Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Hope Bancorp Reports 2023 Third Quarter Financial Results; Announces Strategic Reorganization By: Hope Bancorp, Inc. via Business Wire October 23, 2023 at 06:30 AM EDT 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, 2023. For the three months ended September 30, 2023, net income totaled $30.0 million, or $0.25 per diluted common share. This compares with net income of $38.0 million, or $0.32 per diluted common share, in the preceding second quarter. “Our third quarter 2023 net interest margin expanded 13 basis points, and our net interest income grew 4% quarter-over-quarter,” stated Kevin S. Kim, Chairman, President and Chief Executive Officer. “We maintained disciplined expense control and our noninterest expenses decreased 1% over the same period. However, we recorded a provision for credit losses of $17 million for the third quarter, and certain one-time gains in the second quarter 2023 noninterest income did not reoccur. As a result, our net income declined compared with the prior quarter.” “Our balance sheet continued to strengthen. Total deposits grew to $15.7 billion at September 30, 2023, up 1% from June 30, 2023, reflecting growth in customer deposits, partially offset by a planned reduction of brokered time deposits. Our total capital ratio increased to 13.23% as of September 30, 2023, and all our regulatory capital ratios expanded quarter-over-quarter,” continued Kim. “Our deposit growth, taken together with our expanding capital and ample liquidity, positions us well to take advantage of profitable growth opportunities going forward.” Strategic Reorganization The Company also announced today a strategic reorganization designed to enhance shareholder value over the long term. Accordingly, the Company realigned its structure around lines of business and product delivery channels, optimized its production capacity and reduced headcount. The restructuring is expected to generate over $40 million in estimated annualized cost savings, largely related to the reduction in staffing, savings from a planned branch rationalization, subject to customary notices and approvals, and operational process improvements. The Company expects to recognize one-time charges of approximately $12 million in the fourth quarter of 2023 related to the reorganization. “As the largest Korean American bank in the United States, Bank of Hope has made great strides in transitioning from a traditional community bank into a regional bank serving a wide range of consumer, small business, commercial and corporate customers,” commented Kim. “Today’s strategic reorganization further evolves our business model. As a result, we expect to operate our Bank more efficiently, strengthen our franchise, enhance the customer experience and expand our customer relationships, benefiting all our stakeholders through sustainably improved profitability.” Financial Summary At or for the Three Months Ended (dollars in thousands, except per share data) (unaudited) 9/30/2023 6/30/2023 9/30/2022 Net income $ 30,049 $ 38,022 $ 53,748 Diluted earnings per share $ 0.25 $ 0.32 $ 0.45 Net interest income before provision for credit losses $ 135,378 $ 130,689 $ 153,186 Pre-provision net revenue (“PPNR”) (1) $ 56,810 $ 60,370 $ 82,627 Loans receivable $ 14,306,193 $ 14,864,810 $ 15,491,187 Deposits $ 15,739,859 $ 15,619,352 $ 15,502,209 Total assets $ 20,076,364 $ 20,366,138 $ 19,083,388 Total equity $ 2,030,424 $ 2,067,998 $ 1,975,725 Total capital ratio 13.23 % 12.64 % 11.72 % Tangible common equity (“TCE”) ratio (1) 7.96 % 8.04 % 8.09 % Allowance for credit losses to loans receivable 1.11 % 1.16 % 1.04 % Nonperforming assets to total assets (2) 0.31 % 0.38 % 0.51 % Return on average assets (“ROA”) (3) 0.60 % 0.74 % 1.17 % Return on average equity (“ROE”) (3) 5.78 % 7.34 % 10.58 % Return on average TCE (“ROTCE”) (1) (3) 7.47 % 9.49 % 13.77 % ROA (PPNR) (1) (3) 1.13 % 1.18 % 1.79 % Net interest margin (3) 2.83 % 2.70 % 3.49 % Efficiency ratio 60.5 % 59.1 % 50.4 % (1) PPNR, TCE ratio, ROTCE, and ROA (PPNR) are non-GAAP financial measures. Quantitative reconciliations of the most directly comparable GAAP to non-GAAP financial measures are provided in the accompanying financial information on Table Page 10. (2) Excludes delinquent Small Business Administration (“SBA”) loans that are guaranteed and currently in liquidation. (3) Annualized. Operating Results for the 2023 Third Quarter Net interest income growth and net interest margin expansion. Net interest income before provision for credit losses for the 2023 third quarter totaled $135.4 million, growing 4% from $130.7 million in the preceding second quarter. Third quarter 2023 net interest margin expanded 13 basis points to 2.83%, up from 2.70% in the 2023 second quarter. The linked quarter net interest income growth and net interest margin expansion reflected higher yields on earning assets, a decrease in the average volume of borrowings and debt, and an increase in the average volume of interest-earning cash and deposits at other banks, partially offset by a higher cost of funds and a lower average volume of loans. Third quarter 2023 weighted average yield on earning assets of 5.77% expanded 24 basis points quarter-over-quarter; the rate of change accelerated from the previous quarter. In comparison, the third quarter 2023 weighted average cost of funds of 3.16% increased 14 basis points quarter-over-quarter; the rate of change decelerated from the previous quarter. Noninterest income. Noninterest income for the 2023 third quarter totaled $8.3 million, compared with $17.0 million in the preceding second quarter. Second quarter 2023 noninterest income included a one-time $5.8 million cash distribution from a gain on an investment in an affordable housing partnership and $1.9 million of gains on SBA loan sales. The Company did not sell any SBA 7(a) loans during the 2023 third quarter, retaining loan production on its balance sheet instead. In comparison, during the preceding 2023 second quarter, the Company sold $38.4 million of the guaranteed portion of SBA 7(a) loans for net gains on sale of $1.9 million. Noninterest expense. Noninterest expense for the 2023 third quarter decreased 1% to $86.9 million, down from $87.3 million in the preceding second quarter. The linked quarter decrease was largely driven by lower salaries and employee benefits expense and lower FDIC assessment expense, partially offset by higher earned interest credit costs. Third quarter 2023 salaries and employee benefits expense decreased 2% to $51.0 million, down from $52.3 million in the 2023 second quarter. The Company’s efficiency ratio for the 2023 third quarter was 60.5%, compared with 59.1% in the preceding second quarter. Tax rate. The effective tax rate for the 2023 third quarter was 24.9%, compared with 26.1% for the preceding second quarter. The year-to-date effective tax rate for the first nine months of 2023 was 25.7%. Balance Sheet Summary Strong Liquidity. At September 30, 2023, cash and cash equivalents increased to $2.50 billion, up from $2.30 billion at June 30, 2023, and up from $331.3 million at September 30, 2022. Available borrowing capacity, cash and cash equivalents, and unpledged investment securities totaled $8.29 billion at September 30, 2023, equivalent to 53% of total deposits and well exceeding the Bank’s uninsured deposit balances. Loans. Loans receivable of $14.31 billion at September 30, 2023, decreased 4% from $14.86 billion at June 30, 2023, reflecting our prudent approach to loan growth, an intentional decrease in mortgage warehouse lines, and the impact of paydowns and payoffs in a high interest rate environment. Year-over-year, loans receivable decreased 8%. The following table sets forth the loan portfolio composition and percentage of total loans at September 30, 2023, June 30, 2023, and September 30, 2022: (dollars in thousands) (unaudited) 9/30/2023 6/30/2023 9/30/2022 Balance Percentage Balance Percentage Balance Percentage Commercial real estate (“CRE”) loans $ 8,972,886 62.7 % $ 9,192,160 61.9 % $ 9,504,893 61.3 % Commercial and industrial (“C&I”) loans 4,450,341 31.1 % 4,805,126 32.3 % 5,124,421 33.1 % Residential mortgage and other loans 882,966 6.2 % 867,524 5.8 % 861,873 5.6 % Loans receivable $ 14,306,193 100.0 % $ 14,864,810 100.0 % $ 15,491,187 100.0 % Deposits. Total deposits of $15.74 billion at September 30, 2023, grew 1% from $15.62 billion at June 30, 2023, reflecting growth in customer deposits, partially offset by a planned reduction of brokered time deposits. Year-over-year, total deposits increased 2%. The gross loan-to-deposit ratio was 91.0% at September 30, 2023, compared with 95.5% at June 30, 2023, and 100.2% a year ago at September 30, 2022. The following table sets forth the deposit composition and percentage of total deposits at September 30, 2023, June 30, 2023, and September 30, 2022: (dollars in thousands) (unaudited) 9/30/2023 6/30/2023 9/30/2022 Balance Percentage Balance Percentage Balance Percentage Noninterest bearing demand deposits $ 4,249,788 27.0 % $ 4,229,247 27.1 % $ 5,590,952 36.1 % Money market and interest bearing demand deposits 4,424,918 28.1 % 4,188,584 26.8 % 5,885,093 38.0 % Savings deposits 430,765 2.8 % 224,495 1.4 % 317,841 2.0 % Time deposits 6,634,388 42.1 % 6,977,026 44.7 % 3,708,323 23.9 % Total deposits $ 15,739,859 100.0 % $ 15,619,352 100.0 % $ 15,502,209 100.0 % Gross loan-to-deposit ratio 91.0 % 95.5 % 100.2 % Uninsured deposits at September 30, 2023, represented 37% of the Bank’s deposits. Borrowings. Federal Home Loan Bank and Federal Reserve Bank borrowings totaled $1.80 billion at September 30, 2023, compared with $2.26 billion at June 30, 2023, and $1.07 billion at September 30, 2022. Linked quarter growth in deposits and decrease in loans reduced the need for borrowings in the 2023 third quarter. Credit Quality and Allowance for Credit Losses Nonperforming assets. Nonperforming assets totaled $61.7 million at September 30, 2023, a decrease of 20% from June 30, 2023. The quarter-over-quarter decrease in nonperforming assets reflects charge offs of nonaccrual loans, payoffs and workouts, partially offset by new inflows. The nonperforming assets ratio was 0.31% of total assets at September 30, 2023, an improvement from 0.38% at June 30, 2023. The following table sets forth the components of nonperforming assets at September 30, 2023, June 30, 2023, and September 30, 2022: (dollars in thousands) (unaudited) 9/30/2023 6/30/2023 9/30/2022 Loans on nonaccrual status (1) $ 39,081 $ 61,252 $ 64,571 Accruing delinquent loans past due 90 days or more 21,579 15,182 5,306 Accruing troubled debt restructured loans (2) — — 25,631 Total nonperforming loans 60,660 76,434 95,508 Other real estate owned 1,043 938 1,480 Total nonperforming assets $ 61,703 $ 77,372 $ 96,988 Nonperforming assets/total assets 0.31 % 0.38 % 0.51 % (1) Excludes delinquent SBA loans that are guaranteed and currently in liquidation totaling $12.1 million, $11.9 million and $9.9 million at September 30, 2023, June 30, 2023, and September 30, 2022, respectively. (2) The Company adopted ASU 2022-02 in 2023, which eliminated the concept of troubled debt restructured (“TDR”) loans from GAAP; therefore, accruing TDR loans are no longer included in nonperforming loans. Net charge offs. The Company recorded net charge offs of $31.0 million in the 2023 third quarter. This included an idiosyncratic full charge off of $23.4 million related to a borrower that entered into Chapter 7 liquidation in August 2023. Related to this credit, the Company had recorded impairment reserves of $9.6 million at June 30, 2023. For the 2023 third quarter, the Company recorded a provision for credit losses of $16.8 million, compared with $8.9 million in the preceding second quarter. The following table sets forth net charge offs (recoveries) and net charge offs (recoveries) to average loans receivable, annualized, for the three months ended September 30, 2023, June 30, 2023, and September 30, 2022: For the Three Months Ended (dollars in thousands) (unaudited) 9/30/2023 6/30/2023 9/30/2022 Net charge offs (recoveries) $ 30,987 $ (552 ) $ 219 Net charge offs (recoveries)/average loans receivable (annualized) 0.85 % (0.01 )% 0.01 % Allowance for credit losses. The allowance for credit losses totaled $158.8 million at September 30, 2023, compared with $173.0 million at June 30, 2023. The allowance coverage ratio was 1.11% of loans receivable at September 30, 2023, compared with 1.16% at June 30, 2023. Excluding the $9.6 million of impairment reserves related to the aforementioned charged off credit, the allowance coverage ratio as of June 30, 2023, was 1.10%. Year-over-year, allowance coverage of loans receivable increased from 1.04% at September 30, 2022. The following table sets forth the allowance for credit losses and allowance coverage ratios at September 30, 2023, June 30, 2023, and September 30, 2022: (dollars in thousands) (unaudited) 9/30/2023 6/30/2023 9/30/2022 Allowance for credit losses $ 158,809 $ 172,996 $ 160,561 Allowance for credit losses/loans receivable 1.11 % 1.16 % 1.04 % Capital The Company’s capital ratios are strong and all regulatory capital ratios expanded quarter-over-quarter. At September 30, 2023, the Company and the Bank continued to exceed all regulatory capital requirements generally required to meet the definition of a “well-capitalized” financial institution. The following table sets forth the capital ratios for the Company at September 30, 2023, June 30, 2023, and September 30, 2022: (unaudited) 9/30/2023 6/30/2023 9/30/2022 Minimum Guideline for “Well-Capitalized” Common Equity Tier 1 Capital Ratio 11.67 % 11.05 % 10.32 % 6.50 % Tier 1 Capital Ratio 12.32 % 11.68 % 10.92 % 8.00 % Total Capital Ratio 13.23 % 12.64 % 11.72 % 10.00 % Leverage Ratio 9.83 % 9.57 % 10.25 % 5.00 % At September 30, 2023, total stockholders’ equity was $2.03 billion, or $16.92 per share, tangible common equity per share was $13.01, and the tangible common equity ratio was 7.96%. Quarter-over-quarter, stockholders’ equity declined by 2%, or $37.6 million, primarily reflecting a negative change in accumulated other comprehensive income (“AOCI”) of $53.8 million and $16.8 million in common dividends declared, partially offset by $30.0 million in net income. The following table sets forth the TCE per share and the TCE ratio at September 30, 2023, June 30, 2023, and September 30, 2022: (unaudited) 9/30/2023 6/30/2023 9/30/2022 TCE per share (1) $ 13.01 $ 13.32 $ 12.60 TCE ratio (1) 7.96 % 8.04 % 8.09 % (1) TCE per share and TCE ratio are non-GAAP financial measures. Quantitative reconciliations of the most directly comparable GAAP to non-GAAP financial measures are 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 Monday, October 23, 2023, at 9:30 a.m. Pacific Time / 12:30 p.m. Eastern Time to review unaudited financial results for its third quarter ended September 30, 2023. 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 October 30, 2023, replay access code 5386919. Non-GAAP Financial Metrics This news release contains certain non-GAAP financial measure disclosures, including PPNR, TCE per share, TCE ratio, ROTCE, ROA (PPNR), and ROE (PPNR). Management believes these non-GAAP financial measures provide meaningful supplemental information regarding the Company’s operational performance and the Company’s capital levels and has included these figures in response to market participant interest in these financial metrics. Quantitative reconciliations of the most directly comparable GAAP to non-GAAP financial measures are provided in the accompanying financial information on Table Page 10. About Hope Bancorp, Inc. Hope Bancorp, Inc. (NASDAQ: HOPE) is the holding company of Bank of Hope, the first and only super regional Korean American bank in the United States with $20.08 billion in total assets as of September 30, 2023. Headquartered in Los Angeles and serving a multi-ethnic population of customers across the nation, Bank of Hope operates 54 full-service branches in California, Washington, Texas, Illinois, New York, New Jersey, Virginia, Alabama, and Georgia. The Bank also operates SBA loan production offices in Seattle, Denver, Dallas, Atlanta, Portland, New York City, Northern California and Houston; commercial loan production offices in Northern California, Seattle and Tampa, Fla.; 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 lending, commercial and industrial lending, SBA lending, and international trade financing. Bank of Hope is a California-chartered bank, and its deposits are insured by the FDIC to the extent provided by law. Bank of Hope is an Equal Opportunity Lender. For additional information, please go to bankofhope.com. By including the foregoing website address link, the Company does not intend to and shall not be deemed to incorporate by reference any material contained or accessible therein. Forward-Looking Statements Some statements in this news release may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements relate to, among other things, expectations regarding the business environment in which we operate, projections of future performance, perceived opportunities in the market, statements regarding our business strategies, objectives and vision, and statements about our strategic reorganization. Forward-looking statements include, but are not limited to, statements preceded by, followed by or that include the words “will,” “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates” or similar expressions. With respect to any such forward-looking statements, the Company claims the protection provided for in the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties. The Company’s actual results, performance or achievements may differ significantly from the results, performance or achievements expressed or implied in any forward-looking statements. The risks and uncertainties include, but are not limited to: possible further deterioration in economic conditions in our areas of operation; interest rate risk associated with volatile interest rates and related asset-liability matching risk; liquidity risks; risk of significant non-earning assets, and net credit losses that could occur, particularly in times of weak economic conditions or times of rising interest rates; the failure of or changes to assumptions and estimates underlying the Company’s allowances for credit losses; regulatory risks associated with current and future regulations; and the COVID-19 pandemic and its impact on our financial position, results of operations, liquidity, and capitalization. For additional information concerning these and other risk factors, see the Company’s most recent Annual Report on Form 10-K. The Company does not undertake, and specifically disclaims any obligation, to update any forward-looking statements to reflect the occurrence of events or circumstances after the date of such statements except as required by law. Hope Bancorp, Inc. Selected Financial Data Unaudited (dollars in thousands, except share data) Assets: 9/30/2023 6/30/2023 % change 9/30/2022 % change Cash and due from banks $ 2,500,323 $ 2,302,339 9 % $ 331,336 655 % Investment securities 2,260,837 2,186,346 3 % 2,264,533 — % Federal Home Loan Bank (“FHLB”) stock and other investments 60,433 60,213 — % 65,192 (7 )% Loans held for sale, at the lower of cost or fair value 19,502 49,246 (60 )% 41,989 (54 )% Loans receivable 14,306,193 14,864,810 (4 )% 15,491,187 (8 )% Allowance for credit losses (158,809 ) (172,996 ) (8 )% (160,561 ) (1 )% Net loans receivable 14,147,384 14,691,814 (4 )% 15,330,626 (8 )% Accrued interest receivable 60,665 60,118 1 % 42,363 43 % Premises and equipment, net 51,764 50,513 2 % 46,169 12 % Bank owned life insurance 88,643 88,238 — % 76,788 15 % Goodwill 464,450 464,450 — % 464,450 — % Servicing assets 10,457 11,532 (9 )% 11,601 (10 )% Other intangible assets, net 4,382 4,830 (9 )% 6,212 (29 )% Other assets 407,524 396,499 3 % 402,129 1 % Total assets $ 20,076,364 $ 20,366,138 (1 )% $ 19,083,388 5 % Liabilities: Deposits $ 15,739,859 $ 15,619,352 1 % $ 15,502,209 2 % FHLB and Federal Reserve Bank (“FRB”) borrowings 1,795,726 2,260,000 (21 )% 1,072,000 68 % Convertible notes, net 444 444 — % 216,913 (100 )% Subordinated debentures 107,505 107,188 — % 106,258 1 % Accrued interest payable 166,831 109,236 53 % 11,713 1,324 % Other liabilities 235,575 201,920 17 % 198,570 19 % Total liabilities $ 18,045,940 $ 18,298,140 (1 )% $ 17,107,663 5 % Stockholders’ Equity: Common stock, $0.001 par value $ 137 $ 137 — % $ 137 — % Additional paid-in capital 1,436,769 1,433,788 — % 1,428,052 1 % Retained earnings 1,140,870 1,127,624 1 % 1,048,738 9 % Treasury stock, at cost (264,667 ) (264,667 ) — % (264,667 ) — % Accumulated other comprehensive loss, net (282,685 ) (228,884 ) (24 )% (236,535 ) (20 )% Total stockholders’ equity 2,030,424 2,067,998 (2 )% 1,975,725 3 % Total liabilities and stockholders’ equity $ 20,076,364 $ 20,366,138 (1 )% $ 19,083,388 5 % Common stock shares - authorized 150,000,000 150,000,000 150,000,000 Common stock shares - outstanding 120,026,220 120,014,888 119,479,253 Treasury stock shares 17,382,835 17,382,835 17,382,835 Hope Bancorp, Inc. Selected Financial Data Unaudited (dollars in thousands, except share and per share data) Three Months Ended Nine Months Ended 9/30/2023 6/30/2023 % change 9/30/2022 % change 9/30/2023 9/30/2022 % change Interest and fees on loans $ 229,937 $ 225,671 2 % $ 175,078 31 % $ 671,543 $ 452,774 48 % Interest on investment securities 17,006 15,534 9 % 13,498 26 % 47,665 37,462 27 % Interest on cash and deposits at other banks 28,115 25,295 11 % 142 NM 58,332 352 NM Interest on other investments 735 684 7 % 464 58 % 2,114 1,290 64 % Total interest income 275,793 267,184 3 % 189,182 46 % 779,654 491,878 59 % Interest on deposits 117,854 109,724 7 % 30,667 284 % 319,926 51,563 520 % Interest on borrowings 22,561 26,771 (16 )% 5,329 323 % 59,783 12,415 382 % Total interest expense 140,415 136,495 3 % 35,996 290 % 379,709 63,978 493 % Net interest income before provision for credit losses 135,378 130,689 4 % 153,186 (12 )% 399,945 427,900 (7 )% Provision for credit losses 16,800 8,900 89 % 9,200 83 % 27,400 1,400 1,857 % Net interest income after provision for credit losses 118,578 121,789 (3 )% 143,986 (18 )% 372,545 426,500 (13 )% Service fees on deposit accounts 2,415 2,325 4 % 2,535 (5 )% 6,961 6,779 3 % Net gains on sales of SBA loans — 1,872 (100 )% 2,782 (100 )% 4,097 14,189 (71 )% Net gains on sales of residential mortgage loans 118 82 44 % 29 307 % 264 862 (69 )% Other income and fees 5,772 12,735 (55 )% 8,009 (28 )% 24,975 17,457 43 % Total noninterest income 8,305 17,014 (51 )% 13,355 (38 )% 36,297 39,287 (8 )% Salaries and employee benefits 51,033 52,305 (2 )% 53,222 (4 )% 160,507 152,025 6 % Occupancy 7,149 6,967 3 % 6,682 7 % 21,637 21,195 2 % Furniture and equipment 5,625 5,393 4 % 4,967 13 % 16,076 14,389 12 % Data processing and communications 2,891 2,917 (1 )% 2,469 17 % 8,630 7,823 10 % FDIC assessment 3,683 4,691 (21 )% 1,633 126 % 10,155 4,652 118 % Earned interest credit 6,377 5,090 25 % 4,685 36 % 15,894 5,996 165 % Other 10,115 9,970 1 % 10,256 (1 )% 31,661 33,572 (6 )% Total noninterest expense 86,873 87,333 (1 )% 83,914 4 % 264,560 239,652 10 % Income before income taxes 40,010 51,470 (22 )% 73,427 (46 )% 144,282 226,135 (36 )% Income tax provision 9,961 13,448 (26 )% 19,679 (49 )% 37,090 59,561 (38 )% Net income $ 30,049 $ 38,022 (21 )% $ 53,748 (44 )% $ 107,192 $ 166,574 (36 )% Earnings Per Common Share - Basic $ 0.25 $ 0.32 $ 0.45 $ 0.89 $ 1.39 Earnings Per Common Share - Diluted $ 0.25 $ 0.32 $ 0.45 $ 0.89 $ 1.38 Weighted Average Shares Outstanding - Basic 120,020,567 119,953,174 119,476,035 119,843,382 119,940,044 Weighted Average Shares Outstanding - Diluted 120,374,618 120,129,359 119,996,523 120,249,952 120,595,988 Hope Bancorp, Inc. Selected Financial Data Unaudited For the Three Months Ended For the Nine Months Ended Profitability measures (annualized): 9/30/2023 6/30/2023 9/30/2022 9/30/2023 9/30/2022 ROA 0.60 % 0.74 % 1.17 % 0.72 % 1.23 % ROE 5.78 % 7.34 % 10.58 % 6.92 % 10.85 % ROA (PPNR) (1) 1.13 % 1.18 % 1.79 % 1.15 % 1.68 % ROE (PPNR) (1) 10.93 % 11.65 % 16.26 % 11.08 % 14.83 % ROTCE (1) 7.47 % 9.49 % 13.77 % 8.95 % 14.10 % Net interest margin 2.83 % 2.70 % 3.49 % 2.84 % 3.36 % Efficiency ratio (not annualized) 60.46 % 59.13 % 50.39 % 60.65 % 51.30 % Noninterest expense / average assets 1.73 % 1.71 % 1.82 % 1.77 % 1.77 % (1) ROA (PPNR), ROE (PPNR), and ROTCE are non-GAAP financial measures. Quantitative reconciliations of the most directly comparable GAAP to non-GAAP financial measures are provided in the accompanying financial information on Table Page 10. Hope Bancorp, Inc. Selected Financial Data Unaudited (dollars in thousands) Three Months Ended 9/30/2023 6/30/2023 9/30/2022 Interest Annualized Interest Annualized Interest Annualized Average Income/ Average Average Income/ Average Average Income/ Average Balance Expense Yield/Cost Balance Expense Yield/Cost Balance Expense Yield/Cost INTEREST EARNING ASSETS: Loans, including loans held for sale $ 14,550,106 $ 229,937 6.27 % $ 15,105,212 $ 225,671 5.99 % $ 14,925,298 $ 175,078 4.65 % Investment securities 2,275,133 17,006 2.97 % 2,243,614 15,534 2.78 % 2,366,696 13,498 2.26 % Interest earning cash and deposits at other banks 2,106,469 28,115 5.30 % 1,996,924 25,295 5.08 % 54,870 142 1.03 % FHLB stock and other investments 47,316 735 6.16 % 47,044 684 5.83 % 52,854 464 3.48 % Total interest earning assets $ 18,979,024 $ 275,793 5.77 % $ 19,392,794 $ 267,184 5.53 % $ 17,399,718 $ 189,182 4.31 % INTEREST BEARING LIABILITIES: Deposits: Money market and interest bearing demand $ 4,202,076 $ 36,574 3.45 % $ 4,279,819 $ 34,377 3.22 % $ 6,255,271 $ 19,614 1.24 % Savings deposits 331,354 2,240 2.68 % 216,060 674 1.25 % 324,487 969 1.18 % Time deposits 6,862,038 79,040 4.57 % 6,890,035 74,673 4.35 % 3,146,432 10,084 1.27 % Total interest bearing deposits 11,395,468 117,854 4.10 % 11,385,914 109,724 3.87 % 9,726,190 30,667 1.25 % FHLB and FRB borrowings 1,809,322 19,821 4.35 % 2,177,264 23,622 4.35 % 448,837 2,393 2.12 % Convertible notes, net 444 2 1.76 % 96,621 598 2.45 % 216,762 1,322 2.39 % Subordinated debentures 103,429 2,738 10.36 % 103,123 2,551 9.79 % 102,182 1,614 6.18 % Total interest bearing liabilities $ 13,308,663 $ 140,415 4.19 % $ 13,762,922 $ 136,495 3.98 % $ 10,493,971 $ 35,996 1.36 % Noninterest bearing demand deposits 4,312,117 4,366,868 5,719,213 Total funding liabilities/cost of funds $ 17,620,780 3.16 % $ 18,129,790 3.02 % $ 16,213,184 0.88 % Net interest income/net interest spread $ 135,378 1.58 % $ 130,689 1.55 % $ 153,186 2.95 % Net interest margin 2.83 % 2.70 % 3.49 % Cost of deposits: Noninterest bearing demand deposits $ 4,312,117 $ — — % $ 4,366,868 $ — — % $ 5,719,213 $ — — % Interest bearing deposits 11,395,468 117,854 4.10 % 11,385,914 109,724 3.87 % 9,726,190 30,667 1.25 % Total deposits $ 15,707,585 $ 117,854 2.98 % $ 15,752,782 $ 109,724 2.79 % $ 15,445,403 $ 30,667 0.79 % Hope Bancorp, Inc. Selected Financial Data Unaudited (dollars in thousands) Nine Months Ended 9/30/2023 9/30/2022 Interest Annualized Interest Annualized Average Income/ Average Average Income/ Average Balance Expense Yield/Cost Balance Expense Yield/Cost INTEREST EARNING ASSETS: Loans, including loans held for sale $ 14,961,058 $ 671,543 6.00 % $ 14,378,774 $ 452,774 4.21 % Investment securities 2,255,839 47,665 2.83 % 2,469,858 37,462 2.03 % Interest earning cash and deposits at other banks 1,531,561 58,332 5.09 % 133,745 352 0.35 % FHLB stock and other investments 47,135 2,114 6.00 % 63,542 1,290 2.71 % Total interest earning assets $ 18,795,593 $ 779,654 5.55 % $ 17,045,919 $ 491,878 3.86 % INTEREST BEARING LIABILITIES: Deposits: Money market and interest bearing demand $ 4,603,479 $ 112,349 3.26 % $ 6,360,040 $ 33,970 0.71 % Savings deposits 268,145 3,741 1.87 % 322,058 2,834 1.18 % Time deposits 6,436,645 203,836 4.23 % 2,683,217 14,759 0.74 % Total interest bearing deposits 11,308,269 319,926 3.78 % 9,365,315 51,563 0.74 % FHLB and FRB borrowings 1,558,493 50,141 4.30 % 423,875 4,537 1.43 % Convertible notes, net 103,933 1,922 2.44 % 216,538 3,967 2.42 % Subordinated debentures 103,117 7,720 9.87 % 101,882 3,911 5.06 % Total interest bearing liabilities $ 13,073,812 $ 379,709 3.88 % $ 10,107,610 $ 63,978 0.85 % Noninterest bearing demand deposits 4,445,740 5,702,734 Total funding liabilities/cost of funds $ 17,519,552 2.90 % $ 15,810,344 0.54 % Net interest income/net interest spread $ 399,945 1.67 % $ 427,900 3.01 % Net interest margin 2.84 % 3.36 % Cost of deposits: Noninterest bearing demand deposits $ 4,445,740 $ — — % $ 5,702,734 $ — — % Interest bearing deposits 11,308,269 319,926 3.78 % 9,365,315 51,563 0.74 % Total deposits $ 15,754,009 $ 319,926 2.72 % $ 15,068,049 $ 51,563 0.46 % Hope Bancorp, Inc. Selected Financial Data Unaudited (dollars in thousands) Three Months Ended Nine Months Ended AVERAGE BALANCES: 9/30/2023 6/30/2023 % change 9/30/2022 % change 9/30/2023 9/30/2022 % change Loans, including loans held for sale $ 14,550,106 $ 15,105,212 (4 )% $ 14,925,298 (3 )% $ 14,961,058 $ 14,378,774 4 % Investment securities 2,275,133 2,243,614 1 % 2,366,696 (4 )% 2,255,839 2,469,858 (9 )% Interest earning cash and deposits at other banks 2,106,469 1,996,924 5 % 54,870 3739 % 1,531,561 133,745 1045 % Interest earning assets 18,979,024 19,392,794 (2 )% 17,399,718 9 % 18,795,593 17,045,919 10 % Total assets 20,059,304 20,468,810 (2 )% 18,428,874 9 % 19,875,322 18,018,588 10 % Interest bearing deposits 11,395,468 11,385,914 — % 9,726,190 17 % 11,308,269 9,365,315 21 % Interest bearing liabilities 13,308,663 13,762,922 (3 )% 10,493,971 27 % 13,073,812 10,107,610 29 % Noninterest bearing demand deposits 4,312,117 4,366,868 (1 )% 5,719,213 (25 )% 4,445,740 5,702,734 (22 )% Stockholders’ equity 2,079,092 2,072,859 — % 2,032,362 2 % 2,066,157 2,046,351 1 % LOAN PORTFOLIO COMPOSITION: 9/30/2023 6/30/2023 % change 9/30/2022 % change Commercial real estate (“CRE”) loans $ 8,972,886 $ 9,192,160 (2 )% $ 9,504,893 (6 )% Commercial and industrial (“C&I”) loans 4,450,341 4,805,126 (7 )% 5,124,421 (13 )% Residential mortgage and other loans 882,966 867,524 2 % 861,873 2 % Loans receivable 14,306,193 14,864,810 (4 )% 15,491,187 (8 )% Allowance for credit losses (158,809 ) (172,996 ) (8 )% (160,561 ) (1 )% Loans receivable, net $ 14,147,384 $ 14,691,814 (4 )% $ 15,330,626 (8 )% CRE LOANS BY PROPERTY TYPE: 9/30/2023 6/30/2023 % change 9/30/2022 % change Multi-tenant retail $ 1,745,430 $ 1,778,068 (2 )% $ 1,904,132 (8 )% Hotels/motels 826,732 868,286 (5 )% 1,091,047 (24 )% Gas stations and car washes 1,037,621 1,042,290 — % 1,056,217 (2 )% Mixed-use facilities 813,571 834,948 (3 )% 825,289 (1 )% Industrial warehouses 1,254,643 1,301,075 (4 )% 1,271,104 (1 )% Multifamily 1,234,934 1,257,971 (2 )% 1,199,320 3 % Single-tenant retail 671,921 690,418 (3 )% 728,432 (8 )% Office 454,695 463,998 (2 )% 432,586 5 % All other 933,339 955,106 (2 )% 996,766 (6 )% Total CRE loans $ 8,972,886 $ 9,192,160 (2 )% $ 9,504,893 (6 )% DEPOSIT COMPOSITION: 9/30/2023 6/30/2023 % change 9/30/2022 % change Noninterest bearing demand deposits $ 4,249,788 $ 4,229,247 — % $ 5,590,952 (24 )% Money market and interest bearing demand 4,424,918 4,188,584 6 % 5,885,093 (25 )% Savings deposits 430,765 224,495 92 % 317,841 36 % Time deposits 6,634,388 6,977,026 (5 )% 3,708,323 79 % Total deposits $ 15,739,859 $ 15,619,352 1 % $ 15,502,209 2 % Hope Bancorp, Inc. Selected Financial Data Unaudited (dollars in thousands, except share and per share data) Three Months Ended NEW LOAN ORIGINATIONS: 9/30/2023 6/30/2023 9/30/2022 CRE $ 46,011 $ 115,444 $ 500,826 C&I 201,420 318,063 732,341 SBA loans 48,987 38,051 47,428 Residential mortgage and other loans 32,920 19,016 68,099 Total new loan originations $ 329,338 $ 490,574 $ 1,348,694 CAPITAL & CAPITAL RATIOS: 9/30/2023 6/30/2023 9/30/2022 Total stockholders’ equity $ 2,030,424 $ 2,067,998 $ 1,975,725 Total capital $ 2,105,754 $ 2,102,625 $ 2,000,653 Common equity tier 1 ratio 11.67 % 11.05 % 10.32 % Tier 1 capital ratio 12.32 % 11.68 % 10.92 % Total capital ratio 13.23 % 12.64 % 11.72 % Leverage ratio 9.83 % 9.57 % 10.25 % Total risk weighted assets $ 15,912,742 $ 16,640,323 $ 17,065,355 Book value per common share $ 16.92 $ 17.23 $ 16.54 TCE per share (1) $ 13.01 $ 13.32 $ 12.60 TCE ratio (1) 7.96 % 8.04 % 8.09 % (1) TCE per share and TCE ratio are non-GAAP financial measures. Quantitative reconciliations of the most directly comparable GAAP to non-GAAP financial measures are provided in the accompanying financial information on Table Page 10. Three Months Ended Nine Months Ended ALLOWANCE FOR CREDIT LOSSES CHANGES: 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 9/30/2023 9/30/2022 Balance at beginning of period $ 172,996 $ 163,544 $ 162,359 $ 160,561 $ 151,580 $ 162,359 $ 140,550 ASU 2022-02 day 1 adoption impact — — (407 ) — — (407 ) — Provision for credit losses 16,800 8,900 1,700 8,200 9,200 27,400 1,400 Recoveries 2,938 1,531 387 3,222 331 4,856 21,376 Charge offs (33,925 ) (979 ) (495 ) (9,624 ) (550 ) (35,399 ) (2,765 ) Balance at end of period $ 158,809 $ 172,996 $ 163,544 $ 162,359 $ 160,561 $ 158,809 $ 160,561 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 Allowance for unfunded loan commitments $ 3,143 $ 3,081 $ 2,971 $ 1,351 $ 1,231 Three Months Ended Nine Months Ended NET LOAN CHARGE OFFS (RECOVERIES): 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 9/30/2023 9/30/2022 CRE loans $ (2,227 ) $ 438 $ (109 ) $ 2,022 $ 9 $ (1,898 ) $ (16,917 ) C&I loans 33,145 (1,091 ) 196 4,174 115 32,250 (1,875 ) Residential mortgage and other loans 69 101 21 206 95 191 181 Net loan charge offs (recoveries) $ 30,987 $ (552 ) $ 108 $ 6,402 $ 219 $ 30,543 $ (18,611 ) Net charge offs (recoveries)/average loans receivable (annualized) 0.85 % (0.01 )% — % 0.17 % 0.01 % 0.27 % (0.17 )% NONPERFORMING ASSETS: 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 Loans on nonaccrual status (1) $ 39,081 $ 61,252 $ 78,861 $ 49,687 $ 64,571 Accruing delinquent loans past due 90 days or more 21,579 15,182 364 401 5,306 Accruing troubled debt restructured loans (2) — — — 16,931 25,631 Total nonperforming loans 60,660 76,434 79,225 67,019 95,508 Other real estate owned (“OREO”) 1,043 938 938 2,418 1,480 Total nonperforming assets $ 61,703 $ 77,372 $ 80,163 $ 69,437 $ 96,988 Nonperforming assets/total assets 0.31 % 0.38 % 0.39 % 0.36 % 0.51 % Nonperforming assets/loans receivable & OREO 0.43 % 0.52 % 0.53 % 0.45 % 0.63 % Nonperforming assets/total capital 3.04 % 3.74 % 3.89 % 3.44 % 4.91 % Nonperforming loans/loans receivable 0.42 % 0.51 % 0.53 % 0.44 % 0.62 % Nonaccrual loans/loans receivable 0.27 % 0.41 % 0.52 % 0.32 % 0.42 % Allowance for credit losses/loans receivable 1.11 % 1.16 % 1.09 % 1.05 % 1.04 % Allowance for credit losses/nonperforming loans 261.80 % 226.33 % 206.43 % 242.26 % 168.11 % (1) Excludes delinquent SBA loans that are guaranteed and currently in liquidation totaling $12.1 million, $11.9 million, $7.6 million, $9.8 million, and $9.9 million, at September 30, 2023, June 30, 2023, March 31, 2023, December 31, 2022, and September 30, 2022, respectively. (2) The Company adopted ASU 2022-02 in 2023, which eliminated the concept of TDR from GAAP; therefore, accruing TDR loans are no longer included in nonperforming loans. NONACCRUAL LOANS BY TYPE: 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 CRE loans $ 26,687 $ 29,270 $ 44,376 $ 33,915 $ 47,807 C&I loans 4,234 23,042 26,191 5,620 7,675 Residential mortgage and other loans 8,160 8,940 8,294 10,152 9,089 Total nonaccrual loans $ 39,081 $ 61,252 $ 78,861 $ 49,687 $ 64,571 ACCRUING DELINQUENT LOANS 30-89 DAYS PAST DUE: 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 30 - 59 days past due $ 2,906 $ 9,295 $ 7,662 $ 7,049 $ 13,092 60 - 89 days past due 506 178 249 2,243 4,933 Total accruing delinquent loans 30-89 days past due $ 3,412 $ 9,473 $ 7,911 $ 9,292 $ 18,025 ACCRUING DELINQUENT LOANS 30-89 DAYS PAST DUE BY TYPE: 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 CRE loans $ 611 $ 7,339 $ 3,652 $ 4,115 $ 9,694 C&I loans 1,168 990 419 3,300 6,165 Residential mortgage and other loans 1,633 1,144 3,840 1,877 2,166 Total accruing delinquent loans 30-89 days past due $ 3,412 $ 9,473 $ 7,911 $ 9,292 $ 18,025 CRITICIZED LOANS: 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 Special mention loans $ 186,600 $ 210,806 $ 166,472 $ 157,263 $ 79,399 Substandard loans 174,161 134,203 138,224 104,073 204,713 Total criticized loans $ 360,761 $ 345,009 $ 304,696 $ 261,336 $ 284,112 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. Reconciliations of the most directly comparable GAAP to non-GAAP financial measures utilized by management are provided below. Three Months Ended Nine Months Ended RETURN ON AVERAGE TANGIBLE COMMON EQUITY 9/30/2023 6/30/2023 9/30/2022 9/30/2023 9/30/2022 Average stockholders’ equity $ 2,079,092 $ 2,072,859 $ 2,032,362 $ 2,066,157 $ 2,046,351 Less: Average goodwill and core deposit intangible assets, net (469,079 ) (469,515 ) (470,941 ) (469,525 ) (471,424 ) Average TCE $ 1,610,013 $ 1,603,344 $ 1,561,421 $ 1,596,632 $ 1,574,927 Net income $ 30,049 $ 38,022 $ 53,748 $ 107,192 $ 166,574 ROTCE (annualized) 7.47 % 9.49 % 13.77 % 8.95 % 14.10 % TANGIBLE COMMON EQUITY 9/30/2023 6/30/2023 9/30/2022 Total stockholders’ equity $ 2,030,424 $ 2,067,998 $ 1,975,725 Less: Goodwill and core deposit intangible assets, net (468,832 ) (469,280 ) (470,662 ) TCE $ 1,561,592 $ 1,598,718 $ 1,505,063 Total assets $ 20,076,364 $ 20,366,138 $ 19,083,388 Less: Goodwill and core deposit intangible assets, net (468,832 ) (469,280 ) (470,662 ) Tangible assets $ 19,607,532 $ 19,896,858 $ 18,612,726 TCE ratio 7.96 % 8.04 % 8.09 % Common shares outstanding 120,026,220 120,014,888 119,479,253 TCE per share $ 13.01 $ 13.32 $ 12.60 Three Months Ended Nine Months Ended PRE-PROVISION NET REVENUE 9/30/2023 6/30/2023 9/30/2022 9/30/2023 9/30/2022 Net interest income before provision for credit losses $ 135,378 $ 130,689 $ 153,186 $ 399,945 $ 427,900 Noninterest income 8,305 17,014 13,355 36,297 39,287 Revenue 143,683 147,703 166,541 436,242 467,187 Less: Noninterest expense 86,873 87,333 83,914 264,560 239,652 PPNR $ 56,810 $ 60,370 $ 82,627 $ 171,682 $ 227,535 Average assets $ 20,059,304 $ 20,468,810 $ 18,428,874 $ 19,875,322 $ 18,018,588 ROA (PPNR) (annualized) 1.13 % 1.18 % 1.79 % 1.15 % 1.68 % Average stockholders’ equity 2,079,092 2,072,859 2,032,362 2,066,157 2,046,351 ROE (PPNR) (annualized) 10.93 % 11.65 % 16.26 % 11.08 % 14.83 % View source version on businesswire.com: https://www.businesswire.com/news/home/20231023356482/en/Contacts Julianna Balicka EVP & Chief Financial Officer 213-235-3235 julianna.balicka@bankofhope.com Angie Yang SVP, Director of Investor Relations & Corporate Communications 213-251-2219 angie.yang@bankofhope.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. 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Hope Bancorp Reports 2023 Third Quarter Financial Results; Announces Strategic Reorganization By: Hope Bancorp, Inc. via Business Wire October 23, 2023 at 06:30 AM EDT 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, 2023. For the three months ended September 30, 2023, net income totaled $30.0 million, or $0.25 per diluted common share. This compares with net income of $38.0 million, or $0.32 per diluted common share, in the preceding second quarter. “Our third quarter 2023 net interest margin expanded 13 basis points, and our net interest income grew 4% quarter-over-quarter,” stated Kevin S. Kim, Chairman, President and Chief Executive Officer. “We maintained disciplined expense control and our noninterest expenses decreased 1% over the same period. However, we recorded a provision for credit losses of $17 million for the third quarter, and certain one-time gains in the second quarter 2023 noninterest income did not reoccur. As a result, our net income declined compared with the prior quarter.” “Our balance sheet continued to strengthen. Total deposits grew to $15.7 billion at September 30, 2023, up 1% from June 30, 2023, reflecting growth in customer deposits, partially offset by a planned reduction of brokered time deposits. Our total capital ratio increased to 13.23% as of September 30, 2023, and all our regulatory capital ratios expanded quarter-over-quarter,” continued Kim. “Our deposit growth, taken together with our expanding capital and ample liquidity, positions us well to take advantage of profitable growth opportunities going forward.” Strategic Reorganization The Company also announced today a strategic reorganization designed to enhance shareholder value over the long term. Accordingly, the Company realigned its structure around lines of business and product delivery channels, optimized its production capacity and reduced headcount. The restructuring is expected to generate over $40 million in estimated annualized cost savings, largely related to the reduction in staffing, savings from a planned branch rationalization, subject to customary notices and approvals, and operational process improvements. The Company expects to recognize one-time charges of approximately $12 million in the fourth quarter of 2023 related to the reorganization. “As the largest Korean American bank in the United States, Bank of Hope has made great strides in transitioning from a traditional community bank into a regional bank serving a wide range of consumer, small business, commercial and corporate customers,” commented Kim. “Today’s strategic reorganization further evolves our business model. As a result, we expect to operate our Bank more efficiently, strengthen our franchise, enhance the customer experience and expand our customer relationships, benefiting all our stakeholders through sustainably improved profitability.” Financial Summary At or for the Three Months Ended (dollars in thousands, except per share data) (unaudited) 9/30/2023 6/30/2023 9/30/2022 Net income $ 30,049 $ 38,022 $ 53,748 Diluted earnings per share $ 0.25 $ 0.32 $ 0.45 Net interest income before provision for credit losses $ 135,378 $ 130,689 $ 153,186 Pre-provision net revenue (“PPNR”) (1) $ 56,810 $ 60,370 $ 82,627 Loans receivable $ 14,306,193 $ 14,864,810 $ 15,491,187 Deposits $ 15,739,859 $ 15,619,352 $ 15,502,209 Total assets $ 20,076,364 $ 20,366,138 $ 19,083,388 Total equity $ 2,030,424 $ 2,067,998 $ 1,975,725 Total capital ratio 13.23 % 12.64 % 11.72 % Tangible common equity (“TCE”) ratio (1) 7.96 % 8.04 % 8.09 % Allowance for credit losses to loans receivable 1.11 % 1.16 % 1.04 % Nonperforming assets to total assets (2) 0.31 % 0.38 % 0.51 % Return on average assets (“ROA”) (3) 0.60 % 0.74 % 1.17 % Return on average equity (“ROE”) (3) 5.78 % 7.34 % 10.58 % Return on average TCE (“ROTCE”) (1) (3) 7.47 % 9.49 % 13.77 % ROA (PPNR) (1) (3) 1.13 % 1.18 % 1.79 % Net interest margin (3) 2.83 % 2.70 % 3.49 % Efficiency ratio 60.5 % 59.1 % 50.4 % (1) PPNR, TCE ratio, ROTCE, and ROA (PPNR) are non-GAAP financial measures. Quantitative reconciliations of the most directly comparable GAAP to non-GAAP financial measures are provided in the accompanying financial information on Table Page 10. (2) Excludes delinquent Small Business Administration (“SBA”) loans that are guaranteed and currently in liquidation. (3) Annualized. Operating Results for the 2023 Third Quarter Net interest income growth and net interest margin expansion. Net interest income before provision for credit losses for the 2023 third quarter totaled $135.4 million, growing 4% from $130.7 million in the preceding second quarter. Third quarter 2023 net interest margin expanded 13 basis points to 2.83%, up from 2.70% in the 2023 second quarter. The linked quarter net interest income growth and net interest margin expansion reflected higher yields on earning assets, a decrease in the average volume of borrowings and debt, and an increase in the average volume of interest-earning cash and deposits at other banks, partially offset by a higher cost of funds and a lower average volume of loans. Third quarter 2023 weighted average yield on earning assets of 5.77% expanded 24 basis points quarter-over-quarter; the rate of change accelerated from the previous quarter. In comparison, the third quarter 2023 weighted average cost of funds of 3.16% increased 14 basis points quarter-over-quarter; the rate of change decelerated from the previous quarter. Noninterest income. Noninterest income for the 2023 third quarter totaled $8.3 million, compared with $17.0 million in the preceding second quarter. Second quarter 2023 noninterest income included a one-time $5.8 million cash distribution from a gain on an investment in an affordable housing partnership and $1.9 million of gains on SBA loan sales. The Company did not sell any SBA 7(a) loans during the 2023 third quarter, retaining loan production on its balance sheet instead. In comparison, during the preceding 2023 second quarter, the Company sold $38.4 million of the guaranteed portion of SBA 7(a) loans for net gains on sale of $1.9 million. Noninterest expense. Noninterest expense for the 2023 third quarter decreased 1% to $86.9 million, down from $87.3 million in the preceding second quarter. The linked quarter decrease was largely driven by lower salaries and employee benefits expense and lower FDIC assessment expense, partially offset by higher earned interest credit costs. Third quarter 2023 salaries and employee benefits expense decreased 2% to $51.0 million, down from $52.3 million in the 2023 second quarter. The Company’s efficiency ratio for the 2023 third quarter was 60.5%, compared with 59.1% in the preceding second quarter. Tax rate. The effective tax rate for the 2023 third quarter was 24.9%, compared with 26.1% for the preceding second quarter. The year-to-date effective tax rate for the first nine months of 2023 was 25.7%. Balance Sheet Summary Strong Liquidity. At September 30, 2023, cash and cash equivalents increased to $2.50 billion, up from $2.30 billion at June 30, 2023, and up from $331.3 million at September 30, 2022. Available borrowing capacity, cash and cash equivalents, and unpledged investment securities totaled $8.29 billion at September 30, 2023, equivalent to 53% of total deposits and well exceeding the Bank’s uninsured deposit balances. Loans. Loans receivable of $14.31 billion at September 30, 2023, decreased 4% from $14.86 billion at June 30, 2023, reflecting our prudent approach to loan growth, an intentional decrease in mortgage warehouse lines, and the impact of paydowns and payoffs in a high interest rate environment. Year-over-year, loans receivable decreased 8%. The following table sets forth the loan portfolio composition and percentage of total loans at September 30, 2023, June 30, 2023, and September 30, 2022: (dollars in thousands) (unaudited) 9/30/2023 6/30/2023 9/30/2022 Balance Percentage Balance Percentage Balance Percentage Commercial real estate (“CRE”) loans $ 8,972,886 62.7 % $ 9,192,160 61.9 % $ 9,504,893 61.3 % Commercial and industrial (“C&I”) loans 4,450,341 31.1 % 4,805,126 32.3 % 5,124,421 33.1 % Residential mortgage and other loans 882,966 6.2 % 867,524 5.8 % 861,873 5.6 % Loans receivable $ 14,306,193 100.0 % $ 14,864,810 100.0 % $ 15,491,187 100.0 % Deposits. Total deposits of $15.74 billion at September 30, 2023, grew 1% from $15.62 billion at June 30, 2023, reflecting growth in customer deposits, partially offset by a planned reduction of brokered time deposits. Year-over-year, total deposits increased 2%. The gross loan-to-deposit ratio was 91.0% at September 30, 2023, compared with 95.5% at June 30, 2023, and 100.2% a year ago at September 30, 2022. The following table sets forth the deposit composition and percentage of total deposits at September 30, 2023, June 30, 2023, and September 30, 2022: (dollars in thousands) (unaudited) 9/30/2023 6/30/2023 9/30/2022 Balance Percentage Balance Percentage Balance Percentage Noninterest bearing demand deposits $ 4,249,788 27.0 % $ 4,229,247 27.1 % $ 5,590,952 36.1 % Money market and interest bearing demand deposits 4,424,918 28.1 % 4,188,584 26.8 % 5,885,093 38.0 % Savings deposits 430,765 2.8 % 224,495 1.4 % 317,841 2.0 % Time deposits 6,634,388 42.1 % 6,977,026 44.7 % 3,708,323 23.9 % Total deposits $ 15,739,859 100.0 % $ 15,619,352 100.0 % $ 15,502,209 100.0 % Gross loan-to-deposit ratio 91.0 % 95.5 % 100.2 % Uninsured deposits at September 30, 2023, represented 37% of the Bank’s deposits. Borrowings. Federal Home Loan Bank and Federal Reserve Bank borrowings totaled $1.80 billion at September 30, 2023, compared with $2.26 billion at June 30, 2023, and $1.07 billion at September 30, 2022. Linked quarter growth in deposits and decrease in loans reduced the need for borrowings in the 2023 third quarter. Credit Quality and Allowance for Credit Losses Nonperforming assets. Nonperforming assets totaled $61.7 million at September 30, 2023, a decrease of 20% from June 30, 2023. The quarter-over-quarter decrease in nonperforming assets reflects charge offs of nonaccrual loans, payoffs and workouts, partially offset by new inflows. The nonperforming assets ratio was 0.31% of total assets at September 30, 2023, an improvement from 0.38% at June 30, 2023. The following table sets forth the components of nonperforming assets at September 30, 2023, June 30, 2023, and September 30, 2022: (dollars in thousands) (unaudited) 9/30/2023 6/30/2023 9/30/2022 Loans on nonaccrual status (1) $ 39,081 $ 61,252 $ 64,571 Accruing delinquent loans past due 90 days or more 21,579 15,182 5,306 Accruing troubled debt restructured loans (2) — — 25,631 Total nonperforming loans 60,660 76,434 95,508 Other real estate owned 1,043 938 1,480 Total nonperforming assets $ 61,703 $ 77,372 $ 96,988 Nonperforming assets/total assets 0.31 % 0.38 % 0.51 % (1) Excludes delinquent SBA loans that are guaranteed and currently in liquidation totaling $12.1 million, $11.9 million and $9.9 million at September 30, 2023, June 30, 2023, and September 30, 2022, respectively. (2) The Company adopted ASU 2022-02 in 2023, which eliminated the concept of troubled debt restructured (“TDR”) loans from GAAP; therefore, accruing TDR loans are no longer included in nonperforming loans. Net charge offs. The Company recorded net charge offs of $31.0 million in the 2023 third quarter. This included an idiosyncratic full charge off of $23.4 million related to a borrower that entered into Chapter 7 liquidation in August 2023. Related to this credit, the Company had recorded impairment reserves of $9.6 million at June 30, 2023. For the 2023 third quarter, the Company recorded a provision for credit losses of $16.8 million, compared with $8.9 million in the preceding second quarter. The following table sets forth net charge offs (recoveries) and net charge offs (recoveries) to average loans receivable, annualized, for the three months ended September 30, 2023, June 30, 2023, and September 30, 2022: For the Three Months Ended (dollars in thousands) (unaudited) 9/30/2023 6/30/2023 9/30/2022 Net charge offs (recoveries) $ 30,987 $ (552 ) $ 219 Net charge offs (recoveries)/average loans receivable (annualized) 0.85 % (0.01 )% 0.01 % Allowance for credit losses. The allowance for credit losses totaled $158.8 million at September 30, 2023, compared with $173.0 million at June 30, 2023. The allowance coverage ratio was 1.11% of loans receivable at September 30, 2023, compared with 1.16% at June 30, 2023. Excluding the $9.6 million of impairment reserves related to the aforementioned charged off credit, the allowance coverage ratio as of June 30, 2023, was 1.10%. Year-over-year, allowance coverage of loans receivable increased from 1.04% at September 30, 2022. The following table sets forth the allowance for credit losses and allowance coverage ratios at September 30, 2023, June 30, 2023, and September 30, 2022: (dollars in thousands) (unaudited) 9/30/2023 6/30/2023 9/30/2022 Allowance for credit losses $ 158,809 $ 172,996 $ 160,561 Allowance for credit losses/loans receivable 1.11 % 1.16 % 1.04 % Capital The Company’s capital ratios are strong and all regulatory capital ratios expanded quarter-over-quarter. At September 30, 2023, the Company and the Bank continued to exceed all regulatory capital requirements generally required to meet the definition of a “well-capitalized” financial institution. The following table sets forth the capital ratios for the Company at September 30, 2023, June 30, 2023, and September 30, 2022: (unaudited) 9/30/2023 6/30/2023 9/30/2022 Minimum Guideline for “Well-Capitalized” Common Equity Tier 1 Capital Ratio 11.67 % 11.05 % 10.32 % 6.50 % Tier 1 Capital Ratio 12.32 % 11.68 % 10.92 % 8.00 % Total Capital Ratio 13.23 % 12.64 % 11.72 % 10.00 % Leverage Ratio 9.83 % 9.57 % 10.25 % 5.00 % At September 30, 2023, total stockholders’ equity was $2.03 billion, or $16.92 per share, tangible common equity per share was $13.01, and the tangible common equity ratio was 7.96%. Quarter-over-quarter, stockholders’ equity declined by 2%, or $37.6 million, primarily reflecting a negative change in accumulated other comprehensive income (“AOCI”) of $53.8 million and $16.8 million in common dividends declared, partially offset by $30.0 million in net income. The following table sets forth the TCE per share and the TCE ratio at September 30, 2023, June 30, 2023, and September 30, 2022: (unaudited) 9/30/2023 6/30/2023 9/30/2022 TCE per share (1) $ 13.01 $ 13.32 $ 12.60 TCE ratio (1) 7.96 % 8.04 % 8.09 % (1) TCE per share and TCE ratio are non-GAAP financial measures. Quantitative reconciliations of the most directly comparable GAAP to non-GAAP financial measures are 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 Monday, October 23, 2023, at 9:30 a.m. Pacific Time / 12:30 p.m. Eastern Time to review unaudited financial results for its third quarter ended September 30, 2023. 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 October 30, 2023, replay access code 5386919. Non-GAAP Financial Metrics This news release contains certain non-GAAP financial measure disclosures, including PPNR, TCE per share, TCE ratio, ROTCE, ROA (PPNR), and ROE (PPNR). Management believes these non-GAAP financial measures provide meaningful supplemental information regarding the Company’s operational performance and the Company’s capital levels and has included these figures in response to market participant interest in these financial metrics. Quantitative reconciliations of the most directly comparable GAAP to non-GAAP financial measures are provided in the accompanying financial information on Table Page 10. About Hope Bancorp, Inc. Hope Bancorp, Inc. (NASDAQ: HOPE) is the holding company of Bank of Hope, the first and only super regional Korean American bank in the United States with $20.08 billion in total assets as of September 30, 2023. Headquartered in Los Angeles and serving a multi-ethnic population of customers across the nation, Bank of Hope operates 54 full-service branches in California, Washington, Texas, Illinois, New York, New Jersey, Virginia, Alabama, and Georgia. The Bank also operates SBA loan production offices in Seattle, Denver, Dallas, Atlanta, Portland, New York City, Northern California and Houston; commercial loan production offices in Northern California, Seattle and Tampa, Fla.; 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 lending, commercial and industrial lending, SBA lending, and international trade financing. Bank of Hope is a California-chartered bank, and its deposits are insured by the FDIC to the extent provided by law. Bank of Hope is an Equal Opportunity Lender. For additional information, please go to bankofhope.com. By including the foregoing website address link, the Company does not intend to and shall not be deemed to incorporate by reference any material contained or accessible therein. Forward-Looking Statements Some statements in this news release may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements relate to, among other things, expectations regarding the business environment in which we operate, projections of future performance, perceived opportunities in the market, statements regarding our business strategies, objectives and vision, and statements about our strategic reorganization. Forward-looking statements include, but are not limited to, statements preceded by, followed by or that include the words “will,” “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates” or similar expressions. With respect to any such forward-looking statements, the Company claims the protection provided for in the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties. The Company’s actual results, performance or achievements may differ significantly from the results, performance or achievements expressed or implied in any forward-looking statements. The risks and uncertainties include, but are not limited to: possible further deterioration in economic conditions in our areas of operation; interest rate risk associated with volatile interest rates and related asset-liability matching risk; liquidity risks; risk of significant non-earning assets, and net credit losses that could occur, particularly in times of weak economic conditions or times of rising interest rates; the failure of or changes to assumptions and estimates underlying the Company’s allowances for credit losses; regulatory risks associated with current and future regulations; and the COVID-19 pandemic and its impact on our financial position, results of operations, liquidity, and capitalization. For additional information concerning these and other risk factors, see the Company’s most recent Annual Report on Form 10-K. The Company does not undertake, and specifically disclaims any obligation, to update any forward-looking statements to reflect the occurrence of events or circumstances after the date of such statements except as required by law. Hope Bancorp, Inc. Selected Financial Data Unaudited (dollars in thousands, except share data) Assets: 9/30/2023 6/30/2023 % change 9/30/2022 % change Cash and due from banks $ 2,500,323 $ 2,302,339 9 % $ 331,336 655 % Investment securities 2,260,837 2,186,346 3 % 2,264,533 — % Federal Home Loan Bank (“FHLB”) stock and other investments 60,433 60,213 — % 65,192 (7 )% Loans held for sale, at the lower of cost or fair value 19,502 49,246 (60 )% 41,989 (54 )% Loans receivable 14,306,193 14,864,810 (4 )% 15,491,187 (8 )% Allowance for credit losses (158,809 ) (172,996 ) (8 )% (160,561 ) (1 )% Net loans receivable 14,147,384 14,691,814 (4 )% 15,330,626 (8 )% Accrued interest receivable 60,665 60,118 1 % 42,363 43 % Premises and equipment, net 51,764 50,513 2 % 46,169 12 % Bank owned life insurance 88,643 88,238 — % 76,788 15 % Goodwill 464,450 464,450 — % 464,450 — % Servicing assets 10,457 11,532 (9 )% 11,601 (10 )% Other intangible assets, net 4,382 4,830 (9 )% 6,212 (29 )% Other assets 407,524 396,499 3 % 402,129 1 % Total assets $ 20,076,364 $ 20,366,138 (1 )% $ 19,083,388 5 % Liabilities: Deposits $ 15,739,859 $ 15,619,352 1 % $ 15,502,209 2 % FHLB and Federal Reserve Bank (“FRB”) borrowings 1,795,726 2,260,000 (21 )% 1,072,000 68 % Convertible notes, net 444 444 — % 216,913 (100 )% Subordinated debentures 107,505 107,188 — % 106,258 1 % Accrued interest payable 166,831 109,236 53 % 11,713 1,324 % Other liabilities 235,575 201,920 17 % 198,570 19 % Total liabilities $ 18,045,940 $ 18,298,140 (1 )% $ 17,107,663 5 % Stockholders’ Equity: Common stock, $0.001 par value $ 137 $ 137 — % $ 137 — % Additional paid-in capital 1,436,769 1,433,788 — % 1,428,052 1 % Retained earnings 1,140,870 1,127,624 1 % 1,048,738 9 % Treasury stock, at cost (264,667 ) (264,667 ) — % (264,667 ) — % Accumulated other comprehensive loss, net (282,685 ) (228,884 ) (24 )% (236,535 ) (20 )% Total stockholders’ equity 2,030,424 2,067,998 (2 )% 1,975,725 3 % Total liabilities and stockholders’ equity $ 20,076,364 $ 20,366,138 (1 )% $ 19,083,388 5 % Common stock shares - authorized 150,000,000 150,000,000 150,000,000 Common stock shares - outstanding 120,026,220 120,014,888 119,479,253 Treasury stock shares 17,382,835 17,382,835 17,382,835 Hope Bancorp, Inc. Selected Financial Data Unaudited (dollars in thousands, except share and per share data) Three Months Ended Nine Months Ended 9/30/2023 6/30/2023 % change 9/30/2022 % change 9/30/2023 9/30/2022 % change Interest and fees on loans $ 229,937 $ 225,671 2 % $ 175,078 31 % $ 671,543 $ 452,774 48 % Interest on investment securities 17,006 15,534 9 % 13,498 26 % 47,665 37,462 27 % Interest on cash and deposits at other banks 28,115 25,295 11 % 142 NM 58,332 352 NM Interest on other investments 735 684 7 % 464 58 % 2,114 1,290 64 % Total interest income 275,793 267,184 3 % 189,182 46 % 779,654 491,878 59 % Interest on deposits 117,854 109,724 7 % 30,667 284 % 319,926 51,563 520 % Interest on borrowings 22,561 26,771 (16 )% 5,329 323 % 59,783 12,415 382 % Total interest expense 140,415 136,495 3 % 35,996 290 % 379,709 63,978 493 % Net interest income before provision for credit losses 135,378 130,689 4 % 153,186 (12 )% 399,945 427,900 (7 )% Provision for credit losses 16,800 8,900 89 % 9,200 83 % 27,400 1,400 1,857 % Net interest income after provision for credit losses 118,578 121,789 (3 )% 143,986 (18 )% 372,545 426,500 (13 )% Service fees on deposit accounts 2,415 2,325 4 % 2,535 (5 )% 6,961 6,779 3 % Net gains on sales of SBA loans — 1,872 (100 )% 2,782 (100 )% 4,097 14,189 (71 )% Net gains on sales of residential mortgage loans 118 82 44 % 29 307 % 264 862 (69 )% Other income and fees 5,772 12,735 (55 )% 8,009 (28 )% 24,975 17,457 43 % Total noninterest income 8,305 17,014 (51 )% 13,355 (38 )% 36,297 39,287 (8 )% Salaries and employee benefits 51,033 52,305 (2 )% 53,222 (4 )% 160,507 152,025 6 % Occupancy 7,149 6,967 3 % 6,682 7 % 21,637 21,195 2 % Furniture and equipment 5,625 5,393 4 % 4,967 13 % 16,076 14,389 12 % Data processing and communications 2,891 2,917 (1 )% 2,469 17 % 8,630 7,823 10 % FDIC assessment 3,683 4,691 (21 )% 1,633 126 % 10,155 4,652 118 % Earned interest credit 6,377 5,090 25 % 4,685 36 % 15,894 5,996 165 % Other 10,115 9,970 1 % 10,256 (1 )% 31,661 33,572 (6 )% Total noninterest expense 86,873 87,333 (1 )% 83,914 4 % 264,560 239,652 10 % Income before income taxes 40,010 51,470 (22 )% 73,427 (46 )% 144,282 226,135 (36 )% Income tax provision 9,961 13,448 (26 )% 19,679 (49 )% 37,090 59,561 (38 )% Net income $ 30,049 $ 38,022 (21 )% $ 53,748 (44 )% $ 107,192 $ 166,574 (36 )% Earnings Per Common Share - Basic $ 0.25 $ 0.32 $ 0.45 $ 0.89 $ 1.39 Earnings Per Common Share - Diluted $ 0.25 $ 0.32 $ 0.45 $ 0.89 $ 1.38 Weighted Average Shares Outstanding - Basic 120,020,567 119,953,174 119,476,035 119,843,382 119,940,044 Weighted Average Shares Outstanding - Diluted 120,374,618 120,129,359 119,996,523 120,249,952 120,595,988 Hope Bancorp, Inc. Selected Financial Data Unaudited For the Three Months Ended For the Nine Months Ended Profitability measures (annualized): 9/30/2023 6/30/2023 9/30/2022 9/30/2023 9/30/2022 ROA 0.60 % 0.74 % 1.17 % 0.72 % 1.23 % ROE 5.78 % 7.34 % 10.58 % 6.92 % 10.85 % ROA (PPNR) (1) 1.13 % 1.18 % 1.79 % 1.15 % 1.68 % ROE (PPNR) (1) 10.93 % 11.65 % 16.26 % 11.08 % 14.83 % ROTCE (1) 7.47 % 9.49 % 13.77 % 8.95 % 14.10 % Net interest margin 2.83 % 2.70 % 3.49 % 2.84 % 3.36 % Efficiency ratio (not annualized) 60.46 % 59.13 % 50.39 % 60.65 % 51.30 % Noninterest expense / average assets 1.73 % 1.71 % 1.82 % 1.77 % 1.77 % (1) ROA (PPNR), ROE (PPNR), and ROTCE are non-GAAP financial measures. Quantitative reconciliations of the most directly comparable GAAP to non-GAAP financial measures are provided in the accompanying financial information on Table Page 10. Hope Bancorp, Inc. Selected Financial Data Unaudited (dollars in thousands) Three Months Ended 9/30/2023 6/30/2023 9/30/2022 Interest Annualized Interest Annualized Interest Annualized Average Income/ Average Average Income/ Average Average Income/ Average Balance Expense Yield/Cost Balance Expense Yield/Cost Balance Expense Yield/Cost INTEREST EARNING ASSETS: Loans, including loans held for sale $ 14,550,106 $ 229,937 6.27 % $ 15,105,212 $ 225,671 5.99 % $ 14,925,298 $ 175,078 4.65 % Investment securities 2,275,133 17,006 2.97 % 2,243,614 15,534 2.78 % 2,366,696 13,498 2.26 % Interest earning cash and deposits at other banks 2,106,469 28,115 5.30 % 1,996,924 25,295 5.08 % 54,870 142 1.03 % FHLB stock and other investments 47,316 735 6.16 % 47,044 684 5.83 % 52,854 464 3.48 % Total interest earning assets $ 18,979,024 $ 275,793 5.77 % $ 19,392,794 $ 267,184 5.53 % $ 17,399,718 $ 189,182 4.31 % INTEREST BEARING LIABILITIES: Deposits: Money market and interest bearing demand $ 4,202,076 $ 36,574 3.45 % $ 4,279,819 $ 34,377 3.22 % $ 6,255,271 $ 19,614 1.24 % Savings deposits 331,354 2,240 2.68 % 216,060 674 1.25 % 324,487 969 1.18 % Time deposits 6,862,038 79,040 4.57 % 6,890,035 74,673 4.35 % 3,146,432 10,084 1.27 % Total interest bearing deposits 11,395,468 117,854 4.10 % 11,385,914 109,724 3.87 % 9,726,190 30,667 1.25 % FHLB and FRB borrowings 1,809,322 19,821 4.35 % 2,177,264 23,622 4.35 % 448,837 2,393 2.12 % Convertible notes, net 444 2 1.76 % 96,621 598 2.45 % 216,762 1,322 2.39 % Subordinated debentures 103,429 2,738 10.36 % 103,123 2,551 9.79 % 102,182 1,614 6.18 % Total interest bearing liabilities $ 13,308,663 $ 140,415 4.19 % $ 13,762,922 $ 136,495 3.98 % $ 10,493,971 $ 35,996 1.36 % Noninterest bearing demand deposits 4,312,117 4,366,868 5,719,213 Total funding liabilities/cost of funds $ 17,620,780 3.16 % $ 18,129,790 3.02 % $ 16,213,184 0.88 % Net interest income/net interest spread $ 135,378 1.58 % $ 130,689 1.55 % $ 153,186 2.95 % Net interest margin 2.83 % 2.70 % 3.49 % Cost of deposits: Noninterest bearing demand deposits $ 4,312,117 $ — — % $ 4,366,868 $ — — % $ 5,719,213 $ — — % Interest bearing deposits 11,395,468 117,854 4.10 % 11,385,914 109,724 3.87 % 9,726,190 30,667 1.25 % Total deposits $ 15,707,585 $ 117,854 2.98 % $ 15,752,782 $ 109,724 2.79 % $ 15,445,403 $ 30,667 0.79 % Hope Bancorp, Inc. Selected Financial Data Unaudited (dollars in thousands) Nine Months Ended 9/30/2023 9/30/2022 Interest Annualized Interest Annualized Average Income/ Average Average Income/ Average Balance Expense Yield/Cost Balance Expense Yield/Cost INTEREST EARNING ASSETS: Loans, including loans held for sale $ 14,961,058 $ 671,543 6.00 % $ 14,378,774 $ 452,774 4.21 % Investment securities 2,255,839 47,665 2.83 % 2,469,858 37,462 2.03 % Interest earning cash and deposits at other banks 1,531,561 58,332 5.09 % 133,745 352 0.35 % FHLB stock and other investments 47,135 2,114 6.00 % 63,542 1,290 2.71 % Total interest earning assets $ 18,795,593 $ 779,654 5.55 % $ 17,045,919 $ 491,878 3.86 % INTEREST BEARING LIABILITIES: Deposits: Money market and interest bearing demand $ 4,603,479 $ 112,349 3.26 % $ 6,360,040 $ 33,970 0.71 % Savings deposits 268,145 3,741 1.87 % 322,058 2,834 1.18 % Time deposits 6,436,645 203,836 4.23 % 2,683,217 14,759 0.74 % Total interest bearing deposits 11,308,269 319,926 3.78 % 9,365,315 51,563 0.74 % FHLB and FRB borrowings 1,558,493 50,141 4.30 % 423,875 4,537 1.43 % Convertible notes, net 103,933 1,922 2.44 % 216,538 3,967 2.42 % Subordinated debentures 103,117 7,720 9.87 % 101,882 3,911 5.06 % Total interest bearing liabilities $ 13,073,812 $ 379,709 3.88 % $ 10,107,610 $ 63,978 0.85 % Noninterest bearing demand deposits 4,445,740 5,702,734 Total funding liabilities/cost of funds $ 17,519,552 2.90 % $ 15,810,344 0.54 % Net interest income/net interest spread $ 399,945 1.67 % $ 427,900 3.01 % Net interest margin 2.84 % 3.36 % Cost of deposits: Noninterest bearing demand deposits $ 4,445,740 $ — — % $ 5,702,734 $ — — % Interest bearing deposits 11,308,269 319,926 3.78 % 9,365,315 51,563 0.74 % Total deposits $ 15,754,009 $ 319,926 2.72 % $ 15,068,049 $ 51,563 0.46 % Hope Bancorp, Inc. Selected Financial Data Unaudited (dollars in thousands) Three Months Ended Nine Months Ended AVERAGE BALANCES: 9/30/2023 6/30/2023 % change 9/30/2022 % change 9/30/2023 9/30/2022 % change Loans, including loans held for sale $ 14,550,106 $ 15,105,212 (4 )% $ 14,925,298 (3 )% $ 14,961,058 $ 14,378,774 4 % Investment securities 2,275,133 2,243,614 1 % 2,366,696 (4 )% 2,255,839 2,469,858 (9 )% Interest earning cash and deposits at other banks 2,106,469 1,996,924 5 % 54,870 3739 % 1,531,561 133,745 1045 % Interest earning assets 18,979,024 19,392,794 (2 )% 17,399,718 9 % 18,795,593 17,045,919 10 % Total assets 20,059,304 20,468,810 (2 )% 18,428,874 9 % 19,875,322 18,018,588 10 % Interest bearing deposits 11,395,468 11,385,914 — % 9,726,190 17 % 11,308,269 9,365,315 21 % Interest bearing liabilities 13,308,663 13,762,922 (3 )% 10,493,971 27 % 13,073,812 10,107,610 29 % Noninterest bearing demand deposits 4,312,117 4,366,868 (1 )% 5,719,213 (25 )% 4,445,740 5,702,734 (22 )% Stockholders’ equity 2,079,092 2,072,859 — % 2,032,362 2 % 2,066,157 2,046,351 1 % LOAN PORTFOLIO COMPOSITION: 9/30/2023 6/30/2023 % change 9/30/2022 % change Commercial real estate (“CRE”) loans $ 8,972,886 $ 9,192,160 (2 )% $ 9,504,893 (6 )% Commercial and industrial (“C&I”) loans 4,450,341 4,805,126 (7 )% 5,124,421 (13 )% Residential mortgage and other loans 882,966 867,524 2 % 861,873 2 % Loans receivable 14,306,193 14,864,810 (4 )% 15,491,187 (8 )% Allowance for credit losses (158,809 ) (172,996 ) (8 )% (160,561 ) (1 )% Loans receivable, net $ 14,147,384 $ 14,691,814 (4 )% $ 15,330,626 (8 )% CRE LOANS BY PROPERTY TYPE: 9/30/2023 6/30/2023 % change 9/30/2022 % change Multi-tenant retail $ 1,745,430 $ 1,778,068 (2 )% $ 1,904,132 (8 )% Hotels/motels 826,732 868,286 (5 )% 1,091,047 (24 )% Gas stations and car washes 1,037,621 1,042,290 — % 1,056,217 (2 )% Mixed-use facilities 813,571 834,948 (3 )% 825,289 (1 )% Industrial warehouses 1,254,643 1,301,075 (4 )% 1,271,104 (1 )% Multifamily 1,234,934 1,257,971 (2 )% 1,199,320 3 % Single-tenant retail 671,921 690,418 (3 )% 728,432 (8 )% Office 454,695 463,998 (2 )% 432,586 5 % All other 933,339 955,106 (2 )% 996,766 (6 )% Total CRE loans $ 8,972,886 $ 9,192,160 (2 )% $ 9,504,893 (6 )% DEPOSIT COMPOSITION: 9/30/2023 6/30/2023 % change 9/30/2022 % change Noninterest bearing demand deposits $ 4,249,788 $ 4,229,247 — % $ 5,590,952 (24 )% Money market and interest bearing demand 4,424,918 4,188,584 6 % 5,885,093 (25 )% Savings deposits 430,765 224,495 92 % 317,841 36 % Time deposits 6,634,388 6,977,026 (5 )% 3,708,323 79 % Total deposits $ 15,739,859 $ 15,619,352 1 % $ 15,502,209 2 % Hope Bancorp, Inc. Selected Financial Data Unaudited (dollars in thousands, except share and per share data) Three Months Ended NEW LOAN ORIGINATIONS: 9/30/2023 6/30/2023 9/30/2022 CRE $ 46,011 $ 115,444 $ 500,826 C&I 201,420 318,063 732,341 SBA loans 48,987 38,051 47,428 Residential mortgage and other loans 32,920 19,016 68,099 Total new loan originations $ 329,338 $ 490,574 $ 1,348,694 CAPITAL & CAPITAL RATIOS: 9/30/2023 6/30/2023 9/30/2022 Total stockholders’ equity $ 2,030,424 $ 2,067,998 $ 1,975,725 Total capital $ 2,105,754 $ 2,102,625 $ 2,000,653 Common equity tier 1 ratio 11.67 % 11.05 % 10.32 % Tier 1 capital ratio 12.32 % 11.68 % 10.92 % Total capital ratio 13.23 % 12.64 % 11.72 % Leverage ratio 9.83 % 9.57 % 10.25 % Total risk weighted assets $ 15,912,742 $ 16,640,323 $ 17,065,355 Book value per common share $ 16.92 $ 17.23 $ 16.54 TCE per share (1) $ 13.01 $ 13.32 $ 12.60 TCE ratio (1) 7.96 % 8.04 % 8.09 % (1) TCE per share and TCE ratio are non-GAAP financial measures. Quantitative reconciliations of the most directly comparable GAAP to non-GAAP financial measures are provided in the accompanying financial information on Table Page 10. Three Months Ended Nine Months Ended ALLOWANCE FOR CREDIT LOSSES CHANGES: 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 9/30/2023 9/30/2022 Balance at beginning of period $ 172,996 $ 163,544 $ 162,359 $ 160,561 $ 151,580 $ 162,359 $ 140,550 ASU 2022-02 day 1 adoption impact — — (407 ) — — (407 ) — Provision for credit losses 16,800 8,900 1,700 8,200 9,200 27,400 1,400 Recoveries 2,938 1,531 387 3,222 331 4,856 21,376 Charge offs (33,925 ) (979 ) (495 ) (9,624 ) (550 ) (35,399 ) (2,765 ) Balance at end of period $ 158,809 $ 172,996 $ 163,544 $ 162,359 $ 160,561 $ 158,809 $ 160,561 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 Allowance for unfunded loan commitments $ 3,143 $ 3,081 $ 2,971 $ 1,351 $ 1,231 Three Months Ended Nine Months Ended NET LOAN CHARGE OFFS (RECOVERIES): 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 9/30/2023 9/30/2022 CRE loans $ (2,227 ) $ 438 $ (109 ) $ 2,022 $ 9 $ (1,898 ) $ (16,917 ) C&I loans 33,145 (1,091 ) 196 4,174 115 32,250 (1,875 ) Residential mortgage and other loans 69 101 21 206 95 191 181 Net loan charge offs (recoveries) $ 30,987 $ (552 ) $ 108 $ 6,402 $ 219 $ 30,543 $ (18,611 ) Net charge offs (recoveries)/average loans receivable (annualized) 0.85 % (0.01 )% — % 0.17 % 0.01 % 0.27 % (0.17 )% NONPERFORMING ASSETS: 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 Loans on nonaccrual status (1) $ 39,081 $ 61,252 $ 78,861 $ 49,687 $ 64,571 Accruing delinquent loans past due 90 days or more 21,579 15,182 364 401 5,306 Accruing troubled debt restructured loans (2) — — — 16,931 25,631 Total nonperforming loans 60,660 76,434 79,225 67,019 95,508 Other real estate owned (“OREO”) 1,043 938 938 2,418 1,480 Total nonperforming assets $ 61,703 $ 77,372 $ 80,163 $ 69,437 $ 96,988 Nonperforming assets/total assets 0.31 % 0.38 % 0.39 % 0.36 % 0.51 % Nonperforming assets/loans receivable & OREO 0.43 % 0.52 % 0.53 % 0.45 % 0.63 % Nonperforming assets/total capital 3.04 % 3.74 % 3.89 % 3.44 % 4.91 % Nonperforming loans/loans receivable 0.42 % 0.51 % 0.53 % 0.44 % 0.62 % Nonaccrual loans/loans receivable 0.27 % 0.41 % 0.52 % 0.32 % 0.42 % Allowance for credit losses/loans receivable 1.11 % 1.16 % 1.09 % 1.05 % 1.04 % Allowance for credit losses/nonperforming loans 261.80 % 226.33 % 206.43 % 242.26 % 168.11 % (1) Excludes delinquent SBA loans that are guaranteed and currently in liquidation totaling $12.1 million, $11.9 million, $7.6 million, $9.8 million, and $9.9 million, at September 30, 2023, June 30, 2023, March 31, 2023, December 31, 2022, and September 30, 2022, respectively. (2) The Company adopted ASU 2022-02 in 2023, which eliminated the concept of TDR from GAAP; therefore, accruing TDR loans are no longer included in nonperforming loans. NONACCRUAL LOANS BY TYPE: 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 CRE loans $ 26,687 $ 29,270 $ 44,376 $ 33,915 $ 47,807 C&I loans 4,234 23,042 26,191 5,620 7,675 Residential mortgage and other loans 8,160 8,940 8,294 10,152 9,089 Total nonaccrual loans $ 39,081 $ 61,252 $ 78,861 $ 49,687 $ 64,571 ACCRUING DELINQUENT LOANS 30-89 DAYS PAST DUE: 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 30 - 59 days past due $ 2,906 $ 9,295 $ 7,662 $ 7,049 $ 13,092 60 - 89 days past due 506 178 249 2,243 4,933 Total accruing delinquent loans 30-89 days past due $ 3,412 $ 9,473 $ 7,911 $ 9,292 $ 18,025 ACCRUING DELINQUENT LOANS 30-89 DAYS PAST DUE BY TYPE: 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 CRE loans $ 611 $ 7,339 $ 3,652 $ 4,115 $ 9,694 C&I loans 1,168 990 419 3,300 6,165 Residential mortgage and other loans 1,633 1,144 3,840 1,877 2,166 Total accruing delinquent loans 30-89 days past due $ 3,412 $ 9,473 $ 7,911 $ 9,292 $ 18,025 CRITICIZED LOANS: 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 Special mention loans $ 186,600 $ 210,806 $ 166,472 $ 157,263 $ 79,399 Substandard loans 174,161 134,203 138,224 104,073 204,713 Total criticized loans $ 360,761 $ 345,009 $ 304,696 $ 261,336 $ 284,112 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. Reconciliations of the most directly comparable GAAP to non-GAAP financial measures utilized by management are provided below. Three Months Ended Nine Months Ended RETURN ON AVERAGE TANGIBLE COMMON EQUITY 9/30/2023 6/30/2023 9/30/2022 9/30/2023 9/30/2022 Average stockholders’ equity $ 2,079,092 $ 2,072,859 $ 2,032,362 $ 2,066,157 $ 2,046,351 Less: Average goodwill and core deposit intangible assets, net (469,079 ) (469,515 ) (470,941 ) (469,525 ) (471,424 ) Average TCE $ 1,610,013 $ 1,603,344 $ 1,561,421 $ 1,596,632 $ 1,574,927 Net income $ 30,049 $ 38,022 $ 53,748 $ 107,192 $ 166,574 ROTCE (annualized) 7.47 % 9.49 % 13.77 % 8.95 % 14.10 % TANGIBLE COMMON EQUITY 9/30/2023 6/30/2023 9/30/2022 Total stockholders’ equity $ 2,030,424 $ 2,067,998 $ 1,975,725 Less: Goodwill and core deposit intangible assets, net (468,832 ) (469,280 ) (470,662 ) TCE $ 1,561,592 $ 1,598,718 $ 1,505,063 Total assets $ 20,076,364 $ 20,366,138 $ 19,083,388 Less: Goodwill and core deposit intangible assets, net (468,832 ) (469,280 ) (470,662 ) Tangible assets $ 19,607,532 $ 19,896,858 $ 18,612,726 TCE ratio 7.96 % 8.04 % 8.09 % Common shares outstanding 120,026,220 120,014,888 119,479,253 TCE per share $ 13.01 $ 13.32 $ 12.60 Three Months Ended Nine Months Ended PRE-PROVISION NET REVENUE 9/30/2023 6/30/2023 9/30/2022 9/30/2023 9/30/2022 Net interest income before provision for credit losses $ 135,378 $ 130,689 $ 153,186 $ 399,945 $ 427,900 Noninterest income 8,305 17,014 13,355 36,297 39,287 Revenue 143,683 147,703 166,541 436,242 467,187 Less: Noninterest expense 86,873 87,333 83,914 264,560 239,652 PPNR $ 56,810 $ 60,370 $ 82,627 $ 171,682 $ 227,535 Average assets $ 20,059,304 $ 20,468,810 $ 18,428,874 $ 19,875,322 $ 18,018,588 ROA (PPNR) (annualized) 1.13 % 1.18 % 1.79 % 1.15 % 1.68 % Average stockholders’ equity 2,079,092 2,072,859 2,032,362 2,066,157 2,046,351 ROE (PPNR) (annualized) 10.93 % 11.65 % 16.26 % 11.08 % 14.83 % View source version on businesswire.com: https://www.businesswire.com/news/home/20231023356482/en/Contacts Julianna Balicka EVP & Chief Financial Officer 213-235-3235 julianna.balicka@bankofhope.com Angie Yang SVP, Director of Investor Relations & Corporate Communications 213-251-2219 angie.yang@bankofhope.com
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, 2023. For the three months ended September 30, 2023, net income totaled $30.0 million, or $0.25 per diluted common share. This compares with net income of $38.0 million, or $0.32 per diluted common share, in the preceding second quarter. “Our third quarter 2023 net interest margin expanded 13 basis points, and our net interest income grew 4% quarter-over-quarter,” stated Kevin S. Kim, Chairman, President and Chief Executive Officer. “We maintained disciplined expense control and our noninterest expenses decreased 1% over the same period. However, we recorded a provision for credit losses of $17 million for the third quarter, and certain one-time gains in the second quarter 2023 noninterest income did not reoccur. As a result, our net income declined compared with the prior quarter.” “Our balance sheet continued to strengthen. Total deposits grew to $15.7 billion at September 30, 2023, up 1% from June 30, 2023, reflecting growth in customer deposits, partially offset by a planned reduction of brokered time deposits. Our total capital ratio increased to 13.23% as of September 30, 2023, and all our regulatory capital ratios expanded quarter-over-quarter,” continued Kim. “Our deposit growth, taken together with our expanding capital and ample liquidity, positions us well to take advantage of profitable growth opportunities going forward.” Strategic Reorganization The Company also announced today a strategic reorganization designed to enhance shareholder value over the long term. Accordingly, the Company realigned its structure around lines of business and product delivery channels, optimized its production capacity and reduced headcount. The restructuring is expected to generate over $40 million in estimated annualized cost savings, largely related to the reduction in staffing, savings from a planned branch rationalization, subject to customary notices and approvals, and operational process improvements. The Company expects to recognize one-time charges of approximately $12 million in the fourth quarter of 2023 related to the reorganization. “As the largest Korean American bank in the United States, Bank of Hope has made great strides in transitioning from a traditional community bank into a regional bank serving a wide range of consumer, small business, commercial and corporate customers,” commented Kim. “Today’s strategic reorganization further evolves our business model. As a result, we expect to operate our Bank more efficiently, strengthen our franchise, enhance the customer experience and expand our customer relationships, benefiting all our stakeholders through sustainably improved profitability.” Financial Summary At or for the Three Months Ended (dollars in thousands, except per share data) (unaudited) 9/30/2023 6/30/2023 9/30/2022 Net income $ 30,049 $ 38,022 $ 53,748 Diluted earnings per share $ 0.25 $ 0.32 $ 0.45 Net interest income before provision for credit losses $ 135,378 $ 130,689 $ 153,186 Pre-provision net revenue (“PPNR”) (1) $ 56,810 $ 60,370 $ 82,627 Loans receivable $ 14,306,193 $ 14,864,810 $ 15,491,187 Deposits $ 15,739,859 $ 15,619,352 $ 15,502,209 Total assets $ 20,076,364 $ 20,366,138 $ 19,083,388 Total equity $ 2,030,424 $ 2,067,998 $ 1,975,725 Total capital ratio 13.23 % 12.64 % 11.72 % Tangible common equity (“TCE”) ratio (1) 7.96 % 8.04 % 8.09 % Allowance for credit losses to loans receivable 1.11 % 1.16 % 1.04 % Nonperforming assets to total assets (2) 0.31 % 0.38 % 0.51 % Return on average assets (“ROA”) (3) 0.60 % 0.74 % 1.17 % Return on average equity (“ROE”) (3) 5.78 % 7.34 % 10.58 % Return on average TCE (“ROTCE”) (1) (3) 7.47 % 9.49 % 13.77 % ROA (PPNR) (1) (3) 1.13 % 1.18 % 1.79 % Net interest margin (3) 2.83 % 2.70 % 3.49 % Efficiency ratio 60.5 % 59.1 % 50.4 % (1) PPNR, TCE ratio, ROTCE, and ROA (PPNR) are non-GAAP financial measures. Quantitative reconciliations of the most directly comparable GAAP to non-GAAP financial measures are provided in the accompanying financial information on Table Page 10. (2) Excludes delinquent Small Business Administration (“SBA”) loans that are guaranteed and currently in liquidation. (3) Annualized. Operating Results for the 2023 Third Quarter Net interest income growth and net interest margin expansion. Net interest income before provision for credit losses for the 2023 third quarter totaled $135.4 million, growing 4% from $130.7 million in the preceding second quarter. Third quarter 2023 net interest margin expanded 13 basis points to 2.83%, up from 2.70% in the 2023 second quarter. The linked quarter net interest income growth and net interest margin expansion reflected higher yields on earning assets, a decrease in the average volume of borrowings and debt, and an increase in the average volume of interest-earning cash and deposits at other banks, partially offset by a higher cost of funds and a lower average volume of loans. Third quarter 2023 weighted average yield on earning assets of 5.77% expanded 24 basis points quarter-over-quarter; the rate of change accelerated from the previous quarter. In comparison, the third quarter 2023 weighted average cost of funds of 3.16% increased 14 basis points quarter-over-quarter; the rate of change decelerated from the previous quarter. Noninterest income. Noninterest income for the 2023 third quarter totaled $8.3 million, compared with $17.0 million in the preceding second quarter. Second quarter 2023 noninterest income included a one-time $5.8 million cash distribution from a gain on an investment in an affordable housing partnership and $1.9 million of gains on SBA loan sales. The Company did not sell any SBA 7(a) loans during the 2023 third quarter, retaining loan production on its balance sheet instead. In comparison, during the preceding 2023 second quarter, the Company sold $38.4 million of the guaranteed portion of SBA 7(a) loans for net gains on sale of $1.9 million. Noninterest expense. Noninterest expense for the 2023 third quarter decreased 1% to $86.9 million, down from $87.3 million in the preceding second quarter. The linked quarter decrease was largely driven by lower salaries and employee benefits expense and lower FDIC assessment expense, partially offset by higher earned interest credit costs. Third quarter 2023 salaries and employee benefits expense decreased 2% to $51.0 million, down from $52.3 million in the 2023 second quarter. The Company’s efficiency ratio for the 2023 third quarter was 60.5%, compared with 59.1% in the preceding second quarter. Tax rate. The effective tax rate for the 2023 third quarter was 24.9%, compared with 26.1% for the preceding second quarter. The year-to-date effective tax rate for the first nine months of 2023 was 25.7%. Balance Sheet Summary Strong Liquidity. At September 30, 2023, cash and cash equivalents increased to $2.50 billion, up from $2.30 billion at June 30, 2023, and up from $331.3 million at September 30, 2022. Available borrowing capacity, cash and cash equivalents, and unpledged investment securities totaled $8.29 billion at September 30, 2023, equivalent to 53% of total deposits and well exceeding the Bank’s uninsured deposit balances. Loans. Loans receivable of $14.31 billion at September 30, 2023, decreased 4% from $14.86 billion at June 30, 2023, reflecting our prudent approach to loan growth, an intentional decrease in mortgage warehouse lines, and the impact of paydowns and payoffs in a high interest rate environment. Year-over-year, loans receivable decreased 8%. The following table sets forth the loan portfolio composition and percentage of total loans at September 30, 2023, June 30, 2023, and September 30, 2022: (dollars in thousands) (unaudited) 9/30/2023 6/30/2023 9/30/2022 Balance Percentage Balance Percentage Balance Percentage Commercial real estate (“CRE”) loans $ 8,972,886 62.7 % $ 9,192,160 61.9 % $ 9,504,893 61.3 % Commercial and industrial (“C&I”) loans 4,450,341 31.1 % 4,805,126 32.3 % 5,124,421 33.1 % Residential mortgage and other loans 882,966 6.2 % 867,524 5.8 % 861,873 5.6 % Loans receivable $ 14,306,193 100.0 % $ 14,864,810 100.0 % $ 15,491,187 100.0 % Deposits. Total deposits of $15.74 billion at September 30, 2023, grew 1% from $15.62 billion at June 30, 2023, reflecting growth in customer deposits, partially offset by a planned reduction of brokered time deposits. Year-over-year, total deposits increased 2%. The gross loan-to-deposit ratio was 91.0% at September 30, 2023, compared with 95.5% at June 30, 2023, and 100.2% a year ago at September 30, 2022. The following table sets forth the deposit composition and percentage of total deposits at September 30, 2023, June 30, 2023, and September 30, 2022: (dollars in thousands) (unaudited) 9/30/2023 6/30/2023 9/30/2022 Balance Percentage Balance Percentage Balance Percentage Noninterest bearing demand deposits $ 4,249,788 27.0 % $ 4,229,247 27.1 % $ 5,590,952 36.1 % Money market and interest bearing demand deposits 4,424,918 28.1 % 4,188,584 26.8 % 5,885,093 38.0 % Savings deposits 430,765 2.8 % 224,495 1.4 % 317,841 2.0 % Time deposits 6,634,388 42.1 % 6,977,026 44.7 % 3,708,323 23.9 % Total deposits $ 15,739,859 100.0 % $ 15,619,352 100.0 % $ 15,502,209 100.0 % Gross loan-to-deposit ratio 91.0 % 95.5 % 100.2 % Uninsured deposits at September 30, 2023, represented 37% of the Bank’s deposits. Borrowings. Federal Home Loan Bank and Federal Reserve Bank borrowings totaled $1.80 billion at September 30, 2023, compared with $2.26 billion at June 30, 2023, and $1.07 billion at September 30, 2022. Linked quarter growth in deposits and decrease in loans reduced the need for borrowings in the 2023 third quarter. Credit Quality and Allowance for Credit Losses Nonperforming assets. Nonperforming assets totaled $61.7 million at September 30, 2023, a decrease of 20% from June 30, 2023. The quarter-over-quarter decrease in nonperforming assets reflects charge offs of nonaccrual loans, payoffs and workouts, partially offset by new inflows. The nonperforming assets ratio was 0.31% of total assets at September 30, 2023, an improvement from 0.38% at June 30, 2023. The following table sets forth the components of nonperforming assets at September 30, 2023, June 30, 2023, and September 30, 2022: (dollars in thousands) (unaudited) 9/30/2023 6/30/2023 9/30/2022 Loans on nonaccrual status (1) $ 39,081 $ 61,252 $ 64,571 Accruing delinquent loans past due 90 days or more 21,579 15,182 5,306 Accruing troubled debt restructured loans (2) — — 25,631 Total nonperforming loans 60,660 76,434 95,508 Other real estate owned 1,043 938 1,480 Total nonperforming assets $ 61,703 $ 77,372 $ 96,988 Nonperforming assets/total assets 0.31 % 0.38 % 0.51 % (1) Excludes delinquent SBA loans that are guaranteed and currently in liquidation totaling $12.1 million, $11.9 million and $9.9 million at September 30, 2023, June 30, 2023, and September 30, 2022, respectively. (2) The Company adopted ASU 2022-02 in 2023, which eliminated the concept of troubled debt restructured (“TDR”) loans from GAAP; therefore, accruing TDR loans are no longer included in nonperforming loans. Net charge offs. The Company recorded net charge offs of $31.0 million in the 2023 third quarter. This included an idiosyncratic full charge off of $23.4 million related to a borrower that entered into Chapter 7 liquidation in August 2023. Related to this credit, the Company had recorded impairment reserves of $9.6 million at June 30, 2023. For the 2023 third quarter, the Company recorded a provision for credit losses of $16.8 million, compared with $8.9 million in the preceding second quarter. The following table sets forth net charge offs (recoveries) and net charge offs (recoveries) to average loans receivable, annualized, for the three months ended September 30, 2023, June 30, 2023, and September 30, 2022: For the Three Months Ended (dollars in thousands) (unaudited) 9/30/2023 6/30/2023 9/30/2022 Net charge offs (recoveries) $ 30,987 $ (552 ) $ 219 Net charge offs (recoveries)/average loans receivable (annualized) 0.85 % (0.01 )% 0.01 % Allowance for credit losses. The allowance for credit losses totaled $158.8 million at September 30, 2023, compared with $173.0 million at June 30, 2023. The allowance coverage ratio was 1.11% of loans receivable at September 30, 2023, compared with 1.16% at June 30, 2023. Excluding the $9.6 million of impairment reserves related to the aforementioned charged off credit, the allowance coverage ratio as of June 30, 2023, was 1.10%. Year-over-year, allowance coverage of loans receivable increased from 1.04% at September 30, 2022. The following table sets forth the allowance for credit losses and allowance coverage ratios at September 30, 2023, June 30, 2023, and September 30, 2022: (dollars in thousands) (unaudited) 9/30/2023 6/30/2023 9/30/2022 Allowance for credit losses $ 158,809 $ 172,996 $ 160,561 Allowance for credit losses/loans receivable 1.11 % 1.16 % 1.04 % Capital The Company’s capital ratios are strong and all regulatory capital ratios expanded quarter-over-quarter. At September 30, 2023, the Company and the Bank continued to exceed all regulatory capital requirements generally required to meet the definition of a “well-capitalized” financial institution. The following table sets forth the capital ratios for the Company at September 30, 2023, June 30, 2023, and September 30, 2022: (unaudited) 9/30/2023 6/30/2023 9/30/2022 Minimum Guideline for “Well-Capitalized” Common Equity Tier 1 Capital Ratio 11.67 % 11.05 % 10.32 % 6.50 % Tier 1 Capital Ratio 12.32 % 11.68 % 10.92 % 8.00 % Total Capital Ratio 13.23 % 12.64 % 11.72 % 10.00 % Leverage Ratio 9.83 % 9.57 % 10.25 % 5.00 % At September 30, 2023, total stockholders’ equity was $2.03 billion, or $16.92 per share, tangible common equity per share was $13.01, and the tangible common equity ratio was 7.96%. Quarter-over-quarter, stockholders’ equity declined by 2%, or $37.6 million, primarily reflecting a negative change in accumulated other comprehensive income (“AOCI”) of $53.8 million and $16.8 million in common dividends declared, partially offset by $30.0 million in net income. The following table sets forth the TCE per share and the TCE ratio at September 30, 2023, June 30, 2023, and September 30, 2022: (unaudited) 9/30/2023 6/30/2023 9/30/2022 TCE per share (1) $ 13.01 $ 13.32 $ 12.60 TCE ratio (1) 7.96 % 8.04 % 8.09 % (1) TCE per share and TCE ratio are non-GAAP financial measures. Quantitative reconciliations of the most directly comparable GAAP to non-GAAP financial measures are 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 Monday, October 23, 2023, at 9:30 a.m. Pacific Time / 12:30 p.m. Eastern Time to review unaudited financial results for its third quarter ended September 30, 2023. 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 October 30, 2023, replay access code 5386919. Non-GAAP Financial Metrics This news release contains certain non-GAAP financial measure disclosures, including PPNR, TCE per share, TCE ratio, ROTCE, ROA (PPNR), and ROE (PPNR). Management believes these non-GAAP financial measures provide meaningful supplemental information regarding the Company’s operational performance and the Company’s capital levels and has included these figures in response to market participant interest in these financial metrics. Quantitative reconciliations of the most directly comparable GAAP to non-GAAP financial measures are provided in the accompanying financial information on Table Page 10. About Hope Bancorp, Inc. Hope Bancorp, Inc. (NASDAQ: HOPE) is the holding company of Bank of Hope, the first and only super regional Korean American bank in the United States with $20.08 billion in total assets as of September 30, 2023. Headquartered in Los Angeles and serving a multi-ethnic population of customers across the nation, Bank of Hope operates 54 full-service branches in California, Washington, Texas, Illinois, New York, New Jersey, Virginia, Alabama, and Georgia. The Bank also operates SBA loan production offices in Seattle, Denver, Dallas, Atlanta, Portland, New York City, Northern California and Houston; commercial loan production offices in Northern California, Seattle and Tampa, Fla.; 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 lending, commercial and industrial lending, SBA lending, and international trade financing. Bank of Hope is a California-chartered bank, and its deposits are insured by the FDIC to the extent provided by law. Bank of Hope is an Equal Opportunity Lender. For additional information, please go to bankofhope.com. By including the foregoing website address link, the Company does not intend to and shall not be deemed to incorporate by reference any material contained or accessible therein. Forward-Looking Statements Some statements in this news release may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements relate to, among other things, expectations regarding the business environment in which we operate, projections of future performance, perceived opportunities in the market, statements regarding our business strategies, objectives and vision, and statements about our strategic reorganization. Forward-looking statements include, but are not limited to, statements preceded by, followed by or that include the words “will,” “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates” or similar expressions. With respect to any such forward-looking statements, the Company claims the protection provided for in the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties. The Company’s actual results, performance or achievements may differ significantly from the results, performance or achievements expressed or implied in any forward-looking statements. The risks and uncertainties include, but are not limited to: possible further deterioration in economic conditions in our areas of operation; interest rate risk associated with volatile interest rates and related asset-liability matching risk; liquidity risks; risk of significant non-earning assets, and net credit losses that could occur, particularly in times of weak economic conditions or times of rising interest rates; the failure of or changes to assumptions and estimates underlying the Company’s allowances for credit losses; regulatory risks associated with current and future regulations; and the COVID-19 pandemic and its impact on our financial position, results of operations, liquidity, and capitalization. For additional information concerning these and other risk factors, see the Company’s most recent Annual Report on Form 10-K. The Company does not undertake, and specifically disclaims any obligation, to update any forward-looking statements to reflect the occurrence of events or circumstances after the date of such statements except as required by law. Hope Bancorp, Inc. Selected Financial Data Unaudited (dollars in thousands, except share data) Assets: 9/30/2023 6/30/2023 % change 9/30/2022 % change Cash and due from banks $ 2,500,323 $ 2,302,339 9 % $ 331,336 655 % Investment securities 2,260,837 2,186,346 3 % 2,264,533 — % Federal Home Loan Bank (“FHLB”) stock and other investments 60,433 60,213 — % 65,192 (7 )% Loans held for sale, at the lower of cost or fair value 19,502 49,246 (60 )% 41,989 (54 )% Loans receivable 14,306,193 14,864,810 (4 )% 15,491,187 (8 )% Allowance for credit losses (158,809 ) (172,996 ) (8 )% (160,561 ) (1 )% Net loans receivable 14,147,384 14,691,814 (4 )% 15,330,626 (8 )% Accrued interest receivable 60,665 60,118 1 % 42,363 43 % Premises and equipment, net 51,764 50,513 2 % 46,169 12 % Bank owned life insurance 88,643 88,238 — % 76,788 15 % Goodwill 464,450 464,450 — % 464,450 — % Servicing assets 10,457 11,532 (9 )% 11,601 (10 )% Other intangible assets, net 4,382 4,830 (9 )% 6,212 (29 )% Other assets 407,524 396,499 3 % 402,129 1 % Total assets $ 20,076,364 $ 20,366,138 (1 )% $ 19,083,388 5 % Liabilities: Deposits $ 15,739,859 $ 15,619,352 1 % $ 15,502,209 2 % FHLB and Federal Reserve Bank (“FRB”) borrowings 1,795,726 2,260,000 (21 )% 1,072,000 68 % Convertible notes, net 444 444 — % 216,913 (100 )% Subordinated debentures 107,505 107,188 — % 106,258 1 % Accrued interest payable 166,831 109,236 53 % 11,713 1,324 % Other liabilities 235,575 201,920 17 % 198,570 19 % Total liabilities $ 18,045,940 $ 18,298,140 (1 )% $ 17,107,663 5 % Stockholders’ Equity: Common stock, $0.001 par value $ 137 $ 137 — % $ 137 — % Additional paid-in capital 1,436,769 1,433,788 — % 1,428,052 1 % Retained earnings 1,140,870 1,127,624 1 % 1,048,738 9 % Treasury stock, at cost (264,667 ) (264,667 ) — % (264,667 ) — % Accumulated other comprehensive loss, net (282,685 ) (228,884 ) (24 )% (236,535 ) (20 )% Total stockholders’ equity 2,030,424 2,067,998 (2 )% 1,975,725 3 % Total liabilities and stockholders’ equity $ 20,076,364 $ 20,366,138 (1 )% $ 19,083,388 5 % Common stock shares - authorized 150,000,000 150,000,000 150,000,000 Common stock shares - outstanding 120,026,220 120,014,888 119,479,253 Treasury stock shares 17,382,835 17,382,835 17,382,835 Hope Bancorp, Inc. Selected Financial Data Unaudited (dollars in thousands, except share and per share data) Three Months Ended Nine Months Ended 9/30/2023 6/30/2023 % change 9/30/2022 % change 9/30/2023 9/30/2022 % change Interest and fees on loans $ 229,937 $ 225,671 2 % $ 175,078 31 % $ 671,543 $ 452,774 48 % Interest on investment securities 17,006 15,534 9 % 13,498 26 % 47,665 37,462 27 % Interest on cash and deposits at other banks 28,115 25,295 11 % 142 NM 58,332 352 NM Interest on other investments 735 684 7 % 464 58 % 2,114 1,290 64 % Total interest income 275,793 267,184 3 % 189,182 46 % 779,654 491,878 59 % Interest on deposits 117,854 109,724 7 % 30,667 284 % 319,926 51,563 520 % Interest on borrowings 22,561 26,771 (16 )% 5,329 323 % 59,783 12,415 382 % Total interest expense 140,415 136,495 3 % 35,996 290 % 379,709 63,978 493 % Net interest income before provision for credit losses 135,378 130,689 4 % 153,186 (12 )% 399,945 427,900 (7 )% Provision for credit losses 16,800 8,900 89 % 9,200 83 % 27,400 1,400 1,857 % Net interest income after provision for credit losses 118,578 121,789 (3 )% 143,986 (18 )% 372,545 426,500 (13 )% Service fees on deposit accounts 2,415 2,325 4 % 2,535 (5 )% 6,961 6,779 3 % Net gains on sales of SBA loans — 1,872 (100 )% 2,782 (100 )% 4,097 14,189 (71 )% Net gains on sales of residential mortgage loans 118 82 44 % 29 307 % 264 862 (69 )% Other income and fees 5,772 12,735 (55 )% 8,009 (28 )% 24,975 17,457 43 % Total noninterest income 8,305 17,014 (51 )% 13,355 (38 )% 36,297 39,287 (8 )% Salaries and employee benefits 51,033 52,305 (2 )% 53,222 (4 )% 160,507 152,025 6 % Occupancy 7,149 6,967 3 % 6,682 7 % 21,637 21,195 2 % Furniture and equipment 5,625 5,393 4 % 4,967 13 % 16,076 14,389 12 % Data processing and communications 2,891 2,917 (1 )% 2,469 17 % 8,630 7,823 10 % FDIC assessment 3,683 4,691 (21 )% 1,633 126 % 10,155 4,652 118 % Earned interest credit 6,377 5,090 25 % 4,685 36 % 15,894 5,996 165 % Other 10,115 9,970 1 % 10,256 (1 )% 31,661 33,572 (6 )% Total noninterest expense 86,873 87,333 (1 )% 83,914 4 % 264,560 239,652 10 % Income before income taxes 40,010 51,470 (22 )% 73,427 (46 )% 144,282 226,135 (36 )% Income tax provision 9,961 13,448 (26 )% 19,679 (49 )% 37,090 59,561 (38 )% Net income $ 30,049 $ 38,022 (21 )% $ 53,748 (44 )% $ 107,192 $ 166,574 (36 )% Earnings Per Common Share - Basic $ 0.25 $ 0.32 $ 0.45 $ 0.89 $ 1.39 Earnings Per Common Share - Diluted $ 0.25 $ 0.32 $ 0.45 $ 0.89 $ 1.38 Weighted Average Shares Outstanding - Basic 120,020,567 119,953,174 119,476,035 119,843,382 119,940,044 Weighted Average Shares Outstanding - Diluted 120,374,618 120,129,359 119,996,523 120,249,952 120,595,988 Hope Bancorp, Inc. Selected Financial Data Unaudited For the Three Months Ended For the Nine Months Ended Profitability measures (annualized): 9/30/2023 6/30/2023 9/30/2022 9/30/2023 9/30/2022 ROA 0.60 % 0.74 % 1.17 % 0.72 % 1.23 % ROE 5.78 % 7.34 % 10.58 % 6.92 % 10.85 % ROA (PPNR) (1) 1.13 % 1.18 % 1.79 % 1.15 % 1.68 % ROE (PPNR) (1) 10.93 % 11.65 % 16.26 % 11.08 % 14.83 % ROTCE (1) 7.47 % 9.49 % 13.77 % 8.95 % 14.10 % Net interest margin 2.83 % 2.70 % 3.49 % 2.84 % 3.36 % Efficiency ratio (not annualized) 60.46 % 59.13 % 50.39 % 60.65 % 51.30 % Noninterest expense / average assets 1.73 % 1.71 % 1.82 % 1.77 % 1.77 % (1) ROA (PPNR), ROE (PPNR), and ROTCE are non-GAAP financial measures. Quantitative reconciliations of the most directly comparable GAAP to non-GAAP financial measures are provided in the accompanying financial information on Table Page 10. Hope Bancorp, Inc. Selected Financial Data Unaudited (dollars in thousands) Three Months Ended 9/30/2023 6/30/2023 9/30/2022 Interest Annualized Interest Annualized Interest Annualized Average Income/ Average Average Income/ Average Average Income/ Average Balance Expense Yield/Cost Balance Expense Yield/Cost Balance Expense Yield/Cost INTEREST EARNING ASSETS: Loans, including loans held for sale $ 14,550,106 $ 229,937 6.27 % $ 15,105,212 $ 225,671 5.99 % $ 14,925,298 $ 175,078 4.65 % Investment securities 2,275,133 17,006 2.97 % 2,243,614 15,534 2.78 % 2,366,696 13,498 2.26 % Interest earning cash and deposits at other banks 2,106,469 28,115 5.30 % 1,996,924 25,295 5.08 % 54,870 142 1.03 % FHLB stock and other investments 47,316 735 6.16 % 47,044 684 5.83 % 52,854 464 3.48 % Total interest earning assets $ 18,979,024 $ 275,793 5.77 % $ 19,392,794 $ 267,184 5.53 % $ 17,399,718 $ 189,182 4.31 % INTEREST BEARING LIABILITIES: Deposits: Money market and interest bearing demand $ 4,202,076 $ 36,574 3.45 % $ 4,279,819 $ 34,377 3.22 % $ 6,255,271 $ 19,614 1.24 % Savings deposits 331,354 2,240 2.68 % 216,060 674 1.25 % 324,487 969 1.18 % Time deposits 6,862,038 79,040 4.57 % 6,890,035 74,673 4.35 % 3,146,432 10,084 1.27 % Total interest bearing deposits 11,395,468 117,854 4.10 % 11,385,914 109,724 3.87 % 9,726,190 30,667 1.25 % FHLB and FRB borrowings 1,809,322 19,821 4.35 % 2,177,264 23,622 4.35 % 448,837 2,393 2.12 % Convertible notes, net 444 2 1.76 % 96,621 598 2.45 % 216,762 1,322 2.39 % Subordinated debentures 103,429 2,738 10.36 % 103,123 2,551 9.79 % 102,182 1,614 6.18 % Total interest bearing liabilities $ 13,308,663 $ 140,415 4.19 % $ 13,762,922 $ 136,495 3.98 % $ 10,493,971 $ 35,996 1.36 % Noninterest bearing demand deposits 4,312,117 4,366,868 5,719,213 Total funding liabilities/cost of funds $ 17,620,780 3.16 % $ 18,129,790 3.02 % $ 16,213,184 0.88 % Net interest income/net interest spread $ 135,378 1.58 % $ 130,689 1.55 % $ 153,186 2.95 % Net interest margin 2.83 % 2.70 % 3.49 % Cost of deposits: Noninterest bearing demand deposits $ 4,312,117 $ — — % $ 4,366,868 $ — — % $ 5,719,213 $ — — % Interest bearing deposits 11,395,468 117,854 4.10 % 11,385,914 109,724 3.87 % 9,726,190 30,667 1.25 % Total deposits $ 15,707,585 $ 117,854 2.98 % $ 15,752,782 $ 109,724 2.79 % $ 15,445,403 $ 30,667 0.79 % Hope Bancorp, Inc. Selected Financial Data Unaudited (dollars in thousands) Nine Months Ended 9/30/2023 9/30/2022 Interest Annualized Interest Annualized Average Income/ Average Average Income/ Average Balance Expense Yield/Cost Balance Expense Yield/Cost INTEREST EARNING ASSETS: Loans, including loans held for sale $ 14,961,058 $ 671,543 6.00 % $ 14,378,774 $ 452,774 4.21 % Investment securities 2,255,839 47,665 2.83 % 2,469,858 37,462 2.03 % Interest earning cash and deposits at other banks 1,531,561 58,332 5.09 % 133,745 352 0.35 % FHLB stock and other investments 47,135 2,114 6.00 % 63,542 1,290 2.71 % Total interest earning assets $ 18,795,593 $ 779,654 5.55 % $ 17,045,919 $ 491,878 3.86 % INTEREST BEARING LIABILITIES: Deposits: Money market and interest bearing demand $ 4,603,479 $ 112,349 3.26 % $ 6,360,040 $ 33,970 0.71 % Savings deposits 268,145 3,741 1.87 % 322,058 2,834 1.18 % Time deposits 6,436,645 203,836 4.23 % 2,683,217 14,759 0.74 % Total interest bearing deposits 11,308,269 319,926 3.78 % 9,365,315 51,563 0.74 % FHLB and FRB borrowings 1,558,493 50,141 4.30 % 423,875 4,537 1.43 % Convertible notes, net 103,933 1,922 2.44 % 216,538 3,967 2.42 % Subordinated debentures 103,117 7,720 9.87 % 101,882 3,911 5.06 % Total interest bearing liabilities $ 13,073,812 $ 379,709 3.88 % $ 10,107,610 $ 63,978 0.85 % Noninterest bearing demand deposits 4,445,740 5,702,734 Total funding liabilities/cost of funds $ 17,519,552 2.90 % $ 15,810,344 0.54 % Net interest income/net interest spread $ 399,945 1.67 % $ 427,900 3.01 % Net interest margin 2.84 % 3.36 % Cost of deposits: Noninterest bearing demand deposits $ 4,445,740 $ — — % $ 5,702,734 $ — — % Interest bearing deposits 11,308,269 319,926 3.78 % 9,365,315 51,563 0.74 % Total deposits $ 15,754,009 $ 319,926 2.72 % $ 15,068,049 $ 51,563 0.46 % Hope Bancorp, Inc. Selected Financial Data Unaudited (dollars in thousands) Three Months Ended Nine Months Ended AVERAGE BALANCES: 9/30/2023 6/30/2023 % change 9/30/2022 % change 9/30/2023 9/30/2022 % change Loans, including loans held for sale $ 14,550,106 $ 15,105,212 (4 )% $ 14,925,298 (3 )% $ 14,961,058 $ 14,378,774 4 % Investment securities 2,275,133 2,243,614 1 % 2,366,696 (4 )% 2,255,839 2,469,858 (9 )% Interest earning cash and deposits at other banks 2,106,469 1,996,924 5 % 54,870 3739 % 1,531,561 133,745 1045 % Interest earning assets 18,979,024 19,392,794 (2 )% 17,399,718 9 % 18,795,593 17,045,919 10 % Total assets 20,059,304 20,468,810 (2 )% 18,428,874 9 % 19,875,322 18,018,588 10 % Interest bearing deposits 11,395,468 11,385,914 — % 9,726,190 17 % 11,308,269 9,365,315 21 % Interest bearing liabilities 13,308,663 13,762,922 (3 )% 10,493,971 27 % 13,073,812 10,107,610 29 % Noninterest bearing demand deposits 4,312,117 4,366,868 (1 )% 5,719,213 (25 )% 4,445,740 5,702,734 (22 )% Stockholders’ equity 2,079,092 2,072,859 — % 2,032,362 2 % 2,066,157 2,046,351 1 % LOAN PORTFOLIO COMPOSITION: 9/30/2023 6/30/2023 % change 9/30/2022 % change Commercial real estate (“CRE”) loans $ 8,972,886 $ 9,192,160 (2 )% $ 9,504,893 (6 )% Commercial and industrial (“C&I”) loans 4,450,341 4,805,126 (7 )% 5,124,421 (13 )% Residential mortgage and other loans 882,966 867,524 2 % 861,873 2 % Loans receivable 14,306,193 14,864,810 (4 )% 15,491,187 (8 )% Allowance for credit losses (158,809 ) (172,996 ) (8 )% (160,561 ) (1 )% Loans receivable, net $ 14,147,384 $ 14,691,814 (4 )% $ 15,330,626 (8 )% CRE LOANS BY PROPERTY TYPE: 9/30/2023 6/30/2023 % change 9/30/2022 % change Multi-tenant retail $ 1,745,430 $ 1,778,068 (2 )% $ 1,904,132 (8 )% Hotels/motels 826,732 868,286 (5 )% 1,091,047 (24 )% Gas stations and car washes 1,037,621 1,042,290 — % 1,056,217 (2 )% Mixed-use facilities 813,571 834,948 (3 )% 825,289 (1 )% Industrial warehouses 1,254,643 1,301,075 (4 )% 1,271,104 (1 )% Multifamily 1,234,934 1,257,971 (2 )% 1,199,320 3 % Single-tenant retail 671,921 690,418 (3 )% 728,432 (8 )% Office 454,695 463,998 (2 )% 432,586 5 % All other 933,339 955,106 (2 )% 996,766 (6 )% Total CRE loans $ 8,972,886 $ 9,192,160 (2 )% $ 9,504,893 (6 )% DEPOSIT COMPOSITION: 9/30/2023 6/30/2023 % change 9/30/2022 % change Noninterest bearing demand deposits $ 4,249,788 $ 4,229,247 — % $ 5,590,952 (24 )% Money market and interest bearing demand 4,424,918 4,188,584 6 % 5,885,093 (25 )% Savings deposits 430,765 224,495 92 % 317,841 36 % Time deposits 6,634,388 6,977,026 (5 )% 3,708,323 79 % Total deposits $ 15,739,859 $ 15,619,352 1 % $ 15,502,209 2 % Hope Bancorp, Inc. Selected Financial Data Unaudited (dollars in thousands, except share and per share data) Three Months Ended NEW LOAN ORIGINATIONS: 9/30/2023 6/30/2023 9/30/2022 CRE $ 46,011 $ 115,444 $ 500,826 C&I 201,420 318,063 732,341 SBA loans 48,987 38,051 47,428 Residential mortgage and other loans 32,920 19,016 68,099 Total new loan originations $ 329,338 $ 490,574 $ 1,348,694 CAPITAL & CAPITAL RATIOS: 9/30/2023 6/30/2023 9/30/2022 Total stockholders’ equity $ 2,030,424 $ 2,067,998 $ 1,975,725 Total capital $ 2,105,754 $ 2,102,625 $ 2,000,653 Common equity tier 1 ratio 11.67 % 11.05 % 10.32 % Tier 1 capital ratio 12.32 % 11.68 % 10.92 % Total capital ratio 13.23 % 12.64 % 11.72 % Leverage ratio 9.83 % 9.57 % 10.25 % Total risk weighted assets $ 15,912,742 $ 16,640,323 $ 17,065,355 Book value per common share $ 16.92 $ 17.23 $ 16.54 TCE per share (1) $ 13.01 $ 13.32 $ 12.60 TCE ratio (1) 7.96 % 8.04 % 8.09 % (1) TCE per share and TCE ratio are non-GAAP financial measures. Quantitative reconciliations of the most directly comparable GAAP to non-GAAP financial measures are provided in the accompanying financial information on Table Page 10. Three Months Ended Nine Months Ended ALLOWANCE FOR CREDIT LOSSES CHANGES: 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 9/30/2023 9/30/2022 Balance at beginning of period $ 172,996 $ 163,544 $ 162,359 $ 160,561 $ 151,580 $ 162,359 $ 140,550 ASU 2022-02 day 1 adoption impact — — (407 ) — — (407 ) — Provision for credit losses 16,800 8,900 1,700 8,200 9,200 27,400 1,400 Recoveries 2,938 1,531 387 3,222 331 4,856 21,376 Charge offs (33,925 ) (979 ) (495 ) (9,624 ) (550 ) (35,399 ) (2,765 ) Balance at end of period $ 158,809 $ 172,996 $ 163,544 $ 162,359 $ 160,561 $ 158,809 $ 160,561 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 Allowance for unfunded loan commitments $ 3,143 $ 3,081 $ 2,971 $ 1,351 $ 1,231 Three Months Ended Nine Months Ended NET LOAN CHARGE OFFS (RECOVERIES): 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 9/30/2023 9/30/2022 CRE loans $ (2,227 ) $ 438 $ (109 ) $ 2,022 $ 9 $ (1,898 ) $ (16,917 ) C&I loans 33,145 (1,091 ) 196 4,174 115 32,250 (1,875 ) Residential mortgage and other loans 69 101 21 206 95 191 181 Net loan charge offs (recoveries) $ 30,987 $ (552 ) $ 108 $ 6,402 $ 219 $ 30,543 $ (18,611 ) Net charge offs (recoveries)/average loans receivable (annualized) 0.85 % (0.01 )% — % 0.17 % 0.01 % 0.27 % (0.17 )% NONPERFORMING ASSETS: 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 Loans on nonaccrual status (1) $ 39,081 $ 61,252 $ 78,861 $ 49,687 $ 64,571 Accruing delinquent loans past due 90 days or more 21,579 15,182 364 401 5,306 Accruing troubled debt restructured loans (2) — — — 16,931 25,631 Total nonperforming loans 60,660 76,434 79,225 67,019 95,508 Other real estate owned (“OREO”) 1,043 938 938 2,418 1,480 Total nonperforming assets $ 61,703 $ 77,372 $ 80,163 $ 69,437 $ 96,988 Nonperforming assets/total assets 0.31 % 0.38 % 0.39 % 0.36 % 0.51 % Nonperforming assets/loans receivable & OREO 0.43 % 0.52 % 0.53 % 0.45 % 0.63 % Nonperforming assets/total capital 3.04 % 3.74 % 3.89 % 3.44 % 4.91 % Nonperforming loans/loans receivable 0.42 % 0.51 % 0.53 % 0.44 % 0.62 % Nonaccrual loans/loans receivable 0.27 % 0.41 % 0.52 % 0.32 % 0.42 % Allowance for credit losses/loans receivable 1.11 % 1.16 % 1.09 % 1.05 % 1.04 % Allowance for credit losses/nonperforming loans 261.80 % 226.33 % 206.43 % 242.26 % 168.11 % (1) Excludes delinquent SBA loans that are guaranteed and currently in liquidation totaling $12.1 million, $11.9 million, $7.6 million, $9.8 million, and $9.9 million, at September 30, 2023, June 30, 2023, March 31, 2023, December 31, 2022, and September 30, 2022, respectively. (2) The Company adopted ASU 2022-02 in 2023, which eliminated the concept of TDR from GAAP; therefore, accruing TDR loans are no longer included in nonperforming loans. NONACCRUAL LOANS BY TYPE: 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 CRE loans $ 26,687 $ 29,270 $ 44,376 $ 33,915 $ 47,807 C&I loans 4,234 23,042 26,191 5,620 7,675 Residential mortgage and other loans 8,160 8,940 8,294 10,152 9,089 Total nonaccrual loans $ 39,081 $ 61,252 $ 78,861 $ 49,687 $ 64,571 ACCRUING DELINQUENT LOANS 30-89 DAYS PAST DUE: 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 30 - 59 days past due $ 2,906 $ 9,295 $ 7,662 $ 7,049 $ 13,092 60 - 89 days past due 506 178 249 2,243 4,933 Total accruing delinquent loans 30-89 days past due $ 3,412 $ 9,473 $ 7,911 $ 9,292 $ 18,025 ACCRUING DELINQUENT LOANS 30-89 DAYS PAST DUE BY TYPE: 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 CRE loans $ 611 $ 7,339 $ 3,652 $ 4,115 $ 9,694 C&I loans 1,168 990 419 3,300 6,165 Residential mortgage and other loans 1,633 1,144 3,840 1,877 2,166 Total accruing delinquent loans 30-89 days past due $ 3,412 $ 9,473 $ 7,911 $ 9,292 $ 18,025 CRITICIZED LOANS: 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 Special mention loans $ 186,600 $ 210,806 $ 166,472 $ 157,263 $ 79,399 Substandard loans 174,161 134,203 138,224 104,073 204,713 Total criticized loans $ 360,761 $ 345,009 $ 304,696 $ 261,336 $ 284,112 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. Reconciliations of the most directly comparable GAAP to non-GAAP financial measures utilized by management are provided below. Three Months Ended Nine Months Ended RETURN ON AVERAGE TANGIBLE COMMON EQUITY 9/30/2023 6/30/2023 9/30/2022 9/30/2023 9/30/2022 Average stockholders’ equity $ 2,079,092 $ 2,072,859 $ 2,032,362 $ 2,066,157 $ 2,046,351 Less: Average goodwill and core deposit intangible assets, net (469,079 ) (469,515 ) (470,941 ) (469,525 ) (471,424 ) Average TCE $ 1,610,013 $ 1,603,344 $ 1,561,421 $ 1,596,632 $ 1,574,927 Net income $ 30,049 $ 38,022 $ 53,748 $ 107,192 $ 166,574 ROTCE (annualized) 7.47 % 9.49 % 13.77 % 8.95 % 14.10 % TANGIBLE COMMON EQUITY 9/30/2023 6/30/2023 9/30/2022 Total stockholders’ equity $ 2,030,424 $ 2,067,998 $ 1,975,725 Less: Goodwill and core deposit intangible assets, net (468,832 ) (469,280 ) (470,662 ) TCE $ 1,561,592 $ 1,598,718 $ 1,505,063 Total assets $ 20,076,364 $ 20,366,138 $ 19,083,388 Less: Goodwill and core deposit intangible assets, net (468,832 ) (469,280 ) (470,662 ) Tangible assets $ 19,607,532 $ 19,896,858 $ 18,612,726 TCE ratio 7.96 % 8.04 % 8.09 % Common shares outstanding 120,026,220 120,014,888 119,479,253 TCE per share $ 13.01 $ 13.32 $ 12.60 Three Months Ended Nine Months Ended PRE-PROVISION NET REVENUE 9/30/2023 6/30/2023 9/30/2022 9/30/2023 9/30/2022 Net interest income before provision for credit losses $ 135,378 $ 130,689 $ 153,186 $ 399,945 $ 427,900 Noninterest income 8,305 17,014 13,355 36,297 39,287 Revenue 143,683 147,703 166,541 436,242 467,187 Less: Noninterest expense 86,873 87,333 83,914 264,560 239,652 PPNR $ 56,810 $ 60,370 $ 82,627 $ 171,682 $ 227,535 Average assets $ 20,059,304 $ 20,468,810 $ 18,428,874 $ 19,875,322 $ 18,018,588 ROA (PPNR) (annualized) 1.13 % 1.18 % 1.79 % 1.15 % 1.68 % Average stockholders’ equity 2,079,092 2,072,859 2,032,362 2,066,157 2,046,351 ROE (PPNR) (annualized) 10.93 % 11.65 % 16.26 % 11.08 % 14.83 % View source version on businesswire.com: https://www.businesswire.com/news/home/20231023356482/en/
Julianna Balicka EVP & Chief Financial Officer 213-235-3235 julianna.balicka@bankofhope.com Angie Yang SVP, Director of Investor Relations & Corporate Communications 213-251-2219 angie.yang@bankofhope.com
