Hope Bancorp, Inc. · NASDAQ:HOPE
Hope Bancorp — Q4 2023 Earnings Presentation
22 slides from Hope Bancorp's earnings presentation, Jan 30, 2024
Slide 1: Fourth Quarter 2023 Earnings Conference Call
2023 Fourth Quarter Earnings Conference Call January 30, 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. (the “Company”) that constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as a
Slide 3: Q4 2023 Financial Overview
Q4 2023 Financial Overview Total Capital & TCE Ratio Strong Capital & Liquidity at 12/31/23 • Total capital ratio was 13.92% at 12/31/23, +69bps QoQ. All regulatory capital ratios expanded QoQ 13.92% / 8.86% • Tangible common equity (“TCE”) ratio1 was 8.86% at 12/31/23, +90bps QoQ Deposits Total Dep
Slide 4: Strong Capital Ratios
Strong Capital Ratios • All regulatory capital ratios increased QoQ. All regulatory capital ratios meaningfully above requirements for “well-capitalized” financial Common Equity Tier 1 Capital Ratio Tangible Common Equity Ratio1 institutions • Proforma capital very strong: Adjustments for the allowa
Slide 5: Diverse & Granular Deposit Base
Diverse & Granular Deposit Base Deposit Composition by Product Type Deposit Composition by Customer Type Noninterest Bearing Consumer Demand Deposits 37% 27% Time Deposits 40% $14.8B $14.8B Total Deposits Total Deposits (at 12/31/23) (at 12/31/23) Money Market, Commercial Interest Bearing & Wholesal
Slide 6: 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 6% and residential mortgage 9
Slide 7: Diversified CRE Portfolio with Low LTVs
Diversified CRE Portfolio with Low LTVs Total CRE: Distribution by LTV (ex. SBA) $8.8B As a % of CRE Portfolio Avg Loan Size: > 55% - > 60% - (at 12/31/23) 60%: 65%: > 65% - 70%: Total Loans: Weighted Avg LTV1: 10% 7% 5% Multi-tenant Retail $2.3MM > 50% - 55%: 12% $1,704MM 42.5% > 70%: $8.8B 13% 7%
Slide 8: Granular CRE Portfolio, Diversified by Submarket
Granular CRE Portfolio, Diversified by Submarket CRE Portfolio by Size Segment CRE Portfolio by Geographic Submarket ($ Millions) Average Other States Loan Size Balance # of Weighted Loan Size LA Fashion District (at 12/31/23) ($ Millions) Loans Average LTV 1 Illinois ($ Millions) 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 ($ Millions) QoQ change $151 2.83% +6bps +4bps +1bps +4bps -6bps -9bps -13bps 2.70% Other Decrease Loan yield Impact of Decrease Decrease earning in cost of expansion, 3Q23 Increase
Slide 10: Average Loans & Deposits, Yields & Rates
Average Loans & Deposits, Yields & Rates Average Loans Receivable Average Loan Yield Relative to Fed Funds Rate ($ Billions) $15.4 5.99% 6.27% 6.24% 15.75 $15.2 5.75% 15.25 $15.1 5.36% $14.6 5.43% 5.50% 14.75 4.69% 5.16% $14.1 14.25 3.82% 13.75 13.25 12.75 12.25 4Q22 1Q23 2Q23 3Q23 4Q23 4Q22 1Q23 2Q
Slide 11: Noninterest Income
Noninterest Income Noninterest Income ($ Millions) • 4Q23 noninterest income of $9MM vs. $8MM in 3Q23 $17.0 – QoQ increase reflected growth across various fee income businesses $12.1 5.8 • No SBA loan gain on sales (“GOS”) in 2H23: $11.0 more economic to retain SBA 7(a) loan production on balance sh
Slide 12: Noninterest Expense & Efficiency
Noninterest Expense & Efficiency Noninterest Expense 1 Efficiency Ratio & (excluding notable items) GAAP Noninterest Expense Noninterest Expense to Average Assets ($ Millions) $86.9 $99.9 $90.4 $87.3 $86.4 2 $84.5 $84.8 2 73.9% 18.8 17.9 18.1 18.9 21.8 1.8 62.4% 62.8%3 1.6 12.6 4.7 3.7 59.1% 60.5% 1
Slide 13: Asset Quality Metrics
Asset Quality Metrics Allowance for Credit Losses & Coverage Ratio Nonperforming Assets Ratio • Allowance for credit losses (“ACL”) stable ($ Millions) QoQ at $159MM at 12/31/23. Coverage ratio: 1.15% of loans receivable at $173 12/31/23, +4bps from 1.11% at 9/30/23 $162 $164 $159 $159 • Net charge
Slide 14: Strategic Reorganization
Strategic Reorganization Realignment Around Lines of Business and Products, to Better Serve Client Base & Run Bank More Efficiently Four Distinct Business Groups: RETAIL BANKING COMMERCIAL BANKING CORPORATE & FEE-BASED BUSINESS GROUP INSTITUTIONAL BANKING Separated from commercial banking to Consoli
Slide 15: Management's Financial Outlook for 4Q24 vs. 4Q23
Management’s Financial Outlook for 4Q24 * vs. 4Q23 4Q23 Outlook for 4Q24 * Anticipated Drivers ($ Millions) vs. 4Q23 ▪ Reorganized frontline pivoting to growth ▪ Expecting payoffs to moderate in 2024; 2023 included strategic exits Average Loans $ 14,053 Low single-digit % growth ▪ Anticipating loan
Slide 16: 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 Targeting balanced growth across revenue growth to outpace loan gr
Slide 17: Fourth Quarter Q&A
2023 Fourth Quarter Earnings Conference Call Q&A 17
Slide 18: Appendix
Appendix 18
Slide 19: Summary Income Statement
Summary Income Statement QoQ YoY ($ in thousands, except per share and share data) 4Q23 3Q23 4Q22 % change % change Net interest income before provision for credit losses $ 125,916 $ 135,378 (7)% $ 150,521 (16)% Provision for credit losses 1,700 16,800 (90)% 8,200 (79)% Net interest income after pro
Slide 20: Summary Balance Sheet
Summary Balance Sheet QoQ YoY ($ in thousands, except per share data) 12/31/2023 9/30/2023 12/31/2022 % change % change Cash and due from banks $ 1,928,967 $ 2,500,323 (23)% $ 506,776 281 % Investment securities 2,408,971 2,260,837 7% 2,243,195 7% Federal Home Loan Bank (“FHLB”) stock and other inve
Slide 21: Appendix: Non-GAAP Financials
Appendix: Non-GAAP Financials 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 utilized by managem
Slide 22: Appendix: Non-GAAP Financials
Appendix: Non-GAAP Financials 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 utilized by managem