Q3 2017 Highlights:

  • Net income increases 10% to a record $44.6 million, or $0.33 per diluted common share
  • Net interest margin expands 8 basis points to 3.83%
  • Expands presence in Texas with opening of second full-service branch in Houston
  • Loans receivable increase organically by $147 million to $10.96 billion, or 5% on an annualized basis
  • Total assets increase 2% to $14.15 billion, or 8% on an annualized basis

LOS ANGELES, Oct. 24, 2017 (GLOBE NEWSWIRE) -- Hope Bancorp, Inc. (the “Company”) (NASDAQ:HOPE), the holding company of Bank of Hope (the “Bank”), today reported unaudited financial results for its three- and nine-month periods ended September 30, 2017.

The mergers of Wilshire Bancorp, Inc. (“Wilshire”) with and into BBCN Bancorp, Inc. (“BBCN”) and Wilshire Bank with and into BBCN Bank were completed on July 29, 2016, and the combined companies commenced operations under the new banners of Hope Bancorp, Inc. and Bank of Hope, respectively, effective July 30, 2016.  The 2017 financial results reflect full quarters of combined operations.  The 2016 third quarter reflects one month of stand-alone operations of the former BBCN and two months of combined operations.  As a result, the Company’s financial results for the 2017 periods may not be comparable to financial results for the corresponding 2016 periods.

For the three months ended September 30, 2017, net income increased 10% to a record $44.6 million, or $0.33 per diluted common share, from $40.7 million, or $0.30 per diluted common share, for the preceding 2017 second quarter. In the year-ago 2016 third quarter during which the mergers were completed, net income amounted to $26.1 million, or $0.22 per diluted common share, and included $11.2 million in pre-tax merger-related expenses.

“We are very pleased with the many positive trends in our financial performance that resulted in record earnings of $44.6 million for the 2017 third quarter,” said Kevin S. Kim, President and Chief Executive Officer. “Net interest income before provision for loan losses increased 6%, and our net interest margin increased by 8 basis points, reflecting a full quarter’s benefit of the June 2017 interest rate increase and the strong loan growth that occurred at the tail end of the preceding quarter. Notably, our residential mortgage operations delivered its strongest quarter since the merger with consumer residential mortgage originations of $119 million. The progress that our new institutional banking group is making with attracting a new customer base and deposit relationships also appears to be quite promising. Together with a concentrated focus on expense management and a non-core, credit-related benefit, we achieved an efficiency ratio of 44.32% for the 2017 third quarter.

“A full year following our transformational merger, Bank of Hope surpassed $14 billion in assets, and I am confident that the investments we are making in our organization today will support sustainable growth and profitability for many years to come,” said Kim.

Financial Highlights

(dollars in thousands, except per share data) (unaudited)At or for the Three Months Ended
 9/30/2017 6/30/2017 9/30/2016
Net income$44,564  $40,687  $26,105 
Diluted earnings per share$0.33  $0.30  $0.22 
Net interest income before provision for loan losses$123,263  $116,820  $103,474 
Net interest margin 3.83%  3.75%  3.77%
Noninterest income$16,246  $16,115  $14,146 
Noninterest expense$61,837  $64,037  $67,846 
Net loans receivable$10,879,341  $10,736,345  $10,481,221 
Deposits$10,993,320  $10,955,101  $10,702,505 
Nonaccrual loans (1)$43,323  $47,361  $40,602 
ALLL to loans receivable 0.76%  0.74%  0.76%
ALLL to nonaccrual loans (1) 193.05%  169.07%  196.98%
ALLL to nonperforming assets (1) (2) 66.51%  64.40%  68.38%
Provision for loan losses$5,400  $2,760  $6,500 
Net charge offs$1,841  $1,345  $2,949 
Return on assets (“ROA”) 1.30%  1.21%  0.89%
Return on equity (“ROE”) 9.26%  8.60%  6.59%
Efficiency ratio 44.32%  48.17%  57.68%

(1) Excludes delinquent SBA loans that are guaranteed and currently in liquidation totaling $21.5 million, $15.5 million and $14.1 million at September 30, 2017, June 30, 2017 and September 30, 2016, respectively.
(2) Nonperforming assets exclude purchased credit-impaired loans totaling $20.4 million, $16.3 million and $16.4 million at September 30, 2017, June 30, 2017 and September 30, 2016, respectively.

Operating Results for the 2017 Third Quarter

The comparability of the Company’s operating results with past performance is impacted by acquisition accounting adjustments and merger-related expenses associated with past and current acquisitions. The Company provides the following supplemental information to facilitate a better understanding of financial performance. Net interest income and operating income for the three months ended September 30, 2017, June 30, 2017 and September 30, 2016 include the following pre-tax acquisition accounting adjustments and merger-related expenses associated with past and current acquisitions:

(dollars in thousands) (unaudited)Three Months Ended
 9/30/2017 6/30/2017 9/30/2016
Accretion on purchased non-impaired loans$4,566  $3,501  $3,111 
Accretion on purchased credit-impaired loans 5,389   5,212   1,673 
Amortization of premium on low income housing tax credits (84)  (85)  (54)
Amortization of premium on acquired FHLB borrowings 357   446   1,940 
Accretion of discount on acquired subordinated debt (262)  (261)  (190)
Amortization of premium on acquired time deposits and savings 206   1,218   2,336 
Amortization of core deposit intangibles (676)  (676)  (565)
Total acquisition accounting adjustments$9,496  $9,355  $8,251 
Merger-related expenses (260)  (562)  (11,222)
Total$9,236  $8,793  $(2,971)
            

Net Interest Income.  Net interest income before provision for loan losses for the 2017 third quarter increased 6% to $123.3 million from $116.8 million in the immediately preceding second quarter, predominantly reflecting higher levels of interest and fee income on larger loan and securities portfolios, as well as an 18 basis point increase in the average loan yield. In the year-ago third quarter, net interest income before provision for loan losses amounted to$103.5 million.

The net interest margin (net interest income divided by average interest earning assets) for the 2017 third quarter increased 8 basis points to 3.83% from 3.75% in the 2017 second quarter and increased 6 basis points from 3.77% in the year-ago third quarter.

The weighted average yield on loans for the 2017 third quarter increased to 5.07% from 4.89% in the 2017 second quarter, reflecting a full quarter’s benefit from the June 2017 rate increase. Compared with the 2016 third quarter, the weighted average yield on loans increased 27 basis points.

The weighted average yield on new loans originated was 4.40% for the 2017 third quarter, compared with 4.56% in the preceding 2017 second quarter and 4.03% in the year-ago third quarter.

The weighted average cost of deposits for the 2017 third quarter increased 7 basis points to 0.75% from 0.68% in the 2017 second quarter and increased 19 basis points from the year-ago third quarter.

Noninterest IncomeNoninterest income for the 2017 third quarter increased 1% to $16.2 million from $16.1 million in the 2017 second quarter. Compared with the immediately preceding 2017 second quarter, net gains on sales of SBA loans increased to $3.6 million from $3.3 million, and net gains on sales of residential mortgage loans increased to $847,000 from $352,000. These increases were largely offset by lower levels of swap fee income and recoveries on acquired charged off loans versus the 2017 second quarter. Compared with the 2016 third quarter, noninterest income increased 15% from $14.1 million, largely reflecting a nominal gain on sales of SBA loans of only $230,000.

Noninterest ExpenseNoninterest expense declined 3% to $61.8 million in the 2017 third quarter from $64.0 million in the 2017 second quarter, largely reflecting a $2.8 million reversal of an off-balance sheet provision for unfunded loan commitments, partially offset by increased compensation expense. In the 2016 third quarter, total noninterest expense amounted to $67.8 million and included merger-related expenses of $11.2 million in the quarter that the merger of equals was completed.

Salaries and employee benefits expense for the 2017 third quarter increased 3% to $36.0 million from $34.9 million for the immediately preceding second quarter and increased 18% from $30.5 million in the year-ago third quarter.  The total number of FTEs, excluding employees on leave, as of September 30, 2017 was 1,463, up from 1,378 as of June 30, 2017 and 1,400 as of September 30, 2016.

Income Tax Provision.  The effective tax rate for the 2017 third quarter was 38.3%, compared with 38.5% for the preceding 2017 second quarter and 39.7% for the third quarter a year ago.

Balance Sheet Summary

Loans receivable increased by $146.6 million to $10.96 billion at September 30, 2017 from $10.82 billion at June 30, 2017, reflecting a 5% annualized growth rate.  At September 30, 2016, loans receivable were $10.56 billion.

Total new loan originations during the 2017 third quarter amounted to $610.9 million and included SBA loan production of $67.9 million and residential mortgage loan originations of $119.9 million.

Sales of SBA loans to the secondary market and gains derived from those sales are based substantially on the production of SBA 7(a) loans. SBA 7(a) loan originations totaled $49.7 million for the third quarter of 2017, compared with $65.5 million for the second quarter of 2017 and $50.2 million for the year-ago third quarter. During the 2017 third quarter, the Company sold $49.9 million of its SBA loans held for sale, compared with $46.1 million in the immediately preceding second quarter and $2.4 million in the third quarter a year ago.

Aggregate pay offs and pay downs in the 2017 third quarter amounted to $447.6 million, compared with $432.1 million for the immediately preceding second quarter. In the year-ago third quarter, aggregate pay offs and paydowns totaled $357.0 million.

Total deposits at September 30, 2017 increased to $10.99 billion from $10.95 billion at June 30, 2017 and from $10.70 billion at September 30, 2016. Noninterest bearing demand deposits trended positively and accounted for 27.7%, 27.5% and 27.1% of total deposits as of September 30, 2017, June 30, 2017 and September 30, 2016, respectively.

Credit Quality

The provision for loan and lease losses for the 2017 third quarter was $5.4 million, compared with $2.8 million for the immediately preceding second quarter and $6.5 million for the year-ago third quarter.

For a more detailed understanding of the changes in the allowance for loan and lease losses (“ALLL”), the composition of the ALLL has been segmented for disclosure purposes between loans accounted for under the amortized cost method (referred to as “legacy loans”) and loans acquired through the Wilshire Bancorp, Center Financial, Pacific International and Foster Bankshares transactions (referred to as “purchased loans”).  The purchased loans are further segregated between non-impaired and credit-impaired loans.

The composition of the ALLL as of September 30, 2017, June 30, 2017 and September 30, 2016 is as follows:

(dollars in thousands) (unaudited)9/30/2017 6/30/2017 9/30/2016
Legacy loans (1)$70,282 $65,255 $66,986
Purchased non-impaired loans (2) 2,740  2,753  938
Purchased credit-impaired loans (2) 10,611  12,066  12,052
Total ALLL$83,633 $80,074 $79,976
         
Loans receivable$10,962,974 $10,816,419 $10,561,197
ALLL coverage ratio  0.76%   0.74%   0.76%

(1) Legacy loans include loans originated by the Bank’s predecessor banks, loans originated by Bank of Hope and loans that were acquired that have been refinanced as new loans.
(2) Purchased loans were marked to fair value at acquisition date, and the ALLL reflects provisions for credit deterioration since the acquisition date.

The Company defines nonperforming loans to include delinquent loans past due 90 days or more 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 September 30, 2017 declined to $43.3 million, or 0.40% of loans receivable, from $47.4 million, or 0.44% of loans receivable, at June 30, 2017. At September 30, 2016, nonaccrual loans amounted to $40.6 million, or 0.38% of loans receivable. Accruing restructured loans totaled $64.8 million at September 30, 2017, compared with $53.3 million at June 30, 2017 and $48.7 million at September 30, 2016. Total nonperforming loans at September 30, 2017 increased to $108.5 million, or 0.99% of loans receivable, from $102.5  million, or 0.95% of loans receivable, at June 30, 2017 and $89.5 million, or 0.85% of loans receivable, at September 30, 2016.

Nonperforming assets, including nonperforming loans and OREO, increased to $125.7 million at September 30, 2017 from $124.3 million at June 30, 2017 and $117.0 million at September 30, 2016.  As a percentage of total assets, nonperforming assets was 0.89% at September 30, 2017, 0.90% at June 30, 2017 and 0.87% at September 30, 2016.

Following are the components of criticized loan balances as of September 30, 2017, June 30, 2017 and September 30, 2016:

(dollars in thousands) (unaudited)9/30/2017 6/30/2017 9/30/2016
Special Mention (1)$225,228 $251,056 $308,893
Classified (1) 348,109  315,441  259,268
Criticized$573,337 $566,498 $568,161
         

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

Criticized loan balances as of September 30, 2017 were relatively stable when compared with the preceding second quarter and year-ago third quarter. The variance in the criticized loan balance from the 2017 second quarter reflects the migration of loans from special mention to classified, which has been accounted for in the provision for loan losses for the 2017 third quarter.

For the 2017 third quarter, net charge offs totaled $1.8 million, or 0.07% of average loans receivable on an annualized basis. This compares with 2017 second quarter net charge offs of $1.3 million, or 0.05% of average loans receivable on an annualized basis, and $2.9 million, or 0.13% of average loans receivable on an annualized basis, for the year-ago third quarter.

The ALLL at September 30, 2017 was $83.6 million, or 0.76% of loans receivable (excluding loans held for sale), compared with $80.1 million, or 0.74% of loans receivable (excluding loans held for sale), at June 30, 2017 and $80.0 million, or 0.76% of loans receivable (excluding loans held for sale), at September 30, 2016.  The coverage ratio of the ALLL to nonperforming loans (excluding purchased credit-impaired loans) was 77.05% at September 30, 2017, compared with 78.12% at June 30, 2017 and 89.36% at September 30, 2016.

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) totaled $108.5 million at September 30, 2017, compared with $100.7 million at June 30, 2017 and $128.1 million at September 30, 2016.

Capital

At September 30, 2017, the Company continued to exceed all regulatory capital requirements to be generally classified as a “well-capitalized” financial institution, as summarized in the following table:

 9/30/2017 6/30/2017 9/30/2016 Minimum Guideline
for “Well-Capitalized”
Institution
Common Equity Tier 1 Capital12.29%  12.18%  11.96%  6.50% 
Tier 1 Leverage Ratio11.78%  11.80%  13.02%  5.00% 
Tier 1 Risk-based Ratio13.10%  13.00%  12.79%  8.00% 
Total Risk-based Ratio13.81%  13.70%  13.51%  10.00% 

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

 9/30/2017 6/30/2017 9/30/2016
Tangible common equity per share (1)$10.72  $10.52  $10.14 
Tangible common equity to tangible assets (1) 10.63%   10.64%   10.52% 

(1) Tangible common equity to tangible assets is a non-GAAP financial measure that represents common equity less goodwill and net other intangible assets divided by total assets less goodwill and net other intangible assets.  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.  The accompanying financial information includes a reconciliation of the ratio of tangible common equity to tangible assets with stockholders’ equity to total assets.

Investor Conference Call

The Company will host an investor conference call on Wednesday, October 25, 2017 at 9:30 a.m. Pacific Time / 12:30 p.m. Eastern Time to review financial results for the third quarter ended September 30, 2017. 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.” 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 at www.ir-hopebancorp.com. By including the foregoing website address, the Company does not intend to and shall not be deemed to incorporate by reference any material contained therein. 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 November 1, 2017, replay access code 10112701.

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 $14.2 billion in total assets as of September 30, 2017. Headquartered in Los Angeles and serving a multi-ethnic population of customers across the nation, Bank of Hope operates 64 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, and Portland, Oregon; a commercial loan production office in Fremont, California; residential mortgage loan production offices in 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, the registrant does not intent to and shall not be deemed to incorporate by reference any material contained 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. Our 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: the Company’s inability to remediate its presently identified material weaknesses or to do so in a timely manner, the possibility that additional material weaknesses may arise in the future, and that a material weakness may have an impact on our reported financial results; 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 Part I, Item 1A. Risk Factors contained in our Annual Report on Form 10-K for the year ended December 31, 2016 and Part II, Item 1A., Risk Factors, contained in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2017. 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

(tables follow)

 
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands, except share data)
 
Assets9/30/2017 6/30/2017 % change 12/31/2016 % change 9/30/2016 % change
Cash and due from banks$405,296  $446,415  (9)% $437,334  (7)% $443,903  (9)%
Securities available for sale, at fair value1,868,309  1,680,382  11% 1,556,740  20% 1,558,719  20%
Federal Home Loan Bank (“FHLB”), Federal Reserve Bank (“FRB”) stock and other investments82,141  66,313  24% 66,166  24% 69,119  19%
Loans held for sale, at the lower of cost or fair value11,425  16,927  (33)% 22,785  (50)% 58,186  (80)%
Loans receivable10,962,974  10,816,419  1% 10,543,332  4% 10,561,197  4%
Allowance for loan losses(83,633) (80,074) (4)% (79,343) (5)% (79,976) (5)%
Net loans receivable10,879,341  10,736,345  1% 10,463,989  4% 10,481,221  4%
Accrued interest receivable29,145  25,640  14% 26,880  8% 24,165  21%
Premises and equipment, net55,838  52,565  6% 55,316  1% 53,966  3%
Bank owned life insurance74,514  74,113  1% 73,696  1% 73,290  2%
Goodwill464,450  464,450  % 462,997  % 464,419  %
Servicing assets25,079  25,338  (1)% 26,457  (5)% 26,529  (5)%
Other intangible assets, net17,198  17,874  (4)% 19,226  (11)% 19,968  (14)%
Other assets237,285  252,855  (6)% 229,836  3% 237,144  %
Total assets14,150,021  13,859,217  2% 13,441,422  5% 13,510,629  5%
                     
Liabilities                    
Deposits$10,993,320  $10,955,101  % $10,642,035  3% $10,702,505  3%
Borrowings from FHLB1,018,046  793,403  28% 754,290  35% 754,739  35%
Subordinated debentures100,590  100,328  % 99,808  1% 99,548  1%
Accrued interest payable13,740  11,855  16% 10,863  26% 9,708  42%
Other liabilities89,894  92,236  (3)% 78,953  14% 89,558  %
Total liabilities12,215,590  11,952,923  2% 11,585,949  5% 11,656,058  5%
                     
Stockholders’ Equity                    
Common stock, $0.001 par value; authorized, 150,000,000 shares at September 30, 2017, June 30, 2017, March 31, 2017, December 31, 2016, and September 30, 2016$135  $135  % $135  % $135  %
Capital surplus1,403,586  1,402,303  % 1,400,490  % 1,400,915  %
Retained earnings540,921  513,945  5% 469,505  15% 445,104  22%
Accumulated other comprehensive income (loss), net(10,211) (10,089) (1)% (14,657) 30% 8,417  (221)%
Total stockholders’ equity1,934,431  1,906,294  1% 1,855,473  4% 1,854,571  4%
Total liabilities and stockholders’ equity$14,150,021  $13,859,217  2% $13,441,422  5% $13,510,629  5%
                         


Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands, except share and per share data)
 
 Three Months Ended Nine Months Ended
 9/30/2017 6/30/2017 % change 9/30/2016 % change 9/30/2017 9/30/2016 % change
Interest income:               
Interest and fees on loans$136,822  $128,515  6% $112,132  22% $388,631  $266,336  46%
Interest on securities9,540  8,741  9% 6,645  44% 26,394  18,051  46%
Interest on federal funds sold and other investments1,281  1,277  % 775  65% 3,894  2,160  80%
Total interest income147,643  138,533  7% 119,552  23% 418,919  286,547  46%
                          
Interest expense:                         
Interest on deposits20,376  18,114  12% 13,017  57% 53,001  33,276  59%
Interest on other borrowings4,004  3,599  11% 3,061  31% 10,930  7,125  53%
Total interest expense24,380  21,713  12% 16,078  52% 63,931  40,401  58%
                      
Net interest income before provision for loan losses123,263  116,820  6% 103,474  19% 354,988  246,146  44%
Provision for loan losses5,400  2,760  96% 6,500  (17)% 13,760  8,200  68%
Net interest income after provision for loan losses117,863  114,060  3% 96,974  22% 341,228  237,946  43%
                          
Noninterest income:                         
Service fees on deposit accounts5,151  5,179  (1)% 4,778  8% 15,668  10,363  51%
Net gains on sales of SBA loans3,631  3,267  11% 230  1,479% 10,148  5,090  99%
Net gains on sales of other loans847  352  141% 1,476  (43)% 1,619  1,519  7%
Net gains on sales of securities available for sale    % 948  (100)%   948  (100)%
Other income and fees6,617  7,317  (10)% 6,714  (1)% 22,529  15,707  43%
Total noninterest income16,246  16,115  1% 14,146  15% 49,964  33,627  49%
                          
Noninterest expense:                         
Salaries and employee benefits35,987  34,946  3% 30,456  18% 105,099  73,782  42%
Occupancy7,131  7,154  % 6,889  4% 21,479  16,626  29%
Furniture and equipment3,642  3,556  2% 3,297  10% 10,611  7,921  34%
Advertising and marketing2,217  2,394  (7)% 2,306  (4)% 8,035  4,845  66%
Data processing and communications3,221  2,676  20% 3,199  1% 9,503  7,499  27%
Professional fees3,239  3,260  (1)% 1,898  71% 10,401  4,255  144%
FDIC assessment1,262  1,004  26% 1,564  (19)% 3,276  3,697  (11)%
Credit related expenses(2,487) 113  N/A   810  N/A  (491) 2,142  N/A 
Other real estate owned (“OREO”) expense, net678  1,188  (43)% (423) N/A  2,863  1,138  152%
Merger-related expenses260  562  (54)% 11,222  (98)% 1,769  13,962  (87)%
Other6,687  7,184  (7)% 6,628  1% 21,028  12,377  70%
Total noninterest expense61,837  64,037  (3)% 67,846  (9)% 193,573  148,244  31%
Income before income taxes72,272  66,138  9% 43,274  67% 197,619  123,329  60%
Income tax provision27,708  25,451  9% 17,169  61% 76,158  50,212  52%
Net income$44,564  $40,687  10% $26,105  71% $121,461  $73,117  66%
                
Earnings Per Common Share:               
Basic$0.33  $0.30    $0.22    $0.90  $0.80   
Diluted$0.33  $0.30    $0.22    $0.90  $0.79   
                
Average Shares Outstanding:               
Basic135,382,457  135,257,044    116,622,920    135,296,332  91,940,070   
Diluted135,630,912  135,613,181    116,951,074    135,661,965  92,266,245   


Hope Bancorp, Inc.
Selected Financial Data
Unaudited
 
 For the Three Months Ended
(Annualized)
 For the Nine Months Ended
(Annualized)
Profitability measures:9/30/2017 6/30/2017 9/30/2016 9/30/2017 9/30/2016
ROA1.30% 1.21% 0.89% 1.20% 1.05%
ROE9.26% 8.60% 6.59% 8.54% 8.35%
Return on average tangible equity 112.36% 11.54% 8.59% 11.46% 10.03%
Net interest margin3.83% 3.75% 3.77% 3.78% 3.76%
Efficiency ratio44.32% 48.17% 57.68% 47.80% 52.99%
          
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.
 


Hope Bancorp, Inc.
Selected Financial Data 
Unaudited (dollars in thousands) 
 
 Three Months Ended Three Months Ended Three Months Ended
 9/30/2017 6/30/2017 9/30/2016
   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 receivable, including loans held for sale$10,712,856  $136,822  5.07% $10,536,428  $128,515  4.89% $9,292,814  $112,132  4.80%
Securities available for sale1,743,610  9,540  2.17% 1,609,310  8,741  2.18% 1,406,919  6,645  1.89%
FRB and FHLB stock and other investments299,305  1,281  1.70% 364,906  1,277  1.40% 237,981  775  1.30%
Total interest earning assets$12,755,771  $147,643  4.59% $12,510,644  $138,533  4.44% $10,937,714  $119,552  4.35%
                             
INTEREST BEARING LIABILITIES:                            
Deposits:                            
Demand, interest bearing$3,526,846  $8,127  0.91% $3,457,412  $7,974  0.93% $2,924,340  $5,932  0.81%
Savings258,383  348  0.53% 280,188  279  0.40% 268,424  311  0.46%
Time deposits4,053,577  11,901  1.16% 4,012,838  9,861  0.99% 3,600,400  6,774  0.75%
Total interest bearing deposits7,838,806  20,376  1.03% 7,750,438  18,114  0.94% 6,793,164  13,017  0.76%
FHLB advances764,691  2,698  1.40% 713,858  2,338  1.31% 698,081  2,161  1.23%
Other borrowings96,524  1,306  5.29% 96,218  1,261  5.18% 78,828  900  4.47%
Total interest bearing liabilities8,700,021  $24,380  1.11% 8,560,514  $21,713  1.02% 7,570,073  $16,078  0.84%
Noninterest bearing demand deposits2,993,441       2,929,656       2,535,015      
Total funding liabilities/cost of funds$11,693,462    0.83% $11,490,170    0.76% $10,105,088    0.63%
Net interest income/net interest spread  $123,263  3.48%   $116,820  3.42%   $103,474  3.51%
Net interest margin    3.83%     3.75%     3.77%
Cost of deposits:                            
Noninterest bearing demand deposits$2,993,441       $2,929,656       $2,535,015      
Interest bearing deposits7,838,806  20,376  1.03% 7,750,438  18,114  0.94% 6,793,164  13,017  0.76%
Total deposits$10,832,247  $20,376  0.75% $10,680,094  $18,114  0.68% $9,328,179  $13,017  0.56%
                                 

 

Hope Bancorp, Inc.
Selected Financial Data 
Unaudited (dollars in thousands) 
 
 Nine Months Ended Nine Months Ended
 9/30/2017 9/30/2016
   Interest Annualized   Interest Annualized
 Average Income/ Average Average Income/ Average
 Balance Expense Yield/Cost Balance Expense Yield/Cost
INTEREST EARNING ASSETS:           
Loans receivable, including loans held for sale$10,544,898  $388,631  4.93% $7,347,740  $266,336  4.84%
Securities available for sale1,640,784  26,394  2.15% 1,171,816  18,051  2.06%
FRB and FHLB stock and other investments362,265   3,894  1.44% 230,993  2,160  1.25%
Total interest earning assets$12,547,947  $418,919  4.46% $8,750,549  $286,547  4.37%
                  
INTEREST BEARING LIABILITIES:                 
Deposits:                 
Demand, interest bearing$3,474,077  $23,291  0.90% $2,310,000  $14,083  0.81%
Savings277,264  914  0.44% 211,255  962  0.61%
Time deposits4,025,360  28,796  0.96% 2,916,868  18,231  0.83%
Total interest bearing deposits7,776,701  53,001  0.91% 5,438,123  33,276  0.82%
FHLB advances714,048  $7,176  1.34% 598,672  5,370  1.20%
Other borrowings96,220  3,754  5.14% 53,593  1,755  4.30%
Total interest bearing liabilities8,586,969  $63,931  1.00% 6,090,388  $40,401  0.89%
Noninterest bearing demand deposits2,930,937       1,947,673      
Total funding liabilities/cost of funds$11,517,906    0.74% $8,038,061    0.67%
Net interest income/net interest spread  $354,988  3.46%   $246,146  3.48%
Net interest margin    3.78%     3.76%
Cost of deposits:             
Noninterest bearing demand deposits$2,930,937       $1,947,673      
Interest bearing deposits7,776,701  53,001  0.91% 5,438,123  33,276  0.82%
Total deposits$10,707,638  $53,001  0.66% $7,385,796  $33,276  0.60%
                      


Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
 
  Three Months Ended Nine Months Ended
AVERAGE BALANCES:9/30/2017 6/30/2017 % change 9/30/2016 % change 9/30/2017 9/30/2016 % change
Loans receivable, including loans held for sale$10,712,856  $10,536,428  2% $9,292,814  15% $10,544,898  $7,347,740  44%
Investments2,042,915  1,974,216  3% 1,644,900  24% 2,003,049  1,402,809  43%
Interest earning assets12,755,771  12,510,644  2% 10,937,714  17% 12,547,947  8,750,549  43%
Total assets13,737,532  13,470,745  2% 11,777,564  17% 13,516,139  9,279,438  46%
                               
Interest bearing deposits7,838,806  7,750,438  1% 6,793,164  15% 7,776,701  5,438,123  43%
Interest bearing liabilities8,700,021  8,560,514  2% 7,570,073  15% 8,586,969  6,090,388  41%
Noninterest bearing demand deposits2,993,441  2,929,656  2% 2,535,015  18% 2,930,937  1,947,673  50%
Stockholders’ equity1,924,444  1,892,126  2% 1,585,100  21% 1,895,393  1,167,747  62%
Net interest earning assets4,055,750  3,950,130  3% 3,367,641  20% 3,960,978  2,660,161  49%
                
LOAN PORTFOLIO COMPOSITION:9/30/2017 6/30/2017 % change 12/31/2016 % change 9/30/2016 % change  
Commercial loans$2,005,290  $1,925,503  4% $1,986,949  (3)% $2,011,913    %  
Real estate loans8,438,064  8,432,395  % 8,154,570  3% 8,158,871  3%  
Consumer and other loans521,459  460,446  13% 403,470  14% 392,608  33%  
Loans outstanding10,964,813  10,818,344  1% 10,544,989  3% 10,563,392  4%  
Unamortized deferred loan fees - net of costs(1,839) (1,925) 4% (1,657) (11)% (2,195) 16%  
Loans, net of deferred loan fees and costs10,962,974  10,816,419  1% 10,543,332  3% 10,561,197  4%  
Allowance for loan losses(83,633) (80,074) (4)% (79,343) (5)% (79,976) (5)%  
Loan receivable, net$10,879,341  $10,736,345  1% $10,463,989  3% $10,481,221  4%  
                
REAL ESTATE LOANS BY PROPERTY TYPE:9/30/2017 6/30/2017 % change 12/31/2016 % change 9/30/2016 % change  
Retail buildings$2,314,867  $2,260,091  2% $2,163,075  4% $2,136,128  8%  
Hotels/motels1,595,787  1,606,334  (1)% 1,605,787   % 1,599,985    %  
Gas stations/car washes979,378  973,266  1% 946,364  3% 962,643  2%  
Mixed-use facilities614,255  605,379  1% 563,484  7% 546,177  12%  
Warehouses913,217  929,034  (2)% 892,100  4% 912,818    %  
Multifamily435,088  433,414   % 423,084  2% 426,257  2%  
Other1,585,472  1,624,877  (2)% 1,560,676  4% 1,574,863  1%  
Total$8,438,064  $8,432,395  % $8,154,570  3% $8,158,871  3%  
                
DEPOSIT COMPOSITION9/30/2017 6/30/2017 % change 12/31/2016 % change 9/30/2016 % change  
Noninterest bearing demand deposits$3,049,998  $3,016,538  1% $2,900,241  5% $2,903,658  5%  
Money market and other3,685,973  3,563,404  3% 3,401,446  8% 3,318,728  11%  
Saving deposits243,042  275,272  (12)% 301,906  (19)% 304,719  (20)%  
Time deposits of $250,000 or more1,252,747  1,127,941  11% 1,077,024  16% 1,075,020  17%  
Other time deposits2,761,560  2,971,946  (7)% 2,961,418  (7)% 3,100,380  (11)%  
Total deposit balances$10,993,320  $10,955,101  % $10,642,035  3% $10,702,505  3%  
                
DEPOSIT COMPOSITION (%)9/30/2017 6/30/2017   12/31/2016   9/30/2016    
Noninterest bearing demand deposits27.7% 27.5%   27.3%   27.1%    
Money market and other33.5% 32.5%   32.0%   31.0%    
Saving deposits2.2% 2.5%   2.8%   2.9%    
Time deposits of $250,000 or more11.4% 10.3%   10.1%   10.0%    
Other time deposits25.2% 27.2%   27.8%   29.0%    
Total deposit balances100.0% 100.0%   100.0%   100.0%    
                    


Hope Bancorp, Inc.      
Selected Financial Data      
Unaudited (dollars in thousands, except share and per share data)      
       
CAPITAL RATIOS:9/30/2017 6/30/2017 12/31/2016 9/30/2016      
Total stockholders’ equity$1,934,431  $1,906,294  $1,855,473  $1,854,571       
Common Equity Tier 1 ratio12.29% 12.18% 12.10% 11.96%      
Tier 1 risk-based capital ratio13.10% 13.00% 12.92% 12.79%      
Total risk-based capital ratio13.81% 13.70% 13.64% 13.51%      
Tier 1 leverage ratio11.78% 11.80% 11.49% 13.02%      
Total risk weighted assets$11,935,561  $11,814,607  11,575,944  11,491,204       
Book value per common share$14.28  $14.09  $13.72  $13.73       
Tangible common equity to tangible assets 210.63% 10.64% 10.60% 10.52%      
Tangible common equity per share 2$10.72  $10.52  $10.15  $10.14       
              
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.        
              


Reconciliation of GAAP financial measures to non-GAAP financial measures: 
  
 Three Months Ended 
 9/30/2017 6/30/2017 9/30/2016 
TANGIBLE COMMON EQUITY      
Total stockholders’ equity$1,934,431  $1,906,294  $1,854,571  
Less:  Goodwill and core deposit intangible assets, net(481,648) (482,324) (484,387) 
Tangible common equity$1,452,783  $1,423,970  $1,370,184  
       
Total assets$14,150,021  $13,859,217  $13,510,629  
Less:  Goodwill and core deposit intangible assets, net(481,648) (482,324) (484,387) 
Tangible assets$13,668,373  $13,376,893  $13,026,242  
       
Common shares outstanding135,467,176  135,297,678  135,109,641  
       
Tangible common equity to tangible assets10.63% 10.64% 10.52% 
Tangible common equity per share10.72  $10.52  $10.14  
       


 Three Months Ended Nine Months Ended
ALLOWANCE FOR LOAN LOSSES:9/30/2017 6/30/2017 3/31/2017 12/31/2016 9/30/2016 9/30/2017 9/30/2016
Balance at beginning of period$80,074  $78,659  $79,343  $79,976  $76,425  $79,343  $76,408 
Provision for loan losses5,400  2,760  5,600  800  6,500  13,760  8,200 
Recoveries3,072  777  321  452  1,009  4,170  2,443 
Charge offs(4,913) (2,122) (6,605) (1,885) (3,958) (13,640) (7,075)
Balance at end of period$83,633  $80,074  $78,659  $79,343  $79,976  $83,633  $79,976 
Net charge offs/average loans receivable (annualized)0.07% 0.05% 0.24% 0.05% 0.13% 0.07% 0.13%
              
 Three Months Ended Nine Months Ended
NET CHARGED OFF (RECOVERED) LOANS  BY TYPE:9/30/2017 6/30/2017 3/31/2017 12/31/2016 9/30/2016 9/30/2017 9/30/2016
Real estate loans$314  $830  $1,444  $(45) $127  $2,588  $(245)
Commercial loans1,293  276  4,564  1,000  2,663  6,133  4,691 
Consumer loans234  239  276  478  159  749  186 
Total net charge offs$1,841  $1,345  $6,284  $1,433  $2,949  $9,470  $4,632 
                            

 

Hope Bancorp, Inc.
Selected Financial Data 
Unaudited (dollars in thousands)
 
NONPERFORMING ASSETS9/30/2017 6/30/2017 3/31/2017 12/31/2016 9/30/2016
Delinquent loans on nonaccrual status 3$43,323  $47,361  $37,009  $40,074  $40,602 
Delinquent loans 90 days or more on accrual status 4407  1,850  275  305  192 
Accruing troubled debt restructured loans64,807  53,290  48,984  48,874  48,701 
Total nonperforming loans108,537  102,501  86,268  89,253  89,495 
Other real estate owned17,208  21,839  19,096  21,990  27,457 
Total nonperforming assets$125,745  $124,340  $105,364  $111,243  $116,952 
Nonperforming assets/total assets0.89% 0.90% 0.78% 0.83% 0.87%
Nonperforming assets/loans receivable & OREO1.15% 1.15% 1.00% 1.05% 1.10%
Nonperforming assets/total capital6.50% 6.52% 5.61% 6.00% 6.31%
Nonperforming loans/loans receivable0.99% 0.95% 0.82% 0.85% 0.85%
Nonaccrual loans/loans receivable0.40% 0.44% 0.35% 0.38% 0.38%
Allowance for loan losses/loans receivable0.76% 0.74% 0.75% 0.75% 0.76%
Allowance for loan losses/nonaccrual loans193.05% 169.07% 212.54% 197.99% 196.98%
Allowance for loan losses/nonperforming loans77.05% 78.12% 91.18% 88.90% 89.36%
Allowance for loan losses/nonperforming assets66.51% 64.40% 74.65% 71.32% 68.38%
          
3  Excludes delinquent SBA loans that are guaranteed and currently in liquidation totaling $21.5 million, $15.5 million, $15.2 million, $15.9 million, and $14.1 million, at September 30, 2017, June 30, 2017, March 31, 2017, December 31, 2016, and September 30, 2016, respectively.
4  Excludes Acquired Credit Impaired Loans that are delinquent 90 or more days totaling $20.4 million, $16.3 million, $17.3 million, $19.6 million, and $16.4 million, at September 30, 2017, June 30, 2017, March 31, 2017, December 31, 2016, and September 30, 2016, respectively.
          
BREAKDOWN OF ACCRUING TROUBLED DEBT RESTRUCTURED LOANS BY TYPE:9/30/2017 6/30/2017 3/31/2017 12/31/2016 9/30/2016
Retail buildings$6,807  $6,396  $5,794  $5,832  $5,876 
Hotels/motels1,279  1,287  1,300  1,305  1,315 
Gas stations/car washes        829 
Mixed-use facilities131  133  134  889  895 
Warehouses5,185  5,253  5,321  5,379  5,449 
Other 551,405  40,221  36,435  35,469  34,337 
Total$64,807  $53,290  $48,984  $48,874  $48,701 
          
Includes commercial business and other loans         
          
          
ACCRUING DELINQUENT LOANS 30-89 DAYS PAST DUE9/30/2017 6/30/2017 3/31/2017 12/31/2016 9/30/2016
Legacy         
30 - 59 days$8,857  $5,910  $10,198  $6,253  $3,580 
60 - 89 days3,572  11,740  3,978  6,720  1,100 
Total$12,429  $17,650  $14,176  $12,973  $4,680 
          
Acquired         
30 - 59 days$1,429  $6,373  $5,249  $4,015  $3,450 
60 - 89 days1,687  996  1,007  1,049  1,169 
Total$3,116  $7,369  $6,256  $5,064  $4,619 
          
Total delinquent loans 30-89 days past due$15,545  $25,019  $20,432  $18,037  $9,299 
          

 

Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
 
DELINQUENT LOANS 30-89 DAYS PAST DUE BY TYPE9/30/2017 6/30/2017 3/31/2017 12/31/2016 9/30/2016
Legacy         
Real estate loans$7,850  $14,126  $12,575  $10,896  $2,678 
Commercial loans3,771  3,333  1,404  2,010  1,866 
Consumer loans808  191  198  67  136 
Total delinquent loans 30-89 days past due - legacy$12,429  $17,650  $14,177  $12,973  $4,680 
          
Acquired         
Real estate loans$2,323  $5,786  $5,211  $2,721  $3,761 
Commercial loans793  1,519  360  1,987  858 
Consumer loans  64  684  356   
Total delinquent loans 30-89 days past due - acquired$3,116  $7,369  $6,255  $5,064  $4,619 
          
Total delinquent loans 30-89 days past due$15,545  $25,019  $20,432  $18,037  $9,299 
          
          
NONACCRUAL LOANS  BY TYPE9/30/2017 6/30/2017 3/31/2017 12/31/2016 9/30/2016
Real estate loans$31,453  $33,503  $26,550  $27,522  $24,055 
Commercial loans10,682  12,874  10,117  11,773  15,742 
Consumer loans1,188  984  342  779  805 
Total nonaccrual loans$43,323  $47,361  $37,009  $40,074  $40,602 
          
CRITICIZED LOANS9/30/2017 6/30/2017 3/31/2017 12/31/2016 9/30/2016
Legacy         
Special mention$131,785  $152,373  $127,431  $127,562  $168,289 
Substandard197,993  177,097  167,748  162,942  124,938 
Doubtful216  2,208  233  95  441 
Loss         
Total criticized loans - legacy$329,994  $331,678  $295,412  $290,599  $293,668 
          
Acquired         
Special mention$93,443  $98,684  $98,536  $116,094  $140,604 
Substandard148,615  134,474  139,964  148,164  131,398 
Doubtful1,285  1,660  2,051  1,854  2,624 
Loss        (133)
Total criticized loans - acquired$243,343  $234,818  $240,551  $266,112  $274,493 
          
Total criticized loans$573,337  $566,496  $535,963  $556,711  $568,161 
                    


Contact:
Angie Yang
SVP, Director of Investor Relations &
Corporate Communications
213-251-2219
angie.yang@bankofhope.com