Hope Bancorp, Inc. · NASDAQ:HOPE
Hope Bancorp — Q2 2024 Earnings Presentation
20 slides from Hope Bancorp's earnings presentation, Jul 29, 2024
Slide 1: Second Quarter 2024 Earnings Conference Call
2024 Second Quarter Earnings Conference Call July 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”), including regarding its proposed merger with Territorial Bancorp Inc. (“Territorial”) that constitute forward-looki
Slide 3: Q2 2024 Financial Overview
Q2 2024 Financial Overview Total Capital & TCE Ratio Strong Capital & Liquidity at 6/30/24 • Total capital ratio was 14.42% at 6/30/24, +23bps QoQ. All regulatory capital ratios expanded QoQ 14.42% / 9.72% • Tangible common equity (“TCE”) ratio(1) was 9.72% at 6/30/24, +39bps QoQ • Pending acquisiti
Slide 4: Strong Capital Ratios
Strong Capital Ratios • All capital ratios increased QoQ: All regulatory capital ratios meaningfully above requirements Common Equity Tier 1 Capital Ratio Tangible Common Equity Ratio(1) for “well-capitalized” financial institutions • Proforma capital very strong: Adjustments for the allowance for c
Slide 5: Diverse & Granular Deposit Base
Diverse & Granular Deposit Base Deposit Composition by Product Type Deposit Composition by Customer Type Noninterest Bearing Demand Deposits Consumer 25% 39% Time Deposits $14.7B $14.7B 42% Total Deposits Total Deposits (at 6/30/24) (at 6/30/24) Money Market, Commercial Interest Bearing & Wholesale
Slide 6: Well-Balanced Loan Portfolio
Well-Balanced Loan Portfolio $0.6B; <1% Loans Held for Sale • Loan portfolio well-diversified across $1.0B $1.2B major loan types of nonowner-occupied Avg Size: $0.6MM Residential CRE, C&I, owner-occupied CRE, Mortgage & Multifamily Avg Size: $2.3MM Residential multifamily residential (“MFR”), and O
Slide 7: Diversified CRE Portfolio with Low LTVs
Diversified CRE Portfolio with Low LTVs Total CRE: Distribution by LTV (excl. SBA) $8.7B > 60% - As a % of CRE Portfolio Avg Loan Size: > 55% - > 65% - 70%: (at 6/30/24) 65%: 5% Total Loans: Weighted Avg LTV(1): 60%: 7% 11% Multi-tenant Retail $2.3MM 12% > 70%: $1,659MM 41.5% $8.7B > 50% - 55%: 10%
Slide 8: Granular CRE Portfolio, Diversified by Submarket
Granular CRE Portfolio, Diversified by Submarket CRE Portfolio by Size Segment CRE Portfolio by Geographic Submarket ($ Millions) Average Other States Loan Size Balance # of Weighted Loan Size LA Fashion District (at 6/30//24) ($ Millions) Loans Average LTV(1) ($ Millions) Illinois Gateway Cities >
Slide 9: Net Interest Income & Net Interest Margin
Net Interest Income & Net Interest Margin Net Interest Income & Net Interest Margin QoQ Change in Net Interest Margin +7bps -7bps $131 $135 +5bps -3bps $126 2.62% $115 +5bps Change in Changes in $106 IB funding yields on Loan 2.55% IB deposit costs loans and balances balances decrease BTFP payoff: i
Slide 10: Average Loans & Deposits, Yields & Rates
Average Loans & Deposits, Yields & Rates Average Loans Average Loan Yield Relative to Fed Funds Rate ($ Billions) $15.1 6.27% 6.24% 6.25% 6.20% $14.6 $14.1 5.99% $13.7 $13.6 16.00 14.00 12.00 10.00 5.43% 5.50% 5.50% 5.50% 8.00 5.16% 6.00 4.00 2.00 0.00 2Q23 3Q23 4Q23 1Q24 2Q24 2Q23 3Q23 4Q23 1Q24 2Q
Slide 11: Noninterest Income
Noninterest Income Noninterest Income ($ Millions) • 2Q24 noninterest income of $11MM, up from $8MM in 1Q24 $17.0 • Resumed SBA loan gain on sales (“GOS”) in 2Q24, as secondary market conditions 5.8 improved $11.1 – Sold $30MM of the guaranteed $9.3 portion of SBA 7(a) loans during $8.3 $8.3 2Q24 an
Slide 12: Noninterest Expense & Efficiency
Noninterest Expense & Efficiency Noninterest Expense(1) Efficiency Ratio (excl. notable items) ($ Millions) GAAP Noninterest Expense $86.8 $99.2 $84.8 $81.0 73.4% $87.2 $86.3(2) $84.1(2) $82.4(2) 68.8% 69.3% $79.1(2) 22.5 22.5 60.4% 24.2 22.7 23.0 59.1% 66.8%(3) 67.7%(3) 12.4 12.8 62.2%(3) 12.5 12.1
Slide 13: Asset Quality Metrics
Asset Quality Metrics Allowance for Credit Losses & Coverage Ratio Nonperforming Assets Ratio ($ Millions) • Allowance for credit losses (“ACL”) totaled $156MM at 6/30/24 $173 $159 $159 $159 $156 • ACL coverage ratio: essentially stable at 1.15% of loans receivable as of 1.16% 1.15% 1.16% 1.15% 6/30
Slide 14: Management's Financial Outlook for 4Q24 vs. 4Q23
Management’s Financial Outlook for 4Q24 * vs. 4Q23 4Q23 Prior Outlook as of Updated Outlook for 4Q24 * Comments actual 4/29/24 vs. 4Q23 actual ($ Millions) ▪ Continued growth from residential mortgage Low single-digit % Average Loans $ 14,053 Unchanged ▪ Strengthening loan pipelines in CRE and C&I g
Slide 15: Medium-Term Financial Targets
Medium-Term Financial 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 annual revenue growth greater than loan growth: Targeting efficiency ratio
Slide 16: Appendix
Appendix 16
Slide 17: Summary Balance Sheet
Summary Balance Sheet QoQ YoY ($ in millions, except per share data) 6/30/24 3/31/24 6/30/23 % change % change Cash and due from banks $ 654.0 $ 1,185.3 (44.8)% $ 2,302.3 (71.6)% Investment securities 2,172.9 2,278.0 (4.6)% 2,186.3 (0.6)% Federal Home Loan Bank (“FHLB”) stock and other investments 6
Slide 18: Summary Income Statement
Summary Income Statement QoQ YoY ($ in thousands, except per share and share data) 2Q24 1Q24 2Q23 % change % change Net interest income before provision for credit losses $ 105,860 $ 115,047 (8)% $ 130,689 (19)% Provision for credit losses 1,400 2,600 (46)% 9,010 (84)% Net interest income after prov
Slide 19: Appendix: Non-GAAP Financial Measures Reconciliation
Appendix: Non-GAAP Financial Measures 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 measu
Slide 20: Appendix: Non-GAAP Financial Measures Reconciliation (cont'd)
Appendix: Non-GAAP Financial Measures 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 financ