Hope Bancorp(US:HOPE)2021-05-10 18:42Loan Modifications and Allowances - As of March 31, 2021, the balance of loans with modified terms due to COVID-19 totaled $949.1 million, with approximately 94% being real estate loans[86]. - The Company recorded an allowance for TDR loans of $18.9 million as of March 31, 2021, compared to $4.8 million as of December 31, 2020[88]. - TDR loans on accrual status included 34 commercial real estate loans totaling $33.1 million and 21 commercial business loans totaling $8.5 million as of March 31, 2021[88]. - During the three months ended March 31, 2021, the Company recorded $14.8 million in allowance for credit losses (ACL) for TDR loans modified[89]. - Total charge-offs of TDR loans modified during the three months ended March 31, 2021 amounted to $0[89]. - The Company expects TDR loans on accrual status to continue performing in accordance with their restructured terms due to reduced principal or interest payments[88]. Lease Obligations - The net lease cost for the three months ended March 31, 2021 was $4.43 million, slightly down from $4.5 million in the same period of 2020[97]. - As of March 31, 2021, the Company had right-of-use (ROU) assets of $44.2 million and related lease liabilities of $48.6 million[95]. - The total lease obligations as of March 31, 2021 were $48.575 million after deducting imputed interest of $4.107 million[99]. - The weighted-average remaining lease term for operating leases was 5.1 years as of March 31, 2021[98]. Deposits and Borrowing - As of March 31, 2021, total deposits amounted to $14.30 billion, a slight decrease from $14.33 billion on December 31, 2020[103]. - Noninterest bearing demand deposits increased to $5.43 billion (38%) from $4.81 billion (34%) year-over-year[103]. - Brokered deposits decreased to $720.6 million as of March 31, 2021, down from $1.14 billion at December 31, 2020[102]. - FHLB advances increased to $400.0 million at March 31, 2021, compared to $250.0 million at December 31, 2020, with a weighted average interest rate of 0.69%[106]. - The Company’s remaining borrowing capacity with the FHLB was $3.86 billion as of March 31, 2021[106]. - The Company had a total borrowing capacity from the FHLB of $4.28 billion, with $3.86 billion unused and available to borrow as of March 31, 2021[304]. Financial Instruments and Hedging - The Company maintains a loan hedging program that allows for variable rate loans to be converted into fixed interest rate contracts[117]. - As of March 31, 2021, the notional amount of interest rate swaps related to the Company's loan hedging program was $100.7 million with a weighted average remaining term of 9.1 years[118]. - The estimated fair value of interest rate swaps on loans with correspondent banks included in other liabilities was $(17,878) thousand as of March 31, 2021, compared to $(34,606) thousand at December 31, 2020[118]. - The Company had risk participation agreements with a notional amount of $111.8 million as of March 31, 2021, with a credit valuation adjustment of $95 thousand[119]. Commitments and Servicing Assets - Commitments to extend credit increased to $2,477,778 thousand as of March 31, 2021, from $2,137,178 thousand at December 31, 2020, representing a growth of approximately 16%[127]. - The balance of servicing assets at the end of the period was $12,084 thousand as of March 31, 2021, down from $14,847 thousand at the end of March 2020[135]. - The principal balances of loans serviced for other institutions were $1.21 billion as of March 31, 2021, compared to $1.23 billion at December 31, 2020[135]. Tax and Regulatory Matters - For the three months ended March 31, 2021, the company reported a pretax income of $57.7 million and an income tax provision of $14.0 million, resulting in an effective tax rate of 24.22%, up from 19.94% in the same period of 2020[139]. - The company had total unrecognized tax benefits of $2.8 million as of March 31, 2021, with a potential decrease of $902 thousand expected in the next twelve months due to a settlement with state tax authorities[140][141]. - The company expects no material adjustments from the ongoing examination by the New York City Department of Finance for tax years 2016, 2017, and 2018[142]. - The company determined that a valuation allowance for deferred tax assets was not required as of March 31, 2021, based on its analysis of future income forecasts and current economic conditions[144]. Stockholders' Equity and Compensation - Total stockholders' equity remained stable at $2.05 billion as of March 31, 2021, unchanged from December 31, 2020[166]. - The company repurchased a total of 12,661,581 shares of common stock for $200.0 million as part of previous repurchase programs, with no shares repurchased during the three months ended March 31, 2021[167]. - Dividends paid were $0.14 per common share for both the three months ended March 31, 2021 and 2020[168]. - The total fair value of restricted stock and performance units vested for the three months ended March 31, 2021 was $5.2 million, compared to $2.0 million for the same period in 2020[176]. - The compensation expense for the Employee Stock Purchase Plan (ESPP) during the three months ended March 31, 2021 was $221 thousand, up from $71 thousand in 2020[175]. Comprehensive Income and Fair Value - The unrealized loss on securities available for sale was $40.8 million for the three months ended March 31, 2021, compared to an unrealized gain of $38.9 million in 2020[168]. - The total other comprehensive loss for the three months ended March 31, 2021 was $27.5 million, compared to a total income of $27.3 million in 2020[168]. - The estimated fair value of loans receivable—net was $13.54 billion as of March 31, 2021, compared to $13.43 billion at December 31, 2020[163]. - The company recorded net losses on collateral dependent loans at fair value of $17.3 million for real estate loans and $2.6 million for commercial business loans for the three months ended March 31, 2021[162].