Hope Bancorp : Fourth Quarter 2022 Earnings Conference Presentation

2022

Fourth Quarter

Earnings Conference Call

Tuesday, January 24, 2023

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 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements relate to, among other things, expectations regarding the business environment in which we operate, projections of future performance, perceived opportunities in the market, and statements regarding our business strategies, objectives and vision. Forward-looking statements include, but are not limited to, statements preceded by, followed by or that include the words "will," "believes," "expects," "anticipates," "intends," "plans," "estimates" or similar expressions. With respect to any such forward- looking statements, the Company claims the protection provided for in the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties. The Company's actual results, performance or achievements may differ significantly from the results, performance or achievements expressed or implied in any forward-looking statements. The risks and uncertainties include, but are not limited to: possible further deterioration in economic conditions in our areas of operation; interest rate risk associated with volatile interest rates and related asset-liability matching risk; liquidity risks; risk of significant non-earning assets, and net credit losses that could occur, particularly in times of weak economic conditions or times of rising interest rates; the failure of or changes to assumptions and estimates underlying the Company's allowances for credit losses, regulatory risks associated with current and future regulations; and the COVID-19 pandemic and its impact on our financial position, results of operations, liquidity, and capitalization. For additional information concerning these and other risk factors, see the Company's most recent Annual Report on Form 10-K. The Company does not undertake, and specifically disclaims any obligation, to update any forward-looking statements to reflect the occurrence of events or circumstances after the date of such statements except as required by law.

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4Q22 & FY 2022 Financial Highlights

Net Income

$51.7M (4Q22)

$218.3M (FY2022)

Earnings & Profitability

• Net interest income for 4Q22 decreased 2% Q-o-Q but increased 13% for the full year vs. 2021
• Net interest margin for 4Q22 decreased 13bps Q-o-Q but increased 27bps for the full year vs. 2021
• Net income for 4Q22 decreased 4% Q-o-Q but increased 7% for the full year vs. 2021
• Pre-provisionnet revenue1 ("PPNR") decreased 5% Q-o-Q but increased 16% for the full year vs. 2021

Diluted EPS

$0.43 (4Q22) $1.81 (FY 2022)

Gross Loans (as of 12/31/22)

$15.40B

Total Deposits (as of 12/31/22)

$15.74B

Loans

• New loan production for 4Q22 totaled $793 million and aggregated to a record $4.45 billion for the full year
• Mix of new originations well diversified with C&I 54%, CRE 41% and Mortgage and Consumer 5% for 4Q22, and C&I 47%, CRE 44% and Mortgage and Consumer 9% for the full year
• Loans receivable decreased 1% Q-o-Q but increased 10% Y-o-Y (12% excluding SBA PPP loans)

Deposits

• Deposits for 4Q22 increased 2% Q-o-Q and increased 5% Y-o-Y
• Total cost of deposits for 4Q22 increased 83bps Q-o-Q and increased 139bps Y-o-Y

Asset Quality

• Total nonperforming assets decreased 28% Q-o-Q and decreased 38% Y-o-Y
• Total criticized loans as of 12/31/22 decreased 8% Q-o-Q and decreased 48% Y-o-Y
• Losses remain minimal with annualized net charge offs to average loans receivable of 0.17% for 4Q22, and net recoveries to average loans receivable for 2022 of 0.08%

1 PPNR (Pre-provision net revenue) is a non-GAAP financial measure. A quantitative reconciliation of most directly comparable GAAP to non-GAAP financial

measure is provided on Slide 17.

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Loan Production & Portfolio Trends

				New Loan Originations Funded
							($ Millions)
	$1,243				$1,286		$1,349
					$68
	$81
	$1,026	$184
	$539	$104						$747		$793
				$557
		$344					$37
													$432
	$623	$578	$545		$534		$324
	4Q21			1Q22			2Q22		3Q22	4Q22
				CRE		C&I			Mortgage and Consumer

Average Rate of New Loans

4Q21	1Q22	2Q22	3Q22	4Q22
3.38%	3.54%	4.26%	5.37%	6.71%

• Total new loan originations of $793 million reflects more selective and prudent approach to new loan credit risk and overall profitability
• Well diversified mix of new loans with C&I production volume accounting for 54%, CRE 41% and Mortgage and Consumer loans 5%
• Average rate on new loans increased 134bps Q-o-Q to 6.71%

Loans Receivable

16.75

($ Billions)

16.25 Q-o-Q change

15.75			$15.49	$15.40
15.25
			$14.55	-1%
14.75
		$14.07	+6%
14.25	$13.95
13.75			+3%
		+1%
13.25

12.75

12.25

12/31/21 03/31/22 06/30/22 09/30/22 12/31/22

Full-year loan growth 10.4%,

or 12.2% excluding PPP

• Total loans receivable decreased 0.6% Q-o-Q, but increased 10.4% year-over-year
• Excluding PPP, loans receivable increased 12.2% year-over-year
• Aggregate payoffs and paydowns relatively stable at $734 million vs. $711 million in 3Q22

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Transformation to Lower-Risk Loan Portfolio

5%

6%

30%	33% $15.24 B
$13.95 B

CRE Loan Portfolio

Multi-tenant Retail

Multi-family

Industrial & Warehouse

Gas Station & Car Wash

Hotel/Motel

Mixed Use

Single-tenant Retail

All Others

% of CRE Portfolio

As of	As of
12/31/2021	12/31/2022
20%	20%
8%	14%
14%	14%
12%	11%
14%	10%
9%	9%
8%	8%
15%	14%

(as of 12/31/2021)	(as of 12/31/2022)
	61%

Note: All Other CRE includes property types representing less than 7% of total CRE

portfolio unless otherwise noted, including: Mixed Use, Retail-Single, Church, Residential, Office, Golf Course and Other smaller segments.

65%

CRE		C&I		Consumer

Ongoing transformation to lower-risk loan portfolio reflects:

•	Lower concentration of CRE loans
•	Reduced exposure to hotel/motel loans
•	Higher mix of lower-risk multifamily loans
•	Growth and diversification of C&I portfolio primarily driven by loans to larger, recessionary-resistant industry

C&I Loan Portfolio

Manufacturing

Information

Wholesale Trade

Gas Station

Healthcare & Social Assistance

Warehouse Line

Restaurant

Real Estate & Leasing

Supermarkets

All Others

% of C&I Portfolio

As of	As of
12/31/2021	12/31/2022
13%	14%
9%	13%
15%	11%
4%	5%
4%	5%
13%	5%
7%	5%
3%	4%
4%	3%
28%	35%

verticals

Note: All Other C&I includes business types representing less than 4% of total C&I

portfolio unless otherwise noted, including: Retail Trade, Real Estate & Leasing, Hotel/Motel, Laundries & Drycleaners, Liquor Store, Supermarkets, Transportation and Other smaller segments.

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