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Section 1: 8-K (8-K)

hope-20200730
0001128361false00011283612020-07-302020-07-3000011283612019-10-212019-10-21


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

July 30, 2020
Date of Report (Date of earliest event reported)
HOPE BANCORP INC
(Exact name of registrant as specified in its charter)
Delaware000-5024595-4849715
(State of incorporation)(Commission File Number)(I.R.S. Employer Identification No.)

3200 Wilshire Boulevard, Suite 1400
Los Angeles, California 90010
(Address of principal executives offices, including zip code)

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


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))

Securities registered pursuant to Section 12(b) of the Act:
Common Stock,par value $0.001 per shareHOPENASDAQ Global Select Market
(Title of class)(Trading Symbol)(Name of exchange on which registered)

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 July 30, 2020, Hope Bancorp, Inc. (“HOPE” or the “Company”) issued a news release concerning its results of operations and financial condition for the second quarter and six-month periods ended and as of June 30, 2020. A copy of the July 30, 2020 press release is attached hereto as Exhibit 99.1.

Item 8.01 Other Events.
On July 30, 2020, 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 August 24, 2020 to all stockholders of record as of the close of business on August 10, 2020. A copy of the July 30, 2020 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, July 31, 2020 at 9:30 a.m. Pacific Time / 12:30 p.m. Eastern Time to review financial results for its second quarter and six-month periods ended June 30, 2020. 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.

The following risk factor supplements the “Risk Factors” section in our 2019 Form 10-K.

The COVID-19 pandemic has had a material and adverse impact on our business, financial condition and results of operations, and the further impact will depend on future developments that cannot be predicted, including the scope and duration of the pandemic, the economic implications of the same, and the actions taken by governmental authorities in response to the pandemic.

The novel COVID-19 pandemic has substantially and negatively impacted the United States economy, disrupted global supply chains, considerably lowered equity market valuations, created significant volatility and disruption in financial markets, and materially increased unemployment levels. In addition, the pandemic has resulted in temporary closures of countless businesses and the institution of social distancing and sheltering in place requirements in most states and communities. As a result, the demand for our products and services has been and likely will continue to be significantly adversely impacted, which could materially and adversely affect our financial condition and results of operations. Furthermore, the pandemic could result in the recognition of amplified credit losses in our loan portfolios and increases in our allowance for loan losses, particularly if businesses remain closed and our customers draw on their lines of credit. Similarly, because of changing economic and market conditions, we may be required to recognize impairments on goodwill or the securities we hold. Our business operations may also be further disrupted if significant portions of our workforce are unable to work effectively, including because of challenges arising as a result of circumstances related to working from home, illness, quarantines, government actions, or other restrictions in connection with the pandemic, and we have already temporarily closed certain of our branches. In response to the pandemic, we have also suspended residential property foreclosure sales, evictions, and involuntary automobile repossessions, and are offering payment deferrals and other expanded assistance for credit card, mortgage and small business lending customers, and future governmental actions may require these and other types of customer-related responses. In addition, we may take capital actions in response to the COVID-19 pandemic. The extent to which the COVID-19 pandemic continues to impact our business, results of operations, and financial condition, as well as our regulatory capital and liquidity ratios, will depend on future developments that cannot be predicted, including the scope and duration of the pandemic, the economic implications of the same and actions taken by governmental authorities and other third parties in response to the pandemic.





Item 9.01 Financial Statements and Exhibits

(d) Exhibits
Exhibit No.Description of Exhibit
99.1
99.2
99.3
104
Cover Page Interactive Data File (embedded within the Inline XBRL document)





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: July 31, 2020By:/s/ Kevin S. Kim
Kevin S. Kim
Chairman, President and Chief Executive Officer





EXHIBIT INDEX
Exhibit No.Description of Exhibit
99.1
99.2
99.3
104
Cover Page Interactive Data File (embedded within the Inline XBRL document)




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Section 2: EX-99.1 (EX-99.1)

Document

404819357_hopebancorp5a0311.jpg
News Release


HOPE BANCORP REPORTS 2020 SECOND QUARTER FINANCIAL RESULTS


LOS ANGELES - July 30, 2020 - Hope Bancorp, Inc. (the “Company”) (NASDAQ: HOPE), the holding company of Bank of Hope (the “Bank”), today reported unaudited financial results for its three and six-month periods ended June 30, 2020.

For the three months ended June 30, 2020, net income totaled $26.8 million, or $0.22 per diluted common share, compared with $26.0 million, or $0.21 per diluted common share for the 2020 first quarter. In the year-ago second quarter, net income totaled $42.7 million, or $0.34 per diluted common share.

“The second quarter of 2020 represented the most challenging operating environment in the history of our Bank, with the COVID-19 crisis exacerbated by the aggregate 150 basis point reduction in the Fed Funds rate in March and the mounting social justice movement across the nation,” said Kevin S. Kim, Chairman, President and Chief Executive Officer of Hope Bancorp, Inc. “Notwithstanding these strong headwinds, I am proud of how the entire Bank of Hope team came together and has been managing through this difficult period. We delivered solid loan production, significant core deposit growth and positive deposit cost trends as well as meaningful cost reductions. We also supported many of our customers impacted by COVID-19 with modifications under the CARES Acts during the quarter and maintained relatively stable asset quality metrics. While our net interest margin was heavily impacted by the rate cuts as well as a buildup of our liquidity and resulting excess cash balances, we believe this quarter represents the trough. Going forward, we expect stable loan yields, continued reductions in our deposit costs and the deployment of excess cash balances will lead to an expansion of our net interest margin in the coming quarters.

“We are in the late stages of developing additional initiatives in light of the new normal designed to restructure our balance sheet and contain expenses to further optimize our operational performance. We believe the near-term implementation of these initiatives will lead to improved profitability as we progress through the year and beyond. With our robust capital and liquidity positions as well as the successes achieved to date with our deposit initiatives, we have great confidence in our ability to navigate through this new landscape and emerge as an even stronger regional bank to support the financial needs of our customers and communities and deliver greater value to our shareholders.”

Q2 2020 Highlights
New loan originations totaled $832 million, including $480 million of PPP loans, which led to a 2.3% increase in loans receivable quarter-over-quarter, or 9% annualized.
Total deposits increased 10.0% quarter-over-quarter, of which the vast majority of the growth was in noninterest bearing demand deposits.
Continuation of favorable mix-shift to lower-cost core deposits contributed to a 47 basis point reduction quarter-over-quarter in total deposit costs.
NIM compression of 52 basis points represents the trough, with expansion expected going forward from stable loan yields, continued reduction in deposit costs and deployment of excess cash.
Strategic reductions in noninterest expenses contributed to an improved 1.60% ratio as a percentage of average assets, versus 1.87% in the preceding first quarter.
Continued buildup of reserves with allowance for credit losses as a percentage of loans receivable increasing to 1.26% at June 30, 2020 from 1.15% at March 31, 2020.

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Financial Highlights
(dollars in thousands, except per share data) (unaudited)At or for the Three Months Ended
6/30/20203/31/20206/30/2019
Net income$26,753  $25,953  $42,681  
Diluted earnings per share$0.22  $0.21  $0.34  
Net interest income before provision for credit losses$109,814  $119,291  $117,221  
Net interest margin2.79 %3.31 %3.31 %
Noninterest income$11,240  $13,264  $12,287  
Noninterest expense$67,030  $72,140  $71,371  
Net loans receivable$12,710,063  $12,438,493  $11,883,068  
Deposits$14,123,532  $12,836,567  $12,172,384  
Total cost of deposits0.87 %1.34 %1.62 %
Nonaccrual loans (1) (2)
$82,137  $72,639  $64,934  
Nonperforming loans to loans receivable (1) (2)
1.06 %0.93 %0.89 %
ACL to loans receivable (3)
1.26 %1.15 %0.79 %
ACL to nonaccrual loans (1) (2) (3)
196.95 %199.51 %144.86 %
ACL to nonperforming assets (1) (2) (3)
102.95 %103.62 %84.24 %
Provision for credit losses$17,500  $28,000  $1,200  
Net charge offs$652  $3,421  $1,351  
Return on average assets (“ROA”)0.64 %0.67 %1.12 %
Return on average equity (“ROE”)5.31 %5.12 %8.71 %
Return on average tangible common equity (“ROTCE”) (4)
6.94 %6.69 %11.51 %
Noninterest expense / average assets1.60 %1.87 %1.88 %
Efficiency ratio55.37 %54.42 %55.11 %

(1) Excludes delinquent SBA loans that are guaranteed and currently in liquidation.
(2) Excludes purchased credit impaired (“PCI”) loans for June 30, 2019.
(3) Allowance for credit losses for current-year periods were calculated under the CECL methodology while allowance for loan losses for the prior-year period was calculated under the incurred loss methodology.
(4) Return on average tangible common equity is a non-GAAP financial measure. A reconciliation of the Company’s return on average tangible common equity is provided in the accompanying financial information on Table Page 10.


Operating Results for the 2020 Second Quarter
Net interest income before provision for credit losses for the 2020 second quarter totaled $109.8 million, compared with $119.3 million in the 2020 first quarter. The decrease primarily reflects a full quarter’s impact of the aggregate 150 basis point decrease in the Fed Funds rate in March 2020, along with a large payoff of an acquired loan that contributed $5.6 million in purchase accounting discount accretion in the first quarter of 2020. Net interest income before provision for credit losses amounted to $117.2 million in the year-ago second quarter.

The net interest margin for the 2020 second quarter decreased 52 basis points to 2.79% from 3.31% in the preceding first quarter and was primarily impacted by the Fed Funds rate reductions and a significant increase in lower-yielding cash balances as the Company temporarily increased its excess liquidity as a precautionary measure in light of the COVID-19 pandemic. In addition, the large payoff mentioned above benefited the 2020 first quarter net interest margin by 16 basis points. The net interest margin for the 2019 second quarter was 3.31%.

The weighted average yield on loans for the 2020 second quarter decreased 83 basis points to 4.23% from 5.06% in the 2020 first quarter, reflecting the repricing of variable rate loans in the Company’s portfolio as a result of the 150 basis point reduction in the Fed Funds rate. In the year-ago second quarter, the weighted average yield on loans was 5.32%.

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The weighted average cost of deposits for the 2020 second quarter decreased 47 basis points to 0.87% from 1.34% for the 2020 first quarter and decreased 75 basis points from 1.62% for the year-ago second quarter. The significant improvements in the weighted average cost of deposits reflects the Company’s ongoing success with its initiative to enhance its deposit mix to favor lower-cost core deposits.

Noninterest income totaled $11.2 million for the 2020 second quarter, compared with $13.3 million for the preceding first quarter and $12.3 million for the 2019 second quarter. The Company noted a 38% reduction in service fees on deposit accounts as transaction volumes decreased significantly in the midst of the COVID-19 related lockdowns. In addition, the net gains on sales of other loans in the preceding first quarter included gains from a bulk sale of residential mortgage loans, together with sales of new residential mortgage originations.

Noninterest expense for the 2020 second quarter declined 7% to $67.0 million from $72.1 million in the preceding first quarter, with reductions in compensation expense and professional fees being the largest factors driving the improvement. In the year-ago second quarter, noninterest expense totaled $71.4 million. Noninterest expense as a percentage of average assets for the 2020 second quarter improved to 1.60% from 1.87% for the 2020 first quarter and 1.88% for the 2019 second quarter.

Salaries and employee benefits expense for the 2020 second quarter decreased 9% to $38.9 million from $42.5 million for the 2020 first quarter. The Company noted that PPP loan origination costs of $5.2 million was a material factor in the reduced compensation expense for the current quarter. In the 2019 second quarter, salaries and employee benefits expense totaled $39.3 million.

The effective tax rate for the 2020 second quarter was 26.8%, compared with 19.9% for the preceding first quarter, reflecting the Company’s projections for increased pretax income in the second half of 2020 than previously budgeted. In the year-ago second quarter, the effective tax rate was 25.0%.

Balance Sheet Summary
New loan originations funded during the 2020 second quarter totaled $832.0 million and included SBA PPP loan originations of $480.1 million, traditional SBA loan production of $5.9 million and residential mortgage loan originations of $72.3 million. This compares with 2020 first quarter originations of $624.5 million, including traditional SBA loan production of $49.8 million and residential mortgage loan originations of $37.4 million. In the year-ago second quarter, new loan originations funded totaled $503.9 million, including SBA loan production of $37.2 million and residential mortgage loan originations of $74.0 million.

At June 30, 2020, loans receivable increased 2.3% to $12.87 billion from $12.58 billion at March 31, 2020 and increased 7.5% from $11.98 billion at June 30, 2019.

Total deposits at June 30, 2020 increased by $1.29 billion, or 10.0% quarter-over-quarter, to $14.12 billion from $12.84 billion at March 31, 2020, with $1.03 billion of the increase in noninterest bearing demand deposits, of which approximately $326 million is identified as being related to PPP loans that the Company originated. Total deposits at June 30, 2019 amounted to $12.17 billion. The increases in total deposits versus the comparable periods reflect a continuation of a positive shift in the mix of deposits favoring core deposits over the last year.

Following is the deposit composition as of June 30, 2020, March 31, 2020 and June 30, 2019:
(dollars in thousands) (unaudited)6/30/20203/31/2020% change6/30/2019% change
  Noninterest bearing demand deposits$4,036,383  $3,010,143  34 %$3,009,218  34 %
  Money market and other4,831,679  4,851,000  — %3,238,947  49 %
  Saving deposits296,614  272,577  %243,859  22 %
  Time deposits 4,958,856  4,702,847  %5,680,360  (13)%
    Total deposit balances$14,123,532  $12,836,567  10 %$12,172,384  16 %

Reflecting the continued favorable mix-shift in deposits, total cost of deposits decreased 47 basis points to 0.87% from 1.34% for the 2020 first quarter and decreased 75 basis points from 1.62% for the 2019 second quarter.
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Allowance for Credit Losses
The 2020 second quarter provision for credit losses under the CECL methodology was $17.5 million, compared with $28.0 million for the preceding first quarter. This compares with a provision for loan losses under the prior incurred loss methodology of $1.2 million for the 2019 second quarter.

The provision for credit losses for the 2020 second quarter reflects updated macroeconomic variables incorporating the Moody’s Analytics Baseline scenario published June 2020, enhanced qualitative factors in the Company’s ACL methodology, relatively stable asset quality metrics and minimal credit losses, as well as an additional Management overlay to accounts related to COVID-19 modifications.

The ACL as of June 30, 2020 increased to $161.8 million from $144.9 million at March 31, 2020 and from $94.1 million at June 30, 2019. As a percentage of loans receivable (excluding loans held for sale), the ACL rose to 1.26% at June 30, 2020 from 1.15% at March 31, 2020 and from 0.79% at June 30, 2019. The coverage ratio of the ACL to nonperforming loans was 118.82%, 124.06% and 88.73% at June 30, 2020, March 31, 2020 and June 30, 2019, respectively.
 (unaudited)(dollars in thousands)
Allowance for loan losses - Dec 31, 2019$94,144  
CECL day 1 adoption impact26,200  
Allowance for credit losses - Jan 1, 2020120,344  
Provision for credit losses28,000  
Recoveries2,536  
Charge offs(5,957) 
Allowance for credit losses - Mar 31, 2020$144,923  
Provision for credit losses17,500  
Recoveries252  
Charge offs(904) 
Allowance for credit losses - June 30, 2020$161,771  

Credit Quality
Following are the components of nonperforming assets as of June 30, 2020, March 31, 2020 and June 30, 2019:
(dollars in thousands) (unaudited)6/30/20203/31/20206/30/2019
Loans on nonaccrual status (1)
$82,137  $72,639  $64,934  
Delinquent loans 90 days or more on accrual status (2)
9,986  387  353  
Accruing troubled debt restructured loans44,026  43,789  40,731  
Total nonperforming loans136,149  116,815  106,018  
Other real estate owned20,983  23,039  5,644  
Total nonperforming assets$157,132  $139,854  $111,662  

(1)  Excludes delinquent SBA loans that are guaranteed and currently in liquidation totaling $30.3 million, $28.8 million and $32.1 million, at June 30, 2020, March 31, 2020 and June 30, 2019, respectively.
(2) Excludes PCI loans totaling $17.6 million at June 30, 2019.

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Following are the components of criticized loan balances as of June 30, 2020, March 31, 2020 and June 30, 2019:
(dollars in thousands) (unaudited)6/30/20203/31/20206/30/2019
Special Mention$127,149$122,279$186,485
Classified299,368278,783323,842
     Criticized$426,517$401,062$510,327

During the 2020 second quarter, net charge offs were minimal at $652,000, or 0.02% of average loans receivable on an annualized basis. This compares with net charge offs of $3.4 million, or 0.11% of average loans receivable on an annualized basis for the 2020 first quarter and net charge offs for the 2019 second quarter of $1.4 million, or 0.05% of average loans receivable on an annualized basis.

Individually evaluated loans (previously referred to as impaired loans prior to the adoption of CECL) totaled $116.1 million at June 30, 2020. This compares with individually evaluated loans of $118.7 million at March 31, 2020 and impaired loans of $106.0 million at June 30, 2019. The Company attributed $22.2 million of the increase in individually evaluated loans in the 2020 first quarter to the reclassification of PCD (formerly purchased credit-impaired loans) due to the implementation of the new CECL accounting standards.

Capital
At June 30, 2020, the Company and the Bank continued to exceed all regulatory capital requirements to be classified as a “well-capitalized” financial institution. Following are capital ratios for the Company as of June 30, 2020, March 31, 2020 and June 30, 2019:
Hope Bancorp, Inc. (unaudited)
6/30/20203/31/20206/30/2019Minimum Guideline for “Well-Capitalized” Bank
Common Equity Tier 1 Capital11.50%11.44%11.90%6.50%
Tier 1 Leverage Ratio10.08%10.88%10.94%5.00%
Tier 1 Risk-Based Ratio12.24%12.19%12.67%8.00%
Total Risk-Based Ratio13.23%13.06%13.42%10.00%

As previously announced, the Company has elected to defer the impact of the adoption of CECL for two years, at which time the impact will be phased-in over a three year period. Therefore, the Day 1 CECL adjustment has not had an impact to the Company’s regulatory capital ratios as of June 30, 2020.

Following are tangible common equity (“TCE”) per share and TCE as a percentage of tangible assets as of June 30, 2020, March 31, 2020 and June 30, 2019:
(unaudited)6/30/20203/31/20206/30/2019
Tangible common equity per share (1)
$12.62$12.52$11.98
Tangible common equity to tangible assets (2)
9.32%9.92%10.21%

(1) Tangible common equity represents common equity less goodwill and net other intangible assets. Tangible common equity per share represents tangible common equity divided by the number of shares issued and outstanding. Both tangible common equity and tangible common equity per share are non-GAAP financial measures. A reconciliation of the Company’s total stockholders’ equity to tangible common equity is provided in the accompanying financial information on Table Page 10.
(2) Tangible assets represent total assets less goodwill and net other intangible assets. Tangible common equity to tangible assets is the ratio of tangible common equity over tangible assets. Tangible common equity to tangible assets is a non-GAAP financial measure. A reconciliation of the Company’s total assets to tangible assets is provided in the accompanying financial information on Table Page 10.



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


Investor Conference Call

The Company previously announced that it will host an investor conference call on Friday, July 31, 2020 at 9:30 a.m. Pacific Time / 12:30 p.m. Eastern Time to review financial results for its second quarter ended June 30, 2020. 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 August 7, 2020, replay access code 10146201.

About Hope Bancorp, Inc.

Hope Bancorp, Inc. is the holding company of Bank of Hope, the first and only super regional Korean-American bank in the United States with $17.2 billion in total assets as of June 30, 2020. Headquartered in Los Angeles and serving a multi-ethnic population of customers across the nation, Bank of Hope operates 58 full-service branches in California, Washington, Texas, Illinois, New York, New Jersey, Virginia, Georgia and Alabama. The Bank also operates SBA loan production offices in Seattle, Denver, Dallas, Atlanta, Portland, Oregon, New York City, Northern California and Houston; commercial loan production offices in Northern California and Seattle; residential mortgage loan production offices in Southern California; and a representative office in Seoul, Korea. Bank of Hope specializes in core business banking products for small and medium-sized businesses, with an emphasis in commercial real estate and commercial lending, SBA lending and international trade financing. Bank of Hope is a California-chartered bank, and its deposits are insured by the FDIC to the extent provided by law. Bank of Hope is an Equal Opportunity Lender. For additional information, please go to bankofhope.com. By including the foregoing website address link, the Company does not intend to and shall not be deemed to incorporate by reference any material contained or accessible therein.

Forward-Looking Statements

Some statements in this press release may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements relate to, among other things, expectations regarding the business environment in which we operate, projections of future performance, perceived opportunities in the market and statements regarding our business strategies, objectives and vision. Forward-looking statements include, but are not limited to, statements preceded by, followed by or that include the words “will,” “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates” or similar expressions. With respect to any such forward-looking statements, the Company claims the protection provided for in the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties. The Company’s actual results, performance or achievements may differ significantly from the results, performance or achievements expressed or implied in any forward-looking statements. The risks and uncertainties include, but are not limited to: possible deterioration in economic conditions in our areas of operation; interest rate risk associated with volatile interest rates and related asset-liability matching risk; liquidity risks; risk of significant non-earning assets, and net credit losses that could occur, particularly in times of weak economic conditions or times of rising interest rates; 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 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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Contacts:
Alex Ko
EVP & Chief Financial Officer
213-427-6560
alex.ko@bankofhope.com


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


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

Assets:6/30/20203/31/2020% change12/31/2019% change6/30/2019% change
Cash and due from banks$1,468,949  $802,033  83 %$698,567  110 %$609,795  141 %
Securities available for sale, at fair value1,887,604  1,718,702  10 %1,715,987  10 %1,826,903  %
Federal Home Loan Bank (“FHLB”) stock and other investments98,357  96,956  %97,659  %100,962  (3)%
Loans held for sale, at the lower of cost or fair value11,350  8,281  37 %54,271  (79)%6,426  77 %
Loans receivable12,871,834  12,583,416  %12,276,007  %11,977,134  %
Allowance for credit losses(161,771) (144,923) 12 %(94,144) 72 %(94,066) 72 %
  Net loans receivable12,710,063  12,438,493  %12,181,863  %11,883,068  %
Accrued interest receivable52,859  30,450  74 %30,772  72 %33,980  56 %
Premises and equipment, net51,029  51,392  (1)%52,012  (2)%52,552  (3)%
Bank owned life insurance77,050  76,429  %76,339  %75,963  %
Goodwill464,450  464,450  — %464,450  — %464,450  — %
Servicing assets14,164  14,847  (5)%16,417  (14)%19,997  (29)%
Other intangible assets, net10,770  11,302  (5)%11,833  (9)%12,947  (17)%
Other assets322,417  308,099  %267,270  21 %251,784  28 %
  Total assets$17,169,062  $16,021,434  %$15,667,440  10 %$15,338,827  12 %
Liabilities:
Deposits$14,123,532  $12,836,567  10 %$12,527,364  13 %$12,172,384  16 %
FHLB advances500,000  675,000  (26)%625,000  (20)%695,000  (28)%
Convertible notes, net201,987  200,716  %199,458  %196,977  %
Subordinated debentures103,602  103,318  — %103,035  %102,477  %
Accrued interest payable26,093  30,436  (14)%33,810  (23)%36,987  (29)%
Other liabilities183,072  157,309  16 %142,762  28 %139,830  31 %
  Total liabilities$15,138,286  $14,003,346  %$13,631,429  11 %$13,343,655  13 %
Stockholders’ Equity:
Common stock, $0.001 par value$136  $136  — %$136  — %$136  — %
Capital surplus 1,430,757  1,429,275  — %1,428,066  — %1,425,262  — %
Retained earnings761,734  752,228  %762,480  — %712,351  %
Treasury stock, at cost(200,000) (200,000) — %(163,820) (22)%(150,000) (33)%
Accumulated other comprehensive gain (loss), net38,149  36,449  %9,149  317 %7,423  414 %
  Total stockholders’ equity2,030,776  2,018,088  %2,036,011  — %1,995,172  %
  Total liabilities and stockholders’ equity$17,169,062  $16,021,434  %$15,667,440  10 %$15,338,827  12 %
Common stock shares - authorized150,000,000  150,000,000  150,000,000  150,000,000  
Common stock shares - outstanding123,239,276  123,169,404  125,756,543  126,673,822  
Treasury stock shares12,661,581  12,661,581  9,945,547  9,002,453  
Table Page 1

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

Three Months EndedSix Months Ended
6/30/20203/31/2020% change6/30/2019% change6/30/20206/30/2019% change
  Interest and fees on loans$134,190  $154,230  (13)%$158,627  (15)%$288,420  $316,763  (9)%
  Interest on securities9,891  10,609  (7)%11,866  (17)%20,500  24,185  (15)%
  Interest on federal funds sold and other investments980  2,029  (52)%2,973  (67)%3,009  5,648  (47)%
    Total interest income145,061  166,868  (13)%173,466  (16)%311,929  346,596  (10)%
  Interest on deposits 29,451  41,113  (28)%48,826  (40)%70,564  95,673  (26)%
  Interest on other borrowings and convertible notes5,796  6,464  (10)%7,419  (22)%12,260  14,094  (13)%
    Total interest expense35,247  47,577  (26)%56,245  (37)%82,824  109,767  (25)%
Net interest income before provision for credit losses109,814  119,291  (8)%117,221  (6)%229,105  236,829  (3)%
Provision for credit losses17,500  28,000  (38)%1,200  1,358 %45,500  4,200  983 %
Net interest income after provision for credit losses92,314  91,291  %116,021  (20)%183,605  232,629  (21)%
  Service fees on deposit accounts2,583  4,133  (38)%4,416  (42)%6,716  8,733  (23)%
  International service fees667  790  (16)%1,020  (35)%1,456  1,953  (25)%
  Loan servicing fees, net 1,106  365  203 %738  50 %1,471  1,467  — %
  Wire transfer fees 820  998  (18)%1,311  (37)%1,818  2,400  (24)%
  Net gains on sales of other loans1,678  1,855  (10)%1,066  57 %3,533  1,807  96 %
  Net gains on sales of securities available for sale—  —  100 %129  100 %129  (100)%
  Other income and fees4,386  5,123  (14)%3,607  22 %9,510  7,220  32 %
    Total noninterest income11,240  13,264  (15)%12,287  (9)%24,504  23,709  %
  Salaries and employee benefits38,850  42,502  (9)%39,297  (1)%81,352  79,726  %
  Occupancy7,043  7,410  (5)%7,839  (10)%14,453  15,516  (7)%
  Furniture and equipment4,654  4,259  %4,026  16 %8,913  7,472  19 %
  Advertising and marketing1,315  1,673  (21)%2,245  (41)%2,988  4,307  (31)%
  Data processing and communications2,274  2,631  (14)%2,587  (12)%4,905  5,543  (12)%
  Professional fees1,510  3,300  (54)%5,959  (75)%4,810  11,339  (58)%
  FDIC assessment1,652  1,559  %1,559  %3,211  3,110  %
  Credit related expenses1,361  1,662  (18)%1,549  (12)%3,023  2,227  36 %
  OREO expense (income), net1,338  843  59 %83  1,512 %2,181  (69) N/A
  Other7,033  6,301  12 %6,227  13 %13,334  13,033  %
    Total noninterest expense67,030  72,140  (7)%71,371  (6)%139,170  142,204  (2)%
Income before income taxes36,524  32,415  13 %56,937  (36)%68,939  114,134  (40)%
Income tax provision9,771  6,462  51 %14,256  (31)%16,233  28,695  (43)%
Net income $26,753  $25,953  %$42,681  (37)%$52,706  $85,439  (38)%
Earnings Per Common Share:
Basic$0.22  $0.21  $0.34  $0.43  $0.67  
Diluted$0.22  $0.21  $0.34  $0.42  $0.67  
Weighted Average Shares Outstanding:
Basic123,200,127  124,295,327  126,658,509  123,747,727  126,649,536  
Diluted123,430,891  124,676,296  126,870,455  124,054,291  126,842,870  
Table Page 2

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


For the Three Months Ended
(Annualized)
For the Six Months Ended
(Annualized)
Profitability measures:6/30/20203/31/20206/30/20196/30/20206/30/2019
  ROA 0.64 %0.67 %1.12 %0.65 %1.12 %
  ROE 5.31 %5.12 %8.71 %5.21 %8.81 %
  ROTCE (1)
6.94 %6.69 %11.51 %6.82 %11.68 %
  Net interest margin2.79 %3.31 %3.31 %3.04 %3.35 %
  Efficiency ratio55.37 %54.42 %55.11 %54.88 %54.58 %
  Noninterest expense / average assets1.60 %1.87 %1.88 %1.73 %1.87 %
(1) Average tangible equity is calculated by subtracting average goodwill and average core deposit intangible assets from average stockholders’ equity. This is a non-GAAP measure that we
     believe provides investors with information that is useful in understanding our financial performance and position.
Three Months EndedSix Months Ended
Pre-tax acquisition accounting adjustments and merger-related expenses:6/30/20203/31/20206/30/20196/30/20206/30/2019
Accretion on purchased non-impaired loans$658  $1,059  $1,799  $1,717  $3,965  
Accretion on purchased credit deteriorated/purchased credit impaired loans3,046  9,449  6,848  12,495  12,682  
Amortization of premium on low income housing tax credits(70) (71) (76) (141) (152) 
Amortization of premium on acquired FHLB borrowings—  —  —  —  1,280  
Accretion of discount on acquired subordinated debt(284) (283) (275) (567) (548) 
Amortization of core deposit intangibles(532) (531) (557) (1,063) (1,114) 
     Total acquisition accounting adjustments$2,818  $9,623  $7,739  $12,441  $16,113  

Table Page 3

Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
Three Months Ended
6/30/20203/31/20206/30/2019
InterestAnnualizedInterestAnnualizedInterestAnnualized
AverageIncome/AverageAverageIncome/AverageAverageIncome/ Average
BalanceExpenseYield/CostBalanceExpenseYield/CostBalanceExpense Yield/Cost
INTEREST EARNING ASSETS:
    Loans, including loans held for sale $12,755,088  $134,190  4.23 %$12,259,848  $154,230  5.06 %$11,959,920  $158,627  5.32 %
    Securities available for sale 1,750,156  9,891  2.27 %1,712,033  10,609  2.49 %1,804,677  11,866  2.64 %
    FHLB stock and other investments 1,317,049  980  0.30 %519,309  2,029  1.57 %460,623  2,973  2.59 %
Total interest earning assets$15,822,293  $145,061  3.69 %$14,491,190  $166,868  4.63 %$14,225,220  $173,466  4.89 %
       
INTEREST BEARING LIABILITIES:
  Deposits:
    Demand, interest bearing $4,903,786  $7,563  0.62 %$4,204,406  $14,880  1.42 %$3,094,179  $14,019  1.82 %
    Savings 284,050  862  1.22 %274,075  808  1.19 %225,978  608  1.08 %
    Time deposits4,954,446  21,026  1.71 %4,900,405  25,425  2.09 %5,784,980  34,199  2.37 %
    Total interest bearing deposits10,142,282  29,451  1.17 %9,378,886  41,113  1.76 %9,105,137  48,826  2.15 %
    FHLB advances593,407  2,238  1.52 %594,890  2,647  1.79 %706,044  3,384  1.92 %
    Convertible notes, net201,169  2,358  4.64 %199,960  2,346  4.64 %196,244  2,310  4.66 %
    Subordinated debentures99,534  1,200  4.77 %99,252  1,471  5.86 %98,406  1,725  6.93 %
Total interest bearing liabilities$11,036,392  $35,247  1.28 %$10,272,988  $47,577  1.86 %$10,105,831  $56,245  2.23 %
Noninterest bearing demand deposits3,510,783  2,963,136  2,947,476  
Total funding liabilities/cost of funds$14,547,175  0.97 %$13,236,124  1.45 %$13,053,307  1.73 %
Net interest income/net interest spread$109,814  2.41 %$119,291  2.77 %$117,221  2.66 %
Net interest margin2.79 %3.31 %3.31 %
Cost of deposits:
    Noninterest bearing demand deposits$3,510,783  $—  — %$2,963,136  $—  — %$2,947,476  $—  — %
    Interest bearing deposits10,142,282  29,451  1.17 %9,378,886  41,113  1.76 %9,105,137  48,826  2.15 %
Total deposits$13,653,065  $29,451  0.87 %$12,342,022  $41,113  1.34 %$12,052,613  $48,826  1.62 %

Table Page 4

Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
Six Months Ended
6/30/20206/30/2019
InterestAnnualizedInterestAnnualized
AverageIncome/AverageAverageIncome/Average
BalanceExpenseYield/CostBalanceExpenseYield/Cost
INTEREST EARNING ASSETS:
    Loans, including loans held for sale $12,507,468  $288,420  4.64 %$12,023,690  $316,763  5.31 %
    Securities available for sale 1,731,094  20,500  2.38 %1,816,081  24,185  2.69 %
    FHLB stock and other investments 918,179  3,009  0.66 %433,293  5,648  2.63 %
Total interest earning assets$15,156,741  $311,929  4.14 %$14,273,064  $346,596  4.90 %
      
INTEREST BEARING LIABILITIES:
  Deposits:
    Demand, interest bearing $4,554,096  $22,443  0.99 %$3,068,494  $27,005  1.77 %
    Savings 279,063  1,670  1.20 %224,761  1,173  1.05 %
    Time deposits4,927,425  46,451  1.90 %5,860,492  67,495  2.32 %
    Total interest bearing deposits9,760,584  70,564  1.45 %9,153,747  95,673  2.11 %
    FHLB advances594,148  4,885  1.65 %758,161  5,998  1.60 %
    Convertible notes, net200,565  4,704  4.64 %195,610  4,609  4.69 %
    Subordinated debentures99,393  2,671  5.32 %98,267  3,487  7.06 %
Total interest bearing liabilities$10,654,690  $82,824  1.56 %$10,205,785  $109,767  2.17 %
Noninterest bearing demand deposits3,236,960