Hope Bancorp, Inc. · NASDAQ:HOPE
Hope Bancorp — 2019 D.A. Davidson West Coast Bank Tour
36 slides from Hope Bancorp's conference presentation, Aug 14, 2019
Slide 1: 2019 D.A. Davidson West Coast Bank Tour
2019 D.A. Davidson West Coast Bank Tour Los Angeles August 14, 2019 1
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 the Company that constitute forward‐looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section
Slide 3: Presentation Index
Presentation Index Company Overview Slide 4 Financial Highlights & Earnings Performance Slide 10 Loan Trends Slide 17 Asset Quality Slide 23 Deposit Trends Slide 25 Franchise Value Slide 27 Appendix Slide 34 3
Slide 4: Company Overview
Company Overview 4
Slide 5: Bank of Hope's Roots
Bank of Hope’s Roots 39 Years of Service in Los Angeles Saehan Bank Nov 2013 Foster Bank Aug 2013 BankAsiana 2nd Merger of Equals Oct 2013 Pacific July 29, 2016 International Bank Feb 2013 1st Merger of Equals Nov 2011 Mirae Bank Jun 2009 Innovative Bank Apr 2010 Liberty Bank of New York Asiana Bank
Slide 6: Company Profile Today
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 . 88th largest financial institution in the U.S.2 . 12th largest SBA lender in the country by volume3 . Only Korean‐American
Slide 7: National Geographic Presence
National Geographic Presence Nationwide footprint with meaningful presence, providing full banking services to the largest Asian‐American communities in the U.S. Seattle (4 branches + 1 SBA LPO + 1 commercial lending LPO) Portland New York/ SBA LPO New Jersey Illinois (10 branches + 1 Northern (5 br
Slide 8: Corporate Social Responsibility Highlights
Corporate Social Responsibility Highlights 1 OUT OF 2 1200 HOURS $3.01 BILLION 1 out of 2 Bank of Hope branches Nearly 1200 hours of $3.01 billion located in low‐to‐moderate CRA‐reportable of loans funded income areas volunteer hours in 2018 $500 MILLION $10 MILLION $2.0 MILLION $500 million of $10
Slide 9: Executive Leadership
Executive Leadership We are proud to have one of the strongest leadership teams among Leadership Asian‐American banks. Risk Operations Business Management Oversight Leadership Peter Koh Thomas Stenger Daniel H. Kim David P. Malone Kyu S. Kim David Song David W. Kim Kevin S. Kim EVP, Chief Credit EVP
Slide 10: Financial Highlights & Earnings Performance
Financial Highlights & Earnings Performance 10
Slide 11: Balance Sheet Growth
Balance Sheet Growth Loans Receivable Total Deposits Total Assets $15.31 $15.34 $14.21 $ Billions $ Billions $ Billions $13.44 $12.10 $11.98 $12.16 $12.17 $11.10 $10.54 $10.64$10.85 $7.91 $6.25 $6.34 $7.14 $5.57 $5.69 2014 2015 2016 2017 2018 1H19 2014 2015 2016 2017 2018 1H19 2014 2015 2016 2017 20
Slide 12: Solid Earnings Performance
Solid Earnings Performance Revenues Net Income $189.6 $547.8 $548.1 $ millions $ millions $139.4 $415.2 $113.7 $98.8 1 $88.6 $92.3 2 $310.8 $316.7 $85.4 $278.0 1 $260.5 2 2014 2015 2016 2017 2018 6 Mos 6 Mos 2014 2015 2016 2017 2018 6 Mos 6 Mos 2018 2019 2018 2019 15% 21% 4‐Year 4‐Year CAGR CAGR 1 6
Slide 13: Q2 2019 Financial Highlights
Q2 2019 Financial Highlights Net income of $42.7 million, or $0.34 per diluted common share Net interest margin declined 8bps Q‐o‐Q to 3.31%; compression of core net interest margin Earnings & excluding purchase accounting adjustments moderated to a 6bps decrease from a 7bps decrease in Net 1Q19
Slide 14: Net Interest Income and Margin
Net Interest Income and Margin Key Net Interest Income Drivers Net Interest Income & NIM Average Loans & Yield ($ millions) ($ billions) $126.4 $11.9 $12.1 $12.0 $123.3 $123.1 $11.8 $122.8 $121.9 $11.4 5.31% 5.32% $120.1 $119.6 $10.9 $11.1 $10.7 5.16% 5.21% $10.5 $116.8 3.84% $117.2 3.83% 3.66% 3.61
Slide 15: Noninterest Income
Noninterest Income Noninterest Income Noninterest income increased to $12.3 million in 2Q19 from $11.4 million in 1Q19, largely reflecting higher net gains on loan sales ($ millions) $19.9 Quarter‐over‐Quarter Gain‐on Sale Variance Sold $76 million of residential mortgage loans to $16.1 $16.2 $1
Slide 16: Noninterest Expense and Efficiency
Noninterest Expense and Efficiency Noninterest Expense and Efficiency Ratio Breakdown of Noninterest Expense and FTE ($ millions) ($ millions) $73.0 $71.6 $70.8 $71.4 $68.5 $67.5 $70.2 $64.0 $61.8 $33.3 $29.1 $31.1 $33.6 $30.4 $32.1 $29.1 $30.5 $25.9 1,502 1,491 1,512 1,494 1,463 1,470 1,468 1,446 F
Slide 17: Loan Trends
Loan Trends 17
Slide 18: Loan Production & Portfolio Trends
Loan Production & Portfolio Trends New Loan Originations Funded New loan originations funded increased to $504 million; new loan commitments of $597 million 5.52% 5.46% ($ millions) 5.22% 4.97% 4.79% Lower Y‐o‐Y new loan volumes reflect more selective 4.56% 4.64% 4.40% 4.42% stance on CRE origin
Slide 19: Loan Portfolio by Region
Loan Portfolio by Region $11.98 Billion (as of 06/30/2019) Southern California • 1986: Founded by Los Angeles‐based Korean‐ Others American investors 12% Northern California • 1997: Expanded de novo into Northern California; Pacific Acquired Asiana Bank in 2003 Texas Northwest 4% Eastern Region 3% •
Slide 20: Loan Portfolio Composition
Loan Portfolio Composition $11.98 Billion Total Portfolio (as of 06/30/2019) Consumer Outstanding $913.1B Consumer 8% Average Size $595MM Owner‐ Average Yield 4.09% Occupied CRE C & I 23% 20% CRE C&I Outstanding $8,630.9B Outstanding $2,432.1B Average Size $1,512MM Average Size $512MM Nonowner‐ Aver
Slide 21: Portfolio Diversification
Portfolio Diversification as of 06/30/2019 CRE Portfolio C&I Portfolio $8.63 Billion $2.43 Billion Hotel & Manufacturing Motel All Others 14% 19% 23% All Others 30% Wholesale Trade 23% Mixed Use Retail ‐ Multi 9% 20% Gasoline Stations 5% Office Building Health Care & Social 7% Assistance Supermarket
Slide 22: Loan Portfolio Rate Mix
Loan Portfolio Rate Mix as of 06/30/2019 Fixed / Variable Breakdown Variable Rate Loan Base Index Other * Libor Based 10% 27% Variable @4.53% 2 Hybrid 1 38% @4.63% 2 37% @5.72% 2 @4.55% 2 Prime Fixed Based 25% 63% @4.67% 2 @6.38% 2 1 Hybrid loans have fixed interest rates for a specified period and
Slide 23: Asset Quality
———— ‘Asset Quality .
Slide 24: Asset Quality
Asset Quality Nonperforming Assets Provision Expense & Net Charge Offs ($ millions) ($ millions) $7.3 $137.9 $138.5 $125.7 $125.2 $129.1 $5.4 $124.3 $8.3 $118.2 $6.3 $17.2 $10.8 $8.7 $113.0 $111.7 $21.8 $129.6 $9.0 $7.8 $132.2 $5.6 $2.8 $3.6 0.22% $114.4 $120.4 $2.8 $3.0 $102.5 $108.5 $109.2 $105.2
Slide 25: Deposit Trends
050. Deposit Trends
Slide 26: Deposit Trends
Deposit Trends Deposit Composition Total end‐of‐period deposits decreased 1% Q‐o‐Q ($ billions) Favorable shift in deposit mix with increases in lower‐cost $11.51 $11.73 $12.05 $12.16 $12.25 $12.17 deposits and decreases in time deposits $10.96 $10.99 $10.85 – 2% increase in noninterest bearing
Slide 27: Franchise Value
Franchise Value 27
Slide 28: The Representative Bank of the Korean-American Community
The Representative Bank of the Korean-American Community Total Assets Net Loans Total Deposits $29.73 Billion $23.12 Billion $24.58 Billion As of 6/30/2019 As of 6/30/2019 As of 6/30/2019 52% 51% 50% Bank of Hope Hanmi Bank Pacific City Bank Metro City Bank Commonwealth Business Bank Open Bank First
Slide 29: Strong Shareholder Returns & Capital
Strong Shareholder Returns & Capital Strong Dividend Robust Capital Position Yield: 4.22% (06/19) $0.14 $0.14 $0.14 $0.14 Payout Ratio: 39.72% (ttm) (as of 06/30/2019) $0.13 $0.13 $0.13 $0.13 $0.12 $0.12 $0.12 13.42% $0.11 $0.11 $0.11 $0.11 $0.11 $0.10 $0.10 $0.10 $0.10 11.90% 10.94% 10.21% $0.0
Slide 30: Unique Growth Opportunities
Unique Growth Opportunities Increasing Korean Investment South Korean Companies Among in the U.S. Top Foreign Investors in the U.S. • Hyundai Motor and Kia Motors announced Jan 2017 ($ billions) plans to spend $3.1 billion in U.S. in the next 5 years $103.2 – 250‐plus Korean‐national companies in Hy
Slide 31: 2019 Key Priorities
2019 Key Priorities Profitable Growth – •New TMS leadership actively engaging front line to build new core deposit relationships •Targeting existing commercial customers rich in deposits Better Deposit Cost •Rebuilding online banking platform Management •Redesigned frontline incentive compensation p
Slide 32: Near-Term Outlook & Strategies
Near-Term Outlook & Strategies Continuation of positive trends from first half of 2019 Favorable shift in mix of new loan production favoring higher‐yielding loans Gaining more traction with deposit gathering initiatives, leading to improved deposit mix and better deposit cost management Sta
Slide 33: Investment Opportunity
Investment Opportunity The Only Super Regional Korean‐American Bank in the Nation Definitive leadership position as the representative bank of the Korean‐American community National platform and solid presence across all geographic markets with largest populations of Asian Americans Strong, su
Slide 34: Appendix
Appendix 34
Slide 35: Appendix – Q2 2019 Financial Summary
Appendix – Q2 2019 Financial Summary ($ thousands) Q2 2019 Q1 2019 Q2 2018 Net income $ 42,681 $ 42,758 $ 47,530 Diluted earnings per share $ 0.34 $ 0.34 $ 0.36 Net interest income $ 117,221 $ 119,608 $ 122,819 Net interest margin 3.31% 3.39% 3.61% Noninterest income $ 12,287 $ 11,422 $ 15,269 Nonin
Slide 36: Appendix – Pre-Tax Acquisition Accounting Adjustments and Merger-Related Expenses
Appendix – Pre-Tax Acquisition Accounting Adjustments and Merger-Related Expenses Q2 Q3 Q4 Q1 Q2 2018 2018 2018 2019 2019 Accretion of discount on acquired performing loans $3,189 $2,969 $2,360 $2,166 $1,799 Accretion of discount on acquired credit impaired loans 5,959 5,239 4,867 5,834 6,848 Amorti
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