Hope Bancorp, Inc. (HOPE) Tops Q3 EPS by 6c

Hope Bancorp, Inc. (NASDAQ: HOPE) reported Q3 EPS of $0.25, $0.06 better than the analyst estimate of $0.19.

Q3 2020 Highlights

• Net interest income before provision for credit losses increased 7% to $117.6 million from Q2 2020, largely benefiting from meaningful reductions in interest expense due to lower cost of deposits.
• Net interest margin expanded 12 basis points quarter-over-quarter benefiting from continued reduction in deposit costs and redeployment of excess liquidity.
• Noninterest bearing deposits increased 11% by $452 million quarter-over-quarter and accounted for 32% of total deposits at quarter end.
• Favorable mix-shift to lower-cost core deposits continued and total deposit costs decreased 23 basis points quarter-over-quarter.
• Loan originations of $782 million included $301 million in utilization of new warehouse mortgage lines and contributed to a 2% increase in loans receivable quarter-over-quarter, or 8% annualized.
• Noninterest expenses were well contained, and efficiency ratio improved to 54.31% from 55.37% in Q2 2020.
• ROA and ROTCE improved to 0.72% and 7.80%, respectively, from 0.64% and 6.94% in Q2 2020.
• Nonperforming loans decreased 16% quarter-over-quarter to $106.2 million, or 0.81% of loans receivable.
• Allowance for credit losses increased to 1.37% of loans receivable at September 30, 2020 from 1.26% at June 30, 2020.

“We continue to manage our business well in this most challenging operating environment as evidenced by the many positive trends in our 2020 third quarter,” said Kevin S. Kim, Chairman, President and Chief Executive Officer of Hope Bancorp, Inc. “The continued success we are having in reducing our deposit costs resulted in a 7% quarter-over-quarter increase in net interest income and a 12 basis point expansion in our net interest margin. Contributing to a 23 basis point reduction in our cost of deposits, noninterest bearing demand deposits increased 11% quarter-over-quarter and accounted for 32% of total deposits at quarter end. We also made significant progress during the quarter redeploying the excess liquidity that was built up as a precautionary measure in light of COVID-19. Altogether with our cost containment efforts, we saw improvement in our efficiency ratio.

“Asset quality remains top of mind as we continue to help our borrowers manage through the impact of the pandemic. Overall, credit trends remain stable with meaningful reductions in nonaccrual loans and restructured loans. Underscoring the protracted impact COVID-19 is having on the economy, we further increased our allowance for credit losses to 1.37% of total loans at September 30, 2020 from 1.26% at June 30, 2020. We believe we are taking appropriate mitigating actions for the current environment and remain confident in our ability to continue supporting our customers and communities while delivering solid financial performance for our shareholders.”

For earnings history and earnings-related data on Hope Bancorp, Inc. (HOPE) click here.

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