HOPE - Earnings call transcript Q3 2024

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Operator

Good day, and welcome to the Hope Bancorp 2024 Third Quarter Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Angie Yang, Director of Investor Relations. Please go ahead.

Angie Yang

Thank you, Nick. thank Third joining Quarter and Hope for everyone, XXXX Bancorp Investor morning, you us for the Good Conference Call.

will this statements remarks. today regarding available start with we accompany The website. Beginning on of call usual, be brief let slide Relations a the As me X, presentation our our Investor discussion projections the statement morning, contains in is a forward-looking Slide which Presentations page using to future regarding forward-looking financial closing pending customary regarding stockholders of other is closing and as company approvals, as future the and of The approval Territorial regulatory the transaction the and between Bancorp. events conditions. Bancorp performance pending Hope subject transaction to Bancorp, of of well the Territorial the

not results of outcomes projections assumes guarantees Hope Bancorp that Actual performance. today's may on obligation made materially. call. are to any and no future may Forward-looking revise forward-looking differ statements be

referenced are of today on In call the addition, information some this measures. financial non-GAAP

detailed as risk please refer more of harbor this measures, company's with filings morning. release a the the press as financial a SEC the our the factors reconciliation GAAP statements safe non-GAAP to description issued For well of to in and

the let session. Kim. that, here as Kevin and usual With available turn for and Hope over allotted us the is with management have Presenting our Peter Chief Balicka, Operating Officer. Kevin and Now we Q&A side our also Officer, Koh, will be this Julianna be Bancorp's the call. will X Kevin? CEO; hour for today President from Kim, Chairman, to Chief me Financial call

Kevin Kim

us for today. everyone, morning, Good Thank you, Angie. you thank joining and

quarter. a brief Let us begin Slide on overview of the with X

sale, deposit from in grew XX, a excludes were continued banking grew success brokered X% in growth in productivity teams. loan of deposits and reflecting higher for financial highlighted loan Our XX, June receivable, loans deposits. a which our our Loans a XXXX our from from XX% growth quarter trend, supporting results growth XXXX. annualized and Customer planned third held levels strong turnaround XXXX, June offsetting by reduction annualized core

For diluted net share. earned we the of $X.XX per or third quarter $XX.X of million XXXX, income

Excluding $XX.X Slide XX, $X.XX. Hope million our ratios per quarter was were items were were earnings in X, capital share Notable Wilshire from XX, notable June merger-related. On merging ratios All XXXX since this capital Bancorp's XXXX. net items, and primarily highest risk-based our income our expanded quarter-over-quarter risk-based with XXXX. September yet

ample common position XX, and market in sheet as XX.X% to loan ratio activity, September client balance As our our tangible economic merger our was profitable improve generate prudent was management year. coming the and liquidity, of and ratio total strong support demand equity increase our add conditions and relationships, capital new Together with share, capital our ratios well growth XX.X%. us

a Board Our growth dividend XXXX, record of a of share billion, of robust deposits. million with essentially XXXX. Continuing $X.XX brokered per quarter-over-quarter XX, XX total $XX.X declared September November offsetting payable of stock planned quarterly on stockholders customer stable $XXX November to of as common X. Directors in were At deposits Slide deposits our X, to reduction

on see of brokered mix reduced September down from XXXX, of slide this can You XX, X% XX% to that deposits as in June our XX, XXXX. we as

offset of On by $XXX came Virginia approximately totaling in the customer that demand highlight quarter would will I small be sale this elsewhere from growth addition, our growth XXXX, X/X of our deposits. from October In more This branches in X, organic X deposit noninterest-bearing the accounts. our than deposit outflow of million business network. closed,

$XX and for growth million receivable, X% XX, loans higher mortgage and of sale, by to XX, Moving September At excluding annualized balances increased reflecting equivalent X. residential on held Slide June our from XXXX, loans commercial to loans.

million sorry, $XX relatively of and -- sold increased I'm third and the Slides X X, our production while consistent. On commercial The loan weighted Quarter-over-quarter, SBA property average and was and loan we commercial by and loan-to-values estate well X details residential X loans. During production granular type with real changed. XX% XX, we mortgage in not a SBA the size. of quarter, more on low estate our diversified remain of September has are at profile portfolio provide commercial loans, real which XXXX, approximately

that, quality I the provide details financial has commercial for performance Julianna real loans to XXXX. XX, stable September XX% estate with at additional on will quarter. Asset of our remained traded ask the Julianna? With

Julianna Balicka

income $X Thank million X XXXX, as total growth interest totaled with basis our reflected preceding Slide from average $XXX interest increased you, which morning, in deposit the X, expense, and and income increased Beginning quarter was growth points for second interest offset the in everyone. Average million net costs deposit third of by cost Kevin, good by higher down balances. quarter-over-quarter. quarter

to September deposit XX, our in our decreased deposit inflection from an points deposit However, basis end-of-period cost total indicating XX by costs type. June point X by

quarter trends average yields the to our our deposit net weighted show costs. On and margin to by and declined XX, quarterly in X you loan third basis quarter-over-quarter Our we average Slide points Slide interest and XX. X.XX%. On balances

second of on was The primarily In attributable $XX of level SBA $X noninterest quarter. higher of sold sale second a for income million in a million the we sold $X.X Our gain a of increase million $XX of loans loans. an of SBA third of for quarter, gain gain increase SBA the with million X% the to quarter, loans quarter. $XX.X compared for from is third million the

Moving on to noninterest Slide expense on XX.

second the was $XX.X expense Our noninterest in quarter. million

were Excluding restructuring notable primarily excluding On we our expense excluding the impact for notable a year-over-year basis, million, was million, items of the X%, which last noninterest items $XX.X $XX.X down with second executed the merger-related, which was compares quarter. expense year. notable reflecting noninterest our late adjusted items,

process was due Slide This matured. relationship status of on relationship to change its XX, quarter-over-quarter asset XX, real the our X estate $XXX well is $XX nonaccrual Nonperforming borrower actively decrease a are of after minimal X moving quarter-over-quarter, will secured placement million. in mention in at content. these review consists September million primary consisting of by loss Now in increase The locations an criticized to substandard loans in no loans the of loans. increased that I properties. Total The special by commercial selling quality. loans loans properties and with were to XXXX on assets

in are XX of This points loans. previously charge-offs for resolutions second quarter expected with annualized, continue moderate work the and points identified XXXX compares the favorable loans. date, before of quarter. loans $XX at basis to more we average year-end. XX million, problem basis had Net our We more to Fourth quarter annualized or third $X.X problem of manageable with million than have

in Kevin. coverage me from and by XXXX macroeconomic million or with positive for For let that, the representing XXX basis points XXX basis XX, in of compared the improved points variables, the million third receivable provision September call allowance the points quarter, evaluated as losses preceding price impact The CRE At index, XXXX, notably as our compared reserves. With of back quarter. qualitative turn second to loans for credit $XXX our with of was increased the $X.X XXXX. XXX XX, loan June allowance $X.X offset September individually reflects losses million, change credit XX, was partially basis

Kevin Kim

Thank you, Julianna.

outlook the XX. to Slide on Moving on

Our share year, coming market relationships client sheet and in generating expand to the growth. our has balance management our positioned profitable well grow us

for brief ahead. me provide For a now, let quarter update the

For third given quarter less simplicity, in we quarter with are of have XXXX. the our that year, presenting quarter X than of fourth the the left for we compared outlook XXXX

mergers and of impact the include not acquisitions. does outlook Our

As is our custom, XXXX we the quarter and results. will when expectations medium-term fourth present report we

loans average quarter to from of the percentage the for in quarter. single single grow XXXX is at building digits outlook interest third income Net quarter-over-quarter. Our our is momentum expected fourth quarter-over-quarter, digits low in the a low rate grow for on to the

from We expense expect growth benefit deposit management. to interest income benefit loan positive continued rate and from interest to

consistent rate the or funds XX, current forward as implies of which rate Our interest Fed December curve, a XXXX. funds Fed with are rate target X.X% per expectations

SBA a sale quarter third level of gain as expect the quarter. on in the similar We in fourth of loans

to notable are stable forward be quarter-over-quarter. expenses, net-net, excluding operating And positive expect to We quarter-over-quarter. essentially looking operating leverage items, we

assume of of an points we essentially reserve stable basis which as XXX to XX, was Lastly, XXXX. loans September continue coverage,

about pending created with through merger compelling Bancorp Territorial the our value combination. and We this are excited

will not discuss to questions is taking about financial open for today up our questions. given call this However, of the third be we purpose quarter. transaction, for the the that operator, results please the call that, With

Operator

our today with Davidson. [Operator from first D.A. Instructions] And Gary comes Tenner question

Gary Tenner

guess, give us loan and and could of you update, in I repricing on portfolio if an floating rate see terms the just hybrid fixed rate of idea then loan first an XXXX. to in wanted I

Julianna Balicka

Sorry, in XXXX?

Gary Tenner

again? say Sorry,

Julianna Balicka

you about talking Are Sorry. XXXX?

Gary Tenner

then the XXXX. of get floating repricing to Well, rate in of rate loans the but updated the I percentage portfolio wanting in fixed was amount

Julianna Balicka

hybrid, is loans is me of Right. XX%, repricing period are and and the XX% percentage portfolio let see, The rate remainder amount that is, is and in fixed. million. fixed [indiscernible] $XXX that's of And fixed variable XXXX XX% our in hybrid.

Gary Tenner

and offer wake rate those in now? that you pricing All of the us CDs the on September rate deposit in of -- relates quarter, on do us what quarter-over-quarter gave side, as rolling the the where is decline just right, you able rate. tell cut spot the side are your were great. then to just particularly And kind of fourth it over the right on what in the Can kind you to

Julianna Balicka

rate accounts all our costs deposit the already to account we some example, accounts deposit of CDs I'll market the you rate cost down. beta over down rate, market, where say And for so in for reprice wouldn't that for down, X% was with that an begin -- XX%. low And moved of with the money and the the savings for our savings, right? But down rates on moved continue down approximately we in for obviously those say CDs. like and handle So and accounts rates for terms -- money a accounts a moved accounts because were we are move I'll accounts roll to

we CD points down and across the XX. reduce another average X our So October rates our to CD costs evaluate quarter-to-date, in are board. September from basis -- And continue

Operator

And next Instructions] today with comes [Operator KBW. question McGratty Chris our from

Christopher McGratty

or in for Julianna, you on the margin the sticking you assuming a What's total your deposit mean, you betas? either your beta with I XX% you're mentioned cycle deposit What are for assuming modeling? second. moved. interest-bearing stuff full

Julianna Balicka

just see numbers. Yes, And not like the on the sharing, obviously, the incremental because you right, change I that whole, the was second. that was X in can

it's get assuming By there. to to we but X while cycle So second. we're beta, time on cost, the get going take a to XX% the deposit interest-bearing full a us high

Christopher McGratty

there's whether the maybe on, was then for reserves credit again, added drove to was that we on -- relationship be there there no surprise I already, it discussion And The more whether could Great. guess, those color or was switch what minute. if it, would detail nonaccrual, Any to a helpful. any loans loss. a

Peter Koh

little is loss an well the This well-positioned don't are now property. But We're process anticipate workout. borrower the of is the these because selling active again, a properties. in limited Peter. much Really secured, right of very and

it's we this proactive right a now So we feel like manageable resolution. being but with are situation

Operator

our D.A. And a Davidson Tenner next with of Gary follow-up. today comes question from

Gary Tenner

had. you around I I guess, fourth is? a the be a in fourth I What quarter that little level rate, just they CD want X% a maturities offer to rate last follow on your what you projected are what think. to as quarter, on that I up now? are see Could mean, right were quarter based first, on CDs know more that question down rolling CD quarter today? I specific to X.XX% I

Julianna Balicka

Yes.

up my opening here. Just rate right

CDs are would an in approximately, blended rate. X.XX% We I say, originating

Operator

McGratty follow-up. Instructions] of next KBW And with our from a question Chris today [Operator comes

Christopher McGratty

-- considering it the, portfolio kind bond year. I'm the this on looks potentially into is restructuring in whether of did spot on be mini quickly and the the more Really a interested in yields you like quarter. investment you'd

Julianna Balicka

-- low-yielding as have portfolio we rates, Well, current continuing of done, transaction are considering not, X.XX% hold referring move on -- end far whole mean, on securities me, lowest-yielding that incrementally investment the securities. the was I while moment, to our you the as portfolio. And book and yield at taking where our of of have quite them which spot September. up is the we down of the bit we end off at of kind in average a are at may at other question bigger securities are I the Spot market X.XX% that repricing to perhaps the portfolio a pulling the second. can your -- in are reposition a from for moments of banks loan to kind mean, we in advantage Bear of our excuse portfolio of the moment, yields mind, blended

Operator

today comes next our Sandler. of Clark Piper question Matthew from And

Matthew Clark

that truly truly or you rate of loans said I adjustables think, XX.X% floating variable contribution was all there? that so. The floating there said, in Is or you is

Julianna Balicka

Or what? is there

Matthew Clark

in adjustables there variable? Are that

Julianna Balicka

-- the hybrid, The future. that's floating. is the that's in XX% we No, truly the quoted floating the truly variable. The hybrid variable to fixed that

Matthew Clark

Okay, it then basis the September, average one? okay. in or other if had an And margin adjusted on an you adjusted

Julianna Balicka

interest adjusted for margin was margin? interest month-to-date, nicely. margin and Our net net trending it's The but September it's up X.XX% up

Matthew Clark

Okay. reversals? That's adjusted for any interest

Julianna Balicka

That's right.

Operator

back would our closing concludes over I like conference This to management any question-and-answer remarks. turn for session. to the

Kevin Kim

to Bye, we Thank you today, everyone. you. us thank again again, look with and forward all Once joining quarter. next for speaking you

Operator

now The presentation. for concluded. today's conference Thank you has attending

You may now disconnect.

Hope Bancorp (HOPE) 28 Oct 242024 Q3 Earnings call transcript