Hope Bancorp (HOPE) Q4 2023 earnings summary

Executive summary

• Q4 net income was $26.5M, or $0.22 diluted EPS; excluding $11.1M in restructuring costs and a $4.0M FDIC assessment ($12M after tax), net income was $38.3M, up 26% QoQ.

• FY 2023 net income was $133.7M, or $1.11 per diluted share.

Financial highlights

• Net interest income was $125.9M, down 7% QoQ; NIM was 2.70%, down 13 bps, or down 7 bps excluding Q3’s interest recovery.

• Noninterest income was $9.3M, up 12% QoQ; adjusted noninterest expense was $84.8M, down 2% QoQ.

• Provision for credit losses was $1.7M versus $16.8M in Q3; FY net charge-offs were 0.22% of average loans.

• FY 2023 effective tax rate was 24.9%, versus 26.3% in FY 2022.

Outlook and guidance

• 2024 outlook versus 2023: low-single-digit loan growth, low-single-digit NII decline, adjusted noninterest expense down more than 5%, positive operating leverage, and stable ACL coverage.

• Loan growth is expected to be weighted toward 2H24; average loan-to-deposit ratio is expected below 95%, with BTFP repayment planned for late March/early April.

• 2026-and-beyond targets: high-single-digit loan growth, revenue growth above 10%, efficiency ratio below 50%, and ROA above 1.2%.

• Strategic realignment aims to improve efficiency, support high-quality loan and deposit growth, and enhance returns; strong capital supports customer growth plans.