EX-99.1 2 hope-12312023ex991financia.htm EX-99.1 Document

hopebancorp5a03.jpg
News Release


HOPE BANCORP REPORTS 2023 FOURTH QUARTER AND
FULL-YEAR FINANCIAL RESULTS

LOS ANGELES - January 30, 2024 - Hope Bancorp, Inc. (the “Company”) (NASDAQ: HOPE), the holding company of Bank of Hope (the “Bank”), today reported unaudited financial results for its fourth quarter and full year ended December 31, 2023. For the three months ended December 31, 2023, net income totaled $26.5 million, or $0.22 per diluted common share. For the full year ended December 31, 2023, net income totaled $133.7 million, or $1.11 per diluted common share.

“Net income for the 2023 fourth quarter was $26.5 million, or $38.3 million excluding the FDIC special assessment and restructuring charges related to our strategic reorganization,” stated Kevin S. Kim, Chairman, President and Chief Executive Officer. “Excluding these notable items, our net income was up 26% quarter-over-quarter. Continued focus on expense discipline and improvements in our credit quality metrics were important contributors to our net income growth. Nonperforming assets decreased 26%, and criticized loans declined 11% from September 30, 2023. Net charge offs for the 2023 fourth quarter were a very low five basis points, annualized, of average loans.

“We grew tangible book value 6% year-over-year, and all our regulatory risk-based capital ratios expanded,” continued Kim. “At December 31, 2023, the Company’s total capital ratio was 13.9% and common equity tier 1 capital ratio was 12.3%. Our strong capital positions the Bank well to support all our customers in their growth plans for the new year.

“The 2023 fourth quarter was an important building quarter for the Company with the announcement of our strategic reorganization in October. We believe our realignment around lines of business and products will enable Bank of Hope to operate more efficiently, support high-quality loan and deposit growth, and deliver improved returns in the years to come, enhancing stockholder value over the long term,” concluded Kim. “I wish to thank all our team members at Bank of Hope for their continued dedication to our organization and their excellence in serving our customers.”

Operating Results for the 2023 Fourth Quarter

Net income and earnings per share. Net income for the 2023 fourth quarter was $26.5 million, or $0.22 per diluted common share, compared with $30.0 million, or $0.25 per diluted common share, for the immediately preceding third quarter. Notable items impacting net income in the fourth quarter of 2023 were $8.7 million of restructuring costs, after tax, related to the Company’s previously announced strategic reorganization, and $3.1 million, after tax, accrued for the Federal Deposit Insurance Corporation (“FDIC”) special assessment, which was approved by the FDIC Board of Directors in November 2023. Excluding these notable items, net income for the 2023 fourth quarter was $38.3 million(1), up 26% from $30.4 million (excluding $376,000, after tax, of restructuring costs) for the third quarter of 2023. Earnings per diluted common share excluding notable items(1) amounted to $0.32 for the three months ended December 31, 2023, up 28% compared with $0.25 per diluted common share for the immediately preceding third quarter.

Net interest income and net interest margin. Net interest income before provision for credit losses for the 2023 fourth quarter totaled $125.9 million, compared with $135.4 million in the immediately preceding third quarter, a decrease of 7% quarter-over-quarter. Fourth quarter 2023 net interest margin contracted 13 basis points to 2.70%, from 2.83% in the 2023 third quarter. The linked quarter change in net interest income and net interest margin reflected a higher cost of interest bearing deposits and a decrease in the average balance of loans, partially offset by higher yields on investment securities and other earning assets, as well as a decrease in the average balance of interest bearing deposits. In addition, the third quarter of 2023 included $3.1 million of recovered interest income related to one borrower relationship, which contributed eight basis points to the average loan yield and six basis points to the net interest margin in the third quarter.
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(1) Net income, excluding the FDIC special assessment and restructuring charges (also referred to collectively as the “notable items”), and earnings per diluted common share excluding notable items are non-GAAP financial measures. Quantitative reconciliations of the most directly comparable GAAP to non-GAAP financial measures are provided in the accompanying financial information on Table Pages 10 and 11.
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Noninterest income. Noninterest income for the 2023 fourth quarter totaled $9.3 million, increasing 12% from $8.3 million in the immediately preceding third quarter. Growth was well distributed across various fee income lines. The Company did not sell any SBA 7(a) loans during the second half of 2023, retaining loan production on the balance sheet instead.

Noninterest expense. Noninterest expense for the 2023 fourth quarter was $99.9 million, including $11.1 million of pre-tax restructuring costs, primarily comprising severance costs, planned branch consolidation charges and professional fees, and $4.0 million (pre-tax) accrued for the FDIC special assessment. Excluding these notable items, fourth quarter 2023 noninterest expense(2) was $84.8 million, down 2% from $86.4 million (excluding $500,000, pre-tax, of restructuring charges) in the 2023 third quarter. Fourth quarter 2023 salaries and employee benefits expense decreased 7% to $47.4 million, down from $51.0 million in the 2023 third quarter, reflecting the reduction to total headcount related to the restructuring. Other noninterest expense increased quarter-over-quarter, primarily reflecting increased CRA investment expense and provision for unfunded loan commitments.

Tax rate. The effective tax rate for the 2023 fourth quarter was 21.2%, compared with 24.9% for the immediately preceding third quarter. For the full year 2023, the effective tax rate was 24.9%, compared with 26.3% for the full year 2022.
Balance Sheet Summary
Cash and investment securities. At December 31, 2023, cash and cash equivalents totaled $1.93 billion, compared with $2.50 billion at September 30, 2023, primarily driven by a decrease in deposit balances. At December 31, 2022, cash and equivalents were $506.8 million. Investment securities totaled $2.41 billion at December 31, 2023, up from $2.26 billion at September 30, 2023, and $2.24 billion at December 31, 2022.

Loans. Loans receivable of $13.85 billion at December 31, 2023, decreased 3% from $14.31 billion at September 30, 2023, reflecting declines in commercial and commercial real estate loans, partially offset by growth in residential mortgage loans. During the 2023 fourth quarter, the Company exited its residential mortgage warehouse line business, which accounted for $64.7 million of the linked quarter decrease in loans. Fourth quarter average loans of $14.05 billion decreased 3% quarter-over-quarter.

The following table sets forth the loan portfolio composition at December 31, 2023, September 30, 2023, and December 31, 2022:
(dollars in thousands) (unaudited)12/31/20239/30/202312/31/2022
BalancePercentageBalancePercentageBalancePercentage
Commercial real estate (“CRE”) loans$8,797,884 63.6 %$8,972,886 62.7 %$9,414,580 61.1 %
Commercial and industrial (“C&I”) loans4,135,044 29.8 %4,450,341 31.1 %5,109,532 33.2 %
Residential mortgage and other loans920,691 6.6 %882,966 6.2 %879,428 5.7 %
    Loans receivable$13,853,619 100.0 %$14,306,193 100.0 %$15,403,540 100.0 %

Deposits. Total deposits of $14.75 billion at December 31, 2023, decreased 6% from $15.74 billion at September 30, 2023. Fourth quarter 2023 average deposits of $15.26 billion decreased 3% quarter-over-quarter. During the fourth quarter of 2023, the Company reduced brokered time deposits by $449.9 million, or 25% from September 30, 2023. Noninterest bearing demand deposits decreased in the fourth quarter of 2023 primarily due to seasonality of funds from commercial customers in the residential mortgage business; these customers were unrelated to the exit of residential mortgage warehouse lending.

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(2) Noninterest expense, excluding notable items, is a non-GAAP financial measure. A quantitative reconciliation of the most directly comparable GAAP to non-GAAP financial measures is provided in the accompanying financial information on Table Pages 10 and 11.
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The gross loan-to-deposit ratio was 93.9% at December 31, 2023, compared with 91.0% at September 30, 2023, and 98.2% at December 31, 2022.

The following table sets forth the deposit composition at December 31, 2023, September 30, 2023, and December 31, 2022:
(dollars in thousands) (unaudited)12/31/20239/30/202312/31/2022
BalancePercentageBalancePercentageBalancePercentage
  Noninterest bearing demand deposits$3,914,967 26.5 %$4,249,788 27.0 %$4,849,493 30.8 %
  Money market, interest bearing
  demand, and savings deposits		4,872,029 33.0 %4,855,683 30.9 %5,899,248 37.5 %
  Time deposits 5,966,757 40.5 %6,634,388 42.1 %4,990,060 31.7 %
     Total deposits$14,753,753 100.0 %$15,739,859 100.0 %$15,738,801 100.0 %
  Gross loan-to-deposit ratio93.9 %91.0 %98.2 %

Borrowings. Federal Home Loan Bank and Federal Reserve Bank borrowings totaled $1.80 billion at December 31, 2023, unchanged from September 30, 2023, and up from $865.0 million at December 31, 2022.


Credit Quality and Allowance for Credit Losses
Nonperforming assets. Nonperforming assets totaled $45.5 million at December 31, 2023, a decrease of 26% from $61.7 million at September 30, 2023. The nonperforming assets ratio was 0.24% of total assets at December 31, 2023, an improvement from 0.31% of total assets at September 30, 2023.

The following table sets forth the components of nonperforming assets at December 31, 2023, September 30, 2023, and December 31, 2022:
(dollars in thousands) (unaudited)12/31/20239/30/202312/31/2022
Loans on nonaccrual status (1)
$45,204 $39,081 $49,687 
Accruing delinquent loans past due 90 days or more
261 21,579 401 
Accruing troubled debt restructured loans (2)
— — 16,931 
   Total nonperforming loans45,465 60,660 67,019 
Other real estate owned63 1,043 2,418 
   Total nonperforming assets$45,528 $61,703 $69,437 
Nonperforming assets/total assets0.24 %0.31 %0.36 %
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(1)     Excludes delinquent SBA loans that are guaranteed and currently in liquidation totaling $11.4 million, $12.1 million and $9.8 million at December 31, 2023, September 30, 2023, and December 31, 2022, respectively.
(2)     The Company adopted ASU 2022-02 in 2023, which eliminated the concept of troubled debt restructured (“TDR”) loans from GAAP; therefore, accruing TDR loans are no longer included in nonperforming loans.

Criticized loans. Criticized loans decreased 11% quarter-over-quarter to $322.4 million at December 31, 2023, down from $360.8 million at September 30, 2023. Both special mention and substandard loans decreased quarter-over-quarter. The decrease was largely driven by upgrades, along with payoffs and note sales. As of December 31, 2022, criticized loans totaled $261.3 million.

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Net charge offs and provision for credit losses. The Company recorded net charge offs of $1.8 million in the 2023 fourth quarter, equivalent to 0.05%, annualized, of average loans. This was an improvement from net charge offs of $31.0 million, or 0.85%, annualized, of average loans in the immediately preceding third quarter. Accordingly, the Company recorded a provision for credit losses of $1.7 million for the 2023 fourth quarter, compared with $16.8 million in the immediately preceding third quarter. For the full year 2023, net charge offs were 0.22% of average loans, compared with net recoveries of (0.08)% of average loans for the full year 2022.

The following table sets forth net charge offs (recoveries) and the provision for credit losses for the three months ended December 31, 2023, September 30, 2023, and December 31, 2022, and for the twelve months ended December 31, 2023 and 2022:
For the Three Months EndedFor the Twelve Months Ended
(dollars in thousands) (unaudited)12/31/20239/30/202312/31/202212/31/202312/31/2022
Net charge offs (recoveries)$1,815 $30,987 $6,402 $32,358 $(12,209)
Net charge offs (recoveries)/average loans receivable (annualized)0.05 %0.85 %0.17 %0.22 %(0.08)%
Provision for credit losses$1,700 $16,800 $8,200 $29,100 $9,600 


Allowance for credit losses. The allowance for credit losses totaled $158.7 million at December 31, 2023, compared with $158.8 million at September 30, 2023. The allowance coverage ratio increased to 1.15% of loans receivable at December 31, 2023, up from 1.11% at September 30, 2023. Year-over-year, allowance coverage of loans receivable increased from 1.05% at December 31, 2022.

The following table sets forth the allowance for credit losses and the coverage ratios at December 31, 2023, September 30, 2023, and December 31, 2022:

(dollars in thousands) (unaudited)12/31/20239/30/202312/31/2022
Allowance for credit losses$158,694 $158,809 $162,359 
Allowance for credit losses/loans receivable1.15 %1.11 %1.05 %

Capital

The Company’s capital ratios are strong and all regulatory risk-based capital ratios expanded quarter-over-quarter and year-over-year. At December 31, 2023, the Company and the Bank continued to exceed all regulatory capital requirements generally required to meet the definition of a “well-capitalized” financial institution. The following table sets forth the capital ratios for the Company at December 31, 2023, September 30, 2023, and December 31, 2022:
(unaudited)
12/31/20239/30/202312/31/2022Minimum Guideline for “Well-Capitalized”
Common Equity Tier 1 Capital Ratio12.28%11.67%10.55%6.50%
Tier 1 Capital Ratio12.96%12.32%11.15%8.00%
Total Capital Ratio13.92%13.23%11.97%10.00%
Leverage Ratio10.11%9.83%10.15%5.00%

At December 31, 2023, total stockholders’ equity was $2.12 billion, or $17.66 per common share. Quarter-over-quarter, stockholders’ equity increased 4%, or $90.8 million, primarily reflecting a positive change in accumulated other comprehensive income (“AOCI”) and growth in retained earnings. Tangible common equity (“TCE”) per share was $13.76 at December 31, 2023, up 6% from September 30, 2023, and the TCE ratio was 8.86%, up 90 basis points quarter-over-quarter.

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The following table sets forth the TCE per share and the TCE ratio at December 31, 2023, September 30, 2023, and December 31, 2022:
(unaudited)12/31/20239/30/202312/31/2022
TCE per share (1)
$13.76$13.01$12.96
TCE ratio (1)
8.86%7.96%8.29%
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(1)    TCE per share and TCE ratio are non-GAAP financial measures. Quantitative reconciliations of the most directly comparable GAAP to non-GAAP financial measures are provided in the accompanying financial information on Table Pages 10 and 11.

Investor Conference Call

The Company previously announced that it will host an investor conference call on Tuesday, January 30, 2024, at 9:30 a.m. Pacific Time / 12:30 p.m. Eastern Time to review unaudited financial results for its fourth quarter and full year ended December 31, 2023. Investors and analysts are invited to access the conference call by dialing 866-235-9917 (domestic) or 412-902-4103 (international) and asking for the “Hope Bancorp Call.” A presentation to accompany the earnings call will be available at the Investor Relations section of Hope Bancorp’s website at www.ir-hopebancorp.com. Other interested parties are invited to listen to a live webcast of the call available at the Investor Relations section of Hope Bancorp’s website. After the live webcast, a replay will remain available at the Investor Relations section of Hope Bancorp’s website for one year. A telephonic replay of the call will be available at 877-344-7529 (domestic) or 412-317-0088 (international) for one week through February 6, 2024, replay access code 4752295.

Non-GAAP Financial Metrics

This news release and accompanying financial tables contain certain non-GAAP financial measure disclosures, including net income excluding notable items, earnings per share excluding notable items, noninterest expense excluding notable items, TCE per share, TCE ratio, ROA excluding notable items, ROE excluding notable items, ROTCE, ROTCE excluding notable items, efficiency ratio excluding notable items and noninterest expense / average assets excluding notable items. Management believes these non-GAAP financial measures provide meaningful supplemental information regarding the Company’s operational performance and the Company’s capital levels and has included these figures in response to market participant interest in these financial metrics. Quantitative reconciliations of the most directly comparable GAAP to non-GAAP financial measures are provided in the accompanying financial information on Table Pages 10 and 11.

About Hope Bancorp, Inc.

Hope Bancorp, Inc. (NASDAQ: HOPE) is the holding company of Bank of Hope, the first and only super regional Korean American bank in the United States with $19.13 billion in total assets as of December 31, 2023. Headquartered in Los Angeles and serving a multi-ethnic population of customers across the nation, the Bank provides a full suite of commercial, corporate and consumer loans, including commercial and commercial real estate lending, SBA lending, residential mortgage and other consumer lending; deposit and fee-based products and services; international trade financing; cash management services, foreign currency exchange solutions, and interest rate derivative products, among others. 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, commercial loan production offices, and residential mortgage loan production offices in the United States; and a representative office in Seoul, Korea. 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.
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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 and economic environment in which we operate, projections of future performance, perceived opportunities in the market, statements regarding our business strategies, objectives and vision, and statements about our strategic reorganization. Forward-looking statements include, but are not limited to, statements preceded by, followed by or that include the words “will,” “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates” or similar expressions. With respect to any such forward-looking statements, the Company claims the protection provided for in the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties. The Company’s actual results, performance or achievements may differ significantly from the results, performance or achievements expressed or implied in any forward-looking statements. The risks and uncertainties include, but are not limited to: possible further deterioration in economic conditions in our areas of operation; interest rate risk associated with volatile interest rates and related asset-liability matching risk; liquidity risks; risk of significant non-earning assets, and net credit losses that could occur, particularly in times of weak economic conditions or times of rising interest rates; the failure of or changes to assumptions and estimates underlying the Company’s allowances for credit losses; potential increases in deposit insurance assessments 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. 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:

Julianna Balicka    Angie Yang
EVP & Chief Financial Officer    SVP, Director of Investor Relations & Corporate Communications
213-235-3235    213-251-2219
julianna.balicka@bankofhope.com     angie.yang@bankofhope.com

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

Assets:12/31/20239/30/2023% change12/31/2022% change
Cash and due from banks$1,928,967 $2,500,323 (23)%$506,776 281 %
Investment securities2,408,971 2,260,837 7 %2,243,195 7 %
Federal Home Loan Bank (“FHLB”) stock and other investments61,000 60,433 1 %61,761 (1)%
Loans held for sale, at the lower of cost or fair value3,408 19,502 (83)%49,245 (93)%
Loans receivable13,853,619 14,306,193 (3)%15,403,540 (10)%
Allowance for credit losses(158,694)(158,809)— %(162,359)(2)%
  Net loans receivable13,694,925 14,147,384 (3)%15,241,181 (10)%
Accrued interest receivable61,720 60,665 2 %55,460 11 %
Premises and equipment, net50,611 51,764 (2)%46,859 8 %
Goodwill and intangible assets468,385 468,832 — %470,176 — %
Other assets453,535 506,624 (10)%489,838 (7)%
  Total assets$19,131,522 $20,076,364 (5)%$19,164,491 — %
Liabilities:
Deposits$14,753,753 $15,739,859 (6)%$15,738,801 (6)%
FHLB and Federal Reserve Bank (“FRB”) borrowings1,795,726 1,795,726 — %865,000 108 %
Subordinated debentures and convertible notes, net108,269 107,949 — %323,713 (67)%
Accrued interest payable168,174 166,831 1 %26,668 531 %
Other liabilities184,357 235,575 (22)%190,981 (3)%
  Total liabilities$17,010,279 $18,045,940 (6)%$17,145,163 (1)%
Stockholders’ Equity:
Common stock, $0.001 par value$138 $137 1 %$137 1 %
Additional paid-in capital1,439,963 1,436,769 — %1,431,003 1 %
Retained earnings1,150,547 1,140,870 1 %1,083,712 6 %
Treasury stock, at cost(264,667)(264,667)— %(264,667)— %
Accumulated other comprehensive loss, net(204,738)(282,685)28 %(230,857)11 %
  Total stockholders’ equity2,121,243 2,030,424 4 %2,019,328 5 %
  Total liabilities and stockholders’ equity$19,131,522 $20,076,364 (5)%$19,164,491 — %
Common stock shares - authorized150,000,000 150,000,000 150,000,000 
Common stock shares - outstanding120,126,786 120,026,220 119,495,209 
Treasury stock shares17,382,835 17,382,835 17,382,835 
Table Page 1
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands, except share and per share data)
Three Months EndedTwelve Months Ended
12/31/20239/30/2023% change12/31/2022% change12/31/202312/31/2022% change
  Interest and fees on loans$221,020 $229,937 (4)%$207,958 6 %$892,563 $660,732 35 %
  Interest on investment securities18,398 17,006 8 %14,758 25 %66,063 52,220 27 %
  Interest on cash and deposits at other banks29,029 28,115 3 %942 NM87,361 1,295 NM
  Interest on other investments and FHLB dividends777 735 6 %579 34 %2,891 1,868 55 %
    Total interest income269,224 275,793 (2)%224,237 20 %1,048,878 716,115 46 %
  Interest on deposits 121,305 117,854 3 %63,276 92 %441,231 114,839 284 %
  Interest on borrowings22,003 22,561 (2)%10,440 111 %81,786 22,855 258 %
    Total interest expense143,308 140,415 2 %73,716 94 %523,017 137,694 280 %
Net interest income before provision for credit losses125,916 135,378 (7)%150,521 (16)%525,861 578,421 (9)%
Provision for credit losses1,700 16,800 (90)%8,200 (79)%29,100 9,600 203 %
Net interest income after provision for credit losses124,216 118,578 5 %142,321 (13)%496,761 568,821 (13)%
  Service fees on deposit accounts2,505 2,415 4 %2,159 16 %9,466 8,938 6 %
  Net gains on sales of SBA loans— — — %2,154 (100)%4,097 16,343 (75)%
  Other income and fees6,775 5,890 15 %7,797 (13)%32,014 26,116 23 %
    Total noninterest income9,280 8,305 12 %12,110 (23)%45,577 51,397 (11)%
  Salaries and employee benefits47,364 51,033 (7)%52,694 (10)%207,871 204,719 2 %
  Occupancy7,231 7,149 1 %7,072 2 %28,868 28,267 2 %
  Furniture and equipment5,302 5,625 (6)%5,045 5 %21,378 19,434 10 %
  Data processing and communications2,976 2,891 3 %2,860 4 %11,606 10,683 9 %
  FDIC assessment3,141 3,683 (15)%1,596 97 %13,296 6,248 113 %
  FDIC special assessment3,971 — 100 %— 100 %3,971 — 100 %
  Earned interest credit6,505 6,377 2 %5,002 30 %22,399 10,998 104 %
  Restructuring costs11,076 500 NM— 100 %11,576 — 100 %
  Other noninterest expense12,325 9,615 28 %10,249 20 %43,486 43,821 (1)%
    Total noninterest expense99,891 86,873 15 %84,518 18 %364,451 324,170 12 %
Income before income taxes33,605 40,010 (16)%69,913 (52)%177,887 296,048 (40)%
Income tax provision7,124 9,961 (28)%18,210 (61)%44,214 77,771 (43)%
Net income $26,481 $30,049 (12)%$51,703 (49)%$133,673 $218,277 (39)%
Earnings Per Common Share - Diluted$0.22 $0.25 $0.43 $1.11 $1.81 
Weighted Average Shares Outstanding - Diluted120,761,112 120,374,618 120,102,665 120,393,257 120,472,345 
Table Page 2
Hope Bancorp, Inc.
Selected Financial Data
Unaudited
For the Three Months Ended
For the Twelve Months Ended
Profitability measures (annualized):12/31/20239/30/202312/31/202212/31/202312/31/2022
  ROA 0.54 %0.60 %1.10 %0.67 %1.20 %
  ROA excluding notable items (1)
0.78 %0.61 %1.10 %0.73 %1.20 %
  ROE5.17 %5.78 %10.35 %6.48 %10.73 %
  ROE excluding notable items (1)
7.49 %5.85 %10.35 %7.05 %10.73 %
  ROTCE (1)
6.71 %7.47 %13.54 %8.39 %13.97 %
  ROTCE excluding notable items (1)
9.71 %7.56 %13.54 %9.13 %13.97 %
  Net interest margin2.70 %2.83 %3.36 %2.81 %3.36 %
  Efficiency ratio (not annualized)73.89 %60.46 %51.97 %63.78 %51.47 %
  Efficiency ratio excluding notable items (not annualized) (1)
62.76 %60.11 %51.97 %61.06 %51.47 %
  Noninterest expense / average assets2.04 %1.73 %1.79 %1.84 %1.78 %
  Noninterest expense / average assets, excluding notable items (1)
1.73 %1.72 %1.79 %1.76 %1.78 %
(1) ROA excluding notable items, ROE excluding notable items, ROTCE, ROTCE excluding notable items, efficiency ratio excluding notable items, and noninterest expense / average assets excluding notable items are non-GAAP financial measures. Quantitative reconciliations of the most directly comparable GAAP to non-GAAP financial measures are provided in the accompanying financial information on Table Pages 10 and 11.


Table Page 3
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
Three Months Ended
12/31/20239/30/202312/31/2022
InterestAnnualizedInterestAnnualizedInterestAnnualized
AverageIncome/AverageAverageIncome/AverageAverageIncome/ Average
BalanceExpenseYield/CostBalanceExpenseYield/CostBalanceExpense Yield/Cost
INTEREST EARNING ASSETS:
    Loans, including loans held for sale $14,052,953 $221,020 6.24 %$14,550,106 $229,937 6.27 %$15,393,843 $207,958 5.36 %
    Investment securities2,283,613 18,398 3.20 %2,275,133 17,006 2.97 %2,254,678 14,758 2.60 %
    Interest earning cash and deposits at
    other banks		2,142,147 29,029 5.38 %2,106,469 28,115 5.30 %66,075 942 5.66 %
    FHLB stock and other investments47,587 777 6.48 %47,316 735 6.16 %48,002 579 4.79 %
Total interest earning assets$18,526,300 $269,224 5.77 %$18,979,024 $275,793 5.77 %$17,762,598 $224,237 5.01 %
 
INTEREST BEARING LIABILITIES:
  Deposits:
    Money market, interest bearing demand and
    savings		$4,821,222 $45,662 3.76 %$4,533,430 $38,814 3.40 %$6,030,576 $35,959 2.37 %
    Time deposits6,327,191 75,643 4.74 %6,862,038 79,040 4.57 %4,276,655 27,317 2.53 %
    Total interest bearing deposits11,148,413 121,305 4.32 %11,395,468 117,854 4.10 %10,307,231 63,276 2.44 %
    FHLB and FRB borrowings1,795,740 19,224 4.25 %1,809,322 19,821 4.35 %838,335 6,988 3.31 %
    Subordinated debentures and convertible
    notes		104,198 2,779 10.44 %103,873 2,740 10.32 %319,498 3,452 4.23 %
Total interest bearing liabilities$13,048,351 $143,308 4.36 %$13,308,663 $140,415 4.19 %$11,465,064 $73,716 2.55 %
Noninterest bearing demand deposits4,113,680 4,312,117 5,174,306 
Total funding liabilities/cost of funds$17,162,031 3.31 %$17,620,780 3.16 %$16,639,370 1.76 %
Net interest income/net interest spread$125,916 1.41 %$135,378 1.58 %$150,521 2.46 %
Net interest margin2.70 %2.83 %3.36 %
Cost of deposits:
    Noninterest bearing demand deposits$4,113,680 $— — %$4,312,117 $— — %$5,174,306 $— — %
    Interest bearing deposits11,148,413 121,305 4.32 %11,395,468 117,854 4.10 %10,307,231 63,276 2.44 %
Total deposits$15,262,093 $121,305 3.15 %$15,707,585 $117,854 2.98 %$15,481,537 $63,276 1.62 %

Table Page 4
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
Twelve Months Ended
12/31/202312/31/2022
InterestInterest
AverageIncome/AverageAverageIncome/Average
BalanceExpenseYield/CostBalanceExpenseYield/Cost
INTEREST EARNING ASSETS:
    Loans, including loans held for sale$14,732,166 $892,563 6.06 %$14,634,627 $660,732 4.51 %
    Investment securities2,262,840 66,063 2.92 %2,415,621 52,220 2.16 %
    Interest earning cash and deposits at
    other banks		1,685,462 87,361 5.18 %116,689 1,295 1.11 %
    FHLB stock and other investments47,249 2,891 6.12 %59,624 1,868 3.13 %
Total interest earning assets$18,727,717 $1,048,878 5.60 %$17,226,561 $716,115 4.16 %
INTEREST BEARING LIABILITIES:
  Deposits:
    Money market, interest bearing demand and
    savings		$4,858,919 $161,751 3.33 %$6,517,879 $72,763 1.12 %
    Time deposits6,409,056 279,480 4.36 %3,084,851 42,076 1.36 %
    Total interest bearing deposits11,267,975 441,231 3.92 %9,602,730 114,839 1.20 %
    FHLB and FRB borrowings1,618,292 69,365 4.29 %528,342 11,525 2.18 %
    Subordinated debentures and convertible
    notes		181,125 12,421 6.76 %318,691 11,330 3.51 %
Total interest bearing liabilities$13,067,392 $523,017 4.00 %$10,449,763 $137,694 1.32 %
Noninterest bearing demand deposits4,362,043 5,569,542 
Total funding liabilities/cost of funds$17,429,435 3.00 %$16,019,305 0.86 %
Net interest income/net interest spread$525,861 1.60 %$578,421 2.84 %
Net interest margin2.81 %3.36 %
Cost of deposits:
    Noninterest bearing demand deposits$4,362,043 $— — %$5,569,542 $— — %
    Interest bearing deposits11,267,975 441,231 3.92 %9,602,730 114,839 1.20 %
Total deposits$15,630,018 $441,231 2.82 %$15,172,272 $114,839 0.76 %


Table Page 5
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
 Three Months Ended Twelve Months Ended
AVERAGE BALANCES:12/31/20239/30/2023% change12/31/2022% change12/31/202312/31/2022% change
Loans, including loans held for sale $14,052,953 $14,550,106 (3)%$15,393,843 (9)%$14,732,166 $14,634,627 1 %
Investment securities2,283,613 2,275,133 — %2,254,678 1 %2,262,840 2,415,621 (6)%
Interest earning cash and deposits at other banks2,142,147 2,106,469 2 %66,075 NM1,685,462 116,689 NM
Interest earning assets18,526,300 18,979,024 (2)%17,762,598 4 %18,727,717 17,226,561 9 %
Goodwill and intangible assets468,622 469,079 — %470,442 — %469,298 471,176 — %
Total assets19,600,942 20,059,304 (2)%18,863,726 4 %19,806,163 18,231,609 9 %
Noninterest bearing demand deposits4,113,680 4,312,117 (5)%5,174,217 (20)%4,362,043 5,569,534 (22)%
Interest bearing deposits11,148,413 11,395,468 (2)%10,307,231 8 %11,267,975 9,602,730 17 %
Total deposits15,262,093 15,707,585 (3)%15,481,537 (1)%15,630,180 15,172,272 3 %
Interest bearing liabilities13,048,351 13,308,663 (2)%11,465,064 14 %13,067,392 10,449,763 25 %
Stockholders’ equity2,048,335 2,079,092 (1)%1,997,460 3 %2,061,665 2,034,027 1 %
LOAN PORTFOLIO COMPOSITION: 12/31/20239/30/2023% change12/31/2022% change
Commercial real estate (“CRE”) loans$8,797,884 $8,972,886 (2)%$9,414,580 (7)%
Commercial and industrial (“C&I”) loans4,135,044 4,450,341 (7)%5,109,532 (19)%
Residential mortgage and other loans920,691 882,966 4 %879,428 5 %
 Loans receivable13,853,619 14,306,193 (3)%15,403,540 (10)%
Allowance for credit losses(158,694)(158,809)— %(162,359)(2)%
    Loans receivable, net$13,694,925 $14,147,384 (3)%$15,241,181 (10)%
CRE LOANS BY PROPERTY TYPE:12/31/20239/30/2023% change12/31/2022% change
Multi-tenant retail$1,704,337 $1,745,430 (2)%$1,866,434 (9)%
Hotels/motels796,267 826,732 (4)%952,579 (16)%
Gas stations and car washes1,030,888 1,037,621 (1)%1,054,720 (2)%
Mixed-use facilities870,664 813,571 7 %848,417 3 %
Industrial warehouses1,226,780 1,254,643 (2)%1,294,893 (5)%
Multifamily1,226,384 1,234,934 (1)%1,295,644 (5)%
Single-tenant retail662,705 671,921 (1)%718,977 (8)%
Office401,821 454,695 (12)%473,459 (15)%
All other878,038 933,339 (6)%909,457 (3)%
  Total CRE loans$8,797,884 $8,972,886 (2)%$9,414,580 (7)%
DEPOSIT COMPOSITION:12/31/20239/30/2023% change12/31/2022% change
Noninterest bearing demand deposits$3,914,967 $4,249,788 (8)%$4,849,493 (19)%
Money market, interest bearing demand, and savings4,872,029 4,855,683 — %5,899,248 (17)%
Time deposits 5,966,757 6,634,388 (10)%4,990,060 20 %
  Total deposits$14,753,753 $15,739,859 (6)%$15,738,801 (6)%
Table Page 6
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)

CAPITAL & CAPITAL RATIOS:12/31/20239/30/202312/31/2022
Total stockholders’ equity$2,121,243 $2,030,424 $2,019,328 
Total capital$2,120,157 $2,105,754 $2,041,319 
Common equity tier 1 ratio12.28 %11.67 %10.55 %
Tier 1 capital ratio 12.96 %12.32 %11.15 %
Total capital ratio 13.92 %13.23 %11.97 %
Leverage ratio 10.11 %9.83 %10.15 %
Total risk weighted assets$15,230,302 $15,912,792 $17,049,410 
Book value per common share$17.66 $16.92 $16.90 
TCE per share (1)
$13.76 $13.01 $12.96 
TCE ratio (1)
8.86 %7.96 %8.29 %
(1) TCE per share and TCE ratio are non-GAAP financial measures. Quantitative reconciliations of the most directly comparable GAAP to non-GAAP financial measures are provided in the accompanying financial information on Table Page 10.
Three Months EndedTwelve Months Ended
ALLOWANCE FOR CREDIT LOSSES CHANGES:12/31/20239/30/20236/30/20233/31/202312/31/202212/31/202312/31/2022
Balance at beginning of period$158,809 $172,996 $163,544 $162,359 $160,561 $162,359 $140,550 
ASU 2022-02 day 1 adoption impact— — — (407)— (407)— 
Provision for credit losses1,700 16,800 8,900 1,700 8,200 29,100 9,600 
Recoveries306 2,938 1,531 387 3,222 5,162 24,598 
Charge offs (2,121)(33,925)(979)(495)(9,624)(37,520)(12,389)
Balance at end of period$158,694 $158,809 $172,996 $163,544 $162,359 $158,694 $162,359 
12/31/20239/30/20236/30/20233/31/202312/31/2022
Allowance for unfunded loan commitments$3,843 $3,143 $3,081 $2,971 $1,351 
Three Months EndedTwelve Months Ended
12/31/20239/30/20236/30/20233/31/202312/31/202212/31/202312/31/2022
Provision for credit losses$1,700 $16,800 $8,900 $1,700 $8,200 $29,100 $9,600 
Provision for unfunded loan commitments
(in noninterest expense)		700 62 110 1,620 120 2,492 250 
Total provision expense$2,400 $16,862 $9,010 $3,320 $8,320 $31,592 $9,850 
Table Page 7
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)

Three Months EndedTwelve Months Ended
NET LOAN CHARGE OFFS (RECOVERIES):12/31/20239/30/20236/30/20233/31/202312/31/202212/31/202312/31/2022
CRE loans$1,560 $(2,227)$438 $(109)$2,022 $(338)$(14,895)
C&I loans138 33,145 (1,091)196 4,174 32,388 2,299 
Residential mortgage and other loans117 69 101 21 206 308 387 
Net loan charge offs (recoveries)$1,815 $30,987 $(552)$108 $6,402 $32,358 $(12,209)
Net charge offs (recoveries)/average loans receivable (annualized)0.05 %0.85 %(0.01)%— %0.17 %0.22 %(0.08)%

NONPERFORMING ASSETS:12/31/20239/30/20236/30/20233/31/202312/31/2022
Loans on nonaccrual status (1)
$45,204 $39,081 $61,252 $78,861 $49,687 
Accruing delinquent loans past due 90 days or more261 21,579 15,182 364 401 
Accruing troubled debt restructured loans (2)
— — — — 16,931 
Total nonperforming loans45,465 60,660 76,434 79,225 67,019 
Other real estate owned (“OREO”)63 1,043 938 938 2,418 
Total nonperforming assets$45,528 $61,703 $77,372 $80,163 $69,437 
Nonperforming assets/total assets0.24 %0.31 %0.38 %0.39 %0.36 %
Nonperforming assets/loans receivable & OREO0.33 %0.43 %0.52 %0.53 %0.45 %
Nonperforming assets/total capital2.15 %3.04 %3.74 %3.89 %3.44 %
Nonperforming loans/loans receivable0.33 %0.42 %0.51 %0.53 %0.44 %
Nonaccrual loans/loans receivable0.33 %0.27 %0.41 %0.52 %0.32 %
Allowance for credit losses/loans receivable1.15 %1.11 %1.16 %1.09 %1.05 %
Allowance for credit losses/nonperforming loans349.05 %261.80 %226.33 %206.43 %242.26 %
(1) Excludes delinquent SBA loans that are guaranteed and currently in liquidation totaling $11.4 million, $12.1 million, $11.9 million, $7.6 million, and $9.8 million, at December 31, 2023, September 30, 2023, June 30, 2023, March 31, 2023, and December 31, 2022, respectively.
(2) The Company adopted ASU 2022-02 in 2023, which eliminated the concept of TDR from GAAP; therefore, accruing TDR loans are no longer included in nonperforming loans.
NONACCRUAL LOANS BY TYPE:12/31/20239/30/20236/30/20233/31/202312/31/2022
CRE loans$33,932 $26,687 $29,270 $44,376 $33,915 
C&I loans5,013 4,234 23,042 26,191 5,620 
Residential mortgage and other loans6,259 8,160 8,940 8,294 10,152 
   Total nonaccrual loans$45,204 $39,081 $61,252 $78,861 $49,687 
Table Page 8
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
ACCRUING DELINQUENT LOANS 30-89 DAYS PAST DUE:12/31/20239/30/20236/30/20233/31/202312/31/2022
30 - 59 days past due$2,833 $2,906 $9,295 $7,662 $7,049 
60 - 89 days past due1,289 506 178 249 2,243 
   Total accruing delinquent loans 30-89 days past due$4,122 $3,412 $9,473 $7,911 $9,292 
ACCRUING DELINQUENT LOANS 30-89 DAYS PAST DUE BY TYPE:12/31/20239/30/20236/30/20233/31/202312/31/2022
CRE loans$2,160 $611 $7,339 $3,652 $4,115 
C&I loans1,643 1,168 990 419 3,300 
Residential mortgage and other loans319 1,633 1,144 3,840 1,877 
   Total accruing delinquent loans 30-89 days past due$4,122 $3,412 $9,473 $7,911 $9,292 
CRITICIZED LOANS:12/31/20239/30/20236/30/20233/31/202312/31/2022
Special mention loans$178,992 $186,600 $210,806 $166,472 $157,263 
Substandard loans143,449 174,161 134,203 138,224 104,073 
   Total criticized loans$322,441 $360,761 $345,009 $304,696 $261,336 
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. Reconciliations of the most directly comparable GAAP to non-GAAP financial measures utilized by management are provided below.
Three Months EndedTwelve Months Ended
RETURN ON AVERAGE TANGIBLE COMMON EQUITY12/31/20239/30/202312/31/202212/31/202312/31/2022
Average stockholders’ equity$2,048,335 $2,079,092 $1,997,460 $2,061,665 $2,034,027 
Less: Average goodwill and core deposit intangible assets, net(468,622)(469,079)(470,442)(469,298)(471,176)
Average TCE$1,579,713 $1,610,013 $1,527,018 $1,592,367 $1,562,851 
Net income$26,481 $30,049 $51,703 $133,673 $218,277 
ROTCE (annualized)6.71 %7.47 %13.54 %8.39 %13.97 %
TANGIBLE COMMON EQUITY12/31/20239/30/202312/31/2022
Total stockholders’ equity$2,121,243 $2,030,424 $2,019,328 
Less: Goodwill and core deposit intangible assets, net(468,385)(468,832)(470,176)
TCE$1,652,858 $1,561,592 $1,549,152 
Total assets$19,131,522 $20,076,364 $19,164,491 
Less: Goodwill and core deposit intangible assets, net(468,385)(468,832)(470,176)
Tangible assets$18,663,137 $19,607,532 $18,694,315 
TCE ratio8.86 %7.96 %8.29 %
Common shares outstanding120,126,786 120,026,220 119,495,209 
TCE per share$13.76 $13.01 $12.96 
Table Page 10
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands, except share and per share data)

Three Months EndedTwelve Months Ended
PROFITABILITY RATIOS EXCLUDING NOTABLE ITEMS12/31/20239/30/202312/31/202212/31/202312/31/2022
Net income$26,481 $30,049 $51,703 $133,673 $218,277 
Notable items:
FDIC special assessment expense3,971 — — 3,971 — 
Restructuring costs11,076 500 — 11,576 — 
Total notable items15,047 500 — 15,547 — 
Tax provision3,190 124 — 3,864 — 
Less: total notable items, net of tax provision$11,857 $376 $— $11,683 $— 
Net income excluding notable items$38,338 $30,425 $51,703 $145,356 $218,277 
Diluted common shares120,761,112 120,374,618 120,102,665 120,393,257 120,472,345 
EPS excluding notable items$0.32 $0.25 $0.43 $1.21 $1.81 
Average Assets19,600,942 20,059,304 18,863,726 19,806,163 18,231,609 
ROA excluding notable items0.78 %0.61 %1.10 %0.73 %1.20 %
Average Equity2,048,335 2,079,092 1,997,460 2,061,665 2,034,027 
ROE excluding notable items7.49 %5.85 %10.35 %7.05 %10.73 %
Average TCE$1,579,713 $1,610,013 $1,527,018 $1,592,367 $1,562,851 
ROTCE excluding notable items9.71 %7.56 %13.54 %9.13 %13.97 %
Three Months EndedTwelve Months Ended
EFFICIENCY RATIOS EXCLUDING NOTABLE ITEMS12/31/20239/30/202312/31/202212/31/202312/31/2022
Noninterest expense$99,891 $86,873 $84,518 $364,451 $324,170 
Less: notable items:
FDIC special assessment expense(3,971)— — (3,971)— 
Restructuring costs(11,076)(500)— (11,576)— 
Noninterest expense excluding notable items$84,844 $86,373 $84,518 $348,904 $324,170 
Revenue$135,196 $143,683 $162,631 $571,438 $629,818 
Efficiency ratio excluding notable items62.76 %60.11 %51.97 %61.06 %51.47 %
Average assets19,600,942 20,059,304 18,863,726 19,806,163 18,231,609 
Noninterest expense / average assets, excluding notable items1.73 %1.72 %1.79 %1.76 %1.78 %
Table Page 11