Hope Bancorp(US:HOPE)2023-04-25 18:04Financial Data and Key Metrics Changes - The company's total risk-based capital ratio increased to 12.25% at March 31, 2023, up 28 basis points quarter-over-quarter [3][9] - Net interest income totaled $134 million for Q1 2023, representing an 11% decrease from the preceding quarter, with a net interest margin of 3.02%, down 34 basis points quarter-over-quarter [12][34] - Non-interest income was $11 million for Q1, a decrease of 9% from the preceding quarter [6] Business Line Data and Key Metrics Changes - New loan production in Q1 was $569 million, lower than previous quarters, with commercial and industrial loans making up 61% of total loan production [33][80] - The average yield on the loan portfolio increased to 5.75%, up 39 basis points quarter-over-quarter [87] - Non-performing assets at March 31 were 39 basis points of total assets, compared to 36 basis points at December 31, 2022 [14] Market Data and Key Metrics Changes - Average deposits grew 2% quarter-over-quarter to $15.8 billion, with the average cost of deposits increasing to 2.41% [34] - The bank's uninsured deposit ratio improved to 38%, down from 41% at December 31, 2022 [4] Company Strategy and Development Direction - The company plans to focus on improving profitability and efficiency, expecting quarterly improvements in the efficiency ratio driven by cost savings from staffing rationalization [16] - Loan growth is expected to be in the low single-digit range for 2023, reflecting lower customer demand in a higher interest rate environment [90] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of the balance sheet and capital positions, indicating that the financial institution serves as a source of strength and stability through economic cycles [91] - The company anticipates a decline in net interest income in Q2, followed by stabilization and modest growth in the second half of the year supported by loan growth [37] Other Important Information - The company repurchased $11 million of convertible senior notes and expects to pay off the remaining balance of $207 million in May with excess cash [85] - The Board of Directors declared a quarterly common stock dividend of $0.14 per share [32] Q&A Session Summary Question: What is the plan for the borrowings to fund cash? - Management indicated that they have enough liquidity to cover the borrowings and do not expect to raise funds to replace the convertible notes [28] Question: How much of the growth in time deposits was broker deposits? - Management noted that nearly $2 billion of growth in time deposits occurred towards the end of the quarter, with a shift in deposit mix due to industry disruptions [44][45] Question: What are the assumptions for net interest income stabilization in the back half of the year? - Projections incorporate conservative assumptions around deposit behaviors and are informed by trends from core relationship customers [55] Question: What is the outlook for loan demand in the current environment? - Management expects loan growth to be in the low single-digit range for 2023, with no drastic changes anticipated in loan demand [61]