposits

9,105,137

 

 

48,826

 

 

2.15

%

 

9,202,897

 

 

46,847

 

 

2.06

%

 

8,490,531

 

 

30,610

 

 

1.45

%

FHLB advances

706,044

 

 

3,384

 

 

1.92

%

 

810,857

 

 

2,614

 

 

1.31

%

 

846,014

 

 

3,681

 

 

1.75

%

Convertible debt

196,244

 

 

2,310

 

 

4.66

%

 

194,969

 

 

2,298

 

 

4.71

%

 

102,979

 

 

1,198

 

 

4.60

%

Subordinated debentures

98,406

 

 

1,725

 

 

6.93

%

 

98,126

 

 

1,763

 

 

7.19

%

 

97,315

 

 

1,602

 

 

6.51

%

Total interest bearing liabilities

10,105,831

 

 

$

56,245

 

 

2.23

%

 

10,306,849

 

 

$

53,522

 

 

2.11

%

 

9,536,839

 

 

$

37,091

 

 

1.56

%

Noninterest bearing demand deposits

2,947,476

 

 

 

 

 

 

2,886,746

 

 

 

 

 

 

3,053,338

 

 

 

 

 

Total funding liabilities/cost of funds

$

13,053,307

 

 

 

 

1.73

%

 

$

13,193,595

 

 

 

 

1.65

%

 

$

12,590,177

 

 

 

 

1.18

%

Net interest income/net interest spread

 

 

$

117,221

 

 

2.66

%

 

 

 

$

119,608

 

 

2.79

%

 

 

 

$

122,819

 

 

3.14

%

Net interest margin

 

 

 

 

3.31

%

 

 

 

 

 

3.39

%

 

 

 

 

 

3.61

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest bearing demand deposits

$

2,947,476

 

 

$

 

 

%

 

$

2,886,746

 

 

$

 

 

%

 

$

3,053,338

 

 

$

 

 

%

Interest bearing deposits

9,105,137

 

 

48,826

 

 

2.15

%

 

9,202,897

 

 

46,847

 

 

2.06

%

 

8,490,531

 

 

30,610

 

 

1.45

%

Total deposits

$

12,052,613

 

 

$

48,826

 

 

1.62

%

 

$

12,089,643

 

 

$

46,847

 

 

1.57

%

 

$

11,543,869

 

 

$

30,610

 

 

1.06

%

 

Table Page 4

Hope Bancorp, Inc.

Selected Financial Data

Unaudited (dollars in thousands)

 

Six Months Ended

 

6/30/2019

 

6/30/2018

 

 

 

Interest

 

Annualized

 

 

 

Interest

 

Annualized

 

Average

 

Income/

 

Average

 

Average

 

Income/

 

Average

 

Balance

 

Expense

 

Yield/Cost

 

Balance

 

Expense

...