Hope Bancorp, Inc. · NASDAQ:HOPE
Hope Bancorp — 2021 KBW Virtual Winter Financial Services Symposium
39 slides from Hope Bancorp's conference presentation, Feb 11, 2021
Slide 1: 2021 KBW Virtual Winter Financial Services Symposium
1 2021 KBW Virtual Winter Financial Services Symposium Virtual Meeting February 11 – 12, 2021
Slide 2: Forward Looking Statements & Additional Disclosures
2 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 Sectio
Slide 3: Presentation Index
3 Presentation Index Company Overview Slide 4 Financial Highlights & Earnings Performance Slide 10 Loan Growth Trends Slide 15 Asset Quality Trends Slide 21 Favorable Deposit Trends Slide 27 Strong Franchise Value Slide 29 Appendix Slide 37
Slide 4: Company Overview
4 Company Overview
Slide 5: Bank of Hope's Roots
5 Bank of Hope’s Roots 41 Years of Service Beginning in Los Angeles (Established 1986 in Los Angeles) (Established 1980 in Los Angeles) (Established 1989 in Los Angeles) Asiana Bank Aug 2003 Innovative Bank Apr 2010 1st Merger of Equals Nov 2011 2nd Merger of Equals July 29, 2016 Saehan Bank Nov 201
Slide 6: Company Profile Today
6 Company Profile Today Only super regional Korean-American bank in the nation 3rd largest Asian-American bank in the U.S.1 6th largest bank headquartered in Los Angeles1 97th largest financial institution in the U.S.2 31st largest SBA lender in the country by volume3 Only Korean-America
Slide 7: National Geographic Presence
7 National Geographic Presence Illinois (4 branches) Southern California (27 branches + 1 residential mortgage LPO) Northern California (2 branches + 1 SBA LPO + 1 commercial lending LPO) Denver SBA LPO New York/ New Jersey (10 branches + 1 SBA LPO + 2 commercial lending LPOs) Seattle (3 branches +
Slide 8: Corporate Social Responsibility Highlights
8 Corporate Social Responsibility Highlights 1 OUT OF 2 Bank of Hope branches located in low-to-moderate income areas 450 HOURS 450 hours of CRA-reportable volunteer hours in 2020 (previously averaged 1,000 hours/year) $3.08 BILLION loans funded in 2020 $447 MILLION CRA-reportable small business len
Slide 9: Leadership
9 Leadership We are proud to have one of the strongest leadership teams among Asian-American banks. Executive Leadership Kyu S. Kim Senior EVP, Eastern Regional President Jason Kim Senior EVP, Western Regional President Angelee Harris EVP, General Counsel Richard Marshall EVP, Credit Administration
Slide 10: Financial Highlights & Earnings Performance
10 Financial Highlights & Earnings Performance
Slide 11: Q4 2020 Financial Highlights
11 Q4 2020 Financial Highlights Earnings & Profitability Loan Production Asset Quality Net interest income before provision for credit loss increased 3% to $120.8 million from $117.6 million for 3Q20, largely reflecting benefit of lower cost of deposits Net interest margin expanded 11bps Q-o-Q b
Slide 12: Net Interest Income and Margin
12 $113.5 $119.3 $109.8 $117.6 $120.8 3.16% 3.31% 2.79% 2.91% 3.02% 4Q19 1Q20 2Q20 3Q20 4Q20 Net Interest Income & NIM Net Interest Income NIM Net Interest Income and Margin 5.04% 5.06% 4.23% 4.20% 4.03% 1.79% 1.41% 0.35% 0.16% 0.15% 4Q19 1Q20 2Q20 3Q20 4Q20 Average Loan Yield & Average 1M LIBOR Rat
Slide 13: Noninterest Income
13 $4.5 $4.1 $2.6 $2.7 $3.0 $0.8 $0.8 $0.7 $1.0 $0.7 $0.7 $0.4 $1.1 $0.8 $0.6 $1.1 $1.0 $0.8 $0.9 $0.9 $1.9 $1.9 $1.7 $2.9 $1.6 $7.5 $4.1 $5.1 $4.4 $1.7 $4.7 4Q19 1Q20 2Q20 3Q20 4Q20 Noninterest Income Service fees on dep accts International service fees Loan servicing fees, net Wire transfer fees G
Slide 14: Noninterest Expense and Efficiency
14 Noninterest Expense and Efficiency 55.68% 54.42% 55.37% 54.31% 53.77% 1.85% 1.87% 1.60% 1.73% 1.69% 4Q19 1Q20 2Q20 3Q20 4Q20 Efficiency Ratio & Noninterest Expense to Average Assets Efficiency Ratio Noninterest Expense/Avg Assets Noninterest expense decreased 3% to $71.1 million from $73.4 mill
Slide 15: Loan Growth Trends
15 Loan Growth Trends
Slide 16: Loan Production & Portfolio Trends
16 $513 $348 $216 $244 $340 $266 $234 $61 $433 $439 $69 $42 $74 $105 $65 4.37% 3.98% 3.39%1 2.88% 3.27% 4Q19 1Q20 2Q20 3Q20 4Q20 New Loan Originations Funded CRE PPP C&I Consumer Average Rate Loan Production & Portfolio Trends New loan originations funded of $844 million resulted in 3.4% growth in
Slide 17: Loan Portfolio by Region
17 Loan Portfolio by Region Southern CA 54% Northern CA 6% Eastern Region 16% Illinois 3% Washington 3% Texas 4% Other States 14% Diverse national footprint spreads credit risk and provides greater growth opportunities • 1980: Founders of root banks included Los Angeles-based Korean-American investo
Slide 18: Loan Portfolio Composition
18 Loan Portfolio Composition $13.56 Billion Total Portfolio (as of 12/31/2020) CRE Outstanding $8,772.1M Average Size $1,641M Average Yield 4.16% C&I Outstanding $4,157.8M Average Size $505M Average Yield 2.70% Consumer Outstanding $633.3M Average Size $681M Average Yield 3.60% Owner- Occupied CRE
Slide 19: Portfolio Diversification
19 Portfolio Diversification as of 12/31/2020 CRE Portfolio $8.77 Billion Retail - Multi 20% Hotel & Motel 19% Industrial & Warehouse 12% Gas Station & Car Wash 10% Mixed Use 9% Office 7% All Others 23% C&I Portfolio $4.16 Billion Note: All Others includes property types representing less than 7% of
Slide 20: Loan Portfolio Rate Mix
20 Libor Based 49% @2.38% 1 Prime Based 51% @4.07% 1 Variable Rate Loan Base Index Loan Portfolio Rate Mix as of 12/31/2020 1 The weighted average rate as presented excludes loan discount accretion and interest rates on nonaccrual loans 62% 55% 73% 29% 50% 38% 45% 27% 71% 50% 4.37% 3.98% 2.01% 1 2.8
Slide 21: Asset Quality Trends
21 Asset Quality Trends
Slide 22: Provision for Credit Losses & Asset Quality
22 $1.0 $28.0 $17.5 $22.0 $27.5 0.02% 0.11% 0.02% 0.12% 0.02% 4Q19 1Q20 2Q20 3Q20 4Q20 Provision for Credit Losses & Net Charge Offs Provision Expense Net Charge Offs (Recoveries) (annualized) ($ millions) Asset Quality Nonperforming loans increased $17 million Q-o-Q, reflecting migration of 2 con
Slide 23: Allocation of Allowance by Loan Type
23 Allocation of Allowance by Loan Type ($ thousands) Allowance of Loan & Lease Losses (ALLL) Allocation for Credit Losses for Current Expected Credit Loss (CECL) Quarter-over- Quarter Change 4Q20 from 3Q20 Dec 31, 2019 Sep 30, 2020 Dec 31, 2020 Loan Type Amount Coverage Ratio Amount Coverage Ratio
Slide 24: Active COVID-19 Loan Modifications & Expirations
24 Active COVID-19 Loan Modifications & Expirations • Active modifications outstanding as of 1/31/2021 totaled $1.26 billion, or 9.3% of total loan portfolio • Based on modifications expiration schedule, active modifications outstanding expected to decrease substantially to approximately 2-3% of tot
Slide 25: Hotel/Motel CRE Property Characteristics
25 Hotel/Motel CRE Property Characteristics • Majority of Hotel/Motel properties are limited-service facilities • Less impacted by lockdowns than full-service hotel properties • 73% of Hotel/Motel portfolio represented by flagged properties • 95%+ of Hotel/Motel exposure located in major MSAs or reg
Slide 26: Retail CRE Property Characteristics
26 Retail CRE Property Characteristics • Retail portfolio largely represents “strip mall” type of properties (not shopping malls) • Majority of tenants comprised of service-oriented businesses – traditionally less impacted by e-commerce • Local supermarkets are representative anchor tenants of large
Slide 27: Favorable Deposit Trends
27 Favorable Deposit Trends
Slide 28: Deposit Composition and Trends
28 $3.1 $3.0 $4.0 $4.5 $4.8 $4.0 $4.9 $4.8 $4.8 $5.2$0.3 $0.3 $0.3 $0.3 $0.3$5.2 $4.7 $5.0 $4.4 $4.0 12/31/19 3/31/20 6/30/20 9/30/20 12/31/20 Deposit Composition DDA MMA/NOW Savings Time Deposit Trends Noninterest bearing demand deposits increased 7% Q-o-Q and increased to 34% of total deposits f
Slide 29: Strong Franchise Value
29 Strong Franchise Value
Slide 30: The Representative Bank of the Korean-American Community
30 51% Total Assets Bank of Hope Hanmi Bank Pacific City Bank Metro City Bank Commonwealth Business Bank Open Bank First IC Bank US Metro Bank PromiseOneBank NewBank New Millennium Bank UniBank Noah Bank Ohana Pacific Bank 51% Total Loans 50% Total Deposits The Representative Bank of the Korean-Amer
Slide 31: Commitment to Shareholder Returns
31 Commitment to Shareholder Returns $0.05 $0.05 $0.05 $0.075 $0.075 $0.075 $0.075 $0.10 $0.10 $0.10 $0.10 $0.11 $0.11 $0.11 $0.11 $0.11 $0.12 $0.12 $0.12 $0.13 $0.13 $0.13 $0.13 $0.14 $0.14 $0.14 $0.14 $0.14 $0.14 $0.14 $0.14 $0.14 $0.14 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4
Slide 32: Strong Capital & Liquidity Positions
32 Strong Capital & Liquidity Positions 5.00% 12/31/2020 ($ Thousands) Available Borrowing Capacity FHLB Remaining Capacity $ 3,918,238 FRB Discount Window $ 616,001 Unsecured lines with other banks $ 306,180 Total Borrowing Capacity $ 4,840,419 Brokered Deposit Availability (internal policy limit 1
Slide 33: Unique Growth Opportunities
33 Unique Growth Opportunities South Korean Foreign Direct Investment in the U.S. South Korean Companies Among Top Foreign Investors in the U.S. • Hyundai Motor and Kia Motors announced Jan 2017 plans to spend $3.1 billion in U.S. in the next 5 years – 250-plus Korean-national companies in Hyundai a
Slide 34: 2020 Achievements
34 2020 Achievements Stronger, More Diversified, Relationship Bank Enhanced Deposit Franchise Expense Management Profitable Organic Loan Growth Strong Capital Management CECL Implementation & Reserve Build
Slide 35: Near-Term Outlook
35 Near-Term Outlook Mid- to high-single digit loan growth projected for 2021 driven by growth in non-CRE loans Substantial declines in active modifications to approximately 2-3% of total loans by 6/30/2021 Lower level of provisioning in 2021 with potential reserve releases beginning in 2H 202
Slide 36: Investment Opportunity
36 Investment Opportunity Definitive leadership position as the representative bank of the Korean-American community and a leading Asian-American bank National platform and solid presence across all geographic markets with largest populations of Asian Americans Strong core earnings power and c
Slide 37: Appendix
37 Appendix
Slide 38: Appendix – Q4 2020 Financial Summary
38 Appendix – Q4 2020 Financial Summary ($ thousands) Q4 2020 Q3 2020 Q4 2019 Net income $ 28,319 $ 30,490 $ 43,009 Diluted earnings per share $ 0.23 $ 0.25 $ 0.34 Net interest income before provision for credit losses $ 120,756 $ 117,637 $ 113,508 Net interest margin 3.02% 2.91% 3.16% Noninterest i
Slide 39: Appendix – Pre-Tax Acquisition Accounting Adjustments and Merger-Related Expenses
39 Appendix – Pre-Tax Acquisition Accounting Adjustments and Merger-Related Expenses ($ thousands) Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Accretion of discount on acquired performing loans $1,945 $1,059 $658 $747 $452 Accretion of discount on acquired credit impaired loans 5,958 9,449 3,046 4,584 3
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