Hope Bancorp, Inc. · NASDAQ:HOPE
Hope Bancorp — D.A. Davidson West Coast Bank Tour Virtual Conference 2021
38 slides from Hope Bancorp's conference presentation, Aug 17, 2021
Slide 1: D.A. Davidson West Coast Bank Tour Virtual Conference
1 D.A. Davidson West Coast Bank Tour Virtual Conference August 17, 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 22 Favorable Deposit Trends Slide 27 Strong Franchise Value Slide 29 Appendix Slide 36
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 99th 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 $700 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 Andy Chan EVP, Chief Internal Audit Executiv
Slide 10: Financial Highlights & Earnings Performance
10 Financial Highlights & Earnings Performance
Slide 11: Q2 2021 Financial Highlights
11 Q2 2021 Financial Highlights Net Income $53.8MM EPS (diluted) $0.43 Gross Loans $13.42B Total Deposits $14.73B Net interest income before provision for credit loss increased 3% to $126.6 million – 4th consecutive Q‐o‐Q increase Net interest margin expanded 5bps Q‐o‐Q benefiting from lower dep
Slide 12: Net Interest Income and Margin
12 $109.8 $117.6 $120.8 $122.6 $126.6 2.79% 2.91% 3.02% 3.06% 3.11% 2Q20 3Q20 4Q20 1Q21 2Q21 Net Interest Income & NIM Net Interest Income NIM Net Interest Income and Margin $12.74 $12.72 $13.04 $13.33 $13.29 4.23% 4.20% 4.03% 3.94% 3.98% 2Q20 3Q20 4Q20 1Q21 2Q21 Average Loans Receivable & Avg Loan
Slide 13: Noninterest Income
13 $5.2 $5.4 $5.1 $4.5 $4.5 $2.4$1.7 $2.9 $1.6 $2.1 $1.0 $7.5 $4.4 $1.7 $4.7 $2.2 $3.2 2Q20 3Q20 4Q20 1Q21 2Q21 Noninterest Income Service fees Gain on sale of SBA loans Gain on sale of other loans Gain on sale of securities Other income and fees Noninterest Income Noninterest income increased to
Slide 14: Noninterest Expense and Efficiency
14 Noninterest Expense and Efficiency 55.37% 54.31% 53.77% 53.61% 53.12% 1.60% 1.73% 1.69% 1.65% 1.70% 2Q20 3Q20 4Q20 1Q21 2Q21 Efficiency Ratio & Noninterest Expense to Average Assets Efficiency Ratio Noninterest Expense/Avg Assets Noninterest expense increased to $73.1 million from $70.4 million
Slide 15: Loan Trends
15 Loan Trends
Slide 16: Loan Production & Portfolio Trends
16 $216 $244 $340 $311 $520 $480 $305 $20 $61 $433 $439 $160 $301 $74 $105 $65 $71 $53 3.39%1 2.88% 3.27% 3.44%1 3.37%1 2Q20 3Q20 4Q20 1Q21 2Q21 New Loan Originations Funded CRE PPP C&I Consumer Average Rate Loan Production & Portfolio Trends New loan originations funded increased to record high $
Slide 17: Loan Portfolio Period-End vs. Average Balance
17 Loan Portfolio Period-End vs. Average Balance Total Loans Receivable $12.87 $13.12 $13.56 $13.70 $13.42 $12.74 $12.72 $13.04 $13.33 $13.27 2Q20 3Q20 4Q20 1Q21 2Q21 Period‐End Average Balance Warehouse Line of Credit $544.1 $828.5 $1,008.2 $956.2 $725.2 $400.6 $473.9 $754.4 $756.9 $635.7 2Q20 3Q20
Slide 18: Loan Portfolio by Region
18 Loan Portfolio by Region Southern CA 53% Northern CA 7% Eastern Region 16% Illinois 2% Washington 3% Texas 4% Other States 15% Diverse national footprint spreads credit risk and provides greater growth opportunities •1986: Founded by Los Angeles‐based Korean‐ American investors Southern Californi
Slide 19: Loan Portfolio Composition
19 Loan Portfolio Composition $13.42 Billion Total Portfolio (as of 6/30/2021) CRE Outstanding $8,832.3MM Average Size $1,664M Average Yield 1 4.09% C&I Outstanding $4,001.4MM Average Size $415M Average Yield 1 2.68% Consumer Outstanding $590.6MM Average Size $652M Average Yield 1 3.17% Owner‐ Occup
Slide 20: Portfolio Diversification as of 6/30/2021
20 Portfolio Diversification as of 6/30/2021 CRE Portfolio $8.83 Billion Retail ‐Multi 20% Hotel & Motel 16% Industrial & Warehouse 13% Gas Station & Car Wash 11% Mixed Use 9% Office 7% All Others 24% C&I Portfolio $4.00 Billion Note: All Others includes property types representing less than 7% of t
Slide 21: Loan Portfolio Rate Mix
21 Libor Based 48% @2.40% 1 Prime Based 52% @4.14% 1 Variable Rate Loan Base Index Loan Portfolio Rate Mix as of 06/30/2021 1 The weighted average rate as presented excludes loan discount accretion and interest rates on nonaccrual loans 73% 29% 50% 68% 33% 27% 71% 50% 32% 67% 2.01% 2.88% 3.27% 2.56%
Slide 22: Asset Quality Trends
22 Asset Quality Trends
Slide 23: Asset Quality
23 $17.5 $22.0 $27.5 $3.3 ($7.0) 0.02% 0.12% 0.02% 0.06% 0.35%1 2Q20 3Q20 4Q20 1Q21 2Q21 Provision (Credit) for Credit Losses & Net Charge Offs Provision (Credit) for Credit Losses Net Charge Offs (annualized) ($ millions) Asset Quality $126.6 $106.2 $123.2 $152.0 $167.1$21.0 $18.4 $20.1 $18.5 $16.6
Slide 24: Allocation of Allowance by Loan Type
24 Allocation of Allowance by Loan Type ($ thousands) Allocation of Allowance for Credit Losses Quarter‐over‐ Quarter Change 1Q21 to 2Q21 June 30, 2020 Mar 31, 2021 Jun 30, 2021 Loan Type Amount Coverage Ratio Amount Coverage Ratio Amount Coverage Ratio Amount Coverage Ratio Commercial RE $ 119,030
Slide 25: Active COVID-19 Loan Modifications & Expiration Schedule
25 Active COVID-19 Loan Modifications & Expiration Schedule • Active modifications outstanding as of 6/30/2021 totaled $319 million, or 2.4% of total loan portfolio – Active modifications outstanding as of 7/31/2021 reduced to approximately 1.8% of total loan portfolio • Based on modifications expir
Slide 26: COVID-19 Impacted Portfolios - Hotel/Motel and Retail
26 • 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 regions where the Bank has presence and know
Slide 27: Deposit Trends
27 Deposit Trends
Slide 28: Deposit Composition and Trends
28 $4.0 $4.5 $4.8 $5.4 $5.6 $4.8 $4.8 $5.2 $5.0 $5.8$0.3 $0.3 $0.3 $0.3 $0.3$5.0 $4.4 $4.0 $3.6 $3.0 6/30/20 9/30/20 12/31/20 3/31/21 6/30/21 Deposit Composition DDA MMA/NOW Savings Time Deposit Trends Noninterest bearing demand deposits increased 4% Q‐o‐Q and accounted for 38% of total deposits a
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 Strong Dividend Aggregate $200 million, or approximately 12.7 million shares, repurchased from 2018 to 2020, reducing shares outstanding by 9% Additional $50 million stock repurchase plan launched Q3 2021, with repurchases starting in July 2021 Stock Buybacks
Slide 32: Strong Capital Position
32 Strong Capital Position 10.00% 5.00% 6.50% 8.00% 13.03% 10.15% 11.08% 11.78% 13.16% 10.43% 11.44% 12.14% Total Risk‐Based Capital Ratio Tier 1 Leverage Ratio Tier 1 Common Equity Ratio Tier 1 Capital Ratio Min. Guideline Well Capitalized Institution 3/31/2021 6/30/2021 Growing equity with Book Va
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 $3.1 billion in U.S. in the next 5 years – 250‐plus Korean‐national companies in Hyundai a
Slide 34: Near-Term Outlook
34 Near-Term Outlook Loan Growth: Revised to flat to nominal net loan growth for 2021 – reflecting lower warehouse line balances due to interest rate environment, higher payoffs due to competitive environment and PPP forgiveness, strategic loan sale de‐risking hotel/motel portfolio and resumption
Slide 35: Investment Opportunity
35 Investment Opportunity Definitive leadership position as the representative bank of the Korean American community and a leading Asian American bank National platform and solid presence across all geographic markets with largest populations of Asian Americans Strong core earnings power and c
Slide 36: Appendix
36 Appendix
Slide 37: Appendix – Q2 2021 Financial Summary
37 Appendix – Q2 2021 Financial Summary ($ thousands) Q2 2021 Q1 2021 Q2 2020 Net income $ 53,763 $ 43,687 $ 26,753 Diluted earnings per share $ 0.43 $ 0.35 $ 0.22 Net interest income before provision (credit) for credit losses $ 126,577 $ 122,579 $ 109,814 Net interest margin 3.11% 3.06% 2.79% Noni
Slide 38: Appendix – Acquisition Accounting Adjustments and Merger-Related Expenses
38 Appendix – Pre-Tax Acquisition Accounting Adjustments and Merger-Related Expenses ($ thousands) Q2 2021 Q1 2021 Q2 2020 Accretion on acquired loans $2,554 $2,960 $3,704 Amortization of premium on low income housing tax credits (74) (73) (70) Accretion of discount on acquired subordinated debt (29
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