Press Release

Hope Bancorp Reports 2016 Fourth Quarter and Full-Year Financial Results

Company Release - 1/24/2017 4:40 PM ET

Q4 2016 Summary:

  • Loans receivable total $10.54 billion, reflecting a 69% increase year-over-year 
  • Total deposits amount to $10.64 billion, reflecting a 68% increase year-over-year 
  • Total assets amount to $13.44 billion, reflecting a 70% increase year-over-year 
  • Net income totals $40.6 million, or $0.30 per diluted common share, including merger-related expenses of $3.0 million
  • New loan originations total $465 million

LOS ANGELES, Jan. 24, 2017 (GLOBE NEWSWIRE) -- 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, 2016.

The mergers of Wilshire Bancorp, Inc. (“Wilshire”) with and into BBCN Bancorp, Inc. (“BBCN”) and Wilshire Bank with and into BBCN Bank were completed on July 29, 2016, and the combined company began operations under the new banners of Hope Bancorp, Inc. and Bank of Hope effective July 30, 2016.  The 2016 fourth quarter financial results reflect the first full quarter of combined operations following the completion of the merger.  The full-year financial results reflect seven months of stand-alone operations of the former BBCN and five months of combined operations.  As a result, the Company’s 2016 fourth quarter and full-year financial results may not be comparable to financial results in prior periods.

For the three months ended December 31, 2016, net income totaled $40.6 million, or $0.30 per diluted common share, based on 135,585,561 weighted average diluted shares outstanding, and included pre-tax merger-related expenses of $3.0 million.  This compares with 2016 third quarter net income of $26.1 million, or $0.22 per diluted common share, based on 116,653,166 weighted average diluted shares outstanding, and included $11.2 million in merger-related expenses.  For the 2015 fourth quarter, net income totaled $22.9 million, or $0.29 per diluted common share, based on 79,601,452 weight average diluted shares outstanding, and included merger-related expenses of $1.4 million.  Excluding the merger-related expenses, core net income would have been $42.4 million, or $0.31 per diluted common share, for the 2016 fourth quarter, $32.9 million, or $0.28 per diluted common share, for the preceding 2016 third quarter, and $23.7 million, or $0.30 per diluted common share, for the 2015 fourth quarter.

For the full year, net income increased to $113.7 million, or $1.10 per diluted common share, based on 103,530,318 weighted average diluted shares outstanding.  This compares with 2015 net income of $92.3 million, or $1.16 per diluted common share, based on 79,611,800 weighted average diluted shares outstanding.  Excluding pre-tax merger-related expenses of $16.9 million in 2016 and $1.5 million in 2015, core net income would have been $123.8 million, or $1.20 per diluted common share, for 2016 and $93.2 million, or $1.17 per diluted common share, for 2015.

Net income excluding pre-tax merger-related expenses is a non-GAAP financial measure.  Management reviews net income excluding merger-related expenses in evaluating the Company’s overall evaluation of its performance and has included this financial metric in response to market participant interest in the Company’s core earnings performance.  The accompanying financial information includes a reconciliation of core net income and earnings per share excluding merger-related expenses.

“2016 was certainly a monumental year for our organization with the formation of the only super regional Korean-American bank in the United States and one that cannot be replicated by our niche peers in terms of size or market presence,” said Kevin S. Kim, President and Chief Executive Officer of Hope Bancorp, Inc.  “We continue to make solid progress with the integration, having successfully completed the systems conversion and the first phase of branch consolidations during the fourth quarter.  With these achievements behind us, we are well on track to achieve the anticipated cost saves from our merger and expect the benefits to be progressively evident in our financial results going forward.  While loan originations were lighter than expected for the fourth quarter, we are in the final stage of a transitional period of combining two strong lending forces, which remains intact, and believe we are well positioned to deliver the synergies from the merger.

“Today, Bank of Hope enjoys a significantly stronger competitive position with unrivaled leadership and unparalleled opportunity to cross-sell the most diversified offering of financial products and services among our peers.  The definitive agreement announced yesterday to acquire Seattle-based U & I Financial Corp. continues our momentum of establishing dominant leadership in the markets that we operate in. Looking into 2017, we have a clear vision of the bank that we want to become and are confident that we are moving in the right direction to maximize the value proposition that we provide to our customers, employees and shareholders,” said Kim.

Financial Highlights

(dollars in thousands, except per share data) (unaudited)At or for the Three Months Ended
 12/31/2016 9/30/2016 12/31/2015
Net income$40,630  $26,105  $22,869 
Diluted earnings per share$0.30  $0.22  $0.29 
Net interest income before provision for loan losses$117,209  $103,474  $71,768 
Net interest margin 3.75%  3.77%  3.88%
Noninterest income$18,192  $14,146  $10,977 
Noninterest expense$66,731  $67,846  $38,938 
Net loans receivable$10,463,989  $10,481,221  $6,171,933 
Deposits$10,642,035  $10,702,505  $6,340,976 
Nonaccrual loans (1)$40,074  $40,602  $40,801 
ALLL to loans receivable 0.75%  0.76%  1.22%
ALLL to nonaccrual loans (1) 197.99%  196.98%  187.27%
ALLL to nonperforming assets (1) (2) 71.32%  68.38%  69.34%
Provision for loan losses$800  $6,500  $4,900 
Net charge offs (recoveries)$1,433  $2,949  $(398)
ROA 1.20%  0.89%  1.19%
ROE 8.72%  6.59%  9.76%
Efficiency ratio 49.28%  57.68%  47.06%
            

(1) Excludes delinquent SBA loans that are guaranteed and currently in liquidation totaling $15.9 million,  $14.1 million and $18.7 million at December 31, 2016, September 30, 2016, and December 31, 2015, respectively.
(2) Nonperforming assets exclude purchased credit-impaired loans totaling $19.6 million, $16.4 million and $12.2 million at December 31, 2016, September 30, 2016, and December 31, 2015, respectively.

Operating Results for the 2016 Fourth Quarter

The comparability of Hope Bancorp’s operating results with past performance is impacted by acquisition accounting adjustments and merger-related expenses associated with past and current acquisitions.  The Company provides the following supplemental information to facilitate a better understanding of financial performance.  Net interest income and operating income for the three months ended December 31, 2016, September 30, 2016, and December 31, 2015 include the following pre-tax acquisition accounting adjustments and merger-related expenses associated with past and current acquisitions:

(dollars in thousands) (unaudited)Three Months Ended
 12/31/2016 9/30/2016 12/31/2015
Accretion on purchased non-impaired loans$3,355  $3,111  $2,648 
Accretion on purchased credit-impaired loans 2,182   1,673   2,206 
Amortization of premium on low income housing tax credits (84)  (54)   
Amortization of premium on acquired FHLB borrowings 449   330   97 
Accretion of discount on acquired subordinated debt (260)  (190)  (44)
Amortization of premium on acquired time deposits and savings 3,478   2,336   28 
Total acquisition accounting adjustments$9,120  $7,206  $4,935 
Merger-related expenses (2,952)  (11,222)  (1,438)
Total$6,168  $(4,016) $3,497 
            

Net Interest Income and Net Interest Margin.  Net interest income before provision for loan losses for the 2016 fourth quarter totaled $117.2 million, an increase of 13% over $103.5 million in the preceding 2016 third quarter and an increase of 63% over $71.8 million in the prior-year fourth quarter.  The increase in net interest income is primarily attributable to the significantly higher level of interest earning assets following the merger.  The 2016 fourth quarter included a full quarter of combined operations; the 2016 third quarter included two months of combined operations and one month of stand-alone BBCN operations; and the year-ago fourth quarter reflects stand-alone BBCN.

The net interest margin (net interest income divided by average interest earning assets) and the impact of acquisition accounting adjustments are summarized in the following table:

 Three Months Ended
 12/31/2016 9/30/2016 change 12/31/2015 change
Net interest margin, excluding the effect of acquisition accounting adjustments3.45% 3.48% (0.03) 3.59% (0.14)
Acquisition accounting adjustments0.30% 0.29% (0.01) 0.29% 0.01 
Net interest margin3.75% 3.77% (0.02) 3.88% (0.13)
               

The net interest margin for the 2016 fourth quarter was 3.75%, down 2 basis points from the preceding third quarter, but down 13 basis points when compared with the year-ago fourth quarter.  On a core basis, excluding the effect of acquisition accounting adjustments, the net interest margin for the 2016 fourth quarter declined by 3 basis points from the preceding third quarter and 14 basis points from the fourth quarter a year ago.

The weighted average yield on loans and the impact of acquisition accounting adjustments are summarized in the following table:

 Three Months Ended
 12/31/2016 9/30/2016 change 12/31/2015 change
Weighted average yield on loans, excluding the effect of acquisition accounting adjustments4.59% 4.55% 0.04  4.64% (0.05)
Acquisition accounting adjustments0.21% 0.25% (0.04) 0.35% (0.14)
Weighted average yield on loans4.80% 4.80%   4.99% (0.19)
               

The weighted average yield on loans for the 2016 fourth quarter was steady when compared with the preceding 2016 third quarter, but declined 19 basis points from the year-ago fourth quarter.  On a core basis, excluding the effect of acquisition accounting adjustments, the weighted average yield on loans increased 4 basis points from the preceding third quarter, but decreased 5 basis points from the 2015 fourth quarter.

The weighted average yield on new loans originated during the 2016 fourth quarter was 4.15%, compared with 4.03% in the preceding 2016 third quarter and 4.24% in the year-ago fourth quarter.

The weighted average cost of deposits and the impact of acquisition accounting adjustments are summarized in the following table:

 Three Months Ended
 12/31/2016 9/30/2016 change 12/31/2015 change
Weighted average cost of deposits, excluding the effect of acquisition accounting adjustments0.68% 0.64% 0.04  0.60% 0.08 
Acquisition accounting adjustments(0.13)% (0.08)% (0.05) % (0.13)
Weighted average cost of deposits0.55% 0.56% (0.01) 0.60% (0.05)
               

The weighted average cost of deposits for the 2016 fourth quarter decreased 1 basis point from the preceding third quarter and 5 basis points from the year-ago fourth quarter.  On a core basis, excluding the effect of premium amortization on time and savings deposits assumed in acquisitions, the weighted average cost of deposits increased 4 basis points from the preceding third quarter and increased 8 basis points when compared with the 2015 fourth quarter.

Noninterest Income.   Noninterest income for the 2016 fourth quarter totaled $18.2 million, compared with $14.1 million in the preceding 2016 third quarter and $11.0 million in the year-ago fourth quarter.  The Company noted that the increase reflects in part a full quarter of combined operations for the 2016 fourth quarter, versus the 2016 third quarter, which included two months of combined operations and one month of stand-alone BBCN, and the 2015 fourth quarter, which was stand-alone BBCN. In addition, noninterest income for the comparable periods reflect variations in gain on sale of Small Business Administration (“SBA”), gain on sale of other loans and gain on sale of securities available-for-sale. Noninterest income for the 2016 fourth quarter included a $3.7 million gain on sale of SBA loans and a $1.4 million gain on sale other loans from the combined mortgage operations platform.  Noninterest income for the preceding 2016 third quarter included a $948,000 net gain on the sale of securities available-for-sale, a $1.5 million gain on sale of other loans, which was predominantly mortgage loans, and just $230,000 gain on sale of SBA loans.  In the 2015 fourth quarter, noninterest income included a $3.1 million gain on sale of SBA loans and just $17,000 gain on sale of other loans.

Noninterest Expense.  Total noninterest expense for the 2016 fourth quarter, 2016 third quarter and 2015 fourth quarter amounted to $66.7 million, $67.8 million and $38.9 million, respectively.  The Company noted that total noninterest expense reflects the combination of the two predecessor companies as previously described and merger-related expenses of $3.0 million, $11.2 million and $1.4 million in the 2016 fourth quarter, 2016 third quarter and 2015 fourth quarter, respectively.  Excluding merger-related expenses, total noninterest expense would have been $63.8 million, $56.6 million and $37.5 million for the 2016 fourth quarter, 2016 third quarter and 2015 fourth quarter, respectively.

Noninterest expense excluding merger-related expenses is a non-GAAP financial measure.  Management believes total noninterest expense excluding merger-related expenses more accurately reflects the Company’s results of operations in the overall evaluation of its performance.  A reconciliation of the noninterest expense excluding merger-related expenses is included in the accompanying financial tables.

Salaries and employee benefits expense totaled $34.2 million for the 2016 fourth quarter, $30.5 million for the 2016 third quarter and $21.3 million for the year-ago fourth quarter. The total number of FTEs for the combined company as of December 31, 2016 was 1,382, down from 1,400 as of September 30, 2016.  At December 31, 2015, the total number of FTEs for the former BBCN was 938.

As previously reported, the Company announced the second and final phase of its branch consolidation plan that will result in nine branch consolidations to be completed by the second quarter of 2017.  These branch consolidations are expected to result in additional costs savings of approximately $5 million pre-tax on an annual basis beginning in 2017.  During the 2016 fourth quarter, the Company recorded $1.3 million in one-time charges pre-tax related to branch consolidations.

Income Tax Provision.  The effective tax rate for the 2016 fourth quarter was 40.1%, compared with 39.7% for the preceding 2016 third quarter and 41.2% for the 2015 fourth quarter.

Balance Sheet Summary

Loans receivable totaled $10.54 billion at December 31, 2016, compared with $10.56 billion at September 30, 2016, and $6.25 billion at December 31, 2015.

Total new loan originations during the 2016 fourth quarter amounted to $464.8 million, including warehouse lines of credit of $16.0 million, residential mortgage loans of $74.2 million and SBA loan originations of $62.5 million.

Sales of SBA loans to the secondary market and gains derived from those sales are based substantially on the production of SBA 7(a) loans.  Production of SBA 7(a) loans totaled $42.2 million for the fourth quarter of 2016, compared with $50.2 million for the preceding 2016 third quarter and $39.4 million for the 2015 fourth quarter.  During the 2016 fourth quarter, the Company returned to its regular practice of selling the majority of its SBA 7(a) loans and sold $50.3 million, compared with just $2.4 million in the preceding third quarter and $41.9 million in the year-ago fourth quarter.  The decision to retain or sell SBA loans is made on a quarter-to-quarter basis, depending on prevailing pricing in the secondary market and the Company’s liquidity needs.

Aggregate pay offs and pay downs for the combined company in the 2016 fourth quarter amounted to $417.3 million, compared with $357.0 million for the preceding 2016 third quarter, which included two months of combined operations and one month of stand-alone BBCN, and $267.1 million for the year-ago fourth quarter for BBCN alone.

Total deposits amounted to $10.64 billion at December 31, 2016, compared with $10.70 billion at September 30, 2016, and largely reflects increases in money market accounts, offset by outflows in time deposits.  Total deposits increased 68% when compared with $6.34 billion at December 31, 2015, reflecting the merger completion on July 29, 2016.

Credit Quality

The provision for loan losses for the 2016 fourth quarter was $800,000, compared with $6.5 million for the preceding 2016 third quarter and $4.9 million for the prior-year fourth quarter.

For a more detailed understanding of the changes in the Allowance for Loan and Lease Losses (“ALLL”), the composition of the ALLL has been segmented for disclosure purposes between loans accounted for under the amortized cost method (referred to as “legacy loans”) and loans acquired through the Wilshire Bancorp, Center Financial, Pacific International and Foster Bankshares transactions (referred to as “purchased loans”).  The purchased loans are further segregated between non-impaired and credit-impaired loans.

The composition of the ALLL as of December 31, 2016, September 30, 2016 and December 31, 2015 is as follows:

(dollars in thousands) (unaudited)12/31/2016 9/30/2016 12/31/2015
Legacy loans (1)$66,399 $66,986 $63,309
Purchased non-impaired loans (2) 814  938  1,117
Purchased credit-impaired loans (2) 12,130  12,052  11,982
Total ALLL$79,343 $79,976 $76,408
         
Loans receivable$10,543,332 $10,561,197 $6,248,341
ALLL coverage ratio 0.75%  0.76%  1.22%
            

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

Following are the components of criticized loan balances as of December 31, 2016, September 30, 2016 and December 31, 2015:

(dollars in thousands)12/31/2016 9/30/2016 12/31/2015
Special Mention (1)$243,656 $308,893 $104,186
Classified (1) 313,055  259,268  203,576
Criticized$556,711 $568,161 $307,762
         

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

The Company defines nonperforming loans to include delinquent loans past due 90 days or more on nonaccrual status, delinquent loans past due 90 days or more on accrual status (excluding purchased credit-impaired loans) and accruing restructured loans.  Nonaccrual loans at December 31, 2016 totaled $40.1 million, or 0.38% of loans receivable.   This compares with nonaccrual loans of $40.6 million, or 0.38% of loans receivable, at September 30, 2016 and $40.8 million, or 0.65% of loans receivable, at December 31, 2015.  Accruing restructured loans totaled $48.9 million at December 31, 2016, compared with $48.7 million at September 30, 2016 and $48.0 million at December 31, 2015.  Total nonperforming loans at December 31, 2016 amounted to $89.3 million, or 0.85% of loans receivable.  This compares with total nonperforming loans of $89.5 million, or 0.85% of loans receivable, at September 30, 2016 and $89.2 million, or 1.43% of loans receivable, at September 30, 2015.

Nonperforming assets, including nonperforming loans and other real estate owned, totaled $111.2 million at December 31, 2016, compared with $117.0 million at September 30, 2016 and $110.2 million at December 31, 2015.  As a percentage of total assets, nonperforming assets declined to 0.83% at December 31, 2016 from 0.87% at September 30, 2016 and 1.39% at December 31, 2015.

For the 2016 fourth quarter, the Company recorded net charge offs of $1.4 million, or 0.05% of average loans receivable on an annualized basis.  This compares with net charge offs of $2.9 million, or 0.13% of average loans receivable on an annualized basis for the 2016 third quarter and net recoveries of $398,000, or 0.03% of average loans receivable on an annualized basis, for the 2015 fourth quarter.

The allowance for loan losses at December 31, 2016 was $79.3 million, or 0.75% of loans receivable (excluding loans held for sale), compared with $80.0 million, or 0.76%, at September 30, 2016 and $76.4 million, or 1.22%, at December 31, 2015.   The coverage ratio of the allowance for loan losses to nonperforming loans (excluding purchased credit-impaired loans) was 88.90% at December 31, 2016, versus 89.36% at September 30, 2016 and 85.70% at December 31, 2015.

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 $140.4 million at December 31, 2016, compared with $128.1 million at September 30, 2016 and $138.1 million at December 31, 2015.

Capital

At December 31, 2016, the Company continued to exceed all regulatory capital requirements to be classified as a “well-capitalized” institution, as summarized in the following table:

 12/31/2016 9/30/2016 12/31/2015 Minimum Guideline
for “Well-Capitalized”
Institution
Common Equity Tier 1 Capital12.10% 11.96% 12.08% 6.50%
Tier 1 Leverage Ratio11.49% 13.02% 11.53% 5.00%
Tier 1 Risk-based Ratio12.92% 12.79% 12.67% 8.00%
Total Risk-based Ratio13.64% 13.51% 13.80% 10.00%
            

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

 12/31/2016 9/30/2016 12/31/2015
Tangible common equity per share (1)$10.15  $10.14  $10.43 
Tangible common equity to tangible assets (1) 10.60%  10.52%  10.63%
            

(1) Tangible common equity to tangible assets is a non-GAAP financial measure that represents common equity less goodwill and net other intangible assets divided by total assets less goodwill and net other intangible assets.  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.  The accompanying financial information includes a reconciliation of the ratio of tangible common equity to tangible assets with stockholders’ equity and total assets.

Investor Conference Call

The Company will host an investor conference call on Wednesday, January 25, 2017 at 9:30 a.m. Pacific Time / 12:30 p.m. Eastern Time to review financial results for the fourth quarter ended December 31, 2016.  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.”  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 at www.ir-hopebancorp.com.   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 February 1, 2017, replay access code 10098630.

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 $13.4 billion in total assets as of December 31, 2016. Formed through the merger of BBCN Bank and Wilshire Bank, the top two commercial lenders in the market, Bank of Hope is headquartered in Los Angeles and serves a multi-ethnic population of customers across the nation. Bank of Hope operates 73 full-service branches in California, Washington, Texas, Illinois, New York, New Jersey, Virginia, Georgia and Alabama. The Bank also operates SBA loan production offices in Seattle, Denver, Dallas, Atlanta, and Portland, Oregon; a commercial loan production office in Fremont, California; residential mortgage loan production offices in 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.

Forward-Looking Statements

This press release may contain forward-looking statements. These statements are based on current expectations, estimates, forecasts and projections and management assumptions about the future performance of the combined company, as well as the businesses and markets in which the combined company operates and is expected to operate. These statements constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, involve certain risks, uncertainties and assumptions that are difficult to assess and  are not guarantees of future performance and.  Actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. Readers should carefully review the risk factors and the information that could materially affect the Company’s financial results and business, described in documents the Company files from time to time with the Securities and Exchange Commission, including its quarterly reports on Form 10-Q and Annual Reports on Form 10-K, and particularly the discussions of business considerations and certain factors that may affect results of operations and stock price set forth therein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements.

(tables follow)

 
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands, except share data)
 
Assets12/31/2016 9/30/2016 % change 12/31/2015 % change
Cash and due from banks$437,334  $443,903  (1)% $298,389  47%
Securities available for sale, at fair value1,556,740  1,558,719  % 1,010,556  54%
Federal Home Loan Bank (“FHLB”), Federal Reserve Bank (“FRB”) stock and other investments66,166  69,119  (4)% 66,859  (1)%
Loans held for sale, at the lower of cost or fair value22,785  58,186  (61)% 8,273  175%
Loans receivable10,543,332  10,561,197  % 6,248,341  69%
Allowance for loan losses(79,343) (79,976) 1% (76,408) (4)%
Net loans receivable10,463,989  10,481,221  % 6,171,933  70%
Accrued interest receivable26,880  24,165  11% 15,195  77%
Premises and equipment, net55,316  53,966  3% 34,575  60%
Bank owned life insurance73,696  73,290  1% 47,018  57%
Goodwill464,448  464,419  % 105,401  341%
Servicing assets26,457  26,529  % 12,000  120%
Other intangible assets, net19,226  19,968  (4)% 2,820  582%
Other assets229,451  237,144  (3)% 139,629  64%
Total assets$13,442,488  $13,510,629  (1)% $7,912,648  70%
                  
Liabilities                 
Deposits$10,642,035  $10,702,505  (1)% $6,340,976  68%
Borrowings from FHLB754,290  754,739  % 530,591  42%
Subordinated debentures99,808  99,548  % 42,327  136%
Accrued interest payable10,863  9,708  12% 6,007  81%
Other liabilities78,599  89,558  (12)% 54,652  44%
Total liabilities11,585,595  11,656,058  (1)% 6,974,553  66%
                  
Stockholders’ Equity                 
Common stock, $0.001 par value; authorized, 150,000,000 shares at December, 31, 2016, September, 30, 2016, and December, 31, 2015;  issued and outstanding, 135,240,079, 135,109,641, and 79,566,356 at December, 31, 2016, September, 30, 2016, and December, 31, 2015, respectively
135  135  % 80  69%
Capital surplus1,401,911  1,400,915  % 541,596  159%
Retained earnings469,505  445,104  5% 398,251  18%
Accumulated other comprehensive income (loss), net(14,658) 8,417  (274)% (1,832) (700)%
Total stockholders’ equity1,856,893  1,854,571  % 938,095  98%
Total liabilities and stockholders’ equity$13,442,488  $13,510,629  (1)% $7,912,648  70%
                  


Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands, except per share data)
 
 Three Months Ended Twelve Months Ended
 12/31/2016 9/30/2016 % change 12/31/2015 % change 12/31/2016 12/31/2015 % change
Interest income:               
Interest and fees on loans$125,791  $112,132  12% $76,807  64% $392,127  $291,344  35%
Interest on securities7,391  6,645  11% 5,544  33% 25,442  18,611  37%
Interest on federal funds sold and other investments2,205  775  185% 622  255% 4,365  3,705  18%
Total interest income135,387  119,552  13% 82,973  63% 421,934  313,660  35%
                             
Interest expense:                            
Interest on deposits14,815  13,017  14% 9,297  59% 48,091  33,412  44%
Interest on other borrowings3,363  3,061  10% 1,908  76% 10,488  7,206  46%
Total interest expense18,178  16,078  13% 11,205  62% 58,579  40,618  44%
                             
Net interest income before provision for loan losses117,209  103,474  13% 71,768  63% 363,355  273,042  33%
Provision for loan losses800  6,500  (88)% 4,900  (84)% 9,000  8,000  13%
Net interest income after provision for loan losses116,409  96,974  20% 66,868  74% 354,355  265,042  34%
                             
Noninterest income:                            
Service fees on deposit accounts5,601  4,778  17% 2,944  90% 15,964  12,206  31%
Net gains on sales of SBA loans3,660  230  1,491% 3,112  18% 8,750  12,665  (31)%
Net gains on sales of other loans1,401  1,476  (5)% 17  8,141% 2,920  270  981%
Net gains on sales of securities available for sale2  948  (100)%   100% 950  424  124%
Other income and fees7,528  6,714  12% 4,904  54% 23,235  18,126  28%
Total noninterest income18,192  14,146  29% 10,977  66% 51,819  43,691  19%
                             
Noninterest expense:                            
Salaries and employee benefits34,162  30,456  12% 21,329  60% 107,944  84,899  27%
Occupancy7,948  6,889  15% 4,949  61% 24,574  19,391  27%
Furniture and equipment3,805  3,297  15% 2,330  63% 11,726  9,245  27%
Advertising and marketing2,475  2,306  7% 906  173% 7,320  5,090  44%
Data processing and communications3,904  3,199  22% 2,175  79% 11,403  9,179  24%
Professional fees2,301  1,898  21% 1,618  42% 6,556  5,585  17%
FDIC assessment468  1,564  (70)% 1,040  (55)% 4,165  4,088  2%
Credit related expenses812  810  % 324  151% 2,954  1,924  54%
Other real estate owned (“OREO”) expense, net1,354  (423) N/A  (154) N/A  2,492  1,523  64%
Merger-related expenses2,952  11,222  (74)% 1,438  105% 16,914  1,540  998%
Other6,550  6,628  (1)% 2,983  120% 18,927  10,920  73%
Total noninterest expense66,731  67,846  (2)% 38,938  71% 214,975  153,384  40%
Income before income taxes67,870  43,274  57% 38,907  74% 191,199  155,349  23%
Income tax provision27,240  17,169  59% 16,038  70% 77,452  63,091  23%
Net income$40,630  $26,105  56% $22,869  78% $113,747  $92,258  23%
                
Earnings Per Common Share:               
Basic$0.30  $0.22    $0.29    $1.10  $1.17   
Diluted$0.30  $0.22    $0.29    $1.10  $1.16   
                
Average Shares Outstanding:               
Basic135,238,928  116,622,920    79,556,859    103,289,059  78,549,651   
Diluted135,585,561  116,653,166    79,601,452    103,530,318  79,611,800   
                     


Hope Bancorp, Inc.
Selected Financial Data
Unaudited
 
 At or for the Three Months Ended
(Annualized)
 At or for the Twelve Months Ended
(Annualized)
Profitability measures:12/31/2016 9/30/2016 12/31/2015 12/31/2016 12/31/2015
ROA1.20% 0.89% 1.19% 1.10% 1.25%
ROE8.72% 6.59% 9.76% 8.47% 10.11%
Return on average tangible equity 111.77% 8.59% 11.03% 10.59% 11.48%
Net interest margin3.75% 3.77% 3.88% 3.75% 3.88%
Efficiency ratio49.28% 57.68% 47.06% 51.78% 48.43%
          
Average 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.
 


Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
 
 Three Months Ended Three Months Ended Three Months Ended
 12/31/2016 9/30/2016 12/31/2015
   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$10,427,538  $125,791  4.80% $9,292,814  $112,132  4.80% $6,102,693  $76,807  4.99%
Securities available for sale1,586,560  7,391  1.85% 1,406,919  6,645  1.89% 1,010,247  5,544  2.20%
FRB and FHLB stock and other investments433,212  2,205  2.02% 237,981  775  1.30% 225,529  622  1.09%
Total interest earning assets$12,447,310  $135,387  4.33% $10,937,714  $119,552  4.35% $7,338,469  $82,973  4.49%
                     
INTEREST BEARING LIABILITIES:                    
Deposits:                    
Demand, interest bearing$3,414,158  $7,054  0.82% $2,924,340  $5,932  0.81% $1,855,772  $3,651  0.78%
Savings303,064  319  0.42% 268,424  311  0.46% 189,271  410  0.86%
Time deposits:                            
$100,000 or more3,035,499  5,325  0.70% 2,687,108  4,913  0.73% 1,752,429  3,764  0.85%
Other1,085,254  2,117  0.78% 913,292  1,861  0.81% 704,040  1,472  0.83%
Total time deposits4,120,753  7,442  0.72% 3,600,400  6,774  0.75% 2,456,469  5,236  0.85%
Total interest bearing deposits7,837,975  14,815  0.75% 6,793,164  13,017  0.76% 4,501,512  9,297  0.82%
FHLB advances681,757  2,190  1.28% 698,081  2,161  1.23% 515,981  1,507  1.16%
Other borrowings95,650  1,173  4.80% 78,828  900  4.47% 40,764  401  3.85%
Total interest bearing liabilities8,615,382  $18,178  0.84% 7,570,073  $16,078  0.84% 5,058,257  $11,205  0.88%
Noninterest bearing demand deposits2,918,156       2,535,015       1,645,237      
Total funding liabilities/cost of funds$11,533,538    0.63% $10,105,088    0.63% $6,703,494    0.66%
Net interest income/net interest spread  $117,209       $103,474       $71,768    
Net interest margin    3.75%     3.77%     3.88%
Cost of deposits:                    
Noninterest bearing demand deposits$2,918,156  $     $2,535,015  $     $1,645,237  $    
Interest bearing deposits7,837,975  14,815  0.75% 6,793,164  13,017  0.76% 4,501,512  9,297  0.82%
Total deposits$10,756,131  $14,815  0.55% $9,328,179  $13,017  0.56% $6,146,749  $9,297  0.60%
                                 


Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
 
 Twelve Months Ended  Twelve Months Ended
 12/31/2016 12/31/2015
   Interest Annualized    Interest Annualized
 Average Income/ Average Average  Income/ Average
 Balance Expense Yield/Cost Balance  Expense Yield/Cost
INTEREST EARNING ASSETS:           
Loans receivable, including loans held for sale$8,121,897  $392,127  4.83% $5,846,658  $291,344  4.98%
Securities available for sale1,276,068  25,442  1.99% 871,010  18,611  2.14%
FRB and FHLB stock and other investments281,824  4,365  1.55% 313,904  3,705  1.18%
Total interest earning assets$9,679,789  $421,934  4.36% $7,031,572  $313,660  4.46%
              
INTEREST BEARING LIABILITIES:             
Deposits:             
Demand, interest bearing$2,587,548  $21,136  0.82% $1,697,033  $12,430  0.73%
Savings234,332  1,282  0.55% 193,610  1,670  0.86%
Time deposits:             
$100,000 or more2,357,794  18,535  0.79% 1,723,410  14,105  0.82%
Other861,690  7,138  0.83% 654,583  5,207  0.80%
Total time deposits3,219,484  25,673  0.80% 2,377,993  19,312  0.81%
Total interest bearing deposits6,041,364  48,091  0.80% 4,268,636  33,412  0.78%
FHLB advances619,557  7,560  1.22% 503,127  5,645  1.12%
Other borrowings64,165  2,928  4.49% 40,694  1,561  3.78%
Total interest bearing liabilities6,725,086  $58,579  0.87% 4,812,457  $40,618  0.84%
Noninterest bearing demand deposits2,191,620       1,611,068      
Total funding liabilities/cost of funds$8,916,706    0.66% $6,423,525    0.63%
Net interest income/net interest spread  $363,355  3.49%   $273,042  3.62%
Net interest margin    3.75%     3.88%
Cost of deposits:             
Noninterest bearing demand deposits$2,191,620  $     $1,611,068  $    
Interest bearing deposits6,041,364  48,091  0.80% 4,268,636  33,412  0.78%
Total deposits$8,232,984  $48,091  0.58% $5,879,704  $33,412  0.57%
                      


Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
 
  Three Months Ended  Twelve Months Ended
AVERAGE BALANCES:12/31/2016 9/30/2016 % change 12/31/2015 % change 12/31/2016 12/31/2015 % change
Loans receivable, including loans held for sale$10,427,538  $9,292,814  12% $6,102,693  71% $8,121,897  $5,846,658  39%
Investments2,019,772  1,644,900  23% 1,235,776  63% 1,557,892  1,184,914  31%
Interest earning assets12,447,310  10,937,714  14% 7,338,469  70% 9,679,789  7,031,572  38%
Total assets13,506,860  11,777,564  15% 7,700,716  75% 10,342,068  7,389,530  40%
                         
Interest bearing deposits7,837,975  6,793,164  15% 4,501,512  74% 6,041,364  4,268,636  42%
Interest bearing liabilities8,615,382  7,570,073  14% 5,058,257  70% 6,725,086  4,812,457  40%
Noninterest bearing demand deposits2,918,156  2,535,015  15% 1,645,237  77% 2,191,620  1,611,068  36%
Stockholders’ equity1,864,797  1,585,100  18% 937,664  99% 1,342,962  912,609  47%
Net interest earning assets3,831,928  3,367,641  14% 2,280,212  68% 2,954,703  2,219,115  33%
                
LOAN PORTFOLIO COMPOSITION:12/31/2016 9/30/2016 % change 12/31/2015 % change      
Commercial loans$1,986,949  $2,011,913  (1)% $1,079,316  84%      
Real estate loans8,154,570  8,158,871  % 5,069,482  61%      
Consumer and other loans403,470  392,608  3% 102,573  293%      
Loans outstanding10,544,989  10,563,392  % 6,251,371  69%      
Unamortized deferred loan fees - net of costs(1,657) (2,195) 25% (3,030) 45%      
Loans, net of deferred loan fees and costs10,543,332  10,561,197  % 6,248,341  69%      
Allowance for loan losses(79,343) (79,976) 1% (76,408) (4)%      
Loan receivable, net$10,463,989  $10,481,221  % $6,171,933  70%      
                
REAL ESTATE LOANS BY PROPERTY TYPE:12/31/2016 9/30/2016 % change 12/31/2015 % change      
Retail buildings$2,163,075  $2,136,128  1% $1,326,516  63%      
Hotels/motels1,605,787  1,599,985  % 1,061,111  51%      
Gas stations/car washes946,364  962,643  (2)% 667,496  42%      
Mixed-use facilities563,484  546,177  3% 369,425  53%      
Warehouses892,100  912,818  (2)% 529,255  69%      
Multifamily423,084  426,257  (1)% 245,532  72%      
Other1,560,676  1,574,863  (1)% 870,147  79%      
Total$8,154,570  $8,158,871  % $5,069,482  61%      
                
DEPOSIT COMPOSITION12/31/2016 9/30/2016 % change 12/31/2015 % change      
Noninterest bearing demand deposits$2,900,241  $2,903,658  % $1,694,427  71%      
Money market and other3,401,446  3,318,728  2% 1,983,250  72%      
Saving deposits301,906  304,719  (1)% 187,498  61%      
Time deposits of $100,000 or more2,982,256  3,077,629  (3)% 1,772,975  68%      
Other time deposits1,056,186  1,097,771  (4)% 702,826  50%      
Total deposit balances$10,642,035  $10,702,505  (1)% $6,340,976  68%      
                
DEPOSIT COMPOSITION (%)12/31/2016 9/30/2016   12/31/2015        
Noninterest bearing demand deposits27.3% 27.1%   26.7%        
Money market and other32.0% 31.0%   31.3%        
Saving deposits2.8% 2.8%   3.0%        
Time deposits of $100,000 or more28.0% 28.8%   28.0%        
Other time deposits9.9% 10.3%   11.0%        
Total deposit balances100.0% 100.0%   100.0%        
                   


Hope Bancorp, Inc.    
Selected Financial Data    
Unaudited (dollars in thousands)    
     
CAPITAL RATIOS:12/31/2016 9/30/2016 12/31/2015        
Total stockholders’ equity$1,856,893  $1,854,571  $938,095         
Common Equity Tier 1 ratio12.10% 11.96% 12.08%        
Tier 1 risk-based capital ratio12.92% 12.79% 12.67%        
Total risk-based capital ratio13.64% 13.51% 13.80%        
Tier 1 leverage ratio11.49% 13.02% 11.53%        
Total risk weighted assets$11,575,559  $11,491,204  $6,905,154         
Book value per common share$13.73  $13.73  $11.79         
Tangible common equity to tangible assets 210.60% 10.52% 10.63%        
Tangible common equity per share 2$10.15  $10.14  $10.43         
              
Tangible common equity to tangible assets is a non-GAAP financial measure that represents common equity less goodwill and core deposit intangible assets, net divided by total assets less goodwill and core deposit intangible assets, net.  Management reviews tangible common equity to tangible assets in evaluating the Company’s capital levels and has included this ratio in response to market participant interest in tangible common equity as a measure of capital.    
              
Reconciliation of GAAP financial measures to non-GAAP financial measures:        
 Three Months Ended Twelve Months Ended    
NONINTEREST EXPENSE BEFORE MERGER-RELATED COSTS12/31/2016 9/30/2016 12/31/2015 12/31/2016 12/31/2015    
Total noninterest expense$66,731  $67,846  $38,938  $214,975  $153,384     
Less: merger-related costs2,952  11,222  1,438  16,914  1,540     
Total noninterest expense, excluding merger-related expense$63,779  $56,624  $37,500  $198,061  $151,844     
              
CORE EPS LESS MERGER RELATED EXPENSES             
Net income$40,630  $26,105  $22,869  $113,747  $92,258     
Less: merger-related costs2,952  11,222  1,438  16,914  1,540     
Tax provision adjustment(1,185) (4,452) (593) (6,852) (625)    
Net income, excluding merger-related expense$42,397  $32,875  $23,714  $123,809  $93,173     
              
Weighted average common shares diluted135,585,561  116,653,166  79,601,452  103,530,318  79,611,800     
Core EPS excluding merger-related expenses$0.31  $0.28  $0.30  $1.20  $1.17     
              
TANGIBLE COMMON EQUITY             
Total stockholders’ equity$1,856,893  $1,854,571  $938,095         
Less:  Common stock warrant             
Goodwill and core deposit intangible assets, net(483,674) (484,387) (108,221)        
Tangible common equity$1,373,219  $1,370,184  $829,874         
              
Total assets$13,442,488  $13,510,629  $7,912,648         
Less:  Goodwill and core deposit intangible assets, net(483,674) (484,387) (108,221)        
Tangible assets$12,958,814  $13,026,242  $7,804,427         
              
Common shares outstanding135,240,079  135,109,641  79,566,356         
              
Tangible common equity to tangible assets10.60% 10.52% 10.63%        
Tangible common equity per share$10.15  $10.14  $10.43         
                    


Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
 
  Three Months Ended  Twelve Months Ended
ALLOWANCE FOR LOAN LOSSES:12/31/2016 9/30/2016 6/30/2016 3/31/2016 12/31/2015 12/31/2016 12/31/2015
Balance at beginning of period$79,976  $76,425  $76,856  $76,408  $71,110  $76,408  $67,758 
Provision for loan losses800  6,500  1,200  500  4,900  9,000  8,000 
Recoveries452  1,010  664  769  955  2,895  5,562 
Charge offs(1,885) (3,959) (2,295) (821) (557) (8,960) (4,912)
Balance at end of period$79,343  $79,976  $76,425  $76,856  $76,408  $79,343  $76,408 
Net charge offs/average loans receivable (annualized)0.05% 0.13% 0.10% % (0.03)% 0.07% (0.01)%
              
 Three Months Ended  Twelve Months Ended
NET CHARGED OFF/(RECOVERED) LOANS  BY TYPE12/31/2016 9/30/2016 6/30/2016 3/31/2016 12/31/2015 12/31/2016 12/31/2015
Real estate loans$(45) $(248) $18  $(390) $(254) $(665) $(1,206)
Commercial loans1,375  2,663  1,649  379  (127) 6,066  519 
Consumer loans478  159  (36) 63  (17) 664  37 
Charge offs excluding Acquired Credit Impaired Loans1,808  2,574  1,631  52  (398) 6,065  (650)
Charge offs on Acquired Credit Impaired Loans(375) 375           
Total net charge offs / (recoveries)$1,433  $2,949  $1,631  $52  $(398) $6,065  $(650)
                            


Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
 
NONPERFORMING ASSETS12/31/2016 9/30/2016 6/30/2016 3/31/2016 12/31/2015
Delinquent loans on nonaccrual status 3$40,074  $40,602  $42,398  $43,548  $40,801 
Delinquent loans 90 days or more on accrual status 4305  192  147  45  375 
Accruing restructured loans48,874  48,701  50,837  52,760  47,984 
Total nonperforming loans89,253  89,495  93,382  96,353  89,160 
Other real estate owned21,990  27,457  16,392  19,794  21,035 
Total nonperforming assets$111,243  $116,952  $109,774  $116,147  $110,195 
Nonperforming assets/total assets0.83% 0.87% 1.32% 1.44% 1.39%
Nonperforming assets/loans receivable & OREO1.05% 1.10% 1.66% 1.82% 1.76%
Nonperforming assets/total capital5.99% 6.31% 11.3% 12.07% 11.75%
Nonperforming loans/loans receivable0.85