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Section 1: 8-K (8-K)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 16, 2018

HOPE BANCORP, INC.
(Exact name of registrant as specified in its charter)
Delaware
000-50245
95-4849715
(State or other jurisdiction
(Commission File Number)
(IRS Employer Identification No.)
of incorporation)
 
 
3200 Wilshire Blvd, Suite 1400, Los Angeles, CA
90010
(Address of principal executive offices)
(Zip Code)

Registrant’s telephone number, including area code: (213) 639-1700.

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company [ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]











Item 2.02 Results of Operations and Financial Condition.

On October 16, 2018, Hope Bancorp, Inc. (“HOPE” or the “Company”) issued a news release concerning its results of operations and financial condition for the three- and nine-month periods ended and as of September 30, 2018. A copy of the October 16, 2018 press release is attached hereto as Exhibit 99.1.

Item 8.01 Other Events.
 
On October 16, 2018, Hope Bancorp, Inc. (the “Company”) issued a news release announcing that its Board of Directors declared a quarterly cash dividend of $0.14 per common share. The cash dividend is payable on or about November 9, 2018 to all stockholders of record as of the close of business on October 26, 2018. A copy of the October 16, 2018 press release is attached hereto as Exhibit 99.2.

Item 7.01. Regulation FD Disclosure

The Company previously announced that it will host an investor conference call on Wednesday, October 17, 2018 at 9:30 a.m. Pacific Time / 12:30 p.m. Eastern Time to review financial results for its three-and nine-month periods ended September 30, 2018. A presentation to accompany the conference call, which contains certain historical and forward-looking information relating to the Company (the “Presentation Materials”), has been made available at the Investor Relations section of Hope Bancorp’s website at www.ir-hopebancorp.com. A copy of the Presentation Materials is attached hereto as Exhibit 99.3.

The information included in this report pursuant to Item 2.02, Item 8.01 and Item 7.01 of Form 8-K (including Exhibit 99.1, Exhibit 99.2 and Exhibit 99.3) shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act.


Item 9.01 Financial Statements and Exhibits

(d) Exhibits

Exhibit No.         Description of Exhibit

        
99.1
News release, dated October 16, 2018, concerning the results of operations and financial condition for the third quarter ended and as of September 30, 2018.
99.2
News release, dated October 16, 2018 announcing the declaration of a quarterly cash dividend.
99.3
Presentation Materials, dated October 17, 2018.















SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
Hope Bancorp, Inc.
 
 
 
 
Date: October 17, 2018
/s/ Kevin S. Kim
 
Name: Kevin S. Kim
 
Title: President and Chief Executive Officer








EXHIBIT INDEX


Exhibit No.         Description of Exhibit


99.1
News release, dated October 16, 2018, concerning the results of operations and financial condition for the third quarter ended and as of September 30, 2018.
99.2
News release, dated October 16, 2018 announcing the declaration of a quarterly cash dividend.
99.3
Presentation Materials, dated October 17, 2018.





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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
395377931_hopebancorp5.jpg
News Release

Contacts:

Alex Ko    Angie Yang
EVP & Chief Financial Officer    SVP, Director of Investor Relations
213-427-6560    & Corporate Communications
[email protected]     213-251-2219
[email protected]


HOPE BANCORP REPORTS 2018 THIRD QUARTER FINANCIAL RESULTS

Q3 2018 Highlights:
New loan disbursements of $784.1 million
Loans receivable of $11.93 billion reflects a 2% increase over Q2 2018; 7% year-to-date
Total deposits of $12.05 billion reflects a 3% increase over Q2 2018; 11% year-to-date
Q3 net income totals $46.4 million, or $0.36 per diluted common share
Completed $100 million share buyback plan on July 26, 2018, with an aggregate 5,565,696 shares repurchased since Q2 2018
Board authorization of new $50 million share repurchase program

LOS ANGELES - October 16, 2018 - Hope Bancorp, Inc. (the “Company”) (NASDAQ: HOPE), the holding company of Bank of Hope (the “Bank”), today reported unaudited financial results for the three and nine months ended September 30, 2018. Net income for the 2018 third quarter totaled $46.4 million, or $0.36 per diluted common share. This compares with net income for the 2018 second quarter of $47.5 million, or $0.36 per diluted common share and $44.6 million, or $0.33 per diluted common share, for the 2017 third quarter.

“Bank of Hope delivered a successful quarter in terms of business development with loan originations of $784 million, resulting in a 7% increase in loans receivable year-to-date,” said Kevin S. Kim, President and Chief Executive Officer. “At the same time, the deposit environment has become increasingly more challenging, which impacted our bottom line results. We have implemented a number of initiatives to enhance our deposit mix and the value of our overall franchise. While we recognize that any deposit strategy will take time to deliver results, we believe our efforts will improve our sensitivity to market rates and lead to enhanced profitability longer term. The Board and management remain confident about the prospects of Bank of Hope and will continue to focus on driving value creation for all of our stakeholders,” said Kim.


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Financial Highlights
(dollars in thousands, except per share data) (unaudited)
At or for the Three Months Ended
 
9/30/2018
 
6/30/2018
 
9/30/2017
Net income
$
46,378

 
$
47,530

 
$
44,564

Diluted earnings per share
$
0.36

 
$
0.36

 
$
0.33

Net interest income before provision for loan losses
$
123,147

 
$
122,819

 
$
123,263

Net interest margin
 
3.47
%
 
 
3.61
%
 
 
3.83
%
Noninterest income
$
13,447

 
$
15,269

 
$
16,246

Noninterest expense
$
67,455

 
$
71,629

 
$
61,837

Net loans receivable
$
11,836,553

 
$
11,581,559

 
$
10,879,341

Deposits
$
12,045,619

 
$
11,734,595

 
$
10,993,320

Nonaccrual loans (1) (2)
$
56,299

 
$
68,226

 
$
43,323

ALLL to loans receivable
 
0.76
%
 
 
0.77
%
 
 
0.76
%
ALLL to nonaccrual loans (1) (2)
 
160.98
%
 
 
131.74
%
 
 
193.05
%
ALLL to nonperforming assets (1) (2)
 
76.67
%
 
 
69.60
%
 
 
66.51
%
Provision for loan losses
$
7,300

 
$
2,300

 
$
5,400

Net charge offs (recoveries)
$
6,552

 
$
(1,120
)
 
$
1,841

Return on average assets (“ROA”)
 
1.24
%
 
 
1.30
%
 
 
1.30
%
Return on average equity (“ROE”)
 
9.76
%
 
 
9.89
%
 
 
9.26
%
Noninterest expense / average assets

 
1.80
%
 
 
1.96
%
 
 
1.80
%
Efficiency ratio
 
49.38
%
 
 
51.87
%
 
 
44.32
%

(1) Excludes delinquent SBA loans that are guaranteed and currently in liquidation
(2) Excludes purchased credit-impaired loans

Operating Results for the 2018 Third Quarter
 
The comparability of the Company’s operating results with past performance is impacted by acquisition accounting adjustments and merger-related expenses associated with past and current acquisitions. The Company provides the following supplemental information to facilitate a better understanding of financial performance. Net interest income and operating income for the three months ended September 30, 2018, June 30, 2018 and September 30, 2017 included the following pre-tax acquisition accounting adjustments and merger-related expenses associated with past acquisitions:
(dollars in thousands) (unaudited)
Three Months Ended
 
9/30/2018
 
6/30/2018
 
9/30/2017
Accretion on purchased non-impaired loans
$
2,969

 
$
3,189

 
$
4,566

Accretion on purchased credit-impaired loans
 
5,239

 
 
5,959

 
 
5,815

Amortization of premium on low income housing tax credits
 
(84
)
 
 
(85
)
 
 
(84
)
Amortization of premium on acquired FHLB borrowings
 
356

 
 
352

 
 
357

Accretion of discount on acquired subordinated debt
 
(271
)
 
 
(269
)
 
 
(262
)
Amortization of premium on acquired time deposits and savings
 

 
 

 
 
206

Amortization of core deposit intangibles
 
(615
)
 
 
(615
)
 
 
(676
)
     Total acquisition accounting adjustments
$
7,594

 
$
8,531

 
$
9,922

Merger-related expenses
 

 
 

 
 
(260
)
          Total
$
7,594

 
$
8,531

 
$
9,662


Net Interest Income. Net interest income before provision for loan losses for the 2018 third quarter totaled $123.1 million, compared with $122.8 million in the 2018 second quarter and $123.3 million in the year-ago third quarter.


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The net interest margin (net interest income divided by average interest earning assets) for the 2018 third quarter declined 14 basis points to 3.47% from 3.61% in the preceding 2018 second quarter, reflecting the impact of higher deposit costs and a stable loan yield. In the year-ago third quarter, the net interest margin was 3.83%.

The weighted average yield on loans for the 2018 third quarter was flat with the preceding second quarter at 5.16% but increased 9 basis points from 5.07% in the year-ago third quarter. The year-over-year increase in the weighted average yield on loans largely reflects the benefits to the variable rate portion of the Company’s loan portfolio resulting from the increases in the fed funds rate in December of 2017 and March, June and September 2018 of 25 basis points each.

The weighted average cost of deposits for the 2018 third quarter increased to 1.24%, up 18 basis points from 1.06% in the 2018 second quarter and up 49 basis points from 0.75% in the year-ago third quarter. The increase in the weighted average cost of deposits reflects the competitive deposit market, as well as an increase in the higher-rate time deposit balances in the rising interest rate environment.

Noninterest Income. Noninterest income for the 2018 third quarter decreased to $13.4 million from $15.3 million in the 2018 second quarter and $16.2 million in the year-ago third quarter, largely reflecting lower levels of net gains on sales of SBA loans and fluctuations in the gain on sale of residential mortgage loans. Net gains on sales of SBA loans for the 2018 third quarter decreased to $2.3 million from $3.5 million and $3.6 million for the 2018 second quarter and 2017 third quarter, respectively, reflecting a reduction in the premiums on SBA loans. Net gains on sales of residential mortgage loans amounted to $477,000 for the 2018 third quarter, compared with $431,000 and $847,000 for the 2018 second quarter and 2017 third quarter, respectively. In addition, the Company recorded a $1.6 million reduction to other noninterest income to record the fair value reduction on its equity investments for the 2018 third quarter compared with a $1 thousand fair value reduction on equity investments for the 2018 second quarter. There were no fair adjustments recorded on equity investment for the 2017 third quarter.

Noninterest Expense. Noninterest expense for the 2018 third quarter decreased to $67.5 million from $71.6 million in the preceding second quarter, largely reflecting lower levels of compensation expense. For the year-ago third quarter, the Company reported total noninterest expense of $61.8 million, which included the benefit of a $2.8 million reversal of an off-balance sheet provision for unfunded loan commitments.

Salaries and employee benefits expense decreased to $37.0 million for the 2018 third quarter, compared with $40.6 million for the 2018 second quarter and $36.0 million in the prior-year third quarter. The decrease in compensation expense from the 2018 second quarter to the third quarter reflects a proactive management of employee related costs.

Income Tax Provision. The effective tax rate for the 2018 third quarter was 25.0%, compared with 25.9% in the preceding 2018 second quarter and 38.3% in the 2017 third quarter. The 2018 effective tax rates reflect the enactment of the Tax Cuts and Jobs Act on December 22, 2017, which lowered the corporate federal tax rate from 35% to 21% effective January 1, 2018.

Balance Sheet Summary
 
Loans receivable increased 2% to $11.9 billion at September 30, 2018 from $11.67 billion at June 30, 2018, reflecting a 9% annualized growth rate. Year-over-year, loans receivable increased 9% from $10.96 billion at September 30, 2017.

New loan originations funded during the 2018 third quarter totaled $784.1 million and included SBA loan production of $71.4 million and residential mortgage loan originations of $165.6 million. This compares with 2018 second quarter originations of $792.3 million, including SBA loan production of $87.0 million and residential mortgage loan originations of $182.1 million. In the year-ago third quarter, new loan originations funded totaled $610.9 million, including SBA loan production of $67.9 million and residential mortgage loan originations of $119.9 million.

Sales of SBA loans to the secondary market and gains derived from those sales are based substantially on the production of SBA 7(a) loans. SBA 7(a) loan originations totaled $52.5 million for the 2018 third quarter, compared with $65.8 million for the second quarter of 2018 and $49.7 million for the year-ago third quarter. During the 2018 third quarter, the Company sold $48.5 million of its SBA loans held for sale, compared with $52.5 million in the immediately preceding second quarter and $49.9 million in the third quarter a year ago.


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Aggregate loan pay offs and pay downs in the 2018 third quarter totaled $495.3 million, compared with $435.1 million for the immediately preceding second quarter and $447.6 million in the year-ago third quarter.

Total deposits at September 30, 2018 amounted to $12.05 billion, up 3% from $11.73 billion at June 30, 2018 and up 11% from $10.99 billion at September 30, 2017.

Credit Quality
 
The provision for loan and lease losses for the 2018 third quarter was $7.3 million, compared with $2.3 million for the immediately preceding 2018 second quarter and $5.4 million for the year-ago third quarter.

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

The composition of the ALLL as of September 30, 2018, June 30, 2018 and September 30, 2017 is as follows:
(dollars in thousands) (unaudited)
9/30/2018
 
6/30/2018
 
9/30/2017
Legacy loans (1)
$
75,364
 
$
76,048
 
$
70,282
Purchased non-impaired loans (2)
 
2,411
 
 
2,467
 
 
2,740
Purchased credit-impaired loans (2)
 
12,854
 
 
11,366
 
 
10,611
Total ALLL
$
90,629
 
$
89,881
 
$
83,633
 
 
 
 
 
 
 
 
 
Loans receivable
$
11,927,182
 
$
11,671,440
 
$
10,962,974
ALLL coverage ratio (excluding loans held for sale)
 
0.76
%
 
 
0.77
%
 
 
0.76
%

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

The Company defines nonperforming loans to include delinquent loans on nonaccrual status, delinquent loans past due 90 days or more on accrual status (excluding purchased credit-impaired loans) and accruing restructured loans. Nonaccrual loans declined 17% to $56.3 million at September 30, 2018 from $68.2 million at June 30, 2018 and decreased as a percentage of loans receivable to 0.47% from 0.58%, respectively. At September 30, 2017, nonaccrual loans amounted to $43.3 million, or 0.40% of loans receivable. Accruing restructured loans at September 30, 2018 totaled $52.5 million, compared with $49.2 million at June 30, 2018 and $64.8 million at September 30, 2017. Total nonperforming loans amounted to $109.2 million, or 0.92% of loans receivable, at September 30, 2018, compared with $120.5 million, or 1.03% of loans receivable, at June 30, 2018 and $108.5 million, or 0.99% of loans receivable, at September 30, 2017.

Nonperforming assets, including nonperforming loans and OREO, decreased to $118.2 million at September 30, 2018, from $129.1 million at June 30, 2018 and $125.7 million September 30, 2017. As a percentage of total assets, nonperforming assets declined to 0.78% at September 30, 2018, from 0.87% at June 30, 2018 and 0.89% at September 30, 2017.
 

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Following are the components of criticized loan balances as of September 30, 2018, June 30, 2018 and September 30, 2017:
(dollars in thousands) (unaudited)
9/30/2018
 
6/30/2018
 
9/30/2017
Special Mention (1)
$
217,746
 
$
139,494
 
$
225,228
Classified (1)
 
302,719
 
 
357,671
 
 
348,109
     Criticized
$
520,465
 
$
497,165
 
$
573,337

(1)
Balances include purchased loans which were marked to fair value on the date of acquisition.
 
For the 2018 third quarter, the Company recorded net charge offs of $6.6 million, or 0.22% of average loans receivable on an annualized basis, primarily attributed to the charge off of one large relationship that was fully reserved for in a prior quarter. This compares with net recoveries of $1.1 million, or 0.04% of average loans receivable on an annualized basis, for the 2018 second quarter. In the 2017 third quarter, the Company recorded net charge offs of $1.8 million, or 0.07% of average loans receivable on an annualized basis.

The ALLL at September 30, 2018 was $90.6 million, or 0.76% of loans receivable (excluding loans held for sale), compared with $89.9 million, or 0.77% of loans receivable (excluding loans held for sale), at June 30, 2018 and $83.6 million, or 0.76% of loans receivable (excluding loans held for sale), at September 30, 2017. The coverage ratio of the ALLL to nonperforming loans (excluding purchased credit-impaired loans) was 82.98% at September 30, 2018, 74.61% at June 30, 2018 and 77.05% at September 30, 2017.
 
Impaired loans (defined as loans for which it is probable that not all principal and interest payments due will be collected in accordance with the contractual terms) totaled $109.2 million at September 30, 2018, compared with $117.8 million at June 30, 2018 and $108.5 million at September 30, 2017.

Capital
 
At September 30, 2018, the Company and the Bank continued to exceed all regulatory capital requirements to be classified as an “adequately capitalized” or “well-capitalized” financial institution, as summarized in the following table:
 
9/30/2018
 
6/30/2018
 
9/30/2017
 
Minimum Guideline for “Well-Capitalized” Institution
Common Equity Tier 1 Capital
11.61%
 
11.74%
 
12.29%
 
6.50%
Tier 1 Leverage Ratio
10.13%
 
11.06%
 
11.78%
 
5.00%
Tier 1 Risk-based Ratio
11.61%
 
12.52%
 
13.10%
 
8.00%
Total Risk-based Ratio
13.10%
 
13.24%
 
13.81%
 
10.00%


Tangible common equity per share and as a percentage of tangible assets are summarized in the following table:
 
9/30/2018
 
6/30/2018
 
9/30/2017
Tangible common equity per share (1)
$10.96
 
$10.87
 
$10.72
Tangible common equity to tangible assets (2)
9.66%
 
9.91%
 
10.63%

(1) 
Tangible common equity represents common equity less goodwill and net other intangible assets. Tangible common equity per share represents tangible common equity divided by the number of shares issued and outstanding. Both tangible common equity and tangible common equity per share are non-GAAP financial measures. A reconciliation of the Company’s total stockholders’ equity to tangible common equity, including and excluding tax reform adjustments, is provided in the accompanying financial information on Table Page 7.
(2) 
Tangible assets represent total assets less goodwill and net other intangible assets. Tangible common equity to tangible assets is the ratio of tangible common equity over tangible assets. Tangible common equity to tangible assets is a non-GAAP financial measure. A reconciliation of the Company’s total assets to tangible assets, including and excluding tax reform adjustments, is provided in the accompanying financial information on Table Page 7.

Management reviews tangible common equity per share and the tangible common equity to tangible assets ratio in evaluating the Company’s and the Bank’s capital levels and has included these figures in response to market participant

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interest in tangible common equity as a measure of capital. A reconciliation of the GAAP to non-GAAP financial measures is provided in the accompanying financial information.

Investor Conference Call

The Company previously announced that it will host an investor conference call on Wednesday, October 17, 2018 at 9:30 a.m. Pacific Time / 12:30 p.m. Eastern Time to review financial results for its third quarter ended September 30, 2018. Investors and analysts are invited to access the conference call by dialing 866-235-9917 (domestic) or 412-902-4103 (international), and asking for the “Hope Bancorp Call.” A presentation to accompany the earnings call will be available at the Investor Relations section of Hope Bancorp’s website at www.ir-hopebancorp.com. Other interested parties are invited to listen to a live webcast of the call available at the Investor Relations section of Hope Bancorp’s website. After the live webcast, a replay will remain available in the Investor Relations section of Hope Bancorp’s website for one year. A telephonic replay of the call will be available at 877-344-7529 (domestic) or 412-317-0088 (international) for one week through October 24, 2018, replay access code 10124319.

About Hope Bancorp, Inc.

Hope Bancorp, Inc. is the holding company of Bank of Hope, the first and only super regional Korean-American bank in the United States with $15.2 billion in total assets as of September 30, 2018. Headquartered in Los Angeles and serving a multi-ethnic population of customers across the nation, Bank of Hope operates 63 full-service branches in California, Washington, Texas, Illinois, New York, New Jersey, Virginia, Georgia and Alabama. The Bank also operates SBA loan production offices in Seattle, Denver, Dallas, Atlanta, Portland, Oregon, New York City, Northern California and Houston; commercial loan production offices in Northern California and Seattle; residential mortgage loan production offices in Southern California; and a representative office in Seoul, Korea. Bank of Hope specializes in core business banking products for small and medium-sized businesses, with an emphasis in commercial real estate and commercial lending, SBA lending and international trade financing. Bank of Hope is a California-chartered bank, and its deposits are insured by the FDIC to the extent provided by law. Bank of Hope is an Equal Opportunity Lender. For additional information, please go to bankofhope.com. By including the foregoing website address link, the Company does not intend to and shall not be deemed to incorporate by reference any material contained or accessible therein.

Forward-Looking Statements

Some statements in this press release may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements relate to, among other things, expectations regarding the business environment in which we operate, projections of future performance, perceived opportunities in the market and statements regarding our business strategies, objectives and vision. Forward-looking statements include, but are not limited to, statements preceded by, followed by or that include the words “will,” “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates” or similar expressions. With respect to any such forward-looking statements, the Company claims the protection provided for in the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties. The Company’s actual results, performance or achievements may differ significantly from the results, performance or achievements expressed or implied in any forward-looking statements. The risks and uncertainties include, but are not limited to: possible deterioration in economic conditions in our areas of operation; interest rate risk associated with volatile interest rates and related asset-liability matching risk; liquidity risks; risk of significant non-earning assets, and net credit losses that could occur, particularly in times of weak economic conditions or times of rising interest rates; and regulatory risks associated with current and future regulations. For additional information concerning these and other risk factors, see the Company’s most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q. The Company does not undertake, and specifically disclaims any obligation, to update any forward-looking statements to reflect the occurrence of events or circumstances after the date of such statements except as required by law.



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Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands, except share data)


Assets:
9/30/2018
 
6/30/2018
 
% change
 
12/31/2017
 
% change
 
9/30/2017
 
% change
Cash and due from banks
$
522,710

 
$
466,364

 
12
 %
 
$
492,000

 
6
 %
 
$
405,296

 
29
 %
Securities available for sale, at fair value
1,854,250

 
1,835,106

 
1
 %
 
1,720,257

 
8
 %
 
1,868,309

 
(1
)%
Federal Home Loan Bank (“FHLB”) stock and other investments
106,243

 
104,764

 
1
 %
 
83,142

 
28
 %
 
82,141

 
29
 %
Loans held for sale, at the lower of cost or fair value
15,023

 
26,866

 
(44
)%
 
29,661

 
(49
)%
 
11,425

 
31
 %
Loans receivable
11,927,182

 
11,671,440

 
2
 %
 
11,102,575

 
7
 %
 
10,962,974

 
9
 %
Allowance for loan losses
(90,629
)
 
(89,881
)
 
(1
)%
 
(84,541
)
 
(7
)%
 
(83,633
)
 
(8
)%
  Net loans receivable
11,836,553

 
11,581,559

 
2
 %
 
11,018,034

 
7
 %
 
10,879,341

 
9
 %
Accrued interest receivable
33,338

 
30,954

 
8
 %
 
29,979

 
11
 %
 
29,145

 
14
 %
Premises and equipment, net
55,178

 
56,242

 
(2
)%
 
56,714

 
(3
)%
 
55,838

 
(1
)%
Bank owned life insurance
76,081

 
75,693

 
1
 %
 
74,915

 
2
 %
 
74,514

 
2
 %
Goodwill
464,450

 
464,450

 
 %
 
464,450

 
 %
 
464,450

 
 %
Servicing assets
24,354

 
25,050

 
(3
)%
 
24,710

 
(1
)%
 
25,079

 
(3
)%
Other intangible assets, net
14,677

 
15,292

 
(4
)%
 
16,523

 
(11
)%
 
17,198

 
(15
)%
Other assets
226,638

 
187,668

 
21
 %
 
196,332

 
15
 %
 
237,285

 
(4
)%
  Total assets
$
15,229,495

 
$
14,870,008

 
2
 %
 
$
14,206,717

 
7
 %
 
$
14,150,021

 
8
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
Deposits
$
12,045,619

 
$
11,734,595

 
3
 %
 
$
10,846,609

 
11
 %
 
$
10,993,320

 
10
 %
FHLB advances and fed funds purchased
836,637

 
836,994

 
 %
 
1,227,593

 
(32
)%
 
1,018,046

 
(18
)%
Convertible debt
193,332

 
192,120

 
1
 %
 

 
100
 %
 

 
100
 %
Subordinated debentures
101,657

 
101,386

 
 %
 
100,853

 
1
 %
 
100,590

 
1
 %
Accrued interest payable
31,717

 
24,594

 
29
 %
 
15,961

 
99
 %
 
13,740

 
131
 %
Other liabilities
115,953

 
74,643

 
55
 %
 
87,446

 
33
 %
 
89,894

 
29
 %
  Total liabilities
13,324,915

 
12,964,332

 
3
 %
 
12,278,462

 
9
 %
 
12,215,590

 
9
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stockholders’ Equity:
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock, $0.001 par value
$
136

 
$
136

 
 %
 
$
136

 
 %
 
$
135

 
1
 %
Capital surplus
1,422,685

 
1,421,679

 
 %
 
1,405,014

 
1
 %
 
1,403,586

 
1
 %
Retained earnings
636,080

 
607,944

 
5
 %
 
544,886

 
17
 %
 
540,921

 
18
 %
Treasury stock, at cost
(100,000
)
 
(78,961
)
 
(27
)%
 

 
100
 %
 

 
100
 %
Accumulated other comprehensive loss, net
(54,321
)
 
(45,122
)
 
(20
)%
 
(21,781
)
 
(149
)%
 
(10,211
)
 
(432
)%
  Total stockholders’ equity
1,904,580

 
1,905,676

 
 %
 
1,928,255

 
(1
)%
 
1,934,431

 
(2
)%
  Total liabilities and stockholders’ equity
$
15,229,495

 
$
14,870,008

 
2
 %
 
$
14,206,717

 
7
 %
 
$
14,150,021

 
8
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock shares - authorized
150,000,000

 
150,000,000

 
 
 
150,000,000

 
 
 
150,000,000

 
 
Common stock shares - outstanding
130,074,103

 
131,167,705

 
 
 
135,511,891

 
 
 
135,467,176

 
 
Treasury stock shares
5,565,696

 
4,361,740

 
 
 

 
 
 

 
 



Table Page 1

Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands, except share and per share data)



 
Three Months Ended
 
Nine Months Ended
 
9/30/2018
 
6/30/2018
 
% change
 
9/30/2017
 
% change
 
9/30/2018
 
9/30/2017
 
% change
Interest income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Interest and fees on loans
$
153,366

 
$
146,188

 
5
 %
 
$
136,822

 
12
 %
 
$
437,497

 
$
388,631

 
13
 %
  Interest on securities
11,957

 
10,899

 
10
 %
 
9,540

 
25
 %
 
32,957

 
26,394

 
25
 %
  Interest on federal funds sold and other investments
2,503

 
2,823

 
(11
)%
 
1,281

 
95
 %
 
7,692

 
3,894

 
98
 %
    Total interest income
167,826

 
159,910

 
5
 %
 
147,643

 
14
 %
 
478,146

 
418,919

 
14
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Interest on deposits
37,022

 
30,610

 
21
 %
 
20,376

 
82
 %
 
92,481

 
53,001

 
74
 %
  Interest on other borrowings and convertible debt
7,657

 
6,481

 
18
 %
 
4,004

 
91
 %
 
19,631

 
10,930

 
80
 %
    Total interest expense
44,679

 
37,091

 
20
 %
 
24,380

 
83
 %
 
112,112

 
63,931

 
75
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income before provision for loan losses
123,147

 
122,819

 
 %
 
123,263

 
 %
 
366,034

 
354,988

 
3
 %
Provision for loan losses
7,300

 
2,300

 
217
 %
 
5,400

 
35
 %
 
12,100

 
13,760

 
(12
)%
Net interest income after provision for loan losses
115,847

 
120,519

 
(4
)%
 
117,863

 
(2
)%
 
353,934

 
341,228

 
4
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Service fees on deposit accounts
4,569

 
4,613

 
(1
)%
 
5,151

 
(11
)%
 
13,983

 
15,668

 
(11
)%
  Net gains on sales of SBA loans
2,331

 
3,480

 
(33
)%
 
3,631

 
(36
)%
 
9,261

 
10,148

 
(9
)%
  Net gains on sales of other loans
477

 
431

 
11
 %
 
847

 
(44
)%
 
2,104

 
1,619

 
30
 %
  Other income and fees
6,070

 
6,745

 
(10
)%
 
6,617

 
(8
)%
 
23,218

 
22,529

 
3
 %
    Total noninterest income
13,447

 
15,269

 
(12
)%
 
16,246

 
(17
)%
 
48,566

 
49,964

 
(3
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest expense:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Salaries and employee benefits
36,969

 
40,575

 
(9
)%
 
35,987

 
3
 %
 
116,929

 
105,099

 
11
 %
  Occupancy
7,837

 
7,418

 
6
 %
 
7,131

 
10
 %
 
22,494

 
21,479

 
5
 %
  Furniture and equipment
3,710

 
4,023

 
(8
)%
 
3,642

 
2
 %
 
11,454

 
10,611

 
8
 %
  Advertising and marketing
1,986

 
2,737

 
(27
)%
 
2,217

 
(10
)%
 
7,022

 
8,035

 
(13
)%
  Data processing and communications
3,513

 
3,574

 
(2
)%
 
3,221

 
9
 %
 
10,582

 
9,503

 
11
 %
  Professional fees
3,950

 
4,474

 
(12
)%
 
3,239

 
22
 %
 
11,530

 
10,401

 
11
 %
  FDIC assessment
1,788

 
1,611

 
11
 %
 
1,262

 
42
 %
 
5,166

 
3,276

 
58
 %
  Credit related expenses
658

 
926

 
(29
)%
 
(2,487
)
 
N/A

 
2,356

 
(491
)
 
N/A

  Other real estate owned (“OREO”) expense, net
(56
)
 
45

 
N/A

 
678

 
N/A

 
(115
)
 
2,863

 
N/A

  Merger-related expenses

 

 
 %
 
260

 
(100
)%
 
(7
)
 
1,769

 
N/A

  Other
7,100

 
6,246

 
14
 %
 
6,687

 
6
 %
 
20,126

 
21,028

 
(4
)%
    Total noninterest expense
67,455

 
71,629

 
(6
)%
 
61,837

 
9
 %
 
207,537

 
193,573

 
7
 %
Income before income taxes
61,839

 
64,159

 
(4
)%
 
72,272

 
(14
)%
 
194,963

 
197,619

 
(1
)%
Income tax provision
15,461

 
16,629

 
(7
)%
 
27,708

 
(44
)%
 
49,823

 
76,158

 
(35
)%
Net income
$
46,378

 
$
47,530

 
(2
)%
 
$
44,564

 
4
 %
 
$
145,140

 
$
121,461

 
19
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings Per Common Share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Basic
$
0.36

 
$
0.36

 

 
$
0.33

 
 
 
$
1.09

 
$
0.90

 
 
  Diluted
$
0.36

 
$
0.36

 

 
$
0.33

 
 
 
$
1.09

 
$
0.90

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average Shares Outstanding:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Basic
130,268,992

 
133,061,304

 
 
 
135,382,457

 
 
 
132,930,437

 
135,296,332

 
 
  Diluted
130,525,474

 
133,352,841

 
 
 
135,630,912

 
 
 
133,214,069

 
135,661,965

 
 

Table Page 2

Hope Bancorp, Inc.
Selected Financial Data
Unaudited


 
For the Three Months Ended
(Annualized)
 
For the Nine Months Ended
(Annualized)
Profitability measures:
9/30/2018
 
6/30/2018
 
9/30/2017
 
9/30/2018
 
9/30/2017
  ROA
1.24
%
 
1.30
%
 
1.30
%
 
1.32
%
 
1.20
%
  ROE
9.76
%
 
9.89
%
 
9.26
%
 
10.09
%
 
8.54
%
  Return on average tangible equity 1
13.06
%
 
13.18
%
 
12.36
%
 
13.46
%
 
11.46
%
  Net interest margin
3.47
%
 
3.61
%
 
3.83
%
 
3.58
%
 
3.78
%
  Efficiency ratio
49.38
%
 
51.87
%
 
44.32
%
 
50.06
%
 
47.80
%
  Noninterest expense / average assets
1.80
%
 
1.96
%
 
1.80
%
 
1.89
%
 
1.91
%
 
 
 
 
 
 
 
 
 
 
1 Average tangible equity is calculated by subtracting average goodwill and average core deposit intangible assets from average stockholders’ equity. This is a non-GAAP measure that we believe provides investors with information that is useful in understanding our financial performance and position.


Table Page 3

Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)


 
Three Months Ended
 
9/30/2018
 
6/30/2018
 
9/30/2017
 
 
 
Interest
 
Annualized
 
 
 
Interest
 
Annualized
 
 
 
Interest
 
Annualized
 
Average
 
Income/
 
Average
 
Average
 
Income/
 
Average
 
Average
 
Income/
 
 Average
 
Balance
 
Expense
 
Yield/Cost
 
Balance
 
Expense
 
Yield/Cost
 
Balance
 
Expense
 
 Yield/Cost
INTEREST EARNING ASSETS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    Loans receivable, including loans held for sale
$
11,781,091

 
$
153,366

 
5.16
%
 
$
11,364,229

 
$
146,188

 
5.16
%
 
$
10,712,856

 
$
136,822

 
5.07
%
    Securities available for sale
1,844,493

 
11,957

 
2.57
%
 
1,732,908

 
10,899

 
2.52
%
 
1,743,610

 
9,540

 
2.17
%
    FHLB stock and other investments
446,390

 
2,503

 
2.22
%
 
561,230

 
2,823

 
2.02
%
 
299,305

 
1,281

 
1.70
%
Total interest earning assets
$
14,071,974

 
$
167,826

 
4.73
%
 
$
13,658,367

 
$
159,910

 
4.70
%
 
$
12,755,771

 
$
147,643

 
4.59
%
 
 
 
 
   
 
 
 
 
 
   
 
 
 
 
 
 
 
INTEREST BEARING LIABILITIES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Deposits:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    Demand, interest bearing
$
3,237,673

 
$
11,526

 
1.41
%
 
$
3,342,685

 
$
10,438

 
1.25
%
 
$
3,526,846

 
$
8,127

 
0.91
%
    Savings
228,218

 
486

 
0.84
%
 
228,381

 
442

 
0.78
%
 
258,383

 
348

 
0.53
%
    Time deposits
5,344,464

 
25,010

 
1.86
%
 
4,919,465

 
19,730

 
1.61
%
 
4,053,577

 
11,901

 
1.16
%
    Total interest bearing deposits
8,810,355

 
37,022

 
1.67
%
 
8,490,531

 
30,610

 
1.45
%
 
7,838,806

 
20,376

 
1.03
%
    FHLB advances
837,412

 
3,703

 
1.75
%
 
846,014

 
3,681

 
1.75
%
 
764,691

 
2,698

 
1.40
%
    Convertible debt
192,541

 
2,299

 
4.67
%
 
102,979

 
1,198

 
4.60
%
 

 

 
%
    Subordinated debentures
97,589

 
1,655

 
6.64
%
 
97,315

 
1,602

 
6.51
%
 
96,524

 
1,306

 
5.29
%
Total interest bearing liabilities
9,937,897

 
$
44,679

 
1.78
%
 
9,536,839

 
$
37,091

 
1.56
%
 
8,700,021

 
$
24,380

 
1.11
%
Noninterest bearing demand deposits
3,041,489

 
 
 
 
 
3,053,338

 
 
 
 
 
2,993,441

 
 
 
 
Total funding liabilities/cost of funds
$
12,979,386

 
 
 
1.37
%
 
$
12,590,177

 
 
 
1.18
%
 
$
11,693,462

 
 
 
0.83
%
Net interest income/net interest spread
 
 
$
123,147

 
2.95
%
 
 
 
$
122,819

 
3.14
%
 
 
 
$
123,263

 
3.48
%
Net interest margin
 
 
 
 
3.47
%
 
 
 
 
 
3.61
%
 
 
 
 
 
3.83
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of deposits:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    Noninterest bearing demand deposits
$
3,041,489

 
$

 
%
 
$
3,053,338

 
$

 
%
 
$
2,993,441

 
$

 
%
    Interest bearing deposits
8,810,355

 
37,022

 
1.67
%
 
8,490,531

 
30,610

 
1.45
%
 
7,838,806

 
20,376

 
1.03
%
Total deposits
$
11,851,844

 
$
37,022

 
1.24
%
 
$
11,543,869

 
$
30,610

 
1.06
%
 
$
10,832,247

 
$
20,376

 
0.75
%


Table Page 4

Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)


 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended
 
9/30/2018
 
9/30/2017
 
 
 
Interest
 
Annualized
 
 
 
Interest
 
Annualized
 
Average
 
Income/
 
Average
 
Average
 
Income/
 
Average
 
Balance
 
Expense
 
Yield/Cost
 
Balance
 
Expense
 
Yield/Cost
INTEREST EARNING ASSETS:
 
 
 
 
 
 
 
 
 
 
 
    Loans receivable, including loans held for sale
$
11,416,238

 
$
437,497

 
5.12
%
 
$
10,544,898

 
$
388,631

 
4.93
%
    Securities available for sale
1,750,802

 
32,957

 
2.52
%
 
1,640,784

 
26,394

 
2.15
%
    FRB and FHLB stock and other investments
506,802

 
7,692

 
2.03
%
 
362,265

 
3,894

 
1.44
%
Total interest earning assets
$
13,673,842

 
$
478,146

 
4.68
%
 
$
12,547,947

 
$
418,919

 
4.46
%
 
 
 
 
 
 
 
 
 
 
 
 
INTEREST BEARING LIABILITIES:
 
 
 
 
 
 
 
 
 
 
 
  Deposits:
 
 
 
 
 
 
 
 
 
 
 
    Demand, interest bearing
$
3,327,101

 
$
30,828

 
1.24
%
 
$
3,474,077

 
$
23,291

 
0.90
%
    Savings
230,909

 
1,352

 
0.78
%
 
277,264

 
914

 
0.44
%
    Time deposits
4,932,912

 
60,301

 
1.63
%
 
4,025,360

 
28,796

 
0.96
%
    Total interest bearing deposits
8,490,922

 
92,481

 
1.46
%
 
7,776,701

 
53,001

 
0.91
%
    FHLB advances
885,332

 
$
11,453

 
1.73
%
 
714,048

 
7,176

 
1.34
%
    Convertible debt
99,212

 
3,498

 
4.65
%
 

 

 
%
    Other borrowings
97,320

 
4,680

 
6.34
%
 
96,220

 
3,754

 
5.14
%
Total interest bearing liabilities
9,572,786

 
$
112,112

 
1.57
%
 
8,586,969

 
$
63,931

 
1.00
%
Noninterest bearing demand deposits
3,012,501

 
 
 
 
 
2,930,937

 
 
 
 
Total funding liabilities/cost of funds
$
12,585,287

 
 
 
1.19
%
 
$
11,517,906

 
 
 
0.74
%
Net interest income/net interest spread
 
 
$
366,034

 
3.11
%
 
 
 
$
354,988

 
3.46
%
Net interest margin
 
 
 
 
3.58
%
 
 
 
 
 
3.78
%
 
 
 
 
 
 
 
 
 
 
 
 
Cost of deposits:
 
 
 
 
 
 
 
 
 
 
 
    Noninterest bearing demand deposits
$
3,012,501

 
$

 
%
 
$
2,930,937

 
$

 
%
    Interest bearing deposits
8,490,922

 
92,481

 
1.46
%
 
7,776,701

 
53,001

 
0.91
%
Total deposits
$
11,503,423

 
$
92,481

 
1.07
%
 
$
10,707,638

 
$
53,001

 
0.66
%


Table Page 5

Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)


 
 Three Months Ended
 
Nine Months Ended
AVERAGE BALANCES:
9/30/2018
 
6/30/2018
 
% change
 
9/30/2017
 
% change
 
9/30/2018
 
9/30/2017
 
% change
Loans receivable, including loans held for sale
$
11,781,091

 
$
11,364,229

 
4
 %
 
$
10,712,856

 
10
 %
 
$
11,416,238

 
$
10,544,898

 
8
%
Investments
2,290,883

 
2,294,138

 
 %
 
2,042,915

 
12
 %
 
2,257,604

 
2,003,049

 
13
%
Interest earning assets
14,071,974

 
13,658,367

 
3
 %
 
12,755,771

 
10
 %
 
13,673,842

 
12,547,947

 
9
%
Total assets
15,019,224

 
14,596,963

 
3
 %
 
13,737,532

 
9
 %
 
14,613,094

 
13,516,139

 
8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest bearing deposits
8,810,355

 
8,490,531

 
4
 %
 
7,838,806

 
12
 %
 
8,490,922

 
7,776,701

 
9
%
Interest bearing liabilities
9,937,897

 
9,536,839

 
4
 %
 
8,700,021

 
14
 %
 
9,572,786

 
8,586,969

 
11
%
Noninterest bearing demand deposits
3,041,489

 
3,053,338

 
 %
 
2,993,441

 
2
 %
 
3,012,501

 
2,930,937

 
3
%
Stockholders’ equity
1,899,853

 
1,922,290

 
(1
)%
 
1,924,444

 
(1
)%
 
1,917,696

 
1,895,393

 
1
%
Net interest earning assets
4,134,077

 
4,121,528

 
 %
 
4,055,750

 
2
 %
 
4,101,056

 
3,960,978

 
4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LOAN PORTFOLIO COMPOSITION:
9/30/2018
 
6/30/2018
 
% change
 
12/31/2017
 
% change
 
9/30/2017
 
% change
 
 
Commercial loans
$
2,318,213

 
$
2,287,482

 
1
 %
 
$
1,947,533

 
19
 %
 
$
2,005,290

 
16
 %
 
 
Real estate loans
8,639,857

 
8,512,740

 
1
 %
 
8,508,222

 
2
 %
 
8,438,064

 
2
 %
 
 
Consumer and other loans
969,835

 
872,562

 
11
 %
 
647,102

 
50
 %
 
521,459

 
86
 %
 
 
    Loans outstanding
11,927,905

 
11,672,784

 
2
 %
 
11,102,857

 
7
 %
 
10,964,813

 
9
 %
 
 
Unamortized deferred loan fees - net of costs
(723
)
 
(1,344
)
 
(46
)%
 
(282
)
 
156
 %
 
(1,839
)
 
(61
)%
 
 
    Loans, net of deferred loan fees and costs
11,927,182

 
11,671,440

 
2
 %
 
11,102,575

 
7
 %
 
10,962,974

 
9
 %
 
 
Allowance for loan losses
(90,629
)
 
(89,881
)
 
1
 %
 
(84,541
)
 
7
 %
 
(83,633
)
 
8
 %