Hope Bancorp, Inc. · NASDAQ:HOPE
Hope Bancorp — Q3 2023 Earnings Presentation
19 slides from Hope Bancorp's earnings presentation, Oct 23, 2023
Slide 1: Third Quarter 2023 Earnings Conference Call
2023 Third Quarter Earnings Conference Call Monday, October 23, 2023
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 Hope Bancorp, Inc. (the “Company”) that constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, a
Slide 3: Q3 2023 Financial Overview
Q3 2023 Financial Overview Total Capital & TCE Ratio Strong Capital & Liquidity • Company’s total capital ratio was 13.23% at 9/30/23. All regulatory ratios expanded QoQ at 9/30/23 • Tangible common equity (“TCE”) ratio1 was 7.96% at 9/30/23 13.23% / 7.96% • Avail. borrowing capacity, cash & equival
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: Strong Balance Sheet & Ample Liquidity Position
Strong Balance Sheet & Ample Liquidity Position Cash and Cash Unpledged Equivalents • Cash and cash equivalents increased to $2.5B at 9/30/23, up $2.5 Bn Securities $0.3 Bn from $2.3B at 6/30/23 Fed Fund Lines at Other Banks • Available borrowing capacity, cash and cash equivalents, and unpledged in
Slide 6: Diverse & Granular Deposit Base
Diverse & Granular Deposit Base Deposit Composition by Product Type Deposit Composition by Customer Type Noninterest Bearing Consumer Demand Deposits 35% Time Deposits 42% 27% $15.7B $15.7B Total Deposits Total Deposits (at 9/30/23) (at 9/30/23) Commercial & Wholesale Savings Deposits Money Market a
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-occupied Residential Avg Size: $2.3MM CRE, C&I, owner-occupied CRE, Mortgage Multifamily & Other multifamily residential (“MFR”), and Residential 6% residential mortgage 9%
Slide 8: Diversified CRE Portfolio with Low LTVs
Diversified CRE Portfolio with Low LTVs Total CRE: Distribution by LTV (ex. SBA) $9.0B CRE Portfolio > 55% - As a % of Avg Loan Size: 60%: > 60% - 65%: (at 9/30/23) > 65% - 70%: Total Loans: Weighted Avg LTV1: 10% 7% 5% Multi-tenant Retail $2.3MM > 50% - 55%: 12% 14% > 70%: 42.7% $9.0B $1,745MM 6% I
Slide 9: Granular CRE Portfolio, Diversified by Submarket
Granular CRE Portfolio, Diversified by Submarket CRE Portfolio by Size Segment CRE Portfolio by Geographic Submarket ($ Millions) Average Other States Loan Size Balance # of Weighted Loan Size LA Fashion District (at 9/30/23) ($ Millions) Loans Average LTV 1 Illinois ($ Millions) Gateway Cities > $3
Slide 10: Net Interest Income & Net Interest Margin
Net Interest Income & Net Interest Margin Net Interest Income & Net Interest Margin QoQ Change in Net Interest Margin (“NIM”) ($ Millions) QoQ change $153 +2bps -10bps $151 +9bps +4bps -14bps +22bps 2.83% 2.70% Other Increase in Reduction Reduction earning avg int-earn in avg Higher -2% Loan yield i
Slide 11: Average Loans & Deposits, Yields & Rates
Average Loans & Deposits, Yields & Rates Average Loans Receivable Average Loan Yield Relative to Fed Funds ($ Billions) $15.4 5.99% 6.27% 15.75 $15.2 5.75% 15.25 $14.9 $15.1 5.36% $14.6 4.65% 14.75 5.16% 5.43% 4.69% 14.25 3.82% 2.35% 13.75 13.25 12.75 12.25 3Q22 4Q22 1Q23 2Q23 3Q23 3Q22 4Q22 1Q23 2Q
Slide 12: Noninterest Income
Noninterest Income Noninterest Income ($ Millions) • 3Q23 noninterest income of $8MM, vs. $17MM in 2Q23 $17.0 – 2Q23 included a one-time $6MM cash distribution from an investment in an affordable housing $13.4 partnership, which did not reoccur in 3Q23 5.8 $12.1 2.8 $11.0 – No SBA loan sale gains in
Slide 13: Noninterest Expense & Efficiency
Noninterest Expense & Efficiency Noninterest Expense Efficiency Ratio & ($ Millions) Noninterest Expense to Average Assets $90.4 $87.3 $86.9 $83.9 $84.5 62.4% 60.5% 18.8 17.9 59.1% 17.5 18.1 19.4 1.8 1.6 1.6 4.7 3.7 12.6 11.6 12.1 12.4 12.8 52.0% 50.4% 1.89% 53.2 52.7 57.2 52.3 51.0 1.82% 1.79% 1.71
Slide 14: Asset Quality Metrics
Asset Quality Metrics Allowance for Credit Losses & Coverage Ratio Nonperforming Assets Ratio • Nonperforming assets (“NPA”) of $62MM ($ Millions) at 9/30/23, -20% QoQ $173 • NPA ratio improved to 31bps of total $162 $164 assets, -7bps QoQ $161 $159 1.16% 1.11% • Net charge offs (“NCO”) of $31MM in
Slide 15: Strategic Reorganization
Strategic Reorganization Realignment Around Lines of Business and Products, to Better Serve Client Base & Run Bank More Efficiently Four Distinct Business Groups: RETAIL BANKING COMMERCIAL BANKING CORPORATE & FEE-BASED BUSINESS GROUP INSTITUTIONAL BANKING Newly separated from commercial banking Cons
Slide 16: Appendix
Appendix 16
Slide 17: Summary Income Statement
Summary Income Statement QoQ YoY ($ in thousands, except per share and share data) 3Q23 2Q23 9/30/2022 % change % change Net interest income before provision for credit losses $ 135,378 $ 130,689 4% $ 153,186 (12)% Provision for credit losses 16,800 8,900 89 % 9,200 83 % Net interest income after pr
Slide 18: Summary Balance Sheet
Summary Balance Sheet QoQ YoY ($ in thousands, except per share data) 9/30/2023 6/30/2023 9/30/2022 % change % change Cash and due from banks $ 2,500,323 $ 2,302,339 9% $ 331,336 655 % Investment securities 2,260,837 2,186,346 3% 2,264,533 —% Federal Home Loan Bank (“FHLB”) stock and other investmen
Slide 19: 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