EX-99.1 2 hope-09302022ex991financia.htm EX-99.1 Document

hopebancorp5a03a.jpg
News Release


HOPE BANCORP REPORTS 2022 THIRD QUARTER FINANCIAL RESULTS


LOS ANGELES - October 24, 2022 - 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, 2022.

For the three months ended September 30, 2022, net income totaled $53.7 million, or $0.45 per diluted common share, compared with $52.1 million, or $0.43 per diluted common share, in the preceding second quarter and $55.5 million, or $0.45 per diluted common share, in the year-ago third quarter.

“We delivered a strong performance for the third quarter of 2022 that demonstrates the significant strides we have made in transforming the profile of our franchise to a lower-risk, high-performing regional bank,” said Kevin S. Kim, Chairman, President and Chief Executive Officer. “We broke new ground yet again with another record high in originations totaling $1.35 billion and representing a well diversified mix with commercial loans accounting for 55% of new loans. Loans receivable grew 6.5% quarter-over-quarter or 11% year-to-date, and together with the increased yields on our interest-earning assets outpacing deposit cost growth, our net interest margin expanded by 13 basis points for the quarter. This, together with the strong loan growth and higher loan yields, resulted in an 8% quarter-over-quarter and 18% year-over-year increase in our net interest income for the third quarter of 2022. We are also pleased that our enhanced credit administration framework is driving ongoing improvements in our asset quality with total nonperforming assets and total criticized loans decreasing 12% and 17%, respectively, quarter-over-quarter. The improved earnings power of Bank of Hope is underscored by the improvements in our pre-provision net revenue, which increased 12% quarter-over-quarter to a record high for the Company.

“As we move forward into the final quarter of the year, our board and management team remain confident in our ability to navigate through the challenges of the current environment and deliver strong financial results for our stockholders for the long term,” said Kim.
Q3 2022 Highlights
•Loan originations totaled a record $1.35 billion, representing a well-diversified mix of new loan production with new commercial loans accounting for 55% of total originations for the quarter.
•Loans receivable increased 6.5% quarter-over-quarter, or 11% year-to-date.
•Criticized loan balances continued its downward trend, decreasing 17% quarter-over-quarter, or 43% year-to-date.
•Total nonperforming assets declined 12% quarter-over-quarter and represented 0.51% of total assets.
•Company recorded a provision for credit losses of $9.2 million, primarily reflecting strong loan growth and increased recessionary risk factors.
•Net interest income increased 8% quarter-over-quarter and 18% year-over-year.
•Net interest margin expanded 13 basis points from the preceding second quarter, benefiting from 4% linked-quarter increase in average loans outstanding and a 59 basis-point expansion in average loan yields.
•Total deposits increased 3.1% quarter-over-quarter, reflecting increases in time deposits.
•Total cost of deposits increased 46 basis points quarter-over-quarter, reflecting the impact of increases in the Federal Funds target rates since June 2022.
•Pre-provision net revenue increased 11.8% quarter-over-quarter to a record high $82.6 million.
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Financial Highlights
At or for the Three Months Ended
(dollars in thousands, except per share data) (unaudited)9/30/20226/30/20229/30/2021
Net income$53,748 $52,088 $55,499 
Diluted earnings per share$0.45 $0.43 $0.45 
Pre-provision net revenue (“PPNR”) (1)
$82,627 $73,919 $65,411 
Net interest income before provision (credit) for credit losses$153,186 $141,538 $130,296 
Net interest margin3.49 %3.36 %3.07 %
Noninterest income$13,355 $12,746 $10,617 
Noninterest expense$83,914 $80,365 $75,502 
Net loans receivable$15,330,626 $14,394,469 $13,281,917 
Deposits$15,502,209 $15,029,630 $15,062,527 
Total cost of deposits0.79 %0.33 %0.26 %
Nonaccrual loans(2)
$64,571 $69,522 $54,380 
Nonperforming loans to loans receivable(2)
0.62 %0.75 %0.73 %
ACL to loans receivable
1.04 %1.04 %1.02 %
ACL to nonaccrual loans(2)
248.66 %218.03 %251.52 %
ACL to nonperforming assets(2)
165.55 %137.09 %120.33 %
Provision (credit) for credit losses$9,200 $3,200 $(10,000)
Net charge offs (recoveries)$219 $(930)$42,678 
Return on average assets (“ROA”)1.17 %1.17 %1.25 %
Return on average equity (“ROE”)10.58 %10.33 %10.61 %
ROA (PPNR) (1)
1.79 %1.65 %1.47 %
ROE (PPNR) (1)
16.26 %14.66 %12.51 %
Return on average tangible common equity (“ROTCE”)(1)
13.77 %13.48 %13.71 %
Noninterest expense / average assets1.82 %1.80 %1.70 %
Efficiency ratio50.39 %52.09 %53.58 %

(1) Pre-provision net revenue, ROA (PPNR), ROE (PPNR), and ROTCE are non-GAAP financial measures. Management’s reasons and purposes for using these non-GAAP financial measures are set forth on Table Pages 10 and 11 of this earnings release. A quantitative reconciliation of the Company’s GAAP to non-GAAP financial measures are provided in the accompanying financial information on Table Pages 10 and 11.
(2) Excludes delinquent SBA loans that are guaranteed and currently in liquidation.



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Operating Results for the 2022 Third Quarter

Net interest income before provision for credit losses for the 2022 third quarter increased 8% to $153.2 million from $141.5 million in the 2022 second quarter and increased 18% from $130.3 million in the 2021 third quarter. The Company attributed the increase to higher interest income largely due to a favorable shift in our mix of earning assets, as well as higher average balances of loans receivable and an increase in loan yields, partially offset by higher interest expense on deposits.

The net interest margin for the 2022 third quarter increased 13 basis points to 3.49% from 3.36% in the preceding second quarter and increased 42 basis points from 3.07% in the year-ago third quarter, as the expansion of the yields on interest-earning assets outpaced the increase in the cost of deposits.

The weighted average yield on loans for the 2022 third quarter was 4.65%, up 59 basis points from 4.06% in the 2022 second quarter and up 68 basis points from the year-ago third quarter. The Company attributed the quarter-over-quarter increase in weighted average yield on loans to the repricing of its variable rate loans following the increases in the market interest rates, as well as a significant increase in the average rate of new loans originated during the quarter.

The weighted average cost of deposits for the 2022 third quarter increased by 46 basis points to 0.79% from 0.33% in the 2022 second quarter, primarily reflecting a 71 basis point increase in the cost of interest bearing deposits due to the previously mentioned Federal Funds target rate hikes. Compared with the year-ago third quarter, the weighted average cost of deposits for the 2022 third quarter increased 53 basis points from 0.26%, reflecting an 83 basis point increase in the cost of interest bearing deposits.

Noninterest income for the 2022 third quarter increased 5% to $13.4 million from $12.7 million in the 2022 second quarter. Quarter-over-quarter reductions in the net gains on sales of SBA loans and residential mortgage loans were more than offset by increases across most all other noninterest income categories. Most notably, other income and fees increased 94% quarter-over-quarter, which largely reflects higher swap fee income and a reduction in fair value losses on equity investments. During the 2022 third quarter, the Company sold $57.8 million in the guaranteed portion of SBA 7(a) loans and $3.7 million in retail mortgage loans, compared with $70.2 million and $4.1 million, respectively, sold in the preceding second quarter. Noninterest income for the 2022 third quarter increased 26% compared with $10.6 million in the third quarter of 2021, primarily reflecting higher service fees on deposit accounts, as well as other income and fees.

Noninterest expense for the 2022 third quarter increased 4% to $83.9 million from $80.4 million for the preceding second quarter, largely reflecting higher salaries and employee benefits and other noninterest expenses, partially offset by lower credit related expenses. For the 2021 third quarter, noninterest expense totaled $75.5 million.

Salaries and employee benefits expense for the 2022 third quarter increased to $53.2 million from $51.1 million in the preceding second quarter, largely reflecting higher incentive compensation accruals related to the strong financial performance. Salaries and employee benefits expense for the 2021 third quarter totaled $47.0 million.

Other noninterest expense for the 2022 third quarter increased to $10.8 million from $6.3 million in the 2022 second quarter and $6.4 million in the 2021 third quarter, largely reflecting higher earnings credit expenses as a result of recent Fed Fund rate hikes and higher amortization expense related to low-income housing tax credits.

The Company’s efficiency ratio for the 2022 third quarter was 50.39%, compared with 52.09% in the preceding second quarter and 53.58% in the year-ago third quarter. Noninterest expense as a percentage of average assets was 1.82% for the 2022 third quarter, compared with 1.80% for the 2022 second quarter and 1.70% for the 2021 third quarter.

The effective tax rate for the 2022 third quarter was 26.8%, compared with 26.4% for the preceding second quarter and 26.4% in the year-ago third quarter.


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Balance Sheet Summary
New loan originations during the 2022 third quarter totaled $1.35 billion, reflecting a 5% increase over the preceding second quarter and a 34% increase over the year-ago third quarter.

Following are the components of new loan production for the quarters ended September 30, 2022, June 30, 2022, and September 30, 2021.

For the Three Months Ended
(dollars in thousands) (unaudited)9/30/20226/30/20229/30/2021
Commercial real estate$500,826 $522,093 $488,969 
Commercial732,341 544,639 329,702 
SBA47,428 35,085 115,023 
Residential mortgage67,079 181,408 75,007 
Consumer1,020 2,770 500 
Total new loan originations$1,348,694 $1,285,995 $1,009,201 

At September 30, 2022, loans receivable increased 6.5% to $15.49 billion from $14.55 billion at June 30, 2022 and increased 15.4% from $13.42 billion at September 30, 2021.

Total deposits at September 30, 2022 increased 3.1% to $15.50 billion from $15.03 billion at June 30, 2022, largely reflecting an increase in time deposits, and increased 2.9% year-over-year from $15.06 billion at September 30, 2021. Quarter-over-quarter, noninterest bearing demand and money market and NOW deposits decreased 1.7% and 7.2%, respectively, but these decreases were more than offset by a 38.7% increase in time deposits. On a year-over-year basis, noninterest bearing demand deposits at September 30, 2022 decreased 6.9%, money market and NOW deposits increased 0.2%, and time deposits increased 29.3%.

Following is the deposit composition as of September 30, 2022, June 30, 2022 and September 30, 2021:
(dollars in thousands) (unaudited)9/30/20226/30/20229/30/2021
  Noninterest bearing demand deposits$5,590,952 $5,689,992 $6,007,586 
  Money market and other5,885,093 6,339,467 5,871,567 
  Saving deposits317,841 326,927 314,603 
  Time deposits 3,708,323 2,673,244 2,868,771 
    Total deposit balances$15,502,209 $15,029,630 $15,062,527 

Following is the deposit composition as a percentage of total deposits and a breakdown of cost of deposits as of and for the quarters ended September 30, 2022, June 30, 2022 and September 30, 2021:
Deposit BreakdownCost of Deposits
(unaudited)9/30/20226/30/20229/30/2021
Q3 2022
Q2 2022
Q3 2021
  Noninterest bearing demand deposits36.1 %37.9 %39.9 %— %— %— %
  Money market and other38.0 %42.2 %39.0 %1.24 %0.54 %0.40 %
  Saving deposits2.0 %2.1 %2.1 %1.18 %1.16 %1.18 %
  Time deposits 23.9 %17.8 %19.0 %1.27 %0.46 %0.38 %
    Total deposit balances100.0 %100.0 %100.0 %0.79 %0.33 %0.26 %

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Allowance for Credit Losses
For the 2022 third quarter, the Company recorded a provision for credit losses of $9.2 million, compared with a provision for credit losses of $3.2 million in the preceding second quarter and a negative provision for credit losses of $10.0 million in the 2021 third quarter.

Following is the allowance for credit losses and allowance coverage ratios as of September 30, 2022, June 30, 2022 and September 30, 2021:

(dollars in thousands) (unaudited)9/30/20226/30/20229/30/2021
Allowance for credit losses$160,561 $151,580 $136,774 
Allowance for credit loss/loans receivable1.04 %1.04 %1.02 %
Allowance for credit losses/nonperforming loans168.11 %139.63 %138.92 %


Credit Quality
Following are the components of nonperforming assets as of September 30, 2022, June 30, 2022 and September 30, 2021:
(dollars in thousands) (unaudited)9/30/20226/30/20229/30/2021
Loans on nonaccrual status (1)
$64,571 $69,522 $54,380 
Delinquent loans 90 days or more on accrual status
5,306 12,468 4,567 
Accruing troubled debt restructured loans25,631 26,572 39,509 
Total nonperforming loans95,508 108,562 98,456 
Other real estate owned1,480 2,010 15,213 
Total nonperforming assets$96,988 $110,572 $113,669 

(1)     Excludes delinquent SBA loans that are guaranteed and currently in liquidation totaling $9.9 million, $13.2 million and $20.6 million, at September 30, 2022, June 30, 2022 and September 30, 2021, respectively.

Total nonperforming assets at September 30, 2022 decreased to $97.0 million from $110.6 million at June 30, 2022 and from $113.7 million at September 30, 2021. Quarter-over-quarter, the decrease in total nonperforming assets reflects reductions across the board in all categories.

Following are net charge offs (recoveries) and net charge offs (recoveries) to average loans receivable on an annualized basis for the three months ended September 30, 2022, June 30, 2022 and September 30, 2021:
For the Three Months Ended
(dollars in thousands) (unaudited)9/30/20226/30/20229/30/2021
Net charge offs (recoveries) $219 $(930)$42,678 
Net charge offs (recoveries)/average loans receivable (annualized)0.01 %(0.03)%1.28 %

Following are the components of criticized loan balances as of September 30, 2022, June 30, 2022 and September 30, 2021:
(dollars in thousands) (unaudited)9/30/20226/30/20229/30/2021
Special mention$79,399$95,797$306,766
Substandard204,713244,748243,684
     Total criticized loans$284,112$340,545$550,450

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At September 30, 2022, special mention loans decreased 17.1% quarter-over-quarter and total criticized loans decreased 16.6% quarter-over-quarter. Compared with a year ago at September 30, 2021, special mention and total criticized loans decreased 74.1% and 48.4%, respectively.


Capital
At September 30, 2022, the Company and the Bank continued to exceed all regulatory capital requirements generally required to meet the definition of a “well-capitalized” financial institution. Following are capital ratios for the Company as of September 30, 2022, June 30, 2022 and September 30, 2021:
(unaudited)
9/30/20226/30/20229/30/2021Minimum Guideline for “Well-Capitalized” Bank
Common Equity Tier 1 Capital10.32%10.69%11.01%6.50%
Tier 1 Leverage Ratio10.25%10.32%9.98%5.00%
Tier 1 Risk-Based Ratio10.91%11.33%11.70%8.00%
Total Risk-Based Ratio11.72%12.13%12.42%10.00%

Following are tangible common equity (“TCE”) per share and TCE as a percentage of tangible assets as of September 30, 2022, June 30, 2022 and September 30, 2021:
(unaudited)9/30/20226/30/20229/30/2021
Tangible common equity per share (1)
$12.60$12.80$13.33
Tangible common equity to tangible assets (1)
8.09%8.68%9.24%

(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. 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, tangible common equity per share, tangible assets and tangible common equity to tangible assets are non-GAAP financial measures. Management’s reasons and purposes for using these non-GAAP financial measures are set forth in the following section. A quantitative reconciliation of the GAAP to non-GAAP financial measures is provided in the accompanying financial information on Table Pages 10 and 11.


Non-GAAP Financial Metrics

This news release contains certain non-GAAP financial measure disclosures, including pre-provision net revenue, ROA (PPNR), ROE (PPNR), tangible common equity, tangible common equity per share, tangible assets and tangible common equity to tangible assets. Management believes these non-GAAP financial measures provide meaningful supplemental information regarding its operational performance and the Company’s and the Bank’s capital levels and has included these figures in response to market participant interest in these financial metrics. A reconciliation of the GAAP to non-GAAP financial measures is provided in the accompanying financial information on Table Pages 10 and 11.

Investor Conference Call

The Company previously announced that it will host an investor conference call on Tuesday, October 25, 2022 at 9:30 a.m. Pacific Time / 12:30 p.m. Eastern Time to review financial results for its third quarter ended September 30, 2022. 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 November 1, 2022, replay access code 7421375.
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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 $19.08 billion in total assets as of September 30, 2022. 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 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 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 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. 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.



Contacts:
Alex Ko
Senior 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:9/30/20226/30/2022% change9/30/2021% change
Cash and due from banks$331,336 $197,062 68 %$627,352 (47)%
Investment securities2,264,533 2,352,997 (4)%2,669,489 (15)%
Federal Home Loan Bank (“FHLB”) stock and other investments65,192 87,109 (25)%88,102 (26)%
Loans held for sale, at the lower of cost or fair value41,989 76,376 (45)%179,117 (77)%
Loans receivable15,491,187 14,546,049 6 %13,418,691 15 %
Allowance for credit losses(160,561)(151,580)6 %(136,774)17 %
  Net loans receivable15,330,626 14,394,469 7 %13,281,917 15 %
Accrued interest receivable42,363 37,845 12 %47,102 (10)%
Premises and equipment, net46,169 46,093 — %45,307 2 %
Bank owned life insurance76,788 77,692 (1)%76,756 — %
Goodwill464,450 464,450 — %464,450 — %
Servicing assets11,601 11,215 3 %10,787 8 %
Other intangible assets, net6,212 6,698 (7)%8,180 (24)%
Other assets402,129 337,056 19 %300,467 34 %
  Total assets$19,083,388 $18,089,062 5 %$17,799,026 7 %
Liabilities:
Deposits$15,502,209 $15,029,630 3 %$15,062,527 3 %
FHLB and FRB borrowings1,072,000 573,000 87 %200,000 436 %
Convertible notes, net216,913 216,678 — %215,974 — %
Subordinated debentures106,258 105,953 — %105,057 1 %
Accrued interest payable11,713 4,112 185 %5,367 118 %
Other liabilities198,570 159,320 25 %135,703 46 %
  Total liabilities$17,107,663 $16,088,693 6 %$15,724,628 9 %
Stockholders’ Equity:
Common stock, $0.001 par value$137 $137 — %$136 1 %
Capital surplus 1,428,052 1,424,891 — %1,420,151 1 %
Retained earnings1,048,738 1,011,715 4 %897,766 17 %
Treasury stock, at cost(264,667)(264,667)— %(247,198)(7)%
Accumulated other comprehensive (loss) gain, net(236,535)(171,707)(38)%3,543 N/A
  Total stockholders’ equity1,975,725 2,000,369 (1)%2,074,398 (5)%
  Total liabilities and stockholders’ equity$19,083,388 $18,089,062 5 %$17,799,026 7 %
Common stock shares - authorized150,000,000 150,000,000 150,000,000 
Common stock shares - outstanding119,479,253 119,473,939 120,198,061 
Treasury stock shares17,382,835 17,382,835 16,149,007 
Table Page 1
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands, except share and per share data)

Three Months EndedNine Months Ended
9/30/20226/30/2022% change9/30/2021% change9/30/20229/30/2021% change
  Interest and fees on loans$175,078 $145,024 21 %$132,794 32 %$452,774 $394,353 15 %
  Interest on investment securities13,498 12,308 10 %9,207 47 %37,462 24,835 51 %
  Interest on federal funds sold and other investments606 492 23 %865 (30)%1,642 2,175 (25)%
    Total interest income189,182 157,824 20 %142,866 32 %491,878 421,363 17 %
  Interest on deposits 30,667 12,220 151 %9,640 218 %51,563 33,106 56 %
  Interest on other borrowings and convertible notes5,329 4,066 31 %2,930 82 %12,415 8,805 41 %
    Total interest expense35,996 16,286 121 %12,570 186 %63,978 41,911 53 %
Net interest income before provision (credit) for credit losses153,186 141,538 8 %130,296 18 %427,900 379,452 13 %
Provision (credit) for credit losses9,200 3,200 188 %(10,000)N/A1,400 (13,700)N/A
Net interest income after provision (credit) for credit losses143,986 138,338 4 %140,296 3 %426,500 393,152 8 %
  Service fees on deposit accounts2,535 2,270 12 %1,814 40 %6,779 5,381 26 %
  International service fees834 744 12 %889 (6)%2,372 2,525 (6)%
  Loan servicing fees, net 981 843 16 %642 53 %2,660 2,620 2 %
  Wire transfer fees 856 858 — %836 2 %2,614 2,603 — %
  Net gains on sales of SBA loans2,782 5,804 (52)%2,459 13 %14,189 4,834 194 %
  Net gains on sales of residential mortgage loans29 76 (62)%781 (96)%862 3,905 (78)%
  Net gains (losses) on sales of other loans117 (547)N/A— 100 %(430)— 100 %
  Other income and fees5,221 2,698 94 %3,196 63 %10,241 8,629 19 %
    Total noninterest income13,355 12,746 5 %10,617 26 %39,287 30,497 29 %
  Salaries and employee benefits53,222 51,058 4 %47,018 13 %152,025 130,543 16 %
  Occupancy6,682 7,178 (7)%7,473 (11)%21,195 21,507 (1)%
  Furniture and equipment4,967 4,778 4 %4,429 12 %14,389 13,437 7 %
  Advertising and marketing1,739 2,226 (22)%2,656 (35)%5,601 6,378 (12)%
  Data processing and communications2,469 2,893 (15)%2,394 3 %7,823 7,542 4 %
  Professional fees1,196 1,582 (24)%2,431 (51)%4,989 9,729 (49)%
  FDIC assessment1,633 1,450 13 %1,204 36 %4,652 3,743 24 %
  Credit related expenses873 2,872 (70)%1,266 (31)%4,857 3,527 38 %
  OREO expense378 5 7,460 %248 52 %740 827 (11)%
  Software impairment— — — %— — %— 2,146 (100)%
  Other10,755 6,323 70 %6,383 68 %23,381 19,677 19 %
    Total noninterest expense83,914 80,365 4 %75,502 11 %239,652 219,056 9 %
Income before income taxes73,427 70,719 4 %75,411 (3)%226,135 204,593 11 %
Income tax provision19,679 18,631 6 %19,912 (1)%59,561 51,644 15 %
Net income $53,748 $52,088 3 %$55,499 (3)%$166,574 $152,949 9 %
Earnings Per Common Share - Basic$0.45 $0.43 $0.45 $1.39 $1.24 
Earnings Per Common Share - Diluted$0.45 $0.43 $0.45 $1.38 $1.23 
Weighted Average Shares Outstanding - Basic119,476,035 120,219,919 122,244,948 119,940,044 123,050,174 
Weighted Average Shares Outstanding - Diluted119,996,523 120,699,638 122,908,536 120,595,988 123,848,512 
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 Nine Months Ended
(Annualized)
Profitability measures:9/30/20226/30/20229/30/20219/30/20229/30/2021
  ROA 1.17 %1.17 %1.25 %1.23 %1.18 %
  ROE 10.58 %10.33 %10.61 %10.85 %9.86 %
  ROA (PPNR) (1)
1.79 %1.65 %1.47 %1.68 %1.47 %
  ROE (PPNR) (1)
16.26 %14.66 %12.51 %14.83 %12.30 %
  ROTCE (2)
13.77 %13.48 %13.71 %14.10 %12.78 %
  Net interest margin3.49 %3.36 %3.07 %3.36 %3.08 %
  Efficiency ratio50.39 %52.09 %53.58 %51.30 %53.43 %
  Noninterest expense / average assets1.82 %1.80 %1.70 %1.77 %1.68 %
(1) ROA (PPNR) and ROE (PPNR) are non-GAAP financial measures. Management’s reasons and purposes for using these non-GAAP financial measures are set forth on Table Pages 10 and 11 of this earnings release. A quantitative reconciliation of the Company’s GAAP to non-GAAP financial measures are provided in the accompanying financial information on Table Pages 10 and 11.
(2) Average tangible common 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
9/30/20226/30/20229/30/2021
InterestAnnualizedInterestAnnualizedInterestAnnualized
AverageIncome/AverageAverageIncome/AverageAverageIncome/ Average
BalanceExpenseYield/CostBalanceExpenseYield/CostBalanceExpense Yield/Cost
INTEREST EARNING ASSETS:
    Loans, including loans held for sale $14,925,298 $175,078 4.65 %$14,327,476 $145,024 4.06 %$13,286,382 $132,794 3.97 %
    Investment securities2,366,696 13,498 2.26 %2,424,454 12,308 2.04 %2,370,672 9,207 1.54 %
    FHLB stock and other investments 107,724 606 2.23 %134,055 492 1.47 %1,197,537 865 0.29 %
Total interest earning assets$17,399,718 $189,182 4.31 %$16,885,985 $157,824 3.75 %$16,854,591 $142,866 3.36 %
 
INTEREST BEARING LIABILITIES:
  Deposits:
    Demand, interest bearing $6,255,271 $19,614 1.24 %$6,487,890 $8,655 0.54 %$5,919,225 $5,946 0.40 %
    Savings 324,487 969 1.18 %323,114 937 1.16 %310,525 920 1.18 %
    Time deposits3,146,432 10,084 1.27 %2,277,938 2,628 0.46 %2,914,977 2,774 0.38 %
    Total interest bearing deposits9,726,190 30,667 1.25 %9,088,942 12,220 0.54 %9,144,727 9,640 0.42 %
    FHLB and FRB borrowings448,837 2,393 2.12 %577,966 1,457 1.01 %200,000 640 1.27 %
    Convertible notes, net216,762 1,322 2.39 %216,540 1,322 2.42 %215,840 1,321 2.39 %
    Subordinated debentures102,182 1,614 6.18 %101,880 1,287 5.00 %100,993 969 3.75 %
Total interest bearing liabilities$10,493,971 $35,996 1.36 %$9,985,328 $16,286 0.65 %$9,661,560 $12,570 0.52 %
Noninterest bearing demand deposits5,719,155 5,715,830 5,848,983 
Total funding liabilities/cost of funds$16,213,126 0.88 %$15,701,158 0.42 %$15,510,543 0.32 %
Net interest income/net interest spread$153,186 2.95 %$141,538 3.10 %$130,296 2.84 %
Net interest margin3.49 %3.36 %3.07 %
Cost of deposits:
    Noninterest bearing demand deposits$5,719,155 $— — %$5,715,830 $— — %$5,848,983 $— — %
    Interest bearing deposits9,726,190 30,667 1.25 %9,088,942 12,220 0.54 %9,144,727 9,640 0.42 %
Total deposits$15,445,345 $30,667 0.79 %$14,804,772 $12,220 0.33 %$14,993,710 $9,640 0.26 %

Table Page 4
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
Nine Months Ended
9/30/20229/30/2021
InterestAnnualizedInterestAnnualized
AverageIncome/AverageAverageIncome/Average
BalanceExpenseYield/CostBalanceExpenseYield/Cost
INTEREST EARNING ASSETS:
    Loans, including loans held for sale $14,378,774 $452,774 4.21 %$13,308,526 $394,353 3.96 %
    Investment securities2,469,858 37,462 2.03 %2,297,450 24,835 1.45 %
    FHLB stock and other investments 197,287 1,642 1.11 %867,745 2,175 0.34 %
Total interest earning assets$17,045,919 $491,878 3.86 %$16,473,721 $421,363 3.42 %
INTEREST BEARING LIABILITIES:
  Deposits:
    Demand, interest bearing $6,360,040 $33,970 0.71 %$5,555,711 $17,345 0.42 %
    Savings 322,058 2,834 1.18 %306,780 2,678 1.17 %
    Time deposits2,683,217 14,759 0.74 %3,298,393 13,083 0.53 %
    Total interest bearing deposits9,365,315 51,563 0.74 %9,160,884 33,106 0.48 %
    FHLB and FRB borrowings423,875 4,537 1.43 %205,971 1,913 1.24 %
    Convertible notes, net216,538 3,967 2.42 %215,483 3,967 2.43 %
    Subordinated debentures101,882 3,911 5.06 %100,697 2,925 3.83 %
Total interest bearing liabilities$10,107,610 $63,978 0.85 %$9,683,035 $41,911 0.58 %
Noninterest bearing demand deposits5,702,754 5,451,908 
Total funding liabilities/cost of funds$15,810,364 0.54 %$15,134,943 0.37 %
Net interest income/net interest spread$427,900 3.01 %$379,452 2.84 %
Net interest margin3.36 %3.08 %
Cost of deposits:
    Noninterest bearing demand deposits$5,702,754 $— — %$5,451,908 $— — %
    Interest bearing deposits9,365,315 51,563 0.74 %9,160,884 33,106 0.48 %
Total deposits$15,068,069 $51,563 0.46 %$14,612,792 $33,106 0.30 %

Table Page 5
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
 Three Months Ended Nine Months Ended
AVERAGE BALANCES:9/30/20226/30/2022% change9/30/2021% change9/30/20229/30/2021% change
Loans, including loans held for sale $14,925,298 $14,327,476 4 %$13,286,382 12 %$14,378,774 $13,308,526 8 %
Investments2,474,420 2,558,509 (3)%3,568,209 (31)%2,667,145 3,165,195 (16)%
Interest earning assets17,399,718 16,885,985 3 %16,854,591 3 %17,045,919 16,473,721 3 %
Total assets18,428,874 17,876,945 3 %17,745,066 4 %18,018,588 17,344,095 4 %
Interest bearing deposits9,726,190 9,088,942 7 %9,144,727 6 %9,365,315 9,160,884 2 %
Interest bearing liabilities10,493,971 9,985,328 5 %9,661,560 9 %10,107,610 9,683,035 4 %
Noninterest bearing demand deposits5,719,155 5,715,830 — %5,848,983 (2)%5,702,754 5,451,908 5 %
Stockholders’ equity2,032,362 2,016,577 1 %2,092,018 (3)%2,046,351 2,068,676 (1)%
Net interest earning assets6,905,747 6,900,657 — %7,193,031 (4)%6,938,309 6,790,686 2 %
LOAN PORTFOLIO COMPOSITION: 9/30/20226/30/2022% change9/30/2021% change
Commercial loans$5,124,421 $4,395,738 17 %$3,857,879 33 %
Real estate loans9,504,893 9,335,020 2 %8,908,657 7 %
Consumer and other loans861,873 815,291 6 %652,155 32 %
    Loans, net of deferred loan fees and costs15,491,187 14,546,049 6 %13,418,691 15 %
Allowance for credit losses(160,561)(151,580)6 %(136,774)17 %
    Loans receivable, net$15,330,626 $14,394,469 7 %$13,281,917 15 %
REAL ESTATE LOANS BY PROPERTY TYPE:9/30/20226/30/2022% change9/30/2021% change
Retail buildings$2,632,564 $2,603,516 1 %$2,466,881 7 %
Hotels/motels1,091,047 1,143,982 (5)%1,385,003 (21)%
Gas stations/car washes1,056,217 1,080,777 (2)%999,069 6 %
Mixed-use facilities825,289 833,342 (1)%819,516 1 %
Warehouses1,271,104 1,279,647 (1)%1,160,863 9 %
Multifamily1,199,320 989,840 21 %691,262 73 %
Other1,429,352 1,403,916 2 %1,386,063 3 %
  Total$9,504,893 $9,335,020 2 %$8,908,657 7 %
DEPOSIT COMPOSITION9/30/20226/30/2022% change9/30/2021% change
Noninterest bearing demand deposits$5,590,952 $5,689,992 (2)%$6,007,586 (7)%
Money market and other5,885,093 6,339,467 (7)%5,871,567 — %
Saving deposits317,841 326,927 (3)%314,603 1 %
Time deposits 3,708,323 2,673,244 39 %2,868,771 29 %
  Total deposits$15,502,209 $15,029,630 3 %$15,062,527 3 %

Table Page 6
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands, except share and per share data)

CAPITAL RATIOS:9/30/20226/30/20229/30/2021
Total stockholders’ equity$1,975,725 $2,000,369 $2,074,398 
Common equity tier 1 ratio10.32 %10.69 %11.01 %
Tier 1 risk-based capital ratio 10.91 %11.33 %11.70 %
Total risk-based capital ratio 11.72 %12.13 %12.42 %
Tier 1 leverage ratio 10.25 %10.32 %9.98 %
Total risk weighted assets$17,070,444 $16,059,739 $14,737,809 
Book value per common share$16.54 $16.74 $17.26 
Tangible common equity to tangible assets (1)
8.09 %8.68 %9.24 %
Tangible common equity per share (1)
$12.60 $12.80 $13.33 
(1) Tangible common equity to tangible assets is a non-GAAP financial measure that represents common equity less goodwill and core deposit intangible assets, net divided by total assets less goodwill and core deposit intangible assets, net. Management reviews tangible common equity to tangible assets in evaluating the Company’s capital levels and has included this ratio in response to market participant interest in tangible common equity as a measure of capital.
Three Months EndedNine Months Ended
ALLOWANCE FOR CREDIT LOSSES CHANGES:9/30/20226/30/20223/31/202212/31/20219/30/20219/30/20229/30/2021
Balance at beginning of period$151,580 $147,450 $140,550 $136,774 $189,452 $140,550 $206,741 
Provision (credit) for credit losses9,200 3,200 (11,000)1,500 (10,000)1,400 (13,700)
Recoveries331 1,642 19,403 3,615 1,906 21,376 4,630 
Charge offs (550)(712)(1,503)(1,339)(44,584)(2,765)(60,897)
Balance at end of period$160,561 $151,580 $147,450 $140,550 $136,774 $160,561 $136,774 
Net charge offs (recoveries)/average loans receivable (annualized)0.01 %(0.03)%(0.52)%(0.07)%1.28 %(0.17)%0.56 %
Three Months EndedNine Months Ended
NET LOAN CHARGE OFFS (RECOVERIES):9/30/20226/30/20223/31/202212/31/20219/30/20219/30/20229/30/2021
Real estate loans$9 $(508)$(16,418)$(2,352)$40,542 $(16,917)$54,057 
Commercial loans115 (461)(1,529)144 1,117 (1,875)1,218 
Consumer loans95 39 47 (68)1,019 181 992 
Total net charge offs (recoveries)$219 $(930)$(17,900)$(2,276)$42,678 $(18,611)$56,267 
Table Page 7
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
NONPERFORMING ASSETS:9/30/20226/30/20223/31/202212/31/20219/30/2021
Loans on nonaccrual status (1)
$64,571 $69,522 $52,717 $54,616 $54,380 
Delinquent loans 90 days or more on accrual status5,306 12,468 3,090 2,131 4,567 
Accruing troubled debt restructured loans25,631 26,572 44,555 52,418 39,509 
Total nonperforming loans95,508 108,562 100,362 109,165 98,456 
Other real estate owned1,480 2,010 2,010 2,597 15,213 
Total nonperforming assets$96,988 $110,572 $102,372 $111,762 $113,669 
Nonperforming assets/total assets0.51 %0.61 %0.58 %0.62 %0.64 %
Nonperforming assets/loans receivable & OREO0.63 %0.76 %0.73 %0.80 %0.85 %
Nonperforming assets/total capital4.91 %5.53 %5.02 %5.34 %5.48 %
Nonperforming loans/loans receivable0.62 %0.75 %0.71 %0.78 %0.73 %
Nonaccrual loans/loans receivable0.42 %0.48 %0.37 %0.39 %0.41 %
Allowance for credit losses/loans receivable1.04 %1.04 %1.05 %1.01 %1.02 %
Allowance for credit losses/nonaccrual loans248.66 %218.03 %279.70 %257.34 %251.52 %
Allowance for credit losses/nonperforming loans168.11 %139.63 %146.92 %128.75 %138.92 %
Allowance for credit losses/nonperforming assets165.55 %137.09 %144.03 %125.76 %120.33 %
(1) Excludes delinquent SBA loans that are guaranteed and currently in liquidation totaling $9.9 million, $13.2 million, $17.0 million, $19.5 million, and $20.6 million, at September 30, 2022, June 30, 2022, March 31, 2022, December 31, 2021, and September 30, 2021, respectively.
NONACCRUAL LOANS BY TYPE:9/30/20226/30/20223/31/202212/31/20219/30/2021
Real estate loans$47,807 $53,966 $36,655 $39,756 $41,673 
Commercial loans7,675 8,206 8,686 11,025 10,991 
Consumer loans9,089 7,350 7,376 3,835 1,716 
   Total$64,571 $69,522 $52,717 $54,616 $54,380 
ACCRUING TROUBLED DEBT RESTRUCTURED LOANS:9/30/20226/30/20223/31/202212/31/20219/30/2021
Retail buildings$5,474 $6,337 $24,356 $28,483 $11,280 
Hotels/motels— — — 472 — 
Gas stations/car washes185 189 193 197 202 
Mixed-use facilities2,832 2,837 2,836 2,846 7,937 
Warehouses4,988 4,770 5,321 5,366 4,908 
Other (2)
12,152 12,439 11,849 15,054 15,182 
Total$25,631 $26,572 $44,555 $52,418 $39,509 
(2) Includes commercial business, consumer, and other loans
Table Page 8
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
ACCRUING DELINQUENT LOANS 30-89 DAYS PAST DUE:9/30/20226/30/20223/31/202212/31/20219/30/2021
30 - 59 days$13,092 $10,090 $12,439 $29,723 $15,016 
60 - 89 days4,933 6,354 3,090 10,345 4,746 
   Total$18,025 $16,444 $15,529 $40,068 $19,762 
ACCRUING DELINQUENT LOANS 30-89 DAYS PAST DUE BY TYPE:9/30/20226/30/20223/31/202212/31/20219/30/2021
Real estate loans$9,694 $7,919 $6,097 $20,232 $10,359 
Commercial loans6,165 3,397 5,003 3,057 9,377 
Consumer loans2,166 5,128 4,429 16,779 26 
   Total$18,025 $16,444 $15,529 $40,068 $19,762 
CRITICIZED LOANS:9/30/20226/30/20223/31/202212/31/20219/30/2021
Special mention$79,399 $95,797 $166,958 $257,194 $306,766 
Substandard204,713 244,748 226,661 242,397 243,684 
   Total criticized loans$284,112 $340,545 $393,619 $499,591 $550,450 
Table Page 9
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. A reconciliation of the GAAP to non-GAAP financial measures utilized by management is provided below.
Three Months EndedNine Months Ended
9/30/20226/30/20229/30/20219/30/20229/30/2021
RETURN ON AVERAGE TANGIBLE COMMON EQUITY
Average stockholders’ equity$2,032,362 $2,016,577 $2,092,018 $2,046,351 $2,068,676 
Less: Goodwill and core deposit intangible assets, net(470,941)(471,421)(472,918)(471,424)(473,438)
Average tangible common equity$1,561,421 $1,545,156 $1,619,100 $1,574,927 $1,595,238 
Net income$53,748 $52,088 $55,499 $166,574 $152,949 
Return on average tangible common equity (annualized)13.77 %13.48 %13.71 %14.10 %12.78 %
9/30/20226/30/20229/30/2021
TANGIBLE COMMON EQUITY
Total stockholders’ equity$1,975,725 $2,000,369 $2,074,398 
Less: Goodwill and core deposit intangible assets, net(470,662)(471,148)(472,630)
Tangible common equity$1,505,063 $1,529,221 $1,601,768 
Total assets$19,083,388 $18,089,062 $17,799,026 
Less: Goodwill and core deposit intangible assets, net(470,662)(471,148)(472,630)
Tangible assets$18,612,726 $17,617,914 $17,326,396 
Common shares outstanding119,479,253 119,473,939 120,198,061 
  Tangible common equity to tangible assets8.09 %8.68 %9.24 %
  Tangible common equity per share$12.60 $12.80 $13.33 
Table Page 10
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands, except share and per share data)

Three Months EndedNine Months Ended
9/30/20226/30/20229/30/20219/30/20229/30/2021
PRE-PROVISION NET REVENUE
Net interest income before provision (credit) for credit losses$153,186 $141,538 $130,296 $427,900 $379,452 
Noninterest income13,355 12,746 10,617 39,287 30,497 
Revenue166,541 154,284 140,913 467,187 409,949 
Less noninterest expense83,914 80,365 75,502 239,652 219,056 
Pre-provision net revenue$82,627 $73,919 $65,411 $227,535 $190,893 
Average assets$18,428,874 $17,876,945 $17,745,066 $18,018,588 $17,344,095 
ROA (PPNR)1.79 %1.65 %1.47 %1.68 %1.47 %
Average stockholders’ equity2,032,362 2,016,577 2,092,018 2,046,351 2,068,676 
ROE (PPNR)16.26 %14.66 %12.51 %14.83 %12.30 %
Table Page 11