Press Release

Hope Bancorp Reports 2017 Second Quarter Financial Results

Company Release - 7/25/2017 4:30 PM ET

Q2 2017 Highlights:

  • $725.1 million in new loan originations funded during the quarter, up 23% over 1Q 2017
  • Loans receivable increase 3% to $10.82 billion, or 10% on an annualized basis
  • Total deposits increase 2% to $10.96 billion, despite consolidation of 9 additional branches during 2017
  • Total assets increase 3% to $13.86 billion, or 11% on an annualized basis
  • Net income totals $40.7 million, or $0.30 per diluted common share

LOS ANGELES, July 25, 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 three- and six-month periods ended June 30, 2017.

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 companies began operations under the new banners of Hope Bancorp, Inc. and Bank of Hope, respectively, effective July 30, 2016.  The 2017 second quarter and first quarter financial results reflect full quarters of combined operations.  The 2016 second quarter reflects stand-alone operations of the former BBCN.  As a result, the Company’s 2017 second quarter may not be comparable to financial results for the year-ago second quarter.

For the three months ended June 30, 2017, net income increased 12% to $40.7 million, or $0.30 per diluted common share, based on 135,613,181 weighted average diluted shares outstanding, and included pre-tax merger-related expenses of $562,000. This compares with 2017 first quarter net income of $36.2 million, or $0.27 per diluted common share, based on 135,768,645 weighted average diluted shares outstanding, and included $947,000 in pre-tax merger-related expenses.  For the 2016 second quarter, net income for BBCN on a stand-alone basis totaled $23.4 million, or $0.29 per diluted common share, based on 79,634,762 weight average diluted shares outstanding, and included pre-tax merger-related expenses of $1.5 million.

“The momentum that we achieved in the beginning of 2017 continued to build into the second quarter, with new loan fundings of $725 million and growth in our loans receivable during the quarter of $267 million, or 10% on an annualized basis,” said Kevin S. Kim, President and Chief Executive Officer. “Despite the consolidation of nine additional branches in 2017, we grew our deposit base by $251 million during the second quarter, or 9% on an annualized basis. We are also pleased with the improved pricing of new loan originations, with the average rate on new loans during the second quarter increasing 31 basis points from the immediately preceding first quarter to 4.56%.

“As we approach our one-year anniversary of the creation of the only super regional Korean-American bank in the United States, we express our deepest appreciation and commitment to all of our stakeholders. With the physical integration completed and strong momentum building in our business expansion efforts, we believe we are well poised to deliver even greater returns in the years ahead,” said Kim.

Financial Highlights

(dollars in thousands, except per share data) (unaudited)  At or for the Three Months Ended
   6/30/2017  3/31/2017  6/30/2016
Net income  $40,687   $36,210   $23,390 
Diluted earnings per share  $0.30   $0.27   $0.29 
Net interest income before provision for loan losses  $116,820   $114,905   $71,064 
Net interest margin   3.75%   3.77%   3.67%
Noninterest income  $16,115   $17,603   $10,707 
Noninterest expense  $64,037   $67,699   $40,348 
Net loans receivable  $10,736,345   $10,471,008   $6,507,812 
Deposits  $10,955,101   $10,703,777   $6,637,522 
Nonaccrual loans (1)  $47,361   $37,009   $42,398 
ALLL to loans receivable   0.74%   0.75%   1.16%
ALLL to nonaccrual loans (1)   169.07%   212.54%   180.26%
ALLL to nonperforming assets (1) (2)   64.40%   74.65%   69.62%
Provision for loan losses  $2,760   $5,600   $1,200 
Net charge offs  $1,345   $6,284   $1,631 
Return on assets (“ROA”)   1.21%   1.09%   1.15%
Return on equity (“ROE”)   8.60%   7.75%   9.67%
Efficiency ratio   48.17%   51.09%   49.34%

(1) Excludes delinquent SBA loans that are guaranteed and currently in liquidation totaling $15.5 million, $15.2 million and $15.5 million at June 30, 2017, March 31, 2017 and June 30, 2016, respectively.
(2) Nonperforming assets exclude purchased credit-impaired loans totaling $16.3 million, $17.3 million and $13.8 million at June 30, 2017, March 31, 2017 and June 30, 2016, respectively.

Operating Results for the 2017 Second 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 June 30, 2017, March 31, 2017 and June 30, 2016 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
   6/30/2017   3/31/2017   6/30/2016
Accretion on purchased non-impaired loans  $3,501    $2,676    $898 
Accretion on purchased credit-impaired loans   5,212     5,348     1,436 
Amortization of premium on low income housing tax credits   (85)    (84)     
Amortization of premium on acquired FHLB borrowings   446     441     97 
Accretion of discount on acquired subordinated debt   (260)    (259)    (44)
Amortization of premium on acquired time deposits and savings   1,218     3,476     19 
Amortization of core deposit intangibles   (676)    (676)    (212)
Total acquisition accounting adjustments  $9,356    $10,922    $2,194 
Merger-related expenses   (562)    (947)    (1,533)
Total  $8,794    $9,975    $661 

Net Interest Income.  Net interest income before provision for loan losses for the 2017 second quarter increased 2% to $116.8 million from $114.9 million in the immediately preceding first quarter, largely reflecting higher levels of interest and fee income on a larger loan portfolio, partially offset by higher deposit costs. In the year-ago second quarter, net interest income before provision for loan losses amounted to $71.1 million for BBCN on a stand-alone basis.

The net interest margin (net interest income divided by average interest earning assets) for the 2017 second quarter declined 2 basis points to 3.75% from 3.77% in the 2017 first quarter, largely due to higher funding costs. Compared with the year-ago second quarter for BBCN on a stand-alone basis, net interest margin increased 8 basis points.

The weighted average yield on loans for the 2017 second quarter increased 7 basis points to 4.89% from 4.82% in  the 2017 first quarter. Compared with the 2016 second quarter for BBCN on a stand-alone basis, the weighted average yield on loans increased 9 basis points.

The weighted average yield on new loans originated during the 2017 second quarter improved 31 basis points to 4.56% from 4.25% in the 2017 first quarter. The weighted average yield on new loans in the year-ago first quarter for BBCN on a stand-alone basis was 4.28%.

The weighted average cost of deposits for the 2017 second quarter increased 13 basis points to 0.68% from 0.55% in the 2017 first quarter. In addition to the recent interest rate hikes, the Company noted that deposit premiums for Wilshire were fully amortized in April, which resulted in a significant reduction in the benefit from acquisition accounting. Compared with the year-ago second quarter for BBCN on a stand-alone basis, the weighted average cost of deposits increased 4 basis points.

Noninterest Income.   Noninterest income for the 2017 second quarter declined to $16.1 million from $17.6 million in the 2017 first quarter, largely reflecting higher-than-usual swap fee income and recoveries on pre-merger, fully charged off acquired loans in the immediately preceding first quarter. Swap fee income amounted to $481,000 in the 2017 second quarter, versus $963,000 in the 2017 first quarter. The Company recognized recoveries on pre-merger, fully charged off acquired loans of $210,000 in the 2017 second quarter, compared with $1.1 million in the 2017 first quarter. Noninterest income for BBCN on a stand-alone basis was $10.7 million in the year-ago second quarter.

Noninterest Expense. Noninterest expense declined to $64.0 million in the 2017 second quarter from $67.7 million in the 2017 first quarter, largely reflecting linked-quarter reductions in expenses related to the consolidation of nine additional branches since late March 2017. In addition, the Company’s 2017 first quarter noninterest expenses included higher-than-usual advertising and marketing costs associated with Bank of Hope’s title sponsorship of an LPGA event and elevated levels of credit-related expenses due to the amount of charge offs in the first quarter. In the 2016 second quarter, total noninterest expense amounted to $40.3 million for BBCN on a stand-alone basis.

Salaries and employee benefits expense for the 2017 second quarter increased 2% to $34.9 million from $34.2 million for the immediately preceding first quarter.  For BBCN on a stand-alone basis in the 2016 second quarter, salaries and employee benefits expense amounted to $21.8 million. The total number of FTEs, excluding employees on leave, as of June 30, 2017 was 1,378, up from 1,352 as of March 31, 2017. At June 30, 2016, the total number of FTEs for the former BBCN was 918.

Income Tax Provision.  The effective tax rate for the 2017 second quarter was 38.5%, compared with 38.8% for the preceding 2017 first quarter and 41.8% for the second quarter a year ago for BBCN on a stand-alone basis.

Balance Sheet Summary

Loans receivable increased 3% to $10.82 billion at June 30, 2017 from $10.55 billion at March 31, 2017, reflecting a 10% annualized growth rate.  At June 30, 2016, loans receivable for BBCN on a stand-alone basis amounted to $6.58 billion.

Total new loan originations during the 2017 second quarter amounted to $725.1 million and included SBA loan production of $109.4 million and residential mortgage loan originations of $70.8 million. The Company also purchased a $10.4 million pool of seasoned, adjustable rate residential loans.

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.  SBA 7(a) loan originations totaled $65.5 million for the second quarter of 2017, compared with $51.9 million for the first quarter of 2017 and $56.7 million for the year-ago second quarter for BBCN on a stand-alone basis. During the 2017 second quarter, the Company sold $46.1 million of its SBA loans held for sale, compared with $44.9 million in the immediately preceding first quarter and $39.6 million in the second quarter a year ago for BBCN on a stand-alone basis.

Aggregate pay offs and pay downs in the 2017 second quarter amounted to $432.1 million, compared with $414.6 million for the immediately preceding first quarter. In the year-ago second quarter, aggregate pay offs and paydowns for BBCN on a stand-alone basis totaled $235.6 million.

Total deposits at June 30, 2017 increased 2% to $10.96 billion from $10.70 billion at March 31, 2017, notwithstanding the consolidation of nine additional branches during the first half of the year. The increase in deposits reflects higher balances in noninterest bearing deposits, money market accounts and time deposits under $100,000. Total deposits at June 30, 2016 for the stand-alone BBCN amounted to $6.64 billion.

Credit Quality

The provision for loan and lease losses for the 2017 second quarter was $2.8 million, compared with $5.6 million for the immediately preceding first quarter and $1.2 million for the year-ago second quarter for BBCN on a stand-alone basis.

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 June 30, 2017, March 31, 2017 and June 30, 2016 is as follows:

(dollars in thousands) (unaudited)  6/30/2017   3/31/2017   6/30/2016
Legacy loans (1)  $65,255    $64,055    $63,616 
Purchased non-impaired loans (2)   2,753     2,468     860 
Purchased credit-impaired loans (2)   12,066     12,136     11,949 
Total ALLL  $80,074    $78,659    $76,425 
                  
Loans receivable  $10,816,419    $10,549,667    $6,584,237 
ALLL coverage ratio   0.74%    0.75%    1.16%

(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 ALLL reflects provisions for credit deterioration since the acquisition date.

Following are the components of criticized loan balances as of June 30, 2017, March 31, 2017 and June 30, 2016:

(dollars in thousands) (unaudited)  6/30/2017   3/31/2017   6/30/2016
Special Mention (1)  $251,056   $225,968   $100,370
Classified (1)   315,439    309,996    198,857
Criticized  $566,495   $535,964   $299,227

(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 June 30, 2017 increased to $47.4 million, or 0.44% of loans receivable, from $37.0 million, or 0.35% of loans receivable, at March 31, 2017 and $42.4 million, or 0.64% of loans receivable, at June 30, 2016 for BBCN on a stand-alone basis. Accruing restructured loans totaled $53.3 million at June 30, 2017, compared with $49.0 million at March 31, 2017 and $50.8 million at June 30, 2016 for BBCN on a stand-alone basis.  Total nonperforming loans at June 30, 2017 increased to $102.5 million, or 0.95% of loans receivable, from $86.3 million, or 0.82% of loans receivable, at March 31, 2017 and $93.4 million, or 1.42% of loans receivable, at June 30, 2016.

Nonperforming assets, including nonperforming loans and OREO, increased to $124.3 million at June 30, 2017 from $105.4 million at March 31, 2017 and $109.8 million at June 30, 2016 for BBCN on a stand-alone basis.  As a percentage of total assets, nonperforming assets was 0.90% at June 30, 2017, 0.78% at March 31, 2017 and 1.32% at June 30, 2016 for BBCN on a stand-alone basis.

For the 2017 second quarter, net charge offs totaled $1.3 million, or 0.05% of average loans receivable on an annualized basis. This compares with 2017 first quarter net charge offs of $6.3 million, or 0.24% of average loans receivable on an annualized basis, and $1.6 million, or 0.10% of average loans receivable on an annualized basis, for the year-ago second quarter.

The ALLL at June 30, 2017 was $80.1 million, or 0.74% of loans receivable (excluding loans held for sale), compared with $78.7 million, or 0.75% of loans receivable (excluding loans held for sale), at March 31, 2017 and $76.4 million of loans receivable (excluding loans held for sale), or 1.16%, at June 30, 2016 for BBCN on a stand-alone basis.  The coverage ratio of the ALLL to nonperforming loans (excluding purchased credit-impaired loans) was 78.12% at June 30, 2017, versus 91.18% at March 31, 2017 and 81.84% at June 30, 2016 for BBCN on a stand-alone basis.

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) declined to $100.7 million at June 30, 2017 from $129.6 million at March 31, 2017 and $136.6 million at June 30, 2016 for BBCN on a stand-alone basis.

Capital

At June 30, 2017, the Company continued to exceed all regulatory capital requirements to be generally classified as a “well-capitalized” financial institution, as summarized in the following table:

   6/30/2017  3/31/2017  6/30/2016  Minimum Guideline
for “Well-Capitalized”
Institution
Common Equity Tier 1 Capital  12.18%  12.22%  11.66%  6.50%
Tier 1 Leverage Ratio  11.80%  11.72%  11.14%  5.00%
Tier 1 Risk-based Ratio  13.00%  13.05%  12.22%  8.00%
Total Risk-based Ratio  13.70%  13.76%  13.28%  10.00%

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

   6/30/2017  3/31/2017  6/30/2016
Tangible common equity per share (1)  $10.52   $10.32   $10.85 
Tangible common equity to tangible assets (1)   10.64%   10.74%   10.50%

(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 to total assets.

Investor Conference Call

The Company will host an investor conference call on Wednesday, July 26, 2017 at 9:30 a.m. Pacific Time / 12:30 p.m. Eastern Time to review financial results for the second quarter ended June 30, 2017. 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 August 2, 2017, replay access code 10109988.

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 $13.9 billion in total assets as of June 30, 2017. Formed through the merger of BBCN Bank and Wilshire Bank on July 29, 2016, 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 64 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. By including the foregoing website address, the registrant does not intent to and shall not be deemed to incorporate by reference any material contained 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. Our 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: the inability to consummate our proposed merger with U & I Financial Corp. on the terms we have proposed or at all; failure to realize the benefits from the merger with U & I Financial Corp. that we currently expect if the merger is consummated; the Company’s inability to remediate its presently identified material weaknesses or to do so in a timely manner, the possibility that additional material weaknesses may arise in the future, and that a material weakness may have an impact on our reported financial results; 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; and regulatory risks associated with current and future regulations. For additional information concerning these and other risk factors, see Part I, Item 1A. Risk Factors contained in our Annual Report on Form 10-K for the year ended December 31, 2016 and Part II, Item 1A., Risk Factors, contained in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2017. 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.

(tables follow)

                     
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands, except per share data)
                     
Assets 6/30/2017  3/31/2017  % change  12/31/2016  % change  6/30/2016  % change
Cash and due from banks $446,415   $461,068   (3)%  $437,334   2%  $286,173   56%
Securities available for sale, at fair value 1,680,382   1,583,946   6%  1,556,740   8%  1,099,944   53%
Federal Home Loan Bank (“FHLB”), Federal Reserve Bank (“FRB”) stock and other investments 66,313   65,161   2%  66,166   %  63,429   5%
Loans held for sale, at the lower of cost or fair value 16,927   19,141   (12)%  22,785   (26)%  14,323   18%
Loans receivable 10,816,419   10,549,667   3%  10,543,332   3%  6,584,237   64%
Allowance for loan losses (80,074)  (78,659)  (2)%  (79,343)  (1)%  (76,425)  (5)%
Net loans receivable 10,736,345   10,471,008   3%  10,463,989   3%  6,507,812   65%
Accrued interest receivable 25,640   25,683   %  26,880   (5)%  15,787   62%
Premises held for sale, at fair value    3,300   (100)%     %     %
Premises and equipment, net 52,565   51,125   (3)%  55,316   (5)%  37,663   40%
Bank owned life insurance 74,113   74,090   %  73,696   1%  47,562   56%
Goodwill 464,450   463,975   %  462,997   %  105,401   341%
Servicing assets 25,338   25,941   (2)%  26,457   (4)%  12,193   108%
Other intangible assets, net 17,874   18,550   (4)%  19,226   (7)%  2,395   646%
Other assets 252,855   218,441   16%  229,836   10%  144,144   75%
Total assets $13,859,217   $13,481,429   3%  $13,441,422   3%  $8,336,826   66%
                     
Liabilities                    
Deposits $10,955,101   $10,703,777   2%  $10,642,035   3%  $6,637,522   65%
Borrowings from FHLB 793,403   703,850   13%  754,290   5%  610,398   30%
Subordinated debentures 100,328   100,067   %  99,808   1%  42,415   137%
Accrued interest payable 11,855   10,592   12%  10,863   9%  7,164   65%
Other liabilities 92,236   85,096   8%  78,953   17%  67,587   36%
Total liabilities 11,952,923   11,603,382   3%  11,585,949   3%  7,365,086   62%
                     
Stockholders’ Equity                    
Common stock, $0.001 par value; authorized, 150,000,000 shares at June 30, 2017, March 31, 2017, December 31, 2016, and June 30, 2016 $135   $135   %  $135   %  $80   69%
Capital surplus 1,402,303   1,401,275   %  1,400,490   %  541,688   159%
Retained earnings 513,945   489,486   5%  469,505   9%  418,998   23%
Accumulated other comprehensive income (loss), net (10,089)  (12,849)  21%  (14,657)  31%  10,974   (192)%
Total stockholders’ equity 1,906,294   1,878,047   2%  1,855,473   3%  971,740   96%
Total liabilities and stockholders’ equity $13,859,217   $13,481,429   3%  $13,441,422   3%  $8,336,826   66%


      
Hope Bancorp, Inc.
Selected Financial Data
Unaudited
      
  Three Months Ended  Six Months Ended
  6/30/2017  3/31/2017  % change  6/30/2016  % change  6/30/2017  6/30/2016  % change
Interest income:                       
Interest and fees on loans $128,515   $123,294   4%  $77,086   67%  $251,809   $154,204   63%
Interest on securities 8,741   8,113   8%  5,729   53%  16,854   11,406   48%
Interest on federal funds sold and other investments 1,277   1,336   (4)%  719   78%  2,613   1,385   89%
Total interest income 138,533   132,743   4%  83,534   66%  271,276   166,995   62%
                        
Interest expense:                       
Interest on deposits 18,114   14,511   25%  10,352   75%  32,625   20,259   61%
Interest on other borrowings 3,599   3,327   8%  2,118   70%  6,926   4,065   70%
Total interest expense 21,713   17,838   22%  12,470   74%  39,551   24,324   63%
                        
Net interest income before provision for loan losses 116,820   114,905   2%  71,064   64%  231,725   142,671   62%
Provision for loan losses 2,760   5,600   (51)%  1,200   130%  8,360   1,700   392%
Net interest income after provision for loan losses 114,060   109,305   4%  69,864   63%  223,365   140,971   58%
                        
Noninterest income:                       
Service fees on deposit accounts 5,179   5,338   (3)%  2,902   78%  10,517   5,585   88%
Net gains on sales of SBA loans 3,267   3,250   1%  3,035   8%  6,517   4,860   34%
Net gains on sales of other loans 352   420   (16)%  43   719%  772   43   1,695%
Net gains on sales of securities available for sale       %     %        %
Other income and fees 7,317   8,595   (15)%  4,727   55%  15,912   8,994   77%
Total noninterest income 16,115   17,603   (8)%  10,707   51%  33,718   19,482   73%
                        
Noninterest expense:                       
Salaries and employee benefits 34,946   34,166   2%  21,757   61%  69,112   43,326   60%
Occupancy 7,154   7,194   (1)%  4,920   45%  14,348   9,737   47%
Furniture and equipment 3,556   3,413   4%  2,337   52%  6,969   4,624   51%
Advertising and marketing 2,394   3,424   (30)%  1,402   71%  5,818   2,538   129%
Data processing and communications 2,676   3,606   (26)%  2,129   26%  6,282   4,300   46%
Professional fees 3,260   3,902   (16)%  1,273   156%  7,162   2,356   204%
FDIC assessment 1,004   1,010   (1)%  1,095   (8)%  2,014   2,133   (6)%
Credit related expenses 113   1,883   (94)%  911   (88)%  1,996   1,332   50%
Other real estate owned (“OREO”) expense, net 1,188   997   19%  133   793%  2,185   1,561   40%
Merger-related expenses 562   947   (41)%  1,533   (63)%  1,509   2,740   (45)%
Other 7,184   7,157   %  2,858   151%  14,341   5,750   149%
Total noninterest expense 64,037   67,699   (5)%  40,348   59%  131,736   80,397   64%
Income before income taxes 66,138   59,209   12%  40,223   64%  125,347   80,056   57%
Income tax provision 25,451   22,999   11%  16,833   51%  48,450   33,043   47%
Net income $40,687   $36,210   12%  $23,390   74%  $76,897   $47,013   64%
                        
Earnings Per Common Share:                       
Basic $0.30   $0.27      $0.29      $0.57   $0.59    
Diluted $0.30   $0.27      $0.29      $0.57   $0.59    
                        
Average Shares Outstanding:                       
Basic 135,257,044   135,248,018      79,604,673      135,252,556   79,595,599    
Diluted 135,613,181   135,768,645      79,634,762      135,685,064   79,625,673    


        
Hope Bancorp, Inc.
Selected Financial Data
Unaudited
        
   For the Three Months Ended
(Annualized)
   For the Six Months Ended
(Annualized)
Profitability measures:  6/30/2017   3/31/2017   6/30/2016   6/30/2017   6/30/2016
ROA  1.21%   1.09%   1.15%   1.15%   1.17%
ROE  8.60%   7.75%   9.67%   8.18%   9.83%
Return on average tangible equity 1  11.54%   10.44%   10.88%   11.00%   11.08%
Net interest margin  3.75%   3.77%   3.67%   3.76%   3.75%
Efficiency ratio  48.17%   51.09%   49.34%   49.63%   49.58%
                    
 
Average tangible equity is calculated by subtracting average goodwill and average core deposit intangible assets from average stockholders’ equity. This is a non-GAAP measure that we believe provides investors with information that is useful in understanding our financial performance and position.


         
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
         
  Three Months Ended  Three Months Ended  Three Months Ended
  6/30/2017  3/31/2017  6/30/2016
     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 $10,536,428   $128,515   4.89%  $10,381,771   $123,294   4.82%  $6,457,883   $77,086   4.80%
Securities available for sale 1,609,310   8,741   2.18%  1,567,497   8,113   2.10%  1,089,080   5,729   2.10%
FRB and FHLB stock and other investments 364,906   1,277   1.40%  423,955   1,336   1.28%  237,872   719   1.20%
Total interest earning assets $12,510,644   $138,533   4.44%  $12,373,223   $132,743   4.35%  $7,784,835   $83,534   4.32%
                           
INTEREST BEARING LIABILITIES:                          
Deposits:                          
Demand, interest bearing $3,457,412   $7,974   0.93%  $3,436,984   $7,191   0.85%  $2,030,272   $4,147   0.82%
Savings 280,188   279   0.40%  293,609   287   0.40%  178,249   285   0.64%
Time deposits 4,012,838   9,861   0.99%  4,009,179   7,033   0.71%  2,636,652   5,920   0.90%
Total interest bearing deposits 7,750,438   18,114   0.94%  7,739,772   14,511   0.76%  4,845,173   10,352   0.86%
FHLB advances 713,858   2,339   1.31%  662,472   2,139   1.31%  564,637   1,686   1.20%
Other borrowings 96,218   1,260   5.18%  95,911   1,188   4.95%  40,861   432   4.18%
Total interest bearing liabilities 8,560,514   $21,713   1.02%  8,498,155   $17,838   0.85%  5,450,671   $12,470   0.92%
Noninterest bearing demand deposits 2,929,656         2,868,339         1,671,986       
Total funding liabilities/cost of funds $11,490,170      0.76%  $11,366,494      0.64%  $7,122,657      0.70%
Net interest income/net interest spread    $116,820   3.42%     $114,905   3.50%     $71,064   3.39%
Net interest margin       3.75%        3.77%        3.67%
Cost of deposits:                          
Noninterest bearing demand deposits $2,929,656   $      $2,868,339   $      $1,671,986   $    
Interest bearing deposits 7,750,438   18,114   0.94%  7,739,772   14,511   0.76%  4,845,173   10,352   0.86%
Total deposits $10,680,094   $18,114   0.68%  $10,608,111   $14,511   0.55%  $6,517,159   $10,352   0.64%


      
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
      
  Six Months Ended  Six Months Ended
  6/30/2017  6/30/2016
     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 $10,459,527   $251,809   4.85%  $6,363,656   $154,204   4.87%
Securities available for sale 1,588,519   16,854   2.14%  1,052,972   11,406   2.17%
FRB and FHLB stock and other investments 394,267   2,613   1.34%  227,460   1,385   1.20%
Total interest earning assets $12,442,313   $271,276   4.40%  $7,644,088   $166,995   4.39%
                  
INTEREST BEARING LIABILITIES:                 
Deposits:                 
Demand, interest bearing $3,447,254   $15,164   0.89%  $1,999,454   $8,151   0.82%
Savings 286,862   567   0.40%  182,356   651   0.72%
Time deposits 4,011,019   16,894   0.85%  2,571,346   11,457   0.90%
Total interest bearing deposits 7,745,135   32,625   0.85%  4,753,156   20,259   0.86%
FHLB advances 688,307   $4,477   1.31%  548,421   3,209   1.18%
Other borrowings 96,065   2,449   5.07%  40,837   856   4.14%
Total interest bearing liabilities 8,529,507   $39,551   0.94%  5,342,414   $24,324   0.92%
Noninterest bearing demand deposits 2,899,167         1,650,775       
Total funding liabilities/cost of funds $11,428,674      0.70%  $6,993,189      0.70%
Net interest income/net interest spread    $231,725   3.46%     $142,671   3.47%
Net interest margin       3.76%        3.75%
Cost of deposits:                 
Noninterest bearing demand deposits $2,899,167   $      $1,650,775   $    
Interest bearing deposits 7,745,135   32,625   0.85%  4,753,156   20,259   0.86%
Total deposits $10,644,302   $32,625   0.62%  $6,403,931   $20,259   0.64%


      
Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)
      
   Three Months Ended  Six Months Ended
AVERAGE BALANCES: 6/30/2017  3/31/2017  % change  6/30/2016  % change  6/30/2017  6/30/2016  % change
Loans receivable, including loans held for sale $10,536,428   $10,381,771   1%  $6,457,883   63%  $10,459,527   $6,363,656   64%
Investments 1,974,216   1,991,452   (1)%  1,326,952   49%  1,982,786   1,280,432   55%
Interest earning assets 12,510,644   12,373,223   1%  7,784,835   61%  12,442,313   7,644,088   63%
Total assets 13,470,745   13,335,727   1%  8,157,358   65%  13,403,609   8,016,649   67%
                        
Interest bearing deposits 7,750,438   7,739,772   %  4,845,173   60%  7,745,135   4,753,156   63%
Interest bearing liabilities 8,560,514   8,498,155   1%  5,450,671   57%  8,529,507   5,342,414   60%
Noninterest bearing demand deposits 2,929,656   2,868,339   2%  1,671,986   75%  2,899,167   1,650,775   76%
Stockholders’ equity 1,892,126   1,868,998   1%  967,919   95%  1,880,626   956,777   97%
Net interest earning assets 3,950,130   3,875,068   2%  2,334,164   69%  3,912,806   2,301,674   70%