Hope Bancorp, Inc. · NASDAQ:HOPE
Hope Bancorp — Q3 2020 Earnings Presentation
19 slides from Hope Bancorp's earnings presentation, Oct 21, 2020
Slide 1: 2020 Third Quarter Earnings Conference Call
2020 Third Quarter Earnings Conference Call Wednesday, October 21, 2020 1
Slide 2: Forward Looking Statements & Additional Disclosures
Forward Looking Statements & Additional Disclosures This presentation may contain statements regarding future events or the future financial performance of the Company that constitute forward‐looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section
Slide 3: Q3 2020 Financial Highlights
Q3 2020 Financial Highlights Net interest income before provision for credit loss increased 7% to $117.6 million from $109.8 Net million for Q2 2020, reflecting meaningful reductions in interest expense from lower cost of deposits Income Net interest margin expanded 12bps Q‐o‐Q benefiting from c
Slide 4: Loan Production & Portfolio Trends
Loan Production & Portfolio Trends New Loan Originations Funded New loan originations funded of $782 million 4.72% 4.37% resulted in 2% growth in loans receivable Q‐o‐Q, or 3.98% 3.39%1 8% annualized 2.88% ($ millions) $847.6 $832.0 New loan originations included $301 million $69 $782.4 $693.9 $
Slide 5: Phase II COVID-19 Loan Modifications
Phase II COVID-19 Loan Modifications • Phase II modifications granted as of 9/30/2020 totaled $1.1 billion, or 8.8% of total loan portfolio • Additional documentation, covenants, and in some cases collateral required to qualify for Phase II modifications ($ millions) % of Modified Loans All Loans %
Slide 6: COVID-19 Modification Type & Duration
COVID-19 Modification Type & Duration Modification Type & Duration Modification Type 3M Int Only, 1.58% 10‐12M Pmt Other, Def, 2.77% 6.47% 10‐12M Int 3M Pmt Def, Only, 4.60% 17.41% 10‐12M Hybrid, 6.61% 1.06% 6M Int Only, 4.71% 9M Pmt Def, 16.70% 6M Pmt Def, Modification Duration 5.21% 6M Hybrid, 7.3
Slide 7: COVID-19 Impacted Portfolios - Hotel/Motel CRE
COVID-19 Impacted Portfolios - Hotel/Motel CRE - Hotel/Motel CRE Property Characteristics Hotel/Motel CRE Modification Type • Majority of Hotel/Motel properties are limited service facilities 6M Int Only, 5M Hybrid, Other, 3.66% • Less impacted by lockdowns than full‐service hotel properties 3.24% 2
Slide 8: COVID-19 Impacted Portfolios - Retail CRE
COVID-19 Impacted Portfolios - Retail CRE - Retail CRE Property Characteristics Retail CRE Modification Type • Retail portfolio largely represents “strip mall” type of properties (not shopping malls) Other, 7.59% 6M Hybrid, • Majority of tenants comprised of service oriented businesses – 3.53% tradi
Slide 9: Net Interest Income and Margin
Net Interest Income and Margin Average Loan Yield & Average 1M LIBOR Rate Net Interest Income & NIM ($ millions) 5.27% 5.06% 5.04% $116.3 $119.3 $117.6 4.23% 4.20% $113.5 $109.8 2.18% 3.31% 1.79% 3.25% 3.16% 1.41% 2.79% 2.91% 0.35% 0.16% 3Q19 4Q19 1Q20 2Q20 3Q20 3Q19 4Q19 1Q20 2Q20 3Q20 Net Interest
Slide 10: Noninterest Income
Noninterest Income Noninterest Income Noninterest income increased 56% to $17.5 ($ millions) million Q‐o‐Q largely reflecting $7.5 million net $17.5 gain on sale of $161 million of available‐for‐sale investment securities $1.7 Service fees on deposit accounts, international $13.0 $13.0 $13.3 ser
Slide 11: Noninterest Expense and Efficiency
Noninterest Expense and Efficiency ($ millions) Breakdown of Noninterest Expense & FTE Efficiency Ratio & Noninterest Expense to Average Assets $73.4 55.68% 55.37% $72.1 54.15% 54.42% 54.31% $70.0 $70.4 $67.0 $6.4 $7.2 $8.8 $10.9 $0.8 $1.6 $9.7 $5.2 $5.9 $3.3 $3.6 $2.8 $2.6 $1.2 $1.5 $2.4 $1.7 $1.7
Slide 12: Deposit Trends
Deposit Trends Q‐o‐Q growth annualized Deposit Composition ($ billions) Noninterest bearing demand deposits increased $452 million $14.12 $14.01 Q‐o‐Q and increase to 32% of total deposits from 29% as of $12.53 $12.84 +40% ‐4% $12.23 6/30/20 +10% +10% $5.0 $4.4 $4.7 Time deposits decreased $512
Slide 13: Asset Quality
Asset Quality Nonperforming Assets Provision for Credit Losses & ($ millions) ($ millions) Net Charge Offs $139.9 $147.6 $28.0 $122.1 $21.0 $124.6 $23.0 $22.0 $96.7 $24.1 $18.4 0.11% $116.8 $126.6 0.06% 0.02% $17.5 $19.4 $106.2 $98.0 0.12% $77.4 0.87% 0.86% 0.78% 0.74% 0.02% 0.63% $2.1 $1.0 3Q19 4Q1
Slide 14: Allowance for Credit Losses
Allowance for Credit Losses ($ thousands) $179,849 • Updated macroeco‐ • Recognition of • Aggregate changes to • Relatively stability in nomic factors increased risk from the loan portfolio, asset quality metrics reflecting improved conditions vs. June granting longer‐term modifications under includ
Slide 15: Allocation of Allowance by Loan Type
Allocation of Allowance by Loan Type Allowance of Loan & Allocation for Credit Losses ($ thousands) Lease Losses (ALLL) for Current Expected Credit Loss (CECL) December 31, 2019 March 31, 2020 June 30, 2020 September 30, 2020 Coverage Coverage Coverage Coverage Loan Type Amount Amount Amount Amount
Slide 16: Strong Capital & Liquidity Positions
Strong Capital & Liquidity Positions Sufficient Liquidity Sources Robust Capital Position 13.23% 13.19% 12.24% 12.09% Available 11.50% 11.36% 9/30/2020 ($ Thousands) Borrowing Capacity 10.08% 10.02% FHLB Remaining Capacity $ 4,053,152 10.00% FRB Discount Window $ 631,527 8.00% Unsecured lines with o
Slide 17: Near-Term Outlook
Near-Term Outlook Meaningful loan growth for 2020 driven by corporate banking, warehouse mortgage line and residential mortgage refinancings Anticipating net interest margin expansion going forward as a result of stable loan yields and decreasing deposit costs Residential mortgage originations
Slide 18: With HOPE, we'll get through this Together.
With HOPE, we'll get through this Together. ws a Hope Bancorp
Slide 19: 2020 Third Quarter Earnings Conference Call Q&A
2020 Third Quarter Earnings Conference Call Q&A 19