EX-99.1 2 hope-03312024ex991financia.htm EX-99.1 Document

hopebancorp5a03a.jpg
News Release


HOPE BANCORP REPORTS 2024 FIRST QUARTER FINANCIAL RESULTS;
SIGNS DEFINITIVE MERGER WITH TERRITORIAL BANCORP

LOS ANGELES - April 29, 2024 - Hope Bancorp, Inc. (“Company”) (NASDAQ: HOPE), the holding company of Bank of Hope (“Bank”), today reported unaudited financial results for its first quarter ended March 31, 2024. For the three months ended March 31, 2024, net income totaled $25.9 million, or $0.21 per diluted common share. This compares with net income of $26.5 million, or $0.22 per diluted common share, in the fourth quarter of 2023.
“We are pleased with the progress we are making in our strategic transformation, realigning our structure around lines of business and products,” stated Kevin S. Kim, Chairman, President and Chief Executive Officer. “All our business lines exceeded their deposit goals for the first quarter of 2024; growth in customer deposits offset a planned reduction of brokered time deposits, resulting in stable balances quarter-over-quarter. Our first quarter financial results demonstrated the benefits of our more efficient structure with noninterest expenses, excluding notable items(1), decreasing 2% from the preceding fourth quarter of 2023. All our capital ratios increased quarter-over-quarter, with our tangible common equity ratio(2) rising to 9.33% and our total capital ratio rising to 14.19%, both as of March 31, 2024.

“The strength of our balance sheet positioned us well to capitalize on strategic opportunities in the market. This morning, we announced the signing of a definitive merger agreement with Territorial Bancorp, the stock holding company of Territorial Savings Bank, a $2.2 billion savings bank headquartered in Hawai‘i,” continued Kim. “Territorial has a stable, low-cost core deposit base, excellent asset quality, and provides us an entry point to the attractive Hawai‘i market, which has a large Asian American and Pacific Islander population. Moreover, the combination with Territorial would more than double the size of Hope’s residential mortgage portfolio. We expect this transaction, upon completion, to be immediately accretive to earnings, sustainably strengthening our profitability while further diversifying our franchise.”

Territorial Bancorp Merger Agreement

As concurrently announced in a joint news release issued today, the Company and Territorial Bancorp Inc. (Nasdaq: TBNK) (“Territorial”) signed a definitive merger agreement, which is expected to create the largest regional bank catering to multi-ethnic customers with full-service branches across the continental United States and Hawai‘i.

Under the terms of the merger agreement, following the completion of the transaction, Territorial shareholders will receive a fixed exchange ratio of 0.8048 shares of the Company’s common stock in exchange for each share of Territorial common stock they own, in a 100% stock-for-stock transaction valued at approximately $78.6 million. Based on the closing price of the Company’s common stock on April 26, 2024, this represents a value of $8.82 per share of Territorial common stock, although the actual value will be determined upon transaction closing. Upon completion of the transaction, it is expected that the Company’s shareholders will own approximately 94.4% of the combined entity, and Territorial’s shareholders will own approximately 5.6%, with the actual percentages being determined as of the transaction closing date. The transaction is intended to qualify as a tax-free reorganization for Territorial shareholders.

Upon completion of the merger, the Company intends to preserve and build upon the 100-plus year legacy of the Territorial Savings Bank brand name, culture and commitment to its local communities. Accordingly, the legacy Territorial franchise in Hawai‘i will continue to do business under the Territorial Savings Bank brand, as a trade name of Bank of Hope.

(1)     Noninterest expense, excluding the FDIC special assessment, restructuring charges and merger-related expenses (also referred to collectively as the “notable items”), is a non-GAAP financial measure. Quantitative reconciliations of the most directly comparable GAAP to non-GAAP financial measures are provided in the accompanying financial information on Table Pages 9 and 10.
(2)    Tangible common equity (“TCE”) ratio is a non-GAAP financial measure. Quantitative reconciliations of the most directly comparable GAAP to non-GAAP financial measures are provided in the accompanying financial information on Table Pages 9 and 10.
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The Boards of Directors of both companies have approved the transaction. The transaction is expected to close by year-end 2024, subject to regulatory approvals, the approval of Territorial shareholders, and the satisfaction of other customary closing conditions.

Operating Results for the 2024 First Quarter

Net income and earnings per share. Net income for the 2024 first quarter was $25.9 million, or $0.21 per diluted common share, compared with $26.5 million, or $0.22 per diluted common share, for the immediately preceding fourth quarter. Notable items impacting net income for the 2024 first quarter included $752,000 of merger-related expenses, after tax, related to the Company’s proposed acquisition of Territorial announced today; an accrual of $721,000, after tax, for an incremental Federal Deposit Insurance Corporation (“FDIC”) special assessment; and restructuring costs of $103,000, after tax, related to the Company’s strategic reorganization announced in the 2023 fourth quarter. In the immediately preceding fourth quarter, notable items impacting net income were $8.7 million of restructuring costs, after tax, and $3.1 million, after tax, accrued for an FDIC special assessment. Excluding these notable items, net income(3) for the 2024 first quarter was $27.4 million, compared with $38.3 million for the fourth quarter of 2023. Earnings per diluted common share excluding notable items(3) amounted to $0.23 for the three months ended March 31, 2024, compared with $0.32 for the three months ended December 31, 2023.

Net interest income and net interest margin. Net interest income before provision for credit losses for the 2024 first quarter totaled $115.0 million, compared with $125.9 million in the immediately preceding fourth quarter, a decrease of 9% quarter-over-quarter. First quarter 2024 net interest margin contracted 15 basis points to 2.55% from 2.70% in the 2023 fourth quarter. The linked-quarter change in net interest income and net interest margin largely reflected a decline in the average balance of loans and a higher cost of interest bearing deposits, partially offset by a decrease in the average balance of time deposits and wholesale borrowings.

Noninterest income. Noninterest income for the 2024 first quarter totaled $8.3 million, compared with $9.3 million in the immediately preceding fourth quarter. Growth in deposit account service fees was offset by reductions in other income and fees. The Company continued to retain SBA 7(a)loan production on its balance sheet and did not sell any loans in the 2024 first quarter.

Noninterest expense. Noninterest expense for the 2024 first quarter was $84.8 million, including $1.0 million of merger-related expenses, an incremental accrual of $1.0 million for the FDIC special assessment, and $143,000 of restructuring-related costs, all on a pre-tax basis. For the immediately preceding fourth quarter, noninterest expense was $99.2 million, including $11.1 million of pre-tax restructuring costs and $4.0 million (pre-tax) accrued for the FDIC special assessment.

Excluding notable items, noninterest expense for the 2024 first quarter was $82.7 million, down 2% compared with $84.1 million for the 2023 fourth quarter, and down 7% compared with $88.7 million for the 2023 first quarter. First quarter 2024 salaries and employee benefits expense increased 1% quarter-over-quarter to $47.8 million, up from $47.4 million in the 2023 fourth quarter, reflecting seasonal increases in payroll taxes and vacation accruals, partially offset by reduced salary and benefits costs following the restructuring in the fourth quarter of 2023. Year-over-year, salaries and employee benefits expense decreased 16% from $57.2 million in the 2023 first quarter. Occupancy expenses decreased 6% quarter-over-quarter and 10% year-over-year, reflecting branch rationalization.

Tax rate. The effective tax rate for the 2024 first quarter was 27.9%, compared with 24.9% for the full year 2023. The provision for income taxes in the 2024 first quarter was $10.0 million and included $1.1 million of true-up adjustments, which are not expected to recur. For the full year 2024, the Company expects the effective tax rate to be approximately 26%.

(3) Net income excluding 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 9 and 10.
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Balance Sheet Summary
Cash and investment securities. At March 31, 2024, cash and cash equivalents totaled $1.19 billion, compared with $1.93 billion at December 31, 2023. The decrease primarily reflected the payoff of $1.00 billion of the Company’s Bank Term Funding Program (“BTFP”) borrowings with existing cash on March 19, 2024. At March 31, 2023, cash and equivalents were $2.21 billion. Investment securities totaled $2.28 billion at March 31, 2024, $2.41 billion at December 31, 2023, and $2.23 billion at March 31, 2023.

Loans. Loans receivable of $13.72 billion at March 31, 2024, decreased 1% from $13.85 billion at December 31, 2023, reflecting declines in commercial and commercial real estate loans, partially offset by strong growth in residential mortgage loans.

The following table sets forth the loan portfolio composition at March 31, 2024, December 31, 2023, and March 31, 2023:
(dollars in thousands) (unaudited)3/31/202412/31/20233/31/2023
BalancePercentageBalancePercentageBalancePercentage
Commercial real estate (“CRE”) loans$8,707,673 63.5 %$8,797,884 63.6 %$9,373,529 62.2 %
Commercial and industrial (“C&I”) loans4,041,063 29.5 %4,135,044 29.8 %4,821,270 32.0 %
Residential mortgage and other loans970,442 7.0 %920,691 6.6 %870,050 5.8 %
    Loans receivable$13,719,178 100.0 %$13,853,619 100.0 %$15,064,849 100.0 %

Deposits. Total deposits were stable quarter-over-quarter with total deposits of $14.75 billion at March 31, 2024 and December 31, 2023, reflecting growth in customer deposits that offset a planned reduction of brokered deposits. During the first quarter of 2024, the Company reduced brokered time deposits by $182.7 million, or 13% from December 31, 2023.

The following table sets forth the deposit composition at March 31, 2024, December 31, 2023, and March 31, 2023:
(dollars in thousands) (unaudited)3/31/202412/31/20233/31/2023
BalancePercentageBalancePercentageBalancePercentage
Noninterest bearing demand deposits$3,652,592 24.7 %$3,914,967 26.5 %$4,504,621 28.4 %
Money market, interest bearing demand, and savings deposits5,313,064 36.0 %4,872,029 33.0 %4,563,702 28.9 %
Time deposits 5,787,761 39.3 %5,966,757 40.5 %6,759,886 42.7 %
Total deposits$14,753,417 100.0 %$14,753,753 100.0 %$15,828,209 100.0 %
  Gross loan-to-deposit ratio93.0 %93.9 %96.0 %

Borrowings. Federal Home Loan Bank and Federal Reserve Bank borrowings totaled $795.6 million at March 31, 2024, $1.80 billion at December 31, 2023, and $2.13 billion at March 31, 2023. The quarter-over-quarter reduction reflects the payoff of $1.00 billion of the Company’s BTFP borrowings during the 2024 first quarter.

Credit Quality and Allowance for Credit Losses
Nonperforming assets. Nonperforming assets totaled $106.8 million, or 0.59% of total assets, at March 31, 2024. This compares with nonperforming assets of $45.5 million, or 0.24% of total assets, at December 31, 2023, and $80.2 million, or 0.39% of total assets, at March 31, 2023. The quarter-over-quarter increase in nonperforming assets largely reflects one relationship consisting of three commercial real estate loans that were accruing delinquent loans past due 90 days or more at March 31, 2024. These loans are fully secured and sales agreements are in place for the collateral properties.
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The following table sets forth the components of nonperforming assets at March 31, 2024, December 31, 2023, and March 31, 2023:
(dollars in thousands) (unaudited)3/31/202412/31/20233/31/2023
Loans on nonaccrual status (1)
$59,526 $45,204 $78,861 
Accruing delinquent loans past due 90 days or more
47,290 261 364 
Total nonperforming loans106,816 45,465 79,225 
Other real estate owned— 63 938 
Total nonperforming assets$106,816 $45,528 $80,163 
Nonperforming assets/total assets0.59 %0.24 %0.39 %
_____________________________________
(1)     Excludes delinquent SBA loans that are guaranteed and currently in liquidation totaling $10.9 million, $11.4 million and $7.6 million at March 31, 2024, December 31, 2023, and March 31, 2023, respectively.

Net charge offs and provision for credit losses. The Company recorded net charge offs of $3.5 million in the 2024 first quarter, equivalent to 0.10%, annualized, of average loans. This compares with net charge offs of $1.8 million, or 0.05%, annualized, of average loans in the immediately preceding fourth quarter.

The following table sets forth net charge offs and annualized net charge off ratios for the three months ended March 31, 2024, December 31, 2023, and March 31, 2023:
For the Three Months Ended
(dollars in thousands) (unaudited)3/31/202412/31/20233/31/2023
Net charge offs$3,536 $1,815 $108 
Net charge offs/average loans receivable (annualized)0.10 %0.05 %— %

For the 2024 first quarter, the Company recorded a provision for credit losses of $2.6 million. This compares with a provision for credit losses of $2.4 million in the immediately preceding fourth quarter.

Allowance for credit losses. The allowance for credit losses totaled $158.8 million at March 31, 2024, compared with $158.7 million at December 31, 2023. The allowance coverage ratio was 1.16% of loans receivable at March 31, 2024, up one basis point from 1.15% at December 31, 2023. Year-over-year, allowance coverage of loans receivable increased from 1.09% at March 31, 2023.

The following table sets forth the allowance for credit losses and the coverage ratios at March 31, 2024, December 31, 2023, and March 31, 2023:

(dollars in thousands) (unaudited)3/31/202412/31/20233/31/2023
Allowance for credit losses$158,758 $158,694 $163,544 
Allowance for credit losses/loans receivable1.16 %1.15 %1.09 %

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Capital

The Company’s capital ratios are strong and all regulatory risk-based capital ratios expanded quarter-over-quarter and year-over-year. At March 31, 2024, 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 March 31, 2024, December 31, 2023, and March 31, 2023:
(unaudited)
3/31/202412/31/20233/31/2023Minimum Guideline for “Well-Capitalized”
Common Equity Tier 1 Capital Ratio12.47%12.28%10.75%6.50%
Tier 1 Capital Ratio13.17%12.96%11.36%8.00%
Total Capital Ratio14.19%13.92%12.25%10.00%
Leverage Ratio10.42%10.11%10.13%5.00%

At March 31, 2024, total stockholders’ equity was $2.11 billion, or $17.51 per common share. Quarter-over-quarter, stockholders’ equity decreased slightly by $9.0 million, primarily reflecting an adverse change in accumulated other comprehensive income (“AOCI”), partially offset by growth in retained earnings. Tangible common equity (“TCE”) per share(1) was $13.63 at March 31, 2024, compared with $13.76 at December 31, 2023, and the TCE ratio(1) was 9.33%, up 47 basis points quarter-over-quarter.

The following table sets forth the TCE per share and the TCE ratio at March 31, 2024, December 31, 2023, and March 31, 2023:
(unaudited)3/31/202412/31/20233/31/2023
TCE per share (1)
$13.63$13.76$13.26
TCE ratio (1)
9.33%8.86%7.91%
__________________
(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 9 and 10.

Investor Conference Call

The Company previously announced that it will host an investor conference call on Monday, April 29, 2024, at 9:30 a.m. Pacific Time / 12:30 p.m. Eastern Time to review unaudited financial results for its first quarter ended March 31, 2024. 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, along with a presentation regarding the proposed Territorial merger, 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 at least 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 May 6, 2024, replay access code 4889007.

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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 9 and 10.

About Hope Bancorp, Inc.

Hope Bancorp, Inc. (NASDAQ: HOPE) is the holding company of Bank of Hope, the first and only super regional Korean American bank in the United States with $18.09 billion in total assets as of March 31, 2024. 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 48 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 www.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.

About Territorial Bancorp Inc.

Territorial Bancorp Inc. (NASDAQ: TBNK), headquartered in Honolulu, Hawai‘i, is the stock holding company for Territorial Savings Bank. Territorial Savings Bank is a state-chartered savings bank which was originally chartered in 1921 by the Territory of Hawai‘i. Territorial Savings Bank conducts business from its headquarters in Honolulu, Hawai‘i and has 28 branch offices in the state of Hawai‘i. For additional information, please visit Territorial’s website at: https://www.tsbhawaii.bank. By including the foregoing website address link, Territorial does not intend to and shall not be deemed to incorporate by reference any material contained or accessible therein.

Additional Information and Where to Find It

In connection with the proposed merger, Hope Bancorp, Inc. will file with the Securities and Exchange Commission (“SEC”) a Registration Statement on Form S-4, which will include a Proxy Statement of Territorial Bancorp Inc., that also constitutes a prospectus of Hope Bancorp, Inc. Territorial Bancorp shareholders are encouraged to read the Registration Statement and the Proxy Statement/Prospectus regarding the merger when it becomes available and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they will contain important information about the proposed merger. Territorial Bancorp shareholders will be able to obtain a free copy of the Proxy Statement/Prospectus, as well as other filings containing information about Hope Bancorp and Territorial Bancorp at the SEC’s Internet site (www.sec.gov). Territorial Bancorp shareholders will also be able to obtain these documents, free of charge, from Territorial Bancorp at https://www.tsbhawaii.bank/tsb/investor-relations/.

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Participants in Solicitation

Territorial Bancorp and its directors, executive officers, management and employees may be deemed to be participants in the solicitation of proxies in respect of the merger. Information concerning Territorial Bancorp’s participants is set forth in the Proxy Statement, dated April 16, 2024, for Territorial Bancorp’s 2024 annual meeting of stockholders as filed with the SEC on Schedule 14A. Additional information regarding the interests of participants of Territorial Bancorp in the solicitation of proxies in respect of the merger will be included in the Registration Statement and Proxy Statement/Prospectus to be filed with the SEC.

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 Territorial Bancorp’s low-cost core deposit base, strengthening of profitability, diversification of franchise, and statements about the proposed transaction being immediately accretive. 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, Hope Bancorp and Territorial Bancorp each claims the protection provided for in the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties. Hope Bancorp’s actual results, performance or achievements may differ significantly from the results, performance or achievements expressed or implied in any forward-looking statements. The closing of the proposed transaction is subject to regulatory approvals, the approval of Territorial Bancorp shareholders, and other customary closing conditions. There is no assurance that such conditions will be met or that the proposed merger will be consummated within the expected time frame, or at all. If the transaction is consummated, factors that may cause actual outcomes to differ from what is expressed or forecasted in these forward-looking statements include, among things: difficulties and delays in integrating Hope Bancorp and Territorial Bancorp and achieving anticipated synergies, cost savings and other benefits from the transaction; higher than anticipated transaction costs; deposit attrition, operating costs, customer loss and business disruption following the merger, including difficulties in maintaining relationships with employees and customers, may be greater than expected; and required governmental approvals of the merger may not be obtained on its proposed terms and schedule, or without regulatory constraints that may limit growth. Other risks and uncertainties include, but are not limited to: possible further deterioration in economic conditions in Hope Bancorp’s areas of operation or elsewhere; 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 Hope Bancorp’s allowances for credit losses; potential increases in deposit insurance assessments and regulatory risks associated with current and future regulations; the outcome of any legal proceedings that may be instituted against Hope Bancorp; the risk that any announcements relating to the proposed transaction could have adverse effects on the market price of the common stock of Hope Bancorp; and diversion of management’s attention from ongoing business operations and opportunities. For additional information concerning these and other risk factors, see Hope Bancorp’s most recent Annual Report on Form 10-K. Hope Bancorp 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:3/31/202412/31/2023% change3/31/2023% change
Cash and due from banks$1,185,296 $1,928,967 (39)%$2,212,637 (46)%
Investment securities2,277,990 2,408,971 (5)%2,231,989 2 %
Federal Home Loan Bank (“FHLB”) stock and other investments61,175 61,000 — %59,962 2 %
Loans held for sale, at the lower of cost or fair value2,763 3,408 (19)%125,268 (98)%
Loans receivable13,719,178 13,853,619 (1)%15,064,849 (9)%
Allowance for credit losses(158,758)(158,694)— %(163,544)(3)%
Net loans receivable13,560,420 13,694,925 (1)%14,901,305 (9)%
Accrued interest receivable60,316 61,720 (2)%57,021 6 %
Premises and equipment, net50,541 50,611 — %47,887 6 %
Goodwill and intangible assets467,984 468,385 — %469,728 — %
Other assets421,729 453,535 (7)%463,087 (9)%
Total assets$18,088,214 $19,131,522 (5)%$20,568,884 (12)%
Liabilities:
Deposits$14,753,417 $14,753,753 — %$15,828,209 (7)%
FHLB and Federal Reserve Bank (“FRB”) borrowings795,634 1,795,726 (56)%2,130,000 (63)%
Subordinated debentures and convertible notes, net108,592 108,269 — %313,533 (65)%
Accrued interest payable122,467 168,174 (27)%53,818 128 %
Other liabilities195,834 184,357 6 %184,744 6 %
Total liabilities$15,975,944 $17,010,279 (6)%$18,510,304 (14)%
Stockholders’ Equity:
Common stock, $0.001 par value$138 $138 — %$137 1 %
Additional paid-in capital1,439,484 1,439,963 — %1,430,977 1 %
Retained earnings1,159,593 1,150,547 1 %1,106,390 5 %
Treasury stock, at cost(264,667)(264,667)— %(264,667)— %
Accumulated other comprehensive loss, net(222,278)(204,738)(9)%(214,257)(4)%
Total stockholders’ equity2,112,270 2,121,243 — %2,058,580 3 %
Total liabilities and stockholders’ equity$18,088,214 $19,131,522 (5)%$20,568,884 (12)%
Common stock shares - authorized150,000,000 150,000,000 150,000,000 
Common stock shares - outstanding120,610,029 120,126,786 119,865,732 
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 Ended
3/31/202412/31/2023% change3/31/2023% change
Interest and fees on loans$213,626 $221,020 (3)%$215,935 (1)%
Interest on investment securities18,049 18,398 (2)%15,125 19 %
Interest on cash and deposits at other banks27,183 29,029 (6)%4,922 452%
Interest on other investments and FHLB dividends816 777 5 %695 17 %
Total interest income259,674 269,224 (4)%236,677 10 %
Interest on deposits 124,033 121,305 2 %92,348 34 %
Interest on borrowings20,594 22,003 (6)%10,451 97 %
Total interest expense144,627 143,308 1 %102,799 41 %
Net interest income before provision115,047 125,916 (9)%133,878 (14)%
Provision for credit losses2,600 2,400 8 %3,320 (22)%
Net interest income after provision112,447 123,516 (9)%130,558 (14)%
Service fees on deposit accounts2,587 2,505 3 %2,221 16 %
Net gains on sales of SBA loans— — — %2,225 (100)%
Other income and fees5,699 6,775 (16)%6,532 (13)%
Total noninterest income8,286 9,280 (11)%10,978 (25)%
Salaries and employee benefits47,836 47,364 1 %57,169 (16)%
Occupancy6,786 7,231 (6)%7,521 (10)%
Furniture and equipment5,340 5,302 1 %5,058 6 %
Data processing and communications2,990 2,976 — %2,822 6 %
FDIC assessment2,926 3,141 (7)%1,781 64 %
FDIC special assessment1,000 3,971 (75)%— 100 %
Earned interest credit5,834 6,505 (10)%4,427 32 %
Restructuring costs143 11,076 (99)%— 100 %
Merger related costs1,044 — 100 %— 100 %
Other noninterest expense10,940 11,625 (6)%9,956 10 %
Total noninterest expense84,839 99,191 (14)%88,734 (4)%
Income before income taxes35,894 33,605 7 %52,802 (32)%
Income tax provision10,030 7,124 41 %13,681 (27)%
Net income $25,864 $26,481 (2)%$39,121 (34)%
Earnings Per Common Share - Diluted$0.21 $0.22 $0.33 
Weighted Average Shares Outstanding - Diluted121,020,292 120,761,112 120,242,295 
Table Page 2
Hope Bancorp, Inc.
Selected Financial Data
Unaudited
For the Three Months Ended
Profitability measures (annualized):3/31/202412/31/20233/31/2023
ROA 0.54 %0.54 %0.82 %
ROA excluding notable items (1)
0.57 %0.78 %0.82 %
ROE4.87 %5.17 %7.65 %
ROE excluding notable items (1)
5.16 %7.49 %7.65 %
ROTCE (1)
6.24 %6.71 %9.93 %
ROTCE excluding notable items (1)
6.62 %9.71 %9.93 %
Net interest margin2.55 %2.70 %3.02 %
Efficiency ratio (not annualized)68.79 %73.37 %61.26 %
Efficiency ratio excluding notable items (not annualized) (1)
67.02 %62.24 %61.26 %
Noninterest expense / average assets1.77 %2.02 %1.86 %
Noninterest expense / average assets, excluding notable items (1)
1.73 %1.72 %1.86 %
(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 9 and 10.


Table Page 3
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
Three Months Ended
3/31/202412/31/20233/31/2023
InterestAnnualizedInterestAnnualizedInterestAnnualized
AverageIncome/AverageAverageIncome/AverageAverageIncome/ Average
BalanceExpenseYield/CostBalanceExpenseYield/CostBalanceExpense Yield/Cost
INTEREST EARNING ASSETS:
    Loans, including loans held for sale $13,746,219 $213,626 6.25 %$14,052,953 $221,020 6.24 %$15,235,386 $215,935 5.75 %
    Investment securities2,317,154 18,049 3.13 %2,283,613 18,398 3.20 %2,248,479 15,125 2.73 %
    Interest earning cash and deposits at
    other banks		2,019,769 27,183 5.41 %2,142,147 29,029 5.38 %473,344 4,922 4.22 %
    FHLB stock and other investments48,136 816 6.82 %47,587 777 6.48 %47,043 695 5.99 %
Total interest earning assets$18,131,278 $259,674 5.76 %$18,526,300 $269,224 5.77 %$18,004,252 $236,677 5.33 %
 
INTEREST BEARING LIABILITIES:
  Deposits:
    Money market, interest bearing demand and
    savings		$5,072,782 $50,145 3.98 %$4,821,222 $45,662 3.76 %$5,597,251 $42,226 3.06 %
    Time deposits5,985,501 73,888 4.96 %6,327,191 75,643 4.74 %5,543,369 50,122 3.67 %
    Total interest bearing deposits11,058,283 124,033 4.51 %11,148,413 121,305 4.32 %11,140,620 92,348 3.36 %
    FHLB and FRB borrowings1,683,334 17,853 4.27 %1,795,740 19,224 4.25 %676,444 6,698 4.02 %
    Subordinated debentures and convertible
    notes		104,493 2,741 10.38 %104,198 2,779 10.44 %319,905 3,753 4.69 %
Total interest bearing liabilities$12,846,110 $144,627 4.53 %$13,048,351 $143,308 4.36 %$12,136,969 $102,799 3.44 %
Noninterest bearing demand deposits3,803,870 4,113,680 4,662,081 
Total funding liabilities/cost of funds$16,649,980 3.49 %$17,162,031 3.31 %$16,799,050 2.48 %
Net interest income/net interest spread$115,047 1.23 %$125,916 1.41 %$133,878 1.89 %
Net interest margin2.55 %2.70 %3.02 %
Cost of deposits:
    Noninterest bearing demand deposits$3,803,870 $— — %$4,113,680 $— — %$4,662,081 $— — %
    Interest bearing deposits11,058,283 124,033 4.51 %11,148,413 121,305 4.32 %11,140,620 92,348 3.36 %
Total deposits$14,862,153 $124,033 3.36 %$15,262,093 $121,305 3.15 %$15,802,701 $92,348 2.37 %



Table Page 4
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
 Three Months Ended
AVERAGE BALANCES:3/31/202412/31/2023% change3/31/2023% change
Loans, including loans held for sale $13,746,219 $14,052,953 (2)%$15,235,386 (10)%
Investment securities2,317,154 2,283,613 1 %2,248,479 3 %
Interest earning cash and deposits at other banks2,019,769 2,142,147 (6)%473,344 327 %
Interest earning assets18,131,278 18,526,300 (2)%18,004,252 1 %
Goodwill and intangible assets468,229 468,622 — %469,992 — %
Total assets19,140,775 19,600,942 (2)%19,087,170 — %
Noninterest bearing demand deposits3,803,870 4,113,680 (8)%4,662,081 (18)%
Interest bearing deposits11,058,283 11,148,413 (1)%11,140,620 (1)%
Total deposits14,862,153 15,262,093 (3)%15,802,701 (6)%
Interest bearing liabilities12,846,110 13,048,351 (2)%12,136,969 6 %
Stockholders’ equity2,126,333 2,048,335 4 %2,046,159 4 %
LOAN PORTFOLIO COMPOSITION: 3/31/202412/31/2023% change3/31/2023% change
Commercial real estate (“CRE”) loans$8,707,673 $8,797,884 (1)%$9,373,529 (7)%
Commercial and industrial (“C&I”) loans4,041,063 4,135,044 (2)%4,821,270 (16)%
Residential mortgage and other loans970,442 920,691 5 %870,050 12 %
 Loans receivable13,719,178 13,853,619 (1)%15,064,849 (9)%
Allowance for credit losses(158,758)(158,694)— %(163,544)(3)%
    Loans receivable, net$13,560,420 $13,694,925 (1)%$14,901,305 (9)%
CRE LOANS BY PROPERTY TYPE:3/31/202412/31/2023% change3/31/2023% change
Multi-tenant retail$1,666,153 $1,704,337 (2)%$1,817,874 (8)%
Industrial warehouses1,221,852 1,226,780 — %1,309,763 (7)%
Multifamily1,212,941 1,226,384 (1)%1,302,597 (7)%
Gas stations and car washes1,013,708 1,030,888 (2)%1,046,528 (3)%
Mixed-use facilities861,613 870,664 (1)%818,227 5 %
Hotels/motels786,198 796,267 (1)%900,990 (13)%
Single-tenant retail667,898 662,705 1 %706,593 (5)%
Office401,392 401,821 — %464,703 (14)%
All other875,918 878,038 — %1,006,254 (13)%
  Total CRE loans$8,707,673 $8,797,884 (1)%$9,373,529 (7)%
DEPOSIT COMPOSITION:3/31/202412/31/2023% change3/31/2023% change
Noninterest bearing demand deposits$3,652,592 $3,914,967 (7)%$4,504,621 (19)%
Money market, interest bearing demand, and savings5,313,064 4,872,029 9 %4,563,702 16 %
Time deposits 5,787,761 5,966,757 (3)%6,759,886 (14)%
  Total deposits$14,753,417 $14,753,753 — %$15,828,209 (7)%
Table Page 5
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands, except per share data)

CAPITAL & CAPITAL RATIOS:3/31/202412/31/20233/31/2023
Total stockholders’ equity$2,112,270 $2,121,243 $2,058,580 
Total capital$2,130,033 $2,120,157 $2,068,433 
Common equity tier 1 ratio12.47 %12.28 %10.75 %
Tier 1 capital ratio 13.17 %12.96 %11.36 %
Total capital ratio 14.19 %13.92 %12.25 %
Leverage ratio 10.42 %10.11 %10.13 %
Total risk weighted assets$15,011,661 $15,230,302 $16,886,419 
Book value per common share$17.51 $17.66 $17.17 
TCE per share (1)
$13.63 $13.76 $13.26 
TCE ratio (1)
9.33 %8.86 %7.91 %
(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 9.
Three Months Ended
ALLOWANCE FOR CREDIT LOSSES CHANGES:3/31/202412/31/20239/30/20236/30/20233/31/2023
Balance at beginning of period$158,694 $158,809 $172,996 $163,544 $162,359 
ASU 2022-02 day 1 adoption impact— — — — (407)
Provision for credit loss on loans3,600 1,700 16,800 8,900 1,700 
Recoveries1,184 306 2,938 1,531 387 
Charge offs (4,720)(2,121)(33,925)(979)(495)
Balance at end of period$158,758 $158,694 $158,809 $172,996 $163,544 
3/31/202412/31/20239/30/20236/30/20233/31/2023
Allowance for unfunded loan commitments$2,843 $3,843 $3,143 $3,081 $2,971 
Three Months Ended
3/31/202412/31/20239/30/20236/30/20233/31/2023
Provision for credit loss on loans$3,600 $1,700 $16,800 $8,900 $1,700 
Provision for unfunded loan commitments(1,000)700 62 110 1,620 
Provision for credit losses$2,600 $2,400 $16,862 $9,010 $3,320 
Table Page 6
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)

Three Months Ended
NET LOAN CHARGE OFFS (RECOVERIES):3/31/202412/31/20239/30/20236/30/20233/31/2023
CRE loans$(497)$1,560 $(2,227)$438 $(109)
C&I loans4,072 138 33,145 (1,091)196 
Residential mortgage and other loans(39)117 69 101 21 
Net loan charge offs (recoveries)$3,536 $1,815 $30,987 $(552)$108 
Net charge offs (recoveries)/average loans receivable (annualized)0.10 %0.05 %0.85 %(0.01)%— %

NONPERFORMING ASSETS:3/31/202412/31/20239/30/20236/30/20233/31/2023
Loans on nonaccrual status (1)
$59,526 $45,204 $39,081 $61,252 $78,861 
Accruing delinquent loans past due 90 days or more47,290 261 21,579 15,182 364 
Total nonperforming loans106,816 45,465 60,660 76,434 79,225 
Other real estate owned (“OREO”)— 63 1,043 938 938 
Total nonperforming assets$106,816 $45,528 $61,703 $77,372 $80,163 
Nonperforming assets/total assets0.59 %0.24 %0.31 %0.38 %0.39 %
Nonperforming assets/loans receivable & OREO0.78 %0.33 %0.43 %0.52 %0.53 %
Nonperforming assets/total capital5.06 %2.15 %3.04 %3.74 %3.89 %
Nonperforming loans/loans receivable0.78 %0.33 %0.42 %0.51 %0.53 %
Nonaccrual loans/loans receivable0.43 %0.33 %0.27 %0.41 %0.52 %
Allowance for credit losses/loans receivable1.16 %1.15 %1.11 %1.16 %1.09 %
Allowance for credit losses/nonperforming loans148.63 %349.05 %261.80 %226.33 %206.43 %
(1) Excludes delinquent SBA loans that are guaranteed and currently in liquidation totaling $10.9 million, $11.4 million, $12.1 million, $11.9 million, and $7.6 million, at March 31, 2024, December 31, 2023, September 30, 2023, June 30, 2023, and March 31, 2023, respectively.
NONACCRUAL LOANS BY TYPE:3/31/202412/31/20239/30/20236/30/20233/31/2023
CRE loans$37,835 $33,932 $26,687 $29,270 $44,376 
C&I loans15,071 5,013 4,234 23,042 26,191 
Residential mortgage and other loans6,620 6,259 8,160 8,940 8,294 
   Total nonaccrual loans$59,526 $45,204 $39,081 $61,252 $78,861 
Table Page 7
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
ACCRUING DELINQUENT LOANS 30-89 DAYS PAST DUE:3/31/202412/31/20239/30/20236/30/20233/31/2023
30 - 59 days past due$2,273 $2,833 $2,906 $9,295 $7,662 
60 - 89 days past due313 1,289 506 178 249 
   Total accruing delinquent loans 30-89 days past due$2,586 $4,122 $3,412 $9,473 $7,911 
ACCRUING DELINQUENT LOANS 30-89 DAYS PAST DUE BY TYPE:3/31/202412/31/20239/30/20236/30/20233/31/2023
CRE loans$1,639 $2,160 $611 $7,339 $3,652 
C&I loans551 1,643 1,168 990 419 
Residential mortgage and other loans396 319 1,633 1,144 3,840 
   Total accruing delinquent loans 30-89 days past due$2,586 $4,122 $3,412 $9,473 $7,911 
CRITICIZED LOANS:3/31/202412/31/20239/30/20236/30/20233/31/2023
Special mention loans$215,183 $178,992 $186,600 $210,806 $166,472 
Substandard loans206,350 143,449 174,161 134,203 138,224 
   Total criticized loans$421,533 $322,441 $360,761 $345,009 $304,696 
Table Page 8
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands, except share and per share data)


Reconciliation of GAAP financial measures to non-GAAP financial measures
Management reviews select non-GAAP financial measures in evaluating the Company’s and the Bank’s financial performance and in response to market participant interest. Reconciliations of the most directly comparable GAAP to non-GAAP financial measures utilized by management are provided below.
Three Months Ended
RETURN ON AVERAGE TANGIBLE COMMON EQUITY3/31/202412/31/20233/31/2023
Average stockholders’ equity$2,126,333 $2,048,335 $2,046,159 
Less: Average goodwill and core deposit intangible assets, net(468,229)(468,622)(469,992)
Average TCE$1,658,104 $1,579,713 $1,576,167 
Net income$25,864 $26,481 $39,121 
ROTCE (annualized)6.24 %6.71 %9.93 %
TANGIBLE COMMON EQUITY3/31/202412/31/20233/31/2023
Total stockholders’ equity$2,112,270 $2,121,243 $2,058,580 
Less: Goodwill and core deposit intangible assets, net(467,984)(468,385)(469,728)
TCE$1,644,286 $1,652,858 $1,588,852 
Total assets$18,088,214 $19,131,522 $20,568,884 
Less: Goodwill and core deposit intangible assets, net(467,984)(468,385)(469,728)
Tangible assets$17,620,230 $18,663,137 $20,099,156 
TCE ratio9.33 %8.86 %7.91 %
Common shares outstanding120,610,029 120,126,786 119,865,732 
TCE per share$13.63 $13.76 $13.26 
Table Page 9
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands, except share and per share data)

Three Months Ended
PROFITABILITY RATIOS EXCLUDING NOTABLE ITEMS3/31/202412/31/20233/31/2023
Net income$25,864 $26,481 $39,121 
Notable items:
FDIC special assessment expense1,000 3,971 — 
Restructuring costs143 11,076 — 
Merger related costs1,044 — — 
Total notable items2,187 15,047 — 
Tax provision611 3,190 — 
Less: total notable items, net of tax provision$1,576 $11,857 $— 
Net income excluding notable items$27,440 $38,338 $39,121 
Diluted common shares121,020,292 120,761,112 120,242,295 
EPS excluding notable items$0.23 $0.32 $0.33 
Average Assets19,140,775 19,600,942 19,087,170 
ROA excluding notable items0.57 %0.78 %0.82 %
Average Equity2,126,333 2,048,335 2,046,159 
ROE excluding notable items5.16 %7.49 %7.65 %
Average TCE$1,658,104 $1,579,713 $1,576,167 
ROTCE excluding notable items6.62 %9.71 %9.93 %
Three Months Ended
EFFICIENCY RATIOS EXCLUDING NOTABLE ITEMS3/31/202412/31/20233/31/2023
Noninterest expense$84,839 $99,191 $88,734 
Less: notable items:
FDIC special assessment expense(1,000)(3,971)— 
Restructuring costs(143)(11,076)— 
Merger related costs(1,044)— — 
Noninterest expense excluding notable items$82,652 $84,144 $88,734 
Revenue$123,333 $135,196 $144,856 
Efficiency ratio excluding notable items67.02 %62.24 %61.26 %
Average assets19,140,775 19,600,942 19,087,170 
Noninterest expense / average assets, excluding notable items1.73 %1.72 %1.86 %
Table Page 10