Hope Bancorp, Inc. · NASDAQ:HOPE
Hope Bancorp — Q1 2024 Earnings Presentation
24 slides from Hope Bancorp's earnings presentation, Apr 29, 2024
Slide 1: First Quarter 2024 Earnings Conference Call
2024 First Quarter Earnings Conference Call April 29, 2024
Slide 2: Forward Looking Statements & Additional Disclosures
Forward Looking Statements & Additional Disclosures This presentation contains statements regarding future events or the future financial performance of Hope Bancorp, Inc. (“Company”) and its proposed merger with Territorial Bancorp Inc. (“Territorial”) that constitute forward-looking statements wit
Slide 3: Q1 2024 Financial Overview
Q1 2024 Financial Overview Total Capital & TCE Ratio Strong Capital & Liquidity at 3/31/24 • Total capital ratio was 14.19% at 3/31/24, +27bps QoQ. All regulatory capital ratios expanded QoQ 14.19% / 9.33% • Tangible common equity (“TCE”) ratio(1) was 9.33% at 3/31/24, +47bps QoQ • Announced signing
Slide 4: Territorial Bancorp (TBNK) Pending Merger Highlights
Territorial Bancorp (TBNK) Pending Merger Highlights ▪ Creates the largest U.S. regional bank catering to multi-ethnic customers across the continental United States and the Hawaiian Islands ▪ TBNK bolsters Combined Company’s core funding base with $1.6 billion in low-cost deposits as of 12/31/23 St
Slide 5: Strong Capital Ratios
Strong Capital Ratios • All capital ratios increased QoQ: All regulatory capital ratios meaningfully above requirements for “well-capitalized” financial institutions Common Equity Tier 1 Capital Ratio Tangible Common Equity Ratio(1) • Pro Forma capital very strong: Adjustments for the allowance for
Slide 6: Diverse & Granular Deposit Base
Diverse & Granular Deposit Base Deposit Composition by Product Type Deposit Composition by Customer Type Noninterest Bearing Demand Deposits Consumer 25% 38% Time Deposits 39% $14.8B $14.8B Total Deposits Total Deposits (at 3/31/24) (at 3/31/24) Money Market, Commercial Interest Bearing & Wholesale
Slide 7: Well-Balanced Loan Portfolio
Well-Balanced Loan Portfolio $0.9B $1.2B • Loan portfolio well-diversified across Avg Size: $0.6MM major loan types of nonowner- Residential Avg Size: $2.3MM occupied CRE, C&I, owner-occupied Mortgage Multifamily & Other CRE, multifamily residential (“MFR”), Residential 7% and residential mortgage 9
Slide 8: Diversified CRE Portfolio with Low LTVs
Diversified CRE Portfolio with Low LTVs Total CRE: Distribution by LTV (excl. SBA) $8.7B CRE Portfolio > 55% - > 60% - As a % of Avg Loan Size: > 65% - 70%: (at 3/31/24) 60%: 65%: Total Loans: Weighted Avg LTV(1): 5% 11% 7% Multi-tenant Retail $2.3MM 12% > 70%: $1,666MM 43.1% > 50% - 55%: Industrial
Slide 9: Granular CRE Portfolio, Diversified by Submarket
Granular CRE Portfolio, Diversified by Submarket CRE Portfolio by Size Segment CRE Portfolio by Geographic Submarket ($ Millions) Average Other States Loan Size Balance # of Weighted Loan Size LA Fashion District (at 3/31/24) ($ Millions) Loans Average LTV(1) Illinois ($ Millions) Gateway Cities > $
Slide 10: Net Interest Income & Net Interest Margin
Net Interest Income & Net Interest Margin Net Interest Income & Net Interest Margin QoQ Change in Net Interest Margin ($ Millions) QoQ change 2.70% +2bps +2bps +1bps -2bps -6bps -12bps 2.55% Decrease Decrease Loan yield Decrease expansion Decrease in avg IB in avg in avg Increase in in avg deposits
Slide 11: Average Loans & Deposits, Yields & Rates
Average Loans & Deposits, Yields & Rates Average Loans Receivable Average Loan Yield Relative to Fed Funds Rate ($ Billions) 5.99% 6.27% 6.24% 6.25% 15.75 $15.2 5.75% 15.25 $15.1 $14.6 5.43% 5.50% 5.50% 14.75 4.69% 5.16% $14.1 $13.7 14.25 13.75 13.25 12.75 12.25 1Q23 2Q23 3Q23 4Q23 1Q24 1Q23 2Q23 3Q
Slide 12: Noninterest Income
Noninterest Income Noninterest Income ($ Millions) • 1Q23 noninterest income of $8MM vs. $9MM in 4Q23 $17.0 – QoQ growth in deposit service fees offset by a decrease in other noninterest income 5.8 • No SBA loan gain on sales (“GOS”) in 1Q24: continuously evaluating premiums available in the $11.0 s
Slide 13: Noninterest Expense & Efficiency
Noninterest Expense & Efficiency Noninterest Expense(1) Efficiency Ratio & (excl. notable items) Noninterest Expense to Average Assets ($ Millions) GAAP Noninterest Expense $86.8 $99.2 $84.8 73.4% $88.7 $87.2 $86.3(2) 68.8% $84.1(2) $82.7(2) 17.1 61.3% 62.2%(3) 17.8 18.8 21.1 59.1% 60.4% 1.8 19.9 67
Slide 14: Asset Quality Metrics
Asset Quality Metrics Allowance for Credit Losses & Coverage Ratio Nonperforming Assets Ratio ($ Millions) • Allowance for credit losses (“ACL”) stable QoQ at $159MM at 3/31/24. $173 $164 $159 $159 $159 • ACL coverage ratio: 1.16% of loans receivable at 3/31/24, +1bps from 1.16% 1.15% 1.16% 1.15% at
Slide 15: Management's Updated Financial Outlook for 4Q24
Management’s Updated Financial Outlook for 4Q24 * vs. 4Q23 4Q23 Prior Outlook as of Updated Outlook for 4Q24 * Comments actual 1/30/24 vs. 4Q23 actual ($ Millions) ▪ Reorganized frontline pivoting to growth Low single-digit % ▪ Expecting payoffs to moderate in 2024 Average Loans $ 14,053 Unchanged g
Slide 16: First Quarter Q&A
2024 First Quarter Earnings Conference Call Q&A 16
Slide 17: Appendix
Appendix 17
Slide 18: Strategic Reorganization
Strategic Reorganization Realignment Around Lines of Business and Products, to Better Serve Client Base & Run Bank More Efficiently Four Distinct Business Groups: RETAIL BANKING COMMERCIAL BANKING CORPORATE & FEE-BASED BUSINESS GROUP INSTITUTIONAL BANKING Separated from commercial banking to Consoli
Slide 19: Medium-Term Targets
Medium-Term Targets* Anticipated positive impact from strategic reorganization expected to drive operational efficiencies and greater returns in the medium term. High single-digit >10% <50% >1.2% % growth • Targeting medium-term annual revenue growth > loan growth Targeting efficiency ratio Targetin
Slide 20: Bank of Hope's Roots
Bank of Hope’s Roots Announced: Saehan Bank April 29, 2024 Nov 2013 2nd Merger of Equals Foster Bank Jul 2016 BankAsiana Aug 2013 Oct 2013 Pacific International Bank Combination with TBNK fits Feb 2013 well into HOPE’s long-term growth strategy Innovative Bank 1st Merger of Equals Apr 2010 Mirae Ban
Slide 21: Summary Income Statement
Summary Income Statement QoQ YoY ($ in thousands, except per share and share data) 1Q24 4Q23 1Q23 % change % change Net interest income before provision for credit losses $ 115,047 $ 125,916 (9)% $ 133,878 (14)% Provision for credit losses 2,600 2,400 8% 3,320 (22)% Net interest income after provisi
Slide 22: Summary Balance Sheet
Summary Balance Sheet QoQ YoY ($ in thousands, except per share data) 3/31/24 12/31/23 3/31/23 % change % change Cash and due from banks $ 1,185,296 $ 1,928,967 (39)% $ 2,212,637 (46)% Investment securities 2,277,990 2,408,971 (5)% 2,231,989 2% Federal Home Loan Bank (“FHLB”) stock and other investm
Slide 23: Appendix: Non-GAAP Financials Reconciliation
Appendix: Non-GAAP Financials Reconciliation Management reviews select non-GAAP financial measures in evaluating the Company’s and the Bank’s financial performance and in response to market participant interest. Reconciliations of the most directly comparable GAAP to non-GAAP financial measures util
Slide 24: Appendix: Non-GAAP Financials Reconciliation (cont'd)
Appendix: Non-GAAP Financials Reconciliation (cont’d) Management reviews select non-GAAP financial measures in evaluating the Company’s and the Bank’s financial performance and in response to market participant interest. Reconciliations of the most directly comparable GAAP to non-GAAP financial meas