HOPE BANCORP INC - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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EX-99.3 - EXHIBIT 99.3 - HOPE BANCORP INC	hope2019q4earningsconfer.htm
EX-99.2 - EXHIBIT 99.2 - HOPE BANCORP INC	ex992-q42019dividend.htm
8-K - 8-K - HOPE BANCORP INC	hope-12x31x20198xkbody.htm

Page 1-1-1 NASDAQ: HOPE

News Release

HOPE BANCORP REPORTS 2019 FOURTH QUARTER FINANCIAL RESULTS

LOS ANGELES - January 22, 2020 - 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 year ended December 31, 2019.

For the three months ended December 31, 2019, net income totaled $43.0 million, or $0.34 per diluted common share. This compares with net income of $42.6 million, or $0.34 per diluted common share, in the 2019 third quarter and $44.4 million, or $0.35 per diluted common share, in the 2018 fourth quarter. For 2019, net income totaled $171.0 million, or $1.35 per diluted common share, compared with 2018 net income of $189.6 million, or $1.44 per diluted common share.

“We are pleased to have completed the year with another solid quarter that underscores the consistent progress we are making with our strategic initiatives,” said Kevin S. Kim, Chairman, President and Chief Executive Officer of Hope Bancorp, Inc. “Most notably, we continued to see a favorable shift in our deposit base to lower costing core deposits, which contributed to a considerable reduction in our total cost of deposits, the first decrease we have seen in three years. We also originated a record level of $848 million in new loans, which continues to represent a well-balanced mix of commercial real estate, commercial and consumer loans and led to a second consecutive quarter of organic loan growth. Noninterest expenses remain well contained at 1.85% of total assets, notwithstanding the ongoing investments we continue to make in our organization. And our active buyback of 943,094 shares under our current share repurchase plan underscores our ongoing commitment to enhance shareholder returns.

“We move forward into 2020 with strong conviction that we have the right strategies in place given the current stage of the economic growth cycle and the lower interest rate environment that we are operating in. With the progress we have made in controlling our deposit costs, the growing contribution of the higher-rate SBA loans in our portfolio, and assuming no further changes in the Fed Funds rate this year, we believe we are positioned to begin seeing some margin expansion by the second half of the year, which will ultimately improve our ability to further enhance returns and profitability.”

Q4 2019 Highlights


•	Record new loan originations of $847.6 million led to more than a 1% increase in loans receivable quarter-over-quarter, or 6% annualized.


•	Deposit initiatives contributed to a 13 basis point reduction quarter-over-quarter in total deposit costs, the first quarter-over-quarter decrease since Q4 2016.


•	Total deposits increased 2% quarter-over-quarter, reflecting a continuation of a favorable mix-shift to core deposits.


•	Total noninterest expenses well contained and remain at 1.85% of average assets.


•	Repurchased 943,094 shares at an average price of $14.62 during the 2019 fourth quarter.

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Financial Highlights



(dollars in thousands, except per share data) (unaudited)	At or for the Three Months Ended
	12/31/2019			9/30/2019			12/31/2018
Net income	$	43,009		$	42,592		$	44,449
Diluted earnings per share	$	0.34		$	0.34		$	0.35
Net interest income before provision for loan losses	$	113,508		$	116,258		$	121,893
Net interest margin		3.16	%		3.25	%		3.41	%
Noninterest income	$	12,979		$	12,995		$	11,614
Noninterest expense	$	70,429		$	69,995		$	70,189
Net loans receivable	$	12,181,863		$	12,010,800		$	12,005,558
Deposits	$	12,527,364		$	12,234,750		$	12,155,656
Nonaccrual loans ^{(1) (2)}	$	54,785		$	42,235		$	53,286
Nonperforming loans to loans receivable ^{(1) (2)}		0.80	%		0.64	%		0.87	%
ALLL to loans receivable		0.77	%		0.78	%		0.77	%
ALLL to nonaccrual loans ^{(1) (2)}		171.84	%		222.28	%		173.70	%
ALLL to nonperforming assets ^{(1) (2)}		77.08	%		97.06	%		81.92	%
Provision for loan losses	$	1,000		$	2,100		$	2,800
Net charge offs	$	738		$	1,822		$	872
Return on average assets (“ROA”)		1.13	%		1.12	%		1.17	%
Return on average equity (“ROE”)		8.46	%		8.47	%		9.42	%
Return on average common tangible equity (“ROTCE”) ⁽³⁾		11.04	%		11.11	%		12.62	%
Noninterest expense / average assets		1.85	%		1.85	%		1.85	%
Efficiency ratio		55.68	%		54.15	%		52.57	%

⁽¹⁾ Excludes delinquent SBA loans that are guaranteed and currently in liquidation

⁽²⁾ Excludes purchased credit-impaired loans

⁽³⁾ Return on average tangible common equity is a non-GAAP financial measure. A reconciliation of the Company’s return on average tangible common equity is provided in the accompanying financial information on Table Page 7.

Operating Results for the 2019 Fourth Quarter

Net interest income before provision for loan losses for the 2019 fourth quarter totaled $113.5 million, compared with $116.3 million in the 2019 third quarter and $121.9 million in the year-ago fourth quarter.

The net interest margin for the 2019 fourth quarter declined 9 basis points to 3.16% from 3.25% in the 2019 third quarter, reflecting lower weighted average yield on loans, due to three decreases in the fed funds rate of 25 basis points each on July 31, September 18 and October 30, 2019, partially offset by lower deposit costs. The net interest margin in the prior-year fourth quarter was 3.41%.

The weighted average yield on loans for the 2019 fourth quarter was 5.04%, compared with 5.27% in the preceding third quarter and 5.21% in the year-ago fourth quarter.

The Company continued to see benefits from its deposit initiatives with a favorable shift in the mix of deposits. This contributed to a quarter-over-quarter decrease in the weighted average cost of deposits, which was 1.49% for the 2019 fourth quarter, compared with 1.62% for the third quarter of 2019. In the 2018 fourth quarter, the weighted average cost of deposits was 1.40%.

Noninterest income totaled $13.0 million for the 2019 fourth quarter and preceding third quarter. Net gains on sales of other loans, predominantly from the sale of residential mortgage loans, increased to $1.9 million for the 2019 fourth quarter from $804,000 in the preceding third quarter. This increase was largely offset by lower levels of swap fee income versus the preceding quarter. In the 2018 fourth quarter, noninterest income totaled $11.6 million and included a $447,000 net gain on sales of SBA loans to the secondary market and $381,000 net gain on the sale of other loans. Since

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the middle of the 2018 fourth quarter, the Company has discontinued its practice of regularly selling SBA loans to the secondary market.

Noninterest expense was stable at $70.4 million for the 2019 fourth quarter, compared with $70.0 million for the preceding third quarter and $70.2 million for the year-ago fourth quarter. Noninterest expense as a percentage of average assets amounted to 1.85% for the 2019 fourth quarter, 2019 third quarter and 2018 fourth quarter.

The slight increase in noninterest expense quarter-over-quarter reflects an increase in professional fees, FDIC assessment, and credit and OREO related expenses. The preceding third quarter included FDIC assessment credits which reduced the FDIC assessment expense for the quarter to zero, compared with minimal credit applied for the fourth quarter of 2019. These increases were offset by lower compensation costs in the 2019 fourth quarter.

Salaries and employee benefits expense decreased to $39.8 million for the 2019 fourth quarter from $41.6 million for the 2019 third quarter, largely reflecting reduced expenses related to the Company’s 401(k) and insurance programs. In the 2018 fourth quarter, salaries and employee benefits expense totaled $36.6 million.

The effective tax rate for the 2019 fourth quarter was 21.9%, compared with 25.5% in the preceding 2019 third quarter and 26.6% in the 2018 fourth quarter. The Company attributed the reduction of the effective tax rate for the 2019 fourth quarter mainly due to adjustments related to FASB Interpretation No. 48 (“FIN 48”), which lowered the tax provision for the quarter by approximately $1.8 million, net of Federal and State tax.

Balance Sheet Summary

New loan originations funded during the 2019 fourth quarter totaled a record $847.6 million and included SBA loan production of $61.8 million and residential mortgage loan originations of $64.2 million. This compares with 2019 third quarter originations of $693.9 million, including SBA loan production of $53.8 million and residential mortgage loan originations of $58.5 million. In the year-ago fourth quarter, new loan originations funded totaled $667.3 million, including SBA loan production of $81.5 million and residential mortgage loan originations of $162.3 million.

SBA 7(a) loan originations totaled $46.1 million for the 2019 fourth quarter, compared with $34.4 million for the third quarter of 2019 and $44.7 million for the year-ago fourth quarter. There were no sales of SBA 7(a) loans to the secondary market during 2019. In contrast, the Company sold $10.2 million of its SBA 7(a) loans during the 2018 fourth quarter prior to its decision to retain the loans in its portfolio.

At December 31, 2019, loans receivable increased 1% to $12.28 billion from $12.10 billion at September 30, 2019 and increased 1% from $12.10 billion at December 31, 2018.

Total deposits at December 31, 2019 increased 2% to $12.53 billion from $12.23 billion at September 30, 2019 and increased 3% from $12.16 billion at December 31, 2018. During the 2019 fourth quarter, the Company continued to see a favorable shift in the mix of deposits marked by higher core deposits, particularly in money market account balances, and decreases in higher-cost time deposits. Noninterest bearing demand deposits at year-end 2019 increased 2% from September 30, 2019 and increased 3% from December 31, 2018. Money market and other deposits at year-end 2019 increased 6% and 31% from September 30, 2019 and December 31, 2018, respectively, and rose as a percentage of total deposits to 32% at December 31, 2019 from 31% at September 30, 2019 and 25% at December 31, 2018.

Reflecting the continued favorable mix-shift in deposits, total cost of deposits decreased 13 basis points to 1.49% from 1.62% for the 2019 third quarter. In the fourth quarter of 2018, total cost of deposits was 1.40%.

Credit Quality

The provision for loan and lease losses for the 2019 fourth quarter was $1.0 million, compared with $2.1 million for the preceding 2019 third quarter and $2.8 million for the year-ago fourth quarter.

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Following are the components of nonperforming assets as of December 31, 2019, September 30, 2019, and December 31, 2018:



(dollars in thousands) (unaudited)	12/31/2019		9/30/2019		12/31/2018
Loans on nonaccrual status ⁽¹⁾	$	54,785	$	42,235	$	53,286
Delinquent loans 90 days or more on accrual status ⁽²⁾		7,547		398		1,529
Accruing troubled debt restructured loans		35,709		34,717		50,410
Total nonperforming loans		98,041		77,350		105,225
Other real estate owned		24,091		19,374		7,754
Total nonperforming assets	$	122,132	$	96,724	$	112,979


⁽¹⁾	Excludes delinquent SBA loans that are guaranteed and currently in liquidation totaling $28.1 million, $37.3 million, and $29.2 million, at December 31, 2019, September 30, 2019, and December 31, 2018, respectively.


⁽²⁾	Excludes Acquired Credit Impaired Loans totaling $13.2 million, $15.5 million, and $14.1 million, at December 31, 2019, September 30, 2019, and December 31, 2018, respectively.

Following are the components of criticized loan balances as of December 31, 2019, September 30, 2019, and December 31, 2018:



(dollars in thousands) (unaudited)	12/31/2019		9/30/2019		12/31/2018
Special Mention ⁽³⁾	$	141,452	$	139,848	$	163,089
Classified ⁽³⁾		259,291		268,622		318,327
Criticized	$	400,743	$	408,470	$	481,416


⁽³⁾	Balances include purchased loans which were marked to fair value on the date of acquisition.

The Company recorded net charge offs of $738,000 during the 2019 fourth quarter, or 0.02% of average loans receivable on an annualized basis. This compares with net charge offs of $1.8 million, or 0.06% of average loans receivable on an annualized basis, during the 2019 third quarter. In the 2018 fourth quarter, the Company recorded net charge offs of $872,000, or 0.03% of average loans receivable on an annualized basis.

The allowance for loan and lease losses (“ALLL”) was $94.1 million, $93.9 million, and $92.6 million at December 31, 2019, September 30, 2019 and December 31, 2018, respectively. As a percentage of loans receivable (excluding loans held for sale), the ALLL was 0.77%, 0.78% and 0.77% at December 31, 2019, September 30, 2019 and December 31, 2018, respectively. The coverage ratio of the ALLL to nonperforming loans (excluding purchased credit-impaired loans) was 96.03% at December 31, 2019, 121.37% at September 30, 2019 and 87.96% at December 31, 2018.

Impaired loans (defined as loans for which it is probable that not all principal and interest payments due will be collected in accordance with the contractual terms) totaled $90.5 million at December 31, 2019, $77.3 million at September 30, 2019 and $104.0 million at December 31, 2018.

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Capital

At December 31, 2019, the Company and the Bank continued to exceed all regulatory capital requirements to be classified as a “well-capitalized” financial institution, as summarized in the following table:



(unaudited)	12/31/2019	9/30/2019	12/31/2018	Minimum Guideline for “Well-Capitalized” Bank
Common Equity Tier 1 Capital	11.76%	11.89%	11.44%	6.50%
Tier 1 Leverage Ratio	11.22%	11.18%	10.55%	5.00%
Tier 1 Risk-Based Ratio	12.51%	12.65%	12.21%	8.00%
Total Risk-Based Ratio	13.23%	13.38%	12.94%	10.00%

Tangible common equity per share and as a percentage of tangible assets are summarized in the following table:



(unaudited)	12/31/2019	9/30/2019	12/31/2018
Tangible common equity per share ⁽¹⁾	$12.40	$12.27	$11.25
Tangible common equity to tangible assets ⁽²⁾	10.27%	10.43%	9.61%

⁽¹⁾

Tangible common equity represents common equity less goodwill and net other intangible assets. Tangible common equity per share represents tangible common equity divided by the number of shares issued and outstanding. Both tangible common equity and tangible common equity per share are non-GAAP financial measures. A reconciliation of the Company’s total stockholders’ equity to tangible common equity is provided in the accompanying financial information on Table Page 7.

⁽²⁾

Tangible assets represent total assets less goodwill and net other intangible assets. Tangible common equity to tangible assets is the ratio of tangible common equity over tangible assets. Tangible common equity to tangible assets is a non-GAAP financial measure. A reconciliation of the Company’s total assets to tangible assets is provided in the accompanying financial information on Table Page 7.

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

Stock Repurchase Plan

Under the Company’s $50 million stock repurchase program announced on July 16, 2019, the Company repurchased 943,094 shares at an average price of $14.62 during the 2019 fourth quarter. As of December 31, 2019, $36.2 million of the plan remained available.

Investor Conference Call

The Company previously announced that it will host an investor conference call on Thursday, January 23, 2020 at 9:30 a.m. Pacific Time / 12:30 p.m. Eastern Time to review financial results for its fourth quarter ended December 31, 2019. Investors and analysts are invited to access the conference call by dialing 866-235-9917 (domestic) or 412-902-4103 (international) and asking for the “Hope Bancorp Call.” A presentation to accompany the earnings call will be available at the Investor Relations section of Hope Bancorp’s website at www.ir-hopebancorp.com. Other interested parties are invited to listen to a live webcast of the call available at the Investor Relations section of Hope Bancorp’s website. After the live webcast, a replay will remain available in the Investor Relations section of Hope Bancorp’s website for one year. A telephonic replay of the call will be available at 877-344-7529 (domestic) or 412-317-0088 (international) for one week through January 30, 2020, replay access code 10137771.

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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 $15.7 billion in total assets as of December 31, 2019. Headquartered in Los Angeles and serving a multi-ethnic population of customers across the nation, Bank of Hope operates 58 full-service branches in California, Washington, Texas, Illinois, New York, New Jersey, Virginia and Alabama. The Bank also operates SBA loan production offices in Seattle, Denver, Dallas, Atlanta, Portland, Oregon, New York City, Northern California and Houston; commercial loan production offices in Northern California and Seattle; residential mortgage loan production offices in Southern California; and a representative office in Seoul, Korea. Bank of Hope specializes in core business banking products for small and medium-sized businesses, with an emphasis in commercial real estate and commercial lending, SBA lending and international trade financing. Bank of Hope is a California-chartered bank, and its deposits are insured by the FDIC to the extent provided by law. Bank of Hope is an Equal Opportunity Lender. For additional information, please go to bankofhope.com. By including the foregoing website address link, the Company does not intend to and shall not be deemed to incorporate by reference any material contained or accessible therein.

Forward-Looking Statements

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

Contacts:



Alex Ko EVP & Chief Financial Officer 213-427-6560 alex.ko@bankofhope.com	Angie Yang SVP, Director of Investor Relations & Corporate Communications 213-251-2219 angie.yang@bankofhope.com

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Hope Bancorp, Inc.

Selected Financial Data

Unaudited (dollars in thousands, except share data)



Assets	12/31/2019			9/30/2019			% change		12/31/2018			% change
Cash and due from banks	$	698,567		$	549,356		27	%	$	459,606		52	%
Securities available for sale, at fair value	1,715,987			1,772,322			(3	)%	1,846,265			(7	)%
Federal Home Loan Bank (“FHLB”) stock and other investments	97,659			98,848			(1	)%	104,705			(7	)%
Loans held for sale, at the lower of cost or fair value	54,271			29,627			83	%	25,128			116	%
Loans receivable	12,276,007			12,104,682			1	%	12,098,115			1	%
Allowance for loan losses	(94,144		)	(93,882		)	—	%	(92,557		)	(2	)%
Net loans receivable	12,181,863			12,010,800			1	%	12,005,558			1	%
Accrued interest receivable	30,772			29,743			3	%	32,225			(5	)%
Premises and equipment, net	52,012			52,604			(1	)%	53,794			(3	)%
Bank owned life insurance	76,339			75,968			—	%	75,219			1	%
Goodwill	464,450			464,450			—	%	464,450			—	%
Servicing assets	16,417			17,865			(8	)%	23,132			(29	)%
Other intangible assets, net	11,833			12,390			(4	)%	14,061			(16	)%
Other assets	267,270			265,905			1	%	201,809			32	%
Total assets	$	15,667,440		$	15,379,878		2	%	$	15,305,952		2	%

Liabilities
Deposits	$	12,527,364		$	12,234,750		2	%	$	12,155,656		3	%
FHLB advances	625,000			625,000			—	%	821,280			(24	)%
Convertible notes, net	199,458			198,211			1	%	194,543			3	%
Subordinated debentures	103,035			102,755			—	%	101,929			1	%
Accrued interest payable	33,810			38,197			(11	)%	31,374			8	%
Other liabilities	142,762			149,681			(5	)%	97,959			46	%
Total liabilities	13,631,429			13,348,594			2	%	13,402,741			2	%

Stockholders’ Equity
Common stock, $0.001 par value	136			136			—	%	136			—	%
Capital surplus	1,428,066			1,426,666			—	%	1,423,405			—	%
Retained earnings	762,480			737,209			3	%	662,375			15	%
Treasury stock, at cost	(163,820		)	(150,000		)	(9	)%	(150,000		)	(9	)%
Accumulated other comprehensive gain (loss)	9,149			17,273			(47	)%	(32,705		)	128	%
Total stockholders’ equity	2,036,011			2,031,284			—	%	1,903,211			7	%
Total liabilities and stockholders’ equity	$	15,667,440		$	15,379,878		2	%	$	15,305,952		2	%

Common stock shares - authorized	150,000,000			150,000,000					150,000,000
Common stock shares - outstanding	125,756,543			126,697,925					126,639,912
Treasury stock shares	9,945,547			9,002,453					9,002,453

Table Page 1

Hope Bancorp, Inc.

Selected Financial Data

Unaudited (dollars in thousands, except per share data)



	Three Months Ended												Twelve Months Ended
	12/31/2019			9/30/2019			% change		12/31/2018		% change		12/31/2019			12/31/2018		% change
Interest income:
Interest and fees on loans	$	152,795		$	158,115		(3	)%	$	156,606	(2	)%	$	627,673		$	594,103	6	%
Interest on securities	10,737			11,373			(6	)%	12,385		(13	)%	46,295			45,342		2	%
Interest on federal funds sold and other investments	2,241			2,929			(23	)%	3,035		(26	)%	10,818			10,727		1	%
Total interest income	165,773			172,417			(4	)%	172,026		(4	)%	684,786			650,172		5	%

Interest expense:
Interest on deposits	45,428			49,057			(7	)%	42,477		7	%	190,158			134,958		41	%
Interest on other borrowings and convertible notes	6,837			7,102			(4	)%	7,656		(11	)%	28,033			27,287		3	%
Total interest expense	52,265			56,159			(7	)%	50,133		4	%	218,191			162,245		34	%

Net interest income before provision for loan losses	113,508			116,258			(2	)%	121,893		(7	)%	466,595			487,927		(4	)%
Provision for loan losses	1,000			2,100			(52	)%	2,800		(64	)%	7,300			14,900		(51	)%
Net interest income after provision for loan losses	112,508			114,158			(1	)%	119,093		(6	)%	459,295			473,027		(3	)%

Noninterest income:
Service fees on deposit accounts	4,510			4,690			(4	)%	4,568		(1	)%	17,933			18,551		(3	)%
Net gains on sales of SBA loans	—			—			—	%	447		(100	)%	—			9,708		(100	)%
Net gains on sales of other loans	1,876			804			133	%	381		392	%	4,487			2,485		81	%
Net gains on sales of securities available for sale	—			153			(100	)%	—		—	%	282			—		100	%
Other income and fees	6,593			7,348			(10	)%	6,218		6	%	26,981			29,436		(8	)%
Total noninterest income	12,979			12,995			—	%	11,614		12	%	49,683			60,180		(17	)%

Noninterest expense:
Salaries and employee benefits	39,841			41,607			(4	)%	36,594		9	%	161,174			153,523		5	%
Occupancy	7,516			7,703			(2	)%	7,877		(5	)%	30,735			30,371		1	%
Furniture and equipment	4,260			3,851			11	%	3,448		24	%	15,583			14,902		5	%
Advertising and marketing	2,462			2,377			4	%	2,392		3	%	9,146			9,414		(3	)%
Data processing and communications	2,416			2,821			(14	)%	3,650		(34	)%	10,780			14,232		(24	)%
Professional fees	5,948			5,241			13	%	4,756		25	%	22,528			16,286		38	%
FDIC assessment	772			—			100	%	1,406		(45	)%	3,882			6,572		(41	)%
Credit related expenses	1,717			1,031			67	%	507		239	%	4,975			2,863		74	%
OREO (income) expense, net	(122		)	(743		)	(84	)%	302		N/A		(934		)	187		N/A
Branch restructuring costs	—			—			—	%	1,674		(100	)%	—			1,674		(100	)%
Other	5,619			6,107			(8	)%	7,583		(26	)%	24,759			27,702		(11	)%
Total noninterest expense	70,429			69,995			1	%	70,189		—	%	282,628			277,726		2	%
Income before income taxes	55,058			57,158			(4	)%	60,518		(9	)%	226,350			255,481		(11	)%
Income tax provision	12,049			14,566			(17	)%	16,069		(25	)%	55,310			65,892		(16	)%
Net income	$	43,009		$	42,592		1	%	$	44,449	(3	)%	$	171,040		$	189,589	(10	)%

Earnings per Common Share:
Basic	$	0.34		$	0.34				$	0.35			$	1.35		$	1.44
Diluted	$	0.34		$	0.34				$	0.35			$	1.35		$	1.44

Average Shares Outstanding:
Basic	126,410,924			126,685,921					128,115,170				126,598,564			131,716,726
Diluted	126,835,273			127,007,469					128,261,998				126,875,320			131,954,192

Table Page 2

Hope Bancorp, Inc.

Selected Financial Data

Unaudited



	At or for the Three Months Ended (Annualized)						At or for the Twelve Months Ended
Profitability measures:	12/31/2019		9/30/2019		12/31/2018		12/31/2019		12/31/2018
ROA	1.13	%	1.12	%	1.17	%	1.12	%	1.29	%
ROE	8.46	%	8.47	%	9.42	%	8.63	%	9.92	%
Return on average tangible equity ¹	11.04	%	11.11	%	12.62	%	11.37	%	13.25	%
Net interest margin	3.16	%	3.25	%	3.41	%	3.27	%	3.53	%
Efficiency ratio	55.68	%	54.15	%	52.57	%	54.74	%	50.67	%
Noninterest expense / average assets	1.85	%	1.85	%	1.85	%	1.86	%	1.88	%

¹Average tangible equity is calculated by subtracting average goodwill and average core deposit intangibles 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
	12/31/2019						9/30/2019						12/31/2018
			Interest		Annualized				Interest		Annualized				Interest		Annualized
	Average		Income/		Average		Average		Income/		Average		Average		Income/		Average
	Balance		Expense		Yield/Cost		Balance		Expense		Yield/Cost		Balance		Expense		Yield/Cost
INTEREST EARNING ASSETS:
Loans receivable, including loans held for sale	$	12,036,477	$	152,795	5.04	%	$	11,911,658	$	158,115	5.27	%	$	11,935,109	$	156,606	5.21	%
Securities available for sale	1,755,887		10,737		2.43	%	1,798,239		11,373		2.51	%	1,835,218		12,385		2.68	%
FHLB stock and other investments	463,615		2,241		1.92	%	482,952		2,929		2.41	%	431,901		3,035		2.79	%
Total interest earning assets	$	14,255,979	$	165,773	4.61	%	$	14,192,849	$	172,417	4.82	%	$	14,202,228	$	172,026	4.81	%

INTEREST BEARING LIABILITIES:
Deposits:
Demand, interest bearing	$	3,682,300	$	14,924	1.61	%	$	3,450,749	$	15,802	1.82	%	$	3,127,598	$	12,425	1.58	%
Savings	265,008		748		1.12	%	252,780		675		1.06	%	225,746		537		0.94	%
Time deposits	5,148,092		29,756		2.29	%	5,368,753		32,580		2.41	%	5,626,355		29,515		2.08	%
Total interest bearing deposits	9,095,400		45,428		1.98	%	9,072,282		49,057		2.15	%	8,979,699		42,477		1.88	%
FHLB advances & fed funds purchased	608,052		2,921		1.91	%	632,500		3,112		1.95	%	824,995		3,674		1.77	%
Convertible notes, net	198,669		2,334		4.60	%	197,410		2,322		4.60	%	193,749		2,299		4.64	%
Subordinated debentures	98,972		1,582		6.25	%	98,690		1,668		6.61	%	97,856		1,683		6.73	%
Total interest bearing liabilities	10,001,093		$	52,265	2.07	%	10,000,882		$	56,159	2.23	%	10,096,299		$	50,133	1.97	%
Noninterest bearing demand deposits	2,999,048						2,958,233						3,018,672
Total funding liabilities/cost of funds	$	13,000,141			1.60	%	$	12,959,115			1.72	%	$	13,114,971			1.52	%
Net interest income/net interest spread			$	113,508	2.54	%			$	116,258	2.59	%			$	121,893	2.84	%
Net interest margin					3.16	%					3.25	%					3.41	%

Cost of deposits:
Noninterest bearing demand deposits	$	2,999,048	$	—	—	%	$	2,958,233	$	—	—	%	$	3,018,672	$	—	—	%
Interest bearing deposits	9,095,400		45,428		1.98	%	9,072,282		49,057		2.15	%	8,979,699		42,477		1.88	%
Total deposits	$	12,094,448	$	45,428	1.49	%	$	12,030,515	$	49,057	1.62	%	$	11,998,371	$	42,477	1.40	%

Table Page 4

Hope Bancorp, Inc.

Selected Financial Data

Unaudited (dollars in thousands)



	Twelve Months Ended
	12/31/2019						12/31/2018
			Interest						Interest
	Average		Income/		Average		Average		Income/		Average
	Balance		Expense		Yield/Cost		Balance		Expense		Yield/Cost
INTEREST EARNING ASSETS:
Loans receivable, including loans held for sale	$	11,998,675	$	627,673	5.23	%	$	11,547,022	$	594,103	5.15	%
Securities available for sale	1,796,412		46,295		2.58	%	1,772,080		45,342		2.56	%
FHLB stock and other investments	453,452		10,818		2.39	%	487,922		10,727		2.20	%
Total interest earning assets	$	14,248,539	$	684,786	4.81	%	$	13,807,024	$	650,172	4.71	%

INTEREST BEARING LIABILITIES:
Deposits:
Demand, interest bearing	$	3,319,556	$	57,731	1.74	%	$	3,276,815	$	43,252	1.32	%
Savings	241,968		2,596		1.07	%	229,608		1,889		0.82	%
Time deposits	5,556,983		129,831		2.34	%	5,107,698		89,817		1.76	%
Total interest bearing deposits	9,118,507		190,158		2.09	%	8,614,121		134,958		1.57	%
FHLB advances & fed funds purchased	688,652		12,031		1.75	%	870,124		15,127		1.74	%
Convertible notes, net	196,835		9,264		4.64	%	123,040		5,797		4.65	%
Subordinated debentures	98,551		6,738		6.74	%	97,455		6,363		6.44	%
Total interest bearing liabilities	10,102,545		$	218,191	2.16	%	9,704,740		$	162,245	1.67	%
Noninterest bearing demand deposits	2,948,212						3,014,056
Total funding liabilities/cost of funds	$	13,050,757			1.67	%	$	12,718,796			1.28	%
Net interest income/net interest spread			$	466,595	2.65	%			$	487,927	3.04	%
Net interest margin					3.27	%					3.53	%

Cost of deposits:
Noninterest bearing demand deposits	$	2,948,212	$	—	—	%	$	3,014,056	$	—	—	%
Interest bearing deposits	9,118,507		190,158		2.09	%	8,614,121		134,958		1.57	%
Total deposits	$	12,066,719	$	190,158	1.58	%	$	11,628,177	$	134,958	1.16	%

Table Page 5

Hope Bancorp, Inc.

Selected Financial Data

Unaudited (dollars in thousands)



	Three Months Ended													Twelve Months Ended
AVERAGE BALANCES:	12/31/2019			9/30/2019			% change		12/31/2018			% change		12/31/2019		12/31/2018		% change
Loans receivable, including loans held for sale	$	12,036,477		$	11,911,658		1	%	$	11,935,109		1	%	$	11,998,675	$	11,547,022	4	%
Investments	2,219,502			2,281,191			(3	)%	2,267,119			(2	)%	2,249,864		2,260,002		—	%
Interest earning assets	14,255,979			14,192,849			—	%	14,202,228			—	%	14,248,539		13,807,024		3	%
Total assets	15,228,488			15,154,661			—	%	15,152,946			—	%	15,214,412		14,749,166		3	%

Interest bearing deposits	9,095,400			9,072,282			—	%	8,979,699			1	%	9,118,507		8,614,121		6	%
Interest bearing liabilities	10,001,093			10,000,882			—	%	10,096,299			(1	)%	10,102,545		9,704,740		4	%
Noninterest bearing demand deposits	2,999,048			2,958,233			1	%	3,018,672			(1	)%	2,948,212		3,014,056		(2	)%
Stockholders’ equity	2,034,231			2,010,458			1	%	1,888,053			8	%	1,981,811		1,910,224		4	%
Net interest earning assets	4,254,886			4,191,967			2	%	4,105,929			4	%	4,145,994		4,102,284		1	%

LOAN PORTFOLIO COMPOSITION:	12/31/2019			9/30/2019			% change		12/31/2018			% change
Commercial loans	$	2,719,210		$	2,643,836		3	%	$	2,324,820		17	%
Real estate loans	8,664,965			8,587,943			1	%	8,721,600			(1	)%
Consumer and other loans	889,090			870,734			2	%	1,051,486			(15	)%
Loans outstanding	12,273,265			12,102,513			1	%	12,097,906			1	%
Unamortized deferred loan fees - net of costs	2,742			2,169			26	%	209			1,212	%
Loans, net of deferred loan fees and costs	12,276,007			12,104,682			1	%	12,098,115			1	%
Allowance for loan losses	(94,144		)	(93,882		)	—	%	(92,557		)	(2	)%
Loans receivable, net	$	12,181,863		$	12,010,800		1	%	$	12,005,558		1	%

REAL ESTATE LOANS BY PROPERTY TYPE:	12/31/2019			9/30/2019			% change		12/31/2018			% change
Retail buildings	$	2,298,872		$	2,304,346		—	%	$	2,379,589		(3	)%
Hotels/motels	1,709,189			1,664,311			3	%	1,694,696			1	%
Gas stations/car washes	844,081			911,494			(7	)%	980,619			(14	)%
Mixed-use facilities	785,882			743,428			6	%	698,779			12	%
Warehouses	1,030,876			949,336			9	%	966,413			7	%
Multifamily	465,397			473,640			(2	)%	453,555			3	%
Other	1,530,668			1,541,388			(1	)%	1,547,949			(1	)%
Total	$	8,664,965		$	8,587,943		1	%	$	8,721,600		(1	)%

DEPOSIT COMPOSITION:	12/31/2019			9/30/2019			% change		12/31/2018			% change
Noninterest bearing demand deposits	$	3,108,687		$	3,033,371		2	%	$	3,022,633		3	%
Money market and other	3,985,556			3,752,274			6	%	3,036,653			31	%
Saving deposits	274,151			259,454			6	%	225,746			21	%
Time deposits	5,158,970			5,189,651			(1	)%	5,870,624			(12	)%
Total deposit balances	$	12,527,364		$	12,234,750		2	%	$	12,155,656		3	%

DEPOSIT COMPOSITION (%):	12/31/2019			9/30/2019					12/31/2018
Noninterest bearing demand deposits	24.8		%	24.8		%			24.9		%
Money market and other	31.8		%	30.7		%			25.0		%
Saving deposits	2.2		%	2.1		%			1.8		%
Time deposits	41.2		%	42.4		%			48.3		%
Total deposit balances	100.0		%	100.0		%			100.0		%

Table Page 6

Hope Bancorp, Inc.

Selected Financial Data

Unaudited (dollars in thousands, except per share data)




CAPITAL RATIOS:	12/31/2019			9/30/2019			12/31/2018
Total stockholders’ equity	$	2,036,011		$	2,031,284		$	1,903,211
Common equity tier 1 ratio	11.76		%	11.89		%	11.44		%
Tier 1 risk-based capital ratio	12.51		%	12.65		%	12.21		%
Total risk-based capital ratio	13.23		%	13.38		%	12.94		%
Tier 1 leverage ratio	11.22		%	11.18		%	10.55		%
Total risk weighted assets	$	13,208,299		$	12,951,936		$	12,749,403
Book value per common share	$	16.19		$	16.03		$	15.03
Tangible common equity to tangible assets ¹	10.27		%	10.43		%	9.61		%
Tangible common equity per share ¹	$	12.40		$	12.27		$	11.25

¹Tangible 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.

Reconciliation of GAAP financial measures to non-GAAP financial measures:
	Three Months Ended									Twelve Months Ended
	12/31/2019			9/30/2019			12/31/2018			12/31/2019			12/31/2018
RETURN ON AVERAGE TANGIBLE COMMON EQUITY
Average stockholders’ equity	$	2,034,231		$	2,010,458		$	1,888,053		$	1,981,811		$	1,910,224
Less goodwill and core deposit intangible assets, net	(476,596		)	(477,159		)	(478,897		)	(477,444		)	(479,811		)
Average tangible common equity	$	1,557,635		$	1,533,299		$	1,409,156		$	1,504,367		$	1,430,413

Net Income	$	43,009		$	42,592		$	44,449		$	171,040		$	189,589
Return on average tangible common equity	11.04		%	11.11		%	12.62		%	11.37		%	13.25		%

TANGIBLE COMMON EQUITY	12/31/2019			9/30/2019			12/31/2018
Total stockholders’ equity	$	2,036,011		$	2,031,284		$	1,903,211
Less goodwill and core deposit intangible assets, net	(476,283		)	(476,840		)	(478,511		)
Tangible common equity	$	1,559,728		$	1,554,444		$	1,424,700

Total assets	$	15,667,440		$	15,379,878		$	15,305,952
Less goodwill and core deposit intangible assets, net	(476,283		)	(476,840		)	(478,511		)
Tangible assets	$	15,191,157		$	14,903,038		$	14,827,441

Common shares outstanding	125,756,543			126,697,925			126,639,912

Tangible common equity to tangible assets	10.27		%	10.43		%	9.61		%
Tangible common equity per share	$	12.40		$	12.27		$	11.25

Table Page 7

Hope Bancorp, Inc.

Selected Financial Data

Unaudited (dollars in thousands, except per share data)



	Three Months Ended															Twelve Months Ended
ALLOWANCE FOR LOAN LOSSES CHANGE:	12/31/2019			9/30/2019			6/30/2019			3/31/2019			12/31/2018			12/31/2019			12/31/2018
Balance at beginning of period	$	93,882		$	94,066		$	94,217		$	92,557		$	90,629		$	92,557		$	84,541
Provision for loan losses	1,000			2,100			1,200			3,000			2,800			7,300			14,900
Recoveries	939			780			725			1,292			805			3,736			3,991
Charge offs	(1,677		)	(2,602		)	(2,076		)	(1,754		)	(1,677		)	(8,109		)	(10,875		)
PCI allowance adjustment	—			(462		)	—			(878		)	—			(1,340		)	—
Balance at end of period	$	94,144		$	93,882		$	94,066		$	94,217		$	92,557		$	94,144		$	92,557
Net charge offs/average loans receivable (annualized)	0.02		%	0.06		%	0.05		%	0.02		%	0.03		%	0.04		%	0.06		%


ALLOWANCE FOR LOAN LOSSES COMPOSITION:	12/31/2019			9/30/2019			6/30/2019			3/31/2019			12/31/2018
Legacy loans ¹	$	82,898		$	82,267		$	81,606		$	80,953		$	78,259
Purchased non-impaired loans ²	3,168			3,239			3,376			2,948			2,135
Purchased credit-impaired loans ²	8,078			8,376			9,084			10,316			12,163
Total allowance for loan losses	$	94,144		$	93,882		$	94,066		$	94,217		$	92,557

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


	Three Months Ended															Twelve Months Ended
NET CHARGED OFF (RECOVERED) LOANS BY TYPE:	12/31/2019			9/30/2019			6/30/2019			3/31/2019			12/31/2018			12/31/2019			12/31/2018
Real estate loans	$	203		$	951		$	(388	)	$	(1,067	)	$	123		$	(301	)	$	5,700
Commercial loans	245			596			1,399			1,250			436			3,490			8
Consumer loans	290			275			340			279			313			1,184			1,176
Total net charge offs	$	738		$	1,822		$	1,351		$	462		$	872		$	4,373		$	6,884

Table Page 8

Hope Bancorp, Inc.

Selected Financial Data

Unaudited (dollars in thousands)



NONPERFORMING ASSETS:	12/31/2019			9/30/2019			6/30/2019			3/31/2019			12/31/2018
Loans on nonaccrual status ³	$	54,785		$	42,235		$	64,934		$	86,637		$	53,286
Delinquent loans 90 days or more on accrual status ⁴	7,547			398			353			387			1,529
Accruing troubled debt restructured loans	35,709			34,717			40,731			45,204			50,410
Total nonperforming loans	98,041			77,350			106,018			132,228			105,225
Other real estate owned	24,091			19,374			5,644			6,258			7,754
Total nonperforming assets	$	122,132		$	96,724		$	111,662		$	138,486		$	112,979
Nonperforming assets/total assets	0.78		%	0.63		%	0.73		%	0.90		%	0.74		%
Nonperforming assets/loans receivable & OREO	0.99		%	0.80		%	0.93		%	1.15		%	0.93		%
Nonperforming assets/total capital	6.00		%	4.76		%	5.60		%	7.12		%	5.94		%
Nonperforming loans/loans receivable	0.80		%	0.64		%	0.89		%	1.10		%	0.87		%
Nonaccrual loans/loans receivable	0.45		%	0.35		%	0.54		%	0.72		%	0.44		%
Allowance for loan losses/loans receivable	0.77		%	0.78		%	0.79		%	0.78		%	0.77		%
Allowance for loan losses/nonaccrual loans	171.84		%	222.28		%	144.86		%	108.75		%	173.70		%
Allowance for loan losses/nonperforming loans	96.03		%	121.37		%	88.73		%	71.25		%	87.96		%
Allowance for loan losses/nonperforming assets	77.08		%	97.06		%	84.24		%	68.03		%	81.92		%

³ Excludes delinquent SBA loans that are guaranteed and currently in liquidation totaling $28.1 million, $37.3 million, $32.1 million, $30.5 million, and $29.2 million, at December 31, 2019, September 30, 2019, June 30, 2019, March 31, 2019, and December 31, 2018, respectively.
⁴ Excludes Acquired Credit Impaired Loans totaling $13.2 million, $15.5 million, $17.6 million, $18.4 million, and $14.1 million, at December 31, 2019, September 30, 2019, June 30, 2019, March 31, 2019, and December 31, 2018, respectively.


NONACCRUAL LOANS BY TYPE:	12/31/2019			9/30/2019			6/30/2019			3/31/2019			12/31/2018
Real estate loans	$	40,935		$	27,920		$	42,921		$	58,030		$	33,719
Commercial loans	10,893			11,242			18,997			27,042			18,128
Consumer loans	2,957			3,073			3,016			1,565			1,439
Total nonaccrual loans	$	54,785		$	42,235		$	64,934		$	86,637		$	53,286

BREAKDOWN OF ACCRUING TROUBLED DEBT RESTRUCTURED LOANS:	12/31/2019			9/30/2019			6/30/2019			3/31/2019			12/31/2018
Retail buildings	$	4,215		$	3,221		$	2,919		$	2,965		$	3,085
Gas stations/car washes	—			233			241			255			267
Mixed-use facilities	3,175			3,200			3,223			3,254			5,956
Warehouses	10,381			10,449			11,246			11,315			7,188
Other ⁵	17,938			17,614			23,102			27,415			33,914
Total	$	35,709		$	34,717		$	40,731		$	45,204		$	50,410

⁵Includes commercial business and other loans

Table Page 9

Hope Bancorp, Inc.

Selected Financial Data

Unaudited (dollars in thousands)




ACCRUING DELINQUENT LOANS 30-89 DAYS PAST DUE:	12/31/2019		9/30/2019		6/30/2019		3/31/2019		12/31/2018
Legacy
30 - 59 days	$	11,975	$	14,229	$	16,405	$	30,971	$	23,846
60 - 89 days	4,447		4,164		718		1,227		218
Total delinquent loans less than 90 days past due - legacy	$	16,422	$	18,393	$	17,123	$	32,198	$	24,064

Acquired
30 - 59 days	$	2,458	$	11,052	$	1,508	$	2,717	$	1,094
60 - 89 days	265		371		577		—		406
Total delinquent loans less than 90 days past due - acquired	$	2,723	$	11,423	$	2,085	$	2,717	$	1,500

Total delinquent loans less than 90 days past due	$	19,145	$	29,816	$	19,208	$	34,915	$	25,564

ACCRUING DELINQUENT LOANS 30-89 DAYS PAST DUE BY TYPE:	12/31/2019		9/30/2019		6/30/2019		3/31/2019		12/31/2018
Legacy
Real estate loans	$	6,224	$	9,707	$	9,580	$	12,324	$	2,352
Commercial loans	415		2,004		1,755		2,711		5,159
Consumer loans	9,783		6,682		5,788		17,163		16,553
Total delinquent loans less than 90 days past due - legacy	$	16,422	$	18,393	$	17,123	$	32,198	$	24,064

Acquired
Real estate loans	$	1,465	$	10,865	$	214	$	1,371	$	905
Commercial loans	277		278		77		374		595
Consumer loans	981		280		1,794		972		—
Total delinquent loans less than 90 days past due - acquired	$	2,723	$	11,423	$	2,085	$	2,717	$	1,500

Total delinquent loans less than 90 days past due	$	19,145	$	29,816	$	19,208	$	34,915	$	25,564

CRITICIZED LOANS:	12/31/2019		9/30/2019		6/30/2019		3/31/2019		12/31/2018
Legacy
Special mention	$	120,620	$	101,892	$	147,050	$	154,671	$	121,622
Substandard	164,131		184,518		202,676		223,511		193,494
Doubtful / Loss	13		17		—		351		—
Total criticized loans - legacy	$	284,764	$	286,427	$	349,726	$	378,533	$	315,116

Acquired
Special mention	$	20,832	$	37,956	$	39,435	$	50,702	$	41,467
Substandard	95,147		84,087		121,165		129,122		124,421
Doubtful / Loss	—		—		1		218		412
Total criticized loans - acquired	$	115,979	$	122,043	$	160,601	$	180,042	$	166,300

Total criticized loans	$	400,743	$	408,470	$	510,327	$	558,575	$	481,416

Table Page 10

HOPE BANCORP INC - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - January 23, 2020

Attached files

HOPE BANCORP INC Reports